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2013ANNUAL REPORTFor the Year Ended March 31, 2013

For ward-Look ing StatementsThis annual report contains forward-looking statements that refl ect

Sumitomo Osaka Cement Co., Ltd.’s current views and judgments

with respect to current plans, strategies and beliefs. They are based

upon currently available information, and do not constitute promises,

commitments or guarantees. The forward-looking statements involve

both real and potential risks and uncertainties that can cause actual

events and results to differ materially from those anticipated in these

statements. Risks that can cause actual results to differ materially from

those stated or implied in the forward-looking statements and from

historical events include, but are not limited to, future economic trends,

competition in the industrial sector in which Sumitomo Osaka Cement

operates, market demand, rates of exchange, and other social, politi-

cal and economic factors.

We aim to be a business group that helps preserve the

global environment and contributes to the sustainment

and ongoing development of a prosperous society

through tireless technological innovation and wide-

ranging business activities.

Through the implementation of the Sumitomo Osaka

Cement Corporate Philosophy in the daily business

activities of all Group employees, we will gain the trust

of all stakeholders as we strive to improve our corporate

value in order to achieve sustainable growth.

ContentsTo Our Shareholders 1

At a Glance 3

Review of Operations 5

Corporate Governance 7

Our Management Team 9

Six-Year Summary 10

Financial Review 11

Consolidated Financial Statements 14

Notes to Consolidated Financial Statements 19

Independent Auditors’ Report 30

Company Profi le 31

Philosophy

To Our Shareholders

Performance during Fiscal 2013

During the fiscal year ended March 31, 2013, the Japanese economy saw gradual recovery backed by reconstruction demand related to the Great East Japan Earthquake but was impacted by the slowing of the global economy from summer onward. From around the beginning of calendar 2013, however, conditions began to improve due to the economic policies implemented by the newly elected Japanese government.

In the cement industry, both public- and private-sector demand related to disaster reconstruction picked up, as did private housing investment, mainly in urban areas, buoying private-sector demand. As a result, cement demand in Japan grew 4.5% year on year to 44,577 thousand

metric tons. Exports, however, retreated 3.7%. Consequently, the total sales volume of cement produced by domestic manufacturers, including exports, climbed 2.8% year on year to 53,387 thousand metric tons.

Under these circumstances, the Sumitomo Osaka Ce ment Group worked to provide a stable supply of cement and other materials for disaster reconstruction while promoting Groupwide efforts aimed at ensuring its sustainable growth, such as cost reduction measures. As a result, consolidated net sales during the fiscal year under review increased 0.9% year on year to ¥219,083 million, due largely to higher revenue in the cement business. Operating income increased 71.6% year on year to ¥13,959 million, and net income surged 104.6% to ¥7,460 million.

Of particular note is the fact that, despite increased costs resulting from the deflation of the yen in the latter half of the fiscal year, thanks to growth in sales and production volumes and reductions in manufacturing costs, the cement business achieved an increase in segment profit of ¥5,328 million compared with the previous fiscal year.

Fiscal 2014 Outlook

In the fiscal year ending March 31, 2014, while risks associ ated with the global economic downturn and other factors remain, the Japanese economy is expected to see gradual recovery, due in part to the economic policies of the government.

In the cement industry, strong private-sector demand is expected due to ongoing increases in private housing investment and private capital investment. Furthermore, public-sector demand is forecast to increase on the back of reconstruction demand related to the Great East Japan Earthquake. Accordingly, overall domestic demand is expected to grow.

Amid such circumstances, the Sumitomo Osaka Cement Group will continue to focus on ensuring supply stability by establishing flexible pro duction, sales and distribu tion systems to meet fluc tuations in demand in the domestic cement business while working to set appropriate sales prices. With regard to the overseas cement business, the Group will continue to examine the possibility of penetrating regions that are expected to grow in the future in order to facilitate new business expansion. In other business fields, the Group will investigate various measures to increase its business scale and profits through overseas production and sales as well as the focused distribution of management resources.

In line with its social mission, the Group will continue to actively contribute to the establishment of a tu yb yteicos detneiro-gnilcycer ilizing recycled raw materials and fuels, strive to reduce its environmental

impact, and accept and treat disaster waste produced during the Great East Japan Earthquake.

For the fiscal year ending March 31, 2014, Sumitomo Osaka Cement expects net sales of ¥225,000 million, an increase of 2.7% year on year, operating income of ¥16,000 million, an increase of 14.6%, and net income of ¥8,000 million, a rise of 7.2% from the fiscal year under review.

11

Returning Profits to Shareholders

Sumitomo Osaka Cement believes that earnings distributions to shareholders should be determined in accordance with the Company’s busi ness results. As a cement manufa cturer, it is essential for the Company to continually improve fa ni gnitsevni elihw seitilic facility renewal in order to secure future earnings. Therefore, we consider it vital to expand our reserves. Reflecting this conviction, we will determine earnings distribution from the viewpoint of overall business management.

Annual dividends for fiscal 2013 were increased ¥1 from the previous year to ¥5 to reflect improved business performance. In fiscal 2014, the Company plans to again pay an annual dividend of ¥5.

We would like to sincerely thank our shareholders and other stakeholders for their continuing support and understanding.

September 2013

22

At a Glance

Products

• Assorted cements• Ready-mixed concrete• Cement-related solidification materials• Supply of electrical power• Recycling of raw materials and fuels

Business Overview

With the cement business as our core operation, we have established plants and service stations throughout Japan and conduct manufacturing, distribution and sales of cement and solidification materials. The Group actively contributes to a recycling-based society by recycling waste materials and by-products, and improving its electricity self-supply ratio with in house power generation systems that mainly use wood biomass. At the same time, we focus on the development of high-performance cements and efficient manufacturing systems.

Products

• Limestone• Dolomite• Calcium carbonate• Aggregate• Silica powder

Business Overview

Sumitomo Osaka Cement owns limestone mines in various places throughout Japan and supplies limestone as an industrial material to the steel, chemical, cement and other industries. High-purity limestone enjoys robust demand and is exported to Asian countries. In addition, we apply our unique grinding and sorting technologies to manufacture and market aggregate for ready-mixed concrete, calcium carbonate, silica powder and other products.

Products

• Repairing and reinforcing products for concrete structures• Construction work• Cathodic protection for concre te structures (ELGARD SYSTEM)• Artificial marine reefs

Business Overview

We manufacture and sell product s used in the rehabilitation and reinforcement of concrete structures and implement projects related to rehabilitative construction. By usin g expertise gained in the cement business, we supply high-value-added products that respond to the many different causes of deterioration to concrete infrastructure and buildings, including damage from salt, acid rain and frost damage. We also develop large-scale, high-rise artificial marine reefs as well as seaweed bed technology, thus contributing to the preservation of the ocean environment.

3

Products

• LiNbO3 external optical modulators• Optical transmitters and receivers for CATV• Optical measurement equipment

Business Overview

Our optoelectronics business is engaged in the manufacture and sale of optical communications devices and components such as LiNbO 3

(LN) modulators and optical transmitters and receivers for cable television. These products offer high-quality, high-performance features for the expanding optical communications market in Japan and overseas.

Products

• Components of semiconductor manufacturing equipment• Various transparent and functional coating solutions• Heat and ultraviolet shielding films• Hydrophilic antifouling easy cleaning coating solutions• Functional films

Business Overview

The advanced materials business develops and manufactures such functional materials as films, coating and anti-bacterial agents based on the Group’s proprietary nanoparticle production technologies. These unique materials are being used in a wide array of fields that include various functional films and cosmetics. In addition, ceramics that combine sintering and engineering technologies are used mainly in semiconductor manufacturing equipment.

Products

• Leasing of real estate, including distribution warehouses• Secondary battery cathode materials• Sales of office appliances• Development of software• Engineering

Business Overview

The others business engages in the long-term leasing of office buildings, supermarkets, hardware stores, distribution centers and a wide array of other facilities constructed on the Group’s idle real estate. In addition, we manufacture and sell high-capacity and safe secondary battery cathode materials. We are involved in activities including the construction of electrical facilities and electric furnaces at Group companies.

44

Review of Operations

The volume of cement sales roseyear on year, causing net sales toincrease ¥5,944 million, or 3.5%,year on year to ¥175,846 million.Segment profit rose ¥5,328million, or 78.2%, to ¥12,145million due to cost reductions,including expanded use ofrecycled raw fuels. The total sales volume increased3.5% year on year to 10,232thousand metric tons, with thesales volume in Japan up 5.1% to9,191 thousand metric tons, whileexports fell 8.4% to 1,041thousand metric tons. Capital expenditures totaled¥12,236 million, an increase of¥3,152 million from the previousfiscal year.

In addition to a rise in the salesvolume of limestone andaggregate for use in overseassteel industries, the launch of theHiraodai joint mining project inJune 2012 led to an increase inthe volume of limestone sold.As a result, net sales rose to¥11,708 million, up ¥349 million,or 3.1%, year on year. Segmentprofit increased ¥290 million, or45.0%, to ¥934 million due in partto reductions in mining costs. Capital expenditures amountedto ¥2,557 million, a decrease of ¥303 million from the previous fiscal year.

The sales volume of materialsused in the rehabilitation andreinforcement of concretestructures increased, as didprivate soil improvement work,leading net sales to edge up to¥15,287 million, an increase of¥179 million, or 1.2%, year onyear. Segment profit came to¥297 million, up ¥165 million, or124.9%, from the previous fiscalyear. Capital expenditures amountedto ¥184 million, a decrease of ¥83million from the previous fiscalyear.

5

The sales volume of opticalcommunication devices increased,leading to net sales of ¥4,257million, up ¥700 million, or 19.7%,year on year. However, the salesvolume of optical measurementequipment for semiconductorinspection decreased, which, together with costs incurred inbuilding a mass-productionframework, led to a segment lossof ¥18 million, a ¥163 millionturnaround from the segmentprofit of ¥144 million in theprevious fiscal year. Capital expenditures were ¥847million, an increase of ¥278million from the previous fiscalyear.

Due in part to decreases in thesales volumes of filters used inplasma display panels andelectronic materials used insemiconductor manufacturingequipment, net sales fell to¥5,835 million, down ¥4,240million, or 42.1%, year on year.However, thanks to streamliningand cost reductions related toplasma display panel filters,segment profit came to ¥575million, up ¥675 million from thesegment loss of ¥100 millionrecorded in the previous fiscalyear. Capital expenditures came to¥316 million, an increase of ¥120million from the previous fiscalyear.

Due to a drop in manufacturingfacility construction work in theengineering business andincreased repair costs in realestate leasing, net salesdecreased ¥894 million, or 12.7%,year on year to ¥6,148 million. Segment profit fell ¥417 million,or 85.9%, compared with theprevious year to ¥68 million. In November 2012, theproduction subsidiary SOCVietnam Co., Ltd. completed theconstruction of a lithium-ionbattery cathode material plant inHung Yen Province, Vietnam, andbegan operations there. Capital expenditures stood at¥2,509 million, an increase of¥779 million from the previousfiscal year.

6

Corporate Governance

We believe that a primary objective of co rporate governance is to constantly enhance corporate value by increasing management efficiency as well as by securing soundness and transparency in every phrase of business activities. We, therefore, recognize the fulfillment of this aim as our most important management issue.

Each Organization’s Roles

We promote a corporate governance syst em that is based on our view that it is appropriat e to improve our operational efficiency through management decision making carried out by a Board of Directors’ Meeting consisting of directors knowledgeable in business operations as well as to enhance the auditing functions of corporate auditors, and, therefore, we have adopted a corporate auditor system. In addition, we have taken steps to improve our operational efficiency by strengthening both the management decision making and supervisory functions of the Board of Directors, by accelerating the decision making process, and by defining authority and responsibility through the introduction of the Executive Officer System in June 2006, under which management decision making and superv osi ry functions are separated from the business execution function.

With the President as its chairman, the Board of Directors consists of se ven directors, including one outside director* who provides an outside perspective to management decision making. In addition, the term of office for directors is limited to one year in order to define the responsibility of directors and to build a management system that allows us to respond more quickly to changes in our business environment. The Board of Directors’ Meeting is held once or more each month to determine important management matters and to receive reports on business execution.

The Board of Corporate Auditors consists of five corporate auditors, including three outside auditors.* The Board of Corporate Auditors’ Meeting is held once or more each month. The corporate auditors audit the decision making of directors and business execution of executive officers to determine whether or not the decision making and business execution are being properly conducted. Also to this end, the corporate auditors participate in Board of Directors’ Meetings and other important meetings in addition to obtaining reports from directors and executive officers, employees and accounting auditors (audit corporations).

With regard to internal audits, we established the 10-member Internal Audit Department as an in-house organization to conduct audits in accordance with the Internal Audit Regulations. The Internal Audit Department works closely with the corporate auditors.

* The outside director and outside corporate auditors have been reported to the Tokyo Stock Exchange as an independent director and independent auditors.

77

Compliance System Status

We established a Compliance Committee chaired by the President for the purpose of raising the Groupwide awareness of compliance on the part of the Sumitomo Osaka Cement Group’s directors, executive officers and employees. In addition, we issued Compliance Committee Regulations to define the roles and responsibilities of the Compliance Committee. The Compliance Committee initiates annual compliance activity plans and monitors the progress of the plans. Compliance Audits are conducted by the Internal Audit Department, which submits a report to the Compliance Committee. The Compliance Committee then takes necessary measures, screening the results and subm itting a report to the Board of Directors and the corporate auditors.

Furthermore, we have introduced a reporting system (Compliance Hotline System) to enhance compliance. This system is designed to receive compliance reports from the Group’s directors, executive officers and employees and allows us to take corrective actions at an earlier stage. The syst em’s reporting methods and the scope of reportable subject matter have been revised in an effort to ensure an even higher level of effective compliance and to make sure that all our business transactions are conducted fairly.

Risk Management

Chaired by the President, the Risk Management Committee strives to identify and evaluate the Group’s risks. In order to define the Committee’s roles and responsibilities, we issued Risk Management Committee Regulations. The Risk Management Committee prepares a risk management plan each year. Risk Management Audits in accordance with the risk management plan are conducted by the Internal Audit Department, which submits a report to the Risk Management Committee. The Risk Management Committee then takes necessary measures, screens the results and submits a report to the Board of Directors and the corporate auditors.

Basic Policy regarding Control of the Company

At a Board of Directors’ Meeting held on May 14, 2008, we adopted a basic policy regarding parties who control the decisions on our financial and business policies as well as introduced countermeasures against the acquisition of its shares with a view of securing 20% or more of our voting rights by a specific shareholder group (hereafter “the Pl an”). The Plan was introduced as a measure to prevent certain parties, who are considered to be inappropriate in accordance with Sumitomo Osaka Cement’s basic policy, from controlling decisions on its financial and business policies.

The Plan (valid for a three-year period) went into forc e with the approval of the majority of shareholders at the 145th Ordinary General Meeting of Shareholders held on June 27, 2008, and, later, was partially revised and renewed with the approval of the majority of shareholders at the 148th Ordinary General Meeting of Shareholders held on June 29, 2011.

For details of the Plan, please visit our website ( http://www.soc.co.jp/wp-content/uploads/2013/09/20110513_News_Release.pdf , Japanese only).

88

Our Management Team (As of June 27, 2013)

Board of Directors

* enikeS ihciukuFtnediserP

* arustaK ikuyomoTtnediserP eciV

Director, Senior Managing Executive Officers Masafumi NakaoAkira Fujisue

Director, Managing Executive Officers Katsuji MukaiYushi Suga

adiaS oratinuKrotceriD lanretxE

* Representative Director

Auditors

Corporate Auditors Ryuji MuramatsuKatsuhisa Aoi

External Corporate AuditorsFuminori TomosawaShoji HosakaKazuo Suzuki

Executive Officers

Executive Officers

Shigemi YamamotoYasuo FujiwaraIsao YoshitomiFujitoshi NakagawaShinichi InoueToshihiko OnishiHiroyuki SakakibaraRyoji OgiTomonori NonomuraHirotsune Morohashi

9

Six-Year SummarySUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESYears ended March 31

Millions of yenThousands of U.S. dollars

(Note 2)

2008 2009 2010 2011 2012 2013 2013

For the year:

Net sales ¥197,358 ¥215,390 ¥194,624 ¥201,644 ¥217,044 ¥219,083 $2,329,437

Cost of sales 149,333 172,920 157,432 159,542 172,609 170,042 1,807,998

Selling, general and administrative expenses 36,097 36,496 34,415 35,362 36,297 35,082 373,016

Operating income 11,928 5,973 2,776 6,738 8,136 13,959 148,422

Net income (loss) 5,073 450 (1,002) 920 3,645 7,460 79,327

Net cash provided by operating activities ¥ 23,202 ¥ 17,593 ¥ 24,555 ¥ 21,548 ¥ 23,243 ¥ 30,015 $ 319,146

Net cash used in investing activities (18,329) (23,191) (21,525) (15,048) (16,314) (17,362) (184,604)

Net cash (used in) provided by financing activities 5,158 8,753 1,765 (10,991) (6,111) (15,173) (161,339)

Cash and cash equivalents at end of year 22,825 25,988 30,800 26,277 27,093 25,078 266,653

At year end:

Net assets ¥135,523 ¥121,682 ¥125,044 ¥128,541 ¥131,782 ¥142,976 $1,520,222

Total assets 316,835 309,465 311,707 310,746 309,890 315,734 3,357,096

Per share data (yen/dollars):

Net income (loss) ¥ 12.14 ¥ 1.08 ¥ (2.41) ¥ 2.21 ¥ 8.76 ¥ 17.92 $ 0.191

Cash dividends 6.00 4.00 4.00 4.00 4.00 5.00 0.053

Shareholders’ equity 320.83 288.62 296.41 305.37 313.21 340.14 3.617

Financial ratios:

ROE (Return on equity) 3.7% 0.4% (0.8)% 0.7% 2.8% 5.5%

ROA (Return on assets) 3.2% 1.4% 0.3% 0.4% 1.2% 2.4%

Equity ratio (Note 1) 42.3% 38.9% 39.6% 40.9% 42.1% 44.8%

Number of employees 2,646 2,706 2,808 2,816 2,769 2,834

Notes: 1. Equity = Total net assets – Share subscription rights – Minority interests2. U.S. dollar amounts have been translated from yen at the rate of ¥94.05=US$1 as of March 31, 2013.

Consolidated Financial Data

10

Financial Review

Scope of ConsolidationThe scope of these consolidated financial statements includes Sumitomo Osaka Cement, 36 consolidated subsidiaries and one equity-method affiliate.

Net Sales During the fiscal year under review, the Japanese economy saw gradual recovery backed by reconstruction demand related to the Great East Japan Earthquake, but was impacted by the slowing of the global economy from summer onward. However, from around the beginning of calendar 2013, conditions began to improve due to the economic policies implemented by Japan’s new government. In the cement industry, both public- and private-sector demand related to disaster reconstruction picked up, as did pri-vate housing investment, mainly in urban areas, buoying pri-vate-sector demand. As a result, cement demand in Japan grew 4.5% year on year to 44,577 thousand metric tons. Exports, however, retreated 3.7%. Consequently, the total sales volume of cement produced by domestic manufacturers, including exports, climbed 2.8% year on year to 53,387 thou-sand metric tons. Under these circumstances, the Sumitomo Osaka Cement Group worked to provide a stable supply of cement and other materials for disaster reconstruction while promoting Groupwide efforts aimed at sustainable development, such cost reduction measures. As a result, consolidated net sales during the fiscal year under review increased 0.9% year on year to ¥219,083 million (US$2,329,437 thousand), due largely to high-er revenue in the cement business. For more information on results by business segment, please refer to the Review of Operations.

ProfitsOperating income grew 71.6% year on year to ¥13,959 million (US$148,422 thousand) due to a rise in earnings primarily in the cement business. Net income surged 104.6% compared with the previous fiscal year to ¥7,460 million (US$79,327 thou-sand). Consequently, net income per share stood at ¥17.92.

Financial PositionTotal assets as of March 31, 2013, stood at ¥315,734 million (US$3,357,096 thousand), an increase of ¥5,844 million from the previous fiscal year-end. Current assets decreased ¥1,553 million from the previous fiscal year-end to ¥95,515 million (US$1,015,582 thousand), attributable primarily to a decrease in cash and deposits. Total noncurrent assets rose ¥7,398 mil-lion from the previous fiscal year-end to ¥220,219 million (US$2,341,514 thousand), mainly as a result of an increase in securities. Within noncurrent assets, property, plant and equip-ment increased ¥1,007 mil l ion to ¥159,809 mil l ion (US$1,699,193 thousand), while investments and other assets rose ¥7,153 million to ¥56,997 million (US$606,030 thousand). Total liabilities declined ¥5,349 million from the previous fiscal year-end to ¥172,758 million (US$1,836,874 thousand). Current liabilities decreased ¥15,525 million to ¥90,373 million (US$960,912 thousand) largely due to a decrease in the bal-ance of the current portion of long-term loans payable and cor-porate bonds scheduled to be reimbursed within one year. Long-term liabilities increased ¥10,176 million to ¥82,384 mil-lion (US$875,961 thousand) as a result of such factors as a rise in long-term loans payable. Total interest-bearing debt declined ¥13,398 million to ¥102,810 million (US$1,093,148 thousand) compared with the previous fiscal year-end, while the interest

0

50

100

150

200

250

197.4 194.6

219.1217.0201.6

215.4

Net Sales(Billions of yen)

’13’12’11’10’09’080

15

10

5

11.9

14.0

8.1

6.7

2.8

6.0

Operating Income(Billions of yen)

’13’12’11’10’09’080

400

300

200

100

316.8 311.7335.7

309.9310.7309.5

Total Assets(Billions of yen)

’13’12’11’10’09’08

11

repayment of long-term loans payable and redemption of cor-porate bonds. As a result, cash and cash equivalents at the fiscal year-end decreased ¥2,015 million, or 7.4%, year on year to ¥25,078 million (US$266,653 thousand).

Dividend PolicySumitomo Osaka Cement believes that earnings distributions to shareholders should be determined in accordance with the Company’s business results. As a cement manufacturer, it is essential for the Company to continuously improve facilities while investing in facility renewal in order to secure future earn-ings. To this end, the Company considers it vital to expand its reserves. Based on this viewpoint, the Company will determine earnings distribution from the viewpoint of overall business management. For f iscal 2013, interim dividends were not paid. Consequently, the year-end dividend was ¥5.00 per share, and the full-year dividend payment totaled ¥5.00 per share.

Fiscal 2014 OutlookIn the fiscal year ending March 31, 2014, while risks associated with the global economic downturn and other factors remain, the Japanese economy is expected to make a gradual recov-ery, due in part to the economic policies of the government. In the cement industry, strong private-sector demand is expected due to ongoing increases in private housing invest-ment and private capital investment. Furthermore, public-sector demand is forecast to increase on the back of reconstruction demand related to the Great East Japan Earthquake. Accordingly, overall domestic demand is expected to grow. Amid such circumstances, the Sumitomo Osaka Cement Group will continue to focus on ensuring supply stability by establishing flexible production, sales and distribution systems

coverage ratio increased from 12.0 times in the previous fiscal year to 17.7 times. Net assets at the end of the fiscal year under review stood at ¥142,976 million (US$1,520,222 thousand), up ¥11,194 million from a year earlier. This increase was mainly the result of a rise in retained earnings. Consequently, the shareholders’ equity ratio edged up from 42.1% as of March 31, 2012, to 44.8% as of March 31, 2013. Capital Investment, Depreciation and AmortizationThe Company is taking steps to stabilize its business founda-tion in the cement business by making further efforts to stream-line production and distribution. In other business fields, the Company implements capital investment based on its medium- and long-term management strategies to expand revenues by allocating key management resources to growth fields. As a result, total capital expenditures undertaken throughout the Group increased ¥3,943 million, or 26.8%, from the previous fiscal year to ¥18,652 mill ion as of March 31, 2013. Depreciation and amortization fell ¥2,251 million, or 11.4%, to ¥17,485 million. Cash FlowNet cash provided by operating activities totaled ¥30,015 mil-lion (US$319,146 thousand), up ¥6,772 million from the previ-ous fiscal year. In addition to income before income taxes and minority interests, cash inflows were primarily composed of internal adjustments, including depreciation and amortization. Net cash used in investing activities amounted to ¥17,362 mil-lion (US$184,604 thousand), up ¥1,048 million from the previ-ous fiscal year, mainly reflecting purchases of property, plant and equipment. Net cash used in financing activities was ¥15,173 million (US$161,339 thousand), up ¥9,062 million from the previous fiscal year, Cash outflows comprised mainly the

0

30

60

90

120

150135.5

143.0

131.7128.5125.0121.7

Net Assets(Billions of yen)

’13’12’11’10’09’08–2

0

2

4

6

3.7

0.40.7

2.8

(0.8)

5.5

ROE (Return on Equity)(%)

’13’12’11’10’09’080

1

2

3

4

3.2

1.4

0.3

ROA (Return on Assets)(%)

’13’12’11’10’09’08

0.4

1.2

2.4

12

stable supply of limestone, the primary raw material of cement, over the long term. On the other hand, the price of coal, the pri-mary raw fuel used in cement production, may potentially increase due to future circumstances. The Group is making efforts to limit the effects on its performance by improving cement sales prices to reflect operating cost increases caused by rising expenses for coal procurement.

• Collection of DebtThe Sumitomo Osaka Cement Group has business with major customers in the construction and retail industries for its main-stay cement products and concrete. In the event that the per-formance of such major customers rapidly deteriorates and the Group is unable to collect receivables, its financial condition, results and cash flows may be seriously affected. The Sumitomo Osaka Cement Group is therefore working to strengthen credit administration by holding down accounts receivable through direct sales at cement service stations and by seeking to secure liquidity guarantees from customers.

• Plant OperationsBecause cement plants contain large-scale equipment and facilities, in the event of a significant incident, fire, accident, nat-ural disaster, electric outage or other unforeseen circumstance that may interfere with plant operations, the Group’s financial condition, results and cash flows may be significantly affected due to excessive recovery time and costs. However, the Group conducts regular inspections and disaster-prevention patrols at all of its plants in order to ensure stable operations based on its production plan. Accordingly, the Group estimates the possi-bility of such an occurrence to be low. Further, Sumitomo Osaka Cement has six cement plants nationwide (four operated by the Company; two by affiliated companies), and should operations at one plant be interrupted, the Group will respond by shifting orders among cement plants and by purchasing needed cement from business partners in an effort to ensure stable supply.

• Impairment of Property, Plant and EquipmentIn the event that the Group is unable to recover its investment due to decreased profitability or a decline in the market value of property, plant and equipment following the application of impairment accounting, Sumitomo Osaka Cement will be required to write down the book value of fixed assets to a price that may be recovered, based upon future earnings plans and related forecasts. At the current moment, the Group has recorded all impairment accounting of property, plant and equipment, which is required. However, impairment loss may be caused by changes in future land prices and operating con-ditions, and the Group’s financial condition and results may be significantly affected.

to meet fluctuations in demand in the domestic cement busi-ness while working to set appropriate sales prices. With regard to the overseas cement business, the Group will continue to examine the possibility of penetrating regions that are expected to grow in the future in order to facilitate new business expan-sion. In other business fields, the Group will investigate various measures to increase its business scale and profits through overseas production and sales as well as the focused distribu-tion of management resources. In line with its social mission, the Group will continue to actively contribute to the establishment of a recycling-oriented society by utilizing recycled raw materials and fuels, strive to reduce its environmental impact, and accept and treat disaster waste produced during the Great East Japan Earthquake. For the fiscal year ending March 31, 2014, Sumitomo Osaka Cement expects net sales of ¥225,000 million, an increase of 2.7% year on year, operating income of ¥16,000 million, an increase of 14.6%, and net income of ¥8,000 million, a rise of 7.2% from the fiscal year under review. The Company plans to pay a full-year dividend of ¥5.00 per share.

The aforementioned figures are based on information available as of May 2013, and therefore may differ in accordance with various factors in the future. Major possible risk factors are described as follows:

Business Risks• Decrease in Domestic Demand for CementIn the Sumitomo Osaka Cement Group’s mainstay cement business, domestic demand is significantly impacted by public investment and private-sector capital expenditure in Japan. Therefore, in the event that public works spending and private-sector capital expenditure deteriorate at a pace that exceeds the Company’s forecasts, the Group’s financial condition, results and cash flows may be substantially affected. However, given that cement is an indispensable material contributing to social capital, it is projected that demand above a certain level can be consistently secured in the medium to long term. Based on an anticipated decline in domestic demand for the foresee-able future, the Sumitomo Osaka Cement Group has restruc-tured its production framework by closing certain cement plants in prior years and will continue to implement various cost reductions and revisions of sales prices.

• Increase in Raw Material and Fuel PricesThe Group’s mainstay product of cement requires a variety of raw materials and fuels, including limestone, clay and coal. Therefore, price hikes in raw materials and fuels used in the cement manufacturing process have the potential to significant-ly affect the Group’s financial condition, results and cash flows. However, the Group’s own mine can provide an extremely

13

Consolidated Balance SheetsSUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2012 and 2013


(Note 1)

2012 2013 2013

ASSETS

Current assets:

Cash and deposits (Note 4) ¥ 27,237 ¥ 25,225 $ 268,215

Notes and accounts receivable—trade 47,676 47,697 507,148

Securities 0 0 2

Merchandise and finished goods 6,831 6,540 69,541

Work in process 1,465 1,990 21,166

Raw materials and supplies 9,544 9,533 101,366

Short-term loans receivable 689 567 6,029

Deferred tax assets (Note 11) 1,717 2,267 24,110

Other 2,265 1,954 20,782

Less: Allowance for doubtful receivables (357) (261) (2,781)

Total current assets 97,069 95,515 1,015,582

Property, plant and equipment, net:

Land 39,080 38,914 413,764

Buildings and structures 50,689 53,240 566,087

Machinery, equipment and vehicles 46,384 46,393 493,281

Construction in progress 7,783 5,888 62,606

Other 14,864 15,372 163,452

Total property, plant and equipment, net 158,802 159,809 1,699,193

Intangible assets:

Goodwill 649 357 3,799

Other 3,506 3,055 32,491

Total intangible assets 4,156 3,413 36,290

Investments and other assets:

Investment securities (Note 6) 40,663 48,925 520,205

Long-term loans receivable 1,787 1,714 18,226

Deferred tax assets (Note 11) 905 788 8,386

Other 7,349 6,329 67,299

Less: Allowance for doubtful accounts (843) (760) (8,087)

Total investments and other assets 49,862 56,997 606,030

Total noncurrent assets 212,821 220,219 2,341,514

Total assets ¥309,890 ¥315,734 $3,357,096

See accompanying notes to the consolidated financial statements.

14


(Note 1)

2012 2013 2013

LIABILITIES AND NET ASSETS

Current liabilities:

Notes and accounts payable—trade ¥ 26,541 ¥ 27,245 $ 289,690

Short-term loans payable (Note 7) 33,839 34,086 362,429

Current portion of long-term loans payable (Note 7) 21,169 11,290 120,045

Current portion of bonds (Note 7) 10,000 — —

Income taxes payable 2,183 4,320 45,935

Provision for bonuses 2,058 2,091 22,236

Provision for loss on disaster 6 — —

Other 10,100 11,340 120,575

Total current liabilities 105,899 90,373 960,912

Long-term liabilities:

Bonds payable (Note 7) 15,000 15,000 159,489

Long-term loans payable (Note 7) 36,200 42,433 451,183

Deferred tax liabilities (Note 11) 9,602 13,013 138,367

Provision for retirement benefits (Note 13) 1,392 1,299 13,816

Provision for directors’ retirement benefits 234 221 2,356

Asset retirement obligations 299 642 6,830

Other 9,478 9,773 103,917

Total long-term liabilities 72,207 82,384 875,961

Total liabilities 178,107 172,758 1,836,874

Contingent liabilities (Note 8)

Net assets:

Shareholders’ equity

Capital stock 41,654 41,654 442,892

Capital surplus (Note 9) 31,084 31,084 330,510

Retained earnings (Note 9) 44,865 50,620 538,226

Treasury stock (1,972) (1,989) (21,158)

Total shareholders’ equity 115,630 121,368 1,290,471

Accumulated other comprehensive income:

Unrealized gain on available-for-sale securities 14,822 20,125 213,982

Foreign currency translation adjustments (55) 95 1,019

Total accumulated other comprehensive income 14,767 20,220 215,002

Minority interests 1,384 1,387 14,749

Total net assets 131,782 142,976 1,520,222

Total liabilities and net assets ¥309,890 ¥315,734 $3,357,096

15

Consolidated Statements of IncomeSUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESYears ended March 31, 2012 and 2013


(Note 1)

2012 2013 2013Net sales ¥217,044 ¥219,083 $2,329,437

Cost of sales 172,609 170,042 1,807,998

Gross profit 44,434 49,041 521,438

Selling, general and administrative expenses 36,297 35,082 373,016

Operating income 8,136 13,959 148,422

Non operating income:

Interest income 78 96 1,030

Dividend income 1,237 1,093 11,628

Foreign exchange gain — 728 7,744

Compensation income 278 326 3,471

Equity in earnings of affiliates 33 122 1,304

Rental income 157 189 2,014

Other 509 626 6,658

Total non operating income 2,294 3,183 33,852

Non operating expenses:

Interest expense 1,921 1,647 17,513

Foreign exchange loss 23 — —

Other 820 883 9,392

Total non operating expenses 2,765 2,530 26,905

Ordinary income 7,666 14,612 155,369

Extraordinary income:

Gain on sales of noncurrent assets 37 132 1,407

Gain on sales of investment securities 86 4 48

Compensation income 313 — —

Other 4 — —

Total extraordinary income 441 136 1,455

Extraordinary loss:

Loss on retirement of noncurrent assets 1,255 613 6,522

Loss on sales of noncurrent assets 97 38 411

Loss on valuation of investment securities 22 16 177

Loss on impairment of noncurrent assets (Note 14) 610 517 5,503

Loss on business restructuring (Note 15) — 541 5,752

Loss on disaster (Note 16) 228 — —

Other 17 68 727

Total extraordinary loss 2,231 1,795 19,094

Income before income taxes and minority interests 5,876 12,953 137,730

Income taxes (Note 11):

Current 2,554 5,468 58,139

Deferred (333) (2) (31)

Income before minority interests 3,654 7,488 79,622

Minority interests in net income of consolidated subsidiaries (8) (27) (295)

Net income ¥ 3,645 ¥ 7,460 $ 79,327

Yen U.S. dollars (Note 1)

2012 2013 2013

Per share information (Note 2 (n)):

Net income ¥ 8.76 ¥ 17.92 $ 0.191

Net income assuming dilution — — —


16

Consolidated Statements of Comprehensive IncomeSUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESYears ended March 31, 2012 and 2013


(Note 1)

2012 2013 2013

Income before minority interests ¥3,654 ¥ 7,488 $ 79,622

Other comprehensive income (Note 12):

Unrealized gain on available-for-sale securities 1,244 5,299 56,346

Foreign currency translation adjustments (8) 151 1,611

Share of other comprehensive income of affiliates accounted for using the equity method (0) 2 30

Comprehensive income ¥4,889 ¥12,942 $137,609

Total comprehensive income attributable to:

Shareholders of Sumitomo Osaka Cement Co., Ltd. ¥4,880 ¥12,914 $137,315

Minority interests 8 27 295


17

Consolidated Statements of Changes in Net AssetsSUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESYears ended March 31, 2012 and 2013

Millions of yen


Shares of common stock

Capital stock

Capital surplus

Retained earnings

Treasury stock Total

Balance at March 31, 2011 427,432,175 ¥41,654 ¥31,084 ¥42,839 ¥(1,959) ¥113,619 Cash dividend paid — — (1,665) — (1,665) Net income for the year — — 3,645 — 3,645 Acquisition of treasury stock — — — (14) (14) Disposal of treasury stock — 0 — 0 0 Increase due to change in accounting

period of consolidated subsidiary — — 44 — 44 Other, net — — — — —Balance at March 31, 2012 427,432,175 ¥41,654 ¥31,084 ¥44,865 ¥(1,972) ¥115,630 Cash dividend paid — — 1,665 — 1,665 Net income for the year — — 7,460 — 7,460 Acquisition of treasury stock — — — (17) (17) Disposal of treasury stock — 0 — 0 0 Decrease due to change in accounting

period of consolidated subsidiary — — (40) — (40) Other, net — — — — —Balance at March 31, 2013 427,432,175 ¥41,654 ¥31,084 ¥50,620 ¥(1,989) ¥121,368

Millions of yen

Accumulated other comprehensive income

Unrealized gain on available-for-sale

securities

Foreign currency translation

adjustmentsTotal

Minority interests

Total net assets

Balance at March 31, 2011 ¥13,578 ¥(46) ¥13,532 ¥1,390 ¥128,541 Cash dividend paid — — — — 1,665 Net income for the year — — — — 3,645 Acquisition of treasury stock — — — — (14) Disposal of treasury stock — — — — 0 Increase due to change in accounting

period of consolidated subsidiary — — — — 44 Other, net 1,243 (9) 1,234 (5) 1,229Balance at March 31, 2012 ¥14,822 ¥(55) ¥14,767 ¥1,384 ¥131,782 Cash dividend paid — — — — 1,665 Net income for the year — — — — 7,460 Acquisition of treasury stock — — — — (17) Disposal of treasury stock — — — — 0 Decrease due to change in accounting

period of consolidated subsidiary — — — — (40) Other, net 5,302 151 5,453 2 5,456Balance at March 31, 2013 ¥20,125 ¥ 95 ¥20,220 ¥1,387 ¥142,976

Thousands of U.S. dollars (Note 1)


Capital stock

Capital surplus

Retained earnings

Treasury stock Total

Balance at March 31, 2012 $442,892 $330,509 $477,034 $(20,978) $1,229,459 Cash dividend paid — — (17,706) — (17,706) Net income for the year — — 79,327 — 79,327 Acquisition of treasury stock — — — (180) (180) Disposal of treasury stock — 0 — 0 0 Decrease due to change in accounting

period of consolidated subsidiary — — (428) — (428) Other, net — — — — —Balance at March 31, 2013 $442,892 $330,510 $538,226 $(21,158) $1,290,471

Thousands of U.S. dollars (Note 1)

Accumulated other comprehensive income

Unrealized gain on available-for-sale

securities

Foreign currency translation

adjustmentsTotal

Minority interests

Total net assets

Balance at March 31, 2012 $157,605 $(591) $157,013 $14,725 $1,401,198 Cash dividend paid — — — — (17,706) Net income for the year — — — — 79,327 Acquisition of treasury stock — — — — (180) Disposal of treasury stock — — — — 0 Decrease due to change in accounting

period of consolidated subsidiary — — — — (428) Other, net 56,376 1,611 57,988 23 58,011Balance at March 31, 2013 $213,982 $1,019 $215,002 $14,749 $1,520,222


18

Consolidated Statements of Cash FlowsSUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESYears ended March 31, 2012 and 2013


(Note 1)

2012 2013 2013Operating activities:Income before income taxes and minority interests ¥ 5,876 ¥12,953 $137,730Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,736 17,485 185,920 Amortization of goodwill 188 152 1,621 Loss on impairment of fixed assets 610 517 5,503 Increase (decrease) in provision for retirement benefits 329 (131) (1,401) Increase (decrease) in provision for directors’ retirement benefits (12) 14 159 Increase (decrease) in provision for loss on disaster (474) (6) (69) Increase (decrease) in allowance for doubtful accounts 500 (90) (964) Interest and dividend income (1,315) (1,190) (12,658) Interest expenses 1,921 1,647 17,513 Foreign exchange loss (gain) (61) 256 2,727 Equity in earnings of affiliates (33) (122) (1,304) Gain on sales of noncurrent assets (37) (132) (1,407) Loss on sales of noncurrent assets 97 38 411 Loss on retirement of noncurrent assets 943 274 2,922 Loss (gain) on sales of investment securities (86) 29 318 Loss on valuation of investment securities 22 16 177 Decrease (increase) in notes and accounts receivable—trade (5,371) 156 1,668 Decrease (increase) in inventories 2,107 (220) (2,342) Increase in notes and accounts payable—trade 1,724 778 8,273 Other (818) 1,411 15,008Subtotal 25,848 33,839 359,805 Interest and dividends income received 1,310 1,186 12,616 Interest expenses paid (1,932) (1,693) (18,008) Income taxes paid (1,983) (3,316) (35,266) Net cash provided by operating activities 23,243 30,015 319,146

Investing activities:Proceeds from redemption of securities 0 0 1Proceeds from sales of property, plant and equipment 405 492 5,233Purchases of property, plant and equipment (15,156) (17,746) (188,696)Proceeds from sales of investment securities 300 62 663Purchases of investment securities (3) (10) (109)Purchases of investments in subsidiaries resulting in change in scope of consolidation (186) — —Payments for sales of investments in subsidiaries resulting in change in scope of consolidation — (19) (203)Payments for investments in capital of subsidiaries and affiliates (920) — —Collection of loans receivable 231 739 7,861Payments of loans receivable (984) (883) (9,393)Other (1) 3 36 Net cash used in investing activities (16,314) (17,362) (184,604)

Financing activities: Increase (decrease) in short-term loans payable (437) 239 2,550Proceeds from long-term loans payable 2,530 18,598 197,745Repayment of long-term loans payable (9,452) (22,253) (236,617)Proceeds from issuance of bonds 10,000 — —Proceeds from sales of treasury stock 0 0 0Redemption of bonds (7,000) (10,000) (106,326)Purchase of treasury stock (14) (17) (180)Cash dividends paid (1,665) (1,665) (17,706)Cash dividends paid to minority shareholders (4) (1) (11)Other (67) (74) (793) Net cash used in financing activities (6,111) (15,173) (161,339)Effect of exchange rate changes on cash and cash equivalents (2) 154 1,644Net (decrease) increase in cash and cash equivalents 815 (2,365) (25,152)Cash and cash equivalents at beginning of year 26,277 27,093 288,079Increase in cash and cash equivalents resulting from change in scope of consolidation — 350 3,726Increase in cash and cash equivalents resulting from change in accounting period of consolidated subsidiary 0 — —Cash and cash equivalents at end of year (Note 4) ¥27,093 ¥25,078 $266,653


19

Notes to Consolidated Financial StatementsSUMITOMO OSAKA CEMENT CO., LTD. AND CONSOLIDATED SUBSIDIARIESMarch 31, 2012 and 2013

1. BASIS OF PREPARATION OF CONSOLIDATED

FINANCIAL STATEMENTS

Sumitomo Osaka Cement Co., Ltd. (the “Company”) maintains its

accounting records and prepares its financial statements in accordance

with accounting principles and practices generally accepted and

applied in Japan.

The accompanying consolidated financial statements of the

Company and its consolidated subsidiaries are prepared on the basis of

accounting principles generally accepted in Japan, and are compiled

from the consolidated financial statements prepared by the Company

as required by the Financial Instruments and Exchange Law of Japan.

In addition, the notes to the consolidated financial statements include

certain information which is not required under accounting principles gen-

erally accepted in Japan but is presented herein as additional information.

The U.S. dollar amounts are included solely for the convenience of

the reader and are stated, as a matter of arithmetic computation only, at

US$1.00=¥94.05, the exchange rate prevailing on March 31, 2013.

These translations should not be construed as representations that the

Japanese yen amounts actually represent, or have been or could be

converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of consolidation

The accompanying consolidated financial statements include the

accounts of the Company and its significant subsidiaries. All significant

intercompany balances and transactions have been eliminated in consol-

idation. Any material differences between the cost of investments in con-

solidated subsidiaries and the underlying equity in their net assets at the

dates of acquisition are amortized over five years. Significant investments

in unconsolidated subsidiaries and affiliates are accounted for by the

equity method. Investments in unconsolidated subsidiaries and affiliates

which are not accounted for by the equity method are carried at cost.

Three consolidated subsidiaries have a December 31 year end which

differs from that of the Company. As a result, adjustments have been

made for any significant intercompany transactions which took place

during the period between the year end of the subsidiaries and the year

end of the Company.

(b) Cash and cash equivalents

Cash and cash equivalents include all highly liquid debt instruments

purchased with a maturity of three months or less.

(c) Inventories

Inventories are stated principally at the lower of cost or market, cost

being determined principally by the moving average method.

(d) Allowance for doubtful receivables

Allowance for doubtful receivables is provided at an estimated amount

of the anticipated loss on bad debts plus an amount calculated at the

average rate of historical losses on bad debts charged to income for

the past three years.

(e) Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated

depreciation. Depreciation is calculated mainly by the declining-balance

method for property, plant and equipment at rates based on the esti-

mated useful lives of the respective assets. The depreciation of build-

ings purchased on and after April 1, 1998, in-house power generation

facility at the Ako Plant, the Kochi Plant and the Tochigi Plant, and

property, plant and equipment of certain subsidiaries is calculated by

the straight-line method. Leased assets under finance leases which do

not transfer ownership of the leased property are depreciated or amor-

tized by the straight-line method over the lease terms assuming no

residual value. The useful lives range as follows: buildings and struc-

tures, 2 to 75 years; machinery, equipment and tools, 2 to 22 years.

Quarry sites are depreciated by the unit-of-production method.

Normal repairs and maintenance, including minor renewals and

improvements, are charged to income as incurred.

(f) Investment securities

Securities are classified and accounted for, depending on manage-

ment’s intent, as follows: i) “trading securities,” which are held for the

purpose of earning capital gains in the short term, are stated at fair

value, and the related unrealized gain or loss is included in earnings, ii)

“held-to-maturity debt securities,” which are expected to be held to

maturity with the positive intent and ability to hold to maturity, are stated

at amortized cost and iii) “available-for-sale securities,” not classified in

either of the aforementioned categories, are stated at fair value with

unrealized gain and loss, net of the applicable taxes, stated as a sepa-

rate component of accumulated other comprehensive income.

The Company classified all securities as “available-for-sale securities.”

Available-for-sale securities with fair value are stated at average mar-

ket value for the month ended on the balance sheet date. Other securi-

ties without a fair value are stated at cost determined by the

moving-average method.

The difference between the acquisition cost and the carrying value of

available-for-sale securities, net of the applicable taxes, is recognized in

“unrealized gain (loss) on available-for-sale securities.” The cost of available-

for-sale securities sold is computed based on the moving-average method.

20

(g) Foreign currency translation

Balance sheets of consolidated overseas subsidiaries are translated into

Japanese yen at the rates of exchange in effect at the balance sheet

date for all assets and liabilities, and at the historical rates for the compo-

nent of net assets excluding minority interests. Differences arising from

such translations are shown as “foreign currency translation adjust-

ments” as a separate component of accumulated other comprehensive

income.

Exchange rates as of the subsidiaries’ balance sheet date are used

for the translation of income and expenses. Gain or loss resulting from

the translation of foreign currency transactions is credited or charged to

income as incurred.

(h) Leases

All finance lease transactions are capitalized and recognized as leased

assets and lease obligations on the consolidated balance sheets,

except for finance lease transactions executed on or before March 31,

2008 that do not involve a transfer of ownership, which are accounted

by the same method as former fiscal years.

(i) Income taxes

Deferred tax assets and liabilities are determined based on the differ-

ences between the carrying amounts of the existing assets and the lia-

bilities for financial reporting purposes and their respective tax bases,

and the operating loss carryforwards. Deferred tax assets and liabilities

are measured using the enacted tax rates and laws which will be in

effect when the differences are expected to reverse.

(j) Provision for bonuses

Provision for bonuses is recorded based on an estimated amount.

(k) Provision for retirement benefits

Employees of the Company are covered by its funded pension plan.

Benefits under this plan are based on current basic salary rates and

length of service.

Accrued severance benefits are stated based on the projected bene-

fit obligation and the estimated assets in the pension plan at the end of

the year. The unrecognized actuarial gain or loss is amortized over a

period of 15 years, which falls within the remaining years of service of

the eligible employees and is amortized from the year following the year

in which the gain or loss was incurred.

Directors and statutory auditors are generally entitled to receive

lump-sum retirement benefit payments based on their level of compen-

sation and years of service at the time of retirement. Such lump-sum

payments are covered by an unfunded retirement benefit plan and

accrued at an amount to be required at the balance sheet date accord-

ing to internal regulations.

(l) Revenue recognition

The percentage-of-completion method is applied if the outcome of the

construction activities can be accurately estimated as of the fiscal year-

end. Otherwise, the completed-contract method shall be applied.

(m) Appropriation of retained earnings

Under the Corporation Law and the Articles of Incorporation of the

Company, appropriations of retained earnings (primarily for the payment

of cash dividends) proposed by the Board of Directors must be

approved at a shareholders’ meeting held within three months of the

end of each fiscal year. The appropriations of retained earnings reflected

in the accompanying financial statements represent appropriations

applicable to the immediately preceding fiscal year, which were duly

approved at a shareholders’ meeting and implemented during that year.

Dividends are paid to shareholders of record at the end of the fiscal year.

(n) Net income per share

Basic net income per share is computed by dividing net income avail-

able to common shareholders by the weighted-average number of

common shares outstanding for the period.

(o) Derivatives

The Company and consolidated subsidiaries enter into derivative

agreements to manage their exposures to fluctuations in interest rates.

Interest rate swaps are utilized to reduce interest rate risks on borrow-

ings. The Company and consolidated subsidiaries do not enter into

derivative agreements for trading or speculative purposes. Interest rate

swaps which qualify for hedge accounting and meet specific matching

criteria are not remeasured at fair value, but accounted for as if the

interest rates applied to the interest rate swaps had originally applied to

the underlying borrowings.

Hedged items are identified by transaction at the time when the

Company and the consolidated subsidiaries enter into derivative agree-

ments, and the hedging instruments and the hedged items are sepa-

rately recorded and maintained. The Company and the consolidated

subsidiaries evaluate the effectiveness of derivatives based on either

the difference between the accumulated amount of cash flows from the

hedging instrument and from the corresponding hedged item or

variance between the fair value of the hedging instrument and the

hedged item, except for interest rate swaps which meet specific

matching criteria.

(p) Asset retirement obligations

An asset retirement obligation is recorded at the time of acquisition or

construction of a tangible fixed asset and when there is a statutory or

similar obligation associated with the removal of such tangible fixed

asset. The asset retirement obligation is measured at the discounted

21

value of the liability at the time the tangible fixed asset is acquired or

constructed and the amount of the liability is added to the book value of

the relevant tangible fixed asset. The cost component of the obligation is

depreciated over the remaining useful life of the tangible fixed asset.

(q) Accounting standards issued but not yet applied

The Company plans to adopt the Accounting Standard for Retirement

Benefits (Accounting Standards Board of Japan (ASBJ), Statement No.

26, issued on May 17, 2012) and the Guidance on Accounting

Standard for Retirement Benefits (ASBJ Guidance No. 25, issued on

May 17, 2012).

Summary

Under the revised accounting standard, actuarial gains and losses and

past service costs will be recognized on the balance sheet within net

assets after adjusting for tax effects, and the difference between retire-

ment benefit obligations and plan assets will be recognized as a liability

or asset. With respect to the method of attributing expected benefits to

periods, the standard allows the use of a benefit formula basis, in addi-

tion to a straight-line basis. Furthermore, the method of calculating the

discount rate has also been amended.

Effective date

The new standard will be applied from the end of the fiscal year begin-

ning April 1, 2013.

Effect of application

The effect of adopting this new standard on the Company’s financial

statements was under evaluation at the time the accompanying consol-

idated financial statements were being prepared.

3. CHANGES IN ACCOUNTING POLICY

Effective April 1, 2012, the Company and its consolidated subsidiaries

in Japan have applied a new depreciation method for newly acquired

tangible fixed assets based on changes to the Corporation Tax Act

brought about by the Act on Partial Revision of the Income Tax Act to

Build a Tax System Which Adapts to Changing Economic and Social

Structures (Act No. 114 of 2011, promulgated on December 2, 2011)

and the Cabinet Order for Partial Revision of the Order for Enforcement

of the Corporation Tax Act (Cabinet Order No. 379 of 2011, promulgat-

ed December 2, 2011).

As a result, operating income, ordinary income and income before

income taxes and minority interests each increased ¥444 million

(US$4,724 thousand) for the year ended March 31, 2013.

4. CASH AND CASH EQUIVALENTS

Cash and cash equivalents at March 31, 2012 and 2013 consisted of

the following:

Millions of yenThousands ofU.S. dollars

2012 2013 2013

Cash and deposits ¥27,237 ¥25,225 $268,215

Time deposits with a maturity of over three months (143) (146) (1,561)

¥27,093 ¥25,078 $266,653

5. FINANCIAL INSTRUMENTS

1. Items Concerning the Status of Financial Instruments

(a) Policies for Financial Instruments

The Sumitomo Osaka Cement Group (the “Group”) procures necessary

funds primarily through bank loans and the issuance of bonds in accor-

dance with capital expenditure plans and financial plans mainly to

engage in the business of producing and selling cement. Temporary

surpluses are invested in low-risk financial instruments and bank loans

provide short-term working capital. It is the Group’s policy to use deriv-

atives as a way to avoid the below-stated risks and to not engage in

trading or speculative transactions.

(b) Types and Risks of Financial Instruments and Risk Management

Trade receivables, such as notes and accounts receivable, are subject

to credit risk in relation to customers. In accordance with its internal

policies for managing such risk, the Company has established a system

that manages the due dates and outstanding balances by each cus-

tomer. Securities and investment securities are composed of mainly

stocks associated with business and capital alliances, and are subject

to market risk.

Trade payables, such as notes and accounts payable, usually have a

payment due dates within one year. Furthermore, a certain portion of

such payables are denominated in a foreign currency, associated with

the import of raw materials, thus subject to exchange rate fluctuation

risk. However, such risks are minor. Loans, bonds and lease obligations

related to finance lease transactions are taken out principally for the

purpose of making capital investments. Such obligations’ redemption

dates are a maximum of 15 years from the balance sheet date. A cer-

tain portion of said liabilities have variable interest rates and are subject

to interest rate fluctuation risk. However, to hedge such risk, the interest

rates are fixed through the use of derivative transactions (interest rate

swap transactions). Evaluation of the effectiveness of derivatives is

omitted since all of the interest rate swap transactions meet the specific

matching criteria.

22

Derivative transactions are entered into and managed in accordance

with internal policies, which determine the authority to undertake such

transactions. To minimize credit risk, derivative transactions are entered

into only with highly rated financial institutions.

Furthermore, trade payables and loans are subject to liquidity risks

(the risk that the Group may not be able to meet its obligations). The

Group manages such risks by preparing monthly cash flow plans.

(c) Supplemental Explanation of the Estimated Fair Value of

Financial Instruments

The values of contracts related to derivative transactions as stated in “2.

Estimated Fair Value of Financial Instruments” do not by themselves indi-

cate the market risk associated with the respective derivative transaction.

2. Estimated Fair Value of Financial Instruments

Consolidated balance sheet amounts, estimated fair values and their

differences as of March 31, 2013 (the consolidated account closing

date for the fiscal year under review) are as follows. The following table

does not include financial instruments for which it is extremely difficult

to determine the fair value (see Note 2).

Millions of yen

2013Consolidated

Balance Sheet Amounts Fair Value Difference

Cash and deposits ¥25,225 ¥25,225 ¥ —

Notes and accounts receivable —trade 47,697 47,697 —

Securities and investment securities:

Available-for-sale securities 44,308 44,308 —

Short-term loans receivable (Note 5) 567 567 —

Long-term loans receivable 151 155 4

Total assets 117,949 117,953 4

Notes and accounts payable —trade 27,245 27,245 —

Short-term loans payable 34,086 34,086 —

Bonds payable 15,000 15,188 188

Long-term loans payable 53,724 54,251 527

Total liabilities 130,055 130,771 715

Derivative transactions — — —

Total derivative transactions — — —

Thousands of U.S. dollars

2013Consolidated

Balance Sheet Amounts Fair Value Difference

Cash and deposits $ 268,215 $ 268,215 $ —

Notes and accounts receivable —trade 507,148 507,148 —

Securities and investment securities:

Available-for-sale securities 471,115 471,115 —

Short-term loans receivable (Note 5) 6,029 6,029 —

Long-term loans receivable 1,605 1,655 49

Total assets 1,254,112 1,254,161 49

Notes and accounts payable —trade 289,690 289,690 —

Short-term loans payable 362,429 362,429 —

Bonds payable 159,489 161,493 2,004

Long-term loans payable 571,228 576,832 5,603

Total liabilities 1,382,838 1,390,446 7,607

Derivative transactions — — —

Total derivative transactions — — —

Note 1: Methods to determine the estimated fair value of financial instruments

and other matters related to securities and derivative transactions

Cash and deposits, trade receivables and short-term loans receivable

Since these items are settled in the short-term, their fair market value

approximates the carrying amount. Therefore, the carrying amount is

used to estimate fair value.

Securities and investment securities

The fair value of such securities is based on quoted market prices.

Please refer to Note 6. Securities, of these notes to the consolidated

financial statements for information on securities classified by holding

purpose.

Long-term loans receivable

Long-term loans receivable are classified by remaining length of time to

maturity. The fair values are estimated based on the present value of

future cash flows discounted by the contracted rates as adjusted con-

sidering the rate for Japanese government issued bonds.

Trade payables and short-term loans payable

Since these items are settled in the short-term, their fair market value

approximates the carrying amount. Therefore, the carrying amount is

used to estimate fair value.

Bonds payable

The fair value of bonds issued by the Company is based on the quoted

market price.

23

Long-term loans payable

Long-term loans payable are classified by remaining length of time to

maturity. The fair values are estimated based on the present value of

future cash flows discounted by interest rates applicable to new bor-

rowings. Long-term loans payable are hedged by interest rate swaps

that meet the specific matching criteria.

Therefore, the fair value of such loans payable is estimated based on

the present value of future cash flows estimated in accordance with the

accounting treatment described in Note 2 (o) Derivatives.

Accordingly, such future cash flows include cash flows from applica-

ble interest rate swap transactions as well as payment of principal and

interest. Future cash flows are discounted by the interest rate to be

applied if similar new borrowings were entered into.

Derivative Transactions

(a) Items not subject to hedge accounting: None

(b) Items subject to hedge accounting:

Information on derivative transactions subject to hedge accounting as

of March 31, 2013 is as follows.

Millions of yen

Hedge accounting

method

Type of derivative

transaction

Major hedged items

Contracted amount

Amount due after one year

Fair value

Special accounting treatmentfor interest rate swaps

Interest swap transactions(Pay fixed; receive floating)


¥27,750 ¥22,950 *


Hedge accounting

method

Type of derivative

transaction

Major hedged items

Contracted amount

Amount due after one year

Fair value

Special accounting treatmentfor interest rate swaps

Interest swap transactions(Pay fixed; receive floating)


$295,055 $244,019 *

* The fair value of the interest rate swaps is not shown since it is included in

long-term loans payable (please refer to the abovementioned long-term

loans payable).

Note 2: Financial instruments for which fair value is extremely difficult to

determine as of March 31, 2013

Millions of yen

Classification Consolidated Balance Sheet Amounts

Unlisted securities ¥2,047

Long-term loans receivable 1,563


Classification Consolidated Balance Sheet Amounts

Unlisted securities $21,771

Long-term loans receivable 16,620

Unlisted securities have no available market price and the estimation of

future cash flows is expected to entail excessive costs. Consequently,

their fair value is recognized as extremely difficult to estimate and, unlisted

securities are not included in available-for-sale securities.

In addition, the abovementioned long-term loans receivable are not

included in long-term loans receivable of the preceding table because

future cash flows cannot be estimated reliably.

Note 3: Redemption schedule for receivables and securities with

maturities at March 31, 2013.

Millions of yen

2013

Within one year

Over one year and under five years

Over five years and under ten years

Over ten years

Cash and deposits ¥25,190 ¥— ¥ — ¥—Trade receivables 47,697 — — —Securities: Available-for-sale

securities 0 0 201 —Short-term loans receivable 567 — — —Long-term loans receivable 1 68 6 75Total ¥73,456 ¥68 ¥207 ¥75


2013

Within one year

Over one year and under five years

Over five years and under ten years

Over ten years

Cash and deposits $267,842 $ — $ — $ —Trade receivables 507,148 — — —Securities: Available-for-sale

securities 1 2 2,140 —Short-term loans receivable 6,029 — — —Long-term loans receivable 15 725 64 801Total $781,038 $727 $2,204 $801

6. SECURITIES

The acquisition cost and fair value of the securities classified as

available-for-sale at March 31, 2012 and 2013 are summarized as follows:

Millions of yen

2012Acquisition

costFair

valueUnrealized

gainUnrealized

loss

Classified as:

Available-for-sale ¥12,789 ¥36,099 ¥23,683 ¥(373)

Millions of yen

2013Acquisition

costFair

valueUnrealized

gainUnrealized

loss

Classified as:

Available-for-sale ¥12,779 ¥44,308 ¥31,536 ¥(7)

24


2013Acquisition

costFair

valueUnrealized

gainUnrealized

loss

Classified as:

Available-for-sale $135,879 $471,115 $335,316 $(80)

Proceeds from sales of investment securities for the years ended

March 31, 2012 and 2013 consisted of the following:


2012 2013 2013

Proceeds ¥200 ¥60 $648

Gross realized gain 91 4 48

Gross realized loss 4 34 366

A significant decline in the fair value of investment securities is recog-

nized as an impairment loss if the decline is not considered recoverable.

Losses on devaluation of investments classified as available-for-sale

securities as a result of a permanent decline in value amounted to ¥22

million and ¥16 million (US$177 thousand) for the years ended March

31, 2012 and 2013, respectively.

7. SHORT-TERM BANK LOANS AND BONDS

The annual interest rates applicable to the loans outstanding at March

31, 2012 and 2013 ranged from 0.2% to 2.0% and from 0.5% to 1.9%,

respectively.

Long-term debt at March 31, 2012 and 2013 consisted of

the following:


2012 2013 2013

Loans, principally from banks and insurance companies, due from 2012 to 2024 (2011 to 2024 in 2011) ¥57,396 ¥53,724 $571,228

Bonds 25,000 15,000 159,489

¥82,369 ¥68,724 $730,718

Less: Current portion of long-term debt:

Loans ¥21,169 ¥11,290 $120,045

Bonds 10,000 0 0

31,169 11,290 120,045

¥51,200 ¥57,434 $610,673

The annual interest rates applicable to the long-term loans outstanding

at March 31, 2012 and 2013 ranged from 0.8% to 2.9% and from 0.8%

to 2.5%, respectively.

The aggregate annual maturities of long-term loans subsequent to

March 31, 2013 are summarized as follows:

Years ending March 31, Millions of yenThousands of U.S. dollars

2015 ¥15,700 $166,933

2016 8,074 85,850

2017 7,094 75,437

2018 3,789 40,287

2019 and thereafter 7,775 82,675

¥42,433 $451,183

Assets pledged as collateral at March 31, 2012 and 2013 are sum-

marized as follows:


2012 2013 2013

Property, plant and equipment, at net book value ¥25,120 ¥21,509 $228,698

Other 534 557 5,932

¥25,655 ¥22,066 $234,630

The obligations secured by such collateral as at March 31, 2012 and

2013 are as follows:


2012 2013 2013

Short-term loans payable ¥1,117 ¥ 635 $ 6,751

Current portion of long-term loans payable 893 812 8,633

Long-term loans payable 3,684 2,742 29,158

Other 430 395 4,209

¥6,125 ¥4,585 $48,752

8. CONTINGENT LIABILITIES

Contingent liabilities at March 31, 2012 and 2013 are as follows:


2012 2013 2013

Guarantees of loans and other ¥158 ¥223 $2,381

9. SHAREHOLDERS’ EQUITY

The Corporation Law of Japan provides that an amount equal to 10%

of the amounts to be disbursed as distributions of earnings be appropri-

ated to the legal reserve until the sum of the legal reserve equals 25%

of the common stock account.

10. LEASES

(a) Finance leases

Finance leases commencing on or before March 31, 2008 continue to

be accounted for in the same method as operating leases. The follow-

ing amounts represent the acquisition costs, accumulated depreciation

and amortization and net book value of the leased property at March

31, 2012 and 2013 which would have been reflected in the consolidated

25

balance sheets if finance lease accounting had been applied to the

finance leases currently accounted for as operating leases:


2012 2013 2013

Acquisition costs

Machinery, equipment and vehicles ¥160 ¥ 9 $106

Other 61 20 216

222 30 322

Accumulated depreciation and amortization

Machinery, equipment and vehicles 131 6 71

Other 52 15 169

184 22 241

Net book value

Machinery, equipment and vehicles 29 3 34

Other 8 4 46

¥ 37 ¥ 7 $ 81

Lease payments relating to finance leases accounted for as operating

leases amounted to ¥70 million and ¥17 million (US$186 thousand),

which are equal to the depreciation and amortization expenses of the

leased assets computed by the straight-line method over the lease

terms, for the years ended March 31, 2012 and 2013, respectively.

Future minimum lease payments (including the interest portion there-

on) subsequent to March 31, 2013 for finance leases accounted for as

operating leases are summarized as follows:


2014 ¥4 $45

2015 and thereafter 3 36

¥7 $81

(b) Operating leases

Future minimum lease payments subsequent to March 31, 2013 for

non-cancelable operating leases are summarized as follows:


2014 ¥ 78 $ 838

2015 and thereafter 166 1,774

¥245 $2,613

11. INCOME TAXES

A reconciliation of the statutory tax rates to the effective tax rates for the

years ended March 31, 2012 and 2013 is presented as follows.

2012 2013

Statutory tax rates 41.0% 38.0%

Change in valuation allowance 7.4 4.1

Nondeductible expenses 1.3 0.5

Tax credit (7.5) (1.6)

Other (4.4) 1.3

Effective tax rates 37.8% 42.2%

The significant components of the Company’s deferred income tax

assets and liabilities at March 31, 2012 and 2013 are as follows:


2012 2013 2013

Deferred tax assets:

Impairment loss on fixed assets ¥2,354 ¥2,468 $26,246

Deferred tax loss 1,567 1,090 11,599

Accrued bonuses 782 796 8,466

Unrealized holding gain 678 694 7,383

Provision for retirement benefits 496 468 4,979

Unpaid enterprise tax 184 396 4,216

Allowance for doubtful accounts 209 214 2,279

Other 1,762 1,705 18,135

Gross deferred tax assets 8,038 7,835 83,307

Less valuation allowance (4,369) (4,161) (44,243)

Total deferred tax assets ¥ 3,668 ¥ 3,674 $39,064

Deferred tax liabilities:

Difference between cost of investments and their underlying net equity at fair value ¥ (1,641) ¥ (1,530) $ (16,271)

Unrealized gain on available-for-sale securities (8,367) (11,346) (120,643)

Other (638) (754) (8,019)

Total deferred tax liabilities (10,647) (13,631) (144,935)

Deferred tax liabilities, net ¥ (6,979) ¥ (9,957) $(105,870)

12. OTHER COMPREHENSIVE INCOME

The following table presents reclassification adjustments and tax effects

allocated to each component of other comprehensive income for the

years ended March 31, 2012 and 2013.


2012 2013 2013

Unrealized gain (loss) on available-for-sale securities:

Amount arising during the year ¥ 202 ¥8,267 $87,907

Reclassification adjustments for gains and losses included in net income (64) 12 129

Amount before tax effect 138 8,279 88,036

Tax effect 1,105 (2,980) (31,692)

Unrealized gain (loss) on available-for-sale securities 1,244 5,299 56,346

Foreign currency translation adjustments:

Amount arising during the year (8) 151 1,611

Share of other comprehensive income of affiliates accounted for using the equity method

Amount arising during the year (0) 2 30

Total other comprehensive income ¥1,234 ¥5,453 $57,988

26

13. RETIREMENT BENEFITS FOR EMPLOYEES

The Company and consolidated subsidiaries have a defined benefit

pension plan covering substantially all employees.

Accrued severance benefits at March 31, 2012 and 2013 consisted

of the following:


2012 2013 2013

Projected benefit obligation ¥(14,856) ¥(14,821) $(157,594)

Fair value of pension fund 10,600 11,742 124,856

Unrecognized actuarial loss 2,936 1,956 20,805

Prepaid pension expenses (71) (177) (1,884)

Provision for retirement benefits ¥ (1,392) ¥ (1,299) $ (13,816)

Retirement benefit expenses for the years ended March 31, 2012

and 2013 are as follows:


2012 2013 2013

Service cost ¥ 878 ¥ 744 $ 7,911

Interest cost 239 240 2,556

Expected return on pension fund assets (182) (176) (1,877)

Recognized actuarial loss 370 393 4,187

Net retirement benefit expenses ¥1,305 ¥1,201 $12,778

Assumptions adopted for the years ended March 31, 2012 and 2013

are as follows:

2012 2013

Discount rate 2.0% 2.0%

Expected rate of return on pension fund assets 2.0% 2.0%

Period over which actuarial loss is recognized 15 years 15 years

14. LOSS ON IMPAIRMENT OF NONCURRENT ASSETS

For the years ended March 31, 2012 and 2013, the Company and certain

consolidated subsidiaries recognized ¥610 million and ¥517 million

(US$5,503 thousand), respectively, of losses on impairment of fixed

assets as follows:


2012 2013 2013

Idle assets ¥305 ¥106 $1,133

Business assets 305 411 4,370

¥610 ¥517 $5,503

As for idle assets, their grouping of assets is based on the corre-

sponding property unit, and for business assets, on the smallest seg-

ments used in management accounting.

The Company and consolidated subsidiaries recognize impairment

losses if the undiscounted expected future cash flows are less than

carrying amounts of the assets.

In such case, the carrying amounts of the assets are written down to

their recoverable amounts. The recoverable amounts in these asset

groups were calculated using respective net selling prices based primari-

ly on appraisal valuations or discounted expected future cash flows.

15. LOSS ON BUSINESS RESTRUCTURING

This loss is due to the discontinuation of production of plasma display

panel (PDP) filters following a restructuring of the high functional film

business in the Advanced Materials segment during the year ended

March 31, 2013.

16. LOSS ON DISASTER

Loss on disaster for the years ended March 31, 2012 and 2013

referred mainly to the restoration costs for fixed assets damaged by the

Great East Japan Earthquake and the disposal losses on inventories.

17. SUBSEQUENT EVENTS

The following appropriation of retained earnings was approved at the

meeting of the shareholders of the Company held on June 27, 2013:


Cash dividends ¥2,081 $22,130

18. FAIR VALUE OF INVESTMENT AND RENTAL PROPERTY

The Company and certain subsidiaries own rental warehouses, rental

office buildings (including the surrounding land), idle land and other

properties in Osaka prefecture and other areas. During the fiscal year

ended March 31, 2013, rental income from rental property was ¥748

million (US$7,963 thousand) (rental income was recorded as sales and

rental costs were recorded as cost of sales), net gains from sales of

rental property amounted to ¥9 million (US$105 thousand) (recorded as

extraordinary income) and impairment loss amounted to ¥286 million

(US$3,042 thousand) (recorded as extraordinary loss).

27

The carrying amount of rental property and corresponding fair value

as of March 31, 2013 and changes in carrying amount during the fiscal

year are as follows:

Millions of yen

Consolidated balance sheet amountsFair value as of March 31, 2013As of March 31, 2012 Net change As of March 31, 2013

¥20,610 ¥2,749 ¥23,360 ¥32,168


Consolidated balance sheet amountsFair value as of March 31, 2013As of March 31, 2012 Net change As of March 31, 2013

$219,144 $29,238 $248,382 $342,040

Notes: 1. The consolidated balance sheet amounts represent the acquisition

cost less accumulated depreciation and cumulative impairment loss.

2. The fair value (which includes adjustments using relevant indices) is

estimated by the Company in accordance with standard for real

estate appraisal for significant assets, estimated based on the

value calculated for property tax for other assets.

19. SEGMENT INFORMATION

For the years ended March 31, 2012 and 2013:

The reportable segments of the Company are components for which

discrete financial information is available and whose operating results

are regularly reviewed by the Executive Committee to make decisions

about resource allocation and to assess performance.

The Company’s reportable segments are composed of products and ser-

vices based on the Cement segment and departments. The Company’s six

reportable segments are: Cement, Mineral Resources, Cement-Related

Products, Optoelectronics, Advanced Materials, and Others.

Main products for each reportable segment are as follows:

Cement: Assorted cement, ready-mix concrete, cement-related solidifi-

cation materials, supply of electrical power, and recycling of raw materi-

als and fuel

Mineral Resources: Limestone and mineral products

Cement-Related Products: Repairing and reinforcing products for con-

crete structures, and secondary products of concrete

Optoelectronics: Optical communications devices and components,

and optical measurement equipment

Advanced Materials: Ceramic products, plasma display panels (PDPs)

filters, and nanoparticle materials

Others: Leasing of real estate, engineering, development of software,

and secondary cell materials

Information on the reportable segments as of and for the years ended

March 31, 2012 and 2013 is as follows:

Millions of yen

2012

CementMineral

resourcesCement-related

products Optoelectronics Advanced materials Others Total

Eliminations and adjustments Consolidated

Net sales:

Outside customers ¥169,902 ¥11,359 ¥15,108 ¥3,556 ¥10,075 ¥ 7,043 ¥217,044 ¥ — ¥217,044

Intersegment sales 2,971 4,242 1,819 18 0 4,910 13,962 (13,962) —

Total 172,873 15,601 16,927 3,574 10,075 11,953 231,006 (13,962) 217,044

Segment profit or loss 6,816 644 132 144 (100) 485 8,123 13 8,136

Segment assets 204,234 32,394 11,998 3,497 9,180 30,680 291,986 17,903 309,890

Other items:

Depreciation and amortization 15,808 2,194 549 228 403 821 20,006 (269) 19,736

Amortization of goodwill 211 34 (59) 1 — — 188 — 188

Capital expenditures 9,084 2,860 267 569 196 1,730 14,709 — 14,709

Notes: 1. Eliminations and adjustments for segment profit and loss include ¥(13) million of elimination of inter-segment profit and loss.

2. Eliminations and adjustments for segment assets include ¥(10,545) million of elimination of inter-segment profit and loss and ¥28,448 million of corpo-

rate assets.

3. Eliminations and adjustments for depreciation and amortization include ¥(34) million of elimination of inter-segment profit and loss and ¥20 million of

depreciation and amortization for corporate assets, which are not allocable to a reportable segment.

28

Millions of yen

2013

CementMineral




Net sales:

Outside customers ¥175,846 ¥11,708 ¥15,287 ¥4,257 ¥5,835 ¥ 6,148 ¥219,083 ¥ — ¥219,083

Intersegment sales 3,611 4,193 2,034 15 14 5,162 15,032 (15,032) —

Total 179,458 15,902 17,321 4,272 5,850 11,311 234,116 (15,032) 219,083

Segment profit or loss 12,145 934 297 (18) 575 68 14,002 (43) 13,959

Segment assets 209,616 32,527 13,161 4,941 5,228 32,275 297,752 17,982 315,734

Other items:

Depreciation and amortization 13,431 2,074 433 348 305 893 17,485 (0) 17,485

Amortization of goodwill 169 34 (59) 7 — — 152 — 152

Capital expenditures 12,236 2,557 184 847 316 2,509 18,652 — 18,652


2013

CementMineral




Net sales:

Outside customers $1,869,713 $124,496 $162,543 $45,264 $62,042 $65,377 $2,329,437 $ — $2,329,437

Intersegment sales 38,401 44,584 21,634 165 159 54,891 159,836 (159,836) 0

Total 1,908,114 169,081 184,178 45,430 62,201 120,268 2,489,274 (159,836) 2,329,437

Segment profit or loss 129,135 9,939 3,163 (201) 6,120 725 148,882 (459) 148,422

Segment assets 2,228,781 345,857 139,943 52,545 55,590 343,174 3,165,892 191,203 3,357,096

Other items:

Depreciation and amortization 142,809 22,056 4,605 3,707 3,244 9,497 185,920 (0) 185,920

Amortization of goodwill 1,806 363 (628) 80 — — 1,621 — 1,621

Capital expenditures 130,110 27,193 1,956 9,011 3,368 26,682 198,322 — 198,322

Notes: 1. Eliminations and adjustments for segment profit and loss include ¥(43) million ($(459) thousand) of elimination of inter-segment profit and loss.

2. Eliminations and adjustments for segment assets include ¥(11,382) million ($(121,030) thousand) of elimination of inter-segment profit and loss and

¥29,365 million ($321,234 thousand) of corporate assets.

3. Eliminations and adjustments for depreciation and amortization include ¥(14) million ($(159) thousand) of elimination of inter-segment profit and loss

and ¥14 million ($158 thousand) of depreciation and amortization for corporate assets, which are not allocable to a reportable segment.

Geographical information

Information regarding geographical areas is omitted for the years ended March 31, 2012 and 2013, because sales and total assets in the Japan area

constitute more than 90% of all geographical areas.

Impairment loss on fixed assets by reportable segment for the years ended March 31, 2012 and 2013 is summarized as follows:

Millions of yen

2012

CementMineral




Loss on impairment of fixed assets ¥328 ¥75 ¥— ¥— ¥— ¥— ¥403 ¥207 ¥610

Millions of yen

2013

CementMineral




Loss on impairment of fixed assets ¥188 ¥12 ¥50 ¥— ¥— ¥— ¥251 ¥265 ¥517


2013

CementMineral




Loss on impairment of fixed assets $2,006 $130 $541 $— $— $— $2,678 $2,825 $5,503

29

tropeR s’rotiduIndependent A

3030

Company Profile

Company Name Sumitomo Osaka Cement Co., Ltd

President Fukuichi Sekine

Headquarters 6-28, Rokubancho, Chiyoda-ku, TOKYO, 102-8465, Japan

Date Established November 29, 1907

ney noillib 6.14latipaC

Number of Employees 1,250 employees (As of March 31, 2013)

Net Sales 140 billion yen (Year ended March 31, 2013)

31

6-28, Rokubancho, Chiyoda-ku, Tokyo 102-8465, Japan

Tel: +81-3-5211-4500 Fax: +81-3-3221-4652

http://www.soc.co.jp

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