InterimBusinessReportfor the 131th Term2015.4.1−2015.9.30

To Our Shareholders
First of all, let us express our sincere appreciation to our shareholders for your continued patronageand support. It is our pleasure to present the interim report for the 131st period, covering the period
from April 1st 2015 to September 30th 2015.
During this period in the global economy, the Chinese economy showed clear signs of decelerationand overall the export-oriented economies in Asia remained at a standstill. While the U.S. economy
continues to recover momentum, there are many uncertainties remaining and the Federal Reserve has
yet to raise the interest rate.

In the Japanese economy there has been a moderate recovery andcorporate profits have rebounded due to factors such as the low oil prices and weak yen and there havebeen indications of a recovery in equipment investment. However as Japanese corporations haveglobalized their operations and are increasingly reliant on conditions overseas, concerns for a
downturn overseas are casting a shadow domestically.
Regarding the business environment for metal surface modifications faced by our Parker Group,
our key customers in the automotive industry have been reducing output, and the total number of
automobiles manufactured domestically fell compared to the previous year. Likewise in the steel
industry, while domestic demand has remained stable, Asia has continued to suffer from excess supply
and the business environment remains tough.
In the midst of such a difficult economic environment, our Parker Group has worked to provide
our customers with high quality, low cost technology which matches their needs, and has strengthened
our production facilities overseas particularly in the U.S., Mexico, China and Thailand to ensure that
we take advantage of overseas demand. Furthermore, we have been concentrating our efforts on
research and development targeting the creation of innovative technologies to ensure that we retain
our position of predominance in the market well into the future.
As a result, our business achievements for this period were as follows.
Net sales were 51,852 million yen (up 8.1% on the corresponding period for the previous year) andoperating income was 7,297 million yen (down 1.1% ditto). Ordinary income was 8,532 million yen(up 1.4% ditto) and net income attributable to parent company shareholders was 5,073 million yen (up3.7% ditto).
The overview by each business segment is as follows.
(Chemicals Business)
Net sales were 21,887 million yen (up 1.1% on the corresponding period for the previous year) andoperating income was 4,175 million yen (down 6.0% ditto). Domestic demand for metal surface
treatment chemicals in the automotive and steel industries showed improvement and overseas demand
was also relatively steady due in part to the weak yen. However profitability fell due to the price rises
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for raw materials, resulting in an overall fall in profit despite increased revenue.
(Equipment Business)
Net sales were 9,492 million yen (up 27.2% on the corresponding period for the previous year) andoperating income was 275 million yen (down 12.4% ditto). In Japan this segment posted sales for large
facilities in the housing related industry and business was relatively steady overseas as well leading toincreased revenue. However profitability was stagnant and the overall result was increased revenue
coupled with decreased profit.
(Jobbing Business)
Net sales were 18,889 million yen (up 7.3% on the corresponding period for the previous year)
and operating income was 3,313 yen (up 11.3% ditto). In the heat treatment jobbing business overseas,
while demand expanded in China it was stagnant in Indonesia. Demand for heat treatment jobbing wasalso sluggish domestically due to the shift overseas of automotive parts manufacturing. By contrast,
demand was relatively steady in the rust prevention jobbing business both domestically and overseas
and as a result, there was an overall increase in revenue and profit.
(Other Business)
Net sales were 1,582 million yen (up 28.2% on the corresponding period for the previous year)
and operating income was 126 million yen (up 31.5% ditto). The building maintenance businessperformed well and with the inclusion of a consolidated subsidiary that manufactures and sells bolts,
this segment achieved an overall increase in both revenue and profit.
Regarding the interim dividend for this period, a resolution was passed by the Board of Directors
on 6th November to pay a dividend of seven and a half yen per share to be paid on the 10th of December,
2015.
Regarding the outlook for the second half of the financial year, while there are indications thatdomestic automotive production has bottomed-out after continuing to fall each month year-on-year
for over a year, there is increased wariness over the deceleration of the Chinese economy as well as
concern over its effect on the global economy. The future outlook is extremely uncertain and weanticipate that the environment faced by the metal surface modification business will remain tough.
Against such an economic backdrop, our Parker Group, under its motto of “back to the basics” asa technology-driven company, will pursue the development of surface modification technologies
which cannot be beaten in terms of innovation and originality as well as actively promoting equipment
investment overseas, strengthening the structure of our organization and increasing profits.
We look forward to the unerring support of our shareholders.
President & C.O.O.
Kazuichi SATOMI
2Consolidated Balance Sheet
September 30

March 31

2015

2015

(JPY Million)
AssetsCurrent assets

95,71989,812

Cash and deposits

41,70838,835Notes and accounts receivable-trade33,06332,675

Short-term investment securities

4,441

2,090

Inventories

11,374

10,765

Deferred tax assets

1,385

1,425

Other

3,919

4,190

Allowance for doubtful accounts

△173

△169

Fixed assets

94,60597,303

Tangible assets

52,81350,911

Buildings and fixtures, net

17,287

16,393

Machinery, equipment and vehicles, net

13,373

12,851Land

15,183

15,235Construction in progress

4,752

4,481

Other

2,215

1,949

Intangible assets

1,451

1,616

321

466

Other

1,130

1,149

Investments and other assets

40,341

44,775Investment in securities

28,50332,376220

250

Deferred tax assets

1,104

1,088

Other

10,607

11,159△95△99

190,325

187,116

Goodwill

Long-term loans receivable

Allowance for doubtful accounts

Total assets

3September 30

March 31

2015

2015

Current liabilities

34,07632,710Notes and accounts payable-trade

15,116

15,535

Short-term loans payable

308

144

Current portion of long-term loans payable

329

399

Corporate income taxes payable

1,848

1,888

Provision for bonuses

2,307

2,345

Other

14,165

12,397

Fixed liabilities

17,60918,282Long-term loans payable

1,789

1,854

873

901

Net defined benefit liability

9,753

9,711

Deferred tax liabilities

2,994

3,938

Other

2,199

1,875

Total liabilities

51,68550,992102,919

98,793Paid-in capital

4,560

4,560

Capital surplus

3,912

3,913

Retained earnings

98,076

93,949Treasury stock△3,629△3,628

Accumulated other comprehensive profit

13,262

15,492

Valuation difference on available-for-sale securities

8,583

10,61519△3Foreign currency translation adjustment

4,691

4,910

Remeasurements of defined benefit plans△31△29Non-controlling interests

22,457

21,836

Total net assets

138,640

136,123

Total liabilities and net assets

190,325

187,116

Liabilities

Provision for directors’ retirement benefits

Net assets
Shareholders' equity

Deferred gains or losses on hedges

4Consolidated Statements of income
Six months ended September 302015

2014(JPY Million)

Net sales

51,852

47,946

Cost of sales

32,56729,562Gross profit

19,284

18,383

Selling, general and administrative expenses

11,987

11,007

Operating income

7,297

7,375

Non-operating profit

1,474

1,213

Interest income

131

106

Dividends income

345

251

Rent income

187

169

Technical support fee

199

167

Equity in earnings of affiliates

412

336

Other

197

182

Non-operating expenses

238

175

Interest expenses

117

Foreign exchange losses

80

38

Other

147

129

8,532

8,412

Extraordinary income

63

10Extraordinary loss

102

130

Income before income taxes

8,493

8,293

Income taxes

2,474

2,605

Net income

6,019

5,687

946

796

5,073

4,891

Ordinary income

Net income attributable to non-controlling interests
Net income attributable to parent company shareholders

5