AKEBONO REPORT 2015

45/64

payments from changes in ownership interests in subsidiaries that do notresult in change in scope of consolidation. In addition these two companiesbecame wholly owned subsidiaries). The primary cash inflow was proceedsfrom long-term loans payable of ?20.0 billion.Basic Policy for Distribution of Earnings andDividends for Fiscal 2014 and 2015Akebono positions the return of profit to its shareholders as an importantmanagement issue. Accordingly the Company adheres to a basic policy ofensuring long-term sustainable returns to shareholders while giving comprehensiveconsideration to its business performance and dividend payoutratio as well as to maintaining retained earnings at the level necessary tomake investments for securing sustainable growth.In line with this policy the Company paid a fiscal 2014 full-year dividendof ?10 per share which comprises an interim dividend of ?5 per share anda year-end dividend of ?5 per share. For fiscal 2015 the Company plans topay a full-year dividend of ?10 per share consisting of interim and year-enddividends each amounting to ?5 per share.Basis of Presenting Consolidated Financial StatementsThe accompanying consolidated financial statements have been preparedin accordance with the provisions set forth in the Japanese FinancialInstruments and Exchange Law and its related accounting regulations andin conformity with accounting principles generally accepted in Japan which are different in certain respects as to application and disclosurerequirements of International Financial Reporting Standards.The consolidated financial statements are stated in Japanese yen thecurrency of the country in which Akebono Brake Industry Co. Ltd. (the“Company”) is incorporated and operates. The translations of Japanese yenamounts into U.S. dollars are included solely for the convenience of readersoutside Japan and have been made at the rate of ?120.17 to $1 (roundeddown to the nearest $1 000; or rounded down to the nearest cent pershare) the approximate rate of exchange at March 31 2015. Such translationsshould not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.Summary of Significant Accounting PoliciesThe Scope of ConsolidationThe consolidated financial statements as of March 31 2015 include theaccounts of the Company and its 27 significant (24 in the fiscal year endedMarch 31 2014) subsidiaries (together the “Group”). Under the controllingcompany accounting method companies in which the Company directly orindirectly is able to exercise control over operations are fully consolidated and those companies over which the Group has the ability to exercise significantinfluence are accounted for by the equity method.During fiscal 2014 Akebono Advanced Engineering Co. Ltd. AkebonoBrake Slovakia s.r.o. (ABSK) and A&M Casting (Thailand) Co. Ltd. (A&M)were newly established and included in the scope of consolidation.An investment in one associated company (one in the fiscal year endedMarch 31 2014) is accounted for by the equity method. Investments in theremaining two associated companies (two in the fiscal year ended March31 2014) are stated at cost and their impact on the consolidated financialstatements is insignificant. The differences between the cost and theunderlying net equity (at fair value) of investments in consolidated subsidiariesand associated companies accounted for by the equity method havebeen amortized over a period of five years. All significant intercompanybalances and transactions have been eliminated in consolidation. All materialunrealized profit included in assets resulting from transactions withinthe Group is eliminated.Note: Please refer to page 51 for Changes in Accounting Policies and Accounting Estimates.Consolidated Assets Liabilities and Net AssetsAssetsAt the end of fiscal 2014 total consolidated assets rose ?26.7 billion fromthe end of fiscal 2013 to ?225.9 billion.Over the same period current assets increased ?7.2 billion to ?80.4 billion.This was mainly attributable to a ?3.7 billion increase in notes andaccounts receivable?trade that reflected sales growth and the effect offoreign currency translation and a ?2.6 billion rise in inventories whichoffset a ?1.6 billion decrease in cash and deposits.Noncurrent assets grew ?19.5 billion from the end of fiscal 2013 to?145.5 billion at the end of fiscal 2014 due mainly to a ?12.5 billionincrease in property plant and equipment arising from capital investmentsfocusing on Japanese and North American operations and a ?7.7 billionrise in investment securities backed by higher stock prices.LiabilitiesTotal consolidated liabilities increased ?27.2 billion from the end of fiscal2013 to ?166.0 billion at the end of fiscal 2014.Over the same period current liabilities increased ?31.3 billion to?100.5 billion due primarily to a ?2.0 billion increase in notes and accountspayable?trade and a ?25.0 billion rise in short-term interest-bearing debt(comprising short-term loans payable the current portion of long-termloans payable the current portion of bonds and lease obligations).Consolidated noncurrent liabilities decreased ?4.1 billion from the endof fiscal 2013 to ?65.5 billion at the end of fiscal 2014. This was due mainlyto a transfer of corporate bonds to current liabilities which resulted in a?15.0 billion decrease in noncurrent liabilities that offset a ?3.8 billionincrease in deferred tax liabilities due to a rise in stock prices.Net interest-bearing debt amounted to ?95.8 billion following the exclusionof cash and deposits from total interest-bearing debt of ?108.2 billion.Net AssetsAt the end of fiscal 2014 consolidated net assets edged down ?0.5 billionfrom the end of fiscal 2013 to ?59.9 billion. This was mainly attributable tothe posting of a net loss which led to a ?7.6 billion fall in retained earningsthat largely outpaced a ?5.5 billion increase in valuation difference onavailable-for-sale securities attributable to higher stock prices and a ?3.3billion improvement in foreign currency translation adjustment due to thedepreciation of the yen.Consolidated Cash FlowsConsolidated cash and cash equivalents decreased ?1.2 billion from theend of fiscal 2013 to ?12.4 billion at the end of fiscal 2014.Cash Flow from Operating ActivitiesA net inflow of ?10.2 billion was seen in cash flow from operating activities(a decrease of ?8.7 billion from the inflow recorded in fiscal 2013).The main factors influencing this net inflow were depreciation totaling?10.8 billion and an impairment loss totaling ?3.3 billion. Primary cash outflowswere a loss before income taxes and minority interests of ?0.6 billionand income taxes paid of ?2.9 billion.Cash Flow from Investing ActivitiesA net outflow of ?17.7 billion was recorded in cash flow from investingactivities (a decrease of ?2.6 billion from the net outflow recorded in fiscal2013). The main factors influencing this outflow were ?20.6 billion usedfor the purchase of property plant and equipment in the course of facilityinvestment focusing on Japan and North America.Cash Flow from Financing ActivitiesA net inflow of ?5.8 billion was recorded in cash flow from financing activities(a turnaround from a net outflow of ?6.2 billion recorded in fiscal2013). The main factors affecting cash outflow included ?9.8 billion for therepayments of long term loans payable and ?4.1 billion used for the purchaseof additional shares of Akebono Brake Sanyo Manufacturing Co. Ltd.and Akebono Brake Industrial Machinery & Rolling Stock Component SalesCo. Ltd. (Presented as purchase of treasury shares of subsidiaries and