for the 133rd Term 2017.4.1－2017.9.30

1To Our Shareholders
Thank you very much for your continued support. It is our pleasure to present our mid-term
report for the 133rd period, April 1st to September 30th, 2017.
In the global economy in this period, the U.S. economy sustained a moderate expansion,
however many elements of uncertainty remained including the direction of emerging
economies in Asia and policy trends in the U.S. Furthermore, in the Japanese economy, wesaw improvements in corporate profits and employment and the economy continued torecover gradually.
The business environment for metal surface modifications faced by our Group was one
in which our key customers in the automotive industry experienced a recovery in domestic
auto production and the automotive business was robust both in Japan and overseas. In
addition, in the steel industry, exports of steel from China fell and a strong demand for steel
in Japan in the lead-up to the Tokyo Olympics resulted in robust demand in the steel industry.
Against such a backdrop, the Parker Group has been working to provide high value added
technology which will provide high quality at a low cost and increase the satisfaction of ourcustomers, as well as strengthening our overseas businesses by bolstering our production
facilities particularly in the U.S., Mexico, China, and Thailand, based on the second mid-termManagement Plan which entered its second year in this period. In addition, we have been
focusing on research and development initiatives, enhancing our fundamental research inorder to create core technologies that will ensure that we retain our leading positon in themarket well into the future. As a result, our business achievements for this mid-term period
were as described in the latter part of this report.
Net sales were 53,466 million yen (up 5.9% on the same period in the previous year), andoperating income was 8,663 million yen (up 15.7% ditto). Ordinary income was 10,392 millionyen (up 34.4% ditto) and net income attributable to parent company shareholders was 6,370
million yen (up 34.1% ditto).
The overview by each business segment is as follows.
(Chemicals Business)
Net sales were 22,389 million yen (up 5.2% on the same period in the previous year), andoperating income was 4,594 million yen (up 3.4% ditto). In Japan, business achievements
were steady due to the recovery in auto production and increased demand for steel for theconstruction industry. Overseas, sales expanded in China, India and other parts of Asia. Dueto a fall in profitability in Japan, the growth in operating income was weak, however overall
results were a rise in both income and profit in this segment.
(Equipment Business)
Net sales were 6,951 million yen (down 11.2% on the same period in the previous year),and operating income was 363 million yen (up 39.9% ditto). Equipment investment by our2customers was sluggish both domestically and overseas, resulting in a fall income. However,
our overseas businesses saw an improvement in profitability and while operating income wasin the red in the first quarter, it switched to black, and overall results were a fall income anda rise in profit in this segment.
(Jobbing Business)
Net sales were 21,642 million yen (up 11.5% on the same period in the previous year), andoperating income was 4,194 million yen (up 27.9% ditto). In Japan, demand for jobbing
treatments rose for automotive parts, construction equipment and hydraulic parts, resulting
in robust sales figures. In addition, income rose in all of the regions overseas where weconduct business. While depreciation costs rose due to equipment investment made to meetthe expanded demand, profitability was robust, resulting in a rise in both income and profit inthis segment.
(Other)
Income rose and profit fell in this segment, as net sales were 2,482 million yen (up 25.0%
on the same period in the previous year) and operating income was 105 million yen (down22.5% ditto).
The mid-term dividend for this period will be ten year per share to be paid on 8th December,in accordance with the resolution of the meeting of the Board of Directors held on 6thNovember.
Regarding the outlook for the second half of the year, it is anticipated that Japan’s
economy will continue to recover moderately due to the improvement in corporate profits andemployment. However, the business environment remains far from reassuring in theeconomies overseas due to uncertainty in the direction of the emerging economies in Asiaand the policy trends in the U.S.
In such an economic environment, the Parker Group aims for sustainable growth throughthree basic policies including enhancing and expanding our business base, promoting
innovation in R&D at our technology-driven company and strengthening the structure of theorganization.
We look forward to the continuing support of our shareholders.

President and C.O.O.
Kentaro Sato3

Consolidated Balance Sheet
September 30

March 31

2017

2017

(JPY Million)
AssetsCurrent assets

99,216

97,021

Cash and deposits

46,29545,400Notes and accounts receivable-trade36,41535,879

Short-term investment securities

3,033

3,195

Inventories

9,077

8,933

Deferred tax assets

1,614

1,578

Other

2,934

2,189

Allowance for doubtful accounts

△154

△155

Fixed assets

106,547

100,238

Tangible assets

56,75655,792

Buildings and fixtures, net

19,882

17,559Machinery, equipment and vehicles, net

15,774

16,186

Land

15,697

15,660Construction in progress

3,339

4,210

Other

2,063

2,176

Intangible assets

1,291

1,186

Investments and other assets

48,49943,260Investment in securities

38,161

32,586963995

Other

9,470

9,776

Allowance for doubtful accounts△96△98205,763

197,260

Deferred tax assets

Total assets

4September 30

March 31

2017

2017

Current liabilities

31,37833,562

Notes and accounts payable-trade

16,23017,817853

831

Corporate income taxes payable

2,212

2,965

Provision for bonuses

2,522

2,564

Other

9,559

9,382

Fixed liabilities

18,54017,196Long-term loans payable

2,004

2,374

Net defined benefit liability

9,284

9,107

Deferred tax liabilities

5,457

3,772

Other

1,794

1,941

Total liabilities

49,91950,758

118,654

113,291

Paid-in capital

4,560

4,560

Capital surplus

4,291

4,070

Retained earnings

117,340

112,207

Treasury stock△7,538△7,546

Accumulated other comprehensive profit

13,66010,006

Valuation difference on available-for-sale securities

13,4359,439

43Foreign currency translation adjustment

292643Remeasurements of defined benefit plans

△70

△79

Non-controlling interests

23,52923,204

Total net assets

155,844

146,502

Total liabilities and net assets

205,763

197,260

Liabilities

Current portion of long-term loans payable

Net assets
Shareholders' equity

Deferred gains or losses on hedges

5Consolidated Statements of income
Six months ended September 30

2017

2016

(JPY Million)

Net sales

53,46650,498

Cost of sales

32,35631,019Gross profit

21,10919,478Selling, general and administrative expenses

12,446

11,993Operating income

8,663

7,485

Non-operating profit

1,879

1,460

Interest income

108

114

Dividends income

326

308

Rent income

196

177

Technical support fee

222

177

Equity in earnings of affiliates

539

436

Foreign exchange gains

265―Other220

246

Non-operating expenses

1491,211

Interest expenses

1533

Foreign exchange losses

―

1,071

Other133

106

10,392

7,734

Extraordinary income

863

Extraordinary loss

102

64

Income before income taxes

10,376

7,672

Income taxes

2,799

2,246

Net income

7,577

5,425

Net income attributable to non-controlling interests

1,207

673

Net income attributable to parent company shareholders

6,370

4,751

Ordinary income

6