Business Report 2016
Year ended March 31, 2016

The Pursuit of ExcellenceBuilding on Core Strengths
Kureha Corporation is a manufacturer of highly originative specialty chemicals andplastics that leverages proprietary technologies to develop products in advanced
materials, agrochemicals, pharmaceuticals, and packaging materials. Since its
establishment in 1944, Kureha has utilized its strengths in technology and innovation toprovide a wide range of solutions suited to the market needs of each era.
Today, this corporate DNA drives Kureha to always pursue originality and excellencein harmony with the environment, and consistently create products that bring value tocustomers and society.

Corporate Philosophy
To be a company supporting an ever-changing society.
To be a company that changes society for the better.
We formulated our Corporate Identity to reflect our vision for Kureha.
●

We treasure people and the natural environment.

●

We constantly evolve through innovation.

●

We contribute to society by developing beneficial products.

Contents
Profile ........................................................................................ 1

Corporate Governance ............................................19

At a Glance ........................................................................... 2

Management Team ....................................................23

Consolidated Statements of
Changes in Net Assets ..............................................31

Consolidated Financial Highlights ...................... 3

Consolidated Five-Year Summary ...................24

Consolidated Statements of Cash Flows ......32

President’s Message ....................................................... 4

Management Discussion and Analysis .......25

The Mid-Term Management Plan ....................... 6

Consolidated Balance Sheets .............................28

Notes to Consolidated Financial
Statements ........................................................................33

The Year’s Highlights ...................................................10

Consolidated Statements of Income ............30

Review of Operations.................................................12

Consolidated Statements ofComprehensive Income .........................................30

Research & Development .......................................16
Responsible Care ...........................................................18

Major Subsidiaries and Affiliates ........................62
Investor Information ..................................................63

R&D Innovation:
The Source of Our CompetitivenessWe 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 thedevelopment of our original innovative materials and products. We are constantly adding andfusing 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.

Th e P u r s u i t o f E xce l l e n ce

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 33% of total revenue

Our innovative products and services are broadly based

as of March 2016. 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 andVietnam and Australia, enabling an effective response toenergy. We maximize earnings and diversify risk throughneeds in overseas markets. With continued growthbroad-based business development in promising

expected in newly emerging countries and many othergrowth fields such as the environment, energy, healthregions, we are taking active and strategic steps to expand

and lifestyle. We continuously optimize our portfolio tosales of highly competitive products in line with the needsalign with shifting market needs while securing ourof overseas markets, whether for advanced materials,

earnings path.

chemicals, or plastic products.
Kureha Corporation Business Report 201601

At a Glance
Net Sales/Net Sales Composition

Advanced Materials¥36,536 million

25.6%

Specialty Chemicals¥31,182 million
FY2015Net Sales¥142,549 million

21.9%

Specialty Plastics¥44,210 million

31.0%

Construction and Other Operations¥16,201 million ¥14,418 million

11.4%(Construction)

02 Kureha Corporation Business Report 2016

10.1%

(Other Operations)Consolidated Financial Highlights
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2016 (FY2015) and 2015 (FY2014)

Business Areas
Thousands of
U.S. dollars

Millions of yen

FY2015

Advanced Plastics
Carbon Fibers & Products
Battery Materials

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

FY2015FY2014¥142,549
12,600¥150,182
14,551$1,265,078
111,821

7,342

9,195

65,157

12,1399,877
4,885

17,557
8,261
4,978

136,782
87,65555,044¥236,633
119,274
79,685¥249,697
120,624
86,636$2,100,044
1,058,519

Yen

Agrochemicals
Pharmaceuticals
Industrial Chemicals

Household Products

Amounts per share:
Net income – basic
Net assets

¥

42.73
686.06

U.S. dollars

¥

53.53
687.80

$

0.37
6.08

Percent

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

5.2%
6.2
4.9
49.8

6.1%
8.3
6.5
47.3

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥112.68 to US$1, therate of exchange prevailing on the Tokyo Foreign Exchange Market on March 31, 2016.
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.

Packaging Materials
Synthetic Fiber Products

Net Sales

Operating Income(Millions of yen)

(Millions of yen)

Net Income attributable to
Owners of Parent(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) 2011 2012 2013 2014 2015

0(FY) 2011 2012 2013 2014 2015

10,000

60

8,000

48

6,000

36

4,000

24

2,000

12

0

0

(FY) 2011 2012 2013 2014 2015

Kureha Corporation Business Report 201603

President’s Message

Laying the Groundwork for Lasting Future Growth
Dear Shareholders,
In FY2015 (ended March 31, 2016), market conditions continued to be

it is vital that we instill this mindset and behavior throughout thecompany, and that the President leads by example.
In April 2016, we launched “Kureha’s Challenge 2018,” a new mid-term

challenging for the Kureha Group. Consolidated sales decreased 5.1%

management plan for the period from FY2016 through FY2018. This isyear on year to 142.5 billion yen, with operating income declining

the first mid-term management plan formulated under my direction, and13.4% to 12.6 billion yen, and recurring income down 22.5% to 12.0

fully reflects my thoughts based on the internal discussions we have hadbillion yen. These results were mostly driven by a lack of one-time

on how to make Kureha a company of lasting prosperity.

income in the pharmaceuticals business, which led to a sharp earnings

In formulating the new mid-term management plan, we began

decline for the Specialty Chemicals segment. Earnings per share werewith a thorough review of the results of “Grow Globally II,” the previous

42.73 yen, with which we maintained our annual dividend at theplan covering the period from FY2012 through FY2015. Under thisprevious year’s level of 11 yen per share, not including theplan, we steadily strengthened our business foundation, restoredcommemorative dividend paid in FY2014.

profitability in the Advanced Materials segment, and significantly

However, it should be noted that, excluding this one-time income

reduced costs through the Reform Project.

in the pharmaceuticals business, we have increased earnings each year

Regretfully, we were unable to achieve both the initial operating

since FY2012. This means that our foundation for generating earnings

income target of 20 billion yen and the revised target of 15 billion yen

has gradually but steadily improved, an achievement that represents

adopted in the fall of FY2013. While changes in the businessthe concerted efforts of all Kureha Group employees.

environment were partly to blame, we recognized that the main reason

I am also pleased to say that in FY2015, the Advanced Materials

was due to our own business shortcomings. To cite a few examples, we

segment recorded a further earnings increase since regaining profitability

did not devise multifaceted and precise business scenarios, we werein the previous year. Advanced materials, such as PVDF, PPS and PGA, arenot sufficiently sensitive to changes in the business climate to be able

expected to be our core businesses to drive future growth, and therefore

to take swift action, and we failed to invest appropriately in resources

we are determined to ensure that this positive trajectory continues.

for the future. Reflecting on these inadequacies, we launched the new

Another achievement is that Kureha recorded an additional 1.5

mid-term plan strongly determined to establish a robust managementbillion yen in profit gains from our Reform Project, which we launched infoundation capable of withstanding competition for the long-term

FY2013 to reduce costs and improve efficiency. Through FY2014,

future, and achieve our quantitative target of 16.0 billion yen in

together with the efforts of group companies, we generated 3.5 billion

operating income (14.0 billion yen under IFRS standards*) by FY2018.

yen in profit gains, meaning that in the three years since the project

The action measures set forth in Kureha’s Challenge 2018 arestarted, we have achieved a cumulative total benefit of 5.0 billion yen.

guided by our corporate philosophy, The Pursuit of Excellence, and inPartly due to this effort, Kureha has managed to establish a structureline with the overall strategic direction that, “As a company built oncapable of maintaining a stable operating income base of 10 billion yen.

technology, Kureha will develop differentiated products in the field ofWhen I became President in September 2012, I declared that we

specialty chemicals and become a high value-added enterprise thatwould establish a solid business foundation that would allow us toremain an “excellent company” by the time we mark our 100th

continually contributes to global society.”
The new plan is also positioned as a period to lay the foundation

anniversary in 2044. I have focused tirelessly on reforming Kureha tofor Kureha’s future expansion. While we anticipate a profitability decline

realize that vision. To link this reform mindset to action, I havein the Specialty Chemicals segment (pharmaceuticals andcontinually stressed the watchwords: Passion, Speed and Commitment.

agrochemicals), which up to now has been a source of stable earnings,

It is my belief that we can overcome any obstacle, no matter how big,

we will enhance the competitiveness and earnings capacity of otheras long as we work together and remain committed. To nurture theexisting businesses, in particular developing the PGA business into astrength of employees, and allow each and every one of them to grow,new earnings pillar. Furthermore, in the next three years we will

04 Kureha Corporation Business Report 2016

intensify our efforts to explore and create new businesses, and identify
promising new themes for the future.
Exploring new business themes is vital to a company that professes

For FY2016, although we are forecasting year-on-year increases inboth revenue and earnings under IFRS, our business segments will bein a preparatory stage for future growth. During this initial year of ourto be built on technology. In April 2016, we launched the New Businessnew mid-term plan, we will orient ourselves toward the future we want

Creation Project, led by myself, to accelerate the search for new

to realize, with all employees acting together in steady progress toward

technologies and business themes. We are exploring fields in the areas

the plan’s management goals and quantitative targets.

of environment, energy, and quality of life that have promising potential

Through efforts to resolve various social issues by using highlymarkets, and in which Kureha can apply its technological strengths. We

original technology, Kureha will contribute to the advancement ofare also making use of outside resources wherever necessary, such associety, achieve sustainable growth in enterprise value, and further

M&A and joint research with other companies or universities, in an

enhance the relationship of trust we have with our stakeholders.

effort to develop more high value-added downstream fields. Whilemaintaining our dedication to being a “company built on technology,”

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

we aim to react to external stimuli and incorporate new discoveries,
pursuing projects with the spirit of “if it doesn’t exist, let’s create it.”
In addition, Kureha will strengthen its governance structures toensure we remain a company that continually contributes to society.
Last year, we formulated a set of Corporate Governance Guidelines thatclearly state our management philosophy and approach to corporate

Yutaka Kobayashi
President & Chief Executive Officer
June 2016

governance, and we are acting in accordance with these tenets toenhance the effectiveness of our governance structure. Furthermore,while promoting activities related to environmental protection andoperational safety, Kureha is pursuing dialogue with various
stakeholders to promote CSR management and reinforce efforts tocontribute to and coexist with society.
As a company, we have a particularly important social role to playin Iwaki in Japan’s Fukushima Prefecture, the location of our main
production and R&D facility. Kureha General Hospital, one of our groupcompanies, is a key medical center in southern Iwaki City. We intend tocontinue to support its operations in order to provide for the health andwellness of local people. We are also supporting independence andsocial participation for the disabled through Sunshine Kureha, a special
subsidiary established in 2014 to employ disabled persons.
In May 2016, Kureha launched the Employees Shine-Up Project,
aimed at encouraging the active participation of all employees. This
project is founded in the conviction that sustainable growth for thecompany requires creating an environment that encourages andcultivates personal and professional growth among employees.
At the same time, we are working to develop human resources who
can play an active role on the global stage, and to expand systems
that provide opportunities for a diverse range of employees toactively participate in our company’s growth.
* Starting from FY2016, ending March 2017, Kureha will be reporting its financial performance based on International
Financial Reporting Standards (IFRS) instead of the Japanese Generally Accepted Accounting Principles.

Kureha Corporation Business Report 201605

The Mid-Term Management Plan

“Kureha’s Challenge 2018”
For fiscal years 2016 through 2018, the Kureha Group is operating its businessbased on the mid-term management plan, “Kureha’s Challenge 2018”.
Under this plan, Kureha strives to develop differentiated products in the specialty
chemicals field, with a goal at becoming a high value-added company that continuallycontributes to society. These three years are also strategically positioned as a period to lay
the foundation for Kureha’s future expansion, where we take on varied challenges tostrengthen existing businesses, develop original and innovative technologies andproducts, and explore new businesses.

Concept:“Achieve product differentiation” and “Create new businesses”

Management Goals:
Business strategies

competitiveness and earnings capacity of existing businesses that support• Ethenhance
management foundation of the Kureha Group• Expand the PGA business that is currently driving the Kureha Group’s growth• Explore new business themes that will carry the Kureha Group’s future

Promote CSR-based management
Strengthen the management foundation

06 Kureha Corporation Business Report 2016

Expanding Overseas Sales
FY201533

Quantitative Targets(JPN GAAP)FY2015FY2018Targets¥142.5 billion¥170.0 billion

Operating income

12.6 billion

16.0 billion

Net income attributableto owners of parent

7.3 billion

9.0 billion

0.7

0.5

6.2%

6.0%

Net sales

DE ratioROE%

37
FY2018%Presumptions• Currency exchange rates: ¥120/US$1, ¥130/ €1, ¥18/CNY1• Crude oil price: US$40/bbl• Number of shares of common stock issued in FY2018: 206 million shares, including
conversion of convertible bonds

Strategic Direction:
As a company built on technology,
Kureha will develop differentiated productsin the field of specialty chemicals andbecome a high value-added enterprise that
continually contributes to global society.

Sales and Operating Income Targets by Segment(JPN GAAP)
Sales

Operating income(Billions of yen)(Billions of yen)

60

8

55.0
50.0

50
40

FY2015FY2018

44.2

16.2

13.0

14.4

Specialty
Chemicals

Specialty
Plastics

Construction

Other
operations

3.6

3
2.0

2
1

Advanced
Materials

4.8

4
22.0

10
0

5.0

5

31.2 30.0

20FY2018

6

36.5

30

FY20157.0

70

1.8 1.7

1.5

1.1

0.3

Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

Construction

Other
operations

Kureha Corporation Business Report 201607

Action Measures:

Action01

Enhance Competitiveness and Earnings Capacity of Existing Businesses
Advanced
Materials

Specialty
Chemicals

Specialty
Plastics

business by actively investing• Expandresources and pursuing differentiation•

strategies with PVDF and PPS

sales activities and reduce costs• Strengthen
in anticipation of decreased demand forthe post-quake reconstruction project in
the Iwaki, Japan area

Construction

Secure earnings in the carbon fiber
business by improving the profitability

new product development in the• Promotepharmaceutical and agrochemical fields

earnings capacity for household• Increase
products by strengthening brand power andglobal business development• Expand global sales of packaging materials• Increase cost competitiveness for synthetic fibers

Other
Operations

R&D and
Production

the industrial waste treatment• Expandbusiness, including the processing
services of micro-PCB wastes
improved grades and new• Develop
applications
downstream business by• Expandstrengthening polymer processing•

technologies
Promote the development of innovative
production processes

Explore New Business Themes

Action03

exploration of new technologies and business themes to support the Kureha Group’s• Accelerate
future through the “New Business Creation Project,” initiated in April 2016 and led by the president
potential business themes in the environment, energy and life science fields, which• Explore
will utilize Kureha’s specialty technologies
use of other companies’ resources through M&A and collaboration, conduct joint R&D• Makewith universities, and develop business in high value-added downstream sectors

Exploring and Integrating
Kureha’s Technological Strengths

Targeted Fields
Environment

Needs
&
Wants

Polymerization

EnergyQuality of life
(medicine, food)DifferentiatedProducts

Processing
technology

Expanding from upstream
to downstream
Expanding Product Value Chain

08 Kureha Corporation Business Report 2016

Organicsynthesis
Testing &Analysis
Processdevelopment

ActionAction02

Expand the PGA Businessgrowth by extending the value• Achieve
chain in the shale oil and gas sector:- Developing improved frac plugs andother products- Enhancing sales network in North America- Expanding to regions other than North America

04

Promote CSR Managementbusiness operations in strict• Conduct
accordance with Kureha’s complianceregulations and Corporate Governance
Guidelines, and enhance the effectiveness ofcorporate governance (e.g., increase thenumber of outside directors, improve theeffectiveness of the Board of Directors throughappropriate evaluation)line with the current emphasis on ESG• In(environmental,social and governance) measures,enhance initiatives related to community support,
environment and safety through a newly
established CSR Promotion Division

Frac plug

Frac ballAction05

Strengthen the Management Foundation•

Enhance technological capabilities by strengthening links
between Research, Production, Engineering, and CSR
Promotion divisions

to increase production capacity by incorporating• Invest
technological innovation and to ensure stable production
with proper facility maintenance and upgrades, and enhance
asset efficiency

personnel placements in growth and strategic• Prioritize
fields, and secure and develop global talents
the “Shine-Up Project” initiated in May 2016 and led• Throughby the president, promote personnel development to foster•

active participation by all employees, and create a work
environment in which women can play an active roleContinue the “Reform Project” to further reduce ¥3.5 billion incosts by FY2018

Action06

Capital Investment and R&D Expenditure
Kureha is planning a total of ¥50 billion in capital expenditures forfiscal years 2016-2018. The main expenditures are:in increased production capacity that incorporates• Investment
technological innovation

PVDF (polyvinylidene fluoride): New capacity to begin operatingin FY2018
PPS (polyphenylene sulfide): New capacity provisionally planned
to begin operating in fiscal 2019

• Investment in maintenance and upgrades to ensure stable earnings
of a new facility for testing and developing new• Construction
manufacturing processes
Kureha is also planning a total of ¥20 billion in R&D expenditures forfiscal years 2016-2018. This includes expenditures related tostrengthening processing technologies for downstream businessdevelopment and exploration of new business themes

Kureha Corporation Business Report 201609

The Year’s Highlights

Business Enhancement

PVDF: Rapid Growth for Lithium-ion Battery Binder Applications
Kureha began producing polyvinylidene fluoride (PVDF) in 1970 as
Japan’s first manufacturer. The business is currently undergoingremarkable growth with the use of PVDF as a binder in lithium-ion
batteries (LiB), along with firm demand in other fields where it is used
as a material for such applications as membranes for water
purification, industrial pipes and bulbs, and fishing line.
PVDF was first used as a battery binder material in 1991, in video
cameras sold by Sony. It has since become an indispensable material
in the manufacture of secondary batteries, and is now widely used bybattery manufacturers in Japan and overseas. Kureha’s share of the

PVDF manufacturing plant in China

global market currently surpasses
50%, a result of proven technicaldevelopment capabilities
accumulated over many years
and our ability to consistently
deliver products that meetcustomer needs.
With the widespread use ofmobile devices, and growing useof automobiles powered byelectricity (EV, HEV, and PHEV), demand is expected to grow for LiBs
and vitally important binder material.
In spring 2015, a Kureha Group company in Jiangsu, China began
operations of a new PVDF manufacturing plant. The launchestablished a production structure that, together with the Iwaki
Factory in Japan, allows Kureha to meet the growing demand. In
anticipation of further demand increases, we also plan to expand
PVDF production facilities at the Iwaki Factory by fiscal 2018.
Kureha will continue to increase sales of PVDF for existing uses,
while exploring possibilities to develop new applications.

New ProductsContinually Enhancing Products’ Ease of Use
Kureha continually improves its kitchen products for easier use andgreater convenience.
The Kichinto-San Series includes a broad lineup of products toassist with kitchen work, such as microwave and freezer-safe storage
containers and bags, as well as cooking sheets and foil.
The latest new and renewed products include:• Frying pan foil sheets with a silicone resin coating to allow forcooking without oil. Along with the previous product, Kureha haslaunched a line 40% thicker that tears less easily.

• New designs for oven fan filters. The filters are also offered in a
new, easy-to-use size.
• Improved designs for freezer and refrigerator storage bags thatmake zippers easier to grip with wet hands.
In addition, in January 2016, Kureha introduced new packaging for
our food wrap film NEW Krewrap with further improvements for easiercutting as well as simplified cautions and usage instructions. Kureha
has continually updated and improved the packaging for NEW
Krewrap for 13 consecutive years.

Kichinto-San Foil Sheet

Kichinto-San Food Storage Bags
NEW Krewrap

10 Kureha Corporation Business Report 2016

Research & Development

Fostering Industry-Academia Collaboration in R&D
In April 2016, Kureha and Yamagata University signed an agreement oncomprehensive support for industry-academia collaboration.
Yamagata University conducts advanced basic research on
polymers, as well as applied research that incorporates industry needs
and considers practical applications. The collaboration with Yamagata
University will help to refine Kureha’s own technical strengths as an
R&D-oriented company, and foster open innovation through theutilization of external resources. It will also accelerate the development
of differentiated products.
Kureha already has a comprehensive joint research contract with
Yamagata University for the development of plastics processing
technologies. We are currently conducting joint research on
functional polymeric materials and processing technologies,
centered on Kureha’s Polymer Processing Research Laboratories andYamagata University’s Research Center for Green Materials andAdvanced Processing.

This latest agreement will enable Kureha and Yamagata University
to mutually utilize intellectual, human, and physical resources, as wellas collaborate for business development.

Employee Empowerment

Creating a Dynamic Workplace for All Employees
Kureha believes that employees with diverse values, who have apositive work-life balance and are able to continually utilize theirabilities, will generate sustainable growth for the company. In May 2016,
Kureha launched the “Employees Shine-Up Project,” led by the President,
to explore various measures to realize this ideal and strengthen thecompany’s support and consultation system for shaping the work
environment and adapting to diversity.
In addition to ongoing discussions begun last year on ways tosupport career development for female employees, the project isstrengthening the following measures to support and mobilize all
Kureha employees.
• Foster a corporate culture that actively supports careerdevelopment• Enhance the employee development capabilities of managers,
and promote dialogue with employees• Empower female employees• Increase inter-departmental communication• Support work-life balance for employees

Kureha Corporation Business Report 2016

11

Review of Operations

Advanced Materials
Major Product Areas:

Advanced plastics (PPS, PVDF, PGA), carbon materials
Advanced Materials segment sales rose 1% year-on-year to 36.5 billion yen.
The segment also saw operating income rising further to 1.1 billion yen, adevelopment driven by demand growth for polyglycolic acid (PGA) andpolyvinylidene fluoride (PVDF) in the advanced plastics business, priceadjustments, and effective cost reductions in carbon fiber products.

Advanced plastics: Continued growth for PGA and PVDF
Kureha continued to see robust performance for PGA for use in shale oil and gas
extraction applications, as well as for PVDF resin for use in lithium-ion battery binders.
These businesses outweighed falling sales of PPS resin, leading to a 6% net sales
increase for advanced plastics as a whole. However, cost increases related to facility
reinforcements had a negative impact on operating income.

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) 2011

2012

2013

2014 2015-5,000Carbon materials: Cost reductions reduce operating loss
Sales volumes decreased for both carbon fiber and special carbon materials, a key
factor being fluctuating demand for insulation material used in silicon ingot
production for solar power applications. However, the sales decrease was partly offset
by Kureha’s continued drive for group-wide cost reductions, which narrowed theoperating loss in this business.
Outlook (IFRS)*: FY2016 segment sales are forecast to increase by 13% to 40.0 billion
yen, with operating income continuing to rise to 3.0 billion yen, an increase of 120%.
Kureha expects this growth to be primarily driven by continued solid demand for PVDF
lithium-ion battery binder materials for automotive applications. Additional positive
factors include improved PPS performance and improved profits for carbon products
driven by operational restructuring and price adjustments. We also expect to see
positive shale oil and gas development in the US and continued strong demand for
our PGA solutions in this market.
* Starting from FY2016, ending March 2017, Kureha will be reporting financial performance based on International Financial ReportingStandards (IFRS) instead of the Japanese Generally Accepted Accounting Principles (J-GAAP). Outlook figures for FY2016 given inthis section are therefore calculated based on IFRS.

Kuredux (polyglycolic acid) used
to make downhole tools in
shale oil and gas extraction

Key products• Polyphenylene sulfide (PPS)• Polyvinylidene fluoride (PVDF)• Polyglycolic acid (PGA)KF Polymer (polyvinylidene fluoride)binds electrodes in lithium-ion batteries• Carbon fibers• Bead-shaped activated carbon• Specialty carbon materials

12 Kureha Corporation Business Report 2016

Carbon-based Kreca FR is a thermal
insulation material suitable forhigh-temperature furnaces

Specialty Chemicals
Major Product Areas:

Industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals sales fell by 12.0% year-on-year to 31.2 billion yen
from 35.5 billion yen. Operating income decreased by 40% to 4.8 billion
yen, a key reason being the lack of one-time income related to apharmaceutical sales contract.

Pharmaceuticals / agrochemicals: Slowing demand andfall in income
Sales and operating income decreased due to lower sales volumes for agrochemicals,
which demand weakened in North America. The pharmaceutical business was affectedby the lack of one-time income related to a pharmaceutical sales contract.

Net Sales (Left scale)Operating Income (Right scale)Industrial chemicals: Decreased sales and income(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) 2011

2,000

2012

2013

2014 2015

0

Sales and operating income decreased due to lower market prices for organic andinorganic chemicals.
Outlook (IFRS)*: Specialty Chemicals segment sales are projected to decrease by 13%
in FY2016 to 26.5 billion yen, while operating income is forecast to fall 47.0% to 2.5
billion yen. All three business areas are forecast to be affected by challenging
conditions. The industrial chemicals business will likely be affected by lower raw
material prices, which will necessitate lower pricing points. Agrichemicals andhorticultural fungicides will continue to be affected by weak demand and inventory
adjustments, while performance in the pharmaceutical business will be slower due tothe effects of national drug price revisions mandated by the Japanese government aswell as growing competition from government-promoted generic drugs.
* Starting from FY2016, ending March 2017, Kureha will be reporting financial performance based on International Financial ReportingStandards (IFRS) instead of the Japanese Generally Accepted Accounting Principles (J-GAAP). Outlook figures for FY2016 given inthis section are therefore calculated based on IFRS.

Key products• Therapeutic agent for chronic
renal failure

Agricultural and horticulture
fungicide (Metconazole)• Anti-cancer agent• Agricultural and horticulture
fungicide• Caustic soda
• Hydrochloric acid• Sodium hypochlorite• Monochlorobenzene• para-Dichlorobenzene• ortho-Dichlorobenzene

Therapeutic agent forchronic renal failure (KREMEZIN)

Kureha Corporation Business Report 201613

Review of Operations

Specialty Plastics
Major Product Areas:

Household packaging products, food packaging materials
Specialty Plastics segment sales decreased by 5% from 46.5 billion yen to44.2 billion yen, while operating income decreased slightly by 1% to 3.6
billion yen, mainly due to slower performance in the food packaging
machinery business.

Consumer products: Robust performance for both NEW
Krewrap and Seaguar
In consumer products, both NEW Krewrap and Seaguar fishing lines saw steady growthin demand, leading to increases in both sales and income for this business. The robust
performance, particularly for NEW Krewrap more than offset the impact on operating
income of depreciation costs related to a new PVDC production facility in Japan.

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) 2011

2012

2013

2014 2015

0

Food packaging materials: Absence of large machineryorders affects sales
Sales of heat-shrinkable multilayer film grew, and Kureha also continued efforts toexercise cost control. However, the absence of a large order for packaging machinery
negatively affected sales for this business.
Outlook (IFRS)*: FY2016 performance for the Specialty Plastics segment is expected
to improve slightly over FY2015, with sales forecast to rise by 4% to 44.0 billion yen andoperating income climbing by 10% to 3.6 billion yen. In consumer products, we expect
continued growth for both NEW Krewrap and Seaguar, although increased marketingcosts will impact income. In food packaging materials, we will continue our efforts to
reduce costs while also expanding global sales of high-performance films.
* Starting from FY2016, ending March 2017, Kureha will be reporting financial performance based on International Financial ReportingStandards (IFRS) instead of the Japanese Generally Accepted Accounting Principles (J-GAAP). Outlook figures for FY2016 given inthis section are therefore calculated based on IFRS.

Key products• Household wrap film

Home-use wrap film, NEW Krewrap• Plastic containers• PVDF fishing lines• Polyvinylidene chloride (PVDC) film

Seaguar fluorocarbon fishing lines• PVDC compound• Multilayer shrinkable film
• Multilayer non-shrinkable film
• Multilayer bottles• Machinery for auto-seal foodpackaging

14 Kureha Corporation Business Report 2016

Krehalon food packaging film

Construction and Other Operations
Major Product Areas:

Construction, environmental engineering, transport/
warehousing, and trading-related businesses
Construction: Continued strong trend in earthquake
reconstruction
Despite a continued firm trend in official reconstruction projects connected to the Great
East Japan Earthquake of March 2011, a slowdown in private construction projects led
sales to fall slightly by 3% to 16.2 billion yen in FY2015. However, successful cost
reductions contributed to a sharp 36% increase in operating income to 1.5 billion yen.

Other Operations: Cost reductions generate profit increases
Net Sales (Left scale)Operating Income (Right scale)

Construction

35,000

Other
Operations
7,000

30,0006,000

25,0005,000

20,0004,000

15,0003,000

10,000

2,000

5,000

1,000

(Millions of yen)0(FY) 2011

2012

2013

2014 20150

In the environment business, while lower industrial waste treatment volumes resulting
from incinerator maintenance led sales to decrease, operating income remained stable
year-on-year due to volume growth in the highly profitable micro-PCB (polychlorinatedbiphenyls) waste treatment business as well as successful cost reductions. Similarly, inthe transportation business, slower sales were offset by cost reductions, leading
operating income to increase. As a result, while sales decreased 5% from 15.2 billion
yen to 14.4 billion yen, operating income increased slightly by 1% to 1.8 billion yen.
Outlook (IFRS)*: FY2016 sales for the Construction business are projected to decline
to 14.0 billion yen, while operating income is expected to fall to 0.5 billion yen. The
slowdown is expected to result from a decline in post-earthquake reconstruction
demand, as well as higher labor and material costs.
Sales for Other Operations are estimated to increase to 17.5 billion yen, while
operating income is projected to be 1.4 billion yen. Although sales will grow on theback of further volume growth in the industrial waste treatment business, higher R&D
costs will likely depress profit.
* Starting from FY2016, ending March 2017, Kureha will be reporting financial performance based on International Financial ReportingStandards (IFRS) instead of the Japanese Generally Accepted Accounting Principles (J-GAAP). Outlook figures for FY2016 given inthis section are therefore calculated based on IFRS.

Facility to detoxify low-concentration PCB wastes[Kureha Ecology Management Co.]

Key products and services• Civil engineering andconstruction• Plant engineering andmaintenance• Environmental engineering andindustrial waste treatment• Environmental andphysiochemical testing andanalysis• Transport and warehousing

Construction of ‘Sendai Nursery School’[Kurehanishiki Construction Co.]
Kureha Corporation Business Report 201615

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
structure comprises four research hubs: The Research Center, which

Research Center & Process Innovation
Research Laboratories

conducts basic research and improvements for existing businesses; theAgrochemical Research Laboratories; the Process Innovation ResearchLaboratories; and the Polymer Processing Research Laboratories.
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.

16 Kureha Corporation Business Report 2016

Polymer Processing ResearchLaboratories

R&D Expenditure in Fiscal 2015: ¥4,885 million
Advanced Materials Division

Specialty Chemicals Division

For Fortron KPS (PPS) which is widely used in automobiles andIn the agrochemicals business, we are working to expand markets,electronic devices and KF Polymer (PVDF), Kureha is developing

both in Japan and overseas, for agricultural and horticultural

new improved grades, exploring ways to further raise

fungicides. We are further improving productivity, while

productivity, and expanding applications. For Kuredux (PGA), while

promoting the development of new agrichemical products.

working to improve resin manufacturing technologies, we are

In pharmaceuticals, we are providing supporting research toactively developing applications particularly in the area of shaleenhance the earnings of Kremezin, a therapeutic agent for chronic

oil and gas extraction, where PGA’s easy-to-degrade attribute has

renal failure.

proved useful. We are also developing technologies that allow

FY2015 R&D spending in this division amounted to ¥1,866 million.

extended application of PGA and its various unique properties inother fields.
Among battery-related materials, our development effort has

Specialty Plastics Division
For household wrap film and commercial food packaging film,

centered on binder materials for the large lithium-ion batteries

Kureha is pursuing technology development to ensure stableused in hybrid and electric vehicles. We are accelerating the

supply and improve quality. In addition, to further expand global

development of advanced binder grades and improved solutions

sales of food packaging film, we are actively providing technicalfor customers, which will enable us to secure and expand our

support to customers in Japan and overseas.

market share.

FY2015 R&D spending in this division amounted to ¥1,155 million.

FY2015 R&D spending in this division amounted to ¥1,863 million.

Kureha Corporation Business Report 201617

Responsible Care
Plan

Environmental
Security anddisaster
response

RC
PolicyEnergyconservation

Logistics
safetyLabor
safetyand healthDo

Kureha, an inaugural member of the Japan Responsible
Care Council founded in 1995, continues to pursue
Responsible Care initiatives to improve health, safety andenvironmental performance throughout its operations.
We regard our commitment to Responsible Care as anintegral part of our corporate responsibility.

ActionCommunity
relations

Product safety
Quality assurance

Check

Responsible Care Implementation

In our manufacturing facilities, we strive to minimize environmental

Kureha is continually enhancing its responsible care initiatives underimpact by implementing strict measures to prevent air and water

the direction of the Corporate Social Responsibility Committee andpollution, reduce chemical material and industrial wastes, and makethe Kureha Group Responsible Care Committee. We take proactive

effective use of energy.

actions to protect the environment, improve labor safety and healthand ensure product safety and quality, while being responsive and

Safety and Disaster Prevention

sensitive to community concerns. Our actions are in line with

Safety and disaster prevention are among the most important

ISO14001, the international standards for environmental manage-

responsibilities of a chemical manufacturing company. Kureha

ment, ISO9001 for product quality management as well as

manages its facilities and operations in strict compliance with the

OHSAS18001 for labor safety and hygiene management, and are

relevant laws and regulations as well as voluntary safety standards

constantly improving through the Plan-Do-Check-Act cycle.

set to best protect its employees and community. Comprehensive
safety and emergency drills and training have been also conduced

Reducing the Burden on the Environment

regularly at our manufacturing sites in order to enhance ourSince its establishment, Kureha has developed technologies andpreparedness for emergency situations, including a large-scale

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

earthquake.

Contributing to the Community

Greenhouse Gas Emissions (CO2)(Thousands of tonnes) (Left scale)In addition to Kureha General Hospital serving as a community medical

Specific Energy Consumption Indexfacility in the southern part of Iwaki City, Kureha contributes to the local(Right scale)
500

125

400

100

300

75

200

50

100

25

0

(FY) 2011

2012

2013

2014

2015

community in a variety of different ways. These include opening
company sports facilities for public use, volunteering for clean up activities, teaching science classes at elementary schools and holding community meetings to initiate dialogue with local neighborhood associations.

0*The above data were obtained from Kureha Corporationand its facilities in Japan.

Disaster prevention and safety drill at
the Iwaki Factory (November 2015)18 Kureha Corporation Business Report 2016

Kureha General HospitalCorporate Governance

Kureha’s Corporate Philosophy, Corporate Mission, and Employee Code of Conduct together constitute ourcompany’s identity. All executives and employees share these ideals, and constantly strive to achieve ambitious
goals. Corporate governance is a critical element in maintaining and acting in accordance with this identity, andwe have outlined our basic policies and stance in Kureha’s Corporate Governance Guidelines. Kureha follows theseguidelines to ensure compliance and enhance internal control functions, provide for fair and transparent
management, and ensure a high standard of corporate governance.

Corporate Philosophy• We treasure people and the natural environment.
• We constantly evolve through innovation.
• We contribute to society by developing beneficial products.
Corporate Mission
Kureha will continually strive in the pursuit of excellence.
Employee Code of Conduct
We always act as global corporate citizens, recognizing our corporate social responsibilities.
In relation to our clients: We will act with sincerity and with customer satisfaction as our priority.
In relation to our work: We will consistently pursue progress and innovation.
		 We will consistently respond to change and act with a global perspective.
In relation to our colleagues: We will maintain mutual respect and exhibit teamwork.

Decision-Making, Execution and Management Framework
1. Supervisory and executive responsibilities are clearly
distinguished to strengthen corporate governance andaccelerate managerial decision-making and execution.
The Board of Directors, which is limited in size to a maximumof 10 directors, of whom at least 2 should be outside directors,
consists of 4 directors and 3 outside directors as of June 2016.
The Board, presided over by the President & Representative
Director, meets once a month in principle, to make decisions onimportant management issues and supervise execution.
The Executive Committee, chaired by the President & CEO
and comprised of executive officers meets twice a month inprinciple. 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 is given to all directors and executive officers.
2. 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 toexchange views on basic management policies and businessstrategies with representatives from each group company, withthe aim of strengthening consolidated management.
Meanwhile, the operations of group companies are supervised
and managed in accordance with the Group Company
Management Rules, in which the obligations of groupcompanies are clearly specified, while giving autonomy, interms of certain business and management issues required forreporting and consultation prior to making decisions within
their companies.
3. A total of four corporate auditors (including two independent
outside auditors) forms the Audit & Supervisory Board. Thisbody works within a framework that allows them to monitor
the deliberation processes of board resolutions and reports, aswell as have a representative corporate auditor attend andmonitor meetings of the Executive Committee and theConsolidated Executive Committee. In addition, auditors areable 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
Kureha Corporation Business Report 201619

Corporate GovernanceDiagram of Internal Control Systems (As of June 24, 2016)
General Meeting of Shareholders
Appoints

Appoints

Supervisory Function
Board of Directors(Seven members, including three external members)

Audit

LiaiseAppoints

Audit & Supervisory Board(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

Audit

All divisions ofKureha Corporation

Information Management
Committee
Information Disclosure Committee
Information Security Committee

Audit
Audit

Kureha Group companies

Risk Management Committee

Internal Control ofFinancial Reporting Committeewith the President & Representative Director and outside
directors on management matters including corporate
governance, business conditions 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 andeffectiveness of internal management control systems including
compliance and risk management. It then proposes necessary or
desired changes and improvements, so as to enhance bothmanagement 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.

20 Kureha Corporation Business Report 2016

In addition, Kureha has also established a set of Basic Rules forInternal Control of Financial Reports to ensure the reliability of thefinancial reports and to guarantee implementation ofmanagement’s assessment and certified public accountant’s
auditing of the effectiveness of internal control of financial reports,
as stipulated in the Financial Instruments and Exchange Law.

Appointment of Independent Directors and Auditors
Kureha has appointed three outside directors and two outside
auditors. Outside directors utilize their extensive experienceand insight as former managers to provide independent andfair supervision of the Company’s management decisions.
Outside auditors provide auditing from an independent
perspective based on their extensive experience and expertise
regarding corporate law, corporate finance, and accounting.
The outside directors and outside auditors currently serving
Kureha fulfill the requirements for independent executives asprescribed by the Tokyo Stock Exchange, as well as the “Criteria
for Determining the Independence of Outside Executives”
established by the Company. The Company has determinedthat there is no conflict of interest with general shareholders.

Outside Directors
1. Tsuneharu Takeda
Mr. Takeda brings extensive experience and insight related tooverseas business operations, having served as operating
officer at ITOCHU Corporation during his 30 years with thatcompany, and later leading business operations as President
and CEO of Central Engineering & Construction Co., Ltd. He
has been an outside director for Kureha since June 2013, andconcurrently holds the positions as Advisor of Seiko Holdings
Corporation, Outside Director, KCJ GROUP INC., Advisor of
CAPLAN Corporation, Outside Director, Mandarin Oriental,
Tokyo, and Advisor of Jardine Matheson Holdings Ltd.
2. Shigeto Umatani
Mr. Umatani has over 30 years of experience in operations offinancial institutions, having served as operating officer for Fuji
Bank (currently Mizuho Bank) and managing executive officer for
Mizuho Securities. He has also managed business enterprises as
managing executive officer and served as a full-time company

auditor for Nippon Sanso Corporation (currently Taiyo Nippon
Sanso Corporation). He has been an outside director for Kureha
since June 2013, and concurrently holds the position as Outside
Audit & Supervisory Board Member of the Michinoku Bank Ltd..
3. Osamu Tosaka
Dr. Tosaka worked at Ajinomoto Co., Inc. for over 40 years,
accumulating extensive experience in business operations
through overseas postings and by serving in the company’s
research and production divisions. He has particular experiencein company management from the perspective of technology
and research, having served as Representative Board Director
and Corporate Executive Deputy President for Ajinomoto from2007 to 2011. He was appointed as outside director for Kureha
in June 2016.

Outside Auditors
1. Haruki Yamaguchi
Mr. Yamaguchi has served as president of domestic andoverseas affiliates of Yasuda Life Insurance Company(currently Meiji Yasuda Life Insurance Company), and brings
extensive insight and experience regarding global
management. He has been an outside auditor for Kureha
since June 2012.
2. Masaru Kitamura
Mr. Kitamura has served as a lawyer with Japan’s Ministry ofForeign Affairs, and in 1992 established the Kitamura Law
Office (currently Kitamura & Makiyama). He has been an
outside auditor for Kureha since June 2011, and concurrently
holds the positions as Corporate Auditor of Japan PacificCentury Group, Corporate Auditor of Pacific Century Hotel,
and Outside Corporate Auditor of Kowabo Company, Ltd.

Executive Remuneration
Executive remuneration reflects corporate performance. It isdetermined with consideration to enhancing medium- tolong-term enterprise value, and in accordance with thecompensation structure and levels appropriate to the roles andresponsibilities required of each executive.
Total remuneration paid to directors and auditors in fiscal
2015 (ended March 31, 2016) was as follows.

Board directors(for total of 8 directors)¥261.5 mil(of which ¥22 mil was paid to 2 outside directors)

Auditors(for total of 5 auditors)¥85.7 mil(of which ¥33.6 mil was paid to 2 outside auditors)

Note: • The remuneration above includes amounts paid to 2 directors and 1 auditor who retired
in June 2015.
• The remuneration for board directors includes stock acquisition rights at a total value
equivalent to 14.5 million yen, issued as reward-type stock options to 4 directors, notincluding outside directors.

Kureha Corporation Business Report 201621

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
and employees act in a manner that is consistent with legal
compliance and that also meets the standards of our society. This
framework is constantly being improved and reinforced so as tocultivate a compliance-focused corporate culture.
The Compliance Committee, led by the President & Chief
Executive Officer (CEO), keeps employees informed of complianceissues through training programs and other activities based on
the Compliance Handbook and the Compliance Standards. In
addition, direct access to internal and external (legal) advisers forinquiries and reporting on compliance issues is maintained so thatlegal violations, confirmed or suspected, can be detected anddeterred at an early stage.

Disclosure and Transparency
Impartial and continuous information disclosure ensuresmanagement transparency and builds trust with stakeholders. Kureha
provides timely and appropriate disclosure in accordance with allapplicable laws and regulations, as well as the Timely Disclosure Rules
prescribed by the Tokyo Stock Exchange. Kureha also proactively
releases information deemed to be valuable to shareholders.
Kureha’s General Meeting of Shareholders is held annually in
June. To ensure that shareholders have sufficient time to review
the proposals, the proxy statement for the shareholders’ meetingis posted on the Company’s website at the end of May, and mailedin early June. Shareholders are able to exercise their voting rights
by post or via the Internet.
During the shareholders’ meeting, Kureha uses video to clearly
explain its business content and results, and makes every effort torespond directly and fully to shareholders’ questions.
Kureha also holds regular briefings for institutional investors
and analysts regarding its medium-term business strategies andresults, and regularly provides individual hearings for investors inJapan and overseas.

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
and an Information Management Committee. Each committee istasked with recognizing related risks, and proposes concretemeasures to the President & Representative Director aimed at
reducing and avoiding risk and manages implementation.
In addition, to respond to unforeseen circumstances, aBusiness Continuity 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, andensuring the continuation 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 havebeen established that comply with ISO 14001, ISO 9001, and
OHSAS 18001 standards. In addition, Kureha is also continuingwith ongoing efforts to improve environmental conservation,
quality assurance, and occupational health and safety.

Compliance with the Corporate Governance Code
The Corporate Governance Code is a compilation of various
regulations aimed at ensuring substantive corporate governanceat listed companies. It was formulated in March 2015 in responseto revisions made to the Japanese government’s growth strategy,
the Japan Revitalization Strategy, in 2014.

22 Kureha Corporation Business Report 2016

Kureha considers thorough corporate governance to be ofvital importance for strengthening the management base toachieve medium- to long-term corporate growth. In November
2015, the Company formulated its own Corporate Governance
Guidelines to comply with the government code.

Management Team

Board of Directors

Yutaka Kobayashi

Tadashi Sagawa

Yoshio Noda

Michihiro Sato

President &Chief Executive Officer

Executive Vice President
General Manager of CSR Division
General Manager of
Manufacturing Sector

Senior Vice President
General Manager ofCorporate Planning,
Finance & Accounting Division

Senior Vice President
General Manager of R&D Division

Tsuneharu Takeda

Shigeto Umatani

Osamu Tosaka

Outside Director

Outside Director

Outside Director

Audit & Supervisory Board

Haruki Yamaguchi

Koichi Niimura

Toru Yoshida

Masaru Kitamura

Executive Officers
Naoki Fukuzawa

Fumihiko Yamada

Satoshi Yonezawa

Executive Vice President, General
Manager of Krehalon Division

Vice President, General Manager of
Administration Division

Vice President, General Manager of
Performance Materials Division

Yoshiki Shigaki

Yoshinori Shiojiri

Masahiro Namikawa

Senior Vice President, General
Manager of Engineering Division

Vice President, General Manager ofIwaki Factory

Vice President, General Manager of
Pharmaceuticals & Agrochemicals Division

Naomitsu Nishihata

Koji Suyama

Vice president, General Manager of
PGA Division and KF Products Division

Vice President, General Manager ofHome Products Division

Kureha Corporation Business Report 201623

Consolidated Five-Year Summary
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2016 (FY2015), 2015 (FY2014), 2014 (FY2013), 2013 (FY2012) and 2012 (FY2011)

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 attributable to owners of parent
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

FY2015FY2014FY2013

FY2012FY2011FY2015¥142,549
96,02546,524¥150,182
103,943
46,237¥148,124
105,588
42,534¥130,550
98,26932,278¥128,358
97,46130,896$1,265,078
852,192
412,886

36,536
31,182
44,21030,61916,201
14,41812,600
1,091
4,783
3,613
3,268
1,467
1,801
(156)
7,342
12,139
9,877
4,885
1,863
1,866
1,155
—
14,045(6,026)(9,328)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

324,245276,730
392,350
271,734
143,778
127,955
111,821
9,682
42,44732,06429,00213,01915,983(1,384)
65,157
136,782
87,65555,044
16,533
16,560
10,250—124,645(53,478)(82,783)¥236,633
119,274
79,685¥249,697
120,624
86,636¥224,459
106,190
77,225¥205,284
96,211
68,448¥186,223
88,55456,683$2,100,044
1,058,519
707,179

Yen

Amounts per share:
Net income – basic
Net assets
Cash dividends¥42.73686.0611¥53.53687.8012¥42.87
604.0011

U.S. dollars¥18.71546.6910¥8.51510.37
10

6.5%
2.5
3.5
3.4
45.7

6.6%
1.1
1.7
4.3
47.0

$0.376.08
0.09

Percent

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

8.8%
5.2
6.2
4.9
49.8

9.7%
6.1
8.3
6.5
47.3

8.0%
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 ¥112.68 to US$1, the rate of exchange prevailing on the Tokyo Foreign
Exchange Market on March 31, 2016.
2. For amounts per share, see Note 21 of the Notes to Consolidated Financial Statements.

24 Kureha Corporation Business Report 2016

Management Discussion and Analysis
Business environment
During the fiscal year ended March 31, 2016, although there was a moderate
recovery trend going overall due to continuing low oil prices and improvements inthe employment environment, there were concerns about the future outlook of theJapanese economy due to factors such as the rapid appreciation of the yen since thebeginning of the year. On the other hand, with regard to the world economy, thedeceleration of the economies of emerging countries starting with China, as well as
high geopolitical risks, contributed to the increasing opaqueness of its future outlook.

Net Sales

125,000

Net sales in the subject fiscal year decreased by ¥7,632 million year-on-year to¥142,549 million. Gross profit decreased by ¥2,187 million to ¥40,280 million,
and the gross profit margin stayed at the same level as the previous fiscal year, at
28.3%. On the other hand, selling, general and administrative expenses
decreased by ¥235 million from the previous fiscal year to ¥27,680 million, andas a result, operating income decreased by ¥1,951 million to ¥12,600 million.
The operating income ratio decreased from 9.7% in the previous fiscal year to
8.8%.
Other expenses (net of other income) for the fiscal year ended March 31,
2016 amounted to a loss of ¥637 million, a decrease of ¥1,512 million from theprevious fiscal year. As a result of the above, ordinary income decreased by¥3,463 million to ¥11,962 million. The ordinary income ratio decreased from
10.3% in the previous fiscal year to 8.4%.
Extraordinary loss (income) decreased by ¥481 million
year-on-year
Net
Sales to a lossof yen) interestsof ¥1,352 million. As a result, income before income taxes(Millions
and minority
decreased by ¥2,982 million to ¥10,610 million.
Total income taxes amounted to ¥3,293 million, and net income decreasedby ¥1,846 million to ¥7,317 million. Loss attributable to non-controllinginterests amounted to ¥25 million, and profit attributable to owners of parent
150,000
amounted to ¥7,342 million, a decrease of ¥1,853 million.

100,000

125,000

Cash Flows from

Cash150,000
flows from financing activities
15,00010Investing Activities
yen)
Net cash used in financing activities amounted to ¥9,328 (Millions
million,of comparedtonet cashprovided amounting to ¥5,042 million in the20,000
previous fiscal year. This
125,000
12,0008
was mainly due to redemption of bonds.
15,00010,0009,000

675,0005,000 from operating
The KurehaGroup’s basic policy is to maximize cash flows
activities by securing earnings in line with its business
6,000 plan4
0 and by enhancing
50,000asset efficiency,
and to allocate cash with priority given to capital expenditure for-5,000new businesses and expansion of existing businesses, investments and loans,researchand development, and dividend payments3,000
to-10,000
investors. In line with this 2
25,000policy, Kureha procures required capital with priority given to securing long-term
funding, 0and in consideration of the balance between-15,000
0long- and short-term
0-20,000
borrowings.
(FY) 2011 2012 2013 2014 2015
(FY)
2011 2012 2013 2014 2015
-25,000(FY) 2011

Cash Flows from

9,000
75,0006,000
50,0003,000

25,0000(FY) 2011

2012

2013

Domestic

2014

2012

2013

Total Assets(Millions of yen)

2014

0

2015

(FY) 2011

Overseas

Ne
to o
(Left
Total
Net
(MillionsOperating Income(Left scale) (Millions of yen)

OperatingCash FlowsIncome
from toscale) (%)
Net
Sales (Right
Operating
Activities
Cash Flows from15,000 Investing Activities 10(Righ12,000(Millions of yen)8

10,000250,000

6

8,000
200,000

4

150,000

2

100,000
2,000

050,000 0

6,000

5,000

Cash flow from investment activities
NetinSales
Operating
Net cash used
investment activities amounted to ¥6,026
million, Income
a decrease ofscale) due(Millionsyen)(Millionsfromof yen)¥12,740 million
the previous fiscal year. This was(Leftmainlyto aofdecreasein payments for purchases of property, plant and equipment
andintangible
fixedOperating
IncometoCash Flows
from
assets, as well as an increase in proceeds from sales of investments
securities.
scale) (%)
NetOperating
Salesin(Right
Activities

Overseas

12,0009,000
10,00050,000

Domestic

15,00015,000Cash flow from operating activities
Net cash provided by operating activities amounted 25,000
to ¥14,045 million, an
increase of ¥1,511 million from the previous fiscal year. This was mainly due toan increase in depreciation and trade notes and accounts0 payable, as well as anincrease in dividends received, while income before income
taxes2012and2013
minority
2014 2015(FY) 2011
interests decreased and trade notes and accounts receivable increased.
Domestic
Overseas100,000

Oper
Net S

20,00012,000The balance of cash and cash equivalents at the end100,000of the subject fiscal year
(March 31, 2016) amounted to ¥6,621 million, a decrease of ¥1,151 million
from the end of the previous fiscal year (March 31, 2015).
75,000 An outline of individual cash flows and the main factors affecting each is as follows:

Financial policy(Left sca

150,000

Analysis of business results

Cash flow analysis

Oper(Millions of yen)2015

6,00004,000-5,0003,000-10,000-15,0000(FY) 2011-20,000-25,000(FY) 2011

2012
2012

2013
2013

2014

2015

(FY) 2011

0

2015

2014

(FY) 2011

Net Income attributableto owners of the parent(Leftscale)(Millions of yen)
Total
Assets(Millionsof yen) to Net Sales
Net
IncomeReturnon Assets(Rightscale) (%)
Returnon Equity 6
12,000

Net
(Left
Inter
Equ
(Million

(Righ

(%)

10,000250,000
10
8,000
200,000

5

120,000

4

90,000100,000

6,000 8150,000

3

80,0004,000 62

60,00060,000100,000
2,000

450,0000

140,000030,00020,000

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

(FY) 2011

Kureha Corporation Business Report 2016

25

(FY) 2 2011
0

0

Net Assets(Left scale) (Millions of yen)

00(FY) 2011

50,000
3,000

25,0000(FY) 2011

2012

2013

Domestic

Balance sheet analysis

Net Sales(FY) 2011

Operating
IncomeCash Flows
fromto(Rightscale)
(%)
Net
Sales
Operating Activities
Overview of capital expenditure
Cash Flows fromThe Kureha
business as a core business 10
150,000 Group has designated advanced materials
15,000that drives earnings, and as such actively invests in this area.Investing
Total capitalActivities
expendi-Operating
Cash
FlowsIncome
from toscale) (%)
Net Sales (Right
Operating
Activities
Cash Flows from15,000 Investing Activities 10

Ne
to o
(Left
Total
Net
(Millions

15,000Capital expenditure by business division:
100,000
The Advanced Materials Division invested ¥3,550 million,
9,000
610,000 mainly in manufacturing75,000
facilities for PPS resin (Kureha).
5,000
The Specialty Chemicals Division invested ¥1,597 million,
primarily in
6,000 04
production
facilitiesfor
inorganic
chemicals(Kureha).
50,000The Specialty Plastics Division invested ¥1,944 million,
primarily in manufac-5,000
turing facilities for polyvinylidene chloride resin (Kureha).
3,000
225,000The
Construction Division invested ¥65 million. -10,000
The Other Operations Division invested ¥1,284 million,
mainly in industrial-15,000
00 Co., Ltd.).
0waste processing
facilities (Kureha Ecology Management(FY) 2011 2012 2013 2014 2015
(FY)
2011 2012 2013 2014 2015
-20,000
In addition,
as a joint initiative, the Advanced Materials,
Specialty Chemicals,
Overseasand Specialty Domestic
Plastics Divisions
invested ¥3,698 million
in such areas as private-25,000
2012 2013 2014 2015
(FY) 2011
power plant facilities (Kureha), and common factory facilities(Kureha).
Capital required for these investments was procured from cash-at-hand,
corporate bonds, and borrowings.

(Righ12,000(Millions of yen)8

10,000250,000

6

8,000
200,000

6,00004

150,000-5,0003,000-10,000

2

100,000
2,000

050,00020,00012,00015,0009,000
10,000

6,000

5,000

4,000

-15,0000(FY) 2011-20,000-25,000(FY) 2011

2012

2013

2014

2015

2012

2013

2014

2015

0

(FY) 2011
0(FY) 2011

Net Income attributableto owners of the parent(Left scale) (Millions of yen)
Total
AssetsNet Income(Millionsof yen) to Net Sales
Return(Rightscale)on(%) Assets
Return on Equity
6
12,00010,000250,000(Righ

5

120,000

10
8,000
200,000

4

90,000100,000

6,00083

80,0004,000
6

260,00060,000100,000
2,000
4

1

40,000030,00020,000150,000

50,0000

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

(FY) 2011200

CashotherFlowsrisks
fromTotal Assets
Business and(Millions of yen)
Operating Activities
ReturnAssetsThe KurehaCash
Group’sbusiness
operations are diverse, comprisingtheon
Advanced
Flows
from
ReturnoncarbonEquityMaterials Divisionfocusedon
PPS
resin,
PVDF
resin,
PGA
resin
and
Investing Activities(%)
products; the Specialty Chemicals Division focused on pharmaceuticals,
agro-

0

0

(FY) 2011(FY) 2011

Net Assets(Left scale) (Millions of yen)Interest-Bearing Debt
Equity(Millions of Ratio
yen)-10,000

4(1) Changes
in the business environment in Japan and overseas;changes in the-15,000
50,000market price of products-20,000
The KurehaGroup’s business is exposed to external factors2 such as changes in0markets
or customers, and intensification of competition
with competing-25,000
2011 2012for 20132014 20152011 2012 2013changes
2014 2015(FY) Accordingly,(FY)demandcompanies.
such as a decrease in
the Group’s
0principle products, customers shifting production overseas,andanincreasein 2015(FY) 2011 2012 2013 2014

ReportReturnon2016
Assets26 Kureha Corporation Business

Return on Equity(%)

Interest-Bearing Debt
(Millions of yen)

2

Cap
Dep

(Right scale) (%)(Millio(Millions of yen)chemicals and industrial chemicals; the Specialty Plastics Division focused on
250,000
20,000householdproducts and food packaging; the Construction
Division focused on
15,000construction and engineering; and the Other Operations10Division including
environmental
businesses and logistics. By region,200,000
the Group conducts business
10,000in Japan as well as Europe, North America, and Asia.
8
The5,000main factors that could affect the operating results,
stock price, financial
150,000
position andotheraspectsoftheKurehaGroupareasfollows.
0
Forward-looking statements in this text are based on evaluations
made at the
6time of-5,000
the Company’s securities report filing (June24, 2016).
100,000

2

Net
(Left
IntereEqu(Millions(%)(Millions of yen)

82Overseas(Left scale) (Millions of yen)

As of March 31, 2016, total assets amounted to ¥236,633 million, a decrease of¥13,064 million from the end of the previous fiscal year (March 31, 2015).
Current assets totaled ¥75,357 million, a decrease of ¥591 million from the endof the previous fiscal year. This was mainly due to a150,000
decrease in cash anddeposits, etc. Property, plant and equipment amounted to ¥117,808 million, adecrease of ¥5,377 million from a year earlier, due mainly
125,000 to the completion of acycle in investments in large-scale facilities, as well as impairment loss associatedwith the restructuring of the Advanced Materials Division.
100,000 Investment securities
decreased by ¥5,976 million year-to-year to ¥20,984 million due to sales. As aresult, non-current assets went down by ¥12,472 million
from the end of the
75,000previous fiscal year to ¥161,275 million.
Total liabilities at the end of the subject fiscal year amounted to ¥117,358
million, a decrease of ¥11,714 million from the end 50,000of the previous fiscal year.
This was mainly because of a decrease in interest-bearing debt of ¥6,950 million
25,000to ¥79,685 million as a result of redemption of debts,
a decrease in accounts
payable – other due to the payment for capital expenditure, and a decrease in0
deferred tax liabilities related to the unrealized gain on available-for-sale(FY) 2011 2012 2013 2014 2015
securities.
Domestic million,
Overseas
Total net assets for the subject fiscal year amounted to ¥119,274
adecrease of ¥1,350 million from the end of the previous fiscal year. This mainly
resulted from
attributable to owners of parent of Operating¥7,342 million,
dividends
Netprofit
Sales
Incomepaid of ¥2,061
million,and a decrease in unrealized gain
onscale)available-for-sale(Left(Millions of yen)
(Millionsof yen)securities and translation adjustments.

20,00012,0000

2015

Operating Income(Millions of yen)ture during
the fiscal year ended March 31, 2016 amounted to ¥12,139 million.
125,000

2014

120,000

60

90,000100,000

50

80,00040

20,00060,00060,00030

15,00040,00020

30,00020,00010

0025,00010,0005,000(FY) 2011

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

0

Capital Expenditure
Depreciation(Millions of yen)0(FY) 2011

3,000-10,000

25,0000(FY) 2011

2012

2013

Domestic

2015

2014

Overseas-15,0000(FY) 2011-20,000-25,000(FY) 2011

Net Sales

Operating Income(Millions of yen)

(Left scale) (Millions of yen)

Operating
Incomeproduction capacity by competing firms, could therefore
influencetheGroup’sCash Flows
from toscale) (%)
operating results and financial position.
Net
Sales (RightActivities
OperatingCash Flows from

(2) Changes
150,000 in fuel and raw material prices
15,000Investing Activities10
Raw materials such as naphtha and coal used by the Kureha Group,
well as fuel,(Millions asof yen)are susceptible
to changes in market conditions. As a 12,000
result,125,000
20,000changes such as an
8increase in the price of these raw materials, or the inability to shift the additional cost
15,000
to product100,000prices in a timely and appropriate manner, could have a negative effect on
the Group’s operating results and financial position. 9,000
6
10,00075,0005,000(3) Product liability
6,000 04
The Kureha
50,000 Group’s core business is chemical manufacturing. The Group isacutely aware of the risks connected with its products-5,000
and the manufacturing
3,000
2
process,
and is careful to continually exercise Responsible
Care (autonomous
25,000-10,000
management for environmental conservation, disaster safety and other measures).
-15,000
However, 0should a significant, unforeseen quality issue
arise, there could be a00
negative (FY)
effectontheGroup’soperatingresultsandfinancial2011 2012 2013 2014 2015
(FY) 2011 position.
2012 2013 2014 2015
-20,000
Domestic

Overseas-25,000(4) The Specialty Chemicals Division’s pharmaceutical business(FY) 2011 2012 2013 2014 2015
One of the Kureha Group’s main businesses is the manufacture and sale ofpharmaceuticals. Accordingly, revisions to drug prices under Japan’s medical
insurance system, as well as the rise of the usage of generic drugs, could have anegative effecton theGroup’soperating results.
Cash
Flows
from
Total Assets

150,000

0 fluctuations(6) Currency
6-5,000in the Kureha Group’s financial statements not denominated in yen
The items
100,000
are susceptibletofluctuations
inexchangerates
when
converted
into yen. The-10,000
Group concludes exchange contracts and takes other steps4 to minimize theeffects -15,000of fluctuations in exchange rates. However, 50,000
fluctuations in exchange rates
beyond-20,000
those predicted could have a negative effect on the Group’s operating2
results and financial position.
-25,000(FY) 2011

2012

2013

2014

2015

0

(FY) 2011

2012

2013

2014

2015

(7) Investment securities
02012 2013(FY) 2011 GroupOf the ¥33,730 million in investment in securities, the Kureha
held 2014a 2015
total of ¥20,984 million for the purpose of long-term holdings (8.9% of total
assets on a consolidated basis) as of the end of the subject fiscal year. Significant
changes in market prices, or in the financial position of the issuing companies,
AssetsInterest-Bearing
could have aReturn
negative on
effecton the Group’s operating results
and financial Debt
(Millions of yen)
Returnon
Equityposition.

(9) Litigation
430,000Ethical Charter,”
The Kureha Group has established the “Kureha Group“Compliance Rules” and “Compliance Standards,” and strives to ensure that the2Group strictly
complies with all laws, regulations and societal norms. However,there is a risk that the Group’s domestic or overseas businesses could be the targetof lawsuits, 0administrative measures or other action. A major
lawsuit or other02013 Group’s
2014 20152013 Kureha
2014 2015(FY) 2011filed2012(FY) 2011
action be taken
againstcould have a negative
effect2012
on theoperating results and financial position.

2014

2015

2012

2013

2014

2015

0

50,0002,0000(FY) 2011
0(FY) 2011

10,000250,000(Righ

5

120,000

10
8,000
200,000

4

90,000100,000

6,000
8

3

80,0004,000
6

260,00060,000100,000
2,000
4

1

40,000030,00020,000150,000

50,0000

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

(FY) 2011
2

0

0

20

Net
(Left
IntereEqu(Millions

(%)

0

0

(FY) 2011(FY) 2011

Net Assets(Left scale) (Millions of yen)Interest-Bearing Debt
EquityRatio(Millionsof yen)

20

Cap
Dep

(Right scale) (%)(Millio

120,000

60

90,000100,000

50

80,00040

20,00060,00060,00030

15,00040,00020

30,00020,00010

0025,00010,0005,000(FY) 2011

2012

2013

2014

2015

(FY) 2011

2012

2013

2014

2015

0

0

(FY) 2011

Capital Expenditure
Depreciation(%)(8) Occurrence of natural disasters or accidents
Manufacturing for the Kureha Group’s principal products is concentrated in the
90,000production10division of the Iwaki Factory (Iwaki, Fukushima
Prefecture), and assuch the Company makes continual efforts focused on this facility for environmental conservationand to ensure safety. However, damage to production facilities8
as a result of natural disasters such as major earthquakes or typhoons, or due to60,000accidents, could have a negative effect on the Group’s
operating results and financial position.6

2013

100,000

Net Income attributableto owners of the parent(Left scale) (Millions of yen)
Total
AssetsNet Income(Millionsof yen) to Net Sales
Returnon(Right scale)(%)Assets
Return on Equity
6
12,000(Millions of yen)
Operating Activities
Return on Assets(5) Country Cashrisks forFlows
overseasfrom
businesses
Returnon Equity
The KurehaInvestingGroup conducts
business in Europe, North Americaand Asia.
Activities(%)

of yen)Accordingly,(Millions
changessuch as deterioration in the political or economic situationin these20,000
regions, the enactment or abolishment of250,000
laws and regulations, international tax practice risks such as transfer price taxation, and deterioration in
15,000public safety,
as well as unforeseen circumstances such as10terrorism, armed
200,000 on the Group’s operating
conflict10,000
or natural disaster, could have a negative effectresults andfinancial
position.
8
5,000

2012

2

(Millions of yen)

25,00020,00015,00010,0005,000

0(FY) 2011

2012

2013

2014

2015

Kureha Corporation Business Report 201627

Consolidated Balance Sheets
Kureha Corporation and its Consolidated Subsidiaries
As of March 31, 2016 and 2015

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

FY2015FY2014FY2015ASSETS
Current assets:
Cash and time deposits (Notes 5 & 7)
Trade notes and accounts receivable (Note 7)
Inventories (Note 6)
Deferred tax assets (Note 13)
Others (Note 7 and 18)
Less: Allowance for doubtful accounts (Note 7)
Total current assets¥6,621
30,222
33,183
2,347
3,192
(210)
75,357¥ 7,772
28,984
32,775
2,506
4,102
(192)
75,949$58,759
268,210294,488
20,82828,328(1,863)
668,769

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

41,59252,00913,523
6,924
3,758
117,808

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

369,116
461,563
120,01261,44833,351
1,045,509

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)
Others (Notes 7 and 19)
Less: Allowance for doubtful accounts
Total investments and other assets

33,730
1,808
2,345
1,651
4,030
(99)
43,466

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

299,343
16,045
20,811
14,65235,764(878)
385,747¥236,633¥249,697$2,100,044

Total assets (Note 23)

The accompanying notes are an integral part of these statements.
FY2015 and FY2014 refer to the fiscal years ended March 31, 2016 and 2015, respectively.

28 Kureha Corporation Business Report 2016

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

FY2015
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
Others (Note 9)
Total long-term liabilities
Total liabilities
Net assets:
Shareholders’ equity (Note 22 and 24):
Capital, non par value
Authorized: March 31, 2016 and 2015 – 600,000,000 shares
Issued: March 31, 2016 and 2015 – 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 14)
Non-controlling interests
Total net assets
Total liabilities and net assets

FY2014FY2015¥13,870¥ 13,766$123,091

29,716
6,562
1,417
4,978
2,633
—
6,737
65,91734,866
7,247
2,430
5,734
2,909
21
3,285
70,262

263,720
58,235
12,57544,17823,367—59,788584,992

45,9682,183

51,7704,125

407,951
19,373

236
253
430
816
1,552
51,440117,358

229
374
550
804
955
58,810129,072

2,094
2,245
3,816
7,241
13,773456,514
1,041,515

12,4609,982
89,416(4,450)107,408

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

110,578
88,587
793,539(39,492)
953,212

7,104
(0)
4,768
(1,371)
10,50049
1,315
119,274¥236,633

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

63,045(0)42,314(12,167)
93,184434
11,6701,058,519$2,100,044

The accompanying notes are an integral part of these statements.
Kureha Corporation Business Report 201629

Consolidated Statements of Income
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2016 and 2015

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

FY2014FY2015FY2015¥142,549
102,269
40,280¥150,182
107,71442,467$1,265,078
907,605
357,472

27,68012,60027,916
14,551

245,651
111,821

820
(596)
(809)
4,577
218
11
(4,486)

678
(701)
912
70
314
37
—

7,277
(5,289)(7,179)40,6191,934
97(39,811)(1,128)
(464)
—
—
(132)
(1,989)(1,063)
—
(751)
(399)
(56)
(958)

(10,010)(4,117)——(1,171)(17,651)

Income before income taxes

10,61013,593

94,160

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

3,347
(53)
3,293

4,061
367
4,429

29,703(470)
29,224

7,317(25)¥7,342

9,163(32)¥9,195

64,936(221)$65,157

Net sales (Note 23)
Cost of sales
Gross profit
Selling, general and administrative expenses (Note 15)
Operating income (Note 23)
Other income (expenses):
Interest and dividend income
Interest expense
Foreign exchange (losses) gains
Gain on sales of investments in securities (Note 8)
Compensation income
Gain on sales of property, plant and equipment (Note 16)
Business restructuring costs (Notes 17 and 18)
Loss on disposal and sales of property, plant and equipment(Note 16)
Impairment loss (Note 17)
Loss on liquidation of subsidiaries (Note 17)
Loss on valuation of investments in capital
Other, net
Other expenses, net

Net income
Net loss attributable to non-controlling interests
Net income attributable to owners of parent
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, 2016 and 2015

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

FY2015
Net income
Other comprehensive income:Unrealized (loss) 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
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

The accompanying notes are an integral part of these statements.

30 Kureha Corporation Business Report 2016

FY2014FY2015¥7,317¥9,163$64,936(2,272)5(2,386)(760)(146)(5,561)¥1,756

3,761
8
4,223
1,166
285
9,444
¥18,608(20,163)44(21,175)(6,744)(1,295)(49,352)$15,583¥1,840(83)¥18,52978$16,329(736)

Consolidated Statements of Changes in Net Assets
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal year ended March 31, 2016

Millions of yen
Shareholders’ equity
Number ofcommon stock

BALANCE-APRIL 1, 2015
Dividends paid
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of tresury stock
Purchase of shares of consolidated subsidiaries
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2016

CapitalsurplusCapital181,683,909¥12,460
—
—
—
—
—
—
—
¥12,460

181,683,909

Treasurystock,
at costRetainedearnings¥10,013
—
—
—
—
(31)
—
—
¥9,982¥84,163(2,061)
7,342
—
(6)
—
(21)
—
¥89,416

Total
shareholders’equity¥(4,487)
—
—
(3)
40
—
—
—
¥(4,450)¥102,150(2,061)
7,342
(3)
34
(31)
(21)
—
¥107,408

Accumulated other comprehensive income
Unrealized
gain onavailablefor-salesecurities

BALANCE-APRIL 1, 2015
Dividends paid
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of tresury stock
Purchase of shares of consolidated subsidiaries
OthersNet changes of items other than shareholders' equity
BALANCE-MARCH 31, 2016

Deferredloss onhedges¥9,352——————(2,248)¥7,104

Total
accumulated
Stock
Remeasurements
otherTranslationof defined comprehensive acquisitionrightsadjustments benefit plansincome¥(5) ¥7,272 ¥(615) ¥16,002
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5
(2,503)(755) (5,502)¥(0) ¥4,768 ¥(1,371) ¥10,500

Noncontrollinginterests

¥68
—
—
—
—
—
—
(18)
¥49

Total net
assets¥2,403 ¥120,624—(2,061)
—
7,342
—
(3)
—
34
—
(31)
—
(21)
(1,087) (6,608)¥1,315 ¥119,274

Thousands of U.S. dollars (Note 2)
Shareholders’ equity
CapitalsurplusCapitalBALANCE-APRIL 1, 2015
Dividends paid
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of tresury stock
Purchase of shares of consolidated subsidiaries
OthersNet changes of items other than shareholders’ equity
BALANCE-MARCH 31, 2016

$110,578
—
—
—
—
—
—
—
$110,578$88,862
—
—
—
—
(275)
—
—
$88,587

Retainedearnings$746,920(18,290)
65,157
—
(53)
—
(186)
—
$793,539

Treasury stock,at costTotal shareholders’equity$(39,820)
—
—
(26)
354
—
—
—
$(39,492)$906,549(18,290)
65,157
(26)
301
(275)
(186)
—
$953,212

Accumulated other comprehensive income
Unrealized
gain onavailablefor-salesecurities

BALANCE-APRIL 1, 2015
Dividends paid
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of tresury stock
Purchase of shares of consolidated subsidiaries
OthersNet changes of items other than shareholders' equity
BALANCE-MARCH 31, 2016

$82,996
—
—
—
—
—
—
(19,950)$63,045

Deferredloss onhedges$(44)
—
—
—
—
—
—
44
$(0)

Total
accumulated
Stock
Remeasurements
otherTranslationof defined comprehensive acquisitionrightsadjustments benefit plansincome$64,536 $(5,457) $142,012
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(22,213)(6,700) (48,828)$42,314 $(12,167) $93,184

$603
—
—
—
—
—
—
(159)
$434

Noncontrollinginterests

Total net
assets$21,325 $1,070,500—(18,290)—
65,157
—
(26)
—
301
—
(275)
—
(186)
(9,646) (58,643)$11,670 $1,058,519

The accompanying notes are an integral part of these statements.

Kureha Corporation Business Report 201631

Consolidated Statements of Cash Flows
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2016 and 2015

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

FY2014FY2015
Cash flows from operating activities:
Income before income taxes
Adjustments for:Business restructruing charges
Impairment loss
Loss on liquidation of subsidiaries
Depreciation
Amortization of goodwill
Increase in allowance for doubtful accounts
Increase in net defined benefit asset
Decrease in net defined benefit liability
Increase (decrease) in retirement allowance for directors andcorporate 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(Increase) decrease in trade notes and accounts receivable
Increase in inventories
Decrease (increase) in other assets
Increase (decrease) in trade notes and accounts payable(Decrease) 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 increase (decrease) in commercial paper
Net (decrease) increase in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Dividends paid
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do
not result in change in scope of consolidation
Other, net
Net cash (used in) 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 fiscal year
Decrease in cash and cash equivalents resulting from fiscal yearchange of consolidated subsidiaries
Increase in cash and cash equivalents resulting from consolidated
subsidiaries’ merger with unconsolidated subsidiaries
Cash and cash equivalents at end of fiscal year (Note 5)
The accompanying notes are an integral part of these statements.

32 Kureha Corporation Business Report 2016

FY2015¥10,610¥13,593$94,160

3,988
464
—
9,877
2
17
(1,060)
(101)

—
—
660
8,261
3
36
(805)
(26)

35,392
4,117—
87,65517150(9,407)
(896)

6
(142)
(821)
596
1,116
—
(4,477)(1,410)
(745)
717
149
(917)
(998)
16,8742,178(670)(4,336)
14,045

(55)
(62)
(678)
701
1,025
399
(70)
739
(4,350)(1,132)(2,437)904(1,077)
15,6291,677(690)(4,082)
12,53353(1,260)(7,286)
5,289
9,904
—
(39,731)(12,513)(6,611)6,363
1,322(8,138)(8,856)
149,751
19,329(5,946)(38,480)
124,645(12,704)
387
(924)
(117)
7,054
(20)
728
(64)
(300)
(65)
(6,026)(16,051)
127
(698)
(377)
215
(20)
117
(10)
(2,168)100(18,766)(112,744)
3,434(8,200)(1,038)62,602
(177)
6,460
(567)
(2,662)(576)(53,478)

4,000(1,417)
8,059(6,649)—(10,000)(2,061)(30)(2,000)2,463
5,236(5,441)
6,959—(1,975)(37)

35,498(12,575)
71,521(59,007)—(88,746)(18,290)(266)(1,026)—(9,105)(201)(9,328)158(1,151)
7,772

(163)
5,042
375
(815)
8,726

(1,783)(82,783)
1,402(10,214)
68,974

—

(166)

—

—

28

—

¥6,621¥7,772$58,759

Notes to Consolidated Financial Statements
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2016 and 2015

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, 2016 and 2015, amountsof less than one million yen have been omitted. Consequently, totals shown in the accompanying consolidated financial
statements for the fiscal years ended March 31, 2016 and 2015 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 ¥112.68 to U.S. $1, the rate of exchange prevailing as of March 31, 2016. 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 38 subsidiaries (37 in 2015) and one affiliate (one in 2015) as of March 31, 2016. The accountsof one subsidiary (one in 2015) and six affiliates (four in 2015) were not consolidated and not applied to equity method for the
fiscal year ended March 31, 2016, 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.

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 raterisk. 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.

Kureha Corporation Business Report 201633

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
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, 2016 and 2015 were ¥178,067 million ($1,580,289 thousand) and ¥172,971 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
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.
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 “non-controlling interests” under net assets.

34 Kureha Corporation Business Report 2016

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
The Group has adopted the “Revised Accounting Standard for Business Combinations” (the Accounting Standards Board ofJapan (ASBJ) Statement No. 21, September 13, 2013, hereinafter “Business Combinations Standard”), “Revised AccountingStandard for Consolidated Financial Statements” (ASBJ Statement No. 22, September 13, 2013, hereinafter “Consolidated
Financial Statements Standard”), and “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 7,
September 13, 2013, hereinafter “Business Divestitures Standard”) from the current fiscal year. Accordingly, differences arisingfrom changes in the Company’s ownership interests in subsidiaries over which the Company retains control are recognized ascapital surplus, and acquisition-related costs are recognized as expenses in the fiscal year of incurrence. Regarding businesscombinations to be performed on or after the beginning of the fiscal year ended March 31, 2016, changes have been madewhereby adjustments to the provisional amount arising from the finalization of the tentative accounting treatment relating to theallocation of acquisition cost are recognized in the consolidated financial statements for the year in which the businesscombination occurred. In addition, the Group has changed the presentation of net income and other related items, and thepresentation of “minority interests” to “non-controlling interests.” To reflect these changes in presentation, the consolidated
financial statements for the fiscal year ended March 31, 2015 have been reclassified.
The Group has adopted these accounting standards prospectively from the beginning of the fiscal year ended March 31,
2016, in accordance with the transitional accounting treatments set forth in Paragraph 58-2, Item 4 of Business Combinations
Standard, Paragraph 44-5, Item 4 of Consolidated Financial Statements Standard, and Paragraph 57-4, Item4 of Business
Divestitures Standard.
In the consolidated statement of cash flows for the current fiscal year, cash flows from purchase or sales of shares insubsidiaries that do not result in change in scope of consolidation are recognized under “cash flows from financing activities,”
whereas cash flows concerning any costs associated with purchase of shares in subsidiaries that result in change in scope of
consolidation or any costs incurred associated with purchase or sales of shares in subsidiaries that do not result in change inscope of consolidation are recognized under “cash flows from operating activities.”
As a result, the effect on consolidated financial statements and per share information for the current fiscal year is immaterial.

5. Cash and Cash Equivalents

The following table represents a reconciliation of cash and cash equivalents as of March 31, 2016 and 2015:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Cash and cash equivalents

FY2015¥6,6216,621

FY2014¥7,7727,772

FY2015$58,759
58,7596. Inventories

Inventories as of March 31, 2016 and 2015, respectively, consisted of the following:Thousands of
U.S. dollars

Millions of yen

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

FY2015¥27,157
1,080
4,946¥33,183

FY2014¥26,303
1,144
5,327¥32,775

FY2015$241,009
9,584
43,894$294,488

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.

Kureha Corporation Business Report 201635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 principally by using forward foreign currency contracts. Investments in securities, equity instruments ofcustomers and suppliers 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 Chinese yuan are hedged by forward foreign currency contracts.
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. 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 note that the contract amounts themselves shown in Note 19 Derivatives and Hedging
Activities do not imply the market risk exposure regarding derivative transactions.

36 Kureha Corporation Business Report 2016

II. Fair value of financial instruments
Carrying amount, fair value and the differences as of March 31, 2016 and 2015 were as follows:(This information excludes financial instruments whose fair value cannot be reliably determined)

March 31, 2016

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, 2016

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¥6,621
30,222(210)
30,011¥6,621¥—

30,011—

19,985
1,973¥58,591
13,87016,162
6,562
17,00015,00027,522¥96,118

19,9852,135¥58,754
13,87016,162
6,562
17,205
15,562
27,630¥96,993

—
162
¥162
—
—
—
(205)
(562)
(107)
¥(874)

¥43
(1)

¥43
(1)

¥—
—

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

Fair value$58,759
268,210(1,863)
266,338$58,759$—266,338—

177,360
17,509$519,976
123,091
143,432
58,235150,869
133,120244,249$853,017

177,360
18,947$521,423
123,091
143,432
58,235
152,689
138,107245,207$860,782—
1,437$1,437———(1,819)(4,987)(949)$(7,756)

$381
(8)

$381
(8)

$—
—

Kureha Corporation Business Report 201637

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
amountFair value

Millions of yen
Unrealized
gain/loss¥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)

¥—
—

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.

38 Kureha Corporation Business Report 2016

B) Carrying amount of financial instruments whose fair value cannot be reliably determined as of March 31, 2016 and 2015
Carrying amountThousands of
U.S. dollars

Millions of yen

FY2014FY2015Investments in equity instruments that do not have aquoted market price in an active market

FY2015¥315¥315$2,795C) The aggregate annual maturities of monetary receivables as of March 31, 2016 and 2015

March 31, 2016

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

March 31, 2016

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

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

¥—
—
726
¥726

¥—
—
938
¥938

¥—
—
143
¥143

Due after one year
through five years

Due after five years
through ten years

Thousands of U.S. dollars
Due after
ten years

$—
—
6,443
$6,443$——
8,324$8,324$——
1,269$1,269Due 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

¥6,621
30,222
164¥37,008
Due in one
year or less$58,759
268,2101,455$328,434
Due in one
year or less¥7,772
28,984
95¥36,852D) The aggregate annual maturities of bonds and long-term loans payable as of March 31, 2016 and 2015
Millions of yen

March 31, 2016

Due in one
year or less

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

¥—
—
13,554¥13,554

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¥5,000
15,0006,021¥26,021¥5,000—3,813¥8,813¥7,000—2,894¥9,894¥——
1,087¥1,087

Due after
five years

¥—
—
150
¥150

Thousands of U.S. dollars

March 31, 2016

Due in one
year or lessDue 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

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

$—
—
120,287$120,287$44,373
133,120
53,434$230,928$44,373—
33,839$78,212$62,122—
25,683$87,806

$—
—
9,646
$9,646

Due after
five years

$—
—
1,331
$1,331

Kureha Corporation Business Report 2016

39

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
¥1,081

8. Securities

Investments in unconsolidated subsidiaries and affiliates amount to ¥5,532 million ($49,094 thousand) and ¥5,857 million as ofMarch 31, 2016 and 2015, respectively.
The acquisition cost and carrying amount of available-for-sale securities whose fair value were available as of March 31, 2016
and 2015 were as follows:
March 31, 2016

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

March 31, 2016

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

Acquisition
cost

Carrying
amountMillions of yen
Unrealized
gain (loss)¥7,711
7,711¥18,424
18,424¥10,713
10,713

1,864
1,864¥9,5751,560
1,560¥19,985

(303)
(303)
¥10,409

Acquisition
cost

Carrying
amountThousands of U.S. dollars
Unrealized
gain (loss)$68,432
68,432$163,507
163,507$95,074
95,074

16,542
16,542$84,975

13,844
13,844$177,360(2,689)(2,689)$92,376

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

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, 2016 and 2015 were as follows:
Thousands of
U.S. dollars

Millions of yen

Proceeds from sales
Gross realized gain
Gross realized loss

40 Kureha Corporation Business Report 2016

FY2015¥7,0544,577
99

FY2014¥215
70—

FY2015$62,60240,619878

9. Short-term Loans Payable, Long-term Debt and Lease Obligations

Short-term loans payable, long-term debt and lease obligations as of March 31, 2016 and 2015 consisted of the following:Thousands of
U.S. dollars

Millions of yen

Short-term loans payable with average interest rate of 1.09%
in 2016 and 0.88% in 2015
Current portion of long-term loans payable with averageinterest rate of 0.88% in 2016 and 0.92% in 2015
Current portion of lease obligation
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 2017 through 2033 withaverage interest rate of 0.88% in 2016 and 0.92% in 2015
Lease obligation
Total

FY2014FY2015FY2015¥16,162¥18,094$143,432

13,554
176

6,772
162

120,287
1,561—

10,000

—

5,000

5,000

44,373

5,000

5,000

44,373

7,000

7,000

62,122

15,00015,000133,120

13,968292¥76,154

19,770282¥87,081

123,961
2,591$675,843(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 ($3.84)
Aggregate amount of bond
¥ 15,000 million ($133,120 thousand)Aggregate amount of stock issued by exercising—stock 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.
The aggregate annual maturities of long-term loans payable as of March 31, 2016 were as follows:
Fiscal year ending March 31

2017
2018
2019
2020
2021

Thousands of
U.S. dollars

Millions of yen¥13,554
6,021
3,813
2,894
1,087

$120,287
53,43433,83925,683
9,646

Kureha Corporation Business Report 201641

The aggregate annual maturities of lease obligations as of March 31, 2016 were as follows:
Fiscal year ending March 31

Millions of yen

2017
2018
2019
2020
2021

¥176
139
79
50
18

Thousands of
U.S. dollars$1,561
1,233
701
443
159

Note:	Average interest rate on lease obligations is omitted since above lease obligations recorded in the consolidated balance sheet
as of March 31, 2016 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 ¥982 million ($8,714 thousand) and ¥1,191 million as of March 31, 2016 and2015, respectively:
Thousands of
U.S. dollars

Millions of yen

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

FY2015¥16,346
13,776
3,942
6,469¥40,535

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

FY2015$145,065
122,257
34,98457,410$359,735

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, 2016 and 2015 was as follows:
Thousands of
U.S. dollars

Millions of yen

Total commitment available
Amount utilized
Balance available

12. Net Defined Benefit Asset and Liability

FY2015¥7,896—¥7,896FY2014¥10,97326¥10,947

FY2015$70,074—$70,074

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
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.

42 Kureha Corporation Business Report 2016

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(ii) Change in plan assets

FY2015¥20,749—
20,749
1,075
234
1,243
(1,448)(2)¥21,853

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

FY2015$184,140—
184,140
9,540
2,076
11,031(12,850)(17)$193,938
Thousands of
U.S. dollars

Millions of yen

FY2015FY2014FY2015
Balance at beginning of fiscal year
¥22,614¥19,939$200,692
Expected return on plan assets
526
462
4,668
Actuarial gain or loss
(178)
1,166
(1,579)
Employer contributions
2,168
2,181
19,240Benefits paid
(1,357)(1,148)(12,042)
Others(5)12(44)
Balance at end of fiscal year
¥23,768¥22,614$210,933(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

FY2015¥21,582(23,768)(2,185)270

FY2014¥20,467(22,614)(2,147)282

FY2015$191,533(210,933)(19,391)
2,396(1,914)(1,864)(16,986)430(2,345)550(2,415)

3,816(20,811)¥(1,914)¥(1,864)$(16,986)(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

FY2015¥1,075
234
(526)
313
¥1,097FY2014¥1,092
238
(462)
537
¥1,405FY2015$9,5402,076(4,668)2,777$9,735

Kureha Corporation Business Report 201643

(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, 2016 and 2015 were as follows:
Millions of yen

Thousands of
U.S. dollars

FY2015FY2014FY2015
Actuarial gain or loss¥(1,114)¥1,889$(9,886)
Total¥(1,114)¥1,889$(9,886)(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, 2016 and 2015 were as follows:
Millions of yen

FY2015FY2014
Unrecognized actuarial gain or loss
¥2,007¥893
Total¥2,007¥893(vii) Plan assets(a) Percentage by major category of plans assets as of March 31, 2016 and 2015 were as follows:
FY2015FY2014
Bonds
63%
62%
Equities
21%
24%
General account
14%
13%
Others
2%
1%
Total
100%
100%

Thousands of
U.S. dollars

FY2015$17,811$17,811(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, 2016 and 2015 were as follows (weighted
average):
FY2015FY2014
Discount rate
0.5%
1.1%
Long-term expected rate of return on plan assets
2.3%
2.3%
B. Defined contribution pension plans
The amount to be paid by consolidated subsidiaries to the defined contribution pension plans was ¥24 million ($212 thousand)and ¥21 million for the fiscal years ended March 31, 2016 and 2015, respectively.

44 Kureha Corporation Business Report 2016

13. Income Taxes

The significant components of deferred tax assets and liabilities as of March 31, 2016 and 2015 were as follows:
Thousands of
U.S. dollars

Millions of yen

FY2015FY2014
Deferred tax assets:
Tax loss carried forward¥7,587¥7,460
1,429
1,392
Unrealized gain on fixed assets
Impairment loss
1,336—
Accrued bonuses
758
892
Accumulated depreciation
562
616
Loss on valuation of inventories
540
522
Others3,120
4,034
Sub-total
15,335
14,917
Valuation allowance(2,812)(2,315)
Total deferred tax assets
12,523
12,602
Deferred tax liabilities:
Shortfall in depreciation(6,368)(6,720)Net unrealized gain on available-for-sale securities(3,161)(4,456)
Others(1,190)(1,260)Total deferred tax liabilities(10,720)(12,437)¥164
Net deferred tax assets¥1,802
Deferred tax assets and liabilities as of March 31, 2016 and 2015 were presented as follows:

FY2014FY2015$67,332
12,681
11,856
6,727
4,987
4,792
27,689136,093(24,955)
111,137(56,514)(28,052)(10,560)(95,136)$15,992
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

FY2015FY2015¥2,347¥2,506$20,828

1,651

1,787

14,652

(12)

(3)

(106)

(2,183)(4,125)(19,373)

Reconciliations of the difference between the statutory income tax rate and the effective income tax rate for the fiscal years ended
March 31, 2016 and 2015 were as follows:
FY2015FY2014
Statutory income tax rate:
32.83%
35.38%
Expense not deductible for tax purpose
7.44
0.77
Non-taxable revenue(0.41)(0.80)Tax credit for research and development costs(9.16)(6.71)
Valuation allowance
4.68
5.87
Decrease in deferred tax assets at the end of the fiscal year due to changes in tax rate
1.05
1.51
Others(5.39)(3.43)
Effective income tax rate
31.04%
32.59%(Revisions to amounts of deferred tax assets and deferred tax liabilities due to change in rate of income taxes)“Partial Amendment of the Income Tax Act” and “Partial Amendment of the Local Tax Act” were enacted in the Diet session on
March 29, 2016. Accordingly, for temporary differences expected to be reversed on and after April 1, 2016, the effective tax rateapplied to the calculation of deferred tax assets and liabilities for the current fiscal year has been lowered from 32.07% in theprior fiscal year to 30.69% for those expected to be collected or paid during the period from April 1, 2016 to March 31, 2018,
and to 30.46% for those expected to be collected or paid on and after April 1, 2018, respectively.
As a result, the amount of deferred tax liabilities (after deducting deferred tax assets) decreased by ¥22 million ($195
thousand), while income taxes – deferred, unrealized gain on available-for-sale securities, and remeasurements of defined benefit
Kureha Corporation Business Report 201645

plans for the current fiscal year increased by ¥111 million ($985 thousand), ¥165 million ($1,464 thousand), and ¥(30) million($(266) thousand), respectively.

14. 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, 2016 and 2015
Thousands of
U.S. dollars

Millions of yen

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

FY2014FY2015¥15FY2015¥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

Eligible service period
Exercise period

46 Kureha Corporation Business Report 2016

1st Stock Option Plan (Note)
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 (Note)
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.
From June 26, 2008 to June 25, 2009
From July 23, 2008 to July 22, 2038

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

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 201647

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

48 Kureha Corporation Business Report 2016

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

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

Eligible service period
Exercise period

9th Stock Option Plan
4 directors of the Company
Common stock 34,100 shares
July 22, 2015
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 the10th day.
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, 2015 to June 23, 2016
From July 22, 2015 to July 21, 2045

Note:	All stock options in 1st Stock Option Plan and 2nd Stock Option Plan had been exercised by the end of the current fiscal year.
B) Volume and activity of stock options for the fiscal year ended March 31, 2016:
Volume of stock options:
Before vesting:
As of March 31, 2015
GrantedForfeited
VestedOutstanding
After vesting:
As of March 31, 2015
VestedExercised
Forfeited
Outstanding

196,100
34,100—90,000140,200—
90,00090,000——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
493
—

¥  1
—
380

$0.00
4.37
—

$0.00
—
3.37

C) Valuation method for fair value of stock options granted during the fiscal year ended March 31, 2016:
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

29.1%
4.0 years¥12 ($0.10) per share
0.05%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.
Kureha Corporation Business Report 201649

15. Selling, General and Administrative Expenses

Major components of selling, general and administrative expenses for the fiscal years ended March 31, 2016 and 2015 were as
follows:
Millions of yen

FY2015¥8,474
734
535
4,830

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

Thousands of
U.S. dollars

FY2014¥8,473
849
650
4,842

FY2015$75,204
6,514
4,747
42,864

16. 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, 2016 and 2015 were as follows:
Thousands of
U.S. dollars

Millions of yen

FY2015Gain on sales of property, plant and equipment:
Machinery, equipment and vehicles
Land
Total
Loss on disposal of property, plant and equipment:
Machinery, equipment and vehicles
Buildings and structures
Others (tools, furniture and fixtures)
Total
Loss on sales of property, plant and equipment:
Machinery, equipment and vehicles
Total

FY2014FY2015

¥11
0
¥11

¥10
26
¥37

$97
0
$97

¥540
468
117
¥1,126

¥424
597
33
¥1,055$4,792
4,153
1,038$9,992

¥1
¥1

¥8
¥8

$8
$8

17. Impairment Loss

For the fiscal year ended March 31, 2016
The Group has recognized impairment loss for the following asset group for the fiscal year ended March 31, 2016.
Purpose of use

Locations

Manufacturing facility

Iwaki City,
Fukushima Prefecture

Leased assets

Iwaki City,
Fukushima Prefecture
Iwaki City,
Fukushima Prefecture

Type of assets

Buildings
Structures
Machinery and equipment
OthersMillions of yen

Thousands of
U.S. dollars¥  363
283
1,873
116

$ 3,221
2,511
16,622
1,029

Land

464

4,117

Machinery and equipment
Others
Machinery and equipment
Others

122
32
686
121

1,082
283
6,088
1,073

Kasumigaura City,
Ibaraki Prefecture
Shanghai,
Machinery and equipment
389
3,452
China
In principle, the Group has grouped the operating assets by business units, and leased assets and idle assets by individual
properties.
For manufacturing facility, under carbon products business in the Advanced materials segment which was affected by the
weak demand and increasingly fierce competition, the Group conducted a thorough review and assessment of business, including
its future operating environment and projected earnings. Consequently, for the above mentioned manufacturing facility, theGroup wrote down the carrying amount of fixed assets associated with carbon products business to their recoverable value andrecognized the reduction of ¥2,635 million ($23,384 million) as business restructuring costs under other expenses.
Idle assets

50 Kureha Corporation Business Report 2016

For leased assets, due to the decline in rents, the Group wrote down the carrying amount of the fixed assets to the recoverable
value and recognized the reduction of ¥464 million ($4,117 million) as impairment loss under other expenses.
For idle assets, since these assets are not expected to be used in the future, the Group wrote down the carrying amount of the
fixed assets to their recoverable value and recognized the reduction of ¥1,352 million ($11,998 million) as business restructuringcosts under other expenses.
In addition, the recoverable value is determined as the higher of either net sales price or the value in use. Net sales price ofland is reasonably calculated based on assessed value of fixed assets for property tax, while others are taken as zero because sales
cannot be expected. The value in use is taken as zero because the future cash flows cannot be expected.
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

Location

Pennsylvania,
the United States

Type of assets

Millions of yen

Buildings
Machinery and equipment
Others¥255
397
8

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 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.

18. Business Restructuring Costs

The Group implemented a business restructuring in the Advanced materials segment after reviewing the business including its
future operating environment and projected earnings in response to weak demand and increasingly fierce competition. Major
components of business restructuring costs for the fiscal years ended March 31, 2016 and 2015 were as follows:
Millions of yen

Impairment loss
Loss on valuation of inventories
Other
Total

FY2015¥3,988431
66¥4,486FY2014

Thousands of
U.S. dollars

¥—
—
—
¥—

FY2015$35,392
3,824
585$39,811

Kureha Corporation Business Report 201651

19. Derivatives and Hedging Activities

I. Derivative contracts to which hedge accounting is not applied as of March 31, 2016 and 2015 were as follows:
Currency related
Millions of yen

FY2014FY2015

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

Contract
amountContract
amountover oneyear¥1,378
1,184

¥ —
—

50
—
173
569
1,287
¥4,643

—
—
—
158
—
¥158

Unrealized Contract
Fair value gain (loss) amountContract
amountover one
year

¥(20)
29

¥(20) ¥ 906
29 1,127

¥—
—

¥25
(24)

¥25
(24)

(0)
—
0
43
(8)
¥ 43

(0)
—
—
92
0
77
43
—
(8)
458
¥ 43 ¥2,662

—
—
—
—
—
¥—

—
(2)
0
—
(0)
¥(0)

—
(2)
0
—
(0)
¥(0)

Thousands of U.S. dollars

FY2015

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

Contract
amountover oneyear

Unrealized
Fair value gain (loss)$12,229 $—
10,507—$(177) $(177)
257
257

443
—
—
—
1,535
—
5,049 1,402
11,421—$41,205 $1,402

(0)
(0)
—
—
0
0
381
381
(70)
(70)
$ 381 $ 381

Contract
amountNotes: 1. Fair value is calculated using the forward rates.
2. For foreign exchange forward contracts, unrealized gain (loss) is presented as fair value.

52 Kureha Corporation Business Report 2016

Unrealized
Fair value gain (loss)

II. Derivative contracts to which hedge accounting is applied as of March 31, 2016 and 2015 were as follows:
Interest rate related
Millions of yen

As of March 31, 2016
Classification of derivative
contracts

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

Long-term loans
payable¥198¥—

Interest rate swaps
meeting certain
conditions

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

Long-term loans
payable

144

94

¥343

¥94

Major hedged items

Total

Contract
amountContract
amountover one year

Hedge accounting
methodFair value

Classification of derivative
contracts

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

Long-term loans
payable$1,757$ —Interest rate swaps
meeting certain
conditions

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

Long-term loans
payable

1,277

834

$3,044$834

Major hedged items

Total

Contract
amountContract
amountover one year

Hedge accounting
methodAs of March 31, 2015

Principle processing
method(Note 2)¥(1)

Thousands of U.S. Dollars

As of March 31, 2016

Hedge accounting
method¥(1)

Fair value$(8)(Note 2)$(8)
Millions of yen

Classification of derivative
contracts

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

Major hedged items

Long-term loans
payableContract
amount¥636

Contract
amountover one year

¥212

Fair value¥(9)

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.

Kureha Corporation Business Report 201653

20. Other comprehensive Income

Reclassification adjustments and tax effect amounts of other comprehensive income for the fiscal years ended March 31, 2016
and 2015 were as follows:

FY2015
Unrealized (loss) gain on available-for-sale securities
Amount for the fiscal year
Reclassification adjustment
Amount before tax effectTax effect amount
Unrealized (loss) 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

FY2014FY2015¥1,070(4,638)(3,567)
1,294(2,272)¥5,174(69)
5,105(1,344)3,761$9,495(41,160)(31,656)
11,483(20,163)

0
8
8
(3)
5

(6)
20
13
(4)
8

0
70
70
(26)
44

(2,386)

4,223(21,175)(1,427)313(1,114)
353
(760)

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

(12,664)
2,777(9,886)
3,132(6,744)(146)¥(5,561)

285¥9,444(1,295)$(49,352)

21. Per Share Information

Net assets per share as of March 31, 2016 and 2015 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

54 Kureha Corporation Business Report 2016

FY2015¥686.06
42.73
35.53

U.S. dollars

FY2014¥687.80
53.53
44.51

FY2015
$6.08
0.37
0.31

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

FY2014FY2015
Basic net income per share:
Net income attributable to owners of parent
Net income attributable to common shareholders of theparentWeighted average number of common stock during theperiodDiluted earnings per share:
Number of increased common stock used in computing
diluted net income per share:
Bonds with stock acquisition rights
Stock acquisition rights

FY2015¥7,342¥9,195$65,157

7,342

9,195

65,157

171,853,636

171,786,895—

34,789,602
34,642,032
147,570

34,823,223
34,642,032
181,191———

22. Shareholders’ Equity

For the fiscal year ended March 31, 2016
I. Issued stock
Type of share

Common stock

Share at beginning of fiscal year

Increase

Decrease

Share at end of fiscal year—

181,683,909—

181,683,909

II. Treasury stock
Type of share

Common stock

Share at beginning of fiscal year

Increase

Decrease

8,472

9,900,843

Share at end of fiscal year

90,0009,819,315

III. Dividends
A) Dividends paid
Date of approval

April 21, 2015
Board of Directors
October 20, 2015
Board of Directors

Date of approval

April 21, 2015
Board of Directors
October 20, 2015
Board of Directors
B) Dividends declared
Date of approval

April 19, 2016
Board of Directors

Date of approval

April 19, 2016
Board of Directors

Type of share

Common stock

Amount(millions of yen)

1,116

Common stock

Type of share

Common stock
Common stock

Type of share

Commonstock

Type of share

Commonstock

Amount per
share (yen)

6.50

945
Amount(thousands of
U.S. dollars)

9,904

5.50
Amount per
share(U.S. dollars)

0.05

8,386

0.04

Source of dividend

Amount(millions of yen)

Source of dividend

Amount(thousands of
U.S. dollars)

Retained
Earnings

Retained
Earnings

945

8,386

Measurement date

Effective Date

March 31,2015
September 30,
2015

June 2,2015
December 2,
2015

Measurement date

Effective Date

March 31,2015
September 30,
2015

Amount per
share (yen)June 2,2015
December 2,
2015

Measurement date

Effective Date

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

Effective Date

5.50

0.04

March 31,2016

March 31,2016

June 2,
2016

June 2,
2016

Kureha Corporation Business Report 201655

For the fiscal year ended March 31, 2015
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

7,839

9,893,004

Share at end of fiscal year—

9,900,843

III. Dividends
A) Dividends paid
Date of approval

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

April 21, 2015
Board of Directors

Type of share

Commonstock
Commonstock

Type of share

Commonstock

Amount(millions of yen)

1,030

Amount per share (yen)

6.00

944

Source of dividend

Retained
Earnings

5.50

Amount(millions of yen)

1,116

Measurement date

March 31,2014
September 30,
2014

Amount per
share (yen)

6.50

Effective Date

June 3,2014
December 2,
2014

Measurement date

Effective Date

March 31,2015

June 2,
2015

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 related,” and “Other operations” are 5 reportable segments.
Major products and services for each segment are as follows:
Segment
Advanced materials
Specialty chemicals
Specialty plastics
Construction
Other operations

Products and services
polyphenylene sulfide (PPS), polyvinylidene fluoride (PVDF), polyglycolic acid (PGA),
carbon fiber, activated carbon, materials for lithium-ion battery
therapeutic agent for chronic renal failure, anti-cancer agent, agricultural andhorticultural fungicides, caustic soda, hydrochloric acid, sodium hypochlorite,
monochlorobenzene, para-dichlorobenzene, ortho-dichlorobenzene
household plastic wrap, plastic bags and containers, fishing lines, packaging film andcompounds, auto-pack machinery
civil engineering and construction contracting business, construction and management
serviceenvironmental engineering, industrial waste management, transport and warehousing,physiochemical and biochemical testing, analysis and measurement

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.

56 Kureha Corporation Business Report 2016

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

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

Advancedmaterials

Specialty
chemicalsMillions of yen
FY2015
Reportable segment
Specialty
Other
plastics
Construction
operations¥36,536820
37,357¥1,091¥80,056
3,666¥31,182399
31,581¥4,783¥25,553931¥44,210383
44,593¥3,613¥45,5292,344¥16,201
6,270
22,472¥1,467¥10,082
110¥14,418
6,245
20,664¥1,801¥14,447902¥142,549
14,119156,669¥12,757¥175,669
7,955

3,550

1,597

1,944

65

1,284

8,441

Advancedmaterials

Specialty
chemicals

Thousands of U.S. dollars
FY2015
Reportable segment
Specialty
Other
plastics
Construction
operations$324,245
7,277
331,531$9,682$710,472
32,534$276,730
3,541
280,271$42,447$226,774
8,262$392,350
3,399
395,749$32,064$404,055
20,802$143,778
55,644
199,432$13,019$89,474
976

31,505

14,172

17,252576

Advancedmaterials

Specialty
chemicals

Total

Total

$127,955 $1,265,078
55,422
125,301
183,386 1,390,388$15,983 $113,214$128,212 $1,559,007
8,004
70,598
11,395

Millions of yen
FY2014
Reportable segment
Specialty
Other
plastics
Construction
operations

74,911

Total

Adjustment(Note 1)

Consolidated(Note 2)¥— ¥142,549(14,119)—(14,119) 142,549¥(156) ¥12,600¥60,963 ¥236,633
1,922
9,877
3,698

12,139Adjustment(Note 1)

Consolidated(Note 2)

$
— $1,265,078(125,301)—(125,301) 1,265,078$(1,384)$111,821$541,027 $2,100,044
17,05787,65532,818

107,729

Adjustment(Note 1)

Consolidated(Note 2)

Net sales:
Outside customers¥36,187¥35,535¥46,519¥16,721¥15,218 ¥150,182¥— ¥150,182
929
331
421
6,478
6,885
15,046(15,046)—
Inter-segment
Total
37,11635,866
46,941
23,20022,104
165,228(15,046) 150,182¥7,941¥(360) ¥14,551
Operating income¥438¥3,660¥1,081¥1,789 ¥14,912
Assets¥88,251¥25,405¥46,502¥10,404¥13,493 ¥184,059¥65,638 ¥249,697
Depreciation
3,217
867
1,634
106
786
6,611
1,650
8,261
Adjustment for increasein fixed assets
3,596
1,713
5,205
31
1,217
11,765
5,791
17,557
Notes: 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 is adjusted with operating income on the consolidated statements of income.

Kureha Corporation Business Report 201657

Information by geographical area of the Company for the fiscal years ended March 31, 2016 and 2015 was summarized asfollows:
Millions of yen
FY2015

Sales

Japan

Europe

Asia

Other

Total

¥96,025¥15,803¥18,410¥12,311¥142,549

Total

Thousands of U.S. dollars
FY2015

Sales

Japan

Europe

Asia

Other

$852,192$140,246$163,383$109,256$1,265,078

Millions of yen
FY2014
Japan

Sales

Europe¥103,943¥13,335

Asia

Other

Total

¥19,915¥12,987¥150,182

Note: Sales are categorized by country and regions based on customer’s location.
Millions of yen
FY2015Japan

Property, plant and equipment¥86,804

United States

Other¥17,264¥13,739

Total¥117,808

Thousands of U.S. dollars
FY2015Japan

Property, plant and equipment$770,358

United States

Other$153,212$121,929

Total$1,045,509

Millions of yen
FY2014
Japan

Property, plant and equipment

58 Kureha Corporation Business Report 2016

¥86,980

United States¥19,832

Other¥16,372

Total¥123,185

Information on impairment loss of fixed assets by reportable segment for the fiscal years ended March 31, 2016 and 2015 wassummarized as follows:

Advancedmaterials

Impairment loss

¥3,988Advancedmaterials

Impairment loss

$35,392

Advancedmaterials

Impairment loss

¥660

Specialty
chemicals¥—

Specialty
chemicals$—

Specialty
chemicals¥—Millions of yen
FY2015
Reportable segment
Specialty
Other
plastics
Construction
operations

¥—

¥—

¥464

Thousands of U.S. dollars
FY2015
Reportable segment
Specialty
Other
plastics
Construction
operations$—$—$4,117

Millions of yen
FY2014
Reportable segment
Specialty
Other
plastics
Construction
operations

¥—

¥—

¥—

Total

¥4,452

Total$39,510

Total

¥660

Adjustment

Consolidated¥—¥4,452Adjustment

Consolidated$—$39,510Adjustment

Consolidated

¥—

¥660

24. Subsequent Events

I. Changes in the number of shares constituting one trading unit and the share consolidation
At the meeting of the Board of Directors held on May 12, 2016, the Company resolved to make a change to the number ofshares constituting one trading unit. In addition, it resolved to submit a proposal concerning share consolidation at the 103rd
Annual General Meeting of Shareholders (hereinafter, “General Meetings of Shareholders”) held on June 24, 2016, and the said
proposal was then approved at the General Meetings of Shareholders. The details are as follows.
A) Change in the number of shares constituting one trading unit
a. Reason of changeThis is to respond to the “Action Plan for Consolidating Trading Units” announced by the Japanese stock exchanges,
which aims to consolidate all trading units of common stock (number of shares constituting one trading unit) of Japaneselisted companies to 100 shares by October 1, 2018.
b. Details of change
The number of shares constituting one trading unit will be changed from 1,000 shares to 100 shares effective October 1,
2016.
B) Share consolidationa. Purpose of the share consolidation
As described in “A) Change in the number of shares constituting one trading unit,” in changing the number of sharesconstituting one trading unit from 1,000 shares to 100 shares, the Company will execute a share consolidation(consolidating 10 shares to 1 share) for the purpose of maintaining the standard investment unit considered optimal by
the stock exchanges (50 thousand yen or more, less than 500 thousand yen) even after the change. In addition, effective
October 1, 2016, the Company will change the total number of shares authorized to be issued from the current
600,000,000 shares to 60,000,000 shares in proportion to the ratio of the share consolidation.

Kureha Corporation Business Report 201659

b. Details of the share consolidation
1. Type of shares subject to the share consolidation
Common stock
2. Method and ratio of the share consolidation
Effective October 1, 2016, a consolidation of 10 shares to 1 share will be executed for those shares owned byshareholders who are registered in the latest shareholder register as of September 30, 2016.
3. Reduction in shares resulting from the share consolidation
Total number of outstanding shares before
181,683,909 sharesconsolidation (as of March 31, 2016)
Number of shares to decrease due to163,515,519 sharesconsolidation
Total number of outstanding shares after
18,168,390 sharesconsolidation
Note: “Number of shares to decrease due to consolidation” and “Total number of outstanding shares after
consolidation” are theoretical values calculated based on the total number of outstanding shares before theconsolidation and the ratio of share consolidation.
c. Treatment of fractional shares less than one share
In case where any fractional shares less than one share arise due to the share consolidation, such shares will be sold in alump or purchased as treasury stock in accordance with the provisions of the Companies Act. The proceeds from saidtransactions will be then distributed to the shareholders who hold fractional shares in proportion to their fractional
ownership.
d. Total number of shares authorized to be issued as of the effective dateIn order to adjust the total number of shares authorized to be issued to an appropriate level in line with the decrease in the
total number of outstanding shares due to the share consolidation, the Company will decrease the total number of sharesauthorized to be issued in proportion to the ratio (10 to 1) of the share consolidation, effective October 1, 2016.
Total number of shares authorized to be issued prior to the change
Total number of shares authorized to be issued after the change

600,000,000 shares
60,000,000 sharesC) Effect of the share consolidation on per share information
Per share information for the current and previous fiscal years assuming the share consolidation was executed at the beginning of
the previous fiscal year, is as follows.
Yen

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

FY2015¥6,860.58¥427.27¥355.34

U.S. dollars

FY2014¥6,878.03¥ 535.31¥ 445.09

FY2015$60.88$3.79$3.15

II. The following appropriation of retained earnings has been approved by the meeting of the Board of Directors held on April
19, 2016.
Millions of yen

Cash dividends at ¥5.50 ($0.04) per share

60 Kureha Corporation Business Report 2016

¥945

Thousands of
U.S. dollars$8,386

Kureha Corporation Business Report 2016

61

Major Subsidiaries and Affiliates

Country

Company Name

Major BusinessJapan

Kureha Trading Co., Ltd.

Trading of chemical and plastic products

Resinous Kasei Co., Ltd.

Manufacture/sale of advanced materials

Kureha Extech Co., Ltd.

Manufacture/sale of plastic film and products

Kureha Extron Co., Ltd.

Manufacture/sale of plastic products

Kureha Gohsen Co., Ltd.

Manufacture/sale of plastic fiber and products

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 Unyu Co., Ltd.

Transportation and storage services

Kureha Service Co., Ltd.

Real estate, travel and welfare services for Kureha Group

Kureha Staff Service Co., Ltd.

Recruiting and staffing services

Kureha-kai Medical Corporation

Hospital operations (Kureha General Hospital)

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

Australia

Krehalon Australia Pty. Ltd.

Sale of food packaging products

China

Kureha (China) Investment Co., Ltd.

Holding company and finance

Kureha (Shanghai) Carbon Fiber Materials Co., Ltd.

Manufacture/sale of carbon fiber products

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 Vietnam Co., Ltd.

Manufacture/sale of food packaging films

USA

Vietnam

62 Kureha Corporation Business Report 2016

Investor Information(As of March 31, 2016)

Major Stockholders

Corporate Data
Corporate Name
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, Japan

Japan Trustee Services Bank, 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

4,087 (As of March 2016)

Independent Auditor

Ernst & Young ShinNihon LLC

CBNY–GOVERNMENT OF NORWAY (USA)Daiichi Sankyo Company, Ltd.
Mizuho Bank, Ltd.
JP MORGAN CHASE BANK 385166 (UK)Japan Trustee Services Bank, Ltd. (9 trust accounts)
The Nomura Trust and Banking Co., Ltd. (Investment
trust account)

Stock Information
Number of Shares ofCommon Stock Issued

The Master Trust Bank of Japan Ltd. (Trust account)

181,683,909 shares

Th e P u r s u i t o f E xce l l e n ce

Number of Shareholders 15,653

Number of Shares Heldby Foreign Shareholders 38,003,995 (20.9% of total)
Stock Exchange Listings Tokyo Stock Exchange
Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Kureha Corporation
Headquarters
Kureha Corporation Business Report 201663

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

Printed in Japan