SANWA HOLDINGS CORPORATION
Shinjuku Mitsui Building 52FNishi-Shinjuku 2-1-1, Shinjuku-ku, Tokyo
163-0478, Japan
Phone: +81-3-3346-3019
Inquiries : Corporate Communication Department
https://www.sanwa-hldgs.co.jp/english/

INTEGRATED REPORTFor the year ended March 31, 2020

2020

A History ofValue Creation

Our Mission

The Sanwa Group is committed to offering products andservices that provide safety, security and convenience tofurther contribute to the prosperity of society.

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Message from the Chairman

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 theenhancement of corporate value.
PDCA SAKURAThe employees of the Sanwa Group, not satisfied with the current situation, maintain acritical 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 the intended results. Getting back to thebasics such as increasing good aspects and improving bad ones is part of the Plan-DoCheck-Act (PDCA) cycle. PDCA SAKURA represents this concept as the Sanwa Groupsymbol. We even planted PDCA SAKURA cherry blossom trees on the grounds of main
Group facilities.

CONTENTS
A History of Value Creation

ESG Materiality Initiatives

Message from the Chairman........................................1
Message from the President....................................... 2
A History of Value Creation......................................... 6
Financial & Non-Financial Highlights.......................... 8
Sanwa Value Creation Model.................................... 10
ESG (Materiality)........................................................ 12
Value through Business............................................. 14
Risks and Opportunities............................................ 16

Future........................................................................ 48

Strategy

Financial Section and Corporate Data.......... 54

Long-Term Vision and Mid-Term Management Plan....... 18
Financial Strategy...................................................... 22

Special Feature:
Value that Generates a Competitive Advantage
Service....................................................................... 26
Multi-Product Sales................................................... 28
Globalization............................................................. 30

Reliable Business Performance
Regional Operations................................................. 32

Reliable Management
Corporate Governance......................................... 40
Management Team............................................... 46

Responding to Climate Change
Regional Contribution and Social Contribution

People....................................................................... 50
Respect for Human Rights / Human Resource Development
Work-Life Balance and Diversity / Health and Safety

Manufacturing........................................................... 52
Strengthening Quality Control
Improvement of Customer Satisfaction

Editorial policy

To present the Sanwa Group’s management and corporate activities, wehave published this Integrated Report. The report is edited in a holisticmanner to include non-financial information such as corporate social
responsibility activities in addition to information on management
direction and strategy and a 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 pastexperiences. Forward-looking statements necessarily entail some degreeof 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 2019 is the year ended March 31, 2020.

In the 64 years since its establishment, the Sanwa Group has grown and is now doing businessin 26 countries and regions worldwide with over 11,000 employees on a consolidated basis.
The Group, which began as a shutter business in Amagasaki, Hyogo Prefecture, went on topromote a multi-product sales strategy, extending its product lineup to address diverse needs.
We have also worked on globalization, developing our business on a global level, as animportant business theme. We consider it our mission to provide people across the globe withsafety, security and convenience and have achieved what we have through our mantra oftaking PDCA to the next level. However, we believe that we are only halfway to reaching ourultimate goal of becoming a major global player.
The world has entered an era of rapid change and turmoil. The effects of the spread of thenovel coronavirus (COVID-19) will not be short-lived. We must accept a new normal created by
the crisis and rapidly develop new business approaches. In addition, all of humanity faces theissue of climate change caused by global warming. The Group must tackle these issues headon through our business activities, contributing to the creation of a sustainable future byproviding people with safe communities and lifestyles. This is our mission and my dream.
From April 2020, as Director and Chairman, I will pass on the spirit of our establishment to
the next generation and be willing to continue to devote myself to the enduring developmentof the Group. I hope that our shareholders, investors and all of our stakeholders will continue
to offer their support, helping our Group flourish.

Toshitaka Takayama
Director, Chairman

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

1

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Message from the President

Even as times change,
we will continue to provide
unchanging levels of safety,
security, and convenience.
As the representative of the Sanwa Group, I first wish to
express my deepest sympathies and condolences tothose who have lost their lives or been stricken with thenovel coronavirus (COVID-19).

Yasushi Takayama
Representative Director, President

Responding to Climate Change
Modern society is in the midst of a huge wave of change. I believe that we must alsochange to adapt to changes in society. For example, while shutters initially became popular
as a means of protection from crime, the purposes for installing shutters have diversified
over time, as demands for fireproof, smokeproof, and earthquake-proof functions grew, inorder to use them as protection in the event of fires and earthquakes. Furthermore, as theimpacts of natural disasters intensify due to larger typhoons and increasingly frequentlocalized torrential rains, we are now required to meet the needs for waterproof andwindproof functions, in order to deal with this unprecedented environmental change. We
are aware of these needs, and will work to create products that respond to both climatechange and disaster prevention, and to deliver safety, security and convenience topeople’s lives.

Responding to the Current Market
To meet the needs of society, we must not only develop products that respond to climatechange, but also to the changing social structure. The shopping arcades that supported
our development in the early years following our foundation have gradually decreased in
number with the passage of time, and have been replaced by giant shopping centers andconvenience stores. Large-scale distribution centers have also emerged with the growth of
e-commerce businesses. This is just one example of how people’s lifestyles have changed.
I believe that the Company has been able to achieve continuous growth by creating new
products and services that are suited to new purposes. In this way, we have been able torespond flexibly to such changes in society. Going forward, we will continue to pursue ourmulti-product sales strategy, and work to stay one step ahead of changes in society.

2

Things That Can and Cannot Be Changed

Sustainable Growth through Globalization

Our founder once said, “If we compare a building or a house to the human body, shutters
are the kabuto and yoroi (helmet and armor, in English) that people wear.” Shutters, which
in Japanese are called yoroi-do (armored doors), protect us. This is in line with the basic
view behind the Company’s mission, which is to offer “products and services that provide
safety, security and convenience to further contribute to the prosperity of society,” so thesocial significance of our businesses comes first in corporate management. As
Representative Director, President, I will be unwavering in keeping this view alive.
As long as we run a company, we need to turn a profit. However, since profits come asa result of our social significance, namely our efforts to provide safety, security andconvenience, I believe that contribution to society will lead to sustainable growth for theCompany. Our current chairman speaks of “two kinds of reliability” – reliable businessperformance, which arises from the growth of each business, and reliable management,
which consists of safety, quality and corporate governance, among other aspects. Building
up both types of reliability is critical. We will continue to manage our businesses based onthese basic views.

One of our main business goals is to bring safety, security and convenience not only topeople in Japan, but to people all over the world. In 1996, we entered the North American
market ahead of the rest of the industry, and this was followed by a large-scale expansionof our business into Europe and Asia. As we have expanded our global operations, ourcorporate value has steadily increased, and I am proud to say that we have become acorporate group that is able to contribute all over the world.
Recently, there has been a move toward protectionism, and although there is a risk that
the COVID-19 crisis will exacerbate this tendency, I do not believe that the globalization of
the world economy that has occurred over the past few decades will be reversed. The sameis true for us, and we are going to be bringing our ideas to the rest of the world, and willcontinue to pursue global operations. We have already established business bases in North
America and Europe. In Asia, we also included four subsidiaries into the scope of
consolidation in fiscal 2019, and are determined not to take any steps backward. We willcontinue to establish business foundations in Asia to complement our bases in Japan, theU.S. and Europe.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20203

Value Created in Our Service Businesses
One of the key goals of the Third Mid-Term Management Plan is to “strengthen service
segments and expand our business model” as society has been shifting towards anemphasis on “using services” in addition to “owning products.” Our access systems, which
are used frequently in people’s daily lives, play an important role in supporting
infrastructure, such as control functions including crime prevention, as well as fireproof,
waterproof, and other disaster prevention functions. Accordingly, maintenance services arepart of our responsibility to ensure that customers will be able to use our systems for alonger period of time. Going forward, we will contribute to maintaining and improving
infrastructure by expanding our service businesses.
We must take our mission of providing safety, security and convenience to another level
as we look ahead to the next era. This idea is also exemplified by the “Society 5.0” conceptthat the Japanese government is currently promoting. I believe we need to further promotea shift to digitalization, and we regard this one of our tasks. We will be able to develop new
fields and technologies by combining our own capabilities with measures such as
collaborative partnerships and M&A with external partners.

Aggressive Investment in Growth with Awareness of Capital Efficiency
In fiscal 2001 we adopted SVA* as a performance indicator, and have operated in eachregion with a particular awareness of capital cost and capital efficiency, not simply profit
and loss. We are working to increase our corporate value by steadily improving SVA and
ROIC through the effective use of free cash flow for strategic investments. As one aspect ofour strategic investment plan, we actively engaged in M&A even under difficult conditions.
For example, in 2009, in the wake of the financial crisis, we acquired Wayne Dalton
Corporation in North America. Going forward, we will continue to compete on a global
level and make wise strategic investments in order to achieve sustainable growth.
Improving productivity is another task that cannot be ignored. Since our response to the
IoT and IT holds the key to the promotion of operational efficiency of every process fromsales to installation, we will continue to invest in information systems in Japan, the U.S.,
Europe and Asia.
Regarding shareholder returns in fiscal 2019, we executed a share buyback worth ¥5billion. The annual dividend has been raised to ¥34 in fiscal 2019, which marks the eighthconsecutive years of increases, and we achieved our target payout ratio of 35%. In fiscal
2020, even though we are forecasting a sharp drop in revenue and profits, we areforecasting to keep our annual dividend at ¥34, in line with our policy of maintaining stabledividends.

and the Company is undergoing a generational change. While I want our veteranemployees, who possess expertise and skills, to fulfil their potential, we will not be able toadapt to changes in younger generations if things are done in the same way as they werein the past. We will need to undertake work-style reforms in our own way as the Sanwa Group.
The Company offers a variety of job types, such as sales, design, production andinstallation, and has introduced a training system called the “Sanwa Professional Human
Resources Training Plan” to enable employees to learn all of these operations in a uniform
manner. One of our strengths is that vertical communication takes place rapidly andaccurately; however, going forward horizontal cooperation will become increasingly
important for improving customer satisfaction. New ideas and innovations cannot emerge
without the free thinking that comes from linking both vertical and horizontal communication.
I believe an environment that is filled with diverse human resources, and a workplace that is
comfortable for both men and women alike facilitates the generation of wide-ranging
ideas. At present, the Sanwa Group operates in 26 countries and regions, and we will work
to encourage the creation of synergies as “one Sanwa.”

Strengthening Governance
The Company has positioned corporate governance as an important management issue.
We delegate authority to Group companies appropriately, while working to ensure
effective governance as Sanwa Holdings in terms of important decisions. Furthermore, ourBoard of Directors will appropriately monitor management risks within the Group, andfunction as a communicative forum in which adequate deliberation time is given and morevigorous debate takes place in order to maintain and strengthen the effectiveness of theBoard of Directors.

*SVA (Sanwa Value Added): Our unique indicator of added value:
NOPAT (net operating profit after tax) – invested capital × WACC (weighted average cost of capital: 6%)

To Our Stakeholders
Human Resources as the Source of Value Creation
Our employees have a strong sense of responsibility, and this has been the case for many
years in our corporate culture. This is one of the reasons that we have been able toestablish a superior position compared to other companies in the industry. However,change is also happening in this area. The average age of our employees has gone down,

4

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

We have grown and will continue to grow thanks to the support of not only our employees,
but also of our various stakeholders including clients, suppliers, installers, and partnercompanies that work with us in areas such as manufacturing, logistics, design, and installation.
We will strive to become a corporate group that is capable of contributing to the creation ofa sustainable society in the 21st century, so that our stakeholders can feel proud to beconnected to the Sanwa Group. Please look forward to seeing what the future will bring.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

5

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

A History of Value Creation
FY2019Record-HighNet Sales

440.2 billion¥

The Sanwa Group has grown and developed based on two pillars,
under the leadership of the current Chairman, Toshitaka Takayama:
firstly, through a thorough “Multi-Product Sales Strategy” that
expanded from the door business during its foundation in the 1960s
into a wide range of product lines other than shutters and then to asecond pillar, “Globalization,” which began in the 1990s. Manji
Takayama founded Sanwa shutter in 1956 with a fundamental ethosof passion, trust and diligence. The Sanwa Group formulated its
mission, values and principles of business in 2002. Since then, we
have continuously passed along the Group spirit of contributing tosociety by providing safety, security and convenience, all of which aresymbolized by the three rings of the corporate emblem.

FY2019Record-HighApprox.

78.8%

Non-shutter
sales ratio*
Approx.

77.7%

2019-2020

Become a Leading
Global Brand(2010)

Approx.

2016-2018

Leaping

Net sales

Three years to strengthen
our competitiveness as amajor global player

Non-shutter
sales ratio*
Approx.

65.1%

2013-2015(1990)

Overseas sales
1960s

1970s

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

69.5%(2000)

1956

199.8 billion¥(2019)

Non-shutter
sales ratio*

1950s

Overseas Net Sales

Non-shutter
sales ratio*

1980s

Overhead
Door
Corporation

Novoferm
Group(1996)(2003)

M&A

1990s

M&A

2000s

Challenge
Three years to establish abasis for becoming a major
global player

Overseas
sales ratio
Approx.

Operations in

45.4(2019)

26

countries% and regions(2019)

2010s* Non-shutter sales ratio: Domestic consolidated net sales excluding net sales of heavy-duty and lightweight shutters/Domestic consolidated net sales x 100

Entry into the shutter industry
Sanwa Shutter Manufacturing began
manufacturing lightweight shutters in 1956
near the Sanwa Market in Amagasaki, Hyogo.
Despite being a latecomer to the market, weestablished a leading position in the shutter
industry in the 1960s. Our production capacity
grew to a world-class level with the rapid
construction of six factories.

Multi-Product Sales

Sanwa Global VisionFirst Step toward Multi-Product Sales

Expanding the Multi-Product Strategy

PDCA Advances the Multi-Product Sales Strategy

Product Development in Harmony with Society

The Sanwa Group’s multi-product sales strategy beganwith its entry into the door business in the late 1960s.
Focusing on fields where we could apply theknow-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 rose to the top of the industry.

We have promoted the multi-product sales strategy throughacquisitions to further broaden our value. The first company weacquired was Showa Front Sales (now Showa Front) in 1984. That
was followed by the acquisitions of Showa Kensan, a manufacturerof automatic door operators; Venix a manufacturer of partitions;and Sanwa Tajima, which manufactures and sells stainless steelbuilding products. By acquiring quality companies with establishedproduct brands, we accelerated our multi-product sales strategy.

To vigorously push forward with multi-product sales, infiscal 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 inmarketing. Our corporate culture of placing thehighest priority on implementing the PDCA cycle is the
backbone of our daily business activities.

We have contributed to the building of a sustainable society
by expanding our environmentally conscious products that
address climate change, and a lineup of disaster prevention
products with flood prevention, earthquake resistance, wind
resistance and other functions, which help realize safety,
security and convenience. We have been expanding
maintenance services to comply with inspection legislation
for fire prevention equipment in Japan.

Gaining a Foothold Overseas

Business Expansion by Penetrating the North American Market

Establishment of Three-Pronged Platform: Japan, U.S.A., Europe

Aspiring to be a Major Global Player

In 1974, we entered into a technical tie-up with
Overhead Door Corporation (North America; ODC),
and began manufacturing and selling overhead doors.
In 1986, we established Sanwa Shutter (H.K.). in Hong
Kong, making us the first in the industry in Japan tofocus on overseas markets.

In 1996, we acquired tie-up partner ODC. Through theaddition of new businesses boasting leading shares inNorth America into the Group, we proceeded withcollaborative product development and sales, as well
as expansion into new markets.

In 2003, we acquired Novoferm Group (NF), making
the European market our third cornerstone. We started
to grow into a leading global brand by pursuingbusiness and regional diversification, in addition to
expanding and growing our core businesses throughthe development of multiple product types.

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 accesssystems industry. Looking towards 2020, we are
implementing our Third Mid-Term Management Plan
to establish a foundation in this field.

Globalization

Deliveries just after the foundation

6

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

2020

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

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

7

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Financial & Non-Financial Highlights
Financial Indicators

Non-Financial Highlights

Operating Income / Operating Income Ratio(Millions of yen)
40,0007.3
30,0007.5

26,8707.3

34,21731,59328,322

26,440

(%)
8

7.8

7.7

20,000

2

0

2016

2017

2018

2019

(Millions of yen)
30,000(Billions of yen)
60.0(Millions of yen)
6,000
1.06

12.0

15.4

6.0
12.2

3.0

15.0

12.8

12.2

10

0

SVA (left scale)2016

17,07014,627

21,64718,280

9
6

10,000

2017

2018

2019

(%)
20

54.2

12
40.0

15
12.3
11.6

11.3

10.7

8.9

20.0

47.6

43.7

37.8

32.5

0

0

2015

2016

2017

2018

0

0

2019

(FY)

2015

2016

ROE (right scale)Service business net sales (left scale)

2017

2018

2019

Number of Employees / Female Employee Ratio(Consolidated)(Times)1.0

15,0000.6

10,000

0.54

0.53

0.44

0.4

0.38

0.38

8,790

5,000

0

0

2015

(FY)

2016

2017

2018

2019

ROIC (right scale)

10,151

9,643

9,051

12

3,000

8

2,000

4

1,000

3,634

3,617

3,666

3,819

3,676

3,117

3,257

3,432

3,524

4,127

(FY)

2015

2016

2017

(Left scale)Japan(Right scale)

Female employee ratio

2018

Overhead Door Corporation

0

2019

Novoferm

1.07
4,728

0.0

2015

2016

2017

2018

2019

Ratio of R&D expenditures to net sales (right scale)

Asia

0
(FY)

2015

2016

Number of installers

2017

2018

2019

Number of installation training center trainees

Capital Expenditures /Depreciation and Amortization*

Free Cash Flow

Lost-Time Injuries Frequency Rate /Severity Rate (Domestic Group Factories)

CO2 Emissions (Domestic Group Companies)(Millions of yen)
15,000(Millions of yen)
20,000

(%)
2.0

1.9

(t-CO2)30,0001.5

1.81

12,367

11,38315,00010,000
8,127
5,000

8,419

8,096
8,022

8,049

7,622

7,290

10,000

9,301

0
(FY)

2015

Capital expenditures

2016

2017

2018

2019

15,67915,664
13,36010,593

8,737

5,000

0.5

0

0.0

(FY)

2015

2016

2017

2018

2019

1.06
0.06

2015

(FY)

Depreciation and amortization* Excluding amortization of goodwill

1.8
1.20

1.02

1.0

1.20

1.15

0.02

0.07

0.00

2016

0.08

0.10

0.7
0.10
0.01

2018

2019

0.04

2017

29,081

27,94630,501

28,32528,15420182019

20,00010,000

0.9

0.8

0.9

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

11,474
524
3,147

2,808

4,611

(%)
1.2

0.6

R&D expenditures (left scale)

4,000

2,545

4,422

0

(%)
16

2,177

1.12

0.3

16.8

2,039

3,999

3,868

1.15

2,000

(FY)

Ratio of service business sales to total net sales (right scale)

Debt/Equity Ratio

4,000

1.13

10
5

3

0.2

0

2015

13.3

20,91020,000

(%)
15

0.8
20

9.0

8.1

8.2

(%)
30

14.0

12.7

13.5

12.7

Profit attributable to owners of the parent company (left scale)Operating income ratio (right scale)(Billions of yen)
15.0

12.7

11.4

(FY)

Sanwa Value Added (SVA)/ Return on Invested Capital (ROIC)(FY)

R&D Expenditures / Ratio of R&D Expenditures to
Net Sales (Consolidated)

0

2015

Operating income (left scale)

9.0

Service Business Net Sales / Ratio of Service Business
Sales to Total Net Sales (Consolidated)4

10,000(FY)

6Profit Attributable to Owners of the Parent Company/ ROE

Japan (domestic factories) frequency rate

Manufacturer average frequency rate

Japan (domestic factories) severity rate

Manufacturer average severity rate

0
(FY)

2015

2016

2017

*Source: 2 019 survey on workplace accidents (Ministry of Health, Labour and Welfare of Japan)

Cash Dividend per Share / Earnings per Share
(Yen)
50

92.95

40
30
20

74.61
63.07
23

97.14

80.97
30

32

34

25

2016

310,269

200,000

0

Cash dividend (left scale)

300,000

(%)
80

2017

2018

2019

Earnings per share (right scale)

SANWA HOLDINGS CORPORATION

323,393

331,686

338,432

INTEGRATED REPORT 2020

41.7

43.0

45.2

354,023
60

60

20

2015

(Millions of yen)
400,000

40

0

8

(Yen)
100
80

10

(FY)

Total Assets / Shareholders’ Equity Ratio

47.4

46.3

0

Total assets (left scale)

2017

2018

Shareholders’ equity ratio (right scale)(Thousand m3)
120

2019

95.8

87.5

81.0

80.0

111

101
90

40

0

2016

(Billions of yen)
100.0

84

60.0

20

2015

Amount of Water Intake / Discharge (Sanwa Shutter
Factories)

60

40.0

100,000(FY)

Sales of Eco- Friendly Products / Sales of Disaster
Prevention Products (Consolidated)

20.0

26.2

29.3

31.4

31.2

0
(FY)

30

39

37

38

2018

2019

0

2016

Eco-friendly products

2017

2018

2019

Sales of disaster prevention products

(FY)

2017

Amount of water intake

Amount of discharge

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

9A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Sanwa Value Creation Model
The Sanwa Group creates value by conducting business activities in line with its products and services, and ensuring sustained growth
based on six types of capital, in order to address ESG issues (materiality). The value created by the Group resolves global social issues,
such as changes in the economic situation and technology and climate change, and contributes to society by providing safety, security
and convenience to communities and the daily lives of people around the world.

Social Issues

ESG Issues (Materiality)
Category

Sanwa Business Activities

Input

OutputP12-13Natural Capital

Seamlessly integrated system, from development to maintenance and service

FY2019Reduction in energy consumption· Global warming· Depletion of energy andresources· Energy consumption (crude oil equivalent)(Sanwa Shutter): 8,787 kl

Future· Amount of water intake (Sanwa Shutter
factories): 84,000 m3

Contributing to a sustainable future
and the development of society

Social and Relationship Capital· Increasingly frequent

Installation· Sales network in Japan:
Approximately 500 locations (divisions)· Widening disparities
P48-49Manufacturing

a

Pl

n

ROE

13.3%

Multi-Product Sales Strategy
Japan: No.1
North America: No.2
Europe: No.2

Procurement· Number of employees (consolidated):

11,474Globalization(Percentage of overseas employees: 64%)

Industrial sectional doors· Number of employees who havereceived training: 1,869

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

(Hosted by Human Resource Development Center)aging populationt
AcA

P50-51

Uniform supply chain fromdevelopment to maintenance andserviceci ot· Number of production bases: 60· Capital expenditures: ¥8.42 billion

ckk

Technology/Manufactured Capital· Changes in workstyles

OutcomeGarage doorsneec· Decreasing workforce· Declining birthrate and¥14.0 billionDohuman rights

Ensuring that everyone involved
with the Group can work withpeace of mind, thus being
the driving force for value creation

7.8%

SVA

Japan: No.1
North America: No.1

Human Capital· Due consideration to¥34.2 billion

Shutters· Number of installers (Japan):
Approximately 3,900

Human resource development, which isthe source of value creation, andimprovement of the work environment

Operating income
Operating income ratio

A large market share in the major regions of Japan,
North America and Europe and a multi-product lineup

Service· 24-hour repair request receiving
service (FTS)· “Ribbon Distributors” in North America:	Approximately 400 companies

People¥440.2 billion

Maintenanceand service

 trengthening engagement withS
stakeholders

natural disasters

Net salesChhSpecial Feature: P26-31
Steel doors

Japan: No.1
Europe: No.2

DesignIntellectual Capital· Progressing urbanization· Advances in the AI andIoT society· Diversification of needs· Increasing complexity ofsupply chains

Know-how in access systems field thatrealizes multi-product types

Manufacturing
Providing products and services
that support the infrastructureof communities and daily life

Implementation of PDCA that has been
firmly established, from management
to rank-and-file employees

Sales

Overseas sales ratio

Development

Disaster prevention products net sales· R&D expenditures: ¥4.7 billion

95.8 billion¥

Financial CapitalP52-53Service business net sales

45.4%¥54.2 billion

The Sanwa Groupis committed tooffering products
and services
that provide safety,
security andconvenience tofurther contributeto the prosperityof society.

Environmentally friendly products net sales

Financial strategies focused on ROE(Cost of capital) and SVA (ROIC and
WACC) to achieve sustainable growth31.2 billion
28,154 t-CO¥

CO2 Emissions (Japan) · Free cash flow: ¥15.6 billion

Reliable Business
Performance

A corporate group that earns the trust of stakeholders
by reliably achieving its performance targets2

P18-25/P32-39

GovernanceReliableManagement

10

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

A sincere and transparent corporate culturethat earns the trust of society

P40-47SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

11

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

ESG (Materiality)
Decision-Making Process for Key ESG Issues (Materiality)
In recent years, companies are strongly required to take global action toward achieving a sustainable society, following significant
societal changes, such as the establishment of the SDGs, the adoption of the Paris Agreement, and trends in ESG-related investment.
In light of international trends and the business environment in which the Sanwa Group operates, the Group has used the process
presented on the right to identify the priority ESG issues (materiality) toward which we should apply our energies.

FutureContributing to a sustainable future
and the development of society

PeopleEnsuring that everyone involved with
the Group can work with peaceof mind, thus being the driving
force for value creation

Manufacturing
Providing products and services
that support the infrastructure ofcommunities and daily life

Reliable Management
A sincere and transparent
corporate culture that earns
the trust of society

In response to climate change, the Sanwa Group strives
to reduce its emissions of greenhouse gases and waste,
and we believe that it is our duty as a global
comprehensive manufacturer of building materials tooffer eco-friendly products that contribute to therealization of a low-carbon society.
Furthermore, the Sanwa Group conducts businessactivities that are rooted in local communities in regions
throughout the world, and we believe that contributing
to local communities and society in general will lead tothe sustainable development of both these communities
and the Group, itself.

To ensure that the Sanwa Group’s products function
properly as access systems, numerous resources are
required, from development and production to
installation and maintenance. Through efforts to respecthuman rights and diversity, and ensure health and safety,
we are creating workplaces in which all of our
stakeholders, including employees, affiliated companies,
and suppliers can work with peace of mind, anddeveloping human resources who are capable of driving
the growth of the Group. We believe that these initiatives
support the foundation of our business and constitute an
investment in sustainable growth.

As an essential business to continue supporting people's
lifestyles and commercial infrastructure, we believe thatendeavoring to offer waterproof products that are
resilient to flood damage and disasters caused byextreme weather and other products and services that
contribute to safety, security, and convenience, while
also pursuing quality assurance and customer satisfaction,
serves as the engine for increasing our corporate value.

The Sanwa Group is a global enterprise operating in 26
countries and regions around the world. We believe that
it is important to enhance organizational resilience bybuilding highly transparent management systems,
reinforcing compliance, and properly managing risks, andto build fair, equitable, and ethical relationships in orderto facilitate growth and development together with ourvarious stakeholders.

STEP 2

Identify ESG Issues

Categorize Issues andSpecify Key Issues

STEP 3
Confirm Appropriateness andDefine Key Issues

Key Issues

Actions Taken

Reduction of greenhouse gas emissions

Reduced energy consumption through demand monitoring, switching to LEDs,
introducing air-conditioning equipment, etc.

Gather overseas environmental impact data and set reduction targets

Appropriate waste management

Reduced waste by stepping up recycling, increasing yields, etc.

Gather overseas waste emission data and set reduction targets

Promotion of green purchasing

Promoted the 3Rs for packaging materials by reusing wooden pallets, using
reusable shipping cartons, etc.

Engage in dialogue with supply chains to promote green purchasing

Providing eco-friendly products

Expanded sales of high-speed sheet shutters and other products, which
contribute to climate-change mitigation

Develop and expand sales of products and services that address climatechangeRegional contribution

Used locally produced materials, participated in local cleanup activities, andengaged in dialogue with local communities

Take action to develop local communities

Social contribution

Made donations to NPOs and organized events for local communities, etc.

Further promote social contribution through our main businessRespect for human rights

Implemented harassment training for top management, executives, and othermanagement members

Define human rights risks

Human resource development

Implemented the Sanwa Professional Human Resources Training Plan, anddeveloped global personnel and installers

Secure manufacturing workers and installers, and pass on skills

Work-life balance

Accurately managed working hours by deploying an attendance system andpromoted telecommuting

Promote work-style reforms

Diversity

Promoted telecommuting, introduced a partial paid leave scheme for childcare,and mobilized senior workers

Take steps to increase the number of female managers and encourage male
employees to take childcare leave

Health and safety

Expanded safety education by conducting DVD-based training and VR-based
training, and held Sanwa Group Health & Safety Month

Promote actions to eradicate occupational accidents and step up efforts in thearea of health management

Offering products and services that contribute tosafety, security and convenience

As part of the disaster prevention business, launched products to protect people’s
lives from disasters, such as fire-prevention products, waterproof products,
wind-load-resistant products, and aseismic products, as well as products that
contribute to enhancing the infrastructure
P14 – 15functions of factories and warehouses

Develop products and services that can adapt to the risks of increasingly
severe natural disasters, develop products that prevent infection with the novel
coronavirus and other infectious diseases, as well as products and services thatare suited to the new lifestyles that have emerged due to the pandemic

Strengthening quality control

Expanded our quality management structure, audited supply chains, andorganized a skills contest

Take further actions to ensure stable quality and improve quality

Improvement of customer satisfaction

Provided business manners training for salespersons as well as installers

Further enhance customer satisfaction through customer surveys, gatherings
with customers, etc.

Corporate governance

Disclosed corporate governance guidelines and conducted a questionnaire
survey of members of the Board of Directors

Improve governance at overseas subsidiaries

Compliance

Provided training on a continuous basis and stepped up efforts to propagate
the Compliance Code of Conduct at overseas subsidiaries

Make the internal whistleblowing system even more effective

Risk management

Established the Information Security Countermeasures Council and analyzed thecurrent status of IT-BCP

Construct a Company-wide risk management system and respond to thepandemic

Stakeholder dialogue

Implemented proactive dialogue with customers, employees, business partners,
shareholders/investors, installers, and local communities

Step up dialogue with stakeholders

Fair competition

Implemented thorough compliance with the Guidelines on Regulations Concerning Contact with
Associates from Industry Peers and provided Antitrust Law training on a continuous basis

Expand the scope and content of Antitrust Law training

Anti-corruption

Provided compliance training prior to transfer to Asia

Formulate guidelines for bribery prevention

Response to climate change

Background

Categories

STEP 1

Action in Progress and Future Tasks▶

Stakeholder Engagement
Customers, employees, business partners, shareholders/investors, installers, and local communities
that support the Sanwa Group’s business activities

12

Dialogue with Customers

Dialogue with Employees

Dialogue with Business Partners

Dialogue with Shareholders and Investors

Dialogue with Installers

We respond to the diverse opinions andrequests of our customers through our robust
network, which encompasses more than 500
locations (divisions) in Japan, and 26 countries
and regions worldwide.

We improve our organizational culture by having
senior executives inform employees about strategies
or send them messages of encouragement via
internal newsletters or the intranet, by exchanging
opinions with them at policy briefings, etc., andthrough employee awareness surveys and theinternal whistleblowing system.

The “Sanwakai” group, which comprises suppliers,
affiliated manufacturing companies, and otherentities, serves as a forum for information sharing
and mutual encouragement with the aim of taking
quality, cost, delivery and environment (QCDE)
to the next level. In North America, we endeavor
to engage in regular dialogue with our 400
distributors located there.

In addition to making timely and appropriate
information disclosures via our website andother channels, we hold financial results
briefings twice per year, conduct individual IR
meetings more than 200 times a year, havethe management hold an international roadshow, organize briefings for individual
investors, and so on.

We make concerted efforts to enhance engagement
The Sanwa Group conducts activities that arewith the more than 3,900 installers who are thedeeply rooted in local communities, such as
lifeline of the Company in the realm of accessfactory tours, events for local residents, andsystems. In addition to holding regular occupational
local cleanups on Sanwa Environmental Day,safety meetings with them, and providing all types
in which more than 1,500 people participateof training and support for benefits packages, weeach year.
publish a specialized magazine for installers
twice per year.
SANWA HOLDINGS CORPORATION INTEGRATED REPORT 2020

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Dialogue with Local Communities

13

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Value through Business
The Sanwa Group aims to protect people’s treasured lives, and create a society that is more
prosperous and easier to live in by offering products and services that provide safety, security,and convenience to customers worldwide.

Safe livingwith protection
from disaster

Secure living with protection
from crimes against
people and property

Protection from fire, floods and other disasters

Comfortable living
through easy-to-use
access systems

Contributing to improving the functions ofinfrastructure such as factories and warehouses
Scale of sales

Scale of sales

Approx.

Approx. ¥95.8 Billion

Products that protect people from disasters
Minimizing flood damage

FloodsIn recent years, there have been a growing number of casesof inundation and flooding damage caused by large-scale
typhoons and localized torrential rains. Due to increasing
amounts of rainfall, and the large number of cases offlooding damage both above and below floor level, it isnecessary to take more measures to prevent damage fromtyphoons and heavy rains.

Flooding damage caused by large-scale typhoons and localized torrential rains isincreasing due to climate change. As a new Japanese Industrial Standard (JIS) that
evaluates inundation prevention functions under a unified method has been
established, it is now possible to install inundation prevention equipment inaccordance with the purpose of use, based on the expected depth of floodingshown on hazard maps. Sanwa Shutter Corporation and SUZUKI SHUTTERCORPORATION offer
waterproof shutters and doors,
as well as waterproof panels,
to help minimize flooding
damage to underground
shopping malls and buildings.
Water Guard
Double-tight door
waterproof shutter¥114.5 Billion(Fiscal 2019 Consolidated)

Preparing for strong winds caused by large-scale typhoons and hurricanes(Fiscal 2019 Consolidated)Wind Damage
In the case of fires in places where large numbers of people gather, suchas office buildings, department stores, schools, and hospitals, fire
prevention equipment such as fireproof shutters and doors can stop afire from spreading for certain period of time, by sealing off areas inresponse to signals from smoke and heat detectors. Waterproof shuttersand doors provide flood prevention functions at the time of typhoons
and localized torrential rains, and keep buildings from being inundated.
These products protect people and property from disasters, and provide
safe spaces.

▶ See page 15 for details regarding disaster prevention products.

Enhancing the convenience of public spaces

Products such as heavy duty shutters, sheet shutters, and overheadsliders are required to be effective in improving productivity at factories
and warehouses by ensuring that workers follow appropriate routes andmaking the frontlines of production and logistics friendly to both theenvironment and people.
In addition to fireproofing functions, shutters that open and close
rapidly improve work efficiency, and a thermal insulation function thatallows temperatures to be managed provides comfortable spaces,
contributing to energy saving as environmental products. These
products are indispensable for the development of areas such as
e-commerce, which have seen significant growth in recent years.

Ensuring safe living and comfort for everyone

Scale of sales

Scale of sales

Approx. ¥137.8 Billion

Approx. ¥115.2 Billion(Fiscal 2019 Consolidated)(Fiscal 2019 Consolidated)

There is an increasing number of cases of damage towindow glass caused by flying objects that have become
airborne and crashed into windows, due to strong winds
from typhoons. As there are also cases in which winds
entering a house have blown out the roof, there is a
growing need for further measures to provide protection
from strong winds.

There have been a growing number of cases in which shutters have been blown
from their guide rails by strong winds from typhoons, which are becoming
increasingly larger. Sanwa Shutter Corporation’s Taifu (wind-resistant) Guard offers
heavy-duty shutters, as the industry’s first products that use wind-resistant guiderails, and window shutters that can be installed at medium-rise condominiums.
ODC’s garage doors are designed to withstand the wind load from a hurricane
without sacrificing their stylish designs.

High-strength shutter,
Taifu GuardHigh wind-load-resistantwindow shutter
Mado More Taifu GuardWind Storm™

Preventing people from being trapped in a facility when an earthquake occurs

Earthquakes
Although large-scale earthquakes such as a Nankai TroughEarthquake are expected to cause even more serious
damage than that caused by the Great East Japan
Earthquake, it is impossible to predict when and wheresuch major earthquakes will occur.

After an earthquake, people may find doors being unable to open or close, due todeformation of the frames by external forces. Sanwa’s earthquake proof doors
display strong seismic performance, enabling sufficient clearance to be maintained
between the door and frame to allow it
to open, and feature earthquake-proof
metal fittings as standard equipment, toensure that people will be able to safely
open the door to evacuate a facility after
an earthquake, without fear of being
trapped inside.
Sliding entrance door for indoor Common-area earthquake-proof
hallway, Smood Yuraku
steel door, AKUZOExternal power source enabling automatic rolling even during a power outage

In the case of products such as lightweight shutters, steel doors,partitions, and automatic doors in public spaces where a large numberof unspecified persons come and go, such as commercial facilities,
schools, hospitals, hotels, and stations, it is important for the products
to be capable of providing a pleasant space for the visiting customers.
In addition, these products offers functions to solve numerous
societal problems, such as crime prevention, fireproofing, and thermal
insulation.

14

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

As lifestyles become more diverse and the trend toward a society witha low birthrate and an aging population accelerates, the environment
surrounding housing is changing drastically, as it strongly reflects
changes in society. Products such as garage doors, window shutters,
condominium doors, and exteriors are required to offer security
functions that enhance crime prevention, as well as convenient day-today home living, in addition to a high level of safety. Furthermore, in
cold regions such as Europe, it is important for garage doors to also
provide thermal insulation performance as environmental products.

Power Outages

Power outages can occur when electric cables aredamaged by flying objects due to strong winds from atyphoon, when power poles collapse due to a landslidecaused by heavy rain, or when electric cables have been
struck and damaged by lightning. Power outages can also
be caused by earthquakes.

Previously, shutters had to be rolled up while securing a safe foothold, after having
been closed through manual operation or by rolling down under their own weightafter receiving a disaster signal.
With the introduction of apower supply system, aconnection is provided to abattery or power generator,
enabling users to open theelectric shutters even in theevent of a power outage. This
Shutter power supply systemsystem can be utilized as afor opening shutter, E Connectbusiness continuity plan (BCP)
measure.
SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

15

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Risks and Opportunities
Categories

Main Risks/Opportunities

Responses

External
Environment•	Impact on business due to declining housing starts and construction
investment as a result of changes in economic trends•	Impact on business due to fluctuations in financial markets such as exchange
rates and interest rates•	Impact on the Group’s business due to global political, societal, andeconomic trends•	Impact on business due to terrorism or riots at the Group’s overseas facilities•	Increase productivity and reduce costs through the promotion ofmulti-product sales initiatives•	Hedge against exchange rate risk, interest-rate risk, etc.
•	Continuously gauge global political, societal, and economic conditions,analyze the impact on business, and respond appropriately

Supply Chain/
Procurement•	Impact on business due to sudden price hikes for steel or other auxiliarymaterials•	Impact on business due to overreliance on specific suppliers or supplierbankruptcies•	Build close relationships with multiple suppliers and establish/expand
alternative procurement methods for major components

R&D/New Products•	Loss of competitiveness due to delays in developing advanced technologies
or application to products/services, or insufficient product improvement
Opportunity: C apture growth opportunities through revolutionary
technologies•	Perform information gathering regarding customer needs andstrengthen capabilities in advanced technologies and development

Production/Quality/
Installation/Inspection•	Impact on business due to a decline in supply capability caused by the aging
of production facilities, a decrease in the number of manufacturingpersonnel, or a decline in manufacturing technology level•	Impact on business due to late deliveries•	Loss of reliability due to recalls, product defects, etc.
•	Loss of reliability due to accidents involving products or their installation•	Impact on business due to a decrease in the number of installers, installer
aging, or a decline in installation abilities•	Impact on business due to inadequate maintenance inspections of fire
prevention equipment
Opportunity: E xpand service business in response to inspection legislation•	Continuously upgrade production facilities•	Prompt delivery through integration of production and logistics systems•	Thorough product quality control•	Expand recruitment of installers and enhance installation training•	Increase the number of fire prevention equipment inspectors andprovide education to improve their abilities• Expand the range of easy to install products/processes•	Risks from the establishment/revision of legal requirements• Risk of infringement of patents or other intellectual property rights•	Risk of litigation, investigations by regulatory authorities, or imposition ofpenalties•	Keep everyone informed by sending alerts on legal revisions to relevant
departments, and organizing study meetings, training sessions, etc.
•	Establish a structure by working closely with law offices•	Loss of trust as a result of fraud, scandals, legal violations, etc.
•	Loss of trust as a result of false financial statements or window-dressing•	Loss of trust due to personnel- or labor-related problems•	Risk of inappropriate accounting estimates (setting of various provisions andallowances)•	Foster a corporate climate based on our Compliance Code of Conduct•	Conduct compliance trainings•	Eradicate false accounting and false order booking through thoroughinternal audits•	Compliance with Article 36 (Overtime Work and Work on Days Off) of
the Labor Standards Act through deployment of a working-hours
management system•	Expand the paid vacation acquisition program•	Ensure the proper calculation of accounting estimates and conduct
thorough internal audits

Information Security•	Impact of information leaks, system failures due to infections with computerviruses, cyberattacks, etc., or data loss

• Address cybersecurity risks under the Sanwa Group Information
Management System based on our Information Security Policy

Human Resources•	Risk of being unable to steadily secure or retain high added-value talent•	Risk of being unable to steadily secure installers or address problems
associated with aging
Opportunity: C apture long-term growth opportunities by expanding theProfessional Human Resources Training Plan•	Continuously generate innovation through the hiring of high-valueadded talent and improve our ability to respond to diversifying
customer needs•	Expand the Professional Human Resources Training Plan•	Expand systems for developing and training installers

M&A/Investments•	Unanticipated risks associated with acquisitions and investments
Opportunity: Achieve growth by venturing into unserved areas andexpanding business domains•	Perform proper analyses of market trends, acquisition prices, strategies,
etc.

Climate Change/
Major Disasters•	Climate-change risks such as carbon-tax burden, regulations on greenhousegas emissions, and increases in compliance costs•	Risk of deterioration in quality at installation sites, lower work efficiency, andincrease in occupational accidents resulting from global warming.
•	Impact on our supply systems and our suppliers’ business due to damage
caused by major disasters such as large-scale typhoons, localized torrential
rains, and major earthquakes•	Risk of tightening of environment-related laws and regulations
Opportunity: Achieve growth by expanding sales of eco-friendly products
Opportunity: E xpand profit opportunities by supplying disaster preventionrelated products (products that are fireproof, smokeproof,
waterproof, wind resistant, etc.)•	Have individual factories and offices work to ensure environmental
protection in line with the Sanwa Group Environmental Policy•	Consider and implement countermeasures for climate-change risk at the
CSR Promotion Council•	Set CO2-reduction targets and implement initiatives for theirachievement•	Develop and supply waterproof or wind resistant-related products• Ensure business continuity by formulating a BCP•	Impact on our supply systems and our suppliers’ business due to damage
caused by the global spread of infectious diseases (pandemics)•	Impact on business due to lost sales opportunities, and delays in orsuspension of operations as a result of protracted pandemics•	Lost opportunities due to delays in responding to customer needs
Opportunity: E xpand profit opportunities by supplying antibacterial
products, contactless products, etc.

•	Develop a crisis management manual and strengthen infection
prevention measures•	Implement initiatives to respond to customer needs

Regulatory Risks

Compliance

Infectious-Disease(Pandemic) Risk

16

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Impact of the Novel Coronavirus (COVID-19)
In 2020, the novel coronavirus has spread throughout the world, and it is inevitable that the Sanwa Group’sbusiness performance will be affected. Therefore, we anticipate a significant drop in revenues and profits
compared with the previous year. Although there are no problems regarding our supply systems in Japan, theUnited States, or Europe, the economic impact of lockdowns and other measures that have been implemented
by each country has been substantial. While we expect a gradual economic recovery to occur, we believe thatthe negative impact will continue throughout fiscal 2020.

External Environment and Status of the Company’s Production, Sales, and Installation (as of July 2020)

Japan

North America

EuropeAsia

External Environment

External Environment

External Environment

External Environment·D eclaration of a Nationwide
State of Emergency (April andMay)·D isruptions at someconstruction sites·C onstruction sites in somestates suspended work (Marchand April)·F rom the end of April, states
and counties began lifting
lockdowns, and resumed
economic activities·F rom the end of March, economic
activities halted completely in
Italy, France, Spain, the U.K.,
etc.
·F rom mid-April, countries began
lifting lockdowns and gradually
resumed economic activities·E conomic activity in China
slowed down after the Chinese
New Year·C urrently, generally normal
economic activities aremaintained in China, Vietnam,
etc.

Status of Business

Status of Business

Status of Business

Status of Business· Sales and administrative departments,
etc. have staggered working hours
and introduced remote working to
the greatest extent possible, and arefocused on preventing infection·N one of the factories weresignificantly affected, and they are
maintaining normal operations· Installations may see slow progress
at some sites, and there may bedelays in finalizing incoming orders
and other work disruptions·O DC's operations have been
designated as an essential
business by the U.S. government·S ales and administrative
departments are generally
working remotely· Although some factories
suspended their operations
temporarily, there was no major
impact, and all factories are
currently maintaining normal
operations·S ales and administrative
departments are generally
working remotely·F actories in Germany and theNetherlands are maintaining
normal operations· Although operations atfactories in Italy, France, Spain,
and the U.K. were suspended(until the end of April), allfactories are currently
maintaining normal operations·S uspension periods for
production and sales activities
have ended in China, Hong
Kong, and Taiwan (February
and March), and normal
operations are being
maintained· In Vietnam, production andsales activities are being
maintained at normal levels

Issues for the Sanwa Group after the Novel Coronavirus

Products that contribute to the prevention of COVID-19 and other infectious diseases
Contactless
operations

Use of antibacterialmaterials

UV light
irradiation

Ventilation
functions

Barriers to
infectious droplets

After the COVID-19 pandemic has settled, the adoption of new lifestyles (the “new normal”) will be required, and as people are
greatly concerned about infection prevention and working environments are changing drastically, it is necessary for us to identify
the risks and opportunities for the Sanwa Group.
The Sanwa Group has been engaged in the development and sales of products that use antibacterial materials, as well as
products that allow contactless operation. In addition, we will be taking initiatives to develop and manufacture products thatprovide safety measures for preventing infection, such as easy-to-install partitions to serve as barriers to infectious droplets,
products that emit UV light as an antibacterial measure, and products that emphasize ventilation functions for avoidance of thethree C’s (closed spaces, crowded places, close-contact settings). Furthermore, we are now engaged in the development of anelectrically-operated toilet booth. In line with the Sanwa Group’s mission of “providing safety, security, and convenience,” we willcontinue working to create a society in which people around the world will be able to live with peace of mind.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

17

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Long-Term Vision and Mid-Term Management Plan
Vision 2010: Outcomes and Issues

Reflections on Sanwa Global Vision 2020

• Globalize

Achievements•S trengthen multi-productsales

To offer products and services that provide safety,
security, and convenience as a major global player
in the access systems industry•E xpand the foundation of

Remaining tasks• Strengthen the service business

Three years to strengthen
our competitiveness
Three years to establish a basis for

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

18

Second Three-Year Plan
(FY2016-FY2018)

Third Mid-Term Management Plan
(FY2019-FY2020)

FY2018Targets

FY2018Actual

FY2019ActualFY2020
Forecast

FY2020Targets

Net Sales¥325.0 billion¥365.6 billion¥410.0 billion¥410.0 billion¥440.2 billion¥390.0 billion¥450.0 billion

Operating Income¥23.00 billion¥26.87 billion¥37.00 billion¥31.59 billion¥34.20 billion¥22.00 billion¥37.50 billion

Operating Income Ratio

7.1%

7.3%

9.0%

7.7%

7.8%

5.6%

8.3%

ROE

11.7%

11.4%

15.0%

13.5%

13.3%

7.5%

14.1%

D/E Ratio

0.61 times

0.54 times

0.40 times

0.38 times

0.38 times

0.36 times—

SVA¥5.0 billion¥8.2 billion¥12.8 billion¥12.7 billion¥14.0 billion¥5.4 billion¥15.9 billion

SANWA HOLDINGS CORPORATION•T he domestic business drove performance,
and the targets for the First Three-Year Plan
were met one year ahead of schedule.
•S anwa Shutter Corporation achieved an
operating income ratio of 10%.

•W hile the European and U.S. businesses
recovered, domestic business stagnated, and theSecond Three-Year Plan targets were not met.
•P
 rofitability increased on the back of “NF3.0”of the European business.

•T he domestic business was the driver in fiscal 2019, andachieved its best performance figures ever.
• Sanwa Shutter Corporation recovered an operating income ratio of 10%.
• In fiscal 2020, revenues and profits are expected to fall shortof the targets for the Mid-Term Management Plan, due to thenovel coronavirus (COVID-19).

•P romote the multi-product sales in thedomestic business•D eploy new ERP and implement adownstream strategy at ODC•B oost profitability by restructuring NF Group•G
 et the Asia business into the black• Increase the production, logistics, and installation
capabilities of the domestic business•P ass on sale prices and manage costs in thedomestic business•D eploy new ERP and promote multi-productsales at ODC•H ave ODC expand into adjacent fields•E stablish the foundation for the Asia business•R espond to the coronavirus crisis in each area•P
 romote AI/IoT adoption•S trengthen the service business as a Group•E
 stablish the foundation for the Asia business•D eploy new ERP• Promote ESG

INTEGRATED REPORT 2020

Promote global management,

Targets

FY2015
ActualTasks

Outlinedevelopment phase

FY2015
Targets

Reflections

Sanwa Global Vision 2020

from the initial phase to theas a major global player

becoming a major global player
First Three-Year Plan
(FY2013-FY2015)

the Asia business•R einforce global synergies(1) ‌Become definite No. 1 brand inJapan, the U.S. and Europe(2) ‌Establish a business model forservice business(3) ‌Expand shutter & door business inemerging markets, spotlighting
Asia, and make them grow to be
top brands(4) ‌Promote realization of Groupsynergy in global markets

In fiscal 2013, we launched our long-term
management vision, “Sanwa Global Vision 2020.”
This vision is built upon the achievements of “Sanwa
Vision 2010” (fiscal 2001 to fiscal 2012), evolvingfrom the initial phase of corporate value creation
through global group management to a new phaseof growth and success. We are now implementing
the Third Mid-Term Management Plan (fiscal 2019 to
fiscal 2020), the declared objective of which is toestablish a foundation for becoming the top brandas a major global player.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

19

A History ofValue Creation

Progress of the Third Mid-Term
Management Plan
Fiscal 2019 was unaffected by the coronavirus disease,and the domestic business drove both sales and profits

Basic
Strategies

1

2. S trengthen service segments and expand
business model
3. E
 nhance operation bases of China businessand Asia business▶ Reinforcing Business Foundation
4. Reform work styles and improve productivity
5. P romote ESG to develop a corporate structurethat is more trusted by society

2

Strengthen service segments
and expand business model

Corporate Data

EuropeGrow as an access system company
by establishing our position in each business field

ODC: Strengthening core business segments
while entering adjacent business fields

NF Group: Further strengthen the industrial
segment, and promote digitalization through NF4.0

Core Business•

Ensure the profitability of shutters and doors

Service Business

Door Business

Expand orders received in response to new legal
requirements for inspections, and respond to demandfor post-disaster restoration work

Step up residential retrofitting•

Expand sales of commercial doors

Industrial Business

Improved productivity as a result of expansion of Alpha
Deuren International’s plant•

Hinge Door Business

Leverage the acquisition of Robust AB in order toexpand sales in Sweden and the U.K.

Expand the development of new products such as
Wi-Fi-enabled products••Strengthening Supply Capabilities

Secure production, logistics, and installation capacity
during busy periods•

In fiscal 2019, although we received a record number of orders in Japan,
we were able to complete the work with no major difficulties by boostingproductivity and strengthening internal cooperation.
This was due to successfully passing on increases in installation
expenses and logistics costs to customers in the form of higher saleprices, as well as strengthening supply capability by expanding
production capacity for doors and other products, and enhancing
efficiency in logistics and installation.
In addition, orders received also rose steadily in the service business,
as customers complied with new legal requirements to perform
inspections, or asked us to repair installations that had been damaged asa result of natural disasters. This increase in orders also contributed toour strong domestic operating performance.

•

Door Opener Business•▶ Growing Business
Basic
Strategies

ESG Materiality
Initiatives

North America

Expand sales of partitions, entrances, waterproof
products, etc. through Group cooperation▶ Growing Business

ReliableManagement

Japan

•

1. E
 xpand and strengthen business areas in corebusinesses in Japan, the U.S. and Europe

Reliable Business
Performance

Expand and strengthen businessareas in core businesses

Multi-Product Sales Strategy▶ Core BusinessSpecial Feature▶ Core Businessto record levels.

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

Strategy•

Expand our retail strategy•

Transfer door opener manufacturing to Mexico

In North America, although we struggled somewhat in the first half offiscal 2019, there was a recovery in the second half, particularly in theresidential market. This was thanks to the implementation of a channel
strategy, especially in large urban areas, as well as the running ofpromotions targeting end users. Meanwhile, in the non-residential
segment, although market conditions were soft throughout the year,
we endeavored to maintain and enhance our market share throughstrategic pricing.
As for the door opener business, performance held steady as a resultof launching new products, expanding our retail strategies throughsuch measures as reinforcing sales at home centers, and increasing
productivity by moving production to our Mexico Plant.

Garage Door Business•

Strengthen sales operations in the U.K.

The industrial business remains the main performance driver in Europe.
Productivity improved thanks to Alpha Deuren International’s expansionof its plant, which also enabled us to keep up with booming demand.
Measures to boost dock leveler output capacity also proceededsmoothly.
Meanwhile, in the hinge door business, the newly-acquired Robust
AB played a central role in enabling us to expand our sales in Sweden,
the U.K., and beyond.
Regarding the garage door business, although we faced intensifying
competition, the improved operational efficiency resulting from the
NF4.0 digitalization drive contributed to the performance of the Europe
business as a whole, which held steady.

▶ Reinforcing Business Foundation
Basic
Strategies

3

Enhance operation bases ofAsia business

Basic
Strategies

4

Reform work styles
and improve productivity

Basic
Strategies

5

Promote ESG to develop a
corporate structure that ismore trusted by society

Future: Expand the range of products that are adapted
to climate change• People:
Take measures to foster new value andcompetitive strength• Manufacturing:Provide important protection for daily
life through a diverse range of products• ReliableManagement (governance, stronger
compliance, risk management)•Provide service businesses that meet the needs ofcustomers in various regions to cultivate new customers
and expand our business model•Enhance Synergies from the addition of Suzuki Shutter
Corporation to the Group•In fiscal 2019, we were able to substantially increase consolidated service
business net sales, from ¥47.6 billion in fiscal 2018 to ¥54.2 billion.
This was largely due to a substantial increase in sales at Sanwa Shutter
Corporation maintenance service, stemming from an expansion inlegally-required inspections of fireproof equipment, as well as solid
performance from the newly acquired Suzuki Shutter Corporation, which
contributed to the growth of the domestic business.
We have also introduced field service systems and improved
productivity in both North America and Europe. In Europe, we are
pursuing integration synergies via Novoferm UK, which was made subject
to consolidation in 2017, and BGS, which we acquired in 2018.

20

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

From fiscal 2019, four companies were brought into
the scope of consolidation. In addition, Suzuki Shutter(HK) will be brought into the scope of consolidationfrom fiscal 2020.

•

Enhance operational efficiency using the latest
information systems, such as AI and IoT•Improve productivity through work-style reforms•Bring about recovery by further localizing operations•Starting in fiscal 2019, Shanghai Baosteel-Sanwa Door, An-Ho Metal
Industrial (Taiwan), Sanwa Shutter (H.K.) and Vina-Sanwa (Vietnam) werebrought into the scope of consolidation. However, due to recent market
changes and delays in localization, net sales were ¥6.4 billion, and weincurred an operating loss of ¥0.35 billion.
In fiscal 2020, we will be aiming to get into the black in Asia byachieving a recovery through a further localization of operations, and bybringing Suzuki Shutter (HK) into the scope of consolidation.

We are pursuing various methods to improve productivity in each region.
For example, in fiscal 2019, we introduced mobile PCs and updated our
teleconferencing system in Japan. As a result, this contributed
substantially to efforts to promote teleworking in response to the spreadof the coronavirus.
In North America, we improved both productivity and quality bypromoting production automation in the door division. Meanwhile, in
Europe we optimized our production and supply systems, andtransformed our business processes by pushing forward withdigitalization through NF4.0.

Japan has recently been hit by a series of large-scale disasters. This has
continued in fiscal 2019, with Chiba and other Eastern Japan areas being
struck by large-scale typhoons. As our mission is to provide infrastructurethat protects people’s lives and property from such disasters, including
typhoons and water damage, we will continue to offer products that
guard against damage from natural disasters.
In fiscal 2020, we will need to re-acknowledge viruses as a new threat,
and take actions, going forward to address risks from external factors.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

21

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Financial Strategy
The Company will prioritize strategic investments for growth when allocating its free cash flows, and enhance
our corporate value by steadily expanding SVA and ROIC. As part of such strategic investment, we estimate a
total of ¥30 billion to be used for capital investments and M&As over the two fiscal years of 2019 and 2020. In
fiscal 2019, approximately ¥15 billion was invested, including about ¥10.6 billion for M&As of SUZUKI SHUTTERCORPORATION, Robust AB, and other companies, and about ¥4.3 billion for strategic capital investments. In
fiscal 2020, we will continue to make proactive investments that contribute to long-term growth.

SVA (Effective corporate
tax rate: 33%)

FY2019 Actual

FY2020 Forecast¥14.0 billion¥5.4 billion

15.4%

9.5%

ROIC
(WACC: 6%)
ROE(Cost of capital: 8%)

13.3%
35.0%

Payout Ratio
Free Cash Flow

60.1%

Due to dividends that are forecast to be thesame amount as in the previous fiscal year,
a temporary increase is anticipated.

0.38 times

0.36 times

46.3%

46.9%

D/E Ratio
Shareholders’ Equity
Ratio

D/E ratio and shareholders’ equity ratio are
expected be maintained at a level sufficientfor safety, in light of ratings and interest
conditions.

Approach to cash flows and allocation of strategic investments(Three-year total)

Second Three-Year
Plan Actual(Three-year total)

Cash dividends

Cash dividends

Share buybacks

Share buybacks¥10.5 billion¥10.0 billion
M&A

Third Mid-Term
Management Plan
Forecast¥19.0 billion¥5.0 billion
M&A(Two-year total)

Cash dividends¥15.5 billion
M&A¥14.0 billion¥5.8 billion¥20.0 billion

Strategic investments

Strategic investments

Strategic investments

Capital investments:¥13.0 billion

Capital investments:¥20.0 billion

Capital investments:¥9.0 billion

Repayment ofinterest-bearing
debt, etc.:¥8.9 billion

Repayment ofinterest-bearing
debt, etc.:¥12.9 billion

Repayment ofinterest-bearing
debt, etc.:¥6.7 billion¥10.0 billion¥11.8 billion

Operatingcash flow:¥74.5 billion

Improvement of NOPATFY2018 ¥21.1 bln
FY2019 ¥22.9 bln
SVA
FY2018 ¥12.7 bln
FY2019 ¥14.0 bln
Reduction of cost of capital
FY2018 ¥8.5 bln
FY2019 ¥8.9 bln

Improvement of operating income
FY2018 ¥31.5 bln
FY2019 ¥34.2 bln

Reduction of selling, general and administrative expenses
Reduction of tax expenses
FY2018: Tax rate 33%
FY2019: Tax rate 33%

Cash equivalents +Investment securities
FY2018 ¥76.2 bln
FY2019 ¥80.2 bln

Reduction of invested capital *1
FY2018 ¥141.1 bln
FY2019 ¥149.1 bln

Interest Bearing Liabilities
FY2018 ¥61.2 bln
FY2019 ¥63.7 bln

Decrease in WACCFY2018: 6.0%
FY2019: 6.0%=

Decrease in cost of liabilities
FY2018: 0.9%
FY2019: 0.9%

Net assets
FY2018 ¥161.6 bln
FY2019 ¥165.6 bln

Decrease in cost of shareholders’ equity
FY2018: 8.0%
FY2019: 8.0%

ROIC*2= NOPAT / Invested capital
ROIC

Reduction of cost of sales

NOPAT*1Invested capital = working capital + noncurrent assets= Shareholders’ Equity + Interest Bearing Liabilities – (cash equivalents + investment securities)

Invested capital*2 The invested capital used in the Company’s ROIC has been calculated excluding cash and cash equivalents as wellas investments in securities.

2. Cost of capital

Strategic Investment Policy of theThird Mid-Term Management Plan
We expect to allocate approximately ¥30 billion
to capital investments and M&As over the
two-year period, focusing on investments forpromoting multi-product sales and in growth
sectors where synergy effects are anticipated.

· Cost of shareholders’ equity and ROE· WACC and ROICThe Company aims for a cost of shareholders’ equity of roughly
8.0%.
The breakdown includes a beta of 1.0 to 1.5, an equity risk
premium of 5.0 to 6.0, and a risk-free rate of 0.5 to 1.5 times. By
referring to each of these items, the Company recognizes thecost of shareholders’ equity to be around 8.0%. Meanwhile, ROE
has been maintained at 10% or higher since 2014, which exceeds
the level of the cost of shareholders’ equity (8.0%), thereby
leading to an increase in corporate value.

The Company recognizes its weighted average cost of capital(WACC) to be 6.0%, which is calculated with a cost ofshareholders’ equity of 8.0% and a cost of liabilities of 0.5 to 1.0.
Due to a steady increase in net operating profit after tax(NOPAT), ROIC has been 10% or higher since fiscal 2014,
significantly exceeding the WACC.

¥10.0 billion

FY2019 Actual

15.0

Approximately ¥billion(Breakdown)

M&As 

10.6 billion

Operatingcash flow:¥61.2 billion(Forecast)

（%）
16.0

15.0
12.6

12.0

Strategic capital investments
Approximately ¥4.3 billion(New CAD system, new ERP system,
new production line at the Mexico plant, etc.)

10.7
8.0

12.2

10.6

Approximately ¥(SUZUKI SHUTTER CORPORATION and Robust AB)

Operatingcash flow:¥66.4 billion

Increase in net sales

Free cash flows will be allocatedpreferentially to strategic investments.

Major revisions were made for fiscal 2020 due to the impact of COVID-19.

First Three-Year
Plan Actual

Since fiscal 2001, the Company has adopted SVA (Sanwa Value Added) as a management indicator, and uses it as anindicator for making decisions regarding M&As, and as an indicator for evaluating the business performance of each Group
company.

SVA and ROIC for fiscal 2020 are expected
to decline due to a decrease in operating
income.

7.5%¥10.2 billion

1. SVA as a management indicator

SVA = NOPAT – Cost of Capital

ROE for fiscal 2020 is expected to fall to thelevel of the cost of shareholders’ equity.

¥15.6 billion

Management with an awareness of the cost of capital

11.4

12.7
12.2

12.8
12.7

13.5

13.3

8.0

9.6

6.0

4.0
(FY)

15.4

2013

2014

2015

2016

2017

2018

2019

-●- ROE -●- ROIC -●- Cost of capital -●- WACC

22

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

23

A History ofValue Creation

Capital Policy

StrategySpecial Feature· Optimal capital structure
The shareholders’ equity ratio was 46.3% as of March 31, 2020
(shareholders’ equity: ¥164,065 million). In the Third Mid-Term

ESG Materiality
Initiatives

Corporate Data

As of March 31, 2020

In order to further promote management aimed at increasing

For fiscal 2019, we paid an annual dividend of ¥34 per share

Total assets 354,023

corporate value while also improving the corporate culture(¥17 per share for both the interim and year-end dividends),

Current assets

Management Plan, it was estimated to be 47.8%, and has

222,532

maintained a level in excess of 45% since fiscal 2017. The(62.9%)

Company’s basic approach to its financial strategy is that it
does not excessively use financial leverage.

Non-current
assets131,491(37.1%)· Ratings
A stable financial foundation is essential in order to safely return(Millions of yen)and strengthening the management foundation, theas planned. For fiscal 2020, while the performance outlook

Current liabilities

Company’s basic policy is to maintain a stable dividend

predicts significant decreases in both revenue and profits, our114,071

payout ratio and distribute profits based on consolidated

forecast is to pay an annual dividend of ¥34 per share (¥17 perperformance, targeting a payout ratio of 35%.

share for both the interim and year-end dividends), which is(32.2%)

Non-current
liabilities

For fiscal 2019, we paid an annual dividend of ¥34 pershare (¥17 per share for both the interim and year-end

74,318

dividends), as planned. For fiscal 2020, while the performanceoutlook predicts significant decreases in both revenue andpurchased and cancelled in fiscal 2019. In fiscal 2020, we will

165,633

profits, our forecast is to pay an annual dividend of ¥34 percarry out comprehensive shareholder returns while considering

share (¥17 per share for both interim and year-end dividends),

investments and funds on hand.

Dividends

Cash dividend / Payout ratio(46.8%)In terms of share buybacks, ¥5.0 billion of shares werePercentage figures in parentheses show composition ratios.

· FY2019 dividend
Forecast an annual dividend of ¥34 per share, with anincrease of ¥2 (interim dividend of ¥17 and year-end
dividend of ¥17)

ratings of A+ from Japan Credit Rating Agency, Ltd. (JCR) andA from Rating and Investment Information, Inc. (R&I), as
objective indicators (both ratings are as of March 2020).

Note: Payout ratio target of 35%· FY2020 dividend (forecast)Forecast an annual dividend of ¥34 per share, the sameamount as in fiscal 2019

Trends in ratings· ‌Announced share buybacks on July 31, 2019A mount of buybacks: ¥5 billionT he number of shares acquired: 4,133 thousand sharesB uyback period: August 1, 2019 to November 27, 2019

A
A-

4,000 thousand shares out of those acquired were cancelled on
February 19, 2020.

BBB+
0

1996.3
R&I

2000.3

2004.32008.32012.32016.32020.3

(Yen)

(%)
70

70
60.1

60
50

60
50

40
33.5

37.1

30

30
25

Share buybacks

A+A

and capital position.

(21.0%)and creditors. To this end, the Company has obtained issuer

Rating and Investment
Information, Inc. (R&I)

the same amount as in fiscal 2019, in light of our cash flows

Net assets

profits and repay debts to stakeholders, including shareholders

A+

ReliableManagement

Shareholder Returns

1. Financial foundation

Japan Credit Rating
Agency, Ltd. (JCR)

Reliable Business
Performance

34.4

35.0

32

34

40
34

30

20

20

10

10

0
(FY)

0

2016

2017

Cash dividend (left scale)

2018

2019

Payout ratio (right scale)2020(forecast)

Note: S hare buybacks are carried out flexibly while considering theCompany’s cash position, in order to prioritize strategic
investments.

JCR

Outlook for Fiscal 2020
Our outlook is based on the assumption that the impact of

12% is expected in the second half, with the greatest decrease

D/E ratio

COVID-19 on each sector will continue at least throughout

expected in the second quarter. Operating income isrevised forecast for D/E ratio in the Third Mid-Term(Times)1.0

fiscal 2020. We expect consolidated net sales to decrease

expected to decrease 35.7% year on year to ¥22.0 billion.

Management Plan was 0.36 times, and we are moving closer

0.8

to this forecast. However, because the Company places the

0.6

highest priority on future growth, it will proactively pursue

0.4

2. Financing and D/E ratio
The D/E ratio was 0.38 times as of March 31, 2020. The

M&As. If our funds on hand are insufficient to successfully
carry out M&As, the Company will consider increasing its
interest-bearing debt.

24

SANWA HOLDINGS CORPORATION

expected in the first half of the fiscal year, while a decrease of
0.54

0.53

0.44

0.38

0.38

0

2015

2016

2017

2018

2019

This outlook will be revised, as necessary, depending on
the situation.

Full-year consolidated forecast(Billions of yen, %)FY2020
Forecast

FY2020First half

FY2020
Second half

Net sales

390.0

178.0

Operating income

22.0

Profit attributable to ownersof the parent company

12.5

0.2

(FY)

INTEGRATED REPORT 2020

11.4% year on year to ¥390.0 billion. A decrease of 10.6% is

FY2019 actualYear-on-yearchange (amount)

Year-on-yearchange (%)

212.0

440.2

(50.2)(11.4)

5.1

16.9

34.22

(12.22)(35.7)

2.3

10.2

21.65

(9.15)(42.3)SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

25

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Special Feature:

Value that Generates a Competitive Advantage
Sources of the Sanwa

Multi-Product Sales

Service

Group’s Value Creation
Based on its mission of offering products and services that provide
safety, security, and convenience to further contribute to the prosperityof society, the Sanwa Group will be executing various strategies andcontinuing to grow. The sources of the value creation that will support
this growth are the characteristics and strengths that are unique to the
Sanwa Group, which we describe as our “service business,” a “multiproduct sales strategy,” and “globalization.” By organically combining
these strengths, we will deliver even more value to society.

Globalization

Strengthen Service Segments
and Expand Business ModelJapan
Service Business Net Sales(Billions of yen)
60.0

(%)
15
54.2
14

47.6

43.7
40.0

13
12.3

Service

20.0

12

11.6

11.3

Fiscal 2019 Service Business
Net Sales (Consolidated)

¥

54.2

11

0

billion

(FY)

10

2017

Net sales (left scale)2018

INTEGRATED REPORT 2020

Development
Seamless Customer Support

SANWA HOLDINGS CORPORATION

2019

Consolidated sales ratio (right scale)

The Sanwa Group supports our customers at every stage, from productdevelopment through sales, design, procurement, manufacturing, installation,
maintenance and service. In Japan, in particular, we have established a businessmodel based on our capabilities in the areas of installation and maintenance, andthis model has already become a driver for future growth.
Installation quality is obviously critical. However, when a product manufacturer
also assumes responsibility for ensuring installation ability and managing
progress, it increases the value delivered to its customers, such as generalcontractors and building firms. In addition, by handling repairs and service after
completion of installation by a highly specialized manufacturer, we are able toprovide added value to the end users.
In buildings, shutters and doors play critical roles in controlling entry to
prevent crime and protecting against fires and other disasters, and constituteaccess systems, while installation and service serve as an important key fordelivering products to customers and ensuring that they can use them with peaceof mind, on a day-to-day basis.
By expanding the service business, the Sanwa Group aims to further enhancesafety, security, and convenience, in order to protect human lives and societal
infrastructure from fires and other disasters.

26

In Japan, our sophisticated nationwide network, which is centered on Sanwa
Shutter Corporation, constitutes a powerful infrastructure.
In 2016, a partial amendment to the Building Standards Act came into
force, introducing a periodic inspection report system for fire prevention
equipment, such as fireproof shutters and doors. Full-scale implementation of
the measures began in fiscal 2019, and we have been aiming to further reinforce
and expand our operations in this area. For example, we have been striving
to attract new maintenance customers, and to secure and train qualified
personnel. We have also been doing our utmost for recovery from natural
disasters, which have become a frequent occurrence in recent years, and willcontinue to contribute to the maintenance of societal infrastructure in this way.

Sales

North America
Our sales structure in the North American market mainly involves sellingthrough a network of about 400 distributors and several thousands of dealers,rather than directly to customers. However, by also being able to perform
installation and service, we are strongly cementing our presence there.
As a key measure, we have restructured NS, a direct sales division
centered on Canada’s CDS, and placed it under the control of the door
division. In addition, we will be working to further expand our service
business while endeavoring to expand the number of automatic door plants
through M&As, and to attract more incoming orders for services such as
periodic inspections, and boosting our capabilities in this area.

DesignProcurement
Manufacturing
Installation
Maintenanceand service

EuropeNovoferm Group acquired Norsud of France in 2016, and Bolton Gate
Services Ltd. (BGS) of the U.K. in 2018. These acquisitions allowed us toexpand our operations to the industrial doors business area, in addition to theareas in which we have been operating our service business.
Going forward, we will be strengthening and leveraging synergies fromour sales and service network, which encompasses Norsud, BGS, and Horton
UK, in order to further reinforce our service structure across Europe, mainly inthe realm of industrial doors, which require frequent maintenance.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

27

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Total Solutions from Multi-Product Sales
Our Products for Buildings
Sales Trend in the Non-Shutter Business

Building Exterior

Office Areas(Millions of yen)
40,00035,00030,00025,000Partitions

Low and mid-rise curtain walls

20,00015,000Multi-Product Sales

10,000Fiscal 2019 Non-Shutter Sales Ratio(on a domestic, consolidated basis)

5,000

78.8

Fire Areas
Toilet booths

0
(FY)

%

2009

2015

Lightweight doors
Stainless products

2019

Heavy-duty doors
Partitions
Facades
Exteriors* Non-shutter sales ratio: Domestic consolidated net sales excluding net sales of heavy-duty and lightweight shutters/Domestic consolidated net sales x 100

The Sanwa Group has always kept pace with the times, in order to develop products that are suited to thevarious situations that people experience in their lives. In the early years after our foundation, we
manufactured lightweight shutters. However, we entered the door business in the late 1960s, as Japan moved
into a period of intense growth. From the 1980s, we promoted the diversification of product types throughM&As, acquired leading companies with a strong brand presence in each field, and worked on multi-productsales, starting with Showa Front for store fronts, Showa Kensan for automatic door engines, Venix forpartitioning products, Sanwa Tajima Corporation for stainless steel products, and Sanwa System Wall forwooden school partitioning.
The Sanwa Group currently has 18 domestic subsidiaries. As a result, we are able to offer a vast range of
products including shutters, steel doors, overhead doors, exteriors, automatic doors, stainless steel andaluminum facades, and partitions, and are ranked No. 1 in the industry in terms of the number of productsthat contribute to safe, secure, and convenient lifestyles. We aim to solve the issues faced by society throughthe provision of a wide variety of product groups that have been cultivated through our multi-product sales
strategy.

Entrance Areas

Aluminum& stainless steel facades

Automatic doors

Door openers

2005

2017

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

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

Acquired the partition businessof Nihon Spindle
and established Sanwa Spindle(now Sanwa System Wall)

Japan
No.1

North
America
No.2

Europe
No.4

Asia

North
America

Europe

Asia

1984

1999

2008

Established Sanwa
Door Industrial

Began sales of facades forstores through Showa Front
Sales (now Showa Front)

Acquired 100% of the shares ofTajima Junzo Seisakusho
the top brand of stainlesssteel architectural materials

Acquired 100% of the sharesof Hayashi Kogyo,
a steel door manufacturer

Entered the door
business

1970s

Japan

1980s

1990s

2010s

1974

1990

2003

Began manufactureand sales of ODC
products

Acquired stake inautomatic door company
Showa Kensan

Acquired 100% of the shares ofVenix, strengthening
sales of partitions

1987
Established Sanwa Exterior(now Sanwa Exterior Niigata Plant)

28

2000s

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

No.1

North
America
No.2

Partitions & toilet booths

Japan
No.3

North
America
No.3

EuropeAsia

Industrial sectional doors

Japan
No.1

North
America
No.1

EuropeNo.2

Asia

Steel doors

Garage doors

1969

Fireproof doors (steel doors)

Waterproof shutters

Automatic doors

High-speed sheet shutters

1983

Mailboxes

Multi
Products

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

Japan

Transition of Our Multi-Product Sales Strategy in Japan

Fireproof & smokeproof shutters

EuropeNo.2

Asia

Lightweight shutters

Japan
No.1

North
America

Japan
*
No.2

North
America

EuropeNo.1

North
America

EuropeNo.2

Asia

Heavy duty shutters

Japan
No.2

North
America

EuropeNorth
America

EuropeAsia

EuropeAsia

Curtain walls

Asia

Condominium doors

Europe

Japan

Asia

Aluminum & stainless steel facades

Japan

Waterproofing products

Japan

North
America

Mail boxes & delivery boxes

Japan

Asia

Window shutters

No.2

North
America

EuropeAsia

Lightweight sliding doors

2014
Began sales ofwaterproof shuttersand waterproof
doors

Japan

2019
Acquired all shares in
LIXIL Suzuki Shutter
Corporation(now Suzuki Shutter)

No.1

North
America
No.1

Core
Products

Europe

Asia

Japan
No.1

North
America
No.1

Europe

Asia

Japan
No.3

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

North
America

EuropeAsia

Detached
Houses

Housing
Complexes

Commercial
Facilities
andOffice Buildings

Japan
No.1

Schools

North
America

Asia

EuropeMedicalandWelfareFacilities

Factories
andWarehouses

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

29

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Enlarge our Presence through Globalization
North America

Overseas
Sales Ratio

38.1%

45.4%

FY2009FY20191996: Acquired Overhead Door Corporation
2009: Acquired Wayne Dalton Corporation
2011: Acquired Creative Door Services of Canada
2012: Acquired DCI and ADA
2013: Acquired TAC
2014: Acquired HAO (currently DSC)
2018: Acquired LUX ODCGlobalization
Overseas
Employee Ratio

Fiscal 2019 Overseas Sales Ratio

45.4

%

63.6%

64.0%

FY2009FY2019One of the Group’s strengths is its globalization, and after venturing abroad before other Japanesecompanies in the industry with the establishment of Sanwa Shutter (Hong Kong) in 1986, we continued to
expand overseas, and now engage in business in 26 countries and regions around the world. Our steps
toward full-fledged globalization have also been marked by acquisitions such as Overhead Door Corporation(ODC), which has the top market share in North America, in 1996, and Novoferm Group (NF Group), a longestablished European manufacturer of doors and shutters, in 2003.
When operating in global markets, it is important to keep in mind that countries all have different histories,
cultures, and legal regulations, and to adapt to each region’s needs and attributes. To maximize postacquisition synergies, mutual understanding and clear communication are critical. Accordingly, we endeavor
to increase interest in each other’s technologies and products, while engaging in collaborative development,
selling one another’s products, and providing mutual assistance toward opening new markets.
We will therefore continue to enlarge our presence, in order to establish ourselves as the top brand andas a major global player in the access systems industry, and thereby offer safety, security, and convenience allover the world.

Overseas operating Number ofincome ratio
production bases

Number ofcountries

36.2% 60sites 26andcountries
regions

EuropeNorth
America

Asia

17%

27%

Compositionof net sales
by region(FY2019)

ODC, which we acquired in 1996, boasts a top-tier market share in North
America and will mark its 100th anniversary in 2021. In 2009, in the wakeof the financial crisis, we also acquired our competitor, Wayne Dalton,
thereby establishing a solid position in the garage door market.
Moving into the 2010s, in 2011 we acquired Creative Door Services(CDS), which installs and services automatic doors in Canada, and later
purchased distributors that handle installation work. As such, we
expanded our service business to match the respective regions andbusinesses. Looking forward, we will continue to maintain and expand
our core businesses, while also broadening our business domains throughentry into adjacent fields.

Europe1%

2003: Acquired Novoferm Group
2014: Acquired Alpha Deuren of the Netherlands
2016: Acquired Norsud of France
2017: Acquired additional shares in Novoferm UK,
making it a wholly-owned subsidiary
2018: Acquired BGS of the U.K.
2019: Acquired Robust AB of Sweden

NF Group, which we acquired in 2003, is a long-established manufacturer
that traces its history back to 1955. With Germany as its main hub, it has
manufacturing bases and distribution networks throughout Europe, andhas achieved the number-two market share. Entering the 2010s, we
rapidly expanded our industrial-use product business through theacquisition of Alpha Deuren, while the subsequent purchases of Norsud
and BGS allowed us to further strengthen our sales and service network.
More recently, in 2019, we snapped up Robust AB, which is engaged
in the hinged doors business in Sweden, Norway, and the U.K. This moveallowed as to advance into regions in which we still only have a small
share of the market. Going forward, we will be pursuing synergies arisingfrom integration with the companies we have acquired, and aggressively
expanding our industrial doors business and service business, in order toestablish a larger presence in the European market.

Japan

55%
Asia

No.2

EuropeFY2019 Net Sales€

613

millionAsia

FY2019 Net Sales¥

6.4

billionFiscal 2004 Net SalesAt the timeof acquisition €millionNotes: 1. The sales figures for each region include internal sales
2. The exchange rates for fiscal 2019 were $1: ¥109.24 and €1: ¥122.15

SANWA HOLDINGS CORPORATIONFY2019 Net Sales

¥

240.4

billionNo.1

INTEGRATED REPORT 2020

North
America

FY2019 Net Sales

US$

1,084

At the timeof acquisition

340

30

No.1

Japan

millionFiscal 1997 Net Sales
US$

597million

1986: Established Sanwa Shutter (Hong Kong)
1988: Established An-Ho Metal Industrial in Taiwan
1991: Established Sun Metal in Thailand
1996: E stablished Sanwamas Metal Industry inIndonesia
2005: Established Novoferm (Shanghai)
2006: Established Shanghai Baosteel-Sanwa Door
2008: Established Vina-Sanwa in Vietnam
2019:
Acquired Suzuki Shutter (Hong Kong)

The Sanwa Group also operates in Asia, including the ASEAN nations
and China. However, we have not based our strategy on the acquisitionof local companies, as we have in Europe and North America. Instead,
we have established joint ventures (JVs) with local capital. This meansthat it is necessary for us to perform tasks such as establishing distribution
channels and training installers by ourselves. For this reason, we are
currently focused on establishing a foundation in each market. We arealso taking on the challenge of expanding commercial opportunities
across Asia, and are ready to move forward to the next stage. For
example, we are promoting further localization and strengthening
cooperation among Group companies.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

31

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Regional OperationsJAPAN

Net Sales Composition by Region
Residential(20% of Japan’s sales)

Maintain the profitability of coreproducts and achieve growth throughmulti-product sales initiatives

Japan
Approx.

Strengths· Number-one share in Japan in six fields, including shutters anddoors· Seamlessly integrated business model from development andproduction to installation and after-sales service· Nationwide sales network comprising 500 locations and morethan 3,900 installers

55%

Tasks

Meiji Takayama
Representative Director and President, Sanwa Shutter Corporation

Non-residential(80% of Japan’s sales)· Enhance productivity through higher efficiency of production and logistics· Improve profitability of orders received· Pass on to customers increases in raw materials prices and othercosts

Sanwa Shutter Corporation
Net Sales Composition by Product
(%)

10.7

15.9

12.4

Net Sales(Millions of yen)
210,407200,000 187,388 198,569
191,300(Millions of yen)
20,00017,104

100,000

10,000

9.2

2017

(FY)

6.6

18,33921,172
17,0000

016.1

HIGHLIGHTS

Operating Income

2018

2019

2020

(Forecast)

2017

(FY)

2018

2019

2020

(Forecast)

Domestic subsidiaries

29.0

Net Sales

Operating Income(Millions of yen)
60,000Lightweight shutters
Heavy-duty shutters
Shutter-related (overhead doors,high-speed sheet shutters, etc.)

30,00051,18032,46435,3882017

2018

52,700(Millions of yen)
3,000

1,500

Commercial building / condominium doors
Partitions

0

Maintenance services
Others (residential doors,
window-related products, exterior fittings,
stainless-steel entrances, aluminum fronts,
automatic door oprators)

(FY)

2,583

1,161

1,214

2017

2018

2,360

2020

(Forecast)

(FY)

2019

2020

(Forecast)

Note: Figures for net sales and operating income exclude internal transactions

In fiscal 2019, Sanwa Shutter Corporation dealt with a record numberof orders received with no major difficulties and revenues fromheavy-duty shutters and doors for buildings, condominiums, etc.
increased. The maintenance and service business also performed
robustly in response to demand for legally required inspections. As aresult, net sales increased 6.0% year on year to ¥210.41 billion.
Operating income increased 15.4% year on year to ¥21.17 billion due
to higher volume and sale prices. In other domestic subsidiaries, theeffect of bringing a new subsidiary into the scope of consolidation
contributed to a 44.6% increase year on year in net sales to ¥51.2 billion
and a 112.8% increase year on year in operating income to ¥2.58 billion.
For fiscal 2020, Sanwa Shutter Corporation is forecasting net
sales of ¥191.3 billion (a decrease of 9.1% year on year) and
SANWA HOLDINGS CORPORATION

Magical Taika Plus is a fireproof partition for
installation in factories, warehouses, etc. It features
an insertable panel structure secured by screws at
the top and bottom, and the use of an installationassist robot called a Giraffe allows installation to becompleted more than twice as fast as with the ALC(autoclaved lightweight concrete) or LGS (lightgauge steel) methods. The opening can be
combined with one of Sanwa Shutter Corporation’s
fireproof shutters, doors, etc. to save space andreduce the time taken for installation.

0
2019

Fiscal 2019 Business Performance and Fiscal 2020 Outlook

32

Launched Fireproof Panel,“Magical Taika Plus”

INTEGRATED REPORT 2020

operating income of ¥17.0 billion (a decrease of 19.7% year onyear) due to the impact of COVID-19. In the first quarter (from April
to June), the spread of COVID-19 began to have an impact, and thisis expected to continue through the second quarter. We believethat signs of recovery will finally begin to be seen from the second
half onward. However, factors such as delays in finalizing new incoming
orders and slower progress with completing on-site work are likely
to have an impact throughout the year. The trend at other domestic
subsidiaries will be the same as that for Sanwa Shutter Corporation.
However, we are projecting an increase in sales of 3.0% year on year
to ¥52.7 billion and a decrease in operating income of 8.7% year on
year to ¥2.36 billion due to the effect of the consolidation of
SUZUKI SHUTTER CORPORATION.

SUZUKI SHUTTER CORPORATION
Joins the GroupSUZUKI SHUTTER CORPORATION was founded in
1903, and was the first company in Japan to
manufacture and sell shutters. SUZUKI SHUTTERCORPORATION offers a full range of products fromheavy-duty shutters to lightweight shutters andother products for homes and small stores andcurrently focuses on shutter maintenance services.
By integrating its long history and outstanding
customer base with the Sanwa Group, we will beaiming to create new synergies and drive further
growth.

Headquarters of SUZUKI SHUTTER CORPORATION (Tokyo)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

33

NORTHAMERICAA History ofValue Creation

StrategySpecial Feature

Net Sales Composition by Region
Non-residential(50% of· Strengthen channel strategies for each product and application· Reinforce the service business by proving support to
distributors and dealers in the door business· Build strength in regions in which we have a low market share· Smoothly deploy a new ERP

Rresidential(50% of North America’s sales)

7.2
19.3

(Millions of U.S. dollars)
1,500(Millions of U.S. dollars)
100

1,000

1,007

1,057

75

1,085

78.3

79.6

Basic Strategies Maintain and expand core business segments while entering into adjacent business fields
New Business

82.7

941

500

0

Doors
Automatic doors

29.0

25

(FY)

0
2017

2018

2019

2020

(FY)

(Forecast)

2017

2018

2019

2020

(Forecast)

Shutters

Overhead doors
Security related
products
Garage doors

Forex Rate
FY

2017

2018

2019

2020 (Forecast)

Forex Rate (1$)¥112.04¥110.36¥109.24¥105.00

Fiscal 2019 Business Performance and Fiscal 2020 Outlook
In fiscal 2019, our mainstay door business and door opener
business performed steadily, and as a result, net sales
totaled ¥118.5 billion, up 1.6% year on year. Operating
income was ¥9.03 billion, up 2.9% year on year, due topassing on higher materials prices to customers in the formof higher sale prices and cost reductions. U.S. dollar basis,
net sales increased by 2.6% year on year to $1,085 million,
and operating income increased by 3.9% to $82.7 million.
For fiscal 2020, we estimate a 16.6% drop year on year
in net sales to ¥98.8 billion and a 66.3% drop year on year

SANWA HOLDINGS CORPORATION

Dock levelers

Access control
equipment

Door openers

Note: Figures for net sales and operating income exclude internal transactions

34

Existing Business

Gate openers

50

73.5

Strengths

27%

Overhead Door Corporation
President & CEO

Operating Income

Corporate Data

Tasks

Approx.

Net Sales

ESG Materiality
Initiatives

North
America

Kelly Terry(%)

ReliableManagement·P owerful brand and top-tier market share in North America·S trong sales network of about 400 “Ribbon Distributors”

North America’s
sales)

Maintaining and expanding
core businesses while entering into
adjacent business fields

Net Sales Composition by ProductReliable Business
Performance

INTEGRATED REPORT 2020

in operating income to ¥3.05 billion. Although COVID-19
had little impact up to the first quarter (from January to
March), we expect to see an effect in the second quarterand a recovery beginning in the fourth quarter. Of thethree regions of Japan, North America, and Europe, we
forecast that North America will be impacted by the
pandemic for the longest period. On a U.S. dollar basis, weestimate net sales decreasing by 13.3% to $941 million,
with operating income down 64.9% to $29 million.

Door openers

Automatic doors

HIGHLIGHTS

Launched Genie Models 6170 and 6070
Two shaft-direct openers for residential garage doors, Models 6170 and
6070 have been released by Genie as new-style openers. Unlike theconventional design, in which the opener is attached to the ceiling,these openers can be attached directly to the garage wall. This
represents that an opener can be easily installed even in a high-ceilinggarage, and brings a clean and open look to the garage. The freed-up
space can be used for storage or other purposes.
We will continue working to develop products that deliver
convenience to people’s lives.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

35

A History ofValue Creation

EUROPE

StrategySpecial Feature

Reliable Business
Performance

Net Sales Composition by Region
Non-residential(60% of Europe’s sales)

Residential

Further strengthen industrial segment
and promote digitalization through
NF4.0

(40%
of Europe’s sales)

EuropeApprox.

17%

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Strengths· Operates in the mainstay markets of Germany and the Netherlands
as well as in other European countries such as France, the U.K., Italy
and Spain· Agile M&A strategy and ability to respond to local needs ineach region· Integrated sales, manufacturing, and logistics network built
through structural reform, and increased productivity

Tasks

Rainer Schackmann·S trengthen competitive edge in regions in which we have

Novoferm Group CEOa low market share·G enerate synergies from integration with acquiredcompanies

HIGHLIGHTSNet Sales Composition by Product(%)

Net Sales

Operating Income(Millions of euros)
1,000(Millions of euros)
40

750

28.6

30

44.0

511

500

565

613

553

20

Released Sectional Garage Door,“ISO 70”
29.5

30.2

22.7
14.8

250

27.4

10

0
(FY)
Hinge doors
Industrial doors

0
2017

2018

2019

2020

(FY)

(Forecast)

2017

2018

2019

2020

(Forecast)

Garage doors

Forex Rate
FY

2017

2018

2019

2020 (Forecast)

Forex Rate (1€)¥127.22¥130.01¥122.15¥115.00

ISO 70 is a 70mm-thick sectional garage
door featuring panels offering superior
insulation performance. A double floor seal
located at the bottom of the door maintains
close contact with the floor, preventing dirt
being blown inside by the wind while
reducing heat loss. The door can also be
combined with a Thermo frame set as an
option, which improves insulation
performance by up to 15%.

(Note) Figures for net sales and operating income exclude internal transactions

Synergies with Robust AB
Fiscal 2019 Business Performance and Fiscal 2020 Outlook
In fiscal 2019, the strong and expanding industrial door
business and the acquisition of Robust AB led to a rise in
net sales by 2.0% year on year to ¥74.9 billion. Operating
income fell 3.7% year on year to ¥3.69 billion, as exchange
rate fluctuations offset overall success in passing on higher
materials price to customers in the form of higher saleprices. On a euro basis, net sales increased by 8.5% year
on year to €613 million, and operating income increasedby 2.5% year on year to €30.2 million.
For fiscal 2020, we predict that net sales will drop by 15.1%

36

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020year on year to ¥63.6 billion, with operating income droppingby 53.9% year on year to ¥1.70 billion due to the impact of
COVID-19. Europe began to be affected by COVID-19 in thefirst quarter (from January to March), earlier than Japan orNorth America, and the impact was greatest in the second
quarter. We expect a recovery to occur to a certain extent in
the fourth quarter. On a euro basis, we anticipate that net sales
will drop by 9.8% year on year to €553 million, with operating
income dropping by 51.0% year on year to €14.8 million.

The NF Group has positioned the hinge door business(particularly anticrime and fireproof doors) in Northern
Europe and the U.K. as an important and promising market
for the future, and expect it to see solid growth over the next
few years. With the acquisition of Robust AB, we will
strengthen the NF Group’s hinge door business, and will be
pursuing further growth by maximizing synergies between
the two entities.
Headquarters of Robust AB (Sweden)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

37

A History ofValue Creation

ASIA

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Net Sales Composition by Region

Strengths

Asia

Approx.

1%

Increase consolidated businesses
by enhancing Group integrated
management· Product lineup and exceptional quality utilizing Sanwa Grouptechnology· Production and sales structures that utilize all bases

Tasks· Promote localization to meet needs in each region· Establish a network of distributors and optimize manufacturingbases

HIGHLIGHTSNet Sales

Operating Income(Millions of yen)
8,000(Millions of yen)
1,500

6,000

Dongbang Novoferm(Korea)

7,367

6,421

1,000

4,000

500

2,000

0

0

Vina-Sanwa(Vietnam)Shanghai Baosteel-Sanwa Door (China)

Sanwa Shutter (H.K.)
Suzuki Shutter (HK)Pt Sanwamas
Metal Industry(Indonesia)

Consolidated Subsidiaries

38

SANWA HOLDINGS CORPORATION

2019

2020

(Forecast)

60

-500

-348

(FY)

2019

2020

(Forecast)

Novoferm (Shanghai)
An-Ho Metal Industrial(Taiwan)

SUN METAL(Thailand)(FY)

Aiming for Further Business Expansion
by Consolidating the Asia Business

INTEGRATED REPORT 2020

Fiscal 2019 Business Performanceand Fiscal 2020 Outlook
In fiscal 2019, we newly brought Shanghai Baosteel-Sanwa
Door, An-Ho Metal Industrial, Sanwa Shutter (H.K.), andVina-Sanwa into the scope of consolidation, and worked toestablish the business foundation by enhancing management
synergies of each Group company. Net sales in fiscal 2019were ¥6.4 billion. However, we recorded an operating loss of¥348 million and were unable to establish a profit base.
In fiscal 2020, although we anticipate the effect of
COVID-19 in Asia mainly in the first quarter, projecting net
sales of ¥7.4 billion, a 14.7% increase year on year andoperating income of ¥60 million, an improvement of ¥408
million from the previous fiscal year, due mainly to factors
such as the effect of bringing Suzuki Shutter (HK) into thescope of consolidation.

Regarding the Asia business, in view of the separate strategies fromeach company and for each country that we saw in the past, weregard Greater China and ASEAN members as separate markets,and are aiming to further achieve business expansion through the
supply of each other’s products and the centralization of production
facilities. We are taking steps to rapidly adapt to the needs of eachmarket environment, and will pursue integration synergies from themerger with Sanwa Shutter (H.K.) of two companies that joined theGroup in September 2019, namely Suzuki Shutter (HK) and Suzuki
Shutter (Macau). In fiscal 2019, Shanghai Baosteel-Sanwa Door, An-Ho Metal Industrial, Sanwa
Shutter (H.K.), and Vina-Sanwa were brought into the scope of consolidation, and Suzuki
Shutter (HK) will be consolidated in fiscal 2020. With these initiatives, we will be working toensure that we can accelerate the speed of growth.

New Models of Heat-Insulating Fireproof Doors
at Novoferm (Shanghai)
Novoferm (Shanghai) launched new models of heat-insulating fireproof
door that are certified as fireproof doors under China’s building standards
law. All of these models, which are constructed from steel or stainlesssteel, cleared heat-blocking and fireproofing tests for the three fireresistance classes of 90 minutes, 60 minutes, and 30 minutes, and theymeet a wide range of needs as they can be designed to be as high as
three meters, which is top class in the industry. In addition, the new models
help reduce CO2 emissions as they are 8-9% lighter than previous versions
by partially replacing magnesium sheets used as structural material withaerated concrete.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

39

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Corporate Governance
HIG H L IGH TS
Number of Board of Directors Meetings / Attendance Rate

Fiscal 201910/97.8%

Exercise Ratio of Voting Rights
at 85th Ordinary General Meeting of Shareholders

87.97%The Sanwa Group’s Corporate Governance Structure

Number of Audit & Supervisory Committee Meetings /Attendance Rate

10/100%

Number of Explanatory Sessions for Individual Investors

Fiscal 20199

General Meeting of Shareholders
Appointment/Dismissal

Directors

Propose/Report

Report/Present opinion

Board of Directors

Audit/Report

Audit & Supervisory
Committee

Select/Audit
Authority for important businessexecution decisions

Basic Approach to Corporate Governance
As a global access systems company that is developing
business in 26 countries and regions in North America,
Europe and Asia as well as in Japan, Sanwa Holdings
Corporation achieves business growth through good faithand 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 “twokinds of reliability” (reliable business performance andreliable management). Continuing to grow and improve
corporate value, the Company will also contribute to thesustainable development of society while positioning
corporate governance, which forms its foundation, as animportant management issue.

Corporate Governance Structure
The details of specific measures to enhance our businessexecution and supervisory functions are set out below. By
adopting this system, we believe that we can establish asystem to ensure the appropriateness of operations andenhance corporate governance.

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, the following principles are not implemented forthe reasons set out below.

(Principle 4-10-1: Establishment of an Independent,
Voluntary Advisory Committee)
Each of the Company’s directors is working to actively
stimulate deliberations by the Board. Independent outside
directors engage in lively discussions, stating their opinions
based on their advanced insight, specialized knowledge andglobal experience. The Board receives appropriate
recommendations from our independent outside directors.
The Audit & Supervisory Committee (comprising threemembers, two of whom are independent outside directors)
verifies the candidates for director and director
compensation and other matters discussed at meetings ofthe Board of Directors and, at times, expresses its opinion aspart 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
the option of establishing a voluntary advisory committee.
(Principle 4-11: Preconditions for Board and Audit &Supervisory Board Effectiveness)
In its Articles of Incorporation, the Company stipulates thatthe appropriate number of directors shall be no more than40

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Specific Measures for Enhancing Business
Execution and Supervisory Function
Management Conference
In accordance with the transition to a company with an Audit& Supervisory Committee structure, from the perspective ofspeeding up management decisions a director (Executive
Officer, President for fiscal 2020) was entrusted to make“significant decisions concerning business execution,”
excluding matters prescribed by law. Consequently, set up
as an advisory body to the delegated director (hereinafter,
Executive Officer, President), a Management Conference
deliberates and reports on important management issues, andassists the Executive Officer, President in making decisions
and strengthening the flexibility of business execution.
Discussing (1) matters concerning important businessexecution decisions delegated by the Board of Directors to
the Executive Officer, President, (2) matters deemednecessary by the Executive Officer, President from among
the Board of Directors’ meeting agenda items, and (3) otherimportant, management-related matters deemed necessary
by the Executive Officer, President, the Management
Conference works in conjunction with the Board of Directors
in the making of quick and efficient management decisions.
Detailed Supervision/Audits of Business Execution
by Group 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, which convene on a quarterly basis, directors
oversee the progress of management plans and provide
guidance on management issues, while the directors who
are Audit & Supervisory Committee members audit thestatus of business execution by executive officers.

Report (Advise)/Discuss/Propose

Lead andsupervise
operations

Group CSR
Promotion Council
Supervise andguide business
units

Representative
Director and President

Consult
AdviseExecutive Officers

Regional PDCA Councils(Japan, U.S., Europe, Asia)

ReportReportManagement
Conference

Accounting
audit

Cooperation
Report/AssistAudit Dept.

ReportReportInternal
audit

Divisions

Promotion/
SupportPromotion/
SupportIndependent Auditors

Audit

Partial transfer ofauthority and Report
responsibilityGroup PDCA Council

Cooperation

Cooperation
Refer/Report

17, in order to make decisions promptly and resolutely toaddress changes in the business environment on a global
basis, and to ensure the diversity of opinions. In accordancewith its standards, directors are appointed based on theirability, insight, and experience, as well as other qualities thatare necessary to monitor and oversee corporate managementfrom a global perspective, and to make important businessdecisions. The incumbent nine directors are composed of acorporate manager, multiple persons with experience ininternational business, a person with expert knowledge infinance and accounting, and a legal expert, thereby securing
the diversity of the Board members.
We will continue examining methods to secure thediversity of the Board members, not only in terms of seeking
gender diversity, but also through the election of non-Japanese
directors as a global company, and recommend persons whoare considered to be well-qualified as candidates for directors.

Appointment/Dismissal

Accounting audit report

Promote and support
business execution

ReportGroup Companies

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 Group 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 andcountermeasures as well as compliance measures, theGroup CSR Promotion Council works to improve and avoid
damage to corporate value. Furthermore, each Group
company has a CSR Promotion Committee in place thatplans and promotes activities that are integrated with theworkplace and works to promote CSR activities.

Result of Evaluations of Board of Directors’
EffectivenessEvaluation Process and Guidelines

Board of Directors’ Evaluation Implementation Guidelines

End of Fiscal 2017 after
conclusion of Board of
Directors’ meeting•H anding out ofquestionnaire on Board of
Directors’ effectivenessEnd of Fiscal 2018 after
conclusion of Board of
Directors’ meeting• C onducted questionnaire
based on previous year’s
results(22 questions in all)End of Fiscal 2019 after
conclusion of Board of
Directors’ meeting• C onducted questionnaire
based on previous year’s
results(25 questions in all)Fiscal 2018 First Boardof Directors’ meeting• A nalysis and evaluationof effectiveness based on
the response results

Fiscal 2019 First Boardof Directors’ meeting• A nalysis and evaluation ofeffectiveness based oncomparative aggregation
with previous year andresponse results

Fiscal 2020 First Boardof Directors’ meeting• B ased on the response
results, the evaluation withregard to the Board’s
effectiveness was confirmed

The Company has been conducting a questionnaire on theeffectiveness of the Board of Directors at the conclusion ofBoard of Directors’ meetings since the end of fiscal 2017.
In fiscal 2019 as well, we obtained responses from all
directors, and at the first Board meeting in fiscal 2020 they
analyzed and evaluated effectiveness based on the
response results. As a result, although there were issues
raised, we evaluated that our Board of Directors isfunctioning effectively. Going forward, we will continue tomake improvements to enhance the effectiveness of theBoard of Directors.

Improvements Made(Content that could be evaluated)• E arly advance distributionof Board meeting
materials

Subjects of evaluation: All nine fiscal 2019 directors
Implementation method:	Anonymous survey (freedom to express own opinions)
Question content:
25 questions in all, related to the degree of deliberation at Board of
Directors’ meetings, the status of ensuring the effectiveness of the Board of
Directors, the status of the Board of Directors’ management, and theself-evaluation of 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.

Improvements Made
• S ufficient provision of
information other than
Board of Directors’
meeting materials(Content that could be evaluated)
Points to Be Improved• Each director is proactive in ensuring lively deliberations• It was confirmed that the Board of Directors is functioning effectively• I mprovement of secretariat
system(Points to be improved)• E arly distribution of materials
for Board meetings to ensure
effective deliberations• Improvement of secretariat system•E arly distribution of materials for Board meetings to ensure effective deliberations(Other opinions expressed)
There were opinions given on further ensuring diversity of the Board of
Directors through the election of foreign directors, etc.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

41

A History ofValue Creation

Strategy

Reliable Business
Performance

Special Feature

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Reasons for Appointment of Outside Directors
Name

Masanaka
YokotaAttendance at Board of
Directors meetings–%

Tsunekatsu
Yonezawa
Attendance at Board of
Directors meetings
100%

Akira
GokitaAttendance at Board of
Directors meetings
90%

Reasons for Selecting the Candidate

Supplementary Explanation

Since his diagnosis of corporate management in a broad range ofindustries in Japan and overseas as a consultant, and hisachievements and knowledge related to management reform willcontribute to enhancing the corporate value of the Company andstrengthening the functions of the Board of Directors, theCompany has determined that he is qualified as an Outside
Director.

The Sanwa Group has no business relationship with the company where
Mr. Masanaka Yokota concurrently serves. Moreover, concerningtransactions between the Sanwa Group and the corporate group where
he concurrently serves, the average transaction amount for the past
three fiscal years was less than 1% of the annual consolidated net salesof each of the groups, and the Company has determined that he has
no conflict of interest with ordinary shareholders.

He has engaged in corporate management for many years as acompany executive. Based on his possessing global experience inmanagement and economics in addition to a high level ofknowledge, and his achievements in auditing the execution ofbusiness at the Company and in providing appropriate advice andsuggestions to management with regard to overall managementfrom his independent position, as Outside Corporate Auditor
since 2015 and as outside director serving as Audit andSupervisory Committee member since 2016, the Company
continues to determine that he is qualified as an outside director
serving as Audit and Supervisory Committee member.

Mr. Yonezawa is a former employee of Marubeni-Itochu Steel Inc.
(MISI), which has a business relationship with the Group. The Groupand the MISI Group have transactions involving the Sanwa Group’spurchase of raw materials and the sale of Sanwa Group products.
However, the amount of transactions between the Sanwa Group andthe 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 with ordinary
shareholders.

Although Mr. Gokita has not been involved in the management of
the Company other than as an outside director in the past, he has
many years of experience as a prosecutor and lawyer, and since2016 he has applied his extensive experience and knowledge as alegal professional to audits of the execution of the Company’s
management and has provided appropriate advice andrecommendations to management as an outside director serving
as an Audit & Supervisory Committee member. He has therefore
been determined to be qualified to continue 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. In the
Company’s independence criteria for outside officers, the annualcompensation to be paid to experts in such areas as law is limited toless than ¥10 million. For the duration of the agreement, the monthly
legal fees paid to Mr. Gokita were ¥100,000 (there was no payment forcompensation outside of the advisory agreement). Therefore, theCompany determined that Mr. Gokita meets the independence criteria
for the Company’s outside directors and has no conflict of interest withordinary shareholders.

Compensation of Directors
Policies for Determining Compensation and Amounts ofCompensation of Directors and Audit & 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 andChairman [CEO] Toshitaka Takayama for fiscal 2019) determines
the compensation for each director based on the policies below,
which are set by the Board of Directors. (Stock options 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 andform opinions, from policy decisions with regard tocompensation 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 based on the following
policies, in consultation with directors who are Audit andSupervisory Committee members.
Policies for Determining Compensation of Directors
and Audit & Supervisory Committee Members
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.
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.
The compensation of outside directors, however, consists onlyof base 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
shall be within the limit for stock options, also determined by
the General Meeting of Shareholders.

Independent Audit & Supervisory
Officer
Committee member(2) Compensation of directors serving as Audit & Supervisory
Committee members
Comprises only base compensation, the total amount of
which shall be within the limit for the amount of compensation
determined by the General Meeting of Shareholders.
(3) Base compensation
The base compensation for each director (excluding directors
serving as Audit & Supervisory Committee members) is set foreach position based on consolidated performance withreference to the compensation levels of other companies
presented by a specialized outside organization. The
compensation for each director serving as an Audit &Supervisory Committee member is determined by discussion
among the Directors who are Audit and Supervisory
Committee members, also with reference to thecompensation levels of other companies presented by aspecialized 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 thecompensation levels of other companies presented by aspecialized outside organization. The standard amount of thistype of compensation is determined by taking into accountstandard amount indicators and the levels of contribution ofeach executive director, evaluated quantitatively andqualitatively. As far as serving as a reward that functions as asound incentive for sustainable growth that reflects theCompany’s business performance is concerned, consolidated
operating income has been selected as the primary indicatorof 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
the Company’s corporate value by sharing not only thebenefits from stock price increases but also the risk of stock
price declines with shareholders. 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 thedirector’s duties into consideration.

Total Compensation by Type (Millions of yen)Classification

Total Compensation(Millions of yen)

Base Compensation

Performance-Linked
Compensation

Stock Options

Number of Officers
Eligible

Directors (excluding directors serving
as Audit & Supervisory Committee
members and outside directors)

385

215

136

33

4

Directors serving as Audit &Supervisory Committee members(excluding outside directors)

33

33

—

—

1

Outside directors (excluding Audit& Supervisory Committee members)

10

10

—

—

1

Outside directors (Audit &Supervisory Committee members)

40

40

—

—

2

(Notes)1. The amount paid to directors does not include the portion of employee’s salary for those directors who concurrently serve as employees.
2. The 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 key indicator to provide incentives that enable
sustainable growth based on the consolidated performance of the Company as a whole. In fiscal 2019, consolidated operating income was ¥34.2 billion (actual result for the fiscal year
ended March 31, 2019, an 8.3% year-on-year increase) compared to the initial forecast of ¥34.0 billion.
3. Separately 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. The 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. Stock options are in the amount recorded in the current fiscal year related to stock acquisition rights granted as stock options.

Strategic Shareholdings

and investors in management.

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 cost against theacquisition price (current weighted average cost of capital [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 41 shares, worth ¥9,703 million (as of the end of March 2020).
The Company exercises its voting rights related to strategic
shareholdings in accordance with the following standard:(Standard for the exercise of the Company’s voting rights)
The Company shall exercise its voting rights based on acomprehensive judgment regarding whether the proposal willcontribute to the sustainable growth of the issuer of shares, andwhether it will contribute to the maintenance and enhancement of
the corporate value of the Company, among other matters.

Group GovernanceInternal Control System
In accordance with the provisions of the Companies Act, the Company
passed a resolution on its “Basic Policy for Building an Internal Control
System” at a Board of Directors’ meeting and is appropriately
establishing an internal control system based on that basic policy.
Passed by resolution at the Board of Directors’ meeting held on
March 27, 2019, the basic policy has been partially revised, as astrengthening 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 Board of Directors and, via business
reports, to shareholders. We will continue to strengthen corporate
governance by making improvements.

Dialogue with Shareholders and Investors
To increase the transparency of its corporate activities, the Groupwill endeavor to achieve sustainable growth and increase
corporate value by disclosing information in a timely andappropriate manner and reflecting dialogue with shareholders

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 kinds ofreliability” (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.

Functions as Corporate Pension Asset OwnerWith regard to the pension management system, we establishedthe Sanwa Shutter Corporate Pension Fund. In addition to afull-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, and important matters, such as decisions on asset allocation
policy and recipients entrusted with assets, are resolved by aboard of representatives using external consultants. The fund ismanaged and controlled in an appropriate manner to prevent
conflicts of interest between pension beneficiaries and theCompany. We carry out stewardship activities that can be
implemented as corporate pension funds, such as the assigningof employees familiar with the practical side of the business tothe 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.

Please see the Company’s website
for detailed information regarding
corporate governance.

https://www.sanwa-hldgs.co.jp/english/csr/effort/governance/
42

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

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43

A History ofValue Creation

Risk Management and Compliance

Number of participantsin Antitrust Law training

Fiscal 2019: 214

Fiscal 2019: 187

Implementing Risk Management

Enhancement of Information Security

The Sanwa Group identifies, analyzes, and evaluatesbusiness execution-related risks as well as undertakes
measures required to avoid and/or mitigate risks. As anorganization dedicated to promoting risk management, theGroup CSR Promotion Council reports and deliberates on
the Sanwa Group’s basic risk management policies, risk
management-related plans, and the 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 andrapidly responding to risks that occur during the course ofeach company’s business activities.

In June 2019, the Sanwa Group established the Information
Security Countermeasures Council chaired by the executive
officer in charge of the Corporate Planning Unit. The
Information Security Countermeasures Council identifies
security risks Group-wide (including overseas operations);
investigates, formulates and implements various measures
to maintain and increase security levels; and aims to formulate
security measures based on the latest information received
mainly from external organizations. As examples of specificmeasures, we have provided training on targeted e-mailattacks and implemented measures to raise awareness of
security measures among companies in our supply chain
and partner companies that dispatch staff to us.

Masanaka Yokota
Outside Director

Outside Director (Audit & Supervisory Committee Member)

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

Compliance Training
We are also working to instill compliance awareness at
With the aims of enhancing awareness of the importance ofoverseas Group companies. We invited a lawyer who iscompliance and eliminating violations of laws and rules, wefamiliar with circumstances overseas to give an explanatory
provide training on a nationwide basis once every two
lecture on practical methods to deal with bribery, includingyears to managers at domestic Group companies. Thisactual cases involving foreign capital companies. In fiscal
training features lectures designed to brush up the2019, this lecture was attended by 20 persons, including
participants’ knowledge of laws related to our business,both Japanese stationed overseas and executives.
such as Antitrust Law, Construction Business Act, Waste
Management and Public Cleansing Act, and Labor
Standards Act. It also includes lectures concerning safety
obligations, harassment, and risks relating
Compliance Code of Conduct: Conceptual Diagram
to information security and other areas,
thereby fostering compliance awareness.

44

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Our Mission
and Our Values

Areas of conduct in line with corporate
ethics and social demands based on
Sanwa Group values
as essential compliance

Principles of Business

Adherence to the Compliance
Code of Conduct

Internal regulations, rules
and standards

Set domains that must adhere
to laws and regulations

Laws, regulations and rules

Legalcompliance

Work styles have changed dramatically, including thenormalization of remote work, throughout the world. New
initiatives for non-contact forms of working and other styles
are needed, not only for offices, but also at production sites
and out in the field. I am confident that the Company’scommitment to manufacturing as one of the major global
players in the access systems industry, where the Company’s
strength lies, will be enough to meet these changes insociety.
In an era in which the sustainability of society is more
important than ever before, I believe that the role of an
outside director is to assist in ensuring that a company’s
governance is properly maintained. I hope that I will be able
to contribute to invigorating discussions at the Board of
Directors, while leveraging my experience and remaining
conscious of my perspective as an outsider.

Beyond Sanwa Global Vision 2020
Tsunekatsu Yonezawa

Identify risks at each company (Plan)

Values to be sharedby each Sanwa Group
employeewhen undertaking
business activities

Reliable Business
Performance

Becoming Even More Indispensable to Society

Number of participantsin compliance training

Fiscal 2019: 53

Special Feature

Messages from Outside Directors

HIG H L IGH TS
Number of reports made using
internal whistleblower system

Strategy

It is important to proceed with structural reforms, including arevamp of organizations and systems. The need to establish
new work styles in response to the COVID-19 pandemic is
one example. The Company already has a lineup of productsin the field of disaster prevention, such as products with
fireproof and waterproof specifications, and it must improve
development to further enhance their effectiveness in order
to contribute to society from the perspective of ESG. In
addition, given that the domestic market offers little room for
expansion, further business development in global markets
will be a key factor for growth. To that end, it will be evenmore important to develop human resources who can adapt
to the global environment.
Going forward, I believe that it is becoming increasingly
important to establish a management structure that is wellbalanced.

Transparency and Effectiveness in Corporate Governance
Akira Gokita

Outside Director (Audit & Supervisory Committee Member)

I believe the essence of corporate governance is this:directors should fulfill their duty of diligence and the Board of
Directors should supervise business execution in atransparent and effective way in order to perform
management oversight from the standpoint of shareholders
and other stakeholders and to enhance corporate value overthe medium- to long-term.
As a company with an Audit & Supervisory Committee,
the Company’s Board of Directors comprises nine directors,
including Audit & Supervisory Committee Members, onethird of whom are independent outside directors. We areworking to ensure the transparency and effectiveness ofcorporate governance, including through constructive debate
between outside directors and executive directors.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

45

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate DataManagement Team
Directors

Toshitaka Takayama

Yasushi Takayama

August 1963 Joined the Company
April 1972 Director
April 1974	General Manager of Construction
Material Div.
April 1974 Managing Director
January 1977	Head of Construction Material Dept.
April 1980 Director, Vice President
May 1981 Representative Director, President
August 1985	Representative Director, President,
SHOWAFRONT Sales Co. (currently
SHOWAFRONT Co., Ltd.)
June 2000 Executive Officer, President
October 2007 	Representative Director, Chairman of
the Board, Sanwa Shutter Corporation
April 2012 CEO & COO
June 2012 Representative Director, Chairman
April 2019	Director, Sanwa Shutter Corporation(present post)
April 2020 Director, Chairman (present post)

October 2006 Joined the Company
April 2008 General Manager of TCR Div.
April 2009	General Manager of Structural Reform Div.
April 2010	Director, Senior Executive Officer,
Sanwa Shutter Corporation
April 2010	Responsible for Group Function, Sanwa
Shutter Corporation
April 2011 Senior Executive Officer
April 2011	Assistant Director of Overseas Business
April 2012 Senior Managing Executive Officer
April 2012 Responsible for Corporate Planning
June 2012 Director
April 2016 Executive Officer, Vice President
April 2016 Deputy President
April 2017	Representative Director, President(present post)
April 2017 COO
April 2019	Representative Director, Chairman of
the Board, Sanwa Shutter Corporation
April 2020	Executive Officer, President (present post)

Director, Chairman

Representative Director, President

Attendance at Board of Directors meetings
100%
Number of Company Shares Held 1,860,800 Shares

Hiroatsu Fujisawa

Teiko Zaima

Tsunekatsu Yonezawa

Akira Gokita

April 2003	President and CEO, Marubeni-Itochu
Steel America Inc.
April 2009	Representative Director and President,
DRESSER JAPAN, LTD.
November 2012 Joined the Company
April 2013 Senior Executive Officer
April 2013	Responsible for Strategic Re-Engineering Unit
June 2014 Director (present post)
April 2015 Responsible for Europe Business Unit
April 2016	Responsible for Europe and Americas
Business Unit
April 2017	Senior Managing Executive Officer(present post)
April 2017	Responsible for Global Business Unit
(present post)
April 2019 Head of Europe BusinessFebruary 2020 Head of Asia Business (present post)

March1975 Joined the Company
April 2004 General Manager of Accounting Div.
October 2007 	General Manager of Accounting Div.,
Sanwa Shutter Corporation
April 2010	Executive Officer, Sanwa Shutter
Corporation
April 2012	Senior Executive Officer, Sanwa Shutter
Corporation
April 2015 Standing Advisor of the Company
June 2015 Corporate Auditor
June 2016	
Director serving as Audit and Supervisory
Committee Member (present post)

April 1971 Joined ITOCHU Corporation
April 1996	General Manager of Thin Plate
Department I, ITOCHU Corporation
April 1999	General Manager of Oceania (Stationed
in Sydney), ITOCHU Corporation(concurrent)		 President, ITOUCHU Australia Ltd.
June 2001 Executive Officer, ITOCHU Corporation
October 2001	Member of the Board, General
Manager of Iron & Steel Division-I,
Marubeni-Itochu Steel Inc.
April 2004 	Vice President, Member of the Board,
Marubeni-Itochu Steel Inc.
April 2005 	President and CEO, Member of theBoard, Marubeni-Itochu Steel Inc.
April 2009	Chairman, Member of the Board,
Marubeni-Itochu Steel Inc.
April 2012	Advisory Board Member, MarubeniItochu Steel Inc.
April 2013	Director (Assistant to President),
ITOCHU Corporation
June 2015	Outside Corporate Auditor, theCompany
June 2016	Outside Director serving as Audit andSupervisory Committee Member(present post)

April 1978	Assumed the office of Public
Prosecutor, Tokyo District Public
Prosecutors Office (Criminal Affairs
Division and Trial Division)
March1979 Mito District Public Prosecutors Office
March1982	Tokyo District Public Prosecutors Office(Criminal Affairs Division and Special
Investigation Division)
March1985	Osaka District Public Prosecutors Office(Special Investigation Division)
March1987	Tokyo District Public Prosecutors Office(Special Investigation Division)
March1988 Retired from Public Prosecutor
April 1988 Registered as an attorney at law
May 1994	Representative, Gokita and Mitsuura
Law Office (present post)
June 2010	Outside Director, Ichiyoshi Securities
Co., Ltd. (present post)
June 2016	Outside Director serving as Audit andSupervisory Committee Member, theCompany (present post)

Director, Senior Managing Executive Officer
Global Business Unit

Director
Audit & Supervisory Committee Member

Attendance at Board of Directors meetings
100%
Attendance at Audit & Supervisory Committee meetings 100%
Number of Company Shares Held
23,400 Shares

Attendance at Board of Directors meetings
100%
Number of Company Shares Held
26,100 Shares

Attendance at Board of Directors meetings
100%
Number of Company Shares Held112,787 Shares

Outside Director
Audit & Supervisory Committee Member

Outside Director
Audit & Supervisory Committee Member

Attendance at Board of Directors meetings
90%
Attendance at Audit & Supervisory Committee meetings 100%
— Shares
Number of Company Shares Held

Attendance at Board of Directors meetings
100%
Attendance at Audit & Supervisory Committee meetings 100%
— Shares
Number of Company Shares Held

Hiroyuki Yamazaki

Director, Senior Executive Officer
Corporate Planning Unit

Meiji Takayama

Masanaka Yokota

Senior Executive Officers and Executive Officers

October 2006 Joined the Company
General Manager of Sales Promotion Dept.,
April 2009	
Building Business Div., Sanwa Shutter Corporation
April 2010	
Executive Officer, General Manager of		Corporate Sales Dept., Building Materials
Div., Sanwa Shutter Corporation
April 2011 Director, Sanwa Shutter Corporation
April 2011 Senior Executive Officer, Head of Building
Materials Div., Sanwa Shutter Corporation
April 2012	Senior Managing Executive Officer, Head of
Building Materials Div., Sanwa Shutter Corporation
April 2013	Senior Managing Executive Officer, Head of Sales
Development Div., Sanwa Shutter Corporation
April 2014	Senior Managing Executive Officer, Head ofBusiness Strategy Div., Sanwa Shutter Corporation
April 2016	
Representative Director, Sanwa Shutter Corporation
April 2016	
Executive Officer, Vice President and Deputy
President, Sanwa Shutter Corporation
April 2017	
Representative Director, President, Sanwa
Shutter Corporation (present post)
April 2017	Chief Executive Officer, Sanwa Shutter
Corporation (present post)
June 2017 Director (present post)

June 2003 Director, JMA Consultants Inc.
January 2009 President, JMAC China
June 2013	Managing Director, JMA Consultants
Inc.
April 2015 President, JMAC Europe S.p.A
June 2020	Executive Adviser, JMA Consultants
Inc. (present post)
June 2020	Outside Director, the Company (present
post)

Senior Executive Officer

Toshiaki Doba

Head of Europe and Americas Business, Global Business unit

Senior Executive Officer

Kenichiro Motomachi

Subleader, Corporate Planning Unit

Executive Officer

Takenobu Hoizumi

Subleader, Global Business Unit

Director (Part-time)

April 1983 Joined Sumitomo Corporation
April 2016	Representative Director, Executive Vice
President, SCSK Corporation
September 2017 Joined the Company
April 2018	Senior Executive Officer (present post)		Subleader of Corporate Planning Unit
(Concurrent)		General Manager of Corporate
Planning Dept.
April 2020	Responsible for Corporate Planning
Unit (present post)
June 2020 Director (present post)—%
Attendance at Board of Directors meetings
Number of Company Shares Held
2,300 Shares

Outside Director—%
Attendance at Board of Directors meetings
Number of Company Shares Held
3,000 Shares

Attendance at Board of Directors meetings
100%
Number of Company Shares Held
88,338 Shares

46

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

47

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

ESG Materiality Initiatives
to a Sustainable Future
F u tu re Contributing
and the Development of Society
Trends in CO2 Emissions(Domestic Group Companies)

Trends by Scope(Sanwa Shutter)(t-CO2)(t-CO2)
Scope 130,501FY201728,325FY201828,154FY2019Note: Calculated based on amount of electricity, gas, gasoline,
diesel fuel, and kerosene used at business offices and factories
Note: Not including Scope 3(Tons)
Scope 2

Scope 3 Category 9*

12,423

12,62912,385

14,76014,335

12,83012,181

10,466

10,714FY2017FY2018FY2019* Calculated based on amount of fuel used by trucks whentransporting goods from factories to sales offices(part of Category 9: Transportation/Logistics (Downstream))

Offices*(Persons)

Factories

2,000

2,121

2,061

4,441

4,426

4,576

1,994

1,578

1,566

Recipients of Donations from Sanwa Group
Social Contribution Club* in Fiscal 2019
· Childline Support Center Japan· JOICFP· Family House®
· Make-A-Wish of Japan· Nanbyonet (National Support Network
for Children with Intractable Diseases)· ATOPICCO Network for Children of
the Earth·P aralym Art·K ids’ Door· JEANFY2017FY2018FY2019FY2017* For offices, includes only industrial waste

FY2018FY2019* A volunteer organization for officers and employees that was established in 2006. The Company matches
donations from members with its own donation of the same amount (matching gift program), and the
donations are made to various organizations each year.

Note: Includes community cleanup activities

Responding to Climate Change

Initiatives at Overseas Subsidiaries

Regional Contribution and Social Contribution

Social Contribution to Fight against COVID-19

The Sanwa Group regards climate change as an importantmanagement issue, and is carrying out various initiatives toreduce greenhouse gas emissions, as well as providing
eco-friendly products that help to reduce energy use.
Through these initiatives, we are contributing to theestablishment of a sustainable and prosperous society.
Sanwa Shutter has established and operates anenvironmental management system based on ISO 14001,
and has set goals under three themes: “Reduce: Reduce
logistics energy, facility energy, and waste emissions,”“Create: Bring to the market eco-products and eco-friendly
design products,” and “Purchase: Promote green
procurement.” We are implementing measures for these
themes. As a means of reflecting on our progress and resultswith achieving each goal, and discussing improvement measures,the Quality, Environment and CSR Promotion Council is held
twice a year, and lively discussions are carried out.

ODC has reduced its electricity usage by introducing a highlyenergy-efficient air-conditioning system, installing ceiling windows,
and switching to LED lighting. At each site, efforts are being madeto promote recycling of packaging materials and scrap metal. In
addition, the Sales Center in San Francisco is producing woodchips from sawdust, and using them for flower beds, etc.
The NF Group has acquired ISO 14001 certification for six
plants, which are two plants in Germany, two plants in
Netherlands, and Robust AB’s plants in Poland and Sweden. These
plants are working to reduce their energy usage. By switching to
LED lighting and installing motion sensors and light and darkness
sensors, they are helping to reduce the amount of electricity usedand electricity charges.
In Asia, Shanghai Baosteel-Sanwa Door, Novoferm (Shanghai),and Vina-Sanwa have also obtained ISO 14001, and are
endeavoring to reduce the environmental impact of all theirproduction processes. For example, they have deployed devices
for periodically measuring noise levels and gas emissions andtreating waste gas. They are also recycling packaging materials
and improving packaging methods. In addition, An-Ho Metal
Industrial has introduced a twice-yearly “Public Transport Day,” onwhich employees travel to and from work by train or bus, as partof initiatives to reduce greenhouse gas emissions.

Sanwa Shutter, which was established in the city of Amagasaki in
Hyogo Prefecture, has been in business for 64 years, and currently
operates in 26 countries and regions around the world. We
conduct business activities that are firmly rooted in the local
communities as a way of supporting people’s lives. We contributeto the development of local communities by manufacturing
products that match the climate and culture of the regions, such as
wooden partitions and toilet booths that are made of locallyproduced materials. Shanghai Baosteel-Sanwa Door has concluded
a memorandum of understanding (MOU) with the local residents’association as part of its efforts to integrate with the community,and engages in regular exchange activities to create a better local
community.
In addition, we makedonations as an
outstanding corporate
citizen, while returningtechnology and knowhow we have acquired tosociety in order to help
resolve social issues.

At Okinawa Sanwa Shutter, employees voluntarily assembled
1,100 medical face shields and donated them to 26 medical
institutions, elderly care facilities, etc. in Okinawa Prefecture.
At ODC, two employees from the installation department
joined a local charity group and delivered meals to firefighters,
police officers, hospital staff, etc. every morning before starting
work for about one month.
The NF Group made donations to local communities,
donated protective gowns and surgical masks, dispatchedvolunteers to elderly care facilities to wash clothes, and donated5,000 meals to medical personnel, among others.
Shanghai Baosteel-Sanwa Door has also donated face masks
worth 3,000 yuan to local communities.

ThemesFiscal 2019 Environmental Targets
Reduce logistics energy
consumption units*1 by 1%
compared with fiscal 2018

ReduceReduce facility energy consumption
units*2 by 1% compared with fiscal
2018
Reduce industrial waste units*3 by 2%
compared with fiscal 2017
Reduce waste units*4 by 1%
compared with fiscal 2018
Commercialize
eco-products

CreateStudy and research eco-products
Commercialize eco-friendly design
products

Purchase

Promote green procurement andimprove logistics

FY2019 Actual

Factories

0.0495(Target 0.0518)

0.0232
Offices(Target 0.0239)
0.1131
Factories(Target 0.1158)
21.75
Offices(Target 23.23)
34.85
Factories(Target 35.50)
Two themes(Two or more target themes)
Two themes(Three or more target themes)
Ten themes(Ten or more target themes)
Switch to 4Ms*5 in 4 projects(target: 4 projects)*1 Basic Unit:Amount of energy used (crude oil kl equivalent) / value of goods shipped (¥ million)*2 Basic Unit (Offices): Amount of energy used (crude oil kl equivalent) / total floor area (m²)
Basic Unit (Factories):Amount of energy used (crude oil kl equivalent) / value of goods shipped (¥ million)*3 Basic Unit:Amount of industrial waste (kg) / net sales (¥ million)*4 Basic Unit:Amount of waste (kg) / value of goods shipped (¥ million)*5 Man, Machine, Method, Material

48

Trends in No. of Participants in
Volunteer Activities(Domestic Group)

Trends in Waste Emissions(Sanwa Shutter)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Conclusion of MOU by Shanghai
Baosteel-Sanwa Door

Assembling medical face shields at NF Group donated 5,000 meals to
Okinawa Sanwa Shutter
medical personnel

TOPIC

Initiatives Concerning Water Use
Trends of Amount of Groundwater Extracted
at Sanwa Shutter Ota Door Plant(m3)

10,000
Piping Work
Performed
in Summer 2019

8,000
6,000
4,000
2,000
0
Apr.

An employee commuting on a
motorbike

Public Transport Day

FY2018June

Aug.

FY2019

Oct.

Dec.

Feb.

As the climate changes, forests are destroyed, and the population of developing andemerging countries increases, water risks are increasing worldwide.
Although production activities performed by the Company, namely cutting andforming metal materials and assembling them into products, involves less use of water
than total output, a certain amount of water needs to be used for some of our processes.
At Sanwa Shutter Corporation’s factories, we are endeavoring to reduce water use
and releases of wastewater by making effective use of water circulation systems forcoating equipment and chilling equipment that circulates cold water from tanks.
Previously, at the Ota Door Plant, groundwater wasused to supplement the shortfall in the cooling capacityof the cooling tower. However, as a result of combining
pipes to supply cool water from chilling equipment in
the plant, the amount of groundwater used has been
substantially reduced.
(Amount of groundwater extracted in the second half of fiscal 2018:
24,804m³ Second half of fiscal 2019: 103m³)

Cooling tower

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

49

A History ofValue Creation

PeopleTrends in Total No. of Participants in Training
Hosted by the Human Resource
Development Center (Sanwa Shutter)(Persons)

1,869

Reliable Business
Performance

Special Feature

ReliableManagement

Trends in Total No. of Participants in Training
Hosted by the Installation Training Center(Sanwa Shutter)

2,658

Trends in Total No. of Participants in Training
Hosted by the MaintenanceTraining Center (Sanwa Shutter)

Trends in No. of Employees Taking
Childcare Leave(Sanwa Shutter)(Persons)(Persons)

1,174

1,113
1,121

FY2018FY2019Corporate Data

31
736

17

Total No. of Participants in Training
about Health and Safety Standards(Sanwa Shutter Factories)(Persons)

1,209

1,439

Trends in No. of New Graduates
Recruited Globally(Sanwa Shutter)3

3

Fiscal 2019:

2

17
8

FY2017

ESG Materiality
Initiatives

Ensuring That Everyone Involved with theGroup Can Work with Peace of Mind, Thus
Being the Driving Force for Value Creation(Persons)

1,448

Strategy

FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019FY2017FY2018FY2019470persons

Note: Including affiliated companies

Of which, No. of male employees

Respect for Human Rights

Human Resource Development

Work-Life Balance and Diversity

Health and Safety

The Sanwa Group recognizes the diverse set of values held byindividuals and respects the character and individuality of each
person from the perspective of respect for human rights andconducts business activities giving due consideration to the humanrights of all stakeholders, including customers, shareholders andemployees.
We provide compliance training, including the prevention ofharassment, for managers at domestic Group companies every
other year. In fiscal 2019, we provided a training program focusedon harassment for 854 people from top management, executives,and managers of domestic Group companies. Through continued
awareness activities, the Group is working to eliminate harassmentand enhance human rights awareness.
ODC also pursues social contribution activities aimed at
improving rights of children. For example, it makes donations to
the Boys & Girls Clubs of America, which provides after-school
programs that enable boys and girls in the U.S. to develop strong
characters and demonstrate their capabilities to the full.

The Sanwa Group views human resources as its most importantmanagement resource and focuses on the development of humanresources capable of creating value by enhancing systems and a work
environment that enable employees to maximize their capabilities.
Sanwa Shutter has introduced a new training system called the“Sanwa Professional Human Resources Training Plan” since fiscal
2019. Through job rotations over the course of two years, thissystem provides new college graduates with the opportunity tolearn about sales, installation, factory work, and design. The goalof this system is to train human resources that can make decisions
through a comprehensive, optimized field of view. In addition,although installers, who are our important business partners, aregetting older as the working age population shrinks, we are taking
advantage of highly experienced senior workers to accompany
younger workers when they perform installations and repairs andto train successors. In this way, we are endeavoring to ensurestable installation capabilities and pass on their skills to the next
generation.

Along with appropriately managing working hours and reforming
long working hours, the Sanwa Group has also introduced atelecommuting scheme to promote a balance between finding
fulfillment in work and a rich, fulfilling life among all its employees.
Due to the impact of the current COVID-19 epidemic, as many asaround 2,200 domestic employees have experienced teleworking.
Going forward, we will be making active use of mobile PCs andvideoconferencing systems to create diverse working environment,
which will help us in improving productivity and securing
outstanding employees.
In addition, the Group believes that it can create new valuethat contributes to the resolution of customer and social issues by
nurturing an organizational culture that respects and embraces thediversity of each employee. The Sanwa Group promotes the activerole of women, cultivates global competence, mobilizes senior
workers, and employs those with disabilities. These measuresdevelop human resources that can drive growth and maximize thecapabilities of the organization.
In November 2019, NF Germany was certified as a “TopCareer Chance” company for its efforts in helping employees
develop their careers in a survey by Focus Money magazine.

As a company engaged in manufacturing, the Sanwa Group
recognizes that ensuring the health and safety of employees,
affiliated companies’ employees, and installers is fundamental to
our sustainability and our responsibility as a Company.
In line with the annual health and safety action plan, we work
to provide safety education, ensure adherence to rules, share
information about actual cases, improve environment to reduce
workloads, etc., as a means of eliminating occupational accidents.
Sanwa Shutter also provides safety training using virtual reality (VR)technology, which allows employees to experience accidents thatcan occur at construction sites, such as a fall or a cut, from thepoint of view of a victim, thereby focusing on reducing theoccurrence of accidents.
Asian subsidiaries, Shanghai Baosteel-Sanwa Door andNovoferm (Shanghai), have obtained OHSAS 18001, which is astandard for occupational health and safety management systems,
and are endeavoring to create comfortable working environmentand raise levels of health and safety.
In addition, as part of our “health management” initiatives, wehave designated May as “Sanwa Group Health & Safety Month”
since fiscal 2019. We have carried out various initiatives to create
opportunities for each and every employee to confront their own
health and lifestyle habits.

Harassment prevention
training for
top management

Safety training with VRtechnology

Donation of art and craft supplies toBoys & Girls Clubs of America

50

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Installers who support access systems
Top Career Chanceseal of certification

Safe production meeting at Novoferm(Shanghai)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

51

A History ofValue Creation

Manufacturing
The Sanwa Group’s Quality Objectives

1. Improve product safety
2. Improve the quality of products and installation
qualityStrategySpecial Feature

Sanwa Shutter’s Quality Objectives

Strengthen our corporate structure by ensuring product quality
with a focus on customers and work sites

1. R educe complaints and financial losses byanalyzing complaints
2. R educe product accidents by reinforcing structures
3. R educe complaints received by customer centersthrough the provision of education and training

4. Increase traceability

4. Improve structures for traceability

ODC’s Quality Objectives

NF Group’s Quality Objectives

1. Offer the highest complete“Delivered Quality Rate” in theindustry

1. Improving on time delivery
2. Improving quality ratio

2. Instill a “Safety culture”

3. Improving Productivity

3. Improve customer service andsupport

5. Improving inventory ratio

4. Improving safety ratio

Strengthening Quality Control

Improvement of Customer Satisfaction

Manufacturing that Reflects Climate Change

The Sanwa Group works to improve quality and safety, theprimary responsibilities of a manufacturer, in all processes fromdevelopment to sales, production, installation and maintenance.
Each company implements measures aimed at achieving thequality targets it has set and endeavors to improve quality
throughout the entire supply chain by conducting quality auditsof suppliers and proposing improvements. At Novoferm(Shanghai), dedicated quality inspectors verify dimensions andappearance, and only products carrying a pass sticker with thename of the inspector can be shipped out.
In addition, to ensure that its access systems can be usedwith peace of mind, the Sanwa Group regards ensuring stability
in installation quality as an important task. Sanwa Shutter
Corporation is working to enhance the skills of installers byproviding them with training in welding and training to become
licensed as product installers. Norsud, which is part of the NF
Group and whose strength is its industrial door installation andservice business in France, organized an “Installer Day” in May
2019, shared their vision and exchanged opinions with 56
participants.

The Sanwa Group always conducts business activities from theviewpoint of customers and makes use of the feedback it hasreceived from customers to improve its products and services.
Through this approach, we are striving to become a corporategroup that is continuously chosen by society. Sanwa Shutter
Corporation implements various initiatives to enhance customer
satisfaction, including operating a 24-hour-a-day, 365-day-a-year
repair request receiving system called FTS (Full Time Service)throughout Japan as part of its efforts to create an environment
in which customers can use its access systems with peace ofmind. In addition, education for call center personnel is carriedout by using on-site showrooms, videoconferencing systems, etc.
Sales and administrative staff receive training in businessmanners, while installers learn manners and rules through actualrole-playing as part of training programs designed to improvetheir manners. Through the training, we are promoting initiatives
to enhance customer satisfaction.
The NF Group regards a rate of claim expenses against net
sales as a common KPI, assess it by country, and the results areshared with all the companies. Factory production officers andquality control officers work closely with departments that handle
claims to reduce the number of claims and claim expenses,
thereby aiming to maximize customer satisfaction.

Climate change is a global problem that needs to be tackled withurgency. The Sanwa Group believes it essential to address
climate change using the two approaches of “mitigation” toreduce emissions of CO2 and other greenhouse gases, and“adaptation” to respond to the various phenomena that arise asa consequence of climate change.
The Sanwa Group, a corporate group engaging in manufacturing,is active in bringing to the market “eco-products” and “ecofriendly design products” as a means of achieving mitigation.
Eco-products have eco-friendly features that come into play during
the use phase of the product lifecycle, including high-speed sheet
shutters that help reduce energy use by enhancing the airtightnessof openings at factories and warehouses and improving air
conditioning efficiency. Eco-friendly design products have ecofriendly features that come into play during the procurement,
manufacturing, distribution (logistics), sale, and disposal phasesfrom the perspective of lifecycle assessment (LCA).
Regarding adaptation, we will contribute to the creation of asafe, secure, and convenient future through the provision of

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

ESG Materiality
Initiatives

Corporate Data

Training for improving manners

Asia Quality Objectives

1. Reduce number of defects
2. Reduce financial losses

waterproof products, such as waterproof shutters and doors,which protect urban functions and people’s lives from rising sea
levels and torrential rain due to unusual weather, as well as
window shutters, which protect windows from flying objects due
to increasingly intense typhoons.
By strategically offering products as a means of addressing climatechange from the perspectives of both mitigation and adaptation, we
will create opportunities, such as responding to risks, expanding
demand, and creating new markets, as market needs change.

ODC’s high-speed sheet shutter

Waterproof door

TOPIC

Offering Products and Services that Contributeto Safety, Security, and Convenience

52

ReliableManagement

Providing Products and Services
that Support the Infrastructureof Communities and Daily Life

3. Improve the quality of services and businessetiquette

Pass sticker carrying the quality Installer Day at Norsud
inspector’s name at NF

Reliable Business
Performance

Tredoor Rusu Raku,
condominium door
equipped with a parcel
drop-off locker

Self-assembly partition,
FamiplaGarage door thatcan be opened
and closed from asmartphone

By providing customers throughout the world with products andservices that deliver safety, security, and convenience, the Sanwa Groupaims to help people protect their precious lives and create a society inwhich they can live in affluence and comfort.
We are offering products that are designed to match social needs
and diverse lifestyles. For example, our Tredoor Rusu Raku
condominium doors feature a drop-off locker to resolve the problem ofbeing away from home when a delivery service drops off a parcel andmeet the needs for non-face-to-face interaction, and we also offer
window shutters and garage doors that can be opened and closed
automatically via smartphone or AI speaker.
In addition, as a means of addressing the issue of crowded hospital
waiting rooms and preventing droplet contagion at meeting areas, wehave launched a re-designed self-assembly partition called Famipla,
which features transparent acrylic panels. We are contributing tofacilitate the transition to new work styles with our manufacturing
capabilities.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

53

A History ofValue Creation

12-Year Summary

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

(As of March 31, 2020)

Sanwa Vision 2010
(FY2001–FY2012)

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

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

Sanwa Global Vision 2020
(FY2013– FY2020)

FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020 (Forecast)

232,029

237,295

248,214265,913

311,957

339,045

365,615353,922385,673

409,990

440,161

390,000

38.1

56.0

41.0

39.3

41.7

43.8

44.7

44.4

46.1

46.4

45.4

43.5

Cost of sales

173,108

179,399

186,683

196,631

225,954242,273

260,078

250,068

273,155

291,301

310,925—

Gross profit

58,921

57,89561,53069,28186,003

96,771

105,537

103,854

112,517

118,689

129,235—

Operating income

5,624

4,562

8,855

14,174

20,64926,334

26,87026,44028,322

31,59334,21722,000Ordinary income

4,829

4,033

8,190

13,98820,31625,975

26,161

25,27827,89830,43733,46921,000

Profit attributable to owners of the parent company(725)(2,443)

3,297

7,181

10,161

12,857

14,627

17,07018,28020,91021,647

12,500Research and development expenses

2,750

2,436

2,456

2,440

3,149

3,505

3,868

3,999

4,422

4,611

4,728

—

Operating Results (Millions of yen)
Net sales
Overseas sales ratio (%)

Capital expenditures

3,894

3,495

2,897

4,293

7,116

7,727

8,127

8,096

11,38312,3678,419—

Depreciation and amortization (excluding amortization of goodwill)

4,651

5,063

5,348

5,428

6,180

7,188

8,022

7,290

7,622

8,049

9,301

—

Cash flows from operating activities

17,870

3,717

5,453

14,855

19,72822,304

24,37823,67026,532

24,27132,301—

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

5,932(27,080)(15,641)(8,006)(13,172)(13,677)(16,622)—

Cash flows from financing activities

17,914(14,252)

312(4,340)3,876

10,625(25,702)(838)(20,505)(11,349)(10,466)—

Cash and cash equivalents (end of year)

34,912

20,306

16,82522,27552,30758,60541,51656,29049,26347,97754,618—

Free cash flows(4,417)(74)(3,800)9,542

25,660(4,776)

8,737

15,664

13,36010,593

15,679—Total assets

246,599

218,933

226,579

241,771

281,917323,327

310,269

323,393

331,686

338,432

354,023

360,000

Interest–bearing debt

74,62859,892

61,60760,79969,15388,48470,79874,73965,94561,217

63,73060,760Net assets

96,10986,021

85,522

97,134113,956

126,748130,334

139,905

151,121

161,603

165,633

170,735

Working capital

56,151

52,18859,83369,59371,05180,82084,012

82,982

90,794

96,162

105,235

—

91.6

83.3

82.4

84.7

78.8

81.7

82.3

86.1

82.2

83.2

83.5

—

(3.0)

(10.2)

13.7

29.9

42.4

54.1

63.1

74.6

81.0

93.0

97.1

56.6

399.56357.59355.37404.57474.63541.49565.64607.16667.09713.50742.90

—

5

8

8

10

13

16

23

25

30

32

34

34

2.4

1.9

3.6

5.3

6.6

7.8

7.3

7.5

7.3

7.7

7.8

5.6

Cash Flows (Millions of yen)

Financial Position (at Balance Sheet Date) (Millions of yen)

Cash Conversion Cycle (CCC) (Days)
Financial Indicators
Net income (loss) per share (Yen)Net assets per share (Yen)
Cash dividends per share (Yen)
Operating income ratio (%)
R&D expenditures to net sales ratio (%)

1.2

1.0

1.0

0.9

1.0

1.0

1.1

1.1

1.1

1.1

1.1

—

Return on assets (%)(0.30)(1.05)

1.48

3.07

3.88

4.25

4.62

5.39

5.58

6.20

6.11

—

Return on equity (%)

(0.8)

(2.7)

3.8

7.9

9.6

10.7

11.4

12.7

12.7

13.5

13.3

7.5

ROIC (%)

2.9

2.6

4.9

7.7

10.6

12.6

12.2

12.2

12.8

15.0

15.4

—

SVA (Billions of yen)

(3.5)

(3.5)

(1.2)

1.9

5.4

7.8

8.2

8.1

9.0

12.7

14.0

5.4

Debt/equity ratio (Times)

0.78

0.70

0.72

0.63

0.61

0.70

0.54

0.53

0.44

0.38

0.38

0.36

Shareholders’ equity ratio (%)

38.9

39.3

37.7

40.1

40.4

39.1

41.7

43.0

45.2

47.4

46.3

46.9

Liquidity ratio (Times)

1.2

1.7

1.6

1.7

1.6

1.7

1.8

1.8

1.7

1.7

1.9

—

Payout ratio (%)

—

—

58.3

33.4

30.7

29.6

36.5

33.5

37.1

34.4

35.0

60.1

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.

54

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

SVA: Our unique indicator of added value. NOPAT – invested capital × WACC (6%)
CCC: Accounts receivable turnover days + inventory turnover days - accounts payable turnover days

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

55

A History ofValue Creation

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Consolidated Balance Sheets

Consolidated Balance Sheets

Sanwa Holdings Corporation and Subsidiaries As of March 31, 2020 and 2019

Sanwa Holdings Corporation and Subsidiaries
As of March 31, 2020 and 20192020

ASSETS
Current assets:

Cash and deposits (Note 3)
Short-term investments (Notes 3, 4, 10)Notes and accounts receivable, trade (Note 10)
Electronically recorded monetary claims (Note 10)
Inventories (Note 5)
Other current assets
Allowance for doubtful accounts

Total current assets

Non-current assets:
Property, plant and equipment:
Land

Buildings and structures
Machinery and equipment
Right-of-use assets
Construction in progress
Less accumulated depreciation
Total property, plant and equipment

Millions of yen¥ 47,127
9,600
88,441
9,283
61,917
7,828(1,666)
222,5322019¥ 43,007
8,013
82,5639,526
56,475
6,607(1,405)
204,789

Thousands of U.S.
dollars (Note 1)

2020$ 436,361
88,889818,898
85,954573,306
72,481(15,426)
2,060,481

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term debt (Notes 7, 10)Notes and accounts payable, trade (Note 10)
Accrued income taxes
Accrued expenses
Other current liabilities
Total current liabilities

Non-current liabilities:

Long-term debt (Notes 7, 10)
Net defined benefit liability (Note 8)
Deferred income taxes (Note 15)

21,574
61,27581,714
4,163
3,189
171,917(102,826)
69,091

18,50554,74077,3294,122
154,697(94,515)
60,182

199,759
567,361
756,61138,54629,528
1,591,824(952,093)
639,731

Other long-term liabilities
Total long-term liabilities

Total liabilities

2020

Millions of yen

2019

Thousands of U.S.
dollars (Note 1)

2020¥ 12,666
54,407
5,851
24,381
16,763
114,071¥ 20,390
52,401
4,479
22,551
19,045
118,868$ 117,278
503,769
54,176
225,750
155,213
1,056,213

54,57913,6884,241
1,808
74,318
188,389

40,826
11,901
3,467
1,763
57,959176,828

505,361
126,741
39,26916,741
668,130
1,744,343

38,41338,413355,676

39,902
91,72539,90281,741

369,463
849,306(10,036)(8,989)(92,926)

160,005

151,068

1,481,528

94
41
6,531
(2,607)
4,059
281
1,286
165,633

2,219
(25)
8,853
(1,593)
9,454
248
832
161,603870
380
60,472(24,139)
37,583
2,602
11,907
1,533,639¥ 354,023¥ 338,432$ 3,277,991

NET ASSETS (Note 12)
Shareholders’ equity
Common stock:

Intangible assets:
Goodwill

Other intangible assets (Note 6)
Total intangible assets

5,264
18,02823,292

6,769
17,231
24,001

48,741
166,926
215,667

Authorized － 550,000,000 shares at March 31,
2020 and 2019
Issued － 231,000,000 shares at March 31, 2020
and 235,000,000 shares at March 31, 2019

Capital surplus

Retained earnings
Treasury stock, at cost

Investments and other assets:

Investments in securities (Notes 4, 10)Long-term loans receivable
Net defined benefit asset (Note 8)
Deferred income taxes (Note 15)
Other assets
Allowance for doubtful accounts
Total investments and other assets(10,154,344 shares at March 31, 2020 and
10,020,866 shares at March 31, 2019)25,159
538
5,621
4,916
3,319
(448)
39,10736,949
578
6,088
3,011
3,096
(265)
49,459232,954
4,981
52,04645,51930,731(4,148)362,102

Total shareholders’ equity

Accumulated other comprehensive income:Net unrealized holding gains on securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights (Note 13)
Non-controlling interests

Total net assets
Total non-current assets
Total assets

The accompanying notes are an integral part of these statements.

56

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

131,491¥ 354,023

133,642¥ 338,432

1,217,509$ 3,277,991

Total liabilities and net assets

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

57

A History ofValue Creation

Consolidated
Statementsof Operations
Consolidated
Statementsof Operations

Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2020 and 2019
For the years ended March 31, 2020 and 2019

2020

2019

Thousands of U.S.
dollars (Note 1)

2020¥ 440,161¥ 409,990$ 4,075,565

Cost of sales (Note 14)
Gross profit

310,925
129,235

291,301
118,6892,878,935
1,196,620

Selling, general and administrative expenses (Notes 13, 14)
Operating income

95,01734,21787,09531,593879,787
316,824

Interest and dividend income
Interest expenses
Equity in losses of non-consolidated subsidiaries and affiliates
Other, net (Note 16)

Other income (expenses), net
Net profit before income taxes
Income taxes (Note 15)
Current

Deferred

Total income taxes
Net profit
Profit attributable to non-controlling interests
Profit attributable to owners of the parent company

777
(751)
(148)
(1,789)(1,911)32,306

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

7,194(6,954)(1,370)(16,565)(17,694)
299,130

10,624(7)
10,616
21,68941¥ 21,647

8,200
812
9,012
21,034123¥ 20,910

98,370(65)
98,296200,824380$ 200,4352020

Per share: (Note 21)
Net profit － Basic－ Diluted

Cash dividends
The accompanying notes are an integral part of these statements.

Yen

2019

¥ 97.14
96.89
34.00

U.S. dollars (Note 1)

2020

$0.90
0.90
0.32

¥ 92.95
92.73
32.00

Consolidated Statements of Comprehensive Income
Millions of yen

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 17)
Comprehensive income
Comprehensive income attributable to:
Owners of the parent company
Non-controlling interests

The accompanying notes are an integral part of these statements.

58

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

ESG Materiality
Initiatives

Corporate Data2020

¥ 21,689

2019¥ 21,034

Thousands of U.S.
dollars (Note 1)

2020$ 200,824(2,123)66(2,453)(1,013)(1,361)109(2,563)
62(19,657)611(22,713)(9,380)130(5,394)¥ 16,294(143)(3,896)¥ 17,137

1,204(49,944)$ 150,870¥ 16,297(2)

CommonCommonstock
stock

Balance at March 31, 2018
Balance at March 31, 2018
Cumulative effects of
Cumulativeofchanges ineffects
accountingchanges in accounting
policies
policies
Restated balance
Restated balance
Net changes during theNetchanges during the
year
year
Cash dividends
Cash dividends
Profit attributable toProfitattributabletoownersof the parent
owners of the parent
company
company
Purchase of treasury
Purchaseof treasury
stock
stock
Net changes duringNetduringthechanges
year otherthanthe year other equity
thanshareholders’shareholders’ equity
Total net changes during
Total
net changes during
the yearthe year
Balance at March 31, 2019
Balance at March 31, 2019
Net changes during theNetchanges during the
year
year
Cash dividends
Cash dividends
Profit attributable toProfitattributabletoownersof the parent
owners of the parent
company
company
Change of scope of
Changeof scope of
consolidation
consolidation
Change of scope of
Changeof scope ofequity method
equity method
Purchase of treasury
Purchaseof treasury
stock
stock
Disposal of treasury
Disposalstock of treasury
stock
Retirement of treasury
Retirementof treasury
stock
stock
Net changes duringNetduringthechanges
year otherthanthe year other equity
thanshareholders’shareholders’ equity
Total net changes during
Total
net changes during
the yearthe year
Balance at March 31, 2020
Balance at March 31, 2020

¥ 38,413 ¥¥ 38,413 ¥

38,41338,413

CapitalCapitalsurplussurplusRetained
Retainedearnings
earnings

Millions of yen
Millions of yen

NetNet
Treasury
unrealized
Treasury
unrealized
stock,
at cost holding
gains
stock, at cost holding
gains
on securities
on securities

39,902 ¥39,902 ¥67,403 ¥67,403 ¥39,90239,902401
401
67,80467,804(8,988) ¥(8,988) ¥(8,988)(8,988)DeferredDeferred
lossesonlossesonhedgeshedges3,583 ¥
3,583 ¥

3,583
3,583

Foreign
RemeasureForeign
Remeasurecurrency
ments ofcurrency
mentsoftranslation
definedtranslation
definedadjustments benefit
plans
adjustments benefit plans(134) ¥
(134) ¥

(134)
(134)

11,558 ¥
11,558 ¥

11,558
11,558Stock
Stockacquisitionacquisitionrightsrights(1,656) ¥(1,656) ¥(1,656)(1,656)

NonNoncontrolling
controllinginterests
interests

213 ¥
213 ¥

213
213

825 ¥
825 ¥

151,121
151,121

825
825

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

20,91020,91020,91020,910(1)(1)¥ 38,413¥ 38,413¥ 38,413¥ 38,413¥ 39,902¥ 39,902¥ 39,902¥ 39,902

Total net
Total
netassetsassets13,936
13,936¥ 81,741 ¥¥ 81,741 ¥

(1)
(1)

(1)
(1)
(8,989) ¥(8,989) ¥(1,364)(1,364)109
109(2,704)(2,704)

62
62

34
34

7
7

(3,855)(3,855)(1,364)(1,364)
2,219 ¥
2,219 ¥109
109(25) ¥(25) ¥(2,704)(2,704)
8,853 ¥
8,853 ¥

62
62
(1,593) ¥(1,593) ¥

34
34
248 ¥
248 ¥

7
7
832 ¥
832 ¥

10,08010,080161,603
161,603(7,385)(7,385)(7,385)(7,385)

21,647
21,647

21,647
21,647

(242)
(242)

(242)
(242)

(82)
(82)

(82)
(82)
(5,000)(5,000)(5,000)(5,000)

(0)
(0)

0
0

0
0

(3,953)(3,953)

3,953
3,953

-

9,984
9,984
¥ 91,725 ¥¥ 91,725 ¥(1,046)(1,046)(10,036) ¥(10,036) ¥(2,124)(2,124)66
66(2,322)(2,322)(1,013)(1,013)

33
33

454
454

(4,906)(4,906)(2,124)(2,124)
94 ¥
94 ¥

66
66
41 ¥
41 ¥

(2,322)(2,322)
6,531 ¥
6,531 ¥

(1,013)(1,013)(2,607) ¥(2,607) ¥

33
33
281 ¥
281 ¥

454
454
1,286 ¥
1,286 ¥

4,030
4,030
165,633
165,633

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

Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2020 and 2019

Net profit
Other comprehensive income (Note 17)

ReliableManagement

Sanwa
Holdings Corporationand Subsidiariesof Changes in Net Assets
Consolidated
Statements
Consolidated
Statementsof Changes in Net Assets
For
the years
ended March
31, 2020 and
Sanwa
Holdings
Corporation
and2019
Subsidiaries

Millions of yen

Other income (expenses):Reliable Business
Performance

Special Feature

Consolidated Statements of Changes in Net Assets

Sanwa
Holdings
Corporationand Subsidiaries
Sanwa
Holdings
Corporationand Subsidiaries
Forthe
the
years
ended
For
years
ended
MarchMarch
31, 202031,
and20202019 and 2019

Net sales

Strategy¥ 17,06473$ 150,898(19)

CommonCommonstock
stock

CapitalCapitalsurplussurplusRetained
Retainedearnings
earnings

Treasury
Treasurystock,
atstock,
cost at
cost

Net
Net
unrealized
unrealized
holding
holdinggains
ongains onsecurities
securities

Balance at March 31, 2019 $ 355,676 $ 369,463 $ 756,861 $ (83,231) $ 20,546
Balance at March 31, 2019 $ 355,676 $ 369,463 $ 756,861 $ (83,231) $ 20,546
Net changes during theNetchanges during the
year
year
Cash dividends(68,380)
Cash dividends(68,380)
Profit attributable toProfitattributabletoownersof the parent
ownersof the parent
company
200,435
company
200,435
Change of scope of
Changeof scope of
consolidation(2,241)
consolidation(2,241)
Change of scope of
Changeof scope ofequity method(759)
equity method(759)
Purchase of treasury
Purchaseof treasurystock(46,296)stock(46,296)
Disposal of treasury
Disposalstock of treasury
(2)
0
stock
(2)
0
Retirement of treasury
Retirementof treasurystock(36,602)36,602stock(36,602)36,602
Net changes duringNetduringthechanges
year otherthantheyear otherequity
thansareholders'(19,667)
sareholders' equity(19,667)
Total net changes during
Total
net changes during
the year
92,444(9,685) (19,667)
the year
92,444(9,685) (19,667)
Balance at March 31, 2020 $ 355,676 $ 369,463 $ 849,306 $ (92,926) $870
Balance at March 31, 2020 $ 355,676 $ 369,463 $ 849,306 $ (92,926) $870

Foreign

Remeasure-

DeferredStock
NonForeign
Remeasurecurrency
ments ofDeferred
Stock
Nonlosseson
acquisition
controllingcurrency
mentsoftranslation
definedlossesonacquisition
controlling
hedges adjustments
rightsinterests
translation benefit
definedhedges adjustments benefit plansrightsinterestsplans$ (231) $$ (231) $81,972 $ (14,750) $81,972 $ (14,750) $2,296 $
2,296 $

Total net
Total
netassetsassets7,704 $1,496,324
7,704 $1,496,324(68,380)(68,380)
200,435
200,435(2,241)(2,241)(759)(759)(46,296)(46,296)
(2)
(2)
-

$
$

611
611

(21,500)(21,500)(9,380)(9,380)

306
306

4,204
4,204

(45,426)(45,426)

611
611(21,500)(21,500)(9,380)(9,380)

306
306

4,204
4,204

37,31537,315

380 $
380 $

60,472 $ (24,139) $60,472 $ (24,139) $SANWA HOLDINGS CORPORATION

2,602 $ 11,907 $1,533,639
2,602 $ 11,907 $1,533,639

INTEGRATED REPORT 2020

59

A History ofValue Creation

Consolidated Statements of Cash Flows

Cash flows from operating activities:
Net profit before income taxes
Adjustments for:
Depreciation and amortization
Amortization of goodwill
Impairment loss
Equity in losses of non-consolidated subsidiaries and affiliates
Interest and dividend income
Interest expenses
Increase in allowance for doubtful accounts
Increase (decrease) in allowance for bonuses
Decrease in net defined benefit liability and asset
Increase (decrease) in notes and accounts receivable
Decrease in inventories
Decrease (increase) in notes and accounts payable
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities

Thousands of U.S.
dollars (Note 1)

2020

2019

2020

¥ 32,306¥ 30,046$ 299,130

9,301
2,260
536
148
(777)
751
355
3
(141)
2,039
(2,157)(1,631)(823)
42,173811(745)(9,937)32,301

8,049
1,449
599
(756)
637
27
(122)
(1,072)(3,101)(5,345)2,478(138)
32,752721(626)(8,575)24,271

86,12020,926
4,963
1,370(7,194)
6,954
3,287
28
(1,306)
18,880(19,972)(15,102)(7,620)390,491
7,509(6,898)(92,009)
299,083(1,619)4,635(8,419)(1,134)
1,255(12,367)(14,991)
42,917(77,954)(10,580)
(506)
253
(385)
(16,622)(1,519)(2,972)
1,930
1,130(13,677)(97,963)(4,685)2,343(3,565)(153,907)

Cash flows from financing activities:
Decrease (increase) in short-term loans, net
Proceeds from long-term loans
Repayments of long-term loans
Proceeds from issuance of bonds
Repayments of bonds
Purchase and disposal of treasury stock, net
Cash dividends paid
Cash dividends paid to non-controlling interests
Other, net
Net cash used in financing activities(1,498)
6,894(11,902)
10,000(1,500)(5,000)(7,385)(73)(1)(10,466)

1,414
5,091
(10,265)(550)(1)(6,974)(65)(11,349)(13,870)
63,833(110,204)
92,593(13,889)(46,296)(68,380)(676)(9)(96,907)

(183)
5,029
47,977(529)(1,285)49,263(1,694)46,565444,2311,610¥ 54,618¥ 47,977

14,907$ 505,722

The accompanying notes are an integral part of these statements.

60

Millions of yen

Cash flows from investing activities:
Payments for purchase of investments in securities
Proceeds from sales of investments in securities
Payments for purchase of tangible and intangible assets
Acquisition of investments in subsidiaries resulting
in change in scope of consolidation
Payments for advances
Proceeds from collections of advances
Other, net
Net cash used in investing activities

Effect of exchange rate changes on cash and cash equivalents
Net Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Changes in cash and cash equivalents by changing
the scope of consolidation
Cash and cash equivalents at end of year (Note 3)
SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Special Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

1. Basis of Presenting Consolidated Financial Statements

Sanwa Holdings Corporation and Subsidiaries
Consolidated
Statementsof Cash FlowsFor
the years ended March
31, 2020 and 2019

Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2020 and 2019

Strategy

Sanwa Holdings Corporation (the “Company”) and
its domestic subsidiaries maintain their accounts
and records in accordance with the provisions
set forth in the Japanese Corporate Act and the
Financial Instruments and Exchange Law and inaccordance 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 inaccordance with maily either 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 not correspond withthe aggregation of such account balances.
The accompanying consolidated financial
statements are prepared based on the consolidated
financial statements of the Company and its
subsidiaries (the “Group”), which were filed with the
Director of Kanto Local Finance Bureau as requiredby the Financial Instruments and Exchange Law.
The translation of the Japanese yen amounts into
U.S. dollars is included solely for the convenience ofthe reader, using the approximate exchange rate at
March 31, 2020, which was ¥108 to US$1.00.

2. Summary of Significant Accounting Policies(a) Scope of Consolidation
The scope of consolidation for the fiscal year ended
March 31, 2020 (FY2019) includes Sanwa Holdings
Corporation and its 61 consolidated subsidiaries.
Equity method accounting is applied to investments
in 4 non-consolidated subsidiaries and 1 affiliate at
March 31, 2020 (FY2019).
In the fiscal year ended March 31, 2020, Showa
Kensan Co., Ltd., Tajima Metalwork Co., Ltd., Sanwa
Electronics Engineering Co., Ltd., Hayashi Kogyo
Co., Ltd., Shanghai Baosteel-Sanwa Door Co., Ltd.,
Sanwa Shutter (H.K.) Ltd., An-Ho Metal IndustrialCo., Ltd., Vina-Sanwa Company Liability Ltd., andNovoferm Polska Sp. zo.o. were included in thescope of consolidation because their significanceincreased, and Suzuki Shutter Corporation, Robust
AB and four other companies were included in
the scope of consolidation because the Company
acquired shares of their stock. Glomot-Penot
Systems S.A.S., Alutomanu Industrie S.A.S., Lux
Overhead Door Corporation and WDC Holdings were
excluded from the scope of consolidation because
they were liquidated due to business restructuring,and Novoferm Europe Ltd. was excluded from thescope of consolidation due to a merger.
In the fiscal year ended March 31, 2020, Showa
Kensan Co., Ltd., Tajima Metalwork Co., Ltd.,
Sanwa Shutter (H.K.) Ltd., An-Ho Metal IndustrialCo., Ltd., Vina-Sanwa Company Liability Ltd., andShanghai Baosteel-Sanwa Door Co., Ltd. were
excluded from the scope of application of the equity
method and included in the scope of consolidation
because their significance increased. In addition,
PT. Sanwamas Metal Industry was included in thescope of application of the equity method because
its significance increased, while Suzuki Shutter(HK) Limited and Suzuki Shutter (Macau) Company

Limited were included in the scope of application of
the equity method because the Company acquired
shares of their stock.
In the fiscal year ended March 31, 2020, SCI Parc
Industriel Maurice Hollande was excluded from thescope of application of the equity method due to thesale of its shares.
(b) Foreign Currency Translation
All asset and liability accounts of foreign subsidiaries
and affiliates are translated into Japanese yen at theexchange 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 foreignsubsidiaries and affiliates are translated at historicalrates. The resulting translation differences aredebited or credited to foreign currency translation
adjustment or to non-controlling interests inshareholders' equity.
(c) Cash Equivalents
All highly liquid investments with original maturitiesof 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 BusinessAccounting Deliberation Council. In accordancewith 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 classification,
securities with a maturity of less than one year are

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

61

A History ofValue Creation

included in “Short-term investments” as current
assets.
Marketable securities classified as other securities
are carried at fair value with the unrealized gain andloss, net of applicable tax, reported in a separate
component of shareholders’ equity. Non-marketablesecurities classified as other securities are carriedat cost determined by 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 at cost, determined by the gross averagemethod (Carrying amount in the balance sheet is
calculated with consideration of write-downs due todecreased profitability). The costs of inventories held
by foreign consolidated subsidiaries are stated at thelower of cost or market value by the first-in, first-out
method or the moving average method.
(f) Property, Plant and Equipment (Excluding
Lease Assets)
Property, plant and equipment is stated at cost.
Depreciation is computed by the decliningbalance method over the estimated useful livesof assets, except that the straight-line method isapplied to buildings (other than fixtures attachedto the buildings) acquired subsequent to April 1,
1998 and fixtures attached to the buildings andstructures acquired subsequent to April 1, 2016. The
consolidated subsidiaries outside of Japan adopt thestraight-line method for depreciation.
Costs of maintenance, repairs and minor renewals
are charged to income in the year incurred, althoughmajor renewals and improvements are capitalized.
(g) Amortization of Goodwill
Amortization of goodwill is determined on a case bycase basis and is generally amortized over a period
not exceeding 20 years.
(h) Leased Assets
Leased assets related to finance lease transactions
that do not transfer ownership rights are amortizedunder the straight-line method based on the leaseterm as the useful life with residual value of zero.
(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 to periods of service for the calculation of theretirement benefit obligation.
Actuarial differences are amortized principallyover a 10-year period, which is within the averageremaining service period of employees, using the62

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020straight-line method from the fiscal year when the
difference was generated. Prior service cost of thedomestic consolidated companies is amortized when
the prior services cost is generated.
Prior service cost of certain foreign subsidiaries isamortized over a 10-year period.
Certain consolidated subsidiaries have calculated
their retirement benefit obligation and retirement
benefit expenses based on the amount 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 completioncan be reliably estimated, are recognized by thepercentage-of-completion method. To estimate
the progress of such construction projects, theGroup measures the percentage of completion bycomparing costs incurred to date with the mostrecent 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 Expenses andSoftwareResearch and development expenses are charged
to income when incurred.
Expenditure relating to software developed forinternal use is charged to income when incurred,
except if it contributes to the generation of income
or to the future cost savings. Such expenditures
capitalized as assets are amortized using thestraight-line method over their estimated useful livesof five years.
(l) Income Taxes
The provision for income taxes is computed basedon 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 andliabilities.
(m) Net Income per Share
The computation of basic net income (loss) per shareis based on the weighted-average number of sharesof common stock outstanding. The average numberof shares used in the computation was 222,852
thousand and 224,979 thousand for the fiscal years
ended March 31, 2020 and 2019, respectively.

StrategySpecial Feature

Cash dividends per share shown in the
consolidated statements of operations are theamounts applicable to the respective years.
(n) Derivative and Hedging Activities
The Group utilizes derivative transactions related toforeign currency exchange rates in order to reduce
their risk exposure arising from fluctuations in these
rates and prices, to reduce the cost of the funds
financed and to improve their return on invested
funds.
Derivative transactions currently utilized by theGroup include interest rate swap contracts andcurrency swap contracts.
Net assets or liabilities arising from derivativetransactions are measured at fair value, withunrealized 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 or asset until gain or loss
relating to the hedge object is recognized.
In addition, certain forward exchange contracts
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 orpayables covered by forward exchange contracts tobe translated at such contract rates.
The Group has established a control environment,
which includes policies and procedures for risk
assessment and for the approval, reporting andmonitoring of derivative transactions. The Group
does not engage in derivative transactions for
trading purposes. The Group is exposed to certain
market risks arising from derivative transactions. 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-performance by any of thesecounterparties, all of whom are financial institutions
with high credit ratings.
The Group evaluates hedge effectiveness bycomparing the cumulative changes in cash flows or
the changes in fair value of the hedged items withthe corresponding changes in the hedging derivative
instruments.
The assessment of hedging effectivenessregarding forward exchange contracts, which areaccounted for under the above allocation method
and special method, is omitted.
(o) Other Significant Matters for Preparation ofConsolidated Financial Statements
Application of Tax Effect Accounting for theTransition from the Consolidated Taxation System to
the Group Tax Sharing System
With regard to the items that were reviewed in
the non-consolidated tax return filing system in line

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Datawith the transition from the Consolidated Taxation
System to the Group Tax Sharing System establishedin the “Act for Partial Amendment of the Income Tax
Act, etc. ” (Act No. 8 of 2020), the Company andits domestic consolidated subsidiaries do not apply
paragraph 44 of the Implementation Guidance on Tax
Effect Accounting (ASBJ Guidance No. 28, issued on
February 16, 2018), in accordance with the treatment
in paragraph 3 of the “Practical Solution on theTreatment of Tax Effect Accounting for the Transition
from the Consolidated Taxation System to the GroupTax Sharing System” (PITF No. 39, issued on March
31, 2020), and the amounts of deferred tax assets
and deferred tax liabilities are based on the provisionsof the tax law prior to the amendment.
(p) Reclassifications
Certain reclassifications of the financial statements
for the fiscal year ended March 31, 2019 have been
made to conform to the presentation for the fiscal
year ended March 31, 2020.
(q) Changes in Accounting Policies
Application of IFRS 16 (Leases)
IFRS 16 (Leases) is applied from the beginningof the fiscal year ended March 31, 2020 at theCompany’s overseas subsidiaries that have adopted
International Financial Reporting Standards (IFRS).
As a transitional measure upon the application of
IFRS 16, these subsidiaries use an approach whereby
the cumulative effect from application of this standard
is recognized at the date of initial application. As
a result, in line with application of this accounting
standard, right-of-use assets under property, plantand equipment in the consolidated balance sheets asof March 31, 2020 increased ¥4,163 million ($38,546
thousand), lease obligations under current debt
increased ¥731 million ($6,769 thousand), and leaseobligations under long-term debt increased ¥2,784
million ($25,778 thousand).
The effect of this change on profit and loss for the
fiscal year ended March 31, 2020 is immaterial.
(r) Additional Information
Accounting Estimates
In preparing the consolidated financial statements
for the fiscal year ended March 31, 2020, theCompany examined the impact of the COVID-19
pandemic, which was generally expected to last until
the end of the year, in setting accounting estimatesand assumptions, but as for its judgments depending
on how the situation changes in the future, theCompany believes the pandemic may potentiallyhave a material impact on the consolidated financial
statements for the fiscal year ending March 31, 2021
and after.
(s) Accounting Standards Issued but Not Yet
Effective

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

63

A History ofValue Creation

・Accounting Standard for Revenue Recognition(ASBJ Statement No. 29, issued on March 31, 2020)
・Implementation Guidance on Accounting Standard
for Revenue Recognition (ASBJ Guidance No. 30,
issued on March 31, 2020)
・Implementation Guidance on Disclosures about
Fair Value of Financial Instruments (ASBJ GuidanceNo. 19, issued on March 31, 2020)(1) Overview
The International Accounting Standards Board(IASB) and the U.S. Financial Accounting Standards
Board (FASB) together developed a comprehensive
accounting standard for revenue recognition, andreleased the standard for Revenue from Contracts
with Customers (IASB’s IFRS 15 and FASB’s Topic
606) in May 2014. IFRS 15 was applied from fiscal
years beginning on or after January 1, 2018, andTopic 606 was applied for fiscal years beginning
after December 15, 2017. Accordingly, the ASBJ’s
comprehensive accounting standard for revenue
recognition was developed, and was released alongwith implementation guidance.
The ASBJ’s basic policy in its development of theaccounting standard for revenue recognition was
to establish a new standard incorporating the basic
principles of IFRS 15 as the starting point to allow forcomparability of financial statements, which is one of
the benefits of ensuring consistency with IFRS 15,
and to add alternative accounting treatments for any
items requiring consideration due to conventional
practices in Japan, provided that such treatments do
not impair comparability.
(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 AccountingStandard
The amount of the effect was under review when the
consolidated financial statements were prepared.
・Accounting Standard for Fair Value Measurement(ASBJ Statement No. 30, issued on July 4, 2019)
・Accounting Standard for Measurement of
Inventories (ASBJ Statement No. 9, issued on July 4,
2019)・Accounting Standard for Financial Instruments(ASBJ Statement No. 10, issued on July 4, 2019)
・Implementation Guidance on Accounting Standard
for Fair Value Measurement (ASBJ Guidance No. 31,
issued on July 4, 2019)(1) Overview
The International Accounting Standards Board(IASB) and the U.S. Financial Accounting Standards
Board (FASB) established similar detailed guidanceon fair value measurement (IFRS 13, “Fair Value
Measurement” and FASB Accounting Standards
Codification Topic 820, “Fair Value Measurement.”)

64

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Accordingly, the ASBJ made efforts to ensure theconsistency of Japanese GAAP with international
accounting standards regarding guidance anddisclosure of fair value, primarily for financial
instruments, and the Accounting Standard for Fair
Value Measurement was released.
The ASBJ’s basic policy in its development of theaccounting standard for fair value measurement was
to adopt essentially all of the provisions of IFRS 13
to improve the comparability of financial statements
between companies in Japan and overseas byusing uniform measurement methods, and to add
alternative accounting treatments for any items
requiring consideration due to conventional practices
in Japan, provided that such treatments do notsignificantly impair comparability.
(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 AccountingStandard
The amount of the effect was under review when the
consolidated financial statements were prepared.

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

2020)(1) Overview
A recommendation was made to consider enhancing
the note regarding “accounting principles andprocedures used in cases where the provisions of
the relevant accounting standards are unclear.” In
response, the ASBJ made the necessary revisions
and issued the Accounting Standard for Accounting
Policy Disclosures, Accounting Changes and Error
Corrections.
When enhancing the note on “accounting
principles and procedures used in cases where theprovisions of the relevant accounting standards
are unclear,” the ASBJ decided to take over theprovisions of the explanatory notes on corporate
accounting principles (notes 1-2) in order to avoid
affecting conventional practices in cases where theprovisions of the relevant accounting standards areunclear.
(2) Planned Date of Application
To be applied from the beginning of the fiscal year
ending March 31, 2021

・Accounting Standard for Disclosure of Accounting
Estimates (ASBJ Statement No. 31, issued on March
31, 2020)(1) Overview
Paragraph 125 of the International AccountingStandards (IAS) 1, “Presentation of Financial
Statements” (“IAS 1”), released in 2003 by theInternational Accounting Standards Board (IASB),
requires disclosure of sources of estimation
uncertainty. There have been requests to consider
requiring disclosure of sources of estimation
uncertainty under Japanese GAAP as information in
the notes to financial statements, as this information
is of value to users of financial statements. In
response, the ASBJ developed and issued the
Accounting Standard for Disclosure of Accounting
Estimates (hereinafter, “the Standard”).
The ASBJ’s basic policy in its development of theStandard was, rather than to expand individual notes,
to state the general principle (disclosure objectives),
and then to allow the company to decide the specificinformation to be disclosed in light of the disclosure
objectives. In its development, the ASBJ referred tothe provisions of paragraph 125 of IAS 1.

3. Cash and Deposits
The balances of cash and deposits reflected in the accompanying consolidated balance sheets at March
31, 2020 and 2019 were reconciled to the balances of cash and cash equivalents in the accompanying
consolidated statements of cash flows for the years ended March 31, 2020 and 2019 as follows:
Millions of yen

Cash and deposits
Securities
Time deposits with maturities of more than three months
Debt securities with maturities of more than three months
Cash and cash equivalents at end of period2020¥ 47,1279,600(10)(2,099)¥ 54,618

2019¥ 43,007
8,013(30)(3,013)¥ 47,977

Thousands of
U.S. dollars

2020$ 436,361
88,889(93)(19,435)$ 505,722(2) Planned Date of Application
To be applied from the beginning of the fiscal year
ending March 31, 2021
・Accounting Standard for Accounting Policy
Disclosures, Accounting Changes and Error
Corrections (ASBJ Statement No. 24, March 31,

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

65

A History ofValue Creation

4. Short-term Investments, Investments in Securities and Investments in Nonconsolidated Subsidiaries and Affiliates

2020
Carrying
value

Securities whose carrying
value exceeds theiracquistion costs:

Acquisition Unrealized
costs
gain (loss)

Carrying
value

Carrying
value

Acquisition
costs

ESG Materiality
Initiatives

Millions of yen

2020¥ 10,730
25,37225,814¥ 61,917

Finished goods
Work in process
Raw materials and supplies

2020

Acquisition Unrealized
costs
gain (loss)

ReliableManagement

Corporate Data

Unrealized
gain (loss)2019¥ 9,640
23,96522,869¥ 56,475

Thousands of
U.S. dollars

2020$ 99,352
234,926
239,019$ 573,306

6. Other Intangible Assets
Other intangible assets at March 31, 2020 and 2019 comprised the following:¥ 4,949¥ 2,628

Bonds and debentures

2,860

2,854

6

Other

3,504

3,503

0

Subtotal¥ 11,314¥ 8,986¥ 4,994¥ 6,954 ¥ (1,959)

Equity securities¥ 2,321 ¥ 10,548¥ 7,028¥ 3,519

9,186

9,154

32

3,006

3,005

0

¥ 2,327 ¥ 22,741 ¥ 19,188$ 45,824

26,48132,444¥ 3,553 $ 104,759$ 24,333

26,42632,435$ 83,204$ 21,491

56

Equity securities¥ 1,934¥ 2,208¥ (274)

Bonds and debentures

8,721

8,826

(104)

5,384

5,400

(15)

Other

4,912

5,006

(94)

2,924

3,004

(79)

Subtotal¥ 18,628 ¥ 20,787 ¥ (2,158) ¥ 10,242 ¥ 10,613

Total¥ 29,943 ¥ 29,774¥ 168 ¥ 32,984 ¥ 29,801$ 46,24180,750$ 21,546(963)

46,352(870)¥ 3,182 $ 277,250 $ 275,685$ 1,556

45,481¥ (370) $ 172,481 $ 192,472 $ (19,981)

Unlisted equity securities (carrying value for the years ended March 31, 2020 and 2019 amounted to ¥471 million ($4,361
thousand) and ¥259 million, respectively) for which it is extremely difficult to determine the fair value are not included in theabove table.
Information regarding sales of other securities for the years ended March 31, 2020 and 2019 is summarized as follows:

Millions of yen

Proceeds from sales
Gross realized gain

2019
¥ 85,555
154

Thousands of
U.S. dollars

2020$ 138,046
537

The Group has recognized loss on impairment of marketable securities classified as other securities in the amount of ¥0 million
for the year ended March 31, 2019.
At March 31, 2020 and 2019, investments in non-consolidated subsidiaries and affiliates were as follows:

Millions of yen

2020¥ 4,345321¥ 4,666

Equity securities
Advances

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 20202020
¥ 5,0218,475
4,531¥ 18,028

TrademarkSoftwareOther$ 64,389 $ (18,139)
81,7222020¥ 14,909
58

Millions of yen

0

Securities whose carrying
value does not exceed theiracquistion costs:

66

Reliable Business
Performance

Inventories at March 31, 2020 and 2019 comprised the following:Thousands of U.S. dollars

2019Special Feature

5. Inventories

At March 31, 2020 and 2019, other securities, which are included in short-term investments and investment insecurities, were as follows:

Millions of yen

Strategy

2019¥ 11,719
341¥ 12,060

Thousands of U.S.
dollars2020$ 40,231
2,972$ 43,2042019¥ 5,071
8,216
3,944¥ 17,231

Thousands of
U.S. dollars

2020$ 46,491
78,472
41,954$ 166,926

7. Short-term Debt, Long-term Debt and Lease Obligations

Short-term debt, long-term debt and ease obligations at March 31, 2020 and 2019 consisted of the following:Thousands of
U.S. dollars

Millions of yen

2020

Short-term debt (unsecured)
Current portion of long-term debt
0.100% unsecured bonds, due 2019
Current portion of lease obligations
Short-term debt
0.494% unsecured bonds, due 2022
0.370% unsecured bonds, due 2026
0.290% unsecured bonds, due 2029
Unsecured loans from banks and other financial institutions
maturing 2021 - 2025 with average interest ratefrom 0.30% to 3.20%
Lease obligations
Long-term debt
Less, current portionLong-term debt

2019

2020

¥ 6,187
5,747
731¥ 12,666
20,00010,00010,000¥ 6,845
12,0451,500¥ 20,390
20,00010,000-$ 57,287
53,213
6,769$ 117,278
185,185
92,59392,593

17,542
3,515¥ 61,058(6,478)¥ 54,579

22,872¥ 52,873(12,045)¥ 40,826

162,426
32,546$ 565,352(59,981)$ 505,361

Aggregate annual maturities of long-term debt and lease obligations at March 31, 2020 were as follows:

Years ending March 31
2022
2023
2024 and thereafter

Millions of yen

Long-term debt

¥ 20,950
9,645
21,200¥ 51,795

Lease obligation

¥ 491
328
1,964
¥ 2,784

Thousands of U.S. dollars

Long-term debt

$ 193,981
89,306196,296$ 479,583

SANWA HOLDINGS CORPORATION

Lease obligation$ 4,546
3,037
18,185$ 25,778

INTEGRATED REPORT 2020

67

A History ofValue Creation

8. Retirement and Severance Benefits
The Company and its consolidated subsidiaries havefunded and unfunded defined benefit pension plansand 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 ofservice. In the lump-sum payment plans, a lump sum
is paid as a retirement benefit based on salay andyears of service.

For the defined benefit pension plans andlump-sum payment plans of certain consolidated
subsidiaries, the simplified accounting method isused to calculate net defined benefit liability andretirement benefit expense.
Information on retirement benefits for the fiscal
years ended March 31, 2020 and 2019 was asfollows:

Millions of yen

2020¥ 41,452
873
1,540
499
2,407
(3,209)(308)¥ 43,2552019¥ 43,723
1,504
494
(671)
(2,831)(767)¥ 41,452

Millions of yen

INTEGRATED REPORT 2020

Plan assets

Unfunded retirement benefit obligations

Net defined benefit asset

Thousands of U.S.
dollars2020$ 383,815
8,083
14,2594,620
22,287(29,713)(2,852)$ 400,509

Thousands of U.S.
dollars2020¥ 36,166
1,117
131

2019
¥ 37,090
1,161(1,383)

1,108

1,533

10,259(2,367)(113)¥ 36,042(2,001)(233)¥ 36,166(21,917)(1,046)$ 333,722

Millions of yen

SANWA HOLDINGS CORPORATION

Funded retirement benefit obligations

Net defined benefit liability

2020$ 334,870
10,343
1,213(3) Changes in Net Defined Benefit Liability (only application of simplified accounting method)

68

ReliableManagement

ESG Materiality
Initiatives

Millions of yen

2020
¥ 527
217
156
(51)
(42)
46
¥ 853

Net amount of liability and asset on consolidated balance sheets

2019
¥ 517
90
(45)
(36)
¥ 527

Thousands of
U.S. dollars

2020$ 4,880
2,009
1,444
(472)
(389)
426
$ 7,8982020¥ 37,284(36,597)
686
7,380
8,067

2019
¥ 36,169(36,731)
(562)
6,375
5,812

13,688(5,621)¥ 8,067

11,901(6,088)¥ 5,812(5) Retirement Benefit Expenses
Millions of yen

2020¥ 1,540499(1,117)809
156¥ 1,888

Service cost

Interest cost

Expected return on plan assets

Amortization of actuarial differences(2) Changes in Plan Assets (excludes application of simplified accounting method)

Beginning net defined benefit liability
Increase due to new consolidation
Retirement benefits expense
Retirement benefits paid
Contribution to plan
Other
Ending net defined benefit liability

Reliable Business
Performance

Net amount of liability and asset on consolidated balance sheets(1) Changes in Retirement Benefit Obligations (excludes application of simplified accounting method)

Beginning balance of plan assets
Expected return on plan assets
Actual differences arising during the year
Contribution made by the Company and consolidated
subsidiaries
Retirement benefits paid
Other
Ending balance of plan assets

Special Feature

Corporate Data

(4) Reconciliation of Retirement Benefit Obligations and Plan Assets with Net Defined Benefit Liabilities andAssets on the Consolidated Balance Sheets (includes application of simplified accounting method)

1. Defined Benefit Pension Plan

Beginning balance of retirement benefit obligations
Increase due to new consolidation
Service cost
Interest cost
Actual differences arising during the year
Retirement benefits paid
Other
Ending balance of retirement benefit obligations

Strategy

Retirement benefit expenses using the simplified method

Retirement benefit expenses for defined benefit pension plans2019¥ 1,504
494(1,161)669
90¥ 1,598

Thousands of
U.S. dollars

2020$ 345,222(338,861)
6,352
68,33374,694
126,741(52,046)$ 74,694

Thousands of
U.S. dollars

2020$ 14,259
4,620(10,343)
7,491
1,444
$ 17,481(6) Remeasurements of Defined Benefit Plans
Breakdown of remeasurements of defined benefit plans (before deduction of tax effects)
Millions of yen

2020¥ (1,423)¥ (1,423)

Actuarial differences
Total

2019
¥ 47
¥ 47

Thousands of
U.S. dollars

2020$ (13,176)$ (13,176)(7) Accumulated Remeasurements of Defined Benefit Plans
Breakdown of accumulated remeasurements of defined benefit plans (before deduction of tax effects)
Millions of yen

Unrecognized actuarial differences
Total

2020
¥ (3,593)¥ (3,593)2019¥ (2,169)¥ (2,169)

SANWA HOLDINGS CORPORATION

Thousands of
U.S. dollars

2020$ (33,269)$ (33,269)

INTEGRATED REPORT 2020

69

A History ofValue Creation

StrategySpecial Feature

ReliableManagement

ESG Materiality
Initiatives(8) Plan Assets

9. Leases

a. Breakdown of pension assets

The following pro forma amounts represent the acquisition costs, accumulated depreciation and net bookvalue of the leased assets under finance lease contracts, commencing on or before March 31, 2008 that
do not transfer ownership to the lessee at March 31, 2017 and 2016, which would have been reflected in
the accompanying consolidated balance sheets if finance lease accounting had been applied to the financeleases currently accounted for as operating leases:
Obligations under non-cancelable operating leases as of March 31, 2020 and 2019 were as follows:

2020
51%
28%
0%
17%
4%
100%

Bonds
StocksCash and deposits
General life insurance accounts
Other
Total

2019
52%
28%
0%
16%
4%
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
2020(0.2%)-4.4%
0.2%-6.8%
1.5%-6.1%

Discount rate
Expected rate of return on plan assets
Expected rate of increase in compensation level

2019(0.2%)-4.4%
1.0%-6.8%
1.5%-6.1%

2. Defined Contribution Pension Plans
Contributions to defined contribution pension plan
Millions of yen

Contributions to defined contribution pension plan2020
¥ 1,028

2019
¥ 974

Thousands of
U.S. dollars

2020$ 9,519

Due within one year
Due after one year

INTEGRATED REPORT 20202019
¥ 1,289
2,959¥ 4,2482020$ 11,130
22,630$ 33,769

Note: Certain overseas subsidiaries adopted IFRS 16 (Leases) as of the fiscal year ended March 31, 2020. Therefore, operatingleases for these subsidiaries are included only in the figures for the fiscal year ended March 31, 2019.

10. 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 bondissuance.
The Group manages temporary fund surpluses
through financial assets that have high levels ofsafety. 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 purpose of capital expenditure andacquisitions.
The Group limits the use of derivatives to thevolume of long-term debt and bonds and actual
requirements based on established internal
control rules, and does not engage in speculativetransactions.

(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers
or counterparties may default)

SANWA HOLDINGS CORPORATION

2020¥ 1,2022,444¥ 3,647

Corporate Data

Thousands of
U.S. dollars

Millions of yen(2) Types of financial instruments and related risk
Trade receivables - notes receivable and accounts
receivable - electronically recorded monetary claims- are exposed to credit risk in relation to customers.
The Group holds securities and investments insecurities, which are mainly issued by companies
who have business relationships with the Group, andthese securities are exposed to the risk of fluctuationin market prices. Trade payables - notes payable andaccounts payable - mostly have payment due dates
within one year.
Bank loans and bonds are taken out principally forthe purpose of working capital, capital expenditure
and acquisitions, which are exposed to liquidity risk
and interest-rate risk.
Currency swap is almost always used as a hedge
as a type of derivative transaction.

70

Reliable Business
Performance

In accordance with the internal policies for managing
credit risk of the Group, the Group monitors creditworthiness of its main customers periodically, andmonitors due dates and outstanding balances bycustomer.
To minimize credit risk when entering into
derivative transactions, counterparties are limited tofinancial institutions with high ratings.
(b) Monitoring of market risks
Derivatives mainly include currency swaps, which
are used to manage exposure to market risks fromchanges in foreign currency exchange rates ofreceivables and payables.
Investments in securities, primarily the equity
securities of corporations with which the Group does
business, are exposed to the risk of fluctuations
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 derivativetransactions within the limits of established internal
rules and regulations, and reduces credit risk bylimiting counterparties to highly creditworthy financial
institutions.
(c) Monitoring of liquidity risk for financing (therisk that the Companies may not be able to meet
obligations on the scheduled due dates)(4) Supplementary explanation of items relating
to the market value of financial instruments
The Group manages the liquidity risk mainly throughthe cash-flow plans, which are prepared by thefinancial department.
In order to achieve more efficient and flexible
financing, the Group contracts line-of-credit
agreements with certain financial institutions.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

71

A History ofValue Creation

2. Fair Value of Financial Instruments
Amounts recognized in the consolidated balance sheets, fair values and the differences between them on
March 31, 2020 and 2019 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(1) Cash and deposits(2) Notes and accounts receivable, trade(3) Electronically recorded monetary claims(4) Securities and investments in securities
Total assets(1) Notes and accounts payable, trade(2) Short-term debt
(3) Long-term debt
Total liabilities

Book value¥ 47,127
88,441
9,283
29,943¥ 174,795(54,407)(11,934)(51,795)¥ (118,137)

2020
Fair value¥ 47,127
88,441
9,283
29,943¥ 174,795(54,407)(11,940)(51,843)¥ (118,191)

Note: Lease obligations are excluded from Short-term debt and Long-term debt in the amounts of ¥731 million($6,769 thousand) and ¥2,784 million ($25,788 thousand), respectively.

Difference¥ ¥ (5)(47)¥ (53)

Millions of yen(1) Cash and deposits(2) Notes and accounts receivable, trade(3) Electronically recorded monetary claims(4) Securities and investments in securities
Total assets(1) Notes and accounts payable, trade(2) Short-term debt
(3) Long-term debt
Total liabilities

Book value¥ 43,007
82,563
9,526
32,984¥ 168,082(52,401)(20,390)(40,826)¥ (113,618)

2019
Fair value¥ 43,007
82,563
9,526
32,984¥ 168,082(52,401)(20,401)(41,197)¥ (114,000)

Difference
¥
¥
(10)
(371)
¥ (381)Strategy(1) Cash and deposits(2) Notes and accounts receivable, trade(3) Electronically recorded monetary claims(4) Securities and investments in securities
Total assets(1) Notes and accounts payable, trade(2) Short-term debt
(3) Long-term debt
Total liabilities

72

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

Book value$ 436,361
818,898
85,954
277,250$ 1,618,472(503,769)(110,500)(479,583)$ (1,093,861)

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Assets(1) Cash and deposits and (2) Notes and accounts
receivable, trade and (3) Electronically recordedmonetary claims
Since these items are settled in a short period, theircarrying value approximates fair value.
(4) Securities and investments in securities
The fair value of equity securities is based on quoted
market prices. The fair value of debt securities isbased 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, please refer to Note 4. in the notes to theconsolidated financial statements.
Liabilities(1) Notes and accounts payable, trade and (2) Shortterm debt
Since these items are settled in a short period oftime, their carrying value approximates fair value.
(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 is based on theassumed interest rate if a similar new loan wasentered into.

Because long-term debt payable with variableinterest rates is based on the condition that interest
rates are revised periodically and their fair values arealmost the same as their book values, the relevantbook values are used.
A specially treated interest rate swap is accounted
for as an integral part of long-term debt payable, orthe subject of hedging, so that the fair value of theswap is stated by being included in the fair value of
long-term debt payable.
(Bonds)
The fair value of bonds issued by the Company isbased on market prices when market prices arereadily available. The fair value of bonds withoutmarket prices is measured as the present value,calculated by discounting the total amount ofprincipal and interest at a rate determined by taking
into account the remaining maturity of each bond andthe current credit risk.
Derivative transactions
For information on derivative transactions, pleaserefer to Note 11. “Derivative transactions” in thenotes 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

Difference
$
$
(46)
(435)
$
(491)

Corporate Data

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

Thousands of U.S. dollars

2020
Fair value$ 436,361
818,898
85,954
277,250$ 1,618,472(503,769)(110,556)(480,028)$ (1,094,361)

Special Feature

Investments in non-consolidated
subsidiaries and affiliates
Other securities
Unlisted equity securities

2020
2019
Book value

2020
Book value¥ 4,345¥ 11,719$ 40,231

471

259

4,361

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.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

73

A History ofValue Creation

Note 3: Planned redemption amounts after the balance sheet date for monetary assets and investment securities with monetary
assets and maturity dates.

StrategySpecial Feature

Cash and deposits
Notes and accounts receivable, trade
Electronically recorded monetary claims
Securities and investments in securities
Other securities (Bonds)
Other securities (Others)
Total

2,100
7,500
¥ 154,452

2019
Within 1 year
Over 1 year
¥ 43,007
82,563
9,526
-

9,580
1,000
¥ 10,580

3,012
5,000
¥ 143,111

11,557920¥ 12,478

Thousands of U.S. dollars

Cash and deposits
Notes and accounts receivable, trade
Electronically recorded monetary claims
Securities and investments in securities
Other securities (Bonds)
Other securities (Others)
Total

19,44469,444$ 1,430,111

Currency swap contracts:

ESG Materiality
Initiatives

Corporate Data

Contract
amounts

2020
Over 1
year

¥

74

¥

¥ 1,634¥

Millions of yen

Fair value

Contract
amounts

2019
Over 1
year

-

¥ 59

¥ 294

¥ 76

¥ (36)¥-¥ (16)¥ 1,412¥-¥ (21)

¥

-

¥ (0)

¥ 142

¥

-

¥ (2)

Fair value

Classification: Deferral hedge accounting
Hedged item: Long-term debt interest
Receive in euro, pay dollar

Foreign currency forward contracts:
Classification: Special method

Hedged item: Short-term receivables
Receive in cyn, pay yen

Foreign currency forward contracts:

2020
Within 1 year
Over 1 year
$ 436,361
818,898
85,954-

ReliableManagement

Derivative transactions to which hedge accounting is applied at March 31, 2020 and 2019 are as follows:

Millions of yen

2020
Within 1 year
Over 1 year
¥ 47,127
88,441
9,283-

Reliable Business
Performance

Classification: Special method

Hedged item: Short-term receivables
Receive in yen, pay cyn

140

Thousands of U.S. dollars

88,704
9,259$ 97,963

Currency swap contracts:

For information in respect to the redemption schedule of bonds and long-term loans, please refer to Note 7. "Short-term Debt,
Long-term Debt and Lease obligations" in the notes to the consolidated financial statements.

2020
Over 1year

Market
value

$ -

$ 546

$ 15,130$-$ (148)$ 1,296$-$Contract
amounts

Classification: Deferral hedge accounting
Hedged item: Long-term debt interest
Receive in euro, pay dollar

Foreign currency forward contracts:$

685

Classification: Special method

Hedged item: Short-term receivables
Receive in cyn, pay yen

11. Derivative Transactions
Derivative transactions to which hedge accounting is not applied at March 31, 2020 and 2019 are as follows:

Contract
amounts

Currency swap contracts:

Over-the-counter transactions
Receive in dollar, pay in euro

2020
Fair value¥ 6,040

Millions of yen

Unrealized
gain (loss)¥ (96)¥ (96)

Thousands of U.S. dollars

Contract
amounts

Currency swap contracts:

Over-the-counter transactions
Receive in dollar, pay in euro74

SANWA HOLDINGS CORPORATION

2020

Fair value$ 55,926

INTEGRATED REPORT 2020

$ (889)Unrealized
gain (loss)$ (889)Contract
amounts¥ 11,709

2019
Fair value¥ 172

Unrealized
gain (loss)¥ 172

Foreign currency forward contracts:
Classification: Special method

Hedged item: Short-term receivables
Receive in yen, pay cyn(1)

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

12. Shareholders' Equity
The Law provides that an amount equal to 10% of
the amount to be disbursed as distributions of capitalsurplus (other than the capital reserve) and retained
earnings (other than the legal reserve) be transferredto the capital reserve and the legal reserve,
respectively, until the sum of the capital reserve andthe legal reserve equals 25% of the capital stock
account. Such distributions can be made at any timeby 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, 2020 and 2019.
Movements in common stock and treasury stock
for the years ended March 31, 2020 and 2019 weresummarized as follows:

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

75

A History ofValue Creation

Strategy

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

1. Amount of Expense Appropriation and Accounting Name during the Fiscal Years Ended March 31,
2020 and 2019

Thosands of Shares
Balance at
beginning of
year

2020

Increase

235,000

Shares issued: Common Stock

Balance at endof yearDecrease-

10,020Treasury stock:Treasury Stock

4,000

4,133

231,000

4,000

10,154The decrease in common stock of 4,000 thousand shares is due to cancelation of 4,000 thousand shares by the
resolution of the Board of Directors. The increase in treasury stock of 4,133 thousand shares is due to purchasesof 4,133 thousand shares by the resolution on board meeting and purchases of 0 thousand shares of less than one
voting unit and the decrease in treasury stock of 4,000 thousand shares is due to cancelation of 4,000 thousand
shares by the resolution of the Board of Directors, sales of 0 thousand shares at the requests of shareholders who
own less than one voting unit.

Equity deal expense (included in “Selling, general and administrative expenses”) was ¥33 million ($305 thousand) and¥34 million for the fiscal years ended March 31, 2020 and 2019 respectively.

2. The Contents, Scale, and Change in Stock Options(1) The contents of stock options
Company
Resolution date
Grantee classification and the number
Type and number of shares
Date of grant
Exercise period of rights

Thosands of Shares
Balance at
beginning ofyear

Shares issued: Common Stock

2019

Increase

235,000

Treasury stock:Treasury Stock

Balance at endof yearDecrease-

10,019-0-

235,000

10,020The increase in treasury stock is purchases of 0 thousand shares of less than one voting unit.

2020

Dividends paid in fiscal year ended March 31, 2020
Resolution

Dividends per share
Record date

Shareholders' meeting on June 26, 2019
Board of Directors on October 31, 2019

March 31,2019

September 30,
2019

Effective dateJune 27,2019

December 4,
2019

Dividends paid after March 31, 2020
Resolution

March 31,2020

Effective dateJune 25,
2020

Resolution
Shareholders' meeting on June 27, 2018
Board of Directors on October 31, 2018
Dividends paid after March 31, 2019
Resolution

Shareholders' meeting on June 26, 201933,324

17.0

0.16

3,785

35,046

U.S.
dollars

17.0

0.16

Dividends per share
Record date
March 31,2018

Effective dateJune 28,2018

September 30,
2018

December 5,
2018

Record date

Effective date

March 31,2019

June 27,
2019

Thousands of
U.S. dollars

3,599

2019

Dividends paid in fiscal year ended March 31, 2019

Millionsof yen0.15

YenType and number of shares
Date of grant
Exercise period of rights

Type and number of shares

Total dividends

16.0

Dividends per share
Record date

Shareholders' meeting on June 24, 2020U.S.
dollars

Yen

Company
Resolution date
Grantee classification and the number

Company
Resolution date
Grantee classification and the number

2. Dividend Information

Yen

Total dividends

Millionsof yenThousands of
U.S. dollars

3,754

34,759Total dividends
Millions of yen

15.0

3,374

16.0

3,599

Dividends per share
Yen

16.0

Total dividends

Date of grant
Exercise period of rights

Company
Resolution date
Grantee classification and the number
Type and number of shares
Date of grant
Exercise period of rights

Company
Resolution date
Grantee classification and the number
Type and number of shares
Date of grant
Exercise period of rights

Millions of yen

3,599

Company
Resolution date
Grantee classification and the number
Type and number of shares
Date of grant
Exercise period of rights

SANWA HOLDINGS CORPORATION

Reliable Business
Performance

13. Stock Options

1. Stock Information

76

Special Feature

INTEGRATED REPORT 2020

June 2008 stock option
Sanwa Holdings Corporation
June 26, 2008
1 director
Common stock of the Company:
49,000 shares
July 15, 2008
For 30 years from grant date(from July 16, 2008 to July 15, 2038)

June 2009 stock option
Sanwa Holdings Corporation
June 30, 2009
1 director
Common stock of the Company:
52,000 shares
July 15, 2009
For 30 years from grant date(from July 16, 2009 to July 15, 2039)

June 2010 stock option
Sanwa Holdings Corporation
June 30, 2010
1 director
Common stock of the Company:
61,000 shares
July 15, 2010
For 30 years from grant date(from July 16, 2010 to July 15, 2040)

June 2011 stock option
Sanwa Holdings Corporation
June 29, 2011
1 director
Common stock of the Company:
63,000 shares
July 14, 2011
For 30 years from grant date(from July 15, 2011 to July 14, 2041)

June 2012 stock option
Sanwa Holdings Corporation
June 28, 2012
3 directors
Common stock of the Company:
90,000 shares
July 13, 2012
For 30 years from grant date(from July 14, 2012 to July 13, 2042)

June 2013 stock option
Sanwa Holdings Corporation
June 26, 2013
3 directors
Common stock of the Company:
49,000 shares
July 12, 2013
For 30 years from grant date(from July 13, 2013 to July 12, 2043)

June 2014 stock option
Sanwa Holdings Corporation
June 26, 2014
4 directors
Common stock of the Company:
40,000 shares
July 14, 2014
For 30 years from grant date(from July 15, 2014 to July 14, 2044)

June 2015 stock option
Sanwa Holdings Corporation
June 26, 2015
4 directors
Common stock of the Company:
26,900 shares
July 13, 2015
For 30 years from grant date(from July 14, 2015 to July 13, 2045)

June 2016 stock option
Sanwa Holdings Corporation
June 28, 2016
4 directors
Common stock of the Company:
38,400 shares
July 14, 2016
For 30 years from grant date(from July 15, 2016 to July 14, 2046)

June 2017 stock option
Sanwa Holdings Corporation
June 28, 2017
4 directors
Common stock of the Company:
35,700 shares
July 14, 2017
For 30 years from grant date(from July 15, 2017 to July 14, 2047)

June 2018 stock option
Sanwa Holdings Corporation
June 27, 2018
4 directors
Common stock of the Company:
36,800 shares
July 13, 2018
For 30 years from grant date(from July 14, 2018 to July 13, 2048)

June 2019 stock option
Sanwa Holdings Corporation
June 26, 20194 directors
Common stock of the Company:
37,600 shares
July 12, 2019
For 30 years from grant date(from July 13, 2019 to July 12, 2049)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

77

A History ofValue Creation(2) Scale, and change in stock options(2)-1 Number of stock options
June 2008 June 2009
stock
stock
optionoptionJune 2011 June 2012 June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019
stock
stock
stock
stock
stock
stock
stock
stock
stock
optionoptionoptionoptionoptionoptionoptionoptionoptionBefore vested

Beginning of
periodGrantedForfeited
VestedUnvested
After vested

Beginning of
periodVestedExercised
ExpiredExercisable

-

-

-

-

-

-

-

-

-

- 36,800

-

-

-

-

-

-

-

-

-

-

- 37,600

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- 36,800

-

-

-

-

-

-

-

-

-

-

-

49,000 52,000 61,000 63,000 90,000 49,000 40,000 26,900 38,400 35,700

-

-

-

-

-

-

-

-

-

-

-

-

- 36,800

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

49,000 52,000 61,000 63,000 90,000 49,000 40,000 26,900 38,400 35,700 36,800-

June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
optionoptionoptionoptionoptionoptionoptionoptionoptionoptionoptionoption

1

1

1

1

1

1

1

1

1

1

1

1

-

-

-

-

-

-

-

-

-

-

-

-

301

263

250

243

252

515

625

921

810

975

928

885

Fair value unit price(Date of grant)

U.S. dollars
June 2008 June 2009 June 2010 June 2011 June 2012 June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
optionoptionoptionoptionoptionoptionoptionoptionoptionoptionoptionoptionExercise price
Average share priceat exercise

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

Major assumptions

2019 plan

Estimated volatility

a

28.3%

Estimated remaining periodb

9 years

Estimated dividendc¥32 per share

Risk-free rated(0.18%)(a) Estimated volatility was computed by the closing stock prices of common stock in each trading day from July 5, 2010 to July 8, 2019.
(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, 2019.
(d) The risk-free rate was determined based on the rate of Japanese government bonds, for which redemption dates corresponded to theestimated remaining period.

14. Research and Development Expenses
Research and development expenses included in selling, general and administrative expenses were
¥4,241 million ($39,269 thousand) and ¥3,970 million for the fiscal years ended March 31, 2020 and 2019,respectively.
Research and development expenses included in cost of sales were ¥487 million ($4,509 thousand) and¥641 million for the fiscal years ended March 31, 2020 and 2019, respectively.

15. Income Taxes

Yen

Average share priceat exercise

Reliable Business
Performance- 37,600(2)-2 Unit value and exercise period for stock option rights

Exercise priceSpecial Feature

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 the2019 stock option plan are as follows:

Shares
June
2010
stock
optionStrategy

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

0.009

-

-

-

-

-

-

-

-

-

-

-

-

2.787

2.435

2.315

2.250

2.333

4.769

5.787

8.528

7.500

9.028

8.593

8.194

The Company and its domestic subsidiaries are subject to several taxes based on income, which in theaggregate resulted in a statutory tax rate of approximately 30.6% for the fiscal years ended March 31, 2020
and 2019 respectively. Foreign subsidiaries are subject to income taxes of the countries in which they operate.
The effective rates for the fiscal years ended March 31, 2020 and 2019 differ from the Company’s statutory
tax rates for the following reasons:Statutory tax rate
Expenses not deductible for income tax purposes
Depreciation of goodwill
Change in valuation allowance
Other
Effective tax rate

2020
30.6%
0.2
2.3
0.6
(0.8)
32.9

2019
30.6%
(0.4)
1.3
(0.3)
(1.2)
30.0

Fair value unit price(Date of grant)

78

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

79

A History ofValue Creation

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets andliabilities at March 31, 2020 and 2019 were as follows:
2020

Deferred tax assets:
Allowance for bonuses
Net defined benefit liability
Tax loss carryforwards(Note)
Securities
Investment in affiliates securities
Impairment loss
Other
Subtotal
Valuation allowance (Deficits)(Note)
Valuation allowance (Temporary difference)Less valuation allowance subtotal
Total
Deferred tax liabilities:
Depreciation
Net unrealized holding gains on securities
Net defined benefit asset
Other
Total
Net deferred tax assets

Millions of yen

Thousands of U.S.
dollars2019¥ 1,410
4,490
1,046
276
392
1,609
5,028
14,254(440)(2,573)(3,013)¥ 11,240¥ 1,196
4,099
871
255
155
1,492
3,757
11,827(217)(1,912)(2,130)¥ 9,697$ 13,056
41,574
9,685
2,556
3,630
14,89846,556
131,981(4,074)(23,824)(27,898)$ 104,074(6,986)(69)(2,720)(790)¥ (10,566)¥ 674(5,817)(982)(2,807)(547)¥ (10,154)¥ (456)(64,685)(639)(25,185)(7,315)$ (97,833)$ 6,241

Millions of yen

2020

More thanMore thanMore thanMore than
than 5
1 year, within 2 year, within 3 year, within 4 year, within Moreyear
2 years
3 years
4 years
5 years

Deficits (*1)

333

150

61

61

61

Deferred tax assets

254

62

61

61

61

(78)

Valuation allowance

(88)

0

0

378

0

(273)
104

Total

1,046

(440)

605 (*2)

Millions of yen

2019More thanMore thanMore thanMore than
than 5
Within 1 year 1 year, within 2 year, within 3 year, within 4 year, within Moreyear
2 years
3 years
4 years
5 years

Deficits (*1)

312

225

141

Deferred tax assets

221

218

129

Valuation allowance

(91)

(7)

56

(12)

(13)
43

13

121

-

41

(13)

Special Feature

Reliable Business
Performance

(80)

Total

871

(217)

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

16. Other Income (Expenses)
Other, net, for the fiscal years ended March 31, 2020 and 2019 consisted of the following:2020

Note: Amounts of deficits, valuation allowance and related deferred tax assets by tax loss carry-forwards for the year ended
March 31, 2020 and 2019 respectively.

Within1 yearStrategy

Millions of yen

Loss on sales and disposal of fixed assets
Gain on sales of investments in securities
Impairment loss (Note)
Write-down of investments in securities
Loss on restructuring cost of subsidiary
Loss on liquidation of subsidiaries
Loss on trouble measures
Other, net2020¥ (27)
56
(536)
(203)
(3)
(313)
(760)
¥ (1,789)2019¥ (20)
154
(1)
(180)
(21)
(997)
¥ (1,065)

Thousands of U.S.
dollars2020$ (250)519(4,963)(1,880)(28)(2,898)(7,037)$ (16,565)

Note: The Company recognized impairment losses on the following asset groups in the fiscal year ended March 31, 2020.

Location
Amagasaki, Hyogo Pref.

Millions of yen

Thousands of
U.S. dollars

Machinery and equipment, tools,
furniture and fixtures, and software¥371$3,435

Goodwill¥164$1,518¥536$4,963Use

Asset type

Business assets-(Method of grouping assets)
The Group, in principle, groups business assets based on the business management organization. Idle assetsthat are not expected to be used in the future are grouped by individual asset.
(Background to recognition of impairment loss)
As future cash flows of business assets had fallen below the book value, the Company has reduced the bookvalue to the recoverable amount, and recorded the reduction as an impairment loss in extraordinary losses. In
addition, the Company had recorded goodwill based on the assumption of excess earning power at the timeof acquisition of shares of Sanwa System Wall Co., Ltd., a consolidated subsidiary of the Company. However,since the business performance has fallen below the initial business plan, the reduction in the unamortizedbalance of goodwill has been accounted for as a one-time expense, based on a conservative review of thebusiness plan.
(Method of determining recoverable amount)
The Company measures the recoverable amount of business assets based on the value in use. As negative
future cash flows are expected, the value in use is measured at the residual value. In addition, the recoverable
amount of goodwill is measured with a value in use of zero.

653 (*2)Thousands of U.S. dollars

2020

More thanMore thanMore thanMore thanWithin 1 year 1 year, within 2 year, within 3 year, within 4 year, within More than 5year
2 years
3 years
4 years
5 years

Deficits (*1)

3,083

1,389

565

565

565

Deferred tax assets

2,352

574

565

565

565

Valuation allowance

(722)

(815)

0

0

0

3,500

(2,528)
963

Total

9,685

(4,074)

5,602 (*2)(*1) Deficits are the amount after multiplying the statutory tax rate.
(*2) Regarding deficits of ¥1,046 million ($9,685 thousand) and ¥871 million (amount after multiplying the statutory tax rate), the Company records
deferred tax assets of ¥605 million ($5,602 thousand) and ¥653 million for the fiscal years ended March 31, 2020 and 2019, respectively.
Regarding deficits, valuation allowance related to the portion deemed to be recoverable based on future taxable income forecasts is not recognized.

80

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

81

A History ofValue Creation

17. Other Comprehensive Income

The reclassification adjustments and tax effects for components of other comprehensive income (loss) for the
fiscal years ended March 31, 2020 and 2019 are as follows:
Thousands of U.S.
dollars

Millions of yen

Unrealized holding gains on securities:
Amount arising during the year

Reclassification adjustments for losses realized in net income
Before tax effectTax effectTotal unrealized holding gains on securities

Deferred losses on hedges:

Amount arising during the year

Reclassification adjustments for losses realized in net income
Before tax effectTax effectTotal 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:
Amount arising during the year

Reclassification adjustments for losses realized in net income
Before tax effectTax effectTotal remeasurements of defined benefit plans
Share of other comprehensive income ofnon-consolidated subsidiaries and affiliates accounted
for using the equity method:Amount arising during the year

Total other comprehensive income

18. 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 Management Conference of the Company tomake decisions on the allocation of management
resources and assess performance.
The Group is primarily engaged in the manufacture and sales of steel construction materials
for commercial and residential construction, as
well as the maintenance and service businessfor these products. The Group mainly comprises
Sanwa Shutter Corporation in Japan, Overhead
Door Corporation in North America, Novoferm
Gmbh in Europe, and Shanghai Baosteel-Sanwa

82

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

2020

2019

¥ (3,019)(35)(3,055)931(2,123)¥ (1,808)(154)(1,963)601(1,361)$ (27,954)(324)(28,287)
8,620(19,657)

95
95
(29)
66

158
158
(48)
109

880
880
(269)
611

(2,453)(2,453)(2,563)(2,563)(22,713)(22,713)(1,957)533(1,423)410(1,013)

(385)
432
47
15
62

(18,120)
4,935(13,176)
3,796(9,380)130¥ (5,394)

2020

(143)
¥ (3,896)

1,204$ (49,944)

Door Co., Ltd., Sanwa Shutter (H.K.) Ltd., AnHo Metal Industrial Co., Ltd., and Vina-Sanwa
Company Liability Ltd. in Asia. Local legal entities
are independent management units, and formulate
overall regional management strategies for theirproducts and conduct separate business activities.
Accordingly, the Group is comprised of regional
segments and divided into legal entities, based on
the manufacture and sales systems. The Group’s four
reportable segments are “Japan,” “North America,”“Europe” and “Asia.”

Strategy

Reliable Business
Performance

Special Feature

The major products and services of each reportablesegment are as follows:[Japan]Rolling shutters, shutter-related products, door
products for buildings, partitions, stainless steel
products, store front products, window products,
residential door products, exterior products,
residential garage door products, automatic door
products, and the maintenance and service business,
etc.
[North America]
Rolling shutters, shutter-related products, industrial
sectional door products, residential garage door
products, openers for garage doors and other doors,
automatic door products, and the maintenance andservice business, etc.
[Europe]
Rolling shutters, shutter-related products, door
products, industrial sectional door products,
residential garage door products, openers for garage
doors and other doors, and the maintenance andservice business, etc.

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

[Asia]
Rolling shutters, shutter-related products, door
products, residential garage door products, and themaintenance and service business, etc.
2. Calculation method used for sales, income orloss, assets and other items on each reportablesegment
Accounting policies of the reportable businesssegments are the same as those noted in “Note 2.
Summary of Significant Accounting Policies.”
The amount of income on reportable segments isbased on operating income. Inter-segment sales andtransfers between segments are based on market
price.

Information about operations in reportable segments of the Group for the fiscal years ended March 31, 2020 and 2019,
was as follows:(1) Reportable Segments

Millions of yen

2020

Sales to customers
Intersegment sales ortransfers
Total sales

Segment income (loss)

Segment assets
Depreciation andamortization
Investment in equity method
companies
Capital expenditures

Japan

North
America

Europe

Asia

Total

¥240,407¥118,398¥ 74,897¥ 6,395¥ 440,099

¥ 62

190

78

25

12

306

(306)

240,597¥ 26,246

118,477¥ 9,033

74,9236,407¥ 3,692¥ (348)Adjustments

440,405(244)

Consolidated
financialstatement¥ 440,161-

440,161¥6,144¥ 38,623¥284,045¥ (4,405)¥ 34,217¥ 69,977¥354,023¥149,266¥74,584¥54,051

2,862

3,462

2,853

84

9,262

38

9,301

2,423

3,237

2,679

20

8,360

2,019
58

2,019
8,419

Adjustments

Consolidated
financialstatement

Millions of yen

2019

Japan

Sales to customers
Intersegment sales ortransfers
Total sales

Segment income (loss)
Segment assets
Depreciation andamortization

Investment in equity method
companies

Capital expenditures

North
America¥ 219,559 ¥ 116,574
0
219,55932
116,607¥ 137,047¥ 69,968

2,813
2,571

¥ 22,258¥ 8,780

EuropeTotal¥ 73,394 ¥ 409,528
70
73,464

102
409,631¥ 3,834¥ 34,874

3,202

1,998

223
3,978

5,803

¥ 49,042 ¥ 256,059

¥ 462
(102)
359

¥ (3,280)¥ 409,990

409,990¥ 31,593¥ 82,372¥ 338,432

8,014

34

8,049

223
12,353

6,043
14

6,267
12,367SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

83

A History ofValue Creation

Sales to customers
Intersegment sales ortransfers
Total sales
Segment income (loss)
Segment assets
Depreciation andamortization
Investment in equity
method companies
Capital expenditures

North America

Europe

Asia

Total

$ 59,213 $ 4,074,991

Special Feature

Reliable Business
Performance

Adjustments

Consolidated
financialstatement$ 2,225,991 $ 1,096,278$ 693,491

1,759
2,227,750$ 243,019$ 1,382,093

722
1,097,009$ 83,639$ 690,593

231
111
2,833
(2,833)
693,731
59,324
4,077,824(2,259)4,075,565$ 34,185 $ (3,222)$ 357,620 $ (40,787)$ 316,824$ 500,472 $ 56,889 $ 2,630,046 $ 647,935 $ 3,277,991

26,50032,056

26,417778

85,759352

86,12022,43529,97224,806

185

77,407

18,694537

18,694
77,954

3. Major countries in each region
North America: USA, Canada and Mexico, etc. Europe: Germany, France, Netherlands and England, etc.
Asia: China, Hong Kong, Taiwan, Vietnam
4. Matters related to changes in reportable segments, etc.
(Addition of a reportable segment and revision of the allocation method)
From the fiscal year ended March 31, 2020, “Asia” has been added to reportable segments, as Shanghai BaosteelSanwa Door Co., Ltd., Sanwa Shutter (H.K.) Ltd., An-Ho Metal Industrial Co., Ltd., and Vina-Sanwa Company
Liability Ltd. were included in the scope of consolidation.
In addition, in order to more appropriately reflect operating results by reportable segment, the allocation method
for corporate expenses, etc. was revised, and the calculation method for income or loss of reportable segments
was changed.
Segment information for the fiscal year ended March 31, 2019 has been prepared and stated based on thecalculation method for income or loss after the changes.

Sales to customers

Commercial

Residential¥ 281,837¥ 110,298

Maintenance/Home
improvement¥ 45,074

Other

Consolidated¥ 2,950¥ 440,161

Millions of yen

2019

Sales to customers

Commercial

Residential¥ 255,969¥ 108,155

Maintenance/Home
improvement¥ 42,627

Other

Consolidated¥ 3,239¥ 409,990

Thousands of U.S. dollars

2020

Commercial

Sales to customers

Residential$ 2,609,602 $ 1,021,278b) Information on Each Region

Maintenance/Home
improvement$ 417,352

Other

Consolidated$ 27,315$ 4,075,565

Millions of yen

2020

Property, plant and equipment

Japan

North
America

Europe¥ 32,913¥ 13,913¥ 21,391

Asia

Total

¥ 872

¥ 69,091

Millions of yen
2019

Property, plant and equipment

Japan

North
America

EuropeTotal¥ 29,725¥ 13,980¥ 16,475¥ 60,182

Thousands of U.S. dollars

2020

Property, plant and equipment

INTEGRATED REPORT 2020

Corporate Data2020

2. Segment income or loss is reconciled primarily to operating income on the consolidated statement of income.

SANWA HOLDINGS CORPORATIONESG Materiality
Initiatives

Millions of yen$ 574 $ 4,075,565

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 reportable segments.
(2) Adjustments on segment income or loss mainly consist of adjustments of inter-segment 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 not included in the reportable segments.
(6) Adjustments on capital expenditures consist of adjustments of capital expenditures to which are not included in
the reportable segments.

84

ReliableManagement(2) Related Informationa) Information on Products and Each Service

Thousands of U.S. dollars
2020
Japan

Strategy

Japan

North
America

Europe

Asia

Total

$ 304,750$ 128,824$ 198,065$ 8,074$ 639,731

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

85

A History ofValue Creation

19. Business Combination(1) Outline of business combination
1. Name and main business of acquired company
Name of acquired company: LIXIL SUZUKI SHUTTER CORPORATION
Main business of acquired company: Manufacture, sales, installation, and maintenance and service of
shutters and disaster prevention products
2. Main reasons for business combination
In Japan, the Group has been working to strengthen its core shutter and steel door businesses, andexpand the maintenance and service business, including in response to the periodic inspection reporting
system for fire prevention equipment. The acquisition of LIXIL SUZUKI SHUTTER CORPORATION is
expected to generate significant synergies in the shutter and steel door businesses, in which the Group
has top share, by combining the Group’s region-based sales network with LIXIL SSUZUKI SHUTTERCORPORATION’s strong customer base, which has been cultivated over its 117-year history. In
addition, we expect to establish a stronger market position by increasing our share in core products andexpanding profits as we work to achieve “Sanwa Global Vision 2020.”
3. Date of combination
September 30, 2019
4. Legal method used for combination
Purchase of shares with cash
5. Name of controlling entity after combination
SUZUKI SHUTTER CORPORATION
6. Percentage of voting rights acquired
100 percent
7. Principal reason for deciding to acquire the company
The principal reason was the purchase of shares with cash by a consolidated subsidiary of the Company.
(2) Period of the acquired company’s financial results included in the consolidated financial statements
October 1, 2019 to March 31, 2020
(3) Acquisition cost of the acquired company and breakdown of consideration by type¥8,221 million
Cash consideration of the acquisition:［$76,120 thousand］¥8,221 million
Acquisition cost:［$76,120 thousand］(4) Details and amount of major costs associated with the acquisition
Advisory fees, etc.: ¥117 million［$1,083 thousand］(5) Amount of goodwill, reason for its recognition, and amortization method and period(i) Amount of goodwill: ¥745 million ［$6,898 thousand］(ii) Reason for its recognition:
Since the fair value of net assets at the time of acquisition fell below the acquisition cost, the difference
was recognized as goodwill.
(iii) Amortization method and period
One-time amortization in the fiscal year ended March 31, 2020
(6) The amount of assets acquired and liabilities assumed of the business of SUZUKI SHUTTERCORPORATION at the date of acquisition were as follows:
Current assets
Fixed assets
Total assets
Current liabilities
Long-term liabilities
Total liabilities

86

SANWA HOLDINGS CORPORATION¥INTEGRATED REPORT 2020

7,125
4,330
11,456
3,089
890
3,980

Special Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

20. Information on Related Parties

Business combination due to acquisition in the year ended March 31, 2020

Millions of yen

Strategy

Thousands of U.S. dollars$ 65,972
40,093106,074
28,6028,241
36,852

Fiscal years ended March 31, 2020 and 2019
Not applicable.

21. Per Share Informaiton

Yen

2020
¥ 742.90
97.14
96.89

Net assets per share
Earnings per share

Diluted earnings per share2019
713.5092.95
92.73

U.S. dollars

2020$ 6.880.90
0.90

Note:The basis for calculation1

Earnings per share
Yen

Profit related to common shares attributable to owners of parent

2020¥ 21,647
21,647

Average number of common shares during the period

2020
222,852

2019
224,979

564

527

Profit attributable to owners of parent

Amount not attributable to common shareholders

2019
20,910¥ 20,910

U.S. dollars

2020$ 200,435
200,435

Thousand shares

Increase in common stock:
Stock subscription rights

2

Net assets per share
Millions of yen

Total net assets

Deductions from total net assets:
Stock subscription rights

Non-controlling interests

Total net assets attributable to common stockholders

2020¥ 165,633

2019¥ 161,603

281
1,286
164,065248
832
160,522

Thousands of
U.S. dollars

2020$ 1,533,639
2,602
11,907
1,519,120

Thousand shares

Number of shares of common stock used in
the calculation of net assets per share2020

220,8452019
224,979

22. Subsequent Events
Fiscal years ended March 31, 2020 and 2019
Not applicable.

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

87

A History ofValue Creation

Independent Auditor’s Report
To the Board of Directors Sanwa Holdings Corporation
OpinionWe have audited the accompanying consolidated financial statements of Sanwa Holdings
Corporation and its consolidated subsidiaries (collectively referred to as the “Group”), which
comprise the consolidated balance sheets as at March 31, 2020, and the consolidated statements
of income, comprehensive income, changes in net assets, and cash flows for the year then ended,summary of significant accounting policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2020,
and its consolidated financial performance and consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of theGroup in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordancewith these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Responsibilities of Management and the Audit and Supervisory Committee for theConsolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and forsuch internal control as management determines is necessary to enable the preparation of theconsolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Audit and Supervisory Committee is responsible for overseeing the directors’ performanceof their duties including the design, implementation and maintenance of the Group’s financial
reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit.
We also:・Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・Consider internal control relevant to the audit in order to design audit procedures that are
88

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

StrategySpecial Feature

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

appropriate in the circumstances for our risk assessments, while the purpose of the audit of theconsolidated financial statements in not expressing an opinion on the effectiveness of the Group’s
internal control.
・Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
・Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.
・Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation in accordance withaccounting principles generally accepted in Japan.
・Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.
We communicate with the Audit & Supervisory Committee regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Audit & Supervisory Committee with a statement that we have complied withthe ethical requirements regarding independence that are relevant to our audit of the financial
statements in Japan, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.

Conflicts of Interest
We have no interest in the Group which should be disclosed in accordance with the Certified Public
Accountants Act.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2020 are presented solely for convenience. Our audit also included the translation ofJapanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on
the basis described in Note 1 to the consolidated financial statements.
Kyoritsu Audit Corporation
Tokyo, Japan
June 23, 2020
Kiyoshi Asada
Representative Partner, Engagement Partner
Certified Public Accountant
Hiroshi Suzuki
Engagement Partner
Certified Public Accountant
SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 2020

89

A History ofValue Creation

Corporate Overview
Head Office

Established

April 10, 1956

Capital (Paid-In)¥38,413 million

Employees

11,474 (consolidated)

Stock Listings
Transfer Agent

Common Stock

(%)

2016
122.2

(Comparison value:(89.2)TOPIX Total Return Index)

2017
162.7

(102.3)(118.5)2018
160.0(112.5)Japan

Stock Price Trend
High (Yen)

Authorized:
550,000,000 shares
Issued:231,000,000 shares
Number of shareholders:
13,157

2015
96.4

7.52
6.25
5.09
3.67
3.22
2.44
2.10
1.80
1.78
1.72

Notes:
1. The Company holds treasury stock, which is excluded from the major shareholders listed above.
Number of shares held: 10,154,344 shares.
2. Percentage of voting rights is calculated based on the total number of shares issued excluding
treasury stock.
3. Nippon Steel Nisshin Co., Ltd. conducted a merger on April 1, 2020, in which Nippon Steel NisshinCo., Ltd. was the absorbed company and Nippon Steel Corporation was the surviving company.

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
April 1, 2019 – March 31, 2020

Total Shareholders’ Return
FY

RegionPercentage ofvoting rights (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Sumitomo Mitsui Banking Corporation
The Dai-ichi Life Insurance Company, Limited
SSBTC CLIENT OMNIBUS ACCOUNT
Aioi Nissay Dowa Insurance Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Nippon Steel Nisshin Co., Ltd.
JP MORGAN CHASE BANK 385632
Japan Trustee Services Bank, Ltd. (Trust Account 5)

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

2019
110.8
(101.8)

367
333
492
783
925
1,113
1,165
1,624
1,449
1,367

Low (Yen)

204
222
282
457
598
660
793
1,016
1,135
666

Asia

Stock Price (left scale)

Nikkei Stock Average (right scale)(Yen)
30,000

Trading Volume (right scale)

China
Hong Kong/
Macau

Stock Price Range / Trading Volume
(Yen)
2,000

Reliable Business
Performance

ReliableManagement

ESG Materiality
Initiatives

Corporate Data

(As of July 31, 2020)

Shareholder nameTokyo Stock Exchange

Special Feature

Consolidated Subsidiaries and Affiliated Companies(As of March 31, 2020)

Principal Shareholders

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

Strategy

Established

Investment Ratio

Category

Sanwa Shutter Corporation

Company Name

Oct. 2007

100.00%Consolidated subsidiaryShowa Front Co., Ltd.

Jun. 1963

100.00%Consolidated subsidiary

Okinawa Sanwa Shutter Corporation

Jan. 1996

100.00%Consolidated subsidiary

Sanwa Tajima Corporation

Oct. 1938

100.00%Consolidated subsidiary

Tajima Metalwork Co., Ltd.

Apr. 1963

100.00%Consolidated subsidiary

Sanwa System Wall Co., Ltd.

Apr. 2017100.00%Consolidated subsidiarySuzuki Shutter Corporation

Jul. 1936

100.00%Consolidated subsidiaryShowa Kensan Co., Ltd.

Apr. 1987

100.00%Consolidated subsidiary

Venix Co., Ltd.

Jul. 2011

100.00%Consolidated subsidiaryShowa Kensan Co., Ltd.

Jul. 1967

100.00%Consolidated subsidiary

Hayashi Kogyo Co., Ltd.

Dec. 1973

100.00%Consolidated subsidiary

Sanwa Electronics Engineering Co., Ltd.

Apr. 1954

100.00%Consolidated subsidiary

Yoshida Seisakusho Co., Ltd.

Mar. 1955

100.00%Non-consolidated subsidiary

Metalwork Kansai Co., Ltd.

Oct. 1969

100.00%Non-consolidated subsidiary

Ace Co., Ltd.

Apr. 1969

100.00%Non-consolidated subsidiary

Sanwa Mitaka K.K.

Apr. 2003

100.00%Non-consolidated subsidiary

Living110.com Co., Ltd.

Nov. 2000

100.00%Non-consolidated subsidiary

Shanghai Baosteel - Sanwa Door Co., Ltd.

Apr. 2006

80.00%

Consolidated subsidiary

Novoferm (Shanghai) Co., Ltd.

Dec. 2005

100.00%Equity-method affiliate

Sanwa Shutter (H.K.) Ltd.

Oct. 1986

100.00%Consolidated subsidiarySuzuki Shutter (HK) Limited

1967

100.00%Consolidated subsidiary*

Suzuki Shutter (Macau) Company Limited

2005

100.00%Consolidated subsidiary*

TaiwanAn-ho Metal Industrial Co., Ltd.

Aug.1988

79.02%

Consolidated subsidiary

VietnamVina-Sanwa Company Liability Ltd.

Jan. 2008

87.63%

Consolidated subsidiary

Indonesia

Pt. Sanwamas Metal Industry

Dec. 1996

51.02%

Equity-method affiliate

Korea

DongBang Novoferm Inc.

1957

50.00%

Equity-method affiliate

ThailandSUN METAL Co., Ltd.
Overhead Door Corporation

North America

Feb.1991

25.60%

Affiliated company

1921

100.00%Consolidated subsidiary

Apr. 1955

100.00%Consolidated subsidiary(Access Systems Division)

1,600

20,000(Genie)

1,200

10,000Novoferm Germany GmbH

(Horton Automatics)

800

0

400

(Thousands of shares)
60,000EuropeGermany

40,0000

20,0002014.42015.1

2016.12017.1

2018.1

2019.1

Intended readers

Netherlands

Italy

Wide

U.K.

Corporate
WebsiteIntegrated
Reporthttps://www.sanwa-hldgs.co.jp/english/

The Company offers information on its corporatewebsite for its stakeholders, in order to provide
details regarding Sanwa Group’s Corporate
Philosophy and business activities. Stakeholders may
also view IR information and detailed ESG-related
data on this website.

Content

SANWA HOLDINGS CORPORATION

Details

INTEGRATED REPORT 2020

Consolidated subsidiary

Novoferm Riexinger Türenwerke GmbH

Consolidated subsidiary

Novoferm Siebau GmbH

Consolidated subsidiary

Novoferm Tormatic GmbH

Consolidated subsidiary

Tor System Technik GmbH

Consolidated subsidiary

Docking Solution and Service GmbH

Consolidated subsidiary

Novoferm Vertriebs GmbH

Consolidated subsidiary

Novoferm Nederland B.V.

Consolidated subsidiary

Alpha Deuren International B.V.

Consolidated subsidiary

Novoferm France S.A.S.

Consolidated subsidiary

Norsud S.A.S.

Consolidated subsidiary

Novoferm Schievano s.r.l.

Consolidated subsidiary

Novoferm UK Limited

Consolidated subsidiary

Horton Automatics Ltd.

Consolidated subsidiary

The Garage Door Company

Consolidated subsidiary

Bolton Gate Services Ltd.

Consolidated subsidiary

Novoferm Schweiz AG

Consolidated subsidiary

Novoferm Door SP.z o.o.

Consolidated subsidiary

Novoferm Polska SP.z o.o.

Consolidated subsidiary

Spain

Novoferm Alsal S.A.

Consolidated subsidiary

SwedenRobust AB

Consolidated subsidiary

Switzerland

Narrow90

0FranceCorporate Website and Disclosure Media

Overview

2020.1

Novoferm GmbH

Poland* Consolidated subsidiary from fiscal 2020
(The Sanwa Group comprises 100 subsidiaries and 12 associated companies as of March 31, 2020.)

SANWA HOLDINGS CORPORATIONINTEGRATED REPORT 202091