InterimBusiness
Reportfor the 129th Term2013.4.1−2013.9.30

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 129th interim period, covering the period from 1st April 2013 to 30th
September, 2013.
During this period, while there was no significant improvement in the global economy as awhole and the Chinese economy slowed, the U.S. economy began to improve due to a rebound in
consumption, and also in Europe there were signs of rallying after the economic slump due to debtproblems. In Japan, the economy gradually improved due to the depreciation of the yen and theeffects of economic measures, although while the economy was rebounding, it did not reach afull-fledged recovery.
The business environment for metal surface modification faced by our Parker Group is one inwhich, while the yen turned the corner to depreciation, our key customers in the automotive
industry continued to shift production overseas and there were increasingly rigorous demands forhigh quality at a low cost. Also in the steel industry, competition from overseas manufacturers was
fierce and demands for cost reductions grew, creating a harsh business environment.
In the midst of such a tough economic environment, our Parker Group sought to strengthen ouroverseas business in order to steadily capture demand in the expanding overseas markets byactively seeking to gain new customers and provide new technology to match the needs ofcustomers, as well as reinforcing our production equipment particularly in Asia. In addition, as atechnology-driven company, we have been actively focusing on R&D activities aiming to create
innovative technology for the future, as well as strengthening collaboration between Group
members and increasing efficiency of raw materials supply in order to facilitate cost reduction.
As a result, our business achievements for this period were as follows.
Net sales were 46,360 million yen (up 4.4% on the corresponding period for the previous year)
and operating income was 7,215 million yen (up 8.9% ditto). Ordinary income was 8,383 million
yen (up 13.0% ditto) and interim net profit was 4,813 million yen (up 21.5% ditto).
The overview by each business segment is as follows.
(Chemicals Business)
Net sales were 20,269 million yen (up 5.7% on the corresponding period for the previous year) andoperating income was 5,533 million yen (up 11.2% ditto). Domestic net sales revenue continued to fallat the outset however there was a gradual rallying in the latter half of this period. Overseas sales weresteady and combined with the effect of the depreciation of the yen there was an increase in revenue andprofit.
(Equipment Business)
Net sales were 7,624 million yen (up 3.6% on the corresponding period for the previous year) andoperating income was 509 million yen (up 83.6% ditto). Orders for pre-treatment equipment for the
automotive industry overseas were robust and exceeded orders received the previous year. Combinedwith the effects of cost reductions due to strengthening of local procurement, revenue and profit rose.
(Jobbing Business)
Net sales were 16,606 million yen (up 2.4% on the corresponding period for the previous year) andoperating income was 3,066 million yen (down 10.2% ditto). While business was favorable toward thelatter half of the period, domestic customers continued to move production overseas or in-house and thebusiness climate remained tough. Also, overseas results struggled to grow due to increasing1

competition for orders and rising labor costs.
(Other Business)
Net sales were 1,860 million yen (up 13.6% on the corresponding for the previous year) andoperating income was 295 million yen (up 50.3% ditto). The building maintenance business wasrobust and there was a slight increase in profit in the consulting business overseas.
Regarding the interim dividend for this period, a resolution was passed by the Board of Directors
on 5th November to pay a dividend of twelve and a half yen (12.5 yen) per share to be paid on the10th of December, 2013.
Regarding the outlook for the second half of the financial year, we anticipate that domestically themoderate economic recovery will continue due to the continuation of the weaker yen and the effects ofeconomic measures, however the prospects remains uncertain both domestically and overseas and webelieve the economy will continue to fluctuate. It is anticipated that the business environment for metal
surface modification will remain severe.
Against such a tough economic backdrop, the Parker Group, under its motto of “back to thebasics”, will pursue the development of surface modification technologies which cannot be beatenin terms 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 profits.
We look forward to the unerring support of our shareholders.
President & C.O.O.
Kazuichi SATOMI

2Consolidated Balance Sheet
September 30March 312013

2013(JPY Million)
AssetsCurrent assets

82,92477,062

Cash and deposits

35,38631,985

Notes and accounts receivable-trade28,33728,148

Short-term investment securities

3,423

3,419

Inventories

11,628

9,388

Deferred tax assets

1,511

1,529

Other

2,815

2,725

Allowance for doubtful accounts

△126

△134

Fixed assets

77,99969,677

Tangible assets

40,63837,211

Buildings and fixtures, net

13,05812,184

Machinery, equipment and vehicles, net

8,544

7,702

Land

15,334

15,167

Construction in progress

2,623

1,156

Other, net

1,076

999

Intangible assets

2,857

2,469

705

785

Other

2,152

1,684

Investments and other assets

34,50329,996

Investment in securities

22,735

20,114

122

43

Deferred tax assets

1,300

1,373

Other

10,5108,623

Allowance for doubtful accounts

△164

△157

160,974

146,739

Goodwill

Long-term loans receivable

Total assets

3September 30

March 31

2013

2013

Current liabilities

34,52531,450Notes and accounts payable-trade

14,62813,433

Short-term loans payable

1,710

1,697Current portion of long-term loans payable

1,293

1,833

Corporate income taxes payable

2,438

2,659

Provision for bonuses

2,260

2,203

16

255

Other

12,177

9,368

Fixed liabilities

15,562

14,551Long-term loans payable

2,366

2,090

Provision for retirement benefits

10,010

9,864

835

999

Deferred tax liabilities

1,158

372

Other

1,190

1,225

Total liabilities

50,08746,002

Shareholders' equity

86,81682,921

Paid-in capital

4,560

4,560

Capital surplus

3,913

3,913

Retained earnings

81,97678,073

Treasury stock△3,632△3,625

Accumulated other comprehensive profit

5,752

1,765

Valuation difference on available-for-sale securities

6,019

4,531

4

3

Foreign currency translation adjustment△271△2,769Minority interests

18,31816,050Total net assets

110,887

100,737

Total liabilities and net assets

160,974

146,739

Liabilities

Provision for loss on retirement of noncurrent assets

Provision for directors’ retirement benefits

Net assets

Deferred gains or losses on hedges

4Consolidated Statements of income
Six months ended September 302013

2012(JPY Million)

Net sales

46,36044,402

Cost of sales

28,70727,989Gross profit

17,653

16,412

Selling, general and administrative expenses

10,437

9,788

Operating income

7,215

6,624

Non-operating profit

1,322

1,007

Interest income

8570

Dividends income

207

170

Rent income

164

163

Technical support fee

165

117

Foreign exchange gains

217-

Equity in earnings of affiliates

322

298

Other

157

186

Non-operating expenses

154

214

Interest expenses

32

39

Foreign exchange losses

-78

122

96

8,383

7,416

Extraordinary income

540

93

Extraordinary loss

18

138

Income before income taxes and minority interests

8,904

7,371

Income taxes

2,811

2,683

Income before minority interests

6,092

4,688

Minority interests in income

1,279

726

Net profit for the period

4,813

3,962

Other
Ordinary income5