Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021
<Under Japanese GAAP>

November 4, 2020

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 (https://www.nagase.co.jp/english/)Representative:
Kenji Asakura, Representative Director and President
Contact:
Yoshihisa Shimizu, Executive Officer, General Manager, Finance & Accounting DivisionTEL:+81-3-3665-3103
Filing of quarterly report (scheduled): November 12, 2020
Start of distribution of dividends (scheduled): December 7, 2020
Supplementary documents of quarterly financial results: Yes
Quarterly investors' meeting: Yes (for analysts and institutional investors)(Note: Amounts have been rounded down to the nearest million yen.)

1. Consolidated Results for the Second Quarter of the Fiscal Year Ending March 31, 2021
(April 1, 2020 to September 30, 2020)(1) Consolidated Operating Results
Net sales
For the second quarter ended
September 30, 2020
September 30, 2019

Millions of yen%

381,153
391,900(Notes) Comprehensive income

Operating income(2.7)

Millions of yen

Profit attributable toowners of the parent

Ordinary income%

8,934 (15.9)
10,628 (20.9)(3.1)(% = year-on-year change)

Millions of yen%

9,692 (8.4)
10,584 (23.9)

Millions of yen%

10,18737.2
7,423 (28.1)

Second quarter ended September 30, 2020: ¥20,194 million (306.5%)
Second quarter ended September 30, 2019: ¥4,967 million (65.4% decrease)
Earnings per share

For the second quarter ended
September 30, 2020
September 30, 2019

Yen

82.15
59.86

Earnings per share (diluted)
Yen−−(2) Consolidated Financial Position
Total assets
September 30, 2020
March 31, 2020

Millions of yen

Millions of yen

602,131
611,477(Reference) Equity capital

Shareholders’equity ratio

Net assets%

330,418
313,243

As of September 30, 2020:
As of March 31, 2020:

Net assets per share

53.6
49.9

Yen

2,600.26
2,462.04¥322,462 million¥305,322 million

2. Dividends
1Q
For the year ended (or ending)
Yen
March 2020−
March 2021−
March 2021 (forecast)(Note) Revisions to the latest dividends forecast: No

2Q

Annual Dividends per Share
3Q
Fiscal year end
Yen

22.00
22.00

Yen

Yen

Annual
Yen

−

22.00

44.00

−

22.00

44.00

3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2021
(April 1, 2020 to March 31, 2021)(% = year-on-year change)

Net sales
Full fiscal year

Millions of yen

754,000

Operating income% Millions of yen(5.7)

15,000

Profit attributable toowners of the parent

Ordinary income% Millions of yen(21.7)

15,500% Millions of yen(18.8)

12,500Earnings per
share

%

(17.5)

Yen

100.80(Note) Revisions to the latest consolidated earnings forecast: No
Our consolidated earnings forecast for the fiscal year ending March 2021 is based on the assumption that the shift to a fullfledged recovery from the COVID-19 pandemic will be pushed back to the following fiscal year or thereafter.

* 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) Application of special accounting methods to the preparation of quarterly financial statements: No(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial
statements after error correctionsi.
Changes in accordance with revisions to accounting and other standards: No
ii. Changes in items other than (i) above: Noiii. Changes in accounting estimates: No
iv. Restatement of prior period financial statements after error corrections: No(4) Number of shares issued and outstanding (common stock)i.
Number of shares issued and outstanding as of the fiscal period end (including treasury stock)
September 30, 2020
127,408,285 shares March 31, 2020
127,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
September 30, 2020
3,396,894 shares

March 31, 2020

Average number of shares during the period
September 30, 2020
124,011,496 shares

September 30, 2019

3,396,695 shares

124,011,874 shares* Quarterly financial statements are not subject to quarterly review.
* 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. Qualitative Information (3) Qualitative Information Related to Consolidated Earnings Forecasts on P.4of this document.

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

Attachments
1. Qualitative Information

2(1) Business Performance2(2) Financial Position

3(3) Qualitative Information Related to Consolidated Earnings Forecasts

4

2. Quarterly Consolidated Financial Statements and Notes

5(1) Quarterly Consolidated Balance Sheets

5(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income

7

Quarterly Consolidated Statements of Income
Six-month periods ended September 30, 2020 and 20197

Quarterly Consolidated Statements of Comprehensive Income
Six-month periods ended September 30, 2020 and 20198(3) Quarterly Consolidated Statements of Cash Flows

9(4) Notes Related to Quarterly Consolidated Financial Statements

10(Assumption for Going Concern)

10(Significant Fluctuations in Shareholders’ Equity)

10(Additional Information)

10(Segment Information, etc.)

11(Significant Subsequent Events)

13

3. Supplementary Information

14(1) Overseas Sales

14

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1

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

1. Qualitative Information(1) Business Performancea. General Summary of Results
The global economy for the current consolidated second quarter saw different situations for each country. While the economic
impact of the COVID-19 pandemic remains serious, China was able to maintain its economic recovery after quickly resuming
its own economic activity. In Japan, economic activity gradually resumed and consumer activity is on a modest recovery path,but the Japanese economy is not yet in full recovery mode and the situation remains challenging. In the regions where the
NAGASE Group operates our business, the situation has returned to pre-pandemic levels in Greater China, but economic
activity is slow in Japan, the Americas, Europe, and ASEAN and the future continues to be uncertain.
In this environment, the Company recorded domestic sales of ¥166.13 billion (-18.0% year on year) for the cumulative
consolidated second quarter. Overseas sales amounted to ¥215.02 billion (+13.6%) thanks in part to sales from the Prinova
Group acquired by the Company in the prior consolidated second quarter. The Company recorded net sales of ¥381.15 billion(-2.7%) in total.
The Company recorded gross profit of ¥53.78 billion (+5.7%) as a result of the high profitability of the Prinova Groupexceeding the impact of the Company's sales decrease. On the other hand, operating income declined to ¥8.93 billion (-15.9%)
due to rising costs of promoting digital transformation (DX) and other activities for sustainable growth despite the contributionof the Prinova Group. Ordinary income amounted to ¥9.69 billion (-8.4%). Profit attributable to owners of the parent amounted
to ¥10.18 billion (+37.2%) mainly due to the recording of profits stemming from the sales of certain shares owned by theCompany.

b. Segment Summary
Functional Materials
The Functional Materials segment recorded lower sales in both domestic and overseas markets mainly due to lower automotive
production in all regions except Greater China due to the spread of the COVID-19 pandemic.
The Performance Chemicals business recorded significantly lower sales due to lower sales in coating raw materials andurethane materials, as a result of lower automotive production.
The Speciality Chemicals business recorded lower sales overall due to decreased sales of electronics chemicals mainly for thesemiconductor and other electronics industries, and of industrial oil solutions and plastic materials, which were sharply
impacted by the weak automotive industry.
As a result, sales for the segment amounted to ¥70.21 billion, representing a ¥17.02 billion (-19.5%) decrease compared to thesame period in the prior fiscal year. Operating income fell ¥790 million (-28.3%) to ¥2.01 billion.

Advanced Materials & Processing
The Advanced Materials & Processing segment recorded lower sales in both domestic and overseas markets due to the broad
impact of the COVID-19 on the resins and other businesses.
The Colors & Advanced Processing business recorded lower sales overall, due to sharply decreased sales of dyes and additives
and digital print processing materials in Japan, as well as reduced sales of plastic resins for industrial and packaging
applications and conductive materials.
The Polymer Global Account business, which mainly sells plastics to the office equipment, appliance, and video game device
markets, recorded lower sales overall. This was caused by slightly lower sales in Greater China along with declines in Japanand ASEAN.
As a result, sales for the segment amounted to ¥124.36 billion for the cumulative consolidated second quarter, representing a¥13.35 billion (-9.7%) decrease year on year. Operating income declined ¥960 million (-21.7%) compared to the previous
cumulative consolidated second quarter to ¥3.47 billion, impacted primarily by poorer profitability caused by degraded market－ 2 －NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

conditions in the digital print processing materials business.

Electronics
Despite increased sales of precision processing-related materials used in connection with intermediate processing insemiconductors, the Electronics segment recorded lower net sales overall driven by slightly lower sales of display-relatedmaterials and lower sales of materials related to photolithography, formulated epoxy resins for the heavy and light electricalequipment industry, and equipment.
As a result, sales for the segment amounted to ¥54.42 billion, which was a ¥2.88 billion (-5.0%) decrease compared to the
cumulative consolidated second quarter of the prior fiscal year. Operating income was ¥3.53 billion, an increase of ¥400
million (+12.9%) year on year, mainly due to improved profitability among the Company’s manufacturing subsidiaries.

Mobility & Energy
The Mobility Solutions business recorded significantly lower sales both in Japan and overseas, due to lower sales of car
electronics-related products in Japan and lower sales in the resins business in all regions but Greater China as a result of lower
automotive production in all regions except Greater China attributable to the impact of the COVID-19 pandemic.
As a result, sales for the segment amounted to ¥46.03 billion, representing a ¥19.62 billion (-29.9%) decrease compared to thesame period in the prior fiscal year. Operating income fell ¥1.05 billion (-90.3%) to ¥110 million for the cumulative
consolidated second quarter.

Life & Healthcare
The Life & Healthcare segment recorded significantly higher sales overall, due to higher sales overseas driven by the additionof sales from the Prinova Group acquired by the Company in the prior consolidated second quarter, though domestic sales
decreased mainly due to lower demand attributable to the impact of the COVID-19 pandemic.
The new Food Ingredients business recorded significantly higher sales overall, boosted by the addition of sales from thePrinova Group despite reduced sales of TREHA™ and other products in the food materials field in Japan and overseas.
The Life & Healthcare business recorded gains in sales of pharmaceutical raw materials and intermediates and medical
materials in the medical and pharmaceutical field along with rising sales of hygiene products-related materials in the skin careand toiletries field. Overall sales were lower, however, due to reduced sales in the pharmaceutical business in the medical andpharmaceutical field and lower sales in Japan and overseas of AA2G™ in the skin care and toiletries field.
As a result, sales for the segment amounted to ¥85.91 billion, which was a ¥42.18 billion (+96.5%) increase compared to the
cumulative consolidated second quarter of the prior fiscal year. Operating income grew ¥1.02 billion (+51.7%) year on year,
reaching ¥3.02 billion.

Other
No special matters to disclose.

(2) Financial Positiona. Assets, Liabilities and Net Assets
As of the end of the consolidated second quarter, current assets amounted to ¥354.06 billion. This represents a decrease of¥25.26 billion compared to the end of the prior consolidated fiscal year due primarily to decreases in cash and deposits andaccounts receivable. Non-current assets amounted to ¥248.06 billion, up ¥15.92 billion from the end of the prior consolidated
fiscal year. This increase was mainly due to an increase in investment in securities stemming from a rise in the fair value ofshares owned by the Company, despite a decrease resulting from the amortization of intangible fixed assets. As a result, total
assets decreased by ¥9.34 billion compared to the end of the prior consolidated fiscal year, down to ¥602.13 billion.
Liabilities amounted to ¥271.71 billion, a decrease of ¥26.52 billion compared to the end of the prior consolidated fiscal year.
－3－

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

This was mainly due to decreases in commercial paper and accounts payable.
Net assets amounted to ¥330.41 billion, up ¥17.17 billion from the end of the prior consolidated fiscal year. This increase wasmainly due to the recording of profit attributable to owners of the parent in the amount of ¥10.18 billion and an increase in net
unrealized holding gain on securities, despite a decrease in translation adjustments.
As a result, the Company recorded a shareholders’ equity ratio of 53.6%, up 3.7 points over the 49.9% at the end of the priorconsolidated fiscal year.

b. Summary of Consolidated Cash Flows
Cash and cash equivalents (“Cash”) in the cumulative consolidated second quarter amounted to ¥37.02 billion, a decrease of¥13.44 billion (-26.6%) compared to the end of the prior consolidated fiscal year. Cash flows from operating activities
amounted to ¥13.24 billion while Cash used in investing activities amounted to ¥2.59 billion, and Cash flows from financing
activities amounted to ¥23.63 billion, in addition to the ¥460 million decrease in Cash caused by exchange rate changes.

(Cash Flows from Operating Activities)
Cash flows from operating activities for the cumulative consolidated second quarter amounted to ¥13.24 billion. While theCompany recorded ¥5.34 billion in income taxes paid, profit before income taxes amounted to ¥15.17 billion, Cash reserved
associated with depreciation and amortization amounted to ¥5.32 billion, and Cash from a decrease in working capitalamounted to ¥2.21 billion.

(Cash Flows from Investing Activities)
Cash used in investing activities for the cumulative consolidated second quarter amounted to ¥2.59 billion. This result was
mainly due to ¥8.19 billion in purchases of property, plant and equipment and investments in securities, as opposed to ¥5.74
billion in proceeds from sales of investments in securities.

(Cash Flows from Financing Activities)
Cash used in financing activities in the cumulative consolidated second quarter was ¥23.63 billion. This result was mainly due
to a net decline in commercial paper of ¥20.0 billion and dividend payments of ¥2.72 billion.

(3) Qualitative Information Related to Consolidated Earnings Forecasts
Our consolidated earnings forecast for the current fiscal year was created based on the assumption that the economy would
gradually recover from the impact of COVID-19 in the second half. However, our sales for the first half were relatively
stronger than the previous earnings forecast, mainly due to the economic activities resuming earlier than expected and atemporary increase in the demand caused by a supply uncertainty attributable to the spread of the COVID-19 pandemic.
On the other hand, as the COVID-19 pandemic continues to grow worldwide, we forecast as of the end of the consolidated
second quarter that the shift to a full-fledged recovery will be pushed back to the following fiscal year or thereafter. We also
anticipate that costs for sustainable growth including investment to promote DX will be higher in the second half than in thefirst. Furthermore, there is a possibility of temporary costs occurring as a result of actively reviewing our portfolio. Therefore,
at this point, we will not make changes to the consolidated earnings forecast released on May 14, 2020.

－

4

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly Consolidated Balance Sheets
Prior Consolidated Fiscal Year
(March 31, 2020)
ASSETS
Current assets
Cash and time deposits
Notes and accounts receivable
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Less allowance for doubtful accounts
Total current assets
Non-current assets
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
Retirement benefit asset
Deferred tax assets
Other
Less allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

－

5

－

(Millions of yen)
Second Quarter, Current
Consolidated Fiscal Year
(September 30, 2020)

51,408221,116
86,166
1,789
7,730
11,859(732)
379,337

37,850209,475
85,4001,860
7,702
12,384(606)
354,067

74,30975,62835,246
9,064
28,286
72,59733,644
8,276
27,10769,027

76,124
391
1,754
2,085
4,967
(91)
85,232
232,139
611,477

94,128
214
2,183
1,903
5,067
(91)
103,407
248,063
602,131NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

Prior Consolidated Fiscal Year
(March 31, 2020)
LIABILITIESCurrent liabilities
Notes and accounts payable
Short-term loans
Current portion of long-term loans
Commercial paper
Accrued income taxes
Accrued bonuses for employees
Accrued bonuses for directors
Other
Total current liabilities
Long-term liabilities
Bonds
Long-term loans
Deferred tax liabilities
Retirement 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
Net unrealized holding gain on securities
Deferred gain (loss) on hedges
Translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

－

6

－

(Millions of yen)
Second Quarter, Current
Consolidated Fiscal Year
(September 30, 2020)

108,285
30,5901,277
30,000
4,625
5,123
170
20,360200,434

98,445
26,678
7,784
10,000
3,159
5,033
100
20,307
171,509

30,00042,621
9,280
13,6772,221
97,800298,234

30,00039,406
14,80013,9652,030
100,202271,712

9,699
10,646
257,067(5,071)
272,342

9,699
10,646
264,526(5,071)
279,801

32,618
3
1,051
(694)
32,9797,921
313,243
611,477

43,538
(10)
(449)
(418)
42,6607,956
330,418
602,131NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
Income(Quarterly Consolidated Statements of Income)Six-month periods ended September 30, 2020 and 2019

(Millions of yen)Six-month period ended
September 30, 2019

Six-month period ended
September 30, 2020

(April 1, 2019 - September 30, 2019) (April 1, 2020 - September 30, 2020)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rent income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary gains
Gain on sales of non-current assets
Gain on sales of investment securities
Subsidy income
Total extraordinary gains
Extraordinary losses
Loss on sales of non-current assets
Loss on disposal of non-current assets
Impairment losses
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on sales of shares of subsidiaries and affiliates
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit for the period
Profit attributable to non-controlling interests
Profit attributable to owners of the parent

－

7

－

391,900
341,038
50,861
40,233
10,628381,153
327,371
53,782
44,847
8,934

54
1,226
128
175
1,584

67
591
133
570
280
1,643

696
260
421
250
1,629
10,584

481
225
178
885
9,692

14
17
25
57

27
5,597
5,624

21
91
113
10,527
2,526
387
2,914
7,613
190
7,423

7
34
38
10
44
1
138
15,179
3,958
696
4,655
10,523336
10,187

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

(Quarterly Consolidated Statements of Comprehensive Income)Six-month periods ended September 30, 2020 and 2019

(Millions of yen)Six-month period ended
September 30, 2019

Six-month period ended
September 30, 2020

(April 1, 2019 - September 30, 2019) (April 1, 2020 - September 30, 2020)

Profit for the period
Other comprehensive income
Net unrealized holding gain on securities
Deferred gain (loss) on hedges
Translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive loss of affiliates
accounted for by the equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:Shareholders of the parent
Non-controlling interests

－

8

－

7,613

10,523

1,864
30(4,444)
186

10,914(14)(1,470)
276

(282)

(35)

(2,645)
4,967

9,670
20,194

5,120
(152)

19,868325

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)Six-month period ended
September 30, 2019

Six-month period ended
September 30, 2020

(April 1, 2019 - September 30, 2019) (April 1, 2020 - September 30, 2020)

Operating Activities
Income before income taxes
Depreciation and amortization other than amortization of
goodwill
Loss on impairment of fixed assets
Amortization of goodwill
Subsidy income
Increase in retirement benefit liability
Increase in retirement benefit asset
Interest and dividend income
Interest expenses
Exchange (gain) loss, net
Gain on sales of investment securities, investments incapital, shares of subsidiaries and affiliates, andinvestments in capital of subsidiaries and affiliates, net
Decrease in notes and accounts receivable
Decrease in inventories
Decrease in notes and accounts payable
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Investing activities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible fixed assets
Purchases of investments in securities
Proceeds from sales of investments in securities
Purchases of investments in capital
Purchases of shares of subsidiaries resulting in change inscope of consolidation
Decrease on short-term loans receivable included inother current assets(Increase) decrease in time deposits, net
Proceeds from subsidy income
Other
Net cash used in investing activities
Financing Activities
Increase (decrease) in short-term loans, net
Increase (decrease) in commercial paper, net
Proceeds from long-term loans
Repayments of long-term loans
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Other
Net cash provided by (used in) 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
Cash and cash equivalents at end of the period

－

9

－

10,527

15,179

4,522

5,326

904
(25)
1,313
(1,760)(1,280)
696
(23)

38
1,277
687
(429)
(658)
481
122

(17)

(5,584)

6,621
2,394
(7,255)(642)
15,976
1,474(721)(4,282)
12,445

11,697359(9,837)(515)
18,144959(514)(5,344)
13,245(4,192)
75
(189)
(507)
28
(54)

(5,148)42(438)(3,044)
5,746(52)(42,805)

-

303

266

(32)
25
(467)
(47,817)121(90)(2,598)45,176
8,000
456
(414)
(10,000)(0)(2,976)(219)(578)
39,443(3,889)(20,000)
4,383(1,003)(0)(2,728)(290)(104)(23,632)(2,326)

(461)

1,745
44,01745,762(13,447)
50,47137,023

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

(4) Notes Related to Quarterly Consolidated Financial Statements(Assumption for Going Concern)
No matters to report.

(Significant Fluctuations in Shareholders’ Equity)
No matters to report.

(Additional Information)(Application of Tax Effect Accounting for Transition from Consolidated Taxation System to Group Tax Sharing System)
The Company and certain domestic consolidated subsidiaries have calculated the amounts of deferred tax assets and deferred
tax liabilities in accordance with the provisions of tax laws in Japan prior to the amendments based on the treatments stipulated
in Paragraph 3 of Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System (Accounting Standards Board of Japan (ASBJ) Practical Issues Task Force
No. 39, March 31, 2020) instead of applying the provision of Paragraph 44 of Implementation Guidance on Tax EffectAccounting (ASBJ Guidance No. 28, February 16, 2018), regarding the transition to group tax sharing system provided for in
Act for Partial Amendment of the Income Tax Act, etc. (Act No. 8 of 2020), and items for which the non-consolidated taxation
system has been reviewed in line with the transition to the group tax sharing system.
(Effects of COVID-19 Pandemic When Making Accounting Estimates)
The Group made accounting estimates related to impairment loss on non-current assets and recoverability of deferred tax
assets, etc., based on information available at the time the consolidated financial statements were prepared.
In the Additional Information section of the first-quarter report, the Group assumed the economy would gradually recoverfrom the impact of COVID-19 in the second half of the fiscal year ending March 2021. However, as the COVID-19 pandemic
continues to grow worldwide, as of the end of the consolidated second quarter, the Group's accounting estimates reflect theassumption that the shift to a full-fledged recovery will be pushed back to the following fiscal year or thereafter.
There are still many uncertain factors regarding the impact of COVID-19 and it may affect the financial condition andoperating performance of the Group in the consolidated third and subsequent quarters.

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10

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

(Segment Information, etc.)
Segment Information
I Six-month period ended September 30, 2019 (consolidated)
1. Information related to net sales and income (loss) by reportable segment
Reportable Segments
Advanced
Functional
Mobility &Life &
Materials & Electronics
Materials
EnergyHealthcare
Processing

Total

Others(Note) 1(Millions of yen)
Total

Corporate Adjustments Consolidated(Note) 2(Note) 3(Note) 4

Net sales
Sales tocustomers
Intersegment
sales/transfers

87,239137,718

57,30865,651

43,720391,638261

391,900--

391,900

906

1,102

947

1,459

253

4,668

2,879

7,548

-

(7,548)-

Total

88,145

138,820

58,255

67,111

43,974396,3073,141

399,449-(7,548)391,900

Segment income(loss)

2,816

4,439

3,134

1,169

1,990

13,55097

13,648(3,298)278

10,628(Note) 1. “Others” is a business segment consisting of businesses not included in Reportable Segments, and includes logistics
services, information processing services, and professional services.
2. Corporate segment income (loss) represents expenses not allocated to Reportable Segments or Others.
3. Adjustments are eliminations of intersegment transactions.
4. The sum of segment income (loss) Total, Corporate, and Adjustments is equivalent to operating income as presented in“Consolidated”.
2. Information about assets for each reportable segment(Significant increases in assets due to acquisition of subsidiaries)
During the consolidated second quarter, the Company acquired equity in Prinova Group, LLC, adding a total of 18
companies including Prinova Group, LLC and its subsidiaries to the scope of consolidation. In connection with thistransaction, assets of the Life & Healthcare segment increased ¥72,519 million compared to the end of the prior consolidated
fiscal year.
3. Information about impairment loss of non-current assets or goodwill, etc. for each reportable segment(Significant changes in goodwill)
During the consolidated second quarter, the Company acquired equity in Prinova Group, LLC, adding a total of 18
companies including Prinova Group, LLC and its subsidiaries to the scope of consolidation. In connection with thistransaction, the Company recorded goodwill within the Life & Healthcare segment. Following the finalization of theprovisional accounting treatment, goodwill amounted to ¥10,747 million at the end of the consolidated fiscal year.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

II Six-month period ended September 30, 2020 (consolidated)
1. Information related to net sales and income (loss) by reportable segment
Reportable Segments
Advanced
Functional
Mobility &Life &
Materials & Electronics
Materials
EnergyHealthcare
Processing

Total

Others(Note) 1(Millions of yen)
Total

Corporate Adjustments Consolidated(Note) 2(Note) 3(Note) 4

Net sales
Sales tocustomers
Intersegment
sales/transfers

70,214

124,366

54,42346,031

85,910380,946207

381,153--

381,153

790

1,017

550

1,028

196

3,583

3,210

6,793

-

(6,793)-

Total

71,004125,383

54,97447,05986,107384,5293,417

387,946-(6,793)381,153

Segment income(loss)

2,019

3,476

3,538

114

3,020

12,168242

12,410(3,757)

280

8,934

(Note) 1. “Others” is a business segment consisting of businesses not included in Reportable Segments, and includes logistics
services, information processing services, and professional services.
2. Corporate segment income (loss) represents expenses not allocated to Reportable Segments or Others.
3. Adjustments are eliminations of intersegment transactions.
4. The sum of segment income (loss) Total, Corporate, and Adjustments is equivalent to operating income as presented in“Consolidated”.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

(Significant Subsequent Events)(Transfer of shares of consolidated subsidiary, etc.)
At the Board of Directors meeting held on August 28, 2020, the Company resolved to transfer all held shares of Nagase
Medicals Co., Ltd. (hereinafter, "Nagase Medicals"), a consolidated subsidiary of the Company. The Company concluded ashare transfer agreement with Shionogi Pharma Co., Ltd. (hereinafter, “Shionogi Pharma”), a wholly-owned subsidiary ofShionogi & Co., Ltd., on August 31 and completed the transfer on October 1.
(1) Reason for transfer of shares
Based on the manufacturing technology of sterile formulations and highly active formulations, Nagase Medicals has
proceeded with a business structure reform in order to strengthen the company’s competitive advantage in the contract
manufacturing of injections and the development of its proprietary generic drugs. Under these circumstances, theCompany concluded the share transfer agreement since the transfer of shares to Shionogi Pharma, which focuses on thecontract development and manufacturing organization business and aims to become an industry leader in highly potent
injectables and active solid formulations, would lead to further growth of both Shionogi Pharma and Nagase Medicals.
(2) Name of party acquiring shares
Shionogi Pharma Co., Ltd.
(3) Overview of transferred subsidiary
Name: Nagase Medicals Co., Ltd.
Business description: Development, manufacture and import/export of ethical drugs, medical equipment, medical
materials and veterinary drugs
Description of transaction with the Company: Sales of goods and purchases of products(4) Number of shares transferred, transfer price
Shares held before transfer: 596,000 (ratio of equity ownership: 100%)
Number of shares transferred: 596,000 (ratio of equity ownership: 100%)
Transfer price: The Company requested a third-party organization to conduct an assessment, after which the Company
negotiated the transfer price with the other party through a fair process. The price will not be publicly
disclosed from the viewpoint of confidentiality obligation.
Ratio of equity ownership after transfer: 0%(5) Transfer schedule
Date agreement concluded: August 31, 2020
Date shares transferred: October 1, 2020
(6) Name of reportable segment which included transferred subsidiary
Life & Healthcare

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2021

3. Supplementary Information(1) Overseas Sales
I Six-month period ended September 30, 2019 (consolidated)
GreaterChina
I Overseas sales(Millions of yen)

ASEAN

99,964

Americas56,086

Europe17,548

Other

7,459

Total

8,297

189,356

II Consolidated sales(Millions of yen)

391,900

III Ratio of overseas sales toconsolidated sales (%)

25.5

14.3

4.5

1.9

2.1

48.3

II Six-month period ended September 30, 2020 (consolidated)
GreaterChina
I Overseas sales(Millions of yen)

ASEAN

98,494

Americas43,996

42,794

EuropeOther

20,410

Total

9,323

II Consolidated sales(Millions of yen)
III Ratio of overseas sales toconsolidated sales (%)

215,020
381,153

25.9

11.5

11.2

5.4

2.4

(Note) 1. Overseas sales consist of net sales of the Company and consolidated subsidiaries in other countries or regions.
2. Countries/regions are determined by geographical proximity.
3. Major countries in each region(1) Greater China......China, Hong Kong, Taiwan(2) ASEAN...............Thailand, Vietnam(3) Americas.............U.S., Mexico(4) Europe.................Germany, UK(5) Other....................Korea

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56.4