7

AnniversarythBusiness Report 2015
Year ended March 31, 2015

http://www.kureha.co.jp/

The Pursuit of Excellence

Printed in Japan

Profile

7

Investor Information

Anniversary(As of March 31, 2015)th

Major Stockholders

Corporate Data
Corporate Name

Building on Core Strengths

Headquarters

Kureha Corporation

Meiji Yasuda Life Insurance Company

3-3-2, Nihonbashi-Hamacho,

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Chuo-ku, Tokyo 103-8552, JapanThe Master Trust Bank of Japan Ltd. (Trust account)Tel: 81-3-3249-4666
Fax: 81-3-3249-4744
Date of Establishment

June 21, 1944

Paid-in Capital¥12,460 million

Number of Employees

4,123 (As of March 2015)

Independent Auditor

ERNST & YOUNG SHINNIHON LLC

Kureha Corporation

R&D Innovation:

is a manufacturer of highly originative

The Source of Our Competitivenessspecialty chemicals and plastics thatJapan Trustee Services Bank, Ltd. (Trust account)
Mizuho Bank, Ltd.
The Nomura Trust and Banking Co., Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (9 trust accounts)
Mizuho Trust & Banking Co., Ltd.
BBH FOR BBHTSIA NOMURA FUNDS IRELAND PLC/JAPANSTRATEGIC VALUE FUND

Stock Information
Number of Shares ofCommon Stock Issued

Daiichi Sankyo Company, Ltd.

181,683,909 shares

Number of Shareholders 14,814
Number of Shares Heldby Foreign Shareholders 38,561,520 (21.2% of total)
Stock Exchange Listings Tokyo Stock Exchange

leverages proprietary technologies to develop

Transfer Agent

Mizuho Trust & Banking Co., Ltd.

products in advanced materials,
agrochemicals, pharmaceuticals, andpackaging materials. Since its establishment
in 1944, Kureha has utilized its strengths intechnology and innovation to provide a wide
range of solutions suited to the market
needs of each era.
Today, this corporate DNA drives Kureha
to always pursue originality and excellence inharmony with the environment, andconsistently create products that bring value
to customers and society.

We pride ourselves on our expertise in polymer
engineering and processing as well as organic synthesis
and carbon materials development. These technologies
provide the base for the development of our original
innovative materials and products. We are constantly
adding and fusing new ideas to these accumulated
technologies, and in the spirit of “if it doesn’t exist, let’screate it,” each day we pursue technology solutions that
only Kureha can provide to meet unmet needs.

Kureha Corporation
Headquarters
Kureha Corporation Business Report 201555

Contents
At a Glance............................................................................ 4

Directors, Executive Officers andCorporate Auditors ......................................................19

Consolidated Statements of
Changes in Net Assets ...............................................27

Consolidated Financial Highlights....................... 5

Consolidated Five-Year Summary ....................20

Consolidated Statements of Cash Flows ......28

President’s Message........................................................ 6

Management Discussion and Analysis ........21

The Year’s Highlights....................................................... 8

Consolidated Balance Sheets ..............................24

Notes to Consolidated Financial
Statements .........................................................................29

Review of Operations..................................................10

Consolidated Statements of Income .............26

Major Subsidiaries and Affiliates.........................54

Research & Development........................................14

Consolidated Statements ofComprehensive Income ..........................................26

Investor Information ...................................................55

Profile......................................................................................... 1

Responsible Care............................................................16
Corporate Governance .............................................17

The Pursuit of Excellence
Originality and Quality to
Answer Global Needs:

Maximizing Earnings &Diversifying Risks:

The Growth Potential in Global Markets

The Path to Sustainable Growth

Kureha’s overseas sales had reached 31% of total revenue

Our innovative products and services are broadly based

as of March 2015. Along with exports from Japan, we havebut highly specialized, supporting a wide range of

production, processing and sales locations in the United

industries, including electrical and electronic-

States, Germany, the Netherlands, France, the U.K., China

appliances, automotive, agriculture, medicine andand Vietnam, enabling an effective response to needs inenergy. We maximize earnings and diversify risk throughoverseas markets. With continued growth expected inbroad-based business development in promising

newly emerging countries and many other regions, we are

growth fields such as the environment, energy, healthtaking active and strategic steps to expand sales of highly

and lifestyle. We continuously optimize our portfolio tocompetitive products in line with the needs of overseasalign with shifting market needs while securing ourmarkets, whether for advanced materials, chemicals, orearnings path.

plastic products.

Kureha Corporation Business Report 201501

7

AnniversarythCelebrating Our Seventy

A Proud History of Kureha’s Original Technologies
Since its foundation in 1944, Kureha’s growth and development has come exclusively from producing
innovative products developed in-house, rather than using outside technology. As an entrepreneur looking
to the future, we have continually taken on the challenges of developing new technology, and cultivated aculture within the company that promotes the creation of next-generation products.

Milestones & Product Launch

1944 Kureha Chemical Industry Company
is established1960 “Krewrap” household plastic wrap

1977 Anti-cancer agent “Krestin”
1953 Polyvinylidene chloride (PVDC) “Krehalon”
1970 Polyvinylidene fluoride (PVDF) “KF Polymer”
1969 Development of original crude oil cracking technology
Carbon fiber “Kreca”
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Founding of Kureha

Business Expansion Built on
Advanced Application of
Chlorine

1944 Chemical Industry

1950s −
1960s

Kureha Chemical Industry was establishedwhen the Chemicals Division of Kureha
Spinning Company was split off to form an
independent firm. Its main products were
caustic soda and hydrochloric acid, based on
the electrolysis of brine. Kureha also
supported Japan’s post-war agriculture withfertilizer to improve crop yields.

Kureha focused on advanced application ofchlorine, a co-product of the caustic soda
manufacturing process, and began producing
polyvinylidene chloride (PVDC) and polyvinyl
chloride (PVC) resins. In 1960, we launched the firsthome-use food wrapping film using PVDC in Japan.

Company

Strengthening the Structure

1970s of Highly Originative
Specialty Businesses

Kureha’s bold efforts to develop an originaloil cracking process led to a series of newhigh value-added products, including
carbon fiber and activated carbon. We also

02

Kureha Corporation Business Report 2015

successfully entered the pharmaceuticalsector by introducing an anti-cancer
immunologic agent.

Expansion of High

1980s Value-Added Specialty
Businesses

Kureha made proactive capital
investments into high valueadded products, andexpanded the scope ofbusiness operations whileleveraging its proprietary manufacturing
technologies. A new specialty highperformance plastic, polyphenylene sulfide(PPS) resin, was born through this effort.

Years of Innovation(Millions of yen)

160,000

Net Sales
120,000

1987 Polyphenylene sulfide (PPS) “Fortron KPS”

80,0001989 “NEW Krewrap” household plastic wrap
1991 Therapeutic agent for chronic
renal failure “Kremezin” (capsules)

2005 Company name is changed to
Kureha Corporation

40,0002000 “Kremezin” (fine granules)
1993 Agricultural fungicides “Metconazole” and “Ipconazole”
LiB anode materials “Carbotron P”
LiB electrode binder “KF Polymer”

2012 Polyglycolic acid
(PGA) “Kuredux”

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Entry into the Energy and“Selection andSustainable Growth
as a Global Corporation

1990s Environmental Field with

2000s Concentration” and Global

2010 topresent

Kureha’s materials
contributed to thecreation of theworld’s first lithium-ion
battery in 1991.
New fungicide
products were also
launched toenhance agricultural productivity. It is also
when our exploratory research into
environmentally-sound, biodegradable
polymers began.

Kureha withdrew from the commodities
business as part of a global strategy
focusing on specialty products for thegrowth fields of advanced materials,
pharmaceuticals, agrochemicals, andpackaging materials. In 2005, the company
was renamed Kureha Corporation and a
new corporate mission was adopted: “Thepursuit of excellence.”

Kureha is building a business structure inwhich core businesses contribute to earnings
in a constantly growing, balanced manner.
We are drawing on our proprietary
technologies and strengths in innovation toenhance our global competitiveness.

Innovative Technologies

Business Expansion

0

Kureha Corporation Business Report 201503

At a Glance
Net Sales/Net Sales Composition

Advanced Materials¥36,187 million

24.1%

Specialty Chemicals¥35,535 million
FY2014
Net Sales¥150,182 million

23.6%

Specialty Plastics¥46,519 million

31.0%

Construction and Other Operations¥16,721 million ¥15,218 million

11.1%(Construction)04

Kureha Corporation Business Report 2015

10.2%

(Other Operations)Consolidated Financial Highlights
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2015 (FY2014) and 2014 (FY2013)

Business Areas
Thousands of
U.S. dollars

Millions of yen

FY2014

Advanced Plastics
Carbon Fibers & Products
Battery Materials

For the year:
Net sales
Operating income
Net income
Capital expenditure
Depreciation
R&D expenses
Year-end:
Total assets
Net assets
Interest-bearing debt

FY2014FY2013¥150,182
14,551
9,195
17,557
8,261
4,978¥148,124
11,902
7,365
16,468
9,096
4,586$1,249,746
124,090
76,516
146,101
68,744
41,424¥249,697
120,624
86,636¥224,459
106,190
77,225$2,077,864
1,003,777
720,945

Yen

Agrochemicals
Pharmaceuticals
Industrial Chemicals

Amounts per share:
Net income – basic
Net assets

¥

53.53
687.80U.S. dollars

¥

42.87
604.00

$

0.44
5.72

Percent

Ratios:
Net income to net sales
Return on equity
Return on assets
Equity ratio

6.1%
8.3
6.5
47.3

5.0%
7.5
5.7
46.2

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥120.17 to US$1, therate of exchange prevailing on the Tokyo Foreign Exchange Market on March 31, 2015.
2. For amounts per share, see Note 21 of the Notes on Consolidated Financial Statements.
3. Return on equity = [Net income / (Average net assets - Average minority interests - Average stock acquisition rights)]
x 100.
4. Return on assets = (Recurring income / Average total assets) x 100.

Household Products
Packaging Materials
Synthetic Fiber Products

Net Sales

Operating Income

Net Income(Millions of yen)

(Millions of yen)

(Millions of yen) (Left scale)

Net Income per Share(Yen) (Right scale)
160,000

16,000140,000

14,000120,000

12,000100,000

10,000Engineering & Construction

80,0008,000

Environment Management

60,0006,000

Logistics

40,0004,000

20,0002,0000(FY) 2010 2011 2012 2013 2014

0(FY) 2010 2011 2012 2013 2014

10,000

60

8,000

48

6,000

36

4,000

24

2,000

12

0

0

(FY) 2010 2011 2012 2013 2014

Kureha Corporation Business Report 201505

President’s Message

Reforming Kureha through Passion, Speed
and Commitment
Dear Shareholders,●

finally reaping the reward of our long-standing, focused

In FY2014 Kureha continued on its solid growth trend. Despite

investment into this business.

continued challenging market conditions, operating income,recurring income and net income all exceeded their targets,

We returned the Advanced Materials Division to operating profit,●

We are clearly seeing the benefits of our group-wide efforts toreaching the highest levels since we began reporting

pursue cost and productivity improvements. These activities

consolidated results in 1990.

have achieved an accumulated total of ¥1.6 billion in savings●

Consolidated sales increased by 1.4% year-on-year to ¥150.2
billion, while operating income rose 22.3% to ¥14.6 billion.

since FY2013.
Since I became President & CEO in September 2012, I have

Moreover, recurring income grew by 26.4% to ¥15.4 billion, andconsistently worked to reform Kureha and realize its full potential.

net income climbed 24.9% to ¥9.2 billion. We are also delighted to

Not only are we making excellent progress; I also see significant

bring our shareholders a rise in earnings per share to 53.53 yen.

untapped potential for growth and profitability.
At every level of our company, we are continuously working to be
more cost-efficient, make better use of ideas, and add value to our
product offering. This year, we added the word Commitment to thetwo watchwords, Passion and Speed, which guide our drive for change.
This new watchword is about having the mindset to keep challenging
the obstacles that come in our way. If we continue to apply thatmindset, we can achieve a very high level of profitability, even in times
when sales fall below expected levels. I’m proud to report that our drivefor efficiency has contributed to the ¥1.6 billion rise in operating
income seen since FY2013, and that we expect to add another ¥1.2
billion in savings to what we’ve already achieved in FY2015.
That said, we cannot rest on our laurels. At this point, it’s likelythat we will be unable to achieve the FY2015 targets of our
medium-term management plan, Grow Globally II. We can of course
point to external reasons, such as the impact of generic drugs on
the pharmaceutical business; lower-than-expected sales of solar
power equipment; the slow rise of electric vehicles and limited
lithium-ion battery sales; and an unforeseen fall in market prices for
agricultural produce in North America that left farmers less inclined
to buy high-performance but high-price agrichemicals.
However, we must also accept that in some areas, such as solar
power equipment and lithium-ion batteries, we could have moved
faster to revise our strategies. We will implement these lessons fromnow on, and also look more critically at businesses that are not as
profitable as they should be.

06

Kureha Corporation Business Report 2015

We must also become better at leveraging our strengths ininnovation. Going forward, we will continue to develop new,groundbreaking materials with focus on the environment, life
science and energy fields. To build strength in this area, we“The keys to our future lie in improving
our culture, our profitability and ourlevel of globalization”

expanded our Iwaki R&D center in April with a new research facility
dedicated to exploratory research. However, it should be noted thathigh and we are aiming to expand production fivefold from asuch innovation is long-term; it can take up to 20 years to turn ayear-ago level by this fall.

seed planted today into something we can commercialize.
For that reason, we must also bolster our competitiveness by

At the same time, we must also focus on developing our people.
Solid business growth comes from solid business relationships – anstrengthening existing businesses, and think carefully about how toadage that holds particularly true in our globalized era. We see

expand applications for our innovations. We will focus particularly

significant room to expand our current overseas sales ratio of 31%. To

on processing, both to drive down costs and to develop specialized,

truly compete on the global stage and to improve group-wide

high-value-added secondary products that enable high profitability

internal communication, we are since 2014 implementing programs

even at lower sales volumes. In connection, we will also further

to give our employees the skills they need to function internationally,refine our business model for the downstream of the supply chain.

including one-year overseas assignments and setting measurable,

Strengthening Kureha’s processing capabilities will therefore bea cornerstone of our management strategy from 2015 and onwards.

high-bar targets for English skills, especially for our executives.
Furthermore, to communicate more directly with our foreign

We will invest in people and equipment, and explore options forshareholders, we also began last year to hold investor meetings inacquiring companies with processing technologies that we do not

Europe. We are learning much from these direct interactions that

yet have. To accelerate the implementation of this strategy, we have

we can reflect in our operations.

enhanced the R&D structure with a task team specialized in thedevelopment of processing technologies and capabilities.

Having celebrated 70 years of innovation in 2014, we now lookforward to reaching a full century. The keys to our future lie in

Several of our group companies also possess unique andimproving our culture, our profitability and our level of globalization.

compelling technologies, and we intend to make full use of their

I look forward to driving change throughout our organization andcapabilities. Kureha Extech, for instance, has taken the step into

taking our products and people to the next level. Our company willprocessing by manufacturing back sheets for solar modules; Kureha

never cease to evolve.

Gohsen utilizes extensive accumulated know-how to produce

One thing, however, will remain the same: The founding can-do

superior fiber products, including fishing lines; and Kureha Extron

spirit that permeates our company. We have always been, and willproduces molded PGA bars through a unique so-called ‘solid-state

always be, pioneers.

extrusion’ processing technology. These bars form the basic
structures for “frac plugs” used in shale oil and gas extraction.

We thank you for your investment and your confidence in us,
and look forward to your continued support.

These frac plugs, which are made of degradable PGA resin, candrastically lower field operators’ costs since, unlike metal plugs, they
do not need to be salvaged from well bores after use. This alsomeans field operators can extend the depth and horizontal reach of
their drilling, yielding more gas and oil per well bore.
The PGA business, where we no longer sell only resin due tolow market prices, illustrates the wisdom of focusing on
downstream businesses with high margins. Even though theoverall rig count is falling in North America after the decline in

Yutaka Kobayashi

crude oil prices, demand for PGA frac plugs remains extremely

President & Chief Executive Officer
June 3, 2015

Kureha Corporation Business Report 2015

07

The Year’s Highlights

August 2014, United Kingdom:

January 2015, Japan:

Krehalon UK, a Kureha subsidiary for specialty plastics, opened a new
office and factory on a 30,000 sq. ft. site in Kingston-upon-Hull.
Krehalon UK manufactures and sells food packaging bags, processing
raw film purchased from Dutch group company Krehalon Industrie
B.V. The move to Kingston-upon-Hull will shorten the transport routefor the raw film from the Netherlands, while the introduction of thelatest equipment will greatly improve operational efficiency. Krehalon
UK’s sales have doubled in the last five years, and this operational
enhancement will support the growth trajectory and expansion of
the Krehalon food packaging business in Europe.

Production of polyvinylidene chloride (PVDC) at the Iwaki Factory inJapan has been increased by 30,000 tonnes in response to meet
growth in food packaging demand. This expansion raises Kureha’s
total production capacity to 60,000 tonnes annually. PVDC is a
specialty plastic that is stable under high temperatures and has
excellent oxygen and moisture barrier properties. It is used as the raw
material for sausage casing film as well as for the household-use foodplastic wrap NEW Krewrap.

August 2014, Netherlands:

April 2015, Japan:

Deventer-based Krehalon Industrie B.V. added a seventh multilayer
film extrusion machine, enhancing manufacturing capacity by 20%.
The Krehalon brand ML Film is a heat-shrinkable multilayer film that
not only inhibits food oxidation to extend shelf life but also enables
attractive presentation of food contents, and it is one of the strategic
products underpinning Kureha’s global expansion. The new cuttingedge extruder is able to make wider films, broadening our productportfolio in line with market needs. Krehalon Industrie, established in
1973, was Kureha’s first overseas film factory, and is currently thegroup’s largest producer of multilayer films. Kureha will continue tosupply the world with high-quality, highly functional packaging
products from the Netherlands.

A new research facility has been established at Kureha’s main R&D
center in Iwaki. This facility, with 4,349m2 of floor space, is locatednext to the Research Center and houses equipment focused onorganic synthesis and analytical assessment. The new center willconduct technical development to enhance the competitiveness ofexisting businesses, as well as exploratory research to generate new
businesses. Many “communication spaces” have also been createdwithin the facility to enable researchers to freely congregate toexchange ideas and opinions—making it a place to inspire
technological innovation for Kureha’s future.

Krehalon UK Opens New Factory

Packaging Film Capacity Enhanced
at Krehalon Industrie

08

Kureha Corporation Business Report 2015

PVDC Production Doubled in Iwaki
Factory

New R&D Facility Opens in Iwaki

“Smiling Together” — The East Japan Support Project
The Great East Japan Earthquake that struck Japan’s northern Tohoku region in March 2011claimed many lives and devastated the local industry. To aid recovery efforts in the affectedareas, Kureha has since October 2011 donated a portion of the sales of its flagship product,
NEW Krewrap, to support regional activities aimed at restoring agriculture and the revival ofa healthy and enjoyable food life. As of the end of March 2015, we had donated a total of¥104,800,180, exceeding our target of ¥100 million.

Donations from Kureha were used for the following restoration projects:

A project to promote the health of disaster victims throughcooking classes, and to revitalize communication among families
and communities through meals.

Iwate

A project to cultivate rapeseed blossoms to desalinate agricultural land flooded withseawater by the tsunami. The harvested blossoms are used to make cooking or fuel oil,and the seed pomace is used as feed for pig farms.

Miyagi

Fukushima

A project to promote safe agricultural production in Fukushima, the area most strongly affectedby the nuclear plant accident. Activities included guidance on radiation monitoring, along withsupport for measures to reduce radioactive substances in soil and eliminate radioactivity.

Kureha Corporation Business Report 201509

Review of Operations

Advanced Materials
Major Product Areas:

Advanced plastics, carbon materials
Advanced Materials division sales rose 10% year-on-year to ¥36.2 billion. The
division also returned to operating profit, a development driven by acrossthe-board demand growth in the advanced plastics business and a slightdemand recovery in carbon materials for solar applications.

Advanced plastics: Demand growth across all productareas, recovery from loss
Advanced plastics saw increased demand in all of the key product areas including PPS
resin, particularly for use in the automotive sector; PVDF resin for use in lithium-ion
battery binders and for industrial use; and PGA for use in shale oil and gas extraction
applications. As a result, the advanced plastics business was able to recover from theoperating loss recorded in the previous year.

Net Sales (Left scale)Operating Income (Right scale)(Millions of yen)
40,0002,000

35,0001,750

30,0001,500

25,0001,250

20,0001,000

15,000750

10,000

500

5,000

250
0

0
-5,000(FY) 2010

2011

2012

2013 2014

Key products-5,000Carbon materials: Slight recovery in demand in solar
applications
In carbon materials, demand recovered slightly for insulation material used in siliconingot production for solar power applications and there was also an increase in sales ofcarbon fiber. However, due to increased costs related to the production of hard carbon
anode materials used in lithium-ion batteries, the operating loss for this businessremained at the same level as in the previous year.
Outlook: FY2015 division sales are forecast to increase by 20% to ¥43.5 billion, with
operating income making a drastic leap to ¥2.1 billion from ¥0.4 billion in FY2014, anincrease of 378%. A key factor behind this growth will be the continued positive
development of the shale market in the US, where Kureha will work with its partner
Magnum Oil Tools International to refine its business strategy for PGA for use in shale
gas extraction, in turn generating significant increases in sales and profit. Meanwhile,
sales of PPS for use in automotive applications will remain firm. In carbon materials,
Kureha foresees continued profitability improvements for heat insulation materials
used in the manufacturing of solar power equipment, while sales of hard carbon
anode materials used in lithium-ion batteries will remain stable.

Polyglycolic acid (Kuredux) resins areused to make downhole tools in shale
oil and gas extraction• Polyphenylene sulfide (PPS)• Polyvinylidene fluoride (PVDF)• Polyglycolic acid (PGA)• Carbon fibers• Bead-shaped activated carbon• Specialty carbon materials

10

Kureha Corporation Business Report 2015

Automotive parts madeof polyphenylene sulfide(Fortron KPS)

Hard carbon anode materials(CARBOTRON) for lithium-ion
batteries

Specialty Chemicals
Major Product Areas:

Industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals division sales fell slightly by 3% year-on-year to ¥35.5
billion from ¥36.6 billion. However, the division continued to see healthy
profit growth, with operating income rising 8% to ¥7.9 billion primarily due
to one-time income related to a pharmaceutical sales contract.

Pharmaceuticals / agrochemicals: Extraordinary income
balances fall in demand
Demand for the agricultural fungicide Metconazole fell in the North America region,
while government-mandated price revisions and growing use of generic drugs
impacted on sales of Kremezin, a therapeutic agent for chronic renal failure. However,despite a slight sales decrease in this business, one-time income associated with asales contract resulted in an increase in operating income.

Net Sales (Left scale)Operating Income (Right scale)(Millions of yen)
40,00016,00035,00014,00030,00012,00025,00010,00020,0008,000

15,000

6,000

10,000

4,000

5,000
0

(FY) 2010

2,000

2011

2012

2013 20140

Industrial chemicals: Continued sales and income
increases across the board
Increases in sales and operating income were recorded for both organic and inorganic
chemicals.
Outlook: Specialty Chemicals division sales are projected to decrease slightly by 6% in
FY2015 to ¥33.5 billion, while operating income is forecast to fall 46% to ¥4.3 billion.
The main factors behind this downturn are found in the pharmaceuticals business. In
addition to the absence of sales contract one-time income, Kureha also foresees
continued negative influence from generics on the sales of Kremezin. However, inindustrial chemicals, Kureha expects to be able to maintain profitability by responding
flexibly and accurately to raw material price fluctuations and market movements.
Kureha will also be focusing on expanding sales volumes of Metconazole.

Key products• Anti-cancer agent• Therapeutic agent for chronic
renal failure• Agricultural and horticulture
fungicide

Therapeutic agent forchronic renal failure (KREMEZIN)• Caustic soda
• Hydrochloric acid• Sodium hypochlorite• Monochlorobenzene• para-Dichlorobenzene• ortho-Dichlorobenzene

Agricultural and horticulture
fungicide (Metconazole)

Kureha Corporation Business Report 201511

Review of Operations

Specialty Plastics
Major Product Areas:

Food packaging materials, household packaging
products
Specialty Plastics division sales increased by 3% from ¥45.3 billion to ¥46.5
billion, while operating income decreased by 19% to ¥3.7 billion, mainly due
to slower performance in the consumer products business.

Consumer products: NEW Krewrap demand falls backafter pre-tax hike spike
In consumer products, while sales of Seaguar fishing lines increased on steady demand,sales of NEW Krewrap household wrapping film fell compared with the previous period,
when demand rose sharply prior to the consumption tax increase on April 1, 2014. Cost
increases also affected performance, ultimately leading to a decrease in both sales andoperating income for this business.

Net Sales (Left scale)Operating Income (Right scale)(Millions of yen)
50,00010,00045,0009,000

40,0008,000

35,0007,000

30,0006,000

25,0005,000

20,0004,000

15,0003,000

10,000

2,000
1,000

5,000
0

(FY) 2010

2011

2012

2013 2014

0

Food packaging materials: Cost control and packaging
machine sales generate solid performance
Although sales of high-performance heat-shrinkable multilayer film declined, thebusiness as a whole saw increases in both sales and operating income. Key factors
behind this performance include continued cost control and increased sales of
packaging machines.
Outlook: FY2015 division sales are forecast to increase by 1% to ¥47.0 billion, while
operating income is projected to rebound by 26% to ¥4.6 billion. In food packaging
materials, while Kureha forecasts a slight sales decrease with anticipated fewer orders for
packaging machines, the company expects to continue to improve income by
expanding global sales of high-performance heat-shrinkable multilayer films. In
household products, while there will be an increase in depreciation costs related to the
new PVDC plant, Kureha foresees an increase in income due to factors including arebound in sales for NEW Krewrap and continued efforts to promote the product’s added
value to customers.

Key products• Polyvinylidene chloride (PVDC) film
• PVDC compound• Multilayer shrinkable film

Household wrap film (New Krewrap)• Multilayer non-shrinkable film
• Multilayer bottles• Household wrap film
High-barrier food packaging
film (Krehalon)• Plastic containers• PVDF fishing lines• Machinery for auto-seal foodpackaging
Fishing lines (Seaguar)
12

Kureha Corporation Business Report 2015

Construction and Other Operations
Major Product Areas:

Construction, environmental engineering, transport/
warehousing, and trading related businesses
Construction: Performance driven by earthquakerelated reconstruction
Construction businesses saw a substantial increase in operating income due to anincreasing number of earthquake-related reconstruction projects, although thisperformance was partially offset by a decrease in both sales and operating income inthe engineering business. Sales fell slightly by 3% to ¥16.7 billion, and operating
income rose by 30% to ¥1.1 billion

Net Sales (Left scale)Operating Income (Right scale)(Millions of yen)
35,000

Other Operations: Continued demand for industrial
waste disposal
Construction
Other
Operations
7,000

30,0006,000

25,0005,000

20,0004,000

15,0003,000

10,000

2,000

5,000

1,000
0

0
-5,000(FY) 2010

2011

2012

2013 2014

Note: Construction business was separated from otherbusiness segment from fiscal 2011.

Key products and services• Industrial facility design,
construction and management-1,000In the environmental engineering business, while sales decreased, operational
improvements as well as increasing demand for industrial waste treatment resulted in arise in operating income. The transportation/warehousing business saw a fall in bothsales and operating income. As a result, the overall division sales decreased 6% from
¥16.2 billion to ¥15.2 billion, while operating income reached ¥1.8 billion, a 10% increase.
Outlook: FY2015 division sales for Construction business are projected to decline by
10% to ¥15 billion, while operating income is expected to fall by 45% to ¥0.6 billion. In
addition to a decline in post-earthquake reconstruction demand, higher labor andmaterial costs will negatively impact operating income.
Division sales for Other Operations are estimated to increase by 5% to ¥16 billion,
however operating income is projected to decrease by 22% to ¥1.4 billion due largely
to increased facility renovation costs. Kureha continues to focus on enhancing
profitability in industrial waste disposal businesses, including micro-PCB(polychlorinated biphenyls) treatment work.

Public housing for earthquake victims
in Iwaki City

• Civil engineering andconstruction• Environmental engineering andindustrial waste treatment• Environmental andphysiochemical testing andanalysis• Transport and warehousing

Industrial waste treatment facility

Kureha Corporation Business Report 201513

Research & Development

Ever since our company’s founding, Kureha’s growth has rested ontechnological capabilities built through creativity and passion. Our goal
is to utilize these strengths to steadily generate solutions that will help toenrich people’s lives and conserve the global environment.
Kureha’s founding technologies have all been developed and refinedin Japan, from where they are brought to the world. Our current R&D

Research Center

structure comprises four research hubs: The Research Center, which
conducts basic research and improvements at existing businesses; theAgrochemical Research Laboratories; the Advanced Materials ResearchLaboratories; and the Emerging Research Laboratories, which conducts
exploratory research for next-generation products.
Our products are constantly evolving to ensure that they meet shifting
market needs and wants. Here, Kureha’s R&D program has a key role toplay as we strive to meet the anticipated needs of tomorrow through new
businesses and products based on the further evolution and fusion of our
proprietary technologies.

14

Kureha Corporation Business Report 2015

Advanced Materials ResearchLaboratories

In the fiscal year ended March 2015, Kureha’sSpecialty Chemicals Division

R&D spending amounted to ¥4,978 million. An

In agrochemicals, Kureha is working to expand markets, both inoverview of spending is as follows.

Japan and overseas, for the agricultural fungicide Metconazole andthe seed treatment fungicide Ipconazole. To meet robust demand for

Advanced Materials Division

Metconazole, we are working to enhance productivity, and are

In advanced plastics, for Fortron KPS (PPS), which is widely used inproviding support for the expansion of production facilities.

automobiles and electronic devices, Kureha is developing new grades

In pharmaceuticals, we are providing supporting research atof the material and exploring ways to further raise productivity. For KF

Adsorptive Medicine Technology Center incorporated into thePolymer (PVDF), we are developing and improving the backsheets used

Pharmaceuticals Division to enhance the earnings of Kremezin.

for solar panels.

R&D spending in this division amounted to ¥1,947 million.

For Kuredux (PGA), Kureha is proactively working to develop new
applications. We are making steady progress in the development ofSpecialty Plastics Divisionapplications for shale gas oil drilling and extraction, utilizing PGA’s

For Krehalon (PVDC), Kureha is pursuing technology development tostrength and degradability. We are also conducting technicalensure stable supply and improve quality. In addition, to further

development to expand the range of new applications that takeglobal business development we are actively providing technicaladvantage of the resin’s various unique properties.

assistance to customers in Japan and overseas.

In battery-related materials, to secure our competitive advantage

R&D spending in this division amounted to ¥1,167 million.

in anode materials for the large-scale lithium-ion batteries used in
hybrid and electric vehicles, Kureha is optimizing its production
processes, and pursuing R&D aimed at achieving its business plan. We
are also developing high-performance grade binders to help
maintain and grow market share.
R&D spending in this division amounted to ¥1,864 million.

Kureha Corporation Business Report 201515

Responsible Care
We will comply
with international
policies andregulations

Kureha, an inaugural member of the Japan Responsible CareCouncil founded in 1995, continues to pursue Responsible Careinitiatives to improve health, safety and environmental performancethroughout its operations. We regard our commitment to
Responsible Care as an integral part of our corporate responsibility.

We will consider
the global
environmentand operatesafelyRC
PolicyWe will manage
and utilize
environmental
and safety
information

We will provide
safe products
to society

We will establish
better relations
with society

Responsible Care Implementation

reduction of chemical material and industrial waste, odor control,

Together, all Kureha group companies have established the All

and adoption of the Energy Consumption Index.

Kureha Responsible Care Committee. Through this committee, thecompany is working to enhance its efforts in various fields,

Disaster Prevention

including environmental protection, security and disaster response,

Safety and disaster prevention are among the most importantlabor safety and hygiene, product safety and quality assurance,

responsibilities of a manufacturing factory. In order to respond tologistics safety, energy conservation, and community relations.

the trust the community places in the company, Kureha manages

Kureha has obtained ISO 14001, the international standard for environ-its facilities and operations in strict compliance with the relevant

mental management, as well as ISO 9001 for product quality management

laws. In addition, the company implements a safety and disasterand OHSAS 18001 for labor safety and hygiene management. The

prevention program which includes its own voluntary control

Company is further enhancing efforts aimed at improving responsible care

criteria, activities and training.

activities through a “plan, do, check, act”activity cycle.

Contributing to the Community
Reducing the Burden on the Environment

In addition to Kureha General Hospital being used as a community

Since its establishment, Kureha has developed technologies andmedical facility in the southern part of Iwaki City, Kureha contributes to

products with a view to reducing the burden on the environment.

the local community in a variety of different ways. These include opening

In the case of the Iwaki Factory, Kureha seeks to create a manufac-

company sports facilities for public use, volunteering for clean up activi-

turing facility that minimizes stress on the environment by imple-

ties, offering science classes at elementary schools and holding commu-

menting measures such as air and water pollution prevention,nity meetings to initiate dialogue with local neighborhood associations.

GHG (CO2) Production(Thousands of tonnes) (Left scale)Specific Energy Consumption Index
at Iwaki Factory (Right scale)
150

125

120

100

90

75

60

50

30

25

0

(FY) 2010

2011

2012

2013

2014

Disaster drill0

Wastewater treatment system
16

Kureha Corporation Business Report 2015

Kureha General HospitalCorporate GovernanceMaximizing the corporate value of all group companies is a fundamental
policy of Kureha. In order to achieve this goal, Kureha is working to enhance
governance and other internal control functions, guarantee business
transparency and fair disclosure of information, and to implement
Responsible Care policies.
Management, Execution and Decision-Making
Framework
1. Supervisory and executive responsibilities are clearly distinguishedto strengthen corporate governance and accelerate managerial
decision-making and execution.
The Board of Directors, which includes 2 outside directors whoare independent from executive duties and is limited to a maximumof 10 directors in total, currently consists of 6 directors. The Board,presided over by the President & Representative Director, meetsonce a month in principle, to make decisions on importantmanagement issues and supervise execution.
The Executive Committee, chaired by the President & CEO andcomprised of executive officers appointed by the President & CEO,meets twice a month in principle. The committee considers basic
authoritative policies and mid- and long-term management strategy
that cover all aspects of general management. The committee
members pass resolutions on issues as authorized in official
company regulations and take steps to ensure speedy
implementation.
To clarify responsibilities for fiscal year results, a one-year term isgiven to all directors and executive officers.
The consolidated Executive Committee, set up to unify the
Kureha Group’s internal policies and long-term management vision,is chaired by the President & CEO. It serves as a forum to exchange
views on basic management policies and business strategies withrepresentatives from each group company, with the aim ofstrengthening consolidated management. Meanwhile, theoperations of group companies are supervised and managed inaccordance with the Group Company Management Rules, in which
the obligations of group companies are clearly specified, while
giving autonomy, in terms of certain business and management
issues required for reporting and consultation prior to making
decisions within their companies.
2. A total of four corporate auditors (including two external auditors)
undertake auditing activities. This group works within a frameworkthat allows them to monitor the deliberation processes of board
resolutions and reports, as well as have a representative corporate
auditor attend and monitor meetings of the Executive Committee
and the Consolidated Executive Committee. In addition, auditors

are able to access documentation including all documents
requiring senior approval, results of internal audits, anddocumentation on the status of customer inquiries.
Corporate auditors interact with accounting and internal
control functions, for example to exchange opinions on audit
planning and progress. They also regularly exchange opinions with
the President & Representative Director and outside directors on
management matters including corporate governance, businessconditions and issues that the company should address.
In addition, the Internal Control and Auditing Department acts
independently of other departments and under direct management
and supervision of the President & CEO. Based on an annual internal
audit plan approved by the Board of Directors, this department
assesses the suitability and effectiveness of internal management
control systems including compliance and risk management. It thenproposes necessary or desired changes and improvements, so as toenhance both management efficiency and public trust in Kureha.

Internal Control System
To further strengthen its internal control system, Kureha hasestablished a set of basic policies, committees and internal rules toensure that it observes laws and regulations and conducts its
business operations in an appropriate and fair manner.
Under this system, Kureha publishes Internal Control Reports
under the responsibility of the President & CEO. In addition, Kureha
has also established a set of Basic Rules for Internal Control ofFinancial Reports to ensure the reliability of the financial reports andto guarantee implementation of management’s assessment andcertified public accountant’s auditing of the effectiveness of internal
control of financial reports, as stipulated in the Financial Instruments
and Exchange Law.

Compliance Program Framework
Kureha has in place a compliance program framework, based on
the Kureha Group Ethical Charter and its Compliance Rules.
Kureha’s compliance objective is to ensure that all executives andemployees act in a manner that is consistent with legal complianceand that also meets the standards of our society. This framework is
constantly being improved and reinforced so as to cultivate acompliance-focused corporate culture.

Kureha Corporation Business Report 201517

Corporate GovernanceDiagram of Internal Control Systems (As of June 30, 2015)
General Meeting of Shareholders
Appoints

Appoints

Supervisory Function
Board of Directors(Limited to a maximum of ten members, including two external members)

Audit

LiaiseAppoints

Board of Corporate Auditors(Four members, including
two external members)
LiaiseLiaiseCompliance Committee
Antitrust Committee
Trade Control (Export/Import) Committee
Labeling and Trade Promotions Committee
Personal Information Protection Committee

Executive Function

Independent
AuditorPresident &Chief Executive Officer

Executive
Committee

Internal Control and
Auditing Department

CSR Committee
Energy Management Committee

All divisions ofKureha Corporation

Information Management
Committee
Information Disclosure Committee
Information Security Committee

Audit

Audit
Audit

Kureha Group companies

Risk Management Committee

Internal Control ofFinancial Reporting Committee

The Compliance Committee, led by the President & Chief Executive
Officer (CEO), keeps employees informed of compliance issues throughtraining programs and other activities based on the ComplianceHandbook and the Compliance Standards. In addition, direct access tointernal and external (legal) advisers for inquiries and reporting on
compliance issues is maintained so that legal violations, confirmed orsuspected, can be detected and deterred at an early stage.

Risk Management System
In response to various types of risk accompanying businessactivities, Kureha has established a risk management structure
consisting of a Risk Management Committee, a CSR Committee andan Information Management Committee. Each committee is tasked
with recognizing related risks, and proposes concrete measures to
the President & Representative Director aimed at reducing andavoiding risk and manages implementation.

18

Kureha Corporation Business Report 2015

In addition, to respond to unforeseen circumstances, a BusinessContinuity Plan is in place for the establishment of an emergency
response task force, with the objective of prioritizing the safety of
personnel, minimizing economic damage, and ensuring thecontinuation of corporate activities.
In terms of information management, Kureha works rigorously
to ensure appropriate security and disclosure based on its
regulations for information control, security and disclosure, withindividual committees set up to oversee each of these areas.
To address environmental and safety risks, management
procedures for the environment, quality, and labor safety have been
established that comply with ISO 14001, ISO 9001, and OHSAS
18001 standards. In addition, Kureha is also continuing withongoing efforts to improve environmental conservation, quality
assurance, and occupational health and safety.

Directors, Executive Officers and Corporate Auditors

Board of Directors

Yutaka Kobayashi

Tadashi Sagawa

Yoshio Noda

President & Chief Executive Officer

Executive Vice PresidentManaging Director of Internal Control
and Auditing, General Manager of
Manufacturing Sector

Senior Vice President
General Manager of Corporate Planning
Division, Finance Department, andProject for Corporate Managerial Reform

Michihiro Sato

Tsuneharu Takeda

Shigeto Umatani

Senior Vice President
General Manager of Research &Development Division and Emerging
Research Laboratories

Outside Director
Senior Advisor of Seiko Holdings
Corporation, External Board Member of
KCJ GROUP INC., Senior Advisor andDirector of Mandarin Oriental, Tokyo K.K.

Outside Director
Audit & Supervisory Board Member ofthe Michinoku Bank, Ltd.

Board of Corporate Auditors
Haruki Yamaguchi

Mitsuo Sato

External Auditor

Internal Auditor

Koichi Niimura

Masaru Kitamura

Internal Auditor

External Auditor

Yoshiki Shigaki

Naoki Fukuzawa

Senior Vice President, General
Manager of Engineering Division

Senior Vice President, General
Manager of Krehalon Division

Toru Yoshida

Yoshinori Shiojiri

Hiroyuki Tanaka

Vice President, General Manager of
Accounting Center

Vice President, General Manager ofIwaki Factory

Vice President, General Manager of
Administration Division

Fumihiko Yamada

Katsuhiro Natake

Naomitsu Nishihata

Vice President, General Manager ofHome Products Division

Vice President, General Manager ofAdvanced Materials Division

Vice President, General Manager of
PGA Division

Satoshi Yonezawa

Masahiro Namikawa

Vice President, General Manager ofChemicals & Agrochemicals Division

Vice President, General Manager of
Pharmaceuticals Division

Officers

Kureha Corporation Business Report 201519

Consolidated Five-Year Summary
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2015 (FY2014), 2014 (FY2013), 2013 (FY2012), 2012 (FY2011) and 2011 (FY2010)

Thousands of
U.S. dollars(Note 2)Millions of yen

For the year:
Net sales:
Domestic
Overseas
Net sales by segment:
Advanced materials
Specialty chemicals
Specialty plastics
Other operations
Construction Related
Other

Operating income
Advanced materials
Specialty chemicals
Specialty plastics
Other operations
Construction Related
Other
Elimination or corporate
Net income
Capital expenditure
Depreciation
R&D expenses
Advanced materials
Specialty chemicals
Specialty plastics
Other operations
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

Year-end:
Total assets
Net assets
Interest-bearing debt

FY2014FY2013

FY2012FY2011FY2010FY2014¥150,182
103,943
46,237¥148,124
105,588
42,534¥130,550
98,26932,278¥128,358
97,46130,896¥132,309
101,696
30,613$1,249,746
864,966
384,763

36,18735,53546,51931,93916,721
15,21814,551
438
7,941
3,660
2,870
1,081
1,789
(360)
9,195
17,557
8,261
4,978
1,864
1,947
1,167
—
12,533(18,766)
5,042

32,81536,61545,291
33,401
17,23816,163
11,902(2,625)
7,341
4,519
2,454
833
1,621
212
7,365
16,468
9,096
4,586
1,727
1,846
1,012
—
14,058(20,444)
4,673

27,65032,83340,90029,164
14,967
14,197
8,458(2,131)
6,136
2,988
1,651
1,038
613
(186)
3,212
19,984
8,882
4,389
1,756
1,731
900
—
10,246(19,595)
10,264

31,25330,182
37,672
29,25016,30012,950
8,472
534
4,715
2,226
2,046
1,114
932
(1,051)
1,460
14,360
9,580
5,080
1,933
2,293
853
—
12,144(14,169)370

33,391
33,552
41,092
24,274
12,76011,514
6,350
363
5,203
1,790
(348)
(387)
39
(658)
692
14,076
10,266
5,502
1,741
2,765
996
—
12,509(11,432)
2,720

301,131295,706
387,109265,781
139,144
126,637
121,086
3,644
66,08130,45623,882
8,995
14,8872,995
76,516
146,101
68,744
41,424
15,511
16,202
9,711—
104,293(156,162)
41,957¥249,697
120,624
86,636¥224,459
106,190
77,225¥205,284
96,211
68,448¥186,223
88,55456,683¥181,753
89,50054,885$2,077,864
1,003,777
720,945

Yen

Amounts per share:
Net income – basic
Net assets
Cash dividends¥53.53687.8012¥42.87
604.0011¥18.71546.69
10

U.S. dollars¥8.51510.3710¥3.97517.47
10

6.6%
1.1
1.7
4.3
47.0

4.8%
0.5
0.7
3.1
48.9

$0.445.72
0.10

Percent

Ratios:Operating income to net sales
Net income to net sales
Return on equity
Return on assets
Equity ratio

9.7%
6.1
8.3
6.5
47.3

8.0%
5.0
7.5
5.7
46.2

6.5%
2.5
3.5
3.4
45.7

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥120.17 to US$1, the rate of exchange prevailing on the Tokyo Foreign
Exchange Market on March 31, 2015.
2. For amounts per share, see Note 21 of the Notes to Consolidated Financial Statements.

20

Kureha Corporation Business Report 2015

Management Discussion and Analysis
Business environment

Cash flow from operating activities
Net cash provided by operating activities amounted to ¥12,533
million, a decrease of ¥1,525 million from the previous fiscal
year. This was mainly due to a decrease in depreciation and tradenotes and accounts payable and an increase in inventories andincome taxes paid, while income before income taxes andminority interests increased and trade notes and accounts receivable decreased.

During the fiscal year ended March 31, 2015, although there wereconcerns about a deceleration in the Japanese economy due to risingcosts as a result of a weaker yen, a moderate recovery trend iscontinuing overall due to continued low oil prices and signs of arecovery in personal consumption after the consumption tax hike.
With regard to the world economy, although the European
economy stagnated and growth in China slowed, the economy of
the United States remained solid. Thus, there were signs of improvement of management environment of the Company.

Cash flow from investment activities
Net cash used in investment activities amounted to ¥18,766
million, a decrease of ¥1,677 million from the previous fiscal
year. This was mainly due to a decrease in payments forpurchases of property, plant and equipment and intangible fixed
assets.

Analysis of business results
Net sales in the subject fiscal year increased ¥2,058 million
year-on-year to ¥150,182 million. Gross profit increased ¥3,378
million to ¥42,467 million, and the gross profit margin increased
from 26.4% in the previous fiscal year to 28.3%. Selling, generaland administrative expenses increased ¥728 million from theprevious fiscal year to ¥27,916 million. Operating income
increased ¥2,649 million year-on-year to ¥14,551 million. The
operating income ratio increased from 8.0% in the previous fiscal
year to 9.7%.
Other expenses (net of other income) for the fiscal year
ended March 31, 2015 amounted to ¥874 million, an increase of¥569 million from the previous fiscal year. As a result of theabove, ordinary income increased ¥3,218 million to ¥15,426
million. The ordinary income ratio increased from 8.2% in theprevious fiscal year to 10.3%. Income before income taxes andminority interests increased ¥2,964 million to ¥13,593 million.
Total income taxes amounted to ¥4,429 million. Minority
interests amounted to ¥32 million of loss. As a result, net income
increased ¥1,830 million from the previous fiscal year to ¥9,195
million.

Cash flow from financing activities
Net cash provided by financing activities amounted to ¥5,042
million, an increase of ¥369 million from the previous fiscal year.
This was mainly because of procurement of funds via the issuance of corporate bonds, while funds procured from commercial
paper redemption and long-term debt decreased.

Financial policy
The Kureha Group’s basic policy is to maximize cash flows fromoperating activities by securing earnings in line with its businessplan and by enhancing asset efficiency, and to allocate cash withpriority given to capital expenditure for new businesses andexpansion of existing businesses, investments and loans, researchand development, and dividend payments to investors. In linewith this policy, Kureha procures required capital with priority
given to securing long-term funding, and in consideration of thebalance between long- and short-term borrowings.

Cash flow analysis

Balance sheet analysis

The balance of cash and cash equivalents at the end of thesubject fiscal year (March 31, 2015) amounted to ¥7,772
million, a decrease of ¥953 million from the end of the previous
fiscal year (March 31, 2014). An outline of individual cash flows
and the main factors affecting each is as follow:

Net Sales

As of March 31, 2015, total assets amounted to ¥249,697
million, an increase of ¥25,237 million from the end of theprevious fiscal year (March 31, 2014). Current assets totaled¥75,949 million, an increase of ¥2,520 million from the end of

Operating Income(Millions of yen)

Net Income(Left scale) (Millions of yen)

150,000
125,000

15,00010

12,000

8

9,000

6

6,000

4

100,000
75,00050,0003,000

25,0000(FY) 20102011

Domestic

2012(Left scale) (Millions of yen)

Operating Income to
Net Sales (Right scale) (%)

2013

2014

0

2

(FY) 2010

2011

2012

2013

2014

0

Net Income to Net Sales(Right scale) (%)
12,000

6

10,000

5

8,000

4

6,000

3

4,000

2

2,000

1

0

(FY) 2010

2011

2012

2013

2014

0

Overseas

Cash Flows fromOperating Activities

Total Assets(Millions of yen)

Kureha Corporation Business Report 2015
Net Assets(Left scale) (Millions of yen)21the previous fiscal year. This was mainly due to an increase ininventories. Property, plant and equipment, net totaled ¥123,185
million, up ¥11,501 million from a year earlier, due mainly tocapital expenditure at the Iwaki Factory.
Total liabilities at the end of the subject fiscal year amounted
to ¥129,072 million, an increase of ¥10,804 million from theend of the previous fiscal year. This was mainly because interestbearing debt increased ¥9,410 million from the end of theprevious fiscal year to ¥86,636 million as a result of an increasein loans payable, etc.
Total net assets for the subject fiscal year amounted to¥120,624 million, an increase of ¥14,433 million from the endof the previous fiscal year. This mainly resulted from net incomeof ¥9,195 million, dividends paid of ¥1,975 million fromretained earnings, an increase in unrealized gain on available-forsale securities and translation adjustments, and a decrease of¥1,048 million in capital surplus as a result of a change in theaccounting periods of overseas consolidated subsidiaries.

Specialty Chemicals, and Specialty Plastics Divisions invested¥5,791 million in such areas as research and development facilities(Kureha), and private power plant facilities (Kureha).
Capital required for these investments was procured fromcash-at-hand, corporate bonds, and borrowings.

Business and other risks

The Kureha Group’s business operations are diverse, comprising
the Advanced Materials Division focused on PPS resin, PVDF
resin and carbon products; the Specialty Chemicals Divisionfocused on pharmaceuticals, agrochemicals and industrial chemicals; the Specialty Plastics Division focused on householdproducts and food packaging; the Construction Related Divisionfocused on construction and engineering; and the Other
Operations Division including environmental businesses andlogistics. By region, the Group conducts business in Japan as wellas Europe, North America, and Asia.
The main factors that could affect the operating results, stock
price, financial position and other aspects of the Kureha Group
Overview of capital expenditure
are as follows.
The KurehaGroup
has designated advanced materials businessas a Income
Forward-looking statements in this text are based on evaluaNet
Sales
Operating
Net Income
core businessthat drivesin (Millions tions
securities report filing(Left scale)of yen)made at the time of the Company’s(Millionsof yen)earnings, and as such actively invests(Left scale) (Millions of yen)
this area. Total capital expenditure during the fiscal year ended(June 24, 2015).
Operating
Incometo
Net Income to Net Sales
March 31, 2015 amounted to ¥17,557 million.
scale) (%)
Net Sales (Right(1)(Right scale)in(%)
Changes in the business environment
Japan and overseas;
Capitalexpenditure by business division:changesinthemarketpriceofproducts
150,000
6
12,00015,00010
The Advanced Materials Division invested ¥3,596 million, mainly
The Kureha Group’s business is exposed to external factors suchfor PVDF
as changes in markets or customers,
and intensification of5
125,000 (polyvinylidene fluoride) resin production facilities
10,00012,0008(Kureha and Kureha (Changshu) Fluoropolymers Co., Ltd.), etc.
competition with competing companies. Accordingly, changes
The
Specialty Chemicals Division invested ¥1,713 million,
such as a decrease in demand
100,000
48,000for the Group’s principle products,
9,000 (Kureha).
primarily on production facilities for organic chemicals
customers 6shifting production overseas, and an increase in
The
Specialty Plastics Division invested ¥5,205 million,
production capacity by competingfirms, could therefore 3influ75,000
6,000
primarily for manufacturing facilities for polyvinylidene
chlorideencetheGroup’soperatingresultsandfinancial position.
6,000
4resin 50,000(Kureha).
4,000
2
The Construction Related Division invested ¥31 million.
(2) Changes in fuel and raw material prices
2
The
Other Operations Division invested ¥1,2173,000
million,25,0002,000and coal used by the Kureha1Group,
Raw materials such as naphtha
mainly on industrial waste processing facilities (Kureha Ecology
as well as fuel, are susceptible to changes in market conditions. As aManagement
Co., Ltd.).
0
0
0
0
0
result, changes
such as an increasein the price of these raw materials,(FY) 2010 as
2011a joint
2012 initiative,
2013 2014 the Advanced Materials,(FY) 2010 2011 2012 or(FY) 2010 cost2011 to2012
2013 prices
2014 in a
2013the2014
In addition,
inability to shift the additional
product
Domestic

Overseas

Cash Flows fromOperating Activities
Cash Flows from
Investing Activities

Total Assets

Net Assets(Left scale) (Millions of yen)

(Millions of yen)

Equity Ratio(Right scale) (%)(Millions of yen)

250,000

20,000120,000

60

100,000

50

80,00040

60,00030

40,00020

20,00010

15,000200,000

10,0005,000

150,000

0-5,000100,000-10,000-15,000

50,000-20,000-25,000(FY) 2010

22

2011

2012

2013

2014

on Assets
Kureha Corporation Return
Business Report2015

Return on Equity(%)

0(FY) 2010

2011

2012

2013

2014

Interest-Bearing Debt
(Millions of yen)0(FY) 2010

2011

2012

2013

2014

Capital Expenditure
Depreciation(Millions of yen)0Net Sales

Operating Income(Millions of yen)

Net Income(Left scale) (Millions of yen)

(Left scale) (Millions of yen)

Incometotimely and appropriate manner, could have a negativeOperating
effect on(7) Investment
securities
Net Income to Net Sales
scale) (%)
the Group’s operating results and financial position. Net Sales (RightOf(Right scale)in(%)
the ¥40,138 million in investment
securities, the Kureha
Group
held
a
total
of
¥26,960
millionforthe purpose of6 long150,000
12,00015,000
10(3) Product liability
term holdings (10.8% of total assets on a consolidated basis) as
The125,000
Kureha Group’s core business is chemical manufacturing.
of the end of the subject 10,000
fiscal year. Significant changes inmarket5
12,000
The Group is acutely aware of the risks connectedwith its
prices, or 8in the financial position of the issuing companies,
products
and the manufacturing process, and is careful to contincould have a negative effecton the Group’s operating results
and
100,000
48,000
ually exercise Responsible Care (autonomous managementforfinancial
position.
9,000
6
environmental conservation, disaster safety and other measures).
75,0006,000
3However, should a significant, unforeseen quality issue arise,(8) Occurrence of natural disasters or accidents
6,000
4
there could be a negative effect on the Group’s operating
results
Manufacturing for the Kureha
50,0004,000 Group’s principal products2 isand financial position.
concentrated in the production division of the Iwaki Factory
3,000
2(Iwaki, Fukushima
Prefecture),
25,0002,000 and as such the Company1makes(4) TheSpecialty Chemicals Division’s pharmaceutical business
continual efforts focused on this facility for environmental conserOne of theKureha Group’s core businesses is the manufacture
vation and0 to ensure safety. However,damage to production0000and sale(FY)of2010
pharmaceuticals.
revisions (FY)to drug
facilities
such2012
as major
2011 2012 2013Accordingly,
2014
2010 20112013 earthquakes
2014
2010 prices
2011 2012 20132014 as a result of natural(FY)disasters
under Japan’s
medical insurance
or typhoons, or due to accidents, could have a negative effect on
Domestic
Overseassystem could have a negative
effect on the Group’s operating results.
the Group’s operating results and financial position.
(5) Country risks for overseas businesses(9) Litigation
The Kureha Group conducts business in Europe, North America
The Kureha Group has established the “Kureha Group EthicalCash Flowschanges
from such as deterioration in
Total
Assetsand Asia. Accordingly,
the Assets Charter,” “Compliance Rules” Net
and “ComplianceStandards,” and(Left scale) (Millions of yen)
(Millions of yen)
Activities
political orOperating
economic situationin these regions, the enactmentor
strives to ensure that the Group strictly complies with all laws,
Cash
Flows
Ratio
abolishmentof laws
and from
regulations, international tax practiceregulations and societal norms.Equity
However,
there is a risk that the(Right scale) (%)
Activities
risks such Investing
as transfer pricetaxation, and deterioration in publicGroup’s domestic or overseas businesses
could be the target of(Millions of yen)safety, as wellas unforeseen circumstances such as terrorism,lawsuits, administrative measures or other action. A major lawsuit
250,000
20,000
armed conflict or natural disaster, could have a negative
effect onor other action be taken 120,000
filed against Kureha could have a60negative
the Group’s
operatingresultsandfinancial
position.
effectontheGroup’soperatingresults and financial position.
15,000200,000

10,000(6) Currency fluctuations
5,000
The items
in Kureha Group’s financial statements
not denomi150,000
nated in 0yen are susceptible to fluctuations in exchange rates
when-5,000
converted into yen. The Group concludes exchange
contracts and takes other steps to minimize the 100,000
effects of fluctuations-10,000
in exchange rates. However, fluctuations in exchange rates-15,000
beyondthose predicted could have a negative effecton the50,000Group’soperating results and financial position.
-20,000-25,000(FY) 2010

2011

2012

2013

2014

0

(FY) 2010

Return on Assets
Return on Equity

2011

2012

2013

2014

100,000

50

80,00040

60,00030

40,00020

20,000100(FY) 2010

Interest-Bearing Debt

2011

2012

2013

2014

0

Capital Expenditure
Depreciation(Millions of yen)(%)

(Millions of yen)

90,00010

25,0008

20,00060,0006

15,0004

10,00030,00020(FY) 2010

5,000

2011

2012

2013

2014

0

(FY) 2010

2011

2012

2013

2014

0

(FY) 2010

2011

2012

2013

2014

Kureha Corporation Business Report 201523

Consolidated Balance Sheets
Kureha Corporation and its Consolidated Subsidiaries
As of March 31, 2015 and 2014

Thousands of
U.S. dollars(Note 2)Millions of yen

FY2014FY2014¥ 7,772
28,984
32,775
2,506
4,102
(192)
75,949¥8,726
30,445
28,101
2,680
3,591
(118)
73,429$64,675
241,191
272,738
20,85334,134(1,597)632,012

Property, plant and equipment, net:
Buildings and structures (Note 10)
Machinery, equipment and vehicles (Note 10)
Land (Note 10)
Construction in progress
OthersTotal property, plant and equipment, net

39,19849,514
13,264
18,123
3,085
123,185

33,37839,17813,19823,4262,501
111,684

326,187
412,032
110,376
150,81125,671
1,025,089

Investments and other assets:
Investments in securities (Notes 7, 8 & 10)
Long-term loans (Note 7)
Net defined benefit asset (Note 12)
Deferred tax assets (Note 13)
OthersLess: Allowance for doubtful accounts
Total investments and other assets

40,138
1,975
2,415
1,787
4,375
(129)
50,562

31,682
2,070
34
1,524
4,170
(138)
39,345334,010
16,43520,096
14,87036,406(1,073)
420,753¥249,697¥224,459$2,077,864

Total assets (Note 23)

The accompanying notes are an integral part of these statements.
FY2014 and FY2013 refer to the fiscal years ended March 31, 2015 and 2014, respectively.

24

FY2013ASSETS
Current assets:
Cash and time deposits (Notes 5 & 7)
Trade notes and accounts receivable (Notes 7 & 19)
Inventories (Note 6)
Deferred tax assets (Note 13)
Others (Note 7)
Less: Allowance for doubtful accounts (Note 7)
Total current assets

Kureha Corporation Business Report 2015

Thousands of
U.S. dollars(Note 2)Millions of yen

FY2014
LIABILITIES AND NET ASSETS
Current liabilities:
Trade notes and accounts payable (Notes 7 & 10)
Short-term loans payable including current portion of
long-term debt (Notes 7, 9 & 10)
Other payables (Note 7)
Accrued income taxes (Note 13)
Accrued expenses
Accrued bonuses
Reserve for environmental measures
Others (Notes 7, 13 & 19)
Total current liabilities
Long-term liabilities:
Long-term debt (Notes 7, 9, 10 & 19)
Deferred tax liabilities (Note 13)
Retirement allowance for directors and corporate
auditors
Reserve for environmental measures
Net defined benefit liability (Note 12)
Asset retirement obligations
OthersTotal long-term liabilities
Total liabilities
Net assets:
Shareholders' equity (Note 22):
Capital, non par value
Authorized: March 31, 2015 and 2014 – 600,000,000 shares
Issued: March 31, 2015 and 2014 – 181,683,909 shares
Capital surplus
Retained earnings
Less: Treasury stock, at cost
Total shareholders' equity
Accumulated other comprehensive income (loss):
Unrealized gain on available-for-sale securities(Note 8)Deferred loss on hedges (Note 19)
Translation adjustments
Remeasurements of defined benefit plans (Note 12)
Total accumulated other comprehensive income
Stock acquisition rights (Note 15)
Minority interests
Total net assets
Total liabilities and net assets

FY2013

FY2014¥13,766¥16,453$114,554

34,866
7,247
2,430
5,734
2,909
21
3,285
70,262

18,606
6,149
2,526
5,347
2,591
21
5,340
57,037290,138
60,306
20,22147,71524,207
174
27,336584,688

51,7704,125

56,6191,836

430,806
34,326

229
374
550
804
955
58,810129,072

284
437
440
792
819
61,231
118,268

1,905
3,112
4,576
6,690
7,947
489,390
1,074,078

12,46010,01384,163(4,487)102,150

12,46010,01378,289(4,483)
96,279103,686
83,323
700,366(37,338)
850,045

9,352
(5)
7,272
(615)
16,00268
2,403
120,624¥249,697

5,649
(17)
3,621
(1,771)
7,481
51
2,378
106,190¥224,459

77,823(41)
60,514(5,117)133,161
565
19,996
1,003,777$2,077,864

The accompanying notes are an integral part of these statements.
Kureha Corporation Business Report 201525

Consolidated Statements of Income
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2014

Thousands of
U.S. dollars(Note 2)Millions of yen

FY2013

FY2014
Net sales (Note 23)
Cost of sales
Gross profit

FY2014¥ 150,182
107,71442,467¥148,124
109,034
39,089$1,249,746
896,346
353,391

27,916
14,551

27,187
11,902

232,304
121,086

Selling, general and administrative expenses (Note 16)
Operating income (Note 23)
Other income (expenses):
Interest and dividend income
Interest expense
Foreign exchange gains
Compensation income
Gain on sales of investments in securities (Note 8)
Gain on sales of property, plant and equipment (Note 17)
Subsidy income
Loss on disposal and sales of property, plant and equipment(Note 17)
Loss on liquidation of subsidiaries (Note 18)
Loss on valuation of investments in capital
Advanced depreciation of property, plant and equipment
Loss on debt waiver of receivables from affiliates
Impairment loss (Note 18)
Loss due to disaster
Other, net
Other expenses, net

678
(701)
912
314
70
37
—

660
(732)
761
77
193
15
477

5,642
(5,833)
7,589
2,612
582
307
—

(1,063)
(751)
(399)
—
—
—
—
(56)
(958)

(1,183)
—
—
(424)
(300)
(133)
(117)
(570)
(1,273)(8,845)(6,249)(3,320)
—
—
—
—
(466)
(7,972)

Income before income taxes and minority interests

13,593

10,629113,114

Income taxes (Note 13):
Current
Deferred
Total income taxes

4,061
367
4,429

3,647
(624)
3,023

33,793
3,054
36,856

Net income before minority interests
Minority interests
Net income

9,163
(32)
9,195

7,605
240
¥7,365

76,250(266)$76,516¥

The accompanying notes are an integral part of these statements.

Consolidated Statements of Comprehensive Income
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2014

Thousands of
U.S. dollars(Note 2)Millions of yen

FY2014FY2014¥9,163¥7,605$76,250

3,761
8
4,223
1,166
285
9,444
¥18,608

33
15
5,396
—
580
6,026
¥13,632

31,297
66
35,141
9,702
2,371
78,588$154,847

Comprehensive income attributable to:
Owners of parent
Owners of minority interests¥18,52978¥13,314317$154,189
649

The accompanying notes are an integral part of these statements.
26

FY2013

Net income before minority interests
Other comprehensive income:Unrealized gain on available-for-sale securities
Deferred gain on hedges
Translation adjustments
Remeasurements of defined benefit plans (Note 12)
Share of other comprehensive income in affiliates
Total other comprehensive income (Note 20)
Comprehensive income

Kureha Corporation Business Report 2015

Consolidated Statements of Changes in Net Assets
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal year ended March 31, 2015

Millions of yen
Shareholders’ equity
Number ofcommon stock

BALANCE-APRIL 1, 2014
Cumulative effects of changes in accounting policies
Restated balance
Changes in retained earnings resulting from merger ofconsolidated subsidiaries and unconsolidated
subsidiaries
Effect of fiscal year change of consolidated subsidiaries
Dividends paid
Net income
Acquisition of treasury stock
OthersNet changes of items other than shareholders' equity
BALANCE-MARCH 31, 2015

CapitalsurplusCapital181,683,909

181,683,909

Treasurystock,
at costRetainedearnings

Total
shareholders'equity¥12,460—
12,460¥10,013—
10,013¥78,289(276)
78,012¥(4,483)—(4,483)¥96,279(276)
96,002

—
—
—
—
—
—
—
¥12,460

—
—
—
—
—
—
—
¥10,013(23)(1,048)(1,975)9,195—
2—¥84,163

—
—
—
—
(4)
—
—
¥(4,487)(23)(1,048)(1,975)
9,195
(4)
2
—
¥102,150

Accumulated other comprehensive income
Unrealized
gain onavailablefor-salesecurities

BALANCE-APRIL 1, 2014
Cumulative effects of changes in accounting policies
Restated balance
Changes in retained earnings resulting from merger ofconsolidated subsidiaries and unconsolidated
subsidiaries
Effect of fiscal year change of consolidated subsidiaries
Dividends paid
Net income
Acquisition of treasury stock
OthersNet changes of items other than shareholders' equity
BALANCE-MARCH 31, 2015

Deferredloss onhedgesTotal
accumulated
Stock
Remeasurements
otherTranslationof defined comprehensive acquisitionrightsadjustments benefit plansincomeMinority
interests

Total net
assets¥5,649
—
5,649

¥(17)
—
(17)

¥3,621—
3,621¥(1,771) ¥7,481——(1,771)
7,481

¥51
—
51

¥2,378 ¥106,190
2(274)
2,380 105,916

—
—
—
—
—
—
3,703
¥9,352

—
—
—
—
—
—
11
¥(5)

—
—
—
—
—
—
3,650
¥7,272

—
—
—
—
—
—
—
—
—
—
—
—
1,155
8,521
¥(615) ¥16,002

—
—
—
—
—
—
16
¥68

—
(23)
—
(1,048)—(1,975)
—
9,195
—
(4)
—
2
22
8,560
¥2,403 ¥120,624

Thousands of U.S. dollars (Note 2)
Shareholders’ equity
CapitalsurplusCapitalBALANCE-APRIL 1, 2014
Cumulative effects of changes in accounting policies
Restated balance
Changes in retained earnings resulting from merger ofconsolidated subsidiaries and unconsolidated
subsidiaries
Effect of fiscal year change of consolidated subsidiaries
Dividends paid
Net income
Acquisition of treasury stock
OthersNet changes of items other than shareholders' equity
BALANCE-MARCH 31, 2015

Retainedearnings

Treasury stock,at costTotal shareholders’equity$103,686—
103,686$83,323—
83,323$651,485(2,296)649,180$(37,305)—(37,305)$801,189(2,296)
798,884

—
—
—
—
—
—
—
$103,686

—
—
—
—
—
—
—
$83,323(191)(8,720)(16,435)
76,516—16—$700,366

—
—
—
—
(33)
—
—
$(37,338)(191)(8,720)(16,435)
76,516(33)
16—$850,045

Accumulated other comprehensive income
Unrealized
gain onavailablefor-salesecurities

BALANCE-APRIL 1, 2014
Cumulative effects of changes in accounting policies
Restated balance
Changes in retained earnings resulting from merger ofconsolidated subsidiaries and unconsolidated
subsidiaries
Effect of fiscal year change of consolidated subsidiaries
Dividends paid
Net income
Acquisition of treasury stock
OthersNet changes of items other than shareholders' equity
BALANCE-MARCH 31, 2015
The accompanying notes are an integral part of these statements.

Deferredloss onhedgesTotal
accumulated
Stock
Remeasurements
otherTranslationof defined comprehensive acquisitionrightsadjustments benefit plansincome$47,008—
47,008$(141)—(141)$30,132—
30,132

—

—

—

—
—
—
—
30,814$77,823————91$(41)————
30,373$60,514$(14,737) $62,253——(14,737)
62,253
—

$424
—
424

—

—

—
—
—
—
—
—
—
—
9,611
70,907$(5,117) $133,161

—
—
—
—
133
$565

Minority
interests

Total net
assets$19,788 $883,664
16(2,280)19,805 881,384—(191)(8,720)—(16,435)—
76,516
—
(33)
—
16
183
71,232$19,996 $1,003,777

Kureha Corporation Business Report 201527

Consolidated Statements of Cash Flows
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2014

Thousands of
U.S. dollars(Note 2)Millions of yen

FY2013

FY2014
Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments for:
Impairment loss
Loss on liquidation of subsidiaries
Depreciation
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase in net defined benefit asset
Decrease in net defined benefit liability
Decrease in retirement allowance for directors and corporate
auditors
Decrease in provision for environmental measures
Interest and dividend income
Interest expense
Loss on disposal and sales of property, plant and equipment
Loss on valuation of investments in capitalGain on sales of investments in securities
Decrease (increase) in trade notes and accounts receivable
Increase in inventories
Increase in other assets
Decrease in trade notes and accounts payable
Increase in other liabilities
Other, net
Subtotal
Dividends and interest received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for disposal of property, plant and equipment
Purchase of investments in securities
Proceeds from sales of investments in securities
Payments of loans receivable
Proceeds from collection of loans receivable
Purchase of shares in subsidiaries
Payments for investments in capital
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Net (decrease) increase in commercial paper
Net increase in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Proceeds from stock issuance to minority shareholders
Dividends paid
Dividends paid to minority shareholders
Other, net
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Decrease in cash and cash equivalents resulting from fiscal yearchange of consolidated subsidiaries
Increase in cash and cash equivalents resulting from inclusion of
consolidated subsidiaries
Increase in cash and cash equivalents resulting from consolidated
subsidiaries' merger with unconsolidated subsidiaries
Cash and cash equivalents at end of year (Note 5)
The accompanying notes are an integral part of these statements.
28

Kureha Corporation Business Report 2015

FY2014¥13,593¥10,629$113,114

—
660
8,261
3
36
(805)
(26)

133
—
9,320
34
(15)
(656)
(66)

—
5,492
68,74424
299(6,698)
(216)

(55)
(62)
(678)
701
1,025
399
(70)
739
(4,350)(1,132)(2,437)904(1,077)
15,6291,677(690)(4,082)
12,533

(57)
(15)
(661)
732
1,167
—
(193)
(2,278)(1,895)
(177)
(315)
919
(355)
16,2481,525(737)(2,978)14,058(457)(515)(5,642)
5,833
8,529
3,320
(582)
6,149
(36,198)(9,419)(20,279)
7,522(8,962)130,057
13,955(5,741)(33,968)
104,293(16,051)
127
(698)
(377)
215
(20)
117
(10)
(2,168)100(18,766)(18,056)72(772)(2,446)
1,161
(332)
175
(244)
—
(0)
(20,444)(133,569)
1,056(5,808)(3,137)
1,789
(166)
973
(83)
(18,041)832(156,162)(2,000)2,463
5,236(5,441)
6,959—(1,975)
(37)
(163)
5,042
375
(815)
8,726

2,000
1,759
9,598
(6,826)—33(1,717)
(12)
(162)
4,673
381
(1,331)
9,954(16,643)
20,49543,571(45,277)
57,909—(16,435)(307)(1,356)
41,957
3,120(6,782)
72,613(166)—(1,381)

—

102

—

28
¥7,772—¥8,726233$64,675

Notes to Consolidated Financial Statements
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2015 and 2014

1. Basis of Presenting Consolidated Financial Statements

The accompanying consolidated financial statements have been prepared based on the accounts maintained by Kureha
Corporation (the “Company”) and its consolidated subsidiaries (collectively the “Group”) in accordance with the provisions set
forth in the Companies Act and the Financial Instruments and Exchange Act of Japan, and in conformity with accounting
principles generally accepted in Japan, which are different, in certain respects, from the application and disclosure requirementsof International Financial Reporting Standards.
As permitted by the Financial Instruments and Exchange Act, for the fiscal years ended March 31, 2015 and 2014, amounts ofless than one million yen have been omitted. Consequently, totals shown in the accompanying consolidated financial statements forthe fiscal years ended March 31, 2015 and 2014 do not necessarily agree with the sums of the individual amounts.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theCompany’s consolidated financial statements issued domestically in order to present them in a format which is more familiar toreaders outside Japan.

2. U.S. Dollar Amounts

The accounts of consolidated financial statements presented herein are originally expressed in Japanese yen. The U.S. dollar
amounts shown in the accompanying consolidated financial statements and notes thereto have been translated from Japanese yen
into U.S. dollars on the basis of ¥120.17 to U.S. $1, the rate of exchange prevailing as of March 31, 2015. And, for translationof millions of Japanese yen to thousands of U.S. dollars, amounts of less than one thousand dollars have been omitted. These
U.S. dollar amounts are not intended to imply that the Japanese yen amounts have been or could be converted, realized or
settled in U.S. dollars at this or any other rate.

3. Principles of Consolidation

I. Scope of consolidation
The Company has consolidated 37 subsidiaries (36 in 2014) and one affiliate (one in 2014) as of March 31, 2015. The accountsof one subsidiary (one in 2014) and four affiliates (three in 2014) were not consolidated and not applied to equity method forthe fiscal year ended March 31, 2015, as they would not have a material effect on the accompanying consolidated financial
statements.
II. Fiscal years of consolidated subsidiaries
Four consolidated subsidiaries, including KUREHA (CHINA) INVESTMENT CO., LTD., have fiscal years ending on
December 31. The Company uses the financial statements of those subsidiaries based on a tentative settlement as of theconsolidated fiscal year end to prepare the consolidated financial statements.
The Company previously prepared consolidated financial statements using the financial statements of those foreignsubsidiaries whose fiscal year end was December 31, as of that date, and adjusted as necessary for consolidation for majortransactions which were executed during the three months between January 1 and March 31. However, beginning with thecurrent fiscal year, to increase the appropriateness of the consolidated accounting information disclosure, the Company haschanged the fiscal year end for ten companies, including KUREHA AMERICA INC. and KUREHA EUROPE B.V., to March
31, and adopted a new consolidation method with a tentative settlement as of March 31 for four companies including
KUREHA (CHINA) INVESTMENT CO., LTD.
The results of all the subsidiaries affected by the above changes for the three months between January 1, 2014 and March 31,
2014 have been recognized directly in retained earnings.

4. Summary of Significant Accounting Policies

I. Securities
Securities included in marketable securities and investments in securities are designated as available-for-sale securities and arestated as follows:
Available-for-sale securities with market quotations are stated at the average market price during the month before the balance
sheet date.
Valuation difference on these securities is reported at net of taxes as a separate component of net assets.
The cost of securities sold is determined based on the moving average cost at the time of sale.
Available-for-sale securities without market quotations are stated at cost by the moving average method.
II. Derivatives and hedge accounting
Derivative financial instruments are stated at fair value and any changes in the fair value are recognized as gain or loss.
Interest rate swaps qualified for hedge accounting are measured at fair value, and unrealized gains or losses are deferred until
maturity. Interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not re-measured at market
value, but the differential paid or received under the swap agreements are recognized and included in the interest expense or
income.
The Company and its consolidated subsidiaries utilize foreign exchange forward contracts to avoid the risk from futureexchange rate fluctuations in connection with the foreign currency denominated receivables and payables and also interest rate
swaps to reduce the financing costs related to long-term debt and short-term borrowings as a means to manage the interest rate
Kureha Corporation Business Report 201529

risk. Certain foreign exchange forward contracts utilized by the Company and certain consolidated subsidiaries are exposed to an
exchange rate fluctuation risk and interest rate risk from the movement of the interest rates is mitigated by converting floatinginterest rates to fixed interest rates using interest rate swap agreements. The Company and its consolidated subsidiaries use
derivatives to hedge risks in accordance with internal rules.
III. Inventories
Inventories are stated at cost in principle determined by the gross average method. Inventories held for sale in the ordinary courseof business are measured at the lower of cost or net selling value, which is defined as the selling price less incremental estimatedmanufacturing costs and estimated direct selling expenses.
IV. Depreciation and amortization of fixed assets
Property, plant and equipment except for leased assets
Property, plant and equipment are principally stated at cost. Depreciation is computed by the straight-line method based on theirestimated useful lives and residual value. Accumulated depreciation which was directly deducted from property, plant andequipment as of March 31, 2015 and 2014 were ¥172,971 million ($1,439,385 thousand) and ¥169,165 million, respectively.
The useful lives of major property, plant and equipment are summarized as follows:
Buildings and structures
Machinery, equipment and vehicles
Other (tools, furniture and fixtures)

10 to 50 years
7 to 20 years
4 to 10 years

Intangible fixed assets except for leased assets
Intangible fixed assets except for software are amortized by the straight-line method based on the estimated useful lives.
Software for in-house use is amortized by the straight-line method based on the estimated useful lives (5 years).
Leased assets
Leased assets under finance lease arrangements which do not transfer ownership of the leased assets to the lessee are depreciatedby the straight-line method over respective lease periods without salvage value.
V. Allowance for doubtful accounts
Allowance for doubtful accounts of general receivables was established to provide for future losses, which are estimated based on
the past credit loss experience.
In addition, uncollectible amount is estimated individually for doubtful receivables.
VI. Retirement allowance for directors and corporate auditors
The retirement allowance for directors and statutory auditors is recorded based on the amount that would be required inaccordance with the internal rule at the balance sheet date to provide for the payment for the retirement benefits.
VII. Reserve for environmental measures
Reserve for environmental measures is recorded for disposal of PCB (polychlorinated biphenyl) that would be required by the
Waste Disposal Law.
VIII. Accounting treatment for retirement benefits(a) Method of attributing the projected benefits to periods of services		 In calculating the retirement benefit obligations, the projected benefit obligations attributable up to the end of
the fiscal year are accounted for by benefit formula basis.
(b) Actuarial gain or loss and past service cost		 Past service cost is fully amortized when incurred.
		 Actuarial gain or loss is amortized in the fiscal year following the fiscal year in which the gain or loss isrecognized, on a straight-line basis over certain periods within the employees’ average remaining service years.
(c) Adopting the simplified method for small companies
		 Certain consolidated subsidiaries calculate their retirement benefit obligations using the liability which would be
paid if all the employees voluntarily retired at each consolidated balance sheet date.
IX. Foreign currency transactions
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the current exchange
rates at the balance sheet date. The foreign exchange gains and losses arising from such translations are recognized in the
consolidated statement of income.
30

Kureha Corporation Business Report 2015

Assets and liabilities as well as revenue and expenses of the consolidated foreign subsidiaries are translated into Japanese yenat the current exchange rate at the balance sheet date. Foreign exchange gains and losses arising from such translations aredisclosed as “translation adjustments” or included in “minority interests” under net assets.
X. Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows consist of cash on hand, bank deposits payable on
demand and short-term investments due within three months from acquisition with minor value fluctuation risk.
XI. Changes in accounting policies
Adoption of accounting standard and guidance related to retirement benefits
The Company has adopted “Accounting Standard for Retirement Benefits” (the Accounting Standards Board of Japan(hereinafter “ASBJ”) Statement No. 26, May 17, 2012, hereinafter “Retirement Benefits Standard”) and “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, March 26, 2015, hereinafter “Retirement Benefits
Guidance”) from the current fiscal year, with regard to Paragraph 35 of Retirement Benefits Standard and Paragraph 67 of
Retirement Benefits Guidance.
Accordingly, the Company has revised the calculation method for retirement benefit obligations and service cost, and haschanged the method of attributing the projected benefits to periods of services from the straight-line method to the benefit
formula basis, and also changed the method of determining the discount rate from using the discount rate based on the terms
closely related to the employees’ average remaining service years to using a single weighted average discount rate that reflects theestimated term and amount of benefit payments.
The Retirement Benefits Standard and other accounting methods are applied in accordance with the transitional provisions
set forth in Paragraph 37 of the Retirement Benefits Standard, the effect of the change in calculation method for retirement
benefit obligations and service cost is reflected as increase or decrease in retained earnings at the beginning of the current fiscal
year.
The effect on the operating results, the financial position and per share information for the current fiscal year is immaterial.
XII. Changes in accounting estimates
Changes in useful lives of property, plant and equipment
The Group has been discussing whether to continuously adopt the previous useful life for a new large-scale manufacturing
facility built during the current fiscal year. Since the implementation of ERP, the maintenance data for manufacturing plant has
been systematically accumulated, enabling the Group to closely examine the maintenance condition and lifecycle ofmanufacturing plant, and proved that, irrespective of existing or new facility, maintenance technology has reasonably
demonstrated to fulfill the function of manufacturing plants over a certain period. As a result, the Group has come to a decisionthat useful life should be changed based on this certain period. Accordingly, the Company and certain consolidated subsidiaries
have reviewed the useful life of manufacturing plant included in “machinery, equipment and vehicles,” starting from the current
fiscal year.
As a result of the review, compared to the previous method adopted, operating income and income before income taxes andminority interests for the current fiscal year increased by ¥1,014 million ($8,438 thousand), respectively.

5. Cash and Cash Equivalents

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2015 and 2014:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Cash and cash equivalents

FY2014¥7,7727,772

FY2013¥8,7268,726

FY2014$64,675
64,675

6. Inventories

Inventories as of March 31, 2015 and 2014, respectively, consisted of the following:Thousands of
U.S. dollars

Millions of yen

Finished products and merchandiseWork-in-process
Raw materials and supplies
Total

FY2014¥26,303
1,144
5,327¥32,775

FY2013¥20,0142,776
5,311¥28,101

FY2014$218,881
9,519
44,328$272,738

Kureha Corporation Business Report 201531

7. Financial Instruments and Related Disclosures

I. Status of financial instruments
A) Group policy for financial instruments
The Group uses financial instruments, mainly bank loans and bonds for the purpose of raising its necessary fund for equipment
investment plan. Cash surpluses, if any, are invested only in short-term deposits, etc. Working capital for short-term ongoing
operations is procured from short-term bank loans. Derivatives are used, not for speculative purposes, but to manage exposure tofinancial risks as described below.
B) Nature and extent of risks arising from financial instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies
are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign
currencies, is hedged by using forward foreign currency contracts. Investments in securities, equity instruments of customers andsuppliers of the Group, are exposed to the risk of market price fluctuations. And long-term receivables are made to the employees.
Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign
currencies, partly accompanied by the import of materials, are exposed to the market risk of fluctuation in foreign currency
exchange rates, those risks are almost netted against the balance of receivables denominated in the same foreign currency as noted
above. And, the payables in Euro are always within the balance of receivables in Euro.
Although a part of such bank loans, bonds and lease obligation, which are mainly for the purpose of equipment investment,
are exposed to market risks from changes in variable interest rates; those risks are mitigated by using mostly derivatives of interestrate swaps.
Derivatives mainly include forward foreign currency contracts and interest-rate swaps, which are used to manage exposure tomarket risks from changes in foreign currency exchange rates of receivables and payables, and from changes in interest rates ofbank loans. Please see Note 19 for more detail about derivatives.
C) Risk management for financial instruments
Credit risk management (risk of counterparty’s failure to repay)
Credit risk is the risk of economic loss arising from counterparty’s failure to repay or service debt according to the contractual
terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include setting up an
individual credit limit and monitoring of payment terms and balances of major customers by each business administration
department to identify the default risk of customers at an early stage. A credit limit is changed, if necessary, based on a periodic
monitoring of customers’ financial positions. And the Group manages to mitigate the risk of receivable collection due todeteriorating financial position by utilizing such facilities as credit insurance or factoring. In using derivatives, the Group chooses
highly creditworthy financial institutions to avoid counterparty risk.
Market risk management (foreign exchange risk and interest rate risk)
The Company and certain consolidated subsidiaries manage market risk resulting from fluctuations in foreign currency exchange
rates of foreign currency trade receivables and payables, which are to be identified through management per month and per
currency. Such foreign exchange risk is hedged principally by forward foreign currency contracts. Interest-rate swaps are used to
manage exposure to market risks from changes in interest rates of bank loans.
Investments in securities are managed by monitoring market values and financial position of issuers on a regular basis.
Basic principles of derivative transactions have been based on the internal guidelines which prescribe the authority and thelimit for each transaction. The same principles are applicable to the consolidated subsidiaries.
Liquidity risk management (risk of the Group’s failure to pay at maturity)
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Groupmanages its liquidity risk by controlling a monthly cash flow plan, and the Company manages it by using commercial paper andcommitment line.
D) Fair value of financial instruments
Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are not available, other rational
valuation techniques are used instead. The fair values hereof may vary upon applying various procedures, as the valuation
techniques include variable factors. Also please note that the contract amounts themselves shown in Note 19 Derivatives andHedging Activities do not imply the market risk exposure regarding derivative transactions.

32

Kureha Corporation Business Report 2015

II. Fair value of financial instruments
Carrying amount, fair value and the differences as of March 31, 2015 and 2014 were as follows:(This information excludes financial instruments whose fair value cannot be reliably determined)

March 31, 2015

Cash and time deposits
Trade notes and accounts receivable
Allowance for doubtful accounts
Sub-total
Investments in securities
Available-for-sale securities
Long-term loans including current portion
Total assets
Trade notes and accounts payable
Short-term loans payable
Other payables
Bonds including current portion
Bonds with stock acquisition rights
Long-term loans payable including current portion
Total liabilities
Derivatives
Not qualifying for hedge accounting
Qualifying for hedge accounting
March 31, 2015

Cash and time deposits
Trade notes and accounts receivable
Allowance for doubtful accounts
Sub-total
Investments in securities
Available-for-sale securities
Long-term loans including current portion
Total assets
Trade notes and accounts payable
Short-term loans payable
Other payables
Bonds including current portion
Bonds with stock acquisition rights
Long-term loans payable including current portion
Total liabilities
Derivatives
Not qualifying for hedge accounting
Qualifying for hedge accounting

Carrying
amountMillions of yen
Unrealized
gain/loss

Fair value¥7,772
28,984(192)
28,791¥7,772¥—28,791—

26,0262,070¥64,661
13,76618,094
7,247
27,00015,00026,542¥107,650

26,0262,216¥64,808
13,76618,094
7,247
27,222
18,544
26,588¥111,463

—
146
¥146
—
—
—
(222)
(3,544)(46)¥(3,812)

¥(0)
(9)

¥(0)
(9)

¥—
—

Carrying
amountThousands of U.S. dollars
Unrealized
gain/loss

Fair value$64,675
241,191(1,597)
239,585$64,675$—

239,585—

216,576
17,225$538,079
114,554
150,570
60,306
224,681
124,823
220,870$895,814

216,576
18,440$539,302
114,554
150,570
60,306
226,529
154,314221,253$927,544—
1,214$1,214———(1,847)(29,491)(382)$(31,721)

$(0)
(74)

$(0)
(74)

$—
—

Kureha Corporation Business Report 201533

March 31, 2014

Cash and time deposits
Trade notes and accounts receivable
Allowance for doubtful accounts
Sub-total
Investments in securities
Available-for-sale securities
Long-term loans including current portion
Total assets
Trade notes and accounts payable
Short-term loans payable
Other payables
Bonds
Bonds with stock acquisition rights
Long-term loans payable including current portion
Total liabilities
Derivatives
Not qualifying for hedge accounting
Qualifying for hedge accounting

Carrying
amountFair value

Millions of yen
Unrealized
gain/loss¥8,726
30,445(118)
30,327¥8,726¥—

30,327—

20,7982,163¥62,015
16,453
13,8496,149
20,00015,00026,375¥97,828

20,7982,311¥62,163
16,453
13,8496,149
20,431
18,97526,470¥102,329

—
148
¥148
—
—
—
(431)
(3,975)(95)¥(4,501)¥(12)(28)¥(12)(28)¥——A) Method of fair value measurement of financial instruments
1. Asset
Cash and time deposits, and trade notes and accounts receivable
The carrying amounts of these accounts approximate fair value because of their short maturities.
Investments in securities
The fair values of investments in securities are measured at the quoted market price of the stock exchange for the equity
instruments.
Long-term loans including current portion
The fair values of long-term loans are measured at the present value of the future cash flows discounted by a rate of return, an
appropriate rate such as government bond rate added to a credit spread, with respect to each credit risk segment of credit control.
2. Liability
Trade notes and accounts payable, short-term loans payable, and other payables
The carrying amounts of these accounts approximate fair value because of their short maturities.
Bonds including current portion
The fair values of the bonds issued by the Company are measured based on the market price.
Bonds with stock acquisition rights
The fair values of bonds with stock acquisition rights are measured based on the prices obtained from the financial institutions
with which they are transacted.
Long-term loans payable including current portion
The fair values of long-term loans payable are measured by discounting the principal and interest discounted by an assumed new
borrowing rate. As a part of long-term loans payable with floating interest rates is subject to deferral method of interest rate
swaps, the fair values of the interest rate swaps are included in the long-term loans payable.

34

Kureha Corporation Business Report 2015

B) Carrying amount of financial instruments whose fair value cannot be reliably determined as of March 31, 2015 and 2014
Carrying amountThousands of
U.S. dollars

Millions of yen

FY2013

FY2014
Investments in equity instruments that do not have aquoted market price in an active market

FY2014¥215¥315$2,621C) The aggregate annual maturities of monetary receivables as of March 31, 2015 and 2014

March 31, 2015

Cash and time deposits
Trade notes and accounts receivable
Long-term loans
Total

March 31, 2015

Cash and time deposits
Trade notes and accounts receivable
Long-term loans
Total

March 31, 2014

Cash and time deposits
Trade notes and accounts receivable
Long-term loans
Total

Due in one
year or lessDue after one year
through five years

Due after five years
through ten years

Millions of yen
Due after
ten years

¥—
—
669
¥669

¥—
—
983
¥983

¥—
—
322
¥322

Due after one year
through five years

Due after five years
through ten years

Thousands of U.S. dollars
Due after
ten years

$—
—
5,567
$5,567$——
8,180$8,180$——
2,679$2,679Due after one year
through five years

Due after five years
through ten years

Millions of yen
Due after
ten years

¥—
—
657
¥657

¥—
—
757
¥757

¥—
—
655
¥655

¥7,772
28,984
95¥36,852
Due in one
year or less$64,675
241,191790$306,665
Due in one
year or less¥8,726
30,445
93¥39,265D) The aggregate annual maturities of bonds and long-term loans payable as of March 31, 2015 and 2014
Millions of yen

March 31, 2015

Due in one
year or less

Bonds
Bonds with stock acquisition rights
Long-term loans payable
Total¥10,000—
6,772¥16,772

Due after one Due after two Due after three Due after four
year through years through years through years throughtwo years
three years
four years
five years

¥—
—
6,465
¥6,465¥5,000
15,0005,907¥25,907¥5,000—3,621¥8,621¥7,000—2,694¥9,694Due after
five years

¥—
—
1,081
¥1,081Thousands of U.S. dollars

March 31, 2015

Due in one
year or less

Bonds
Bonds with stock acquisition rights
Long-term loans payable
Total$83,215—
56,353$139,568

Due after one Due after two Due after three Due after four
year through years through years through years throughtwo years
three years
four years
five years$——
53,798$53,798$41,607
124,823
49,155$215,586$41,607—30,132$71,740$58,250—
22,418$80,669

Due after
five years

$—
—
8,995
$8,995

Kureha Corporation Business Report 201535

Millions of yen

March 31, 2014

Bonds
Bonds with stock acquisition rights
Long-term loans payable
Total

Due in one
year or less

¥—
—
4,756
¥4,756

Due after one Due after two Due after three Due after four
year through years through years through years throughtwo years
three years
four years
five years¥10,000—
5,353¥15,353

¥

—
—
5,609
¥5,609¥ 5,000
15,000
4,635¥24,635¥5,000—2,725¥7,725Due after
five years

¥

—
—
3,294
¥3,294

8. Securities
Investments in unconsolidated subsidiaries and affiliates amount to ¥5,857 million ($48,739 thousand) and ¥3,607 million as ofMarch 31, 2015 and 2014, respectively.
The acquisition cost and carrying amount of available-for-sale securities whose fair value were available as of March 31, 2015
and 2014 were as follows:
March 31, 2015

Securities with unrealized gain:
Equity securities
Sub-total
Securities with unrealized loss:
Equity securities
Sub-total
Total

March 31, 2015

Securities with unrealized gain:
Equity securities
Sub-total
Securities with unrealized loss:
Equity securities
Sub-total
Total

March 31, 2014

Securities with unrealized gain:
Equity securities
Sub-total
Securities with unrealized loss:
Equity securities
Sub-total
Total

36

Kureha Corporation Business Report 2015

Acquisition
cost

Carrying
amountMillions of yen
Unrealized
gain (loss)¥10,179
10,179¥24,271
24,271¥14,092
14,092

1,878
1,878¥12,057

1,754
1,754
¥26,026

(123)
(123)
¥13,968

Acquisition
cost

Carrying
amountThousands of U.S. dollars
Unrealized
gain (loss)$84,705
84,705$201,972
201,972$117,267
117,267

15,627
15,627$100,332

14,595
14,595$216,576(1,023)(1,023)$116,235

Acquisition
cost

Carrying
amountMillions of yen
Unrealized
gain (loss)¥8,768
8,768¥17,973
17,973¥9,204
9,204

3,157
3,157
¥11,926

2,824
2,824
¥20,798

(332)
(332)
¥8,872

Proceeds from sales of available-for-sale securities and related gross realized gain and loss on those sales for the fiscal years ended
March 31, 2015 and 2014 were as follows:
Millions of yen

Proceeds from sales
Gross realized gain
Gross realized loss

FY2014¥215
70—

FY2013¥1,161
193—

Thousands of
U.S. dollars

FY2014$1,789582—

9. Short-term Loans Payable, Long-term Debt and Lease Obligations
Short-term loans payable and long-term debt as of March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Short-term loans payable with average interest rate of 0.88%
in FY2014 and 0.82% in FY2013
Current portion of long-term loans payable with averageinterest rate of 0.92% in FY2014 and 1.24% in FY2013
Unsecured bonds maturing on June 17, 2015 with the interest
rate of 2.06%
Unsecured bonds maturing on September 15, 2017 with theinterest rate of 0.95%
Unsecured bonds maturing on October 19, 2018 with theinterest rate of 0.82%
Unsecured bonds maturing on March 6, 2020 with theinterest rate of 0.30%
Zero coupon convertible bonds due 2018 (bonds with stockacquisition rights) maturing on March 14, 2018 (Note 1)
Long-term loans payable maturing in 2016 through 2028 withaverage interest rate of 0.92% in FY2014 and 1.24% in FY2013
Total

FY2014FY2013

FY2014¥18,094¥13,849$150,570

6,772

4,756

56,353

10,00010,00083,215

5,000

5,000

41,607

5,000

5,000

41,6077,000—

58,25015,00015,000124,823

19,770¥86,636

21,619¥75,225

164,516$720,945(Note 1) Summary of zero coupon convertible bonds due 2018 (bonds with stock acquisition rights)
Type of stock should be issued
Common stock
Issue price of stock acquisition rights
Zero (no consideration)
Initial conversion price
433 yen per share ($3.60)
Aggregate amount of bond
¥15,000 million ($124,823 thousand)Aggregate amount of stock issued by exercisingstock acquisition rights—
Ratio of stock acquisition rights granted
100%
Exercise period
From March 28, 2013 to February 28, 2018(at the place where the stock acquisition rights are to
be exercised)
Note: When the bondholder claims for exercising stock acquisition rights, the amount should be paid for the stocks acquired
were fulfilled by substitution of the redemption amount of the bonds. Further, when the stock acquisition rights were
exercised, the Company considers as the bondholder has claimed for exercise.

Kureha Corporation Business Report 2015

37

The aggregate annual maturities of long-term loans payable as of March 31, 2015 were as follows:
Fiscal year ending March 31

Millions of yen

2016
2017
2018
2019
2020

¥6,772
6,465
5,907
3,621
2,694

Thousands of
U.S. dollars$56,353
53,79849,15530,132
22,418The aggregate annual maturities of lease obligations as of March 31, 2015 were as follows:
Fiscal year ending March 31

Millions of yen

2016
2017
2018
2019
2020

¥162
127
89
34
18

Thousands of
U.S. dollars$1,348
1,056
740
282
149

Note:	Average interest rate on lease obligations is omitted since above lease obligations recorded in the consolidated balance sheet
as of March 31, 2015 include interest equivalent amounts.

10. Assets Pledged as Collateral
The following assets of the Group were pledged as collateral for trade notes and accounts payable, short-term loans payable, longterm loans payable and others in the amount of ¥1,191 million ($9,910 thousand) and ¥1,545 million as of March 31, 2015 and2014, respectively:
Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Machinery, equipment and vehicles
Land
Investments in securities
Total

FY2014¥16,567
13,386
3,897
5,105¥38,956

FY2013¥16,723
12,474
3,897
4,452¥37,548

FY2014$137,863
111,392
32,42942,481$324,174

11. Loan Commitment Agreements
The Company and its consolidated subsidiaries entered into loan commitment agreements and overdraft agreements with thefinancial institutions. The outstanding balance as of March 31, 2015 and 2014 was as follows:
Thousands of
U.S. dollars

Millions of yen

Total commitment available
Amount utilized
Balance available

FY2014¥10,97326¥10,947

FY2013¥11,179
96¥11,082

FY2014$91,312216$91,095

12. Net Defined Benefit Asset and Liability
The Company and certain consolidated subsidiaries have adopted funded and unfunded retirement benefit plans to prepare for
employees’ retirement benefits. And certain consolidated subsidiaries have adopted defined contribution retirement plans.
Under the defined benefit plans, cash balance plan is introduced. Each participant has a hypothetical individual account withthe amount equivalent to the reserve for each participant and resource of pension. In hypothetical individual accounts, interest
credits based on trends in market interest rates and pay credits based on salary level, etc. are accumulated. Also, in certain
38

Kureha Corporation Business Report 2015

consolidated subsidiaries, employees receive lump-sum payments or payments of pension plans based on salaries and service
period.
Under lump-sum retirement benefit plans, employees receive lump-sum payments based on salaries and service period as
retirement benefits. In addition, certain consolidated subsidiaries that have defined benefit plans and lump-sum retirement
benefit plans calculate net defined benefit liability and net pension expenses using the simplified method.
A. Defined benefit plans(i) Change in retirement benefit obligations
Thousands of
U.S. dollars

Millions of yen

Balance at beginning of fiscal year
Cumulative effects of changes in accounting policies
Restated balance
Service cost
Interest cost
Actuarial gain or loss
Benefits paid
OthersBalance at end of fiscal year

FY2014¥20,345425
20,770
1,092
238
(186)
(1,185)
20¥20,749

FY2013¥20,718—
20,718917
359
64(1,797)
82¥20,345

FY2014$169,301
3,536
172,838
9,087
1,980(1,547)(9,861)
166$172,663(ii) Change in plan assets
Thousands of
U.S. dollars

Millions of yen

Balance at beginning of fiscal year
Expected return on plan assets
Actuarial gain or loss
Employer contributions
Benefits paid
OthersBalance at end of fiscal year

FY2014¥19,939
462
1,166
2,181
(1,148)12¥22,614

FY2013¥18,252
385
837
2,188
(1,777)53¥19,939

FY2014$165,923
3,844
9,702
18,149(9,553)99$188,183(iii) Retirement benefit obligations and plan assets at end of fiscal year and reconciliation of net defined benefit liability and net
defined benefit asset recognized in the consolidated balance sheet
Thousands of
U.S. dollars

Millions of yen

Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Net amount of liability and asset recognized in the
consolidated balance sheet
Net defined benefit liability
Net defined benefit asset
Net amount of liability and asset recognized in the
consolidated balance sheet

FY2014¥20,467(22,614)(2,147)282

FY2013¥20,086(19,939)
146
259

FY2014$170,317(188,183)(17,866)
2,346(1,864)405(15,511)550(2,415)

440
(34)

4,576
(20,096)¥(1,864)¥405$(15,511)

Kureha Corporation Business Report 201539

(iv) Net pension expenses and their breakdown
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain or loss
Net pension expenses

FY2014¥1,092
238
(462)
537
¥1,405FY2013
¥917
359
(385)
594
¥1,485FY2014$9,087
1,980(3,844)
4,468$11,691(v) Remeasurements of defined benefit plans on other comprehensive income
The components of items recognized in remeasurements of defined benefit plans (pre-tax) on other comprehensive income forthe fiscal years ended March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

Actuarial gain or loss
Total

FY2014¥1,889¥1,889FY2013¥—¥—

FY2014$15,719$15,719(vi) Remeasurements of defined benefit plans on accumulated other comprehensive income
The components of items recognized in remeasurements of defined benefit plans (pre-tax) on accumulated other comprehensive
income as of March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

Unrecognized actuarial gain or loss
Total

FY2014¥893¥893

FY2013¥2,782¥2,782FY2014$7,431$7,431(vii) Plan assets(a) Percentage by major category of plans assets as of March 31, 2015 and 2014 were as follows:
FY2014FY2013
Bonds
62%
60%
Equities
24%
26%
General account13%
13%
Others
1%
1%
Total
100%
100%
(b) Determination procedure of long-term expected rate of return on plan assets
In determining long-term expected rate of return on plan assets, the Company and certain consolidated subsidiaries
consider the current and projected asset allocations, as well as the current and future long-term rate of returns for various
categories of the plan assets.
(viii) Basis for calculation of actuarial assumptions
Basis for calculation of actuarial assumptions for the fiscal years ended March 31, 2015 and 2014 were as follows (weighted
average):
FY2014FY2013
Discount rate
1.1%
1.7%
Long-term expected rate of return on plan assets
2.3%
2.1%
B. Defined contribution pension plans
The amount to be paid by consolidated subsidiaries to the defined contribution pension plans was ¥21 million ($174 thousand)and ¥15 million for the fiscal years ended March 31, 2015 and 2014, respectively.

40

Kureha Corporation Business Report 2015

13. Income Taxes
The significant components of deferred tax assets and liabilities as of March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

FY2013

FY2014
Deferred tax assets:
Tax loss carried forward
Unrealized gain on fixed assets
Accrued bonuses
Accumulated depreciation
Loss on valuation of inventories
OthersSub-total
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Shortfall in depreciation
Net unrealized gain on available-for-sale securities
OthersTotal deferred tax liabilities
Net deferred tax assets

FY2014¥7,460
1,392
892
616
522
4,034
14,917(2,315)
12,602¥6,307
1,134
865
516
466
3,877
13,167(1,517)
11,649$62,078
11,583
7,422
5,126
4,343
33,569124,132(19,264)
104,868(6,720)(4,456)(1,260)(12,437)¥164(5,648)(3,112)(527)(9,287)¥2,361(55,920)(37,080)(10,485)(103,495)$1,364

Deferred tax assets and liabilities as of March 31, 2015 and 2014 were presented as follows:
Thousands of
U.S. dollars

Millions of yen

Current assets
Deferred tax assets
Investments and other assets
Deferred tax assets
Current liabilities
OthersLong-term liabilities
Deferred tax liabilities

FY2013

FY2014FY2014¥2,506¥2,680$20,853

1,787

1,524

14,870

(3)

(5)

(24)

(4,125)(1,836)(34,326)

Reconciliations of the difference between the statutory income tax rate and the effective income tax rate for the fiscal years ended
March 31, 2015 and 2014 were as follows:

Statutory income tax rate:
Expense not deductible for tax purpose
Non-taxable revenue
Tax credit for research and development costs
Valuation allowance
Decrease in deferred tax assets at the end of the fiscal year due to changes in tax rate
Others
Effective income tax rate

FY201435.38%
0.77(0.80)(6.71)
5.87
1.51(3.43)
32.59%FY201337.75%
2.56(1.37)(7.29)(1.69)
1.73(3.25)
28.44%(Revisions to amounts of deferred tax assets and deferred tax liabilities due to change in rate of income taxes)
On March 31, 2015, “Partial Amendment of the Income Tax Act” and “Partial Amendment of the Local Tax Act” were
promulgated. Accordingly, for temporary differences expected to be reversed on and after April 1, 2015, the effective tax rateapplied to the calculation of deferred tax assets and liabilities for the current fiscal year has been lowered from 35.38% in theprior fiscal year to 32.83% for those expected to be collected or paid during the period from April 1, 2015 to March 31, 2016,
and to 32.07% for those expected to be collected or paid on and after April 1, 2016, respectively.
Kureha Corporation Business Report 201541

As a result, the amount of deferred tax liabilities (after deducting deferred tax assets) decreased by ¥226 million ($1,880
thousand), while income taxes – deferred, unrealized gain on available-for-sale securities, and remeasurements of defined benefit
plans for the current fiscal year increased by ¥205 million ($1,705 thousand), ¥460 million ($3,827 thousand), and ¥(29)
million ($(241) thousand), respectively.

14. Commitments and Guarantee Liabilities
The Group guarantees employees’ bank loans to the amounts of ¥59 million ($490 thousand) and ¥86 million as of March 31,
2015 and 2014, respectively.

15. Stock Option Plan
The Company issued stock acquisition rights (stock options) in accordance with the provisions of the Companies Act as follows:
I. Accounting for stock option related expenses for the fiscal years ended March 31, 2015 and 2014
Thousands of
U.S. dollars

Millions of yen

Share-based compensation included in selling, generaland administrative expenses:

FY2013

FY2014¥16

FY2014¥16$133

II. Details of stock options, volume and activityA) Detail of stock options

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

42

Kureha Corporation Business Report 2015

1st Stock Option Plan
8 directors of the Company
Common stock 47,500 shares
July 18, 2007
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 27, 2007 to June 26, 2008
From July 18, 2007 to July 17, 2037
2nd Stock Option Plan
8 directors of the Company
Common stock 49,400 shares
July 23, 2008
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

From June 26, 2008 to June 25, 2009
From July 23, 2008 to July 22, 2038
3rd Stock Option Plan
8 directors of the Company
Common stock 55,500 shares
July 22, 2009
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 25, 2009 to June 24, 2010
From July 22, 2009 to July 21, 2039
4th Stock Option Plan
8 directors of the Company
Common stock 55,300 shares
July 21, 2010
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 25, 2010 to June 24, 2011
From July 21, 2010 to July 20, 2040
5th Stock Option Plan
7 directors of the Company
Common stock 56,600 shares
July 20, 2011
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 24, 2011 to June 23, 2012
From July 20, 2011 to July 19, 2041

Kureha Corporation Business Report 201543

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

Persons granted
Number of stock options by type of shares
Grant date
Vesting conditions

Eligible service period
Exercise period

44

Kureha Corporation Business Report 2015

6th Stock Option Plan
7 directors of the Company
Common stock 76,500 shares
July 18, 2012
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 26, 2012 to June 25, 2013
From July 18, 2012 to July 17, 2042
7th Stock Option Plan
4 directors of the Company
Common stock 56,700 shares
July 17, 2013
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 25, 2013 to June 24, 2014
From July 17, 2013 to July 16, 2043
8th Stock Option Plan
4 directors of the Company
Common stock 33,900 shares
July 16, 2014
a. The eligible director shall exercise options collectively during
the period from the following day after he or she retired fromthe position as a director of the Company and through the 10thday.
b. If the eligible director resigned from its position due to certain
reasons, the number of stock options may be reduced
depending on the service period.
c. If the eligible director gives up the acquisition rights, he or shecannot exercise the stock options given up.
From June 25, 2014 to June 24, 2015
From July 16, 2014 to July 15, 2044

B) Volume and activity of stock options for the fiscal year ended March 31, 2015:
Volume of stock options:
Before vesting:
As of March 31, 2014
GrantedForfeited
VestedOutstanding
After vesting:
As of March 31, 2014
VestedExercised
Forfeited
Outstanding

162,200
33,900——196,100—————

Price information:
Yen

Exercise price
Average stock price at the time of exercise
Fair value at the date of grant

U.S. dollars

Exercised

Outstanding

Exercised

Outstanding

¥  1
—
—

¥  1
—
372

$0.00
—
—

$0.00
—
3.09

C) Valuation method for fair value of stock options:
The valuation method for fair value of stock options granted during the fiscal year ended March 31, 2015 is as follows:
Valuation method: Black-Scholes formula
Major basic numerical values and valuation method:
Stock price volatility
Expected years to expiration
Expected dividends
Risk-free interest rate

30.2%
4.0 years¥11 ($0.09) per share
0.11%D) Estimation method for the vested number of stock options
Since it is difficult to make a reasonable estimate on future forfeited stock options, the actual number of forfeited stock options
is reflected in the estimation.

16. Selling, General and Administrative Expenses
Major components of selling, general and administrative expenses for the fiscal years ended March 31, 2015 and 2014 were as
follows:
Millions of yen

Salaries, wages and bonuses
Provision for bonuses
Employees’ retirement benefit expenses
Research and development expenses

FY2014¥8,473
849
650
4,842

FY2013¥7,893
790
644
4,528

Thousands of
U.S. dollars

FY2014$70,508
7,064
5,409
40,292

Kureha Corporation Business Report 201545

17. Gain or Loss on Property, Plant and Equipment
Gain on sales of property, plant and equipment and loss on disposal and sales of property, plant and equipment for the fiscal years
ended March 31, 2015 and 2014 were as follows
Thousands of
U.S. dollars

Millions of yen

FY2014Gain on sales of property, plant and equipment:Land
Machinery, equipment and vehicles
Total
Loss on disposal of property, plant and equipment:
Buildings and structures
Machinery, equipment and vehicles
Others (tools, furniture and fixtures)
Total
Loss on sales of property, plant and equipment:
Machinery, equipment and vehicles
Total

FY2013

FY2014

¥25
11
¥37

¥8
7
¥15

$208
91
$307

¥597
424
33
¥1,055

¥699
413
65
¥1,177$4,967
3,528
274$8,779

¥8
¥8

¥5
¥5

$ 66
$66

18. Impairment Loss
For the fiscal year ended March 31, 2015
The Group has recognized impairment loss for the following asset group for the fiscal year ended March 31, 2015.
Purpose of use

Manufacturing facility

Locations

Pennsylvania,
the United States

Type of assets

Buildings
Machinery andequipment
OthersThousands of
U.S. dollars

Millions of yen¥255$2,121

397

3,303

8

66

In principle, the Group has grouped the operating assets by business units and idle assets by individual properties.
For the above mentioned manufacturing facility, the Group wrote down the carrying amount of fixed assets owned by
KUREHA ADVANCED MATERIALS LLC, a wholly-owned subsidiary of KUREHA AMERICA INC., to their recoverable
value and recognized the reduction as loss on liquidation of subsidiaries of ¥660 million ($5,492 thousand) under other income(expenses), following the decision to dissolve the company.
The recoverable value is determined as the higher of either net sales price or the value in use. Net sales price of buildings isreasonably estimated based on appraisals by real estate appraisers. Net sales price of machinery, equipment and others is
reasonably estimated based on expected net realizable sales proceeds. The value in use is taken as zero because the future cash
flows cannot be expected.
For the fiscal year ended March 31, 2014
The Group has recognized impairment loss for the following asset group for the fiscal year ended March 31, 2014.
Purpose of use

Location

Type of assets

Millions of yen

Tamba City, Hyogo
Idle assets
Land
¥133
Prefecture
In principle, the Group has grouped the operating assets by business units and idle assets by individual properties.
For the above mentioned idle asset for which the market value has been declining, the Group reduced it to the recoverable
value and recognized the reduction as impairment loss of ¥133 million under other income (expenses). The recoverable value ismeasured by the net sales price, determined reasonably based on assessed value of fixed assets tax.

46

Kureha Corporation Business Report 201519. Derivatives and Hedging Activities

I. Derivative contracts to which hedge accounting is not applied as of March 31, 2015 and 2014 were as follows:
Millions of yen

FY2013

FY2014Contract
amountForeign exchange forward contracts:
Selling:
U.S. dollars
Euro
Buying:U.S. dollars
Euro
British pounds
Chinese yuan
Total

Fair value

Unrealized
gain (loss)

Contract
amountUnrealized
gain (loss)

Fair value¥1,127
906

¥(24)
25

¥(24)
25

¥1,693
154

¥(14)
(0)

¥(14)
(0)

458
—
92
77

(0)
—
(2)
0
¥(0)

(0)
—
(2)
0
¥(0)

483
198
—
—

2
0
—
—
¥(12)

2
0
—
—
¥(12)

Thousands of U.S. dollars

FY2014Contract
amountForeign exchange forward contracts:
Selling:
U.S. dollars
Euro
Buying:U.S. dollars
Euro
British pounds
Chinese yuan
Total

Fair value

Unrealized
gain (loss)$9,3787,539$(199)208$(199)
208

3,811
—
765
640

(0)
—
(16)
0
$(0)

(0)
—
(16)
0
$ (0)

Notes: 1. Fair value is calculated using the forward rates.
2. For foreign exchange forward contracts, unrealized gain (loss) is presented as fair value.
II. Derivative contracts to which hedge accounting is applied as of March 31, 2015 and 2014 were as follows:A) Currency related
As of March 31, 2015

Not applicable.
As of March 31, 2014

Millions of yen

Hedge accounting
methodClassification of derivative
contracts

Principle processing
methodForeign exchange
contract (selling) inEuro

Major hedged items

Accounts receivable

Contract
amount¥2,300Contract
amountover one year¥—

Fair value¥(1)

Notes: 1. Fair value is calculated using the forward rates.
2.	Contract amount is presented in full amount, and unrealized gain (loss) calculated using investment ratio is presented
as fair value.

Kureha Corporation Business Report 201547

B) Interest rate related
Millions of yen

As of March 31, 2015
Hedge accounting
methodClassification of derivative
contracts

Principle processing
methodInterest rate swaps:(fixed rate
payment, floating
rate receipt)

Major hedged items

Long-term loans
payableContract
amount¥636

Contract
amountover one year

Fair value¥212

Thousands of U.S. dollars

As of March 31, 2015
Hedge accounting
methodClassification of derivative
contracts

Principle processing
methodInterest rate swaps:(fixed rate
payment, floating
rate receipt)

Major hedged items

Long-term loans
payableContract
amount$5,292Contract
amountover one year

$1,764As of March 31, 2014
Hedge accounting
method¥(9)

Fair value$(74)

Millions of yen
Classification of derivative
contracts

Major hedged items

Contract
amountContract
amountover one year

Principle processing
methodInterest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term loans
payable¥1,580¥1,580Interest rate swaps
meeting certain
conditions

Interest rate swaps:(fixed rate
payment, floating
rate receipt)

Long-term loans
payable100—

Fair value¥(26)(Note 2)

Total
¥1,680¥1,580¥(26)
Notes: 1. Fair value is calculated using prices quoted by financial institutions.
2.	With respect to interest rate swap contracts which meet certain conditions, fair values of the interest rate swap contracts
are included in the fair values of the relevant long-term loans payable, since they are used for recording long-term loans
payable as hedged items.

48

Kureha Corporation Business Report 2015

20. Other comprehensive Income

Reclassification adjustments and tax effect amounts of other comprehensive income for the fiscal years ended March 31, 2015
and 2014 were as follows:

FY2014
Unrealized gain on available-for-sale securities
Amount for the fiscal year
Reclassification adjustment
Amount before tax effectTax effect amount
Unrealized gain on available-for-sale securities
Deferred gain on hedges
Amount for the fiscal year
Reclassification adjustment
Amount before tax effectTax effect amountDeferred gain on hedges
Translation adjustments
Amount for the fiscal year
Remeasurements of defined benefit plans
Amount for the fiscal year
Reclassification adjustment
Amount before tax effectTax effect amountRemeasurements of defined benefit plans
Share of other comprehensive income in affiliates
Amount for the fiscal year
Total other comprehensive income

Millions of yen

Thousands of
U.S. dollars

FY2013

FY2014¥5,174(69)
5,105(1,344)
3,761

¥205
(193)
11
22
33

$43,055(574)
42,481(11,184)
31,297

(6)
20
13
(4)
8

(14)
39
24
(9)
15

(49)
166
108
(33)
66

4,223

5,396

35,141

1,352
537
1,889
(723)
1,166

—
—
—
—
—

11,2504,468
15,719(6,016)
9,702

285¥9,444580¥6,026

2,371$ 78,588

21. Per Share Information

Net assets per share as of March 31, 2015 and 2014 and net income per share for the fiscal years then ended were as follows:Yen

Net assets per share
Basic net income per share
Diluted net income per share

FY2014¥687.80
53.53
44.51

U.S. dollars

FY2013¥604.00
42.87
35.65

FY2014
$5.72
0.44
0.37

Net income per share and diluted net income per share were calculated based on the following data:
Thousands of
U.S. dollars

Millions of yen or shares

FY2014
Basic net income per share:
Net income
Net income attributed to common stock
Weighted average number of common stock during theperiodDiluted net income per share:
Number of increased common stock used in computing
diluted net income per share:
Bonds with stock acquisition rights
Stock acquisition rights

FY2013

FY2014¥9,195
9,195¥7,3657,365$76,516
76,516

171,786,895

171,785,145—

34,823,223
34,642,032
181,191

34,799,522
34,642,032
157,490———

Kureha Corporation Business Report 201549

22. Shareholders’ Equity

For the fiscal year ended March 31, 2015
I. Issued stock
Type of share

Share at beginning of fiscal year

Common stock

Increase

Decrease

Share at end of fiscal year—

181,683,909—

181,683,909

II. Treasury stock
Type of share

Share at beginning of fiscal year

Common stock

Increase

Decrease

Share at end of fiscal year

7,839

9,893,004—

9,900,843

III. Dividends
A) Dividends paid
Date of approval

Amount(millions of yen)Type of share

April 15, 2014
Board of Directors
October 21, 2014
Board of Directors

Common stock

1,030

Common stock

Date of approval

Type of share

April 21, 2015
Board of Directors

Commonstock

Date of approval

Type of share

April 21, 2015
Board of Directors

Commonstock

Amountper share(U.S. dollars)

8,571

Common stock

Date of approval

5.50

Amount(thousands of
U.S. dollars)Common stock

0.04

Source of dividend

Amount(millions of yen)

Source of dividend

Amount(thousands of
U.S. dollars)

Retained
Earnings

1,116

9,286

Effective Date

March 31,2014
September 30,
2014

June 3,2014
December 2,
2014

Measurement date

Effective Date

March 31,2014
September 30,
2014

0.04

7,855

Retained
Earnings

Measurement date

6.00

944

Type of share

April 15, 2014
Board of Directors
October 21, 2014
Board of Directors
B) Dividends declared

Amount per
share (yen)Amount per
share (yen)June 3,2014
December 2,
2014

Measurement date

Effective Date

Amount per share(U.S. dollars)
Measurement date

Effective Date

6.50

0.05

March 31,2015

March 31,2015

June 2,2015

June 2,2015

For the fiscal year ended March 31, 2014
I. Issued stock
Type of share

Share at beginning of fiscal year

Common stock

Increase

Decrease—

181,683,909

Share at end of fiscal year—

181,683,909

II. Treasury stock
Type of share

Share at beginning of fiscal year

Common stock

Increase

Decrease

9,932

9,952,952

Share at end of fiscal year

69,8809,893,004

III. Dividends
A) Dividends paid
Date of approval

April 23, 2013
Board of Directors
October 15, 2013
Board of Directors
50

Kureha Corporation Business Report 2015

Type of share

Commonstock
Commonstock

Amount(millions of yen)

858

858

Amount per share (yen)

5.00

5.00

Measurement date

March 31,2013
September 30,
2013

Effective Date

June 4,2013
December 3,
2013B) Dividends declared
Date of approval

Type of share

April 15, 2014
Board of Directors

Commonstock

Source of dividend

Retained
Earnings

Amount(millions of yen)

1,030

Amount per
share (yen)Measurement date

Effective Date

March 31,2014

June 3,2014

6.00

23. Segment Information

I. Overview of the reportable segments
The Company’s reportable segments are determined on the basis that separate financial information of such segments areavailable and examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and assess the business performances of such segments within the Group. The Company has separate divisions byproduct, and each division formulates a comprehensive strategy for business activities in domestic and overseas markets.
Thus, the Company consists of segments by product and service on the basis of the business divisions, and the “Advanced
materials,” “Specialty chemicals,” “Specialty plastics,” “Construction,” and “Other operations” are 5 reportable segments.
Major products and services for each segment are as follows:
Segment
Advanced materials

Products and services
PPS resin, PVDF resin, carbon fiber, bead-shaped activated carbon, anode materials forlithium ion batteries, PGA (polyglycolic acid) resin
Therapeutic agent for chronic renal failure, anti cancer agent, agricultural andhorticultural fungicide, caustic soda, hydrochloric acid, sodium hypochlorite,
monochlorobenzene, para-dichlorobenzene, ortho-dichlorobenzene
Household plastic wrap, garbage bags for kitchen sink, food containers and cooking
paper, PVDF fishing line, PVDC film, PVDC compound, multilayer heat-shrinkablefilm, multilayer bottle, machinery for auto-seal food packaging
Civil engineering and construction contracting business, construction and management
service
Environmental engineering and industrial waste management business, transport andwarehousing business, laboratory tests, analysis, measurement, and inspection service

Specialty chemicals
Specialty plastics
Construction
Other operations

II. Valuation method for reportable segment profit (loss) and asset amounts
The accounting method for reportable business segments is presented in accordance with “Summary of Significant Accounting
Policies.”
The reportable segment profit figures are based on operating profit. Inter–segment internal rates of return and the amounts
transferred are presented based on the current market prices at the time of this report.
As described in “Changes in accounting estimates,” the useful life of manufacturing plant was revised from the current fiscal
year. As a result of the review, compared to the previous method adopted, segment operating income for the current fiscal year
for “Advanced materials”, “Specialty chemicals” and “Specialty plastics” increased by ¥546 million ($4,543 thousand), ¥278
million ($2,313 thousand) and ¥187 million ($1,556 thousand), respectively.
III. Information on amount of net sales, income (loss), assets, liabilities and other items by reportable segment

Net sales:
Outside customers
Inter-segment
Total
Operating income
AssetsDepreciation
Adjustment for increasein fixed assets

Advancedmaterials

Specialty
chemicalsMillions of yen
FY2014
Reportable segment
Specialty
Other
plastics
Construction
operations¥36,187929
37,116¥438¥88,251
3,217¥35,535331
35,866¥7,941¥25,405867¥46,519421
46,941¥3,660¥46,502
1,634¥16,721
6,478
23,200¥1,081¥10,404106¥15,218
6,885
22,104¥1,789¥13,493786¥150,182
15,046
165,228¥14,912¥184,059
6,611

3,596

1,713

5,205

31

1,217

11,765Adjustment(Note 1)

Total

Consolidated(Note 2)

¥— ¥150,182(15,046)—(15,046) 150,182¥(360) ¥14,551¥65,638 ¥249,697
1,650
8,261
5,791

17,557

Kureha Corporation Business Report 2015

51

Net sales:
Outside customers
Inter-segment
Total
Operating income
AssetsDepreciation
Adjustment for increasein fixed assets

Advancedmaterials

Specialty
chemicals

Thousands of U.S. dollars
FY2014
Reportable segment
Specialty
Other
plastics
Construction
operations$301,131
7,730
308,862$3,644$734,384
26,770$295,706
2,754
298,460$66,081$211,408
7,214$387,109
3,503
390,621$30,456$386,968
13,597$139,144
53,906
193,059$8,995$86,577
882

29,924

14,25443,313257

Advancedmaterials

Specialty
chemicals

Adjustment(Note 1)

Total

Consolidated(Note 2)

$126,637 $1,249,746 $— $1,249,746
57,293
125,205 (125,205)—
183,939 1,374,952 (125,205) 1,249,746$14,887 $124,090 $(2,995)$121,086$112,282 $1,531,655 $546,209 $2,077,864
6,540
55,013
13,73068,744
10,127

Millions of yen
FY2013
Reportable segment
Specialty
Other
plastics
Construction
operations

97,902

Total

48,190146,101

Adjustment(Note 1)

Consolidated(Note 2)

Net sales:
Outside customers¥32,815¥36,615¥45,291¥17,238¥16,163 ¥148,124 ¥— ¥148,124
311
1,227
5,705
6,650
15,676(15,676)—
Inter-segment
1,781
Total
34,59636,926
46,51922,943
22,814
163,800(15,676) 148,124¥4,519¥833¥1,621 ¥11,689 ¥212 ¥11,902
Operating income (loss)¥(2,625) ¥7,341
Assets¥81,360¥22,028¥42,973¥10,394¥13,684 ¥170,441 ¥54,017 ¥224,459
Depreciation
3,918
1,111
1,608
116
744
7,499
1,596
9,096
Adjustment for increasein fixed assets
4,049
1,004
8,207
84
845
14,191
2,277
16,468Notes: 1. Adjustment for segment operating income is due to inter-segment elimination.
		Adjustment for segment assets includes corporate assets such as cash and cash equivalents, investments in securities, andother corporate shared facilities that are not allocated to each reportable segment.
2. Segment operating income (loss) is adjusted with operating income on the consolidated statements of income.
Information by geographical area of the Company for the fiscal years ended March 31, 2015 and 2014 was summarized asfollows:
Millions of yen
FY2014

Sales

Japan

Europe

Asia

Other

Total

¥103,943¥13,335¥19,915¥12,987¥150,182

Thousands of U.S. dollars
FY2014

Sales

Japan

Europe

Asia

Other

$864,966$110,967$165,723$108,071

Total$1,249,746

Millions of yen
FY2013
Japan

Sales

¥105,588

Europe¥12,712

Note: Sales are categorized by country and regions based on customer’s location.

52

Kureha Corporation Business Report 2015

Asia

Other

Total

¥14,184¥15,638¥148,124

Millions of yen
FY2014
Japan

Property, plant and equipment

United States¥86,980

Other¥19,832

Total¥16,372¥123,185

Thousands of U.S. dollars
FY2014
Japan

Property, plant and equipment

United States$723,807

Other$165,032

Total$136,240$1,025,089

Millions of yen
FY2013Japan

Property, plant and equipment

United States¥78,431

Other¥19,438

Total¥13,814¥111,684

Information on impairment loss of fixed assets by reportable segment for the fiscal years ended March 31, 2015 and 2014 wassummarized as follows:

Advancedmaterials

Impairment loss

¥660

Advancedmaterials

Impairment loss¥—

Specialty
chemicals$5,492

Advancedmaterials

Impairment loss

Specialty
chemicals$—

Specialty
chemicals¥—¥—Millions of yen
FY2014
Reportable segment
Specialty
Other
plastics
Construction
operations

¥—

¥—

¥—

Thousands of U.S. dollars
FY2014
Reportable segment
Specialty
Other
plastics
Construction
operations

$—

$—

$—

Millions of yen
FY2013
Reportable segment
Specialty
Other
plastics
Construction
operations

¥133

¥—

¥—

Total

¥660

Total

$5,492

Total

¥133

Adjustment

Consolidated

¥—

¥660

Adjustment

Consolidated$—$5,492Adjustment

Consolidated

¥—

¥133

24. Subsequent Events
The following appropriation of retained earnings has been approved by the general meeting of the Board of Directors held on
April 21, 2015.
Thousands of
U.S. dollars

Millions of yen

Cash dividends at ¥6.50 ($0.05) per share¥1,116$9,286

Kureha Corporation Business Report 2015

53

Major Subsidiaries and Affiliates

Country

Company Name

Major BusinessJapan

Kureha Extech Co., Ltd.

Manufacture/sale of plastic film and products

Kureha Gohsen Co., Ltd.

Manufacture/sale of plastic fiber and products

Kureha Extron Co., Ltd.

Manufacture/sale of plastic products

Kureha Battery Materials Japan Co., Ltd.

Sale of lithium-ion battery materials

Kureha Unyu Co., Ltd.

Transportation and storage services

Kurehanishiki Construction Co., Ltd.

Construction

Kureha Engineering Co., Ltd.

Plant engineering and maintenance

Kureha Ecology Management Co., Ltd.

Waste treatment and management

Kureha Special Laboratory Co., Ltd.

Environmental/physiochemical evaluation and analysis

Kureha Trading Co., Ltd.

Trading of chemical and plastic products

Resinous Kasei Co., Ltd.

Manufacture/sale of advanced materials

Kureha Service Co., Ltd.

Real estate, travel and welfare services for Kureha Group

Kureha Staff Service Co., Ltd.

Recruiting and staffing services

Kureha America Inc.

Holding company and finance

Kureha America LLC

Sale of advanced products and packaging materials

Kureha PGA LLC

Manufacture/sale of PGA resins

Fortron Industries LLC

Manufacture/sale of PPS resins and compounds

Germany

Kureha GmbH

Sale of advanced products

Netherlands

Kureha Europe B.V.

Holding company and financeKrehalon Industrie B.V.

Manufacture/sale of food packaging products

FranceKrehalon France & Benelux S.A.S.

Sale of food packaging productsUK

Krehalon UK Ltd.

Manufacture/sale of food packaging products

China

Kureha (China) Investment Co., Ltd.

Holding company and finance

Kureha Chemicals Shanghai Co., Ltd.

Manufacture/sale of carbon fiber products

Kureha (Shanghai) Co., Ltd.

Sale of advanced products and packaging materials

Kureha (Changshu) Fluoropolymers Co., Ltd.

Manufacture/sale of PVDF resins and compounds

Nantong SKT New Material Co., Ltd.*

Manufacture/sale of PVDC resins and compounds

Kureha Battery Materials Shanghai Inc.

Sale of lithium-ion battery materials

Kureha Vietnam Co., Ltd.

Manufacture/sale of food packaging films

USA

Vietnam54

Kureha Corporation Business Report 2015

Profile

7

Investor Information

Anniversary(As of March 31, 2015)th

Major Stockholders

Corporate Data
Corporate Name

Building on Core Strengths

Headquarters

Kureha Corporation

Meiji Yasuda Life Insurance Company

3-3-2, Nihonbashi-Hamacho,

Tokio Marine & Nichido Fire Insurance Co., Ltd.

Chuo-ku, Tokyo 103-8552, JapanThe Master Trust Bank of Japan Ltd. (Trust account)Tel: 81-3-3249-4666
Fax: 81-3-3249-4744
Date of Establishment

June 21, 1944

Paid-in Capital¥12,460 million

Number of Employees

4,123 (As of March 2015)

Independent Auditor

ERNST & YOUNG SHINNIHON LLC

Kureha Corporation

R&D Innovation:

is a manufacturer of highly originative

The Source of Our Competitivenessspecialty chemicals and plastics thatJapan Trustee Services Bank, Ltd. (Trust account)
Mizuho Bank, Ltd.
The Nomura Trust and Banking Co., Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (9 trust accounts)
Mizuho Trust & Banking Co., Ltd.
BBH FOR BBHTSIA NOMURA FUNDS IRELAND PLC/JAPANSTRATEGIC VALUE FUND

Stock Information
Number of Shares ofCommon Stock Issued

Daiichi Sankyo Company, Ltd.

181,683,909 shares

Number of Shareholders 14,814
Number of Shares Heldby Foreign Shareholders 38,561,520 (21.2% of total)
Stock Exchange Listings Tokyo Stock Exchange

leverages proprietary technologies to develop

Transfer Agent

Mizuho Trust & Banking Co., Ltd.

products in advanced materials,
agrochemicals, pharmaceuticals, andpackaging materials. Since its establishment
in 1944, Kureha has utilized its strengths intechnology and innovation to provide a wide
range of solutions suited to the market
needs of each era.
Today, this corporate DNA drives Kureha
to always pursue originality and excellence inharmony with the environment, andconsistently create products that bring value
to customers and society.

We pride ourselves on our expertise in polymer
engineering and processing as well as organic synthesis
and carbon materials development. These technologies
provide the base for the development of our original
innovative materials and products. We are constantly
adding and fusing new ideas to these accumulated
technologies, and in the spirit of “if it doesn’t exist, let’screate it,” each day we pursue technology solutions that
only Kureha can provide to meet unmet needs.

Kureha Corporation
Headquarters
Kureha Corporation Business Report 201555

7

AnniversarythBusiness Report 2015
Year ended March 31, 2015

http://www.kureha.co.jp/

The Pursuit of Excellence

Printed in Japan