Consolidated Financial Statements for the Year Ended March 31, 2015
<Under Japanese GAAP>May 8, 2015
These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

Stock exchange listing: Tokyo (First Section)
NAGASE & CO., LTD.
Code number:8012
URL (http: //www.nagase.co.jp/english/)Representative:
Kenji Asakura, Representative Director and President
Contact:
Akira Takami, General Manager, Accounting Division
TEL: +81-3-3665-3103
Annual general meeting of stockholders (scheduled): June 24, 2015
Start of distribution of dividends (scheduled): June 25, 2015
Securities report filing (scheduled): June 25, 2015
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, 2015
(April 1, 2014 to March 31, 2015)(1) Consolidated Operating Results(% = year-on-year change)
Net salesFYE March 2015
FYE March 2014

Ordinary income

Net income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

759,713723,2125.0
8.5

18,153
15,78915.0
1.4

20,366
17,90513.7(0.1)

11,318
11,663(3.0)(17.8)(Notes) Comprehensive income

FYE March 2015
FYE March 2014

Operating profit

FYE March 2015: ¥40,453million (68.3%)
FYE March 2014: ¥24,035 million (11.7% decrease)
Earnings per
share
Yen
89.10
91.86

(Reference) Equity in earnings of affiliates

Earnings per
Ordinary income/Return on equity
share (diluted)
total assets
Yen
%
%
4.3
3.9
−
4.9
3.6
−
FYE March 2015: ¥616 million
FYE March 2014: ¥654 million

Operatingincome/net sales
%
2.4
2.2

(2) Consolidated Financial Position
Total assets

Net assets

Net worth ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

FYE March 2015
FYE March 2014

546,525
498,141

287,500
251,89251.5
49.5

2,215.18
1,942.20(Reference) Equity capitalFYE March 2015: ¥281,398 million
FYE March 2014: ¥246,723 million

Cash flows fromfinancing activities

Cash and cash
equivalents, end of theyear(3) Consolidated Cash Flows
Cash flows fromoperating activitiesFYE March 2015
FYE March 2014

Cash flows frominvesting activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

15,474
12,721(7,732)(14,171)(3,205)(11,833)

40,52233,825

2. Dividends
Annual Dividends per Share
Fiscal
2Q
3Q
year end

1Q

AnnualTotal dividends
Dividends/
Payout ratio
paid
net assets(consolidated)(full fiscal year)(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

−
−
−

14.00
15.00
16.00

−
−
−

14.00
15.00
16.00

28.00
30.00
32.00

3,556
3,810

30.5
33.7
33.6

1.5
1.4

FYE March 2014
FYE March 2015
FYE March 2016 (estimate)

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2016
(April 1, 2015 to March 31, 2016)(% = year-on-year change)
Net sales
Millions of yen

2Q (cumulative)
Full fiscal year
(Note)−
823,000

Operating profit

Profit attributable toowners of parent

Ordinary income

Earnings per
share% Millions of yen% Millions of yen% Millions of yen

%

Yen

−
8.3

−
7.4

−
1.1

−
6.9

−
95.25

−
19,500−20,600−12,100As 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 20, “4. 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, 2015
127,408,285shares March 31, 2014
138,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
March 31, 2015
376,363shares

March 31, 2014

11,375,631 shares

Average number of shares during the period
March 31, 2015
127,032,358shares

March 31, 2014

126,971,429 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, 2015

Attachments
1 Business Performance(1) Analysis of Business Performance(2) Analysis of Financial Position(3) Dividend Policy and Dividends for the Fiscal Years Ended March 2015 and March 2016(4) Operating and Other Risks
2 Management Policies(1) Basic Management Policy(2) Management Objectives and Medium-Term Strategies(3) Issues to be Addressed by the Company
3 Basic Policy on the Selection of Accounting Standards
4 Consolidated Financial Statements(1) Consolidated Balance Sheets(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(3) Consolidated Statement of Change in Shareholders' Equity(4) Consolidated Statements of Cash Flows(5) Notes related to Consolidated Financial Statements(Assumption for Going Concern)(Changes in Accounting Policies)(Supplementary Information)(Segment Information, etc.)(Per-Share Data)(Significant Subsequent Events)

CONFIDEN TIAL

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

1 Business Performance(1) Analysis of Business Performance(Performance for the Fiscal Year Ended March 2015)a. General Summary of Results
During the consolidated fiscal year under review, the Japanese economy experienced a gradual improvement,
mainly due to the weakness of the Japanese yen on the global currency market. However, the country is still facing
the aftereffects of increased consumer purchasing during the prior fiscal year in the period leading up to theincrease in consumption tax rates. On the global stage, slower growth in the Chinese economy has made itdifficult to predict the future of certain sectors and regions. Meanwhile, strength in North America and otherregions has resulted in a gradual economic recovery worldwide.
In this environment, the Company recorded domestic sales for the consolidated fiscal year of ¥374.2 billion,
which represented 0.3% year-on-year growth. Overseas sales amounted to ¥385.5 billion (10.1% growth). In total,
the Company recorded net sales of ¥759.71 billion, representing a 5.0% year-on-year increase.
The Company recorded gross profit in the amount of ¥91.99 billion (3.4% year-on-year increase), mainly the
result of strong performances in our automobile-related business and office equipment and appliance business.
Operating profit amounted to ¥18.15 billion, which was an increase of 15% year on year. This result was mainly
due to higher gross profit and lower retirement benefit costs, which more than offset a specific allowance for
doubtful accounts recorded for certain customers of the Company’s Taiwanese subsidiary. Ordinary income
amounted to ¥20.36 billion (13.7% increase). The Company recorded net income of ¥11.31 billion (3.0% year-onyear decrease). This result was mainly due to the impact of lower gains on sale of investment securities and awrite-down of deferred tax assets in response to fiscal 2015 tax reforms.
b. Segment Summary
CONFIDEN TIAL

The following discusses Company earnings by segment.
Beginning with the consolidated fiscal year under review, the Company has reorganized certain of its reportablesegments. For presentation purposes, the Company has calculated consolidated figures and ratios for the priorconsolidated fiscal year according to these reorganized classifications.
Functional Materials
The Company’s Functional Materials segment recorded slightly lower net sales overall for the period. While
Southeast and Northeast Asia led in overseas growth, sales domestically underperformed the prior year.
The performance chemicals business experienced slight declines in net sales. While urethane materials sales to theautomotive and construction markets grew overall, sales of paints for construction and building materials were
slow. Further, the Company experience sluggish sales of basic chemicals in the Middle East.
Our specialty chemicals business reported higher sales overall. While exports of raw materials and epoxy
compound products for electronics materials were somewhat slow, the Company saw strength in sales to domestic
metal working oil makers and encapsulant exports.
As a result, net sales for the Functional Materials segment for the consolidated fiscal year amounted to ¥168.23
billion, which was a year-on-year decrease of ¥1.73 billion (1.0% decrease). Operating profit amounted to ¥4.3
billion, a ¥20 million (0.6%) decrease compared to the prior fiscal year. This decrease was mainly due to lower
profits at our domestic manufacturing businesses, which offset gains in overseas profits.
Advanced Materials & Processing
The Advanced Materials & Processing segment reported higher overall net sales for the fiscal year. Although sales
were lower in the U.S. and Europe, we experienced growth in Northeast and Southeast Asia, with sales in Japan- 2 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

improving slightly.
The colors and imaging business recorded overall sales level with the prior fiscal year. While the dyes andadditives business reported strong sales, the information printing materials business experienced weaker sales
performance.
The Company’s office equipment and appliance business reported higher net sales as a whole. This result was
mainly due to higher plastic materials revenues in Northeastern and Southeastern Asia, as well as slightly
improved performance in our home market.
The functional films and sheets and plastic molding products business experienced strong sales of plastic materials,
materials for LCD TV reflectors, and conductive polymer materials, driving performance higher overall.
As a result, the Company recorded net sales of ¥254.16 billion in the Advanced Materials & Processing Segment,
representing a ¥14.94 billion (6.2%) increase year on year. Operating profit increased ¥1.09 billion (29.6%) year
on year to ¥4.8 billion, due mainly to higher revenues and gross profits, as well as improved profits at theCompany’s manufacturing subsidiaries.
Electronics
The Electronics segment reported higher overall revenues, driven mainly by revenue growth in Japan,
Southeastern Asia, and Northeastern Asia, which offset performance decreases in the U.S.and Europe.
The Company’s electronic chemicals business reported net sales level with the same period in the prior fiscal year.
This result was mainly due to slightly lower sales of formulated epoxy resin for the heavy and light electricalmachinery markets, offsetting higher sales of chemicals used in semiconductor and LCD panel manufacturing.
The electronics materials business reported overall revenue gains, with stronger performance in sales of LEDrelated products, glass-related products, and touch-panel materials.
CONFIDEN TIAL

As a result, segment net sales for the consolidated fiscal year amounted to ¥149.94 billion, representing a ¥12.92
billion (9.4%) increase year on year. Operating profit amounted to ¥5.58 billion, which was a ¥830 million(13.0%) decrease year on year. This result was mainly due to declining profitability among domestic sales
companies and an allowance for doubtful accounts recorded at the Company’s subsidiary in Taiwan. These
declines outpaced the recovery in our glass-related products in Northeastern Asia.
Automotive & Energy
The automobile-related business recorded overall growth for the fiscal year under review. This result was mainly
due to the fact that the Company strengthened its sales structure in North America, where sales of automobiles
continues to be strong. At the same time, the Company expanded product lines and generated stronger sales inJapan, China, and North America. These performance improvements outweighed the decline in domestic auto
purchases in the period following Japan's consumption tax increases, as well as production adjustments on the partof auto makers in China.
As a result, the Automotive & Energy segment recorded net sales for the consolidated fiscal year in the amount of¥109.85 billion, representing a ¥10.4 billion (10.5%) increase compared to the same period in the prior fiscal year.
Operating profit increased by ¥1.2 billion (116.9%), reaching ¥2.22 billion, owing mainly to improved profits
among domestic manufacturing businesses, as well as higher profits in China.
Life & Healthcare
The Company's Life & Healthcare business experienced lower net sales as a whole, driven mainly by lower salesin Japan that outpaced gains overseas, mainly in Northeast Asia and Europe.
The life & healthcare products business reported higher net sales spurred by strong performance of our proprietary- 3 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

TREHA ™ (trehalose) and other products to the food materials industry overseas, owing to our improving sales
structure in overseas markets. At the same time, sales of enzyme products remained level year on year. In the skincare and toiletries business, inclement summer weather negatively affected sales of our proprietary AA2G™
product; however, sales of raw materials to major customers to the skin care and toiletries industry were strong.
The Company reported higher sales of medical materials products within our pharmaceuticals and medical fields,
while performance of pharmaceutical raw materials and intermediates underperformed the prior fiscal year. As aresult, we were able to report higher year-on-year sales for the pharmaceutical and medical business.
Our beauty care products business saw lower year-on-year sales due to front-loaded demand in anticipation of theconsumption tax rate increase in Japan during the prior fiscal year, as well as the fact that the Company did notrecord strong sales of new products.
As a result, net sales for the segment amounted to ¥76.6 billion for the fiscal year, which was ¥200 million (0.3%)
lower than the prior fiscal year. Operating profit fell to ¥3.15 billion, which was ¥840 million (21.1%) lower thanthe prior fiscal year. This result was mainly due to lower sales of our proprietary products and higher general andadministrative expenses.
Other
No special matters to disclose.

CONFIDEN TIAL

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(Forecast for the Fiscal Year Ending March 2016)(Millions of yen)
Net sales

Operating profit

Ordinary income

Net income

Year ending March 31, 2016

823,000

19,50020,60012,100Year ended March 31, 2015

759,713

18,153

20,366

11,318Change

+8.3%

+7.4%

+1.1%

+6.9%

a.

Performance Forecast for the Fiscal Year Ending March 2016

We believe the domestic economy will continue to recover throughout the next fiscal year, pushed by higher
capital investment in conjunction with improved earnings and a rebound in consumer spending. We expect to see acontinuing recovery in North America with improving—however slightly—consumer confidence. Businessconditions in Southeast Asia are expected to remain solid. Fears of slowing economic growth in China, financial
problems in Europe, and geopolitical risk in the Middle East make predicting the future a difficult proposition;
however, we do forecast a gradual recovery in the world economy as a whole.
In light of these expectations, we have forecast earnings of ¥823.0 billion in consolidated net sales (8.3% increase
year on year) for the fiscal year ending March 2016, with gross profit at ¥97.3 billion (5.8% increase). We project
operating profit of ¥19.5 billion (7.4% increase). In addition, we forecast ordinary income of ¥20.6 billion (1.1%
increase) and net income of ¥12.1 billion (6.9% increase year on year).
The forecasts above have been developed based on a currency conversion rate of ¥120 to the US dollar.
b. Forecast by Business Segment
Based on the economic stability in North America and other overseas markets, we forecast continued strength inoffice equipment and appliance business and film used in LCDs. Accordingly, we project net sales of ¥177.6
billion (5.6% year-on-year increase) in Functional Materials, ¥282.4 billion (11.1% increase) in Advanced
Materials & Processing, ¥162.4 billion (8.3% increase) in Electronics, ¥117.4 billion (6.9% increase) in
Automotive & Energy, and ¥82.3 billion (7.4% increase) in Life & Healthcare.
CONFIDEN TIAL

Next-period forecasts are based on information at the time they were calculated. Actual future earnings may differ
from forecasts due to a variety of factors, including, but not limited to, overseas and domestic business conditions,foreign exchange rate fluctuations, etc.
(Millions of yen)

Functional Materials
Advanced Materials & Processing
Electronics
Automotive & EnergyLife & Healthcare
Other
Total SalesFYE March 2015
Actual168,238
254,165
149,947
109,851
76,609900

FYE March 2016
Forecast
177,600
282,400
162,400
117,400
82,300900

759,713823,000- 5 -Change+5.6%+11.1%
+8.3%
+6.9%
+7.4%
-0.0%
+8.3%

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(2) Analysis of Financial Positiona. Summary of Consolidated Balance Sheets
As of the end of the consolidated fiscal period, current assets amounted to ¥329.84 billion. This represents anincrease of ¥23.48 billion compared to the end of the prior consolidated fiscal year, mainly due to increases inaccounts receivable and inventories. Non-current assets amounted to ¥216.67 billion, an increase of ¥24.89 billion
compared to the end of the prior consolidated fiscal year. This increase in non-current assets was mainly due tohigher valuations in the Company's investments in securities, driven by higher market prices. As a result, total
assets increased by ¥48.38 billion, reaching ¥546.52 billion as of the end of the consolidated fiscal year.
Liabilities amounted to ¥259.02 billion, which was an increase of ¥12.77 billion compared to the end of the priorconsolidated fiscal year. This increase was mainly due to increased loans and deferred tax liabilities due tounrealized holding gains on securities.
Net assets amounted to ¥287.5 billion at the end of the consolidated fiscal year, up ¥35.6 billion compared to theend of the prior consolidated fiscal year. This increase was mainly due to ¥11.31 billion in recorded net income, as
well as increases in unrealized holding gains on securities.
As a result, the Company experienced a 2.0-point increase in shareholders' equity ratio, up to 51.5% as of the endof the consolidated fiscal year.
b. Summary of Consolidated Cash Flows
Cash and cash equivalents (Cash) increased by ¥6.69 billion (19.8%) compared to the end of the priorconsolidated fiscal year, amounting to ¥40.52 billion. Cash from operating activities amounted to ¥15.47 billion,
while cash used in investing activities amounted to a net outflow of ¥7.73 billion. Cash used in financing activities
amounted to ¥3.2 billion. The Company added ¥2.12 billion in cash from exchange rate fluctuations, with anadditional ¥30 million in cash from newly consolidated entities.
CONFIDEN TIAL

(Cash Flows from Operating Activities)
Cash flows from operating activities for the consolidated fiscal year amounted to ¥15.47 billion. This result was
mainly due to income before income taxes and minority interests of ¥18.98 billion and depreciation andamortization of ¥9.29 billion, offsetting ¥7.17 billion in increased inventories and ¥8.31 billion in income tax
payments.
(Cash Flows from Investing Activities)
Cash used in investing activities during the consolidated fiscal year amounted to ¥7.73 billion. Although thecompany sold investment securities for a cash amount of ¥2.45 billion and recorded a decrease in time deposits of¥1.16 billion, acquisitions of property, plant, and equipment and intangible fixed assets amounted to ¥11.94 billion.
(Cash Flows from Financing Activities)
Cash used in financing activities for the consolidated fiscal year amounted to ¥3.2 billion. This result was mainly
due to an increase in long-term loans in the amount of ¥9.32 billion, offset by repayments of long-term loans anddividend payments in the amount of ¥6.8 billion and ¥3.68 billion.

- 6 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

FYE March
2011

FYE March
2012

FYE March
2013

FYE March
2014

FYE March
2015

Net worth ratio

53.7%

45.4%

46.9%

49.5%

51.5%

Net worth ratio based on market
value

33.9%

29.2%

29.9%

32.5%

36.6%

2.5 years

15.6 years

5.3 years

7.3 years

6.4 years

19.5

8.9

17.7

11.3

13.7

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(Note 1)

Indicators are calculated based on consolidated figures.

(Note 2)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).

(Note 3)Operating cash flow is net cash provided by operating activities as shown in the consolidated statements ofcash 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 2015 and March 2016
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.
CONFIDEN TIAL

The Nagase Group declared a year-end dividend of ¥15 per share based on this policy. As a result, the scheduled
full-year cash dividend will amount to a total of ¥30 per share.
We forecast a full-year dividend of ¥32 per share for the next fiscal year, consisting of a ¥16 per share interim
dividend and a ¥16 yen 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.
- 7 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015b. 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 demandsupply balance are two factors that result in unique market circumstances for each of our products. Fluctuations inthese factors could affect our revenues and profits in related product lines. Some products manufactured by theGroup use raw materials derived from grains. Raw materials costs fluctuate widely due to changes in grain market
prices; we may not be able to pass on increased raw materials costs through higher sales prices, which could affectour profits in related product lines.
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 and financial 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.
CONFIDEN TIAL

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 manufacturingsubsidiaries in their pursuit of new business through proactive investment and strategic mergers and acquisitions,- 8 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

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,etc.) 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 manufacturing subsidiaries to offer high-value-added
products to our customers. We pay detailed attention to the quality of the technologies and products that bear thename 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 and financial 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

CONFIDEN TIAL

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 ofimportant Group facilities. Such interruptions would result in opportunity loss, and could have a significant impact
on Group earnings and financial condition.

- 9 -NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

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.
As we pursue our overseas strategy and launch businesses in new fields, last year we launched a branding project
to redefine who we are as a group of businesses. As part of this project, we developed a new structure for ourGroup philosophy. We intend to work as one united Nagase Group, leveraging our strengths to contribute to therealization of a society in which people can live in peace and comfort, defining our unique value in terms of
Identify, Develop, and Expand.

(2) Management Objectives and Medium-Term Strategies
During the fiscal year ended March 2013, we began operating under Change-S2014, our three-year medium-term
management plan. Change-S2014 was our bid to further accelerate change in the evolution of our businessstructure and management in continuation of the prior medium-term management plan. Under Change-S2014, ourbasic strategic goals are to accelerate the improving quality of our business and operations (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 (Sustainable growth). In pursuit of these goals, wemade significant investments in the Bio, Environment and Energy, and Electronics fields. However, delays inlaunching new businesses and global expansion plans and declining profitability among our group manufacturing
companies led to results that underperformed our FYE March 2015 targets calling for consolidated net sales of¥800 billion, consolidated operating profits of ¥30 billion and a return on equity of 8.0%. At the same time, wehave been able to further instill the message to Accelerate Change among our group, creating more opportunities
for group integration and intra-group business to make qualitative improvements in our operations.
Looking ahead toward our 200th anniversary in the year 2032, we have created a long-term management plan toguide us in becoming a corporate group capable of sustainable growth in the face of dramatic changes in theexternal environment. This plan calls for our willingness to undertake challenges for growth and to work toward
the reinforcement of our business base. During FYE March 2016, we intend to create a new medium-term
management plan to help us implement these policies. We will begin operating under this new plan starting FYEMarch 2017. Accordingly, we will conduct our business for FYE March 2016 under a single-year plan.
CONFIDEN TIAL

(3) Issues to be Addressed by the Company
We began executing on our Change-S2014 three-year plan in April 2012. Under this plan, we defined Group-wide
initiatives to address issues of creating stronger capabilities in our core businesses and a stronger managementfoundation. We are operating under a single-year plan for FYE March 2016, but we will continue to pursue thatbasic strategies and address the issues that we have already identified.
[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 in- 10 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

long-term renewable resources.

During the period under review, we revised our sales agency policies for Hayashibara product sales overseas andrestructured our sales organization at our local Nagase Group entities. As a result, we have enjoyed favorable sales
in the overseas food industries. We have also set plans for introducing new products to the market.
We continue to develop bio-related technologies for bio-derived chemicals that do not rely on petroleum resources.
The Nagase R&D Center has been working together with Kobe University and other labs in a continuing nextgeneration agri-industrial bio production. This project was adopted by the Ministry of Education, Culture, Sports,
Science and Technology as a continuing program. At the same time, the Center is developing 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 nextgeneration 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.
During the period under review, CAPTEX Co., Ltd. began to see results for sales of large-scale batteries.
CAPTEX is engaged in the manufacture and sale of rechargeable battery systems equipped with lithium-ion
rechargeable batteries. This subsidiary will continue to customize products for market needs and applications, aswell as pursue development working closely with customers.
CONFIDEN TIAL

c. 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 are improving our manufacturing and development
capabilities overseas.
During the fiscal year, we made the decision to invest in a Chinese supply company involved in chemicals used in
the manufacture of LCD panels, strengthening our presence in a market in which we expect to see future growth.
We are also working to have our products adopted into new customer products in the smartphone and tablet
business.
[Stronger Management Foundation]
Where the Japanese market has slowed compared to the growing markets in emerging countries, the Nagase
Group has chosen to focus expanding business in emerging and other international markets, establishing highvalue-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 thefundamental 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- 11 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

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, we completed almost all IT infrastructure work overseas for the purpose of improving ourconsolidated management systems. By following our own Investment Guidelines, we have been able to improve
the quality of our investments, as well as withdraw from unprofitable businesses.
With respect to ongoing risk management, the Company is implementing activities to strengthen our Group-wide
quality assurance structure and workplace safety management.
With respect to human resources training and education, we have started offering a wide range of training andeducation programs for Group human resources development at the Nagase Global HRD Center (Sendagaya,
Tokyo), newly opened in May 2014. In addition to these initiatives, we provide career planning for staff ataffiliates and overseas entities, encouraging the sharing of staff among companies, while at the same time
improving existing Group-wide HR programs.

3. Basic Policy on the Selection of Accounting Standards
The Nagase Group intends to adopt Japanese accounting standards for the time being to allow for inter-company
comparisons.
CONFIDEN TIAL

We have been studying the adoption of International Financial Reporting Standards for some time. We plan tomake the appropriate policy choice in the future, considering external trends and other factors.

- 12 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of yen)
Prior Consolidated Fiscal Year
(March 31, 2014)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

CONFIDEN TIAL

- 13 -

Current Consolidated Fiscal
Year(March 31, 2015)

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

40,575208,209
63,719
1,668
3,625
4,058
8,797
(806)
329,848

51,526(27,174)
24,35258,939(47,349)
11,59019,171
25,381(16,581)
8,800
63,91454,037(28,241)
25,796
61,161(46,512)
14,64918,97623,871(16,519)
7,352
66,77429,78018,517
4,731
53,03027,626
16,942
4,276
48,844

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

92,638
1,139
2,381
6,277
(1,378)101,058
216,677
546,525

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(Millions of yen)

LIABILITIESCurrent liabilities
Notes and accounts payable
Short-term loans
Current portion of long-term loans
Current portion of bonds
Accrued income taxes
Deferred tax liabilities
Accrued bonuses for employees
Accrued bonuses for directors
Other
Total current liabilities
Long-term liabilities
Bonds
Long-term loans
Deferred tax liabilities
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)
Net unrealized holding gain on securities
Deferred (loss) gain on hedges
Translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

Prior Consolidated Fiscal Year
(March 31, 2014)

Current Consolidated Fiscal Year
(March 31, 2015)

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

105,737
31,3886,377
10,000
2,268
19
4,314
213
16,105
176,424

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

20,00030,322
20,272
10,803
1,201
82,600259,025

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

9,699
11,654205,203(228)
226,328

24,725
(0)
2,239
380
27,346
5,168
251,892
498,141

44,9203
9,478
666
55,0696,102
287,500
546,525

CONFIDEN TIAL

- 14 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Millions of yen)
Prior Consolidated Fiscal Year Current Consolidated Fiscal Year
(April 1, 2013 (April 1, 2014 March 31, 2014)
March 31, 2015)

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
Equity in earnings of affiliates
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
Loss on sales of investments in capital
Loss on sales of shares of subsidiaries and affiliates
Loss on sales of investments in capital of subsidiaries and affiliates
Loss on transfer of business
Loss on withdrawal from employees’ pension funds
Other
Total extraordinary losses
Income before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes
Income before minority interests
Minority interests
Net income
CONFIDEN TIAL

- 15 -

723,212634,276
88,936

759,713667,722
91,991

10,71921,335
2,373
202
4,230
2,938
50
(106)
1,685
29,716
73,146
15,78910,921
22,307
2,706
202
4,407
896
44
1,011
1,623
29,717
73,83818,153

188
1,115
277
654
786
668
3,691

196
1,259
253
616
921
682
3,930

1,082
493
1,576
17,905

1,098
619
1,718
20,366

519
867
118
528
11
2,045

392
213
606

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

69
84
602
0
479
20
249
171
114
163
25
1,983
18,989
6,238
834
7,073
11,916597
11,318NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(Consolidated Statement of Comprehensive Income)

Income before minority interests
Other comprehensive income
Net unrealized holding gain on securities
Deferred (loss) gain on hedges
Translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of affiliates accounted for by
the equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Comprehensive income attributable to shareholders of the Company
Comprehensive income attributable to minority interests

CONFIDEN TIAL

- 16 -

Prior Consolidated
Fiscal Year
(April 1, 2013 March 31, 2014)12,131(Millions of yen)
Current Consolidated
Fiscal Year
(April 1, 2014 March 31, 2015)
11,916

6,780
6
3,549
1,368

20,186
3
7,339
285

198

720

11,90324,03528,53640,45323,163871

39,085
1,367

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(3) Consolidated Statement of Change in Shareholders’ Equity
Prior Consolidated Fiscal Year (April 1, 2013 - March 31, 2014)(Millions of yen)
Shareholders’ equity
Common stock
Balance, beginning of period

Capital surplus

9,699

10,041Retained earnings

Less treasury
stock, at cost

199,160

Cumulative effects of changes inaccounting policies

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)(3,425)

Net income

11,663

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 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)
CONFIDEN TIAL

Balance, beginning of period

Net unrealized
holding gain
on securities

Deferred (loss)
gain on hedges

17,943(6)

Remeasurements
Translationof definedadjustment
benefit plans

Total accumulated
other comprehensive
income－16,712

(982)

(982)

(982)

15,730(1,223)Cumulative effects of changes inaccounting policies
Restated balance

17,943(6)(1,223)

Stock
Minority Total net
acquisition
assetsinterests
rights50

9,250 237,806(5)50(1,659)9,244 236,146

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 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－- 17 -

5,168 251,892

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

Prior Consolidated Fiscal Year (April 1, 2014 - March 31, 2015)(Millions of yen)
Shareholders’ equity
Common stock
Balance, beginning of period

9,699

Cumulative effects of changes inaccounting policies
Restated balance

Retained earnings

Less treasury stock,at costTotal shareholders’equity10,242

206,351(6,916)219,377

1,998(2,791)

12,240203,560

Capital surplus

9,699

(792)
(6,916)

218,584

ChangesCash dividends(3,683)(3,683)

Net income

11,318

11,318Purchases of treasury stock
Disposal of treasury stock

(1)

(1)

0

0

6,688

-

0

Retirement of treasury stock(607)

Changes in shareholders’ interest due
to transaction with minority interests(6,081)21

21

Changes in scope of consolidation

89

89

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

-

(585)

1,642

6,687

7,744

9,699

11,654205,203(228)

226,328

Accumulated other comprehensive income
CONFIDEN TIAL

Balance, beginning of period

Net unrealized
holding gain on
securities

Deferred (loss)
gain on hedges

Translation
adjustment

Remeasurementsof defined
benefit plans

Total accumulated
other comprehensive
income24,725

(0)

2,239

380

27,346

Cumulative effects of changes inaccounting policies
Restated balance(64)
24,725(0)2,175

Minority
interests

Total net
assets5,168

251,892(64)
380

27,281

(857)
5,168

251,035

ChangesCash dividends(3,683)

Net income

11,318Purchases of treasury stock(1)

Disposal of treasury stock0

Retirement of treasury stock-

Changes in shareholders’ interest
due to transaction with minority
interests

21

Changes in scope of consolidation

89

Changes other than shareholders’equity accounts (net)20,194

3

7,303

285

27,787933

28,720Total changes

20,194

3

7,303

285

27,787933

36,465

Balance, end of period

44,920

3

9,478

666

55,0696,102

287,500- 18 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(4) Consolidated Statements of Cash Flows(Millions of yen)

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Impairment loss
Increase (decrease) in adjustments for retirement
benefits
Interest income and dividend income
Interest expenses
Foreign exchange loss (gain)
Loss (gain) on sale of non-current assets
Loss (gain) on sale of investment securities(Increase) decrease in notes and accounts receivable(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable
Other
SubtotalInterest 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 investment securities
Cash used for purchase of investments
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Change in short-term loans (increase)
Net decrease (increase) in time deposits
Proceeds from transfer of business
Other
Cash flows from investing activities
Cash flows from financing activities
Increase (decrease) in short-term loans, net
Proceeds from long-term loans
Repayment of long-term loans
Purchase 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
Cash and cash equivalents, at end of the period

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

Current Consolidated Fiscal Year
(April 1, 2014 March 31, 2015)

18,353
8,634
1,685
1,314

18,989
9,292
1,623
602

1,128

(507)

(1,304)
1,082
296
(473)
(840)
(1,983)(3,274)(6,488)281
18,412
1,750(1,122)(6,319)12,721(1,456)
1,098
882
(322)
228
2,430
(7,172)(4,993)
2,324
23,0191,893(1,128)(8,310)15,474(10,131)812(1,669)(3,360)1,832(1,143)(10,899)
1,022(1,046)
(624)
2,456
－

－

(305)

(542)
(136)
－
168
(14,171)

(2)
1,165
497
4
(7,732)

1,337
999(10,484)(1)(3,425)(545)
286(11,833)(1,585)
9,327(6,805)(1)(3,683)(334)(122)(3,205)

1,179

2,129

(12,103)45,816

6,664
33,825

113

32

(1)

－

33,82540,522CONFIDEN TIAL

- 19 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015(5) Notes related to Consolidated Financial Statements(Assumption for Going Concern)
No matters to report.
(Changes in Accounting Policies)
Companies have the option to adopt “Accounting Standard for Business Combinations” (ASBJ Statement No. 21,
September 13, 2013), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013) and “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13,2013) for consolidated fiscal years beginning April 1, 2014. Accordingly, the Company has adopted theseaccounting standards (with the exception of the provisions of paragraph 39 of the Accounting Standard forConsolidated Financial Statements). Under these accounting changes, the Company now records equity changes insubsidiaries subject to ongoing control to capital surplus. In addition, the Company now records acquisitionrelated costs as costs in the consolidated fiscal year in which they occurred. With respect to business combinations
occurring after the beginning of the consolidated fiscal year, the Company will now revise acquisition costallocation base on provisional accounting estimates, reflecting these costs in the consolidated financial statements
for the consolidated fiscal year in which the business combination occurred.
In accordance with the transitional treatment based on the provisions of section 58-2(3) of the AccountingStandard for Business Combinations, section 44-5(3) of the Accounting Standard for Consolidated Financial
Statements and section 57-4(3) of the Accounting Standard for Business Divestitures, the cumulative effects of theretrospective application of these accounting changes have been adjusted to capital surplus and retained earnings
as of the beginning of the consolidated fiscal year.
As a result, goodwill, retained earnings, and translation adjustments decreased by ¥857 million, ¥2,791 million,and ¥64 million as of the beginning of the consolidated fiscal year. At the same time, capital surplus increased by¥1,998 million. The effect of these accounting changes on operating profit, ordinary income, and income before
income taxes and minority interests during the consolidated fiscal year is minimal.
CONFIDEN TIAL

(Supplementary Information)(Revised Balances for Deferred Tax Assets and Deferred Tax Liabilities due to Change in Corporate Tax Rates)
Pursuant to the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No.9, 2015) and the” Act for Partial
Amendment of the Local Tax Act, etc.” (Act No. 2, 2015), promulgated on March 31, 2015, corporate tax rates have been
reduced for consolidated fiscal years beginning on or after April 1, 2015. In conjunction with this change in law, the effective
statutory tax rate used for calculating deferred tax assets and deferred tax liabilities has been changed from 35.6% to 33.1% for
temporary differences expected to be settled during consolidated fiscal years beginning on or after April 1, 2015, and 32.3%
for temporary differences expected to be settled during consolidated fiscal years beginning on or after April 1, 2016.
As a result of this change in tax rates, the Company has written down deferred tax liabilities (net of deferred tax assets) by¥1,599 million. Income taxes-deferred and other comprehensive income have increased by ¥510 million and ¥2,110 million.
In addition, a revision in tax law for loss carryforwards has resulted in a decrease of deferred tax assets of ¥643 million and anincrease in income taxes-deferred of ¥643 million.

(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
and the 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 nextstage of the value chain), Electronics, Automotive & Energy, and Life & Healthcare (these last three- 20 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

segments functioning across all industries).
Beginning with the consolidated fiscal year under review, the low-power semiconductor design
development business, which had been categorized under the Electronics segment, is now categorizedunder the Automotive & Energy segment. We believe this will promote technological development withbusinesses more closely related to environment/energy-related technologies.
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 andother industries.
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, lowtemperature/vacuum equipment, high-function epoxy resins, precision electronics abrasives, and more forthe display, touch panel, LCD, semiconductor, hard disk drive, electronic components, and heavy
electrical industries.
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, and surfactants for the pharmaceutical, food, and cosmetics industries. The segment
offers radiation measurement as one of its main services. In addition, this segment sells cosmetics, healthfoods, 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 basedon actual market prices.

- 21 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

3.

Information related to Net Sales, Profit (Loss), Assets, Liabilities, and Other by Segment
Prior Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)(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
Intersegment
sales/transfers

169,973
2,966

99,441

76,810722,475

737

723,212－－723,212

674

1,886

418

8,158

5,773

13,932－(13,932)－

241,436 137,700

101,328

77,228730,633

6,510

737,144－(13,932)

723,212239,224 137,026
2,212

Total

172,939

Segment income(loss)

4,328

3,707

6,421

1,027

4,000

19,485215

19,701(4,364)452

15,789Segment assets

75,491

119,20269,82440,792

96,205

401,516

7,124

408,640

124,035(34,533)

498,141

407

647

2,323

262

2,993

6,634

193

6,827

1,806

－

8,634

－

－

169

－

1,516

1,685

－

1,685

－

－

1,685

－

－

2,617

－

27,16329,780－29,780－－29,780

1,850

2,245

75

1,777

2,070

8,018

1,838

9,856

－

(54)

9,801

399

862

2,015

369

4,488

8,134

49

8,184

2,929

－

11,113

Other
Depreciation andamortization
Amortization of
goodwill
Goodwill
Investments inequity affiliates
Increase inproperty, plant,
and equipment
and intangible
fixed assets

CONFIDEN TIAL

(Note)
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 (loss) represents expenses not allocated to reportable segments or Other. Segment
assets under Corporate are assets not allocable 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.

- 22 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

Current Consolidated Fiscal Year (April 1, 2014 to March 31, 2015)(millions of yen)
Corporate(Note) 2

Adjustments(Note) 3

To
consolidated
financialstatements(Note) 4

Reportable Segments
Advanced
Functional
Electronic Automotive Life &Materials &Materialss& Energy Healthcare
Processing

Total

Other
(Note) 1

Total

Net sales
Sales tocustomers
Intersegment
sales/transfers

168,2382,361

109,851

76,609758,812

900

759,713－－759,713

858

2,827

286

8,559

4,955

13,515－(13,515)－

256,390 150,805

112,679

76,896

767,3725,856

773,229－(13,515)759,713254,165 149,947
2,224

Total

170,600

Segment income(loss)

4,302

4,804

5,583

2,229

3,157

20,077201

20,278(2,600)475

18,153

Segment assets

75,590131,543

66,86245,213

98,250417,461

7,210

424,671

155,720(33,866)

546,525

483

802

2,649

122

3,136

7,193

198

7,392

1,900

－

9,292

－

－

120

－

1,502

1,623

－

1,623

－

－

1,623

－

－

2,214

－

25,412

27,626－

27,626－－

27,626

2,079

2,507

132

1,932

2,219

8,871

1,896

10,768－(57)

10,711

330

1,392

2,460

346

5,720

10,250317

10,568

1,144－

11,712

Other
Depreciation andamortization
Amortization of
goodwill
Goodwill
Investments inequity affiliates
Increase inproperty, plant,
and equipment
and intangible
fixed assets(Note)
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 (loss) represents expenses not allocated to reportable segments or Other. Segment
assets under Corporate are assets not allocable 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, 2015b.

Other Information
Prior Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)
1. Products and Services
Omitted, as the same information has been disclosed under Segment Information.
2. Geographic Information(1) Net sales(millions of yen)Japan

Northeast Asia

Southeast Asia

North America

Europe & Others

196,118

108,414

26,344

19,394372,939(Note)

Total

723,212

1. Net sales are categorized by country or region, according to the location of the customer.
2. Countries/regions are determined by geographical proximity.
(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.
Current Consolidated Fiscal Year (April 1, 2014 to March 31, 2015)
1. Products and Services
Omitted, as the same information has been disclosed under Segment Information.
CONFIDEN TIAL

2. Geographic Information(1) Net sales(millions of yen)
Japan

Total

Northeast Asia Southeast Asia North America Europe & Others

374,208

217,232

122,493

29,995

15,783759,713(Note) 1 Net sales are categorized by country or region, according to the location of the customer.
2 Countries/regions are determined by geographical proximity.
(2) Property, plant and equipment(millions of yen)
Japan

Other
58,897

Total
7,877

66,774

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

- 24 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

Impairment Losses of Non-Current Assets for Each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)(millions of yen)
Reportable Segments

Impairment

Functional
Materials

Advanced
Materials &Processing

－

－

loss

Electronics

Automotive& EnergyLife &
Healthcare

221

1,080

－

Corporate/
Elimination

Other
Total

－

1,301

12

Total

1,314

(Notes) Due to a significant decline in market value, the Company has written down the book value of certain sharedassets 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 thesuspension of development activities in car electronics under Automotive & Energy, the Company has written
down the book value of the related business assets, reflecting the amounts estimated to be recoverable.
Current Consolidated Fiscal Year (April 1, 2014 to March 31, 2015)(millions of yen)
Reportable Segments

Impairment
loss

Functional
Materials

Advanced
Materials &Processing

Electronics

Automotive& EnergyLife &
Healthcare

－

74

176

78

－

Corporate/
Elimination

Other

Total

Total

328

－

273

602

(Notes) Due to decreasing profitability related to the plastics products manufacturing business in the Advanced
Materials & Processing segment, the Company has written down the book value of related assets, reflecting
amounts estimated to be recoverable.
Due to decreasing profitability related to the semiconductor and LCD industry equipment manufacturing andmaintenance business in the Electronics segment, the Company has written down the book value of related
assets, reflecting amounts estimated to be recoverable.
Due to decreasing profitability related to the rechargeable battery system manufacturing and sales business in
the Automotive & Energy segment, the Company has written down the book value of related assets, reflecting
amounts estimated to be recoverable.
Due to a significant decline in market value, the Company has written down the book value of certain idle
assets under Corporate/Elimination, reflecting amounts estimated to be recoverable.
Amortization and Unamortized Balance of Goodwill for Each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)
Omitted, as the same information has been disclosed under Segment Information.
Current Consolidated Fiscal Year (April 1, 2014 to March 31, 2015)
Omitted, as the same information has been disclosed under Segment Information.
Information about Gain on Bargain Purchase for Each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2013 to March 31, 2014)
During the consolidated fiscal year, additional purchases of stock in consolidated subsidiaries resulted in again on negative goodwill in the amount of ¥431 million and ¥96 million in the Advanced Materials &Processing segment and the Electronics segment.
Current Consolidated Fiscal Year (April 1, 2014 to March 31, 2015)
No matters to report.

- 25 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2015

(Per-Share Data)
Prior Consolidated Fiscal Year
(April 1, 2013 March 31, 2014)

Current Consolidated Fiscal Year
(April 1, 2014 March 31, 2015)

Net assets per share¥1,942.2 Net assets per share¥2,215.18

Earnings per share¥91.86 Earnings per share¥89.10(Note) 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.
Item

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

Current Consolidated Fiscal Year
(April 1, 2014 March 31, 2015)

Net income from consolidated statements of income(millions of yen)

11,663

11,318Net income related to common stock (millions of yen)

11,663

11,318

126,971,429

127,032,358

Average number of outstanding shares of common stock(shares)

409,000 shares subject to stock
options as approved at the annual
shareholders' meeting held June
Dilutive stock not included in calculation of diluted
earnings per share (no dilutive effects)

26, 2008.
The exercise period for the stock
options noted above expired on
July 31, 2013. Accordingly, thesestock options have expired.
CONFIDEN TIAL

(Significant Subsequent Events)
No matters to report.

- 26 --