Consolidated Financial Statements for the Year Ended March 31, 2014
<Under Japanese GAAP>May 9, 2014
These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

NAGASE & CO., LTD.
Stock exchange listing: Tokyo (First Section)
Code number:8012
URL (http: //www.nagase.co.jp/english/)Representative:
Hiroshi Nagase, Representative Director and President
Contact:
Akira Takami, General Manager, Corporate Accounting Division
TEL: +81-3-3665-3103
Annual General Meeting of Stockholders (scheduled): June 25, 2014
Start of Distribution of Dividends (scheduled): June 26, 2014
Securities Report Filing (scheduled): June 26, 2014
Supplementary Documents: Yes
Investors’ Meeting: Yes(Note: Amounts have been rounded down to the nearest million yen.)

1. Consolidated Results for the Year Ended March 31, 2014
(April 1, 2013 to March 31, 2014)(1) Consolidated Operating Results(% = year-on-year change)
Net salesFYE March 2014
FYE March 2013

Ordinary income

Net income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

723,212666,272

8.5
5.4

15,78915,5781.4
16.0

17,905
17,927(0.1)
14.3

11,663
14,182(17.8)
65.5(Notes) Comprehensive income

FYE March 2014
FYE March 2013

Operating profit

FYE March 2014:
FYE March 2013:
Earnings per
share
Yen
91.86
111.31(Reference) Equity in earnings of affiliates¥24,035 million (11.7% decrease)¥27,222 million (273.8%)

Earnings per
share (diluted)YenOrdinary income/total assets
%
%
4.9
3.6
6.5
3.8

Return on equity

Operatingincome/net sales
%
2.2
2.3

FYE March 2014: ¥654 million
FYE March 2013: ¥933 million(2) Consolidated Financial Position
Total assets

Net assets

Net worth ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

FYE March 2014
FYE March 2013

498,141
486,747

251,892
237,806

49.5
46.9

1,942.20
1,803.31(Reference) Equity capitalFYE March 2014: ¥246,723 million
FYE March 2013: ¥228,505 million

Cash flows fromfinancing activities

Cash and cash
equivalents, end of theyear(3) Consolidated Cash Flows
Cash flows fromoperating activitiesFYE March 2014
FYE March 2013

Cash flows frominvesting activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

12,721
18,576(14,171)(9,529)(11,833)
1,164

33,82545,816

2. Dividends
Annual Dividends per Share
Fiscal
2Q
3Q
Year
End

1Q

Total dividends

Annualpaid(full fiscal year)

Payout ratio(consolidated)

Dividends/
net assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%





13.00
14.00
15.00





13.00
14.00
15.00

26.00
28.00
30.00

3,294
3,556

23.4
30.5
26.8

1.5
1.5

FYE March 2013
FYE March 2014
FYE March 2015 (estimate)

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2015
(April 1, 2014 to March 31, 2015)(% = year-on-year change)
Net sales
Millions of yen

2Q (cumulative)
Full fiscal year
(Note)


783,000

Operating profit% Millions of yen


8.3


19,000Ordinary income% Millions of yen


20.3


21,500Earnings per
share

Net income% Millions of yen


20.1


14,200

%

Yen


21.8


111.78

As the Company only discloses full-year earnings targets, we have omitted presentation of interim consolidated results
here.

* Notes(1) Changes in major subsidiaries during the period (changes in specified subsidiaries accompanying changes in thescope of consolidation): No
New: ― (Company name:)
Excluded: ― (Company name:)(2) Changes of Accounting Policies or Presentation Methods in the Consolidated Financial Statementsi.
Changes in accordance with revisions to accounting and other standards: No
ii. Changes in items other than (i) above: Yesiii. Changes in accounting estimates: No
iv. Restatement of prior period financial statements after error corrections: No(Note) For details, see page 21, “3. Consolidated Financial Statements (5) Notes related to Consolidated
Financial Statements (Changes in Accounting Policies).”(3) Number of shares issued and outstanding (common stock)i.
Number of shares issued and outstanding as of the fiscal period end (including treasury stock)
March 31, 2014
138,408,285 shares March 31, 2013
138,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
March 31, 2014
11,375,631 shares

March 31, 2013

11,693,809 shares

Average number of shares during the period
March 31, 2014
126,971,429 shares

March 31, 2013

127,406,786 shares* Disclosure of Audit Procedure ProgressThis earnings report is exempt from audit procedures as provided by the Financial Instruments and Exchange Act.
Consolidated financial statements were undergoing the audit process at the time of the release of this report.
* Cautionary Statement with Respect to Forecasts of Consolidated Business Results
The earnings forecasts presented in this document are based upon currently available information and assumptions
deemed rational. A variety of factors could cause actual results to differ materially from forecasts.
Please refer to “1. Business Performance” on pages 2 through 9 of this document for further information.

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

Attachments
1. Business Performance ................................................................................................................. 2(1) Analysis of Business Performance ........................................................................................ 2(2) Analysis of Financial Position ............................................................................................... 6(3) Dividend Policy and Dividends for the Fiscal Years Ended March 2014 andMarch 2015............................................................................................................................ 7(4) Operating and Other Risks .................................................................................................... 7
2. Management Policies ................................................................................................................ 10(1) Basic Management Policy ................................................................................................... 10(2) Management Objectives and Medium-Term Strategies ...................................................... 10(3) Issues to be Addressed by the Company ............................................................................. 11
3. Consolidated Financial Statements ........................................................................................... 13(1) Consolidated Balance Sheets ............................................................................................... 13(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive
Income ................................................................................................................................. 15(3) Consolidated Statement of Change in Shareholders’ Equity ............................................... 17(4) Consolidated Statements of Cash Flows.............................................................................. 19(5) Notes related to Consolidated Financial Statements ............................................................ 21(Assumption for Going Concern) ........................................................................................ 21(Changes in Accounting Policies) ....................................................................................... 21(Segment Information, etc.) ................................................................................................. 21(Per-Share Data) .................................................................................................................. 27(Significant Subsequent Events) .......................................................................................... 27
4. Other ......................................................................................................................................... 28
Financial Highlights (Consolidated) .................................................................................... 28-1-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

1. Business Performance(1) Analysis of Business Performance(Performance for the Fiscal Year Ended March 2014)a. General Summary of Results
Japanese government and central bank economic policies continued to drive the yen lower and stock prices higher
during the consolidated fiscal year under review. At the same time, the economy experienced signs of a moderate
recovery, with improvement in both capital investment and personal consumption. Globally, the economies of theUnited States and Europe also showed signs of gradual improvement. At the same time, China (which showedsigns of economic decline) and the rest of the world’s emerging economies experienced slowing growth.
In this environment, the Company recorded domestic sales of ¥372.93 billion (3.0% year-on-year increase) andoverseas sales of ¥350.27 billion (15.1% increase), resulting in total net sales of ¥723.21 billion, representing an
8.5% increase year on year.
Strong performance in the automobile-related business and office equipment and appliances business and higher
net sales in film used in LCDs led to gross profit of ¥88.93 billion (7.7% year-on-year increase). Operating profit
amounted to ¥15.78 billion (1.4% increase), due in part to an increase in retirement benefit costs related toamortization of actuarial differences in retirement benefit obligations. The Company recorded ordinary income in
the amount of ¥17.9 billion (0.1% year-on-year decrease), reflecting increased foreign exchange gains offset by adecrease in gain on investment in equity method affiliates. Net income amounted to ¥11.66 billion, representing a
17.8% year-on-year decline. This result was mainly due to gain on sale of non-current assets recorded in the priorconsolidated fiscal year.
b. Segment Summary
The following discusses Company earnings by segment.
Beginning with the consolidated first quarter of this fiscal year, the Company has reorganized certain of its
reportable segments. For presentation purposes, the Company has calculated consolidated figures and ratios for theprior consolidated fiscal year according to these reorganized classifications.
Functional Materials
Functional Materials saw overall gains in net sales. Net sales fell in Southeast Asia, while net sales in Japan andNortheast Asia performed well.
The performance chemicals business recorded higher overall net sales compared to the prior fiscal year. While
sales of basic chemicals in Southeast Asia and additives for the Middle East struggled, production recoveries
among Japanese automobile manufacturers in China and strong demand for housing-related services in Japandrove performance growth in urethane materials and coating raw materials revenues.
In our specialty chemicals business, the group recorded lower comparative net sales. Despite solid results related
to special epoxy resin exports, sales of raw materials for fluorochemical materials and electronics materials wereweak.
As a result, net sales for the Functional Materials segment amounted to ¥169.97 billion, which was a ¥2.95 billion(1.8%) increase year on year. Operating profit for the segment came in at ¥4.32 billion, representing a ¥30 million(0.9%) year-on-year decline. This was due to increased gross profit in Japan and Northeast Asia offset bydecreased gross profit of manufacturing subsidiaries.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

Advanced Materials & Processing
Advanced Materials & Processing reported higher overall net sales for the period, driven by higher performance inJapan, Northeast Asia, Southeast Asia, Europe, and the United States.
The colors and imaging business experienced overall year-on-year growth for the year, with strong gains in salesof dyes/additives business and information printing materials.
Our office equipment and appliance business reported higher net sales on the whole. This result stems mainly form
increased plastics sales in Japan, as well as in Northeast Asia and Southeast Asia.
Our business focusing on functional films and sheets and plastic molding products showed lower net sales overall,caused mainly by lower year-on-year performance in anti-reflective materials for LCD TVs and anti-reflective
sheets for game devices, more than offsetting gains in sales of synthetic resins.
As a result, net sales for the Advanced Materials & Processing segment amounted to ¥239.22 billion, which was a¥25 billion (11.7%) increase year on year. Operating profit increased ¥530 million (16.9%), reaching ¥3.7 billion,
mainly due to higher gross profit from revenue gains and better profitability among manufacturing subsidiaries
that operate in the colors and imaging business.
Electronics
The Electronics segment reported higher overall revenues, driven by growth in Japan, Northeast Asia, andSoutheast Asia, which all outperformed lower results in the United States and Europe.
The electronic chemicals business experienced overall sales gains year. While formulated epoxy resin for thesemiconductor industry showed lower net sales, the decrease was more than offset by higher sales in chemicals
used in the manufacture of LCD panels.
Net sales in our electronic materials business were level with the prior fiscal year. Sales in film for LCDs werestrong, while touch-panel materials experienced gains as well. However, these gains were offset by declines in thesales of LED-related materials.
As a result, we recorded total net sales of ¥137.02 billion in this segment, representing a ¥12.01 billion (9.6%)
increase year on year. Operating profit amounted to ¥6.06 billion—a ¥350 million (5.5%) decrease compared tothe prior consolidated fiscal year, mainly due to weak performance in thin-glass processing revenues in Northeast
Asia that offset gross profit gains owing to higher touch panel materials sales.
Automotive & Energy
Automotive &Energy saw overall gains in net sales, with solid gains in automotive-related business revenues inNortheast Asia, the United States, Europe, and Japan, as well as growth in battery-related materials revenues.
Our automobile-related business recorded overall net sales improvements compared to the prior fiscal year. This
result was mainly due to improved revenues from light/small automobiles in Japan, as well as significantly higher
revenues related to resin sales to Japanese car manufacturers in China. The Company also recorded improved salesof products and services to North America.
In our energy business, higher year-on-year performance in solar power related products and products for lithium
ion batteries lifted net sales higher for the business as a whole.
As a result, segment net sales for the fiscal year amounted to ¥99.44 billion, representing a ¥16.37 billion (19.7%)
increase year on year. Operating profit increase ¥610 million (80.9%) compared to the prior fiscal year, reaching¥1.38 billion for the segment.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

Life & Healthcare
The Company’s Life & Healthcare business experienced higher net sales as a whole, driving mainly by sales offunctional saccharides to the food industry in Japan and overseas and revenues from sales of cosmetics and healthfoods in Japan.
Sales of trehalose and other functional saccharides to the food materials industry in Japan and overseas drovestrong performance and higher revenues. Despite a contraction in Japan’s whitening cosmetics market, theCompany recorded year-on-year gains in sales of raw materials to the toiletries market in the skin care andtoiletries business. However, sales of pharmaceutical raw materials, intermediates and reagents in thepharmaceuticals and medical fields were level with the prior year.
Our beauty care products business includes sales of cosmetics and health foods. Sales for this business grew
overall, owing to strong performance of new products in whitening cosmetics and health foods, as well as
increased purchasing demand in advance of Japan’s increase in consumption tax rates.
As a result, segment net sales amounted to ¥76.81 billion for the fiscal year, which was a ¥690 million (0.9%)
increase year on year. Operating profit fell to ¥4.0 billion, ¥90 million (2.3%) lower than the prior fiscal year. Thisdecrease was mainly due to higher general and administrative expenses.
Other
No special matters to disclose.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(Forecast for the Fiscal Year Ending March 2015)(Millions of yen)
Net sales

Operating profit

Ordinary income

Net income

Year ending March 31, 2015

783,000

19,00021,50014,200Year ended March 31, 2014

723,212

15,78917,905

11,663

Change+8.3%+20.3%+20.1%+21.8%

a. Performance Forecast for the Fiscal Year Ending March 2015
We forecast the business conditions will continue to improve gradually over the next fiscal year, despite negative
factors such as the demand in Japan early in the year to make purchased prior to the increase in the consumption
tax which will likely lead to lower purchases of automobiles and fewer housing starts. Meanwhile, stability inNorth America and Southeast Asia contrast with slower growth and financial problems in China. Europe isshowing signs of recovering from its fiscal crisis, but concerns remain as to how conditions in Ukraine will affectthe regional economy.
In light of these conditions, we have set expectations for earnings at ¥783.0 billion in consolidated net sales (8.3%
year-on-year growth), with gross profit at ¥94.7 billion (6.5% increase). At the same time we predict higher net
sales and gross profit, we also expect lower retirement benefit costs associated with amortizing actuarial
differences in retirement benefit obligations. Accordingly, we have set our projections for operating profit as ¥19
billion (20.3% year-on-year gain), with ordinary income projected to be ¥21.5 billion (20.1% increase), and net
income to come in at ¥14.2 billion (21.8% increase).
The figures above have been calculated using a currency conversion rate of ¥103 to the US dollar.
b. Forecast by Business Segment
With stability in North America and other overseas markets, we expect to see continued strong growth in revenues
from our office equipment and appliance business and film used in LCDs. Accordingly, we forecast net sales of¥179.0 billion (5.3% year-on-year increase) in Functional Materials, ¥260.0 billion (8.7% increase) in Advanced
Materials & Processing, ¥157.0 billion (14.6% increase) in Electronics, ¥104.7 billion (5.3% increase) in
Automotive & Energy, and ¥81.6 billion (6.2% increase) in Life & Healthcare.
Next-period forecasts are based on information available at the time they were calculated. Actual future earnings
may differ from forecast due to a variety of factors, including, but not limited to, overseas and domestic businessconditions, foreign exchange rate fluctuations, etc.
(Millions of yen)FYE March 2014
ActualFunctional Materials

FYE March 2015
Forecast

Change169,973

179,000

Advanced Materials & Processing

239,224

260,000+8.7%

Electronics

137,026

157,000+14.6%

Automotive & Energy

99,441

104,700+5.3%

Life & Healthcare

76,81081,600

+6.2%

737

700

(5.0%)

723,212

783,000

+8.3%

Other
Total Sales

-5-

+5.3%

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(2) Analysis of Financial Positiona. Summary of Consolidated Balance Sheets
As of the end of the fiscal period, current assets amounted to ¥306.36 billion. This represents an increase of ¥610
million compared to the end of the prior consolidated fiscal year. This increase was mainly due to a decrease in
cash and time deposits associated with repayments of loans, offset by increases in accounts receivable andinventories. Non-current assets increased ¥10.78 billion compared to the end of the prior fiscal year, reaching¥191.77 billion. This increase was mainly due to gains in investments in securities, due to market priceimprovements. As a result, total assets at the end of the fiscal year amounted to ¥498.14 billion, which was anincrease of ¥11.39 billion compared to the end of the prior fiscal year.
The Company recorded liabilities in the amount of ¥246.24 billion, representing a ¥2.69 billion decrease comparedto the end of the prior fiscal year. This decrease was mainly due to increased accounts payable and loans outpacing
the increase in deferred tax liabilities due to unrealized holding gains on securities.
Net assets amounted to ¥251.89 billion at the end of the consolidated fiscal year, representing an increase of¥14.08 billion compared to the end of the prior year. This increase was mainly due to net income of ¥11.66 billion,
an increase in unrealized holding gain on securities, and improvements in foreign currency translation adjustments.
As a result, the Company experienced a 2.6-point increase in shareholders' equity ratio, up to 49.5% as of the endof the consolidated fiscal year.
b. Summary of Consolidated Cash Flows
Cash and cash equivalents (Cash) decreased by ¥11.99 billion (26.2%) compared to the prior fiscal year,
amounting to ¥33.82 billion. Cash from operating activities amounted to ¥12.72 billion, while cash used ininvesting activities amounted to a net outflow of ¥14.17 billion, and cash used in financing activities amounted to¥11.83 billion. The Company saw additional cash flow of ¥1.17 billion stemming from translation differences andanother ¥110 million in cash from newly consolidated companies.
(Cash Flows from Operating Activities)
Cash flows from operating activities for the consolidated fiscal year amounted to ¥12.72 billion. This increase wasmainly due to net income before income taxes and minority interests of ¥18.35 billion, offsetting ¥6.31 billion inincome tax payments. In addition, the Company recorded ¥8.63 billion in depreciation and amortization, which
has no effect on cash flows.
(Cash Flows from Investing Activities)
Cash used in investing activities during the consolidated fiscal year amounted to ¥14.17 billion. This was mainly
due to payments of ¥11.8 billion for the acquisition of tangible and intangible fixed assets and ¥3.36 billion inpurchases of investment securities, offsetting ¥1.83 billion in cash from the sale of investment securities.
(Cash Flows from Financing Activities)
Cash used in financing activities for the consolidated fiscal year amounted to ¥11.83 billion. This result was
mainly due to cash outlays of ¥10.48 billion in repayments of long-term debt and ¥3.42 billion in cash dividends
paid.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

FYE March
2010

FYE March
2011

FYE March
2012

FYE March
2013

FYE March
2014

Net worth ratio

53.1%

53.7%

45.4%

46.9%

49.5%

Net worth ratio based on market
value

40.8%

33.9%

29.2%

29.9%

32.5%

0.8 years

2.5 years

15.6 years

5.3 years

7.3 years

44.7

19.5

8.9

17.7

11.3

Interest-bearing debt to cash
flow ratio
Interest coverage ratio

Net worth ratio: Equity capital/total assets
Net worth ratio based on market value: Market capitalization/total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt/operating cash flow
Interest coverage ratio: Operating cash flow/interest payments(Note1) Indicators are calculated based on consolidated figures.
(Note2) Market capitalization is calculated using the closing price at the end of the year multiplied by the number ofoutstanding shares at the end of the year (less treasury stock at cost).
(Note3) Operating cash flow is net cash provided by operating activities as shown in the consolidated statements of cash
flows. Interest-bearing debt is all liabilities for which interest is payable as presented in the consolidated balance
sheets. Interest payments are the amount of interest paid as presented in the consolidated statements of cash flows.

(3) Dividend Policy and Dividends for the Fiscal Years Ended March 2014 and March 2015
Our basic policy is to continue paying a stable dividend to our shareholders in line with our consolidated results as
we improve our earnings power and management structure. We look to improve per-share dividends based on
considerations of consolidated payout ratio and consolidated dividend to equity ratio. We also plan to use funds
from internal reserves effectively in our business activities and to build a stronger management foundation.
The Nagase Group declared a year-end dividend of ¥14 per share based on this policy, resulting in a scheduled
full-year cash dividend of ¥28 per share.
We forecast a full-year dividend of ¥30 per share for the next fiscal year, consisting of a ¥15 per share interim
dividend and a ¥15 per share year-end dividend.

(4) Operating and Other Risks
The Nagase Group is engaged in trading, marketing, research and development, manufacturing and processing insix business segments across the world: Functional Materials, Advanced Materials & Processing, Electronics,
Automotive & Energy, Life & Healthcare, and Other. The nature of these businesses entails various risks that may
have a material effect on investment decisions. We provide a discussion of the major risks below.
Any forward-looking statements are based on management decisions as of the end of fiscal year under review.
a. Overall Operating Risk
The Nagase Group is engaged in activities that rely on the use of chemicals across a wide spectrum of products
and services through our Functional Materials, Advanced Materials & Processing, Electronics, Automotive &Energy and Life & Healthcare business. These products and services include dyes/pigments, coating
materials/inks, surfactants, OA, electrical equipment, home electronics, automobiles, LCDs, semiconductors, andpharmaceutical/medical applications. Accordingly, significant changes in domestic and international commercial
chemicals industry could affect the Nagase Group's earnings and financial condition.
b. Product Market Conditions
The Nagase Group relies heavily on petrochemicals manufactured from naphtha in our Functional Materials,
Advanced Materials & Processing, and Automotive & Energy segments. Raw materials markets and-7-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

demand-supply balance are two factors that result in unique market circumstances for each of our products.
Fluctuations in these factors could affect our revenues and profits in related product lines. Some products
manufactured by the Group use raw materials derived from grains. Raw materials costs fluctuate widely due tochanges in grain market prices; we may not be able to pass on increased raw materials costs through higher sales
prices, which could affect our profits in related product lined.
c. Impact of Fluctuations in Foreign Currency Exchange Rates
The Nagase Group conducts import/export as well as non-trade business transactions denominated in foreign
currencies. Fluctuations in currency markets have a significant impact when prices are converted to yen. While theGroup executes exchange contract hedges for these transactions to minimize exchange rate risk to the greatest
extent possible, currency exchange rate fluctuations could have a significant impact on Group earnings andfinancial conditions. The Nagase Group owns foreign-domiciled corporations whose financial statements areprepared using local currencies. The conversion of these currencies to Japanese yen for consolidated reporting
purposes entails currency conversion risk due to fluctuating exchange rates.
d. Impact of Fluctuations in Interest Rates
The Nagase Group obtains funds for operating and financing activities through loans from financial institutions;some of these loans are interest-bearing debt including variable interest terms. The Group reduces interest rate
fluctuation risk related to variable interest loans by utilizing interest-rate swap contracts. Group earnings andfinancial conditions may be affected by future interest rate trends.
e. Risks Involved in Operating Overseas
A significant and increasing percentage of Nagase Group sales and manufacturing are conducted overseas inlocations such as China, Southeast Asia, Europe, and the United States. While Group management keeps a close
eye on local trends and conditions in order to respond appropriately, unforeseen events stemming from local
government regulations, business customs, or other influences could have a significant impact on Group businessperformance and financial conditions.
f. Impact of Changes in Stock Prices
The Nagase Group maintains a portfolio of marketable securities, primarily equity shares of companies doing
business with the Group. These equity investments are subject to share price fluctuation risks. As a matter ofpolicy, the Nagase Group reduces risk by continuously reviewing and reorganizing its shareholdings. However,changes in share prices could impact Group earnings and financial condition. A decline in share prices could
damage the value of pension plan assets managed by the Group, increasing retirement benefit costs and thereby
reducing Group profits.
g. Counterparty Credit Risk
The Nagase Group extends credit to domestic and overseas purchasers in connection with various transactions. Asa matter of policy, the Nagase Group reduces credit risk by obtaining guarantees and collateral according to thefinancial condition of the purchaser. Although the Nagase Group strives to ensure stable, uninterrupted productprocurement, financial weakness or bankruptcies among suppliers or others could damage the Group's ability to
procure goods. Such circumstances could have a significant impact on the Group’s earnings and financial
condition.
h. Risk of Investments
The Nagase Group business is based on brokered transactions. At the same time, the Group continues to look for
new high-value business opportunities. Accordingly, we support the Nagase R&D Center and domestic
manufacturing subsidiaries in their pursuit of new business through proactive investment and strategic mergers andacquisitions, using advanced technologies and information-gathering capabilities as leverage.
As a result of pursuing new business, the Group will be exposed to greater risk than were we to follow a
conventional brokered business model. The book value of business assets and intangible fixed assets (goodwill,-8-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014etc.) when acquiring other companies becomes an important management topic. If future cash flows from new
businesses underperform projections, and the Group records correlating impairment losses, such losses may have asignificant impact on Group earnings and financial condition.
i. Product Quality Risk
The Nagase Group operates the Nagase R&D Center and domestic manufacturing subsidiaries to offer
high-value-added products to our customers. We pay detailed attention to the quality of the technologies andproducts that bear the name of Nagase and our affiliates. We also bear manufacturers' liability for products that we
handle as an importer, and accordingly treat these products with the same attention to detail and quality as if they
were made in our own facilities. However, product defects could result in cessation of sales and/or product recalls,
exposing the Nagase Group to liability for damages, which could have a significant impact on Group earnings andfinancial conditions.
j. Risks related to Product Laws
The Nagase Group imports, exports, and sells domestically a wide variety of chemicals and other products for abroad range of uses. To maintain international peace and safety, the chemicals and other items we export are
subject to different laws, including the Foreign Exchange and Foreign Trade Control Law and the Export Trade
Control Order. Imports and domestic sales are subject to the Chemical Substances Control Law and other related
statutes, as well as similar regulations in foreign jurisdictions. To ensure compliance, the Group has establishedinternal Security Trade Control Regulations and Chemical/Product Control Regulations. However, a violation ofsuch laws and statutes could result in restrictions on Group business activities, having a significant impact onGroup earnings and financial condition.
k. Risks of Natural Disasters
The Nagase Group has put emergency response systems in place, including the creation of a business contingency
plan, the adoption of safety confirmation systems, the creation of a disaster-response manual, earthquake-response
measures, disaster-response training, and other measures to deal with natural disasters. However, as we conductbusiness across a great number of countries and regions, we are exposed to the risk of major natural disasters,
H1N1 influenza and other communicable diseases, and other emergencies that could disrupt our supply chain.
Such disruptions could prevent us from selling our products or damage the manufacturing capabilities of importantGroup facilities. Such interruptions would result in opportunity loss, and could have a significant impact on Groupearnings and financial condition.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

2. Management Policies(1) Basic Management Policy<Management Philosophy>
The Nagase Group is a member of the world society. As such, it is our duty to maintain good and fair businesspractices and, through continued growth and development, provide society with the goods and services needed
while improving the welfare of our employees.
Consistent with this management philosophy, we believe our most important goal is to contribute to society,including efforts to maintain good and fair business practices, while ensuring continued growth and development.
Guided by our Group slogan to be a “technology- and intelligence-oriented company that turns wisdom intobusiness,” we strive to become a unique company that combines the functions of a trading company with that ofmanufacturing, taking advantage of technologies and wisdom, tempered by experience. We will continue to createstronger functions and offer better business solutions as we become our customers' partner of choice in business.

(2) Management Objectives and Medium-Term Strategies
Based on this management philosophy, we created the following objectives and strategies as we work toward our
vision for the future.
• Allow stakeholders to realize their dreams and ideals through our business• Continue to grow and increase value, using our strengths in technology• Anticipate changes in the market structure and environment, growing together with our customers as we offer
unique solutions• Contribute to making a better society and global environment
The Nagase Group believes that we must further accelerate the organizational and operational changes we pursued
to date under our “CHANGE” 11 medium-term business plan. This is the only way that we can reach our vision
for Nagase in a business environment where structural and qualitative changes are happening faster every day.
Based on the recognition, the Company launched our Change-S2014 three-year medium-term business plan in
April 2012 and we have positioned the business plan as to promote Acceleration of Change.
Under Change-S2014, our basic strategic goals are to accelerate the improving quality of our business andoperations (Speed up), to bring e total strength of the Nagase Group to bear throughout the value chain in our
strategic markets (Step up), and to expand our unique solutions globally, creating sustained growth (Sustainablegrowth). Executing on these basic strategies, the Company reorganized four business segments away from productcategories, reflecting the respective positions of each business in the value chain, as well as with the most closelyaligned industries. This realignment has resulted in five segment categories: Functional Materials (located at the
top of the value chain), Advanced materials & Processing (located in the next stage of the value chain),Electronics, Automotive & Energy, and Life & Healthcare (these last three segments functioning across allindustries). The Company is working to accelerate “CHANGE”, guided by a goal to promote globalization andcreate high-value-added businesses. We plan to take maximum advantage of our Group strengths, improving
existing businesses and creating new ones in the Bio, Environment and Energy, and Electronics fields. We will
combine segment functions with our Group-wide foundation of technologies as one means to put ourcomprehensive capabilities to best use.
Another task for the Group is to improve our management foundation in order to respond to the changing external
environment and evolution of the Group's business structure.

- 10 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

We have set performance indicators to achieve in the final year (fiscal year ending in March, 2015) of ourChange-S2014 plan, targeting consolidated net sales of ¥800 billion, consolidated operating profits of ¥30 billion
and a return on equity of 8.0%. However, as of this time, we have determined that accomplishing these targets
may be difficult. Moving forward, we intend to identify issues and revise our action plans in each business.

(3) Issues to be Addressed by the Company
We began executing on our new Change-S2014 three-year plan in April 2012. Under this plan, we have definedGroup-wide initiatives to address issues of creating stronger capabilities in core businesses and a stronger
management foundation, based on the strategies outlined above.
[Stronger Capabilities in Core Businesses]a. Fields Utilizing Bioscience Technologies
Working from the Hayashibara business, we create a quicker feedback loop from the market through the
integration of the Nagase Group research and development and sales functions. Our goal is to create highly
original bio-related products, expanding sales of the same throughout the world, which will lead to stronger
competitive position and higher growth in the medical, food, health and beauty markets within our Life &Healthcare business.
We have also identified potential applications of bio-related technologies for general commercial use and uses inlong-term renewable resources.
The Company experienced strong sales of core Hayashibara products in the food industry, as well as thedevelopment and launch of new products. We have also worked to build a more robust sales structure overseas for
Hayashibara products and to revise our sales agent policies for building a larger customer base. Local entities are
improving their own marketing and sales activities to help accelerate our global growth.
One area of bio-related technologies we are working on relates to the development of bio-derived chemicals that
do not rely on petroleum resources. The Nagase R&D Center has been working together with Kobe University andother labs in a next-generation agri-industrial bio production project. This project was adopted by the Ministry of
Education, Culture, Sports, Science and Technology as a continuing program. At the same time, the Center isdeveloping next-generation chemical production technologies, focusing on improving microbe activity utilizing
metabolic engineering technologies.
b. Fields Utilizing Environment/Energy-Related Technologies
The Nagase Group is creating a new business model anticipating global technological innovations in green energy,
bringing our entire force to bear in businesses focused on friendly manufacturing (using electricity generated fromPV, wind power, and other renewable sources), smart grids, and energy conservation systems, as well as
next-generation automobiles that make smart use of resources.
We are also advancing research into reducing the environmental burden of business, such as chemical recycling
and creating lighter components for automobiles.
While competition in the market for industrial solar power systems has intensified, overall market growth has led
to higher sales for the Company. CAPTEX, which manufactures and sells rechargeable battery systems equippedwith lithium-ion rechargeable batteries, focuses on needs that lead to higher value, customizing products formarket needs and pursuing development working closely with customers.
The rechargeable battery market is becoming more competitive due to new market entrants and price reductions.
In this environment, CAPTEX is accelerating development focused on niche areas.

- 11 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014c. Fields Utilizing Electronics-Related Technologies
The electronics field is one of rapid technological innovation and structural change. Here, our goal is to expand
our business by offering highly innovative technologies, products, and services that meet the needs of ourcustomers.
To accelerate the pace of growth in the global market, we will create more nimble manufacturing and development
capabilities overseas.
During the fiscal year, Nagase ChemteX (Wuxi) Corp. of China began operations at its research and development
facility to expand its ability to develop products that meet the needs of the local market. The company proposes
proprietary solutions to local firms, and then engages in product development. In the smartphone and tablet
business, the company takes products from development to market, keeping an eye on changes in this increasinglycompetitive market.
[Stronger Management Foundation]
Where the Japanese market has slowed compared to the growing markets in emerging countries, the Nagase Grouphas chosen to focus expanding business in emerging and other international markets, establishinghigh-value-added businesses using our manufacturing and processing functions. Through investments in
manufacturing, we have increased Group-wide manufacturing and processing bases in Japan and around the world,changing the fundamental shape of internal risk in the Group's manufacturing businesses.
To respond to these internal and external changes, we are engaged in creating a stronger consolidated management
structure, building more mature risk management policies, and developing higher-caliber human resources.
With respect to stronger consolidated management structure, we continue build a more efficient Groupmanagement structure, encourage personnel interchange within the Group, and improve our IT infrastructure. To
ensure a sound financial foundation, we are working to balance liabilities and equity at prudent levels, while
keeping an eye open for any changes in our credit rating. At the same time, we are improving our ability toforecast present and future operating cash flows to balance investment (risk assets) and operating cash flows
properly. From a perspective of efficient asset utilization, we are replacing older assets with newer, more
profitable assets.
In terms of risk management, we are in the process of putting stronger systems into place for internal controls, risk
management, and transaction risk control (as a manufacturer) across the Group's companies.
We are also in the process of establishing a stronger Group management foundation through hiring, training, andutilizing a talented workforce that can respond to the diverse demands of our businesses.
During the fiscal year, the Company bolstered our consolidated operations structure, following internal Investment
Guidelines to improve the quality of investments and withdraw from unprofitable businesses. Further, we arecontinuing to improve our IT infrastructure both in Japan and overseas.
With respect to ongoing risk management, the Company is implementing activities to strengthen our Group-wide
quality assurance structure and workplace safety management.
In terms of human resources development, Nagase is actively promoting a program of staff sharing among related
firms, affiliates, and local overseas entities, while also improving existing Group-wide staff programs.

- 12 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of yen)
Prior Consolidated
Fiscal Year
(March 31, 2013)ASSETS
Current assets
Cash and time deposits
Notes and accounts receivable
Merchandise and finished goods
Work in process
Raw materials and supplies
Deferred tax assets
Other
Less allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures (net)
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles (net)Land
Others
Accumulated depreciation
Other(net)Total property, plant and equipment
Intangible fixed assets
Goodwill
Technology-based assets
Other
Total intangible fixed assets
Investments and other assets
Investments in securities
Long-term loans receivable
Net defined benefit assets
Deferred tax assets
Other
Less allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets- 13 -

Current Consolidated
Fiscal Year
(March 31, 2014)

46,693
196,001
47,104
1,554
3,204
4,282
7,967
(1,057)305,751

34,980202,996
53,075
1,344
3,039
4,537
7,324
(936)
306,362

50,057(26,156)
23,90057,047(45,688)
11,35819,441
22,676(16,409)
6,266
60,96751,526(27,174)
24,35258,939(47,349)
11,59019,171
25,381(16,581)
8,800
63,91430,72620,093
4,475
55,29529,78018,517
4,731
53,03056,870
837

2,249
5,067
(289)
64,734
180,996486,747

66,275
1,168
113
2,702
4,792
(218)
74,832
191,778
498,141

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(Millions of yen)
Prior Consolidated
Fiscal Year
(March 31, 2013)
LIABILITIESCurrent liabilities
Notes and accounts payable
Short-term loans
Current portion of long-term debt
Accrued income taxes
Deferred tax liabilities
Accrued bonuses for employees
Accrued bonuses for directors
Other
Total current liabilities
Long-term liabilities
Bonds
Long-term debt
Deferred tax liabilities
Accrued retirement benefits for employees
Net defined benefit liability
Other
Total long-term liabilities
Total liabilities
Net Assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Less treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Unrealized holding gain on securities
Deferred (loss) gain on hedges
Translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets- 14 -

Current Consolidated
Fiscal Year
(March 31, 2014)

107,941
25,061
10,408
2,947
21
3,968
219
15,244
165,812

105,014
28,818
6,596
3,720
24
4,045
232
15,195
163,646

30,00032,6149,251
10,283

980
83,129248,941

30,00027,14012,506

11,875
1,080
82,603
246,249

9,699
10,041
199,160(7,109)211,792

9,699
10,242
206,351(6,916)219,377

17,943(6)(1,223)

16,71250
9,250
237,806
486,747

24,725
02,239
380
27,346

5,168
251,892
498,141

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of yen)
Prior Consolidated
Fiscal Year
(April 1, 2012 March 31, 2013)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
Employee salaries
Provision for accrued bonuses for employees
Provision for accrued bonuses for directors
Depreciation and amortization
Retirement benefit expenses
Provision for retirement benefits for directors
Allowance for doubtful accounts
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Rent income
Investment profit on equity method
Foreign exchange gain
Other
Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary gains
Gain on sale of non-current assets
Gain on sale of investment securities
Other receivables
Gain on negative goodwill
Other
Total extraordinary gains
Extraordinary losses
Loss on sale of non-current assets
Loss on disposal of non-current assets
Impairment loss
Loss on sale of investments securities
Loss on valuation of investments securities
Other
Total extraordinary losses
Net income before income taxes
Income taxes
Deferred taxes
Total income taxes
Net income before minority interests
Minority interests
Net income- 15 -

Current Consolidated
Fiscal Year
(April 1, 2013 March 31, 2014)

666,272
583,689
82,583

723,212634,276
88,936

10,013
19,637
2,530
225
3,971
1,992
51
(36)
1,612
27,00567,004
15,578

10,71921,335
2,373
202
4,230
2,938
50
(106)
1,685
29,716
73,146
15,789

203
1,212
292
933
548
630
3,822

188
1,115
277
654
786
668
3,691

1,099
373
1,472
17,927

1,082
493
1,576
17,905

3,358
801


305
4,464

519
867
118
528
11
2,045

98
196
1,896
0
45
695
2,934
19,4586,417(2,004)
4,413
15,044862
14,182

45
154
1,314
27
3
51
1,596
18,353
7,128
(906)
6,222
12,131
468
11,663

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(Consolidated Statement of Comprehensive Income)(Millions of yen)
Prior Consolidated
Fiscal Year
(April 1, 2012 March 31, 2013)
Net income before minority interests
Other comprehensive income
Unrealized holding gain on securities
Deferred (loss) gain on hedges
Translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income, parent company
Comprehensive income, minority interests- 16 -

Current Consolidated
Fiscal Year
(April 1, 2013 March 31, 2014)

15,044

12,131

5,212
15
6,181


6,780
6
3,549
1,368

768

198

12,17827,222

11,90324,03525,674
1,548

23,163871

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(3) Consolidated Statement of Change in Shareholders’ Equity
Prior Consolidated Fiscal Year (April 1, 2012 - March 31, 2013)(Millions of yen)
Shareholders’ equity
Common stock

Capital surplus

Retained earnings

9,699

10,041

186,907

Balance, beginning of period
Cumulative effects of changes inaccounting policies

Less treasury
stock, at cost

Total shareholders’equity(5,460)201,188Restated balance

9,699

10,041

186,907(5,460)201,188

ChangesCash dividends(3,189)(3,189)Net income

14,182

14,182

Purchases of treasury stock(1,649)

Disposal of treasury stock0(1,649)00Changes in scope of consolidation

(66)

(66)

Changes in scope of equity affiliates

717

717

Changes accompanying changes infiscal years of consolidated subsidiaries

609

609

Changes other than shareholders’ equity
accounts (net)Total changes
Balance, end of period012,253(1,649)10,604

9,699

10,041

199,160(7,109)211,792

Accumulated other comprehensive income (loss)

Balance, beginning of period

Unrealized
holding gain
on securities

Deferred (loss)
gain on hedges

Translation
adjustments

12,731(21)(9,191)

Cumulative effects of changes inaccounting policies
Restated balance

12,731(21)(9,191)

Total
Remeasurements accumulatedof defined benefit
other
plans
comprehensive
income



3,518







3,518

Stock
acquisitionrightsMinority
interests

Total net
assets110

7,927

212,744





7,927

212,744

110

ChangesCash dividends(3,189)Net income

14,182

Purchases of treasury stock(1,649)

Disposal of treasury stock0

Changes in scope of consolidation(66)

Changes in scope of equity affiliates

717

Changes accompanying changes infiscal years of consolidated subsidiaries

609

Changes other than shareholders’ equity
accounts (net)

5,211

15

7,967



13,194

(60)

1,322

14,457

Total changes

5,211

15

7,967



13,194

(60)

1,322

25,061

Balance, end of period

17,943(6)(1,223)



16,71250

9,250

237,806- 17 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

Current Consolidated Fiscal Year (April 1, 2013 - March 31, 2014)(Millions of yen)
Shareholders’ equity
Common stock

Capital surplus

Retained earnings

9,699

10,041

199,160

Balance, beginning of period
Cumulative effects of changes inaccounting policies

Less treasury
stock, at cost

Total shareholders’equity(7,109)211,792(671)

Restated balance

9,699

10,041(671)

198,489(7,109)211,120

ChangesCash dividends(3,425)

Net income

11,663(3,425)
11,663Purchases of treasury stock
Disposal of treasury stock

201

(1)

(1)

194

395

Changes in scope of consolidation

(220)

(220)

Changes in scope of equity affiliates

(154)

(154)

Changes accompanying changes infiscal years of consolidated subsidiaries



Changes other than shareholders’ equity
accounts (net)Total changes
Balance, end of period



201

7,862

192

8,256

9,699

10,242

206,351(6,916)219,377

Accumulated other comprehensive income (loss)

Balance, beginning of period

Unrealized
holding gain
on securities

Deferred (loss)
gain on hedges

Translation
adjustments

17,943(6)(1,223)Cumulative effects of changes inaccounting policies
Restated balance

17,943(6)(1,223)Total
Remeasurements accumulatedof defined benefit
other
plans
comprehensive
income

16,712

(982)

(982)

(982)

15,730StockacquisitionrightsMinority
interests

Total net
assets50

9,250

237,806(5)(1,659)9,244

236,146

50

ChangesCash dividends(3,425)

Net income

11,663Purchases of treasury stock(1)

Disposal of treasury stock

395

Changes in scope of consolidation(220)

Changes in scope of equity affiliates(154)

Changes accompanying changes infiscal years of consolidated subsidiaries



Changes other than shareholders’ equity
accounts (net)

6,782

6

3,463

1,362

11,615(50)(4,075)

7,488

Total changes

6,782

6

3,463

1,362

11,615(50)(4,075)

15,745

Balance, end of period

24,725

0

2,239

380

27,346



5,168

251,892- 18 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(4) Consolidated Statements of Cash Flows(Millions of yen)
Prior Consolidated
Fiscal Year
(April 1, 2012 March 31, 2013)
Cash flows from operating activities
Net income before income taxes
Depreciation and amortization
Amortization of goodwill
Impairment loss
Provision for accrued retirement benefits for employees
Increase (decrease) in net defined benefit liability
Interest income and dividend income
Interest expenses
Foreign exchange gain (loss)
Loss (gain) on sale of non-current assets
Loss (gain) on sale of investments securities(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payableOther
Sub totalInterest and dividends received
Interest paid
Taxes paid
Cash flows from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Cash from sale of property, plant and equipment
Payment for acquisition of intangible fixed assets
Purchases of investments securities
Cash from sale of investments in securities
Cash used for purchase of investments
Change in short-term loans (increase)
Other
Cash flows from investing activities- 19 -

Current Consolidated
Fiscal Year
(April 1, 2013 March 31, 2014)

19,458
7,445
1,612
1,896
205

(1,416)
1,099(1,032)(3,259)(800)
10,357(1,490)(8,771)(1,015)24,2891,724(1,050)(6,387)
18,576

18,353
8,634
1,685
1,314

1,128
(1,304)
1,082
296
(473)
(840)
(1,983)(3,274)(6,488)281
18,412
1,750(1,122)(6,319)12,721(10,551)
3,235(1,709)
(214)
1,200
(646)
(380)
(464)
(9,529)(10,131)812(1,669)(3,360)1,832(1,143)(542)
31(14,171)NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(Millions of yen)
Prior Consolidated
Fiscal Year
(April 1, 2012 March 31, 2013)
Cash flows from financing activities
Increase (decrease) in short-term loans, net
Proceeds from long-term loans
Repayment of long-term debt
Proceeds from issuance of bondPurchase of treasury stock
Cash dividends paid
Cash dividends paid to minority shareholders
Other
Cash flows from financing activities
Effects of exchange rate changes on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents accompanying
consolidation
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Increase (decrease) in cash and cash equivalents
accompanying changes in fiscal years of consolidated
subsidiaries
Cash and cash equivalents, at end of the period- 20 -

Current Consolidated
Fiscal Year
(April 1, 2013 March 31, 2014)(16,273)
4,665(11,564)
29,855(1,649)(3,189)
(540)
(139)
1,164

1,337
999
(10,484)
(1)(3,425)(545)
286(11,833)

2,451

1,179

12,66228,517(12,103)45,816

915

113



(1)

3,721



45,81633,825

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(5) Notes related to Consolidated Financial Statements(Assumption for Going Concern)
No matters to report.
(Changes in Accounting Policies)
Effective consolidated fiscal years beginning April 1, 2013 and after, companies are allowed to apply AccountingStandard for Retirement Benefits (Accounting Standards Board of Japan Statement No. 26, issued May 17,2012) and Implementation Guidance on Accounting Standard for Retirement Benefits (Accounting Standards Boardof Japan Statement No. 25, issued May 17, 2012). Accordingly, the Company has adopted these accounting
standards effective the first day of consolidated fiscal year under review. In doing so, the Company now deducts
pension assets from retirement benefit obligations, recording the amount as liabilities for retirement benefits.
Unrecognized actuarial differences and unrecognized prior service costs are likewise recorded as liabilities for
retirement benefits. Further, the Company has revised its calculation method for retirement benefit obligations andservice costs, changing the method of period attribution of the expected retirement benefit amount from astraight-line basis to a benefit formula basis. Further, the Company has changed the calculation method for the
discount rate.
In accordance with Paragraph 37 of the Accounting Standard for Retirement Benefits, the Company has recorded
effect of the amount of plan assets deducted from retirement benefit obligations and recorded to liabilities for
retirement benefits as an increase or decrease to cumulative adjustment for retirement benefits within accumulated
other comprehensive income (loss). Further, the effect of the change in calculation method of retirement benefit
obligations and service costs is added or subtracted from retained earnings as of the start of the consolidated fiscal
year under review.
As a result, the Company recorded ¥2,562 million in net defined benefit liability as of the beginning of theconsolidated fiscal year under review, as well as ¥982 million in accumulated other comprehensive income (loss)
and a decrease of ¥671 million in retained earnings.
Retirement benefit costs (service costs, interest costs) for the consolidated fiscal year under review are lower whencompared to the former method of calculation. However, the effect of this difference on operating profit, ordinary
income and net income before income taxes is minimal.
(Segment Information, etc.)
a. Segment Information
1. Reportable Segments
The Company’s reportable segments are those units comprising the Nagase Group for which separate
financial information is available and for which the board of directors make regular decisions regarding
resource allocation and operating performance.
The Company classifies reportable segments according to the location of the business in the value chain andthe market(s) targeted. Accordingly, the company has defined five segment categories: Functional Materials(located at the top of the value chain), Advanced Materials & Processing (located in the next stage of thevalue chain), Electronics, Automotive & Energy, and Life & Healthcare (these last three segmentsfunctioning across all industries).
Beginning with the consolidated fiscal year under review, the Company has moved its abrasives business forsemiconductor and HDD industries from the Functional Materials segment to the Electronics segment inorder to develop new markets and expand applications in a segment aligned more closely with the end user.
Similarly, the company has moved its raw materials business for the cosmetics industries from the Functional
Materials segment to the Life & Healthcare segment. This move was made to capitalize on synergies withproducts created by Hayashibara Co., Ltd.

- 21 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

Segment information for the prior consolidated fiscal year reflects these segment changes.
The following describes the major products and services handled by each reportable segment.
The Functional Materials segment is engaged in the sales of materials for paints/inks, urethane materials,
plastic materials, plastic additives, industrial oil solutions, surfactants, fluorochemicals, encapsulantmaterials, and silicone materials and more for the paints/inks, resins, urethane foam, organic synthesis,
surfactants, semiconductor industries.
The Advanced Materials & Processing segment is engaged in the sales of dyestuffs, dyes, functional dyes,
information printing products, thermoplastic resins, thermosetting resins, synthetic rubber, inorganic
materials, plastics products, resins molding tools/dies, external inspection equipment for the dye/additive,
information printing, fiber processing, raw resin material, resin molding, functional film and sheet and otherindustries.
The Electronics segment is engaged in the sales of pre-processing materials and devices for
LCD/semiconductors, materials for LCD panels, materials and devices for semiconductor assembly,
low-temperatures/vacuum equipment, high-function epoxy resins, precision electronics abrasives, and more
for the display, touch panel, LCD, semiconductor, HDD, electronic components, heavy electrical, and otherindustries.
The Automotive & Energy segment is engaged in sales of plastic products, thermoplastic resins,thermosetting resins, resins molding tools/dies, battery materials, solar cell/secondary battery-relatedmaterials and more for the automotive, automotive component, and energy industries.
The Life & Healthcare segment is engaged in the sales of pharmaceutical/agricultural chemicals andmaterials, research products, in vitro diagnostics, enzymes, food additives, additives for cosmetics,
feeds/fertilizers for the pharmaceutical, food, and cosmetics industries. In addition, this segment sells
cosmetics, health foods, and beauty foods directly to consumers.
2. Net Sales, Profit (Loss), Assets, Liabilities, and Other by Segment
Accounting treatment in each reportable segment follows the principles and procedures of the accounting
treatments used to prepare the Company’s consolidated financial statements.
Profit in reportable segments is defined as operating profit. Inter-segment profits and transfers are based on
actual market prices.

- 22 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

3. Information related to Net Sales, Profit (Loss), Assets, Liabilities, and Other by Segment
Prior Consolidated Fiscal Year (April 1, 2012 to March 31, 2013)(Millions of yen)
Reportable Segments
Advanced
Functional
Automotive Life &Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1

Total

Corporate(Note) 2

To
Consolidated
Adjustments
Financial(Note) 3
Statements(Note) 4

Net Sales
Sales toCustomers

167,017214,214125,01483,06876,116

665,431

Intersegment
Sales/Transfers

2,373

1,133

724

1,384

830

6,445

Total





666,272

11,968(11,968)

6,364 678,241



(11,968)

666,272

19,083(3,672)

167

15,5786,489 390,558

127,891(31,702)486,747841 666,272
5,523

169,390

215,347

125,738

84,45376,947

671,877

Segment Profit(Loss)

4,368

3,171

6,421

763

4,093

18,818Segment Assets

76,779108,71365,45337,387

95,735384,069

Depreciation andamortization

418

553

1,508

250

2,025

4,756

202

4,959

2,486



7,445

Amortization of
Goodwill





96



1,516

1,612



1,612





1,612

Goodwill





2,046



28,67930,726



30,726



30,726

Investments in
Equity Affiliates

1,781

1,545

56

1,613

1,856

6,854

1,793

8,648





8,648

Increase in
Property, Plant,
and Equipment
and Intangible
Fixed Assets

612

863

2,788

92

3,028

7,385

436

7,821

3,870



11,691265

Other(Notes)1. Other is a business segment consisting of businesses not included in reportable segments, and includes distribution services, information
processing services, and professional services.
2. Corporate segment income represents expenses not allocated to reportable segments or Other. Segment assets under Corporate are assets notallocable to reportable segments or Other.
3. Adjustments are eliminations of intersegment translations.
4. The sum of segment profit (loss) totals, Corporate and Adjustments is equivalent to operating profit as presented in the consolidated statements
of income.

- 23 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

Current Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)(Millions of yen)
Reportable Segments
Functional
Materials

Advanced
Materials & Electronics
ProcessingTo

Automotive

Life && Energy

Healthcare

Other
Total

(Note) 1

Total

Corporate

Adjustments(Note) 2(Note) 3

Consolidated
Financial
Statements(Note) 4

Net Sales
Sales toCustomers

723,212

13,932



(13,932)

6,510 737,144



(13,932)

723,212

19,701(4,364)452

15,7897,124 408,640

124,035(34,533)

498,141

6,827

1,806



8,634

－

1,685





1,685

169,973

239,224

137,026

99,441

76,810722,475

737 723,212

Intersegment
Sales/Transfers

2,966

2,212

674

1,886

418

8,158

Total

172,939

241,436

137,700

101,328

77,228730,633

Segment Profit(Loss)

4,328

3,707

6,067

1,381

4,000

19,485

Segment Assets

75,491

119,20269,82440,792

96,205

401,516

Depreciation andamortization

407

647

2,323

262

2,993

6,634

193

Amortization of
Goodwill





169



1,516

1,685

Goodwill

5,773

215

Other





2,617



27,16329,780－29,78029,780Investments in
Equity Affiliates

1,850

2,245

75

1,777

2,070

8,018

1,838

9,856



(54)

9,801

Increase in
Property, Plant,
and Equipment
and Intangible
Fixed Assets

399

862

2,015

369

4,488

8,134

49

8,184

2,929



11,113(Notes)1. Other is a business segment consisting of businesses not included in reportable segments, and includes distribution services, information
processing services, and professional services.
2. Corporate segment income represents expenses not allocated to reportable segments or Other. Segment assets under Corporate are assets notallocable to reportable segments or Other.
3. Adjustments are eliminations of intersegment translations.
4. The sum of segment profit (loss) totals, Corporate and Adjustments is equivalent to operating profit as presented in the consolidated statements
of income.

- 24 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

b. Other Information
Prior Consolidated Fiscal Year (April 1, 2012 to March 31, 2013)
1. Products and Services
Omitted, since the same information has been disclosed under Segment Information.
2. Geographic Information(1) Net sales(Millions of yen)
Japan

China
361,971(Note)

Other
133,076

Total
171,224

666,272

Net sales are categorized by country or region, according to the location of the customer.

(2) Property, plant and equipment(Millions of yen)
Japan

Other
54,619

Total
6,347

60,9673. Major Customers
Information not presented here, since no single customer accounts for 10% or more of consolidated net sales.
Current Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)
1. Products and Services
Omitted, since the same information has been disclosed under Segment Information.
2. Geographic Information(1) Net Sales(Millions of yen)
Japan

China
372,939(Note)

Other
152,373

Total
197,899

723,212Net sales are categorized by country or region, according to the location of the customer.

(2) Property, plant and equipment(Millions of yen)
Japan

Other
56,862

Total
7,051

63,914

3. Major Customers
Information not presented here, since no single customer accounts for 10% or more of consolidated net sales.

- 25 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

c. Impairment Losses of Non-current Assets for each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2012 to March 31, 2013)(Millions of yen)
Reportable Segments
Functional
Materials
Impairment(Notes)Materials &Electronics

Processing
loss

Advanced

1,359

Automotive

Life && Energy

Healthcare


326

211

Total

Corporate/

Other

Elimination



1,896



Total

1,896

Advanced Materials & Processing reflects the write-down to recoverable book value for manufacturing assets associated with thedecreasing profitability of plastics resin & material processing businesses and withdrawal from the business of manufacturing resin plastic
tray products for transport use in China.
Electronics reflects the write-down to recoverable book value of commercial assets associated with the withdrawal from the business forsemiconductor wafer plating and the withdrawal from the business for optical film processing for LCD displays in China.
Life & Healthcare reflects the write-down to recoverable book value of commercial assets associated with the increasingly unprofitable
pharmaceutical intermediates manufacturing business. This number also reflects the write-down to recoverable book value for idle assets
with significantly reduced market value.

Current Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)(Millions of yen)
Reportable Segments
Functional
Materials
Impairment
loss(Notes)Advanced
Materials &Electronics

Processing




221

Automotive

Life && Energy

Healthcare

1,080



Total

1,301

Corporate/

Other

Elimination



12

Total

1,314

Due to a significant decline in market value, the Company has written down the book value of certain shared assets related to computer
software duplication business under Electronics, reflecting amounts estimated to be recoverable.
Due to decreasing profitability related to rechargeable battery system manufacturing and sales and the suspension of development activities
in car electronics under Automotive & Energy, the Company has written down the book value of the related business assets, reflecting theamounts estimated to be recoverable.

- 26 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

(Per-Share Data)
Prior Consolidated Fiscal Year
(April 1, 2012 to March 31, 2013)

Current Consolidated Fiscal Year
(April 1, 2013 to March 31, 2014)

Net Assets per Share¥1,803.31 Net Assets per Share¥1,942.20

Earnings per Share¥111.31 Earnings per Share¥91.86(Notes)
1. Diluted earnings per share not presented, as the Company does not issue any stock with dilutive effects.
2. Basic earnings per share calculations are as show below.
Prior Consolidated
Fiscal Year
(April 1, 2012
to March 31, 2013)

Item

Current Consolidated
Fiscal Year
(April 1, 2013
to March 31, 2014)

Net Income from consolidated statements of income (millionsof yen)14,182

11,663

Net income related to common stock (millions of yen)

14,182

11,663

127,406,786

126,971,429

Average number of outstanding shares of common stock(shares)

Dilutive stock not included in calculation of diluted earnings per
share (no dilutive effects)

409,000 shares subject tostock options as approved at
the annual shareholders'meeting held June 26, 2008.

(Significant Subsequent Events)
No matters to report.

- 27 -

409,000 shares subject tostock options as approved at
the annual shareholders'meeting held June 26, 2008.
The exercise period for thestock options noted above
expired on July 31, 2013.
Accordingly, these stock
options have expired.

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014

4 OtherYear ended March 31, 2014 Financial Highlights (Consolidated)(Millions of yen)

[Sales in overseas markets]
Item

Current Consolidated Fiscal Year
Overseas Sales/
Consolidated
Sales (%)

AmountOverseas Sales

Prior Consolidated Fiscal Year

(Notes)Overseas Sales/
Consolidated
Sales (%)

Amount1. Sales in overseas markets consist of net sales of theCompany and consolidated subsidiaries in othercountries or regions.

Change350,27248.4

304.301

45.7

45,971

Northeast Asia

196,11827.1

175,965

26.4

20,153

Southeast Asia

108,41415.0

85,881

12.9

22,533

North America

26,344

3.6

25,4233.8

921Europe & Other

19,394

2.7

17,031

2.6

2,363

2. Major countries in each region(1) Northeast Asia ············ Taiwan, China(2) Southeast Asia ············ Singapore, Thailand(3) North America ············ USA(4) Europe & Others ·········· Germany(Millions of yen)

[Income (Loss)]
Item
Net sales

Current
Consolidated
Fiscal Year

Prior
Consolidated
Fiscal Year

ChangeChange (%)

723,212666,272

56,939Overview+8.5%
Functional Materials

169,973

167,017[Net sales]
Functional Materials:

Sales declined in Southeast Asia; however Japan and Northeast Asia
experienced gains. The performance chemicals business grew, while thespecialty chemicals business recorded a decline in sales.

Advanced Materials & Processing:

Sales gains in every region (Japan, Northeast/Southeast Asia, USA, andEurope). Colors and imaging business and office equipment andappliances business experienced revenue growth, while functional film
and sheets and resin molding performed below prior-year levels.

Electronics:

Lower revenues in Europe, USA. Japan, Northeast/Southeast Asia
showed gains. Sales increased in the electronic chemicals business whileelectronics materials business level with prior year.

Automotive & Energy:

Automotive-related materials reported gains in Northeast Asia, Europe,
USA, and Japan. Energy-related business also showed gains.

Life & Healthcare:

Food materials reported growth in Japan and world-wide. Skin carerevenues fell in Japan, but toiletries showed growth. Beauty careproducts revenues increased.

2,955

Advanced Materials & Processing

239,224

214,21425,009

Electronics

137,026

125,014

12,011

Automotive & Energy

99,441

83,06816,373

Life & Healthcare

76,81076,116

693

Other

737

841

(104)

Gross profit

88,936

82,583

6,353(Profit Ratio)(12.3%)(12.4%)+7.7%

Selling, general and administrative
expenses

73,14667,004

6,141

Selling expense

10,71910,013705

Payroll

31,73328,7203,013

Depreciation and amortization

4,230

3,971

258

Amortization of goodwill

1,685

1,612

72

Other

24,777

22,686

2,091

Operating profit

15,78915,578

211

Financial Profit

249

316

(67)

Interest income

108

203

(95)

Dividend income

1,115

1,212

(96)

[Operating profit]

Interest expenses

975

1,099

(124)

Other non-operating profit (Loss)

1,866

2,032

(166)

Higher profits in Advanced Materials & Processing, and Automotive & Energy segments. Lower profits inFunctional Materials, Electronics, and Life & Healthcare segments.

Ordinary income

17,905

17,927(22)[Extraordinary gains]+1.4%(0.1%)
Extraordinary gains

2,045

4,464

(2,419)Extraordinary losses

1,596

2,934

(1,337)

Total income taxes

6,222

4,413

1,808

Minority interests

468

862

(394)

11,663

14,182(2,519)Net income[Gross profit]
Higher gross profits across all segments.
[Selling, general and administrative expenses]• Payroll (+3,013) :Mainly due to increase in employee bonuses and retirement benefit costs• Other (+2,091) :Increase in research costs (+480), commissioned services (+421)

867 in gains on sale of investment securities, 528 in gains on negative goodwill, and 519 in gains on sale ofnon-current assets[Extraordinary losses]
Impairment loss 1,314, Loss on disposal of non-current assets 154(17.8%)(Millions of yen)

[Assets, Liabilities]
Current
Consolidated
Fiscal Year

Prior
Consolidated
Fiscal Year

Current assets

306,362

305,751611

Non-current assets

191,778

180,996

10,781

116,945

116,262683

Item

PP&E/intangible Fixed Assets
Investments and other assets

ChangeOverview[Current assets]
Increase in notes and accounts receivable (+6,995), inventories (+5,596); decrease in cash and time
deposits (-11,713)

74,83264,734

10,098

Total assets

498,141

486,747

11,393Current liabilities

163,646

165,812(2,166)

Short-term loans

28,81825,061

3,756[Liabilities]

Current portion of long-term debt

6,596

10,408(3,812)• Decrease due to loan repayments (-5,529)

128,231130,342(2,110)82,603

83,129(525)• Increase in long-term deferred tax liabilities (+3,255): mainly due to increase in unrealized holding gains on
securities

Other
Long-term liabilities
Bonds

30,00030,000Long-term debt

27,14032,614(5,473)

Other
Total liabilities
Interest-bearing debt

25,462

20,515

4,947

246,249

248,941(2,692)(5,597)[Non-current assets]
Increase in investments in securities (+9,404): mainly valuation gains on marketable securities

92,82898,425

Shareholders’ equity

219,377

211,792

7,584[Net assets]

Accumulated other comprehensive
income (loss)

27,346

16,712

10,633• Shareholders' equity: Increase in retained earnings due to net income (+11,663); dividend payments(-3,425)



50

(50)

Minority interests

5,168

9,250

(4,081)

Total net assets

251,892

237,806

14,085

49.5%

46.9%

Stock acquisition rights

Net worth ratio(Note) Figures inside parentheses of explanatory text indicate comparative change- 28 -• Accumulated other comprehensive income (loss):

Increase in valuation differences in available-for-salesecurities (+6,782)
Increased due to foreign currency translation
adjustments (+3,463)

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2014
Earnings Performance and Fiscal 2015 Earnings Forecast(Millions of yen)FYE March 2011
Net SalesFYE March 2012

FYE March 2013

FYE March 2015
(forecast)FYE March 2014

660,213631,854666,272

723,212

783,000

Functional Materials



177,126

167,017

169,973

179,000

Advanced Materials & Processing

217,929

214,214239,224

260,000

Electronics

110,495

125,014137,026

157,000

Automotive & Energy76,11383,06899,441

104,700

Life & Healthcare49,17076,11676,81081,600

Other



1,018

841

737

700

Gross profit

73,00871,62882,58388,936

94,700

Ratio(11.1%)(11.3%)(12.4%)(12.3%)(12.1%)

Operating profit

18,732

13,427

15,57815,78919,000Ratio(2.8%)(2.1%)(2.3%)(2.2%)(2.4%)

Ordinary income

20,625

15,69017,927

17,90521,500Ratio(3.1%)(2.5%)(2.7%)(2.5%)(2.7%)

12,8238,570

14,182

11,663

14,200(1.9%)(1.4%)(2.1%)(1.6%)(1.8%)

Total assets

375,336

450,842486,747

498,141

Equity capital

201,516

204,706

228,505

246,723

Net worth ratio

53.7%

45.4%

46.9%

49.5%

ROE (Equity capital/profit ratio)

6.5%

4.2%

6.5%

4.9%

ROA (Total assets/profit ratio)

3.4%

2.1%

3.0%

2.4%

Earnings per share (yen)

99.76

66.69

111.31

91.86









Net income
Ratio

Debt to cash flow ratio (x)Consolidated companies

Year-on-Year
Change108.3%

106.5%
120.3%
120.1%
121.8%

111.78

60

66

82

85

86

Consolidated subsidiaries

51

55

61

60

61

Equity method affiliates

9

11

21

25

25

121.7%

Note 1: ROE = net income / {(equity capital, beginning of period + equity capital, end of period) / 2}
ROA = net income / {(total assets, beginning of period + total assets, end of period) / 2}
Note 2: Debt to Cash Flow Ratio = (Interest-bearing debt - cash and deposits) / equity capital

Consolidated Companies(Units: Companies)[Ratio of Profitable to Unprofitable Companies]
Category

Current Consolidated Fiscal Year
Profitable Co’s

Unprofitable Co’s

Prior Consolidated Fiscal Year
Total

Profitable Co’s

Unprofitable Co’s

Total

Consolidated

Japan

21

5

26

23

5

28

Subsidiaries

Overseas

29

5

34

24

9

33

Equity Method

Japan

7

3

10

7

2

9

Affiliates

Overseas

10

5

15

9

3

12

79%

21%

100%

77%

23%

100%

Composition Ratio (%)

 Major Profitable Companies Category

Company Name

Domestic Consolidated
Subsidiaries

Main Business Lines

Hayashibara Co., Ltd.

Development, manufacture, and sales of food raw materials, pharmaceutical raw
materials, health food raw materials, and functional dyes

Nagase ChemteX Corp.

Research, manufacture, and sale of enzymes, fermented products, pharmaceuticalintermediates, disinfecting agents, functional polymers, epichlorohydrine
derivatives, electronics materials, etc.

Overseas Consolidated
Subsidiaries

Nagase (Thailand) Co., Ltd.

Import/export, domestic sales, marketing

Nagase (Hong Kong) Ltd.

Import/export, domestic sales, marketing

Equity Method Affiliates

Nagase Landauer, Ltd.

Radiation measuring services

 Major Unprofitable Companies Category

Company Name

Main Business Lines

Domestic Consolidated
Subsidiaries

Setsunan Kasei Co., Ltd.

Coloring and sale of plastics

CAPTEX Co., Ltd.

Manufacture and development of battery power source controllers, battery powersources and power source peripheral equipment

Overseas Consolidated
Subsidiaries

Nagase Electronics Technology (Xiamen) Co., Ltd.

Chemical etching of liquid crystal glass panel units

Sofix Corp.

Manufacture and sales of color formers

Equity Method Affiliates

KN Platech America Corporation

Manufacture and sales of blow-molded plastic components, products(Unit: People)[Employees, Consolidated]
Current Consolidated Fiscal Year
Consolidated
Subsidiaries

Parent978

4,982

Equity Affiliates
3,034

ChangeTotal

Consolidated
Subsidiaries

Parent8,994

6- 29 -

Equity Affiliates
57

(155)

Total
(92)