Annual Report2005“Making human life richer and more comfortable through technological innovations”

Profile

Basic Corporate Vision
We are aiming to be a “global company creating new values
through unique technologies” with our corporate philosophy,“Techno Amenity; making human life richer and more comfortablethrough technological innovations.”

Business Fields

Contents
Financial Highlights ......................... 1
To Our Shareholders ........................ 2
Topics ............................................... 5
Review of Operations ....................... 6
Corporate Governance Initiatives .... 8
Responsible Care ............................ 10
Management Indices ...................... 12
Financial Section
Report of Independent Auditors . 15
Consolidated Balance Sheets ...... 16
Consolidated Statements ofIncome ..................................... 18
Consolidated Statements ofShareholders’ Equity ............... 19
Consolidated Statements ofCash Flows .............................. 20
Notes to Consolidated Financial
Statements ............................... 22
Corporate Data ............................... 34

Since the establishment in 1941, we have carried out original
research and development in 4 major fields such as polymer synthesis, environment preservation system, organic synthesis, and catalyst technologies.
Our major products are 1)Basic Chemicals, such as acrylic acid,and ethylene oxide, higher alcohol surfactants, etc., 2)Functional
Chemicals, such as super absorbent polymers, concrete admixture
and resins for paints and adhesives, etc., and 3)Environment andCatalysts, such as catalysts for cleaning automobile exhaust gases,
process catalysts, De-NOx catalysts and dioxins decomposition/
elimination equipments, etc.
In addition, our technologies for manufacturing chemical products are appreciated in foreign countries as well as our diversified
line of products. We have licensed our technologies for manufacturing various chemicals such as acrylic acids and esters worldwide.
Created through our original technologies and know how, ourproducts above have made various contributions to our society anddaily life.

Shokubai Co., Ltd. and Consolidated Subsidiaries
Financial Highlights Nippon
Years ended March 31

Millions of yen

Thousands of
U.S. dollars

2005

2004

2003

2005

For the YearNet Sales ........................................
Operating Income ..........................
Ordinary Income ...........................
Net Income ....................................

¥197,222
22,212
23,70915,705¥169,733
15,45017,212
8,822¥163,514
12,757
10,971
5,516$1,836,331
206,816
220,754
146,229

At Year-End
Total Assets ...................................
Total Shareholders’ Equity ...........

¥249,349
144,660¥220,185
131,685¥216,756
121,297$2,321,685
1,346,927.................................................................

Per Share Amounts
Net Income ....................................
Cash Dividends .............................

Yen¥81.3713.00¥45.37
9.00

U.S. dollars¥27.97
7.00

$0.76
0.12

Foreign Exchange Rate: US$1.00 = ¥107.4

Net Sales

Net Income

Shareholders’ Equity(Billions of yen)(Billions of yen)(Billions of yen)

| Nippon Shokubai Co., Ltd. | 1 |To Our Shareholders

It gives me great pleasure to report on theperformance of NIPPON SHOKUBAI CO., LTD., forthe fiscal year ended March 31, 2005 (fiscal 2004).

Overview
During the fiscal year ended March 31, 2005 (fiscal
2004), the Japanese economy gathered momentum inthe first half on the back of rising private-sector capital
expenditures and export growth thanks to theturnaround of the global economy. Nevertheless, thepace of recovery started to slacken gradually in thelatter half as growth in exports and personal
consumption slowed.
Corporate performance picked up overall in thechemical industry, thanks to a rise in selling prices anda mild increase in exports to Asia, especially to China,
although profitability was restricted somewhat by asteep rise in materials prices.
Tadao Kondo, Representative Director, President

Under such circumstances, our consolidated net
sales increased by ¥27,489 million, or 16.2% year-onyear, to ¥197,222 million, owing to a rise in the prices
both at home and abroad of such Basic Chemicals as
ethylene glycols and acrylic esters, brisk performanceof automotive catalysts and Functional Chemicals likesuper absorbent polymers, and additional contributions
from Singapore Acrylic Pte Ltd. in which we acquireda stake in July 2004.
Despite an increase in materials prices, driven by asteep rise in naphtha prices, consolidated operating
income increased by ¥6,762 million, or 43.8% yearon-year, to ¥22,212 million, as a result of the rise in
prices for Basic Chemicals, higher sales volumes offunctional chemicals, and our focus on lowering
production costs.
Performance Highlights(Unit: millions of yen)

Net sales
Operating income
Ordinary income
Net income
Net income per share
ROA
ROE
Exchange rate
Naphtha price| 2 | Nippon Shokubai Co., Ltd. |Fiscal Year
2004
2003
197,222
169,733
22,212
15,45023,70917,212
15,705
8,822¥81.37¥45.37
10.1%
7.9%
11.4%
7.0%
$=¥107.52$=¥113.11
EUR=¥135.20 EUR=¥132.64¥32,200/kl¥25,600/kl

ChangeAmount27,489
6,762
6,496
6,882
¥36.0
—
—

%
16.2%
43.8%
37.7%
78.0%
79.3%
2.2 points
4.4 points(¥5.59)¥2.56¥6,600/kl

Consolidated ordinary income increased by ¥6,496
million, or 37.7% year-on-year, to ¥23,709 million,
and consolidated net income by ¥6,882 million, or
78.0% year-on-year, to ¥15,705 million, owing to an
improvement in the financial balance, in spite of adecline in technical license revenues.

Summary of the Long-term Business Plan,“TechnoAmenity NV”

On a non-consolidated basis, net sales were¥146,789 million, operating income, ¥15,251 million,
ordinary income, ¥17,795 million, and net income,¥11,063 million.

2. Guided by the slogan, “A Shift from
Quantitative to Qualitative Growth for Our
Development in the 21st Century,” we are aiming
to strengthen our staying power by sifting and/or
concentrating our management resources inemerging product categories, establishing abusiness portfolio and defining where profit
responsibility lies in existing categories, andrevitalizing our personnel and the organization.

1. The vision of the Company for the future is to bea “global company creating new value throughunique technology.”

Considering the business environment and our
performance, we decided to increase the year-end
dividend per share to ¥6 and pay an additional ¥2 pershare as a memorial dividend to celebrate our 65th
anniversary, for a total of ¥8 per share. Together with
the interim dividend, the annual dividend for this fiscal
year amounts to ¥13 per share.

3. To increase the efficiency of our assets and the
profitability of our products, we will use
consolidated ROA (Return on Assets) as theindicator for overall performance, and, as theindicator for business operations, cash flows fromoperating activities and “sales profits” which is ouroriginal indicator.

Medium- and Long-term Business Plans
In April 2001, we launched a six-year long-termbusiness plan, “TechnoAmenity NV,” as well as a
medium-term business plan that served as an action
plan for the first three-year period. The key objectivesof the plans have been to achieve qualitative growththrough sifting and/or concentrating our management
resources, recognizing our strengths and weaknesses.
With the start of fiscal 2004, we kicked off a new
medium-term business plan, prepared on the results ofthe previous plan, to aim for further growth.

Summary of the New Medium-term Business
PlanUnder the new Medium-term Business Plan, we
will stay the course laid out in the Long-term Business
Plan, focusing on: (1) the continued strengthening ofcore businesses, and (2) acceleration of new productdevelopment and commercialization. We intend todeepen our corporate resilience by increasing the
profitability of products to a level free from market
conditions, attempting to minimize any negative
impact from anticipated weakening of basic chemical
prices.

Performance by Business Group and Region(Unit: millions of yen)

Fiscal Year 2004
Product GroupBasic
Chemicals

Sales
Operating income
Regional

80,02799,355
9,931
10,089Japan
EuropeAsia

Sales
Operating income

147,020
16,884

Functional
Chemicals

Fiscal Year 2003

Environment& Catalysts

17,840
2,130
Other

Basic
Chemicals

Functional
Chemicals

Environment& Catalysts

63,32090,647
4,261
10,412Japan
EuropeAsia

Regions

22,701970

17,611
3,186

9,890
247

Change15,766
829
Other

Basic
Chemicals

Functional
Chemicals

Environment& Catalysts

16,707
8,708
5,669
(323)
Japan
Europe
Asia

2,074
1,301
Other

Regions

135,576
12,85918,818
957

6,693
472

8,646
512

Regions

11,444
4,025

3,884
12

10,917
2,713

1,244
(266)

| Nippon Shokubai Co., Ltd. | 3 |1. Continued strengthening of core businesses
In the acrylic acid business, we acquired 51% stakein Singapore Acrylic Pte Ltd. from Sumitomo Chemical
Singapore Pte Ltd. and 100% stake in Singapore Glacial
Acrylic Pte Ltd. (former Sumika Glacial Acrylic PteLtd) in July 2004, seeking a 30% increase of annual
acrylic acid production capacity by debottlenecking inaround July 2005. We are also expanding the Himeji
Plant, with operations scheduled to start in the fall of
2006. These measures will increase our Group’s annual
acrylic acid production capacity to 620,000 tons.
In the super absorbent polymers business, oursubsidiary NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD., Jiangsu, China,
completed a new plant with an annual capacity of
30,000 tons, which has gone into commercial operation
on schedule. In Belgium, Nippon Shokubai Europe
N.V. likewise started expanding their plant in October
2004 to boost annual output by 30,000 tons, withcompletion scheduled for the end of 2005. We are
currently expanding the annual capacity at the Himeji
Plant in Japan by 30,000 tons to coincide with the
expansion of the acrylic acid production plants. Goingforward, we plan to increase our Group’s annual
capacity of super absorbent polymers to 350,000 tons,
to maintain our leading share of the global superabsorbent polymer market.
In the ethylene oxide business, we aim to improve
the sales mix in favor of non-EG (ethylene glycol)
products by expediting development of new ethyleneoxide derivative products, so we can stabilize
profitability free from market conditions.
In other categories of business, we plan to releasesome of our internationally competitive products
overseas, including Functional Chemicals like
polycarboxylates for concrete admixtures, special
acrylates and water soluble polyacrylates, automotive
catalysts and De-NOx catalysts, by making effective
use of our global network and the cash flows being
generated through the worldwide development of corebusinesses and cost reductions. In line with this, our US
subsidiary, NA Industries, Inc. has built a plant toproduce water soluble polyacrylates, which went into
operation in early 2005. In addition, we opened an
office in Shanghai, China, at the end of 2004 to launch| 4 | Nippon Shokubai Co., Ltd. |a full-scale effort to survey and develop markets forfunctional chemicals and De-NOx catalysts there.
2. Acceleration of new product development andcommercialization
Our priority categories for new products are:electronic information materials, fine chemicalintermediates such as pharmaceuticals, and new energy
materials. Electronic information materials, above all,have top priority in the concentration of ourmanagement resources.
Swift response to market demand is the key tosharply accelerating product development andcommercialization. We will maximize the benefits ofthe business unit system that we introduced in April
2004, furthering our partnerships with our customers
through improvements to our existing lines anddevelopment of peripherals for them, as well as
aggressive promotion of joint development, to act
proactively in developing and bringing to market new
products that provide solutions.
We would like to express our sincere appreciation
and ask all of our shareholders for their continued
support and guidance as we move forward.

June 2005

Tadao Kondo
Representative Director, President

Topics

Ramping up Production at
a New Acrylic Acid Plant
On April 11, 2005, a groundbreaking ceremony was held for a
new acrylic acid plant in the Himeji
Plant. When it is completed, it will
add 160,000 tons of capacity to theCompany’s annual output of acrylicacid.
In recent years there has been arapid expansion of demand inacrylic acids for super absorbent
polymers and acrylic esters (foradhesives and paints). To ensure astable supply for our customers andmaterials for in-house consumption,
we decided to establish a new plant.
Together with the increase at
Singapore Acrylic Pte Ltd. thanks
to its debottleneck, when the newplant goes into operation in the fallof 2006, the Group’s annual acrylicacid production capacity will total
620,000 tons, making us the second
largest manufacturer of thiscommodity in the world.
The new plant incorporates a
new process that will help us
further reduce costs, and we expect
it to sharpen our competitiveness.

Acrylic Acid plant in Himeji Plant

Increasing Capacity at
Super Absorbent Polymer
PlantsOur Group is increasing
production capacity of superabsorbent polymers in order to meetthe growing global demand.
In February 2005, oursubsidiary NISSHOKUCHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.,
Jiangsu, China, put a new plantwith an annual capacity of 30,000
tons into commercial operation. In
Belgium, Nippon Shokubai Europe
N.V. is currently constructing aplant that will boost its annual
output by 30,000 tons, scheduled
for completion by the end of 2005.
We are currently expanding annual
capacity of super absorbent
polymers at the Himeji Plant inJapan by 30,000 tons to coincidewith the expansion of the acrylicacid production plants. All in all,this will boost our Group’s annual
capacity of super absorbent
polymers to 350,000 tons by 2006,
making us the top manufacturer ofsuper absorbent polymer in theworld.

New Special Esters Plant
Construction of a special esters
plant was completed at the Himeji
Plant on January 21, 2005. With anannual capacity of 15,000 tons, thenew plant incorporates several
improvements, including higher
production efficiency thanks to therecycling of catalysts and reduced
production of industrial waste.
Special esters are derivatives ofacrylic acid and methacrylic acid.
Demand for these is increasing forsuch applications as high-end
automobile paints and electronic
information materials like resists
for semiconductors and color
filters. Combining the output atexisting plants, the total annual
output of the Group will expand to
29,000 tons, the largest in theworld. We intend to accelerate our
global reach, looking to acquire
25% of the world market.

NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.

| Nippon Shokubai Co., Ltd. | 5 |Review of Operations

Breakdown andComponent Ratio by EachBusiness Group(100 millions of yen)Basic Chemicals
Group

Functional
Chemicals Group

Sales of acrylic acid and acrylic
esters saw substantial increases, between
brisk demand and price increases both athome and abroad and additional
contributions from Singapore Acrylic
Pte Ltd., a stake in which the Company
acquired in July 2004.
Sales of ethylene glycols advanced
owing to bullish international market
conditions, but sales volumes,
particularly of exports, decreased as
inventory levels declined due toperiodical maintenance of equipment.
Sales of ethylene oxide increased
thanks to firm domestic demand.
Sales of ethanolamine increased
thanks to continued firm demand fromoverseas.
Sales of the higher-alcohol surfactant“SOFTANOL” increased thanks to acorrection in export prices.
Overall, sales for the Basic
Chemicals Group grew 26.4% year-onyear to ¥80,027 million.
Operating income of this Groupjumped by 133.0% year-on-year to¥9,931 million, thanks to a rise inmarket prices of acrylic acid, acrylic
esters, ethylene glycols, etc., both athome and abroad.

The growing global demand for superabsorbent polymers pushed up both sales
volume.
Sales of resin modifiers andintermediates for pharmaceuticals
increased on the back of firm demandboth at home and abroad.
As prices proceeded to correct
themselves due to a steep hike in raw
materials prices, demand remained
strong for maleic anhydride both athome and overseas, pushing up sales.
Sales of concrete admixtures
increased, with demand stimulated by
the introduction of a new product line.
Supported by firm demand both athome and abroad, sales of water
treatments and raw materials for paints/
resins increased.
Solid demand for organic andinorganic fine sphere particles at homeresulted in sales growth.
Sales of resins for acrylic adhesives
and paints advanced thanks to steadydemand both at home and abroad. Salesof processed adhesive products andplastic molded products also increased.
Sales of iodine compounds increasedon firm demand.
Sales of unsaturated polyester resinsdeclined due to stagnant domestic
demand.
Consequently, sales for the
Functional Chemicals Group increased
9.6% year-on-year to ¥99,355 million.
Operating income of this Groupdeclined 3.1% year-on-year to ¥10,089
million due to a rise in the price of someof the raw materials, while the sales ofsuper absorbent polymers and resins foradhesives and paints increased.

Paints (acrylic esters)| 6 | Nippon Shokubai Co., Ltd. |LCD (organic and inorganic fine sphere particles)

Environment & Catalysts Group
Sales of automotive catalysts rose
thanks to strong demand in export
markets.
Sales of industrial catalysts throughtechnology licensing increased becauseof strong replacement demand overseas.
Sales of equipment and catalysts for
wastewater treatment plants advanced
thanks to steady domestic demand.
Sales of De-NOx catalysts declined
due to stagnant domestic demand.
Consequently, sales for theEnvironment & Catalysts Group grew
13.2% to ¥17,840 million year-on-year.
Operating income of this Groupsurged 156.8% year-on-year to ¥2,130
million on the back of growth in salesof industrial catalysts throughtechnology licensing, with its
relatively higher added value.

Automotive catalysts/De-NOx catalysts

Regional Information
Japan

Breakdown andComponent Ratio by
Region(100 millions of yen)

Asia

Sales in Japan increased by 8.4%
year-on-year, to ¥147,020 million
owing to a rise in the prices of Basic
Chemicals and brisk performance ofsuch Functional Chemicals as superabsorbent polymers, resins foradhesives and paints.
Operating income in Japan
increased by 31.3% year-on-year to¥16,884 million, to which rise inmarket prices of Basic Chemicals’
products and increased sales volumesof some Functional Chemicals’
products contributed.

Net sales in Asia jumped by
163.1% year-on-year to ¥17,611 million
due to the substantial increase of thesales of acrylic acid, acrylic esters andsuper absorbent polymers, andadditional contributions from Singapore
Acrylic Pte Ltd. and Singapore Glacial
Acrylic Pte Ltd., stake in which theCompany acquired in July 2004.
Operating income in Asia jumped
by 573.0% year-on-year to ¥3,186
million, to which recovered market
prices of acrylic acid and acrylic esters.

EuropeThe net sales in other regions
increased by 14.4 % year-on-year to¥9,890 million due to the substantial
sales volume of super absorbent
polymers.
Operating income in other regions
decreased by 51.9% year-on-year to¥247 million due to the rise of raw
materials prices.

Supported by the stable sales ofsuper absorbent polymers, net sales in
Europe increased by 20.6% year-onyear to ¥22,701 million.
However, operating income inEurope was ¥970 million as just about
the same as that in last fiscal year, due
to the rise in raw material prices.

Other Regions| Nippon Shokubai Co., Ltd. | 7 |Corporate Governance Initiatives

We are striving to reinforce our staying power andour competitive edge so that we can cope flexibly withany changes in the global marketplace. We regard
corporate governance as key for achieving this goal,
and are taking steps to revitalize the board of directors,
strengthen the audit system, increase the efficiency ofthe management structure, and ensure tightercompliance.
To this end, in July 2004 we established a
Responsible Care (RC) Office directly under the
President. The RC Office ensures that existing
management systems function properly in the broad
areas of legal compliance, environmental preservation,
safety and disaster prevention, occupational safety andhealth, chemical substance safety, and quality. The

Corporate Governance System–Corporate governance structure, administrativedecision-making, executive, supervisory andadministrative functions–
1. Company with an Auditor System or Company
with Committees, etc.
The Company has adopted the auditor system as its
corporate governance structure. Two of the four
corporate auditors are outside auditors.
2. Board of Directors
As of March 31, 2005, the Company’s board of
directors is comprised of 15 directors, who deliberate
and resolve matters relating to the execution of business
operations and supervise the directors in the executionof their duties. In principle, the board of directors
convenes once a month, chaired by the president. The
four corporate auditors, including two from outside,
attend the meeting to present statements when deemednecessary.
3. Corporate Management Committee
An advisory organ to the president, the corporate
management committee deliberates basic management
policies, matters relating to management policies, andthe execution of important business operations by
individual divisions. Agenda items referred to thecorporate management committee that are deemed
important are forwarded to the board of directors fordeliberation. The corporate management committee is| 8 | Nippon Shokubai Co., Ltd. |office is likewise charged with encouraging the entire
Group to join hands to improve the levels of corporate
environmental management and customer satisfaction.
The legal section also organizes in-house training on
legal matters coincident with the establishment, revisionand repeal of related laws, develops the concomitant inhouse guidelines, and holds a series of training seminars
on corporate legal affairs. During the year underreview, the Office organized briefing seminars on the
Personal Information Protection Act, the Subcontract
Act, and acts related to security export controls. It alsoestablished related in-house guidelines andimplemented programs designed to ensure compliancethroughout the Group.

attended by the president, senior managing directors,
managing directors and directors nominated bypresident. It is tasked with ensuring speedy decisionmaking and efficient business operations in theexecution of important duties.
4. Board of Corporate Auditors
The Company’s board of corporate auditors iscomprised of four corporate auditors, including two
outside auditors. In principle, the board of corporate
auditors convenes once a month to report, discuss andresolve important matters. In addition to attending themeetings of the board of directors, the corporate auditors
attend corporate management committee and otherimportant meetings to monitor the process of making
important decisions and the execution of business
operations, receive reports from the accounting auditors,
directors and others, and put forward an audit opinion
following due consultation.

5. Lawyers, Accounting Auditors, and Other Third
Parties
The Company solicits opinions from its legal
advisors when decisions on legal issues are called for.
The accounting auditors perform their services under theCommercial Code and Securities and Exchange Law ofJapan, and their opinions are solicited when decisions on
accounting issues are called for. None of the accounting
auditors is involved in the management of the Company.
6. Risk Management Structure
The Company assigns pertinent departments toinvestigate and analyze any risk that might arise in thecourse of general business operations for the sake of its
effective management. Following deliberation at
management meetings and board of directors meetings,
as the occasion demands, contingency plans are
implemented.

7. Internal Audit
We place the Internal Audit Office for carrying out
internal audits (verify the adequacy and effectivenessof the business process in each division and report theresults to the directors) and the Responsible Care
Office for auditing responsible care activities.
8. Possible Conflicts of Interest Among Outside
Directors and Auditors
The two current outside auditors have no personalor any other relationship through investments that
could create a conflict of interest in the performance of
their duties.

Corporate Governance System| Nippon Shokubai Co., Ltd. | 9 |Responsible Care

1. Nippon Shokubai’s Fundamental Policy Regarding Environmental
Preservation, Safety and Quality
Under the key concept “Sustainable Development,”
which is the fundamental policy of our corporate
activities, and which serves to harmonize our activity
with environmental preservation on global basis, we
believe that we have to be a good corporate citizen of

this world, and place a special emphasis onenvironmental preservation, safety and quality
throughout the entire life cycle of our products from thedevelopment to disposal.

2. RC Promotion Organization(1) RC Promotion System(2) RC Management System

Note:“FY” Stands for fiscal year.

th

3. 4 Medium-Term RC Promotion
Basic Plan (FY2004 — FY2006)

ISO Registration

4th Basic Plan Implementation Items

ISO 14001 (EMS) :Registrations of all operations completed in July 2001.
ISO 9001 (QMS):
Registrations of all operations complete. Upgrading to improved 2000
standards completed in 2003.

Goals(1) Voluntarily pursuing goals in each of the related areas within
the company
Environmental Preservation

Occupational Safety and Health● Zero industrial injuries with lost workdays.
● 50% reduction of industrial injuries without lost workdays.
(vrs. FY2001 – FY2003)● 50% reduction of emissions based on PRTR chemical substances.

(vrs. FY2000)● Reduction of amount of externally commissioned waste● 40% reduction of total externally commissioned waste disposal(vrs. FY2002)● Reduction of waste for external landfill disposal.
● Energy saving activities: maintain basic energy unit at FY1997

levels (112.6 L/t)
Process Safety and Disaster Prevention● Zero disaster, 50% reduction of accidents. (vrs. FY2001 – FY2003)

Chemicals Safety● Zero problems on chemicals safety (legal or social).
Communications with Society● Communication with regional communities regarding RC and hold
events.
Quality● Zero serious claims(2) Group RC activities in domestic & overseas● Establishment of management systems by domestic and overseas

affiliated companies for promoting RC activities.

| 10 | Nippon Shokubai Co., Ltd. |4. RC Performance in FY2003(1) Environmental Preservation
1 Energy Saving
2 Reduction of emissions based on PRTR chemical
substances
3 Reduction of industrial wastes
Final Amount of External Landfill Disposal(2) Process Safety and Disaster Prevention
1 Prior facilities assessment and safety reassessment by HAZOP method.
2 Disaster prevention organization and training.
3 There have been no disasters in 8 years since
FY1997.
4 Logistics safety: using Yellow Card system andtraining for transport emergencies.
5 Management of changes.
6 Implementation of RC inspections.
(Theme: Safety Measures of Plant)(3) Occupational Safety and Health
OSHMS (Occupational Safety and HealthManagement System) introduced since FY2001, selfverification.
(4) Chemicals Safety
Safety assessment of new chemicals, MSDS, LRI,
HPV, container Yellow Card.
(5) Communications with regional communities
Regional activities (potato digging, conservationof local chrysanthemums “Noji-Giku”), participation
to Regional Community Dialogue in Hyogo andOsaka area with JRCC.
PRTR: Pollutant Release and Transfer Register
A regulatory system which requires reporting of emission volumes ofchemical substances into the air, water and soil and transferred volumes ofwastes. Data compiled to the government bodies are disclosed to the
public.
HAZOP: Hazard and Operability Studies
An execution to estimate the safety of plants.
Yellow Card:
A card stating the procedures to be taken and contact information fortransporters, fire squads, and police in the event of an accident during theroad transport of chemicals.
Management of Changes:
Program to ensure that proposed changes to plant operations are evaluatedand approved before being implemented and that inadvertent or unintended
changes are prevented so as to maintain the safety of employees, thepublic, and the environment, etc.

Conservation of local
chrysanthemums “Noji-Giku”

Potato digging

Regional Community
Dialogue with JRCC
(Osaka area)

Regional Community
Dialogue with JRCC
(Hyogo area)(6) Quality
・Zero serious claim
・Green procurement activity
Guarantee and disclosure of product’s information(management of specific substances and no specificsubstances within products) and corporate
information (integrating EMS) to customers.
(7) Group RC activities in domestic & overseas
・Reduction of environmental emissions, labor
accidents, equipment troubles and quality claims &nonconformities
・Share of information
1 Domestic-affiliated companies:
RC information exchange, case study work-shop
in quality and mutual site inspections carried out
twice annually.
2 Overseas-affiliated companies:
Implementation of RC meeting for exchange of
RC information in Himeji Plant.

MSDS : Material Safety Data Sheet
A document that describes the health, safety and environmental hazards ofa material and provides information on how the material can be safely
handled, used and disposed.
LRI: Long-range Research Initiative
A voluntary long-term plan to study the effects of chemical substances on
health, safety, and the environment, one of ICCA’s most crucial agendas.
HPV: (High Production Volume) Existing Chemicals
An OECD program for collecting and evaluating safety data on chemicals
with production volumes exceeding 1,000 tons/year.
JRCC: Japan Responsible Care Council
An organization established within JCIA in 1995 for the promotion of RC
in Japan.

| Nippon Shokubai Co., Ltd. | 11 |

Management Indices(1) Consolidated Management IndicesYear ended March 31st
(Fiscal Year)

2001(2000)

2002(2001)

2003(2002)

2004(2003)

2005(2004)(Millions of yen)

Net Sales
Ordinary Income
Net Income
Total Shareholders’ Equity
Total Assets

160,585
4,303
1,242
117,340
230,468

159,7225,558
1,590
120,238
230,253

163,514
10,971
5,516
121,297
216,756

169,733
17,212
8,822
131,685
220,185

197,222
23,70915,705
144,660
249,349(yen)

Net Assets per ShareNet Income per Share
Fully Diluted Net Income per Share
Capital Ratio (%)
Return on Equity (%)
Price Earning Ratio (times)

602.116.37—

617.058.16—

631.1227.97—

685.2045.37—

757.72
81.37
—

50.9
1.1
70.6

52.2
1.3
62.0

56.0
4.6
20.4

59.8
7.0
18.0

58.0
11.4
11.9
(Millions of yen)

Cash Flow from Operating Activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Cash and Cash Equivalents at Year-end
Number of Employees

9,757(12,961)(6,584)
14,806

17,268(8,178)(1,579)23,151

23,117(8,751)(15,956)
21,217

16,399(9,161)(9,506)
18,654

22,161(16,934)(861)
24,160

3,189

3,077

2,967

2,658

2,721

Note 1: Net Sales do not include consumption taxes.
Note 2: Starting with the fiscal year ended March 2003, net assets and net income per share have been prepared in accordance with Financial
Accounting Standard No.2, “Accounting Standards for Earnings per Share,” and Financial Accounting Standard Implementation Guidance
No.4, “Implementation Guidance for Accounting Standard for Earnings per Share.”Note 3: Fully diluted Net Income per Share is not recorded because no dilutive shares exist.

| 12 | Nippon Shokubai Co., Ltd. |(2) Non-consolidated Management IndicesYear ended March 31st
(Fiscal Year)

2001(2000)

2002(2001)

2003(2002)

2004(2003)

2005(2004)(Millions of yen)

Net Sales
Ordinary Income
Net Income
Capital129,712
5,205
2,539
16,529123,706
8,054
1,744
16,529126,612
10,8793,094
16,529132,622
14,228
5,966
16,529146,789
17,795
11,063
16,529Issued and Outstanding Shares(Thousands shares)

194,881

194,881

194,881

194,881

194,881(Millions of yen)

Total Shareholders’ Equity
Total Assets

114,568
189,236

115,578
188,821

115,593
176,155

124,417
182,806

133,100
207,303(yen)

Net Assets per ShareDividend per Share(Interim Dividend per Share)
Net Income per Share
Fully Diluted Net Income per Share

587.897.00(3.50)
13.03—

593.147.00(3.50)
8.95—

601.487.00(3.50)
15.55—

647.41
9.00(4.00)
30.56—

697.1913.00(5.00)
57.20—

Capital Ratio (%)
Return on Equity (%)
Price Earning Ratio (times)
Dividend Payout Ratio (%)

60.5
2.2
34.5
53.7

61.2
1.5
56.5
78.2

65.6
2.7
36.7
45.0

68.1
5.0
26.7
29.5

64.2
8.6
17.0
22.7

Number of Employees

2,004

1,937

1,881

1,774

1,731

Note 1: Net Sales do not include consumption taxes.
Note 2: Starting with the fiscal year ended March 2002, treasury stock has been eliminated from capital and also eliminated from issued and outstanding shares in the calculation of net assets and net income per share.
Note 3: Starting with the fiscal year ended March 2003, net assets and net income per share have been prepared in accordance with Financial
Accounting Standard No.2, “Accounting Standards for Earnings per Share,” and Financial Accounting Standard Implementation Guidance
No.4, “Implementation Guidance for Accounting Standard for Earnings per Share.”Note 4: The dividend per share for the fiscal year ended March 31, 2005 (fiscal 2004) include a ¥2 memorial dividend to celebrate our 65th anniversaryof the company’s foundation.
Note 5: Fully diluted Net Income per Share is not recorded because no dilutive shares exist.

| Nippon Shokubai Co., Ltd. | 13 |Consolidated Financial Statements
Years ended March 31, 2005 and 2004

Report of Independent Auditors .............................................. 15
Consolidated Balance Sheets .................................................. 16
Consolidated Statements of Income ........................................ 18
Consolidated Statements of Shareholders’ Equity ................. 19
Consolidated Statements of Cash Flows ................................. 20
Notes to Consolidated Financial Statements .......................... 22| 14 | Nippon Shokubai Co., Ltd. |Report of Independent Auditors| Nippon Shokubai Co., Ltd. | 15 |Consolidated Balance Sheets
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

March 31,
2004

2005

2005
(Thousands of
U.S. dollars)( Note 2)(Millions of yen)

AssetsCurrent assets:
Cash and cash equivalents .......................................................
Time deposits (Note 6) .............................................................
Notes and accounts receivable:
Unconsolidated subsidiaries and affiliates ...........................
Trade .....................................................................................
Allowance for doubtful receivables ......................................
Inventories (Note 4) .................................................................
Deferred income taxes (Note 8) ...............................................
Other current assets ..................................................................

¥

24,16033¥

18,65418$

224,953307

6,537
46,459(87)
29,702
2,606
5,438

5,505
39,042(112)
23,9182,666
5,771

60,865432,580(810)
276,555
24,26450,634

Total current assets .....................................................................

114,848

95,462

1,069,348

Property, plant and equipment (Notes 5 and 6):
Land ..........................................................................................
Buildings and structures ...........................................................
Machinery and equipment ........................................................
Construction in progress ..........................................................
Accumulated depreciation........................................................

24,83959,568
209,787
9,315(217,099)

25,08658,268203,991
639(210,826)

231,276554,637
1,953,324
86,732(2,021,407)

Property, plant and equipment, net ............................................

86,41077,158804,562

Investments and other assets:
Investments in securities (Notes 3 and 6) ................................
Investments in and advances to unconsolidated
subsidiaries and affiliates ......................................................
Deferred income taxes (Note 8) ...............................................
Prepaid pension cost .................................................................
Other assets ..............................................................................

24,10921,839224,479

11,001
1,494
2,348
9,139

11,456
1,669
1,972
10,629102,430
13,911
21,86285,093

Total investments and other assets .............................................

48,09147,565447,775

Total assets .................................................................................

¥ 249,349¥ 220,185$ 2,321,685| 16 | Nippon Shokubai Co., Ltd. |March 31,
2004

2005

2005
(Thousands of
U.S. dollars)( Note 2)(Millions of yen)

Liabilities and shareholders’ equity
Current liabilities:
Short-term bank loans (Note 6) ................................................
Current portion of long-term debt (Note 6) .............................
Notes and accounts payable:
Unconsolidated subsidiaries and affiliates ...........................
Trade .....................................................................................
Construction ..........................................................................
Accrued income taxes (Note 8) ................................................
Other current liabilities ............................................................

¥

6,951
5,653

¥

7,188
11,825$64,721
52,635

5,313
31,313275
5,029
10,545

3,856
25,270
685
3,206
8,911

49,469291,555
2,561
46,82598,18465,07960,941

605,950

26,541
6,756

16,0706,609

247,123
62,905

390
1,157
1,272

292
1,077
1,741

3,631
10,773
11,843

Total long-term liabilities ...........................................................

36,11625,789336,275

Minority interests .......................................................................

3,494

1,770

32,533

Shareholders’ equity (Note 9):
Common stock:
Authorized – 424,000,000 shares
Issued – 194,881,287 shares in 2005 and 2004 ....................
Additional paid-in capital ........................................................
Retained earnings .....................................................................
Net unrealized holding gain on securities ................................
Translation adjustments ...........................................................
Less treasury stock, at cost .......................................................

16,52913,565
112,496
5,632(1,057)(2,505)

16,52913,563
98,947
4,961(839)(1,476)

153,901
126,304
1,047,449
52,439(9,842)(23,324)

Total shareholders’ equity ..........................................................

144,660

131,685

1,346,927

Total liabilities and shareholders’ equity ...................................

¥ 249,349¥ 220,185$ 2,321,685

Total current liabilities ...............................................................
Long-term liabilities:
Long-term debt (Note 6) ..........................................................
Accrued retirement benefits for employees (Note 7) ...............
Accrued retirement benefits for directors andcorporate auditors .................................................................
Deferred income taxes (Note 8) ...............................................
Other .....................................................................................

Contingent liabilities (Note 12)

See accompanying notes to consolidated financial statements.

| Nippon Shokubai Co., Ltd. | 17 |Consolidated Statements of Income
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Year ended March 31,
2004

2005

(Millions of yen)

2005
(Thousands of
U.S. dollars)( Note 2)

Net sales (Note 16) .....................................................................
Cost of sales (Note 10) ...............................................................
Gross profit ...........................................................................

¥ 197,222
145,019
52,203¥ 169,733
125,699
44,034$ 1,836,331
1,350,270
486,061

Selling, general and administrative expenses (Note 10) ............
Operating income (Note 16) .................................................

29,991
22,21228,584
15,450279,245
206,816

972
(480)
1,006

596
(602)
1,929

9,050
(4,469)
9,367

572
–
(479)
(573)

596
167
(3,709)
(686)

5,326
–
(4,460)(5,336)

Income before income taxes and minority interests .............

23,23013,741

216,294

Income taxes (Note 8):
Current ......................................................................................
Deferred ....................................................................................

7,422
(173)

5,397
(480)

69,106(1,611)

7,249

4,917

67,495

15,981
(276)

8,824
(2)

148,799(2,570)

Other income (expenses):
Interest and dividend income ...................................................
Interest expense ........................................................................
Royalty income ........................................................................
Equity in earnings of unconsolidated
subsidiaries and affiliates ......................................................
Gain on sales of property, plant and equipment ......................
Impairment loss on fixed assets (Note 5) .................................
Other, net ..................................................................................

Income before minority interests ..........................................
Minority interests in earnings of consolidated subsidiaries.......
Net income (Note 13) ............................................................
See accompanying notes to consolidated financial statements.

| 18 | Nippon Shokubai Co., Ltd. |¥15,705

¥

8,822

$

146,229

Consolidated Statements of Shareholders’ Equity
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

2005

Year ended March 31,
2004(Millions of yen)

Common stock:
Balance at beginning and end of year ......................................

2005(Thousands of
U.S. dollars)( Note 2)¥

16,529¥16,529$

153,901

Additional paid-in capital:
Balance at beginning of year ....................................................
Gain on sale of treasury stock ..................................................

¥

13,563
2¥

13,562
1$

126,28519

Balance at end of year ..............................................................

¥

13,565¥

13,563$

126,304¥

98,947
15,705(1,920)(110)¥

91,652
8,822(1,440)(87)$

921,294
146,229(17,877)(1,024)Retained earnings:
Balance at beginning of year ....................................................
Net income ...............................................................................
Cash dividends .........................................................................
Bonuses to directors and corporate auditors ............................
Decrease in retained earnings resulting from exclusion of
an affiliate accounted for by equity method .........................

(126)

–

(1,173)

Balance at end of year ................................................................

¥ 112,496¥

98,947$ 1,047,449

Net unrealized holding gain on securities:
Balance at beginning of year ....................................................
Net change during the year ......................................................

¥

4,961
671

¥

539
4,422

$

46,192
6,247

Balance at end of year ................................................................

¥

5,632

¥

4,961

$

52,439Translation adjustments:
Balance at beginning of year ....................................................
Net change during the year ......................................................

¥

(839)
(218)

¥

468
(1,307)$(7,812)(2,030)

Balance at end of year ................................................................

¥(1,057)

¥

(839)

$

(9,842)Less treasury stock, at cost:
Balance at beginning of year ....................................................
Net change during the year ......................................................

¥(1,476)(1,029)¥(1,453)(23)$(13,743)(9,581)

Balance at end of year ................................................................

¥(2,505)¥(1,476)$(23,324)

See accompanying notes to consolidated financial statements.

| Nippon Shokubai Co., Ltd. | 19 |Consolidated Statements of Cash Flows
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries

Year ended March 31,
2005
2004
(Millions of yen)

Operating activities:
Income before income taxes and minority interests ..................
Adjustments to reconcile income before income taxes andminority interests to net cash provided by operating activities:
Depreciation and amortization ..............................................
Impairment loss on fixed assets ............................................
Increase (decrease) in accrued retirement benefits ...............
Interest and dividend income ................................................
Interest expense .....................................................................
Equity in earnings of unconsolidated subsidiaries
and affiliates .....................................................................
Loss on disposal of property, plant and equipment ..............
Other, net ...............................................................................
Changes in operating assets and liabilities:
Notes and accounts receivable ..........................................
Inventories .........................................................................
Notes and accounts payable ..............................................
Other current liabilities .....................................................

¥

23,230¥13,741

2005(Thousands of
U.S. dollars)(Note 2)$

216,294

8,028
479
148
(972)
480

7,998
3,709
(466)
(596)
602

74,7494,460
1,378(9,050)
4,469

(572)
340
2,513

(596)
477
(1,110)(5,326)
3,166(23,398)(7,913)(5,140)
7,052
(169)

(2,743)
(194)
672
0

(73,678)(47,858)
65,661(1,574)

Subtotal ......................................................................
Interest and dividends received ..................................................
Interest paid ................................................................................
Income taxes paid .......................................................................

27,504957(470)(5,830)21,494675(710)(5,060)

256,089
8,911(4,376)(54,283)

Net cash provided by operating activities ..................................

22,161

16,399206,341

Investing activities:
Proceeds from sales of short-term investments and investments
in securities ...............................................................................
Purchases of marketable securities and investments in securities ...
Acquisition of investments in subsidiaries resulting
in inclusion in consolidation ....................................................
Purchases of property, plant and equipment ..............................
Proceeds from sales of property, plant and equipment ..............
Increase in loans receivable .......................................................
Collection of loans receivable ....................................................
Other, net ....................................................................................

3(3,351)

2,004(5,671)

28(31,201)(2,130)(12,033)
29
(334)
1,126
(244)

–
(5,356)
624
(683)
1,085
(1,164)(19,832)(112,039)
270(3,110)
10,484(2,272)

Net cash used in investing activities ..........................................

(16,934)(9,161)(157,672)| 20 | Nippon Shokubai Co., Ltd. |Year ended March 31,
2005
2004

2005
(Thousands of
U.S. dollars)(Note 2)

(Millions of yen)

Financing activities:
Decrease in short-term bank loans, net ......................................
Proceeds from long-term debt ....................................................
Repayment of long-term debt ....................................................
Proceeds from issuance of bonds ...............................................
Redemption of bonds .................................................................
Cash dividends paid ...................................................................
Purchases of treasury stock ........................................................
Other, net ....................................................................................

(453)
10,700(8,148)5,000(5,000)(1,920)(1,031)(9)(4,636)
6,350(9,742)––(1,440)(26)(12)(4,218)99,628(75,866)
46,555(46,555)(17,877)(9,600)(84)

Net cash used in financing activities ..........................................

(861)(9,506)(8,017)

Effect of exchange rate changes on cash and cash equivalents ...

80

(295)

745

Increase (decrease) in cash and cash equivalents ......................
Cash and cash equivalents at beginning of year ........................
Increase in cash and cash equivalents resulting
from inclusion of subsidiaries in consolidation .......................

4,446
18,654(2,563)
21,21741,397
173,687

1,060

–

9,869

Cash and cash equivalents at end of year...................................

¥

24,160¥18,654$

224,953

See accompanying notes to consolidated financial statements.

| Nippon Shokubai Co., Ltd. | 21 |Notes to Consolodated Financial Statements
Nippon Shokubai Co., Ltd. and Consolidated Subsidiaries
March 31, 2005

1. Summary of Significant Accounting Policies(a)Basis of Presentation
Nippon Shokubai Co., Ltd. (the “Company”) and its
domestic consolidated subsidiaries maintain theiraccounts and records in accordance with accounting
principles generally accepted in Japan. Its foreignsubsidiaries maintain their accounts in conformity withthe requirements of their countries of domicile. The
accompanying consolidated financial statements havebeen compiled from the consolidated financial
statements prepared by the Company as required by the
Securities and Exchange Law of Japan, which are
different in certain respects as to the application anddisclosure requirements of International Financial
Reporting Standards.

(b)Basis of Consolidation
The accompanying consolidated financial
statements include the accounts of the Company and its
significant subsidiaries. All significant intercompany
items have been eliminated in consolidation.
The foreign consolidated subsidiaries areconsolidated on the basis of fiscal periods ending
December 31, which differs from the balance sheet
date of the Company. As a result, adjustments havebeen made for any significant intercompany
transactions which took place during the period
between the year ends of these foreign consolidated
subsidiaries and the year end of the Company.
Investments in an unconsolidated subsidiary andsignificant affiliates are accounted for by the equity
method.
Investments in unconsolidated subsidiaries andaffiliates not accounted for by the equity method are
carried at cost.
The excess of cost over underlying net assets at thedate of acquisition is amortized over a period of five
years on a straight-line basis, except that immaterial
amounts are charged to income as incurred.

(c)Foreign Currency Translation
The financial statements of the foreign consolidated
subsidiaries are translated into yen at the rates of
exchange in effect at the balance sheet date except thatthe components of shareholders’ equity are translated
at their historical exchange rates. Differences resulting
from translating the financial statements of the foreign| 22 | Nippon Shokubai Co., Ltd. |consolidated subsidiaries are not included in thedetermination of net income but are reported astranslation adjustments in a separate component ofshareholders’ equity and minority interests in the
consolidated balance sheets at March 31, 2005 and2004.
Revenue and expense items arising fromtransactions denominated in foreign currencies are
generally translated into yen at the rates in effect at therespective transaction dates.
All monetary assets and liabilities denominated inforeign currencies are translated into yen at the rates of
exchange in effect at the balance sheet date and thegain or loss on each translation is credited or charged
to income.
(d)Cash and Cash Equivalents
Cash and cash equivalents include cash on handand in banks and other highly liquid investments withmaturities of three months or less when purchased.

(e)Inventories
Inventories of the Company and its consolidated
subsidiaries are stated principally at the lower of costor market, cost being determined by the moving
average method.

(f)

Property, Plant and Equipment
Property, plant and equipment is stated on the basisof cost. Depreciation is computed principally by the
declining-balance method over the estimated useful
lives of the respective assets, except that the foreign
consolidated subsidiaries compute depreciation by thestraight-line method over the estimated useful lives of
the respective assets.

(g)

LeasesNon-cancelable leases of the Company and its
domestic consolidated subsidiaries are accounted for as
operating leases (whether such leases are classified as
operating or finance leases), except that leases which
stipulate the transfer of ownership of the leased assets
to the lessee are accounted for as finance leases.
However, leases of the foreign consolidated
subsidiaries are generally classified and accounted foras either finance or operating leases.

(h)Investments in Securities
Securities are classified into three categories:
trading securities, held-to-maturity debt securities andother securities.
Trading securities, consisting of debt andmarketable equity securities, are carried at fair value.
Gain and loss, both realized and unrealized, arecharged to income. Held-to-maturity debt securities
are carried at amortized cost. Marketable securities
classified as other securities are carried at fair value,with any changes in unrealized holding gain or loss,
net of the applicable income taxes, reported as aseparate component of shareholders’ equity. Nonmarketable securities classified as other securities arecarried at cost. Cost of securities sold is determined by
the moving average method.

(i)

Research and Development Costs and Computer
SoftwareResearch and development costs are charged toincome when incurred.
Expenditures relating to the development ofcomputer software intended for internal use arecharged to income as incurred, except if these are
deemed to contribute to the generation of future
income or cost savings. Such expenditures arecapitalized as assets and amortized by the straight-line
method over their useful lives, generally a period of 5
years.

(j)

Income Taxes
Income taxes are calculated based on taxable
income and charged to income on an accrual basis.
Deferred income tax assets and liabilities are computed
based on the temporary differences between thefinancial reporting and tax bases of the assets andliabilities which will result in taxable or deductible
amounts in the future. The calculation of deferredincome tax assets and liabilities is based on the enacted
tax laws.

reference to their basic salary, years of service andcertain other factors. The domestic consolidated
subsidiaries have either unfunded employees’
retirement benefit plans and/or pension plans which arenoncontributory and funded and which coversubstantially all their employees. These plans provide
for lump-sum payments and/or annuity payments
payable upon termination of employment.
Accrued retirement benefits for employees havebeen provided, in general, based on the retirement
benefit obligation and the fair value of the pension plan
assets as adjusted for unrecognized actuarial gain orloss and unrecognized prior service cost.
Prior service cost is amortized principally by thestraight-line method over 5 years, which falls within
the estimated average remaining years of service of theeligible employees.
Actuarial gain or loss is amortized in the year
following the year in which the gain or loss isrecognized principally by the straight-line method over
10 years, which falls within the estimated averageremaining years of service of the eligible employees.
In addition, directors and corporate auditors of theCompany and certain consolidated subsidiaries arecustomarily entitled to lump-sum payments under theirrespective unfunded retirement benefit plans. The
provision for retirement benefits for these officers has
been made at an estimated amount.
(l)

(k)

Retirement Benefits
The Company’s employees are covered by an
employees’ retirement benefit plan and an employees’
pension plan. The employees’ retirement benefit plan
provides for lump-sum payments determined byAppropriation of Retained Earnings
Under the Commercial Code of Japan, theappropriation of retained earnings with respect to agiven financial period is made by resolution of theshareholders at a general meeting held subsequent tothe close of the financial period. The accounts for that
period do not, therefore, reflect such appropriations(see Note 17).

2. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar
amounts is included solely for convenience, as a matterof arithmetic computation only, at ¥107.4 = U.S.$1.00,
the approximate rate of exchange in effect on March
31, 2005. This translation should not be construed as arepresentation that yen have been, could have been, or
could in the future be, converted into U.S. dollars at theabove or any other rate.

| Nippon Shokubai Co., Ltd. | 23 |

3. Investments in Securities
Marketable securities classified as other securities at March 31, 2005 and 2004 are summarized as follows:

2005(Millions of yen)

...
...
...
Securities whose fairmarket value exceeds their cost:
Equity securities .............. ¥Subtotal ...................................
Securities whose costexceeds their fair market value:
Equity securities ...................
Subtotal ...................................
Total ............................................ ¥(Thousands of U.S. dollars)

CostBook value(Fair market Unrealized
value)
gain (loss)

12,35012,350¥ 21,892
21,892¥ 9,542
9,542$ 114,991
114,991$ 203,836
203,836$ 88,845
88,845578
578
12,928551
551¥ 22,443(27)(27)¥ 9,515

5,381
5,381
$ 120,372

5,130
5,130
$ 208,966

(251)
(251)
$ 88,594

Cost

Book value(Fair market Unrealized
value)
gain (loss)

2004(Millions of yen)

...
...
...
Securities whose fairBook value(Fair market Unrealized
value)
gain (loss)

Cost

market value exceeds their cost:
Equity securities ............. ¥ 10,893
Subtotal ...................................
10,893
Securities whose costexceeds their fair market value:
Equity securities .............
931
Subtotal ...................................
931
Total ............................................ ¥ 11,824¥¥

19,41019,410¥ 8,517
8,517

800
800
20,210(131)(131)¥ 8,386

The proceeds and gross realized gains and losses on sales of securities classified as other securities for the years
ended March 31, 2005 and 2004 were as follows:

2005

2004

2005

(Millions of yen)

Proceeds¥ 2

Grossrealizedgains¥ 1| 24 | Nippon Shokubai Co., Ltd. |Grossrealized
losses¥ –Grossrealized
Proceeds gains
¥ 702
¥ 71

(Thousands of U.S. dollars)Grossrealized
losses¥ 0

Proceeds
$ 19

Gross
realized
gains
$ 9

Gross
realized
losses$ –A breakdown of other securities whose market
value was not determinable at March 31, 2005 and2004 is as follows:
2005

2004

(Thousands of
U.S. dollars)(Millions of yen)Preferred subscription
certificates ...............
Other securities ..........

2005

An impairment loss on rental properties andproduction facilities for polyvinilpyrrolidone for theyear ended March 31, 2005 was recorded at the amountat which the acquisition cost of each asset exceeded an
estimate of its future cash flows, discounted at 1.7%.
2004(Millions of yen)

¥ 500

¥ 500

$ 4,655

1,166

1,128

10,857

4. Inventories
Inventories at March 31, 2005 and 2004 were as
follows:
2005

2004

2005
(Thousands of
U.S. dollars)(Millions of yen)

Merchandise andfinished goods ..... ¥ 13,996
Raw materials ...........
7,626
Work in process ........
6,301
Supplies ....................
1,779¥ 29,702¥ 10,134
7,159
4,872
1,753
¥ 23,918$ 130,317
71,001
58,671
16,566$ 276,555

5. Impairment Loss on Fixed Assets
The impairment loss on fixed assets for the years
ended March 31, 2005 and 2004 related primarily tothe significant decrease in the market value of theCompany’s land as well as to an overall deteriorationin its business environment.
Impairment loss on fixed assets for the years ended
March 31, 2005 and 2004 consisted of the following:
2005

Rental properties:
Land .......................
Building ..................
Structure .................
Production facilities
for polyvinilpyrrolidone:
Machinery ..............
Structure .................
Building ..................

Total ................................

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

¥ 333
37
1
371

$ 3,101
344
9
3,454

101
4
3
108

941
37
28
1,006

¥ 479

$ 4,460

Plant site
(nonperforming assets):
Land ..................................................
Structure ............................................
Other ..................................................
Production facilities
for fluorine compounds:
Machinery .........................................
Building .............................................
Structure ............................................
Nonperforming assets:
Land ..................................................
Total ...........................................................

¥ 2,564
455
115
3,134
221
123
17
361
214
¥ 3,709

An impairment loss on production facilities forfluorine compounds for the year ended March 31, 2004
was recorded at the amount at which the acquisition
cost of each asset exceeded an estimate of its future
cash flows, discounted at 1.2%.
An impairment loss on plant site andnonperforming assets for the year ended March 31,
2004 was recorded at the amount at which theacquisition cost of each asset exceeded its estimatedfair value. The estimated fair value of these assets, ifmaterial, was determined using real estate appraisal
standards.

| Nippon Shokubai Co., Ltd. | 25 |

6. Short-Term Bank Loans and Long-Term
Debt
Short-term bank loans consisted mainly of
unsecured loans. The average interest rates on the
short-term bank loans outstanding at March 31, 2005
and 2004 were 0.95% and 0.96%, respectively.
Long-term debt at March 31, 2005 and 2004
consisted of the following:
2005

2004

2005

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

0.81% unsecured bonds
due November 2009 ........... ¥5,000¥ – $46,555
1.85% unsecured bonds
due November 2004 ...........
–
5,000
–
Unsecured loans from banks
and insurance companies,
payable in yen, at rates
from 0.49% to 1.62%,
due through 2011 ................ 16,221
7,847 151,034
Unsecured loans from banks,
payable in U.S. dollars,
at rates from 2.14% to3.60%, due through 2009 ...
9,274
12,07886,350Unsecured loans from banks,
payable in Euro, at rates
from 2.14%,
due through 2005 ................
347
999
3,231
Secured loans from banks
and insurance companies,
payable in yen, at rates
from 1.10% to 5.60%,
due through 2008 ................
1,352
1,971
12,588............................... Subtotal 32,194
27,895 299,758
Less current portion ...............
(5,653) (11,825) (52,635).................................... Total ¥26,541 ¥16,070 $247,123
The aggregate annual maturities of long-term debt
subsequent to March 31, 2005 are summarized below:
Year ending March 31,
2006 ..........................
2007 ..........................
2008 ..........................
2009 ..........................
2010 and thereafter ...

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

¥

5,653
4,452
4,226
3,531
14,332¥ 32,194| 26 | Nippon Shokubai Co., Ltd. |$52,63541,45339,34832,877
133,445$ 299,758

Assets pledged as collateral for short-term bankloans, long-term debt, including the current portion
thereof, and accounts and notes payable at March 31,
2005 and 2004 were as follows:
2005

2004

(Millions of yen)Time deposits ................... ¥8Land ..................................
55
Buildings and structures ...
30
Investments in securities ..
2,517¥ 2,610

2005(Thousands of
U.S. dollars)

¥

8 $
74
55
512
32
279
2,463
23,437¥ 2,558 $ 24,302

7. Retirement Benefits
The following table sets forth the funded andaccrued status of the pension plans and the amounts
recognized in the consolidated balance sheets at March
31, 2005 and 2004 for the Company’s and theconsolidated subsidiaries’ defined benefit plans:
2005

2004

2005

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

Retirement benefit
obligation at end of year .......... ¥ (30,610) ¥ (27,512) $ (285,009)
Fair value of plan assets
at end of year ............................
19,643
19,150182,895
Unfunded retirement
benefit obligation ..................... (10,967)(8,362) (102,114)
Unrecognized actuarial loss........
6,667
4,165
62,076
Unrecognized past service cost ..
(108)
(440)
(1,005)
Net retirement benefit obligation(4,408)(4,637)(41,043)
Prepaid pension cost ...................
2,348
1,972
21,862
Accrued retirement benefits ....... ¥ (6,756) ¥ (6,609) $ (62,905)
The components of retirement benefit expenses forthe years ended March 31, 2005 and 2004 are outlined
as follows:
2005

2004

2005

(Millions of yen)(Thousands of
U.S. dollars)Service cost ...................... ¥ 950¥ 995 $ 8,845
Interest cost ......................
677
725
6,304
Expected return on plan assets ...
(435)
(363)
(4,050)
Amortization:
Past service cost .............
(273)
(285)
(2,542)
Actuarial loss .................
621
1,090
5,782
Retirement benefit expenses .... ¥ 1,540 ¥ 2,162 $ 14,339

2005

The assumptions used in accounting for the defined
benefit plans for the years ended March 31, 2005 and2004 were as follows:
2005

2004

Discount rate .................... Principally 1.9% Principally 2.6%
Expected rate of returnon plan assets ................ Principally 3.0% Principally 3.0%

8. Income Taxes
Income taxes applicable to the Company and its
domestic consolidated subsidiaries consist of
corporation, inhabitants’ and enterprise taxes. The
statutory tax rates in Japan for the years ended March
31, 2005 and 2004 were, in the aggregate,approximately 40.6% and 42.0% respectively. The
effective tax rates reflected in the consolidated
statements of income for the years ended March 31,
2005 and 2004 differed from the above statutory tax
rates for the following reasons:Statutory tax rate ...........................
Effect of:Tax credit for research anddevelopment costs ...................
Permanently nondeductible expenses
Permanently nontaxable
dividends received ...................
Equity in earnings of an
unconsolidated subsidiary
and affiliates ..........................
Valuation allowance ...................
Tax loss carryforward .................
Other, net .....................................
Effective tax rates ..........................

2005

2004

40.6%

42.0%

(4.3)
0.6

(5.8)
0.8

(0.7)

(0.9)

(1.0)
0.6
(3.7)
(0.9)
31.2%

(1.8)
2.4
(1.7)
0.8
35.8%

Deferred income taxes reflect the net tax effect of
the temporary differences between the carrying
amounts of the assets and liabilities calculated forfinancial reporting purposes and the corresponding tax
bases reported for income tax purposes. The significant components of the deferred tax assets and liabilities of the Company and its consolidated subsidiaries
at March 31, 2005 and 2004 are summarized asfollows:

2004(Millions of yen)

Deferred tax assets:
Accrued retirement benefits .... ¥ 1,519
Intercompany profit oninventories and property,
plant and equipment .............
926
Tax loss carryforwards ............
647
Reserve for repairs ...................
902
Depreciation
and amortization ..................
715
Impairment loss on fixed
assets .................................... 1,562
Accrued employees’ bonuses ..
759
Impairment of investments
in securities and other .......... 1,888
Accrued enterprise tax .............
444
Other ........................................
772
Gross deferred tax assets ........... 10,134
Less: Valuation allowance ...... (1,064)
Total deferred tax assets ............ 9,070
Deferred tax liabilities:
Equity in earnings of
a foreign affiliate ................. (909)
Net unrealized holding
gain on securities ................. (3,862)
Depreciation and amortization ... (822)Deferred capital gain on
property ................................ (340)
Reserve for depreciation
for tax purposes .................... (110)Other ........................................
(84)
Total deferred tax liabilities ....... (6,127)
Net deferred tax assets ............... ¥ 2,943

2005(Thousands of
U.S. dollars))¥ 1,367$ 14,143

987
359
856

8,622
6,024
8,399

479

6,657

1,507
709

14,544
7,067

1,896
385
1,031
9,576
(1,016)
8,560

17,5794,134
7,189
94,358(9,907)84,451(535)(8,464)(3,404)(807)(35,959)(7,654)(342)(3,166)(143)(1,024)(71)(782)(5,302) (57,049)¥ 3,258 $ 27,402

9. Shareholders’ Equity
The Commercial Code of Japan (the “Code”)
provides that an amount equal to at least 10% of theamounts to be disbursed as distributions of earnings be
appropriated to the legal reserve until the sum of thelegal reserve and additional paid-in capital equals 25%of the common stock account. The Code also
stipulates that, to the extent that the sum of theadditional paid-in capital account and the legal reserve
exceeds 25% of the common stock account, the amountof any such excess is available for appropriation by
resolution of the shareholders.
Retained earnings include the legal reserve
provided in accordance with the Code. The legal
reserve of the Company included in retained earnings
amounted to ¥3,920 million ($36,499 thousand) at
March 31, 2005 and 2004.

| Nippon Shokubai Co., Ltd. | 27 |

12. Contingent Liabilities

10. Research and Development Costs
Research and development costs included in cost of
sales and selling, general and administrative expenses
for the years ended March 31, 2005 and 2004 totaled¥9,529 million ($88,724 thousand) and ¥9,424 million,
respectively.

11. Leases
The following pro forma amounts represent theacquisition costs (including the interest portion),
accumulated depreciation and net book value of theleased assets as of March 31, 2005 and 2004, which
would have been reflected in the balance sheets if
finance lease accounting had been applied to thefinance leases currently accounted for as operatingleases:2005

2004(Millions of yen)

Machinery and equipment and software:
Acquisition costs .............. ¥ 490¥ 525
Accumulated depreciation ... (292)(253)
Net book value ................. ¥ 198¥ 272

2006 ............................................
2007 and thereafter ....................

$ 4,562(2,719)$ 1,843| 28 | Nippon Shokubai Co., Ltd. |of(Millions of yen) (Thousands
U.S. dollars)

¥ 100
98
¥ 198

13. Amounts Per Share
2005

2004
(yen)

Net income ..................
Cash dividends ............
Net assets .....................

¥ 81.37
13.00
757.72

2005(U.S. dollars)¥ 45.379.00
685.20$ 0.76
0.12
7.06

2005
(Thousands of
U.S. dollars)

Lease payments relating to finance leases accounted for as operating leases amounted to ¥125
million ($1,164 thousand) and ¥126 million for theyears ended March 31, 2005 and 2004, respectively.
Depreciation of the leased assets calculated by thestraight-line method over the respective lease terms
amounted to ¥125 million ($1,164 thousand) and ¥126
million for the years ended March 31, 2005 and 2004,
respectively.
Future minimum lease payments (including theinterest portion thereon) subsequent to March 31, 2005
for finance leases accounted for as operating leases are
summarized as follows:
Years ending March 31,

At March 31, 2005, the Company and one consolidated subsidiary were contingently liable as guarantors
of indebtedness of affiliates, the Company’s employees
and others in the aggregate amount of ¥2,649 million($24,665 thousand).
In addition, at March 31, 2005, two consolidated
subsidiaries had contingent liabilities arising fromnotes discounted by banks and notes endorsed in theaggregate amount of ¥530 million ($4,935 thousand).

$ 931
912
$ 1,843

Net income per share has been computed based on
the net income attributable to shareholders of common
stock and the weighted-average number of shares ofcommon stock outstanding during the year. Diluted
net income per share has not been presented for theyears ended March 31, 2005 and 2004 since neither theCompany nor any of the consolidated subsidiaries had
any potentially dilutive shares at March 31, 2005 and2004.
The amount per share of net assets has been
computed based on the net assets available for
distribution to shareholders of common stock and thenumber of shares of common stock outstanding at theyear end.
Cash dividends per share represent the cash
dividends declared as applicable to the respective years
together with the interim cash dividends paid.
The financial data used in the computation of net
income per share for the years ended March 31, 2005
and 2004 is summarized as follows:
2005

2004

(Millions of yen)

2005
(Thousands of
U.S. dollars)

Net income ............................... ¥ 15,705 ¥ 8,822 $ 146,229
Deduction from net income:
Bonuses to directors
and corporate auditors ..........
(125)
(109)
(1,164)
Adjusted net income
attributable to shareholdersof common stock .................. ¥ 15,580 ¥ 8,713 $ 145,065
Weighted-average numberof shares of common stock
outstanding for the year
(thousands of shares) ............ 191,486 192,036
191,48614. Derivatives
Derivative financial instruments are utilized by theCompany and its consolidated subsidiaries principally
to reduce the risk of fluctuation in interest rates andforeign exchange rates. The Company has establisheda control environment which includes policies andprocedures for risk assessment and for the approval,reporting and monitoring of transactions involving
derivatives. The Company and its consolidated
subsidiaries do not hold or issue derivatives for
speculative trading purposes.
The Company and its consolidated subsidiaries are
exposed to certain market risks arising from forward
foreign exchange contracts and interest-rate swaps.
The Company and its consolidated subsidiaries are also
exposed to the risk of credit loss in the event of
nonperformance by the counterparties to these forward
foreign exchange contracts and interest-rate swap
contracts; however, the Company and its consolidated
subsidiaries do not anticipate nonperformance by anyof the counterparties, all of whom are financial
institutions with high credit ratings.
At March 31, 2005, two consolidated subsidiaries
had open interest-rate swap positions. The total valueof these positions, however, was immaterial.

15. Supplemental Information on Consolidated
Statements of Cash FlowsIn July 2004, the Company purchased shares ofSingapore Acrylic Pte Ltd. and Singapore Glacial
Acrylic Pte Ltd. and initially consolidated the accountsof the these companies for the year ended March 31,
2005. The following summarizes the assets andliabilities included in consolidation and presents theacquisition costs and cash disbursements:
2005(Millions of yen)(Thousands of
U.S. dollars)

Current assets ........................
Non-current assets .................
Excess of investment costover underlying net assets
of a consolidated subsidiary ..
Current liabilities ...................
Non-current liabilities ...........
Minority interests ..................
Acquisition costs ...................
Cash and cash equivalentsof the two companies ..........

¥ 1,671
3,355$ 15,559
31,238280(1,299)(42)(1,545)
2,420

2,607
(12,095)(391)(14,385)
22,533(290)(2,700)Cash disbursements ...............

¥ 2,130$ 19,833

16. Segment Information
The Company and its consolidated subsidiaries are primarily engaged in the manufacture and sales of products inJapan and overseas.

Business Segments
The business segment information of the Company and its consolidated subsidiaries for the years ended March 31,
2005 and 2004 is outlined as follows:
BasicchemicalsYear ended March 31, 2005
Functional Environment
Total
Eliminachemicals & catalysts
tions or
corporate

Consolidated(Millions of yen)

I. Sales and operating income
Sales to third parties ........................... ¥ 80,027
Intergroup sales and transfers .............
12,330Total sales ...........................................
92,357
Operating expenses .............................
82,426
Operating income ............................... ¥ 9,931¥ 99,355 ¥ 17,840
441
200
99,796
18,04089,707
15,910¥ 10,089 ¥ 2,130¥ 197,222 ¥–12,971 (12,971)
210,193 (12,971)
188,043 (13,033)¥ 22,150 ¥62¥ 197,222–
197,222
175,010¥ 22,212

II. Assets, depreciation, impairment loss
and capital expenditures
Total assets ......................................... ¥ 81,919
Depreciation and amortization ...........
2,963
Impairment loss ..................................
–
Capital expenditures ...........................
5,090¥ 113,542 ¥ 22,409
5,624
407
479
–
7,537
375

¥ 217,870
8,994
479
13,002¥ 249,349
8,994
479
13,002¥ 31,479–––| Nippon Shokubai Co., Ltd. | 29 |BasicchemicalsYear ended March 31, 2004
Functional Environment
Total
Eliminachemicals & catalysts
tions or
corporate

Consolidated(Millions of yen)

I. Sales and operating income
Sales to third parties ........................... ¥ 63,320
Intergroup sales and transfers .............
8,766
Total sales ...........................................
72,086
Operating expenses .............................
67,825
Operating income ............................... ¥ 4,261
II. Assets, depreciation, impairment loss
and capital expenditures
Total assets ......................................... ¥ 65,103
Depreciation and amortization ...........
2,950
Impairment loss ..................................
–
Capital expenditures ...........................
1,987

Basic
chemicals¥

90,647 ¥ 15,766
269
829
90,916
16,59580,504
15,766¥ 10,412 ¥829¥ 169,733
9,864
179,597
164,095¥ 15,502¥–(9,864)(9,864)(9,812)¥(52)¥ 169,733–
169,733
154,283¥ 15,450¥ 106,092 ¥ 19,189
5,111
471
575
–
5,874
551

¥ 190,384
8,532
575
8,412

¥ 29,801
43
3,134
–

¥ 220,185
8,575
3,709
8,412

Year ended March 31, 2005
Functional Environment
Total
Eliminachemicals & catalysts
tions or
corporate

Consolidated(Thousands of U.S. dollars)

I. Sales and operating income
Sales to third parties ........................... $ 745,130
Intergroup sales and transfers .............
114,804
Total sales ...........................................
859,934
Operating expenses .............................
767,467
Operating income ............................... $ 92,467$ 925,093 $ 166,108 $1,836,331
4,106
1,862
120,772
929,199
167,970
1,957,103
835,261
148,138
1,750,866$ 93,938 $ 19,832 $ 206,237$–(120,772)(120,772)(121,351)$ 579$1,836,331–
1,836,331
1,629,515$ 206,816

II. Assets, depreciation, impairment loss
and capital expenditures
Total assets ......................................... $ 762,747
Depreciation and amortization ...........
27,588
Impairment loss ..................................
–
Capital expenditures ...........................
47,393$1,057,188 $ 208,650 $ 2,028,585
52,365
3,790
83,743
4,460
–
4,460
70,177
3,492
121,062$293,100–––$2,321,685
83,743
4,460
121,062| 30 | Nippon Shokubai Co., Ltd. |Geographical Areas
The geographical segment information of the Company and its consolidated subsidiaries for the years ended March
31, 2005 and 2004 is outlined as follows:
A new geographic segment, “Asia,” which had previously been part of the “Other” segment has been disclosed
separately in the geographical segment information for the year ended March 31, 2005 because of the increase in its
materiality.

Japan

Year ended March 31, 2005
Asia
Other
Total

EuropeEliminations or
corporate

Consolidated(Millions of yen)

I. Sales andoperating income
Sales to third parties ....
Intergroup sales andtransfers .....................
Total sales ....................
Operating expenses ......
Operating income ........
II. Total assets .................

¥ 147,020¥ 22,701¥ 17,611¥

9,890¥ 197,222¥–¥ 197,222

15,096
162,116
145,232¥ 16,88452
22,753
21,783¥970

176
17,787
14,601¥ 3,186603
10,493
10,247¥
246

15,927
213,149
191,863¥ 21,286(15,927)(15,927)(16,853)¥926–
197,222
175,010¥22,212¥ 170,752¥ 13,428¥ 27,355¥ 12,634¥ 224,169¥ 25,180¥ 249,349

Eliminations or
corporate

Consolidated

Japan

Year ended March 31, 2004
Asia
Other
Total

Europe(Millions of yen)

I. Sales andoperating income
Sales to third parties ....
Intergroup sales andtransfers .....................
Total sales ....................
Operating expenses ......
Operating income ........
II. Total assets .................

¥ 135,576¥ 18,818¥

6,693

12,426
148,002
135,143¥ 12,859

46
18,864
17,907
¥
957

¥

2,525
9,218
8,746
472

¥ 153,434¥ 11,634¥ 15,338¥

8,646¥ 169,733¥–¥ 169,733

¥

415
9,061
8,549
512

15,412
185,145
170,345¥ 14,800(15,412)(15,412)(16,062)¥650–
169,733
154,283¥ 15,450¥ 14,367¥ 194,773¥ 25,412¥ 220,185| Nippon Shokubai Co., Ltd. | 31 |

JapanEuropeYear ended March 31, 2005
Asia
Other
Total

Eliminations or
corporate

Consolidated(Thousands of U.S. dollars)

I. Sales andoperating income
Sales to third parties .... $ 1,368,901
Intergroup sales andtransfers .....................
140,559
Total sales .................... 1,509,460
Operating expenses ...... 1,352,253
Operating income ........ $ 157,207

484
211,853
202,821
$
9,032

1,639
5,615
148,297 (148,297)–
165,615
97,700 1,984,628 (148,297)
1,836,331
135,950
95,410 1,786,434 (156,919)
1,629,515$ 29,665 $ 2,290 $ 198,194 $
8,622 $ 206,816

II. Total assets ................. $ 1,589,870$ 125,028$ 254,702 $ 117,635 $ 2,087,235 $ 234,450 $ 2,321,685$ 211,369 $ 163,976 $ 92,085 $ 1,836,331 $– $ 1,836,331

Overseas Sales
Overseas sales, which include export sales of the Company and the domestic consolidated subsidiaries and sales(other than exports to Japan) of the foreign consolidated subsidiaries, for the years ended March 31, 2005 and 2004
are summarized as follows:

Asia

Year ended March 31, 2005
EuropeNorth
Other
America¥ 36,309¥ 28,688¥ 15,975¥ 4,079¥ 85,051

18.4%

14.5%

8.1%

2.1%

43.1%

Total

(Millions of yen)Overseas sales .................................................................
Overseas sales as a percentage of consolidated
net sales ................................................................

Asia

Year ended March 31, 2004
EuropeNorth
Other
America¥ 29,952¥ 24,712¥ 12,593¥ 4,387¥ 71,644

17.6%

14.6%

7.4%

2.6%

42.2%

Total

(Millions of yen)Overseas sales .................................................................
Overseas sales as a percentage of consolidated
net sales ................................................................

Asia

Year ended March 31, 2005
EuropeNorth
Other
America

Total(Thousands of U.S. dollars)

Overseas sales .................................................................

| 32 | Nippon Shokubai Co., Ltd. |$ 338,072 $ 267,114$ 148,743$ 37,980$ 791,909

17. Subsequent Event
The following appropriations of retained earningsof the Company, which have not been reflected in theaccompanying consolidated financial statements forthe year ended March 31, 2005, were approved at ashareholders’ meeting held on June 22, 2005:(Millionsof yen)Cash dividends(¥8.00 = $0.07 per share) .......... ¥ 1,526
Bonuses to directors andcorporate auditors ......................
110¥ 1,636(Thousands of
U.S. dollars)$ 14,209
1,024$ 15,233| Nippon Shokubai Co., Ltd. | 33 |

Corporate Data

NIPPON SHOKUBAI CO., LTD.
Incorporated
August 21, 1941
Common Stock
Authorized:
424,000,000 shares
Issued:194,881,287 shares
Capital¥16,529,413,238
Number of Employees
Consolidated: 2,721/Non-consolidated: 1,731| 34 | Nippon Shokubai Co., Ltd. |Stock Listings
First Section, Tokyo Stock ExchangeFirst Section, Osaka Securities Exchange
Transfer Agent
UFJ Trust Bank Limited
1-4-3 Marunouchi, Chiyoda-ku
Tokyo 100-0005, Japan(as of March 31, 2005)

Organization

Board of Corporate Auditors
Corporate Auditors

Auditor’s Office| Nippon Shokubai Co., Ltd. | 35 |Consolidated Subsidiaries and Affiliates
Name

EquityOwnership(%)

Principal BusinessPresident

Tatsuhito Matsuda

Nippoh Chemicals Co., Ltd.*

67.9

Manufacture and sale of iodine,natual gas, intermediates for API andagro-chemicals and photo/electrochemicals

Nippon Polyester Co., Ltd.*

97.7

Manufacture and sale of synthetic
resins and related additives

Tamotsu Okamura

Nisshoku Butsuryu Co., Ltd.*

100.0

Logistics

Wataru Makii

Tokyo Fine Chemical Co., Ltd.*

88.7

Manufacture and sale of stabilizerof vinyl chloride resin andanti-freeze

Tadayoshi Honda

Chugoku Kako Co., Ltd.*

89.4

Manufacture and sale of adhesive tape
Fukio Ogawa
and heat insulator

Shinritsu Co., Ltd.*

73.1

Sale of chemical products

Masayoshi Sugimoto

NA Industries, Inc.**

100.0

Manufacture and sale of superabsorbent polymers
Technical liaison and businessdevelopment

Yuji Noma

Nippon Shokubai (Asia) Pte. Ltd.*

100.0

Sale of chemical products

Takeshi Sano

Nippon Shokubai Europe N.V.*

100.0

Manufacture and sale ofsuperabsorbent polymers

Keishi Tsuboi

PT. Nippon Shokubai Indonesia*

93.7

Manufacture and sale of acrylicacid and acrylic esters

Takashi OnishiSingapore Acrylic Pte Ltd.

51.0

Manufacture and sale of crude acrylic
acid

Kenji Ozeki

Singapore Glacial Acrylic Pte Ltd.

100.0

Manufacture and sale of acrylic acidKenji Ozeki

NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.

100.0

Manufacture and sale of superabsorbent polymers

Kiyoshi Kawamura

Nihon Jyoryu Kogyo Co., Ltd.

83.4

Manufacture and sale ofanthraquinone, carbozole, andtheir derivatives

Takakiyo Goto

ICT Co., Ltd.

50.0

Sale of automobile exhaust catalyst

Yojiro Takahashi

Nihon Polymer Ind. Co., Ltd.

50.0

Manufacture and sale of acrylic
emulsionsTadahiro Yoneda

International Catalyst Technology, Inc.

50.0

Manufacture and sale of automobile exhaust catalyst

William Staron

Japan Composite Co., Ltd.

35.0

Manufacture and sale of unsaturated
polyesters resin and plastic moldedmaterials

Tadayoshi Kishimoto(as of June 30, 2005)* Included in consolidation** American Acryl NA LLC, and American Acryl L.P., are consolidated into NA Industries, Inc. by the equity method.
| 36 | Nippon Shokubai Co., Ltd. |Directory
Directory

HEAD OFFICESLABORATORIESOVERSEAS COMPANIESOsaka Office
Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku
Osaka 541-0043, Japan
Telephone: 81-6-6223-9111
Facsimile: 81-6-6201-3716

Advanced Technology ResearchCenter
5-8 Nishi Otabi-cho, Suita
Osaka 564-8512, JapanNA Industries, Inc.
2651 Riverport Road
Chattanooga, Tennessee
TN 37406, 37406,
U.S.A.
(P.O. Box
U.S.A.
(P.O.
5407)
Box 5407)
Telephone: 1-423-624-6496
Facsimile: 1-423-629-0531

Tokyo Office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Japan
Telephone: 81-3-3506-7475
Facsimile: 81-3-3506-7598

Advanced Materials ResearchLaboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-8512, Japan
E&I Materials Research Laboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-8512, Japan

PLANTS
Kawasaki Chidori Plant
14-1 Chidori-cho, Kawasaki-ku
Kawasaki, Kanagawa 210-0865,
Japan

Strategic Technology ResearchLaboratory
5-8 Nishi Otabi-cho, Suita
Osaka 564-8512, Japan

Kawasaki Ukishima Plant
10-12 Ukishima-cho, Kawasaki-ku
Kawasaki, Kanagawa 210-0862,
Japan

Superabsorbents
Fine& Specialty Research
ChemicalsCenter
Research
992-1
Aza-Nishioki
CenterOkihama,
5-8 Nishi Otabi-cho,
Aboshi-ku,
Himeji Suita
Osaka 564-8512,
Hyogo671-1292, JapanJapan

Himeji Plant
992-1 Aza-Nishioki
Aza Nishioki Okihama,
Aboshi-ku
Himeji, Hyogo 671-1282, Japan

Fine & Specialty
Catalysts
Research
ChemicalsCenter992-1 AzaCenter
Research
Nishioki Okihama,
Aboshi-ku,
5-8
Nishi Otabi-cho,
Himeji Suita
Hyogo 564-8512,
Osaka
671-1292, JapanJapan

Ehime Plant
5-1 Soubiraki-cho, Niihama, Ehime
792-8521, Japan

Catalysts Research
Superabsorbent
Polymers
CenterResearchCenterAza-Nishioki Okihama,
992-1
992-1 Aza Nishioki
Aboshi-ku,
Himeji Okihama,
Aboshi-ku,
Hyogo
671-1292,
HimejiJapan
Hyogo 671-1292, Japan

Suita Plant
5-8 Nishi Otabi-cho, Suita
Osaka 564-0034, JapanOVERSEAS OFFICES
Shanghai Office
R/No. 3604, The Center, 989
Changle Road Shanghai, China,
200031
Telephone: 86-21-5407-5959
Facsimile: 86-21-5407-5673

PT. NIPPONNIPPONSHOKUBAISHOKUBAI(ASIA) PTELTD
INDONESIA
138 Cecil Industri
KawasanStreet, #05-04
Panca Puri
Cecil Court,
Jl.Raya
Anyer
Singapore
Km.122 069538
Telephone:Cilegon
Ciwandan65-6-225-6313
42447 Banten,
Facsimile: 65-6-225-0969
Indonesia
Telephone: 62-254-600660
NIPPON SHOKUBAI
Facsimile:
62-254-600657
EUROPE N.V.
Haven 1053, Nieuwe Weg 1, B-2070
Zwijndrecht,
NIPPONSHOKUBAI
Belgium (ASIA) PTE
Telephone: 32-3-250-3705
LTD
1Facsimile:
Raffles Place
32-3-250-3712
OUB Centre #31-01
Singapore 048616
Telephone:
PT. NIPPON65-6532-0078
SHOKUBAI
INDONESIA65-6532-0079
Facsimile:
Kawasan Industri Panca Puri
Jl.Raya Anyer
Singapore
Acrylic
Km.122
Pte Ltd.
Ciwandan
17
Sakra Road
Cilegon#01-0142447
Singapore
Bantan,Indonesia
627886
Telephone: 62-254-600660
Facsimile: Glacial
Singapore
62-254-600657
Acrylic Pte Ltd.
17 Sakra Road #01-01 Singapore
NISSHOKU CHEMICAL INDUSTRY
627886(ZHANGJIAGANG) CO., LTD.
Fugang Shokubai
NipponBldg. 11A,Europe
RenminN.V.
Road(M) No.36,
Haven1053,Zhangjiagang
Nieuwe WegCity,
1, B-2070
Jiangsu Prov.,Belgium
Zwijndrecht,
215600 China
Telephone: 32-3-250-3705
86-512-58676778
Facsimile: 32-3-250-3712
86-512-58676978
NISSHOKU CHEMICAL INDUSTRY(ZHANGJIAGANG) CO., LTD.
No.19 Changjiang Road(E), Yangtze
River International Chemical Industrial Park, Zhangjiagang, Jiangsu,
China, 215635
Telephone: 86-512-5893-7910
Facsimile: 86-512-5893-7912

Osaka Office
Kogin Bldg.
4-1-1 Koraibashi, Chuo-ku
Osaka 541-0043, Japan
Telephone: +81-6-6223-9111
Facsimile: +81-6-6201-3716
Tokyo Office
Hibiya Dai Bldg.
1-2-2 Uchisaiwai-cho, Chiyoda-ku
Tokyo 100-0011, Japan
Telephone: +81-3-3506-7475
Facsimile: +81-3-3506-7598
URL: http://www.shokubai.co.jp’05 Aug., 1500
Printed in Japan