April 28, 2017

Summary of Fiscal 2016
(The Fiscal Year ended March 31, 2017)
Tokuyama Corporation
1. Consolidation
Classification
The number of consolidated
subsidiaries
The number of subsidiaries andaffiliates by the equity method

Fiscal 2016

Fiscal 2015

Changes

51

55

(4)

10

10

-

2. Summary of performance and other corporate data (consolidated)(Unit: Billions of yen, except number of employees)
Fiscal 2016
Fiscal 2015
Changes
299.1
307.1
(8.0)
39.7
23.0
+16.6
33.9
17.7
+16.2
52.1
(100.5)+152.7147.78(289.10)+436.88
17.3
13.9
+3.4
14.2
20.0
(5.8)
7.5
8.5
(1.0)
(3.9)
(4.1)
+0.1

Net sales
Operating income
Ordinary income
Profit a t t r i b u t a b l e t o o w n e r s o f p a r e n t
Basic earnings per share (Unit: yen)
Capital expenditures
Depreciation and amortization
R&D expenses
Financial income and expenses

As of March 31,
2017
213.9
5,406

Interest-bearing debt
Number of employees

As of March 31,
2016
244.1
5,759

Changes(30.1)(353)

3. Net sales and operating income by business segment (year on year)(Unit: Billions of yen)

FY2016FY2015

Changes

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

83.3

13.1

87.8

8.9

(4.4)

+4.2

Specialty Products

67.7

9.6

60.9

(1.1)

+6.8

+10.8

Cement

82.9

7.8

85.4

5.8

(2.4)

+2.0

Life & Amenity

50.7

5.6

57.6

6.5

(6.9)

(0.9)

Others

52.1

5.9

53.6

5.6

(1.5)

+0.2

Total

336.9

42.3

345.5

25.8

(8.5)

+16.4

Inter-segment
eliminations andcorporate-wide expenses(37.8)(2.5)(38.4)

(2.7)

+0.5

+0.1

Consolidated results

299.1

39.7

307.1

23.0

(8.0)

+16.6

○ In the Chemicals segment, operating income was up despite a downturn in sales during the1

fiscal year under review. This was largely attributable to the downturn in domestic naphtha
prices as well as other raw material and fuel prices.
○ In the Specialty Products segment, both sales and operating income increased due to theoperation rate improvement of Tokuyama Malaysia Sdn. Bhd. as well as the increased sales
volumes of semiconductor-related products and solar-grade polycrystalline silicon.
○ In the Cement segment, operating income increased despite a derecase in sales in the fiscal
year ended March 31, 2017. Despite a decrease in the volume of cement sales in Japan anddecline in sales price of export, higher profit in this segment reflected drop in raw material andfuel prices.
○ In the Life & Amenity segment, both sales and operating income decreased. In the fiscal year
under review, sales prices were soft due to the drop in domestic naphtha prices. Figaro
Engineering Inc. was removed from the Company’s scope of consolidation effective from thesecond quarter of the fiscal year under review. This reflected the transfer of a portion of thecompany’s shares.

4. Net sales and operating income by business segment (forecasts)(1) Net sales and operating income by business segment (full year comparison)(Unit: Billions of yen)

FY2017 Forecast

FY2016 Results

Changes

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

89.0

13.0

83.3

13.1

+5.6

(0.1)

Specialty Products

56.0

9.5

67.7

9.6

(11.7)(0.1)

Cement

86.0

5.5

82.9

7.8

+3.0

(2.3)

Life & Amenity

54.0

4.0

50.7

5.6

+3.2

(1.6)

Others

52.0

5.5

52.1

5.9

(0.1)

(0.4)

Total

337.0

37.5

336.9

42.3

+0

(4.8)

Inter-segment
eliminations andcorporate-wide expenses(37.0)(1.5)(37.8)

(2.5)

+0.8

+1.0

Consolidated results

300.0

36.0

299.1

39.7

+0.8

(3.7)

(2) Assumptions of performance forecasts for fiscal 2017

Domestic Naphtha Price (¥/kl)
Exchange Rate (¥/$)

Fiscal 2017

Fiscal 2016

40,00034,700

105

108

The Tokuyama Group is projecting an increase in sales and a decrease in operating income in thefiscal year ending March 31, 2018. Expectations of a decrease in operating income are largely based
on upturn in raw material and fuel costs.

2

○ In the Chemicals segment, the Group has taken into account the revision of selling prices inline with the increase in domestic naphtha prices.
○ In the Specialty Products segment, the business transfer of Tokuyama Malaysia Sdn. Bhd.
scheduled at the end of May 2017 has been taken into account.
○ In the Cement segment, the Tokuyama Group has factored in increase in domestic sales andexport volumes as well as an increase in raw material and fuel costs mainly due to the upturn incoal price.
○ In the Life & Amenity segment, the Group has taken into account the revision of selling prices inline with the upturn in domestic naphtha prices as well as an increase in sales and depreciation
cost due to the operaion startup of new production facility.

3Summary of Consolidated Financial Statements for Fiscal 2016 (JP GAAP)(The Fiscal Year ended March 31, 2017)
April 28, 2017
Tokuyama Corporation
Stock exchange listings:
Tokyo(URL http://www.tokuyama.co.jp/)
Code number:
4043
Representative:
Hiroshi Yokota
President and Representative Director
Contact:
Taro Kobayashi
General Manager, Corporate Communications & Investor Relations Dept.
+81-3-5207-2552
Scheduled date for the Ordinary General Meeting of Shareholders:June 23, 2017
Scheduled date of year-end dividends payout:
Scheduled date for the filing of the consolidated financial statements: June 26, 2017
Preparation of supplementary explanatory materials: Yes
Business results IR briefing to be held:
Yes (for institutional investors and analysts)

1. Consolidated results for fiscal year ended March 31, 2017 (April 1, 2016 – March 31, 2017)
Note: All amounts are rounded down to the nearest million yen.
% indicates year-on-year changes.

(1) Performance

Net sales

Operating income(millions of yen)

Fiscal 2016
Fiscal 2015

299,106
307,115[%](millions of yen)

Profit attributable toowners of parent

Ordinary income[%](millions of yen)[%](millions of yen)

(2.6)
1.7

39,72072.2
33,99891.8
23,071
18.1
17,72537.2(Note) Comprehensive income: FY16: 54,562 million yen [－%] FY15: (110,043) million yen [－%]

[%]

－
－

52,165(100,563)

Basic earnings per Diluted net income Net income to Ordinary income to Operating income
share
per shareshareholders’ equity
total assets
to net sales(yen)

Fiscal 2016
Fiscal 2015(yen)

147.78(289.10)[%]119.93－[%]58.5(94.0)

[%]

8.2
3.7

(Reference) Equity in earnings of unconsolidated subsidiaries and affiliates: FY16: 900 million yen

13.3
7.5

FY15: 668 million yen(2) Financial position

Total assets
Mar 31, 2017
Mar 31, 2016
(Reference)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)

424,433
401,342

135,976
60,205

Shareholders' equity:

FY16:

Net assets per share

[%]

(yen)

305.49147.9829.9
12.8
127,015 million yen

FY15:51,473 million yen(3) Cash flows

Cash flows fromoperating activities
Fiscal 2016
Fiscal 2015

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at the end of
the year(millions of yen)(millions of yen)(millions of yen)(millions of yen)

20,01230,098(10,089)
13,400(11,911)(37,689)

118,819
121,166

2. Dividends（Period）
Fiscal 2015
Fiscal 2016
Fiscal 2017
（Forecast）

1st
quarter
(yen)

----

Annual dividens
3rd
Year2ndquarter quarter
end

Total

Total dividends
paid(Total)

(yen)

(yen)

(yen)

(yen)

(millions of yen)

0.00
0.00
2.00

----

0.00
0.00
2.00

0.00
0.00
4.00

---

1

Dividend
payout ratio(Consolidated)[%]--10.9Dividend on net
assets ratio(Consolidated)
[%]

---

3. Consolidated performance forecast for fiscal 2017 (April 1, 2017 – March 31, 2018)(% indicates the rate of change over the corresponding previous periods respectively)

Net sales(millions of yen)[%]300,000

0.3

Fiscal 2017

Operating income

attributable to Basic earnings per
Ordinary income Profit
share
owners of parent(millions of yen)(millions of yen)[%]36,000 (9.4)[%](millions of
yen)

[%]

32,000 (5.9)

13,000(75.1)

(yen)

36.72

* Cautions pertaining to the appropriate use of performance forecasts and other particular items
The performance forecast and other forward-looking statements contained in this material have been prepared on thebasis of information available at this point and certain assumptions which are judged to be rational, and may besubstantially different from the actual performance etc. because of various factors that may arise from now on.

*Notes(1) Changes of significant subsidiaries in the scope of consolidation during this period: No
Addition to the scope of consolidation: Reduction from the scope of consolidation: (2) Changes of accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes of accounting policies by revision of accounting standards: Yes
ii. Changes of accounting policies other than the above:Noiii. Changes in accounting estimates:
No
iv. Retrospective restatements:
No(3) Number of shares issued (in common stock)
Number of shares issued at end of period
i. (including treasury stock):ii. Number of treasury stock at end of period:iii. Average number of shares over period:

FY16:349,671,876

FY15:

349,671,876

FY16:
FY16:

1,850,780
347,830,738

FY15:
FY15:

1,832,788
347,852,553(Reference) Summary of Non-Consolidated Operating Results
1. Non-consolidated results for fiscal year ended March 31, 2017 (April 1, 2016 – March 31, 2017)
Note: All amounts are rounded down to the nearest million yen.
% indicates year-on-year changes.

(1) Performance

Net sales

Operating income(millions of yen)

Fiscal 2016
Fiscal 2015

173,055
184,755

[%]

(6.3)
0.4

Net income per
share
89.57
(281.37)

33,27625,648

Ordinary income[%](millions of yen)

29.7
33.3

29,74527,216

Net income
[%]

9.3
45.8

(millions of yen)

[%]

－
－

28,316(97,875)

Diluted net income
per share(yen)

Fiscal 2016
Fiscal 2015

(millions of yen)

(yen)

73.38
－

(2) Financial position

Total assets
Mar 31, 2017
Mar 31, 2016
(Reference)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)

330,369
329,286

82,06428,554

Shareholders' equity:

FY16:

[%]

(yen)

176.25
82.09

24.8
8.7
82,064 million yen

Net assets per share

FY15:

28,554 million yen(Note) Notice on the implementation of audit proceduresThis Summary of Consolidated Financial Statements is not subject to audit procedures of the consolidated financial statements in linewith the Financial Instruments and Exchange Act. At the point of disclosure of this Summary of Consolidated Financial Statements, audit
procedures of the consolidated financial statements in line with the Financial Instruments and Exchange Act are underway.
2

(Reference) Dividends for Class A shares
Dividends per share related to class shares are as follows:
Annual dividends per share
Class A shares
1st quarter2nd quarter3rd quarter
Year-end(Period)
(yen)
(yen)
(yen)
(yen)
Fiscal 2015, ended――――
Mar 31, 2016
Fiscal 2016, ending―――
38,082.20
Mar 31, 2017
Fiscal 2017
11,301.40―――(Forecast)

3

Total

(yen)
―
38,082.20
11,301.40

Contents for Accompanying Materials
1. Analysis of Operating Results and Financial Position(1) Analysis of Operating Results

……………

P. 2

(2) Analysis of Financial Position

……………

P. 9

(3) Basic Policy for Profit Distribution and Dividends for Fiscal 2016 and 2017

……………

P. 10

……………

P. 11

(1) Basic Management Policy

……………

P. 11

(2) Medium- to Long-Term Management Strategies and Performance Targets

……………

P. 11

(3) Pending Issues

……………

P. 12

……………

P. 13

(1) Consolidated Balance Sheets

……………

P. 13

(2) Consolidated Statements of Income

……………

P. 15

(3) Consolidated Statements of Comprehensive Income

……………

P. 16

(4) Consolidated Satetements of Cash Flows

……………

P. 17

(5) Segment Information

……………

P. 19

2. Management Policy

3. Consolidated Quarterly Financial Statements

11. Analysis of Operating Results and Financial Position(1) Analysis of Operating Results<1> Operating results for the fiscal year under review[1] Overview of performance for the fiscal year under review
In fiscal 2016 (April 1, 2016 to March 31, 2017), the global economy experienced mixed conditions. In thefirst half, the pace of economic growth slowed owing mainly to concerns that the Chinese economy had
stalled and confusion surrounding financial markets as a result of the U.K.’s decision to withdraw from theEuropean Union. In the second half, however, the global economic conditions recovered. This was largely
due to a pickup in the U.S. economy, various measures put forward by the Chinese government to arrest any
decline, and the prompt action taken by the central banks of each country to prevent further confusion in
financial markets.
Meanwhile, the Japanese economy continued to experience a modest recovery amid improvements in
employment and disposable income conditions.
Against this backdrop, the Tokuyama Group worked diligently to implement the priority measures identified
in its Medium-Term Management Plan announced in May 2016 in order to transition to a robust businessstructure that is resilient against changes in its operating environment and capable of sustainable growth.
As a result, and despite net sales falling below the level recorded in the previous fiscal year, the Company
reported a substantial improvement in operating income for the fiscal year under review. This was mainly
attributable to successful efforts aimed at narrowing the loss incurred by Tokuyama Malaysia Sdn. Bhd., aconsolidated subsidiary, and reducing manufacturing costs in line with the downturn in raw material and fuelprices.

Net sales

Operating income(Unit: Millions of yen)
Profit (Loss)
Ordinary income
attributable toowners of parerent

Fiscal 2016

299,106

39,72033,99852,165

Fiscal 2015

307,115

23,071

17,725(100,563)

(2.6)

72.2

91.8

-

Rate of change (%)

Net sales
Consolidated net sales decreased 2.6%, or ¥8,008 million compared with the previous fiscal year, to¥299,106 million. Despite an increased sales volume in polycrystalline silicon for both solar-cells andsemiconductors, this was largely attributable to weak selling prices of petroleum products on the back of adownturn in domestic naphtha prices.
Cost of sales
Cost of sales decreased 8.8%, or ¥19,332 million compared with the previous fiscal year, to ¥201,305
million. Despite an increased sales volume in polycrystalline silicon, this was due mainly to a downturn in
raw material costs as a result of the drop in domestic naphtha prices.
2

SG&A expenses
SG&A expenses decreased 8.4%, or ¥5,324 million compared with the previous fiscal year, to ¥58,080
million. This decrease primarily reflects a decrease in depreciation cost of mission-critical systems andlower R&D expenses.
Operating income
Operating income increased 72.2%, or ¥16,648 million compared with the previous fiscal year, to ¥39,720
million. In addition to a downturn in production costs as a result of the drop in raw material and fuel prices,
this was due mainly to operating rate improvement and decreased depreciation expenses at Tokuyama
Malaysia Sdn. Bhd.
Non-operating income/expenses, Ordinary income
Non-operating income/expenses deteriorated ¥375 million compared with the previous fiscal year, due
chiefly to increase in trial production expenses at Tokuyama Malaysia Sdn. Bhd.
As a result of the above, ordinary income increased 91.8%, or ¥16,273 million compared with theprevious fiscal year, to ¥33,998 million.
Extraordinary income/losses, Profit (Loss) before income taxes, Profit (Loss), Profit (Loss)
attributable to owners of parent
Extraordinary income/losses improved by ¥108,752 million compared with the previous fiscal year.
As a result of the above, income before income taxes improved by ¥125,025 million compared with theprevious fiscal year, to income of ¥38,525 million.
Income taxes decreased ¥27,891 million compared with the previous fiscal year. This was attributable tothe decision on the business transfer of Tokuyama Malaysia Sdn. Bhd. As a result of this, profit/loss
improved by ¥152,917 million compared with the previous fiscal year, to profit of ¥53,396 million.
Profit/loss attributable to owners of parent improved by ¥152,729 million compared with the previous
fiscal year, to profit of ¥52,165 million.

3[2] Operating performance by business segment(Operating results by segment)
Sales(Unit: Millions of yen)
Reportable segment
Others

Total

Adjustment

Figures in
consolidated
incomestatement

50,751

52,124

336,943(37,836)

299,106

85,46957,67753,684

345,535(38,420)

307,115(2.9)(12.0)

(2.9)

(2.5)

-

(2.6)

Chemicals

Specialty
Products

CementFiscal 2016

83,34667,72682,995

Fiscal 2015

87,80160,902

(5.1)

11.2

Rate of change (%)

Life &
Amenity

Operating income (loss)(Unit: Millions of yen)
Reportable segment
Adjustment

Figures in
consolidated
incomestatement

42,309(2,589)39,7205,668

25,842(2,771)

23,071

5.2

63.7

-

72.2

Others

Total

5,632

5,965

5,832

6,598

35.1

(14.6)

Chemicals

Specialty
Products

Life &
Amenity

Fiscal 2016

13,183

9,649

7,878

Fiscal 2015

8,900

(1,157)

Rate of change (%)

48.1

-

Cement(Note) Sales and operating income (loss) in each segment include inter-segment transactions.

Chemicals
Sales of caustic soda were down compared with the previous fiscal year. While domestic sales volumes
were steady, this decrease was attributable to weak trends in selling prices.
Sales of vinyl chloride monomer (VCM) were down compared with the previous fiscal year. Despite anincrease in the volume of export mainly for Asian market, the decline was primarily due to weak trends inselling prices as a result of the drop in domestic naphtha prices.
Sales of vinyl chloride resin declined. While a recovery in the number of housing starts and other factors
contributed to firm trends in sales volumes, this downturn largely reflects weak selling prices as a result of
the drop in domestic naphtha prices. Earnings on the other hand improved due mainly to the suspensionof operations at the Chiba factory of Shin Dai-ichi Vinyl Corporation.
With regard to soda ash and calcium chloride, sales were essentially unchanged from the previous fiscal year.
Despite decreased sales volume, this was mainly owing to efforts to revise selling prices.
As a result of the above, segment net sales decreased 5.1% compared with the previous fiscal year, to¥83,346 million and operating income increased 48.1% to ¥13,183 million. The segment reported higher
earnings on lower sales.

4Specialty Products
Sales of semiconductor-grade polycrystalline silicon increased. This was primarily due to robust shippingreflecting the growing trend to highly functional mobile devices including smartphones.
Sales of solar-grade polycrystalline silicon increased on the back of higher sales volumes, reflecting theoperating rate improvement at Tokuyama Malaysia Sdn. Bhd.
Sales of fumed silica increased compared with the previous fiscal year. This was mainly due to firm trend insales of such applications as a polishing material for semiconductors.
With regard to high-purity chemicals for electronics manufacturing, sales decreased compared with theprevious fiscal year. Despite robust sales volume in such applications as semiconductor manufacturing, thisdecrease was mainly owing to appreciated yen.
With regard to aluminum nitride, sales increased from the previous fiscal year. This was attributable torobust sales volumes in such applications used for semiconductor manufacturing equipment.
As a result of the above, segment net sales increased 11.2% compared with the previous fiscal year, to¥67,726 million and operating income improved to income of ¥9,649 million (Posted operating loss of¥1,157 million in the previous fiscal year). The segment reported higher earnings on higher sales.
CementSales of cement decreased. Despite an increase in the volume of exports on the back of robust demand in
the Asia region, this decrease was mainly due to the drop in export prices reflecting such factors as theimpact of appreciation in the value of the yen as well as a downturn in sales volumes in Japan due to weak
public- and private-sector demand. Meanwhile, successful steps were taken to reduce manufacturing costs.
In addition to a drop in raw material and fuel prices, this reduction on manufacturing costs was mainly due
to improvements in the basic unit of production.
In the recycling and environment-related business, the Company accepted a higher volume of waste
including coal ash compared with the previous fiscal year. As a result of this, sales increased from theprevious fiscal year.
Consolidated subsidiary net sales declined. This mainly reflected corrections to robust shipping trends ofsuch products as ready-mixed concrete targeting large-scale projects in the previous fiscal year.
As a result of the above, segment net sales decreased 2.9% compared with the previous fiscal year, to¥82,995 million and operating income increased 35.1% to ¥7,878 million. The segment reported higher
earnings on lower sales.
Life & Amenity
Sales of active pharmaceutical ingredients decreased. This reflected the decreased sales volume of genericpharmaceuticals compared with the previous fiscal year.
With regard to plastic lens-related materials, sales increased from the previous fiscal year. This reflectedrobust sales volumes of photochromic dye materials for eyeglass lenses.

5With regard to microporous film, sales of such applications as sanitary articles including disposable diapers
at oversea consolidated subsidiaries decreased. As a result of this, sales decreased compared with theprevious fiscal year.
With regard to polyolefin film, sales were declined compared with the previous fiscal year. Despite firm
trends in sales mainly for application in packaging materials for products sold at convenience stores, thisdecrease was largely the result of weak trends in selling prices on the back of the decline in domestic
naphtha prices.
With regard to dental materials and equipment, sales increased compared with the previous fiscal year, due
to higher sales volumes of new products as well as products targeting overseas markets.
With regard to medical diagnosis systems, sales increased compared with the previous fiscal year. Thislargely reflected robust sales of blood testing products.
In gas sensors, Figaro Engineering Inc. was removed from the Company’s scope of consolidation effectivefrom the second quarter of the fiscal year under review. This reflected the transfer of a portion of thecompany’s shares.
As a result of the above, segment net sales decreased 12.0% compared with the previous fiscal year, to¥50,751 million and operating income decreased 14.6% to ¥5,632 million. The segment reported lower
earnings on lower sales.

6<2> Outlook for fiscal 2017[1] Outlook for operating results
In fiscal 2017 (April 1, 2017 to March 31, 2018), the global economy is expected to exhibit signs ofdownside risk. In addition to the growing worldwide trend toward protectionism, we anticipate conditions
will be impacted by the rapid rise in interest rates in the U.S. as well as rising geopolitical risks and otherfactors. Despite these concerns, growth rates are forecast to recover moderately due mainly to the positive
turnaround on resource prices. On the domestic front, the pace of export and production activity increaseis expected to remain unchanged as overseas economies continue to rally. Buoyed by improvements incorporate sector results, a modest upswing in capital expenditure is also anticipated to help prop up theJapanese economy.
Under these circumstances, the Tokuyama Group will transition to a robust business structure that looks
ahead to trends in the global economy, is unaffected by changes in market conditions and movements insupply and demand, and is capable of sustainable growth. In the traditional Cement and Chemicals
businesses, we will endeavor to strengthen our competitiveness by thoroughly reducing costs and increasing
efficiency. In such growth businesses as Specialty Products, Life & Amenity, and Newly Developed
Products, we will make every effort to bolster our product and development prowess by enhancing
functions as well as quality in a bid to nurture the necessary driving force to proper new growth.
Based on the current information, we forecast net sales of ¥300.0 billion, an increase of 0.3% (¥0.8
billion) compared with the fiscal year under review, operating income of ¥36.0 billion, a decrease of 9.4%(¥3.7 billion), ordinary income of ¥32.0 billion, down 5.9% (¥1.9 billion) and profit attributable to ownersof parerent of ¥13.0 billion, down ¥39.1billion.
Net sales

Operating income(Unit: Millions of yen)
Profit (Loss)
Ordinary income
attributable toowners of parerent
32,00013,000Fiscal 2017

300,000

36,000Fiscal 2016

299,106

39,72033,99852,165

0.3

(9.4)

(5.9)

(75.1)

Rate of change (%)

These forecasts are calculated based on an exchange rate of ¥105/$ and a domestic naphtha price of¥40,000/kl.
[2] Outlook for segment results for fiscal 2017
Chemicals
Raw material and fuel costs are up on the back of a upturn in the market prices of such commodities ascrude oil and coal. At the same time, the risk of profitability fluctuation is expected to linger, owing mainly
to the substantial impact of higher raw material and fuel costs on petrochemical product selling prices.
Under this operating environment, the Tokuyama Group will work to transfer the increase in raw material
and fuel costs to selling prices, and strengthen its cost competitiveness including its unit consumption of
raw marerials and energy as well as the efficiency of its fixed costs. Every effort will be made to securestable earnings.

7

Specialty Products
Semiconductor demand targeting electronic devices including smartphones is projected to maintain thestrong trend. Against this backdrop, customers’ demands for higher levels of quality in line withsemiconductor miniaturization as well as stable supply are expanding. Under these circumstances, theTokuyama Group will endeavor to adhere strictly to a policy of cost reduction while urgently increasing thequality of its semiconductor-related products including semiconductor-grade polycrystalline silicon andputting in place a production structure that is capable of meeting demand, thereby securing earnings. In
addition, the Group will look to boost earnings by pursuing the higher qulity and expanding sales ofhigh-value-added products which are cleary differenciated from other companies’ products..
CementIn overall terms, demand in Japan is projected to increase from fiscal 2016. While private-sector demand is
expected to exhibit a mild recovery in Tokyo area as a result of construction work relating to the 2020
Tokyo Olympic, this will be offset by the forecast drop in public-sector demand due to a downturn inpublic-sector investment and the extension of construction periods. Amid these operating conditions, theTokuyama Group will work diligently to secure earnings by expanding the volumes of exports and waste
accepted and thoroughly reducing manufacturing costs.
Life & Amenity
The Tokuyama Group believes that the market in Japan will continue along a modest recovery trajectory.
In contrast, the Group holds concerns over the economic conditions of overseas markets on a forseenable
future. This is especially true for China as well as emerging countries where there are fears of a slowdown
in the rates of economic growth. Against this backdrop, the Tokuyama Group will place particularemphasis on developing and marketing products that address customers’ needs and changes in the market
while working to expand earnings.
OthersThe “Others” segment includes businesses which are responsible for the Group’s sales, logistics, utilities
and other functions. The segment will work to increase Group-wide earnings by continuing to reduce
costs.

8

(2) Analysis of Financial Position<1> Analysis of assets, liabilities and net assets
As of March 31, 2017, total assets amounted to ¥424,433 million, an increase of ¥23,091 million
compared with those as of March 31, 2016.
This increase primarily reflects an increase of ¥16,584 million in deferred tax asset, increase of ¥5,375
million in notes and accounts receivable and an increase of ¥3,318 million in investment securities owing
to fair market valuation.
Total liabilities amounted to ¥288,457 million, down ¥52,679 million compared with those as of March 31,
2016.
This largely reflected the downturn in the balances of long-term loans payable and current portion of
long-term loans payable, income taxes payable, current portion of bonds, short-term loans payable of¥14,123 million, ¥10,552 million, ¥10,000 million, and ¥7,244 million, respectively.
Net assets totaled ¥135,976 million, an increase of ¥75,770 million compared with those as of March 31,
2016.
This increase mainly reflects the increase in retained earnings of ¥52,165 million as a result of posting
profit attributable to owners of parent, and the increase in shareholders' equity of ¥20,000 million as aresult of issuance of class A shares.
<2> Analysis of cash flows(Unit: Millions of yen)
Fiscal 2015

Fiscal 2016

Cash flows from operating activities

30,09820,012

Cash flows from investing activities

13,400(10,089)

Cash flows from financing activities(37,689)(11,911)

Effect of exchange rate changes on cash and cash equivalents

(792)

(358)

Net increase (decrease) in cash and cash equivalents

5,016(2,346)27-

Cash and cash equivalents at end of year

121,166

118,819[Cash and cash equivalents at end of previous fiscal year ][116,122][121,166]

Increase (decrease) in cash and cash equivalents due to changes of scope of
consolidation

As of March 31, 2017, cash and cash equivalents were ¥118,819 million, a decrease of ¥2,346 million
compared with those as of April 1, 2016.
(Cash flows from operating activities)
Net cash provided by operating activities totaled ¥20,012 million, a decrease of ¥10,085 million comparedwith the previous fiscal year. Principal items included profit before income tax of ¥38,525 million andincome tax paid of ¥18,065 million.

9(Cash flows from investing activities)
Net cash used in investing activities totaled ¥10,089 million, an increase of ¥23,489 million compared withthe previous fiscal year. Major contributory factors were payments for purchases of property, plant andequipment, prceeds from the sales of shares in subsidiary and subsidy income of ¥16,693 million, ¥2,926
million, and ¥2,298 million, respectively.
(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥11,911 million, a decrease of ¥25,778 million
compared with the previous fiscal year.
This was primarily attributed to proceeds for issuance of shares of ¥19,732 million, repayment oflong-term loans payable of ¥17,297 million and redemption of bonds of ¥10,000 million and repaymentof short-term loans payable of ¥6,625 million.

(3) Basic Policy for Profit Distribution and Dividends for Fiscal 2016 and 2017
As far as the distribution of profits is concerned, Tokuyama’s basic policy is the ensure the continuous andstable payment of dividends to its shareholders. In carrying out this policy, the Company takes into
consideration performance trends and the roadmap established under its Medium-Term Management
Plan.
Based on the aforementioned, and taking into account the deterioration in net assets attributable to the net
losses incurred up to the previous fiscal year, Tokuyama has decided to prioritize efforts aimed at restoring
the Company to a sound financial position after considering all business risks. Accordingly, we deeply
regret our decision to forego the payment of a dividend on the Company’s common stock for the fiscal
year under review. However, we will pay a dividend on the Company’s Class A shares in line with thecalculation determined at the time of issue.
Turning to the payment of dividends with respect to Class A shares, we are looking to undertake thefollowing while drawing on other retained earnings.
(1) Type of dividend
Dividends will be paid in cash(2) Matters concerning the allocation of dividends to shareholders and the total amount of dividends¥38,082.2 per Class A share
Total amount: ¥761,644,000(3) Effective date of distribution of surplus
June 26, 2017
Turning to dividends for fiscal 2017, the fiscal year ending March 31, 2018, we intend to restore andundertake the payment of an interim and period-end dividend of ¥2 per common share. This largely
reflects the Company’s greater than expected results in the fiscal year under review, the first year under the
Medium-Term Management Plan and estimates that our profit performance in fiscal 2017 will follow thepath of the Plan.

102. Management Policy(1) Basic Management Policy
Tokuyama has put in place a renewed Group vision in a bid to further clarify its role and significance. As a
key component of this vision, the Tokuyama Group is determined to help realize a prosperous society bycreating value that enhances people’s lives centered on the field of chemistry. Drawing on the chemical
technologies that it has nurtured over many years, the Group will contribute to the well-being, growth, anddevelopment of society by continuously creating and proposing new value.

(2) Medium- to Long-Term Management Strategies and Performance Targets
Tokuyama incurred a substantial loss in each of the fiscal years ended March 31, 2015 and March 31, 2016.
With the goals of rebuilding the Company and securing growth, Tokuyama put in place a medium-term
management plan in May 2016. Under this plan, we have identified the following two medium- tolong-term management strategies, which we intend to carry out over the next decade through to the fiscal
year ending March 31, 2026
1. Transition toward a robust business structure that is resilient against changes in the Company’s
operating environment and is capable of sustainable growth
The Tokuyama Group has set the goal of becoming a global leader in advanced materials through unique
technologies across growth businesses including the Specialty Products as well as Life & Amenity segment
together with the development of new products. In such traditional businesses as the Cement andChemicals segments, the Group will work to become a leader in Japan through strengthening
competitiveness.
2. Transition to a Group-wide lost-cost structure by undertaking a comprehensive review of existing
work practices
The Tokuyama Group will reduce costs by adopting a cross-departmental approach that differs fromconventional methods and undertaking strategic capital expenditures as a part of efforts to cut backprincipal costs including raw material, fuel, repairs and maintenance, and distribution expenses.
In addition, Tokuyama has identified specific numerical targets as a measure of its success in carrying out
these strategies. The goals are to achieve an ROA, cash conversion cycle, and debt-to-equity ratio of at least
10%, not more than 55 days, and not more than 1.0, respectively, as of the end of fiscal 2020, the fiscal
year ending March 31, 2021.

11

(3) Pending Issues
Despite the decision to transfer Tokuyama Malaysia Sdn. Bhd., which was a major source of theCompany’s massive loss, to OCI Co., Ltd., based in South Korea, and positive steps to reform bothmanagement and the Company’s operations, it remains vitally important that we strengthen Tokuyama’s
financial platform, which has suffered under the weight of substantial losses from its mainstay activities. It
is also critical that we continue to push forward initiatives aimed at improving such issues as the inward
posture spread among employees, corporate governance, and uncertainty surrounding business strategies,
while creating the necessary driving force to propel new profit growth. In order to overcome each of theseissues, we will steadfastly carry out the priority measures set out in our medium-term management plan.
1. Change its organizational climate
Recognizing the need to promote an environment in which key positions take the initiative to foster avibrant corporate culture that encourages independent thinking and rapid business execution among
employees, we revised our human resources structure and systems. Looking ahead, we will introduce
drastic reforms including the exchange of staff between Group companies and the active recruitment ofoutside personnel.
2. Rebuild its business strategies
The Tokuyama Group will strictly adhere to a customer-oriented approach in the conduct of its businessactivities. At the same time, the Group will transition to a research and development structure that is intune with customers’ needs. Through these means, energies will be channeled toward cultivating new
business domains that employ unique technologies.
In undertaking a drastic review of our research and development structure and activities, we aretransitioning to a research and development structure that is in tune with customers’ needs. Among a hostof initiatives, we are, for example, reassigning personnel between the Company’s head office Research &Development Division and its various business divisions. In addition, we are implementing open
innovation with other companies and cultivating new business domains that employ unique technologies.
3. Strengthen Group management
Each company of the Tokuyama Group will once again clarify its role and position. Seeking to contributeto the Group’s growth strategy as well as the reduction of costs, particular emphasis will be placed on
further strengthening the management of the Group as a whole.
4. Improve its financial structure
We will put in place the necessary systems to flexibly pursue opportunities including M&As that aredesigned to accelerate the pace of growth while restoring the Company’s shareholders’ equity by steadilybuilding up profits and improving capital efficiency.

123. Consolidated Financial Statements(1) Consolidated Balance Sheets
Millions of yen
3/31/2016
3/31/2017
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease receivables
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Net defined benefit asset
Other
Allowance for investment loss
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

13

121,508
68,5696
14,012
10,882
15,933
4,256
8,788
(192)
243,766

121,598
73,945
6
12,348
9,919
16,567
1,627
10,798(150)
246,661

101,982(74,022)
27,959461,619(410,707)
50,912
22,661(20,890)
1,771
31,3272,237(1,041)
1,196
6,597
119,764

100,430(72,723)
27,707450,926(404,912)
46,01422,015(20,222)
1,793
31,2893,533(1,329)2,203
10,225
119,233

3,738
41
2,613
6,393

2,367
35
2,384
4,787

15,765
3,094
610
8,057
4,190
(22)
(278)
31,417
157,575
401,342

19,083
2,833
19,824
8,936
3,221
－
(148)
53,750177,771424,433

Millions of yen
3/31/2016
3/31/2017
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Income taxes payable
Deferred tax liabilities
Provision for bonuses
Provision for repairs
Provision for product warranties
Provision for loss on purchase contract
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors' retirement benefits
Provision for repairs
Allowance for loss on compensation for building materials
Provision for environmental measures
Provision for loss on purchase contract
Net defined benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

14

35,388
9,382
17,036
10,000356
11,888
2
1,830
1,480
85
2,656
23,093
113,200

37,0352,138
15,235
－
577
1,335
－
2,103
1,628
81
2,671
16,346
79,15334,400172,877
931
457
231
3,691
384
85
2,716
1,354
6
10,799227,935
341,136

34,400160,555
1,787
268
143
2,829
318
287
－
1,430
6
7,275
209,303
288,457

53,45857,532(61,281)(1,439)48,27010,00041,54572,511(1,446)
122,609(1,020)
(526)
2,362
2,386
3,202
8,732
60,205
401,342

319
(274)
1,528
2,833
4,406
8,960
135,976
424,433

(2) Consolidated Statements of Income
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Compensation income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Trial production expenses
Cost of idle operations
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Subsidy income
Gain on write-off debts
Gain on sales of patent right and otherSettlement received
Gain on insurance adjustment
Other
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Impairment loss
Loss on disaster
Loss on reduction of non-current assets
Loss on disposal of non-current assets
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent
15

Millions of yen
FY2015FY2016
307,115
299,106
220,638
201,305
86,47697,80038,09925,30563,40523,071

37,916
20,16458,08039,720

121
443
668
－
542
1,576
3,353

54
249
900
464
115
1,374
3,159

4,668
636
1,134
2,259
8,699
17,725

4,224
1,853
1,200
1,602
8,880
33,99814,144
6,190
－
50
－
－
－
21
1,071
21,477

20
1
1,934
2,298
1,268
836
500
255
202
7,317

130
124,706
5
108
486
264
125,702(86,500)
14,408(1,387)
13,020(99,520)
1,043(100,563)

5
1,683
90
50
560
399
2,790
38,525
2,967(17,838)(14,870)
53,396
1,231
52,165

(3) Consolidated Statements of Comprehensive Income

Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Owners of the Parent
Non-controlling interests

16

Millions of yen
FY2015FY2016(99,520)
53,396(6,851)(901)(1,758)(861)(150)(10,522)(110,043)

1,333
240
(717)
448
(138)
1,166
54,562(110,957)
913

53,3691,193

(4) Consolidated Statements of Cash Flows

Millions of yen
FY2015FY2016

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Increase(decrease) in allowance for loss on compensation for building
Increase (decrease) in provision for loss on purchase contract
Increase (decrease) in other provision
Increase (decrease) in net defined benefit liability
Decrease (increase) in net defined benefit asset
Interest and dividend income
Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries and associates
Share of (profit) loss of entities accounted for using equity method
Subsidy income
Interest expenses
Loss on reduction of non-current assets
Impairment loss
Gain on write-off of debts
Gain on insurance claim
Settlement received
Gain on sales of patent right and other
Loss (gain) on disposal of non-current assets
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Proceeds from insurance income
Settlement package received
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries resulting in change in scope of
consolidation
Payments of long-term loans receivableCollection of long-term loans receivable
Proceeds from subsidy income
Payments for transfer of business
Gain on sales of patent right and other
Other, net
Net cash provided by (used in) investing activities
17(86,500)
20,084(189)(4,059)
322
93
(431)
(565)
(176)
(14,013)(6,190)
－
(668)
(50)
4,668
108
124,706
－
－
－
－
486
301
4,402
(355)
(4,750)(130)
607
37,701
1,178(4,725)－－(4,055)30,09838,525
14,215(65)(2,701)
(381)
135
(290)
(304)
(13)
(14)
(1)
(1,934)(900)(2,298)
4,224
50
1,683
(1,268)
(255)
(500)
(836)
560
(7,744)
824
(574)
3,095
(815)
(1,594)40,818750(4,246)255
500(18,065)
20,012(84)
34(14,334)
17,841(12)
10,932(84)
130(16,693)
197
(305)
341

－

2,926

(40)
239
50
(37)
－
(1,187)
13,400

(9)
270
2,298
－
905
(65)
(10,089)

Millions of yen
FY2015FY2016
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Increase (decrease) in commercial papers
Proceeds from long-term loans payable
Repayments of long-term loans payable
Redemption of bonds
Payments from changes in ownership interests in subsidiaries that do not
Proceeds from issuance of common shares
Cash dividends paid
Dividends paid to non-controlling interests
Decrease (increase) in treasury shares
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting from change ofscope of consolidation
Cash and cash equivalents at end of period

18(2,648)(3,000)
4,631(31,175)(5,600)
(25)
－
(1)
(386)
(6)
523
(37,689)
(792)
5,016
116,122(6,625)－
3,116(17,297)(10,000)－
19,712
0
(294)
(7)
(514)
(11,911)(358)(2,346)
121,166

27－

121,166

118,819

(5)Segment information
1. Summary of reportable segments
The reportable segments of the Touyama Group are defined as individual units, where separate financial information
is available and which are subject to regular review by the Board of Directors of the Company to evaluate theirresults and decide the allocation of management resources.
The Company has business divisions by product group, and the Tokuyama Group conducts business operations
through each business division devising its comprehensive product strategy for domestic and overseas markets.
The Tokuyama Group is, therefore, composed of segments by product group based on business divisions, and has
four reportable segments, “Chemicals,” “Specialty Products,” “Cement,” and “Life & Amenity.”
Main products and services of each reportable segment are as follows:

Reportable segment
Chemicals

Main products and services
Caustic soda, soda ash, calcium chloride, sodium silicate, vinyl chloride monomer,
polyvinyl chloride resin, propylene oxide, isopropyl alcohol and chlorinated solvents

Specialty Products

Polycrystalline silicon, fumed silica, tetrachlorosilane, aluminum nitride, high-purity
chemicals for electronics manufacturing, and photoresist developer

CementCement, ready-mixed concrete, cement-type stabilizer, and resourece recycling businessLife & Amenity

Polyolefin film, plastic window sashes, medical diagnosis systems, dental materials andequipment, gas sensors, ion exchange membranes, pharmaceutical ingredients andintermediates, plastic lens-related materials for glasses, and microporous film

19

2. Information on sales, income (loss), assets and other items by reportable segment
Fiscal 2015 (April 1, 2015 – March 31, 2016)(Millions of yen)
Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment income
Segment assets
Other items
Depreciation expenses*4
Increase in tangible and intangible
fixed assets*5

Chemicals

Specialty
Products

87,042759
87,801
8,900
46,38147,664
13,23760,902(1,157)66,28785,320148
85,4695,832
55,952

2,517
2,000

5,956
4,588

3,211
2,437

CementAdjustment*2

Figures in
consolidated
financialstatements*3

307,115
38,420345,535
25,842
269,097(38,420)(38,420)(2,771)
132,244

307,115
307,115
23,071
401,342

17,384
13,7332,700
585

20,084
14,319Others*1

Total

55,6791,998
57,677
6,598
56,64931,40822,27553,684
5,668
43,825

2,132
3,111

3,565
1,595

Life &
Amenity*1 “Others” segment comprises businesses other than those of the reportable segments. Concretely, the segment includes
overseas sales companies, a distribution company, a real estate business, etc.
*2 Adjustment is as follows:(1) The segment income adjustment amount consists mainly of basic R&D expenses that are not related to specificreportable segments.
(2) Included in the segment assets adjustment amount are corporate assets that are not allocated to specific reportablesegments (¥174,922 million).
*3 With regard to segment income, operating income in the consolidated financial statements has been calculated byadjusting the sum total of the reportable segments’ income and the “Others” segment’s income.
*4 Included in depreciation expenses is the long-term prepaid expense depreciation amount.
*5 Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.
Fiscal 2016 (April 1, 2016 – March 31, 2017)(Millions of yen)
Reportable segments

Sales
Sales to customers
Inter-segment sales/transfer
Total
Segment income (loss)
Segment assets
Other items
Depreciation expenses*4
Increase in tangible and intangible
fixed assets*5

Chemicals

Specialty
Products

82,432913
83,346
13,18347,63356,792
10,93467,726
9,649
65,55582,873
121
82,995
7,878
53,511

2,276
2,410

2,679
1,474

3,194
3,907

CementAdjustment*2

Figures in
consolidated
financialstatements*3

299,106
37,836
336,943
42,309263,057(37,836)(37,836)(2,589)161,375

299,106
299,106
39,720424,433

13,261
16,692

953,228898

14,215
17,591Others*1

Total

48,6122,139
50,751
5,632
53,631

28,39623,72852,124
5,965
42,696

1,824
6,425

3,286
2,473

Life &
Amenity*1 “Others” segment comprises businesses other than those of the reportable segments. Concretely, the segment includes
overseas sales companies, a distribution company, a real estate business, etc.
*2 Adjustment is as follows:(1) The segment income (loss) adjustment amount consists mainly of basic R&D expenses that are not related to specificreportable segments.
(2) Included in the segment assets adjustment amount are corporate assets that are not allocated to specific reportablesegments (¥194,566 million).
*3 With regard to segment income (loss), operating income in the consolidated financial statements has been calculated byadjusting the sum total of the reportable segments’ income and the “Others” segment’s income.
*4 Included in depreciation expenses is the long-term prepaid expense depreciation amount.
*5 Included in increase in tangible and intangible fixed assets is the long-term prepaid expense increase amount.
20