# ANNUAL REPORT 2015 April 1, 2014

– March 31, 2015 

# 2015 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 

# Investing for the Future

# ANNUAL REPORT 2015 April 1, 2014–March 31, 2015 

# 2015 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 

# Investing for the Future

### 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 Las Vegas Mojave 

# 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 Las Vegas Mojave



# Domestic Main Business Locations

Other: 

### China, Vietnam, Philippines, Singapore, Papua New Guinea 

# Sales Composition By Geographic Segment

Japan 

### 79.0 % (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

(Fiscal year) Mar/11 Mar/12 Mar/13 Mar/14 Mar/15 (Millions of yen)

( ■ Con. / ■ Uncon.)

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 18,496

22,908 7,412

18,588 32,667

29,416 69,590

48,821 67,890

39,469

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

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

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

13,832

1,645 13,087

1,679 13,059

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

1

# 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 continuingimprovements 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. 

# Moving toward the next growth stage while operating as a member of the social infrastructure industry

2

## 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.

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 newinvestments 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.

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 World Japan 

## 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

## 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 DividendReduction 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’ returnsGiven 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. Guideline 1 

### Generate and improve our earnings capacity. Guideline 2 

### Build a flexible and strong financial structure 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



## Operating income on sales: 

# 8.4 % or more ROA (ordinary income): 

# 7 % or more

Units: Billions of Yen (Millions of Yen)



### 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 to45.55 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.

ANNUAL REPORT 2015 

### 6Operating 

## ¥ 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.

7 TAIHEIYO CEMENT CORPORATION

# 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.

ANNUAL REPORT 2015 

### 8

## 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 indemand 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



### 9

## 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

# 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.

11 TAIHEIYO CEMENT CORPORATION

## 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

## 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



### 13 TAIHEIYO CEMENT CORPORATION

## Directors, Managing Executive Officers Directors

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

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

### 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



### 152014 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.



### 162014 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.



### 172014 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(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



### 192014 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

# 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.

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 thesubsidiaries 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

## (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 InformationNet 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. 

# Notes to the Consolidated Financial Statements

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

## 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. 

# Notes to the Consolidated Financial Statements

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

## 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 

# Notes to the Consolidated Financial Statements

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

## 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, 2014and 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: 

# Notes to the Consolidated Financial Statements

292014 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



### 3031st 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. 

# Notes to the Consolidated Financial Statements

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

# Notes to the Consolidated Financial Statements

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 CEOBusiness 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.

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

34998,741 982,231 982,473 1,015,564 1,040,602

14 FY Mar/1 1 1 2 1 3 15 67,890

6.6

0. 7 1. 9 32,667

3.3 18,496 7,412 7,412 69,590

7.0

14 FY Mar/1 1 1 2 1 3 15 196,144 166,819

14.06 17.27 219,826

19.48 273,312

23.66 347,490

29.08

14 FY Mar/1 1 1 2 1 3 15 138.09 149.28 155.85 195.57 246.31

14 FY Mar/1 1 1 2 1 3 15 566,171 510,184 473,959 435,118

399,138

14 FY Mar/1 1 1 2 1 3 15

13.9 15.3

7.7

4.9 5.2

14 FY Mar/1 1 1 2 1 3 15 32,429 35,785 32,524 39,094 42,160

14 FY Mar/1 1 1 2 1 3 15 13

43,097 41,624 39,422 40,553 42,401

14 FY Mar/1 1 1 2 1 3 15 4,022 3,684 3,846 4,052 4,422

14 FY Mar/1 1 1 2 1 3 15 42.65

14.64 41.61

14.12 44.57

15.44 47.70

16.67

14 FY Mar/1 1 1 2 1 3 15 45.55

15.96 727,849 726,475 747,616 840,288 842,848

14 FY Mar/1 1 1 2 1 3 15 4.0

2.3 5.4 7.8 65,406

29,185

16,433 40,659
8.4 70,434

14 FY Mar/1 1 1 2 1 3 15 4,450 4.73

7,845 7.16

11,329 9.22 35,223

28.67 44,114

35.91

14 FY Mar/1 1 1 2 1 3 15 5.06

3.01 6.28 16.32 16.25

14 FY Mar/1 1 1 2 1 3 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 Return on Equity (ROE) Total Domestic Cement Demand / 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)

■



### 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

## 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)



### 37 TAIHEIYO CEMENT CORPORATION