integration and enhancement · tria juncta in uno–contributions” toppan forms–an innovative...

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RMS REPO

RT 2016

TOPPAN FORMS REPORT 2016Year ended March 31, 2016

INTEGRATION AND

ENHANCEMENT

e TOPPAN FORMS REPORT 2016

MANAGEMENT PHILOSOPHY

“SAN-EKI ICHIJO– Tria juncta in uno–Contributions”Toppan Forms–An Innovative Business PioneerThe business origin of Toppan Forms Co., Ltd., is found in its management philosophy of “san-eki

ichijo–tria juncta in uno–contributions.” This philosophy has been passed down continuously

over the years and has served as the fundamental meaning of the Company’s existence. “San-eki

ichijo” refers to three kinds of benefits: societal benefits, corporate benefits, and individual

benefits. Societal benefits are those that contribute to economic development by creating new

value that answers the needs of society and meets the expectations of customers. Corporate

benefits are those that help realize sustainable growth by raising profits through fair business

activities. Individual benefits are those that build a prosperous lifestyle for each of our employ-

ees and allow them to conduct their work with pride and a sense of mission. In order to realize

these three kinds of benefits, we have been developing our business as an innovative business

pioneer in a way that clearly differentiates ourselves from a typical business forms manufacturer.

Toppan Forms’ Well-Established History in Business Innovation

CONTENTS

1 Integration and Enhancement

4 Consolidated Financial Highlights

6 To Our Stakeholders

8 A Message from the President

12 Review of Operations

20 Corporate Governance

26 Board of Directors

28 Research and Development

30 Human Resources

31 Corporate Social Responsibility

32 Financial Section

62 Corporate Information

62 Principal Subsidiaries and A�liates

63 Investor Information

About this Toppan Forms Report

Toppan Forms Report 2016 has been published

to serve as a communication tool to help the

Company develop stronger trust-based relation-

ships with its shareholders and other investors

as well as all of its other stakeholders. The pur-

pose of this report is not only to disclose infor-

mation regarding the Company’s operating

performance, financial position, and manage-

ment initiatives, but it is also to deepen the

reader’s understanding of the superior position

that the Company has developed in the fields

of printing, information management,

and communication.

Toppan Forms Report 2016 focuses on expanding

information on our ESG (environment, social, and

governance) activities in order to facilitate an

understanding of our long-term value creation

among all of our stakeholders.

Toppan Forms views business forms as a vessel for information rather than mere slips of paper. By changing the composition of that vessel, whether it is paper, plastic, or some type of online content, the Company has created a wide variety of products and solutions. In addition, through the strong security systems we have established in order to handle valuable information, we have built strong relationships with its customers based on trust. Bringing together the accomplishments we have made throughout the years, we will work to realize sustainable growth by venturing into new business domains.

TOPPAN FORMS REPORT 2016 11

The Position Toppan Forms Has Established over the Years

Net Sales

¥273.2 billion

Operating Income

¥13.7 billion

Operating Income Margin

5.0 %

ROE

5.8 %

in the printing business

share in the domestic business forms market

share in the domestic data print services (DPS) market

A Company Evaluated Highly by Society

Diversity Management Selection 100*1

Selected in 2014

Competitive IT Strategy Company brand*2

Selected for two consecutive years

Nadeshiko Brand*2

Selected for three consecutive years

Health and Productivity Management brand*2

Selected for the �rst time in 2016

*1 Selections are made by the Ministry of Economy, Trade and Industry (METI), and a company can only be selected once.*2 Selections are made by METI and the Tokyo Stock Exchange. Selections are carried out every year, with the selected companies

being replaced each year.

Consolidated Business Performance in Fiscal 2016

No. 3

No. 1

No. 1

2 TOPPAN FORMS REPORT 2016

Aspirations for Sustainable Growth across Four Businesses

Centered on Vessels for InformationSince its establishment as a company specializing in business forms, Toppan Forms has expanded

beyond business forms to create unprecedented products and solutions in a variety of domains,

guided by its efforts to meet the changing needs of customers from generation to generation.

At the time of its foundation, Toppan Forms dealt only in the domain of business forms, a specific

domain within the printing business. Today, we have expanded our range of businesses to include

data print services (DPS), business process outsourcing (BPO), information and communications

technology (ICT), merchandise businesses, and overseas businesses. In these ways, we have trans-

formed into a company that provides a wide variety of solutions and is no longer contained within

the framework of being just a printing company.

* This integrated report presents Toppan Forms’ operations in four business segments to reflect the actual conditions of the Company’s business activities. For accounting purposes, the Financial Review section divides the Company’s business into two segments.

Overseas Business

Printing Business

(Business forms)

(DPS)(BPO)(Others)

Merchandise Business

ICT Business Printing Business

(Business forms)

Sales Composition Ratio for Fiscal 2016*

Security systems

Original business domains

Customer base

The Competitive Edge of Toppan Forms

7.7 %

68.0 %5.4 %

18.9 %


Net Sales

¥300.0 billion

Operating Income

¥20.0 billion

Operating Income Margin

6.7 %

ROE

7.0 %

With the adoption of “accelerate business expansion in the information management domain” in its medium-term management plan,

Toppan Forms is working to develop highly profitable products and solutions unique to the Company.

Creating new payment scenarios through the development of an

e-money payment platform

Developing businesses and BPO ser-vices that respond to both paper and digital media for government agen-cies as well as for manufacturing and other industries

Supporting the design of more e�ective noti�cation materials from a neuroscienti�c perspec-tive by measuring and analyzing eye movement and brain waves

Consolidated Financial Targets

for Fiscal 2021

Creation of Businesses as an Innovative Business Pioneer That Anticipates Global Trends

Following the accelerated progression of IT in various fields, including IoT and FinTech, the needs of the market have become even more diverse. With a focus on this rapidly evolving operating environment, Toppan Forms is leveraging its long-cultivated technologies in information management to develop new businesses. Specifically, we are creating unique solutions that differ from our competitors. Such solutions include services that combine both paper and digital media, highly specialized BPO services, a cloud-based electronic money (e-money) payment platform, and a total support service for business forms that leverages data analysis. By providing these unique solutions, we will continue to achieve sustainable growth while contributing to the realization of an affluent society and establishing next-generation de facto standards.


(Millions of yen) (Thousands of U.S. dollars*1)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016

Business Results Net sales ¥212,327 ¥219,197 ¥228,565 ¥235,895 ¥231,617 ¥224,305 ¥227,049 ¥243,799 ¥261,411 ¥265,886 ¥273,217 $2,424,717 Operating income 15,717 16,088 15,178 15,687 12,997 10,308 10,908 11,887 12,270 12,607 13,675 121,358 Operating income margin (%) 7.4 7.3 6.6 6.6 5.6 4.6 4.8 4.9 4.7 4.7 5.0 – Profit attributable to owners of parent 9,392 9,684 8,752 8,791 7,512 5,030 5,590 7,109 7,322 7,835 9,361 83,074 R&D expenditure 2,174 2,242 2,556 2,697 2,258 2,413 2,269 2,075 1,928 1,781 1,497 13,283 Capital expenditure 5,851 10,173 9,828 9,619 10,275 11,261 5,596 12,998 10,317 6,334 7,555 67,045 Depreciation 4,835 5,013 6,369 8,561 8,904 8,512 8,566 7,470 8,375 8,633 9,159 81,282

Financial Position Total assets ¥182,705 ¥186,902 ¥185,237 ¥185,636 ¥187,094 ¥186,576 ¥190,550 ¥200,510 ¥208,005 ¥224,358 ¥228,612 $2,028,860 Total net assets 118,432 125,285 127,888 133,894 138,631 140,886 143,701 150,264 155,308 163,916 165,785 1,471,287

Cash Flows Net cash provided by operating activities ¥13,319 ¥10,625 ¥ 13,524 ¥ 15,685 ¥14,520 ¥ 17,427 ¥11,670 ¥17,183 ¥ 13,882 ¥26,420 ¥14,362 $127,460 Net cash used in investing activities (5,458) (8,247) (11,948) (10,110) (9,783) (12,504) (5,898) (8,822) (15,927) (7,790) (5,467) (48,521) Free cash flow 7,861 2,378 1,576 5,575 4,737 4,923 5,772 8,361 (2,045) 18,630 8,895 78,939 Net cash used in financing activities (4,074) (2,805) (6,420) (3,488) (3,768) (3,575) (3,242) (2,950) (2,675) (2,933) (2,831) (25,125)

Per Share Data*2 (yen) Net income per share ¥ 81.42 ¥ 84.98 ¥ 77.24 ¥ 79.20 ¥ 67.68 ¥ 45.32 ¥ 50.37 ¥ 64.05 ¥ 65.96 ¥ 70.59 ¥ 84.33 $ 0.75 Shareholders’ equity per share 1,082.39 1,129.46 1,162.99 1,199.04 1,245.62 1,263.23 1,289.67 1,348.07 1,393.46 1,457.40 1,475.11 13.09 Cash dividends per share 24.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 0.22

Financial Indicators (%) Return on equity (ROE) 7.9 7.7 6.8 6.7 5.5 3.6 3.9 4.9 4.8 5.0 5.8 Return on assets (ROA) 5.1 5.2 4.7 4.7 4.0 2.7 2.9 3.5 3.5 3.5 4.1 Equity ratio 67.6 68.9 69.7 71.7 73.9 75.2 75.1 74.6 74.4 72.1 71.6

Non-Financial Data Number of employees (consolidated) 6,224 6,483 6,641 7,357 7,529 7,598 7,715 7,827 11,429 11,964 12,049 Percentage of female employees (non-consolidated) (%) 11.2 11.6 12.5 13.2 13.7 14.1 17.4 18.0 18.3 19.5 20.0 Percentage of female managers (non-consolidated) (%) 0.8 0.8 1.2 2.2 2.1 2.3 2.7 3.0 3.9 4.6 4.8 CO2 emissions*3 (t-CO2) 48,812 47,612 49,732 50,750 50,389 52,723 48,950 47,776 49,670 49,227 48,731 Volume of waste generated (t) 28,716 28,715 30,400 29,101 27,756 26,955 26,176 24,053 24,153 25,080 24,541

*1 U.S. dollar amounts have been converted from yen, for convenience only, at the rate of ¥112.68 = US$1, as at March 31, 2016.

*2 The computations of net income per share and shareholders’ equity per share are based on the weighted-average number of common stock outstanding during each year. Treasury stock held during each year are excluded. Cash dividends per share represent the actual amounts applicable to the earnings of the respective years.

*3 CO2 emissions were calculated based on the Ministry of the Environment’s Guidelines for the Calculation Method for Greenhouse Gas Emissions from Businesses (2003).

70,000

0

140,000

210,000

280,000

12 13 14 15 160

4,000

8,000

12,000

16,000

0

1.5

3.0

4.5

6.0

12 13 14 15 160

2,500

5,000

7,500

10,000

0

1.5

3.0

4.5

6.0

0

60,000

120,000

180,000

240,000

12 13 14 15 16

Net Sales / Operating Income

(Millions of yen) (Millions of yen)

Profit Attributable to Owners of Parent / ROE(Millions of yen) (%)

Total Assets / ROA

(Millions of yen) (%)

Net Sales Operating Income (right) Profit Attributable to Owners of Parent ROE (right)

Total Assets ROA (right)

CONSOLIDATED FINANCIAL HIGHLIGHTS Toppan Forms Co., Ltd. and Consolidated Subsidiaries Year ended March 31


0

50,000

100,000

150,000

200,000

0

25.0

50.0

75.0

100.0

12 13 14 15 16–30,000

–15,000

0

15,000

30,000

12 13 14 15 16 12 13 14 15 160

25

50

75

100

Total Net Assets / Equity Ratio

(Millions of yen) (%)

Cash Flows

(Millions of yen)

Net Income Per Share

(Yen)

Total Shareholders’ Equity

Equity Ratio (right)

Net Cash Provided by Operating Activities

Net Cash Used in Investing Activities

Net Cash Used in Financing Activities

(Millions of yen) (Thousands of U.S. dollars*1)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2016

Business Results Net sales ¥212,327 ¥219,197 ¥228,565 ¥235,895 ¥231,617 ¥224,305 ¥227,049 ¥243,799 ¥261,411 ¥265,886 ¥273,217 $2,424,717 Operating income 15,717 16,088 15,178 15,687 12,997 10,308 10,908 11,887 12,270 12,607 13,675 121,358 Operating income margin (%) 7.4 7.3 6.6 6.6 5.6 4.6 4.8 4.9 4.7 4.7 5.0 – Profit attributable to owners of parent 9,392 9,684 8,752 8,791 7,512 5,030 5,590 7,109 7,322 7,835 9,361 83,074 R&D expenditure 2,174 2,242 2,556 2,697 2,258 2,413 2,269 2,075 1,928 1,781 1,497 13,283 Capital expenditure 5,851 10,173 9,828 9,619 10,275 11,261 5,596 12,998 10,317 6,334 7,555 67,045 Depreciation 4,835 5,013 6,369 8,561 8,904 8,512 8,566 7,470 8,375 8,633 9,159 81,282

Financial Position Total assets ¥182,705 ¥186,902 ¥185,237 ¥185,636 ¥187,094 ¥186,576 ¥190,550 ¥200,510 ¥208,005 ¥224,358 ¥228,612 $2,028,860 Total net assets 118,432 125,285 127,888 133,894 138,631 140,886 143,701 150,264 155,308 163,916 165,785 1,471,287

Cash Flows Net cash provided by operating activities ¥13,319 ¥10,625 ¥ 13,524 ¥ 15,685 ¥14,520 ¥ 17,427 ¥11,670 ¥17,183 ¥ 13,882 ¥26,420 ¥14,362 $127,460 Net cash used in investing activities (5,458) (8,247) (11,948) (10,110) (9,783) (12,504) (5,898) (8,822) (15,927) (7,790) (5,467) (48,521) Free cash flow 7,861 2,378 1,576 5,575 4,737 4,923 5,772 8,361 (2,045) 18,630 8,895 78,939 Net cash used in financing activities (4,074) (2,805) (6,420) (3,488) (3,768) (3,575) (3,242) (2,950) (2,675) (2,933) (2,831) (25,125)

Per Share Data*2 (yen) Net income per share ¥ 81.42 ¥ 84.98 ¥ 77.24 ¥ 79.20 ¥ 67.68 ¥ 45.32 ¥ 50.37 ¥ 64.05 ¥ 65.96 ¥ 70.59 ¥ 84.33 $ 0.75 Shareholders’ equity per share 1,082.39 1,129.46 1,162.99 1,199.04 1,245.62 1,263.23 1,289.67 1,348.07 1,393.46 1,457.40 1,475.11 13.09 Cash dividends per share 24.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 0.22

Financial Indicators (%) Return on equity (ROE) 7.9 7.7 6.8 6.7 5.5 3.6 3.9 4.9 4.8 5.0 5.8 Return on assets (ROA) 5.1 5.2 4.7 4.7 4.0 2.7 2.9 3.5 3.5 3.5 4.1 Equity ratio 67.6 68.9 69.7 71.7 73.9 75.2 75.1 74.6 74.4 72.1 71.6

Non-Financial Data Number of employees (consolidated) 6,224 6,483 6,641 7,357 7,529 7,598 7,715 7,827 11,429 11,964 12,049 Percentage of female employees (non-consolidated) (%) 11.2 11.6 12.5 13.2 13.7 14.1 17.4 18.0 18.3 19.5 20.0 Percentage of female managers (non-consolidated) (%) 0.8 0.8 1.2 2.2 2.1 2.3 2.7 3.0 3.9 4.6 4.8 CO2 emissions*3 (t-CO2) 48,812 47,612 49,732 50,750 50,389 52,723 48,950 47,776 49,670 49,227 48,731 Volume of waste generated (t) 28,716 28,715 30,400 29,101 27,756 26,955 26,176 24,053 24,153 25,080 24,541

*1 U.S. dollar amounts have been converted from yen, for convenience only, at the rate of ¥112.68 = US$1, as at March 31, 2016.

*2 The computations of net income per share and shareholders’ equity per share are based on the weighted-average number of common stock outstanding during each year. Treasury stock held during each year are excluded. Cash dividends per share represent the actual amounts applicable to the earnings of the respective years.

*3 CO2 emissions were calculated based on the Ministry of the Environment’s Guidelines for the Calculation Method for Greenhouse Gas Emissions from Businesses (2003).


TO OUR STAKEHOLDERS

Pioneering in a New Era with Information Management Solutions

Shu SakuraiChairman & CEO

Koichi SakataPresident & COO


Through a resolution passed at the General Meeting of Shareholders held in June 2016 and endorsed at a subsequent

Board of Directors’ meeting, Toppan Forms has instituted a new management structure. Under the new structure, the

Company has appointed Shu Sakurai as chairman and representative director and Koichi Sakata as president and

representative director.

In 1965, Toppan Forms was established as a joint venture between Japan’s largest comprehensive printing company

TOPPAN PRINTING CO., LTD., and the then world’s largest business forms manufacturer Moore Corporation Limited, of

Canada. Since then, Toppan Forms has been working to constantly create new products and solutions as well as advance

into new markets as an industry-leading company alongside the progression of computerization in Japan.

However, our development as a company has been far from an easy journey. In recent years, economic conditions

have worsened both in Japan and overseas due to impacts of global financial crises and the Great East Japan Earthquake.

In addition, the domestic market for the printing business, which represents Toppan Forms’ core business, has steadily

contracted, resulting in the continuation of extremely unfavorable circumstances for the Company.

Within this adverse operating environment, questions arise as to how we can realize sustainable growth.

In accordance with our management philosophy of “san-eki ichijo–tria juncta in uno–contributions,” we have stated

that the meaning of our existence is to proactively contribute to society as an innovative business pioneer. Based on this

premise, which could also be considered the origin of our foundation, we have adopted “to become the unparalleled

No. 1 in personal information handling with ‘overwhelming quality’ and ‘absolute security’,” as our basic management

policy and have worked to enhance both the quality of our services and the effectiveness of our solid security systems

that we have established through our business forms, DPS, and BPO operations. We have also made efforts to enhance

solutions centered on “information management.”

At the start of fiscal 2017, the year ending March 31, 2017, we introduced “accelerate business expansion in the infor-

mation management domain” as an additional policy to complement our basic management policy. Amid the wide

variety of crucial strategies that companies are implementing in their business activities, we have formulated the “information

strategy” to guide our actions in the information management domain, which we view as the greatest strength of the

Toppan Forms Group. In doing so, we have set out on a course to accelerate the expansion of businesses that specialize

in information management.

Our roots lie in the printing of business forms. However, not being constrained to the printing domain, we have been

working to transform ourselves into a company that offers a wide range of information management solutions. By taking

advantage of the opportunities the new management structure provides us, we will accelerate the speed of this transfor-

mation as we aim to realize sustainable growth through our unique business model.

In this endeavor, we would like to ask our stakeholders for your continued understanding and support.

August 2016

Shu SakuraiChairman & CEO



On Being Appointed Company PresidentMy name is Koichi Sakata. On June 29, 2016, I was appointed president and representative director of Toppan Forms. In coopera-

tion with chairman and representative director Shu Sakurai, I intend to lead the Toppan Forms Group on a path to further growth.

Under our current medium-term management plan, not only we are strengthening our existing businesses, we are also

aggressively making investments geared toward creating new businesses. In doing so, we are making efforts under a proactive

strategy to develop a pillar for future profits and realize medium-to-long-term growth. Over the half a century since its founding,

Toppan Forms has upheld the proud tradition of accomplishing growth. As president, I will put forth my best effort in order for

the Company to realize sustainable growth over the next 50 to 100 years.

Business PerformanceOperating EnvironmentIn the fiscal year under review, Japan’s economy made a gradual recovery as corporate earnings and the employment environ-

ment improved, primarily in non-manufacturing industries. On the other hand, consumer spending came to somewhat of a

standstill. Furthermore, there were concerns of economic slowdowns in emerging countries in Asia, including China, and in

resource-rich countries, in addition to the risk of a downturn in corporate earnings due to yen appreciation and falling stock prices.

As a result, the overall operating environment remained unstable.

Under these conditions, the Toppan Forms Group worked to secure new contracts in its BPO operations, centered on DPS,

while focusing its efforts on expanding sales in new businesses, such as original solutions that combine paper media with IT and

e-money payment platforms.

A MESSAGE FROM THE PRESIDENT


Maximizing Our Collective Value through

the Establishment of a Flexible Organization and

the Development of Dynamic Human Resources

Net Sales

¥273.2 billion (compared with previous fiscal year: +2.8% )

Operating Income

¥13.7 billion(compared with previous fiscal year: +8.5% )

Profit Attributable to Owners of Parent

¥9.4 billion (compared with previous fiscal year: +19.5% )


Consolidated Business Performance in the Fiscal Year under ReviewWith steady growth in our DPS and BPO businesses helping to drive overall growth, we achieved

increases in both sales and income for the fifth consecutive year in fiscal 2016. Specifically, net

sales rose 2.8% year-on-year, to ¥273.2 billion, operating income increased 8.5%, to ¥13.7 billion,

and profit attributable to owners of parent was up 19.5%, to ¥9.4 billion. As a result, the operat-

ing income margin edged up 0.3 percentage points, to 5.0%, and ROE rose 0.8 percentage

points, to 5.8%.

In addition to the increase in income that accompanied higher sales, we successfully reduced

costs through recent efforts to reorganize and consolidate our manufacturing bases. By reduc-

ing the number of domestic manufacturing bases from 40 to 26, we have lowered procurement

costs and promoted more efficient operations, thereby realizing significant cost reductions.

Going forward, we are examining further consolidation of our manufacturing bases, primarily in

the Tokai region, with the aim of ultimately maintaining about 20 bases.

Steady Implementation of Five Key InitiativesIn fiscal 2016, we adopted “accelerate business expansion in the information management domain” as an additional policy to com-

plement our basic management policy. This new policy helps to better clarify the strengths of the Group as well as the direction

toward which the Group should head and the domains on which it should focus. Specifically, we are implementing five key initia-

tives: combining paper media and IT; enhancing personalized marketing; maximizing effects of investments; strengthening the

revenue base; and creating work environments for greater job satisfaction.

1 Combining paper media and IT

Backed by our solid information security systems and thorough BCP systems, we are further sharpening our competitive edge by

leveraging our long-cultivated form management technology to enhance our lineup of services that combine paper media and

IT. In doing so, we are solidifying our position as a partner to our customers as they pursue business expansion. To promote this

key initiative, we launched the Enterprise Form Management Service (EFMS), which provides companies with total support for the

management of paper and digitalized business forms over their life cycle. Going forward, we will undertake initiatives to expand

the applications of EFMS, promoting the expansion of sales by targeting not only customers in the financial industry but also

those in the manufacturing and logistics industries as well as government agencies.

2 Enhancing personalized marketing

Aiming to realize optimal communication based on data analysis of individual customer attributes and behavior history, we are

making efforts to discover new markets by reinforcing our marketing capabilities and melding our content management technol-

ogies–a strongpoint of the Company–with variable data printing technologies. In the fiscal year under review, we took steps to

further improve the quality of our printing through the use of variable data printers, working to take on projects that require high

levels of printing quality in which variable data printing had been difficult to perform previously, such as the printing of direct

mail for cosmetic manufacturers. By reinforcing our operations in such upstream domains as data analysis, we aim to provide

highly competitive services that incorporate variable data printing technologies.

3 Maximizing effects of investments

To respond to the changing operating environment and expand our business, we are actively carrying out strategic investments.

These investments are intended to strengthen our functions in the field of IT, add value to our outsourcing services, and secure

new business partners, primarily in ASEAN countries.

As for specific examples of how we are implementing this key initiative, we established TF Payment Service Co., Ltd., in Japan in

December 2011. We have completed the development of the Thincacloud e-money payment platform, which is managed by TF

Payment Service, and have been making genuine progress in increasing the service’s sales in a variety of industries. In overseas,

we have been expanding conventional businesses as well as businesses in the domains of BPO and ICT. At the same time, we have

made strides in entering the markets of ASEAN countries, primarily through Data Products Toppan Forms Ltd., which became

a subsidiary in March 2015.


Further more, in addition to regular capital expenditure, we plan to carry out total investment of ¥10.0 billion by fiscal 2018

with a focus on the future. This undertaking will include strategic investments in M&A and new businesses, primarily in the fields

of IT services, BPO, project consulting, and overseas development.

4 Strengthening the revenue base

We are making efforts to improve profitability and promote products and solutions with high added value. These efforts include

reducing costs by consolidating manufacturing bases and raising productivity, reorganizing Group companies in an optimal

manner, and developing solutions that leverage our strengths.

In fiscal 2016, we promoted further reductions in manufacturing costs by capitalizing on the effects of consolidating our manu-

facturing bases, an effort we engaged in through fiscal 2015, and raising productivity. At the same time, we worked to increase

profits and innovate our business through proactive investments in IT. We are currently examining further consolidation of our

manufacturing bases, primarily in the Tokai region, as we aim to strengthen our revenue base even more going forward.

5 Creating work environments for greater job satisfaction

By promoting “diversity and integration,” we are working to foster a corporate culture that encourages women to play an active

role and realizes a work-life balance and appropriate health management for our employees, thereby increasing job satisfaction.

While it goes without saying, our growth as a company is linked to the personal growth and development of our employees.

As such, we will accelerate initiatives to cultivate outstanding human resources that support the sustainable growth of the Group

as well as efforts to create work environments that fosters greater job satisfaction.

Through these five key initiatives, we aim to achieve net sales of ¥300.0 billion, up 9.8% compared with the year ended March 31,

2016, operating income of ¥20.0 billion, up 46.3%, an operating income margin of 6.7%, up 1.7 percentage points, and ROE of 7.0%, up

1.2 percentage points by fiscal 2021.

Strategies of Corporate Activities and Business Domains of Toppan Forms

Accelerate business expansion in the Information Management domain

1 Combining paper media and IT

2 Enhancing personalized marketing

3 Maximizing effects of investments

4 Strengthening the revenue base

5 Creating work environments for greater job satisfaction

Corporatecommunication

domain

Informationstrategy　Database,

big data

Informationdomain

Promotion &advertising strategy

Campaigns,events, �yers,

POP advertisingcatalogs

Product strategyPacking, materials,

books, publications,electronics

Branding & publicrelations strategy

Corporate public relations,cultural activities

Corporateactivities

Toppan Forms


Toward Realizing Sustainable GrowthAiming to Improve the Transparency of Our ManagementAmid the growing interest toward corporate governance, Japanese corporations are pushing for various reforms to existing cor-

porate governance structures. In November 2015, we announced our Corporate Governance Basic Policy, which lays out our basic

approach and status of initiatives with regard to corporate governance.

Additionally, in July 2016, we reduced the number of Company directors from 15 to 11 and increased the number of outside

directors to two. In this way, we are making efforts to transform our corporate governance structure into one that encourages

efficient and prompt decision making as well as more substantive debate. While I can say with confidence that we have been

holding free and lively debate at meetings of the Board of Directors for many years, these recent reforms ensure that discussions

will be held in a more constructive and meaningful manner. Also, to more clearly separate the roles of management and business

execution, we will continue to promote governance reforms that ensure the fairness and transparency of our management,

including the appointment of additional outside directors.

Improving Our Ability to Respond to Changes through a Diverse Group of Human ResourcesAs we aim to realize growth amid rapidly changing social conditions, I believe that the role our human resources play will become

even more significant. While we started out as a company specializing in business forms, we now engage in a wide variety of

businesses, a reflection of the major changes that markets have undergone over the past half a century. Going forward, the

importance of developing flexible human resources who have the ability to respond to change will increase further.

Moreover, responding appropriately to change is essential for us as an organization. The continual creation of new products,

services, and technologies calls for a high level of business sensitivity that can anticipate market trends as well as in-house sys-

tems where anticipated trends can be accurately communicated to relevant departments. It is also necessary to have sufficient

R&D capabilities to create products that can actually respond to new market trends as well as enough strength on an organiza-

tional level and on an individual level to tie all of these aspects together. I believe that forming a flexible organization that

encourages open communication will help us to improve the way we respond to change.

By drawing on the diversity of human resources from various backgrounds, we are enhancing the ability for our employees and

the Company as a whole to respond appropriately to change. In order to maximize the Group’s collective value, I intend to put a

greater focus on developing and utilizing human resources.

Together with Our StakeholdersShareholder ReturnsIn regard to our policy on shareholder returns, we consider the consolidated payout ratio to be an important management indi-

cator and, as such, adopt a basic policy of providing a continuous and stable dividend. In the fiscal year under review, we issued

dividend payments totaling ¥25.00, making for a consolidated payout ratio of 29.6%.

In ClosingAs an innovative business pioneer, we are working to provide solutions that put the resolution of social issues above all else.

In our 50-year history, we have accumulated a variety of assets, including an extensive customer base, which we established

through our business forms operations; know-how on the management of various information, including personal information,

which we cultivated in our DPS operations; trust-based relationships with our customers; and solid security systems. By combin-

ing these assets with cutting-edge technologies, we will take on the challenge of creating new products, solutions, and busi-

nesses–in a way that only Toppan Forms can do–with the aim of realizing sustainable growth. I would like to ask our shareholders

and other investors for their continued support as we go about tackling this challenge.

August 2016

President & COO


REVIEW OF OPERATIONS

Business Performance in Fiscal 2016

In 2016, the fiscal year ended March 31,

2016, sales in the Printing Business segment

increased 2.6%, to ¥185.8 billion. Specifically,

for business forms, the Company offered

plans and proposals for blanket contracts to

undertake work related to the procurement

and management of printed materials, cen-

tering on forms. In addition, the Company

promoted proposals to improve printed

materials using scientific approaches.

Despite these efforts, sales of business

forms decreased due to several factors,

including the effects of reduced demand

brought about by the spread of digitaliza-

tion, a decline in delivery slip volume, and a

drop in unit prices following increasingly

simple orders from customers.

Sales rose year on year in our DPS opera-

tions, despite a decrease in volume that

accompanied efforts by corporations to

reduce costs and declining demand in

direct mail for sales proposals. This increase

was due primarily to solid growth in

contracts for blanket outsourcing of print-

ing operations, mainly from public offices

and local governments, in addition to the

Company’s efforts to capture demand for

personal printing materials that utilize

digital printing technologies.

The performance of BPO services was

solid due to an expansion in contract areas

for existing projects as well as the incorpo-

ration of new projects, primarily received for

financial institutions. This solid performance

helped drive the increase in sales for the

Printing Business segment.

While there were several negative

impacts, such as the decline in sales of busi-

ness forms, profitability improved at the

operating income level thanks to higher

profits accompanying the increase in sales

in other areas as well as our thorough

efforts to reduce manufacturing costs by

improving productivity and consolidating

our manufacturing bases.

The Printing Business segment is one of the main pillars that supports earnings creation

for Toppan Forms. Today, the segment is also the core business of the Company, acting as

the starting point for the technologies used to develop our ever-more diverse lineup of

products and solutions. The segment primarily operates in the fields of business forms,

data print services (DPS), and business process outsourcing (BPO).

(Millions of yen)

Business Forms Data Print Services (DPS)

Business Process Outsourcing (BPO) Others

Net Sales and Composition Ratio

PRINTING BUSINESS SEGMENT

Business Forms

Transportation and delivery slips

Mail-related forms

POSTEX sealed postcard series

Environment-friendly business forms

Data Print Services (DPS)

Business mail for notifications

Direct mail for sales promotions

Personalized marketing tools

Personalized educational materials

Business Process Outsourcing (BPO)

Document scanning

Data input

Customer service and call center operations

Database management

68.0%

14 15 160

50,000

100,000

150,000

200,000


As the printing market in Japan continues to contract, we are work-

ing to further develop and evolve our printing business, shifting

from business forms to the BPO domain, which incorporates

standard business forms and DPS operations.

In regard to recent market trends, we are seeing an increase in the

blanket outsourcing of back-office tasks at financial institutions as

procedures become ever more complex due to the diversification

of various services. This trend of outsourcing a wide variety of office

tasks can be seen at public offices and local governments as well,

primarily in fields related to social security, taxes, and disaster con-

trol, due to the promotion of improvements in service quality and

the response to the introduction of the “My Number” national identi-

fication number system. At Toppan Forms, we are assessing these

kinds of needs and promoting efforts to

incorporate new projects in highly

technical, highly profitable domains.

In addition to these efforts, we estab-

lished and commenced the Enterprise

Form Management Service (EFMS),

which melds paper and digital media,

with the purpose of accelerating the combination of paper media

with IT, a key initiative adopted in our medium-term management

plan. EFMS is a hybrid form management platform that centralizes

conventional digital form solutions, which we have provided on an

individual project basis, and provides comprehensive support

throughout the life cycle of both paper and digital forms, from

origination to disposal.

EFMS has been designed to target not only the financial industry

but also government agencies and other customers primarily in the

manufacturing industry, and it is believed to have the potential of

realizing a scale that reaches tens of billions of yen. Going forward,

we will work to further enhance

Company strengths, including our top-

class information security systems,

which securely handle personal infor-

mation; our form design know-how,

which we have cultivated as an indus-

try-leading company; our variable data

printing technologies, which realize

changes in content from one printed

piece to the next; and our highly tech-

nical operational design capabilities,

which innovate the office tasks of our

customers. We will also carry out proac-

tive IT investments. In doing so, we will

accelerate the creation of new busi-

nesses and services unique to the

Company that anticipate changing

market needs.

Mitsuyuki HamadaManaging Director & CIO,Division Manager of Corporate Planning Division

Leveraging Our Strengths in Our Growth Strategies

Establish a Unique Position in the Information Management Domain by Leveraging Our Strengths in Both Paper and Digital Media

Integration and Enhancement

Since its foundation, Toppan Forms has

viewed business forms as an instrument for

information and has worked to develop its

business in a way that clearly distinguishes

itself from other companies. Throughout the

process of branching out from business

forms to incorporate DPS operations, which

handle information, and BPO services, which

respond to the blanket outsourcing of office

tasks, we have established trust-based rela-

tionships with our customers that allow us

to handle all kinds of valuable information,

including personal information. We have

also made efforts to bolster our security sys-

tems to handle these kinds of important

information properly.

Supported by the accomplishments we

have made over the years, we are develop-

ing new solutions through a variety of

means, including the utilization of variable

data printing technologies that leverage

cutting-edge digital printers, of which the

Company owns a world-leading number,

the enhancement of personalized marketing

based on big data analytics, and the combi-

nation of paper media and IT. Although the

business forms market in Japan is contract-

ing, we will continue to realize sustainable

growth going forward, as we have always

done, by accelerating our efforts in the

information management domain, an area

where the Company excels.


14 15 160

3,000

6,000

9,000

12,000

15,000


In fiscal 2016, the year ended March 31,

2016, sales in the ICT Business segment rose

6.9% year on year, to ¥14.6 billion. Sales in

the web solutions field were up as we pro-

moted efforts to expand sales of highly

profitable original solutions that use smart-

phones. In the card solutions field, sales also

increased, reflecting our success in captur-

ing solid domestic demand for point cards

and ID cards. Turning to the RFID solutions

field, sales were down due to a decline in

orders for RFID tags in the wake of the com-

pletion of projects to change frequency

bands in accordance with revisions to

Japan’s Radio Act. Operating income for the

ICT Business segment increased due primar-

ily to our efforts to bring in highly profitable

projects centered on web solutions.

In the ICT Business segment, we deal with digital management systems

for document data and a wide range of non-contact type cards, such as

ID cards and e-money cards. We also operate a cloud-based e-money

payment platform.

Web Solutions

Digital management systems for document data

Web invoice delivery and browsing services

Digital business forms

Smart device solutions

Card Solutions

Smart cards

ID cards

E-money cards

Card issuance systems

Card issuance outsourcing

Radio Frequency Identification (RFID) Solutions

RFID tags and labels

RFID devices

Maintenance services

Package software, cloud-based services

Near Field Communication (NFC) Solutions

Thincacloud e-money payment platform

NFC modules

(Millions of yen)


ICT BUSINESS SEGMENT

5.4%

For web solutions, we are cooperating with the Printing Business

segment to promote efforts geared toward the combination of

paper media and IT.

In regard to card solutions, we are leveraging the know-how we

possess on personal information management, which we cultivated

through our DPS operations and BPO services, to take on a large

number of contracts for processing card issuance related to personal

information. We are also working daily to evolve our card manufacturing




technology. Furthermore, we are promoting collaboration with the

Central Research Center to develop printing technologies that leverage

our unique ink, which is resistant to hand grease and does not wear

thin easily, as well as high-performance card materials. Furthermore, we

maintain records of the entire process related to card issuance and have

in place a system at our main domestic plants that allow us to quickly

respond to quality-related inquiries from customers after cards have

been delivered. These efforts have garnered high praise from our cus-

tomers. Going forward, we will further enhance our competitiveness by

working to differentiate ourselves from other companies through tech-

nology that guarantees quality.

As for RFID solutions, with the recent spread of the Internet of

Things (IoT), RFID systems are being widely introduced primarily

in the automobile and precision equip-

ment manufacturing industries. RFID

differs from barcodes and QR codes as it

is able to read objects even when they

are outside the line of sight. As such,

RFID can be used in a variety of situations.

Further, as RFID can be used repeatedly,

RFID solutions help to reduce overall costs and improve efficiency.

The Thincacloud e-money payment platform is the representative

example of our NFC solutions. We have recently completed work to

make this platform compatible with the six major brands of e-money

cards in Japan–Suica, the representative transportation-type smart

card, WAON, nanaco, Edy, QUICPay, and iD. In addition to being intro-

duced at all stores of electronics retailer Yodobashi Camera Co., Ltd.,

Thincacloud is realizing steady expansion in such ways as being

adopted in automatic check-in machines for All Nippon Airways

Co., Ltd., as well as at game arcades managed by Sega Entertainment

Co., Ltd. As we have completed the development phase for Thincacloud

and are finally reaching the phase for

sales expansion, we will actively pro-

mote efforts to increase sales in areas

that have yet to see a major introduc-

tion of e-money, such as at the retail

stores of small and medium-sized com-

panies situated primarily in more rural

areas as well as at amusement facilities.

In addition, we plan to undertake

initiatives to develop differentiated

IoT-related products and solutions that

leverage AI technologies. By doing so,

we will promote the creation of new

businesses in order to realize sustainable

growth going forward.

Develop New Solutions through the Combination of Information Management Know-How and Cutting-Edge Technology


The origins of the card and RFID solutions

of Toppan Forms lies in the Company’s busi-

ness forms with embedded magnetic

stripes that were often used for airline

boarding passes. These forms instilled a

desire in the Company to add even more

information to paper media digitally so that

the media can be easily linked with other

systems. The Company’s development of

magnetic ID cards that stored data for the

purposes of personal authentication derived

from this desire. As technology progressed,

we succeeded in developing not only these

magnetic ID cards but also contact IC

chip-in smart cards and non-contact type

smart cards. The technology we cultivated

for non-contact type smart cards has

allowed us to develop our RFID solutions.

While our products cover a wide range

of areas, they all share a common ground

in being vessels for containing information.

We aim to provide solutions that can store

and communicate information in an appro-

priate, secure, and speedy manner. To real-

ize this aim, we will focus our efforts on

creating new solutions while effectively

incorporating expertise and ideas from

partner companies and other organizations.

Masami NaruseOperating Officer,Business Division Manager of ICT Business Division



In 2016, the year ended March 31, 2016,

sales in the Merchandise Business segment

rose 0.3% year on year, to ¥51.7 billion.

While we worked in our office supplies

operations to attract bulk purchasing proj-

ects using the online sales system

O-TASCARRY, sales decreased due to the

review of low-margin projects. Sales were

up in the office equipment-related business,

owing to our efforts to increase sales of

high-value-added products, such as equip-

ment geared toward local governments in

connection with the “My Number” national

identification system as well as a signage

solution that responds to the inbound

travellers needs of retail companies. With

respect to our system operation contract

business, sales rose as a result of an increase

in the number of new system operation

contracts, primarily from financial institutions

and IT companies, and the incorporation of

new projects.

Also, profitability improved on the oper-

ating income level for the Merchandise

Business segment, accompanying the rise in

sales of our high-value-added original prod-

ucts, the increase in the number of new

system operation contracts, and the

improvement in the prices of copy paper.

(Millions of yen)


18.9%

14 15 160

10,000

20,000

30,000

40,000

50,000

60,000

MERCHANDISE BUSINESS SEGMENTThe Merchandise Business segment handles a variety of services, from providing

customers with office supplies to the design, manufacture, sale, and maintenance

of peripherals and related devices in our business forms operations. In addition, this

segment also deals with such original products as temperature management

systems and processed film and label products.

Office Supplies

Office goods and supplies

Gift and novelty items

O-TASCARRY online sales system

Office Equipment-Related Business

Form processors

System devices

Security devices

Original Products

MechaCool temperature management system

Delivery materials

Processed films and labels

System Operation Contract Business

Development personnel dispatching services

Operations personnel dispatching services



To improve profitability, which has been a recent issue, Toppan Forms

is implementing a wide variety of initiatives. With the completion of

our review of low-margin projects for office supplies, which we have

been undertaking until now, our next task is to review procurement

and delivery structures. In doing so, we will continue to work toward

achieving further improvements in profitability.

In addition, we are focusing our efforts on developing original

products with high added value. For example, with our high-

performance refrigerant MechaCool, we are developing new logistics

solutions that combine special packaging shaped in accordance

with the intended use of our customers and cloud-based tempera-

ture tracing systems that leverage RFID technology. We are being

approached by several companies both in Japan and overseas that

are showing interest in these solutions.

For the “My Number” national identifi-

cation number system introduced in

2015, we have developed and are now

selling PASiD, a product that signifi-

cantly simplifies the counter services of

local governments related to individual

number cards and individual number notification cards. One special

characteristic of PASiD is that it combines the three functions of

authenticity assessment, scanning, and printing into one machine.

PASiD has been receiving favorable reviews for its high level of per-

formance and has been introduced in more than 40% of local gov-

ernment offices nationwide.

Also, we expect to complete renewal work for our online sales

system O-TASCARRY, which we have been promoting since the previ-

ous fiscal year, in fiscal 2017. O-TASCARRY differs from conventional

online sales systems for office supplies in that it allows customers

to manage inventories, place additional orders for various printed

materials, and manage orders from vari-

ous locations all by themselves, thereby

simplifying the various procedures

related to making purchases. In our

renewal work, we have made efforts to

improve the convenience of O-TASCARRY

through the addition of new functions

and other means.

Going forward, we aim to realize sus-

tainable growth. To this end, we will

enhance profitability by strengthening

our relationship with customers

through O-TASCARRY and expanding

sales of original products with high

added value.

Realize a Highly Profitable Financial Structure through

the Provision of Original Products and Solutions

MERCHANDISE BUSINESS SEGMENT Leveraging Our Strengths in Our Growth Strategies


Toppan Forms began as a company that

engaged in the manufacture and sale of

business forms. Since its foundation, the

Company has worked to develop equip-

ment related to business forms that reduce

the burden of office work for its customers,

including detachers that can continuously

cut and sort business forms as well as sealers

that process its POSTEX sealed postcards.

With the aim of developing original prod-

ucts with even more added value, we are

leveraging the expertise and know-how

that we have cultivated in the mechatronics

domain and working Groupwide to bolster

our development and sales structures.

Specifically, through collaboration

between Toppan Forms, which oversees

product development, Techno Toppan

Forms Co., Ltd., which handles sales and

maintenance, and J-SCube Inc., which

undertakes the development and sale of

scanner equipment, we are moving ahead

with the continuous development of highly

competitive products. As an innovative

business pioneer, we will create new prod-

ucts that meet the needs of the generation

going forward.

Hiroshi ItoSenior Operating Officer,Business Division Manager of Merchandise Division


7.7 %

(Millions of yen)

0

5,000

10,000

15,000

20,000

25,000

14 15 16


In fiscal 2016, the year ended March 31,

2016, sales in the Overseas Business seg-

ment rose 7.2% year on year, to ¥21.1

billion. The performance in the Merchandise

Business segment was poor due to the

impact of such factors as the review of low-

margin projects, primarily in Hong Kong.

However, in the Printing Business and ICT

Business segments, performance was strong

due to the positive impact of including Data

Products Toppan Forms Ltd. which has been

consolidated as a subsidiary. This positive

impact contributed to the increase in sales.

As for profitability, operating income in the

Overseas Business segment decreased due

to the impact of loans with default

possibility following the economic slow-

down in China.

In the Overseas Business segment, we handle a wide range of products and

solutions. In a similar fashion to our domestic businesses, these products and

solutions are not limited to the field of printing but include the fields of ICT

and merchandise as well.

Now that 10 countries of ASEAN have established the ASEAN

Economic Community (AEC), high levels of economic growth are

expected in Southeast Asia. Under these circumstances, Toppan Forms

will accelerate business growth overseas by implementing the follow-

ing three strategic initiatives.

The first initiative is to expand existing businesses. To steadily build

upon the results we have accomplished thus far, we will provide DPS

and BPO services with high added value in Hong Kong, Singapore,

Thailand, and other regions and elsewhere in Southeast Asia.

With a view to realizing medium-term growth, the second initia-

tive is to develop new businesses and cultivate new demand in


OVERSEAS BUSINESS SEGMENT


Printing Fields Business forms

DPS services

BPO services

Merchandise Fields

IT-related products

Distribution refrigeration systems

Enterprise resource planning (ERP) and other solutions-based software

ICT Fields Cards (cash cards, credit cards, transportation-related smart cards)

Card issuance systems (national identification cards)

RFID solutions

Toppan Forms (Hong Kong) Ltd. Data Products Toppan Forms Ltd.



Drive Growth Overseas by Prioritizing

Local Business Development

regions in Southeast Asia where we have an established customer

base. Specifically, we will offer flexible services that meet the grow-

ing needs of existing customers, including information management

services that leverage ICT and data collection services that utilize

personal authentication technology through smart devices. In doing

so, we will work to actively incorporate new projects.

The third initiative is to expand our overseas business operations

into new regions of Southeast Asia. From a long-term perspective,

it is extremely important for us to expand into areas where we

have yet to establish a local presence if we are to realize future

growth. We aim to develop products and solutions in accordance

with the economic conditions of each country or region. For exam-

ple, in Indonesia, the Philippines, and Malaysia, three countries that

are seeing a rise in the middle class,

the use of loans and credit cards is

becoming more widespread. As such,

we will take steps to capture demand

for delivering notifications related to

loans and credit cards. For countries in

the Mekong region, such as Thailand

and Vietnam, where the establishment of infrastructure is flourish-

ing, we will provide infrastructure systems that process payments

via transportation-related smart cards and credit cards.

In addition, we are establishing an environment to promote

these strategic initiatives in such ways as establishing a new office

in Singapore and local branches in Thailand and Vietnam. By accu-

rately assessing the needs of local markets, we will steadily imple-

ment these three strategic initiatives amid constantly changing

economic conditions.


Soon after its establishment in 1965, Toppan

Forms established offices in Hong Kong

and Singapore and has been operating in

these countries for nearly 50 years. In that

time, the Company has built relationships

of trust with local companies and govern-

ments and has expanded original busi-

nesses deeply rooted in local communities.

These relationships and businesses

represent a strongpoint of our operations

in Hong Kong and Singapore.

Going forward, we will continue to

respect the independence of each Group

company as we aim to realize Groupwide

growth through the exchange of informa-

tion and business collaboration. To pro-

mote these efforts, we have increased the

number of personnel at our Tokyo Head

Office, which manages all Group compa-

nies overseas. We have also established a

division to support local businesses as well

as a division to unify fundamental business

aspects, such as quality and security.

Primarily through these two divisions, we

will work to support the growth of our

overseas subsidiaries.

Also, our brand power overseas is still

relatively weak, and only certain regions

are aware of the fact that we are a com-

pany that can provide various solutions as

an innovative business pioneer. However,

looking across the globe, our technologies

that handle both paper and digital media

have an extremely high level of competi-

tiveness. As such, we will provide appro-

priate services in accordance with the

economic development of Southeast Asia

as we aim “to become the unparalleled

No. 1 in personal information handling” in not

only Japan but also other countries in Asia.

Hayato HirabayashiOperating Officer, Business Division Manager of International Business Division


CORPORATE GOVERNANCE

Aiming to Realize Corporate Governance That Drives

Growth over the Medium to Long Term

Kyoichi HoriFull-time Corporate Auditor

Entering the Company in 1971, Mr. Hori worked in the Accounting

Division and the Internal Control Department before being

appointed to the position of corporate auditor in 2012.

Kazuko RudyOutside Director

In addition to lecturing as a market researcher at the Graduate School of Management,

Ritsumeikan University, Ms. Rudy serves as the vice president of The Japan Academic

Society of Direct Marketing and as an outside auditor at Seven & i Holdings Co., Ltd.

She was appointed as an outside director at Toppan Forms in 2015.

Hori | Since Toppan Forms was listed on the Tokyo Stock

Exchange in 1998, the Company has been undertaking various

reforms to its governance. One of the major reforms we have made

in recent years was the appointment of our first outside director, Ms.

Rudy, which has significantly changed the atmosphere at meetings

of the Board of Directors. With a heightened awareness of outside

perspectives, we have realized that some aspects of our business we

considered to be a matter of course are actually aspects on which

we should hold further deliberations after once again clarifying and

examining them. As a result, we have been focusing our discussions

on more substantial subjects, which I feel has undoubtedly intensi-

fied the debates we hold at the Board meetings. Japan’s Corporate

Governance Code, which was established in 2015, has adopted

“active deliberation” as one of its basic principles, and I believe that

the increased intensity of debate held by the Board derives from

that principle.

Rudy | I receive extremely detailed explanations on agenda items

prior to Board meetings, and I ask questions on anything that con-

cerns me in regard to the background and reason for an agenda

item’s proposal, including the sequence of events that led up to the

proposal. Through these kinds of questions, I can get a clear sense of

the way a company has developed from past to present as well as its

approach to the future. As such, I make sure that those providing me

with explanations prior to Board meetings take their time to thor-

oughly illustrate the agenda item to me. In the case that I disagree

with an agenda item, I often ask questions directly to the officers

attending the Board meetings who are responsible for the agenda

item. I will not hold deliberations or make a decision on an agenda

item if I have any remaining doubts concerning that item.

Toppan Forms has a clear-cut way of advancing its deliberations.

For example, after a decision is made on an investment, the progress

of that investment is continuously monitored to identify if there are

Promoting Governance That Reflects the Company’s Corporate Culture


Rudy | As an outside director, no matter how much I learn about

a company, it is difficult for me to form opinions from the same per-

spective as those who view the workplace on a day-to-day basis.

Given this situation, I place particular focus on verifying whether or

not a company’s monitoring functions are working properly from a

broad perspective. In corporate management, it is essential for moni-

toring functions to be working appropriately. Accordingly, I believe

that putting such functions in place allows a company to implement

new strategies for sustainable growth. One of my responsibilities as

an outside director is to solidify aspects of a strategy that will serve as

the strategy’s foundation.

Another one of my responsibilities is to provide the Company with

ideas and advice from a marketing perspective. While a company’s

internal directors are well-versed in the industry, that can sometimes

limit their ability to think outside the box. In such cases, I work con-

stantly to offer my input from a perspective that differs from that of a

company’s internal staff.

Hori | Ms. Rudy’s participation in Board of Directors’ meetings has

helped deepen the content of our deliberation. In a similar manner,

the presence of an outside director has worked to promote reforms

to the Company’s governance. Furthermore, in our deliberations, the

way in which we react to internal and external opinions differs. As

such, I would like to ask the outside directors to offer open-heartedly

their input from an objective perspective.

any discrepancies with the Company’s initial expectations. With the

lack of ambiguity in the various content of Board meetings, I get the

sense that the Board members share a clear and common goal.

Hori | Avoiding ambiguity in the various content of our delibera-

tions is something we have maintained a particularly high awareness

of over the past few years. In addition, we are placing more emphasis

on identifying risks. With the rapid changes in modern-day society, it

is becoming extremely difficult to make predications on what condi-

tions will be like even a few years down the road. When it comes to

promoting an agenda item, we work to clarify both the agenda item’s

long-term and relatively short-term risks. In doing so, we advance

deliberations in a way in which all members, both inside and outside,

can agree upon the final decision.

Rudy | I am of the understanding that Toppan Forms has actively

promoted innovations even before the establishment of Japan’s

Corporate Governance Code. With its experience in discovering new

markets on its own initiative as an innovative business pioneer, I

believe that Toppan Forms has in place a corporate culture that does

not fear new challenges or changes. Amid the strong trend of

Japanese companies to adhere strictly to a conservative approach,

I believe that Toppan Forms possesses outstanding qualities as an

innovative corporation.

Another important characteristic of the Company is the extremely

open and transparent corporate culture it has forged. When we talk

about corporate governance, this kind of corporate culture is abso-

lutely essential. My experience working as a consultant with a wide

variety of companies has shown me that, if a company has an encour-

aging atmosphere for employees to voice their opinions, then that

company typically has an in-house environment where monitoring

functions work efficiently.

Hori | I am very happy to hear that Ms. Rudy, with her outside per-

spective, feels that way about our corporate culture. Our corporate

DNA, which helped foster this corporate culture, has been gradually

passed on since the time of the Company’s founding. I believe we can

pass on this DNA in an even better form going forward by intertwin-

ing it with our corporate governance system.

Fulfilling the Role of Outside Director

Continually Transforming Our Corporate GovernanceHori | Improving the efficiency of the Board of Directors is a cru-

cial management task. Until now, the Articles of Incorporation have

stipulated that the Board shall not exceed 23 members. However,

we have changed that limit to 15. In actuality, we reduced the total

number of directors from 15 to 11 in June 2016. In accompaniment

with this reduction, we lowered the percentage of directors who

also work as executive officers. Going forward, we must accelerate

these kinds of efforts to separate the roles of management and

business execution.

Rudy | While discussion is often held on the appropriate number

of outside directors for a company, determining a number in a purely

superficial manner is not something a company should pursue. In

addition, future trends in the management policies of corporations

will result in increases in the numbers of female and foreign directors.

Amid the reduction of board members and the acceleration of efforts

to separate the roles of management and business execution, it is

important for the Board of Directors at Toppan Forms to promote

debate that gives ample consideration toward the future direction

and prospects of the Company, without focusing too much on

outside appearances.

Hori | I agree with Ms. Rudy. With a large number of directors,

simply debating an agenda item in detail consumes so much time

that we are unable to analyze future market trends and determine

crucial management strategies. To avoid this problem, it is absolutely

essential to reduce the number of directors while also promoting the

transfer of authority. These kinds of efforts are not something that

produce results quickly, and we as a company still have many issues

to tackle in regard to strengthening our governance. As such, we will

continue to deliberate ways to improve the current state of our man-

agerial ranks and Board of Directors as we promote further innova-

tions going forward.



Toppan Forms places the establishment and maintenance of a strong corporate governance system, the system

through which all aspects of business operations are monitored and executed, among its top management priorities,

as this system is essential in improving both corporate value and shareholder value.

Corporate Governance System

The Board of Directors comprises 11 members, with two of the

members being outside directors. As a general rule, meetings of the

Board of Directors are held on a monthly basis and on an extraordi-

nary basis as necessary. At these meetings, agenda items are deliber-

ated on in a time-efficient and appropriate manner. In addition to

Board of Directors’ meetings, the Company periodically holds

Management Meetings, where important management issues are

discussed, and Executive Committee meetings, where information

regarding business strategies are shared and discussed. Through this

system, the Company works to ensure that management decisions

are made in an expedient manner and business operations are con-

ducted efficiently. With a position that is independent from the Company’s manage-ment, the independent outside directors offer the Company appro-priate advice based on their individual expertise in regard to

realizing sustainable growth and improving the Company’s corpo-rate value over the medium to long term. At the same time, these directors monitor the Company’s management by holding delibera-tions and passing resolutions at Board of Directors’ meetings. In addition to having independent outside directors attend Board meetings, the Company works to provide the outside directors with ample opportunities to regularly exchange opinions with its man-agement, including the president and representative director, as well as the Board of Corporate Auditors, which includes outside corporate auditors. Furthermore, Toppan Forms has elected to operate as a company with a Board of Corporate Auditors. Through its four members, of whom two are outside corporate auditors and one is a full-time auditor, the Board of Corporate Auditors carries out various auditing activities. The corporate auditors attend important meetings, includ-ing Board of Directors’ meetings, and conduct audits of principal business sites and subsidiaries. In addition, the corporate auditors closely monitor the business execution of directors.

Corporate Governance Basic Policy

Toppan Forms established and disclosed the Corporate Governance Basic Policy in November 2015, which aims to explain to share-

holders and other investors the Company’s basic approach and the status of initiatives related to corporate governance as well as the

Company’s response to Japan’s Corporate Governance Code. Details of this policy can be found in the Corporate Governance Report*

and on our corporate website.

http://www.toppan-f.co.jp/english/ir/governance.html* Corporate Governance Report is in Japanese only

Outside Officer Attendance at Board of Directors’ and Board of Corporate Auditors’ Meetings Held in Fiscal 2016

Outside Directors Board of Directors Board of Corporate Auditors

Kazuko Rudy 11 / 11*1 —

Hideki Amano —*2 —*2

Outside Auditors

Noriaki Kinoshita 14 / 15 13 / 13

Kunio Sakuma 13 / 15 11 / 13

Akiko Obata 11 / 11*1 8 / 8*1

*1 Newly appointed on June 26, 2015

*2 Newly appointed on July 1, 2016

URL


Accounting AuditorCPA

Auditing

Reporting

Instruction/Education

Auditing

Auditing

Auditing Auditing

Cooperation

Division DirectorsOperating O�cer

Auditing O�ce

Operating Divisions

Group CompaniesInternal Reporting SystemCorporate Ethics Hotline

Management Meeting

General Meeting of Shareholders

Company-wide Risk ManagementCommittee

Individual Risk ManagementCommittees at each Operating

Division and Subsidiary

Board of Corporate AuditorsBoard of Directors

Supervision

Emergency ResponseHeadquarters

Representative Director

Cooperation

Appointment/Dismissal




Director Responsible forRisk Management

Speci�c Risk ManagementCommittees

Nomination andRemuneration Committee

Appointment of Directors and Corporate Auditors

Toppan Forms appoints candidates for director and corporate audi-tor who possess a level of knowledge, experience, and capability that will enable them to conduct management or auditing duties in an appropriate, equitable, and efficient manner. Outside directors and outside corporate auditors are appointed from candidates who possess extensive experience and insight in business administration, compliance, internal controls, accounting, and other fields and who are deemed to be independent from the management of the Company. Based on this policy, candidates for director and corporate auditor are determined by the Board of Directors. In addition, the Company discloses the reasons for the appointment of candidates for directors and corporate auditors in reference materials for the General Meeting of Shareholders at the time of appointment. In order to secure a higher level of transparency in the appoint-ment of these candidates, the Company has established an advisory committee for director nomination and remuneration. This committee holds deliberations regarding director nomination and

remuneration and reports the results to the Board of Directors. The committee also includes outside directors and outside corporate auditors.

Basic Policy for Director Remuneration

The remuneration of directors comprises a fixed compensation based on director position and a performance-based compensation decided through consideration of the director’s level of contribution to business performance. Both the fixed and performance-based amounts are paid within a compensation framework determined by resolution at the General Meeting of Shareholders. In addition, in order to enhance incentives for long-term, performance-linked com-pensation, a determined amount of the fixed monthly remuneration for full-time directors is set aside for the purpose of acquiring the Company’s shares, thereby aligning the interests of full-time direc-tors with shareholders. The amount set aside is then allocated to the purchase of the Company’s shares through the Toppan Forms Directors Shareholding Association.

Corporate Governance System

Amount of Remuneration Paid to Directors and Corporate Auditors (Fiscal 2016)

Subject of Remuneration Number of People Remuneration Amount

Directors (Outside directors) 17(1) ¥481 million (¥5 million)

Corporate auditors (Outside corporate auditors) 4(3) ¥33 million (¥18 million)

Total (Outside directors and corporate auditors) 21(4) ¥514 million (¥23 million)


Board of Directors’ Effectiveness and Evaluation

The Company is working to enhance the effectiveness of delibera-

tions by the Board of Directors through the clarification of issues,

challenges, and risks, as well as relevant countermeasures, at

Management Meetings held by management executives prior to

holding deliberations at the Board meetings. In order to facilitate

smooth and lively discussions by the Board of Directors and to

ensure that an issue is thoroughly examined, the Company distrib-

utes Board of Director materials prior to Board meetings. In particu-

lar, the Company explains in advance the content of the Board

meetings to outside directors and outside corporate auditors.

Directors ask related departments to provide information neces-

sary for the performance of duties, and these departments provide

such information to the directors in an appropriate manner. Outside

professionals provide advice to directors as necessary. Furthermore,

directors receive regular reports on management conditions, which

they use to ensure appropriate risk management and conduct over-

sight of business execution. The Corporate Planning Department,

serving as the administrative office of the Board of Directors, sup-

ports directors in the performance of their duties.

For evaluating the effectiveness of the Board of Directors, the

Company has all of its directors and corporate auditors conduct a

self-assessment once a year regarding the Board of Directors’ struc-

ture and management as well as the content of the Board’s

deliberations. The Board of Directors then holds debates based on

the reported results of these self-assessments. An overview of the

evaluation of the Board’s effectiveness is included in the Corporate

Governance Report.

Support Structures for Directors and Corporate Auditors

The Company conducts training with a focus on compliance to

provide newly appointed directors with the opportunity to acquire

necessary knowledge as well as to understand their roles and

responsibilities. Following their appointment, directors participate

in a variety of training and are afforded opportunities for interaction

with outside personnel in order to acquire new knowledge and

enhance their ability to respond to changes in the operating

environment. At the same time, the Company conducts an annual

training session in which all directors participate, providing an

opportunity for directors to develop their management competency

and pursue mutual self-improvement.

The Company’s corporate auditors participate in external training

sessions and network meetings aimed at enhancing their ability to

respond to changes in the auditing environment and at encouraging

self-improvement. In this way, the Company makes concerted efforts

to provide corporate auditors with opportunities to acquire the

knowledge necessary to work as an auditor as well as promote their

understanding of individual roles and responsibilities.

Independence from Parent Company

TOPPAN PRINTING CO., LTD., is the parent company of Toppan Forms,

possessing 60.74% of the Company’s voting rights as of March 31,

2016. Toppan Forms has used the original business know-how and

technologies it possesses to establish a solid, independent business

foundation. Toppan Forms does not maintain either a debtor–creditor

relationship, a guarantor–guarantee relationship, or a licensor–

licensee relationship with the parent company. Moreover, only one

Company director holds a position concurrently with the parent

company, and only a small number of employees are transferred

between Toppan Forms and the parent company. For these reasons,

Toppan Forms maintains independence in its business operations,

although sharing its corporate philosophy with that of the parent

company.

Furthermore, while the Company shares an order-receiving rela-

tionship with the parent company for some products and services,

this does not constitute a significant percentage of the Company’s

business. When such transactions occur, however, they are carried

out in a fair, appropriate manner, on conditions similar to those of

regular business transactions. In addition, the Company takes heed

to ensure that these transactions are not conducted with biased

judgment. Going forward, the Company will continue to ensure its

independence from the parent company. The Company will also

continue to make appropriate judgments regarding transactions

with the parent company to prevent the interests of the Company’s

minority shareholders from being unjustly impaired.

IR-Related Activities

Toppan Forms understands the importance of communicating cor-

porate and business management information to its shareholders,

other investors, and other stakeholders. In order to disclose appro-

priate information to our stakeholders in a timely manner, our

IR-specialist staff, who support the members of our top manage-

ment as well as department managers, engage in numerous IR

activities.

Within these daily IR activities, the Public Relations Department

acts as a point of contact with stakeholders. Through cooperation

between our IR-specialist staff and the IR Committee, which com-

prises the Corporate Planning Department, the General Affairs

Department, the Finance Department, and the Public Relations

Department, we work to disclose information in a way that is easy to

understand for a large number of stakeholders, who are recipients of

such information. Furthermore, we conduct visits by senior manage-

ment to overseas investors in the United States and countries in

Europe and Asia at least once a year, in principle, based on the

shareholder composition.

The opinions, questions, and other useful information we receive

through this kind of dialogue with our stakeholders are reported to

management in a timely and appropriate manner, where the infor-

mation is subsequently leveraged in the revision of management

strategies and other areas.



Compliance

In order to better incorporate compliance and corporate ethics

into its daily business operations, the Company has developed the

Toppan Forms Group Action Guidelines, and it is working to dissemi-

nate awareness and advance the implementation of these guidelines

throughout the Company.

With the goal of cultivating a compliance-based mindset in daily

business operations, the Legal Department is spearheading numer-

ous compliance-related training and education programs. Further,

compliance promotion representatives and compliance promotion

leaders have been established at each business site to help support

employees in practicing good compliance. We are also educating

employees at overseas Group companies with regard to the Toppan

Forms Group Action Guidelines in order to further the dissemination

of these guidelines throughout the Toppan Forms Group.

Also, we have set up the “corporate ethics hotline” to act as an

internal reporting system. With this hotline, we have established two

points of contact to which matters can be reported: the Company’s

Legal Department and an external law firm. In addition, internal

regulations stipulate that informants are provided with appropriate

protection to ensure that they do not suffer prejudicial treatment.

Risk Management

The Company has developed a comprehensive risk management

system to identify risks and to respond to them in an appropriate

way should they arise. Risk management is primarily handled by

five specific risk management committees that work under the

Company-wide Risk Management Committee, which is chaired by

the director responsible for risk management, to manage major

risk exposure throughout the Group. These committees are the

Company-wide Information Security Committee, the BCM Promotion

Committee, the Quality Committee, the Company-wide

Environmental Promotion Committee, and the Compliance

Committee. Additionally, individual risk management committees

have been established in each operating division and at each

subsidiary. These bodies work together in conducting risk manage-

ment activities.

Further, in response to the Japanese government (the Cabinet

Office, the Ministry of Economy, Trade and Industry), as well as cus-

tomers, prompting companies to formulate BCPs in the event of an

earthquake or other natural disaster, the social necessity to establish

business continuity management (BCM) systems is rising. Against

this background, in 2010, Toppan Forms took the lead over other

companies in the industry and acquired the BS (British Standard)

25999-2 standard, which was the global standard in BCM at the time.

Based on this standard, the ISO 22301 and JISQ 22301 standards

were developed, being issued in 2012 and 2013, respectively. In

December 2013, Toppan Forms became the first company in the

industry to acquire certification for JISQ standard.

Information Security

The Data Print Services (DPS) business is one of the Company’s core

businesses. In this business, we are entrusted by our customers with

sensitive information, including personal information. We, therefore,

realize that proper information management is not only necessary in

order to maintain the trust of our customers, but it is also an impor-

tant element of our responsibility toward society.

The Company has subsequently established the Basic Principles

for Information Security and the Personal Information Protection

Policy. Moreover, we have developed the Information Security

Guidelines with the aim of reconciling the differing levels of informa-

tion security awareness among Group companies and operating

divisions. In addition, we are subsequently developing a uniform

information security level throughout the Group. Through these

efforts, we are developing information security systems that are best

suited to Toppan Forms, the industry’s leading company. We are also

actively acquiring certification from external organizations. Currently,

three Group companies have received ISO 27001 certification, while

12 Group companies have received PrivacyMark certification.

Main IR-Related Activities

Activities Details

Presentations for analysts and institutional investors Twice a year

Presentations for overseas investors One to three times a year, president or chief financial officer conducts individual

meetings with overseas investors to explain business performance

Factory tours for investors Three times a year

Disclosure of IR-related materials Multiple times throughout the year through summaries of financial results, securities reports, annual reports, shareholder newsletters, and presentation materials from briefings on financial results

Establishment of dedicated IR office Part of Public Relations Department


BOARD OF DIRECTORSAs of July 1, 2016

1 5

2

3

4

Chairman & CEOShu Sakurai

President & COOKoichi Sakata

Board of Directors

Senior Managing DirectorsToshiro Masuda

Akira Kameyama

Managing DirectorsKenichi Fukushima

Mitsuyuki Hamada6

4

8

1514

12

13

2 613

91011

5

7


8

9

14

15

DirectorsNaoki Adachi

Kazuko Rudy*1

Hideki Amano*1

Kyoichi Hori*2

Noriaki Kinoshita*3

Board of Corporate Auditors

*1 Outside director

*2 Full-time corporate auditor

*3 Outside corporate auditor

7 Keitaro Fukushima

Yasuhiro Okada

Kunio Sakuma

Akiko Obata*311

10 12

13


RESEARCH AND DEVELOPMENT

Overview of Research and Development

The research and development (R&D) activities of Toppan Forms

were originally centered on materials and manufacturing machinery

technologies related to printed paper forms. However, over time,

the Company expanded the scope of its R&D activities to cover a

broader range of R&D domains in response to a variety of changes

in the external environment. These changes included a rise in the

volume of information being exchanged and the emergence of new

communication methods, which followed the advent of computer-

ization and the increase of logistics services, as well as the diversifi-

cation of customer needs.

The Central Research Center of Toppan Forms was established in

1971 inside the Hino Plant, which was then the Company’s main

plant. At that time, the domain that we focused our R&D activities on

was mechatronics, which helped enable us to respond to the

increasingly complex methods and processes for printing paper

forms, including developing paper form materials and the high-per-

formance manufacturing machinery to handle such printed paper

forms. Aiming for an optimal lineup of forms for the various uses of

each customer, such as forms for transportation slips and aircraft

boarding passes, we engaged in R&D activities that drew on our

wealth of technologies and expertise. After dissolving our capital

alliance with Moore Corporation, we began to carry out R&D activi-

ties in fields related not only to paper media but also to ICT in the

latter half of the 1990s. Today, we are making efforts in R&D domains

that deal with our Merchandise Business segment, including the

development of high-performance refrigerants. While the scope of

our R&D activities has expanded to meet the changing needs of the

market, the essence of these activities—to provide products and

Contributing to the Growth of Toppan Forms through an Efficient R&D Structure That Focuses on Both the Medium Term and the Long Term

R&D Structure That Promotes Collaboration among Business Segments

One special characteristic of the Toppan Forms R&D structure is the concept of placing on-site operations first. The Company’s operations are divided into the four business segments of Printing, ICT, Merchandise, and Overseas, which means that the range of R&D domains in which the Company must engage is extensive. Our researchers are actively involved in marketing and factory operations and cooperate with the Sales, Factory, Sales Promotion, and other departments. When necessary, our researchers attend meetings with customers to directly exchange opin-ions. These efforts by our researchers help us to steadily capture market demand and respond promptly to subtle changes in product manufac-turing and design. Accordingly, our researchers provide the driving force behind the development of proposal-based solutions centered on high-value-added products and solutions that only Toppan Forms can provide. Moreover, the concept of placing on-site operations first helps us to improve not only the efficiency of our R&D activities but also our levels of customer satisfaction.

Mizuhiro TaniOperating Officer,Center Manager of Central Research Center


Initiatives for New Business Creation from a Medium-to-Long-Term Perspective

Over the 45-year history of our Central Research Center, we have created a wide variety of products that have been ahead of their time. Examples of these products include our POSTEX sealed post cards and our paper for copy slips that use microcapsule ink. By leveraging the experience and expertise we have long cultivated, our R&D activities help contribute to the Company’s future growth. At the moment, we are promoting product development in the field of industrial materials using microcapsule technology, which represents a core technology of Toppan Forms. Furthermore, we are moving forward with product development related to printed electronics that leverage the Company’s patented “silver salt ink” technology. While the products generated through both these development efforts are still in the test marketing stage, we have already been receiving favorable reviews from customers. As such, we aim to promptly develop and commercialize these products so that they may become the next mainstay products of the Company. In addition, we are taking steps to create new businesses through cooperation with external institutions, including collaborative development with the New Energy and Industrial Technology Development Organization. We report the selected research themes and the status of progress to the Company’s managerial ranks once a year. Also, we promote our R&D activi-ties while investigating and verifying relevant market needs and scale regarding a particular product, thereby realizing a high level of efficiency.

solutions centered on information—has remained unchanged since

our foundation.

Going forward, we will work to establish next-generation de facto

standards through the development of ground-breaking products

and solutions that will drive growth for the Company over the

medium to long term.

Organizational Structure of the Central Research Center

At the Central Research Center, we primarily conduct R&D activities

centered on materials and components. With a staff of approxi-

mately 50 researchers, these activities are carried out from a

medium-to-long-term perspective.

Efforts to Connect Our Technological Capabilities with Future Growth

With regard to future R&D activities, we believe there are three major issues that we must address. The first issue is the creation of new research themes. We strongly feel that there is a necessity for new products and solutions that will not only help extend our current R&D activities but also provide a pillar for future growth. The second issue is the development of human resources who can demonstrate strong leadership skills. As we currently have a group of primarily young employees that are ambitiously conducting research, we will work to develop human resources who can take on management positions to properly lead this group. The third issue is greater Company-wide collaboration among all R&D-related departments. With the Central Research Center acting as the foundation, we will make efforts to efficiently advance research at the center, product development in each operating division, and technological innovation at our factories. In doing so, we will strengthen collaboration Companywide. Toppan Forms is in the middle of making a significant transition from a company that manufactures business forms to a company that provides proposal-based solutions related to information services. Throughout this period of transition, we will undertake R&D initiatives to create new value while consistently listening to the opinions of our customers.

• Next-Generation Product Development Division

• Existing Business Supportive Development Division

• Research Theme Investigation and Planning Division

Factory

Sales

Sales promotion

Group companies and other institutions

Corporate staff

Central Research Center—Cooperating with Each Business Division to Promote Research

Central Research Center


Promoting the Creation of a Work Environment Where Each Employee Plays an Active Role

Basic Approach to Human Resources

Guided by its management philosophy “san-eki ichijo,” Toppan Forms

works to fulfill its mission as an innovative business pioneer. While

playing a vital role in resolving the issues facing our customers, we

aspire to be a company that is filled with employees of strong charac-

ter as well as a company that fulfills its responsibility as a member of

society. We have adopted the concepts of “diversity and integration”

as part of our management strategies and are advancing initiatives

aimed at maximizing results through the assembly of a diverse group

of human resources. As the business forms market in Japan continues

to gradually contract and economic conditions in China and other

Asian countries remain unclear, we currently face a less-than-desirable

operating environment. Under these circumstances, the development

of high-quality human resources, in addition to efforts to solidify our

financial base and improve our technological capabilities, is extremely

important in realizing sustainable growth for the Company.

Accordingly, we are working continuously to enhance the indi-

vidual capabilities of our personnel in a variety of ways while

making revisions to our approach when necessary. For example,

we are undertaking initiatives to create an environment where a

diverse group of personnel can play an active role in a wide range

of fields and conduct training tailored to each employee’s position

as well as career development training. In addition, we provide

financial assistance to employees to help them better develop

themselves professionally through self-study and implement

compliance training.

We will continue to promote the development of high-quality

human resources in a manner that best suits each employee and

takes into consideration individual career stages. In doing so, we will

grow to be a company that can respond swiftly to the various

changes occurring in the operating environment.

Aiming to Realize “Diversity and Integration” by Reforming the Way We Work

We have recruited and developed the necessary human resources to grow to be a company that can respond to the changes in the operating environment, which is becoming ever more sophisticated and complex, and established a work environment in which these human resources can actively participate. In 2006, we began promoting active roles for female employees. Since then, the percentage of female employees, as well as females in managerial positions, has been improving thanks to the detailed employment system we have in place. Also, with the increase in the number of families where both parents work, we have expanded our system for childcare leave to cover male employees with children and improved the ratio of employees taking childcare leave. In these ways, we have steadily established systems that can respond to changes in the workplace. As for our efforts to promote active roles for middle-aged and older employees, we have established a personnel system that allows employees who have reached the retirement age of 60 to continue their career in a managerial position. This system allows us to continue to draw on the long-cultivated experience and personal connections of older employees in our business operations. In addition, we are actively promoting the employment of people with disabilities through various means, including the deployment of personnel, such as psychiatric social workers and job coaches, to offer support to employees. In recognition of our efforts, we were certified as an “Excellent Company Employing People with Mental Disabilities, etc.” by Japan’s Ministry of Health, Labour and Welfare in March 2016. Without being satisfied with the status quo, we will continue to voluntarily reform the way we work as we aim to become a company where each employee can work with a sense of purpose.

HUMAN RESOURCES

Michiyo TerakamiGeneral Manager of General Affairs Department and Diversity Promotion Department,General Affairs Division


CORPORATE SOCIAL RESPONSIBILITY

Basic Approach to CSR

At Toppan Forms, we conduct business activities under our manage-

ment philosophy of “san-eki ichijo,” enabling us to exist in harmony

with stakeholders, the environment, and society as a whole through

mutually beneficial relationships, which provides the foundation to

continue to pursue sustainable growth. Since our establishment, our

business environment has undergone dramatic change. However,

despite this change, the Company’s pursuit of corporate benefits at

the same time as pursuing individual and societal benefits under

“san-eki ichijo” has remained unchanged. We believe that “san-eki

ichijo” reflects the type of corporate social responsibility (CSR) that

society expects us to practice. Going forward, we will therefore con-

tinue to fulfill our social responsibility by conducting business activities

under our management philosophy that are constantly in tune with

stakeholders, the environment, and society as a whole.

Policy on Environmental Management

Toppan Forms has established the Basic Environmental Principle and

Policies based on its management philosophy of “san-eki ichijo.”

Guided by these, the Company is engaging in various activities

related to the preservation of the environment.

CSR Procurement Standard

Toppan Forms has also established the CSR Procurement Standards

under the Toppan Forms CSR Procurement Guidelines. In cooperation

with its business partners (raw material, equipment, and product sup-

pliers; manufacturing and processing outsourcing companies), we are

taking the initiative in CSR-based procurement. We request that our

business partners abide by the CSR Procurement Guidelines, while we

also strictly abide by the guidelines throughout the Company. Through

cooperation with our business partners, we are promoting CSR initia-

tives across the supply chain. In this way, Toppan Forms aims to

improve corporate value for both itself and its business partners. We

believe that the underlying conditions for our business partners to

conduct transactions with the Company are an understanding and

appreciation of the aims of CSR-based procurement and adhering to

the CSR Procurement Standards.

Basic Environmental Principle

Toppan Forms recognizes the fact that environmental

preservation is an important issue which is shared by all

humans, and in order to ful�ll our social responsibility as a

corporation, we will continue to implement the appropriate

measures, involving our entire company.

Policies

1. “Protect the environment, and elevate employee awareness levels”

2. “Promote the conservation of resources and energy, and recycling”

3. “Comply with legislation”

4. “Reduce waste materials and prevent environmental pollution”

5. “Develop and sell green products”

6. “Support biodiversity”

More information about our CSR activities is available on our corporate website http://www.toppan-f.co.jp/english/csr/index.html

Promoting Nine CSR Themes

Customers• Assurance of product and service quality

and safety• Provision of products and services that

contribute to resolution of social issues

Shareholders and other investors• Fair and impartial disclosure of information

Business partners• Creation of a reliable supply chain

Employees• Respect for and utilization of human resources

• Adherence to laws and corporate ethics

• Pursuit of effective risk management

• Support of environmental preservation

Communities and society at large• Contribution to communities and society at large

“San-eki ichijo”

FINANCIAL SECTION33 Financial Review

36 Consolidated Balance Sheets

38 Consolidated Statements of Income

39 Consolidated Statements of Comprehensive Income

40 Consolidated Statements of Changes in Net Assets

42 Consolidated Statements of Cash Flows

43 Notes to Consolidated Financial Statements

61 Independent Auditor’s Report

This integrated report presents Toppan Forms’ operations in four business segments to re�ect the actual conditions of the Company’s business activities. For account-ing purposes, the Financial Review section divides the Company’s business into two segments.



12 151413 16

320

240

160

80

0

80.0

75.0

70.0

65.0

0

Net Sales Cost of Sales Ratio (right)

17.0

16.0

15.0

14.0

012 151413 16

20

15

10

5

0

6.0

5.0

4.0

3.0

012 151413 16

Operating IncomeOperating Income Margin (right)

Net Sales / Cost of Sales Ratio(Billions of yen) (%)

SG&A Expenses Ratio

（%）

Operating Income / Operating Income Margin(Billions of yen) (%)

Operating EnvironmentIn �scal 2016, the year ended March 31, 2016, although there was

sustained demand for outsourcing in connection with the “My

Number” national identi�cation system, the operating environment

for the business forms industry, remained di�cult due primarily to

rising costs related to raw materials, personnel, and logistics, as well

as lower prices resulting from consistent corporate e�orts to reduce

costs and develop IT and networks. At the same time, information

security measures took on greater importance, partly because of the

successive incidents of personal information leaks at public entities

and other organizations.

In this business environment, the Toppan Forms Group (the

“Group”) aimed to achieve sustainable growth by stepping up e�orts

to increase the number of business process outsourcing (BPO) con-

tracts centered on data print services (DPS) and worked to enhance

its production bases, including the Hino Center. The Group also

focused its e�orts on the expansion of new businesses, including its

own original solution that combines print media and IT, as well as an

e-money payment platform that such clients as a large consumer

electronics store, an airline company, and a company in the amusement

industry have decided to introduce.

Outside Japan, the Group strengthened its alliance with Data

Products Toppan Forms Ltd. (DPTF) in Thailand, which was made a

consolidated subsidiary, while focusing on the in-depth cultivation of

such markets as Hong Kong and Singapore.

In addition, the Group promoted further cost reduction in

manufacturing, mainly through the e�ect of integrating aggregated

manufacturing bases and improving productivity, in order to

strengthen pro�tability. The Group also worked toward business

innovation and improved earnings by aggressively investing in IT.

Income and ExpensesIn �scal 2016, net sales increased 2.8% year on year, to ¥273.2 billion

($2,425 million).

By segment, sales in the Printing Business rose 4.2% year on

year, to ¥212.9 billion ($1,889 million). Speci�cally, for business forms,

the Company o�ered plans and proposals for blanket contracts to

undertake work related to the procurement and management of

printed materials, centering on forms. In addition, the Company

promoted proposals to improve printed materials using scienti�c

approaches. Despite these e�orts, sales of business forms were down

1.5%, to ¥73.8 billion ($655 million), due largely to the e�ects of

reduced demand brought about by the spread of digitalization, the

decline in delivery slip volume, and the drop in unit prices following

increasingly simple orders from customers.

In our DPS operations, sales increased 6.8%, to ¥119.5 billion

($1,060 million), despite a decrease in volume that accompanied e�orts

by corporations to reduce costs and a declining demand in direct mail

for sales proposals. This increase was attributable primarily to solid

growth in contracts for blanket outsourcing of printing operations and

BPO, mainly from public o�ces, municipalities, and �nancial institu-

tions, in addition to the Company’s e�orts to capture demand for

personal printing materials that leverage digital printing technologies.

Turning to our ICT operations, sales were up 12.2%, to ¥19.6

billion ($174 million). This increase was due to the fact that such

positive factors as the inclusion of DPTF into the scope of consolidation,

FINANCIAL REVIEWToppan Forms Co., Ltd. and Consolidated Subsidiaries


240

180

120

60

0

8.0

6.0

4.0

2.0

0

Total Assets ROA (right)

12 151413 16

200

150

100

50

0

12.0

9.0

6.0

3.0

0

Total Net Assets ROE (right)

12 151413 16

Pro�t Attributable to Owners of Parent / Net Income per Share

(Billions of yen) (Yen)

Total Assets / ROA

(Billions of yen) (%)

Total Net Assets / ROE

(Billions of yen) (%)Billions of Yen

12

9

6

3

0

Yen

120

90

60

30

0

Pro�t Attributable to Owners of ParentNet Income per Share (right)

12 151413 16

the solid domestic demand for point cards and ID cards, and the

increased sales of solutions that utilize smartphones o�set negative

factors, including the decline in orders for RFID tags in the wake of

the completion of projects to change frequency bands in accordance

with revisions to the Radio Act.

Despite the adverse e�ects from the decline in sales of business

forms, pro�ts rose following the increase in sales in other areas. In

addition, the Company made thorough e�orts to reduce manufactur-

ing costs through such means as improving production e�ciency by

promoting mechanization and systematization. As a result, pro�t-

ability improved at the operationg income level.

Sales in the Merchandise Business fell 2.0% year on year, to

¥60.4 billion ($536 million). Speci�cally, sales of o�ce supplies prod-

ucts decreased due to the review of low-margin projects, despite the

Company’s e�orts to promote sales of developed products, such as

high-performance refrigerants geared toward the transport, distribu-

tion, and pharmaceutical industries, and to attract bulk purchasing

projects using the online sales system O-TASCARRY.

Sales were down in the o�ce equipment-related business as

well, owing to the review of low-margin projects primarily in Hong

Kong. The negative impact of this review o�set e�orts to increase

sales of high-value-added products, such as equipment geared

toward local governments related to the “My Number” national

identi�cation system as well as a signage solution that responds to

the inbound needs of retail companies.

With respect to the system operation contract business, sales

rose year on year as a result of the increase in the number of new

system operation contracts, primarily from �nancial institutions and

IT companies, and the incorporation of new projects.

Cost of sales rose 1.6%, to ¥215.2 billion ($1,910 million), follow-

ing the increase in net sales. The cost of sales ratio edged down 0.9

percentage points, to 78.8%. As a result, gross pro�t increased 7.4%,

to ¥58.0 billion ($515 million).

Selling, general and administrative (SG&A) expenses increased

7.1%, to ¥44.3 billion ($393 million). The SG&A expenses ratio edged

up 0.7 percentage points, to 16.2%. As a result, operating income rose

8.5%, to ¥13.7 billion ($121 million), and the operating income margin

increased 0.3 percentage points, to 5.0%.

The balance of other income and expenses for �scal 2016 was

income of ¥0.9 billion ($8 million), compared with income of ¥0.6

billion in the previous �scal year. Income before income taxes in-

creased 10.9%, to ¥14.6 billion ($130 million), and pro�t attributable

to owners of parent rose 19.5%, to ¥9.4 billion ($83 million).

Net income per share amounted to ¥84.33 ($0.75), which was

higher than ¥70.59 recorded in the previous �scal year. In addition,

return on shareholders’ equity (ROE) rose from 5.0% to 5.8%, and re-

turn on assets (ROA) increased from 3.5% to 4.1%.


Dividend PolicyToppan Forms encourages the medium-to-long-term holding of

Company stock on the basis of maintaining a consistent level of

dividends while also taking into account operating performance

and the dividend payout ratio. In �scal 2016, the amount for annual

dividends was ¥25.00 per share ($0.22), while the consolidated

dividend payout ratio was 29.6%.

Capital Expenditure / DepreciationCapital expenditure, primarily directed toward production facilities,

increased ¥1.3 billion year on year, to ¥7.6 billion ($67 million).

Depreciation was ¥9.2 billion ($81 million), up ¥0.5 billion year on year.

Financial PositionAt the �scal 2016 year-end, total current assets stood at ¥128.3 billion

($1,139 million), up ¥6.7 billion compared with the previous �scal

year-end. Total current liabilities were ¥56.0 billion ($497 million), up

¥0.4 billion. As a result, working capital climbed ¥6.3 billion, to ¥72.3

billion ($641 million), while the current ratio increased 10.5 percentage

points, to 229.0%.

Total net assets at the end of the �scal year under review stood

at ¥165.8 billion ($1,471 million), an increase of ¥1.9 billion compared

with the previous �scal year-end. While retained earnings were up

¥6.6 billion, remeasurements of de�ned bene�t plans fell ¥3.1 billion,

and valuation di�erence on available-for-sale securities decreased

¥1.4 billion. Furthermore, total assets amounted to ¥228.6 billion

($2,029 million), up ¥4.3 billion compared with the close of �scal

2015, due primarily to a ¥5.9 billion increase in cash and deposits.

Consequently, the equity ratio fell from 72.1% to 71.6%.

Cash FlowsNet cash provided by operating activities during the �scal year under

review totaled ¥14.4 billion ($127 million), a decrease of ¥12.1 billion

compared with ¥26.4 billion in the previous �scal year. Major in�ows

included income before income taxes of ¥14.6 billion ($130 million)

and depreciation of ¥9.2 billion ($81 million). Major out�ows included

income taxes paid of ¥4.4 billion ($39 million), decrease in accrued

consumption taxes of ¥2.0 billion ($18 million), and decrease in net

de�ned bene�t liability of ¥1.4 billion ($13 million).

Net cash used in investing activities amounted to ¥5.5 billion

($49 million), which was ¥2.3 billion less than the ¥7.8 billion used

in the previous �scal year. Major in�ows consisted of proceeds from

sales and redemption of investment securities of ¥3.8 billion ($34

million). Major out�ows included purchase of investment securities

totaling ¥4.1 billion ($36 million) and purchase of property, plant and

equipment of ¥3.7 billion ($33 million).

Net cash used in �nancing activities totaled ¥2.8 billion

($25 million), which was nearly on par with the ¥2.9 billion used in

the previous �scal year. Major out�ows consisted primarily of cash

dividends paid of ¥2.8 billion ($25 million).

As a result of the above, cash and cash equivalents at end of

period totaled ¥59.5 billion ($528 million), up ¥6.0 billion compared

with the previous �scal year-end.


CONSOLIDATED BALANCE SHEETSToppan Forms Co., Ltd. and Consolidated Subsidiaries March 31, 2015 and 2016

Millions of yen

Thousands of U.S. dollars

(Note 1)March 31 2015 2016 2016

AssetsCurrent assets Cash and deposits (Note 10) ¥ 53,680 ¥ 59,547 $ 528,462 Notes and accounts receivable–trade 49,522 49,692 440,998 Short-term investment securities (Notes 12 and 13) 1,101 1,303 11,560 Merchandise and �nished goods 7,975 7,920 70,290 Work in process 1,054 1,149 10,200 Raw materials and supplies 2,378 2,560 22,718 Prepaid expenses 1,553 1,735 15,399 Deferred tax assets (Note 15) 2,222 2,370 21,029 Other current assets 2,274 2,355 20,902 Allowance for doubtful accounts (122) (340) (3,013) Total current assets 121,637 128,291 1,138,545 Noncurrent assets Property, plant and equipment Buildings and structures 65,298 65,500 581,293 Accumulated depreciation (29,916) (31,813) (282,333) Buildings and structures, net 35,382 33,687 298,960 Machinery, equipment and vehicles 77,838 78,696 698,403 Accumulated depreciation (67,554) (68,527) (608,153) Machinery, equipment and vehicles, net 10,284 10,169 90,250 Tools, furniture and �xtures 14,855 15,356 136,282 Accumulated depreciation (11,347) (12,027) (106,736) Tools, furniture and �xtures, net 3,508 3,329 29,546 Land 23,369 23,314 206,904 Lease assets 494 610 5,417 Accumulated depreciation (445) (439) (3,897) Lease assets, net 49 171 1,520 Construction in progress 235 341 3,030 Total property, plant and equipment 72,827 71,011 630,210 Intangible assets Goodwill 1,126 910 8,076 Others 5,215 5,375 47,697 Total intangible assets 6,341 6,285 55,773 Investments and other assets Investment securities (Notes 6 and 13) 18,135 16,767 148,801 Long-term loans receivable 246 6 56 Long-term prepaid expenses 162 198 1,753 Lease and guarantee deposits 1,337 1,369 12,148 Insurance funds 2,149 2,122 18,832 Deferred tax assets (Note 15) 1,237 1,993 17,684 Other assets 735 774 6,872 Allowance for doubtful accounts (448) (204) (1,814) Total investments and other assets 23,553 23,025 204,332 Total noncurrent assets 102,721 100,321 890,315

Total assets ¥224,358 ¥228,612 $2,028,860

The accompanying notes are an integral part of these statements.


CONSOLIDATED BALANCE SHEETSToppan Forms Co., Ltd. and Consolidated Subsidiaries March 31, 2015 and 2016

Millions of yen


(Note 1)March 31 2015 2016 2016

LiabilitiesCurrent liabilities

Notes and accounts payable–trade ¥ 24,203 ¥ 19,627 $ 174,182 Electronically recorded obligations–operating 10,417 14,134 125,436 Short-term loans payable (Note 21) 182 171 1,516 Accounts payable–other (Note 5) 2,006 2,648 23,504 Accrued expenses 5,285 5,825 51,691 Income taxes payable 2,251 2,543 22,568 Accrued consumption taxes 3,273 1,241 11,012 Provision for bonuses 4,815 5,053 44,845 Provision for directors’ bonuses 57 64 564 Asset retirement obligations (Note 16) – 171 1,519 Notes payable–facilities 297 327 2,902 Electronically recorded obligations–non-operating 636 1,968 17,464 Other current liabilities (Note 5) 2,243 2,254 20,010 Total current liabilities 55,665 56,026 497,213 Noncurrent liabilities Deferred tax liabilities (Note 15) 1,026 210 1,861 Net de�ned bene�t liability (Note 14) 2,329 5,459 48,450 Provision for directors’ retirement bene�ts 169 167 1,485 Asset retirement obligations (Note 16) 688 625 5,545 Others (Note 5) 565 340 3,019 Total noncurrent liabilities 4,777 6,801 60,360 Total liabilities 60,442 62,827 557,573

Net assetsShareholders’ equity Capital stock Authorized: 400,000,000 shares Issued: 115,000,000 shares 11,750 11,750 104,278 Capital surplus 9,270 9,270 82,268 Retained earnings 138,959 145,545 1,291,664 Treasury stock (Note 9) (2015: 4,003,515 shares, 2016: 4,003,515 shares) (4,917) (4,917) (43,633) Total shareholders’ equity 155,062 161,648 1,434,577 Accumulated other comprehensive income Valuation di�erence on available-for-sale securities 3,538 2,152 19,098 Foreign currency translation adjustment 1,188 1,028 9,121 Remeasurements of de�ned bene�t plans 1,978 (1,096) (9,729) Total accumulated other comprehensive income 6,704 2,084 18,490 Non-controlling interests 2,150 2,053 18,220 Total net assets 163,916 165,785 1,471,287

Total liabilities and net assets ¥224,358 ¥228,612 $2,028,860



Millions of yen


(Note 1)

Year ended March 31 2015 2016 2016

Net sales (Note 17) ¥265,886 ¥273,217 $2,424,717 Cost of sales 211,911 215,222 1,910,030 Gross pro�t 53,975 57,995 514,687 Selling, general and administrative expenses (Note 7) 41,368 44,320 393,329 Operating income 12,607 13,675 121,358

Non-operating income Interest income 177 136 1,205 Dividend income 335 284 2,519 Equity in earnings of a�liates 140 111 989 Subsidy income 190 170 1,506 Others (Note 5) 403 389 3,454

1,245 1,090 9,673 Non-operating expenses Foreign exchange losses 15 38 335 Loss on insurance cancellation 78 52 463 Rent expenses 66 33 292 Provision of allowance for doubtful accounts 20 – – Others (Note 5) 241 50 438

420 173 1,528 Ordinary income 13,432 14,592 129,503

Extraordinary income Gain on sales of investment securities 194 636 5,644 Gain on step acquisitions 133 – – Others 103 16 138

430 652 5,782 Extraordinary loss Loss on retirement of noncurrent assets (Note 7) 95 180 1,598 O�ce transfer expenses (Note 7) 551 98 871 Anniversary project expenses (Note 7) – 260 2,312 Others (Note 5) 35 85 751

681 623 5,532 Income before income taxes 13,181 14,621 129,753

Income taxes (Note 15) – Current 4,660 4,653 41,291 – Deferred 651 472 4,186

5,311 5,125 45,477 Pro�t 7,870 9,496 84,276 Pro�t attributable to non-controlling interests 35 135 1,202

Pro�t attributable to owners of parent ¥ 7,835 ¥ 9,361 $ 83,074


CONSOLIDATED STATEMENTS OF INCOMEToppan Forms Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2015 and 2016


Millions of yen


(Note 1)


Pro�t ¥ 7,870 ¥ 9,496 $ 84,276 Other comprehensive income (loss) Valuation di�erence on available-for-sale securities 1,570 (1,397) (12,399) Foreign currency translation adjustment 746 (118) (1,050) Remeasurements of de�ned bene�t plans, net of tax 2,345 (3,074) (27,282) Share of other comprehensive income of entities accounted for

using equity method (30) (42) (370) Total other comprehensive income (loss) (Note 8) 4,631 (4,631) (41,101)Comprehensive income ¥12,501 ¥ 4,865 $ 43,175 Comprehensive income attributable to Owners of parent 12,451 4,741 42,072 Non-controlling interests 50 124 1,103


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEToppan Forms Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2015 and 2016


Millions of yen


(Note 1)


Statements of changes in net assetsShareholders’ equity Capital stock Balance at beginning of current period ¥ 11,750 ¥ 11,750 $ 104,278 Cumulative e�ects of changes in accounting policies – – – Restated balance 11,750 11,750 104,278 Changes of items during the period Total changes of items during the period – – – Balance at end of current period 11,750 11,750 104,278 Capital surplus Legal capital surplus Balance at beginning of current period 9,270 9,270 82,268 Cumulative e�ects of changes in accounting policies – – – Restated balance 9,270 9,270 82,268 Changes of items during the period Total changes of items during the period – – – Balance at end of current period 9,270 9,270 82,268 Retained earnings Balance at beginning of current period 136,479 138,959 1,233,217 Cumulative e�ects of changes in accounting policies (2,580) – – Restated balance 133,899 138,959 1,233,217 Changes of items during the period Dividends from surplus (2,775) (2,775) (24,627) Pro�t attributable to owners of parent 7,835 9,361 83,074 Total changes of items during the period 5,060 6,586 58,447 Balance at end of current period 138,959 145,545 1,291,664 Treasury stock Balance at beginning of current period (4,917) (4,917) (43,633) Cumulative e�ects of changes in accounting policies – – – Restated balance (4,917) (4,917) (43,633) Changes of items during the period Purchase of treasury stock (0) – – Total changes of items during the period (0) – – Balance at end of current period (4,917) (4,917) (43,633) Total shareholders’ equity Balance at beginning of current period 152,582 155,062 1,376,130 Cumulative e�ects of changes in accounting policies (2,580) – – Restated balance 150,002 155,062 1,376,130 Changes of items during the period Dividends from surplus (2,775) (2,775) (24,627) Pro�t attributable to owners of parent 7,835 9,361 83,074 Purchase of treasury stock (0) – – Total changes of items during the period 5,060 6,586 58,447 Balance at end of current period 155,062 161,648 1,434,577 Accumulated other comprehensive income Valuation di�erence on available-for-sale securities Balance at beginning of current period 1,973 3,538 31,398 Cumulative e�ects of changes in accounting policies – – – Restated balance 1,973 3,538 31,398 Changes of items during the period Net changes of items other than shareholders’ equity 1,565 (1,386) (12,300) Total changes of items during the period 1,565 (1,386) (12,300) Balance at end of current period 3,538 2,152 19,098

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSToppan Forms Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2015 and 2016


Millions of yen


(Note 1)


Foreign currency translation adjustment Balance at beginning of current period ¥ 472 ¥ 1,188 $ 10,541 Cumulative e�ects of changes in accounting policies – – – Restated balance 472 1,188 10,541 Changes of items during the period Net changes of items other than shareholders’ equity 716 (160) (1,420) Total changes of items during the period 716 (160) (1,420) Balance at end of current period 1,188 1,028 9,121 Remeasurements of de�ned bene�t plans Balance at beginning of current period (358) 1,978 17,553 Cumulative e�ects of changes in accounting policies – – – Restated balance (358) 1,978 17,553 Changes of items during the period Net changes of items other than shareholders’ equity 2,336 (3,074) (27,282) Total changes of items during the period 2,336 (3,074) (27,282) Balance at end of current period 1,978 (1,096) (9,729)Total accumulated other comprehensive income Balance at beginning of current period 2,087 6,704 59,492 Cumulative e�ects of changes in accounting policies – – – Restated balance 2,087 6,704 59,492 Changes of items during the period Net changes of items other than shareholders’ equity 4,617 (4,620) (41,002) Total changes of items during the period 4,617 (4,620) (41,002) Balance at end of current period 6,704 2,084 18,490 Non-controlling interests Balance at beginning of current period 639 2,150 19,083 Cumulative e�ects of changes in accounting policies – – – Restated balance 639 2,150 19,083 Changes of items during the period Net changes of items other than shareholders’ equity 1,511 (97) (863) Total changes of items during the period 1,511 (97) (863) Balance at end of current period 2,150 2,053 18,220 Total net assets Balance at beginning of current period 155,308 163,916 1,454,705 Cumulative e�ects of changes in accounting policies (2,580) – – Restated balance 152,728 163,916 1,454,705 Changes of items during the period Dividends from surplus (2,775) (2,775) (24,627) Pro�t attributable to owners of parent 7,835 9,361 83,074 Purchase of treasury stock (0) – – Net changes of items during the period 6,128 (4,717) (41,865) Total changes of items during the period 11,188 1,869 16,582

Balance at end of current period ¥163,916 ¥165,785 $1,471,287



Millions of yen


(Note 1)


Net cash provided by operating activities Income before income taxes ¥13,181 ¥14,621 $129,753 Depreciation 8,633 9,159 81,282 Amortization of goodwill 102 219 1,945 Loss on retirement of noncurrent assets 95 180 1,598 Gain on sales of investment securities (180) (627) (5,563) Decrease in allowance for doubtful accounts (9) (26) (230) Decrease in net de�ned bene�t liability (1,243) (1,425) (12,648) Decrease (increase) in provision for directors’ bonuses (9) 6 55 Decrease (increase) in provision for bonuses (179) 241 2,141 Interest and dividends income (512) (420) (3,724) Interest expense 6 7 59 Gain on maturity of insurance contract (Note 5) (11) (100) (889) Equity in earnings of a�liates (140) (111) (989) Decrease (increase) in notes and accounts receivable–trade 1,001 (254) (2,254) Decrease (increase) in inventories 484 (254) (2,256) Increase (decrease) in notes and accounts payable–trade 5,099 (838) (7,441) Increase (decrease) in accrued consumption taxes 2,662 (2,030) (18,019) Others, net (Note 5) 1,133 46 424 Subtotal 30,113 18,394 163,244 Interest and dividend income received 506 411 3,646 Interest expenses paid (6) (7) (59) Income taxes paid (4,193) (4,436) (39,371) Net cash provided by operating activities 26,420 14,362 127,460 Net cash used in investing activities Payments into time deposits (253) (253) (2,245) Proceeds from withdrawal of time deposits 253 370 3,283 Purchase of securities – (300) (2,662) Proceeds from sales of securities – 300 2,662 Purchase of property, plant and equipment (6,404) (3,707) (32,898) Proceeds from sales of property, plant and equipment 4 3 27 Purchase of investment securities (5,147) (4,107) (36,453) Proceeds from sales and redemption of investment securities 6,133 3,828 33,972 P urchase of investments in subsidiaries resulting in change in scope

of consolidation (Note 10) (1,309) – – Other payments (2,284) (2,735) (24,269) Other proceeds 1,217 1,134 10,062 Net cash used in investing activities (7,790) (5,467) (48,521)Net cash used in �nancing activities Net decrease in short-term loans payable (169) – – Repayments of �nance lease obligations (35) (41) (365) Cash dividends paid (2,775) (2,775) (24,626) Proceeds from share issuance to non-controlling shareholders 61 – – Dividends paid to non-controlling interests (15) (15) (134) Others, net (0) – – Net cash used in �nancing activities (2,933) (2,831) (25,125)E�ect of exchange rate change on cash and cash equivalents 119 (67) (597)Net increase in cash and cash equivalents 15,816 5,997 53,217 Cash and cash equivalents at beginning of period 37,681 53,497 474,775

Cash and cash equivalents at end of period (Note 10) ¥53,497 ¥59,494 $527,992


CONSOLIDATED STATEMENTS OF CASH FLOWSToppan Forms Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2015 and 2016


NOTES TO CONSOLIDATED FINANCIAL STATEMENTSToppan Forms Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2015 and 2016

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated �nancial statements have been translated from the consolidated �nancial statements of TOPPAN FORMS CO., LTD. (the “Company”) and its subsidiaries �led with the Director of the Kanto Local Finance Bureau in accordance with the Financial Instruments and Exchange Law of Japan and its related accounting regulations, and in conformity with accounting principles and practices generally accepted in Japan, which are di�erent in certain respects from the application and disclosure requirements of International Financial Reporting Standards. The consolidated �nancial statements are stated in Japanese yen, the

currency of the country in which the Company is incorporated and principally operates. The translation of Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside Japan and has been calculated at the rate of ¥112.68 to U.S.$1, the approximate rate of exchange on March 31, 2016. Such translations should not be construed as representa-tions that the Japanese yen amounts could have been or could be converted into U.S. dollars at that or any other rate. In addition, certain reclassi�cations of previously reported amounts have been made to conform to the current year presentation.

2. Summary of Signi�cant Accounting Policies

(1) Consolidation (a) Consolidated subsidiariesThe consolidated �nancial statements include the accounts of the Company and all of its subsidiaries (23 companies for the �scal years ended March 31, 2015 and 2016, respectively). Signi�cant subsidiaries are as follows: • Toppan Forms Central Products Co., Ltd. • Toppan Forms Tokai Co., Ltd. • Toppan Forms Logistics and Services Co., Ltd. • Toppan Forms Kansai Co., Ltd. • Toppan Forms Nishinihon Co., Ltd. • Toppan Forms (Sanyo) Co., Ltd. • TOSCO CORPORATION • Toppan Forms (Hong Kong) Ltd. • Toppan Forms (S) Pte. Ltd. • Toppan Forms Operation Co., Ltd. • Techno Toppan Forms Co., Ltd. • TF Payment Service Co., Ltd. • J-SCube Inc. • Data Products Toppan Forms Ltd.(b) Equity-method associatesInvestments in all associates (3 associates for the �scal years ended March 31, 2015 and 2016, respectively), where shareholdings are more than 20% and where the Company has signi�cant in�uence over operations, �nance and management, are accounted for using the equity method. The associate with the most signi�cant impact on the results of the Company is ZHEJIANG MATSUOKA PRINTING CO., LTD.(c) Period-end datesThe period-end date of T.F. Company Ltd. and 9 of its subsidiaries is December 31. The consolidated �nancial statements incorporate the accounts of these companies with adjustments for signi�cant transactions with the Company and consolidated subsidiaries arising during the period from January 1 to March 31.

(2) Valuation methods for major assets(a) SecuritiesSecurities held by the Company and its consolidated subsidiaries are classi�ed into two categories: Held-to-maturity debt securities are stated at cost after accounting for any premium or discount on acquisition, which is amortized over the period to maturity. Other securities for which market price or quotations are available are stated at fair value. Net unrealized gains and losses on these securities are reported as a separate component of net assets at a net-of-tax amount. Other securities for which market quotations are unavailable are stated at cost. In addition, subscriptions to investment funds (not a�liates) that are included in other investment securities are accounted for by the equity method based on the most recently available �nancial information. (b) DerivativesAll derivatives are stated at fair value, with changes in fair value being included in net income for the period in which they arise, except for derivatives that are designated as “hedging instruments”.(c) InventoriesMerchandise (supplies), raw materials and supplies are stated at the lower of cost or net realizable value determined by using the �rst-in, �rst-out method. Merchandise (machinery), �nished goods and work in process are stated at the lower of cost or net realizable value determined by using the speci�c identi�cation method.

(3) Depreciation and amortization of major assets(a) Property, plant and equipment (excluding lease assets)The declining-balance method is principally adopted. The same standard as is stipulated in the Corporate Tax Law of Japan is applied to the useful economic lives and the residual values for accounting purposes. However, depreciation of buildings acquired by the Company and its domestic consolidated subsid-iaries after April 1, 1998 is computed using the straight-line method in ac-cordance with the Corporate Tax Law of Japan. (b) Intangible assets (excluding lease assets)The straight-line method is adopted. Software for in-house use is amortized based on the straight-line method over the expected useful economic life of 5 years.(c) Lease assetsThe straight-line method is adopted over the lease term without residual value. (d) Long-term prepaid expensesThe straight-line method is adopted. The majority of assets have an amortiza-tion period of 5 years.

(4) Basis of provision(a) Allowance for doubtful accountsAllowance for doubtful accounts of the Company and its domestic consoli-dated subsidiaries is computed based on the past bad debt experience ratio for normal receivables, plus the estimated irrecoverable amount of doubtful receivables on an individual account basis.(b) Provision for bonusesProvision for bonuses to employees is provided for in the amount of the expected bonus payments to be made at the end of the �scal year.(c) Provision for bonuses to directors and corporate auditorsProvision for bonuses to directors and corporate auditors are provided for in the estimated amounts to be paid in respect of the �scal year. (d) Provision for directors’ retirement bene�tsThe Company and its domestic consolidated subsidiaries record accrued severance indemnities costs for directors and corporate auditors based on internal regulations. The Company had abolished the severance indemnities for directors and corporate auditors upon the closure of its annual sharehold-ers’ meeting held on June 29, 2006. According to the abolishment, the accrued severance indemnities for directors and corporate auditors, which were calculated and �xed based on the Company’s internal rules and the period from their admission up to June 29, 2006, are included in “Provision for directors’ retirement bene�ts” on the consolidated balance sheets.

(5) Accounting method for retirement bene�ts(a) Allocation of expected bene�t paymentsWhen calculating retirement bene�t obligation, the bene�t formula method is used to allocate expected bene�t payments .(b) Actuarial di�erences and prior service costsThe unrecognized prior service costs are being amortized on a straight-line basis over 15 years (the average remaining service period of employees when the unrecognized prior service costs are incurred). The unrecognized actuarial di�erences are being amortized on a straight-line basis primarily over 15 years (the average remaining service period of employees when the di�erences are incurred) from the period following that in which they occurred.


(6) Recognition for construction contractsThe percentage-of-completion method is adopted if the outcome of the construction activity is deemed certain during the course of the activity, otherwise the completed-contract method is adopted. The percentage of completion at the end of the �scal year is estimated based on the percentage of the costs incurred to the estimated total cost.

(7) Foreign currency translationThe translation of assets and liabilities denominated in foreign currency at the end of the �scal year is made at the period-end exchange rate. Exchange gains and losses resulting from foreign currency transactions and translation of assets and liabilities denominated in foreign currencies are included in the consolidated statements of income. All assets, liabilities, income and expense accounts of foreign subsidiaries and a�liates are translated using the current exchange rates at the respective balance sheet dates. Foreign currency translation adjustments resulting from such procedures are recorded in the consolidated balance sheets as a separate component of net assets.

(8) Hedge accountingGains and losses arising from changes in the fair value of derivatives desig-nated as “hedging instruments” are deferred as an asset or liability, and in-cluded in net income in the same period during which the gains and losses on the hedged items or transactions are recognized. Derivatives designated as hedging instruments by the Company are principally forward exchange contracts and interest rate swap contracts.

The related hedged items are trade accounts receivable and payable, and long-term debts. The Company has a policy of utilizing the above hedging instruments in order to reduce the Company’s exposure to the risk of foreign currency exchange rate �uctuations and interest rate �uctuations. Thus, the Company’s purchase of hedging instruments is limited to, at maximum, the amounts of the hedged items. The Company evaluates the e�ectiveness of its hedging activities by reference to the accumulated gains or losses on the hedging instruments and the related items from the commencement of the hedges.

(9) Amortization of goodwillGoodwill is amortized evenly over the estimated period during which the Company will receive bene�t.

(10) Cash and cash equivalentsCash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, those that are readily convertible to known amounts of cash and, thus, present an insigni�cant risk of changes in value.

(11) Consumption taxThe consumption tax withheld upon sale and consumption tax paid by the Companies on their purchases of goods and services is not included in revenue and cost or expense items, in the accompanying consolidated statements of income.

3. Accounting Changes

For the consolidated �scal year under review, the Company applied the following standards; “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013; hereinafter, the “Business Combination Standard”), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, September 13, 2013; hereinafter, the “Consolidated Accounting Standard”), and the “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013; hereinafter, the “Business Divestitures Accounting Standard”). As a result of the accounting method change the di�erences associated with changes in equity in subsidiaries remaining under control of the Company is recorded as capital surplus and acquisition-related costs are recorded as expenses in the �scal year in which the costs are incurred. For business combinations implemented on or after the start of the current �scal year, the accounting method has been changed to re�ect the adjustments to the allocated amount of acquisition costs on the �nalization of provisional accounting treatment in the consolidated �nancial

statements for the year containing the date of the business combinations. The Company applied the transitional treatment as prescribed in Item (4), Paragraph 58-2 of the Business Combination Standard, Item (4), Paragraph 44-5 of the Consolidated Accounting Standard, and Item (4), Paragraph 57-4 of the Business Divestitures Accounting Standard on the start of the consolidated �scal year under review and for the future years. In the consolidated statement of cash �ows for the consolidated �scal year under review, cash �ows related to acquisition or sale of share of subsidiaries not a�ecting the scope of consolidation are classi�ed into “Cash �ows from �nancing activities,” while cash �ows related to expenses arising from acquisi-tion of shares of subsidiaries not a�ecting the scope of consolidation are classi�ed into “Cash �ows from operating activities.” The changes made do not a�ect the consolidated �nancial statements or per share information in the �scal year under review.

4. Accounting Standard Issued But Not Yet Applied

“Implementation Guidance on Recoverability of Deferred Tax Assets” (Implementation Guidance of Corporate Accounting Standards No. 26, March 29, 2016)

(1) OverviewRegarding the treatment of the recoverability of deferred tax assets, a neces-sary review was conducted following the framework of Japanese Institution of Certi�ed Public Accountants Audit Committee Report No. 66” Audit Treatment of Determining the Recoverability of Deferred Tax Assets” whereby companies are now categorized into �ve categories and deferred tax assets are calculated based on each of these categories.

1) Treatment of companies that do not satisfy any of the category require-ments for (Category 1) through (Category 5)

2) Category requirements for (Category 2) and (Category 3)

3) Treatment related to future deductible temporary di�erences which cannot be scheduled in companies that qualify as (Category 2)

4) Treatment related to the reasonable estimable period of future pre-adjusted taxable income in companies that qualify as (Category 3)

5) Treatment in cases that companies that satisfy the category requirements for (Category 4) but qualify as (Category 2) or (Category 3)

(2) Date of adoptionNew accounting standard will be adopted from the start of the �scal year ending March 31, 2017.

(3) Impact of the adoption of the accounting standardAt the beginning of the next consolidated �scal year, the impact on the Company’s consolidated �nancial statements will be minimal.


5. Change in Presentation Methods

(1) Consolidated Balance SheetsIn the prior consolidated �scal year, “Accounts payable-other” was included in “Other current liabilities” under “Current liabilities.” In the current consolidated �scal year, the balance of “Accounts payable-other” increased and is now disclosed separately under “Other current liabilities” in the consolidated balance sheets due to the increase in the account balance. In order to re�ect this change in presentation, the consolidated �nancial statements has been revised for the previous consolidated �scal year. As a result, the ¥4,249 million for “Other current liabilities” under “Current liabil-ities” is now presented as “Accounts payable-other” of ¥2,006 million and “Other current liabilities” of ¥2,243 million for the previous consolidated �scal year. In the previous consolidated �scal year, “Lease obligations” was disclosed separately under “Noncurrent liabilities.” In the current consolidated �scal year under review, “Lease obligations” is no longer monetarily signi�cant and is now included in the amount for “Others” in the consolidated balance sheet. In order to re�ect this change in presentation, the consolidated �nancial statements for the previous consolidated �scal year have been revised. As a result, the ¥56 million for “Lease obligations” under “Noncurrent liabilities” was reorganized into the ¥509 million for “Others.” Accordingly, the amount listed for “Others” is now ¥565 million for the previous consolidated �scal year.

(2) Consolidated Statements of IncomeIn the previous consolidated �scal year, “House rent income” was disclosed separately under “Non-operating income.” In the current consolidated �scal year, “House rent income” is no longer monetarily signi�cant and is now included in the amount for “Others” in the consolidated statements of income. In order to re�ect this change in presentation, the consolidated �nancial statements for the previous consolidated �scal year have been revised. As a result, the ¥127 million for “House rent income” under “Non-operating income” was reorganized into the ¥276 million for “Others.” Accordingly, the amount listed for “Others” is now ¥403 million for the previous consolidated �scal year. In the previous consolidated �scal year, “Interest expenses” was disclosed separately under “Non-operating expenses.” In the current consolidated �scal

years, “Interest expenses” is no longer monetarily signi�cant and is now in-cluded in the amount for “Others” in the consolidated statements of income. In order to re�ect this change in presentation, the consolidated �nancial statements for the previous consolidated �scal year have been revised. As a result, the ¥6 million for “Interest expenses” under “Non-operating expenses” was reorganized into the ¥235 million for “Others.” Accordingly the amount listed for “Others” is now ¥241 million for the previous consolidated �scal year. In the previous consolidated �scal year, “Loss on disposal of noncurrent assets” was disclosed separately under “Extraordinary loss.” In the current consolidated �scal years “Loss on disposal of noncurrent assets” is no longer monetarily signi�cant and is now included in the amount for “Others” in the consolidated statements of income. In order to re�ect this change in presenta-tion, the consolidated �nancial statements for the previous consolidated �scal year have been revised. As a result, the ¥6 million for “Loss on disposal of noncurrent assets” under “Extraordinary loss” was reorganized into the ¥29 million for “Others.” Accordingly the amount listed for “Others” is now ¥35 million for the previous consolidated �scal year.

(3) Consolidated Statements of Cash FlowsIn the previous consolidated �scal year, “Gain on maturity of insurance con-tract” was included in “Others, net” under “Net cash provided by operating activities.” In the current consolidated �scal year the balance of “Gain on maturity of insurance contract” is now disclosed separately under “Net cash provided by operating activities” in the consolidated statements of cash �ows due to the increase in the account balance. In order to re�ect this change in presentation, the consolidated �nancial statements for the previous consoli-dated �scal year have been revised. As a result, the ¥1,122 million for “Others, net” of under “Net cash provided by operating activities” is now presented as “Gain on maturity of insurance contract” of ¥(11) million and “Others, net” of ¥1,133 million for the previous consolidated �scal year.

6. Notes to Consolidated Balance Sheets

Investments in a�liates

Millions of yenThousands of

U.S. dollars

2015 2016 2016

Investment securities (share stocks) ¥655 ¥722 $6,404

7. Notes to Consolidated Statements of Income

(1) Selling, general and administrative expensesThe major components of “Selling, general and administrative expenses” are as follows:


U.S. dollars


Delivery costs ¥ 7,089 ¥ 6,716 $ 59,604Salaries and bonuses 14,578 14,971 132,859Pension costs 613 514 4,560Provisions for bonuses to employees 1,851 2,065 18,326Provisions for bonuses to directors and corporate auditors 57 64 564Provisions for retirement bene�ts of directors and corporate auditors 18 25 219Depreciation 2,550 2,080 18,464Rent expenses 1,675 1,294 11,481Research and development expenditure 1,781 1,497 13,283

(2) Research and development expenditureResearch and development expenditure, which is charged to the consolidated statement of income when incurred, and is included in selling, general and adminis-trative expenses, amounted to ¥1,781 million and ¥1,497 million (US$13,283 thousand) for the �scal years ended March 31, 2015 and 2016, respectively.


(3) The breakdown of loss on retirement of noncurrent assets


U.S. dollars


Buildings and structures ¥16 ¥ 43 $ 379Machinery, equipment and vehicles 64 81 717Tools, furniture and �xtures 11 36 322Software 1 – –Others 3 20 180

¥95 ¥180 $1,598

(4) O�ce transfer expensesO�ce transfer expenses are the Company, group datacenter of the consolidated subsidiary and factory restructuring for the �scal year ended March 31, 2015 and transferring the head o�ce of a consolidated subsidiary for the �scal year ended March 31, 2016, respectively.

(5) Anniversary project expensesAnniversary project expenses refer to expenses paid in relation to the anniversary projects of the Company and its consolidated subsidiaries.

8. Notes to Consolidated Statements of Comprehensive Income

“Other comprehensive income (loss)” comprises the following:


U.S. dollars


Valuation di�erence on available-for-sale securities Gains (losses) arising during the year ¥ 2,308 ¥(1,566) $(13,896) Reclassi�cation adjustments (173) (543) (4,818) Amount before income tax e�ect 2,135 (2,109) (18,714) Income tax e�ect (565) 712 6,315 Valuation di�erence on available-for-sale securities 1,570 (1,397) (12,399)Foreign currency translation adjustment Gains (losses) arising during the year 746 (118) (1,050)Remeasurements of de�ned bene�t plans, net of tax Gains (losses) arising during the year 3,142 (4,545) (40,336) Reclassi�cation adjustments 350 (10) (93) Amount before income tax e�ect 3,492 (4,555) (40,429) Income tax e�ect (1,147) 1,481 13,147 Remeasurements of de�ned bene�t plans, net of tax 2,345 (3,074) (27,282)Share of other comprehensive income of entities accounted for using equity method Gains (losses) arising during the year 2 (42) (370) Reclassi�cation adjustments (32) – – Share of other comprehensive income of entities accounted for using equity method (30) (42) (370)Total other comprehensive income (loss) ¥ 4,631 ¥(4,631) $(41,101)

9. Notes to Consolidated Statements of Changes in Net Assets

The following are notes to the consolidated statement of changes in net assets as of March 31, 2015.

(1) Shares issued

Share typePrevious �scal year-end

(Thousand shares)Increase

(Thousand shares)Decrease

(Thousand shares)Fiscal year-end

(Thousand shares)

Common stock 115,000 – – 115,000

(2) Treasury stock





(Thousand shares)

Common stock 4,003 0 – 4,004


(3) Matters related to dividends(a) Amount of dividends paid

Resolution Type of stockTotal amount of dividends

(Millions of yen)Dividend per

share (Yen) Date of record E�ective date

Annual shareholders’ meeting held on June 27, 2014

Commonstock

1,387 12.5March 31,

2014June 30,

2014Board of Directors’ meeting held on October 31, 2014

Commonstock

1,387 12.5September 30,

2014December 8,

2014

(b) Schedule of dividendsThe following shows those dividends with date of record in the �scal year ended March 31, 2015, for which the e�ective date is in the following consolidated �scal year.


(Millions of yen)Fiscal resource

of dividendsDividend per



Commonstock

1,387Retainedearnings

12.5March 31,

2015June 29,

2015

The following are notes to the consolidated statement of changes in net assets as of March 31, 2016.(1) Shares issued





(Thousand shares)

Common stock 115,000 – – 115,000

(2) Treasury stock





(Thousand shares)

Common stock 4,004 – – 4,004

(3) Matters related to dividends (a) Amount of dividends paid


(Millions of yen)Dividend per



Commonstock

1,387 12.5March 31,

2015June 29,


Commonstock

1,387 12.5September 30,

2015December 7,

2015

Resolution Type of stockTotal amount of dividends (Thousands of U.S. dollars)

Dividend per share (U.S. dollars) Date of record E�ective date


Commonstock

12,313 0.11March 31,

2015June 29,


Commonstock

12,313 0.11September 30,

2015December 7,

2015

(b) Schedule of dividendsThe following shows those dividends with date of record in the �scal year ended March 31, 2016, for which the e�ective date is in the following consolidated �scal year.


(Millions of yen)Fiscal resource

of dividendsDividend per



Commonstock


12.5March 31,

2016June 30,

2016

Resolution Type of stockTotal amount of dividends (Thousands of U.S. dollars)

Fiscal resource of dividends

Dividend per share (U.S. dollars) Date of record E�ective date


Commonstock


0.11March 31,

2016June 30,

2016


10. Notes to Consolidated Statements of Cash Flows

(1) Cash and cash equivalents


U.S. dollars


Cash and time deposits with original maturity of three months or less ¥53,680 ¥59,547 $528,462Less: Time deposits with original maturities of more than three months (183) (53) (470)

¥53,497 ¥59,494 $527,992

(2) Breakdown of assets received and liabilities assumed from companies converted to consolidated subsidiaries following the acquisition of stockFor the �scal year ended March 31, 2015, the breakdown of assets received and liabilities assumed from Data Products Toppan Forms Ltd. at the time of consolida-tion following the acquisition of stock, acquisition cost, and net cash out�ow to acquire the shares of newly consolidated subsidiary are as follows.

Millions of yen

Current assets ¥ 1,423Noncurrent assets 1,883Goodwill 822Current liabilities (391)Noncurrent liabilities (208)Non-controlling interests (1,407)Acquisition cost 2,122Equity method appraisal value up to the acquisition of control (124)Gain on step acquisitions (133)Cash and cash equivalents (556)Net cash out�ow to acquire the shares of newly consolidated subsidiary ¥ 1,309

11. Lease Transactions

(1) Finance lease transaction (lessee)Finance leases other than those which transfer ownership of property, plant and equipment to lessees are utilized. Lease assets consist mainly of production assets (machinery, equipment and vehicles) used in the printing business. Accumulated depreciation is computed by the straight-line method based on the period of those �nance leases with no residual value.

(2) Operating lease transaction (lessee)Minimum lease payments under non-cancellable operating leases for the �scal years ended March 31, 2015 and 2016 are as follows:


U.S. dollars

March 31 2015 2016 2016

Due within 1 year ¥ 442 ¥ 456 $ 4,050Due after 1 year 1,397 1,337 11,869Total minimum lease payments ¥1,839 ¥1,793 $15,919

12. Financial Instruments

(1) Matters related to the status of �nancial instruments(a) Policies on the use of �nancial instrumentsThe Company invests temporary surpluses in highly secure �nancial assets and does not engage in speculative investment. The Company employs derivative transactions only to hedge against the market risks described below, and does not conduct such trades for speculative purposes.(b) Content of �nancial instruments and assessed risksCash and deposits involve the risk that the depository institution will default and become unable to repay the deposits. Short-term investment securities are subject to the risk of default by an issuing institution or �nancial brokerage �rm, as well as the risk of a substantial decline in fair value as a result of changes in the market environment which may result in the loss or impair-ment of principal investments. Claimable assets such as accounts receivable, notes receivable, loans receivable, and other collectibles, as well as such �nancial assets including lease and guarantee deposits, involve the risk of counterparties becoming unable to discharge their settlement duties due to worsening management or insolvency. Borrowings made from �nancial institutions by consolidated subsidiaries for which the Company has guaran-teed obligations involve the risk that a breach of contract with the guaranteed party by the Company’s consolidated companies could harm the Company’s reputation and force it to assume responsibility for the borrowings. Derivative contracts involve the risk of non-performance due to default and other factors.

Derivative contracts also involve the risk of substantial declines in market value owing to changes in the market environment resulting from foreign exchange rate and interest rate �uctuations, as well as the risk of substantial increases in obligations. Financial obligations on notes and accounts payable involve the risk of double payment owing to the transfer of obligations to a business partner, as well as the risk of being unable to avoid the e�ects of activities by antisocial elements. Loans payable involve the risk of a downturn in operating performance which could result in the attachment of collateral and the risk of being unable to sustain the existing conditions of �nancial agreements. Also, future interest rate increases could cause the Company’s obligations on loans payable and bonds payable to increase. Loans payable and other �nancial obligations also involve the risk that, as the result of a downturn in operating performance, the Company’s liquidity could fall to a level that renders it unable to ful�ll its payment obligations. A portion of the Company’s �nancial assets, such as cash and deposits, and certain �nancial obligations are denominated in foreign currencies as a result of the Group’s e�orts to expand its operations overseas. Consequently, exchange rate �uctuations could cause its asset values to decline or the cost of its obligations to increase. Cash, foreign currency col-lateral securities and notes receivable, equity securities and assets underlying marketable securities involve the risk that the Company may be unable to �le recovery claims as a result of theft, loss or �re.


(c) Risk management system related to �nancial instruments(i) Management of credit risk (the risk that a customer will default on its

transactional obligations) The Company manages its various claimable assets, such as accounts

receivable and notes receivable, according to separately formulated receiv-ables management regulations, with the aim of securing its receivables and boosting its capital e�ciency. Speci�c details regarding management are provided in the Company’s customer information management regulations.

In accordance with the provision for “credit management” in Article 2 of the Company’s customer information management regulations, on a monthly basis the Company determines the total fair value of its loans receivable, other receivables and other guaranteed obligations, con�rming the credit status of customer and collection delays to con�rm recoverability.

To lower its counterparty risk, the Company conducts derivative transactions only with highly rated �nancial institutions.

(ii) Management of market risk (the risk of foreign currency exchange and interest rate �uctuations)

The Company invests funds in accordance with separately formulated �nancial management regulations and �nancial management regulation implementation schedules to minimize risks related to capital, interest, liquidity and fund settlement.

On a quarterly basis, the Company determines the fair value of its holdings of marketable securities and the �nancial status of their issuers (corporate business partners) and reviews the status of its holdings on a regular basis.

The Company engages in derivative transactions only for the purpose of hedging risk, and does not conduct such transactions for speculative purposes.

(iii) Management of liquidity risk related to fund procurement (the risk of being unable to make payments on their due dates)

In accordance with its �nancial management regulations and �nancial management regulation implementation schedule, the Company formulates asset budget plans in line with its medium-term plans, reports on investments and performance at monthly investment meetings, and manages ongoing cash �ow.

The Company conducts medium- to long-term cash planning and raises funds as necessary by issuing corporate bonds or through bank loans to ensure the availability of appropriate levels of cash and raise capital e�ciency.

The Company has formulated �nancial management regulations, supplementary schedules and a�liated company management regulations with regard to the raising of funds through the issuance of corporate bonds and borrowings, and procedures for selecting �nancial institutions, and must follow these regulations.

By employing management methods that comply with its �nancial management regulations and supplementary schedules, the Company is able to determine accurately the total book values of cash and deposits, receivables and payables, and conducts cash planning accordingly to insulate itself from liquidity risk.

(d) Supplementary explanation regarding the fair value of �nancial instrumentsWith regard to the fair value of �nancial instruments, in addition to basing fair value on market value, the fair value of �nancial instruments that have no available market value is determined by using a rational method of calculation. However, as variables are inherent in these value calculations, the resulting values may di�er if di�erent assumptions are used.

(2) Matters related to the fair value of �nancial instrumentsThe following information relates to the aggregated book carrying amounts and fair values as of March 31, 2015 and 2016. Financial instruments that have no readily available fair values are not included in the information below.

Millions of yen

March 31, 2015Book carrying

amount Fair valueUnrealized gains

(losses)

Assets: (i) Cash and deposits ¥ 53,680 ¥ 53,680 ¥ – (ii) Notes and accounts receivable–trade 49,522 Allowance for doubtful accounts* (117)

49,405 49,405 – (iii) Short-term investment securities and investment securities 18,283 18,335 52 Total ¥121,368 ¥121,420 ¥52Liabilities: (i) Notes and accounts payable–trade ¥ 24,203 ¥ 24,203 ¥ – (ii) Electronically recorded obligations–operating 10,417 10,417 – (iii) Income taxes payable 2,251 2,251 Total ¥ 36,871 ¥ 36,871 ¥ –

* Allowances for doubtful accounts on notes and accounts receivable–trade have been omitted.

Millions of yen



(losses)

Assets: (i) Cash and deposits ¥ 59,547 ¥ 59,547 ¥ – (ii) Notes and accounts receivable–trade 49,692 Allowance for doubtful accounts* (332)

49,360 49,360 – (iii) Short-term investment securities and investment securities 16,750 16,804 54 Total ¥125,657 ¥125,711 ¥54Liabilities: (i) Notes and accounts payable–trade ¥ 19,627 ¥ 19,627 ¥ – (ii) Electronically recorded obligations–operating 14,134 14,134 – (iii) Income taxes payable 2,543 2,543 Total ¥ 36,304 ¥ 36,304 ¥ –


(a) Matters related to calculating the fair value of �nancial instruments and marketable securities

Assets(i) Cash and deposits and (ii) Notes and accounts receivable–trade As these instruments are settled within a short term and their fair values

and book values are assumed similar, book values are used as fair values. (iii) Short-term investment securities and investment securities The fair values of equity securities are determined by their prices on stock

exchanges. The fair value of bonds is determined according to prices indicated on bond exchanges or the values indicated by the �nancial institutions handling these transactions.

Liabilities(i) Notes and accounts payable–trade, (ii) Electronically recorded obligations–operating and (iii) Income taxes payable As these instruments are settled within a short term and their fair values

and book values are assumed similar, book values are used as fair values.

(b) Financial instruments for which fair value is not readily determinableBook carrying amount


U.S. dollars

March 31 2015 2016 2016

Non-listed equity securities ¥952 ¥1,320 $11,710

These instruments are not included in (iii) Short-term investment securities and investment securities, as no market value is available, and their fair value is not readily determinable. The Company recognized impairment loss on non-listed equity securities of ¥5 million (US$40 thousand) for the �scal year ended March 31, 2016.

(c) Redemption schedule for monetary assets and the expected maturity values of marketable securities

Millions of yen

March 31, 2015 Within 1 yearOver 1 year but

within 5 yearsOver 5 years but

within 10 years Over 10 years

Cash and deposits ¥ 53,680 ¥ – ¥ – ¥–Notes and accounts receivable–trade 49,522 – – –Short-term investment securities and investment securities – Held-to-maturity debt securities (Corporate bonds) 1,100 1,680 2,208 – – Other securities that have maturity dates (Others) – 280 619 –Total ¥104,302 ¥1,960 ¥2,827 ¥–

Millions of yen




Cash and deposits ¥ 59,547 ¥ – ¥ – ¥–Notes and accounts receivable–trade 49,692 – – –Short-term investment securities and investment securities – Held-to-maturity debt securities (Corporate bonds) 1,300 1,900 1,909 – – Other securities that have maturity dates (Others) – 709 356 –Total ¥110,539 ¥2,609 ¥2,265 ¥–




(losses)

Assets: (i) Cash and deposits $ 528,462 $ 528,462 $ – (ii) Notes and accounts receivable–trade 440,998 Allowance for doubtful accounts* (2,950)

438,048 438,048 – (iii) Short-term investment securities and investment securities 148,650 149,133 483 Total $1,115,160 $1,115,643 $483Liabilities: (i) Notes and accounts payable–trade $ 174,182 $ 174,182 $ – (ii) Electronically recorded obligations–operating 125,436 125,436 – (iii) Income taxes payable 22,568 22,568 Total $ 322,186 $ 322,186 $ –

* Allowances for doubtful accounts on notes and accounts receivable–trade have been omitted.






Cash and deposits $528,462 $ – $ – $–Notes and accounts receivable–trade 440,998 – – –Short-term investment securities and investment securities – Held-to-maturity debt securities (Corporate bonds) 11,537 16,862 16,937 – – Other securities that have maturity dates (Others) – 6,291 3,159 –Total $980,997 $23,153 $20,096 $–

(d) Redemption schedule for lease obligations and other interest-bearing debt

Millions of yen






Short-term loans payable ¥182 ¥ – ¥ – ¥ – ¥– ¥–Lease obligations 30 23 17 14 2 –Total ¥212 ¥23 ¥17 ¥14 ¥2 ¥–

Millions of yen






Short-term loans payable ¥171 ¥ – ¥ – ¥ – ¥ – ¥–Lease obligations 56 53 46 34 22 –Total ¥227 ¥53 ¥46 ¥34 ¥22 ¥–







Short-term loans payable $1,516 $ – $ – $ – $ – $–Lease obligations 493 468 412 304 196 –Total $2,009 $468 $412 $304 $196 $–

13. Marketable and Investment Securities

The following information relates to the aggregate book carrying amount and fair value of securities as of March 31, 2015 and 2016.

(1) “Held-to-maturity debt securities” whose market price or quotations are availableMillions of yen



(losses)

Other securities whose market price or quotations exceed their book carrying amount on the consolidated balance sheets (i) Government bonds, Municipal bonds, etc. ¥ – ¥ – ¥ – (ii) Corporate bonds 3,108 3,178 70 (iii) Others – – –

3,108 3,178 70

Other securities whose market price or quotations do not exceed their book carrying amount on the consolidated balance sheets (i) Government bonds, Municipal bonds, etc. – – – (ii) Corporate bonds 1,894 1,877 (17) (iii) Others – – –

1,894 1,877 (17) Total ¥5,002 ¥5,055 ¥ 53


Millions of yen



(losses)

Other securities whose market price or quotations exceed their book carrying amount on the consolidated balance sheets (i) Government bonds, Municipal bonds, etc. ¥ – ¥ – ¥ – (ii) Corporate bonds 3,452 3,531 79 (iii) Others – – –

3,452 3,531 79


1,677 1,652 (25) Total ¥5,129 ¥5,183 ¥ 54




(losses)

Other securities whose market price or quotations exceed their book carrying amount on the consolidated balance sheets (i) Government bonds, Municipal bonds, etc. $ – $ – $ – (ii) Corporate bonds 30,636 31,340 704 (iii) Others – – –

30,636 31,340 704


14,883 14,661 (222) Total $45,519 $46,001 $ 482

(2) “Other securities” whose market price or quotations are availableMillions of yen

March 31, 2015Market value

(= Book carrying amount) Acquisition costUnrealized gains

(losses)

Other securities whose market price or quotations exceed their book carrying amount on the consolidated balance sheets (i) Share stocks ¥ 9,873 ¥4,819 ¥5,054 (ii) Bond certi�cate – – – (iii) Others 1,395 1,295 100

11,268 6,114 5,154

Other securities whose market price or quotations do not exceed their book carrying amount on the consolidated balance sheets (i) Share stocks 19 21 (2) (ii) Bond certi�cate – – – (iii) Others 1,993 2,012 (19)

2,012 2,033 (21) Total ¥13,280 ¥8,147 ¥5,133


Millions of yen



(losses)

Other securities whose market price or quotations exceed their book carrying amount on the consolidated balance sheet (i) Share stocks ¥ 7,311 ¥4,073 ¥3,238 (ii) Bond certi�cate – – – (iii) Others 1,952 1,864 88

9,263 5,937 3,326

Other securities whose market price or quotations do not exceed their book carrying amount on the consolidated balance sheet (i) Share stocks 447 498 (51) (ii) Bond certi�cate – – – (iii) Others 1,911 2,175 (264)

2,358 2,673 (315) Total ¥11,621 ¥8,610 ¥3,011




(losses)

Other securities whose market price or quotations exceed their book carrying amount on the consolidated balance sheet (i) Share stocks $ 64,887 $36,147 $28,740 (ii) Bond certi�cate – – – (iii) Others 17,321 16,544 777

82,208 52,691 29,517

Other securities whose market price or quotations do not exceed their book carrying amount on the consolidated balance sheet (i) Share stocks 3,963 4,418 (455) (ii) Bond certi�cate – – – (iii) Others 16,960 19,305 (2,345)

20,923 23,723 (2,800) Total $103,131 $76,414 $26,717

Investments held in unlisted stocks with acquisition book value of ¥297 million and ¥598 million (US$5,306 thousand) as at March 31, 2015 and 2016, respec-tively, are not included in the above disclosures of fair value since no quoted market prices are available, meaning that ascertaining fair values is considered to be extremely di�cult.

(3) “Other securities” sold in the current �scal yearMillions of yen

March 31, 2015Proceeds from sales of

“Other securities”Gain on sales of

“Other securities”Loss on sales of

“Other securities”

(i) Share stocks ¥ 110 ¥ 56 ¥ – (ii) Bond certi�cate – – – (iii) Others 3,200 138 14 Total ¥3,310 ¥194 ¥14

Millions of yen





(i) Share stocks ¥ 925 ¥618 ¥– (ii) Bond certi�cate – – – (iii) Others 2,698 18 9 Total ¥3,623 ¥636 ¥9






(i) Share stocks $ 8,209 $5,483 $ – (ii) Bond certi�cate – – – (iii) Others 23,940 162 81 Total $32,149 $5,645 $81


14. Pension and Severance Plans

(1) Outline of pension and severance plans For de�ned bene�t pension plans, the Company and its consolidated subsidiaries adopted pension regulations or pension plans based on pension regulations, a contract-type de�ned bene�t corporate pension plan, and a lump sum pension plan. The Company and its nine major consolidated subsidiaries in Japan adopt a contract-type de�ned bene�t corporate pension plan. The entire bene�t amounts of these 10 companies have been transferred to a de�ned bene�t corporate pension for external contributions. At certain consolidated subsidiaries, the lump sum pension plan has been transitioned to a de�ned contribution pension plan as of March 2015. In addition, certain consolidated subsidiaries participated in the East Japan Stationery Sales Pension Fund, a diversi�ed welfare pension, through a multiem-ployer pension plan. The fund’s dissolution was approved on November 27, 2015, and the fund is in process of the fund dissolution. No additional payments for the fund’s dissolution is expected.

(2) De�ned-bene�t pension plans(a) Reconciliation of de�ned bene�t obligation at beginning and end of period


U.S. dollars


De�ned bene�t obligation at beginning of period ¥31,852 ¥35,950 $319,042Cumulative e�ects of change in accounting policies 3,984 – –Restated balance 35,836 35,950 319,042Service costs 1,947 1,954 17,343Interest costs 323 320 2,838Actuarial gains and losses incurred this period 107 3,660 32,479Retirement bene�ts paid (1,545) (1,422) (12,617)Increase due to business combination 99 – –

Decrease in liability for retirement bene�ts due to change of the plan to de�ned contribution pension plan (820) – –Others 3 0 4De�ned bene�t obligation at end of period ¥35,950 ¥40,462 $359,089

(b) Reconciliation of balance of plan assets at beginning and end of period


U.S. dollars


Plan assets at beginning of period ¥28,772 ¥33,620 $298,373Expected return on plan assets 761 764 6,783Actuarial gains and losses incurred this period 3,249 (885) (7,857)Employer contribution 2,370 2,915 25,873Retirement bene�ts paid (1,532) (1,411) (12,533)Plan assets at end of period ¥33,620 ¥35,003 $310,639

(c) Reconciliation of de�ned bene�t obligation and plan assets with net de�ned bene�t liability and asset re�ected on the consolidated balance sheets


U.S. dollars


De�ned bene�t obligation for funded plan ¥ 35,819 ¥ 40,325 $ 357,875Plan assets at fair value (33,620) (35,003) (310,639)

2,199 5,322 47,236De�ned bene�t obligation for unfunded plan 130 137 1,214Net amount of de�ned bene�t liability and asset on the consolidated balance sheets ¥ 2,329 ¥ 5,459 $ 48,450

Net de�ned bene�t liability ¥ 2,329 ¥ 5,459 $ 48,450Net de�ned bene�t asset – – –Net amount of de�ned bene�t liability and asset on the consolidated balance sheets ¥ 2,329 ¥ 5,459 $ 48,450

(4) “Loss on valuation of investment securities”In the �scal year ended March 31, 2015, there was no loss on valuation of investment securities. The Company recognized impairment loss on non-listed equity securities of ¥5 million (US$40 thousand) for the �scal year ended March 31, 2016.


(d) Components of net periodic bene�t cost


U.S. dollars


Service costs ¥1,947 ¥1,954 $17,343Interest costs 323 320 2,838Expected return on plan assets (761) (764) (6,783)Expense for actuarial losses 650 337 2,992Amortization of prior service costs (348) (348) (3,086)Net periodic bene�t cost of de�ned bene�t plan ¥1,811 ¥1,499 $13,304Gain on changing to the de�ned contribution pension plan ¥ (28) ¥ – $ –

(e) Remeasurements of de�ned bene�t plans, net of taxes


U.S. dollars


Prior service costs ¥ (348) ¥ (348) $ (3,086)Actuarial gains and losses 3,840 (4,208) (37,343)

¥3,492 ¥(4,556) $(40,429)

(f ) Composition of items included in remeasurements of de�ned bene�t plans, net of taxes


U.S. dollars


Unrecognized prior service costs ¥2,128 ¥ 1,780 $ 15,800Unrecognized actuarial gains and losses 793 (3,414) (30,302)

¥2,921 ¥(1,634) $(14,502)

(g) Plan asset information(i) Breakdown of plan assets Ratio of each component of plan assets to the amount of total pension assets

2015 2016

Bond certi�cate 38.9% 49.2%Share stocks 35.5 17.5Alternative investments 12.0 20.6General account 8.6 8.3Cash and deposits 5.0 4.4

100.0 100.0

A retirement bene�t trust established for the corporate pension plan accounts for 7.9% and 6.5% of plan assets for the �scal years ended March 31, 2015 and 2016, respectively. Also, a hedge fund investment is given as an alternative investment.

(ii) Method for calculating long-term rate of return on plan assets In calculating the long-term rate of return on plan assets, the Company considers the current distribution of plan assets and the projected future distribution as

well as the current rates of return for each of the assets included under plan assets and the expected future rates of return for these assets.

(h) Assumptions for making actuarial calculationsAssumptions used for making actuarial calculations in the �scal years ended March 31, 2015 and 2016 (shown using weighted average)

2015 2016

Discount rate 0.9% 0.1%Expected return on plan assets 2.9 2.5Expected rate of salary increases 4.4 4.3

(3) De�ned contribution pension systemThe required contribution amounts for the consolidated subsidiaries were ¥4 million and ¥53 million (US$470 thousand) for the �scal years ended March 31, 2015 and 2016, respectively.


15. Income Taxes

(1) The signi�cant components of deferred tax assets and liabilities


U.S. dollars

2015 2016 2016

Deferred tax assets Provision for bonuses ¥ 1,553 ¥ 1,630 $ 14,466 Social insurance premiums on provision for bonuses 224 235 2,086 Enterprise tax 242 281 2,494 Net de�ned bene�t liability 958 2,082 18,473 Provision for directors’ retirement bene�ts 56 56 500 Allowance for doubtful accounts 172 111 988 Unrealized loss on investment securities 227 156 1,387 Unrealized loss on golf club membership 128 116 1,026 Asset retirement obligations 162 170 1,508 Net operating loss carry forwards of subsidiaries 387 361 3,205 Impairment loss 11 12 107 Others 793 837 7,424 Subtotal of deferred tax assets 4,913 6,047 53,664 Valuation allowance (483) (635) (5,633) Deferred tax assets, total 4,430 5,412 48,031Deferred tax liabilities Undistributed earnings of foreign subsidiaries (43) (38) (338) Valuation di�erence on available-for-sale securities (1,641) (930) (8,249) Depreciation (173) (161) (1,430) Others (140) (130) (1,162) Deferred tax liabilities, total (1,997) (1,259) (11,179)Deferred tax assets, net* ¥ 2,433 ¥ 4,153 $ 36,852

* Deferred tax assets are stated net in the following accounts of the consolidated balance sheets.


U.S. dollars

2015 2016 2016

Current assets—deferred tax assets ¥ 2,222 ¥2,370 $21,029Long-term assets—deferred tax assets 1,237 1,993 17,684Long-term liabilities—deferred tax liabilities (1,026) (210) (1,861)Deferred tax assets, net ¥ 2,433 ¥4,153 $36,852

(2) The reconciliation between the statutory tax rate and the Company’s e�ective tax rate2015 2016

Statutory tax rate 35.6% 33.1%Non-deductible entertainment expense 1.1 1.0Non-taxable dividend income (0.3) (0.1)Per capita portion of resident tax 0.8 0.6Future declining of the enterprise tax rate 3.5 1.4Others (0.4) (0.9)E�ective tax rate 40.3% 35.1%

(3) Revision of values for deferred tax assets and deferred tax liabilities due to change in statutory tax rateFollowing the establishment of the Act for Partial Revision of the Income Tax Act and the Act for Partial Revision of the Local Taxation Act in the National Diet on March 29, 2016, the statutory tax rate used to calculate deferred tax assets and deferred tax liabilities in the consolidated �scal year under review (limited to those to be eliminated on or after April 1, 2016) has been changed from 32.2% to 30.9% for those expected taxes to be recovered or repaid from April 1, 2016 to March 31, 2018, and 30.6% for those expected taxes to be recovered or repaid on or after April 1, 2018. As a result, net deferred tax assets (deferred tax assets less deferred tax liabilities) decreased ¥169 million (US$1,497 thousand), income taxes–deferred (recorded under the Company’s expenses) increased ¥202 million (US$1,789 thousand), valuation di�erence on available-for-sale securities increased ¥42 million (US$374 thousand), and remeasurements for retirement bene�t plans decreased ¥9 million (US$83 thousand).


16. Asset Retirement Obligations

(1) Overview of asset retirement obligationsAsset retirement obligations of the Company are mainly statutory obligations with regard to the removal of property, plant and equipment in connection with real estate leasing agreements to restore them to their original condition.

(2) Method of calculating asset retirement obligationsAsset retirement obligations are calculated using the estimated useful life of assets and related yield on Japanese government bonds.

(3) Change in total asset retirement obligations during the consolidated �scal year under reviewIn the previous consolidated �scal year, the Company made revisions to the estimated restoration cost, and the asset retirement obligation increased by ¥175 million. Also, in the current consolidated �scal year, the Company made revisions to the estimated useful life of the assets based on additional information, and the asset retirement obligation increased by ¥32 million (US$284 thousand).


U.S. dollars


Balance at beginning of period ¥500 ¥688 $6,102Increase due to purchases of property, plant and equipment 86 72 637Changes due to ful�llment of asset retirement obligations (79) – –Increase due to changes in estimates 175 32 284Increases in other items 6 4 41Balance at end of period ¥688 ¥796 $7,064

17. Segment Information

(1) Outline of reporting segmentsThe Company’s reporting segments are composed of those individual business units for which separate �nancial information is available, and which are used by members of the Board of Directors for making decisions regarding the allocation of management resources, and to allow the periodic examination and evaluation of operating performance. The Company’s planning department based at its headquarters prepares the overall plan by product and service. The Company has separated its reporting segments on the basis of product and service into two reporting segments: printing business and merchandise business. The printing business consists of the printing of business forms and data printing services. The merchandise business is the sale of supplies and equipment and provision of services related to the printing business, business information operating services and other.

(2) Methods of calculating sales, income or losses, assets, liabilities and other items by reporting segmentAccounting policies and procedures followed by reporting segments are in principal the same as those indicated in “Note 2. Summary of Signi�cant Accounting Policies”. Pro�ts of reporting segments are based on operating income.

(3) Information related to amounts of sales, income or losses, assets, liabilities and other items for individual reporting segmentsSegment information for the �scal year ended March 31, 2015 is as follows:

Millions of yen

March 31, 2015Printing

businessMerchandise

business Total Adjustment *1 Consolidated *3

Net sales: Outside customers ¥204,286 ¥61,600 ¥265,886 ¥ – ¥265,886 Inter-segment – – – – – Total 204,286 61,600 265,886 – 265,886

Segment pro�ts 14,104 3,018 17,122 (4,515) 12,607 Segment assets ¥163,139 ¥22,154 ¥185,293 ¥39,065 ¥224,358

Others: Depreciation*2 ¥ 7,517 ¥ 304 ¥ 7,821 ¥ 812 ¥ 8,633 Increase of “Property, plant and equipment” and “Intangible assets” *2 5,611 137 5,748 529 6,277

*1 Adjustment to segment pro�ts of ¥(4,515) million includes corporate-level expenses that are not allocated to individual reporting segments. Such expenses comprise mainly non-segment speci�c general and administrative expenses. Adjustment to segment assets includes corporate-level assets of ¥39,065 million, which consist principally of surplus investment funds (term deposits and demand deposits) and long-term investment funds (such as marketable securities) which are non-segment speci�c. Adjustment to increase of “Property, plant and equipment” and “Intangible assets” of ¥529 million includes Group’s systems division’s assets, such as software.

*2 Depreciation and Increase of “Property, plant and equipment” and “Intangible assets” include long-term prepaid expenses.*3 Segment pro�ts are reconciled to the operating income included in the consolidated statements of income.


Segment information for the �scal year ended March 31, 2016 is as follows:

Millions of yen


businessMerchandise


Net sales: Outside customers ¥212,860 ¥60,357 ¥273,217 ¥ – ¥273,217 Inter-segment – – – – – Total 212,860 60,357 273,217 – 273,217

Segment pro�ts 15,627 2,808 18,435 (4,760) 13,675 Segment assets ¥166,568 ¥23,800 ¥190,368 ¥38,244 ¥228,612

Others: Depreciation*2 ¥ 8,085 ¥ 286 ¥ 8,371 ¥ 788 ¥ 9,159 Increase of “Property, plant and equipment” and “Intangible assets” *2 6,703 274 6,977 639 7,616



businessMerchandise


Net sales: Outside customers $1,889,064 $535,653 $2,424,717 $ – $2,424,717 Inter-segment – – – – – Total 1,889,064 535,653 2,424,717 – 2,424,717

Segment pro�ts 138,681 24,924 163,605 (42,247) 121,358 Segment assets $1,478,239 $211,220 $1,689,459 $339,401 $2,028,860

Others: Depreciation*2 $ 71,753 $ 2,534 $ 74,287 $ 6,995 $ 81,282 Increase of “Property, plant and equipment” and “Intangible assets” *2 59,488 2,435 61,923 5,668 67,591

*1 Adjustment to segment pro�ts of ¥(4,760) million (US$(42,247) thousand) includes corporate-level expenses that are not allocated to individual reporting segments. Such expenses comprise mainly non-segment speci�c general and administrative expenses. Adjustment to segment assets includes corporate-level assets of ¥38,244 million (US$339,401 thousand), which consist principally of surplus investment funds (term deposits and demand deposits) and long-term investment funds (such as marketable securities) which are non-segment speci�c. Adjustment to increase of “Property, plant and equipment” and “Intangible assets” of ¥639 million (US$5,668 thousand) includes Group’s systems division’s assets, such as software.

*2 Depreciation and Increase of “Property, plant and equipment” and “Intangible assets” include long-term prepaid expenses.*3 Segment pro�ts are reconciled to the operating income included in the consolidated statements of income.

(4) Related information(a) Products and service Information of each product and service is presented in (3) above.(b) Geographic region(i) Sales Sales information is not presented geographically since sales to customers

located in Japan exceeds 90% of the net sales recorded in the consolidated statements of income.

(ii) Property, plant and equipment Property, plant and equipment information is not presented geographically

since property, plant and equipment located in Japan exceeds 90% of the property, plant and equipment recorded in the consolidated balance sheets.

(c) Main customersMarch 31, 2015 Millions of yen Related segment

Customer

Tokyo Electric Power Co., Inc ¥35,058Printing and Merchandise business

March 31, 2016 Millions of yen Related segment

Customer

Tokyo Electric Power Co., Inc ¥39,018Printing and Merchandise business

March 31, 2016Thousands of

U.S. dollars Related segment

Customer

Tokyo Electric Power Co., Inc $346,277Printing and Merchandise business


(5) Impairment loss on assets by reportable segmentNot applicable.

(6) Amortization of goodwill and unamortized balance by reportable segmentAmortization of goodwill and unamortized balance by reportable segment for the �scal years ended March 31, 2015 and 2016 are as follows:

Millions of yen


businessMerchandise

business Total Adjustment Consolidated

Amortization of goodwill ¥ 102 ¥– ¥ 102 ¥– ¥ 102Balance at end of current period ¥1,126 ¥– ¥1,126 ¥– ¥1,126

Millions of yen


businessMerchandise


Amortization of goodwill ¥219 ¥– ¥219 ¥– ¥219Balance at end of current period ¥910 ¥– ¥910 ¥– ¥910



businessMerchandise


Amortization of goodwill $1,945 $– $1,945 $– $1,945Balance at end of current period $8,076 $– $8,076 $– $8,076

(7) Gain on negative goodwill by reportable segmentNot applicable.

18. Related-Party Transactions

There are several related party transactions, including sales to Toppan Printing Co., Ltd., which owns 60.7% of the common stock of the Company. The transactions were made at arm’s-length prices that are considered to be equivalent to market prices. Sales to Toppan Printing Co., Ltd., for the �scal years ended March 31, 2015 and 2016 amounted to ¥10,767 million and ¥10,512 million (US$93,293

thousand), respectively. The balance of notes and accounts receivable from Toppan Printing Co., Ltd., as of March 31, 2015 and 2016 amounted to ¥2,135 million and ¥2,038 million (US$18,084 thousand), respectively. There are no related-party transactions by consolidated subsidiaries of the Company.

19. Earnings per Share Information

The computation of net income per share is based on the weighted-average number of common shares outstanding during each �scal year. Treasury stocks held during these �scal years are excluded.

Yen U.S. dollars

March 31 2015 2016 2016

Net assets per share ¥1,457.40 ¥1,475.11 $13.09Net income per share 70.59 84.33 0.75

As the Company had no diluted securities as at March 31, 2015 and 2016, the Company does not disclose amounts of diluted net income per share for the �scal years ended March 31, 2015 and 2016.

Basic net income per share


U.S. dollars

March 31 2015 2016 2016

Pro�t attributable to owners of parent ¥ 7,835 ¥ 9,361 $83,074Pro�t attributable to owners of parent not available to common shareholders – – –Pro�t attributable to owners of parent available to common shareholders 7,835 9,361 83,074Weighted-average number of shares outstanding (thousand shares) 110,997 110,996 –


21. Schedule of Borrowings


U.S. dollars

2015

2016

2016

Average interest rate (%)

Due date of payment

Short-term loans payable ¥182 ¥171 $1,516 1.27% –Lease obligations 30 56 493 – –Lease obligations (without current portion) 56 156 1,381 – From 2017 to 2021

¥268 ¥383 $3,390

(1) “Average interest rate” represents the weighted-average interest rate of term-end borrowings.(2) As interest included in lease payments is allocated on the straight-line method to each �scal year, the average interest rate of lease obligations is omitted. (3) The projected repayment amount of long-term debt (excluding debt scheduled to be repaid within one year) within �ve years after the consolidated balance

sheet date (i.e., March 31, 2016) are as follows:

Over 1 year and not

exceeding 2 years

Over 2 years and not

exceeding 3 years


exceeding 4 years


exceeding 5 years

Over 1 year and not

exceeding 2 years


exceeding 3 years


exceeding 4 years


exceeding 5 years

Millions of yen Thousands of U.S. dollars

Lease obligations ¥53 ¥46 ¥34 ¥22 $468 $412 $304 $196

22. Schedule of Asset Retirement Obligations

As the balances of asset retirement obligations at the beginning and end of the current consolidated �scal year were less than one percent of the total balance of liabilities and net assets of the same periods, the asset retirement obligations details disclosure has been omitted.

20. Schedule of Bonds

Not applicable.


CORPORATE INFORMATIONAs of March 31, 2016

PRINCIPAL SUBSIDIARIES AND AFFILIATESAs of March 31, 2016

Name Country Main BusinessIssued Capital(Thousands)

Equity Held by the Company (%)

TOPPAN FORMS CENTRAL PRODUCTS CO., LTD.

Japan Manufacture of business forms ¥100,000 100.0

TOPPAN FORMS TOKAI CO., LTD.

Japan Manufacture of business forms ¥100,000 100.0

TOPPAN FORMS OPERATION CO., LTD.

Japan Operation and administration of computers ¥100,000 100.0

TECHNO TOPPAN FORMS CO., LTD.

Japan Sale, maintenance, and repair of o�ce equipment ¥100,000 100.0

TOPPAN FORMS LOGISTICS AND SERVICES CO., LTD.

Japan Delivery and keeping consignment of products ¥ 50,000 100.0

TOPPAN FORMS KANSAI CO., LTD.

JapanDistribution, delivery, and storage services Manufacture of business forms ¥ 50,000 100.0

TOPPAN FORMS NISHINIHON CO., LTD.

JapanDistribution, delivery, and storage services Manufacture of business forms ¥ 30,000 100.0

TOPPAN FORMS (SANYO) CO., LTD.

Japan Manufacture of business forms ¥ 50,000 100.0

TOSCO CORPORATION Japan Capital alliance and business tie-up ¥100,000 69.7

TF PAYMENT SERVICE CO., LTD. JapanInformation handling service and Settlement-of-accounts processing business by using Internet

¥810,000 83.2

J-SCube Inc. JapanDocument outsourcing services, equipment solutions, and sta� services

¥100,000 100.0

TOPPAN FORMS (HONG KONG) LIMITED

Hong KongManufacture of business forms Sale of plastic cards, computer supplies, DPS, and o�ce automation machines

HK$94,000 100.0*1

TOPPAN FORMS (S) PTE LTD SingaporeManufacture and sale of business forms, DPS, and sale of machines for processing business forms

S$1,226 100.0*2

DATA PRODUCTS TOPPAN FORMS LTD.

ThailandManufacture and sale of business forms, DPS, IC cards, and security-related products

Bht133,650 48.0*3

Total number of subsidiaries: 23Total number of a�liates: 3

*1 Indirectly owned through T.F. Company Ltd.*2 52.3% directly owned by the Company and 47.7% indirectly owned through T.F. Company Ltd.*3 Although equity held by the Company is less than 50%, the Company has substantial control over Data Products Toppan Forms Ltd., making it a subsidiary.

Company Name

TOPPAN FORMS CO., LTD.

Head O�ce

1-7-3 Higashi Shimbashi,Minato-ku, Tokyo 105-8311, Japan

Founded

May 1955

Capital

¥11,750 million

Number of Employees

1,879 (Non-Consolidated)12,049 (Consolidated)

Corporate Website

http://www.toppan-f.co.jp/english/

Contact

Public Relations DepartmentTel: 81-3-6253-5730Fax: 81-3-6253-5627


0.4%10.5%

12.5%

16.9%

59.7%

Brokers / Dealers in Financial Products

Other JapaneseCorporations

Japanese Individuals and Others

Japanese Financial Institutions

Foreign Institutionsand Individuals

4 5 6 1 2 37 8 9 10 11 12 4 5 6 1 2 37 8 9 10 11 12 4 5 6 1 2 37 8 9 10 11 12 4 5 6 1 2 37 8 9 10 11 12FY2013 FY2014 FY2015 FY2016

2,000

1,500

1,000

500

0

Stock Price(Yen)

Trading Volume(Thousand shares)

20,000

15,000

10,000

5,000

0

INVESTOR INFORMATIONAs of March 31, 2016

Stock Price Range and Trading Volume

Shareholdings by Type of Shareholder

Stock Listing

Tokyo Stock Exchange

Stock Code

7862

Fiscal Year

From April 1 to March 31

General Meeting of Shareholders

June

Capital Stock

Authorized: 400,000,000 sharesIssued: 115,000,000 shares

Stock Transaction Unit

100 shares

Independent Certi�ed Public Accountant

PricewaterhouseCoopers Aarata(Member Firm of PricewaterhouseCoopers LLP)

Transfer Agent

Mitsubishi UFJ Trust and Banking Corporation

Number of Shareholders

6,873

Major Shareholders

NameNumber of Shares Held (Thousands)

Percentage of Share Ownership (%)

TOPPAN PRINTING CO., LTD. 67,419 60.74

Japan Trustee Services Bank, Ltd. 6,796 6.12

The Master Trust Bank of Japan, Ltd. 2,985 2.69

CBNY-GOVERNMENT OF NORWAY 2,086 1.88

Toppan Forms Employees Shareholding Association 2,046 1.84

Trust & Custody Services Bank, Ltd. 1,642 1.48

J.P. MORGAN BANK LUXEMBOURG S.A. 1,444 1.30

UBS SECURITIES LLC-HFS CUSTOMER SEGREGATED ACCOUNT 1,360 1.23

CHASE MANHATTAN BANK GTS CLIENTS ACCOUNT ESCROW 1,019 0.92

The Nomura Trust and Banking Co., Ltd. 713 0.64

Note: Figures in the table above do not include the 4,003 thousand shares of treasury stock held by the Company on March 31, 2016. These shares were also excluded when calculating percentage of share ownership.

1-7-3 Higashi Shimbashi,Minato-ku, Tokyo 105-8311, Japanhttp://www.toppan-f.co.jp/english/InquiriesPublic Relations DepartmentTEL. 81-3-6253-5730 © TOPPANFORMS 2016 1 Printed in Japan

TOPPA

N FO

RMS REPO

RT 2016

COM16019-1608N-010

INTEGRATION AND

ENHANCEMENT

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