InterimBusiness
Reportfor the 128th Term2012.4.1−2012.9.30

To Our Shareholders
First of all, thank you for your continued patronage and support. It is our pleasure to present ourreport for the 128th interim period, covering the period from 1st April 2012 to 30th September, 2012.
Looking at the global economy during this period, no concrete solutions emerged in Europe forthe destabilizing factors such as the financial crisis, and there was little anticipation of recovery in
the Western economies. Furthermore, economic growth in China was not as robust as in recent years
and in other Asian countries and overall, the global economy was characterized by a generalsluggishness. Looking at our domestic economy, there was some basis for a slow recovery due todemand stimulated by recovery from the Great East Japan Earthquake and the eco-car subsidy
system however trade figures remained in the red due to the continued high yen and resulting
impairment of our competitiveness in overseas markets. Furthermore, territorial disputes worsened
Japan’s relationships with China and South Korea, forcing corporations to revise their productionplans in those countries, creating a feeling of economic stagnation.
The business environment for metal surface modification faced by our Parker Group is one inwhich our key customers in the automotive industry continued to face a historically high yen,causing further shifts of production overseas by automotive and parts manufacturers and continued
demands for ever higher quality and lower costs. In the steel industry also, there was strong
competition from overseas competitors and the business environment was quite severe.
Amidst such a tough economic environment, our Parker Group sought to actively expand ouroverseas business by strengthening our supply of new technology and broadening our customer basein order to make steady progress in capturing new business opportunities overseas, as well as
focusing on research and development activities to create innovative new technologies for the future.
We also made efforts to strengthen ties within our Group and promote business reorganization, as
well as improving efficiency of raw materials procurement and implementing a variety of cost
reduction measures. As a result, our business achievements for this period were as follows.
Net sales were 44,402 million yen (up 16.9% on the corresponding period for the previous year)
and operating income was 6,624 million yen (up 30.8% ditto). Ordinary income was 7,416 million
yen (up 26.1% ditto) and interim net profit was 3,962 million yen (up 24.7% ditto).
The overview by each business segment is as follows.
(Chemicals Business)
Net sales were 19,184 million yen (up 9.4% on the corresponding period for the previous year)
and operating income was 4,977 million yen (up 20.0% ditto). Sales of metal surface treatment
chemicals were steady however from summer onwards domestic and overseas demand fell slowly
and it is difficult to anticipate the prospects for the future. Also, Dae Han Parkerizing had become aconsolidated subsidiary, increasing sales by 723 million yen and operating income by 158 millionyen.
1(Equipment Business)
Net sales were 7,361 million yen (up 62.6% on the corresponding period for the previous year)
and operating income was 277 million yen (up 272.0% ditto). Orders for pre-treatment equipment
for the automotive industry, mainly for overseas were steady, and while figures for operating income
were in the red in the first half of the period, they recovered to black and the end result was asignificant increase in income.
(Jobbing Business)
Nets sales were 16,218 million yen (up 10.0% on the corresponding period for the previous year)
and operating income was 3,413 million yen (up 24.8% ditto). While income and profits increasedon the corresponding period for the previous year, this division is significantly affected byautomotive production and the overseas transfer of production as well as the slow growth of output
domestically and overseas by our customers in the auto industry led to slow growth for the latter halfof this period.
(Other Business)
Net sales were 1,637 million yen (up 37.9% on the corresponding period for the previous year)
and operating income was 196 million yen (up 85.1% ditto). Income in our building maintenancebusiness increased and profitability improved somewhat in the transportation/logistics businessleading to an increase in income and profits.
Regarding the interim dividend for this period, a resolution was passed by the Board of Directors
on 5th November to pay a dividend of ten yen per share to be paid on the 10th of December, 2012.
Regarding the outlook for the second half of the financial year, not only is the domestic economy
tending to slump, there are no signs of improvement in the overseas economies and we anticipate aworsening of the economy. Furthermore, it is anticipated that domestic automotive sales will slow
due to overall stagnation of consumption and the cessation of the eco-car subsidy system, and in
addition the hollowing out of domestic industry will continue as manufacturers shift production
overseas due to the continued high yen.
Against such a severe economic backdrop, the Parker Group, under its motto of “back to thebasics”, will pursue the development of surface modification technologies which cannot be beaten interms of its innovation and originality as well as actively promoting equipment investment overseas
in order to strengthen our business in the ever expanding overseas markets. We will put our utmost
effort into strengthening the structure of our organization and increasing profitability.
We look forward to the unerring support of our shareholders.
President & C.O.O.
Kazuichi SATOMI
2Consolidated Balance Sheet
September 30

March 312012

2012(JPY Million)
AssetsCurrent assets

74,25964,679Cash and deposits

27,59323,632

Notes and accounts receivable-trade

29,35427,431

Short-term investment securities

2,261

2,164

Merchandise and finished goods

1,807

1,781

Work in process

4,853

2,018

Raw materials and supplies

3,846

3,664

Others

4,660

4,124

Allowance for doubtful accounts

△117

△137

Fixed assets

63,974

65,837

Tangible assets

35,93735,311

Buildings and fixtures, net

12,04512,004Land

14,972

14,554

Others, net

8,918

8,751

Intangible assets

2,411

1,846

Investments and other assets

25,62528,679Investment in securities

16,00318,503

Others

9,776

10,334

Allowance for doubtful accounts

△154

△158

138,233

130,517

Total assets

3Liabilities
Current liabilities

33,072

28,042

Notes and accounts payable-trade

14,817

12,861

Short-term loans payable

2,736

2,731

448

560

Corporate Income taxes payable

2,381

2,202

Provision for bonuses

2,323

2,281

Others

10,365

7,406

Fixed liabilities

15,026

15,201Long-term loans payable

2,886

3,223

Provision for retirement benefits

9,898

9,876

Others

2,241

2,101

Total liabilities

48,09843,243

Shareholders' equity

79,02975,676

Paid-in capital

4,560

4,560

Capital surplus

3,913

3,913

Retained earnings

74,17970,824

Treasury stock△3,623△3,622

Accumulated other comprehensive profit△3,050△2,030

1,938

3,056

3

△34

Foreign currency translation adjustment△4,992△5,052

Minority interests

14,156

13,628

Total net assets

90,13587,273

Total liabilities and net assets

138,233

130,517

Current portion of long-term loans payable

Net assets

Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

4Consolidated Statements of income
Six months ended September 302012

2011(JPY Million)

Net sales

44,40237,999

Cost of sales

27,98923,389Gross profit

16,412

14,609Selling, general and administrative expenses

9,788

9,545

Operating income

6,624

5,064

Non-operating profit

1,007

1,002

Interest income

7053

Dividends income

170

164

Rent income

163

153

Equity in earnings of affiliates

298

386

Other304

244

Non-operating expenses

214

187

Interest expenses

39

46

Foreign exchange losses

7854

Loss on valuation of derivatives

‐44

Other

96

41

7,416

5,879

Extraordinary income

9322

Extraordinary loss

138

112

Income before income taxes and minority interests

7,371

5,789

Income taxes

2,683

2,056

Income before minority interests

4,688

3,732

Minority interests in income

726

556

Net profit for the period

3,962

3,176

Ordinary income5