TAIHEIYO CEMENT CORPORATION

Daiba Garden City Building, 2-3-5 Daiba, Minato-ku, Tokyo 135-8578 Japan

tel: 03-5531-7334 fax: 03-5531-7551 e-mail: ir-com@taiheiyo-cement.co.jp

15100001NT
ANNUAL REPORT 2015

April 1, 2014–March 31, 2015

2015 

Investing for the Future
Investing for the Future

Corporate Profile 

The Taiheiyo Cement Group aspires to leadership in pioneering a sustainable future for our planet. Committed to doing 

business in ways that contribute to economic development, are environmentally efficient, and make a positive difference to 

society, we are working to be a leader of our industry in the Pacific Rim region.

In line with this, we aim to maximize our corporate value by making efficient use of managerial resources in an integrated 

fashion to minimize costs and risks as we strengthen our overall earnings capacity and financial structure.

We are simultaneously committed to fulfilling our corporate social responsibilities and the cement industry’s mission of 

ensuring plentiful supplies of cement and concrete, both materials that are indispensable for building and maintaining social 

infrastructure that secures the safety and assets of the population. We are also committed to helping protect the environment and 

advancing a new socioeconomic order built on closed loop materials sourcing by putting our cement plants and home-grown 

recycling capabilities and technologies to work to reduce, recycle, and reuse large volumes of waste material and by-products.

 Corporate Profile / Contents / Financial Highlights

1 Taiheiyo Cement Group Main Business Locations

2 To Our Stakeholders

4 Special Feature: 

 17 Medium-Term Management Plan (FY 2016 to FY 2018) 

6 Fiscal 2015 Review of Operations

8 Fiscal 2016 Business Strategies

14 Directors and Corporate Auditors

16 Consolidated Balance Sheets

18 Consolidated Statements of Income

 Consolidated Statements of Comprehensive Income

19 Consolidated Statements of Changes in Net Assets

20 Consolidated Statements of Cash Flows

21 Notes to the Consolidated Financial Statements

34 Independent Auditor’s Report

35 Financial Data

36 Taiheiyo Cement Group Network

37 Corporate Data

Contents

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

CONSOLIDATED 2015 2014 2015

For the year:

Net Sales ¥ 842,848 ¥ 840,288 $ 7,013,801

Operating Income 65,406 70,434 544,283

Income before Income Taxes and Minority Interests 67,387 59,143 560,765

Net Income 44,114 35,223 367,104

At year-end:

Net Assets 347,490 273,312 2,891,655

Total Assets 1,040,602 1,015,564 8,659,423

Yen U.S. dollars

Net Income per Share 35.91 28.67 0.30

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

UNCONSOLIDATED 2015 2014 2015

For the year:

Net Sales ¥ 312,712 ¥ 346,044 $ 2,602,250

Operating Income 36,368 51,745 302,646

Income before Income Taxes 36,281 41,085 301,921

Net Income 27,406 22,767 228,060

At year-end:

Net Assets 211,271 189,054 1,758,104

Total Assets 548,540 554,493 4,564,700

Yen U.S. dollars

Net Income per Share 22.17 18.42 0.18

Dividends per Share 5.00 5.00 0.04

Financial Highlights
Yongwol

Donghae

Lae

TAIHEIYO SINGAPORE

Singapore

Ho Chi Minh

Ninh Thuy Bangkok

Nghi Son

Hong Kong

Nanjing

Kaohsiung

Taichung

Taipei

Anchorage

Seattle

Portland

Stockton

Rillito Los Angeles

Oro Grande TAIHEIYO CEMENT U.S.A.

TAIHEIYO CEMENT HEAD OFFICE

Cebu

Qinhuangdao

Hanoi

Shenzhen

Shanghai

Dalian

Beijing

TAIHEIYO CEMENT (CHINA) 

INVESTMENT Mojave Las Vegas

Domestic Main Business Locations

Other:

China, Vietnam, Philippines, Singapore, Papua New Guinea

Sales Composition By Geographic Segment

Japan

79.0%

Other

11.1%

U.S.A

9.9%

(As of March 31, 2015/Consolidated)

0

200,000

400,000

600,000

800,000

1,000,000

265,484

726,475

273,184

727,849

300,359

747,616

346,044

840,288

312,712

842,848

Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 (Fiscal year)

(Millions of yen)

(■Con. / ■Uncon.)

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

18,496

7,412 22,908

18,588

32,667

29,416

69,590

48,821

67,890

39,469

Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 (Fiscal year)

50,000

40,000

30,000

20,000

10,000

0

17,029

21,040

7,845 4,450

35,223

15,102

44,114

22,767

27,406

11,329

Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 (Fiscal year)

5,000

10,000

15,000

20,000

14,467

1,652

15,872

1,691

0

13,832

1,645

13,087

1,679

13,059

1,710

Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 (Fiscal year)

Holding Company ..............................

Representative Office ........................

Cement Plant ....................................

Clinker Grinding Plant ........................

Distribution Terminal ...........................

GLOBAL NETWORK

Taiheiyo Cement Group Main Business Locations 

 Net Sales

 Ordinary Income

 Net Income

 Employees

TAIHEIYO CEMENT CORPORATION 1
Investing for

To Our Stakeholders

During the fiscal year under review consumer spending in Japan did not recover as quickly 

as expected following the earlier rush-demand that had resulted from the consumption 

tax rate increase. Inflation due to the weak yen also contributed to the delay in consumer 

spending recovery. However, the economy moved gradually toward recovery with continuing 

improvements in corporate earnings and employment against the backdrop of governmentled economic stimulus measures and monetary easing by the Bank of Japan.

The U.S. economy continued its steady recovery as improving employment helped 

bolster consumer spending. Meanwhile, the pace of growth in the Chinese economy 

moderated as factors such as slowing growth in fixed asset investment offset strong 

consumer spending. Elsewhere in Asia economic expansion continued, although the pace of 

growth slowed in some regions. 

Against this backdrop the Group’s consolidated sales rose ¥2,559 million from the 

previous year to ¥842,848 million. Consolidated operating income was ¥65,406 million, 

down ¥5,028 million, while consolidated ordinary income fell ¥1,699 million to ¥67,890 

million. As a result, consolidated net income rose by ¥8,891 million to ¥44,114 million. 

Shuji Fukuda

President and Representative Director

Moving toward the next growth stage while operating as 

a member of the social infrastructure industry

2 ANNUAL REPORT 2015
the Future

Looking to the future the gradual recovery in the Japanese economy is expected 

to continue, despite the impact of the next increase in the consumption tax rate, as 

improvements in employment and income drive a recovery in consumer spending and 

corporate earnings. However, we believe that the future direction of the economy remains 

unpredictable as factors such as uncertainty concerning U.S. financial policy, the direction of 

the European economy, and geopolitical risk in locations such as Eastern Europe and the 

Middle East pose the risk of a downturn.

Turning our attention to the Taiheiyo Cement Group’s business environment, our 

core domestic cement business will be affected by developments in both private-sector 

and government demand. In the case of the former we expect a recovery in housing 

investment and capital expenditures, reflecting the results of economic stimulus measures 

and improving corporate earnings. In the case of the latter we expect demand to continue to 

be driven by reconstruction projects in the aftermath of the Great East Japan Earthquake as 

well as construction associated with disaster prevention and mitigation projects. At the same 

time, such work may fall victim to delays caused by factors such as an inconsistent supply of 

building materials and labor shortages. Looking toward the U.S. economy, a stable recovery 

is expected to continue due in part to strong employment growth and rising consumer 

spending, but the risk of a downturn precipitated by factors such as a hike in interest rates 

makes it necessary to closely monitor future trends.

Our (consolidated) outlook for the fiscal year ending March 2016 calls for sales of 

¥892,000 million, operating income of ¥66,000 million, ordinary income of ¥65,000 million 

and net income of ¥37,000 million.

Looking forward towards the mid 2020s, the Taiheiyo Cement Group has established 

a vision and direction in order to clarify medium- and long-term goals that will result in 

sustained growth. As the first step in accomplishing those goals we have formulated the 17 

Medium-Term Management Plan and will work diligently to achieve its objectives.

I look forward to your continued support and cooperation as we pursue these goals.

TAIHEIYO CEMENT CORPORATION 3
About the new Medium-Term Management Plan

Summary of the 14 Medium-Term Management Plan

During the 14 Medium-Term Management Plan, a three-year plan that lasted through the 

previous fiscal year, the Taiheiyo Cement Group worked to strengthen its earnings base and 

to invest capital in growth sectors in order to ensure sustained growth into the future. We also 

pursued a dual financial strategy aimed at growth strategies and strengthening our financial 

structure.

As a result of initiatives undertaken to address our social mission and pursue our core 

business as part of the drive to strengthen our earnings base, we were able to dramatically 

surpass the income goals laid out in the plan. Contributing to this outcome were significantly 

larger than expected domestic cement demand due to factors such as reconstruction in 

the aftermath of the Great East Japan Earthquake, as well as company-wide initiatives 

addressing disaster waste disposal and robust demand for construction materials and ground 

improvement projects.

With regard to capital investment in growth sectors, our International Business Division 

explored a number of opportunities but, unfortunately their efforts did not lead to any new 

investments overseas. As a result we were instead able to give priority to reducing interestbearing debt with the goal of strengthening our financial structure, leading to a substantial 

improvement in our financial indicators and significantly surpassing our original targets.

However, we recognize that in order to ensure sustained growth in the future, capital 

investment in growth sectors must remain a priority.

Having established a vision and direction for the mid-2020s in order to clarify medium- and long-term goals toward realizing sustained growth, the Taiheiyo Cement Group formulated its 

17 Medium-Term Management Plan as the first step in accomplishing these goals. This special feature provides an overview of that plan.

Management targets from the 14 Medium-Term Management Plan

Income goals

FY 2012 results FY 2015 plan FY 2015 results

Net Sales ¥727,800 ¥735,000 ¥842,800 

Operating income ¥29,100 ¥52,000 ¥65,400 

Operating income to net sales 4.0% At least 7% 7.8%

ROA (ordinary income) 1.9% At least 4.5% 6.6%

EBITDA* ¥72,900 ¥94,000 ¥110,600 

Financial indicators

FY 2012 results FY 2015 plan FY 2015 results

Interest-bearing debt ¥510,100 ¥460,000 ¥399,100 

Net DER (times) 2.6 1.8 1.1

Net interest-bearing debt/EBITDA multiple (times) 6.1 4.2 3.1

* EBITDA = Operating income + depreciation expenses (including goodwill amortization)

Present and future awareness

Social issues (examples)

Taiheiyo Cement business domains and strengths

Sustained growth as a member of the social infrastructure industry

Hosting of the Tokyo Olympics and Paralympics

Large infrastructure projects

Reconstruction after the Great East 

Japan Earthquake

Shrinking of the population

Aging of the population

Disaster prevention and mitigation (national resilience)

Infrastructure maintenance and updates

Growth in demand for 

waste disposal

Population growth / Urbanization /

Expanded infrastructure development

Domestic Cement Business

Overseas Cement Business

Mineral Resources Business

Environmental Business

Construction Materials Business

Individual corporate groups 

(real estate, information processing, etc.)

Research and development 

capabilities

Expertise

Sales and marketing capabilities

Technological capabilities

Japan World

Vision and direction (mid-2020s)

Strive to leverage all Group capabilities to become an 

enterprise group that can contribute to the safety and 

security of societies in the Pacific Rim.

Special Feature 17 Medium-Term Management Plan (FY 2016 to FY 2018)

Units: Millions of Yen

4 ANNUAL REPORT 2015
Note: Plans and forecasts in this document are based on information currently available to the Company and certain assumptions the Company deems 

reasonable. As such, they are subject to risks and uncertainties. Consequently, we are unable to offer any promise or guarantee concerning the 

achievement of the planned results and measures included in this document. 

Cash flow allocation 17 Medium-Term Management Plan

Using increasing cash flow from operating activities to fund growth 

investments and dividends

FY 2016: 

¥6 per common share

Net DER: 

Less than 1.0

¥200,000 million 

(50% for growth 

 investment)

17 Medium-Term 

Management 

Plan

Sales CF

14 Medium-Term 

Management 

Plan

Sales CF

Dividend

Reduction of 

interest-bearing 

debt

Capital 

expenditure 

and investment

Dividend

Reduction of interestbearing debt

Capital 

expenditure 

and investment

Net sales and operating income by segment

17 Medium-Term Management Plan

Basic policy

Become an enterprise group 

that achieves progressive 

growth through constant 

innovation and the introduction 

of new technologies and 

solutions that can adequately 

respond to future changes in 

the business environment.

Contribute to the 

establishment of a safe and 

secure society through the 

provision of materials and 

technological developments 

and furthering national 

resilience as a member of the 

social infrastructure industry.

Vigorously push ahead with 

the further strengthening of 

our revenue base and financial 

structure by strengthening 

businesses through exhaustive 

cost-cutting.

Business strategies

1. Enhance existing businesses 

and formulate/implement 

growth strategies

3.Support national projects

2.Strengthen management 

foundations: Enhance 

management effectiveness 

4.Enhance research & 

development

Strive to increase 

corporate value as 

the first step toward 

the realization 

of our vision and 

direction. 

Management targets

FY 2018 targets 

The following three guidelines have been adopted in order to achieve our management targets:

To generate and improve our earnings capacity we will carry out capital 

expenditure and investment totaling ¥200,000 million over three years, of 

which 50% will be allocated to growth sectors. In principle, cash flow from 

operating activities during the period of the 17 Medium-Term Management 

Plan will be used to fund these investments. 

*EBITDA = Operating income + depreciation expenses (including goodwill amortization)

By improving our debt equity ratio and reducing interest-bearing debt, and 

by redoubling our pursuit of selection and concentration we will strive to 

build a flexible and strong financial structure with which we can adequately 

respond to future changes in the business environment.

Enhancing shareholders’ returns

Given our forecast that we will achieve our shortterm target for the net debt to equity ratio (DER) 

of a value less than 1.0 under the 17 MediumTerm Management Plan, we plan to increase the 

dividend for FY 2016 by ¥1 per common share 

to ¥6 per common share. The dividends for FY 

2017 and FY 2018 will be determined based on a 

consideration of factors including capital demand 

for growth investments and performance during 

the fiscal year in question.

FY 2015 results FY 2018 plan Change

Net sales ¥842,800 ¥950,000 or more ¥107,200 or more

Operating income ¥65,400 ¥80,000 or more ¥14,600 or more

EBITDA* ¥110,600 ¥125,000 or more ¥14,400 or more

 Guideline 1 Generate and improve our earnings capacity. Guideline 2 Build a flexible and strong financial structure

FY 2015 results FY 2018 plan Change

Net DER (Debt/Equity Ratio) 

(times) 1.14 Less than 1.0 Greater than 

(0.14)

Net interest-bearing debt/

EBITDA multiple 3.1 2.6 or less Greater than 

(0.5)

 Guideline 3 Enhance shareholders’ returns

Even as we work to build a flexible and strong financial structure we will strive to keep ROE stable at 10% or greater throughout 

the period of the 17 Medium-Term Management Plan by generating and improving our earnings capacity.

17 Medium-Term Management Plan Outline

Net sales Operating income

FY 2015 results FY 2018 plan FY 2015 results FY 2018 plan

Cement 570.6 647.5 40.2 54.0 

 (Domestic) 412.1 421.5 33.0 36.5 

 (Overseas) 158.5 226.0 7.1 17.5 

Mineral Resources 95.9 106.5 6.7 8.0 

Environmental 74.7 98.5 7.4 8.5 

Construction Supplies

Construction Materials Business 90.3 92.0 5.4 6.0 

Other 81.7 86.0 5.6 5.5 

Eliminations (70.6) (80.5) (0.1) (2.0)

Total 842.8 950.0 65.4 80.0 

Operating income on sales: 8.4% or more ROA (ordinary income): 7% or more

Units: Billions of Yen

(Millions of Yen)

TAIHEIYO CEMENT CORPORATION 5
FY 2015 Review of Operations Cement Business

Revenue Rises Domestically and Overseas while Profits Fall in Japan

During the fiscal year under review the construction industry faced ongoing challenges 

including labor shortages. They combined with a decline in housing investment in reaction 

to the hike in Japan’s consumption tax rate to offset the gradual recovery in private-sector 

investment. As a consequence, domestic cement demand fell 4.5% from the previous year to 

45.55 million tons.” Some 500,000 tons of that demand was met by imported cement, a yearon-year decline of 33.1%. Total exports rose 10.7% to 9.42 million tons.

The Taiheiyo Group’s domestic cement sales by volume, including consignment sales, fell 

4.2% from the previous year to 15.96 million tons, while exports fell 0.2% to 2.97 million tons. 

As a result, while domestic cement sales increased ¥15,127 million to ¥412,171 million, 

operating income fell ¥13,032 million to ¥33,080 million due to declining sales volume and 

rising variable and fixed costs.

Overseas, total shipments rose in most regions served by our U.S. West Coast cement and 

ready-mixed concrete business, where the market continues to recover. Our cement business 

in China was impacted by intensifying price competition and falling demand in some sectors, 

while our cement business in Vietnam remained a solid performer thanks to recovering 

domestic demand. Our cement business in the Philippines was impacted by rising power 

prices and other factors.

As a result of the above factors, the Group’s overseas cement business posted net sales of 

¥158,509 million, up ¥20,547 million from the previous year. Operating income improved 

¥6,935 million to ¥7,170 million thanks to growth in the U.S. market and the impact of 

exchange rates.

Operating ¥ 40,251 million

Income down ¥6,096 million year-on-year

Sales ¥ 570,681 million

up ¥35,674 million year-on-year

Operating ¥ 6,708 million

Income down ¥186 million year-on-year

Sales ¥ 95,957 million

up ¥2,075 million year-on-year

Mineral Resources Business

Aggregate Shipments Decline Year-on-Year

Sales volume in our aggregate business fell year-on-year as demand growth failed to 

materialize in the Tokyo region, negating increased shipments of lightweight aggregate and 

other products.

Sales volume in our mineral products business enjoyed year-on-year growth thanks to 

robust shipments of limestone to customers in the iron and steel industry.

Intake in our surplus construction soil recycling business fell below the previous year’s 

figures.

6 ANNUAL REPORT 2015
Operating ¥ 7,474 million

Income down ¥958 million year-on-year

Sales ¥ 74,787 million

down ¥28,646 million year-on-year

Operating ¥ 5,491 million

Income up ¥57 million year-on-year

Sales ¥ 90,340 million

down ¥2,301 million year-on-year

Operating ¥ 5,634 million

Income up ¥1,941 million year-on-year

Sales ¥ 81,764 million

down ¥1,996 million year-on-year

Environmental Business

Disposal of Earthquake Disaster Waste Nears Completion

Our Environmental Business enjoyed a strong year but sales and profits fell as the processing 

of disaster waste neared completion. 

Construction Materials Business

Profit Rises despite Declining Sales

Despite improving market conditions for autoclaved lightweight aerated concrete (ALC) and 

brisk sales of construction materials, results were affected by delays in the start of ground 

improvement and other civil engineering projects.

Other Business

Profitability Rises

This segment includes our ceramic, real estate, engineering, data processing, finance, transport 

and warehousing, and sports facility businesses. 

The ceramic, transport and warehousing businesses performed well, but sales fell due to our 

withdrawal from the electronics business during the previous fiscal year. 

TAIHEIYO CEMENT CORPORATION 7
Fiscal 2016 Business Strategies Strengthening our sales capabilities by ensuring 

that dealers work closely with all Taiheiyo 

Cement departments, and by taking advantage 

of the Group’s overall capabilities

Domestic Cement Business

Spearheading organizational development by 

assuring stable profits

Cement demand during FY 2016, which is the first year of 

our 17 Medium-Term Management Plan, is forecast to reach 

46 million tons, while demand during FY 2017 and FY 2018 

is expected to reach 48.00 million tons and 47.00 million tons 

respectively.

The cement business is the most fundamental of all the 

Group’s core businesses and our mission above all is to ensure 

stable profits. We will work to achieve that goal through sales 

initiatives, ready-mixed concrete initiatives, and distribution 

initiatives, as well as by earning orders for large projects and 

earthquake reconstruction projects.

Our top priority for sales initiatives will be to secure equitable 

pricing. We adopted equitable pricing in FY 2012 and were 

able to reap some benefits from that move during subsequent 

years. However, those efforts have not been adequate. Our goal 

is to achieve an acceptable level of benefit in this area of our 

operations. 

We will also work to strengthen the sales and marketing 

capabilities of dealers who play a pivotal role in our sales 

initiatives. To that end, we will strengthen our sales capabilities 

going forward by ensuring that dealers work closely with all 

Taiheiyo Cement departments and by taking advantage of the 

Group’s overall capabilities. 

For example, our Mineral Resources Business handles 

disposal of contaminated soil and soil removed from construction 

sites, a task that often proves challenging for companies 

operating at such sites. If we and our dealers can propose a way 

to resolve these challenges, that opening might lead not only to 

business opportunities relating to the disposal of contaminated 

soil, but also to ready-mixed concrete sales. 

Furthermore, in the future focus will shift from new building 

construction to infrastructure development, particularly repair 

and reinforcement projects. The Group offers a variety of 

products that can meet these needs and, going forward, we will 

take steps to bring those products to dealers and to strengthen 

our sales capabilities. 

As a result, I look forward to undertaking sales initiatives 

that will serve to bolster our capabilities as a product company 

and as a ready-mixed concrete company. 

8 ANNUAL REPORT 2015
Strengthening safety guidance and helping 

female employees pursue productive careers

In the area of safety, our Head Office, branches and SSs are 

strengthening safety education and safety guidance. In the 

area of human resources, for example, we are asking transport 

companies to report on whether they offer safety education 

for their drivers. Each SS has been carrying out safety patrols 

and checking whether employees are utilizing safety gear such 

as helmets, safety belts, and protective eyewear. These efforts 

revealed some violations in the beginning, but currently we’re 

not seeing any oversights thanks to the effectiveness of the 

strengthened guidance. We’re also carrying out a progressive 

strengthening of safety initiatives, for example by installing 

companionways, escort rails, and safety blocks in bulk cement 

loading areas, and we will work over the next three years to 

ensure that no accidents occur.

In an effort to help female employees pursue productive 

careers, the Taiheiyo Cement Ready-mixed Concrete 

Association formed a Committee to Promote Equal Opportunity 

Employment, which has been engaged in lively discussions about 

how to attract female workers to the ready-mixed concrete and 

cement industry. We look forward to actively supporting this 

effort in the future.

The labor shortage that manifested itself during FY 2014 did 

not develop into a major problem thanks in part to a decline in 

demand during FY 2015. Because we expect to see an across-theboard increase in demand during FY 2017 the effects may extend 

to ready-mixed concrete operations, for example in the form of 

shortages of mixer truck drivers. We will redouble our efforts to 

create human resource structures that can deal with periods of 

strong demand, for example by coordinating construction site 

orders and deploying assistance from other regions. 

Gathering information about large projects 

and providing solutions to secure business 

opportunities

In addition to our own sales structure we will utilize our directly 

owned ready-mixed concrete companies, other companies 

specializing in ready-mixed concrete and the ready-mixed 

concrete industry associations as resources to help secure new 

opportunities for the supply of ready-mixed concrete.”

Since most directly owned ready-mixed concrete companies 

are under independent management it will be important 

to strengthen their financial standing and to ensure robust 

management. I would like these companies to play a central role 

in regional sales, for example from a technological standpoint 

and from the standpoint of ready-mixed concrete association 

operations. 

As a supplier to specialist ready-mixed concrete companies 

we need to earn their trust in our technology, sales services and 

quality, and establish a stable supply. In addition, I look forward 

to making customers value their relationship with the Taiheiyo 

Cement Group by offering a broad range of services, for example 

providing solutions for aggregate initiatives, and consulting on 

succession issues.

For ready-mixed concrete associations, stabilizing the 

industry will be a key priority. While we expect the ready-mixed 

concrete industry to work to help itself we also look to contribute 

to the stabilization of the industry, for example through our 

directly owned ready-mixed concrete companies.

In the area of distribution I would like to build flexible 

supply structures that are capable of accommodating fluctuations 

in demand. We expect a high level of demand during FY 2017 

and FY 2018 and the issue will be how to achieve balance under 

such conditions. To ensure that we can meet demand related to 

construction for the Tokyo Olympics and Paralympics, which 

is expected to develop in earnest starting in FY 2017, we are 

adding a 20,000-ton silo and building a new solidifying material 

manufacturing facility at our Tokyo Service Station (SS).

There are large projects all over the country, particularly 

in Fukushima Prefecture, the Tokyo region and Okinawa 

Prefecture. We are working to gather information and to ensure 

that we do not miss out on any business opportunities. Of 

these projects, in the future we expect demand associated with 

earthquake reconstruction to migrate gradually from Miyagi 

Prefecture and Iwate Prefecture to Fukushima Prefecture. We 

look forward to contributing to these reconstruction efforts 

through the supply of aggregate and other materials, as well as 

by providing technologies. Takaki Minato

Director, Managing Executive Officer and

Senior General Manager of Cement Business Division

TAIHEIYO CEMENT CORPORATION 9
Fiscal 2016 Business Strategies

However, I believe that the key issue will be how to maintain 

and enhance management of Group companies nationwide in the 

face of the slowdown in demand that is expected to follow once 

activity associated with current earthquake reconstruction projects 

and Olympic-related construction settles down. Consequently, we 

will take steps to establish profitability during the term of the 17 

Medium-Term Management Plan.

Looking to future growth fields, we will focus on the resourcechemical business, which deals with products such as ChiccaLight 

and high-purity silicon carbide, as well as the development of our 

businesses overseas. It is easy to assume that limestone should 

play a central role in the Mineral Resources Business, but we 

do not limit ourselves to limestone and other mineral resources. 

Instead, we believe it is important to turn our attention to all of 

the Company’s resources, identify business opportunities for the 

Company, and ask how we can use them to drive new business 

development.

In general, our business development efforts overseas target 

Southeast Asia. We will continue to develop our businesses 

while working closely with the International Business Division 

to investigate local conditions and circumstances, and determine 

whether Japanese business models will work overseas.

Going beyond the status quo to develop 

new creative businesses

Mineral Resources Business

Accelerating business development overseas in 

pursuit of additional growth

For the Mineral Resources Business the most important aspects 

of the 17 Medium-Term Management Plan are strengthening the 

profitability of existing businesses and expanding our operations 

in growth fields. 

It will also be important for our department, which accounts 

for about 60% of all Group company sales, to strengthen the 

Group’s capabilities. I look forward to getting the first fiscal year 

of the 17 Medium-Term Management Plan off to a smooth start 

by focusing on the above priorities as we develop our business.

Our existing businesses are generating stable revenue 

thanks in part to post earthquake reconstruction demand. Since 

construction work associated with the 2020 Tokyo Olympics 

and Paralympics will soon begin in the Kanto region, it will be 

necessary to build facilities capable of providing a stable supply of 

aggregate to those projects.

Masafumi Fushihara

Director and Senior Executive Officer

Mineral Resources Business Department

Environmental Business Development Department

10 ANNUAL REPORT 2015
Achieving TF1000 by expanding existing 

businesses and developing new businesses

Environmental Business

Focusing on accelerating overseas development 

and utilizing coal ash

One year before the Great East Japan Earthquake the 

Environmental Business Department set the target of achieving 

¥100.0 billion in sales by FY 2018 under the slogan TF1000 (“Try 

Future 1000”). Sales reached that level temporarily on the back 

of earthquake-related demand before declining to ¥75.0 billion 

towards the end of the 14 Medium-Term Management Plan. As a 

result, we acknowledged the need to expand sales by ¥25.0 billion 

in the 17 Medium-Term Management Plan. 

Our first priority will be to accelerate overseas development 

as domestic cement production capacity is not expected to realize 

significant growth after the Olympics. Consequently, we will turn 

our attention overseas by working to increase exports of coal ash 

and new blended cement products. At the same time we will 

study the potential of Japanese-style environmental businesses 

operating out of Group plants located overseas, as well as from 

deploying environmental technologies.

Our second priority will be to utilize coal ash. Currently 

multiple coal-fired power plants are on the drawing board. 

These plants will not be completed until after FY 2018 but we 

have already formed a Coal Ash Utilization Committee to study 

how coal ash generated by the plants can be utilized. Given the 

prospect of around 5 million tons of additional coal ash being 

created we will take advantage of our unparalleled technologies 

and accumulated knowledge and expertise to effectively utilize 

this resource and thereby generate increased revenue.

Our third priority will be to develop new businesses, in 

particular to enter the water treatment field while leveraging the 

Aqua Business that we launched three years ago. That business has 

been posting growing sales at a brisk rate, up to ¥1,400 million 

last fiscal year from ¥700 million in its first fiscal year, and this 

fiscal year we are striving to raise that figure to ¥3,000 million with 

the possibility of developing it overseas. In the future we plan to 

increase Aqua Business sales to ¥5,000 million. 

As we strengthen efforts to develop our businesses overseas 

we will need employees with language skills and the ability 

to understand other cultures. However, operating a successful 

business requires more than just speaking a foreign language, so 

we will strive to accelerate human resources development while 

facilitating even greater business expansion and growth.

TAIHEIYO CEMENT CORPORATION 11
Fiscal 2016 Business Strategies

entering promising new markets. For this reason, too, our policy is 

to look to expand the scale of our business operations during the 

period covered by this Medium-Term Management Plan.

In the trading business we are laying the groundwork for 

expanding product volume in the future, for example by steadily 

pursuing sales of CEM II, a new product, using the new silo that 

was completed in Singapore in April. 

Concerning regional conditions, our operations in the U.S. 

finally turned the corner to profitability last year. We believe the 

recovery will continue for several years and we plan to work to 

return sales prices to previous levels as the recovery develops. We 

will also work to further bolster margins in an effort to achieve the 

expected level of profitability. 

In China volume and pricing have both fallen and 

environmental regulations have become more demanding. We 

expect a new, stable order to develop as the companies that are 

unable to deal with these conditions are weeded out, but for the 

time being we will focus our efforts on overcoming the difficult 

conditions in which we find ourselves operating. 

In the Philippines demand has grown rapidly over the last 

several years. A grinding mill currently under construction in 

order to increase our production capacity in the country will be 

completed this fall as we put in place structures that will enable us 

to accommodate short-term growth in demand.

Recovery is also evident in the Vietnamese economy, where 

last year’s domestic cement demand surpassed the previous record, 

which was set in 2010. Nghi Son Cement, the base from which we 

conduct our business in the country, has a berth that could be used 

for product exports, and we may take advantage of that capability 

as we work to maximize profit while maintaining maximum 

production in a way that balances the need to accommodate 

growing domestic demand with exports. 

We have begun exporting natural gas from Papua New Guinea, 

and demand remains firm. Going forward, we will maintain our 

solid position in the local market by taking advantage of the fact 

that we operate the only grinding plant in the country. 

Searching for growth opportunities overseas

The U.S. has potential over the medium and long term, and we 

will actively study any investment opportunities that promise to 

increase the value of existing businesses. 

Although we are not currently considering any large 

investments in China due to the challenging market environment 

that currently characterizes the country, we will continue to search 

for business opportunities. 

In the Philippines, where future growth is expected, we will 

search for opportunities to expand our operating base, for example 

by increasing clinker production capacity.

In Vietnam, we will look for ways to expand our business as 

we study various measures with the potential to boost sales volume 

for cement products such as blended cement.

The above measures will address existing regional businesses, 

but we will also study business in new regions. We consider 

Southeast Asia to be a promising target region. However, many 

companies are considering expanding into the area, so we will work 

to ensure that we do not miss out on any business opportunities. 

Human resources are an essential part of our effort to expand 

the International Business. Going forward, we will continue to 

train personnel to function effectively while working in partnership 

with departments involved in other businesses at the Company. 

In addition to language training and other trainee programs, we 

will increase the number of opportunities available for young 

employees to experience overseas operations, for example through 

overseas projects.

Strengthening our presence in the Pacific Rim

International Business

Working toward the targets laid out in 

our future vision

Formulation of the current 17 Medium-Term Management Plan 

began with developing a vision and long-term direction for the 

Company during the first half of the 2020s. The fundamental basis 

of this vision was the goal of “becoming a company with a strong 

presence in the Pacific Rim.” We recognize that to achieve this 

vision we will need to increase the scale of our operations and to 

boost our cement production capacity beyond current levels.

While we do not intend to pursue large-scale operations 

simply for the sake of growing larger, we have determined that 

cement manufacturing facilities of a certain scale will be necessary, 

particularly if we are to pursue the globalization of our operations 

in a distinctive manner that draws on strengths such as our 

expertise in the resource and environmental fields. 

The trading business will also play a key role insofar as it 

signals our presence and influence in the market. Currently we 

export about 5 million tons of material when trade with our 

three largest overseas trading partners is included. In the future 

we would like to increase that to the 10 million tons level for 

cementitious materials, including slag and fly ash. 

Our vision is to secure the same level of profit from the 

International Business as from our domestic businesses by the 

mid-2020s when domestic demand is expected to decline. We 

plan to accomplish this by expanding the scale of our operations 

to a certain level and by expanding our trading business. 

17 Medium-Term Management Plan objectives 

and status by region

The 17 Medium-Term Management Plan is based on three core 

measures: (1) enhancing the profitability of existing businesses, (2) 

developing and pursuing new businesses, and (3) expanding and 

deepening our trading business. In addition we will focus resources 

on strengthening governance structures from the standpoint of 

CSR management. 

In the effort to enhance the profitability of existing businesses 

our goal is to boost operating income from overseas consolidated 

subsidiaries to nearly ¥18,000 million by the end of FY 2018. 

With regard to new businesses, we will study potential areas 

of operation from the dual standpoints of strengthening our 

operating base in regions in which we are already active and 

Ken Kikuchi

Director, Managing Executive Officer and

Senior General Manager of International Business Division

12 ANNUAL REPORT 2015
strengthening a profit-generating business foundation.”

One specific policy will be to expand our menu of technologies 

and products in the areas of high-value-added and precast concrete 

as well as aging infrastructure, where we expect growing demand 

in the future.

We will also implement effective and strategic policies as we 

make investments that complement and strengthen our business 

structures and consider the possibility of alliances, reorganizations 

and other approaches in key fields.

By carrying out these initiatives we plan to achieve the 17 

Medium-Term Management Plan’s targets of ¥92,000 million in 

sales and ¥6,000 million in operating income. 

Because we expect demand to decline following completion 

of earthquake reconstruction projects and construction related 

to the Tokyo Olympics and Paralympics, it will be necessary to 

establish profit-generating structures that take into account the 

medium- and long-term business environment during the 17 

Medium-Term Management Plan’s term. To that end, we must 

build more long-lasting business structures by continuing our 

program of selection and consolidation while measuring future 

growth potential and profitability to enable us to achieve the 

regeneration of our business and products.

Furthermore, since most of that business development 

takes place in Japan we are working to develop a roadmap for 

accelerating our entry into overseas markets. Training employees 

so that they are able to understand overseas growth markets will 

be an urgent priority and we look forward to working as a Group 

to address this area of need.

By carrying out these policies we will seek to place the 

Construction Materials Business on a trajectory of growth and to 

effect the sustained improvement of its business value.

Striving to establish and strengthen 

a profit-generating business foundation

Construction Materials Business

A multifaceted business domain

The Construction Materials Business consists of all of our affiliates’ 

businesses. Its multifaceted business domain encompasses 

ground improvement, autoclaved lightweight aerated concrete 

(ALC), pre-mixed products such as admixtures, secondary 

concrete products, and backfill material for use in shielded tunnel 

construction projects, among other products. As a Group we have 

put in place structures to accommodate an extensive range of 

customer needs.

Strengthening initiatives to achieve the goals of 

the 17 Medium-Term Management Plan

Having identified the need to formulate a growth strategy we 

are currently working to strengthen the Construction Materials 

Businesses, to clearly define its role, and to transform it into a 

core business alongside the Cement Business, Mineral Resources 

Business and Environmental Business. The 17 Medium-Term 

Management Plan sets forth our basic policy of “establishing and 

Toshihide Nishimura

Director, Managing Executive Officer

Construction Materials Business

TAIHEIYO CEMENT CORPORATION 13
Directors, Managing Executive Officers Directors

Takaki Minato Hidehiko Kasamura Ken Kikuchi Yuuichi Kitabayashi Shigeru Matsushima Keiichi Otagaki Yoshiko Koizumi

Executive Officers

Youichi Funakubo

Yasuhiro Sagara

Keiichi Miura

Masahiro Karino

Kunihiro Ando

Tomoya Sakamoto

Toshiaki Suzuki

Satoshi Asami

lchirou Egami

Toru Kanai

Katsuhide Hukuhara

Masakatsu Kifushi

Seiichi Araki

Yoshiaki Tominaga

Corporate Auditors (Standing)

Kohji lshii

Noriyuki lshii

Corporate Auditors

Takashi Nonaka

Yoshio Narukage

President and Representative Director

Shuji Fukuda

Board of Directors 

Keiji Tokuue

Chairman and Director

Shou Kurasaki

Vice President and

Representative Director

Kenji Ogawa

Director,

Senior Executive Officer

Directors and Corporate Auditors (As of June 26, 2015)

Masafumi Fushihara Toshihide Nishimura

14 ANNUAL REPORT 2015
16 Consolidated Balance Sheets

18 Consolidated Statements of Income

 Consolidated Statements of Comprehensive Income

19 Consolidated Statements of Changes in Net Assets

20 Consolidated Statements of Cash Flows

21 Notes to the Consolidated Financial Statements

34 Independent Auditor’s Report

35 Financial Data

36 Taiheiyo Cement Group Network

37 Corporate Data

FINANCIAL SECTION

Investing for the Future

TAIHEIYO CEMENT CORPORATION 15
2014 2015 2015

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

(Note 5)

Assets

Current assets:

Cash and deposits (Notes 6, 7 and 10) ¥59,369 ¥53,859 $448,190

Notes and accounts receivable – trade (Notes 6 and 10) 176,245 178,350 1,484,148

Less: allowance for doubtful accounts (1,568) (2,329) (19,389)

174,677 176,020 1,464,759

Merchandise and finished goods (Note 15) 26,113 28,587 237,890

Work in process (Note 15) 4,120 2,183 18,166

Raw materials and supplies (Note 15) 39,323 43,252 359,929

Deferred tax assets (Note 18) 14,147 10,705 89,083

Other 20,552 15,374 127,937

338,304 329,981 2,745,957

Investments and other assets:

Investment securities (Notes 6, 8 and 10) 98,890 113,747 946,558

Long-term loans receivable 1,183 1,249 10,395

Assets for retirement benefits (Note 11) 12,134 20,338 169,243

Deferred tax assets (Note 18) 25,818 16,848 140,201

Other (Notes 10 and 20) 32,990 31,997 266,271

171,016 184,181 1,532,671

Less: allowance for doubtful accounts (6,302) (5,961) (49,611)

164,714 178,219 1,483,060

Property, plant and equipment (Notes 10 and 20):

Buildings and structures 472,155 478,522 3,982,043

Machinery, equipment and vehicles 819,139 842,647 7,012,126

Other 100,256 108,537 903,195

1,391,551 1,429,706 11,897,365

Less: accumulated depreciation (1,091,153) (1,117,608) (9,300,227)

300,398 312,098 2,597,138

Land (Notes 10 and 14) 155,301 164,647 1,370,124

Construction in progress 14,616 13,819 114,998

470,316 490,565 4,082,261

Goodwill and other intangible assets (Note 10) 42,228 41,836 348,143

Total assets ¥1,015,564 ¥1,040,602 $8,659,423

Consolidated Balance Sheets

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

The accompanying notes are an integral part of these statements.

16 ANNUAL REPORT 2015
2014 2015 2015

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

(Note 5)

Liabilities and net assets

Current liabilities:

Short-term loans payable (Notes 6, 9 and 10) ¥149,237 ¥119,254 $992,377

Current portion of long-term loans payable (Notes 6, 9 and 10) 83,978 84,767 705,392

Commercial papers (Note 6) – 5,000 41,607

Notes and accounts payable – trade (Notes 6 and 10) 83,691 85,036 707,637

Income taxes payable (Note 18) 18,040 10,730 89,297

Deferred tax liabilities (Note 18) 372 0 6

Other (Note 10) 73,527 73,027 607,701

408,848 377,817 3,144,021

Noncurrent liabilities:

Long-term loans payable (Notes 6, 9 and 10) 206,381 194,942 1,622,219

Lease obligations (Note 9) 22,948 22,616 188,204

Deferred tax liabilities (Note 18) 15,624 4,314 35,907

Deferred tax liabilities for land revaluation (Note 18) 5,282 4,770 39,698

Liability for retirement benefits (Note 11) 25,359 26,889 223,762

Provision for directors’ retirement benefits 509 514 4,278

Provision for asset removal 574 41 345

Asset retirement obligations (Note 22) 7,230 7,673 63,853

Other provision 978 1,106 9,206

Other (Note 10) 48,514 52,426 436,268

333,404 315,295 2,623,745

Contingent liabilities (Note 12)

Net assets (Note 13):

Shareholders’ equity:

Capital stock:

 Authorized: 1,977,308,000 shares Issued: 1,237,800,586 shares in 2014 and 1,237,800,586 shares in 2015 86,174 86,174 717,102

Capital surplus 50,690 50,757 422,380

Retained earnings 121,212 158,939 1,322,625

Treasury stock (9,332,429 shares in 2014 and 9,106,837 shares in 2015) (936) (934) (7,773)

Accumulated other comprehensive income:

Revaluation reserve for land (Note 14) 4,252 4,295 35,748

Valuation difference on available-for-sale securities 5,084 6,908 57,489

Deferred gains or losses on hedges 50 2 17

Retirement benefits liability adjustments (9,472) (4,148) (34,525)

Foreign currency translation adjustments (16,799) 649 5,408

Total accumulated other comprehensive income (16,884) 7,707 64,138

Minority interests 33,055 44,845 373,181

Total net assets 273,312 347,490 2,891,655

Total liabilities and net assets ¥1,015,564 ¥1,040,602 $8,659,423

The accompanying notes are an integral part of these statements.

TAIHEIYO CEMENT CORPORATION 17
2014 2015 2015

(Millions of yen) (Thousands of U.S. 

dollars) (Note 5)

Net Sales ¥840,288 ¥842,848 $7,013,801

Cost of sales (Note 15) 641,469 642,645 5,347,799

Gross profit 198,819 200,203 1,666,001

Selling, general and administrative expenses (Notes 16 and 17) 128,384 134,796 1,121,718

Operating income 70,434 65,406 544,283

Non-operating income (expenses):

Interest and dividends income 1,169 1,322 11,006

Interest expenses (8,362) (6,847) (56,979)

Loss on sales/disposal of property, plant and equipment (3,469) (797) (6,637)

Gain (loss) on sales of investment securities 560 5 49

Loss on liquidation of subsidiaries and affiliates (58) – –

Loss on valuation of stocks of subsidiaries and affiliates (203) (1,231) (10,249)

Equity in earnings (losses) of unconsolidated 

 subsidiaries and affiliates 2,575 5,293 44,048

Impairment loss (Note 20) (6,450) (1,069) (8,899)

Gain on step acquisitions – 916 7,629

Business structure reform costs – (1,180) (9,819)

Gain on forgiveness of debts – 4,569 38,024

Other, net 2,945 998 8,309

(11,291) 1,980 16,481

Income before income taxes and minority interests 59,143 67,387 560,765

Income taxes (Note 18):

Current 23,597 18,170 151,209

Deferred (1,000) (1,884) (15,685)

22,596 16,285 135,524

Net income before minority interests 36,546 51,101 425,240

Minority interests 1,322 6,986 58,136

Net income ¥ 35,223 ¥ 44,114 $367,104

(Yen) (U.S. dollars) (Note 5)

Per share (Note 4 (13)):

Net income

 Basic ¥28.67 ¥35.91 $0.30

Cash dividends 5.00 5.00 0.04

2014 2015 2015

(Millions of yen) (Thousands of U.S. 

dollars) (Note 5)

Net income before minority interests ¥ 36,546 ¥ 51,101 $425,240

Other comprehensive income:

Valuation difference on available-for-sale securities 2,205 1,854 15,431

Deferred gains or losses on hedges (27) (14) (121)

Revaluation reserve for land – 494 4,112

Foreign currency translation adjustments 18,665 16,002 133,161

Retirement benefit liability adjustment 1,055 5,226 43,495

 Share of other comprehensive income of affiliates 

 accounted for using equity method 7,064 5,072 42,208

Total other comprehensive income (Note 21) 28,963 28,635 238,287

Comprehensive income ¥65,509 ¥79,736 $663,528

Comprehensive income attributable to:

Shareholders of Taiheiyo Cement Corporation ¥61,008 ¥68,922 $573,545

Minority interests ¥4,501 ¥10,813 $89,982

Consolidated Statements of Income Consolidated Statements of Comprehensive Income

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

The accompanying notes are an integral part of these statements.

18 ANNUAL REPORT 2015
(Thousands of U.S. dollars) (Note 5)

Shareholders’ equity Accumulated other comprehensive income

Minority 

interests

Total

net assets

Capital

stock

Capital

surplus

Retained 

earnings

Treasury

 stock

Revaluation

reserve for

land

Valuation 

difference on

available-for

-sale securities

Deferred gains

or losses on

hedges

Adjustments 

for employee 

retirement benefit 

of overseas 

subsidiary

Retirement 

benefits liability 

adjustments

Foreign 

currency 

translation 

adjustments

Balance at 31st March, 2014 $717,102 $421,824 $1,008,675 $(7,791) $35,388 $42,311 $419 $ – $(78,829) $(139,797) $275,074 $2,274,378

Cumulative effects of changes in accounting policies (729) (80) (810)

Balance at 1st April, 2014 $717,102 $421,824 $1,007,946 $(7,791) $35,388 $42,311 $419 $ – $(78,829) $(139,797) $274,993 $2,273,568

Dividends from surplus (51,113) (51,113)

Net income 367,104 367,104

Reversal of revaluation reserve for land 275 275

Purchase of treasury stock (529) (529)

Disposal of treasury stock 556 547 1,104

Change in scope of consolidation (1,586) (1,586)

Change of affiliates accounted for by equity method –

Net changes in items other than shareholders’ equity 359 15,178 (402) – 44,303 145,205 98,187 302,833

Balance at 31st March, 2015 $717,102 $422,380 $1,322,625 $(7,773) $35,748 $57,489 $17 $ – $(34,525) $5,408 $373,181 $2,891,655

Consolidated Statements of Changes in Net Assets

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

(Millions of yen)

Shareholders’ equity Accumulated other comprehensive income

Minority 

interests

Total

net assets

Capital

stock

Capital

surplus

Retained 

earnings

Treasury

 stock

Revaluation

reserve for

land

Valuation 

difference on

available-for

-sale securities

Deferred gains

or losses on

hedges

Adjustments 

for employee 

retirement benefit 

of overseas 

subsidiary

Retirement 

benefits liability 

adjustments

Foreign 

currency 

translation 

adjustments

Balance at 31st March, 2013 ¥86,174 ¥50,636 ¥91,174 ¥(934) ¥4,563 ¥3,168 ¥78 ¥(3,793) ¥ – ¥(39,640) ¥28,399 ¥219,826

Dividends from surplus (4,914) (4,914)

Net income 35,223 35,223

Reversal of revaluation reserve for land 4 4

Purchase of treasury stock (60) (60)

Disposal of treasury stock 54 58 112

Change in scope of consolidation (275) (275)

Change of affiliates accounted for by equity method – –

Net changes in items other than shareholders’ equity (310) 1,916 (27) 3,793 (9,472) 22,840 4,656 23,396

Balance at 31st March, 2014 ¥86,174 ¥50,690 ¥121,212 ¥(936) ¥4,252 ¥5,084 ¥50 ¥ – ¥(9,472) ¥(16,799) ¥33,055 ¥273,312

Cumulative effects of changes in accounting policies (87) (9) (97)

Balance at 1st April, 2014 ¥86,174 ¥50,690 ¥121,124 ¥(936) ¥4,252 ¥5,084 ¥50 ¥ – ¥(9,472) ¥(16,799) ¥33,046 ¥273,214

Dividends from surplus (6,142) (6,142)

Net income 44,114 44,114

Reversal of revaluation reserve for land 33 33

Purchase of treasury stock (63) (63)

Disposal of treasury stock 66 65 132

Change in scope of consolidation (190) (190)

Change of affiliates accounted for by equity method –

Net changes in items other than shareholders’ equity 43 1,824 (48) – 5,323 17,449 11,799 36,391

Balance at 31st March, 2015 ¥86,174 ¥50,757 ¥158,939 ¥(934) ¥4,295 ¥6,908 ¥2 ¥ – ¥(4,148) ¥649 ¥44,845 ¥347,490

TAIHEIYO CEMENT CORPORATION 19
2014 2015 2015

(Millions of yen) (Thousands of U.S. 

dollars) (Note 5)

Net cash provided by operating activities 

Income before income taxes and minority interests ¥59,143 ¥67,387 $560,765

Depreciation and amortization 40,553 42,401 352,845

Amortization of goodwill 2,353 2,771 23,062

Equity in (earnings) losses of unconsolidated 

 subsidiaries and affiliates (2,575) (5,293) (44,048)

(Gain) loss on sales of investment securities (560) (5) (49)

Loss on liquidation of subsidiaries and affiliates 58 466 3,878

Loss on valuation of stocks of subsidiaries and affiliates 203 1,231 10,249

Increase (decrease) in liability for retirement benefits (5,193) 485 4,036

Increase (decrease) in provision for directors’ 

 retirement benefit 3 (6) (56)

Decrease in provision for director’s bonuses (7) – –

Increase (decrease) in allowance for doubtful accounts (472) 435 3,622

Interest and dividends income (1,169) (1,322) (11,006)

Interest expenses 8,362 6,847 56,979

Loss on sales/disposal of property, plant and equipment 3,469 797 6,637

Impairment loss 6,450 1,069 8,899

(Increase) decrease in notes and accounts receivable – trade 1,833 2,429 20,219

(Increase) decrease in inventories 842 (1,069) (8,899)

Decrease in notes and accounts payable – trade (2,863) (872) (7,258)

Business structure reform costs – 1,180 9,819

Gain on forgiveness of debts – (4,569) (38,024)

Decrease in provision for asset removal (1,291) (533) (4,436)

Other, net 3,229 (5,932) (49,365)

Subtotal 112,416 107,879 897,726

Interest and dividends income received 1,565 1,705 14,195

Interest expenses paid (8,749) (6,920) (57,587)

Income taxes paid (16,674) (25,664) (213,570)

Net cash provided by operating activities 88,558 77,000 640,763

Net cash used in investing activities

(Increase) decrease in time deposits 1,267 848 7,059

Purchase of property, plant and equipment (35,482) (38,403) (319,573)

Proceeds from sales of property, plant and equipment 2,670 5,017 41,754

Purchase of investment securities (370) (1,444) (12,016)

Proceeds from sale of investment securities 2,999 370 3,080

Purchase of investments in subsidiaries resulting 

 in change in scope of consolidation – (516) (4,301)

Payments of loans receivable (2,077) (1,562) (13,002)

Collections of loans receivable 3,474 3,631 30,222

Other, net (409) 680 5,662

Net cash used in investing activities ¥(27,926) ¥(31,377) $(261,110)

2014 2015 2015

(Millions of yen) (Thousands of U.S. 

dollars) (Note 5)

Net cash used in financing activities

Increase (decrease) in short-term loans payable ¥(32,966) ¥(31,899) $(265,456)

Increase (decrease)commercial papers – 5,000 41,607

Proceeds from long-term loans payable 79,474 44,752 372,412

Repayment of long-term loans payable (102,278) (78,335) (651,871)

Proceeds from issuance of bonds 15,350 20,000 166,430

Redemption of bonds (11,513) (610) (5,076)

Purchase of treasury stocks (61) (50) (420)

Cash dividends paid (4,914) (6,142) (51,113)

Cash dividends paid to minority shareholders (838) (583) (4,853)

Proceeds from issuance of stock to minority shareholders 770 – –

Proceeds from sales of treasury stock 55 67 560

Other, net (5,347) (4,911) (40,873)

Net cash used in financing activities (62,269) (52,713) (438,654)

Effect of exchange rate changes on cash and 

 cash equivalents 3,127 1,712 14,251

Net increase (decrease) in cash and cash equivalents 1,488 (5,377) (44,750)

Cash and cash equivalents at beginning of year 54,408 55,604 462,718

Increase in cash and cash equivalents resulting from 

 merger 

114 76 637

Decrease in cash and cash equivalents resulting from 

change of scope of consolidation (406) 342 2,846

Cash and cash equivalents at end of year (Note 7) ¥55,604 ¥50,645 $421,451

Consolidated Statements of Cash Flows

The accompanying notes are an integral part of these statements.

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

20 ANNUAL REPORT 2015
Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

<Yen in millions and U.S. dollars in thousands, unless otherwise 

indicated.>

1. Basis of Presentation of the Consolidated Financial 

Statements

The accompanying consolidated financial statements of 

Taiheiyo Cement Corporation (the “Company”) and 

consolidated subsidiaries (collectively, the “Companies”) 

are prepared on the basis of accounting principles generally 

accepted in Japan, which are different in certain respects as to 

the application and disclosure requirements of International 

Financial Reporting Standards, and are compiled from the 

consolidated financial statements prepared by the Company as 

required by the Financial Instruments and Exchange Law of 

Japan.

The accounts of overseas subsidiaries are adjusted according 

to ASBJ PITF No.18. In preparing the accompanying 

consolidated financial statements, certain items presented in 

the consolidated financial statements filed with the Directors 

of Kanto Finance Bureau in Japan have been reclassified and/

or recapitulated and certain notes have been added for the 

convenience of readers outside Japan.

As permitted, amount of less than one million yen have been 

omitted. As a result, the totals shown in the accompanying 

consolidated financial statements (both in yen and U.S. dollars) 

do not necessarily agree with the sums of the individual 

amounts.

Certain amounts previously reported have been reclassified 

to conform to the current year’s presentation.

2. Scope of Consolidation and Investments in 

Unconsolidated Subsidiaries and Affiliates

Under Japanese accounting standards, a subsidiary and an 

affiliate are defined as follows:

· a subsidiary: a company in which the reporting entity 

directly or indirectly holds more than 50% of 

the voting rights thereof or which is deemed 

to be controlled directly or indirectly by the 

reporting entity; and

· an affiliate: a company in which the reporting entity 

directly or indirectly holds 20% or more of the 

voting rights thereof or in which the reporting 

entity is deemed to exercise significant 

influence directly or indirectly on its decision 

making.

(1) Scope of Consolidation

The numbers of subsidiaries the Company had for the 

years ended 31st March, 2014 and 2015 were 234 and 

228, respectively, of which 132 and 131, respectively, were 

consolidated in the respective years.

The significant subsidiaries that have been consolidated by 

the Company are listed below:

Consolidated subsidiaries Equity ownership*

(%)

Share capital*

(Millions of yen)

(Domestic)

NM Cement Co., Ltd. 70.0 ¥7,001

NIHON CERATEC Co., Ltd. 100.0 6,546

Mitsui Wharf Co., Ltd. 100.0 3,500

CLION Co., Ltd. 97.4 3,075

Myojo Cement Co., Ltd. 100.0 2,500

Taiheiyo Material Corporation 100.0 1,631

Tsuruga Cement Co., Ltd. 67.1 1,050

(Millions of

U.S. dollars)

(Overseas)

TAIHEIYO CEMENT U.S.A., Inc. (USA) 100.0 $63.5

CALPORTLAND COMPANY (USA) 100.0 24.1

Jiangnan-Onoda Cement Co., Ltd. (China) 88.5 134.3

Dalian-Onoda Cement Co., Ltd. (China) 84.8 82.7

Qinhuangdao Asano Cement Co., Ltd. (China) 71.9 93.0

NGHI SON CEMENT CORPORATION (Vietnam) 65.0 180.1

* as of 31st March, 2015

The remaining 97 unconsolidated subsidiaries for the year 

ended 31st March, 2015 (102 for the year ended 31st March, 

2014) have not been consolidated with the Company since 

the total assets, net sales, retained earnings, and net income 

of those companies in the aggregate were not significant in 

relation to those of the consolidated financial statements of the 

Companies.

(2) Investments in Unconsolidated Subsidiaries and 

Affiliates

For the year ended 31st March, 2015, the Company had 97 

unconsolidated Subsidiaries and 100 affiliates (102 and 103 for 

the year ended 31st March, 2014), of which 11 unconsolidated 

subsidiaries (13 for the year ended 31st March, 2014) and 

37 affiliates (38 for the year ended 31st March, 2014) were 

accounted for by the equity method.

Investments in the remaining 86 unconsolidated subsidiaries 

and 63 affiliates (89 and 65, respectively, for the year ended 31st 

March, 2014) were carried at cost due to the immateriality of 

these entities in relation to the consolidated financial position 

and the results of operations of the Companies.

The unconsolidated subsidiaries and significant affiliates, to 

which the equity method was applied, include:

Unconsolidated subsidiaries/affiliates Equity ownership*

(%)

Share capital*

(Millions of yen)

(Domestic)

DC Co., Ltd. 31.0 ¥4,013

A&A Material Corporation 42.6 3,889

Fuji P.S Corporation 21.1 2,379

Azuma Shipping Co., Ltd. 39.0 2,294

Yakushima Denko Co., Ltd. 49.5 2,006

(Billions of 

Korean Won)

(Overseas)

Ssangyong Cement Industrial Co., Ltd. (Korea) 32.3 401.5

(Millions of 

Singapore dollars)

Taiheiyo Singapore Pte., Ltd. 100.0 47.0

(Millions of Hong 

Kong dollars)

Morehead Company., Ltd. 100.0 11.4

* as of 31st March, 2015

3. Consolidation Policies

For consolidation purposes, all significant inter-company 

transactions, account balances and unrealized profit/loss arising 

from inter-company transactions have been eliminated.

Where the year-end dates of consolidated subsidiaries and 

unconsolidated subsidiaries and affiliates accounted for by 

the equity method are different from that of the Company, 

necessary adjustments have been made for any significant 

transactions that took place between such different year-end 

dates.

Adjustments are made to eliminate the depreciation of assets 

related to unrealized profits incurred from inter-company 

transactions among the Companies.

The difference between the purchase cost of an investment 

in a consolidated subsidiary and the amount of the underlying 

equity in net assets at fair value of such subsidiary is directly 

charged/credited, as the case may be, against income for the year 

unless such difference is material. If the difference is material 

and the effective period is able to be estimated, the difference is 

amortized over the relevant estimated effective periods.

TAIHEIYO CEMENT CORPORATION 21
4. Summary of Significant Accounting Policies

Significant accounting policies employed by the Companies in 

preparing the accompanying consolidated financial statements 

are outlined below:

(1) Inventories

Generally, inventories are stated at cost, which is determined 

by the moving average method. Appropriate write-downs are 

recorded for inventories, which are deemed impaired in value. 

However the cost for contract work in process is determined by 

the specific identification cost method. 

(2) Property, Plant and Equipment (Excluding Lease Assets)

Property, plant and equipment are stated at cost.

Depreciation is computed generally based on the decliningbalance method by the Company and its domestic consolidated 

subsidiaries at rates based on the estimated useful lives of 

assets. The depreciation of buildings, excluding leasehold 

improvements, purchased on and after 1st April, 1998 is 

computed based on the straight-line method.

Depreciation of property and equipment held by the 

subsidiaries in foreign countries is calculated by the straightline method in accordance with accounting standards generally 

accepted in the respective countries.

The range of useful lives is summarized as follows:

 Buildings and structures 10 – 75 years

 Machinery and equipment 4 – 15 years

Normal repairs and maintenance, including minor renewals 

and improvements, are charged to income as incurred.

(3) Intangible Fixed Assets (Excluding Lease Assets)

Intangible fixed assets are amortized by the straight-line 

method.

Capitalized software is amortized by the straight-line 

method over the estimated useful lives (basically 5 years).

(4) Lease Assets

Lease assets are depreciated down to a residual value of either 

zero or the amount calculated as their residual guarantee 

value, over their lease. The accounting treatment of finance 

lease transaction that do not transfer ownership in case where 

the lease transaction on or before 31st March, 2008 is in 

accordance with the accounting method for ordinary rental 

transactions. 

(5) Financial Instruments

(a) Derivatives

All derivatives, except for derivatives that are designated 

as “hedging instruments” (see (c) Hedge Accounting 

below), are stated at fair value, and changes in fair value are 

included in the determination of net profit or loss for the 

period in which they arise.

(b) Securities

Securities are classified in accordance with Japanese 

accounting standards into four categories, namely, trading 

securities, held-to-maturity debt securities, shares in 

equity of subsidiaries and affiliates, and available-for-sale 

securities. 

Trading securities and certain financial instruments that 

meet strict conditions are categorized as current assets, and 

all other securities other than investments in consolidated 

subsidiaries are shown as “Investments in securities” in the 

accompanying consolidated balance sheets, as the case may be.

Valuation of securities is as follows:

Trading securities are valued at fair market value at the 

year-end and the resulting valuation gain/loss is charged to 

income;

Held-to-maturity debt securities are valued by applying 

amortization/

accumulation unless impairments in value are to be 

recognized;

and

With respect to other securities, such securities 

with market values are valued at fair market value and 

those without market values are valued at cost unless 

impairments in the value of those investments are to 

be recognized. The unrealized gain/loss resulting from 

the valuation of other securities at year-end is shown as 

“Valuation difference on available-for-sale securities,” net 

of deferred income taxes thereon, in the accompanying 

consolidated balance sheets. Cost of securities sold is 

determined by the moving-average method.

When market values of other securities are 50% of the 

cost or lower at the end of the financial year, such securities 

are written down to such market value. With respect to 

other securities of which market values have declined 

between 30% and 50% of the respective costs, amounts 

to be written off are determined by considering the 

recoverability of the respective securities.

(c) Hedge Accounting

Gains or losses arising from changes in fair value of 

derivatives designated as hedging instruments are 

deferred as “Deferred gains or losses on hedges,” net of 

deferred income taxes, in net assets. Such gains or losses 

are included in net profit or loss in the same period 

during which the gains and losses on the hedged items or 

transactions are recognized.

The derivatives designated as hedging instruments are 

principally interest swaps and forward exchange contracts. 

The related hedged items are trade accounts receivable and 

payable, long-term bank loans, raw materials swaps, and 

debt securities.

The Company has a policy to utilize the above hedging 

instruments in order to reduce the exposure to the risk of 

interest rate and foreign exchange fluctuations. Thus, the 

purchases of the hedging instruments are limited to, at 

maximum, the amounts of the hedged items. Effectiveness 

of hedging activities is evaluated by reference to the 

accumulated gains or losses on the hedging instruments 

and the related hedged items from the commencement of 

the hedges.

(6) Foreign Currency Translation

(Translation of foreign currency financial statements of 

overseas subsidiaries and affiliates)

Exchange rates at the balance sheet date are applied for 

all assets and liabilities and the historical exchange rates are 

applied to shareholders’ equity whereas profit and loss items 

are translated at the average exchange rates prevailing during 

the year. Items related to inter-company transactions with the 

Company which are subject to elimination on consolidation are 

translated in the amounts the Company recorded. 

The difference in the debits and credits in the balance sheets 

resulting from the translation in the above manner is shown as 

“Foreign currency translation adjustments” accumulated other 

comprehensive income of the accompanying consolidated 

balance sheets, net of the amount attributable to minority 

interests in consolidated subsidiaries.

Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

22 ANNUAL REPORT 2015
(Translation of foreign currency items)

Receivables and payables denominated in foreign currencies 

were translated into Japanese yen at the exchange rates at the 

balance sheet date. Gains or losses arising from transactions 

in foreign currency receivables and payables are credited or 

charged to income as incurred.

(7) Cash and Cash Equivalents

Cash and cash equivalents in the consolidated statement 

of cash flows consist of cash on hand, bank deposits readily 

available, and short-term investments with a maturity of three 

months or less when purchased.

(8) Income Taxes

Deferred tax accounting is applied for the preparation of the 

accompanying consolidated financial statements. The asset 

and liability approach is used to recognize deferred tax assets 

and liabilities in respect of temporary differences between the 

carrying amounts and the tax base of assets and liabilities.

(9) Recognition of Certain Accrued Expenses

In general, the accrual basis of accounting for all income 

and expense items is followed for the preparation of the 

accompanying consolidated financial statements.

(a) Allowance for doubtful accounts

Allowance for doubtful accounts is provided based on the 

estimated uncollectible amounts of doubtful receivables, in 

addition to a general provision computed by applying past 

credit loss experience. Consolidated overseas subsidiaries 

mainly provide for such allowance at the estimated 

amounts of credit losses.

(b) Retirement benefits

(Retirement benefits to employees)

Employees are generally entitled to lump-sum retirement 

and/or annuity upon termination of services, the amount 

of which is determined in light of the regulations set forth 

within the relevant companies of the Companies. As a 

part of such employees’ retirement benefit scheme, the 

Company and certain subsidiaries have non-contributory 

pension funds.

Provision for retirement benefits to employees are provided 

for in the amount of projected benefit obligation less the 

fair value of plan assets at the end of the financial year.

The retirement benefits obligations calculated by 

allocating the estimated retirement benefit amount until 

the end of the current fiscal year on a benefit formula basis.

The actuarial gains and losses and prior service cost 

are being amortized by the straight-line method over the 

certain number of years within the expected remaining 

years of service of the then-active employee participants 

(primarily 10 years), corresponding the year following the 

year in which they arise and effective the period in which 

they arise, respectively.

The Company established a retirement benefit trust by 

contributing a certain shares of stock.

When the value of plan assets exceeds the amount of 

the projected benefit obligation minus both the actuarial 

gains and losses and prior service costs, the amount of such 

excess is included as prepaid pension costs in “Assets for 

retirement benefits” in “Investment and other assets.”

(Retirement benefits to directors and corporate auditors)

As is customary practice in Japan, some consolidated 

subsidiaries pay lump-sum retirement benefits to retiring 

directors or corporate auditors, the amount of which 

is determined by the internal rules similar to those for 

employees. The payment of such retirement benefits is 

subject to approval by shareholders at the annual general 

meeting. The consolidated subsidiaries recognize 100% of 

the amounts the consolidated subsidiaries would have paid 

if all directors and statutory auditors had retired at the 

year-end.

(c) Provision for directors’ bonuses

Domestic consolidated subsidiaries account for allowance 

for directors’ bonuses based on the estimated amount of 

payment for the current year.

(d) Provision for directors' retirement benefits

Certain consolidated subsidiaries provide for retirement 

allowances for directors and statutory auditors at the 

necessary amount at the year-end based on their internal 

regulations.

(e) Provision for loss on assignment of business

With respect to assignment of all businesses of the electrics 

subsidiary, an estimated cost to be incurred is provided for.

(f ) Provision for assets removal

In anticipation of dismantling assets, an estimated cost to 

be incurred is provided for.

(10) Method and Period of Amortization of Goodwill

Goodwill is amortized over the estimated years in cases that 

the number of years can be estimated based on practical 

judgment starting from the fiscal year of acquisition while 

the entire amount of goodwill is amortized in the fiscal year 

of acquisition without analyzing the causes in cases that the 

amount of goodwill is insignificant.

(11) Appropriation of Retained Earnings

Under the Corporation Law of Japan, the appropriations 

of retained earnings, including year-end cash dividends, are 

subject to shareholders’ approval at the annual general meeting 

to be held within three months after the respective periods. The 

board of directors is allowed to make interim cash distributions 

(“interim cash dividends”) with certain strict conditions 

stipulated in the Law.

The appropriation of retained earnings shown in the 

accompanying consolidated statements of net assets reflects 

the results of the appropriation of retained earnings applicable 

to the immediately preceding year and approved at the 

shareholders’ meeting and the interim cash dividends made 

during the current year. 

(12) Accounting for Treasury Stock

The shares of the Company held by consolidated subsidiaries 

are recognized as treasury stock after netting off the amounts 

attributable to minority interests. With respect to those shares 

held by affiliates to which the equity method is applied, the 

amounts attributable to the Companies are also recorded 

as treasury stock in the accompanying consolidated balance 

sheets, and debit/credit differences (gain/loss) incurred from 

transactions involving treasury stocks are charged to additional 

paid-in capital.

(13) Per Share Information

Net income per share is computed based on the weightedaverage number of shares of common stock outstanding during 

the respective periods.

The amount of cash dividends is the total of interim cash 

dividends paid during the respective periods and dividends 

declared as applicable to the respective periods.

TAIHEIYO CEMENT CORPORATION 23
(14) Revenues and Costs of Construction

Revenues and costs of construction contracts that commenced 

on or after, 1st April, 2009, of which the percentage of 

completion can be reliably estimated, are recognized by 

the percentage-of-completion method. The percentage of 

completion is calculated at the cost incurred as a percentage 

of the estimated total cost. The completed-contract method 

continues to be applied for contracts for which the percentage 

of completion cannot be reliably estimated.

(15) Retirement Benefits

Changes in Accounting Policies

The Company has applied the “Accounting Standard for 

Retirement Benefits” (Accounting Standards Board of Japan 

(“ASBJ”) Statement No. 26 of 17th May, 2012; hereinafter 

referred to as “Standard”) and “Guidance on Accounting 

Standard for Retirement Benefits” (ASBJ Guidance No. 25 of 

26th March, 2015; hereinafter referred to as “Guidance”) from 

the consolidated fiscal year with respect to the provision set 

forth in the main clause of paragraph 35 of the Standard and 

the main clause of paragraph 67 of the Guidance; accordingly, 

the calculation method of retirement benefit obligation and 

service cost has been reviewed, the method of attributing the 

projected amount of retirement benefits to periods has been 

changed from straight-line basis to benefit formula basis, and 

the method of determining the discount rate has been changed 

from the method of using the number of years approximated 

to the average remaining years of service of employees to 

the method of using a single weighted average discount rate 

reflecting the estimated period of payment of retirement 

benefits and the amount with respect to each estimated 

payment period. In regards to the application of the Standard 

and Guidance, adjustments have been made to retained earnings 

to account for the amount of impact associated with the change 

in the calculation method of retirement benefit obligation 

and service cost at the beginning of the consolidated fiscal 

year, in accordance with transitional treatment as stipulated in 

paragraph 37 of the Standard.

As a result, at the beginning of the consolidated fiscal year, 

assets for retirement benefits, liability for retirement benefits 

and retained earnings decreased ¥182 million, ¥77 million, ¥87 

million respectively. The impact on operating income, ordinary 

income, income before income taxes and minority interests 

and per share information in the consolidated fiscal year is 

negligible.

(16) Accounting Standards Not Yet Adopted

 • “Revised Accounting Standard for Business Combination” 

(Accounting Standards Board of Japan (ASBJ) Statement 

No.21 of September 13, 2013)

 • “Revised Accounting Standard for Consolidated Financial 

Statement” (ASBJ Statement No.22 of September 13, 2013)

 • “Revised Accounting Standard for Business Divestitures” 

(ASBJ Statement No.7 of September 13, 2013)

 • “Revised Accounting Standard for Earning Per Share” 

(ASBJ Statement No.2 of September 13, 2013)

 • “Guidance on Accounting Standard for Business 

Combination and Accounting Standard for Business 

Divestitures” (ASBJ Statement No.10 of September 13, 

2013)

 • “Guidance on Accounting Standard for Earning Per Share” 

(ASBJ Statement No.4 of September 13, 2013)

(a) Outline

The primary revisions to these accounting standards 

1. How the changes of the shares in subsidiaries, over 

which the Company continues to control, should be 

treated by the Company when additional stock of a 

subsidiary is acquired.

2. Accounting treatment for acquisition-related costs.

3. Change in presentation of net income and change of the 

account name from minority interests to non-controlling 

interests. 

4. Provisional accounting treatment. 

(b) Effective date

These standards are scheduled to take effect from the 

beginning of the year ending March 31, 2016. 

The provisional accounting treatment is applied to 

business combinations that are carried out after the 

beginning of the year ending March 31, 2016.

(c) Effect of adoption of new accounting standard

The effect in the consolidated financial statements as 

a result of the adoption of this accounting standard is 

currently being evaluated.

5. United States Dollar Amounts

The accompanying consolidated financial statements are 

prepared in Japanese yen. The U.S. dollar amounts included 

in the consolidated financial statements and notes thereto 

represent the arithmetical results of translating Japanese yen 

to U.S. dollars on a basis of ¥120.17 = U.S.$1, the approximate 

effective rate of exchange prevailing at 31st March, 2015. The 

inclusion of such U.S. dollar amounts is solely for convenience 

of the readers and is not intended to imply that yen amounts 

have been or could be converted, realized or settled in U.S. 

dollars at that or any other rate.

6. Financial Instruments

(1) Status of Financial Instruments

(a) Policy for financial instruments

In consideration of plans for capital investment, 

The Taiheiyo Cement Group limits the scope of its cash 

and fund management activities to short-term deposits. In 

addition, when raising funds, the Companies have a policy 

of relying principally on bank borrowings. 

The Companies use derivatives for the purpose of reducing 

risk for fluctuation of future exchange /interest rate and 

of raw materials and fuels price and do not enter into 

derivatives for speculative or trading purposes.

(b) Types of financial instruments and related risk

Notes and accounts receivable – trade are exposed to credit 

risk in relation to customers. In addition, the Companies 

are exposed to foreign currency exchange risk arising from 

receivables denominated in foreign currencies.

Marketable securities and investment securities are 

exposed to market risk. Those securities are the shares 

of common stock of other companies with which the 

Companies have business relationships, or affiliated 

companies. The Companies have also long-term loans 

receivable from other companies with which it has business 

relationships.

Substantially all notes and accounts payable – trade 

have payment due dates within one year. The Companies 

are exposed to foreign currency exchange risk arising from 

those payables that is originated from import transactions 

of fuels.

Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

24 ANNUAL REPORT 2015
Short-term borrowings are raised mainly in connection 

with business activities, and long-term loans payable and 

bonds payable are taken out principally for the purpose 

of making capital investments. Long-term loans payable 

have covenants commitments and may influence liquidity 

risks regarding fund raising activities. Long-term debt with 

variable interest rates is exposed to interest rate fluctuation 

risk. However, to reduce such risk and fix interest expense 

for long-term debt bearing interest at variable rates, the 

Companies utilize interest rate swap transactions as a 

hedging instrument.

(c) Risk management for financial instruments

(i) Management of credit risk (the risk that customers or 

counterparties may default)

 In accordance with the internal policies of the 

Companies for managing credit risk arising from 

receivables, each related division monitors credit worthiness 

of their main customers periodically, and monitors due 

dates and outstanding balances by individual customer. In 

addition, the Companies are making efforts to identify and 

mitigate risks of bad debts from customers who are having 

financial difficulties.

 The Companies also believe that the credit risk of 

derivatives is insignificant as it enters into derivative 

transactions only with financial institutions which have a 

sound credit profile.

 At the balance sheet date, the carrying values of 

the financial assets represent the maximum credit risk 

exposures of the Companies.

(ii) Management of market risks (the risks arising from 

fluctuations in foreign exchange rates, interest rates and 

others)

 In order to mitigate the interest rate risk for loans 

payable bearing interest at variable rates, the Companies 

may also enter into interest rate swap transactions.

 For a part of purchasing raw materials, in order to 

mitigate the price volatility risk for raw materials, the 

Companies may also enter into raw materials swap 

transactions.

 For investment securities, the Companies periodically 

review the fair values of such financial instruments and the 

financial position of the issuers. In conducting derivative 

transactions, the division in charge of each derivative 

transaction follows the internal policies, which set forth 

delegation of authority and maximum upper limit on 

positions.

(iii)Management of liquidity risk (the risk that the Companies 

may not be able to meet its obligations on scheduled due 

dates)

 Trade payables and borrowings are exposed to 

liquidity risk. Based on the report from each division, the 

Companies prepare and update its cash flow plans on a 

timely basis to manage liquidity risk.

(d) Supplementary explanation of the estimated fair value of 

financial instruments

 The fair value of financial instruments is based on their 

quoted market price, if available. When there is no quoted 

market price available, fair value is reasonably estimated. 

Since various assumptions and factors are reflected in 

estimating the fair value, different assumptions and factors 

could result in different fair value. In addition, the notional 

amounts of derivatives in Note 24 “Derivative Transactions” 

are not necessarily indicative of the actual market risk 

involved in derivative transactions.

(2) Estimated Fair Value of Financial Instruments

Carrying value of financial instruments on the consolidated 

balance sheet at 31st March, 2014 and 2015 are shown in the 

following table. The following table does not include financial 

instruments for which it is extremely difficult to determine the 

fair value (Please refer to Note 2 on P26).

2014

Carrying value Estimated

fair value Difference

Assets

1) Cash and deposits ¥59,369 ¥59,369 ¥– 

2) Notes and accounts receivable-trade 176,245 176,245 – 

3) Investment securities

Stock of affiliates 46,271 37,829 (8,442)

Other securities 18,480 18,480 – 

Total assets ¥300,366 ¥291,924 ¥(8,442)

Liabilities

1) Notes and accounts payable-trade ¥83,691 ¥83,691 ¥ – 

2) Short-term loans payable 149,237 149,237 – 

3) Commercial papers – – –

4) Bonds payable 47,700 48,008 308

5) Long term loans payable 238,180 242,092 3,911

Total liabilities ¥518,810 ¥523,030 ¥4,219 

Derivatives transaction (*1) ¥13 ¥ 13 ¥– 

2015

Carrying value Estimated

fair value Difference

Assets

1) Cash and deposits ¥53,859 ¥53,859 ¥– 

2) Notes and accounts receivable-trade 178,350 178,350 – 

3) Investment securities

Stock of affiliates 53,657 56,542 2,885

Other securities 22,420 22,420 – 

Total assets ¥308,287 ¥311,172 ¥2,885

Liabilities

1) Notes and accounts payable-trade ¥85,036 ¥85,036 ¥– 

2) Short-term loans payable 119,254 119,254 – 

3) Commercial papers 5,000 5,000 –

4) Bonds payable 67,090 67,438 348

5) Long term loans payable 207,794 209,323 1,529

Total liabilities ¥484,174 ¥486,053 ¥1,878

Derivatives transaction (*1) ¥(9) ¥(9) ¥– 

Assets Carrying value Estimated

fair value Difference

1) Cash and deposits $448,190 $448,190 $– 

2) Notes and accounts receivable-trade 1,484,148 1,484,148 – 

3) Investment securities

Stock of affiliates 446,510 470,520 24,009

Other securities 186,576 186,576 – 

Total assets $2,565,426 $2,589,436 $24,009

Liabilities

1) Notes and accounts payable-trade $707,637 $707,637 $– 

2) Short-term loans payable 992,377 992,377 – 

3) Commercial papers 41,607 41,607 –

4) Bonds payable 558,292 561,196 2,903

5) Long term loans payable 1,729,167 1,741,892 12,724

Total liabilities $4,029,083 $4,044,712 $15,628

Derivatives transaction (*1) $(75) $(75) $– 

(*1)The value of assets and liabilities arising from derivatives 

is shown at net value, and with the amount in parentheses 

representing net liability position.

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 receivable – 

trade 

 Since these items are settled in a short period of time, 

their carrying value approximates fair value.

(3) Investment securities

 The fair value of stocks is based on quoted market prices.

TAIHEIYO CEMENT CORPORATION 25
Liabilities

(1) Notes and accounts payable – trade, (2) Short-term loans 

payable and (3) Commercial papers

 Since these items are settled in a short period of time, 

their carrying value approximates fair value.

(4) Bonds payable

 The fair value of bonds is based on the present value of the 

total of principal and interest discounted by an interest 

rate determined taking into account the current credit risk. 

Bonds payable include the bonds that are due within one year.

(5) Long term loans payable

 The fair value of long-term loans payable is based on 

the present value of the total of principal and interest 

discounted by the interest rate to be applied if similar new 

loans were entered into. Long term loans payable include 

long term loans payable that is due within one year.

Derivatives Transactions

Please refer to Note 24, “Derivatives Transactions”

Note 2 Financial instruments for which it is extremely 

difficult to determine the fair value

2014 2015

Carrying amount Carrying amount

Unlisted stocks ¥34,138 ¥37,669 $313,471

Because no quoted market price is available and it is extremely 

difficult to determine the fair value, the above financial 

instruments are not included in the above table.

Note 3 Redemption schedule for receivables and marketable 

securities with maturities at 31st March, 2014 and 

2015

2014

Due in one 

year or less

Due after one year 

through five years

Due after five years 

through ten years

Due after

ten years

Cash and deposit ¥59,071 ¥– ¥– ¥–

Notes receivable and 

 accounts receivable-trade 176,245 – – –

Investment securities with maturities – 19 – –

Total ¥253,316 ¥19 ¥– ¥–

2015

Due in one 

year or less

Due after one year 

through five years

Due after five years 

through ten years

Due after

ten years

Cash and deposit ¥53,661 ¥– ¥– ¥–

Notes receivable and 

 accounts receivable-trade 178,350 – – –

Investment securities with maturities 19 – – –

Total ¥232,032 ¥– ¥– ¥–

Due in one 

year or less

Due after one year 

through five years

Due after five years 

through ten years

Due after

ten years

Cash and deposit $446,549 $– $– $–

Notes receivable and 

 accounts receivable-trade 1,484,148 – – –

Investment securities with maturities 166 – – –

Total $1,930,864 $– $– $–

Note 4 The redemption schedule for long-term debt and so on

2014

Due in one year 

or less

Due after one 

year through

two years

Due after two 

years through 

three years

Due after three 

years through 

four years

Due after four 

years through 

five years

Due after 

five years

Short-term 

loans payable ¥149,237 ¥– ¥– ¥– ¥– ¥–

Bonds payable 610 20,380 525 11,150 15,035 –

Long-term 

loans payable 78,889 54,278 40,926 28,776 31,611 3,697

Total ¥228,737 ¥74,658 ¥41,451 ¥39,926 ¥46,646 ¥3,697

2015

Due in one year 

or less

Due after one 

year through

two years

Due after two 

years through 

three years

Due after three 

years through 

four years

Due after four 

years through 

five years

Due after 

five years

Short-term 

loans payable ¥119,254 ¥– ¥– ¥– ¥– ¥–

Commercial paper 5,000 – – – – –

Bonds payable 20,380 525 11,150 15,035 10,000 10,000

Long-term 

loans payable 59,562 46,919 36,147 55,022 6,567 3,574

Total ¥204,196 ¥47,444 ¥47,297 ¥70,057 ¥16,567 ¥13,574

Due in one year or less

Due after one 

year through

two years

Due after two 

years through 

three years

Due after three 

years through 

four years

Due after four 

years through 

five years

Due after 

five years

Short-term 

loans payable $992,377 $– $– $– $– $–

Commercial paper 41,607 – – – – –

Bonds payable 169,593 4,368 92,785 125,114 83,215 83,215

Long-term 

loans payable 495,647 390,440 300,806 457,870 54,655 29,747

Total $1,699,226 $394,809 $393,591 $582,984 $137,870 $112,962

7. Cash and Cash Equivalents

“Cash and deposits” in the accompanying consolidated balance 

sheets at 31st March, 2014 and 2015 are reconciled to cash and 

cash equivalents in the accompanying consolidated statements 

of cash flows as follows:

2014 2015

Cash and deposits ¥59,369 ¥53,859 $448,190

Time deposits with a maturity of over three months (3,764) (3,213) (26,739)

Cash and cash equivalents ¥55,604 ¥50,645 $421,451

8. Investment Securities

Investments securities shown in the accompanying 

consolidated balance sheets at 31st March, 2014 and 2015 

comprises:

2014 2015

Investments in and advances to 

 unconsolidated subsidiaries and affiliates ¥74,301 ¥86,249 $717,729

At 31st March, 2014 and 2015, information with respect 

to “available-for-sale securities” for which market prices were 

available is summarized as follows:

As of 31st March, 2014

Acquisition 

cost Fair value Unrealized gain (loss)

Securities with fair value exceeding their 

 acquisition cost:

Equity securities ¥8,714 ¥17,387 ¥8,673

Bonds 19 20 0

8,734 17,407 8,673

Securities with fair value not exceeding their 

 acquisition cost:

Equity securities 1,252 1,072 (179)

Other 0 0 –

¥9,986 ¥18,480 ¥8,493

As of 31st March, 2015

Acquisition cost Fair value Unrealized 

gain (loss)

Acquisition cost Fair value Unrealized 

gain (loss)

Securities with 

fair value 

exceeding their 

acquisition cost:

Equity 

securities ¥10,136 ¥21,917 ¥11,781 $84,351 $182,391 $98,040

Bonds 19 20 0 166 167 1

Other 0 0 0 5 6 1

10,157 21,938 11,781 84,523 182,565 98,042

Securities with 

fair value not 

exceeding their 

acquisition cost:

Equity 

securities 546 481 (64) 4,547 4,010 (536)

Other – – – – – –

¥10,703 ¥22,420 ¥11,717 $89,070 $186,576 $97,506

Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

26 ANNUAL REPORT 2015
Gains and losses incurred from the sale of other securities 

included in the accompanying consolidated statements of 

income for the years ended 31st March, 2014 and 2015 were as 

follows:

2014 2015

Sales amounts ¥200 ¥116 $965

Gains 108 33 280

Losses 5 0 0

9. Short-Term Loans Payable and Long-Term Loans 

Payable

Weighted average interest rates on short-term loans payable 

and current portion of long-term loans payable at 31st 

March, 2014 and 2015 were 0.90 and 1.42%, 0.92 and 1.28% 

respectively.

Interest bearing liabilities at 31st March, 2014 and 2015 are 

as follows:

2014 2015

Weighted average 

interest rates (%)

Weighted average 

interest rates (%)

Long-term loans 

 payable

Long-term loans 

 payable ¥238,180 1.42 – 1.54 ¥207,794 1.28 – 1.43 $1,729,167

Bonds payable 47,700 0.56 – 2.00 67,090 0.56 – 2.00 558,292

285,880 274,884 2,287,459

Less: due within 

one year

Long-term loans 

 payable 78,889 1.42 59,562 1.28 495,647

Bonds payable 610 0.56 – 1.51 20,380 0.56 169,593

79,499 79,942 665,240

¥365,379 ¥217,558 $2,952,599

Aggregate annual maturities of long-term loans payable and 

bonds payable outstanding at 31st March, 2014 and 2015 for 

the next five years are as follows:

Year ending

31st March,

2014

Bonds 

payable

Long-term 

loans payable

Lease 

obligations Total

2015 ¥610 ¥78,889 ¥4,478 ¥83,978

2016 20,380 54,278 5,073 79,732

2017 525 40,926 8,060 49,511

2018 11,150 28,776 2,524 42,451

2019 15,035 31,611 3,911 50,558

Year ending

31st March,

2015

Bonds payable Long-term loans payable Lease obligations

2016 ¥20,380 $169,593 ¥59,562 $495,647 ¥4,825 $40,151

2017 525 4,368 46,919 390,440 9,918 82,537

2018 11,150 92,785 36,147 300,806 3,445 28,671

2019 15,035 125,114 55,022 457,870 5,382 44,789

2020 10,000 83,215 6,567 54,655 1,173 9,763

Year ending

31st March,

2015

Total

2016 ¥84,767 $705,392

2017 57,362 477,347

2018 50,743 422,263

2019 75,439 627,774

2020 17,741 147,634

10. Assets Pledged as Collateral and Secured Liabilities

Assets pledged as collateral and secured liabilities at 31st 

March, 2014 and 2015 were as follows:

(1) Assets pledged as collateral

2014 2015

Cash and deposits ¥1,812 ¥1,657 $13,794

Notes and accounts receivable – trade 240 240 1,997

Investments securities 122 108 906

Other assets 3,004 3,152 26,230

Buildings and structures 19,140 15,398 128,139

Machinery, equipment and vehicles 11,646 11,817 98,340

Land 46,655 41,567 345,908

Other property, plant and equipment 81 18 156

Total ¥82,704 ¥73,961 $615,473

(2) Secured liabilities

2014 2015

Notes and accounts payable – trade ¥5,357 ¥5,641 $46,945

Short-term loans payable 18,013 17,760 147,791

Long- term loans payable 19,708 16,340 135,977

Bonds payable 435 195 1,622

Other liabilities 4,398 916 7,629

Total ¥47,913 ¥40,853 $339,966

11. Retirement Benefits

The Company and certain consolidated subsidiaries have 

funded and unfunded defined benefit pension plans. Certain 

consolidated subsidiaries have defined contribution pension 

plans.

Under the funded defined benefit pension plans, employees 

terminating their employment are entitled to retirement benefits 

determined based on the rate of payment and years of service.

The retirement benefit trusts have been established for some 

defined benefit pension plans.

Under the lump-sum retirement benefit plans (unfunded 

except for plans establishing the retirement benefit trust), 

benefits are determined on based on the rate of payment and 

years of service.

Certain consolidated subsidiaries have joined the welfare 

pension fund system of multi-employer pension plans. 

Contributions made by certain consolidated subsidiaries to 

the multi-employer pension plans are expensed when paid 

since the plan assets attributable to each participant cannot be 

reasonably determined. 

In addition, certain consolidated subsidiaries calculate 

liability for retirement benefits and retirement benefit expenses 

for defined benefit pension plans and lump-sum retirement 

benefit plans, by using the simplified method.

(1) Defined benefit plans

The changes in the retirement benefit obligation during the 

year ended 31st March, 2014 and 2015 are as follows:

2014 2015

Retirement benefit obligation as 

 the beginning of fiscal year ¥72,643 ¥77,589 $645,662

Cumulative effect of accounting change – 105 874

Retirement benefit obligation of 

 changes in accounting policies 72,643 ¥77,694 $646,536

Service cost 3,242 3,113 25,908

Interest cost 1,944 1,570 13,066

Actuarial loss 4,115 3,040 25,304

Benefit paid (4,920) (4,832) (40,217)

Prior service cost – (2,283) (19,004)

Other 563 693 5,774

Retirement benefit obligation as the end 

 of fiscal year ¥77,589 ¥78,996 $657,369

The changes in plan assets during the year ended 31st 

March, 2014 and 2015 are as follows:

2014 2015

Plan asset as the beginning of fiscal year ¥56,143 ¥64,364 $535,615

Expected return on plan assets 902 1,002 8,346

Actuarial gain 4,210 7,099 59,077

Contributions by the employer 5,429 1,947 16,206

Benefit paid (2,305) (2,286) (19,028)

Other (16) 316 2,632

Plan asset as the end of fiscal year ¥64,364 ¥72,444 $602,850

TAIHEIYO CEMENT CORPORATION 27
The reconciliation of the retirement benefit obligations and 

plan assets to the liability and asset for retirement benefits 

recognized in the consolidated balance sheet at March 31, 2014 

and 2015 are as follows:

2014 2015

Funded retirement benefit obligations ¥54,237 ¥53,566 $445,754

Plan assets (64,364) 72,444 602,850

(10,127) (18,878) (157,096)

Unfunded retirement benefit obligations 23,351 25,429 211,615

Net amount of liabilities and assets for 

 retirement benefits in the consolidated 

 balance sheet

¥13,224 ¥6,551 $54,519

Liability for retirement benefits ¥25,359 ¥26,889 $223,762

Asset for retirement benefits (12,134) (20,338) (169,243)

The breakdown of the retirement benefit expenses for the 

year ended 31st March, 2014 and 2015 are as follows:

2014 2015

Service cost ¥3,242 ¥3,113 $25,908

Interest cost 1,944 1,570 13,066

Expected return on plan assets (902) (1,002) 8,346

Amortization of actuarial loss 645 1,830 15,236

Amortization of prior service cost (293) (52) (433)

Other 228 269 2,240

Retirement benefit expense ¥4,865 ¥5,728 $47,673

The breakdown of remeasurements (before tax effect) for the 

year ended 31st March, 2014 and 2015 are as follows:

2014 2015

Prior service cost ¥13 ¥2,231 $18,571

Actuarial loss 2,224 5,446 45,320

Total ¥2,237 ¥7,678 $63,892

The breakdown of items in other comprehensive income 

(before tax effect) for the year ended 31st March, 2014 and 

2015 are as follows:

2014 2015

Unrecognized prior service cost ¥26 ¥(2,513) $(20,912)

Unrecognized actuarial loss 14,479 9,595 79,852

Total ¥14,505 ¥7,082 $58,940

The breakdown of pension assets by major category as a 

percentage of total plan assets at 31st March, 2014 and 2015 

are as follows:

2014 2015

Equity securities 62% 66%

Insurance general account 17% 16%

Debt securities 12% 15%

Other 9% 3%

Total 100% 100%

The retirement benefit trusts of the lump-sum retirement 

benefit plans and the defined benefit pension plans at 31st 

March, 2014 and 2015 account for 27% and 23%, 27% and 

18%, respectively, in the above total.

The expected return rate on plan assets is estimated based 

on the current and anticipated allocation to each asset category 

and current and anticipated long-term return rate on each asset 

category.

2014 2015

Weighted average(%)

Discount rate Mainly 1.3% Mainly 1.3%

Expected long-term return rate on plan 

 assets Mainly 2.5% Mainly 2.5%

(2) Defined contribution plans

The amount which consolidated subsidiaries paid to defined 

contribution pension plans including the welfare pension fund 

system of multi-employer pension plans at 31st March, 2014 

and 2015 are ¥341 and ¥323 ($2,693). 

12. Contingent Liabilities

(1) At 31st March, 2015, the Companies were contingently 

liable for notes discounted by banks in the aggregate 

amount of ¥9,827($81,775) (¥10,291 as of 31st March, 

2014), notes endorsed for payments in the aggregate 

amount of ¥2,960 ($24,637) (¥2,694 at 31st March, 2014).

(2) The Companies were also contingently liable as guarantors 

of bank loans and trade payables for certain companies 

(including guarantee forward commitments), the balances 

of which at 31st March, 2014 and 2015 were as follows:

2014 2015

Guarantees for bank loans payable ¥3,521 ¥2,639 $21,964

Guarantees for account payables to 

 Ready-mixed Cooperative Association 1,194 1,027 8,547

Guarantees (forward commitments) for 

 bank loans payable 0 – –

13. Shareholders’ Equity

The Corporation Law of Japan provides that an amount 

equivalent to 10% of interim cash distributions (interim cash 

dividends) and at least 10% of cash distributions including 

cash dividends made as a result of the appropriation of retained 

earnings is required to be transferred to the legal reserve until 

the balance of the total of the additional paid-in capital and 

the legal reserve reaches 25% of the stated share capital. The 

balance of legal reserve is included in retained earnings, the use 

of which is strictly limited under the Law.

The amount in excess of 25% of the stated share capital, 

as the case may be, allowed to be distributed as dividends 

when certain conditions specifically stipulated in the Law are 

satisfied.

14. Revaluation of Land

Chichibu Railway Co., Ltd., a domestic consolidated 

subsidiary, revalued land on 31st March, 2000 in accordance 

with the Law for Land Revaluation.

With respect to the amount of unrealized profit less deferred 

taxes thereon, the amount attributable to minority interests 

is credited to “Minority interests and the rest is recorded as 

“Revaluation reserve for land accompanying consolidated 

balance sheets.

With respect to the land revalued as mentioned above, the 

difference between the aggregate book value of such land (after 

revaluation) and the aggregate fair value thereof was ¥6,995 

($58,216) at 31st March, 2015 (¥6,990 at 31st March, 2014).

During the year ended 31st March, 2002, A&A Material 

Corporation and DC Co., Ltd., domestic affiliates accounted 

for by the equity method, revalued their land in accordance 

with the Law for Land Revaluation. With respect to the 

amount of unrealized profit less deferred taxes thereon, 

the amount attributable to the Company is included 

in “Revaluation reserve for land” in the accompanying 

consolidated balance sheets.

15. Loss on Write-down of Inventories by 

Decreased Profitability

2014 2015

Cost of sales ¥327 ¥113 $948

Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

28 ANNUAL REPORT 2015
16. Selling, General and Administrative Expenses

Selling, general and administrative expenses for the years ended 

31st March, 2014 and 2015 are summarized as follows:

2014 2015

Labor and payroll cost ¥32,846 ¥34,395 $ 286,221

Freight and transportation/distribution expenses 53,883 56,561 470,682

Provision for accrued bonuses to employees 1,834 1,833 15,254

Expenses related to accrued retirement benefits 1,485 2,793 23,246

Amortization of goodwill 2,353 2,771 23,062

Provision of allowance for doubtful accounts 122 (113) (943)

Provision for directors' retirement benefits 60 64 536

Others 35,798 36,490 303,658

Total ¥128,384 ¥134,796 $1,121,718

17. Research and Development Costs

Research and development costs charged to general and 

administrative expenses and manufacturing costs for the years 

ended 31st March, 2014 and 2015 were ¥4,052 and ¥4,422 

($36,803), respectively.

18. Income Taxes

Income taxes in Japan applicable to the Company and its 

domestic consolidated subsidiaries consist of corporate 

tax, inhabitants’ taxes and enterprise tax. Enterprise tax is 

deductible when paid as expenses for the purpose of the 

calculation of other income taxes. The effective statutory tax 

rate for the years ended 31st March, 2014 and 2015 were 

approximately 34.61% and 32.11%, respectively, and to 31.33% 

for those which are expected to be recovered or paid on and 

after April 1, 2017.

The significant components of deferred tax assets and 

liabilities at 31st March, 2014 and 2015 were as follows:

2014 2015

Deferred tax assets:

Nondeductible portion of:

Provision for doubtful accounts ¥1,204 ¥1,461 $12,161

Provision for bonus to employees 1,813 1,754 14,599

Liability for retirement benefits 11,835 8,546 71,117

Unrealized loss of property, plant and 

 equipment 11,857 10,980 91,375

Impairment loss 11,511 9,708 80,787

Loss carried forward 31,741 28,148 234,236

Others 17,611 21,943 182,601

Subtotal 87,574 82,542 686,879

Valuation allowance (41,856) (30,876) (256,940)

Total deferred tax assets 45,718 51,665 429,938

Deferred tax liabilities:

Special tax reserve on property, 

 plant and equipment (10,922) (9,213) (76,673)

Other reserves under Special Taxation 

 Measures Law (277) (228) (1,899)

Depreciation (4,369) (6,933) (57,695)

Goodwill (2,020) (5,004) (41,642)

Unrealized holding gain on 

 available-for-sale securities (3,083) (3,381) (28,141)

Land revaluation (5,282) (4,770) (39,698)

Others (1,073) (3,666) (30,514)

Total deferred tax liabilities (27,031) (33,198) (276,265)

Net deferred tax assets ¥18,686 ¥18,466 $153,673

For the year ended 31st March, 2015 components of 

differences between the statutory effective tax rate and the 

income tax and other burden rate after the application of tax 

effect accounting:

Statutory effective tax rate 34.61%

(Adjustments)

Entertainment and other expenses that are permanently nondeductible 0.77

Dividends and other income that are permanently deductible (1.87)

Amortization of goodwill 1.42

Equity in earnings of unconsolidated subsidiaries and affiliates (2.71)

Amount of valuation allowance (8.09)

Others 0.04

Income tax and other burden rate after the application of tax 

 effect accounting 24.17

For the year ended 31st March, 2014, the reconciliation 

between the income tax and other burden rate after 

the application of tax effect accounting reflected in the 

consolidated statement of income and the statutory effective 

tax rate is not disclosed, since the difference is less than 5% of 

the statutory effective tax rate.

On March 31, 2015, amendments to the Japanese tax 

regulations were enacted into law. Based on the amendments, 

the statutory income tax rates utilized for the measurement 

of deferred tax assets and liabilities expected to be settled or 

realized from April 1, 2015 to March 31, 2016 and on or after 

April 1, 2016 are changed from 34.61% for the fiscal ended 

March 31, 2015 to 32.11% and 31.33%, respectively, as of 

March 31, 2015.

Due to these changes in statutory income tax rates, net 

deferred tax liabilities (after deducting the deferred tax assets) 

decreased by ¥469($3,903), valuation difference on availablefor-sale securities increased by ¥346($2,886), deferred income 

tax expense decreased by ¥122($1,016) and deferred tax 

liabilities for land revaluation decreased by ¥494($4,112) and 

revaluation reserve for land increased by ¥494($4,112) as of 

March 31, 2015.

19. Accounting Standard for Disclosures about Fair Value of 

Investment and Rental Property

Net rental income from the rental property is ¥3,558 and 

¥3,940 ($32,793) for the year ended 31st March, 2014 

and 2015 (rental revenues are included in net sales or nonoperating income, and rental expenses are included in cost of 

sales or non-operating expenses).

Carrying value and fair value of the rental property for the 

year ended 31st March, 2014 and 2015 are as follows:

2014

Carrying value Fair value

As of 31st March, 

2013 Net Change As of 31st March, 2014

As of 31st March, 

2014

¥54,485 ¥684 ¥55,169 ¥90,985

2015

Carrying value Fair value

As of 31st March, 

2014 Net Change As of 31st March, 2015

As of 31st March, 

2015

¥55,169 ¥2,161 ¥57,330 ¥104,393

$459,092 $17,989 $477,082 $868,716

20. Impairment Loss

The Company evaluated the impairment of fixed assets by 

grouping assets based on a business unit that was largely 

independent of other asset groups, except for assets used 

for rent, important idle properties and assets scheduled for 

disposal, which are individually considered. Each consolidated 

subsidiary principally formed an asset group. Certain 

significant subsidiaries formed asset groups by segment for 

management accounting purposes, except for important idle 

properties and assets scheduled for disposal.

As a result, the Companies recognized impairment losses 

of ¥6,450 and ¥1,069 ($8,899) in non-operating expenses for 

the years ended 31st March, 2014 and 2015, respectively, as 

follows:

TAIHEIYO CEMENT CORPORATION 29
2014 2015

Business assets of ready-mixed concrete

Buildings and structures ¥2 ¥– $–

Machinery, equipment and vehicles 76 – –

Land – – –

Other 44 – –

123 – –

Real estate for rent

Buildings and structures 13 111

Land 176 258 2,153

176 272 2,265

Business assets of aggregate

Buildings and structures 1,350 – –

Machinery, equipment and vehicles 133 – –

Land 235 – –

Other 241 – –

1,960 – –

Business assets of MMC

Buildings and structures 847 – –

Machinery, equipment and vehicles 578 – –

Land 391 – –

Other 1 – –

1,818 – –

Other business assets

Buildings and structures 869 – –

Machinery, equipment and vehicles 2 – –

Land 118 – –

Other 3 – –

994 – –

Idle properties

Buildings and structures 220 548 4,563

Machinery, equipment and vehicles 55 21 180

Land 1,034 146 1,218

Other 65 33 275

1,376 749 6,238

Emission credits 

Invest and other assets – other – 47 395

47 395

¥6,450 ¥1,069 $8,899

The impairment losses were measured as the excess of the 

book value over the higher of (1) the fair market value of the 

assets, net of disposal costs or (2) the present value of future 

cash flows arising from ongoing utilization of the assets and 

disposal after the assets’ use.

The fair market value of the assets, net of disposal costs, was 

estimated as the residual value for tax purposes less disposal 

costs for tangible depreciable assets including buildings 

and structures, an appraised value for lands, and structures; 

the appraised value for lands the aggregated amount of 

appraised values of lands and estimated values of minable raw

materials for mining lands for raw materials.

The present value of future cash flows was calculated using 

discount rates of 5%.

Emission credits are valued at prices of ICE futures 

exchanges.

21. Consolidated Statement of Comprehensive Income

The following table presents reclassifications adjustments and 

tax effects allocated to each component of other comprehensive 

income for the year ended 31st March, 2014 and 2015:

2014 2015

Valuation difference on available-for-sale securities:

Amount arising during the year ¥3,578 ¥2,248 $18,709

Reclassification adjustments for gains 

 and losses included in net income (97) (27) (229)

Amount before tax effect 3,481 2,220 18,479

Tax effect (1,275) (366) (3,048)

Valuation difference on available-for-sale securities 2,205 1,854 15,431

Deferred gains or losses on hedges:

Amount arising during the year (42) (22) (188)

Adjustments of asset acquisition costs – – –

Amount before tax effect (42) (22) (188)

Tax effect 15 8 67

Deferred gains or losses on hedges (27) (14) (121)

Revaluation reserve for land

Tax effect – 494 4,112

Revaluation reserve for land – 494 4,112

Foreign currency translation adjustments:

Amount arising during the year 18,665 16,700 138,972

Reclassification adjustment – (698) (5,810)

Foreign currency translation adjustments 18,665 16,002 133,161

Retirement benefits liability adjustments:

Amount arising during the year 1,668 5,901 49,110

Reclassification adjustments for gains 

 and losses included in net income 569 1,776 14,782

Amount before tax effect 2,237 7,678 63,892

Tax effect (1,182) (2,451) (20,397)

Retirement benefits liability adjustments 1,055 5,226 43,495

Share of other comprehensive income of 

 affiliates accounted for using equity method:

Amount arising during the year 7,056 5,046 41,998

Reclassification adjustments for gains 

 and losses included in net income 7 25 210

Share of other comprehensive income of 

 affiliates accounted for using equity method 7,064 5,072 42,208

Total other comprehensive income ¥28,963 ¥28,635 $238,287

22. Asset Retirement Obligations

Asset retirement obligations recorded in the consolidated 

balance sheets are primarily obligation to take measures to 

prevent pollution and ensure safety, etc. at the time of mine 

closing in accordance with the Mine Safety Act, obligation 

to restore the site to its original condition in accordance with 

the real estate lease agreement, obligation to take measures 

to prevent the dispersion of asbestos in accordance with the 

Industrial Safety and Health Act, the Ordinance on Prevention 

of Health Impairment due to Asbestos, and the Air Pollution 

Control Act, etc.

The value of asset retirement obligations is estimated by 

using useful periods of 3 years to 348 years and discount rates 

from 0.3% to 6.8% according to the type of asset retirement 

obligation.

The following table indicates the changes in asset retirement 

obligations for the year ended 31st March, 2014 and 2015:

2014

Balance at 1st April, 2013 ¥8,032

Liabilities incurred due to the acquisition of 

 property, plant and equipment 31

Accretion expense 152

Liabilities settled (22)

Others (963)

Balance at 31st March, 2014 ¥7,231

2015

Balance at 1st April, 2014 ¥7,231 $60,173

Liabilities incurred due to the acquisition of 

 property, plant and equipment 27 229

Accretion expense 156 1,305

Liabilities settled (56) (472)

Others 314 2,618

Balance at 31st March, 2015 ¥7,673 $63,853

23. Lease

The Companies have various lease agreements whereby the 

Companies act as lessees.

(a) Finance lease contracts other than those that are deemed to 

transfer the ownership of the leased assets to lessees, which 

were commenced before 1st April, 2008 are accounted 

for by the method that is applicable to ordinary operating 

leases. Assumed data as to acquisition costs, accumulated 

depreciation and net balance of the leased assets would be 

follows:

Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

30 ANNUAL REPORT 2015
31st March, 2014

Acquisition 

costs

Accumulated 

depreciation

Accumulated 

impairment loss Net balance

Machinery, equipment and vehicles ¥2,408 ¥1,590 ¥4 ¥814

Total ¥2,408 ¥1,590 ¥4 ¥814

31st March, 2015

Acquisition 

costs

Accumulated 

depreciation

Accumulated 

impairment loss Net balance

Machinery, equipment and vehicles ¥1,230 ¥880 ¥– ¥349

Total ¥1,230 ¥880 ¥– ¥349

Machinery, equipment and vehicles $10,235 $7,324 $– $2,910

Total $10,235 $7,324 $– $2,910

Future minimum lease payments at 31st March, 2014 and 

2015 and lease rental expenses for the years ended at 31st 

March, 2014 and 2015 are as follows.

31st March, 2014 31st March, 2015

The scheduled maturities of future lease 

 rental payments on such lease:

Due within one year ¥519 ¥157 $1,309

Due over one year 295 192 1,600

¥814 ¥349 $2,910

Lease rental expenses for the year ¥273 ¥172 $1,438

There is no impairment loss allocated to lease assets.

(b) Future lease payments under operating leases are as follows:

31st March, 2014 31st March, 2015

Due within one year ¥141 ¥448 $3,728

Due over one year 201 783 6,520

¥342 ¥1,231 $10,249

24. Derivative Transactions

Summarized below are the notional amounts and the estimated 

fair values of the derivatives outstanding at 31st March, 2014 

and 2015.

Derivatives transaction to which hedging accounting is 

applied

Currency related transactions

2014

Method of 

hedging 

accounting

Hedging instruments Hedged 

items

Notional 

amount Fair value

Method of 

treatment in 

principle

(Forward exchange 

 Contracts) Accounts 

payable 

trade US Dollar ¥5 ¥0

 Sweden Clone 338 15

Total ¥343 ¥16

2014

Method of 

hedging 

accounting

Hedging instruments Hedged 

items

Notional 

amount Fair value Notional amount Fair value

Method of 

treatment in 

principle

(Forward exchange 

 Contracts) Accounts 

payable 

trade

 Euro ¥204 ¥(8) $1,698 $(67)

Total ¥204 ¥(8) $1,698 $(67)

Interest rate relation

2014

Method of 

hedging 

accounting

Hedging instruments Hedged 

items

Notional 

amount Fair value

Method of 

treatment in 

principle

(Interest rate swaps) Long term 

and 

short-term 

loans 

payable

Receive/floating and 

pay/fixed ¥196 ¥(2)

Exceptional 

treatment of 

interest rate 

swap

(Interest rate swaps) Long term 

and 

short-term 

loans 

payable

Receive/floating and 

pay/fixed 78,342 (663)

Total ¥78,538 ¥(665)

2015

Method of 

hedging 

accounting

Hedging instruments Hedged 

items

Notional 

amount Fair value Notional amount Fair value

Method of 

treatment in 

principle

(Interest rate swaps) Long term 

and 

short-term 

loans 

payable

Receive/floating and 

pay/fixed ¥90 ¥(0) $748 $(7)

Exceptional 

treatment of 

interest rate 

swap

(Interest rate swaps) Long term 

and 

short-term 

loans 

payable

Receive/floating and 

pay/fixed 47,680 (358) 396,772 (2,982)

Total ¥47,770 ¥(359) $397,521 $(2,990)

Fair value is determined based on the price obtained from 

financial institution. 

25. Segment Information

[Segment Information]

The reportable segments of the Company are components for 

which discrete financial information is available and whose 

operating results are regularly reviewed by the Executive 

Committee to make decisions about resource allocation and to 

assess performance. 

The Company has four reportable segments consisting of 

“Cement,” “Mineral Resources,” “Environmental Business,” 

“Construction Materials,” for its products and services. 

The principal products, etc. of each reportable segment are as 

follows.

Reportable Segment Principal Products, etc.

Cement Various cement, ready-mixed concrete

Mineral Resources Aggregates, limestone products

Environmental Business Waste recycling, desulfurization materials

Construction 

 Materials

Concrete secondary products, autoclaved 

 lightweight aerated concrete (ALC), chemicals

From this fiscal year, the reportable segment which recorded 

as “Ceramics and Electronics” is included in “Other” segment 

because it has become insignificant because of its amount.

 In this regard, for segment information for the previous 

consolidated fiscal year, the amounts reported in the same period 

of last year are modified according to the new classification. 

The accounting policies of the segments are substantially the 

same as those described in the significant accounting policies in 

Note 4. Segment performance is evaluated based on operating 

income or loss. Inter-segment transactions are recorded at the 

same prices used in transactions with third parties.

As stated in "Changes in Accounting Policies", due to the 

change of the method of calculating the retirement benefit 

obligations and service costs in the current consolidated fiscal 

year, we also changed the method of calculating retirement 

benefits and service costs of the business segment. The impact of 

this change is immaterial. 

TAIHEIYO CEMENT CORPORATION 31
Information of net sales, profit or loss, assets, liabilities, and other items by reportable segment are as follows:

2014

Cement Mineral resources Environmental 

business

Construction 

materials

Ceramics & 

electronics Subtotal Other Total Adjustment Consolidated total

Net sales:

(1) Net sales to outside customers ¥522,324 ¥73,828 ¥98,049 ¥88,177 ¥11,477 ¥793,858 ¥46,429 ¥840,288 ¥ – ¥840,288

(2) Inter-segment net sales 12,682 20,053 5,384 4,464 92 42,676 25,878 68,554 (68,554) –

Total ¥535,006 ¥93,881 ¥103,434 ¥92,642 ¥11,570 ¥836,535 ¥72,308 ¥908,843 ¥(68,554) ¥840,288

Segment profit (loss) ¥46,347 ¥6,895 ¥8,432 ¥5,433 ¥152 ¥67,262 ¥3,561 ¥70,823 ¥(388) ¥70,434

Segment assets ¥600,000 ¥115,951 ¥19,420 ¥83,853 ¥15,173 ¥834,398 ¥227,420 ¥1,061,819 ¥(46,255) ¥1,015,564

Depreciation ¥27,207 ¥5,241 ¥296 ¥2,091 ¥727 ¥35,564 ¥4,408 ¥39,973 ¥579 ¥40,553

Amortization of goodwill ¥2,238 ¥65 ¥ – ¥49 ¥ – ¥2,352 ¥0 ¥2,353 ¥ – ¥2,353

Equity in earnings of unconsolidated 

 subsidiaries and affiliates ¥1,280 ¥ – ¥10 ¥830 ¥ – ¥2,120 ¥236 ¥2,357 ¥218 ¥2,575

Impairment loss ¥1,345 ¥2,248 ¥ – ¥3 ¥1,872 ¥5,470 ¥979 ¥6,450 ¥ – ¥6,450

Investment in unconsolidated subsidiaries and 

 affiliates accounted for by the equity method ¥50,962 ¥ – ¥242 ¥9,819 ¥ – ¥61,023 ¥7,932 ¥68,956 ¥312 ¥69,268

Increase for property, plant, equipment, and 

 intangible assets ¥25,920 ¥5,543 ¥520 ¥3,052 ¥383 ¥35,421 ¥3,001 ¥38,422 ¥672 ¥39,094

2015

Cement Mineral resources Environmental business

Construction 

materials Subtotal Other Total Adjustment Consolidated total

Net sales:

(1) Net sales to outside customers ¥559,558 ¥72,960 ¥69,226 ¥86,031 ¥787,776 ¥55,071 ¥842,848 ¥ – ¥842,848 

(2) Inter-segment net sales 11,123 22,996 5,561 4,308 43,989 26,693 70,683 (70,683) –

Total ¥570,681 ¥95,957 ¥74,787 ¥90,340 ¥831,766 ¥81,764 ¥913,531 ¥(70,683) ¥842,848

Segment profit (loss) ¥40,251 ¥6,708 ¥7,474 ¥5,491 ¥59,925 ¥5,634 ¥65,560 ¥(153) ¥65,406

Segment assets ¥629,897 ¥120,429 ¥16,279 ¥81,518 ¥848,126 ¥231,062 ¥1,079,188 ¥(38,585) ¥1,040,602

Depreciation ¥28,623 ¥5,208 ¥361 ¥2,341 ¥36,535 ¥5,271 ¥41,806 ¥594 ¥42,401

Amortization of goodwill ¥2,753 ¥ – ¥1 ¥15 ¥2,771 ¥ – ¥2,771 ¥ – ¥2,771

Equity in earnings of unconsolidated 

 subsidiaries and affiliates ¥4,264 ¥ – ¥12 ¥670 ¥4,948 ¥344 ¥5,292 ¥ – ¥5,293

Impairment loss ¥211 ¥340 ¥ – ¥ – ¥552 ¥46 ¥1,013 ¥55 ¥1,069

Investment in unconsolidated subsidiaries and 

 affiliates accounted for by the equity method ¥60,699 ¥ – ¥250 ¥10,455 ¥71,405 ¥9,964 ¥81,370 ¥312 ¥81,682

Increase for property, plant, equipment, and 

 intangible assets ¥25,773 ¥6,988 ¥224 ¥2,916 ¥35,902 ¥5,732 ¥41,634 ¥525 ¥41,634

2015

Cement Mineral resources Environmental business

Construction 

materials Subtotal Other Total Adjustment Consolidated total

Net sales:

(1) Net sales to outside customers $4,656,390 $607,146 $576,067 $715,914 $6,555,519 $458,281 $7,013,801 $ – $7,013,801

(2) Inter-segment net sales 92,562 191,365 46,279 35,856 366,063 222,128 588,192 (588,192) –

Total $4,748,952 $798,511 $622,347 $751,771 $6,921,583 $680,410 $7,601,993 $(588,192) $7,013,801

Segment profit (loss) $334,953 $55,828 $62,197 $45,694 $498,673 $46,889 $545,563 $(1,279) $544,283

Segment assets $5,241,720 $1,002,163 $135,473 $678,363 $7,057,720 $1,922,796 $8,980,517 $(321,094) $8,659,423

Depreciation $238,193 $43,345 $3,004 $19,486 $304,029 $43,865 $347,895 $4,950 $352,845

Amortization of goodwill $22,917 $2 $14 $126 $23,061 $ – $23,062 $ – $23,062

Equity in earnings of unconsolidated 

 subsidiaries and affiliates $35,489 $ – $106 $5,579 $41,175 $2,867 $44,042 $5 $44,048

Impairment loss $1,763 $2,837 $ – $ – $4,600 $3,833 $8,434 $464 $8,899

Investment in unconsolidated subsidiaries and 

 affiliates accounted for by the equity method $505,111 $ – $2,081 $87,009 $594,202 $82,921 $677,124 $2,600 $679,725

Increase for property, plant, equipment, and 

 intangible assets $214,471 $58,152 $1,872 $24,270 $298,766 $47,700 $346,466 $4,370 $346,466

Notes to the Consolidated Financial Statements

 Taiheiyo Cement Corporation and Subsidiaries for the year ended 31st March, 2015

32 ANNUAL REPORT 2015
26. Major Subsequent Events

On August 4, 2015, The Company announced that its subsidiary, 

CalPortland Company, headquartered in Glendora, California 

(hereinafter, “CPC” ) has reached an agreement with Martin 

Marietta Materials, Inc., headquartered in North Carolina, 

and its subsidiaries (hereinafter, together, “Martin Marietta”) 

to purchase the cement business formerly held in California by 

Martin Marietta.

1. Reasons for the Acquisition

On May 12, 2015, Taiheiyo Cement released its three-year “17 

Medium-Term Management Plan”, covering FY2015, FY2016, 

and FY2017. The Plan allocates, across these three years, 100 

billion Japanese yen in group-wide capital investments intended 

to create and improve opportunities for profitability.

The Plan calls for Taiheiyo Cement Group’s overseas cement 

business to maintain and enhance its presence in the Pacific 

Rim by attaining an effective business scale (cement production 

capacity), specifically recommending improving profitability 

in its current business in the region and developing increased 

foreign trade to maximize Taiheiyo Cement Group’s global 

logistics network. In reference to its business in the United 

States, the Plan also announces Taiheiyo Cement Group’s goal 

to improve profitability in its current business as it steadily 

transforms increasing demand into greater profit.

This asset purchase from Martin Marietta will allow 

CPC to replace the cement production capacity lost by the 

discontinuation of cement production at its Colton Plant. In 

addition, it enables CPC to establish a supply chain to match 

the increase in cement demand in the California, Arizona, and 

Nevada region.

Moreover, with the addition of the Martin Marietta Group’s 

cement plant in Oro Grande, California—situated near the 

major market of Los Angeles—to CPC’s existing capacity 

(specifically, the Mojave Plant in California and the Rillito Plant 

in Arizona), CPC can further optimize its cement production 

and logistics, leading to an expected reduction in logistical 

outlays and optimization of production capability. As a result, the 

purchase will contribute to a steady improvement in sales volume 

and profit in Taiheiyo Cement Group’s U.S. operations, with a 

final outcome of increased profitability.

2. Overview of CalPortland Company

Business Name: CalPortland Company

Address: 2025 East Financial Way, Glendora, California 91741 

U.S.A.

Chief Officer: Allen Hamblen, President / CEO

Business Type: Production and sale of cement, ready-mixed 

concrete, aggregate, and asphalt

Capital: $24 million

Cement Production Base: Mojave Plant, Rillito Plant

3. Overview of the Purchased Assets

CPC is purchasing Martin Marietta’s cement business in 

California. The purchase does not include the Clinker grinding 

plant in Crestmore. Major assets included are:

1) One Cement Plant: Oro Grande Plant

2) Two Cement Terminals: Stockton and San Diego

Purchase Price: $420 million

4. Overview of Martin Marietta Materials, Inc.

Business Name: Martin Marietta Materials, Inc.

Address: 2710 Wycliff Road, Raleigh, North Carolina 27607 

U.S.A.

Chief Officer: C. Howard Nye, Chairman, President, and CEO

Business Type: Production and sale of aggregate, cement, readymixed concrete, and asphalt

Capital: $3.244 billion

Established: 1939

Consolidated Total Equity: $4.352 billion

Consolidated Total Assets: $7.464 billion

The above information is derived from Martin Marietta’s Annual 

Report 2014.

5. Estimated Schedule for the Purchase

Asset Purchase Agreement Signed: June 30, 2015

Transfer of Assets: Anticipated in Taiheiyo Cement’s FY 2nd 

Quarter, 2015

Please note that clearance from relevant authorities is needed for 

the completion of this agreement.

TAIHEIYO CEMENT CORPORATION 33
The Board of Directors

Taiheiyo Cement Corporation

We have audited the accompanying consolidated financial statements of Taiheiyo Cement 

Corporation and its consolidated subsidiaries, which comprise the consolidated balance sheet 

as at March 31, 2015, and the consolidated statement of income, statement of comprehensive 

income, statement of changes in net assets and statement of cash flows for the year then ended 

and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated 

financial statements in accordance with accounting principles generally accepted in Japan, and 

for such internal control as management determines is necessary to enable the preparation of 

consolidated financial statements that are free from material misstatements, whether due to 

fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on 

our audits. We conducted our audits in accordance with auditing standards generally accepted 

in Japan. Those standards require that we comply with ethical requirements and plan and 

perform the audit to obtain reasonable assurance about whether the consolidated financial 

statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the consolidated financial statements. The procedures selected depend on our 

judgement, including the assessment of the risks of material misstatement of the consolidated 

financial statements, whether due to fraud or error. In making those risk assessments, we 

consider internal control relevant to the entity’s preparation and fair presentation of the 

consolidated financial statements in order to design audit procedures that are appropriate in 

the circumstances, while the objective of the financial statement audit is not for the purpose 

of expressing an opinion on the effectiveness of the entity’s internal control. An audit also 

includes evaluating the appropriateness of accounting policies used and the reasonableness of 

accounting estimates made by management, as well as evaluating the overall presentation of the 

consolidated financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 

basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the 

financial position of Taiheiyo Cement Corporation and its consolidated subsidiaries as at March 

31, 2015, and their financial performance and cash flows for the year then ended in accordance 

with accounting principles generally accepted in Japan.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 26 to the consolidated financial 

statements, Taiheiyo Cement Corporation announced that its subsidiary, CalPortland Company, 

has reached an agreement with Martin Marietta Materials, Inc. and its subsidiaries,to purchase 

the cement business formerly held in California by Martin Marietta Materials, Inc. and its 

subsidiaries on August 4,2015.

Other Matter 

The consolidated financial statements of Company as at and for the year ended March 31, 2014, 

were audited by another auditor who expressed an unmodified opinion on those statements on 

June 27, 2014.

Convenience Translation

The U.S. dollar amounts in the accompanying consolidated financial statements with respect to 

the year ended March 31, 2015 are presented solely for convenience. Our audit also included 

the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has 

been made on the basis described in Note 5 to the consolidated financial statements.

KPMG AZSA LLC

September 3, 2015

Tokyo, Japan

Independent Auditor’s Report

34 ANNUAL REPORT 2015
998,741 982,231 982,473 1,015,5641,040,602

FY Mar/11 12 13 14 15

67,890

6.6

0.7

1.9

32,667

3.3 18,496

7,412 7,412

69,590

7.0

FY Mar/11 12 13 14 15

196,144

166,819

14.06 17.27

219,826

19.48

273,312

23.66

347,490

29.08

FY Mar/11 12 13 14 15

138.09 149.28 155.85

195.57

246.31

FY Mar/11 12 13 14 15

566,171

510,184 473,959

435,118

399,138

FY Mar/11 12 13 14 15

13.9

15.3

7.7

4.9 5.2

FY Mar/11 12 13 14 15

32,429

35,785 32,524

39,094 42,160

FY Mar/11 12 13 14 15

13

43,097 41,624 39,422 40,553 42,401

FY Mar/11 12 13 14 15

4,022

3,684 3,846 4,052

4,422

FY Mar/11 12 13 14 15

42.65

14.64

41.61

14.12

44.57

15.44

47.70

16.67

FY Mar/11 12 13 14 15

45.55

15.96

726,475 727,849 747,616

840,288 842,848

FY Mar/11 12 13 14 15

4.0

2.3

5.4

7.8

65,406

29,185

16,433

40,659

8.4

70,434

FY Mar/11 12 13 14 15

4,450

4.73

7,845

7.16

11,329

9.22

35,223

28.67

44,114

35.91

FY Mar/11 12 13 14 15

5.06

3.01

6.28

16.32 16.25

FY Mar/11 12 13 14 15

Total Assets Net Assets /

Equity Ratio

Ordinary Income /

Return on Assets (ROA)

Net Assets per Share Interest-Bearing Debt

Interest-Bearing Debt /

Cash Flow

Capital Expenditure Depreciation R&D Expense

Net Sales Operating Income /

Operating Income to Net Sales

Net Income (Loss) /

Net Income (Loss) per Share

Total Domestic Cement Demand / Return on Equity (ROE)

Group Sales

Total Assets ■■ Net Assets ■■

Equity Ratio ■

Ordinary Income ■■

Return on Assets (ROA) ■

Interest-Bearing Debt/Cash Flow ■Capital Expenditure ■■ Depreciation ■■ R&D Expense ■■

Financial Data 

Net Assets per Share ■Interest-Bearing Debt ■■

Total Domestic Cement Demand ■■

Group Sales ■

Net Sales ■■ Operating Income ■■

Operating Income to Net Sales ■

Net Income (Loss) ■■

Net Income (Loss) per Share ■

Return on Equity (ROE) ■

TAIHEIYO CEMENT CORPORATION 35
OVERSEAS NETWORK

Taiheiyo Cement U.S.A., Inc.

2025 East Financial Way, Glendora, CA 91741, U.S.A.

Tel: +1-626-852-6200 Fax: +1-626-852-6217

Taiheiyo Cement (China) Investment Co., Ltd.

1006 Room, Chang Fu Gong Office Building, 26,

Jian Guo Men Wai Da Jie, 

Chao Yang District, Beijing, China

Tel: +86-10-8591-1815 Fax: +86-10-8591-1870

Taiheiyo Singapore Pte. Ltd.

16 Raffles Quay, #41-03 Hong Leong Building, 

Singapore 048581

Tel: +65-6220-9495 Fax: +65-6225-5853

Vietnam Representative Office

Suite 801, 8th Fl., Sun Red River Building,

23 Phan Chu Trinh Street, 

Hoan Kiem District, Hanoi, Vietnam

Tel: +84-4-3933-0913 Fax: +84-4-3933-0921

Bangkok Representative Office

5 Sitthivorakit Building, 17th. Fl., Soi Pipat, Silom Road, 

Silom, Bangrak, Bangkok 10500, Thailand

Tel: +66-2-266-8741 Fax: +66-2-266-8742

Taipei Representative Office

5F, 139, Cheng-Chou Road, Taipei 103, Taiwan

Tel: +886-2-2557-8098 Fax: +886-2-2553-9853

Hong Kong Representative Office

20F, Tern Centre, Tower 1, 237 Queen’s Road Central, 

Hong Kong

Tel: +852-2545-9987 Fax: +852-2542-0474

MAJOR SUBSIDIARIES AND AFFILIATES

CEMENT AND READY-MIXED CONCRETE

DC Co., Ltd.

Kokusai Kigyo Co., Ltd.

Myojyo Cement Co., Ltd.

Sanyo White Cement Co., Ltd.

Tsuruga Cement Co., Ltd.

MINERAL RESOURCES

Abekawa Kaihatsu Co., Ltd.

Buko Mining Co., Ltd.

Chichibu Mining Co., Ltd.

Chichibu Taiheiyo Cement Corporation

Ishizaki Co., Ltd.

Kansai Matech Co., Ltd. 

Kansai Taiheiyo Minerals Corporation

Kosyu Saiseki Co., Ltd.

Oita Taiheiyo Mining Corporation

Okutama Kogyo Co., Ltd.

Ryushin Mining Co., Ltd.

Yuko Mining Co., Ltd.

ENVIRONMENT

NACODE Corporation

Tokyo Tama Ecocement Inc.

CONSTRUCTION AND CONSTRUCTION MATERIALS

A&A Material Corporation

Chichibu Concrete Industry Co., Ltd.

Clion Co., Ltd.

Fuji P.S Corporation

Onoda Chemico Co., Ltd.

Taiheiyo Materials Corporation

Taiheiyo Precast Concrete Industry Co., Ltd.

Taiheiyo Soil Corporation

OTHERS

Azuma Shipping Co., Ltd.

Chichibu Railway Co., Ltd.

Onoda Chemical Industry Co., Ltd.

Pacific Systems Corporation

Taiheiyo Accounting & Financial Services Corporation

Taiheiyo Engineering Corporation

Taiheiyo Real Estate Co., Ltd.

OVERSEAS ACTIVITIES

CalPortland Company (USA)

Dalian Onoda Cement Co., Ltd. (CHINA)

Jiangnan Onoda Cement Co., Ltd. (CHINA)

Jidong Taiheiyo (Beijing) Environmental Engineering Co., Ltd. (CHINA)

Kalahari Dry (Thailand) Co., Ltd. (THAILAND)

Nghi Son Cement Corporation (VIETNAM)

PNG-Taiheiyo Cement Limited (PAPUA NEW GUINEA)

Qinhuangdao Asano Cement Co., Ltd. (CHINA)

Shanghai Sanhang Onoda Cement Co., Ltd. (CHINA)

Shenzhen Haixing-Onoda Logistics Development Co.,Ltd. (CHINA)

Ssangyong Cement Industrial Co., Ltd. (SOUTH KOREA)

Taiheiyo Cement Philippines, Inc. (PHILIPPINES)

Taiheiyo International (Thailand) Co., Ltd. (THAILAND)

DOMESTIC NETWORK

Taiheiyo Cement’s facilities include our head office and Research & Development Center, eight branch offices, and six cement plants.

Taiheiyo Cement Group Network

36 ANNUAL REPORT 2015
Company Name TAIHEIYO CEMENT CORPORATION

Head Office Daiba Garden City Building, 2-3-5 Daiba, Minato-Ku, Tokyo 135-8578 Japan

Established May 1881

Paid-in Capital ¥ 86,174 million

Fiscal Year April 1–March 31

Annual Meeting June

Common Stock Authorized: 1,977,308,000 Issued: 1,237,800,586

Shareholders 76,320 

Agent of Record Sumitomo Mitsui Trust Bank, Ltd.

Major Stockholders Stockholder Holding (thousand shares) % of shares issued

Japan Trustee Services Bank, Ltd. (Trust Account) 93,988 7.5

The Master Trust Bank of Japan, Ltd. (Trust Account) 58,197 4.7

HSBC-Fund Services Bank Negara Malaysia-Equity 23,976 1.9

Mizuho Bank, Ltd. 23,756 1.9

State Street Bank and Trust Company 505225 17,301 1.3

Chase Manhattan Bank GTS Clients Account Escrow 16,750 1.3

STATE STREET BANK WEST CLIENT- TREATY 505243 15,935 1.2

Meiji Yasuda Life Insurance Company 15,273 1.2

The Bank of New York Mellon SA/NV 10 15,261 1.2

Sumitomo Mitsui Banking Corporation 14,987 1.2

Corporate Data (As of March 31, 2015)

TAIHEIYO CEMENT CORPORATION 37