Annual Report 2017 - 積水樹脂株式会社 has lived up to its corporate slogan: Creation of New Values – through the development of new materials and the compounding of plastics

Annual Report 2017for the year ended March 31, 2017

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Net sales (Millions of yen)

’13 ’14

68,052

’17

69,801

’16

64,168

’15

70,123

0

20,000

60,000

40,000

80,000

Profit attributable to owners of parent (Millions of yen)

’13 ’14 ’16 ’17’15

5,406

6,209 6,329

0

2,000

6,000

4,000

8,000

Net income per share (Yen)

’13 ’14 ’15

121.66

’16

133.07

’17

139.76 142.45

0

40

120

80

160

5,912

67,8266,576

148.04

Corporate Profile

Contents

The Sekisui Jushi Corporation was incorporated in 1954. Since then, the

Company has lived up to its corporate slogan: Creation of New Values –

through the development of new materials and the compounding of plastics

with other materials such as metals, textiles, woods and glass fibers.

Through original technology and attention to quality, the Company has

developed many high value-added products and speciality products, and has

grown into a manufacturing enterprise with a wide range of product lines

that includes consumer goods and home appliances, as well as industrial and

commercial products.

The ubiquitous presence of our products in homes, factories and supermarkets,

on farmland and highways, and at construction sites eloquently tells the

unique story of the Company’s ongoing pioneering efforts.

Financial Highlights ...............................................................1

To Our Shareholders ..............................................................2

At a Glance ...........................................................................4

Topics ...................................................................................6

Product Information ..............................................................7

Environmental & Social Initiatives ..........................................8

Consolidated Balance Sheets ...............................................10

Consolidated Statements of Income ....................................12

Consolidated Statements of Comprehensive Income ...........13

Consolidated Statements of Changes in Net Assets .............13

Consolidated Statements of Cash Flows ..............................14

Notes to Consolidated Financial Statements ........................15

Report of Independent Auditors ..........................................27

Board of Management ........................................................28

Corporate Data ...................................................................28

Global Network of Sekisui Jushi Group ................................29

Artificial Turf“Dream Turf®,” an artificial turf for athletic fields, has been used in schools and athletic fields at public facilities due to the new product’s reputation for outstanding durability and functionality.

(Shizuoka Prefecture)

Front Cover

Sekisui Jushi Corporation Annual Report 2017

010_7042701372908.indd 2 2017/08/07 16:11:36


’13 ’14

68,052

’17

69,801

’16

64,168

’15

70,123

0

20,000

60,000

40,000

80,000

Profit attributable to owners of parent (Millions of yen)

’13 ’14 ’16 ’17’15

5,406

6,209 6,329

0

2,000

6,000

4,000

8,000

Net income per share (Yen)

’13 ’14 ’15

121.66

’16

133.07

’17

139.76 142.45

0

40

120

80

160

5,912

67,8266,576

148.04

Sekisui Jushi Corporation Annual Report 2017 1

Financial HighlightsSekisui Jushi Corporation and Consolidated SubsidiariesYears ended March 31, 2017, 2016, 2015, 2014, 2013

* U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥112.19=$1.00 (See Note 1)

2013

Millions of Yen

Yen

Thousands ofU.S. dollars*

U.S. dollars*

20172017201620152014

For the year:Net sales ¥64,168 ¥69,801 ¥68,052 ¥70,123 ¥67,826 $604,565Operating income 8,723 9,652 9,153 9,665 9,907 88,303Profit attributable to owners of parent 5,406 5,912 6,209 6,329 6,576 58,621

Per share amounts:Net income ¥ 121.66 ¥ 133.07 ¥ 139.76 ¥ 142.45 ¥ 148.04 $ 1.32Net assets 1,464.13 1,597.82 1,785.63 1,843.67 1,984.03 17.68

At year-end:Total assets ¥95,778 ¥101,859 ¥112,445 ¥111,727 ¥119,175 $1,062,262Total net assets 65,847 71,897 80,531 83,262 89,208 795,160

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To Our Shareholders

We would like to extend my heartfelt gratitude for your

continued support and confidence in our business.

Before reporting the outline of our performance during

the 83rd business term, We would like to extend an

introduction to each and every one of you.

The Japanese economy during the fiscal year under

review saw a gradual recovery trend amid a continuing

increase in corporate profits and improvement in the

employment environment. However, the future outlook

remained unclear, due to factors such as the slowdown in

the Chinese economy and the Brexit issue, along with the

direction of the new administration in the U.S. and

unstable situation in neighboring countries in addition to

trends in the exchange rate and crude oil prices.

In this business climate, the Group has formulated a

new four-year medium-term management plan concluding

in the fiscal year ending March 31, 2020, as the 3rd stage

of Management Vision 2020, and is pushing ahead with

measures to stay on track for expansion, including

evolution and consolidation of core businesses, expansion

of global development, and creation of new businesses.

Domestically, the Group pursued various proactive

business initiatives. We worked to cultivate new fields by

selectively allocating management resources to the private

sector business in order to respond to rapid changes in the

public sector business environment. We also held the SJC

Group Fair, a locally oriented exhibition to create new

demand by leveraging the Group’s collective strengths

such as our wide-ranging product line, in Hiroshima,

Nagoya and Sendai. Additionally, we utilized the skills we

have built up in the public sector to propose solutions to

private sector issues, such as noise control in residential

environments and safety measures at factories.

Furthermore, we made efforts to reduce costs by carrying

out strategic purchasing according to changes in raw

materials prices, and improving productivity.

Looking overseas, in an effort to proactively address

globalization, we promoted our brand and expanded

business in Europe and Southeast Asia through efforts such

as continuing to exhibit at “K 2016 (the international trade

fair for plastics and rubber)” held in Dusseldorf, Germany,

and at the traffic and highways infrastructure exhibition

“Intertraffic Amsterdam 2016,” as well as exhibiting at

“Architect’ 16,” an architecture and construction materials

exhibition held in Bangkok, Thailand.

During the fiscal year under review, on a consolidated

basis, we posted sales of 67,826 million yen (down 3.3%

from the previous year) and operating income of 9,907

million yen (up 2.5% from the previous year). Ordinary

income surpassed the 10,000 million yen mark for the first

Yaichiro FukuiChairman of the Board and CEO

Hiroshi BabaPresident and COO

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time since our founding, at 10,198 million yen (up 3.2%

from the previous year), and net income attributable to

owners of the parent amounted to 6,576 million yen (up

3.9% from the previous year). (We changed the

settlement date of our four domestic consolidated

subsidiaries from December 31 to March 31 starting from

the previous fiscal year. Consequently, the performance of

these subsidiaries for the 15 months from January 1, 2015

to March 31, 2016 is reflected in the operating results for

the previous fiscal year.)

Turning to our year-end dividend for the fiscal year

under review, at the meeting of the Board of Directors

held on April 26, 2017, we decided to pay an ordinary

dividend of 18 yen plus a special dividend of 2 yen, for a

total of 20 yen per share, to respond to the continued

support of our shareholders and in consideration of

factors such as consolidated performance and dividend

payout ratio. As a result, added to the midterm dividend

of 18 yen, the annual dividend paid to shareholders during

the fiscal year under review amounts to 38 yen per share,

an increase of 2 yen from the previous fiscal year (marking

our eighth consecutive term of dividend increases), for a

consolidated dividend payout ratio of 25.7%.

Although improvement in corporate profits is expected to

remain steady, uncertainty is expected to continue in the

future business climate, due to such factors as weakness

in consumer spending, soaring raw materials prices, and

concerns about political and economic trends including

geopolitical risks.

Under these circumstances, the Group will speed up

implementation of the measures of the medium-term

management plan that forms the 3rd stage of

Management Vision 2020, taking as its keywords

“collective strength, power to engage, and capacity for

speed.” In line with that, we restructured our domestic

organization as of April 1, 2017, in order to fully leverage

the collective strengths of the Sekisui Jushi Group and to

quickly build our next business foundation. Furthermore,

we will continue to pursue business activities with

emphasis on profitability by actively engaging in efforts

such as product development based on customer needs

and capital investment to improve productivity.

Meanwhile, looking overseas, the Group is united in its

commitment to realizing Management Vision 2020 by

powerfully promoting its Global and M&A strategies

specific to Asia, Oceania and Europe.

In addition, the Company has made efforts to

strengthen the supervisory function of the Board of

Directors by increasing the ratio of outside directors and

auditors starting in June 2016, and will continue striving

to further enhance corporate governance.

With regard to our corporate social responsibility

activities, we continue our support for the Scholarship

Foundation for Traffic Accident Orphans and the Japan

Committee for the United Nations Decade on Biodiversity,

among other activities, in order to fully deliver on our

corporate responsibility to society. At the same time, we

will actively promote CSV (creating shared value) through

measures such as reinforcing product development to

address disaster mitigation and prevention, traffic disaster

prevention and global warming, with a view to resolve

social challenges.

In conclusion, We would like to express my renewed

thanks to all our shareholders and look forward to your

continued support and encouragement.

Hiroshi BabaPresident and COO

Yaichiro FukuiChairman of the Board and CEO

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Operating income (Millions of yen)

’17’16

30,467

’17’16

4,116



’17’16

’17’16

6,473

0

40,000

30,000

20,000

10,000

0

40,000

30,000

20,000

10,000

0

6,000

4,000

2,000

0

8,000

4,000

6,000

2,000

37,359

31,866

4,2306,089

38,257

At a Glance(For the period April 1, 2016 through to March 31, 2017)Results for the fiscal year under review are presented herein by business group.

(Operating Results for This Fiscal Year)

Public Sector Business

Traffic and Urban Landscaping Related ProductsSales of traffic safety products and road marking materials have been steady as our “Pole Cone” traffic lane divider products and “JIS line” products were adopted in measures to prevent wrong-way driving on highways, and in safety measures for school routes and residential roads. We have also strengthened our expansion into the railway field. Our heat insulating pavement has earned a strong reputation for use in reducing the heat island effect in urban areas, and products used to prevent concrete exfoliation have contributed to sales growth against the backdrop of an increase in maintenance work on structures. Meanwhile, sales of safety fences fell due to the impact of a decrease in safety-fence installation projects nationwide, although wind/snow proof plastic fences were adopted in cold regions due to their reputation for visibility and conformity with landscapes. Sales of noise-barrier walls also weakened due to postponed construction for NEXCO and Ministry of Land, Infrastructure, Transport and Tourism projects.

Sports Facilities Related ProductsSales of our “Dream Turf®,” an artificial turf for athletic fields, have grown sharply due to the new product’s reputation for outstanding durability and functionality, and it has been used in schools and athletic fields at public facilities. Sales for facility development for schools including elementary schools that collaborated with leasing companies also contributed to sales growth. Sales of our “Sand Grass,” an artificial turf for tennis courts, were up year on year for municipally run facilities and corporate recreational facilities, and artificial turf for field hockey use has been adopted at official hockey venues as an initiative for the Tokyo Olympics and Paralympics, and has been well received.

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’17’16

30,467

’17’16

4,116



’17’16

’17’16

6,473

0

40,000

30,000

20,000

10,000

0

40,000

30,000

20,000

10,000

0

6,000

4,000

2,000

0

8,000

4,000

6,000

2,000

37,359

31,866

4,2306,089

38,257

Private Sector Business

Exterior Materials Related ProductsPerformance of mesh fence declined from the previous year due to a decrease in solar power generation facility projects, although inquiries were up for exterior walls for distribution centers. Sales of soundproof blind fences grew significantly, buoyed by adoption in nursery schools and commercial facilities due to rising needs for noise control in residential environments, and products for bicycle parking lots for apartment buildings performed strongly.

Artificial Wood & Building Material-Related ProductsSales of artificial wood products were down due to factors such as a decrease in large-scale special order projects, despite adoption of Orangewood Decking in Kobe City’s Parklet Project, a social experiment in which part of the street has been converted into a rest area. Sales of decorative building materials remained flat year on year due to new applications in accommodations and commercial facilities. Sales of aluminum composite panels grew steadily as a result of factors such as use as materials for temporary structures associated with rebuilding, and as interior decoration material in retail stores and various other facilities.

Material Handling Systems and Supplies Related ProductsSales of stretch wrapping machines saw substantial growth since fully automated and semi-automated products with outstanding operability and maintenance functions received popularity, backed by growing demand for manpower-saving and efficiency due to the labor shortage. In packaging material related products, we saw increased sales of bands for heavy packaging as a replacement for steel bands and for use in export packaging. However, performance of ready-to-assemble system pipes declined from the previous year, due to a decline in capital investment in the electric appliance and electronics fields. Sales of automotive part related products were sluggish owing to a decrease in new model launches by car manufacturers. Sales of digital picking system products posted significant sales growth, backed by large-scale projects for OA peripherals manufacturers and their adoption overseas.

Agriculture-Related ProductsSales of gardening poles grew mainly at home centers as a result of promoting the safety, security and stable supply of products made in Japan. Performance of agricultural poles improved from the previous year due to successful product proposals to address cultivation needs.

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Topics

Holding of SJC Group FairWe held the SJC Group Fair in order to introduce the Group’s wide-ranging product line. The fair, held in three places: Hiroshima, Nagoya and Sendai, attracted numerous visitors. We proposed total solutions combining products and technology to address issues (traffic accidents, disaster mitigation and prevention, etc.) in the “Town and Living” category, and received popularity.

Ongoing Exhibitions at Intertraffic Amsterdam 2016

We continued our exhibits of products including Pole Cones and bollards at the world’s largest traffic and highways infrastructure exhibition held in the Netherlands in April 2016, and received high praise from visitors.

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Product Information

Traffic Safety Products, Road Marking Materials, Heat Barrier Paving

Our “Pole Cone” and JIS LINE, Thermoplastic road marking material products have been adopted in measures to prevent wrong-way driving on highways, and in safety measures for school routes and residential roads, and we have also strengthened our expansion into the railway field. The superb heat barrier paving materials has earned it a strong reputation for reducing the heat island effect.

Shelter ProductsOur shelter products, which enjoy a solid reputation for their quality designs that conform to the look and feel of an urban landscape, have been used in renovation projects for train station forecourts and bus stops.

Public Sector Business

Private Sector Business

Stretch Film Wrapping Machine

Our fully automated and semi-automated stretch film wrapping machine, which have outstanding operability and maintenance functions, received popularity, backed by growing demand for manpower-saving and efficiency due to the labor shortage.

Agricultural PolesPerformance for agricultural poles improved from the previous year due to the success of product proposals to address cultivation needs.

Ready-To-Assemble System Pipes

We made proposals using ready-to-assemble system pipes in response to demand for manpower-saving and efficiency in the cultivation of seedlings for leafy vegetables.

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Environmental & Social Initiatives

Environmental ReportReducing environmental burden in business activities

Since FY2010, we have been implementing measures to reduce waste, setting a target level of reduction that includes valuable materials. In FY2016, we made efforts at each of our production facilities to improve the yield rate and reduce the failure rate in our production process, however, due to such factors as the impact of model-change loss when switching production models and the disposal of idle facilities, we registered a 1.5% increase in waste discharge per unit of production from the level of FY2015 domestically. Going forward, we will work harder than ever to enhance our activities for the 3Rs (reduce, reuse and recycle) as we strive to reduce waste.

Working to reduce waste containing valuable materialsMeasures to reduce waste at our production facilities

At each of our production sites, concerted efforts have been undertaken to reduce energy consumption and CO2 emissions during production, through improvement and proper management of production processes, air conditioning, lighting equipment and other methods. During FY2016, we achieved a 5.4% reduction in the basic unit of energy consumption, and a 6.5% reduction in CO2 emissions per basic unit compared to FY2015 domestically. Overseas, CO2 emissions per basic unit were also reduced, albeit by 0.3%. Going forward, we will look to strengthen our energy saving activities, both in hardware and software, by improving our production processes and introducing energy-saving facilities, as well as by making energy use visible and implementing measures to conserve electricity, etc.

5.4% reduction of energy consumption per physical unit of production, and 6.5% reduction of CO2 emissions per physical unit of production (compared with FY2015)

Measures to reduce energy use and CO2 emissions at our production sites

0

0.1

0.2

0.3

0.4

0.5

0

10,000

20,000

30,000

40,000

50,000

CO2 emitted volume byplants during productionand physical unit ofproduction (Domestic Plants)

tons of CO2/million yentons

21,922

0.40

0

600

450

300

150

750

900

0

8

6

4

2

10

12

Energy usage volume atplants during productionand physical unit ofproduction

GJ/million YenThousand GJ

486

’15’14’13(FY) (FY)

469 478

’16 ’13 ’16

9.0 8.9 8.7

22,249

0.41

’14

0

0.04

0.02

0.06

0.08

0.10

0.12

0

100

200

300

400

500

600

Amount of wastematerial discharge andunit of output(Overseas Plants)

tons/million yentons

332

0

3,000

2,000

1,000

4,000

5,000

0

0.045

0.030

0.015

0.060

0.075

Amount of wastematerial discharge andunit of output(Domestic Plants)


’15’13

1,153 1,170

’16 ’15’13 ’16’14

1,070

0.052 0.054 0.052

0.0950.088

0.078

’14

276

(FY) (FY)

21,339

0.41

’15

1,676 1,6591,732

286

459

8.2

20,884

1,277

0.052

1,636

0.083

263

0.38

Emission volume of greenhousegases during manufacturing

Emission volume of greenhouse gases perunit of production

* GJ (gigajoule) =109J (unit of energy)

Energy consumption volume perphysical unit of production

Energy consumption during production

Note: With regard to our overseas plants, we have used a yen exchange rate for our sales turnover from our benchmark year (fiscal 2012) for the per unit calculations.

Total amount of waste discharge(tons)

Amount of waste discharge per unit ofproduction (tons/million yen)

Waste generation per physicalunit of Production

Valuable Materials(Volume sold as valuable waste)

Waste

Reductionof

5.4%per unit

Reductionof

6.5%per unit

Increaseof

1.5%per unit

Reductionof

5.7%per unit

0

0.1

0.2

0.3

0.4

0.5

0

10,000

20,000

30,000

40,000

50,000

CO2 emitted volume byplants during productionand physical unit ofproduction (Domestic Plants)

tons of CO2/million yentons

21,922

0.40

0

600

450

300

150

750

900

0

8

6

4

2

10

12

Energy usage volume atplants during productionand physical unit ofproduction

GJ/million YenThousand GJ

486

’15’14’13(FY) (FY)

469 478

’16 ’13 ’16

9.0 8.9 8.7

22,249

0.41

’14

0

0.04

0.02

0.06

0.08

0.10

0.12

0

100

200

300

400

500

600

Amount of wastematerial discharge andunit of output(Overseas Plants)


332

0

3,000

2,000

1,000

4,000

5,000

0

0.045

0.030

0.015

0.060

0.075

Amount of wastematerial discharge andunit of output(Domestic Plants)


’15’13

1,153 1,170

’16 ’15’13 ’16’14

1,070

0.052 0.054 0.052

0.0950.088

0.078

’14

276

(FY) (FY)

21,339

0.41

’15

1,676 1,6591,732

286

459

8.2

20,884

1,277

0.052

1,636

0.083

263

0.38

Emission volume of greenhousegases during manufacturing

Emission volume of greenhouse gases perunit of production

* GJ (gigajoule) =109J (unit of energy)

Energy consumption volume perphysical unit of production

Energy consumption during production

Note: With regard to our overseas plants, we have used a yen exchange rate for our sales turnover from our benchmark year (fiscal 2012) for the per unit calculations.

Total amount of waste discharge(tons)

Amount of waste discharge per unit ofproduction (tons/million yen)

Waste generation per physicalunit of Production

Valuable Materials(Volume sold as valuable waste)

Waste

Reductionof

5.4%per unit

Reductionof

6.5%per unit

Increaseof

1.5%per unit

Reductionof

5.7%per unit

010_7042701372908.indd 8 2017/08/07 16:11:41


Ongoing Contribution to Scholarship Foundation for Traffic Accident OrphansSince 2011, as a company involved in traffic safety, we have been continuing our program to donate part of our profit from sales of “Pole Cone” traffic lane dividers to the Scholarship Foundation for Traffic Accident Orphans, which supports children who have lost parents in a traffic accident or face financial difficulties in finishing their education as a result of their loss.

Cooperation with Japan Committee for the United Nations Decade on Biodiversity

In order to cooperate on activities that contribute to the preservation and sustainable use of biodiversity, together with the Ministry of the Environment, since 2010 we have continuously supported the Japan Committee for the United Nations Decade on Biodiversity.

Implementation of Forestry Preservation Activities and Reed-Cutting Activities at Lake Biwa

Our employees engage in community-based social contribution activities such as carrying out forestry preservation activities at the Group’s various locations, and participating in reed-cutting activities that contribute greatly to preserving the quality of water in Lake Biwa.

Providing support tochildren who have lost

parents in traffic accidents,or who are experiencingfinancial difficulties thathinder their education

Donationstaken from part of the profits from

sales

Sales

Pole Cone

Contributing to Safetyand relief on the road

Customer

Pole Conesinstalled on a road

ScholarshipFoundationfor Traffic

Accident OrphansSupporting Traffic

AccidentOrphans

Sekisui Jushi

010_7042701372908.indd 9 2017/08/07 16:11:41


2016

Consolidated Balance SheetsSekisui Jushi Corporation and Consolidated SubsidiariesMarch 31, 2017 and 2016

Current assets:

Cash and deposits (Note 11) ¥ 33,464 ¥ 28,110 $ 298,280

Short-term investments (Note 4) — 300 —

Trade notes and accounts receivable 27,464 26,756 244,799

Inventories (Note 5) 7,314 6,912 65,190

Deferred tax assets (Note 8) 526 464 4,687

Prepaid expenses and other current assets 1,683 1,918 15,004

Less: allowance for doubtful accounts (43) (37) (383)

Total current assets 70,408 64,423 627,577

Investments and other assets:

Investments in non-consolidated subsidiaries and affiliates 3,005 3,169 26,787

Investments in securities (Note 4) 11,558 8,464 103,024

Long-term time deposits 18,000 18,500 160,442

Long-term loans receivable 160 165 1,423

Deferred tax assets (Note 8) 209 191 1,865

Other 642 836 5,725

Less: allowance for doubtful accounts (148) (180) (1,326)

Total investments and other assets 33,426 31,145 297,940

Property, plant and equipment:

Land 7,389 7,508 65,862

Buildings and structures 20,977 21,124 186,974

Machinery and equipment 23,652 23,825 210,821

Tools, furniture, fixtures and other 5,717 5,841 50,961

Construction in progress 13 5 115

57,748 58,303 514,733

Less: accumulated depreciation (42,407) (42,144) (377,988)

Property, plant and equipment, net 15,341 16,159 136,745

Total assets ¥119,175 ¥111,727 $1,062,262

See the accompanying notes to the consolidated financial statements.

Thousands ofU.S. dollars (Note 1)

2017 2017

Millions of yen

ASSETS

010_7042701372908.indd 10 2017/08/07 16:11:41


2016

Current liabilities:Short-term loans (Note 6) ¥ 1,750 ¥ 1,900 $ 15,599Trade notes and accounts payable 15,346 14,802 136,786Accrued expenses 1,451 1,302 12,934Accrued income taxes 2,123 1,894 18,918Other current liabilities 4,922 4,480 43,872

Total current liabilities 25,592 24,378 228,109

Long-term liabilities:Net defined benefit liability (Note 7) 2,769 3,158 24,686Deferred tax liabilities (Note 8) 1,388 713 12,368Other long-term liabilities 218 216 1,939

Total long-term liabilities 4,375 4,087 38,993

Total liabilities 29,967 28,465 267,102

Net assets:Shareholders’ equity (Note 9):Common stock

Authorized — 128,380,000 sharesIssued — 47,313,598 shares 12,335 12,335 109,944

Capital surplus 13,213 13,189 117,782Retained earnings 60,545 55,615 539,672Treasury stock, at cost

(2,889,451 shares in 2017 and 2,888,122 shares in 2016) (1,962) (1,960) (17,492)Total shareholders’ equity 84,131 79,179 749,906

Accumulated other comprehensive incomeNet unrealized holding gain on securities 4,149 2,821 36,985Loss on deferred hedges (0) (0) (0)Foreign currency translation adjustments 19 278 174Remeasurements of defined benefit plans (161) (373) (1,442)Total accumulated other comprehensive income 4,007 2,726 35,717

Non-controlling interests 1,070 1,357 9,537Total net assets 89,208 83,262 795,160

Total liabilities and net assets ¥119,175 ¥111,727 $1,062,262


2017 2017

Millions of yen

LIABILITIES AND NET ASSETS

010_7042701372908.indd 11 2017/08/07 16:11:41


Consolidated Statements of IncomeSekisui Jushi Corporation and Consolidated SubsidiariesYears ended March 31, 2017 and 2016

2016

Net sales ¥67,826 ¥70,123 $604,565

Cost of sales 46,426 48,986 413,820

Gross profit 21,400 21,137 190,745

Selling, general and administrative expenses 11,493 11,472 102,442

Operating income 9,907 9,665 88,303

Other income (expenses):

Interest and dividends income 303 271 2,702

Interest expenses (91) (144) (812)

Equity in earnings of affiliates 91 79 813

Gain on sales of investment securities 165 — 1,471

Gain on liquidation of subsidiaries 43 — 384

Loss on valuation of investments in subsidiaries

and non-consolidated subsidiaries (239) — (2,130)

Impairment loss on fixed assets (175) (27) (1,563)

Loss on sales and disposal of fixed assets (51) (68) (457)

Loss on liquidation of business — (51) —

Loss on valuation of investments securities — (39) —

Others-net (12) 7 (105)

34 28 303

Income before income taxes 9,941 9,693 88,606

Income taxes (Note 8):

Current 3,238 3,063 28,861

Deferred (66) 113 (593)

3,172 3,176 28,268

Net income 6,769 6,517 60,338

Net income attributable to non-controlling interests (193) (188) (1,717)

Net income attributable to owners of parent ¥ 6,576 ¥ 6,329 $ 58,621


U.S. dollars (Note 1)

2017 2017

Millions of yen

Yen

Per share:

Net income ¥148.04 ¥142.45 $1.32

Cash dividends 38.00 36.00 0.34

010_7042701372908.indd 12 2017/08/07 16:11:41


Consolidated Statements of Comprehensive IncomeSekisui Jushi Corporation and Consolidated SubsidiariesYears ended March 31, 2017 and 2016

2016Net income ¥6,769 ¥6,517 $60,338

Other comprehensive income (Note 10)

Net unrealized holding gain (loss) on securities 1,326 (895) 11,815Gain (loss) on deferred hedges 0 (0) 2Foreign currency translation adjustments (263) (339) (2,345)Remeasurements of defined benefit plans 211 (950) 1,885Share of other comprehensive income in equity method affiliates 2 (25) 21

Total other comprehensive income (loss) 1,276 (2,209) 11,378

Comprehensive income ¥8,045 ¥4,308 $71,716

Total comprehensive income attributable to:

Comprehensive income attributable to owners of parent ¥7,857 ¥4,135 $70,035Comprehensive income attributable to non-controlling interests 188 173 1,681


2017 2017

Millions of yen


Non-controllinginterests

Totalnet

assets

Millions of yen

Thousands of U.S. dollars (Note 1)

Remeasure-ments

of definedbenefit plans

Foreigncurrency

translationadjustments

Gain (Loss)on

deferredhedges

Treasurystock

Retainedearnings

Commonstock

Number ofshares ofcommon

stock

Netunrealized

holding gainon securities

Capitalsurplus

Thousands

Consolidated Statements of Changes in Net AssetsSekisui Jushi Corporation and Consolidated SubsidiariesYears ended March 31, 2017 and 2016

Balance at March 31, 2015 47,313 ¥12,335 ¥13,189 ¥50,844 ¥(1,957) ¥3,731 ¥ 0 ¥603 ¥ 586 ¥1,200 ¥80,531Net income attributable to

non-controlling parent for the year — — — 6,329 — — — — — — 6,329Cash dividends — — — (1,558) — — — — — — (1,558)Treasury stock — — 0 — (3) — — — — — (3)Other changes — — — — — (910) (0) (325) (959) 157 (2,037)

Balance at March 31, 2016 47,313 ¥12,335 ¥13,189 ¥55,615 ¥(1,960) ¥2,821 ¥(0) ¥278 ¥(373) ¥1,357 ¥83,262Net income attributable to

non-controlling parent for the year — — — 6,576 — — — — — — 6,576Cash dividends — — — (1,646) — — — — — — (1,646)Treasury stock — — 0 — (2) — — — — — (2)Change in equity owners of

parent arising from transactionswith non-controlling interests — — 24 — — — — — — — 24

Other changes — — — — — 1,328 0 (259) 212 (287) 994Balance at March 31, 2017 47,313 ¥12,335 ¥13,213 ¥60,545 ¥(1,962) ¥4,149 ¥(0) ¥19 ¥(161) ¥1,070 ¥89,208

Balance at March 31, 2016 $109,944 $117,564 $495,726 $(17,473) $25,151 $(2) $2,481 $(3,327) $12,092 $742,156Net income attributable to

non-controlling parent for the year — — 58,621 — — — — — — 58,621Cash dividends — — (14,675) — — — — — — (14,675)Treasury stock — 0 — (19) — — — — — (19)Change in equity owners of

parent arising from transactionswith non-controlling interests — 218 — — — — — — — 218

Other changes — — — — 11,834 2 (2,307) 1,885 (2,555) 8,859Balance at March 31, 2017 $109,944 $117,782 $539,672 $(17,492) $36,985 $(0) $174 $(1,442) $9,537 $795,160

Non-controllinginterests

Totalnet

assets

Remeasure-ments

of definedbenefit plans

Foreigncurrency

translationadjustments

Gain (Loss)on

deferredhedges

Treasurystock

Retainedearnings

Commonstock

Netunrealized

holding gainon securities

Capitalsurplus

010_7042701372908.indd 13 2017/08/07 16:11:41


Consolidated Statements of Cash FlowsSekisui Jushi Corporation and Consolidated SubsidiariesYears ended March 31, 2017 and 2016

2016

Cash flows from operating activities:Income before income taxes ¥ 9,941 ¥ 9,693 $ 88,606Adjustments to reconcile net income to net cashprovided by operating activities:Depreciation and amortization 1,188 1,360 10,591Impairment loss on fixed assets 175 27 1,563Increase of accrued bonuses 88 73 789Increase in allowance for bonus for directors and statutory auditors 24 13 216

Increase in provision for directors’ retirement benefits 9 12 79Decrease in allowance for doubtful accounts (24) (13) (216)Decrease in net defined benefit liability (83) (855) (740)Decrease in net defined benefit asset — 238 —Interest and dividends income (303) (271) (2,702)Equity in earnings of affiliates (91) (79) (814)Interest expenses 91 144 812Unrealized loss on foreign currency exchange 1 9 5Gain on sales of investment securities (165) — (1,471)Gain on liquidation of subsidiaries (43) — (384)Loss on valuation of investments securities — 39 —Loss on valuation of investments in subsidiaries and non-consolidated subsidiaries 239 — 2,130

Loss on sales and disposal of fixed assets 51 68 457Loss on liquidation of business — 51 —Decrease (Increase) in trade notes and accounts receivable (739) 3,264 (6,587)Decrease (Increase) in inventories (555) 539 (4,948)Increase (Decrease) in trade notes and accounts payable 541 (2,482) 4,822Net increase or decrease in other current assets and liabilities 407 (65) 3,630Other 97 18 864

Subtotal 10,849 11,783 96,702Interest and dividends income received 303 279 2,705Interest expenses paid (87) (134) (777)Income taxes paid (2,867) (2,641) (25,553)

Net cash provided by operating activities 8,198 9,287 73,077

Cash flows from investing activities: Proceeds from redemption of securities 300 1,500 2,674Payments for purchase of property, plant and equipment (531) (1,777) (4,739)Proceeds from sales of property, plant and equipment 13 13 120Payments for purchase of intangible assets (7) (23) (66)Payments for purchase of investment securities (1,301) (202) (11,603)Proceed from sales of investment securities 256 89 2,284Net decrease in short-term loans receivable 273 187 2,435Net decrease in long-term loans receivable 4 3 39Payments for long-term time deposits (3,000) (4,000) (26,740)Proceeds from long-term time deposits 4,000 5,000 35,654Other 19 (523) 171

Net cash provided by investing activities 26 267 229

Cash flows from financing activities:Net decrease in short-term bank loans (150) (380) (1,337)Payments for purchase of treasury common stock (1) (1) (5)Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation (418) — (3,728)

Cash dividends paid (1,643) (1,556) (14,646)Other (48) (37) (433)

Net cash used in financing activities (2,260) (1,974) (20,149)

Effect of exchange rate changes on cash and cash equivalents (110) (125) (980)Net increase in cash and cash equivalents 5,854 7,455 52,177Cash and cash equivalents at beginning of year 27,110 19,655 241,645Cash and cash equivalents at end of year (Note 11) ¥32,964 ¥27,110 $293,822


2017 2017

Millions of yen


010_7042701372908.indd 14 2017/08/07 16:11:42


Notes to Consolidated Financial StatementsSekisui Jushi Corporation and Consolidated Subsidiaries

1. Basis of presenting consolidated financial statements

Sekisui Joshi Corporation (the “Company”) and its domestic consolidated subsidiaries maintain their accounts and records in accordance with accounting principles generally accepted in Japan. Its overseas consolidated subsidiaries maintain their accounts and records in conformity with the requirements of their respective countries of domicile. The accompanying consolidated financial statements have been 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 have been compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan. In preparing the accompanying financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued in Japan in order to present them in a format which is more familiar to readers outside Japan. In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information. The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of the readers, using the exchange rate prevailing at March 31, 2017, which was ¥112.19 to US$1.00. These convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

2. Summary of significant accounting policies(a) Consolidation principlesThe accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries (collectively, the “Group”) over which substantial control is exerted through either majority ownership of voting stock and/or by other means. In addition, significant affiliates over which substantial control is significantly affected by the consolidated group in various ways have been accounted for by the equity method. All significant intercompany balances and transactions have been eliminated in consolidation. The balance sheet date of 7 consolidated subsidiaries is December 31. Any significant differences in intercompany accounts and transactions arising from intervening intercompany transactions during the period from January 1 through March 31 have been adjusted, if necessary. Goodwill is amortized over a five-year period on a straight-line method. Negative goodwill is recognized as a gain in the statement of income on the acquisition date after reassessing whether it

has correctly identified all of the assets acquired and all of the liabilities assumed with a review of such procedures used.

(b) Foreign currency translationAll monetary assets and liabilities denominated in foreign currencies are translated into yen at the rate of exchange in effect at the balance sheet date, except for those hedged by forward foreign exchange contracts which are translated at the contracted rates. Resulting translation gains or losses are charged to income in the year in which they are incurred. Revenue and expenses are translated at the rates of exchange prevailing when transactions are recorded. Assets and liabilities of overseas subsidiaries are translated into Japanese yen at the exchange rates in effect at the respective balance sheet dates. The components of net assets are translated at the historical exchange rate. Revenue and expenses are translated at the average rates of exchange prevailing during each fiscal year. Translation adjustments resulting from translation of foreign currency financial statements are reported as “Foreign currency translation adjustments” in a separate component of net assets.

(c) Cash and cash equivalentsCash and cash equivalents are comprised of cash in hand, deposits held at call with banks, net of overdrafts and all highly liquid investments with maturities within three months.

(d) Short-term investments and investments in securitiesInvestment securities are classified and accounted for in accordance with management’s intent. Marketable other securities, which are not classified as either trading securities or held-to-maturity debt securities, are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of net assets. Non-marketable other securities are stated at cost. The cost of other securities sold is determined by the moving-average method. The Group classified all securities as other securities.

(e) InventoriesInventories are valued at cost determined by the moving-average method (with book values written down on the balance sheet based on decreased profitability of assets).

(f) Property, plant and equipment (excluding leased assets)Property, plant and equipment are stated at cost. Depreciation of the Company and consolidated domestic subsidiaries are computed primarily by the declining-balance method based on the estimated useful lives of assets. However, the straight-line method is used for buildings acquired on or after April 1, 1998(excluding facilities attached to buildings) and facilities attached to buildings or structures acquired on or after April 1, 2016.

010_7042701372908.indd 15 2017/08/07 16:11:42


Overseas consolidated subsidiaries depreciate property and equipment using the straight-line method on their estimated useful lives.The principal estimated useful lives are as follows: Buildings and structures 3 to 47 years Machinery and equipment 4 to 10 years

(g) Leased assetsFinancial leases other than those that are deemed to transfer the ownership of leased assets to the lessees are accounted for in a similar way to purchases and depreciation for leases assets is computed under the straight-line method with zero residual value over the lease term.

(h) Allowance for doubtful accountsAllowances for doubtful accounts are provided in amounts sufficient to cover possible losses on collection. Allowances for doubtful accounts of the Company and its consolidated domestic subsidiaries are calculated based on the companies’ past credit loss experience or on estimates of the individual uncollectible amounts. Allowances for doubtful accounts of consolidated overseas subsidiaries are calculated based on estimates of the individual uncollectible amounts.

(i) Retirement BenefitsThe retirement benefit obligations are attributed to each period by the benefit formula method.Actuarial gain or loss is amortized by the straight-line method over a certain period within the average remaining years of service of the eligible employees.

(j) Research and development costsResearch and development costs are charged to income as incurred.

(k) Income taxesDeferred income taxes are recognized by the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between financial reporting and the tax basis of the assets and liabilities. (l) Per share informationNet income per share is computed based on the average number of shares outstanding during each fiscal year.Diluted net income per share is not presented since there are no residual securities with dilutive effect upon exercise into common stock. Cash dividends per share are dividends applicable to the respective years including dividends to be paid after the end of the year.

(m) Consumption taxConsumption tax is not included in the stated amounts of net sales and cost of sales.

3. Changes in accounting policies(Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016)Effective from the consolidated fiscal year ended March 31, 2017, the company and domestic consolidated subsidiaries began applying the Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016 (Accounting Standards Board of Japan [ASBJ] Practical Issues Task Force [PITF] No.32 of June 17, 2016) as a result of revisions to Japan’s Corporate Tax Act. The solution was adopted to change from the declining-balance method to the straight-line method for the depreciation of facilities attached to buildings or structures acquired on or after April 1, 2016. The above change had only a negligible effect on profit and loss.

010_7042701372908.indd 16 2017/08/07 16:11:42


4. Short-term investments and investments in securitiesOther securities with market prices at March 31, 2017 and 2016 were as follows:

Other securities of which market values recorded in thebalance sheets exceed their acquisition costs:Equity securities ¥3,806 ¥9,848 ¥6,042 $33,923 $87,778 $53,855Bonds and debentures — — — — — —

Subtotal ¥3,806 ¥9,848 ¥6,042 $33,923 $87,778 $53,855

Other securities of which market values recorded in thebalance sheets do not exceed their acquisition costs:Equity securities ¥ 273 ¥ 210 ¥ (63) $ 2,435 $ 1,875 $ (560)Bonds and debentures 1,100 1,087 (13) 9,804 9,689 (115)

Subtotal ¥1,373 ¥ 1,297 ¥ (76) $12,239 $11,564 $ (675)Total ¥5,179 ¥11,145 ¥5,966 $46,162 $99,342 $53,180

Acquisitioncosts

Amountrecorded in the balance sheets

Difference

Thousands of U.S. dollars

2017

Acquisitioncosts


Difference

Millions of yen

2017

Securities without market prices at March 31, 2017 and 2016 were as follows:

Investments in unlisted stocks ¥402 ¥410 $3,584Investment in a limited liability partnership 11 24 98 ¥413 ¥434 $3,682


Thousands ofU.S. dollars

2017

Millions of yen


2016Amount

recorded in the balance sheets

2017

Other securities of which market values recorded in thebalance sheets exceed their acquisition costs:Equity securities ¥2,572 ¥6,723 ¥4,151Bonds and debentures 300 300 0

Subtotal ¥2,872 ¥7,023 ¥4,151

Other securities of which market values recorded in thebalance sheets do not exceed their acquisition costs:Equity securities ¥1,389 ¥1,307 ¥ (82)Bonds and debentures — — —

Subtotal ¥1,389 ¥1,307 ¥ (82)Total ¥4,261 ¥8,330 ¥4,069

Acquisitioncosts


Difference

Millions of yen

2016

010_7042701372908.indd 17 2017/08/07 16:11:42


5. InventoriesInventories at March 31, 2017 and 2016 were as follows:

6. Short-term loansShort-term loans at March 31, 2017 and 2016 were as follows:

7. Retirement BenefitsThe Company and consolidated subsidiaries have established funded and unfunded defined benefit plans and defined contribution plans. All defined benefit corporate plans are funded plans,which provide employees a lump-sum payment or pension payments based on salary level and length of service. Under the lump-sum payment plans, which are unfunded, lump-sum payments are provided based on salary level and length of service. The lump-sum payment plans, all of which are unfunded plans, for certain consolidated subsidiaries are accounted for using a simplified method for calculating the liability for retirement benefits and retirement benefit expenses.

Defined benefit plans(1) Reconciliation between the beginning balance and the ending balance of retirement benefit obligations were as follows:



2017

2017

Millions of yen

Millions of yen

2016

2016

2017

2017

Merchandise ¥ 500 ¥ 492 $ 4,459Finished goods 2,404 2,510 21,428Work in process 1,362 1,032 12,139Raw materials and supplies 3,048 2,878 27,164 ¥7,314 ¥6,912 $65,190

Short-term loans:0.18% to 0.33% unsecured loans from banks ¥1,750 ¥1,900 $15,599


2017

Millions of yen

20162017

Balance at April 1, 2016 ¥8,304 ¥8,078 $74,014Service cost 290 265 2,584Interest cost 28 103 247Actuarial differences (198) 917 (1,760)Retirement benefits paid (422) (490) (3,757)Decrease due to termination of retirement benefit plan — (540) —Other (2) (29) (18)

Balance at March 31, 2017 ¥8,000 ¥8,304 $71,310


2017

Millions of yen

20162017

Balance at April 1, 2016 ¥5,146 ¥5,932 $45,864Expected return on plan assets 180 203 1,605Actuarial differences 12 (386) 108Contributions paid by the employer 180 242 1,607Retirement benefits paid (287) (363) (2,560)Decrease due to termination of retirement benefit plan — (476) —Other — (6) —

Balance at March 31, 2017 ¥5,231 ¥5,146 $46,624

(2) Reconciliation between the beginning balance and the ending balance of plan assets were as follows:

010_7042701372908.indd 18 2017/08/07 16:11:42






2017

2017

2017

2017

Millions of yen

Millions of yen

Millions of yen

Millions of yen

2016

2016

2016

2016

2017

2017

2017

2017

Funded retirement benefit obligation ¥5,470 ¥5,792 $48,760Plan assets at fair value (5,231) (5,146) (46,624) 239 646 2,136Unfunded retirement benefit obligation 2,530 2,512 22,550Total Net liability (assets) for retirement benefit at March 31, 2017 ¥2,769 ¥3,158 $24,686

Net defined benefit liability ¥2,769 ¥3,158 $24,686Total Net liability (assets) for retirement benefit at March 31, 2017 ¥2,769 ¥3,158 $24,686

Service cost ¥290 ¥265 $2,584Interest cost 28 103 247Expected return on plan assets (180) (203) (1,605)Amortization: Unrecognized actuarial differences 95 (92) 851Gain on termination of retirement benefit plan — (26) —Other — (18) —Total retirement benefit costs for the fiscal year ended March 31, 2017 ¥233 ¥ 29 $2,077

Actuarial differences ¥305 ¥(1,388) $2,717Total balance at March 31, 2017 ¥305 ¥(1,388) $2,717

Unrecognized actuarial differences ¥(245) ¥(550) $(2,183)Total balance at March 31, 2017 ¥(245) ¥(550) $(2,183)

(3) Reconciliation between the beginning balance of retirement benefit obligations and plan assets and net defined benefit liability and asset recorded on the consolidated balance sheet were as follows:

(4) Components of retirement benefit costs were as follows:

(5) Components of remeasurements of defined benefit plan before income tax effect were as follows:

(6) Components of remeasurements of defined benefit plan before income tax effect were as follows:

20162017

Bonds 35% 41%General accounts 22 22Equity securities 20 19Other 23 18Total 100% 100%

(7) Plan assets

① Components plan assets by major categories as a percentage of total plan assets were as follows:

② Method determining expected long-term rate of return on plan assets Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered to determine expected long-term rate of return.

010_7042701372908.indd 19 2017/08/07 16:11:42


20162017

Discount rate 0.35% 0.35%Expected rate of return on plan assets 3.5% 3.5%Expected salary increase rate 2.8% 2.8%

(8) Basic assumptions used for actuarial calculation

(2) The effective tax rates reflected in the accompanying consolidated statement of income for the years ended March 31, 2017 and 2016 differs from the above statutory tax rate for the following reasons. A reconciliation between the above statutory tax rate and the effective tax rate for the year ended March 31, 2017 and 2016 is omitted because the difference is less than 5% of the statutory tax rate.

Defined contribution plansAmounts required to contribute to the defined contribution plans of certain consolidated subsidiaries was ¥14 million and ¥40 million for the year ended March 31, 2016 and 2017 respectively.

8. Income taxesThe Company and its domestic subsidiaries are subject to a number of Japanese income taxes, which, in the aggregate, resulted in a statutory tax rate of approximately 30.81% for the year ended March 31, 2017, 33.0% for the year ended March 31, 2016.

(1) Significant components of deferred tax assets and liabilities at March 31, 2017 and 2016 were as follows:


2017

Millions of yen

20162017

Deferred tax assets:Net defined benefit liability ¥ 863 ¥ 980 $ 7,692Impairment loss on fixed assets 505 453 4,499Loss on valuation of investments in subsidiaries and non-consolidated subsidiaries 305 232 2,717

Accrued bonuses 283 255 2,525Accrued enterprise tax 128 133 1,139Loss on revaluation of investments in securities 64 66 569Intercompany profits 59 57 525Allowance for doubtful account 53 60 475Other 251 211 2,243

Gross deferred tax assets 2,511 2,447 22,384Less: valuation allowance (988) (872) (8,805)Total deferred tax assets 1,523 1,575 13,579

Deferred tax liabilities:Net unrealized holding gain on other securities (1,808) (1,238) (16,111)Special tax-purpose reserve for condensed booking of fixed assets (281) (283) (2,507)Unrealized gains on consolidated subsidiaries (55) (80) (490)Tax deductible reserves (28) (29) (249)Other (4) (3) (38)

Gross deferred tax liabilities (2,176) (1,633) (19,395)Net deferred tax assets (liabilities) ¥ (653) ¥ (58) $ (5,816)

9. Shareholders’ EquityThe Corporation Law of Japan (the “Law”), provides that an amount equal to 10% of the amount to be disbursed as distributions of capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capital reserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of capital stock. Such distributions can be made at any time by resolution of the shareholders or by the Board of Directors if certain conditions are met.

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10. Comprehensive IncomeThe amount of recycling and amount of income tax effect associated with other comprehensive income at March 31, 2017 and 2016 were as follows:


2017

Millions of yen

20162017

Net unrealized holding gain (loss) on securities:Amount recognized in the period under review ¥1,955 ¥(1,417) $17,428Amount of recycling (60) (8) (534)

Before income tax effect adjustments 1,895 (1,425) 16,894Amount of income tax effect (569) 530 (5,079) Net unrealized holding gain (loss) on securities 1,326 (895) 11,815

Gain (loss) on deferred hedges:Amount recognized in the period under review 0 (0) 2Amount of recycling — — —

Before income tax effect adjustments 0 (0) 2Amount of income tax effect (0) 0 (0)Gain (loss) on deferred hedges 0 (0) 2

Foreign currency translation adjustments:Amount recognized in the period under review (221) (339) (1,970)Amount of recycling (42) — (375)

Before income tax effect adjustments (263) (339) (2,345)Amount of income tax effect — — —Foreign currency translation adjustments (263) (339) (2,345)

Remeasurements of defined benefit plansAmount recognized in the period under review 209 (1,289) 1,866Amount of recycling 95 (99) 851

Before income tax effect adjustments 304 (1,388) 2,717Amount of income tax effect (93) 438 (832)Remeasurements of defined benefit plans 211 (950) 1,885

Share of other comprehensive income in equity method affiliates:Amount recognized in the period under review 3 (21) 33Amount of recycling (1) (4) (12)

Share of other comprehensive income in equity method affiliates: 2 (25) 21Total other comprehensive income 1,276 2,209 11,378

11. Supplemental information on statements of cash flowsReconciliations between cash and cash equivalents in the accompanying consolidated statements of cash flows and cash and deposits in the accompanying consolidated balance sheets at March 31, 2017 and 2016 were as follows:

12. Subsequent eventBoard of Directors resolved the following appropriation of retained earnings at the meeting held on April 26, 2017.



2017

Millions of yen

Millions of yen

20162017

Cash and deposits ¥33,464 ¥28,110 $298,280Time deposits with maturities in excess of three months (500) (1,000) (4,458)Cash and cash equivalents ¥32,964 ¥27,110 $293,822

Cash dividends ¥890 $7,932

010_7042701372908.indd 21 2017/08/07 16:11:42


13. Financial instrumentsStatus of financial instruments(1) Policy on financial instruments

The Company and its significant subsidiaries (the “Group”) raise funds by bank borrowings, and manage funds through short-term deposits and others. The purpose of derivative transactions is avoiding the risks as described hereinafter, and transactions are not carried out for speculative purposes.

(2) Types of financial instruments and related riskTrade notes and accounts receivable are exposed to credit risk of customers. As the Group operates globally, foreign currency denominated trade notes and accounts receivable are subject to foreign exchange fluctuations. The Group hedges risks arising from fluctuations in foreign exchange rates with foreign forward exchange contracts. Marketable securities and investments in securities are mainly shares of companies, with which the Group has business relationship or has capital affiliations, and are exposed to market price fluctuation risk. Trade notes and accounts payable and accrued liabilities are mostly payables within one year. While partly exposed to foreign exchange risks from imports of raw materials and others, the Group hedges with forward foreign exchange contracts. Short-term loans are mainly to secure the funding needed for operations.Derivative transactions are forward foreign exchange contracts entered into in order to avoid the risk arising from fluctuations in foreign currency exchange rates related to trade receivables and payables.

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

In keeping with its credit managements rules, The Group regularly monitors the statuses of customers with outstanding operating receivables and oversees dates and balances, while endeavoring to swiftly identify and ameliorate collection concerns that could stem from deteriorating financial positions or other factors.To minimize the credit risk when entering into derivative transactions, counterparties are limited to financial institutions with high ratings.

(b) Monitoring of market risks (the risks arising from fluctuations in foreign exchange rates, interest rates and others)The Company and certain consolidated subsidiaries hedge risks arising from fluctuations in foreign exchange rates, which are relevant to trade note receivables and payables, and are analyzed by currency and settlement month, by using forward foreign exchange contracts. The Group assesses the prices of marketable and investment securities and the financial positions of issuers (business partners).It factors in relationships with business partners in constantly reviewing the necessity of instruments.For derivative transactions, international division enter into the transaction, and is reported to the responsible directors.

(c) Monitoring of liquidity risk (the risk of being unable to make payment on payment date)The Accounting division of the Company prepares funding plans in a timely manner based on reports submitted by each department to manage liquidity risk.

(4) Supplementary explanation of the fair value of financial instrumentsThe amounts of the contracts related to derivative transactions listed in the following section do not in themselves indicate the market risk of derivative transactions.

Fair value of financial instrumentsThe amounts recorded in the consolidated balance sheets, the fair value and the difference at March 31, 2017 and 2016 were as follows. Financial instruments for which it is deemed extremely difficult to determine the fair value are not included. (Please refer to Note 2 below.)

010_7042701372908.indd 22 2017/08/07 16:11:42


Millions of yen

March 31, 2017 Carrying value Fair value Difference

(1) Cash and deposits ¥33,464 ¥33,464 —(2) Trade notes and accounts receivable 27,464 27,464 —(3) Marketable securities and investments in securities

Other securities 11,145 11,145 —(4) Long-term time deposits 18,000 18,000 —Total assets ¥90,073 ¥90,073 —(1) Trade notes and accounts payable ¥15,346 ¥15,346 —(2) Short-term loans 1,750 1,750 —(3) Other accounts payable 1,303 1,303 —Total liabilities ¥18,399 ¥18,399 —Total derivative transactions ¥ (0) ¥ (0) —Net receivables and payables from derivative transactions are presented, with net payables in totals shown in parentheses.



(1) Cash and deposits $298,280 $298,280 —(2) Trade notes and accounts receivable 244,799 244,799 —(3) Marketable securities and investments in securities

Other securities 99,342 99,342 —(4) Long-term time deposits 160,442 160,442 —Total assets $802,863 $802,863 —(1) Trade notes and accounts payable $136,785 $136,785 —(2) Short-term loans 15,599 15,599 —(3) Other accounts payable 11,615 11,615 —Total liabilities $163,999 $163,999 —Total derivative transactions $ (0) $ (0) —Net receivables and payables from derivative transactions are presented, with net payables in totals shown in parentheses.

Millions of yen


(1) Cash and deposits ¥28,110 ¥28,110 —(2) Trade notes and accounts receivable 26,756 26,756 —(3) Marketable securities and investments in securities

Other securities 8,330 8,330 —(4) Long-term time deposits 18,500 18,513 13Total assets ¥81,696 ¥81,709 13(1) Trade notes and accounts payable ¥14,802 ¥14,802 —(2) Short-term loans 1,900 1,900 —(3) Other accounts payable 1,231 1,231 —Total liabilities ¥17,933 ¥17,933 —Total derivative transactions ¥ 1 ¥ 1 —Net receivables and payables from derivative transactions are presented, with net payables in totals shown in parentheses.

Note 1: Methods to determine the fair value of financial instruments and other matters related to securities and derivative transactions were as follows:

Assets(1) Cash and deposits (2) Trade notes and accounts receivable

Since these items are mostly settled in a short period, their carrying value approximates fair value.(3) Marketable securities and investments in securities

The fair value of stocks is based on quoted market price. The fair value of debt securities is based on the prices provided by the financial institutions making markets in these securities.

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(4) Long-term time depositsThe fair value of long-term time deposits based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new long-term time deposits are entered into.

Liabilities(1) Trade notes and accounts payable (2) Short-term loans (3) Other accounts payable

Since these items are mostly settled in a short period, their carrying value approximates fair value. Trade notes and accounts payable are partially translated at the rate of forward foreign exchange contract.

Note 2: Financial instruments for which it is extremely difficult to determine the fair value were as follows:


2017

Millions of yen

20162017

Investments in non-consolidated subsidiaries and affiliates ¥3,005 ¥3,169 $26,787Investments in unlisted stocks 402 410 3,584Investments in limited liability partnership 11 24 98Because no quoted market prices are available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the preceding table.

Millions of yen

March 31, 2017 Over 1 yearWithin 5 yearsWithin 1 year Over 5 years

Within 10 years Over 10 years

Cash and deposits ¥33,464 — — —Trade notes and accounts receivable 27,464 — — —Marketable securities and Investments in securitiesOther securities with maturities (bonds) — 400 700 —Long-term time deposits — 1,000 14,000 3,000Total ¥60,928 ¥1,400 ¥14,700 ¥3,000

Millions of yen



Cash and deposits ¥28,110 — — —Trade notes and accounts receivable 26,756 — — —Marketable securities and Investments in securitiesOther securities with maturities (bonds) 300 — — —Long-term time deposits — 1,500 17,000 —Total ¥55,166 ¥1,500 ¥17,000 —




Cash and deposits $298,280 — — —Trade notes and accounts receivable 244,799 — — —Marketable securities and Investments in securitiesOther securities with maturities (bonds) — 3,565 6,239 —Long-term time deposits — 8,913 124,788 26,740Total $543,079 $12,478 $131,027 $26,740

Note 3: Redemption schedule for monetary claims and investments in securities with maturities March 31, 2017 and 2016.

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(c) Information about net sales, profit, assets and other items by reportable segments for the years ended March 31, 2017 and 2016.

Reportable segments

Millions of yen

Year ended March 31, 2017 Public Sector Private Sector Reportablesegments total

Sales to customers ¥30,467 ¥37,359 ¥67,826Intersegment 4 102 106

Total sales 30,471 37,461 67,932Segment profits ¥ 4,116 ¥ 6,473 ¥10,589Segment assets ¥39,799 ¥49,157 ¥88,956Other:

Depreciation and amortization 390 798 1,188Impairment loss on fixed assets 131 44 175Increase in property, plant and equipment and intangible assets 226 376 602

Reportable segments



Sales to customers $271,564 $333,001 $604,565Intersegment 33 907 940

Total sales 271,597 333,908 605,505Segment profits $ 36,688 $ 57,700 $ 94,388Segment assets $354,750 $438,156 $792,906Other:

Depreciation and amortization 3,475 7,116 10,591Impairment loss on fixed assets 1,175 388 1,563Increase in property, plant and equipment and intangible assets 2,015 3,348 5,363

Reportable segments

Millions of yen


Sales to customers ¥31,866 ¥38,257 ¥70,123Intersegment 0 79 79

Total sales 31,866 38,336 70,202Segment profits ¥ 4,230 ¥ 6,089 ¥10,319Segment assets ¥36,860 ¥46,978 ¥83,838Other:

Depreciation and amortization 433 927 1,360Impairment loss on fixed assets 17 9 26Increase in property, plant and equipment and intangible assets 482 656 1,138

14. Business segment information(a) Description of reportable segmentsReportable segments of the Sekisui Jushi Group are determined as segments whose separate financial information is accessible from among the constituent units of the Sekisui Jushi Group and that are the subject of periodical examinations, in order for management to determine the allocation of management resources.The reportable segments of the Sekisui Jushi Group are composed of two segments, “Public sector” and “Private sector”.

(b) Method of measurement of the amounts of sales, profit, assets, and other items for each reportable segmentThe accounting policies of the reportable segments are consistent with the descriptions in the summary of significant policies.The reportable segment profit is based on operating income.Intersegment income and transactions are based on market prices.

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(d) Differences between total amounts for reportable segments and amounts in the consolidated balance sheets or consolidated statements of income and main details ofthese differences (matters relating to difference adjustments)


2017

Millions of yen

20162017

Reportable segments total ¥67,932 ¥70,202 $605,505Elimination of intersegment transactions (106) (79) (940)Net sales in the consolidated statements of income ¥67,826 ¥70,123 $604,565

Net sales



2017

2017

Millions of yen

Millions of yen

2016

2016

2017

2017

20162017 20162017

2017

Reportable segments total ¥10,589 ¥10,319 $94,388Head office expenses* (682) (654) (6,085)Operating income in the consolidated statements of income ¥ 9,907 ¥ 9,665 $88,303

Reportable segments total ¥ 88,956 ¥ 83,838 $ 792,906Company-wide assets* 30,219 27,889 269,356Total assets in the consolidated balance sheets ¥119,175 ¥111,727 $1,062,262

Segment profits

Segment assets

* Head office expenses are mainly general and administrative expenses and research and development costs not attributable to any reportable segments.

* Company-wide assets mainly consists of the investments in securities are not attributable to any reportable segments and so on.

Millions of yen


Other items

Other items

Reportable segments total The amount in the consolidatedfinancial statements

Reportablesegments

total

The amount in the consolidated

financial statements

Depreciation and amortization ¥1,188 ¥1,360 ¥1,188 ¥1,360Impairment loss on fixed assets 175 26 175 26Increase in property, plant and equipment andintangible assets 602 1,138 602 1,138

Depreciation and amortization $10,591 $10,591Impairment loss on fixed assets 1,563 1,563Increase in property, plant and equipment and intangible assets 5,363 5,363

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Report of Independent Auditors

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Board of Management

Corporate Data

(As of June 29, 2017)

(As of March 31, 2017)

Chairman of the Board and CEO

Yaichiro Fukui

President and COO

Hiroshi Baba

Director and Managing Executive Officer

Jun Hamada

Outside Directors

Shiro WakuiKazuhiko MasudaUmeo Irie

Director and Executive Officers

Yutaka ShibanumaKazuyoshi HayashiEiji Sasaki

Corporate Auditors

Takashi KawarabayashiNaoki Hayakawa

Outside Auditors

Moritoshi NaganumaShigeo SasakiTsuchikazu Oonaka

Managing Executive Officer

Teruo Nakano

Executive Officers

Noboru IshizukaToshihiko YamadaTomohisa KoyamaShuichiro TakabayashiHiroo MoriyamaHiroyuki FukumotoTomoyuki KikuchiKatsuyoshi Sasaki

Directors and Auditors Executive Officers

Plants and Laboratory

Shiga PlantRyuo-cho, Gamo-gun, Shiga

Tsuchiura Tsukuba PlantTsuchiura, Ibaraki

Hiroshima Tojo PlantShobara, Hiroshima

Ishikawa PlantNomi, Ishikawa

Technical Research LaboratoryRyuo-cho, Gamo-gun, Shiga

Consolidated subsidiaries28 companies

Affiliates accounted for using the equity method2 companies

Head OfficeDojima Kanden Bldg., 2-4-4, Nishitenma, Kita-ku,Osaka 530-8565

Tokyo Head OfficeNew Pier Takeshiba North Tower,1-11-1, Kaigan, Minato-ku,Tokyo 105-0022

Domestic Branches

Kanto BranchMinato-ku, Tokyo

Kinki Hokuriku BranchOsaka

Chubu BranchNagoya

Kyushu BranchFukuoka

Tohoku BranchShibata-cho, Shibata-gun, Miyagi

Chugoku Shikoku BranchHiroshima

EstablishmentNovember 26, 1954

Common Stock

Authorized: 128,380,000

Issued: 47,313,598

Capital: ¥12,334,565,623

Listings:First Section of Tokyo Stock Exchange

Transfer agent:The Mitsubishi UFJ Trust andBanking Corporation3-6-3, Fushimimachi, Chuo-ku,Osaka 541-8502

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Global Network of Sekisui Jushi Group (As of March 31, 2017)

International Group Companies

Domestic Group Companies

Sekisui Jushi Corporation

Wuxi Sekisui Jushi Strapping Co., LtdManufacture and sales of strapping bands

Summit Strapping CorporationManufacture and sales of strapping bands

Sekisui Jushi Europe Holdings B.V.Holding company in Europe

Sekisui Jushi Strapping B.V.Manufacture and sales of strapping bands

Jislon (Europe) B.V.Sales of traffic safety materials

Sekisui Jushi (Thailand) Co., LtdManufacture and sales of automotive parts related products and injection types mold

Sekisui Jushi Plametal (Thailand) Co., LtdManufacture and sales of aluminum composite panels

Tohoku Sekisui Jushi Co.,Ltd.

Kantou Sekisui Jushi Co.,Ltd.

Sekisui Jushi CAP-AI System Co.,Ltd.

Nippon Liner Co.,Ltd

Sekisuijushi Plametal Corporation

SJC Kotobuki Corporation

Spacio.Co.,Ltd

Ohmi Tec Corporation

Sekisui Jushi Denshi Techno Corporation

Sekisui Jushi Trading Co.,Ltd.

Sekisui Jushi Sansho Co.,Ltd

San-ei Polymer Co.,Ltd.

Miyazaki Sekisui Jushi Co.,Ltd.

Road Enterprise Co.,Ltd

Tsuchiura-tsukuba Sekisuijushi Corporation

Hokuriku Sekisui Jushi Co.,Ltd.

Siga Sekisui Jushi Corporation

Hiroshima Sekisui Jushi Co.,Ltd.

Other functions sharing companies

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Annual Report 2017for the year ended March 31, 2017

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Documents

Annual Report 2017 - 積水樹脂株式会社 has lived up to its corporate slogan: Creation of New Values – through the development of new materials and the compounding of plastics