May 12, 2016

Summary of Fiscal 2015
(The Fiscal Year ended March 31, 2016)
Tokuyama Corporation
1. Consolidation
Classification
The number of consolidated
subsidiaries
The number of subsidiaries andaffiliates by the equity method

Fiscal 2015

Fiscal 2014

Changes

55

54

+1

10

10

-

2. Summary of performance and other corporate data (consolidated)(Unit: Billions of yen, except number of employees)

Fiscal 2015
Net s ales
O perating incom e
Ordinar y incom e
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 ex penditur e s
Depreciation and amortization
R&D ex penses
Financial income and expenses

Fiscal 2014

Changes

307.1
23.0
17.7
(100.5)(289.10)
13.9
20.0
8.5
(4.1)

302.0
19.5
12.9
(65.3)(187.85)
25.3
18.8
10.1
(4.0)

As of March 31,
2016

As of March 31,
2015

244.1
5,759

283.1
5,852

Interes t- bear ing debt
Num ber of em ployees

+5.0
+3.5
+4.8
(35.2)(101.25)(11.4)
+1.2
(1.6)
(0.0)

Changes(39.0)(93)

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

FY2015FY2014

Changes

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

87.8

8.9

91.9

5.0

(4.1)

+3.8

Specialty Products

60.9

(1.1)

55.4

4.1

+5.4

(5.2)

Cement

85.4

5.8

81.2

4.4

+4.2

+1.3

Life & Amenity

57.6

6.5

58.4

5.1

(0.7)

+1.4

Others

53.6

5.6

51.4

6.0

+2.2

(0.3)

Total

345.5

25.8

338.5

24.8

+7.0

+1.0

Inter-segment
eliminations andcorporate-wide expenses(38.4)(2.7)(36.4)

(5.2)

(1.9)

+2.5

Consolidated results

307.1

23.0

302.0

19.5

+5.0

+3.5

○ 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 decline in domestic naphtha prices
as well as other raw material and fuel prices.
○ In the Specialty Products segment, the Company incurred an operating loss despite anincrease in sales in the fiscal year ended March 31, 2016. While sales volumes ofsemiconductor-related products and solar-grade polycrystalline silicon were up, this operating
loss was mainly due to the deterioration in earnings at Tokuyama Malaysia Sdn. Bhd.
○ In the Cement segment, both sales and operating income increased in the fiscal year ended
March 31, 2016. Despite a decrease in the volume of cement sales in Japan, higher sales andprofit in this segment reflected the upswing in sales volumes of ready-mixed concrete and otherproducts, an increase in the volume of waste accepted, and the drop in raw material and fuelprices.
○ In the Life & Amenity segment, operating income increased despite a decrease in sales. In thefiscal year under review, sales prices were soft due to the drop in domestic naphtha prices.
Earnings, on the other hand, were buoyed by an increase in the sales volumes of medical
diagnosis systems, gas sensors, and other products.

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)

FY2016 Forecast

FY2015 Results

Changes

Net sales

OperatingincomeNet sales

OperatingincomeNet sales

OperatingincomeChemicals

81.0

10.0

87.8

8.9

(6.8)

+1.0

Specialty Products

67.0

7.0

60.9

(1.1)

+6.0

+8.1

Cement

87.0

8.0

85.4

5.8

+1.5

+2.1

Life & Amenity

52.0

5.0

57.6

6.5

(5.6)

(1.5)

Others

53.0

4.5

53.6

5.6

(0.6)

(1.1)

Total

340.0

34.5

345.5

25.8

(5.5)

+8.6

Inter-segment
eliminations andcorporate-wide expenses(38.0)(2.5)(38.4)

(2.7)

+0.4

+0.2

Consolidated results

302.0

32.0

307.1

23.0

(5.1)

+8.9

(2) Assumptions of performance forecasts for fiscal 2016

Fiscal 2016

Oct 2015-

Apr-Sep

Mar 2016

2015

Domestic Naphtha
Price (¥/kl)

35,00037,40048,000Exchange Rate (¥/$)

110

118

122

The Tokuyama Group is projecting a decrease in sales and an increase in operating income in thefiscal year ending March 31, 2017. Expectations of an increase in operating income are largely based2

on forecast improvements in Tokuyama Malaysia’s profitability as a result of increased productivity as
well as further reductions in raw material and fuel costs.

○ In the Chemicals segment, steps have been taken to factor in the softening of selling prices inline with the drop in domestic naphtha prices as well as the effects of business rationalization of
soda ash and vinyl chloride.
○ In the Specialty Products segment, an improvement in profitability as a result of increased
productivity at Tokuyama Malaysia Sdn. Bhd. has been taken into account.
○ In the Cement segment, the Tokuyama Group has factored in a recovery in domestic sales
volumes.
○ In the Life & Amenity segment, the Group has taken into account the softening of selling prices
in line with the drop in domestic naphtha prices as well as an increase in sales in overseas
markets.

3

Summary of Consolidated Financial Statements for Fiscal 2015 (JP GAAP)(The Fiscal Year ended March 31, 2016)
May 12, 2016
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 24, 2016
Scheduled date of year-end dividends payout:
Scheduled date for the filing of the consolidated financial statements: June 27, 2016
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, 2016 (April 1, 2015 – March 31, 2016)
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)[%](millions of yen)

307,115
302,085

1.7
5.1

23,071
19,530Fiscal 2015
Fiscal 2014

[%]

18.1
(3.7)

(Note) Comprehensive income: FY15: (110,043) million yen [－%]

Profit attributable toowners of parent

Ordinary income(millions of yen)

17,725
12,920[%](millions of yen)

37.2
(13.7)[%]－－(100,563)(65,349)

FY14: (64,536) million yen [－%]

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 2015
Fiscal 2014

(yen)

[%]

－
－

(289.10)(187.85)[%](94.0)(33.3)

[%]

3.7
2.3

(Reference) Equity in earnings of unconsolidated subsidiaries and affiliates: FY15: 668 million yen

7.5
6.5

FY14: 684 million yen(2) Financial position

Total assets
Mar 31, 2016
Mar 31, 2015
(Reference)

Shareholders’ equity
ratio

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

401,342554,527

60,205
169,445

Shareholders' equity:

FY15:

Net assets per share

[%]

(yen)

147.98467.3612.8
29.3
51,473 million yen

FY14:

162,577 million yen(3) Cash flows

Cash flows fromoperating activities
Fiscal 2015
Fiscal 2014

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)

30,09830,772

13,400(25,519)(37,689)
40,502

121,166
116,122

2. Dividends（Period）
Fiscal 2014
Fiscal 2015
Fiscal 2016
（Forecast）

1st
quarter
(yen)

----

Annual dividens
2nd
3rd
Yearquarter quarter
end

Total

Total dividends
paid(Total)

(yen)

(yen)

(yen)

(yen)

(millions of yen)

0.00
0.00
0.00

----

0.00
0.00
0.00

0.00
0.00
0.00

---

1

Dividend
payout ratio

Dividend on net
assets ratio(Consolidated)(Consolidated)

[%]

--－

[%]

---

3. Consolidated performance forecast for fiscal 2016 (April 1, 2016 – March 31, 2017)(% indicates the rate of change over the corresponding previous periods respectively)

attributable to Basic earnings per
Operating income Ordinary income Profit
owners of parent
share

Net salesFirst Half
Fiscal 2016
Fiscal 2016

(millions of
yen)

[%]

(millions of
yen)

[%]

(millions ofyen)

145,000(2.8)

14,50092.1

11,500 118.5

7,000 151.5

20.12

302,000(1.7)

32,00038.7

27,00017,000

－

48.87

[%]

(millions of
yen)

52.3

[%]

(yen)

* 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:

FY15:349,671,876

FY14:

349,671,876

FY15:
FY15:

1,832,788
347,852,553

FY14:
FY14:

1,805,814
347,876,356(Reference) Summary of Non-Consolidated Operating Results
1. Non-consolidated results for fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)
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)[%](millions of yen)

184,755
184,043

0.4
3.5

25,64819,247

Fiscal 2015
Fiscal 2014

Net income per
share

[%]

33.3
18.0

27,216
18,66545.8
81.1(281.37)(180.96)

Total assets(Reference)

[%]

－
－

(97,875)(62,950)(yen)

Shareholders’ equity
ratio

Net assets(millions of yen)(millions of yen)329,286
462,042

28,554
133,993

Shareholders' equity:(millions of yen)－－

(2) Financial position

Mar 31, 2016
Mar 31, 2015

Net income(millions of yen)

Diluted net income
per share(yen)

Fiscal 2015
Fiscal 2014

Ordinary income
[%]

FY15:

[%]

(yen)

82.09
385.198.7
29.0
28,554 million yen

Net assets per share

FY14:

133,993 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

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 2015 and 2016

……………

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 2015 (April 1, 2015 to March 31, 2016), signs of a slowdown in the pace of economic growth inChina became increasingly clear. As a result, the prices of resources including crude oil declined substantially.
Due to the decision by the U.S. Federal Reserve Board to raise interest rates for the first time in around nine
years, the outflow of investment funds from emerging and resource-rich countries gathered pace. At the sametime, signs of uncertainty surrounding growth in emerging countries and especially the BRICS nations began
to emerge. Taking each of these factors into consideration, conditions throughout the global economy
witnessed significant change during the fiscal year under review.
Meanwhile, the Japanese economy remained shrouded in uncertainty. Despite expectations of growth on theback of lower crude oil prices and the weaker yen, this uncertainty largely reflected faltering personal
consumption, capital expenditure, and export activity.
Against this backdrop, the Tokuyama Group was able to make some headway toward addressing the priority
issues identified in its Medium-Term Management Plan 2017 announced in July 2015. Under the guidance ofa new management structure, the Group took steps to strengthen business profitability, generate profits at
Tokuyama Malaysia, and rebuild the Company’s financial platform. Despite these endeavors, the net loss forthe period increased after posting an impairment loss of ¥123,875 million in connection with Tokuyama
Malaysia Sdn. Bhd., a consolidated subsidiary.
(Unit: Millions of yen)
Net sales

Operating income

Ordinary income

Profit (Loss)
attributable toowners of parerent

Fiscal 2015

307,115

23,071

17,725(100,563)

Fiscal 2014

302,085

19,53012,920(65,349)

1.7

18.1

37.2

-

Rate of change (%)

Net sales
Consolidated net sales increased 1.7%, or ¥5,029 million compared with the previous fiscal year, to¥307,115 million. Despite weaker selling prices of petroleum chemicals on the back of a downturn indomestic naphtha prices, this was largely attributable to the upswing in sales volumes of soda ash andcalcium chloride as well as solar-grade polycrystalline silicon.
Cost of sales
Cost of sales increased 0.8%, or ¥1,720 million compared with the previous fiscal year, to ¥220,638
million. Despite a downturn in raw material costs as a result of the drop in domestic naphtha prices, thiswas due mainly to the increased sales volume of solar-grade polycrystalline silicon.

2

SG&A expenses
SG&A expenses decreased 0.4%, or ¥231 million compared with the previous fiscal year, to ¥63,405
million. Despite the increase in distribution costs associated with the increase in sales volumes of suchproducts as soda ash and calcium chloride, this decrease primarily reflected our efforts to reduce
Companywide expenses.
Operating income
Operating income increased 18.1%, or ¥3,540 million compared with the previous fiscal year, to ¥23,071
million. Despite the deteriorated profitability of solar-grade polycrystalline silicon at Tokuyama Malaysia
Sdn. Bhd., this was largely attributable to profitability improvement of petroleum chemicals impacted by
the drop in domestic naphtha prices and the weaker yen.
Non-operating income/expenses, Ordinary income
Non-operating income/expenses improved ¥1,264 million compared with the previous fiscal year, due
chiefly to a change from foreign exchange losses, recorded in the previous fiscal year, to foreign exchange
gains.
As a result of the above, ordinary income increased 37.2%, or ¥4,804 million compared with the previous
fiscal year, to ¥17,725 million.
Extraordinary income/losses, Profit (Loss) before income taxes, Profit (Loss), Profit (Loss)
attributable to owners of parent
Extraordinary income/losses deteriorated by ¥26,318 million compared with the previous fiscal year.
Despite the redcording of gains on sales of fixed assets, this was largely attributable to the posting of an
impairment loss on the polycrystalline silicon manufacturing facilities at Tokuyama Malaysia Sdn. Bhd.
As a result of the above, loss before income taxes was ¥86,500 million, which deteriorated by ¥21,513
million compared with the previous fiscal year.
After deducting income taxes calculated in an appropriate way, the Company recorded a loss of ¥99,520
million, which deteriorated by ¥34,192 million compared with the previous fiscal year.
Loss attributable to owners of parent was ¥100,563 million, which deteriorated by ¥35,214 million
compared with the previous fiscal year.

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

57,67753,684

345,535(38,420)

307,115

81,21958,45751,468338,523(36,438)

302,085

5.2

(1.3)

4.3

2.1

-

1.7

Chemicals

Specialty
Products

CementFiscal 2015

87,80160,902

85,469Fiscal 2014

91,92755,450(4.5)

9.8

Rate of change (%)

Life &
Amenity

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

Figures in
consolidated
incomestatement

25,842(2,771)

23,071

6,023

24,808(5,278)19,530

(5.9)

4.2

-

18.1

Others

Total

6,598

5,668

4,446

5,159

31.1

27.9

Chemicals

Specialty
Products

Life &
Amenity

Fiscal 2015

8,900

(1,157)

5,832

Fiscal 2014

5,056

4,122

Rate of change (%)

76.0

-

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.
With regard to vinyl chloride monomer (VCM), profitability improved on the back of a drop in raw
material costs due to the downturn in domestic naphtha prices.
Despite a favorable export environment, sales of polyvinyl chloride (PVC) declined. This was mainly due
to a drop in sales volumes following the closure of the Chiba factory.
With regard to soda ash and calcium chloride, sales increased compared with the previous fiscal year. This
reflected the startup of operations by Tokuyama & Central Soda Inc. in October 2014.
As a result of the above, segment net sales decreased 4.5% compared with the previous fiscal year, to¥87,801 million, while operating income increased 76.0% to ¥8,900 million. The segment reported higher
earnings on lower sales.
Specialty Products
Sales of semiconductor-grade polycrystalline silicon were essentially unchanged from the previous fiscal
year. This largely reflected firm overall trends in sales volumes, which offset the slowdown in demand forcertain semiconductor products targeting various fields including smartphones.
Sales of solar-grade polycrystalline silicon increased on the back of higher sales volumes. This was mainly
4due to the start of sales and marketing by Tokuyama Malaysia in October 2014. In contrast, profitability
deteriorated owing to such factors as the marked drop in spot price and sluggish operating rates.
Sales of fumed silica increased compared with the previous fiscal year due to steady sales of suchapplications as a polishing material for semiconductors.
Sales volme of high-purity chemicals for electronic manufacturing were firm thanks largely tosemiconductor product applications. However, sales declined as a result of soft trends in selling prices.
With regard to aluminum nitride, sales increased compared with the previous fiscal year. This was
attributable to an increase in sales volumes of such applications as heat sink materials used for powerdevices for industrial machinery and LEDs.
As a result of the above, the segment reported a loss on higher sales. Segment net sales increased 9.8%
compared with the previous fiscal year, to ¥60,902 million. However, this segment incurred an operating
loss of ¥1,157 million during the fiscal year under review.
CementIn the cement business, sales declined compared with the previous fiscal year, as a result of decreased sales
volumes. This decrease reflected sluggish trends in both public and private-sector demand impacted bysuch factors as the decrease in public works and delays in construction attributable to unseasonably bad
weather in Japan.
In the recycling and environment-related business, the Company accepted a higher volume of waste
including construction waste soil compared with the previous fiscal year. As a result of this, sales increased
from the previous fiscal year.
With regard to consolidated subsidiaries, sales increased compared with the previous fiscal year, because
sales volumes of such products as ready mixed concrete for large-scale projects increased in certain areas.
As a result of the above, segment net sales increased 5.2% compared with the previous fiscal year, to¥85,469 million and operating income increased 31.1% to ¥5,832 million. The segment reported higher
earnings on higher sales.
Life & Amenity
Sales of active pharmaceutical ingredients were on par with the previous fiscal year. This was in large partdue to solid sales volumes of products used for generic pharmaceuticals.
With regard to plastic lens-related materials, sales volumes of photochromic dye materials for eyeglass
lenses increased. As a result of this, sales increased compared with the previous fiscal year.
With regard to microporous film, sales increased year on year. This was mainly the result of sound sales foruse as sanitary articles including disposable diapers.
With regard to polyolefin film, sales declined compared with the previous fiscal year. Despite firm trends insales mainly for application in packaging materials for goods sold at convenience stores, this decrease was
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 increased sales volumes of new products and products for overseas markets.
5With regard to medical diagnosis systems, sales were up compared with the previous fiscal year. This wasdue to the upswing in large-scale orders in Japan for blood testing products.
With regard to gas sensors, sales increased compared with the previous fiscal year. This was attributable tostrong overseas sales volume of such applications as gas alarm devices.
As a result of the above, segment net sales decreased 1.3% compared with the previous fiscal year, to¥57,677 million, while operating income increased 27.9% to ¥6,598 million. The segment reported higher
earnings on lower sales.

6<2> Outlook for fiscal 2016[1] Outlook for operating results
While the U.S. is projected to enjoy the fruits of ongoing robust economic activity, the global economy isexpected to feel the weight of shrinking investment as a result of weak crude oil prices and other factors infiscal 2016, the fiscal year ending March 31, 2017. In addition, emerging and resource-rich nations are
forecast to confront difficult conditions. Growth rates in China, for example, are anticipated to fall below
previous levels with investment and manufacturing activities also projected to stall. Countries such as Brazil
and Russia are expected to experience a slowdown in their rates of economic growth due mainly to thedrop in resource prices. On a more positive note, Europe is anticipated to enjoy stable growth on the backof such factors as easy monetary policies.
In Japan, business conditions are expected to remain shrouded in uncertainty. The Tokuyama Group is
anticipating stagnant economic activity largely as a result of the strong yen and a slowdown in the rates of
economic growth in emerging countries.
Under these circumstances, energies will be directed toward carrying out the Medium-Term Management
Plan announced on May 12, 2016 and to lay the necessary foundation to revitalize the Tokuyama Group.
Guided by this plan, Tokuyama will transition toward a robust business structure that is resilient againstchanges in the Company’s operating environment and is capable of sustainable growth.
Based on the current information, we forecast net sales of ¥302.0 billion, a decrease of 1.7% (¥5.1 billion)
compared with the fiscal year under review, operating income of ¥32.0 billion, an increase of 38.7% (¥8.9
billion), ordinary income of ¥27.0 billion, up 52.3% (¥9.2 billion) and profit attributable to owners ofparerent of ¥17.0 billion, up ¥117.5 billion.
(Unit: Millions of yen)
Net sales

Operating income

Ordinary income

Profit (Loss)
attributable toowners of parerent

Fiscal 2016

302,000

32,00027,00017,000Fiscal 2015

307,115

23,071

17,725(100,563)

(1.7)

38.7

52.3

-

Rate of change (%)

These forecasts are calculated based on an exchange rate of ¥110/$ and a domestic naphtha price of¥35,000/kl.
[2] Outlook for segment results for fiscal 2016
Chemicals
Raw material and fuel costs are down on the back of a downturn in the market prices of suchcommodities as crude oil and coal. At the same time, the risk of profitability fluctuation is expected to
linger, owing mainly to the substantial impact of lower raw material and fuel costs on petrochemical
product selling prices. Under this operating environment, the Tokuyama Group will work to 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 secure stable earnings.
Specialty Products
The round of inventory adjustments that took place in the semiconductor market during the second halfof the previous fiscal year is expected to come to an end. Semiconductor demand targeting electronic
7

devices including smartphones is also projected to enjoy a modest recovery. Against this backdrop,
customers’ demands for higher levels of quality in line with semiconductor miniaturization as well as stablesupply are expanding. Under these circumstances, the Tokuyama Group will endeavor to adhere strictly toa policy of cost reduction while urgently increasing the quality of its semiconductor-related products
including semiconductor-grade polycrystalline silicon and putting in place a production structure that is
capable of meeting demand, thereby securing earnings. Turning to fumed silica, aluminum nitride, andrelated products, where demand is high, the Group will look to boost earnings by expanding sales ofhigh-value-added products.
CementIn overall terms, demand in Japan is projected to remain unchanged from fiscal 2015. While private-sector
demand is expected to exhibit a mild recovery as a result of construction work relating to the 2020 Tokyo
Olympic and Paralympic Games, this will be offset by the forecast drop in public-sector demand due to adownturn in public-sector investment and the extension of construction periods. Amid these operating
conditions, the Tokuyama Group will work diligently to secure earnings by expanding the volumes ofexports 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 including resource-rich nations where
there are fears of a slowdown in the rates of economic growth. Against this backdrop, the TokuyamaGroup will place particular emphasis 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, 2016, total assets amounted to ¥401,342 million, a decrease of ¥153,185 million
compared with those as of March 31, 2015. This decrease largely reflected the decline in property, plantand equipment resulting from the posting of a loss on the impairment of polycrystalline silicon
manufacturing facilities at Tokuyama Malaysia Sdn. Bhd.
Total liabilities amounted to ¥341,136 million, down ¥43,945 million compared with those as of March 31,
2015. This largely reflected the downturn in the balances of long-term loans payable and current portionof long-term loans payable, bonds payable and current portion of bonds payable, and allowance for loss
on purchase agreements of ¥26,749 million, ¥5,600 million, and ¥4,059 million, respectively.
Net assets totaled ¥60,205 million, a decrease of ¥109,239 million compared with those as of March 31,
2015. This was largely attributable to the decrease in retained earnings resulting from the posting of theimpairment loss.
While the possibility existed that Tokuyama may infringe upon certain financial covenants stipulated incertain loan agreements executed with several financial institutions as of the end of the fiscal year underreview, the issues in question have been resolved as of March 31, 2016. Please refer to the Company’s press
release, “Notice concerning Resolution of Infringements of Certain Loan Agreement Financial
Covenants,” dated March 31, 2016 for details.
<2> Analysis of cash flows(Unit: Millions of yen)
Fiscal 2014

Fiscal 2015

Cash flows from operating activities

30,77230,098Cash flows from investing activities(25,519)

13,400Cash flows from financing activities

40,502(37,689)

392

(792)

46,147

5,016

10

27

(8)

-

Cash and cash equivalents at end of year

116,122

121,166[Cash and cash equivalents at end of previous fiscal year ][69,973][116,122]

Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Increase (decrease) in cash and cash equivalents due to changes of scope of
consolidation
Increase (decrease) in cash and cash equivalents resulting from change infiscal period of consolidated subsidiaries

As of March 31, 2016, cash and cash equivalents were ¥121,166 million, an increase of ¥5,044 million
compared with those as of April 1, 2015.
(Cash flows from operating activities)
Net cash provided by operating activities totaled ¥30,098 million, a decrease of ¥673 million comparedwith the previous fiscal year. Principal items included depreciation expenses of ¥20,084 million.
9(Cash flows from investing activities)
Net cash provided by investing activities totaled ¥13,400 million, an increase of ¥38,919 million comparedwith the previous fiscal year. Major contributory factors were payments for purchases of property, plantand equipment resulting from construction of polycrystalline silicon manufacturing facilities at Tokuyama
Malaysia Sdn. Bhd., proceeds from sales of property, plant and equipment, and proceeds from sales ofinvestment securities of ¥14,334 million, ¥17,841 million, and ¥10,932 million, respectively.
(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥37,689 million, a decrease of ¥78,192 million
compared with the previous fiscal year.
This was primarily attributed to repayment of long-term loans payable of ¥31,175 million and redemptionof bonds of ¥5,600 million.

(3) Basic Policy for Profit Distribution and Dividends for Fiscal 2015 and 2016
On January 29, 2016, Tokuyama issued a press release titled “Notice concerning the Posting of an
Extraordinary Loss, Revision of Performance Forecasts, and the Return of Executive Compensation.”
Taking into consideration the negative impact on net assets after posting a net loss and the decision toprioritize efforts aimed at restoring the Company’s sound financial position, after accounting for businessrisks, Tokuyama deeply regrets that it has decided to forego the payment of an interim and year-end
dividend for the fiscal year under review. For the same reasons, Tokuyama is expecting that it will forego
the payment of an interim and year-end dividend for the fiscal year ending March 31, 2017.
Moving forward, we will do everything within our power to quickly restore our financial platform and tosecure stable profitability in a bid to resume the payment of dividends to shareholders at the earliest
possible opportunity.

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
After incurring a substantial loss for a second consecutive accounting term in the fiscal year ended March
31, 2016, Tokuyama undertook a comprehensive review of its Medium-Term Management Plan 2017
formulated in 2015. In order to rebuild the Company and ensure its ongoing growth, steps have beentaken to put in place a new Medium-Term Management Plan with the emphasis on laying the foundationnecessary to revitalize the Tokuyama Group.
Going forward, Tokuyama is committed to carrying out the following two priority management strategies
by fiscal 2025, 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
In order to reinforce the Company’s net assets that were damaged by its polycrystalline silicon business,
Tokuyama placed the utmost priority on rebuilding its financial platform. Buoyed by concerted efforts tocarry out a raft of management reforms, including steps to strengthen business profitability and generate
profits at Tokuyama Malaysia, the Company achieved a modicum of success. In addition to growth inboth sales and operating income, Tokuyama was able to lift the operating rates of polycrystalline silicon
manufacturing facilities at Tokuyama Malaysia. Following a review of the business plan for Tokuyama
Malaysia, however, Tokuyama recorded an impairment loss. This in turn had a severe negative impact on
the Company’s net assets. Tokuyama recognizes that this substantial downturn in its net assets is the direct
result of a variety of factors. On top of the massive loss in the Group’s overseas business, deterioration in
the Company’s financial position is largely due to delays in new products development, low levels ofinvestment efficiency, and weakening corporate governance. Taking these factors into consideration,
Tokuyama is cognizant of the vital need to overcome these issues and to create the necessary driving force
to propel new profit growth. Reflecting on the events and its activities to date, the Tokuyama Group will
steadfastly carry out the following priority measures under its Medium-Term Management Plan.
1. Change its organizational climate
Every effort will be made to drastically reform the Group’s structure and systems in order to nurture avibrant organizational climate in which each and every employee maintains a strong spirit of independence
while carrying out activities with a sense of speed. Among a host of reforms, the Tokuyama Group will
review its personnel evaluation systems, actively promote the exchange of human resources, andvigorously introduce outside 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.
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
The Company will work to restore its shareholders’ equity by steadily building up profits and increasing theefficiency of its capital. In addition, Tokuyama will issue preferred stock to ensure that the Group is well
positioned to flexibly pursue opportunities including M&As that are designed to accelerate the pace ofgrowth while quickly stabilizing the Company’s financial position.

123. Consolidated Financial Statements(1) Consolidated Balance Sheets
Millions of yen
3/31/2015
3/31/2016
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Lease receivables
Securities
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

61,364
69,37130
55,053
15,456
11,60618,026
4,772
8,396
(103)
243,975

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

137,347(74,090)
63,257546,388(401,461)
144,927
23,261(20,974)
2,286
33,149
2,135
(936)
1,199
8,511
253,331101,982(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

5,097
44
4,641
9,784

3,738
41
2,613
6,393

31,062
3,248
669
8,765
4,015
(22)
(303)
47,436
310,552
554,527

15,765
3,094
610
8,057
4,190
(22)
(278)
31,417
157,575
401,342Millions of yen
3/31/2015
3/31/2016
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Commercial papers
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 compensation for damage
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

40,567
12,212
3,000
25,110
5,000
340
1,318
－
1,911
1,284
132
50
3,183
23,186117,298

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

45,000191,552
981
6,409
226
3,458
574
91
6,250
1,162
5
12,071
267,783
385,082

34,400172,877
931
457
231
3,691
384
85
2,716
1,354
6
10,799227,935
341,136

53,45857,67039,286(1,434)
148,981

53,45857,532(61,281)(1,439)48,270

5,829
330
4,196
3,239
13,596
6,868
169,445554,527(1,020)
(526)
2,362
2,386
3,202
8,732
60,205
401,342(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 income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Cost of idle operations
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on bargain purchase
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
State subsidy
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
Loss on sales of shares of subsidiaries and associates
Provision for loss on purchase contract
Loss on purchase contract
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
FY2014FY2015302,085
307,115
218,917220,638
83,16786,47636,566
27,07063,636
19,53038,09925,30563,40523,071

110
629
684
－
1,465
2,889

121
443
668
542
1,576
3,353

4,756
825
3,917
9,499
12,920

4,668
1,134
2,896
8,699
17,72573
510,44220
24－
10,56614,144
－
6,190
－
50
1,092
21,477

876,010
383
27
420
8
9,433
1,489
692
88,473(64,986)
3,747(3,405)341(65,327)
21(65,349)130
124,706
5
108
486
－
－
－
264
125,702(86,500)
14,408(1,387)
13,020(99,520)
1,043(100,563)

(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
FY2014FY2015(65,327)(99,520)(2,535)
(419)
1,299
2,257
189
791
(64,536)(6,851)(901)(1,758)(861)(150)(10,522)(110,043)(64,564)28(110,957)
913

(4) Consolidated Statements of Cash Flows

Millions of yen
FY2014FY2015

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
Increase (decrease) in net defined benefit asset
Interest and dividend income
Foreign exchange losses (gains)
Gain on bargain purchase
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
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
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
Payments for sales of shares of subsidiaries resulting in change in scope of
consolidation
Additional purchase of investments in consolidated subsidiaries
Payments of long-term loans receivableCollection of long-term loans receivable
Proceeds from subsidy income
Payments for transfer of business
Other, net
Net cash provided by (used in) investing activities

17(64,986)
18,845
(268)
9,433
450
79
442
(739)
1,070
(5)
(64)
(10,442)
(12)
(684)
(24)
4,756
27
76,010420(2,520)
1,136
681
1,443
808
2,689
38,546
1,189(4,732)(4,232)
30,772(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)30,098(34)429(32,470)
109(7,967)
16,746(84)
34(14,334)
17,841(12)
10,932

(633)

－

(23)
(20)
244
2,659
(3,750)(810)(25,519)

－
(40)
239
50
(37)
(1,187)
13,400Millions of yen
FY2014FY2015
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
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

18(5)(1,000)84,311(41,286)－－(1,043)
(437)
(75)
40
40,502392
46,147
69,973(2,648)(3,000)
4,631(31,175)(5,600)
(25)
(1)
(386)
(6)
523
(37,689)
(792)
5,016
116,122

10

27

(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 2014 (April 1, 2014 – March 31, 2015)(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

91,122805
91,927
5,056
55,78543,787
11,66355,4504,122
194,868

81,100118
81,2194,446
60,770

2,706
2,054

4,314
17,456

2,841
3,734

CementAdjustment*2

Figures in
consolidated
financialstatements*3

302,085
36,438338,523
24,808391,037(36,438)(36,438)(5,278)
163,490

302,085
302,085
19,530554,527

13,65026,023

5,194
239

18,84526,262Others*1

Total

56,683
1,774
58,457
5,159
51,35229,391
22,076
51,4686,023
28,260

2,341
1,693

1,447
1,085

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 (¥190,190 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 2015 (April 1, 2015 – March 31, 2016)(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

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 (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 (¥174,924 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