NOTICE: For the convenience of capital market participants, NIPPON PAINT HOLDINGS CO., LTD. makes efforts toprovide English translations of the information disclosed in Japanese, provided that the original Japanese version prevails
over its English translation version in the case of any discrepancy found between the original and translation.

Consolidated Financial Results
for the Fiscal Year Ended December 31, 2017
[Japanese GAAP]
February 14, 2018
Company name: NIPPON PAINT HOLDINGS CO., LTD.
Stock exchange listing: Tokyo Stock Exchange
Code number: 4612
URL: http://www.nipponpaint-holdings.com/
Representative: Tetsushi Tado, Representative Director and President
Contact: Yukiko Mochida, General Manager of Corporate Communication
Phone: +81-6-6455-9140
Scheduled date of annual general meeting of shareholders: March 28, 2018
Scheduled date of commencing dividend payments: March 29, 2018
Scheduled date of filing the securities report: March 29, 2018
Availability of supplementary briefing material on consolidated financial results: Yes
Schedule of consolidated financial results briefing session: Yes(Amounts of less than one million yen are rounded down.)
1. Consolidated Financial Results for the Fiscal Year Ended December 31, 2017 (January 1, 2017 to
December 31, 2017)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Fiscal year ended
Million yen%
Million yen%
Million yen%
Million yen%
December 31, 2017605,252
74,957
76,82037,123
December 31, 2016
470,161
72,48977,14334,788
Note: Comprehensive income: Fiscal year ended December 31, 2017: ¥ 66,970 million [ - %]Fiscal year ended December 31, 2016: ¥ 31,517 million [ - %]Basic earnings
per share

Diluted earnings
per share

Rate of return on
equityTotal assets
Ordinary income
ratio

Net sales
Operatingincome ratio

Fiscal year ended
Yen
Yen
%
%
7.6
8.8
December 31, 2017115.76115.74
December 31, 2016
108.48108.477.4
9.5
Reference: Equity in earnings (losses) of affiliates: Fiscal year ended December 31, 2017: ¥1,217 million
Fiscal year ended December 31, 2016: ¥1,315 million

%

12.4
15.4

The Company has changed its fiscal year-end from March 31 to December 31 from the fiscal year ended December
31, 2016. Accordingly, percentage changes from the previous consolidated fiscal year are not presented, since theconsolidation periods for the fiscal year ended December 31, 2017 (January 1, 2017 to December 31, 2017) andfor the previous fiscal year (April 1, 2016 to December 31, 2016) differ from each other.
For the Company and its consolidated subsidiaries with the previous fiscal year-end of March 31, and for its
consolidated subsidiaries with the fiscal year-end of December 31, the consolidation periods were the nine months
starting on April 1, 2016 and ending on December 31, 2016, and the twelve months starting on January 1, 2016
and ending on December 31, 2016, respectively.

((2) Consolidated Financial Position
Total assets

Net assets

Million yen

Net assets per
share

Equity ratio

Million yen%

Yen

As of December 31, 2017
920,591
629,408
As of December 31, 2016
827,996585,757
Reference: Equity: As of December 31, 2017: ¥504,336 million
As of December 31, 2016: ¥473,337 million

54.8
57.2

1,572.60
1,475.93(3) Consolidated Cash Flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at endof period

Million yen

Million yen

Million yen

Million yen

79,265
77,916(100,680)(42,697)(11,434)(8,583)

100,560
134,515

Fiscal year ended
December 31, 2017
December 31, 2016
2. Dividends

Annual dividends

Total
dividends
paid(Total)Dividend
payoutratio(Consolidated)

Dividend/Net
assets(Consolidated)

1stquarter-end

2ndquarter-end

3rdquarter-end

Year-end

Yen

Yen

Yen

Yen

Yen

Million
yen

%

%

-

20.00

-

20.00

40.00

12,828

36.9

2.7

-

20.00

-

22.00

42.00

13,469

36.3

2.8

-

22.00

-

23.00

45.00

Fiscal year ended
December 31, 2016
Fiscal year ended
December 31, 2017
Fiscal year ending
December 31, 2018
(Forecast)

Total

40.7

3. Consolidated Financial Results Forecast for the Fiscal Year Ending December 31, 2018 (January 1, 2018 to
December 31, 2018)(% indicates changes from the previous corresponding period.)
Net salesFirst half
Full year

Operating income

Ordinary income

Profit attributableto owners of parent

Basic earnings
per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

310,000
650,000

6.3
7.4

33,00078,000(7.0)
4.1

35,00082,000(4.3)
6.7

15,00035,000

(2.9)
(4.4)

46.77
110.69

* Notes:(1) Changes in significant subsidiaries during the period under review: No(2) Changes in accounting policies, changes in accounting estimates and restatement
1) Changes in accounting policies due to the revision of accounting standards: No
2) Changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: No4) Restatement: No(3) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):December 31, 2017: 325,402,443 shares
December 31, 2016: 325,402,443 shares2) Total number of treasury shares at the end of the period:
December 31, 2017: 4,700,301 shares
December 31, 2016: 4,698,228 shares
3) Average number of shares during the period:
Fiscal year ended December 31, 2017: 320,702,897 sharesFiscal year ended December 31, 2016: 320,705,193 shares*These consolidated financial results are outside the scope of audit.
*Explanation of the proper use of financial results forecast and other notes(Caution concerning forward-looking statements)
The earnings forecasts and other forward-looking statements herein are based on information currently available to
the Company and certain assumptions that are judged to be reasonable, and the Company does not in any
way guarantee the achievement of the projections. Actual results, etc. may differ greatly from the forecast figuresdepending on various factors. For the assumptions underlying the forecasts and precautions when using theforecasts, please refer to “1. Overview of Financial Results” on page 2 of the Attachment.

Table of Contents
1. Overview of Financial Results. ...................................................................................................................... 2(1) Overview of Financial Results for the Period under Review ..................................................................... 2(2) Overview of Financial Position for the Period under Review.................................................................... 3(3) Overview of Cash Flows for the Period under Review .............................................................................. 4(4) Future Outlook ............................................................................................................................................. 4
2. Management Policy ........................................................................................................................................ 5(1) Basic Corporate Management Policy ......................................................................................................... 5(2) Medium-term Corporate Management Strategy......................................................................................... 5
3. Basic Approach to Selection of Accounting Standards ................................................................................ 6
4. Consolidated Financial Statements and Primary Notes ................................................................................ 7(1) Consolidated Balance Sheets ................................................................................................................... 7(2) Consolidated Statements of Income and Comprehensive Income ........................................................... 9(3) Consolidated Statements of Changes in Equity ..................................................................................... 11(4) Consolidated Statements of Cash Flows ................................................................................................ 13(5) Notes to Consolidated Financial Statements .......................................................................................... 14(Notes on going concern assumption) ................................................................................................. 14(Changes in methods of presentation) ............................................................................................... 14(Business combinations, etc.) ............................................................................................................ 14(Segment information) ...................................................................................................................... 17(Per-share information) ..................................................................................................................... 19(Significant subsequent events) ......................................................................................................... 20
5. Other ........................................................................................................................................................... 21(1) State of Sales Performance ..................................................................................................................... 21

1

1. Overview of Financial Results(1) Overview of Financial Results for the Period under Review
The period of consolidation for the fiscal year ended December 31, 2017 is the twelve months from January
to December 2017.
NIPPON PAINT HOLDINGS CO., LTD. (the “Company”) has changed its fiscal year-end from March 31
to December 31 from the fiscal year ended December 31, 2016, receiving approval of Partial Amendments of the
Articles of Incorporation at the 191st Annual General Meeting of Shareholders held on June 28, 2016.
As a result, comparisons in each segment are compared with figures calculated with the twelve months fromJanuary to December 2016 as the “corresponding period of the previous year.”During the fiscal year ended December 31, 2017, consolidated net sales of the Company and its groupcompanies (collectively, the “Group”) increased by 17.7% from the corresponding period of the previous year(the “previous year”), to ¥605,252 million. Consolidated operating income decreased by 6.3% from the previous
year, to ¥74,957 million partly due to recording expenses related to the acquisition of stock in DUNN-EDWARDSCORPORATION during the three months ended March 31, 2017, in addition to the effects of an increase in raw
material prices, and consolidated ordinary income decreased by 7.2% from the previous year, to ¥76,820 million.
Profit attributable to owners of parent increased by 3.1% from the previous year, to ¥37,123 million, partly due
to changes in the U.S. tax system.
(Million yen)

For the fiscal year ended
December 31, 2016
(Reference)

For the fiscal year ended
December 31, 2017

Change(%)

Net sales

514,078605,252

17.7

Operating income

80,001

74,957(6.3)

Ordinary income

82,78376,820(7.2)

Profit attributable to owners of parent

36,00637,123

3.1

Results by business segment are as follows.
Japan
In this region, net sales of automotive coatings were higher than the previous year due to factors such asfavorable shipments of premium design and high value-added coatings and efforts to expand sales of coatings forautomotive parts. As for industrial coatings, due to favorable shipments of coatings for construction machineryand farming machinery and coatings for construction materials, net sales were higher than the previous year. As
for trade-use paints, net sales decreased from the previous year due to factors such as sluggish market conditionsin the retail sector, mainly in decorative paints. Regarding other coatings, net sales were higher than the previous
year due to efforts to expand the product lineup and expand market share of marine coatings.
As a result of these factors, consolidated net sales for the Japan segment increased by 2.5% from the previous
year, to ¥175,907 million. Consolidated operating income decreased by 6.2% from the previous year, to ¥43,172
million. ¥12,543 million of dividend income from overseas group companies (¥13,979 million in the previousyear) is included in consolidated operating income. All of this dividend income is eliminated as an internaltransaction under “Inter-segment transaction eliminations and other adjustments.”

2

Asia
In China, a core region, net sales for automotive coatings were higher than the previous year due to factors
such as an increase in the number of automobiles manufactured in addition to advancing the expansion of sales
to Chinese manufacturers. As for trade-use paints, net sales were significantly higher than in the previous year,
owing to factors such as making a Chinese wood coatings manufacturer a subsidiary in January 2017,
implementation of sales promotion campaigns and endeavors to expand recoating services in regions focusing
on interior residential paints, and efforts to expand market share among developers in regions focusing on
decorative paints. In industrial coatings, net sales were higher than the previous year owing primarily to strong
shipments of coatings for construction machinery and construction materials.
In the Asia region excluding China, net sales increased for automotive coatings in India in line with an
expansion in the partnership with BERGER PAINTS INDIA LIMITED. Additionally, net sales of trade-use paints
were strong in Singapore and Vietnam, and net sales of marine coatings in South Korea also grew.
As a result of these factors, consolidated net sales for the Asia segment increased by 16.6% from the previous
year, to ¥347,033 million. Consolidated operating income decreased by 5.8% from the previous year, to ¥40,826
million due to the effects of an increase in raw material prices.
Americas
In this region, net sales for automotive coatings decreased from the previous year, partly due to a decline in
the number of automobiles manufactured in the United States, a core region. In construction paints, consolidated
net sales increased year on year as DUNN-EDWARDS CORPORATION was consolidated in March 2017.
As a result of these factors, consolidated net sales for this geographic region increased by 112.1% from theprevious year, to ¥68,229 million. Consolidated operating income was ¥3,170 million, a decrease of 38.4% fromthe previous year, owing to factors such as the recording of expenses related to the acquisition of stock for the
consolidation of DUNN-EDWARDS CORPORATION during the three months ended March 31, 2017.
Other
In this geographic segment, regarding automotive coatings, production volumes by Japanese and European
manufacturers were strong. Furthermore, consolidated net sales for this geographic segment were ¥14,082 million,
an increase of 12.2% from the previous year due to efforts to expand market share, and consolidated operating
income was ¥248 million, compared to an operating loss of ¥365 million during the previous year.

(2) Overview of Financial Position for the Period under Review
Total assets at the end of the fiscal year under review increased by ¥92.59 billion from the end of the previous
fiscal year to ¥920,591 million. Current assets decreased by ¥11.02 billion, mainly due to an increase in accounts
receivable – trade and inventories, offset by a decrease in cash and deposits and securities. Additionally, noncurrent assets increased by ¥103.61 billion from the end of the previous fiscal year, primarily caused by factors
such as increases in goodwill and non-current assets in line with the acquisition of DUNN-EDWARDSCORPORATION.
Liabilities increased by ¥48.94 billion from the end of the previous year to ¥291,182 million. The increase
was mainly attributable to an increase in loans payable and the recording of deferred tax liabilities in line withthe acquisition of DUNN-EDWARDS CORPORATION.
Net assets increased by ¥43.65 billion from the end of the previous fiscal year to ¥629,408 million. This was
mainly attributable to an increase in retained earnings due to the recording of profit attributable to owners ofparent and an increase in non-controlling interests.
As a result, equity ratio fell from 57.2% at the end of the previous fiscal year to 54.8%.

3

(3) Overview of Cash Flows for the Period under Review
Business operations for the fiscal year ended December 31, 2017 resulted in an inflow of ¥79,265 million,
investing activities resulted in an outflow of ¥100,680 million, and financing activities resulted in an outflow of¥11,434 million, resulting in cash and cash equivalents (hereinafter “cash”) of ¥100,560 million, a decrease of¥33.96 billion compared to the end of the previous consolidated fiscal year.
(Cash flows from operating activities)
Net cash provided by operating activities was ¥79,265 million. Primary factors include a decrease in
cash of ¥12,954 million due to an increase in operating capital and income taxes paid of ¥20,046, despite acash inflow (excluding increases and decreases in operating capital) of ¥112,267 million, reflecting mainly
non-cash expenses such as depreciation and amortization on profit before income taxes.
(Cash flows from investing activities)
Net cash used in investing activities was ¥100,680 million. This was mainly attributable to an outflow of¥111,727 million due partly to the purchase of property, plant and equipment and investment securities, and theacquisition of DUNN-EDWARDS CORPORATION, despite the inflow of ¥13,089 million due to a decrease in
securities.
(Cash flows from financing activities)
Net cash used in financing activities was ¥11,434 million. Primary factors include an inflow of ¥18,677
million due to an increase in loans payable such as funds procured for the acquisition of DUNN-EDWARDSCORPORATION and cash dividends paid of ¥27,008 million.

(4) Future Outlook
For the next period (period ending December 31, 2018), the domestic economy is forecast to be robust, led
by domestic demand. Under such circumstances, the Company will strive to expand its market share in eachbusiness sector, including automotive coatings, trade-use paints, industrial coatings, and marine coatings, andsecure its presence in crucial markets. Additionally, we will work to ensure profits through cost reductions andcost control, including selling, general and administrative expenses, in the midst of severe market conditions for
raw material prices, such as domestic naphtha and titanium oxide.
The business climate in Asia is forecast to remain robust overall. We will further increase added-value for
products and services throughout Asia by engaging in business operation as a unified group with the NIPSEAGroup (*), a joint venture in the region. Specifically, in the interior residential paint field in which we hold the
top domestic market share in China, our core region, and which accounts for the majority of sales in our China
business, we aim to further expand our market share by creating and rousing demand taking advantage of ourhigh brand strength and a nationwide sales network. Similarly, in other countries in Asia, we are promoting thecreation and rousing of demand for trade-use paints, automotive coatings and other products to raise our market
presence. Meanwhile, market conditions for raw material prices are forecast to remain severe in the next period,
and we will continue to reduce costs and control selling, general and administrative expenses in order to ensureprofits.
In the Americas, we will endeavor to expand market share for automotive coatings amid predictions forsteady growth in the number of automobiles manufactured in the region, including Mexico. Furthermore, theCompany will continue to expand the construction paints business and broaden the business portfolio throughthe platform of DUNNS-EDWARDS CORPORATION, a USA-based construction paints manufacturer that
became a wholly-owned subsidiary in March 2017.
In other regions, we will strive to expand market share for automotive coatings and improve profitability
amid forecasts for an increase in the number of automobiles manufactured in Europe.
4As a result of the above factors, our outlook for next fiscal year’s consolidated business performance is¥650.0 billion in net sales, ¥78.0 billion in operating income, ¥82.0 billion in ordinary income, and ¥35.5 billion
in profit attributable to owners of parent.
Additionally, based on these financial results forecasts, we plan a record-high full-year dividend of ¥45.0
for the next fiscal year.
(*) Asian joint venture together with WUTHELAM HOLDINGS LTD., a collaborative partner based in
Singapore

2. Management Policy(1) Basic Corporate Management Policy
The Company has established “N-20” as the medium-term management plan (medium-term plan) from 2018
to 2020 and is positioning it as three years of growth acceleration.
With the commencement of this medium-term plan, we established a new management philosophy. The
existing management philosophy was originally formulated in 1919 but today, almost 100 years later, ourcustomers and business partners, as well as our group companies and employees, are located mainly in Asia andother areas throughout the world. The new management philosophy, which will resonate with these stakeholders
across the world and carry on our DNA, is as follows.
[Mission(*)]
Enhance our strengths in paint and coatings technology to provide the world with color, warmth, and peace ofmind.
[Vision(*)]
Continue to create new value through outstanding paint and specialty chemical products and services and be anindustry leader, founded on a dynamic corporate culture and the efforts of passionate and committed professionals.
(*)Tentative Translation(2) Medium-term Corporate Management Strategy
Under this new management philosophy, the Group has its sights set on the future and has determined thatby 2030 we want to be a retailing company that continues to create new value (Global Paint Major). We havefurther determined that during the period of medium-term management until 2020, we should be a company witha corporate position that can take on the global market leaders as we work toward achieving this goal.
Specifically, we aim to: achieve net sales of ¥750,000 million in 2020 by “conquering” every business sector and region;
 ensure every employee takes up challenges and makes a contribution in their respective places ofwork to enable the company to transition to an entity that can take on the world.
Additionally, by undertaking ESG management, we aim to become a leading company that continues tocreate new value for all our stakeholders.
During the new medium-term management period, we will work on various measures such as “thoroughly
strengthening existing segments,” “accelerating the expansion of our portfolio,” “improving profitability,” and“strengthening management by one global team.” In addition, we will take up the challenge of changing thecorporate culture by pursuing the establishment of a global human resource system and reforming work style.
We established a corporate reforming steering committee as a company-wide project to promote this, and further
established working groups under the umbrella of the steering committee to work on issues such as the“penetration of management philosophy,” “promotion of CSR/ESG management,” and “work style reforms andimprovement of labor productivity.”
By promoting these initiatives, we will deepen our collaboration with our shareholders, customers, business
partners, local communities, and our group employees, and will continue to focus our efforts on improving thecorporate culture of the Group.

3. Basic Approach to Selection of Accounting Standards
5In order to increase international comparability of financial statements, increase quality and efficiency ofgroup management, and strengthen governance, preparations are being made with the goal of adopting IFRS
(International Financial Regulation Standards) by the time of the fiscal year 2018 annual securities report.

6

4. Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheets(Million yen)
As of December 31, 2016
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary claims - operating
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
Trademark right
Other
Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

7

As of December 31, 2017

136,778
135,139
13,71350,78731,041
3,639
20,912
7,553
17,052(3,698)412,920

103,007
153,922
15,40237,47738,198
4,032
26,174
7,278
20,800(4,394)401,900

106,220(62,527)
43,692
95,032(70,368)
24,66425,513(21,522)
3,991
20,500
2,150
(977)
1,173
13,646
107,669

123,589(59,559)
64,029106,609(74,563)
32,04525,398(20,139)
5,259
28,3642,681(1,153)
1,528
11,652
142,880

166,362
44,27947,055
257,696

197,051
61,87054,295313,216

45,418
1,210
154
3,096
(170)
49,709415,076
827,996

57,619
1,143
77
3,834
(82)
62,593
518,690920,591(Million yen)
As of December 31, 2016
Liabilities
Current liabilities
Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for product compensation
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Provision for directors’ retirement benefits
Provision for environmental measures
Net defined benefit liability
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
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

8

As of December 31, 2017

70,732
21,51229,548947
7,866
57,325
187,932

79,94022,38018,274
7,080
6,046
2,340
63,150199,2123,457
883
23,270142294
19,124
7,133
54,306242,238

31,741846
33,337191264
17,398
8,190
91,970291,182

78,86263,451
361,074(6,444)496,944

78,862
63,262
385,369(6,454)
521,040

10,120(28,512)(5,214)(23,606)85
112,334
585,757
827,996

12,068(25,387)(3,384)(16,703)
136
124,934
629,408
920,591

(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodGain on investment of securities
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Purchasing-related expense
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of shares of subsidiaries and associates
Other
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Product compensation expenses
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

For the fiscal year ended
December 31, 2016
470,161
265,286
204,875
132,385
72,489For the fiscal year ended
December 31, 2017605,252
360,055
245,196
170,239
74,957

1,061
773

1,147
965

1,315

1,217

839
1,123
1,997
7,111

1,424
983
1,262
7,000

495
656
1,305
2,457
77,143

1,081
1,381
750
1,923
5,137
76,820

144
59
204

223
899
4
1,127

325
22
348
76,99921,041(533)
20,50856,491
21,702
34,788

728
2,340
106
3,175
74,771
22,210(4,757)
17,45257,31820,19537,1239

Consolidated Statements of Comprehensive Income(Million yen)

ProfitOther 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 method
Total other comprehensive income *Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

For the fiscal year ended
December 31, 2016
56,491For the fiscal year ended
December 31, 201757,3183,149
1(25,407)(2,251)

2,024
5,140
1,843

(464)

644

(24,973)
31,517

9,652
66,970

16,63444,031

14,88322,93910

(3) Consolidated Statements of Changes in Equity
For the Fiscal Year Ended December 31, 2016 (From April 1, 2016 to December 31, 2016)(Million Yen)
Shareholder’s equity
Capitalstock
Balance at beginning ofcurrent period
Changes of items during
periodCapitalsurplus78,862Retainedearnings

63,451Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTreasuryshares(6,439)339,113

Total
shareholders’equity474,989(12,828)(12,828)

34,78834,788
(5)

(5)

－

－

21,960(5)

21,95578,86263,451

361,074(6,444)496,944

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Changes of items during
periodValuationdifference on Deferred gains
availableor losses on
for-salehedgessecurities

Foreigncurrencytranslation
adjustment(0)(9,533)

7,078

Total
Subscription
Remeasureaccumulated
rights toments ofothersharesdefinedcomprehensive
benefit plansincome(3,000)(5,455)39

Noncontrollinginterests

Total net
assets98,176

567,748(12,828)

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period34,788
(5)
3,042

0

(18,979)(2,214)(18,150)45

14,158(3,946)3,042

0(18,979)(2,214)(18,150)45

14,15818,008

10,120－(28,512)(5,214)(23,606)85

112,334

585,757

11

For the Fiscal Year ended December 31, 2017 (From January 1, 2017 to December 31, 2017)(Million Yen)
Shareholder’s equity
Capitalstock
Balance at beginning ofcurrent period
Changes of items during
periodCapitalsurplus78,862Retainedearnings

63,451Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTotal
shareholders’equityTreasuryshares(6,444)

361,074

496,944(12,828)(12,828)

37,12337,123

0

(10)

(10)

0

1

(190)

(190)

－

(189)

24,295(9)

24,09578,862

63,262

385,369(6,454)

521,040

Accumulated other comprehensive income

Balance at beginning ofcurrent period
Changes of items during
periodValuationdifference on Deferred gains
availableor losses on
for-salehedgessecurities

Foreigncurrencytranslation
adjustment－(28,512)

10,120

Total
Subscription
Remeasureaccumulated
rights toments ofothersharesdefinedcomprehensive
benefit plansincome(5,214)(23,606)85

Noncontrollinginterests

Total
net assets

112,334

585,757(12,828)

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period37,123
(10)
1
1,948

－

3,125

1,829

6,903

51

12,59919,364

1,948

－

3,125

1,829

6,903

51

12,59943,65012,068－(25,387)(3,384)(16,703)

136

124,934

629,40812

(4) Consolidated Statements of Cash Flows(Million yen)
For the fiscal year ended
December 31, 2016
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Interest and dividend income
Interest expenses
Share of (profit) loss of entities accounted for using equity
methodLoss (gain) on sales and retirement of property, plant andequipment
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in net defined benefit liability
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
Cash flows from investing activities
Net decrease (increase) in short-term investment securities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Payments for transfer of business
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments of lease obligations
Cash dividends paid
Dividends paid to non-controlling interests
Redemption of bonds
Proceeds from share issuance to non-controllingshareholders
Other
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
Cash and cash equivalents at end of period

13

For the fiscal year ended
December 31, 201776,99913,545
9,347(1,835)495

74,771
17,831
11,616(2,112)
1,081(1,315)(1,217)181505(14,073)(4,967)
12,018(469)
8,933
98,8582,456(395)(27,609)
4,605
77,916(13,655)(4,850)
5,551
471
7,395
97,3883,017(1,094)(24,168)
4,122
79,265(21,653)(15,623)562(772)(3,096)

13,089(20,727)
1,484(8,394)--(82,606)(2,113)(42,697)(3,526)(100,680)

11,649
2,993
(888)
(365)
(12,828)(10,844)-(12,917)35,360(3,764)(567)(12,828)(14,180)(2,558)

1,670

-

30
(8,583)(391)
26,243
108,271
134,515

22(11,434)(1,106)(33,955)
134,515
100,560

(5) Notes to Consolidated Financial Statements(Notes on going concern assumption)
There is no relevant information.
(Changes in methods of presentation)(Consolidated Statements of Income)“Compensation expenses,” which was separately presented in “non-operating expenses” during the previous
fiscal year, is no longer significant in value, and is included in “other” from the fiscal year ended December 31,
2017. To reflect this change, the consolidated financial statements for the previous fiscal year have beenrearranged.
As a result, “Compensation expenses” of ¥318 million and “other” of ¥986 million, which were presented
in “non-operating expenses” on the consolidated statements of income during the previous fiscal year, have beenrearranged to “other” of ¥1,305 million.
“Gain on sales of investment securities,” which was separately presented in “extraordinary income” during
the previous fiscal year, is no longer significant in value, and is included in “other” from the fiscal year ended
December 31, 2017. To reflect this change, the consolidated financial statements for the previous fiscal year havebeen rearranged.
As a result, “Gain on sales of investment securities” of ¥59 million, which was presented in “extraordinary
income” on the consolidated statements of income during the previous fiscal year, has been rearranged to “other”
of ¥59 million.
(Consolidated Statements of Cash Flows)“Proceeds from sales of investment securities,” which was separately presented in “cash flows frominvesting activities” during the previous fiscal year, is no longer significant in value, and is included in “other”
from the fiscal year ended December 31, 2017. To reflect this change, the consolidated financial statements forthe previous fiscal year have been rearranged.
As a result, “proceeds from sales of investment securities” of ¥134 million and “other” of ¥(2,247) million,
which were presented in “cash flows from investing activities” on the consolidated statements of cash flows
during the previous fiscal year, have been rearranged to “other” of ¥(2,113) million.
“Purchase of treasury shares,” which was separately presented in “cash flows from financing activities”
during the previous fiscal year, is no longer significant in value, and is included in “other” from the fiscal year
ended December 31, 2017. To reflect this change, the consolidated financial statements for the previous fiscal
year have been rearranged.
As a result, “purchase of treasury shares” of ¥(5) million and “other” of ¥35 million, which were presented
in “cash flows from financing activities” on the consolidated statements of cash flows during the previous fiscal
year, have been rearranged to “other” of ¥30 million.
(Business combinations, etc.)(Business combination due to acquisition)
As of March 1, 2017, the Company made DE PARENT CORP. and a business company under its control,
DUNN-EDWARDS CORPORATION, wholly-owned subsidiaries by acquiring all shares in DE PARENT CORP.
through the method of merging a special purchase company established by NIPPON PAINT (USA) INC., a USAbased consolidated subsidiary of the Company, with DE PARENT CORP. and by DUNN-EDWARDSCORPORATION absorbing DE PARENT CORP. to remain as the surviving company.

14

(1) Outline of business combination(a) Name and main line of business of the acquired company
DE PARENT CORP.
Name
Main line ofbusiness

Voting rights

DE DE PARENT CORP.
Ma Management of subsidiaries and related business
Percentage of voting rights held before the businesscombination
Percentage of voting rights acquired on the day of thebusiness combination
Percentage of voting rights after the businesscombination

0%
100%
100%

* The above mentioned DE PARENT CORP. has the following subsidiary.
DUNN-EDWARDS CORPORATION
Name
Main line ofbusiness

Voting rights

DUNN-EDWARDS CORPORATION
Manufacture and distribution of paint for architecture and industry
Percentage of voting rights held before the businesscombination
Percentage of voting rights acquired on the day of thebusiness combination
Percentage of voting rights after the businesscombination

0%
100%
100%

* DUNN-EDWARDS CORPORATION became a subsidiary of the Company in accordancewith the acquisition of shares of DE PARENT CORP. Mentioned above.
(b) Main reasons for the business combination
As a result of the transaction, the Company will have established a platform to significantly develop its
architectural paint business in the United States, where it has previously focused on the automotive coatingsbusiness; and with the addition of DUNN-EDWARDS CORPORATION’s retail network, the Company will beable to further expand and augment its existing business in the United States. The Company strongly believes
that the transaction will contribute to accomplishing its goal to become a “Global Paint Major.”(c) Date of the business combination
March 1, 2017(d) Legal form of the business combination
Acquisition of shares for cash consideration(e) Name of company after the business combination
DUNN-EDWARDS CORPORATION(f) Percentage of acquired voting rights
Refer to the above (a) Name and main line of business of the acquired company.
(g) Main reason for deciding on the acquired company
NIPPON PAINT (USA) INC., a consolidated subsidiary of the Company, acquired all shares of DE PARENT
CORP. for cash consideration.

(2) Period of financial results of the acquired company included in the consolidated financial statements
From March 1, 2017 to December 31, 201715

(3) Cost of acquisition of the acquired company and breakdown of the type of consideration
Consideration for acquisition

Cash

US$624 million

Acquisition cost

US$624 million(4) Description and amount of major acquisition-related expenses
Remuneration and commissions, etc. for advisory¥1,717 million(5) Amount of goodwill incurred, cause of occurrence, and method and period of amortization(a) Amount of goodwill incurred
US$306 million (¥34,665 million)(b) Cause of occurrence
Mainly excess profitability anticipated as a result of future business expansion(c) Method and period of amortization
Straight-line method over 20 years(6) Amount and main breakdown of assets and liabilities assumed on the date of the business combination
Current assets
Non-current assets
Total assets¥10,286 million¥50,430 million¥60,716 million

Current liabilities
Non-current liabilities
Total liabilities¥ 5,494 million¥19,241 million¥24,736 million(7) Amounts allocated as intangible assets other than goodwill, breakdown by main type, and overall and main typeof weighted average amortization period
Breakdown by type
Trademark right
Customer-related assets
OthersTotal intangible assets

Amount¥19,416 million¥5,390 million¥505 million¥25,312 million

Amortization period
Not amortized
25 years
5-10 years(8) Estimated impact on the consolidated statements of income for the fiscal year under review and the method of
calculation assuming the business combination was completed at the beginning of the consolidated fiscal year
under review
Net sales
Operating income
Ordinary income
Profit before income taxes
Profit attributable to owners of parent
Basic earnings per share¥42,979 million¥(1,613) million¥(1,541) million¥(1,560) million¥3,334 million¥10.4016

(Method of calculating estimated impact)
Based on net sales and profit and loss information in the consolidated statements of income from thecommencement of the consolidated fiscal year for the acquired company to the date of the business combination
assuming that the business combination was completed at the commencement of the consolidated fiscal year, theamount of amortization of goodwill and other intangible assets is the amount estimated as the impact of the
goodwill, etc. recognized at the time of the business combination occurring at the commencement of the fiscal
year under review. This note has not received audit certification.

(Segment information)
1. Summary of reportable segments
The reportable segments of the Company categorize the business composition of the Company for which
separate financial information is available and are subject to periodical evaluation by the Board of Directors inorder to make decisions regarding management resource allocation and performance assessment.
The Group’s primary business is the manufacture and sale of paint for automotive, general, industrial, andother uses, and fine chemicals. The Company and separate local companies are responsible for domestic activities,
and overseas, separate local companies are responsible for the Asia, Americas and other regions.
Each company is an individual management unit, and concerning which items to carry, comprehensive
strategic proposals are made for each region to foster business growth.
As a result, the Group consists of segments divided by region with manufacture and sales structure as a base,and the three reportable segments are “Japan,” “Asia,” and “Americas.”2. Calculation methods for net sales, profit and loss, assets, liabilities, and other items by reportable segment
Accounting treatment methods for reportable segments comply with the accounting principles andprocedures adopted for preparing consolidated financial statements.
Profits for reportable segments are figures based on operating profit. Inter-segment net sales or transfers are
based on actual market prices.
3. Information on net sales, income (loss), assets, liabilities, and other figures by reportable segment
Previous fiscal year (April 1, 2016 – December 31, 2016)(Million yen)

Reportable segment
Japan

Asia

Americas

Subtotal

Other(Note)Net sales to outside customers

127,920

297,517

32,169457,606

12,554

470,161Inter-segment net sales or transfers

17,745

3,362

191

21,298896

22,195

Total

145,665

300,879

32,360478,905

13,451

492,356

Segment income (loss)

26,57943,304

5,147

75,032(365)

74,666

Segment assets

506,152

528,391

32,900 1,067,444

Total

Net sales

10,745 1,078,189

Other items
Depreciation
2,206
10,235987
13,430115
13,545
Increase in property, plant, and
4,541
13,373
2,562
20,478540
21,019equipment and intangible assets
Note: “Other” represents business segments that are not included in the reportable segments, and contains
business activities by overseas subsidiaries in Europe, etc.
Fiscal year ended December 31, 2017 (January 1, 2017 – December 31, 2017)(Million yen)17

Reportable segment
Japan

Asia

Americas

Subtotal

Other(Note)Total

Net sales to outside customers

175,907347,033

68,229591,170

14,082605,252

Inter-segment net sales or transfers

33,6174,665

162

38,446934

39,381

Total

209,525

351,699

68,392

629,616

15,016644,633

Segment income

43,17240,826

3,170

87,169248

87,417

Segment assets

588,591

537,363

123,222

1,249,177

Net sales

15,285 1,264,462

Other items
Depreciation
3,379
11,634
2,618
17,632
198
17,831
Increase in property, plant, and
6,469
22,19453,46882,131
872
83,004equipment and intangible assets
Note 1: “Other” represents business segments that are not included in the reportable segments, and contains
business activities by overseas subsidiaries in Europe, etc.
Note 2: The increases in “segment assets” and “increase in property, plant, and equipment and intangible assets”
in the “Americas” segment are primarily due to the consolidation of DUNN-EDWARDSCORPORATION.
4. Difference between total amount for reportable segment and the amount recorded in the consolidated financial
statements, and major details of such difference (matters related to adjustments of difference)
Net sales

For the fiscal year ended
December 31, 2016

(Million yen)
For the fiscal year ended
December 31, 2017

Total reportable segment sales

478,905

629,616

Net sales from “Other”

13,451

15,016

Inter-segment transaction eliminations and other(22,195)(39,381)
adjustments
Net sales recorded in the consolidated financial
470,161
605,252
statements
Note: “Inter-segment transaction eliminations and other adjustments” includes inter-segment dividend income.

For the fiscal year ended
December 31, 2016

(Million yen)
For the fiscal year ended
December 31, 2017

Total reportable segment income

75,032

87,169Segment income (loss) from “Other”

(365)

248

IncomeInter-segment transaction eliminations and other(2,176)(12,459)
adjustments
Operating income recorded in the consolidated
72,48974,957
financial statements
Note: “Inter-segment transaction eliminations and other adjustments” includes inter-segment dividend income.

18

(Million yen)Segment assets

As of December 31, 2016 As of December 31, 2017

Total reportable segment assets
Net assets from “Other”
Inter-segment transaction eliminations and otheradjustments
Total company assets (Note)

1,067,444

1,249,177

10,745

15,285(351,667)(420,696)

101,474

76,825

Net assets recorded in the consolidated financial
827,996920,591
statements
Note: Total company assets consist of surplus operating funds (cash and deposits), long-term investment funds(investment securities), and deferred tax assets.
(Million yen)
Other items

Total of reportable
Consolidated financial
Other, net
Adjustment
segments
statements total
Previous
Current
Previous
Current
Previous
Current
Previous
Current
consolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated
fiscal year fiscal year fiscal year fiscal year fiscal year fiscal year fiscal year fiscal year

Depreciation

13,43017,632

115

198

－

－

13,545

17,831

Increase in property, plantand equipment andintangible assets

20,47882,131

540

872

－

－

21,01983,004(Omissions)Regarding notes on lease transactions, transactions with related parties, tax effect accounting, financial
instruments, available-for-sale securities, derivative transactions, retirement benefits, stock options, etc., asset
retirement obligations, and rental and other real estate, these have been omitted as they are not considered to havea high necessity for disclosure.
(Per-share information)
Previous consolidated
Current consolidated
fiscal year
fiscal year
(From April 1, 2016
(From January 1, 2017
To December 31, 2016) To December 31, 2017
¥1,475.93¥1,572.60

Net assets per share
Basic earnings per share¥108.48¥115.76

Diluted earnings per share¥108.47¥115.74(Note) The basis of calculations of basic earnings per share and diluted earnings per share are as below.

19

Previous consolidated
Current consolidated
fiscal year
fiscal year
(From April 1, 2016
(From January 1, 2017
To December 31, 2016) To December 31, 2017
Basic earnings per share
Profit attributable to owners of parent (million yen)Amount not attributable to common shareholders(million yen)
Profit attributable to owners of parent relating tocommon shares (million yen)
Average number of shares during the period(thousands of shares)
Diluted earnings per share
Adjusted profit attributable to owners of parent(million yen)
Increase in the number of shares of common stock(thousands of shares)(Subscription rights to shares included in the above)(thousands of shares)
Descriptions of potential shares that were notincluded in the computation of diluted earnings per
share because of their anti-dilutive effect34,78837,123－－34,78837,123

320,705

320,702

－

－

33

49

(33)

(49)
－

(Significant subsequent events)(Transfer of non-current assets)
The Company completed the transfer of the following non-current assets based on a resolution of the Boardof Directors passed on October 23, 2015 and a sales agreement concluded on October 29, 2015.
1. Transferred asset
Location: 28-6 Ikeda Nakamachi, Neyagawa-shi,Osaka pref,Japan and one other lot
Land: 37,746.47 m2
2. Transferee
Educational foundation: Josho Gakuen
3. Date of transfer
January 31, 2018
4. Reason for transfer
The Group is proceeding with the establishment of a system to achieve sustained improvements incorporate value as we work toward our goal of becoming a Global Paint Major. On this occasion, we
transferred land owned in Neyagawa-shi with the objective of improving the technical capabilities of theGroup as a whole and further strengthening the autonomous business operations of each business firmin the Group.
5. Impact on financial results
In line with the transfer of non-current assets, we plan to record a gain on sales of non-current assetsof ¥2,164 million (estimate) in extraordinary income in the consolidated fiscal year ending December
31, 2018.
20

5. Other(1) State of Sales Performance(Million yen)Previous consolidated
fiscal year
(From April 1, 2016
To December 31, 2016)

Previous consolidated
fiscal year
(From January 1, 2017
To December 31, 2017)

Compared with previous
fiscal year(％)

454,512586,373－

Automotive paint

129,007148,437－

Trade-use paint226,156

308,846－

Industrial paint58,41673,045－

Other paint40,93256,043－

Fine chemical business

15,64918,879－Total

470,161

605,252－

Paint businessNotes: 1. Consumption taxes are not included in these amounts.
2. During the previous fiscal year, the fiscal year-end was changed from March 31 to December 31. As
a result, the period for comparison for the previous fiscal year differs from that of the current fiscal
year, and change from the previous year is not provided.

21