Annual Report 2004 [PDF/1.1MB]

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Corporate Governance 1. Basic Corporate Governance Policies Corporate governance reforms and other structural improvement measures aimed at establishing systems to make Kawasho more responsive to the fast-changing and highly competitive business environment were initiated after approval at the <strong>Annual</strong> Meeting of Shareholders on June 27, 2003. These reforms specifically entailed the introduction of an executive officer system in June 2003, which strengthened governance and management functions within the overall business structure by making a clear separation between business decision-making by the Board of Directors and management supervisory functions, and policy execution functions. This change served to clarify authority and responsibility within the new structure. In addition, recognizing the need for a more comprehensive approach to observance of laws and corporate ethics across the Kawasho Group, a Compliance Committee was established in May 2003. 2. Corporate Governance System Kawasho has adopted the auditor-based system of corporate governance as specified in the Commercial Code of Japan. This system establishes the Meeting of Shareholders, the Board of Directors and the Board of Corporate Auditors as the principal governance structures. Kawasho has also introduced an executive officer system, under which executive officers are responsible for policy execution. Kawasho has not appointed any external directors. Of the four corporate auditors, three are external appointees, of whom two are parttime auditors. 3. Internal Controls and Risk Management Status (1) Reforms to Board of Directors The decision-making and supervisory functions of the Board of Directors are separated from its role in operational execution through a clearer delineation of authority and responsibilities. With regard to corporate governance-related matters, the Board of Directors supervises operations by checking the legality and appropriateness of all operational moves and strategic decisions. The Board of Directors was reduced in size by an amendment to the Articles of Incorporation lowering the maximum number of directors from 35 to 15. This reform aimed to promote an increased volume of more dynamic debate while speeding up decision-making processes. (2) Introduction of executive officer system An executive officer system was introduced in June 2003 to improve management functions. Appointed by the Board of Directors, executive officers have terms of 1 year. Besides the President & CEO, the executive officers include appointees to positions at the levels of Senior Managing Executive Officer, Managing Executive Officer and Executive Officer. The Board of Directors has determined all executive officer roles and the division of responsibilities. A Board of Executive Officers has been established that reports directly to the President & CEO. This change aims to promote smooth communication channels between the directors and the executive officers, and between executive officers, thereby enabling better policy execution. This committee is composed of the President & CEO, all Senior Managing Executive Officers and Managing Executive Officers, and all Executive Officers. (3) Measures to strengthen compliance Establishment of Compliance Committee To raise company-wide awareness of compliance issues and to upgrade risk management capabilities, the Compliance Committee was established in May 2003. Its main tasks are to integrate management of compliance functions and to promote on a company-wide basis (including all affiliates) awareness of the importance of legal and regulatory compliance by executive officers and employees at every level of the organization. Chaired by the senior managing executive officer in charge of general and administrative affairs, the committee decides compliance-related policies and actions, and is responsible for overseeing a quick company-wide response in the event of any compliance violation. Compliance system In addition to the establishment of the Compliance Committee, a Compliance Officer (at director level) and compliance executives (at the levels of division heads, executive officers, and presidents of affiliated companies) were appointed to ensure the operation and maintenance of the compliance system. Institution of compliance violation reporting system Any Kawasho Group employee may report or discuss known compliance-related issues directly through a new system that facilitates reporting of any compliance violations through a mechanism independent of the operational chain of command. Part of the secretariat of the Compliance Committee, the Compliance Consultation Office provides this facility. The confidentiality of any information is strictly protected to ensure that informants’ interests are not prejudiced by their actions. Compliance actions Led by the Compliance Committee, the following measures were taken during the year ended March <strong>2004</strong>: (a) Meetings were held to brief employees and presidents of affiliated companies on the establishment of the Compliance Committee. (b) Compliance manuals were distributed to all employees and executive officers of Kawasho and affiliated companies. (c) Employees and branch managers of Kawasho and presidents of affiliated companies received management level-specific training on compliance issues (including case studies of compliance violations). 12
REVIEWS OF OPERATIONS DOMESTIC STEEL BUSINESS - 14 OVERSEAS STEEL BUISINESS - 16 TERRE ARMÉE CIVIL ENGINEERING BUSINESS - 18 RAW MATERIALS BUSINESS - 20 CHEMICALS & FUELS BUSINESS - 22 FOODS & GENERAL MATERIALS BUSINESS - 24 MACHINERY BUSINESS - 26 ELECTRONICS BUSINESS - 28
Page 1 and 2: KAWASHO CORPORATION ANNUAL REPORT 2
Page 3 and 4: FINANCIAL HIGHLIGHTS Kawasho Corpor
Page 5 and 6: crease of 2,057 million. Recurring
Page 7 and 8: CORPORATE TOPICS August 2, 2004 Est
Page 9 and 10: Director : Tsutomu Yajima (currentl
Page 11: 2. Consolidation and reorganization
Page 15 and 16: Domestic Steel Overseas Steel Terre
Page 31 and 32: CORPORATE OFFICER (As of June 18, 2
Page 33 and 34: CONSOLIDATED BALANCE SHEETS Kawasho
Page 35 and 36: CONSOLIDATED STATEMENTS OF OPERATIO
Page 37 and 38: CONSOLIDATED STATEMENTS OF CASH FLO
Page 39 and 40: NOTES TO CONSOLIDATED FINANCIAL STA
Page 41 and 42: j. Leases The Companies lease certa
Page 43 and 44: 4. SHORT-TERM BORROWINGS AND LONG-T
Page 45 and 46: 6. ACCRUED RETIREMENT BENEFITS The
Page 47 and 48: The effective tax rate reflected in
Page 49 and 50: Future minimum lease payments as of
Page 51 and 52: (2) Commodities Millions of yen 200
Page 53 and 54: Thousands of U.S. dollars Steel Raw
Page 55 and 56: 15. LITIGATION The "Royal Palm Reso
Page 58 and 59: World Network WORLD NETWORK - 60 MA
Page 60 and 61: Singapore SINGAPORE BRANCH 3 Shento
Page 62:
COMPANY DATA Name KAWASHO CORPORATI
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