InterimBusiness
Reportfor the 130th Term2014.4.1−2014.9.30

To Our Shareholders
First of all, thank you very much for your continued patronage and support. It is our pleasure topresent our report for the 130th interim period, covering the period from 1st April 2014 to 30th
September, 2014.
During this period in the global economy, while there was improvement due to an upturn in privatesector demand in the U.S., the European economies were weak due to the prevalence of a high degreeof uncertainty. There was a degree of recovery in Asia however it wasn’t a significant improvement.
In Japan, while economic growth has been sustained, it has not matched the high expectations of thegovernment and the outlook remains severe.
The business environment for metal surface modification faced by our Parker Group is one in which,while the yen depreciation became established, our key customers in the automotive industry including
parts manufacturers stepped up their shift of production overseas and in the steel industry also, excess
supply led to falling prices and a severe business environment continues.
In the midst of such an environment, our Parker Group actively sought to supply high value added
technology that would satisfy our customers’ requirements for high quality and low cost. In addition,
as domestic demand is flat, we have been strengthening our manufacturing equipment principally inNorth America and Asia in order to capture overseas demand. Furthermore, in order to ensure ourposition as market leader into the future, we have been focusing on the creation of innovativetechnology and research and development activities.
As a result, our business achievements for this period were as follows.
Net sales were 47,946 million yen (up 3.4% on the corresponding period for the previous year) andoperating income was 7,375 million yen (up 2.2% ditto). Ordinary income was 8,412 million yen (up0.4% ditto) and interim net profit was 4,891 million yen (up 1.6% ditto).
The overview by each business segment is as follows.
(Chemicals Business)
Net sales were 21,646 million yen (up 6.8% on the corresponding period for the previous year) andoperating income was 5,896 million yen (up 6.6% ditto). Raw materials prices remained high howeverprogress was made in the shift to high value added products and demand for metal surface treatment
chemicals has been steady in the automotive and steel industries. Furthermore, there was an increase
in revenue in China, Korea and India leading to an overall increase in revenue and profit.
(Equipment Business)
Net sales were 7,462 million yen (down 2.1% on the corresponding period for the previous year)
1and operating income was 321 million yen (down 37.0% ditto). In this interim period, while there wereorders for pre-treatment equipment the automotive and machinery industries, profitability fell and thebusiness environment was tough, and both revenue and profit were down.
(Jobbing Business)
Net sales were 17,602 million yen (up 6.0% on the corresponding period for the previous year) andoperating income was 3,312 million yen (up 8.0% ditto). Overseas, in Thailand, one of the key markets,
automotive production fell resulting in a decrease in revenue and profit, and in Indonesia rising laborcosts led to weakness in profits. In North America and China results were relatively favorable. InJapan, results were favorable due to recovery in demand for jobbing of automotive parts, resulting inincreased revenue and profit.
(Other Business)
Nets sales were 1,234 million yen (down 33.7% on the corresponding period for the previous year)
and operating income was 96 million yen (down 67.4% ditto). The transport business was steadyhowever the building maintenance business suffered a fall in revenue and profit and our consolidated
subsidiary which manages the real estate lease business became an equity method affiliated company,
and these and other factors resulted in a decrease in revenue and profit.
Regarding the interim dividend for this period, a resolution was passed by the Board of Directors
on 7th November to pay a dividend of fifteen yen per share to be paid on the 10th of December, 2014.
Regarding the outlook for the second half of the financial year, while the domestic economy isshowing signs of a slow recovery, there is concern that the effect of the tapering down of quantitativeeasing in the U.S., the deceleration of the Chinese economy and the future prospects for newly
emerging economies may cause an economic downturn. In addition, the high prices for imported raw
materials and fuel resulting from the yen depreciation are also a factor in decreasing profitability indomestic firms and it is anticipated that the business environment will remain uncertain for the time
being.
Against such an economic backdrop, the Parker Group, under its motto of “back to the basics”,
will pursue the development of surface modification technologies which cannot be beaten in terms ofinnovation 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

2014

2014

(JPY Million)
AssetsCurrent assets

90,15486,015

Cash and deposits

38,90438,005

Notes and accounts receivable-trade

31,25530,167

Short-term investment securities

3,849

3,649

Inventories

11,364

10,238Deferred tax assets

1,450

1,456

Other

3,490

2,635

Allowance for doubtful accounts

△159

△137

Fixed assets

81,23579,899Tangible assets

44,43142,772

Buildings and fixtures, net13,654

13,747

Machinery, equipment and vehicles, net

10,428

10,141

Land

14,835

15,375Construction in progress

4,015

2,450

Other, net

1,498

1,057

Intangible assets

1,567

2,697

543

689

Other

1,024

2,008

Investments and other assets

35,23534,428Investment in securities

25,11423,916250

118

Deferred tax assets

1,282

1,365

Other

8,713

9,159

Allowance for doubtful accounts

△125

△131

171,390

165,914Goodwill

Long-term loans receivable

Total assets

3September 30

March 312014

2014

Current liabilities

34,23332,412

Notes and accounts payable-trade

15,652

14,538

Short-term loans payable

36

1,680

Current portion of long-term loans payable

255

360

Corporate income taxes payable

2,149

2,759

Provision for bonuses

2,357

2,396

Other

13,811

10,676

Fixed liabilities

15,59015,829Long-term loans payable

788

2,108

Net defined benefit liability

11,217

10,313

869

856

1,776

1,424

937

1,127

49,824

48,241

Shareholders' equity

94,66691,396

Paid-in capital

4,560

4,560

Capital surplus

3,913

3,913

Retained earnings

89,81086,546

Treasury stock△3,617△3,623

Accumulated other comprehensive profit

7,553

7,247

Valuation difference on available-for-sale securities

7,491

6,203

33

Foreign currency translation adjustment

185

1,176

Remeasurements of defined benefit plans

△127

△135

Minority interests

19,34519,028

Total net assets

121,565

117,672

Total liabilities and net assets

171,390

165,914

Liabilities

Provision for directors’ retirement benefits
Deferred tax liabilities
Other

Total liabilities
Net assets

Deferred gains or losses on hedges

4Consolidated Statements of income
Six months ended September 3020142013(JPY Million)

Net sales

47,94646,360

Cost of sales

29,562

28,707Gross profit

18,383

17,653

Selling, general and administrative expenses

11,007

10,437

Operating income

7,375

7,215

Non-operating profit

1,213

1,322

Interest income

106

85

Dividends income

251

207

Rent income

169

164

Technical support fee

167

165

Foreign exchange gains-217

Equity in earnings of affiliates

336

322

Other

182

157

Non-operating expenses

175

154

Interest expenses

732

Foreign exchange losses

38-Other

129

122

8,412

8,383

Extraordinary income

10540

Extraordinary loss

130

18

Income before income taxes and minority interests

8,293

8,904

Income taxes

2,605

2,811

Income before minority interests

5,687

6,092

Minority interests in income

796

1,279

Net profit for the period

4,891

4,813

Ordinary income5