SANWA HOLDINGS CORPORATION

Sanwa Holdings Corporation
Annual Report 2014

Sanwa Holdings Corporation

Global Success Leads to Global Growth

Public Relations Section
Nishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo 163-0478, Japan
Tel : +81-3-3346-3331
Fax : +81-3-3346-3177
http://www.sanwa-hldgs.co.jp
E-mail: sya01@sip.sanwa-ss.co.jp

Annual Report 2014
Printed in JapanFor the year ended March 31, 2014

Corporate Data
As of March 31, 2014

Achieving successthrough global industry leadership

HEAD OFFICE:

Telephone: +81-3-3346-3019
Facsimile: +81-3-3346-3177
ESTABLISHED:

April 10, 1956

CAPITAL (PAID-IN):¥38,413 million

EMPLOYEES:

Consolidated: 8,372

STOCK LISTINGS:Tokyo Stock Exchange

TRANSFER AGENT:

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

ProfileThe Sanwa Group, headed by Sanwa Holdings Corporation, is a global
corporate group composed of 99 companies, including 79 subsidiaries

COMMON STOCK:

and 19 affiliated companies, as of March 31, 2014. The Group has four
major fields of business—commercial building materials, residential
housing materials, maintenance service and home improvement, andother businesses—and provides a wide range of steel construction
materials for commercial and residential construction, including

Shinjuku Mitsui Building, 52F
Nishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo, 163-0478, Japan

Authorized: 550,000,000 shares
Issued: 257,920,497 shares
Number of shareholders: 10,155

PRINCIPAL SHAREHOLDERS:
Percentage of voting rights (%)

Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Sumitomo Mitsui Banking Corporation
The Dai-ichi Life Insurance Company, Limited
Nippon Life Insurance Company
Northern Trust Co. (AVFC) Re 15pct Treaty Account
Aioi Nissay Dowa Insurance Co., Ltd.
Nisshin Steel Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account

6.78
6.17
4.71
3.37
3.30
3.26
2.67
2.07
1.93
1.90

TREND OF STOCK PRICE:
April 1, 2006–March 31, 2007
April 1, 2007–March 31, 2008
April 1, 2008–March 31, 2009
April 1, 2009–March 31, 2010
April 1, 2010–March 31, 2011
April 1, 2011–March 31, 2012
April 1, 2012–March 31, 2013
April 1, 2013–March 31, 2014

High

Low

¥800
¥763
¥462
¥357
¥367
¥333
¥492
¥783

¥582
¥396
¥223
¥218
¥204
¥222
¥282
¥457

MONTHLY STOCK DATA:
Monthly stock price range(Yen)

Nikkei Stock Average

(Yen)

1,000

25,000800

20,000600

15,000400

10,000200

5,000

shutters, doors and other products.
	In April 2013, we launched “Sanwa Global Vision 2020” andinitiated a new mid-term management plan “The First Three Year Plan”(April 2013–March 2016). The aim of the new vision is to establish the
Sanwa Group as a “Global Major Player” and a leading global brandin the access systems industry. We are strengthening production
and marketing synergies across our four key markets, Japan, North
America, Europe and Asia, and venturing into new markets, such as theenvironmental field, seeking to capture new market opportunities anddrive our sustained growth.
0

Apr. ’08

Jan. ’09

Jan. ’10

This annual report includes forwardlooking statements pertaining to
expectations, plans, strategies,
management goals, future performance,
expenses, revenues, income and otherforecasts formulated on past experiences.
Forward-looking statements necessarily
entail some degree of uncertainty, and thecontent 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.

Jan. ’12

Jan. ’13

Jan. ’14

Jan. ’12

Jan. ’13

Jan. ’140Monthly trading volume(Thousands of shares)

Forward-looking
statements:

Jan. ’11

50,000Contents

40,0002	Our Group		
18	North America

4 Consolidated Financial Highlights		
20	Europe

6	To Our Shareholders

		
22	Asia

20,00010 Progress of First Three -Year Plan

23 CSR Activities

10,00015 Business Overview

26 Corporate Governance		
16 Japan

29 Financial Information

30,0000

Apr. ’08

Jan. ’09

Jan. ’10

Jan. ’1161

Convenience

SafetySecurity

Our Mission

Our Values

The Sanwa Group is committed
to offering products and services
that provide safety, security andconvenience to further contributeto the prosperity of society.

 o deliver products and services to satisfyTall customers.
To become a true global player and behighly valued in each market of the world.
To bring together the creativity of eachindividual in a team environment for theenhancement of corporate value.

Sanwa
GlobalVision

2020

01
02

To offer products and services thatprovide safety, security and convenience
as a “Global Major Player” in the accesssystems industry.

Become the definite No.1 brandin Japan, USA and Europe.

Establish a business model
for service business.

03
04

Expand shutter & door business inemerging markets, spotlighting Asia,and make them grow to be top brands.

Promote realization of global synergy
in global markets.

1

Our Group

Sanwa Group conducts its business activities in around 30
countries including Japan, North America, Europe and Asia,and is working hard to build a strong presence in each area.

Japan
Sanwa Shutter
Corporation
No.1 supplier of rolling steel shuttersoverhead doors and steel hinge doors.
Maintenance and repair services inJapan.

Showa FrontCo., Ltd.
Pioneer in store facades withadvanced technology and an
extensive lineup.

North America
SANWA
HOLDINGSCORPORATION

Overhead Door
Corporation
Established in 1921, and with the
Sanwa Group since 1996. A leading
U.S. manufacturer of residential andcommercial doors.

AccessSystems
Division
Producing and selling “Overhead
Door” and “Wayne-Dalton” brandresidential and commercial doors.

EuropeNovoferm
Europe Ltd.
Established in 1955 and with the Sanwa
Group since 2003. One of Europe’s
leading suppliers of doors, garage
doors and industrial doors.

NF GmbH
Producing and selling doors andgarage doors in Germany.

Asia
Shanghai
Baosteel-Sanwa
Door Co., Ltd.
Manufacturing and selling various
shutters and steel doors.

2

Sales by Area
Europe14%¥311,957
million(as of March 31,2014)

Japan
58%

North
America28%

Okinawa
Sanwa Shutter
Corporation
No.1 supplier of shutters, doors
and store building materials in
Okinawa.

Genie

Sanwa Tajima
Corporation
Established in 1918 andmanufacturing stainless steel
products.

HortonAutomatics

Sanwa Exterior
Niigata Plant.
Co., Ltd.
Manufacturing various exterior
products.

Creative Door
Services

Venix Co., Ltd.
Manufacturing toilet stalls,
aluminum partitions and clean
rooms.

TODCO(Taiwan)Producing and selling door
openers for residential andcommercial use.

NF France
S.A.S.
Producing and selling doors andgarage doors in France.

Producing, selling and servicing
automatic doors.

Headquartered in Canada. Selling,
installing and servicing residential
and commercial doors.

NF Nederland
B.V.

NF Schievano
S.r.l.

Producing and selling industrial doors and garage doors
throughout Europe.

Producing and selling doors in
Italy.

Producing and selling truck andtrailer doors.
(Vietnam)

NF UK Ltd.
Producing and selling garage
doors in the UK.

Other 8 subsidiaries in Spain, Poland, Hungary, Austria, Switzerland,
Bulgaria and Denmark.

Novoferm
ShanghaiCo., Ltd.
Manufacturing and selling steel
doors.

Vina-Sanwa
Company
Liability Ltd.
Manufacturing and selling various
shutters and steel doors in Vietnam.

An-Ho Metal
IndustrialCo., Ltd.
Manufacturing and selling various
shutters and steel doors in
Taiwan.

Sanwa Shutter
H.K. Ltd.
Manufacturing and selling various
shutters and steel doors.

3

Consolidated Financial Highlights
Sanwa Holdings Corporation and Subsidiaries

Thousands of
U.S. dollars

Millions of yen

FY 20092010

FY 20102011

FY 20112012

FY 20122013

FY 20132014

FY 20132014

Net sales¥232,029¥237,295¥248,214¥265,913¥311,957$3,058,402

Cost of sales

173,108

179,400

186,684

196,632

225,954

2,215,235

Gross profit

58,921

57,89561,53069,28186,003

843,167

Selling, general and administrative expenses

53,29753,33352,675

55,10765,354

640,725

Operating income

5,624

4,562

8,855

14,174

20,649202,442Net Income (loss) before income taxes andminority interests(270)(1,000)6,826

13,076

16,988

166,550

Income taxes

458

1,468

3,529

5,895

6,827

66,932

Net income (loss)(725)(2,443)

3,297

7,181

10,161

99,618Comprehensive income (loss)—(7,898)

1,389

13,95922,404

219,647

Depreciation and amortization

4,824

6,578

5,605

5,785

6,626

64,961

Capital expenditure

3,895

3,495

2,897

4,293

7,116

69,765

Operating income on sales (%)

2.4

1.9

3.6

5.3

6.6

Net income (loss) before income taxes andminority interests on sales (%)

(0.1)

(0.4)

2.8

4.9

5.4

—

—

3.8

7.9

9.6

Fiscal YearFor the Years ended March 31

For the years:

Return on equity (%)
Net income (loss) per share (yen and U.S. dollars)¥(3.02)¥ (10.17)

¥

13.72

¥

29.93

¥

42.38

$

0.42

Dividends per share (yen and U.S. dollars)

¥

5.00

¥

¥

8.00

¥

10.00

¥

13.00

$

0.13

8.00

Price-earnings ratio (times)

—

—

23.5

16.1

15.8

Return on assets (%)

—

—

1.5

3.1

3.9

¥246,599¥218,933¥226,579¥241,771¥281,917$2,763,894

Long-term debt

26,76349,79048,651

48,84639,060382,941

Total net assets

96,11086,021

85,522

97,135

113,956

1,117,215

Stock price (yen)

312

280

323

483

669

Interest-bearing debt

74,62859,892

61,60760,80069,154

677,980

Liquidity (Note 2)

92,98675,66880,22788,338

127,874

1,253,667

0.8

0.7

0.7

0.6

0.6

At the year-end:
Total assets

Debt-equity ratio (times) (Note 3)

Note 1: U.S. dollar amounts represent arithmetical translations of the Japanese yen at the approximate exchange rate on March 31, 2014 of ¥102 = US$1.
Note 2: Liquidity = Cash and cash equivalents, Short-term investments and Notes and accounts receivables, trade.
Note 3: Debt-equity ratio = Interest-bearing debt/Total shareholders’ equity.

4Net Sales(Millions of yen)

Operating Income /Operating Income on Sales

Net Income /Net Income per Share(Millions of yen / %)(Millions of yen / Yen)

20,649
10,161

311,957

232,029

237,295

248,214265,913
14,174

6.6

7,181
42.38

5.3
8,855
5,624

3,297

3.6
4,562

13.72

-3.02

2.4

-725

1.9

29.93

-10.17-2,443

FY ’09

’10

’11

’13

’12

FY ’09

’10

’11

’12

’13

FY ’09

’10

’11

’12

’13

Net sales increased by
17.3%. This growth reflects
the strong performance of ourbusiness operations in Japan,
as well as the weakening of
the yen.

The combination of higher
revenues with improved cost
ratios resulted in a 45.7%
increase in operating
income.

Net income was 41.5%
higher, despite IT-related
asset retirement losses inJapan and a loss on theliquidation of an ODC
subsidiary in France.

Cash Flows
from Operating Activities

Return on Equity

Dividends per Share

(%)

(Yen)

(Millions of yen)

9.6

19,72817,870

13.0

7.9
10.0

14,855
3.8

8.0

8.0

’10

’11

5.0
5,453

-0.8

3,717
-2.7

FY ’09

’10

’11

’12

’13

Due to increase in net
income, net cash provided byoperating activities showed aincrease of 32.8% from theprevious year.

FY ’09

’10

’11

’12

’13

A positive net income result
maintained the Company’ssustainable profitability,
ROE rose to 9.6% from 7.9%in the previous year.

FY ’09’12’13

The dividend per share
increased ¥3.0 from theprevious year to ¥13.0,
according to the Company’ssustainable dividend policy.

5

To Our Shareholders

Achieving
Growing Success
Credit for our growing
success goes to everyone’s
dedication to a long-term
vision as a strong
global group.
Toshitaka Takayama
Representative Director, Chairman and CEO

Tamotsu Minamimoto
Representative Director, President and COO

In the year under review, companies throughout Sanwa Group set

recessionary trend leveled out, but the progress toward recovery

to work on the key strategies of the First Three-Year Plan under

was slow, and business conditions remained challenging.

“Global Vision 2020.” Their efforts produced healthy businessgeographic regions and for the Group as a whole, due to

Sanwa Global Vision 2020 and the First Three-YearPlansignificantly higher revenue growth and improved profitability.

It was in this environment that the Sanwa Group announced

results, including substantially higher revenues across the“Sanwa Global Vision 2020” and launched a range of initiatives in

Business Environment in Fiscal 2013

May 2013. Our vision is to provide customers worldwide withIn the year ended March 31, 2014 (fiscal 2013), the Japanesesafety, security and convenience through the products andeconomy followed a recovery trend driven by monetary and fiscal

services that we supply as a global major in the field of shutters,

policy and improving consumer confidence. Trends in public

doors and access systems industry. We have identified theinvestment and private investment also remained firm, and afollowing four basic strategies for the realization of this vision.

last-minute demand ahead of the consumption tax increase
helped to boost the number of new housing starts. Overseas, the

1. Become the definite No.1 brand in Japan, USA and Europe.

U.S. economy benefited from a recovery in the residential market

2. Establish a business model for service business.

and a firm trend in personal consumption expenditure, but the3. Expand shutter & door business in emerging markets,

results fell short of expectations due to the waning pace of therecovery in the non-residential construction market. In Europe, the6spotlighting Asia, and make them grow to be top brands.
4. Promote realization of global synergy in global markets.

These factors were reflected in healthy business results,

We also launched the First Three-Year Plan under Global
Vision 2020. Our priority policies under this medium-term plan,

including substantially higher revenues, for Sanwa Shutter

which covers the three years ending March 2014 through March

Corporation and other group companies in Japan. Income was2016, are to strengthen leading positions in core business of Japan,

also significantly higher because of revenue growth and improved

USA and Europe, to establish a service-oriented business model, to

profitability. We also achieved revenue growth in overseas

establish business foundations of Asian business, to expand

markets, thanks to strong performance by Overhead Door

strategically into emerging markets, and to realize global synergy

Corporation in the residential garage door and door opener

effects. Our targets under the plan are net sales of ¥325 billion andsegments, as well as benefits from the acquisition of a door

operating income of ¥23 billion in the year ending March 2016.

service company. Exchange rate trends helped to produce a
dramatic increase in income, although growth in local currency

Initiatives and Results in Fiscal 2013

terms was marginal due to special factors affecting the service

Fiscal 2013 was the inaugural year of the First Three-Year Plan,business in Canada, disappointing second-half results for theduring which Sanwa Group companies in Japan and overseas

truck and trailer door business, and a loss recorded by ODC

implemented a variety of initiatives.

France, which was liquidated. The revenues of Novoferm were
marginally lower in local currency terms because of challenging

Sanwa Group companies in Japan, including our corecompany, Sanwa Shutter Corporation, focused on the improvement

economic conditions, but higher in yen terms. Novoferm achievedof earning performance by working resolutely to attract more orders

income growth through cost cutting efforts, including benefits fromand by further expanding product ranges. In the United States,

the restructuring in France.

American subsidiary, Overhead Door Corporation responded to theOn this basis, net sales increased by 17.3% year on year toresidential market recovery by stepping up their marketing of¥311,957 million. Operating income rose by 45.7% higher to a

products targeted toward the new construction market. They also

new record of ¥20,649 million, thanks to revenue growth andworked to develop forward integration strategies in the door

improved margins. Despite the retirement of assets in a software

segment and expand our market share in the door opener

suspense account relating to the development of IT systems forsegment. Faced with a challenging market environment, European

subsidiary in Japan, and losses on the liquidation of an overseas

subsidiary, Novoferm focused on cost reduction throughsubsidiary, net income was 41.5% higher at ¥10,161 million.

restructuring, productivity improvements and other measures.

Sanwa Global Vision 2020
To offer products and services that provide safety, security and convenience
as a “Global Major Player” in the access systems industry.

2010[SANWA GLOBAL VISION 2020]
Go on to the next phase of global management

2020––– Outline & Targets of Sanwa Global Vision 2020 –––OutlinePromote the global management from the initial
phase to the development phase

Targets
1. Become the definite No.1 brand in Japan, USA and Europe.
2. Establish a business model for service business.
3. Expand shutter & door business in emerging markets,
spotlighting Asia, and make them grow to be top brands.
4. Promote realization of global synergy in global markets.

7

To Our Shareholders

Progress under the First Three-Year Plan

Initiatives in Fiscal 2014

In the plan’s first year, we made an excellent start by setting a newJapan is expected to continue its gradual economic recovery,

record for operating income. Sanwa Group companies in Japandespite concerns about a possible reactionary downswing inand overseas are fully aware that the three-year period covered bydemand following the demand peak ahead of the consumption tax

this plan is crucial for establishing our presence as a global major

hike in spring 2014. Forecasts for the U.S. economy point to ain our industry. The results for the first year are attributable to acontinuing gradual recovery in both the residential and non-rapid response to priority goals. The progress made in Japan was

residential markets. The European economies as a whole areespecially significant, with Sanwa Shutter Corporation achieving its

expected to emerge gradually from recession, but conditions innumerical targets for the First Three-Year Plan fully two years

the construction market are likely to remain difficult.

ahead of schedule. Sanwa Shutter Corporation and its subsidiaries

This was the business environment at the start of fiscal 2014,

in Japan also made sustained progress toward product-range

which is the second year of the First Three-Year Plan. It will be a

expansion, which is our most important group-level priority.

year for the Sanwa Group to continue steadily toward theOverseas, our subsidiaries were affected by the somewhat

realization of our long-term vision of becoming a major global

slower pace of economic recovery. However, our U.S. subsidiary

player in the field of shutters, doors and access systems industry.

ODC was able to build foundations for future efficiency

We are determined to build a solid foundation for growth for the

improvements, including the partial introduction of a newentire Sanwa Group.

enterprise resource planning (ERP) system. We also made steady

Our goals in Japan include the further expansion of ourprogress with our strategy of integrating downstream businessproduct ranges and improvement of our installation andactivities, while also expanding into the installation and service

production capabilities. In the United States, we aim to increasebusiness. Our European subsidiary, Novoferm, faced challenging

our share of the residential products market and further develop

conditions because of the slow pace of economic recovery in theour door opener business. In Europe, we will focus on theEuropean countries. However, it was able to expand both

reinforcement of our industrial door business and therevenues and income thanks to dynamic structural reforms andimplementation of structural reforms while also working to expand

the effects of a weaker yen. It also took significant steps toward

the scope of our business activities.

the establishment of a presence in Middle Eastern markets,

The impact of these initiatives is reflected in our financial

including the opening of a sales office in Doha, Qatar.

forecasts for fiscal 2014. We expect net sales to increase by 5.5%

Consolidated Results and Forecast■ Overseas Sales■ Domestic Sales● Operating
Net Income
incomeOverseasIncome
sales ●Operating
Net income
Domestic sales

Net Sales(Millions of yen)

400,000
350,000

Third
Three-Year Plan

New
Three-Year Plan

2020 VisionFirst Three-Year Plan

35,00030,000300,000

25,000250,000

20,000200,000

15,000150,000

10,000100,000

5,000

50,0000

08SecondThree-Year Plan

Income(Millions of yen)

FY2004

FY 2005

FY 2006

FY 2007

FY 2008

FY2009FY2010FY2011FY2012FY2013

FY2014(Forecast)-5,000Target for

FY2015

year on year to ¥329 billion, operating income by 6.5% to ¥22

In Conclusion

billion, and net income by 13.2% to ¥11.5 billion. Our forecast for

We begin the new fiscal year with a new management team,

net sales is especially significant, since it represents theincluding the two of us. The team is determined to accelerate theachievement of the ¥325 billion target in our Three-Year Plan one

global management systems, build the Sanwa Group into a truly

year ahead of schedule. These projections are based on exchange

global enterprise, and achieve further improvement in ourrates of ¥100 to the U.S. dollar and ¥140 to the euro.

corporate value.

Basic Policy on Income Distribution and Dividends

stakeholders by further strengthening our compliance andUnder our basic policy on income distribution, we aim to maintaincorporate governance systems and increasing our commitment toa stable payout ratio and link income distribution to consolidated

CSR activities, including social contribution and conservation offinancial performance, while improving our corporate

the global environment.

At the same time, we will work to fulfill the expectations of all

fundamentals, strengthening our management infrastructure andWe look forward to your continuing support in the future.

implementing management initiatives targeted toward further
improvement in corporate value. Specifically, our benchmark forincome distribution is a dividend payout ratio equivalent to 30% ofToshitaka Takayama

consolidated net income.
Because of our strong financial performance in fiscal 2013,

Representative Director, Chairman and CEO

we increased the final dividend by ¥1.0 over the initial estimate to¥7.0 per share, bringing the total dividend for the year to ¥13.0.

Tamotsu Minamimoto

Based on our performance estimates for fiscal 2014, we plan toRepresentative Director, President and COO

increase the yearly dividend by ¥1.0 to ¥14.0 per share, consistingof interim and final payments of ¥7.0 each.
Retained earnings will be used mainly for strategic investment,
including mergers and acquisitions and capital expenditure,investment, and for the reduction of interest-bearing debt.

Target Figures for First Three-Year Plan ( 2013–2015 )Results for FY2012

Results for FY2013

Forecast for FY2014

Targets for FY2015¥265.9 billion¥311.9 billion¥329.0 billion¥325.0 billion¥14.2 billion¥20.6 billion¥22.0 billion¥23.0 billion

Operating Income Ratio

5.3%

6.6%

6.7%

7.1%

Return of Equity

7.9%

9.6%

9.7%

11.7%

Debt / Equity Ratio

0.63

0.61

0.59

0.61

Net Sales

Operating Income

9Progress of First Three-Year Plan

Product diversification, newregionally focused marketing

Japan
Sales Trend of Main Products
in Japan
Heavy-duty shutters
Light weight shutters
LD

SD
Window Shutters
Partitions(Millions of yen)

Stainless steel products
Store fronts
Maintenance & repair
Exterior

35,00030,00025,00020,00015,00010,0005,000
0FY2010FY2011FY2012FY2013

FY2014(Forecast)

Sanwa Group companies in Japan worked dynamically to realize

In fiscal 2013, Sanwa Shutter Corporation strengthened its

three priority goals identified in the First Three-Year Plan. First,

production and supply systems and established a production line

we kept up with demand of core products such as shutters andfor condominium doors at its door factory in Ota. It also started

hinge doors, and promoting product diversification. Second, weup a new production line for steel partitions at its Shizuoka Plant.

invested for sustainable growth in the future. Third, we enhanced

Venix continued to strengthen its facilities to support an expanding

our production technologies capability to ensure profit level.

production line-up, including the start-up of new production lines

Our core group company, Sanwa Shutter Corporation,

for aluminum partitions and toilet stalls at its Ranzan Plant.

continued to enhance and expand its production range, which

The Sanwa Group has also continued to strengthen

includes partitions and exterior products in addition to coreits maintenance and service organization. Sanwa Shutter

products such as heavy-duty and lightweight shutters and doors.

Corporation has recruited 300 installation technicians during fiscal

At the same time, through its nationwide network of sales offices

2013–2014 while implementing programs to train technicians andit implemented precisely targeted marketing activities ranging from

improve skills.

proposals to sales of products and installation and maintenance

10

In April 2014, organizational changes brought key domestic

services. As a result, Sanwa Shutter Corporation achieved net

group companies, including Showa Front and Sanwa Tajima andsales and operating income targets for the final year of the Three-

Tajima Metalwork, under the jurisdiction of its corporate strategy

Year Plan two years ahead of schedule. Other group companies

division. By further strengthening its marketing capabilities andin Japan stepped up their efforts to diversify their product ranges

diversifying product ranges, the company aims to achieve growth

and were able to achieve growth in both revenues and income.

in excess of market expansion.

New manufacturing
line for steel partitions
was introduced in the
Sanwa Shutter Corporation’s Shizuoka Plant
in its production diversification expansion.

Sanwa Shutter Corporation is focused on
education of installation technicians, and is
responding to the diversification of products
by helping installation
technicians acquire
multiple skills.

NorthAmerica

Steady progressin all business areas

Sales Trend of Main Products
in North America (ODC)
Doors (L-axis)

Operators (L-axis)

Automatic doors (R-axis)

Truck/trailer doors (R-axis)(Millions of US dollars)
800(Millions of US dollars)
100

700

90

600

80

500

70

400

60

300

50

200

40

100

30

0

20
FY2010FY2011FY2012FY2013

FY2014(Forecast)

In the United States, the Overhead Door Corporation (ODC)

Genie was able to expand its share of the market forcontinued to strengthen its core business operations by bringing

door openers through increased marketing of commercial

Access System Division (ASD), which owns the Overhead Doorand residential products to the pro and retail channels. It also

and Wayne Dalton brands, which serve the door and shutter

commenced production of the Opening Price Point (OPP) range

business, Creative Door Services, which sells and installs doors,of low-cost door openers at the plant in Mexico. The OPP

shutters and openers, and provides maintenance, the Genie

products were developed collaboratively with the European

door opener business, the automatic door business of Horton

Sanwa Group company Novoferm.

Automatics, and the truck/trailer door business of TODCO

Under ODC’s forward integration strategy, the automaticwithin its group. ODC also worked under its forward integration

door service company Horton Automatics achieved strong

strategy to accelerate the growth of its installation, repair andbusiness growth by aggressively acquiring distribution andmaintenance business and expand into Central and Southinstallation companies.

American markets.
In fiscal 2013, ODC strengthened its product line-up by actively

The introduction of the new Enterprise Resource Planning(ERP) system began in September 2013 with TODCO. The

launching new residential door products with focus on design.

introduction of the new system at all North American businessAs part of a fine-tuned response to market needs, it also readiedsites will be completed by March 2016. This innovation is

production lines at its factory in Mt. Hope, Ohio for expansion next

expected to bring major improvements in business processes

year to create a production structure capable of supporting high-and productivity.

mix low-volume production of diversified product ranges.

CDS provides installation, regular maintenance and services,
operations that havebrought strong relationships with end users.

The introduction ofa new Enterprise
Resource Planning(ERP) system began in
September 2013 withTODCO, a division of
ODC.

11

Earnings recover with structuralreforms and new markets

EuropeSales Trend of Main Productsin Europe (Novoferm)
Garage doors

Industrial doors

Doors/door flames(Millions of euro)
150

135

120

105

90

75

0
FY2010FY2011FY2012FY2013

FY2014(Forecast)

Sanwa Group companies in Europe made steady progressacquisition is expected to give Novoferm the second biggest

despite challenging economic conditions, thanks to restructuring

share of the European industrial sectional door market.

and other cost-cutting measures.

Novoferm also made significant progress with cost-cutting

In January 2014, Novoferm Middle East was establishedefforts based on structural reforms, including the restructuring,to support the Sanwa Group’s expansion into Middle Easternand the procurement of components from low cost countries.

markets through its role as a sales office based in Doha, Qatar.

Through these efforts, Novoferm is building a robust businessPreparations for the FIFA World Cup in 2022 are expected tostructure in readiness for the anticipated recovery of European

generate substantial demand in Qatar. Novoferm Middle East will

markets. It aims to achieve growth by developing new products,

be the focus for efforts to expand our business throughout theentering new markets and strengthening its service business.

Middle East.
In June 2014, Novoferm completed its 100% acquisitionof Alpha Deuren International, a major Dutch manufacturer ofindustrial doors, further strengthened its business operations.
Alpha Deuren International manufactures and sells industrial
and garage doors, primarily in the Netherlands and Germany.
Known for its system-based approach to the production andselling of industrial doors and residential garages, Alpha Deuren
International has achieved excellent cost-competitiveness. This

Novoferm acquired theDutch company Alpha
Deuren International
BV, one of the leading
sectional-door producers in Europe with anannual production
volume of almost
50,000 sectional doors.

12

Novoferm Middle East
was established tosupport the Sanwa
Group’s expansion into
Middle Eastern markets
through its role as asales office based in
Doha, Qatar.

Building robust business
infrastructures

Asia
Sales of
Major Asian Companies(Billions of yen)
8
7
6
5
4
3
2
1
0
FY 2010FY2011

FY 2012FY 2013

FY 2014(Forecast)

A key to the Sanwa Group’s future as a global major will be theexpansion of business activities in Asia. One of the priority tasks

projects to attract more large-scale orders.
Novoferm Shanghai recorded year-on-year growth in orders

brought forward from the previous Three-Year Plan is to improveand sales, but escalating competition eroded profit margins,

our adaptability to changes in conditions and environments inand the goal of achieving positive financial results has been

local markets of Asia. During the First Three-Year Plan under thedeferred for one more year. However, the second half of the year

long-term management vision Sanwa Global Vision 2020, we will

saw increased orders, especially for hospitals and commercial

strengthen group companies’ management structures in Asia

properties.

and build foundations for positive financial results and income

In Vietnam, Vina-Sanwa expanded its orders and sales

growth. We are also working to identify the top priorities in eachand improved its income. Major projects and Japanese-owned

market, to establish business infrastructure through the efficient

properties provided most of the order and sales growth.

investment of management resources, and to optimize business

Strong trends in orders, especially for major development

models for local markets. However, although fiscal 2013 brought

projects, helped Sanwa Shutter (H.K.) to achieve revenue growthsignificant improvement in the income structures of our equity

and a substantial increase in income.

method subsidiaries in Asia, we were not able to achieve positive
financial results.
Slower demand for industrial products reduced orders andAlthough financial performance varied somewhat bycompany, all improved their earning performance while continuing
efforts to build efficient management structures by strengthening

earnings for Shanghai BaoSteel-Sanwa Door. The company isgroup-level collaboration. This process is leading to the creation ofusing its track record with the Shanghai Center Building and othera robust business infrastructure for the Sanwa Group in Asia.

Vina-Sanwa Company
Liability, a subsidiaryin Vietnam, successfully
supplied its steel door
products to the Hue
Hospital.

Sanwa Shutter (H.K.)
Ltd. supplies many
excellent products suchas an electric side-slider
clear shutter “SUNVISION” for commercial
facilities in Hong Kong.

13

Globalsynergies

Creating synergies through afour-region structure entry

Principle Theme of
Global Synergy

1. Launch strategic
products onto multiple
markets
2. Increase procurementfrom low-cost countries
3. Expand complementary
supply of products andcomponents among groupcompanies.

We are using our global structure to enhance synergies on

ODC and NF source door opener circuit boards from Chinese

various levels, including the deployment of strategic products incompanies. The benefits of this approach are increasing inJapanese, North American, European and Asian markets, thestep with the expansion of the door opener business and aredevelopment of group supply chains, parts sharing, and joint

currently worth around ¥700 million across the Sanwa Group.

procurement of parts and materials.
In fiscal 2013, we focused in particular on the global

Other initiatives have targeted reciprocal complementationand supply. For example, Sun Metal in Thailand has started to

deployment of strategic products. We made steady progress with

manufacture and sell the “Quick Saver” high-speed industrial

joint development projects involving ODC and Novoferm. A garage

sheet shutter, which is one of the strategic products of Sanwa

door opener targeted toward the entry-price level market was

Shutter Corporation in Japan. We will continue to deploy

launched in Europe by Novoferm in 2012, and in the fall of 2013

products from each area proactively to meet other market needs.

ODC commenced production at its plant in Mexico and put the
product on sale in the North American market.

The realization of synergy benefits is one of the top priorities
for Sanwa Group who seeks to be a global major. We are

Marketing and development staff from Sanwa Shutter

determined to utilize the full potential of our group networks in

Corporation, ODC and Novoferm regularly attend synergy

Japan, North America, Europe and Asia by further expanding

meetings to discuss future joint development initiatives, parts

the joint development of strategic products, collaborative

sharing and other aspects.

procurement, and the reciprocal supply of products.

We are also expanding procurement from so called “lowcost countries (LCC)”. For example, Sanwa Shutter Corporation,

Operator project:
Opening Price Point(OPP) operator wasdeveloped withcollaboration with ODC
and Novoferm.

14

Sun Metal (Thailand)has started in-houseproduction of Sanwa
Shutter’s high-speed
industrial sheet shutter.

Business Overview—At a Glance

Japan
Sales of housing-related products were significantly higher, andfirm trends in private sector construction investment were also
reflected in dramatic growth in sales of heavy-duty shutters anddoors for commercial buildings and condominiums. Net sales
were 12.7% higher year on year at ¥182,013 million. This revenue
growth, together with improving profitability and lower steel prices,
resulted in segment income of ¥16,964 million, a year-on-yearincrease of 45.1%.

Net Sales(Millions of yen)

(Millions of yen)

200,000

18,00015,000150,000
12,000100,000

9,000
6,000

50,0003,000
0FY 2010

North America
Buoyant demand for residential doors and door openers, benefits
from the acquisition of an automatic door business under ourforward integration strategy, and the depreciation of the yen all
helped to lift net sales by 25.7% year on year to (2.7% on a local
currency basis) to ¥87,187 million. Segment income benefited
from lower raw material costs and the effects of cost-cutting
efforts, but the increase in local currency terms was marginal due
to discounting necessitated by price competition. However, yenbased income was 30.8% higher year on year at ¥4,559 million
thanks to the reduced value of the Japanese currency.

2011

2012

0
FY 20102013

Net Sales(Millions of yen)(Thousand of U.S. dollars)

1,000,000

75,000750,000

50,000500,000

25,000250,000

0
FY 2010

2011

2012

2013

2011

2012

2013

Operating Income

100,000

0(Millions of yen)(Thousand of U.S. dollars)

5,000

50,0004,000

40,0003,000

30,0002,000

20,0001,000

10,0000
FY 2010

2011

2012

2013

0

n Segment figures (left scale) n Figures of ODC (right scale)

EuropeIn addition to market stagnation across the whole of Europe,
construction demand was affected by seasonal factors linked toa cold snap at the start of the year, with the result that revenues
were lower in local currency terms. However, yen revenues
were 22.3% higher year on year at ¥42,653 million thanks to
the depreciation of the yen, and segment income increased
by 41.9% to ¥1,000 million. This growth resulted from costcutting measures, including restructuring initiatives in France andelsewhere, the reduction of material costs through procurementfrom China, and measures to improve productivity.

Operating Income

Operating Income

Net Sales(Millions of yen)(Thousand of Euro)(Millions of yen)(Thousand of Euro)

500,000

1,200

12,00040,000400,000

1,000

10,00030,000300,000

800

8,000

600

6,000

20,000200,000

400

4,000

10,000100,000

200

2,000

0

0
FY 201050,0000
FY 2010

2011

2012

2013

2011

2012

2013

0

n Segment figures (left scale) n Figures of NF (right scale)

Asia
In China, slower orders reduced the revenues of Shanghai BaoSteel-Sanwa Door, while Novoferm
Shanghai was unable to achieve a positive bottom line despite improving sales and income ratios in thesecond half of the year. In Vietnam Vina-Sanwa recorded improvement in orders, sales and income, andthe Taiwanese company An-Ho Metal Industry achieved year-on-year growth in both sales and income
by focusing on commercial facilities. Sanwa Shutter (H.K.) recorded growth in both revenues and income
thank to a healthy trend in orders relating to large-scale properties.

15

Business Overview
The entire Sanwa Group in Japan worked to
expand orders through the expansion anddiversification of product ranges, improve
profitability and strengthen productivity. This
strategy brought substantial growth in bothrevenues and income and contributed
significantly to expansion of group level
financial results.

Japan

Business Operations and Financial Results forfiscal 2013
Within Japan, Sanwa Shutter Corporation and its subsidiaries areactive in the areas of building materials for office buildings andcommercial facilities, housing materials, and maintenance andrenovation services. The main products manufactured and sold bySales by Product in Japanthe Sanwa Group are heavy-duty and lightweight shutters, doors
17%

Main Products■ Building & condominium doors■ Heavy-duty shutters■ Lightweight shutters■ Storefronts■ Stainless steel products■ Partitions■ Window shutters■ others

4%
5%

28 %

FY2013Total
6 % ¥182,013 million
17%

8%
15 %

and window shutters. The Sanwa Group is also working to expand
and diversify its product ranges by strengthening its product line-up
in such areas as storefronts, partitions and stainless steel products.
Fiscal 2013 was the first year of the First Three-Year Plan under
the Sanwa Global Vision 2020. Sanwa Group companies in Japan
implemented powerful measures targeted toward priorities identified
in the plan, including order expansion, further product range
diversification and expansion, the reinforcement of production andLaunch of condo entrance door
“Tredoor Ekoa”
Sanwa Shutter Corporation launched the“Tredoor Ekoa” with an easy-opening function
and hidden ventilation slot controlled by thedoor’s cylinder lock (a first in the industry).

supply systems, and the improvement of earning performance.
Sanwa Shutter Corporation, the core group company,
recorded 4.7% year-on-year growth in sales of lightweight
shutters, while firm trends in construction investment brought a
substantial 20.0% year-on-year increment in sales of heavy-duty
shutters. In the area of doors for commercial buildings andcondominiums, there was an 8.5% year-on-year increase in sales

Launch of water stop sheet“ST Water Protect”
Sanwa Tajima Corporation launched“ST Water Protect” for entrance fittings.
It is designed to protect interiors from water
ingress during rainstorms or typhoons.

of doors for offices, medical facilities and condominium units.
Sales of maintenance services were 6.8% higher, while partition
sales showed a dramatic year-on-year increase of 21.8%.
Revenues were up in all categories, and net sales increased by
12.8% over the previous year’s result.
Other subsidiaries in Japan also performed well. Showa Front
reported 11.0% revenue growth thanks to increased constructionof retail outlets, while buoyant regional construction investment

Wall-greening system“Aquavert”
Showa Front launched “Aquavert” with
Sakata Seed Corporation. It beautifully
realizes integration of plants and building
materials, and lightweight mineral artificial
soil reduces irrigation by 70% andmaintenance costs by 50%.

boosted the revenues of Okinawa Sanwa Shutter by 11.6%.
Sanwa Tajima achieved 6.9% revenue growth by winning orders
relating to various types of properties, including brand outlets.
These factors added up a major increase in net sales ofsubsidiaries in Japan, which were 11.0% higher year on year.
Sanwa Shutter Corporation also recorded significantly higher
income with a 54.5% year-on-year gain, while the income of other16

Ever since Sanwa Shutter Corporation was founded over half a century ago, our goal
as a customer-focused manufacturer of building materials, including shutters anddoors, has been to become number one in each region where we are active. In
addition, we have been working to increase customer satisfaction by improving oursystem of 24/7 service, allowing us to respond promptly to urgent requests for repairs
and maintenance.
We will continue to do our best to contribute to society by helping to maintainand improve living standards through our total commitment to the realization of our
mission. This very much includes our important task to actively develop and supply
disaster-preparedness products, which save lives in earthquakes, typhoons and otherdisasters, and eco-products based on our environment policy.

Sanwa Shutter Corporation President & CEO

Toshifumi Nagano

group companies in Japan rose by a substantial 69.2%. As a result,

system linked to the locking mechanism to reduce resistance whensegment net sales increased by 12.7% year on year to ¥182,013

the door is opened. In October we launched more new products

million, and segment income by 45.1% to ¥16,964 million.

designed to meet market needs, including the “Smood Kiraku”
range of lightweight sliding doors with a warm wood grain finish.

Trends in the Business Environment

Other group companies in Japan also released new

The Japanese economy is expected to continue on a gradualproducts. In September 2013, Sanwa Tajima launched a water

recovery trend, although there are lingering concerns regarding astop sheet “ST Water Protect,” for entrance fittings. It is

possible downswing after the last-minute demand thatdesigned to protect interiors from water ingress duringaccompanied the consumption tax increase. In fiscal 2014, newrainstorms or typhoons. The “Aquavert,” a wall surface greening

housing construction starts are likely to slow, but the floor area ofsystem developed in partnership with Sakata Seed Corporation,

non-residential construction starts, such as stores, distribution

was brought to market by Showa Front in March 2014. We will

facilities and office buildings, is expected to increase.

continue to diversify our product ranges by developing andUnder these conditions, the Sanwa Group will continue its
efforts to diversify its product ranges and expand its service
businesses during the second year of the First Three-Year Plan.

releasing a wide variety of products to meet environmental,
safety and disaster preparedness needs.
Our initiatives in fiscal 2014 will be guided by three basic

The markets for heavy-duty shutters, doors for commercial

strategies. First, we will consolidate progress made toward thebuildings and condominiums, and partitions, including toilet stalls

diversification of product ranges by identifying product categories

and steel partitions, are expected to remain strong. Sanwafor expansion. Second, we will strengthen our upstream business

Shutter Corporation is predicting year-on-year sales growth ofactivities and expand our retail business. Third, we will establish a

2.2%. Domestic subsidiaries other than Sanwa Shutter

position for the Sanwa Group as the industry leader in terms ofCorporation are also expected to achieve sales growth of 2.2%.

manufacturing technology, product development and engineering.
In April 2014, some of our domestic subsidiaries were

Initiatives and Strategies

absorbed into Sanwa Shutter Corporation with the aim of fostering

Fiscal 2013 was the first business year of the First Three-Year

group integration in order to achieve greater consistency in thePlan. We focused the total energies of the Sanwa Group towardbusiness policies of individual companies and ensure organic

the reinforcement of the structures required to accomplish ourfunctioning based on each company’s strengths and management

goals under the plan. A particular priority for Sanwa Group

resources. We will work under this new structure to achieve further

companies in Japan was the reinforcement of initiatives targeted

product diversification by leveraging group synergies, and to build

toward the diversification of product ranges.

regionally based sales and installation organizations that will enable

In July 2013, Sanwa Shutter Corporation achieved an industry

us to become number one in each region.

first with the launch of the “Tredoor EKOA,” which uses a ventilation

17

Business Overview
In the United States, a gradual recovery in
the residential market helped ODC to lift its
net sales by 2.7% in dollar terms. However,selling prices came under pressure fromincreasing price competition, and operating
income was only marginally higher with a
1.3% year-on-year increase.

North
America
Performance of Overhead Door Corporation (ODC)

Net Sales

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

802,889

866,586

890,375

49,027

Overview of Operations and Business Results infiscal 2013
Overhead Door Corporation (ODC) has built a strong business

49,681base in North America as the Sanwa Group’s core company in
the United States. In addition to Overhead Door and Wayne

38,867

Dalton-brand garage doors and commercial doors, ODC also
supplies Genie brand door openers, automatic doors
manufactured by Horton Automatics, the Wayne Dalton range ofresidential and commercial doors, and TODCO truck/trailer
doors. Other units include Creative Door Services (CDS),

FY 2011

2012

2013

FY 2011* ODC’s fiscal year is from Jan. 1 to Dec. 31

2012

2013

which provides doors and door openers maintenance services
in Canada.
In fiscal 2013 (year ended December 2013), a continuing

Overhead Door wins Women’s
Choice Award
Overhead Door is honored to be considered
the brand of choice among women and toreceive the Women’s Choice Award for asecond consecutive year.

recovery trend in the U.S. economy helped to create new jobs,
but the pace of improvement was not fast enough to drive growthin personal consumption expenditure. However, the number of
new housing starts was significantly higher at 19% above theprevious year’s level.
In this environment, the ODC Group responded to therecovery in the residential market by intensifying its marketing
efforts for products targeted toward the market for newly built

Genie Battery Back-Up Unit
An optional accessory for our openers. It has
the capacity for 50 open/close cycles after
a power outage, providing peace-of-mind tohomeowners even when the power goes out.

housing. It also focused on the development of its forward
integration strategy for the door business and expansion of its
share of the market for door openers. Wayne Dalton in particular
benefited from the residential recovery thanks to its powerfulmarketing systems geared toward large-scale housing
construction contractors. The success of new products resulted
in a bigger share of the door opener market.

Advanced-performance
sectional door
Thermacore® AP 850 commercial sectional
doors are innovatively engineered forsignificantly higher energy efficiency, to keep
buildings with large openings cool in summer
and warm in winter.

These trends in the door business were reflected insustained growth in sales of commercial and residential doors in
the U.S. market. However sales growth was marginal at 1.4%,
reflecting a sales downturn at CDS, which was acquired in 2011,
caused by sluggish market conditions in western Canada. Salesof door openers increased by 8.4%. The steady 8.9% increase inautomatic door business sales was in part due to the full year

18

While some of our core selling markets have not shown significant improvement inoverall business activity in 2013, we did manage to grow our sales by approximately
3 percent for the year. We have continued to make substantial investments in areasthat will enable us to grow profits faster when the business conditions improve. For
example, our new Oracle ERP platform will make us a more capable supplier to ourcustomers and will increase operating efficiency. We also continue to invest in thedevelopment and engagement of our team of Powerful People whose support isparamount to our performance.
We are making progress pursuing our strategy to grow our installation andservice capabilities, completing another acquisition during 2013 and setting up for
future transactions.
As always, we have confidence that we will achieve our ambitious growth andearnings goals with the continued support of our parent company.
Overhead Door Corporation CEO

Dennis Stone

contribution of sales by Advanced Door Automation (ADA),

Initiatives and Strategies

which was acquired in fiscal 2012. However, exports of truck/

As part of our forward integration strategy, we acquired Texas

trailer doors were slow, and revenues were down by 8.5% year

Access Controls Inc. (TAC), a distributor of automatic doors inon year. ODC’s net sales increased by 2.7% year on year in

the United States. With business sites in Houston, Austin anddollar terms, but the yen result was significantly affected by the

San Antonio, which are three of the most important cities in U.S.

exchange rate and was 25.7% higher year on year at ¥87,187

South, TAC has provided a base for the expansion of themillion. Segment income increased by 30.8% to ¥4,559 million.

automatic door and maintenance service businesses in Texas.

Trends in the Business Environment

September 2013, TODCO and ODC’s financial accounting

Continued gradual growth in both residential and non-residential

began to use the new system.

The introduction of the new ERP system continued. In

markets is predicted for the U.S. economy in 2014. However,We dynamically launched new residential door products withwhile the number of new housing starts is likely to remain on a

sophisticated designs attuned to various need of customers andsteady upward trend, sales of existing houses are expected tomarkets. In July 2013, these efforts earned ODC brand garage

fall below the previous year’s level, in part because of a shortage

doors a Women’s Choice Award from WomenCertified® in theof stocks. Strong trends are predicted for non-residential areas,

garage door category for the second consecutive year.

thanks to the economic recovery.
Under these conditions, we are forecasting a recovery in the

In fiscal 2014, we will further increase our investment in the
new ERP system in order to speed up its adoption by othermarkets for both residential and commercial doors, leading todivisions. Through this strategy, we will build the most advanced

revenue growth for the door business. Sales of door openers aremanagement infrastructure in the industry. Under our forward

also expected to expand thanks to market growth and theintegration strategy, we aim to expand our maintenance service

launch of low-price models. A recovery in investment inbusiness by strengthening our relationships with end users.

commercial building construction should bring growth in sales ofautomatic doors, and steady trends in business with major
customers are expected to result in higher sales of truck andtrailer doors.
On this basis, we are forecasting 8.9% growth in net sales indollar terms in fiscal 2014. In yen terms, operating income isexpected to rise by 20.8% year on year.

19Business Overview
Novoferm (NF) recorded a 3.1% year-on-year
fall in net sales in local currency terms due
to a decline in the garage door market
resulting from an economic slowdown inEurope. However, operating income
increased by 10.7% thanks to restructuring
and cost-cutting measures.

EuropeOverview of Operations and Financial Results infiscal 2013

Performance of Novoferm (NF)

Net Sales

Operating Income(Thousand of Euro)(Thousand of Euro)

340,101

338,722

328,219

The Novoferm (NF) Group forms the core of the Sanwa Group’s
European business activities. With its headquarter in Germany,

10,710

the NF Group is the second largest manufacturer of door-related
7,452

8,247

products in Europe.
In addition to its operations in Germany, Novoferm also
has manufacturing bases in France, the Netherlands, Italy,
Poland, Spain, the United Kingdom and South Korea. It sells
commercial and residential doors, including door frames and

FY 2011

2012

2013

* NF’s fiscal year is from Jan. 1 to Dec. 31

FY 2011

2012

2013

garage doors throughout Europe, Russia, Africa, the Middle
East and South Korea.
Many uncertainties continued to affect the European

NovoPorta Premio – The new
Novoferm steel hinged door
The new multifunctional doors, the innovative
NovoPorta Premio will comply with the new
future standard EN 16034 which will regulate
the requirements for fire- and smoke resistantdoors and shutters in Europe.

economies in fiscal 2013 (year ended December 2013), andthere were no signs of growth. Despite firm trends in the German
housing construction market, challenging conditions continued in
the non-residential and residential markets throughout the
eurozone as a whole.
The NF Group worked in this environment to increase orders
and sales by stepping up sales promotion activities in theirmarkets to stimulate demand and gain market share. Other

Novoferm Middle East –Sanwa‘s new gateway to theMiddle East region“Novoferm Middle East is now open forbusiness” - Chris Spierings (left), Novoferm
Middle East, is welcomed to our new offices
in Doha, by our local Qatari sponsor, Suheil
Abdul Rahim, Managing Director of Petrobuild,
before getting down to work on new quotationsfor Middle East projects.

The plant of Alpha Deuren
International B.V.
Novoferm’s new subsidiary, Alpha Deuren
has established a best cost-competitive edge
through systematic and efficient production
and sales model.

priorities were restructuring, productivity improvement and cost
reduction. Net sales declined by 2.6% year on year in Germany
and by 8.3% in France. However, net sales increased by 8.9% in
Italy and remained largely unchanged in the Netherlands.
An analysis by product segments shows that garage door
sales declined by 7.7% year on year because of market
shrinkage in France and other factors. Efforts to win contracts
for new projects boosted sales of hinged doors by 1.1% year on
year, but sales of industrial doors were 1.7% lower because of
the delayed recovery of the non-residential market.
Net sales in Europe fell by 3.1% year on year in local
currency terms. However, operating income increased by
10.7% thanks to in-depth cost-cutting measures that included
restructuring in France and other markets, the reduction

20

The European markets have shown signs of stabilizing in the last 12 months.
Although some countries are still suffering, overall there are first signs of recovery.
This supports our growth plans for the future.
We are continuing with our strategy to differentiate ourselves against ourcompetitors, by focusing on customer-oriented processes as well as offering moreenergy-saving products, such as quick acting sectional doors or products with low
energy consumption. Our cost reduction programs are running according to plan andincreasing our competitiveness.
To improve our industrial product business, in the first half of 2014 we acquired
Alpha Deuren BV, one of the leading producers of industrial sectional doors in
Europe. With this acquisition, we will double our turnover in this business segment
and quadruple our annual production volume of industrial sectional doors. In addition
to cost reduction synergies, the acquisition also offers us cross-selling opportunities
with Alpha Deuren’s specialized door dealers.
Overall, we are looking very positively towards the future.
Novoferm Group CEO

Rainer Schackmann

of material costs through procurement from China, andpolicy of dynamic expansion, including the establishment of

productivity improvements.

outlets in Russia, Eastern Europe, the Middle East and otherIn yen terms, total net sales in Europe increased by 22.3%

regions. In January 2014, the Sanwa Group began to move into

year on year to ¥42,653 million, while segment income rose by

the Middle East in earnest with the establishment of Novoferm

41.9% year on year to ¥1,000 million.

Middle East as a sales office based in Doha, Qatar. Novoferm
Middle East will act as a base for the Group’s expansion into theBusiness Environment and Trends

Middle East and will work to capture local demand generated by

While the European economies as a whole are expected toa building rush.

recover, challenging conditions are likely to continue in the

In June 2014, Novoferm acquired 100% of shares in Alphaconstruction market. We anticipate a recovery in housing

Deuren International B.V., a major industrial door manufacturer inconstruction in Germany, but conditions in other regions are

the Netherlands. This company manufactures and sells industrial

expected to remain difficult. Non-residential construction isdoors, residential garage doors and other products, primarily in

expected to recover in Germany and the Netherlands, but aGermany, the Netherlands and France, and there is potential for

slowdown is predicted in France.

major synergies with Novoferm. Alpha Deuren is the mostDespite weak trends in the garage door market, we

cost-competitive company in the industry thanks to its system-

expect to achieve sales growth in this environment throughbased production and sales methods. As a result of thisstrategies that include the introduction of new products.

business merger, the Novoferm Group will not only become one

We also expect to achieve higher sales of hinged doors andof the leading business groups in Europe in its mainstay areas ofindustrial doors by adopting a proactive approach to pricing for

garage doors and hinged doors, but will also achieve its long-project-related orders. Net sales are expected to increase bycherished goal of becoming a leader in the industrial door

2.1% and operating income by 3.1% year on year in local

market. This acquisition will allow Novoferm to react quickly tocurrency terms in 2014.

an emerging recovery trend in the European market and work
towards its goal of establishing a strong position in the industrial

Strategies and Initiatives

door market in Europe and especially in Germany.

The Sanwa Group’s future business initiatives in Europe will
focus on the improvement of the income structures of individual
group companies through further restructuring and cost-cutting
efforts. We will also target growth in new markets through a21

Business Overview

Asia

Sanwa Group will work to expand orders through key initiatives
that include pricing measures designed to increase orders for
local properties, entry into the markets for products for use incommercial facilities and office buildings, nationwide expansion
through wide-area management, and marketing activities basedon the tie-up with the Baosteel Group.
Novoferm Shanghai, which manufactures and sells steel
doors in China, is working alongside Baosteel-Sanwa to capture
local demand for doors. In fiscal 2013, sales of upmarket
entrance doors, which are one of its flagship products, wereweak due to the impact of real estate acquisition restrictions
imposed by the Chinese government. Due to continued firm
demand from medical institutions, net sales and the operating
loss were both improved from the previous year, as thecompany works toward achieving full-year profitability. In fiscal
2014, Novoferm Shanghai plans to make full use of the
production capacity created in fiscal 2013 to ensure stable“The Shoutou-en”
in Taiwan
Sanwa Tajima Corporation andAn-Ho Metal Industrial Co., Ltd.,a local subsidiary, have supplied
various products such as stainlesscurtain walls, steel doors for thishigh-grade residence.

production of door products and to achieve profitability, so thatit can continue to contribute to improvement in the Sanwa
Group’s business performance.
Vina-Sanwa manufactures and sells shutters, doors andother products in Vietnam. Orders, net sales and operating
income all increased in fiscal 2013, primarily due to large-scale
projects and projects involving Japanese-affiliated organizations.
In fiscal 2014, Vina-Sanwa will continue working to improve its
net income through initiatives that include the introduction ofHaving built up the Sanwa Group’s businessstructures in Japan, North America andEurope, we are now focusing on thedevelopment of business infrastructure in
Asia. In fiscal 2013, the aggregate net salesof our five key group companies in Asia
increased by ¥1.1 billion year on year to¥5.3 billion.

new products, such as designer apartment doors, and the
expansion of its maintenance business.
The Taiwanese company An-Ho Metal Industrial continues
to expand its door, shutter and stainless steel businesses. In
fiscal 2013, it achieved growth in both net sales and operating
income by focusing on commercial projects amid a lull in capital
investment by the Taiwanese manufacturing sector. The
company will continue its efforts to improve product quality in all
categories in fiscal 2014, with the aim of establishing a position
for itself as the foremost manufacturer of quality doors.
In Hong Kong, Sanwa Shutter H.K. experienced significant

Overview of Operations in fiscal 2013 and Future
Strategies

growth in net sales and operating income, thanks to the

Our Chinese joint venture Shanghai Baosteel-Sanwa Doordevelopment. This was reflected in substantially higher orders,manufactures and sells products that include heavy-duty

particularly relating to large-scale development projects. In fiscal

shutters and overhead doors. Net sales and operating income

2014 the company will work to build a reliable income structure

were both lower in fiscal 2013 because of the combined effects

by diversifying its production line-up and establishing a repairof China’s economic slowdown and reduced orders due to aand maintenance business.

decline in projects by Japanese companies. Work has started on

22

expansion of the construction market, especially infrastructure

These companies will continue to work within the Sanwa

large-scale properties, including super-high-rise buildings andGroup to strengthen our business base in Asia by creating

industrial projects, in major Chinese cities. In fiscal 2014, thebusiness models that match local markets.

CSR Activities
Compliance
We also monitor employee awareness of compliance issues

The Sanwa Group is determined to meet public expectations andearn the trust of society. We have established a Compliancethrough surveys. The findings are used to identify and remedy

Code of Conduct, and implemented a range of measures

issues through ongoing improvement activities.
The Sanwa Group is committed to improving its process fordesigned to make the concepts contained therein an integral part

prevention and early discovery of improper conduct that violatesof our corporate culture.

the law. To this end, we have introduced a corporate ethics

The Compliance Code of Conduct defines the specific rulesof behavior to follow when translating the mission, corporate

hotline as part of our objective to promote compliance with laws

philosophy and values of the Sanwa Group and the spirit of ourand public expectations. The ethics hotline office can receive

behavior guidelines, into actual conduct.

reports by phone, fax or through the Internet, and handles
company-internal or external cases.

Employees learn about the Compliance Code of Conduct
through in-house training and other activities. The purpose of
these activities is to ensure legal compliance and to instill
judgment and conduct that comply with public expectations.

The Sanwa Group’s
CSR Promotion System

CSR Promotion
Organizational System• The CSR Promotion Council

Sanwa Holdings Board of Directors

proposes initiatives and developmentof Group-wide CSR activities.
Chairman: Officer in charge ofCorporate Planning Unit

Initiative proposal/development

Group CSR Promotion Council

Members: Officers in chargeof divisions, generalmanager of Audit

Secretariat

CSR Promotion Department

Department and Group
Company Presidents
and others• Group companies establish CSR

Implementation divisions

Promotion Committees and CSR
Promotion Subcommittees toGroup Company

Group Company

Group Company

CSR Promotion Committee

CSR Promotion Committee

CSR Promotion Committee

CSR Promotion
Subcommittee

CSR Promotion
Subcommittee

CSR Promotion
Subcommittee

coordinate CSR activities.
• The CSR Promotion Department
serves as the secretariat for theGroup CSR Promotion Council and
CSR promotion activities in general.

23

CSR Activities
Risk Management

Environmental Protection Activities

Our risk management systems are designed to detect

The Sanwa Group has formulated the Sanwa Grouppotential risks (factors that may adversely affect or hinder

Environmental Policy and is firmly committed to environmental

business activities) in advance at all stages of our operations atpreservation activities based on the policy.
We have also designated June 10 as “Sanwa Environment

every group company and business unit. We can thenimplement countermeasures to prevent these risks fromDay” to raise our employees’ awareness of the need to protect

causing actual problems.

the environment and to promote environmental protection
activities. On this day, group company employees participate in

We are developing our risk management systems byapplying the PDCA cycle. We work to detect risks promptly andcommunity clean-up campaigns in the areas around ourthen analyze and evaluate them to identify which risks are critical.

various business sites, and similar environmental activities.

Next, we devise and implement countermeasures. After

Also, with the primary aim of reducing CO2 emissions, ourimplementation, we evaluate the countermeasures and continue

manufacturing units have developed energy conservation

them when necessary.

measures that cover proper operation of machinery andequipment as well as thorough monitoring of energy usage,and our sales units take care to follow eco-friendly driving
practices when using company vehicles.

Sanwa Group
Environmental Policy
Basic Philosophy
As globally integrated manufacturers of building materials, the Sanwa Group contributes to the realization of anenriched society capable of sustainable development through environmentally responsible business activities andthe supply of environment-friendly products and services.

Basic Policies
1. To comply with legal systems and otherpreservation of all people working for thecommunicate with society.

Sanwa Group by ensuring they understand this

2. Appropriately assess impacts on the environment,set objectives and goals, and continuously workfor the preservation and improvement of theenvironment.
3. Promote conservation and recycling of natural
resources and energy, and endeavor to prevent

Environmental Policy and providing them withinformation about the environment.
6. E
 ncourage the companies that cooperate with us in
our business activities to undertake environmental
preservation initiatives, and endeavor to support theirefforts to do so.

pollution, for example through the reduction of

In order to promote the above policies we will endeavorwaste.

to implement, maintain and continuously improve our

4. Actively promote the development of environmentfriendly products, and endeavor to improve ourtechnological level further.

24

5. E
 ndeavor to raise the awareness of environmental

requirements related to the environment, andenvironmental management system.

Sanwa Group seeks to contribute to society primarily through on
community-based employee participation activities, to fulfill ourroles and responsibilities as a member of the community.
1. The Sanwa Group will contribute to society throughSanwa Group Social Contribution Policy
The Sanwa Group wants to be part of a society in which people
can enjoy happy, fulfilling lives. We will help to build such asociety through our continuing social contribution activities, andthrough human resource development initiatives designed toenrich the wider human characteristics of our employees.

products and services of the highest quality.
2. As a good corporate citizen, the Sanwa Group willcontribute to the development of local communities.
3. The Sanwa Group will provide effective support forsocial contribution activities involving its employees.

The Social Contribution ClubThe Sanwa Group Social Contribution Club was established infrom executives and employees.

November 2006 to commemorate the 50th anniversary of the

In the year ended March 2014, a total of ¥4.4 million was donatedfounding of Sanwa Shutter Corporation. The Club carries out

to eight organizations. The following are some of the messages ofsocial contribution activities using funds that include donations

appreciation that were received from these organizations.

Thank you for your very generous donation. Throughout Japan over 200,000
children are affected by more than 500 intractable diseases for which the causes
are unknown, or for which no treatment method has been established. Our aim is
to create a network to provide support for those children and their families. We
will make effective use of your kind donation in these activities.
—National Support Network for Children Suffering from Intractable Diseases
Left:	Mr. Kobayashi of the National Support Network for Children Suffering from Intractable Diseases
Right:	Mr. Yamaki of the Social Contribution Club Administration Committee

We are truly

We are sincerely grateful for

grateful for your

your generous donation. Children

wonderful donation.

who travel to Tokyo for medical

Through our activities

treatment face long and daunting

we try to provide

battles with illness far from theiremotional support tohomes. We believe opportunities forchildren who are
suffering as a resultof bullying, family

Left: Ms. Magome of the Social Contribution
Club Administration Office.
Right: Ms. Ota of Childline Support CenterJapan

those children and their families theopportunity to relax in a homelike
environment can have a positive

Left: Ms. Ueda of Family House
Right: Mr. Teramura of the Social
Contribution Club Secretariat

problems or other issues. We look forward to youreffect on their treatment, and we will continue to administer ourcontinuing support in the future.

houses as places that provide warmth and comfort. We will ensure—Childline Support Center Japanthat your donation benefits those who use our houses.
—Family House

25

Corporate Governance
Board of Directors(As of June 26, 2014)

Hiroatsu Fujisawa

Ichiro Ueeda
Kazuhiko Kinoshita

Wadami Tanimoto
Toshitaka Takayama

Board of Directors, Statutory Audit & Supervisory
Board Members and Executive Officers

Masahiro Fukuda

Tamotsu Minamimoto

Makoto Yasuda

Yasushi Takayama

Audit & Supervisory Board Members(As of June 26, 2014)(As of June 26, 2014)

Representative Director
Chairman and CEO

Director
Senior Executive Officer
Americas Business Unit

Senior Executive Officer
General Manager, General
Affairs Dept.

Representative Director
President and COO

Masahiro Fukuda

Tatsuto Satsuka

Tamotsu Minamimoto

Director
Senior Executive Officer
Strategic Re-Engineering
Unit

Toshitaka Takayama

Director
Executive Vice-President
Domestic Business Unit

Kazuhiko Kinoshita
Director
Senior Managing Executive
Officer
Corporate Planning Unit

Yasushi Takayama
Director
Senior Managing Executive
Officer
Europe Business Unit

Hiroatsu Fujisawa
Outside Director

Makoto Yasuda
Standing Statutory Auditor

Toshiaki Nakaya
Standing Statutory Auditor

Jiro Ichioka

Executive Officer
Subleader, Europe Business
Unit

Takenobu Hoizumi
Executive Officer
Subleader, Asia Business
Unit

Takafumi Hashimoto
Katsuhiko Tanabe

Director
Senior Managing Executive
Officer
Asia Business Unit

Statutory Auditor

Jumpei Morimoto
Senior Executive Officer
Subleader, Asia Business
Unit

Sampei Kametaka

26

Tsunahiro Watanabe

Statutory Auditor

Wadami Tanimoto

Ichiro Ueeda

Executive Officer
General Manager, Asia
Business
Planning Dept.

Executive Officer
President, VINA-SANWA
Company
Liability Ltd.

Hidemine Yasui

Katsuhiko Tanabe Toshiaki Nakaya

Jiro Ichioka

Jumpei Morimoto

Basic Stance on Corporate GovernanceManagement Guidelines, which stipulate procedures from

Sanwa Holdings Corporation is a global corporation with groupreporting when an emergency occurs to recovery measures.

companies in the United States, Europe and Asia including
China. Our basic approach to corporate governance is to

Corporate Governance Structure

continuously raise our corporate value through fair and equitable

Sanwa Holdings has established a Board of Directors and abusiness transactions in a business environment characterized

Audit & Supervisory Board. The Board of Directors is composedby intense global competition. To this end, the Sanwa Groupof nine members, including one outside director, and the Audit &seeks to build a highly transparent system that allows us toSupervisory Board has four audit & supervisory board members,

effectively achieve our corporate vision.

including two outside audit & supervisory board members. The

In accordance with this approach, we have introduced an
executive officer system to separate the decision-making
function of the Board of Directors from the business execution

outside director and audit & supervisory board members havebeen designated to play an independent role.
The Board of Directors Meetings and the Audit &function of the executive officers. We undertook this initiative to

Supervisory Board Meetings are normally held once per month.

strengthen management effectiveness and to give the Board of

The Board of Directors makes important management decisions

Directors oversight of business execution as exercised by thebased on their considered judgment and supervise theexecutive officers. Preceding this, we moved to a holding

execution of the directors’ responsibilities. To maintain andcompany structure in October 2007 with three purposes: 1) toenhance management effectiveness, the Board consists ofimprove group-level governance, 2) to strengthen the

directors who are very familiar with Sanwa’s operations and ancompetitiveness of operating companies and 3) to reinforce

outside director with keen insight gained from a wealth ofgroup-level strategic functions. We will continue to work to better

corporate management experience.

fulfill of our corporate governance obligations by preparing

The Audit & Supervisory Board monitors the status ofsystems that ensure competence in business operations.

business execution by the Board of Directors and the executive
officers, issue reports on their findings, and ensure that

Internal Control Systemmanagement actions are legal and proper. To increase thePursuant to “System to ensure conformance of execution ofeffectiveness of audits, they have been granted independence

duties by directors and employees to laws, ordinances andcombined with enhanced responsibilities and authority. In

articles of incorporation” as provided in Article 362, paragraph 4,

partnership with the Audit Department, the corporate audit &item 6 of the Companies Act, the Basic Policy on Internal Control

supervisory board members ensure that the business is in soundSystem was adopted by resolution at a meeting of the Board offinancial health and pursue compliance with rigor andDirectors held on May 15, 2006. In accordance with theconsistency across the Sanwa Group.

resolution, the Company has established and implemented an

In fiscal 2013, the Board of Directors met 13 times with ainternal control system, has established prescribed standards

98.6% attendance rate for directors and corporate audit &and procedures in each business operation to ensure that thesupervisory board members, and the Audit & Supervisory

Company’s internal organizations are operated soundly,

Board met 12 times with a 100.0% attendance record.

effectively, and efficiently, free from improprieties, mistakes, andWe have also established a Group Strategy Committee as

errors, and has implemented controls based on the standards

an advisory body to the Board of Directors. This council

and procedures. At its meeting on April 25, 2014, the Board of

conducts high-level examination and coordination of group

Directors adopted a resolution partially amending the Basicmanagement policies as well as business management plans

Policy on the Internal Control System.

and budgets, and formulates medium-to-long term group
strategies. They also deliberate matters pertaining to group-level

Risk Management

strategies, offer their recommendations on these matters, andIn accordance with the basic matters pertaining to risk

work with the Board of Directors to ensure timely and effective

management established in the Risk Management Regulations,business decisions.

the Company identifies, shares, and mitigates risks and strives toSupervision and audits of the detailed status of businessminimize loss in the event an emergency occurs. In addition, theexecution is carried out at the PDCA Council, held quarterly byCompany is developing a groupwide risk management system

the directors, executive officers and audit & supervisory board

consisting of Risk Management Guidelines and Crisis

members, and similar organizations. The directors monitor

27

Corporate Governance
It is the view of Sanwa Holdings that the structure outlined

progress against the management plan and provide guidance onmanagement issues, while the corporate audit & supervisory

above constitutes a governance system that ensures theboard members audit the state of business execution by thecompetence of the Group’s business operations and fulfills its

executive officers.

corporate governance obligations.

To develop a consistent set of CSR activities across the
CSR Promotion Department, meets four times a year. The

Countermeasures against Large-Scale Acquisition of
Sanwa Holdings Shares (Anti-Takeover Measures)council deliberates CSR policies of the entire Group, matters

The Company has formulated countermeasures against large-

related to the quality assurance system and other CSR issues.

scale acquisition of the company’s shares (anti-takeover

Sanwa is actively working to fulfill its corporate social

measures). At its meeting on May 16, 2014, the Board of Directors

responsibilities, and to this end has established CSR Promotion

resolved to update the countermeasures against large-scale

Committee that plan and promote CSR activities together withacquisition of the company’s shares with the aim of securing andindividual work sites.

enhancing the company’s corporate value and the common

Sanwa Group, the Group CSR Promotion Council, run by the

To establish and maintain a corporate governance systeminterests of shareholders. This resolution was approved at thethat earns the trust of society through its financial health, audit

79th General Meeting of Shareholders held on June 26, 2014.

& supervisory board members travel directly to subsidiaries andaffiliates to study their situation or issue requested reports.
Furthermore, Sanwa’s independent auditors, Kyoritsu Audit
Corporation, conducts financial audits of Sanwa Holdings’
major consolidated subsidiaries.

Sanwa Group
Corporate Governance System
General Shareholders’ Meeting
Appointment
Dismissal

Group Strategy Committee

Proposal

Board of Directors

Appointment
Dismissal
Report
Audit
Report(Consultation on major items)

Appointment Selection
ReportDomestic Business/
Overseas Business
PDCA Council, etc.

ReportReportRepresentative Directors
MonitorDirectCooperation

Audit
ReportAccounting
Audit

ReportExecutive Officers

ReportIndependent Auditors

ReportAudit &
Supervisory Board
Audit

Appointment
Dismissal

ReportReportReportReportGroup CSR
Promotion Council

28

Promotionand Support

Supervise
MonitorReportEach Division/Group Company

Internal Audit

Audit Department

Financial
Information

30 Consolidated Balance Sheets
32 Consolidated Statements of Operations
32 Consolidated Statements of Comprehensive Income
33 Consolidated Statements of Changes in Net Assets
34 Consolidated Statements of Cash Flows
35 Notes to the Consolidated Financial Statements
55 Independent Auditors’ Report29Consolidated Balance Sheets
Sanwa Holdings Corporation and Subsidiaries
As of March 31, 2014 and 2013

Thousands of
U.S. dollars (Note 1)

Millions of yen

2014

2013

2014

¥ 52,307¥ 22,275

ASSETS
Current assets:
Cash and cash equivalents (Note 10)$ 512,814

Short-term investments (Notes 3, 10)

2,620

2,243

25,686

Notes and accounts receivable, trade (Note 10)72,947

63,820715,167

Allowance for doubtful accounts(1,581)(1,335)(15,500)

Inventories (Note 4)

41,714

38,170408,961

Deferred income taxes (Note 14)

4,632

4,185

45,412Other current assets

4,882

4,498

47,863

177,521

133,856

1,740,403

Total current assets
Property, plant and equipment:
Land

22,79822,583

223,510

Buildings and structures

46,46843,214455,569

Machinery and equipment

65,256

56,779639,765

Construction in progress

1,213

1,218

11,892

135,735

123,794

1,330,736(80,963)(73,374)(793,755)

54,77250,420536,981Less accumulated depreciation
Total property, plant and equipment
Intangible assets:
Goodwill

2,259

2,325

22,147

Other intangible assets (Note 5)

15,561

14,718

152,559

17,82017,043

174,706

Investments in non-consolidated subsidiaries and affiliates (Notes 3, 10)

10,985

8,104

107,696

Total intangible assets
Investments and other assets:
Investments in securities (Notes 3, 10)

11,79822,835

115,667

Net defined benefit asset (Note 7)

1,432

—

14,039Deferred income taxes (Note 14)

4,942

4,961

48,451

Allowance for doubtful accounts

(501)

(469)

(4,912)Other assets

3,148

5,021

30,863

Total investments and other assets
Total assets
The accompanying notes are an integral part of these statements.

30

31,80440,452

311,804¥281,917¥241,771$2,763,894

Thousands of
U.S. dollars (Note 1)

Millions of yen

2014

2013

2014

¥ 30,094¥ 11,954$ 295,039

Notes and accounts payable, trade (Note 10)

43,60838,398427,529

Accrued income taxes

4,940

3,754

48,431

Accrued expenses

16,18913,134

158,716

16

30

157

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term debt (Notes 6, 10 )Deferred income taxes (Note 14)
Other current liabilities
Total current liabilities

13,938

12,577

136,647

108,785

79,847

1,066,519

39,06048,846

382,941

Long-term liabilities:
Long-term debt (Notes 6, 10)

—

9,440

—

Net defined benefit liability (Note 7)

12,408—

121,647

Deferred income taxes (Note 14)

5,154

3,942

50,529Other long-term liabilities

2,554

2,561

25,043Retirement and severance benefits (Note 7)

Total long-term liabilities
Total liabilities

59,17664,789580,160

167,961

144,636

1,646,679

Contingent liabilities (Note 8)
NET ASSETS
Shareholders’ equity (Note 12)
Common stock:
Authorized—550,000,000 shares in 2014 and 2013
38,41338,413

376,598

Additional paid-in capital

39,90239,902

391,196

Retained earnings

37,70830,975

369,686

Treasury stock, at cost
(18,174,813 shares in 2014 and 18,134,664 shares in 2013)(9,859)(9,833)(96,657)

106,164

99,4571,040,823

Issued—257,920,497 shares in 2014 and 2013

Total shareholders’ equity
Accumulated other comprehensive income

545(1,601)

5,343

Foreign currency translation adjustments

9,252

(844)

90,706

Remeasurements of defined benefit plans(2,172)—(21,294)

7,625(2,445)74,755

167

123

1,637

Net unrealized holding gains (losses) on securities

Total accumulated other comprehensive income
Stock acquisition rights
Total net assets

113,956

97,135

1,117,215

Total liabilities and net assets¥281,917¥241,771$2,763,894

31

Consolidated Statements of Operations
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2014 and 2013

Thousands of
U.S. dollars (Note 1)

Millions of yen

2014¥ 311,957

2013¥265,913

2014$3,058,402

Cost of sales (Note 13)
Gross profit

225,954
86,003

196,632
69,2812,215,235
843,167

Selling, general and administrative expenses (Note 12)
Operating income

65,354
20,64955,107
14,174

640,725
202,442

575
(918)
206
(3,524)(3,661)
16,988

588
(935)
117
(868)
(1,098)13,076

5,637(9,000)2,020(34,549)(35,892)
166,550

6,060
767
6,827
10,161¥ 10,161

5,439
456
5,895
7,181
7,181

59,412
7,520
66,932
99,61899,618Net sales

Other income (expenses):Interest and dividend income
Interest expenses
Equity in earnings of non-consolidated subsidiaries and affiliates
Other, net (Note 15)
Net income before income taxes and minority interests
Income taxes (Note 14):Current
DeferredIncome before minority interests
Net income

¥
Yen

2014
Per share:
Net income —Basic		—Diluted
Cash dividends

U.S. dollars (Note 1)

2014

2013

¥42.38
42.28
13.00

$

¥29.93
29.87
10.00

$0.42
0.41
0.13

The accompanying notes are an integral part of these statements.

Consolidated Statements of Comprehensive Income
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2014 and 2013
Thousands of
U.S. dollars (Note 1)

Millions of yen

Income before minority interests
Other comprehensive income (Note 16)
Net unrealized holding gains on securities
Foreign currency translation adjustments
Share of other comprehensive income of non-consolidated subsidiaries andaffiliates accounted for using the equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests
The accompanying notes are an integral part of these statements.

32

2014
¥10,161

2013¥7,181

2014$ 99,618

2,146
9,930

1,712
4,890

21,03997,353

167

176

1,637

12,243¥22,404

6,778¥13,959

120,029$219,647¥22,404—¥13,959—$219,647—

Consolidated Statements of Changes in Net Assets
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2014 and 2013

Millions of yen
Commonstock

Balance at March 31, 2012

¥38,413Additional
paid-in
capital¥39,902

Retainedearnings¥25,999

Treasurystock,
at cost¥(9,694)

Net unrealized
Foreignholding gains
currency(losses) on
translation
securities
adjustments¥(3,315)¥(5,909)

Remeasurements ofdefinedbenefit plans

¥

—

Stock
acquisitionrightsTotal
net assets¥126¥ 85,522

Net changes during the year
Cash dividends(2,160)Net income for the year

7,181

Purchase of treasury stock
Disposal of treasury stock(2,160)
7,181
(226)

(226)

(45)

87

42

Net changes during the year otherthan shareholders' equity
Total net changes during the year
Balance at March 31, 2013

1,714

5,065

—

(3)

6,776

—

—

4,976

(139)

1,714

5,065

—

(3)

11,613¥38,413¥39,902¥30,975¥(9,833)¥(1,601)¥ (844)—¥123¥ 97,135¥

Net changes during the year
Cash dividends(2,637)(2,637)

Net income for the year

10,161

10,161

Change of scope of equity method(791)

Purchase of treasury stock

(791)
(26)

(26)

Net changes during the year otherthan shareholders' equity
Total net changes during the year
Balance at March 31, 2014

2,146
—

—

6,733

(26)

¥38,413¥39,902¥37,708¥(9,859)¥

10,096(2,172)

44

10,114

2,146

10,096(2,172)

44

16,821545¥ 9,252¥(2,172)¥167¥113,956

Remeasurements ofdefinedbenefit plans

StockacquisitionrightsTotal
net assets

Thousands of U.S. dollars (Note 1)

Balance at March 31, 2013

Commonstock

Additional
paid-in
capitalRetainedearnings

Treasurystock,
at cost$376,598$391,196$303,676$(96,402)

Net unrealized
Foreignholding gains
currency(losses) on
translation
securities
adjustments$(15,696)$ (8,275)$—$1,206 $ 952,303

Net changes during the year
Cash dividends(25,853)(25,853)

Net income for the year

99,61899,618Change of scope of equity method(7,755)Purchase of treasury stock(7,755)(255)

Net changes during the year otherthan shareholders' equity
Total net changes during the year
Balance at March 31, 2014

(255)
21,03998,981(21,294)——

66,010(255)

21,03998,981(21,294)$376,598$391,196$369,686$(96,657)$ 5,343$90,706$(21,294)

431

99,157431

164,912$1,637 $1,117,215

The accompanying notes are an integral part of these statements.

33

Consolidated Statements of Cash Flows
Sanwa Holdings Corporation and Subsidiaries
For the years ended March 31, 2014 and 2013

Thousands of
U.S. dollars (Note 1)

Millions of yen

2014

2013

2014

¥16,988¥13,076$166,550

Depreciation and amortization

6,626

5,785

64,961Equity in earnings of non-consolidated subsidiaries and affiliates

(206)

(117)

(2,020)Interest and dividend income

(575)

(588)

(5,637)

Interest expenses

918

935

9,000

102

5

1,000

1,653

382

16,206—

392—

Increase (decrease) in net defined benefit liability and assets

1,096

—

10,745Decrease (increase) in notes and accounts receivable(5,044)(260)(49,451)

393

213

3,853

Increase (decrease) in notes and accounts payable
Other, net

3,512
(404)

(802)
3

34,431(3,961)

SubtotalInterest and dividend income received

25,059566

19,024586

245,6775,549Interest expenses paid
Income taxes paid

(917)
(4,980)(938)(3,817)(8,990)(48,824)

19,72814,855

193,412

Payments for purchase of investments in securities(3,138)(5,462)(30,765)

Proceeds from sales of investments in securities

15,412

4,556

151,098

Cash flows from operating activities:
Net income before income taxes and minority interests
Adjustments for:

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for bonuses
Increase (decrease) in retirement and severance benefits

Decrease (increase) in inventories

Net cash provided by operating activities
Cash flows from investing activities:

Payments for purchase of tangible and intangible assets(7,116)(4,293)(69,765)

Payments for advances(1,431)(1,504)(14,029)

Proceeds from collections of advances

1,419

1,240

13,912

(72)
858

(292)
442

(706)
8,412

5,932

(5,313)58,157

Acquisition for business
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Increase in short-term loans, net

292

1,219

2,863

Proceeds from long-term loans

9,660

13

94,706

Repayments of long-term loans(3,412)(827)(33,451)

Proceeds from issuance of bonds

—

3,000

—

Repayments of bonds—(5,000)—Purchase and disposal of treasury stock, net

(26)

(185)

(255)

(2,637)—(2,160)(401)(25,853)—

3,877(4,341)38,010Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

495

249

4,853

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

30,032
22,2755,450
16,825

294,432
218,382

Cash and cash equivalents at the end of year

¥52,307¥22,275$512,814

The accompanying notes are an integral part of these statements.

34

Notes to the Consolidated Financial Statements
Sanwa Holdings Corporation and Subsidiaries

1. Basis‌of Presenting
Consolidated
Financial Statements

Sanwa Holdings Corporation (the “Company”) and its domestic subsidiaries maintain their accounts andrecords in accordance with the provisions set forth in the Japanese Corporate Law and the Financial
Instruments and Exchange Law and in conformity with accounting principles and practices generally
accepted in Japan, which are different from the accounting and disclosure requirements of International
Accounting Standards.
The Company’s overseas subsidiaries have been prepared in conformity with International Financial
Reporting Standards or US GAAP for the Company’s consolidation process, except for certain items
which are required to be adjusted in the consolidation process.
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 Directorof Kanto Local Finance Bureau as required by the Financial Instruments and Exchange Law.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenienceof the reader, using the approximate exchange rate at March 31, 2014, which was ¥102 to US$1.00.

2. ‌Summary of
Significant
Accounting Policies(a) Scope of Consolidation
At March 31, 2014, the Company had 79 subsidiaries and 19 affiliates.
The consolidation for the year ended March 31, 2014 (FY2013) includes Sanwa Holdings
Corporation and its 37 consolidated subsidiaries. In FY2013, 1 company was excluded in the scope of
consolidation because it was filed for liquidation. Equity method accounting is applied to investments in
8 non-consolidated subsidiaries and 5 affiliates at March 31, 2014. In FY2013, 1 company was includedin the scope of equity method accounting because the significance was increased.
(b) Foreign Currency Translation
All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at
the exchange rates prevailing at the year-end and revenues and expenses accounts are translated into
Japanese yen at average exchange rates during the year.
Shareholders’ equity accounts of foreign subsidiaries and affiliates are translated at historical rates.
The resulting translation differences are debited or credited to the foreign currency translation
adjustment account in shareholders’ equity or to the minority interests in consolidated subsidiaries in the
consolidated balance sheets.
(c) Cash Equivalents
All highly liquid investments with original maturities of three months or less are considered to be
cash equivalents.
(d) Short-term Investments and Investments in Securities
The Group adopted the Accounting Standards for Financial Instruments which was issued by theBusiness Accounting Deliberation Council. In accordance with these standards, securities are classified
into four categories: trading securities, held-to-maturity debt securities, equity investments in associates,and other securities. Based on this classification, securities with a maturity of less than one year are
included in “Short-term investments” as current assets.
Securities held by the Group are all classified as other securities. Marketable securities classified asother securities are carried at fair value with the unrealized gain and loss, net of applicable tax, reported
in a separate component of shareholders’ equity. Non-marketable securities classified as othersecurities are carried at cost determined by the moving average method. Realized gain and loss anddeclines in value judged to be other than temporary on other securities are charged 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
the lower of cost or market value method by the first-in, first-out method or the moving average method.

35

(f) Property, Plant and Equipment (Excluding Lease Assets)
Property, plant and equipment are stated at cost. Depreciation is computed by the declining-balancemethod over the estimated useful lives of assets, except that the straight-line method is applied tobuildings (other than structures attached to the buildings) acquired subsequent to April 1, 1998. The
foreign consolidated subsidiaries adopt the straight-line method for depreciation.
Costs of maintenance, repairs and minor renewals are charged to income in the year incurred,
although major renewals and improvements are capitalized.
(g) Amortization of Goodwill
Amortization of goodwill is determined on a case basis and in generally amortized over a period notexceeding 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 lease term as the useful life with residual value of zero.
However, the Group continues to apply the method for ordinary operating lease transactions to financelease transactions contracted before March 31, 2008.
(i) Retirement and Severance Benefits
The Group recognizes pension and severance costs for employees based on the estimates of thepension obligations and the plan assets at the balance sheet date. The straight-line 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 principally over a ten-year period, which is within the averageremaining service period of employees, using the straight-line method from the fiscal year when the
difference was generated. Prior service cost of the domestic consolidated companies is amortized when
the prior services cost is generated.
Prior service cost of certain foreign subsidiaries is amortized over a ten-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”).
(Changes in Method of Accounting)
Effective the year ended March 31, 2014, “Accounting Standard for Retirement Benefits” (AccountingStandards Board of Japan (“ASBJ”) Statement No. 26, revised on May 17, 2012) and “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, revised on May 17, 2012) werepartly adopted. As a result of the partial adoption of these revised accounting standards, the differences
between the retirement benefit obligation and plan assets at fair value is recognized as liabilities orassets for retirement benefits and unrecognized actuarial gains or losses and net retirement benefit
obligation at transition are recognized within net assets (accumulated other comprehensive income),
after adjusting for tax effects.
The effect of the adoption of these revised accounting standards was included in accumulated othercomprehensive income as remeasurements of defined benefit plans as of March 31, 2014 inaccordance with transitional accounting treatments provided in the revised accounting standards.
As a result of the adoption of these revised accounting standards, assets for retirement benefits of¥1,432 million ($14,039 thousand) and liabilities for retirement benefits of ¥12,408 million ($121,647
thousand) were recorded and accumulated other comprehensive income decreased by ¥2,172 million($21,294 thousand) as of March 31, 2014. In addition, net assets per share decreased by ¥9.06 ($0.09).
(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.

36However, revenues and costs of construction contracts, of which the percentage of completion canbe reliably estimated, are recognized by the percentage-of-completion method. To estimate theprogress of such construction projects, the Group measures the percentage of completion bycomparing costs incurred to date with the most recent estimate of total costs required to complete theproject (cost to cost basis ). If a reliable estimate cannot be made, revenues and costs of construction
contract are recognized by the completed-contract method.
(k) Research and Development Expense and Software
Research and development expenditure is charged to income when incurred.
Expenditure relating to software developed for internal 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 asassets are amortized using the straight-line method over their estimated useful lives of five years.
(l) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated
statements of operations. Deferred income taxes are recorded to reflect the expected future tax
consequence of temporary differences between the carrying amounts and the tax bases of assets
and liabilities.
(m) Net Income per Share
The computation of basic net income (loss) per share is based on the weighted-average number ofshares of common stock outstanding. The average number of shares used in the computation was
239,767 thousand and 239,960 thousand for the years ended March 31, 2014 and 2013, respectively.
Cash dividends per share shown in the consolidated statements of operations are the amounts
applicable to the respective years.
(n) Derivative and Hedging Activities
The Group utilizes derivative transactions related to foreign currency exchange rates and interest rates
in order to reduce their risk exposure arising from fluctuations in these rates and prices, to reduce thecost of the funds financed and to improve their return on invested funds.
Derivative transactions currently utilized by the Group include interest rate swap contracts andcurrency swap contracts.
Net asset or liability arising from derivative transactions is measured at fair value, with unrealized gainor 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 and certain interest rate swap transactions areaccounted for using the allocation method and the special method, respectively, which are regulated in
the standard. The allocation method requires recognized foreign currency receivables or payables
covered by forward exchange contracts to be translated at such contract rates. Under the special
method, interest rate swap transactions are accounted for as if the interest rates under thosetransactions were originally applied to underlying borrowing.
The Group has established a control environment, which includes policies and procedures for risk
assessment and for the approval, reporting and monitoring of derivative transactions. The Group does
not do 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 in the event of
non-performance by the counterparties to those transactions. However, the Group does not
anticipate non-performance by any of these counterparties, all of whom are financial institutions withhigh credit ratings.
The Group evaluates hedge effectiveness by comparing the cumulative changes in cash flows or
the changes in fair value of the hedged items with the corresponding changes in the hedging
derivative instruments.

37

The assessment of hedging effectiveness regarding interest rate swaps which are accounted forunder the above special accounting method is omitted.
(o) Reclassifications
Certain reclassifications of the financial statements for the year ended March 31, 2013 have been madeto conform to the presentation for the year ended March 31, 2014.
(p) Accounting Standards Issued but Not Yet Effective
Accounting standards for retirement benefits“Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26) and “Guidance on AccountingStandard for Retirement Benefits” (ASBJ Guidance No. 25) were revised on May 17, 2012. However,these accounting standards have not yet been fully adopted as of March 31, 2014.
The standard provides guidance for the accounting for unrecognized actuarial differences andunrecognized net retirement benefit obligation at transition, the calculation methods for retirement
benefit obligation and service costs, and enhancement of disclosures taking into consideration
improvements to financial reporting and international trends.
These revised accounting standards were partly adopted effective the year ended March 31, 2014.
However, the amendment of the calculation method of the retirement benefit obligation and service
costs will be adopted effective April 1, 2014.
The impact of the adoption of the revised accounting standard on consolidated financial statements
is in process of measuring.
Accounting standards for business combinations“Accounting Standard for Business Combinations” (ASBJ Statement No. 21), “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No. 22), “Accounting Standard for Business
Divestitures” (ASBJ Statement No. 7),” Accounting Standard for Earnings Per Share” (ASBJ Statement
No. 2),”Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No. 10) and “Guidance on Accounting Standard for Earnings
Per Share” (ASBJ Guidance No. 4) were revised on September 13, 2013. However, these accounting
standards have not yet been adopted as of March 31, 2014.
Under these revised accounting standards, major accounting changes are as follows:(1)	A ny differences arising from the movement of ownership interests in its subsidiaries shall be
accounted for as changes in capital surplus as long as the parent company retains control over its
subsidiary.
(2)	Acquisition-related costs shall be accounted for as expenses when incurred.
(3)	“Income before minority interests” in the current year’s consolidated statement of income will bechanged to “net income” in the current year’s consolidated statement of income will be changed to“net income attributable to shareholders of the parent company.” In addition, “Minority interests” inthe current year’s consolidated balance sheet will be changed to “Non-controlling interests.”(4)	If the initial accounting for a business combination is incomplete by the end of the reporting period inwhich the business combination occurs, an acquirer shall report provisional amounts for the items
whose accounting is incomplete in its financial statements (“provisional accounting”). Under theserevised accounting standards, if accounting for a business combination is completed during the next
fiscal year (the “completion period”) and consolidated financial statements for the completion period
and those for the acquisition period are comparatively disclosed, the acquirer shall retrospectively
adjust the provisional amounts recognized at the acquisition date to the completed amounts andshall reflect new information on facts and circumstances that existed as of the acquisition date. Suchadjustments shall be recognized as if the accounting for the business combination had been
completed at the acquisition date.
		 The Group will adopt these accounting standards effective January 1, 2016. At present, theGroup is in the process of evaluating the impact on the consolidated financial statements of the
adoption of these revised accounting standards.

38

At March 31, 2014 and 2013, other securities, which are included in short-term investments and3. ‌Short-term Investments,
Investments in Securities investment in securities, were as follows:
and Investments inMillions of yen
2014
Non-consolidated
Other securities
Subsidiaries and Affiliates
Cost

Gross
unrealized gains

Grossunrealized losses

Book value(Estimated fair value)

Market value available¥ 8,222¥1,396¥(571)

Bonds and debentures

6,003

0

(0)

6,003

Other

23,13296(37)

23,191¥ 38,241

Equity securities¥ 9,047¥ 37,357¥1,492¥(608)

Market value not available(23,823)——(23,823)

Total¥ 13,534¥1,492¥(608)¥ 14,418

Millions of yen

2013
Other securities
Cost

Gross
unrealized gains

Grossunrealized losses

Book value(Estimated fair value)

Market value available
Equity securities¥19,069¥1,023¥(3,456)¥16,636

Bonds and debentures

1,004

5

—

1,009

Other

4,670

87

(112)

4,645

¥24,743¥1,115¥(3,568)¥22,290

Market value not available
Total

2,788

—

—

2,788

¥27,531¥1,115¥(3,568)¥25,078

Thousands of U.S. dollars

2014
Other securities
Cost

Gross
unrealized gains

Grossunrealized losses

Book value(Estimated fair value)

Market value available$ 80,608$13,685$(5,598)

Bonds and debentures

58,8530(0)58,853

Other

226,785

942

(363)

227,364

Equity securities$ 88,695$366,246$14,627$(5,961)

374,912Market value not available(233,559)——(233,559)

Total$132,687$14,627$(5,961)$141,353

At March 31, 2014 and 2013, investments in non-consolidated subsidiaries and affiliates were as follows:
Thousands of
U.S. dollars

Millions of yen

Equity securities
Advances

2014

2013

¥ 9,142¥6,1872014$ 89,627

1,843

1,917

18,069¥10,985¥8,104$107,696

39

4. Inventories

Inventories at March 31, 2014 and 2013 comprised the following:Thousands of
U.S. dollars

Millions of yen

5. O ther Intangible Assets

2014

2013

2014

Finished goods¥ 9,800¥ 7,950$ 96,078

Work in process

16,514

18,339161,902

Raw materials and supplies

15,40011,881150,981¥41,714¥38,170$408,961

Other intangible assets at March 31, 2014 and 2013 comprised the following:Thousands of
U.S. dollars

Millions of yen

6. Short-term‌Debt andLong-term Debt

2014

2013

2014

Trademark¥ 4,893¥ 4,066$ 47,971

Software

6,724

4,916

65,922

Other

3,944

5,736

38,666¥15,561¥14,718$152,559

Short-term debt and long-term debt at March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Short-term loans (unsecured)

2014

2013

2014

¥ 9,564¥ 8,592$ 93,764
54,216

5,530

3,362

Current portion of unsecured bonds

—

—

—

1.03% unsecured bonds, due 2014

15,000—147,059

Short-term debt

$295,039

Current portion of long-term debt

¥30,094¥11,954

1.03% unsecured bonds, due 2014—

15,000—1.04% unsecured bonds, due 2015

2,000

2,000

19,608

1.16% unsecured bonds, due 2016

2,400

2,400

23,5290.89% unsecured bonds, due 2016

10,00010,00098,0391.00% unsecured bonds, due 2017

2,000

2,000

19,6080.73% unsecured bonds, due 2018

3,000

3,000

29,412Loans from banks and other financial institutions
unsecured maturing 2014–2021 with interest
average rate from 0.30% to 4.9%.

25,19017,808

246,961Long-term debt
Less, current portion¥44,590(5,530)¥52,208(3,362)$437,157(54,216)Long-term debt

¥39,060¥48,846$382,941

Aggregate annual maturities of long-term loans at March 31, 2014 were as follows:
Millions of yen

Thousands of
U.S. dollars

2016

10,580103,725

2017

6,680

65,4902018 and thereafter

2,400

23,530¥19,660$192,745

Years ending March 31

40

7. ‌Retirement andSeverance Benefits

For the year ended March 31, 2014
The Company and its consolidated subsidiaries have corporate pension plans and lump-sum payment
plans as defined benefit pension plans, and have defined contribution pension plans.
The defined benefit pension plan and the retirement lump-sum payment plans for certain
consolidated subsidiaries are calculated using the simplified accounting method.
1. Defined benefit pension plan
(1) Changes in retirement benefit obligations (excludes application of simplified accounting method)
Millions of yen

Thousands of
U.S. dollars

2014

2014

¥40,737$399,382

Service cost

1,159

11,363

Interest cost

787

7,716

Actual differences arising during the year

(1,111)(10,892)

Retirement benefits paid

(2,146)(21,039)

Other

2,851

27,950¥42,277$414,480

Beginning balance of retirement benefit obligations

Ending balance of retirement benefit obligations(2) Changes in plan assets (excludes application of simplified accounting method)
Millions of yen

Beginning balance of plan assets
Expected return on plan assets
Actual differences arising during the year

Thousands of
U.S. dollars

2014

2014

¥27,237$267,029

938

9,196

1,637

16,049Contribution made by the Company and consolidated subsidiaries

1,947

19,088Retirement benefits paid

(1,607)(15,755)

Other
Ending balance of plan assets

1,446

14,177¥31,598$309,784(3) Changes in net defined benefit liability (only application of simplified accounting method)

Beginning net defined benefit liability

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥289

$2,833Retirement benefits expense

89

873

Retirement benefits paid

(16)

(157)

Contribution to plan
Ending net defined benefit liability

(65)

(637)

¥297

$2,91241

(4)	Reconciliation of retirement benefit obligations and plan assets with net defined benefit liability andasset on the Consolidated Balance Sheets (includes application of simplified accounting method)
Millions of yen

Thousands of
U.S. dollars

2014

2014

Funded retirement benefit obligations¥ 36,292$ 355,804

Plan assets(31,983)(313,559)

Unfunded retirement benefit obligations

4,309
6,667

42,24565,363

Net amount of liability and asset on Consolidated Balance Sheets

10,976

107,608

Net defined benefit asset

12,408

121,647

Net defined benefit liability(1,432)(14,039)¥ 10,976$ 107,608

Millions of yen

Thousands of
U.S. dollars

Net amount of liability and asset on Consolidated Balance Sheets(5) Retirement benefit expenses

Service cost

2014

2014

¥1,159$11,363Interest cost

787

7,716

Expected return on plan assets(938)(9,196)

Amortization of actuarial differences

843

8,265

Retirement benefit expenses using the simplified method

91

892

¥1,942$19,040Retirement benefit expenses for defined benefit pension plans(6) Remeasurements of defined benefit plans
Breakdown of remeasurements of defined benefit plans (before deduction of tax effects)
Millions of yen

2014

2014

Unrecognized actuarial differences¥(3,392)$(33,255)

Total¥(3,392)$(33,255)(7) Plan assets
Breakdown of plan assets
2014

Bonds

28%

Stocks37%

Cash and deposits

0%General life insurance accounts

17%

Other

18%

Total

100%

(8) Basic assumptions for calculating retirement benefit obligations
2014

42

Thousands of
U.S. dollars

Discount rate

1.0%–4.9%

Expected rate of return on plan assets

2.0%–8.0%

2. Defined Contribution Pension Plans

Contributions to defined contribution pension plan

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥306

$3,000For the year ended March 31, 2013
The following tables set forth the changes in retirement benefit obligation, fair value of plan assets andfunded status of the Group at March 31, 2013.
Retirement Benefit Obligations
Millions of yen

2013

Retirement benefit obligation at the end of year¥(41,402)

Fair value of plan assets at the end of year

27,612

Funded status
Unrecognized actuarial loss

(13,790)
6,323

Accrued pension liability recognized in the consolidated balance sheets¥ (7,467)

Prepayment pension cost
Retirement and severance benefits

1,973(9,440)Some domestic subsidiaries have adopted alternative treatment of the accounting standards for
retirement benefit for small business entities.
Severance and pension cost of the Group included the following components for the years ended
March 31, 2013.
Retirement Benefit Costs
Millions of yen

2013

Service cost

¥1,118Interest cost
Expected return on plan assets

971(1,066)

Amortization:
Prior service cost—

Actuarial loss

982
¥2,005

Loss on transfer of defined benefit pension
Other
Net periodic benefit cost214
¥2,219Assumption used in the accounting for the defined benefit plans for the years ended March 31, 2013
was as follows:
Basic Assumptions for Calculating Retirement Benefit Obligations
2013

Method of attributing benefits to periods of service

Straight-line basis

Discount rate

Mainly 1.0%

Long-term rate of return on fund assets

Mainly 3.5%

Amortization period for prior service cost:
The Company and its domestic subsidiaries

Mainly 1 year

The foreign consolidated subsidiaries

Mainly 10 year

Amortization period for actuarial loss

Mainly 10 year43

8. ‌Contingent
Liabilities

Contingent liabilities at March 31, 2014 and 2013, were as follows:

As a guarantor of indebtedness of :Affiliates

9. Leases

Thousands of
U.S. dollars

Millions of yen

2014

2013

2014

¥1,179¥1,082$11,559

The following pro forma amounts represent the acquisition costs, accumulated depreciation and net
book value 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, 2014 and 2013, which would have beenreflected in the accompanying consolidated balance sheets if finance lease accounting had been
applied to the finance leases currently accounted for as operating leases:
Machinery and equipment
Thousands of
U.S. dollars

Millions of yen

2014

Acquisition costs
Accumulated depreciation
Net book value

2013

¥186
163
¥ 23

¥378
334
¥ 44

2014

$1,824
1,598$ 226

The Group leases certain machinery and equipment. Total lease payments under these leases were ¥21
million ($206 thousand) and ¥38 million for the years ended March 31, 2014 and 2013, respectively.
Obligations under non-cancelable operating leases as of March 31,2014 and 2013 were as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year

10. ‌Financial
Instruments

2014

2013

2014

¥1,4993,605¥5,104¥1,231
2,857¥4,088$14,696
35,343$50,039

1. Status of financial instruments(1) Policy for financial instruments	In light of plans for financing, the Group raises the funds it requires through bank loans and bonds
issuance. The Group manages temporary fund surpluses through financial assets that have highlevels of safety. The Group reduces the customer credit risk by having the internal policies for
managing credit risk. Long-term debt and bonds are taken out principally for the purpose ofcapital expenditure and acquisitions.
		 The Group undertakes interest rate swap transactions as a hedging instrument for certain
long-term debt to reduce such risk and fix interest expense for debt bearing interest at variable rates.
		 The Group limit the use of derivatives to the volume of long-term debt and bonds and actual
requirements based on the established internal control rules, and do not engage in speculativetransactions.
(2) Types of financial instruments and related risk
	Trade receivables - notes receivables and accounts receivables - are exposed to credit risk inrelation to customers.
		 The Group holds securities and investments in securities, which are mainly issued by companies
who have business relationships with the Group, and these securities are exposed to the risk offluctuation in market prices.

44		 Trade payables—notes payable and accounts payable - mostly have payment due dates within
one year.
		 Bank loans and bonds are taken out principally for the purpose of working capital, capital
expenditure and acquisitions, which are exposed to the liquidity risk and the interest-rate risk.
		 The forward exchange contract and the interest swap transaction are almost used for the hedge
as a type of derivative transactions.
(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)		In accordance with the internal policies for managing credit risk of the Group, the Group monitors
credit worthiness of their main customers periodically, and monitors due dates and outstandingbalances by customer.
			 To minimize the credit risk when entering into derivative transactions, counterparties arelimited to financial institutions with high ratings.
(b) Monitoring of market risks		Derivatives mainly include forward foreign currency contracts and interest rate swaps, which areused manage exposure to market risks from charges in foreign currency exchange rates ofreceivables and payables, and from changes in interest rates of bank loans.
			 Investments in securities, primarily the equity securities of corporations with which the Group
does business, are exposed to the risk 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 derivative transactions within the limits of establishedinternal rules and regulations, and reduces credit risk by limiting counterparties to highly
creditworthy financial institutions.
(c)	Monitoring of liquidity risk for financing (the risk that the Companies may not be able to meet its
obligations on the scheduled due dates)		The Group manages the liquidity risk mainly through the cash-flow plans, which are prepared byfinancial department.
			 In order to achieve more efficient and flexible financing, the Group contracts line-of-credit
agreements with certain financial institutions.
(4) Supplementary explanation of items relating to the market value of financial instruments
	The Group calculates the fair value of financial instruments based on market prices, or by using
reasonable estimates when market prices are not available. These estimates include variable factors,
and are subject to fluctuation due to change in the underlying assumptions. The contract amounts ofderivatives are not an indicator of the market risk associated with derivative transactions.

45

2. Market value of financial instruments
Amounts recognized in the consolidated balance sheets, market values and the differences between
them on March 31, 2014 and 2013 are as shown below.
Moreover, items for which it is extremely difficult to determine market values are not included in thefollowing table (see (note 2)).
Millions of yen

2014Book valueMarket value

Difference¥ 28,246¥ 28,246¥ —(2) Notes and accounts receivables, trade72,947

72,947—(3) Securities and Investments in securities

38,241

38,241—¥ 139,434¥ 139,434¥ —(43,608)(30,094)(43,608)(30,094)——(1) Cash and deposits

Total assets(1) Notes and accounts payables, trade(2) Short-term debt
(3) Long-term debt
Total liabilities(39,060)(39,450)(390)¥(112,762)¥(113,152)¥(390)

Millions of yen

2013
Book valueMarket value

Difference¥ 21,740¥ 21,740¥ —(2) Notes and accounts receivables, trade63,82063,820—(3) Securities and Investments in securities

22,29022,290—¥107,850¥107,850¥ —(38,398)(11,954)(38,398)(11,954)——(1) Cash and deposits

Total assets(1) Notes and accounts payables, trade(2) Short-term debt
(3) Long-term debt
Total liabilities(48,846)(49,451)(605)¥ (99,198)¥ (99,803)¥(605)

Thousands of U.S. dollars

2014Book value(1) Cash and deposits(2) Notes and accounts receivables, trade(3) Securities and Investments in securities
Total assets(1) Notes and accounts payables, trade(2) Short-term debt
(3) Long-term debt
Total liabilities$

276,922715,167

Market value$

Difference

276,922$—715,167

374,911

374,911$ 1,367,000$ 1,367,000(427,529)(295,039)(427,529)(295,039)

—
—
$

—
—
—

(382,941)(386,765)(3,824)$(1,105,509)$(1,109,333)$(3,824)Note 1: ‌Methods to determine the estimated fair value of financial instruments and other matters related
to securities and derivative transactions
Assets(1) Cash and deposits and (2) Notes and accounts receivables, trade
Since these items are settled in a short period, their carrying value approximates fair value.
(3) Securities and investments in securities
	The fair value of equity securities is based on quoted market prices. The fair value of debt securities
is based on either quoted market prices or prices provided by the financial institutions making
markets in these securities.
		 For information on securities classified by holding purpose, please refer to Note 3. of the notes tothe consolidated financial statements.

46

Liabilities(1)	Notes and accounts payables, trade and (2) Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
(3) Long-term debt
(Long-term loan)
	The market value of long-term loans payable is calculated by applying a discount rate to the total ofprincipal and interest. That discount rate is based on the assumed interest rate if a similar new loans
was entered into. Because long-term loans payable with variable interest rates are based on thecondition that interest rates are revised periodically, their market values are almost the same as theirbook values, the relevant book values are used.
		 A specially treated interest rate swap is accounted for as an integral part of long-term loans
payable, or the subject of hedging, so that the fair value of the swap is stated by being included in
the fair value of Long-term loans payable.
(Bonds)	The quotation of the company bond that our company issues calculates the one based on themarket price, and the one without the market price is calculated by the present value that discounts
the principal and interest money total at the interest rate in which it tempers with the remaining
period and the credit risk of the company bond.
Derivative transactions
	For information on derivative transactions, please refer to Note 11. “Derivative transaction” of 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

2014

2014

2013
Book value

Investments in non-consolidated—subsidiaries and affiliates
Other securities
Unlisted equity securities
OthersBook value¥9,142¥6,187$89,627

176
60

3,259
65

1,725
588

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

2014



Within 1 year

Cash and deposits
Notes and accounts receivables, trade
Securities and Investments in securities
Other securities (Bonds)
Other securities (Others)
Total

2013
Over 1 year

Within 1 year

Over 1 year

¥28,246
72,947¥——¥21,740
63,820¥4,999
21,682¥127,874

1,064
1,509
¥2,573—
2,778¥88,338

1,074
1,866
¥2,940——47

Thousands of U.S. dollars

2014

Cash and deposits
Notes and accounts receivables, trade
Securities and Investments in securities
Other securities (Bonds)
Other securities (Others)
Total

11. ‌Derivatives
Transactions

Within 1 year

Over 1 year

$ 276,922
715,167$

49,010212,568$1,253,667

10,431
14,794$25,225——

There were no derivative transactions to which hedge accounting was not applied at March 31, 2014
and 2013.
Derivative transactions to which hedge accounting is applied at March 31, 2014 and 2013 were as
follows:
Millions of yen

2014

2013

Contract
amountsOver
1 yearMarketvalue

Contract
amountsOver
1 yearMarketvalue

Foreign currency forward contracts:
Objected by long-term receivables
Receive floating, pay fixed

¥ 410

¥ 410

¥(26)

—

—

—

Interest swap contracts:
Objected by long-term loans
Receive floating, pay fixed¥8,200¥8,200¥ 68¥8,700¥8,200¥(105)

Thousands of U.S. dollars

2014
Contract
amounts

Foreign currency forward contracts:
Objected by long-term receivables
Receive floating, pay fixedInterest swap contracts:
Objected by long-term loans
Receive floating, pay fixedOver
1 yearMarket
value

4,020

4,020

(255)

$80,392$80,392$ 667

Note: The market value is provided by financial institutions with which we made the contracts.

12. Stock Options

1. The amount of expense appropriation and the accounting name during the years ended March
31, 2014 and 2013.
Equity deal expenses (Included in “Selling, general and administratve expenses”) were ¥43 million ($422
thousand) and ¥38 million for the years ended March 31, 2014 and 2013.
2. The contents, scale, and change situation of stock options(1) The contents of stock options
June 2008 stock option

48

Company

Sanwa Holdings Corporation

Resolution dateJune 26, 2008

Grantee classification and the number

3 directors

Type and number of shares

Common stock of the Company: 76,000 shares

Date of grant
Exercise period of rights

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

June 2009 stock option

Company

Sanwa Holdings Corporation

Resolution dateJune 30, 2009

Grantee classification and the number

3 directors

Type and number of shares

Common stock of the Company: 82,000 shares

Date of grant
Exercise period of rights

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

Company

Sanwa Holdings Corporation

Resolution dateJune 30, 2010

Grantee classification and the number

3 directors

Type and number of shares

Common stock of the Company: 99,000 shares

Date of grant
Exercise period of rights

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

Company

Sanwa Holdings Corporation

Resolution dateJune 29, 2011

Grantee classification and the number

3 directors

Type and number of shares

Common stock of the Company: 102,000 shares

Date of grant
Exercise period of rights

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

Company

Sanwa Holdings Corporation

Resolution dateJune 28, 2012

Grantee classification and the number

6 directors

Type and number of shares

Common stock of the Company: 156,000 shares

Date of grant
Exercise period of rights

July 13, 2012
For 30 years from grant date (from July 14, 2012 to July 15, 2042)

Company

Sanwa Holdings Corporation

Resolution dateJune 26, 2013

Grantee classification and the number

6 directors

Type and number of shares

Common stock of the Company: 86,000 shares

Date of grant
Exercise period of rights

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

June 2010 stock option

June 2011 stock option

June 2012 stock option

June 2013 stock option49

(2) Scale, and change situation of stock options(2)-1 Number of stock options
SharesJune 2008
June 2009
June 2010
June 2011
June 2012
June 2013
stock option stock option stock option stock option stock option stock option

Before vested
Beginning of period

—

—

—

—

156,000—

Granted

—

—

—

—

—

86,000Forfeited

—

—

—

—

—

—

Vested————156,000—

Unvested

—

—

—

—

—

86,00076,00082,00099,000102,000

—

—

—

—

—

—

156,000—

After vested
Beginning of period
VestedExercised
ExpiredExercisable

—

—

—

—

—

—

—
76,000—82,000—99,000—102,000—
156,000——(2)-2 Unit value and exercise period for stock option rights
Yen
June 2008
June 2009
June 2010
June 2011
June 2012
June 2013
stock option stock option stock option stock option stock option stock option

Exercise price
Average share price at exercise
Fair value unit price (Date of grant)

1

1

1

1

1

1

—
301

—
263

—
250

—
243

—
252

—
515

U.S. dollars
June 2008
June 2009
June 2010
June 2011
June 2012
June 2013
stock option stock option stock option stock option stock option stock option

Exercise price

0.010

0.010

0.010

0.010

0.010

0.010

Average share price at exercise
Fair value unit price (Date of grant)

—
2.951

—
2.578

—
2.451

—
2.382

—
2.471

—
5.049

3. Assumptions used in estimation of the fair value of stock options above were as follows:
June 2008
stock option

Method of estimation

50

June 2009
stock option

June 2010
stock option

June 2011
stock option

June 2012
stock option

June 2013
stock option

Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes
model
model
model
model
model
model

Volatility

26.6%

30.7%

31.4%

33.5%

30.0%

30.7%

Expectedremaining period

8 years

7 years

6 years

5 years

10 years

9 years

Expected dividend¥13
per share¥10
per share¥5
per share¥8
per share¥8
per share¥10
per share

Risk-free interest rate

1.33%

0.94%

0.46%

0.41%

0.78%

0.79%

13. ‌Research andDevelopment
Expenses

Research and development expenses included in selling, general and administrative expenses were¥2,659 million (US$26,069 thousand) and ¥2,147 million for the years ended March 31, 2014 and2013, respectively.
And so on, research and development expenses included in cost of sales were ¥490 million(US$4,804 thousand) and ¥293 million for the years ended March 31, 2014 and 2013, respectively.

14. Income Taxes

The Company and its domestic subsidiaries are subject to several taxes based on income, which in theaggregate resulted in statutory tax rate of approximately 38.0% for the years ended March 31, 2014 and2013. Foreign subsidiaries are subject to income taxes of the countries in which they operate.
The effective rates for the years ended March 31, 2014 and 2013 differ from the Company’s
statutory tax rates for the following reasons:Statutory tax rate
Expenses not deductible for income tax purposes
Current operating losses of subsidiaries
Depreciation of goodwill
Other
Effective tax rate

2014

2013

38.0%
0.8
(0.1)
1.0
0.5
40.2

38.0%
1.3
0.1
1.0
4.7
45.1

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
and liabilities at March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars

Millions of yen

Deferred tax assets:
Allowance for bonuses
Provision for retirement benefits
Net defined benefit liability
Tax loss carryforwards
Securities
Investment in affiliates securities
Net unrealized holding losses on securities
Other
Less valuation allowance
Total
Deferred tax liabilities:
Depreciation
Prepayment pension cost
Net defined benefit asset
Net unrealized holding gains on securities
Other
Total
Net deferred tax assets

2014

2013

2014

¥ 1,224
—
5,085
1,046
605
124
—
4,248
12,332(946)¥11,386

¥

768
4,513
—
957
645
76
864
3,248
11,071(651)¥10,420$ 12,000—
49,853
10,255
5,931
1,216
—
41,646
120,901(9,274)$111,627(5,340)
—
(618)
(327)
(697)
¥ (6,982)¥ 4,404(4,312)
(349)
—
—
(585)
¥ (5,246)¥ 5,174(52,353)—(6,059)(3,206)(6,832)$ (68,450)$ 43,177

51

Net deferred tax assets at March 31, 2014 and 2013 were included in the consolidated balance sheet
as follows:
Thousands of
U.S. dollars

Millions of yen

Current assets
Investments and other assets
Current liabilities
Long-term liabilities
Net deferred tax assets

2014

2013

2014

¥ 4,632
4,942(16)(5,154)¥ 4,404¥ 4,185
4,961(30)(3,942)¥ 5,174$ 45,412
48,451(157)(50,529)$ 43,177(Change in statutory effective tax rate)
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 10 of 2014) was promulgated on
March 31, 2014 and, as a result, the Company and its domestic subsidiaries are no longer subject to
the Special Reconstruction Corporation Tax effective for fiscal years beginning on or after April 1, 2014.
As a result, the effective statutory tax rate used to measure the deferred tax assets and liabilities of theCompany and its domestic subsidiaries was changed from 38.0% to 35.6% for the temporary
differences expected to be realized or settled from fiscal years beginning April 1, 2014.
The impact of the reduction of the effective statutory tax rate was immaterial.

15. ‌Other Income(Expenses)

Other, net, for the years ended March 31, 2014 and 2013 consisted of the following:

2014

Gain (Loss) on sales and disposal of fixed assets
Gain (Loss) on sales of investments in securities
Write-down of investments in securities
Loss on restructuring cost of subsidiary
Loss on liquidation of subsidiaries
Other, net

16. ‌Other Comprehensive
IncomeThousands of
U.S. dollars

Millions of yen

2014

2013

¥(1,442)
1,044
(440)
(511)
(1,797)(378)¥(3,524)¥ (49)
213
(74)
(869)
—
(89)
¥(868)The reclassification adjustments and tax effects for components of other comprehensive income (loss)
for the year ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. dollars

Millions of yen

Unrealized holding gains on securities:
Amount arising during the year
Reclassification adjustments forlosses realized in net income
Before tax effectTax effectTotal unrelized holding gains on securities
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for losses realized
in net income
Total foreign currency translation adjustments
Share of other comprehensive income ofnon-consolidated subsidiaries andaffiliates accounted for using the equity method:Amount arising during the year
Total other comprehensive income

52$(14,137)
10,235(4,314)(5,010)(17,618)(3,705)$(34,549)

2014

2013

2014

¥ 4,300¥2,799$ 42,157

(965)

(140)

(9,461)

3,335(1,189)
2,146

2,659
(947)
1,712

32,696(11,657)
21,039

9,930

4,890

97,353

—

—

—

9,930

4,890

97,353

167¥12,243

176¥6,778

1,637$120,029

17. ‌Segment
Information

Information about operations in report segments of the Group for the years ended March 31, 2014 and2013, was as follows:(1) Report Segments
Millions of yen

2014

Sales to customers
Inter-segment

Japan

North America

EuropeTotal¥182,013
17¥87,18761¥42,653199¥311,853
277

Adjustment
cost

¥

104
(277)

Consolidated
Financial
Statement¥311,957—

Total sales

182,030

87,24842,852

312,130(173)

311,957

Segment income (loss)¥ 16,964¥ 4,559¥ 1,000¥ 22,523¥ (1,874)¥ 20,649

Segment assets
Depreciation¥115,375
2,823¥58,067
1,996¥32,773
1,315¥206,215
6,134¥75,70246¥281,917
6,180

—

362

1,377

1,739

3,089

4,828

2,558

3,140

1,402

7,100

16

7,116

Adjustment
cost

Consolidated
Financial
Statement

Investment in equity
method companies
Capital expenditures

Millions of yen

2013

Sales to customers
Inter-segment

Japan

North America

EuropeTotal¥161,536
8¥69,39140¥34,884
160¥265,811
208

Total sales

161,544

69,431

Segment income (loss)¥ 11,688¥ 3,486¥

Segment assets
Depreciation¥110,985
2,705

Investment in equity
method companies
Capital expenditures

¥

102
(208)

¥265,913—

35,044

266,019(106)

265,913705¥ 15,879¥ (1,705)¥ 14,174¥45,203
1,624¥25,748
1,046¥181,936
5,375¥59,835
53¥241,771
5,428

—

291

1,120

1,411

2,068

3,479

1,083

1,858

1,345

4,286

7

4,293

Adjustment
cost

Consolidated
Financial
Statement

Thousands of U.S. dollars

2014

Sales to customers
Inter-segment

Japan

North America

EuropeTotal$1,784,441
167$854,774
598$418,167
1,951$3,057,382
2,716

Total sales

1,784,608

855,372

Segment income (loss)$ 166,314$ 44,696$

Segment assets
Depreciation$1,131,128
27,676

Investment in equity
method companies
Capital expenditures$

1,020 $3,058,402(2,716)—420,118

3,060,098

9,804$ 220,814$ (18,372) $ 202,442(1,696)

3,058,402$569,285
19,569$321,305
12,892$2,021,718
60,137$742,176
451$2,763,894
60,588—3,549

13,50017,04930,28447,33325,07930,784

13,74569,608

157

69,765(2) Related Informationa) Information on products and each service
Millions of yen

2014
Commercial

Sales to customers¥201,122

Residential¥77,314Maintenance/Home
improvement¥29,994

Other¥3,527

Consolidated¥311,957

53

Millions of yen

2013
Commercial

Sales to customers¥175,030

Maintenance/Home
improvement

Residential¥60,900

Other¥26,775¥3,208

Consolidated¥265,913

Thousands of U.S. dollars

2014

Sales to customers

Commercial

Residential

Maintenance/Home
improvement$1,971,785$757,980$294,059

Other

Consolidated$34,578$3,058,402b) Information on Each region
Millions of yen

2014
Japan

Property, plant and equipment¥30,849

North America¥13,080

EuropeTotal¥10,843¥54,772

Millions of yen

2013
Japan

Property, plant and equipment¥30,136

North America¥11,398

EuropeTotal¥8,886¥50,420

Thousands of U.S. dollars

2014

Property, plant and equipment

18. ‌Subsequent
EventsJapan

North America

EuropeTotal$302,441$128,236$106,304$536,981(Year-end Cash Dividends)
The following distribution of retained earnings of the Company, which has not been reflected in theaccompanying consolidated financial statements for the year ended March 31, 2014, was approved at
the general shareholders’ meeting held on June 26, 2014:

Year-end cash dividends (¥7.0 per share)

Millions of yen

Thousands of
U.S. dollars¥1,678$16,451(Cancellation of Treasury Stock)
At the meeting of the Board of Directors held on May 14, 2014, the Company resolved to cancel
treasury stock pursuant to Article 178 of the Companies Act of Japan, and canceled it as follows.
1. Class of stock to be cancelled
Common shares
2. Number of shares to be cancelled
8,000,000 shares
3. Scheduled date of cancellation
May 30, 201454

Independent Auditors’ Report55Consolidated Subsidiaries and Affiliated Companies
As of March 31, 2014

Domestic

SANWA SHUTTER CORPORATIONSANWA EXTERIOR NIIGATA PLANT CO., LTD.

The core company of the Sanwa Group.
No.1 supplier of rolling steel shutters, overhead doors,
steel hinge doors and maintenance and repair services in Japan.
• Address: Shingashi 2-3-5, Itabashi-ku, Tokyo, 175-0081, Japan• TEL: +81-3-5998-9111

Manufactures various exterior products.
• Address: O
 igashima 1397-1, Tsubameshi, Niigata, 959-0113, Japan• TEL: +81-256-98-5551

SHOWA FRONT CO., LTD.
A leading manufacturer of facades for stores andother building materials.
• Address: Uchikanda 1-13-7, Chiyoda-ku, Tokyo, 101-0047, Japan• TEL: +81-3-3293-6737

OKINAWA SANWA SHUTTER CORPORATION
Manufactures and sells steel building materials such as shutters anddoors, and store building materials.
• Address: Taira 84-1, Tomigusukushi, Okinawa, 901-0212, Japan• TEL: +81-98-840-5538

SANWA TAJIMA CORPORATION
Manufactures and sells various kinds of stainless steelbuilding products.
• Address: Ikebukuro 2-77-5, Toshima-ku, Tokyo, 171-0014, Japan• TEL: +81-3-5954-5880

VENIX CO., LTD.
Manufactures various partitions.
• Address: K amagata 3128, Ranzan-machi, Hiki-gun, Saitama, 355-0225, Japan• TEL: +81-493-62-6671

Suzuka Engineering Co., Ltd.
Manufactures automatic machine device for rubber industry.
• Address: O gosohigashi 2-1-65, Yokkaichishi, Mie, 510-0951, Japan• TEL: +81-59-346-4774

SHOWA KENSAN CO., LTD.
Manufactures automatic doors for store fronts.
• Address: N akano 1453, Oura-machi, Oura-gun, Gunma, 370-0603, Japan• TEL: +81-276-88-2121

TAJIMA METALWORK CO., LTD.
Top brand designing and marketing company of post boxes.
• Address: H
 igashi-Ikebukuro 4-41-24, Toshima-ku, Tokyo, 170-0013, Japan• TEL: +81-3-5396-7611

Overseas

OVERHEAD DOOR CORPORATIONSANWA SHUTTER (H.K.) LTD.

A leading U.S. manufacturer of garage doors and shutters.
• Address: 2501 South State Highway 121, Suite 200 Lewisville, TX
75067, U.S.A.
• TEL: +1-469-549-7110

Manufactures and sells shutters and doors.
• Address: Room 1901, 19/F Emperor Group Centre, No. 288
Hennessy Road, Wanchai, Hong Kong, China• TEL: +852-2833-6619

NOVOFERM GROUP (Novoferm GmbH)

AN-HO METAL INDUSTRIAL CO., LTD.

One of the leading manufacturers of shutters and doors in Europe.
• Address: Isselburger Strasse 31, 46459 Rees, Germany• TEL: +49-2850-910-624

Manufactures and sells shutters and doors.
• Address: 7Fl, No. 27, Section 1, Chungshan North Road,
Taipei, Taiwan• TEL: +886-2-2521-0013

SHANGHAI BAOSTEEL-SANWA DOOR CO., LTD.
Manufactures and sells shutters and overhead doors.
• Address: 988 Yueluo Road, Baoshan, Shanghai, 200941 China• TEL: +86-21-5692-5550

NOVOFERM (SHANGHAI) CO., LTD.
Manufactures and sells doors.
• Address: No.118 Mingye Road, Shenshan Industrial Area,
Songjiang, Shanghai, 201602 China• TEL: +86-21-5779-3335

SANWA HOLDINGS CORPORATION,
SHANGHAI REPRESENTATIVE OFFICE• Address: Room 1405, Chunshenjiang Building,
400 Zhejiang Road (MID), Shanghai, 200001 China• TEL: +86-21-3318-0127

SANWA SHUTTER DESIGN (SHANGHAI) CORPORATION• Address: Room 7AF, Xinda Building,1399 Beijing West Road, Shanghai, 200042 China• TEL: +86-21-3360-6778

56

VINA-SANWA COMPANY LIABILITY LTD.
Manufactures and sells shutters and doors.
• Address: High-Tech Industrial Zone Ⅱ, Hoa Lac High-Tech Park,
Thach That, Hanoi, Vietnam• TEL: +84-4-3772-8301

SUN METAL CO., LTD.
Manufactures and sells shutters and doors.
• Address: 180-184 METRO Building 4F, Rajawongse Road,
Bangkok 10100, Thailand• TEL: +66-2-222-5190

PT. SANWAMAS METAL INDUSTRY
Manufactures and sells shutters.
• Address: Jl. Let. Jend. S. Parman kav. 32-34,
Jakarta 11480, Indonesia• TEL: +62-21-548-2308

Group Organization

Sanwa Holdings Corporation(Holding Company)

Japan

Asia

North America

EuropeSanwa Shutter Corporation

An-Ho Metal
IndustrialCo., Ltd.

Overhead
Door Corporation
Group

Novoferm
Group

Okinawa
Sanwa
Shutter
Corporation

Showa
Front
Co., Ltd.

Sanwa
Exterior
Niigata Plant
Co., Ltd.

Sanwa
TajimaCorporation

Sanwa Shutter(H.K.) Ltd.

Sanwa Shutter
Design(Shanghai)
Corporation
SuzukaEngineering
Co., Ltd.

Venix
Co.,Ltd.

Shanghai
BaoSteelSanwa DoorCo., Ltd.

Novoferm(Shanghai)Co., Ltd.
Showa KensanCo., Ltd.

Tajima Metalwork Co., Ltd.
Vina-Sanwa
Company
Liability Ltd.

Domestic Customers

Overseas Customers

Supply of Major Products
Consolidated Subsidiaries
Equity-method Affiliates

57

Global Network

24 18

JAPAN

ASIA

20

1

19
21

17
11

57

22
3

2

13
14
5 10
16 15
4

6

9
12

7

23

8

north america

EUROPE

33
34

39

31
30
29
27

28

43
51 42 4447
52
46

26
25
48

56

45

50

40
35

49
54

41
32
37
36
38

58

53

55

Group Plant Locations
Company

Plant NameCountry

Products

SANWA SHUTTER, JAPANESE SUBSIDIARIES & AFFILIATES
Sanwa Shutter Corporation

1 Sapporo

2 Ashikaga
3 Ota
4 Shizuoka
5 Gifu6 Hiroshima
7 Kyushu

Okinawa Sanwa Shutter Corporation
Sanwa Tajima Corporation

8 Okinawa
9 SaitamaJapan

10 Nagoya

Sanwa Exterior Niigata Plant Co., Ltd.
Venix Co., Ltd.
Showa Kensan Co., Ltd.
Yoshida Seisakusyo Co., Ltd.
Suzuka Engineering Co., Ltd.
Metalwork Kansai Co., Ltd.
Hayashi Industries Co., Ltd.

11 Niigata
12 Ranzan
13 Gunma
14 Saku
15 Yokkaichi
16 Sannan
17 Niigata

Rolling Shutters, Overhead Sectional Doors, Doors & Door Frames
Rolling Shutters, Overhead Sectional Doors
Doors & Door FramesWindow Shutters, Doors & Door Frames
Rolling Shutters, Overhead Sectional Doors
Rolling Shutters, Doors & Door Frames
Rolling Shutters
Rolling Shutters, Doors & Door Frames
Stainless Steel Fittings, Automatic Revolving Doors
Stainless Steel Fittings
Exterior Items
Aluminum Partitions
Automatic Doors
Stainless Steel Fittings
Rubber Mixing Plants
Stainless Steel Fittings
Doors & Door Frames

AFFILIATED COMPANIES (ASIA)
Shanghai BaoSteel-Sanwa Door Co., Ltd.
Sanwa Shutter (H.K.) Ltd.
An-Ho Metal Industrial Co., Ltd.
Vina-Sanwa Company Liability Ltd.
Sun Metal Co., Ltd.
Pt. Sanwamas Metal Industry
Novoferm (Shanghai) Co., Ltd.

18 Shanghai
19 Hong Kong
20 Hsinchu
21 Hanoi
22 Korat
23 Bekasi
24 Shanghai

China
TaiwanVietnamThailandIndonesia
China

Overhead Sectional Doors, Rolling Shutters, Sheet Shutters
Rolling Shutters, Doors & Door Frames
Doors & Door Frames
Doors & Door Frames, Rolling Shutters, Sheet Shutters
Rolling Shutters, Doors & Door Frames
Rolling Shutters
Hinge DoorsODC (U.S.A.)
Access Systems Division

25 Lewistown
26 Williamsport
27 Grand Island
28 Mt. Hope
29 Dalton
30 Trail

U.S.A.

31 Conneaut
32 Pensacola
33 Centralia
34 Portland

Genie

35 Baltic
36 Matamoros

Horton37 Corpus Christi
38 Matamoros
39 Telford

TODCO

40 Marion
41 Tecate

U.S.A.
MexicoU.S.A.
MexicoU.K.
U.S.A.
MexicoRolling Doors
Residential Garage Doors, Sectional Steel Doors
Residential Garage Doors, Sectional Steel Doors
Residential Garage Doors, Sectional Steel Doors, Hardware Parts
Rolling Doors
Sheet DoorsWindow Frames, Premium Doors
Residential Garage Doors, Sectional Steel Doors, Hardware Parts
Residential Wood Doors
Residential Garage Doors, Sectional Steel DoorsGarage Door Openers
Garage Door Opener Assembly
Automatic Entrance Systems
Automatic Entrance Systems
Automatic Entrance Systems
Truck & Trailer Doors
Truck & Trailer DoorsNOVOFERM (EUROPE)
Novoferm (NF) GmbH42 Haldern
43 Werth
44 Dortmund

NF Riexinger Tüenwerke GmbHNF Siebau GmbHNF Tormatic GmbHNF France S.A.S.

45 Brackenheim

Germany

46 Buschhütten
47 Dortmund
48 Machecoul
49 BavilliersFrance50 Melun

NF Nederland B.V.

51 Waardenburg
52 Roermond

Novoferm UK Limited
NF Schievano s.r.l.
NF Alsal S.A.
Novoferm Door Sp. zo.oDong Bang Novoferm Inc.

53 Luton
54 Padova
55 Cantabria
56 Wykroty
57 Seoul

Netherlands
U.K.
Italy
Spain
PolandSouth Korea

Doors & Door Frames
Residential Garage Doors, Door Frames
Residential Garage Doors, Sectional Door Panels
Fireproof Doors & Door Frames, Industrial DoorsOther DoorsGarage Door Operators
Residential Garage Doors
Residential Garage Doors
Fireproof Doors & Door Frames
Industrial Doors
Industrial Doors
Residential Garage Doors
Doors & Door Frames
Doors & Door Frames, Residential Garage Doors, Industrial Doors
Tubular Frame Doors
Doors & Door Frames

59History of Sanwa Holdings

1956

Apr.

 stablished Sanwa Shutter Manufacturing Co., Ltd. (President: Manji Takayama), a predecessor ofE
this company, in Amagasaki, Hyogo Prefecture.

1963

Apr.

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

1970

Jul.

Listed on the First Section of the Tokyo Stock Exchange.

1974

Aug. Entered into technical tie-up with Overhead Door Corp. (U.S.A.).
Oct.

Relocated the headquarters to Shinjuku, Tokyo.

1981

May

Toshitaka Takayama becomes President and Manji Takayama Corporate Advisor.

1983

Mar.

Deployed nationwide 24-hour service.

1986

Oct.

Established Sanwa Shutter (HK) Ltd. in Hong Kong.

1988

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

1992

Oct.

Established Sun Metal Co., Ltd. in Thailand.

1996

Jun.

Established Sanwa USA Inc. and acquired Overhead Door Corp., a leading U.S. manufacturer of garage doors and shutters.

Nov. Established PT. Sanwamas Metal Industry in Indonesia.
2003

Oct.

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

2004

Jan.

Established Sanwa Shutter Design (Shanghai) Corporation in Shanghai.

Apr.

 stablished an internal office on corporate social responsibilities to oversee risk management, legal compliance andEenvironment-friendly policies.

2005

Sep. E
 ntered into comprehensive business alliance with Hochiki, a leading fire detection anddisaster-prevention equipment company in Japan.

2006

Apr.

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

2007

Oct.

The Sanwa Group adopts holding company system.

2008

Jan.

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

2009

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

2010

Feb.

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

2011

Jan.

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

Oct.

The partition sales business of subsidiary Venix Co., Ltd. and the automatic door sales business of subsidiary Showa Kensan Co., Ltd.
were integrated into Sanwa Shutter Corporation, and the two subsidiaries become specialized manufacturing operations.

Dec. Overhead Door Corporation acquired Creative Door Services Ltd., a leader in the door business in Western Canada, andwhich became a new Canadian subsidiary of ODC.
2012

Jan.

Sanwa Shutter Corporation announced that it concluded an OEM contract with LIXIL Corporation to supply some types oflightweight shutters and lightweight doors from March 2012.

May

Overhead Door Corporation acquired Door Controls, Inc., an automatic door distributor.

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

2013

60

Oct.

Overhead Door Corporation acquired Advanced Door Automation, LLC., an automatic door distributor.

May

Overhead Door Corporation acquired Texas Access Controls, Inc., an automatic door distributor.

Corporate Data
As of March 31, 2014

Achieving successthrough global industry leadership

HEAD OFFICE:

Telephone: +81-3-3346-3019
Facsimile: +81-3-3346-3177
ESTABLISHED:

April 10, 1956

CAPITAL (PAID-IN):¥38,413 million

EMPLOYEES:

Consolidated: 8,372

STOCK LISTINGS:Tokyo Stock Exchange

TRANSFER AGENT:

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

ProfileThe Sanwa Group, headed by Sanwa Holdings Corporation, is a global
corporate group composed of 99 companies, including 79 subsidiaries

COMMON STOCK:

and 19 affiliated companies, as of March 31, 2014. The Group has four
major fields of business—commercial building materials, residential
housing materials, maintenance service and home improvement, andother businesses—and provides a wide range of steel construction
materials for commercial and residential construction, including

Shinjuku Mitsui Building, 52F
Nishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo, 163-0478, Japan

Authorized: 550,000,000 shares
Issued: 257,920,497 shares
Number of shareholders: 10,155

PRINCIPAL SHAREHOLDERS:
Percentage of voting rights (%)

Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Sumitomo Mitsui Banking Corporation
The Dai-ichi Life Insurance Company, Limited
Nippon Life Insurance Company
Northern Trust Co. (AVFC) Re 15pct Treaty Account
Aioi Nissay Dowa Insurance Co., Ltd.
Nisshin Steel Co., Ltd.
Mitsubishi UFJ Trust and Banking Corporation
The Chase Manhattan Bank, N.A. London Secs Lending Omnibus Account

6.78
6.17
4.71
3.37
3.30
3.26
2.67
2.07
1.93
1.90

TREND OF STOCK PRICE:
April 1, 2006–March 31, 2007
April 1, 2007–March 31, 2008
April 1, 2008–March 31, 2009
April 1, 2009–March 31, 2010
April 1, 2010–March 31, 2011
April 1, 2011–March 31, 2012
April 1, 2012–March 31, 2013
April 1, 2013–March 31, 2014

High

Low

¥800
¥763
¥462
¥357
¥367
¥333
¥492
¥783

¥582
¥396
¥223
¥218
¥204
¥222
¥282
¥457

MONTHLY STOCK DATA:
Monthly stock price range(Yen)

Nikkei Stock Average

(Yen)

1,000

25,000800

20,000600

15,000400

10,000200

5,000

shutters, doors and other products.
	In April 2013, we launched “Sanwa Global Vision 2020” andinitiated a new mid-term management plan “The First Three Year Plan”(April 2013–March 2016). The aim of the new vision is to establish the
Sanwa Group as a “Global Major Player” and a leading global brandin the access systems industry. We are strengthening production
and marketing synergies across our four key markets, Japan, North
America, Europe and Asia, and venturing into new markets, such as theenvironmental field, seeking to capture new market opportunities anddrive our sustained growth.
0

Apr. ’08

Jan. ’09

Jan. ’10

This annual report includes forwardlooking statements pertaining to
expectations, plans, strategies,
management goals, future performance,
expenses, revenues, income and otherforecasts formulated on past experiences.
Forward-looking statements necessarily
entail some degree of uncertainty, and thecontent 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.

Jan. ’12

Jan. ’13

Jan. ’14

Jan. ’12

Jan. ’13

Jan. ’140Monthly trading volume(Thousands of shares)

Forward-looking
statements:

Jan. ’11

50,000Contents

40,0002	Our Group		
18	North America

4 Consolidated Financial Highlights		
20	Europe

6	To Our Shareholders

		
22	Asia

20,00010 Progress of First Three -Year Plan

23 CSR Activities

10,00015 Business Overview

26 Corporate Governance		
16 Japan

29 Financial Information

30,0000

Apr. ’08

Jan. ’09

Jan. ’10

Jan. ’11

61

SANWA HOLDINGS CORPORATION

Sanwa Holdings Corporation
Annual Report 2014

Sanwa Holdings Corporation

Global Success Leads to Global Growth

Public Relations Section
Nishi-Shinjuku 2-1-1, Shinjuku-ku,
Tokyo 163-0478, Japan
Tel : +81-3-3346-3331
Fax : +81-3-3346-3177
http://www.sanwa-hldgs.co.jp
E-mail: sya01@sip.sanwa-ss.co.jp

Annual Report 2014
Printed in JapanFor the year ended March 31, 2014