Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017
<Under Japanese GAAP>May 2, 2017
These financial statements have been prepared for reference only in accordance with accounting principles and practices generally accepted in Japan.

NAGASE & CO., LTD.
Stock exchange listing: Tokyo (First Section)
Code number:8012
URL (http: //www.nagase.co.jp/english/)Representative:
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 28, 2017
Start of distribution of dividends (scheduled): June 29, 2017
Securities report filing (scheduled): June 29, 2017
Supplementary documents: Yes
Investors’ meeting: Yes(Note: Amounts have been rounded down to the nearest million yen.)

1. Consolidated Results for the Fiscal Year Ended March 31, 2017
(April 1, 2016 to March 31, 2017)(1) Consolidated Operating Results
Net sales
Millions of yen

FYE March 2017
FYE March 2016
(Notes) Comprehensive income(% = year-on-year change)
Profit attributable toOrdinary income
owners of the parent

Operating income

Millions of yen%

Millions of yen%

722,384(2.7)
15,030 (16.6)
16,361
742,194(2.3)
18,024(0.7)
18,390FYE March 2017: ¥21,798 million (―%)
FYE March 2016: (¥3,845) million (―%)%

Millions of yen%(11.0)(9.7)

10,331
12,316(16.1)
8.8

Earnings per
Earnings per
Ordinary income/Return on equity
share
share (diluted)
total assets
Yen
Yen
%
%
FYE March 2017
81.65
3.7
3.1
−
FYE March 2016
96.96
4.4
3.5
−
(Reference) Equity in earnings of affiliates FYE March 2017: ¥217 million
FYE March 2016: (¥48) million

Operatingincome/net sales
%
2.1
2.4

(2) Consolidated Financial Position
Total assets

Net assets

Net worth ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

FYE March 2017
FYE March 2016

530,775
512,081295,198
279,14954.7
53.5

2,301.10
2,156.67(Reference) Equity capitalFYE March 2017: ¥290,217 million
FYE March 2016: ¥273,963 million

Cash flows fromfinancing activities

Cash and cash
equivalents, end of theyear(3) Consolidated Cash Flows
Cash flows fromoperating activitiesFYE March 2017
FYE March 2016

Cash flows frominvesting activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

14,527
29,376(6,518)(12,600)(10,592)(12,822)

39,73042,9002. Dividends
Annual Dividends per Share
Fiscal
2Q
3Q
year end

1Q

Total dividends

Annualpaid(full fiscal year)

Dividends/

Payout ratio(consolidated)

net assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

−
−
−

16.00
16.00
17.00

−
−
−

16.00
17.00
18.00

32.00
33.00
35.00

4,064
4,162

33.0
40.4
35.3

1.5
1.5

FYE March 2016
FYE March 2017
FYE March 2018 (estimate)

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2018
(April 1, 2017 to March 31, 2018)(% = year-on-year change)
Net sales
2Q (cumulative)
Full fiscal year
(Note)

Operating income

Millions of yen%−
732,000−
1.3

Millions of yen−
19,100

Profit attributable toowners of the parent

Ordinary income% Millions of yen

−
27.1

−
20,900% Millions of yen

−
27.7

−
12,500Earnings per
share

%

Yen

−
21.0

−
99.11

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

* Notes(1) Changes in major subsidiaries during the period (changes in specified subsidiaries accompanying changes in thescope of consolidation): No
New: ― (Company name:)
Excluded: ― (Company name:)(2) Changes of accounting principles, 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: Yesiii. Changes in accounting estimates: No
iv. Restatement of prior period financial statements after error corrections: No(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, 2017
127,408,285 shares March 31, 2016
127,408,285 shares
ii.

iii.

Number of treasury stock as of the fiscal period end
March 31, 2017
1,287,366 shares

March 31, 2016

377,300 shares

Average number of shares during the period
March 31, 2017
126,541,671 shares

March 31, 2016

127,031,413 shares* These consolidated financial statements are not subject to audit by an independent audit corporation* 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 5 of this document.

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

Attachments
1. Business Performance2(1) Review of Business Performance2(2) Review of Financial Position

4(3) Dividend Policy and Dividends for the Fiscal Years Ending March 2017 and 2018

5

2. Basic Policy on the Selection of Accounting Standards

6

3. Consolidated Financial Statements

7(1) Consolidated Balance Sheets

7(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

9(3) Consolidated Statement of Changes in Shareholders’ Equity

11(4) Consolidated Statements of Cash Flows

13(5) Notes related to Consolidated Financial Statements

15(Assumption for Going Concern)

15(Change in Presentation Methods)

15(Additional Information)

15(Segment Information, Etc.)

16(Per-Share Data)

21(Significant Subsequent Events)

21

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

1. Business Performance(1) Review of Business Performance(Performance for the Fiscal Year Ended March 2017)a. General Summary of Results
Despite weakness in personal spending, improved corporate earnings, employment, and payrolls led to a gradual recovery in
the economy of Japan during the current consolidated fiscal year. The global economy continued to grow at a moderate pace,despite slowing growth in China and other emerging economies. Other worrisome factors include uncertainty surrounding the
economic and trade policies of the new U.S. administration and the impact of the British exit from the EU.
In this environment, the Company recorded domestic sales of ¥369.36 billion for the consolidated fiscal year, which
represented a 1.7% increase year on year. Overseas sales, impacted by the comparatively strong yen, fell to ¥353.01 billion(6.9% decrease). In total, the Company recorded ¥722.38 billion in net sales, a decrease of 2.7%.
The Company recorded gross profit of ¥91.5 billion (0.2% decrease) in conjunction with lower revenues. Operating income
amounted to ¥15.03 billion, a decrease of 16.6%. This decrease was mainly due to an increase in retirement benefit expense inconnection with the amortization of actuarial losses. Ordinary income amounted to ¥16.36 billion (11.0% decrease), while
profit attributable to owners of the parent amounted to ¥10.33 billion (16.1% decrease).

b. Segment Summary
Functional Materials
The Functional Materials segment recorded slightly lower sales in both domestic and overseas markets.
The Performance Chemicals business recorded slightly lower sales as a whole, mainly due to lower naphtha prices driving
sales of coating raw materials and urethane materials down in Japan and Greater China.
The Speciality Chemicals business recorded slightly lower sales for the year. While sales of plastic additives and silicone
materials were strong in the Americas, sales fell in other regions.
As a result, the segment recorded sales of ¥153.54 billion for the year, representing a ¥3.6 billion (2.3%) decrease compared tothe prior consolidated fiscal year. Operating income for the segment was ¥4.18 billion, representing a ¥500 million (13.7%)
increase. This increase was mainly due to lower raw materials procurement costs at domestic manufacturing subsidiaries.

Advanced Materials & Processing
The Advanced Materials & Processing segment recorded lower sales in both domestic and overseas markets.
The Colors & Advanced Processing business recorded lower sales. Despite higher sales of conductive materials from domestic
manufacturing subsidiaries, sales of plastic resins for packaging applications and digital print processing materials were lower
both in Japan and overseas.
The Polymer Global Account business mainly sells plastics to office equipment, appliance, and video game device markets.
Here, sales were lower as a whole, as performance declines in sales of thermoplastic resins were lower in Greater China andother overseas markets, despite gains from domestic manufacturing subsidiaries.
As a result, the segment recorded sales of ¥242.6 billion for the year, representing a ¥12.89 billion (5.0%) decrease comparedto the prior consolidated fiscal year. Meanwhile, operating income increased ¥110 million (2.3%) to ¥5.09 billion, mainly due
to improved product mix and cost reduction measures at domestic manufacturing subsidiaries.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

Electronics
The Electronics segment recorded segment sales level with the prior year. Despite higher sales in Japan, driven by theperformance of domestic manufacturing subsidiaries, overseas sales were lower.
The Electronic Chemicals business recorded increased sales for the period, driven by higher sales of formulated epoxy resin to
the electronic components and semiconductor industries.
The Electronic Materials business recorded lower net sales, mainly due to lower sales of materials for touch panels and thinglass processing.
As a result, the segment recorded sales of ¥127.72 billion for the year, representing a ¥200 million (0.2%) decrease comparedto the prior consolidated fiscal year. Operating income for the segment was ¥6.33 billion, representing a ¥70 million (1.2%)
increase. This increase was mainly due to the contribution of higher revenues raising profits at domestic manufacturingsubsidiaries.

Automotive & Energy
The Automotive Solutions business recorded slightly lower sales for the year. While sales increased thanks to growth in theresins business in Japan, the impact of lower naphtha prices drove sales down overseas.
As a result, the segment recorded sales of ¥112.95 billion for the year, representing a ¥2.39 billion (2.1%) decrease comparedto the prior consolidated fiscal year. Operating income for the segment was ¥1.53 billion, representing a ¥230 million (18.4%)
increase. This increase was mainly due to the profit improvements at domestic manufacturing subsidiaries.

Life & Healthcare
The Life & Healthcare segment recorded net sales slightly lower compared to the same period in the prior fiscal year. While
sales were level domestically, sales from Greater China and other overseas regions were lower.
The Life & Healthcare Products business recorded slightly lower sales of TREHA™ and other products to food ingredientmakers in Japan, while sales were also lower in overseas markets. Although the business recorded lower sales of AA2G™ tomajor Japanese customers in the skin care and toiletries field, sales from raw materials sales to the same field in Japan andoverseas grew year on year. In the pharmaceuticals and medical fields, sales of raw pharmaceuticals and intermediates grew,significantly, while sales of medical materials were lower. As a result, the business recorded sales slightly lower compared tothe prior year.
The Beauty Care Products business, which includes sales of cosmetics and health foods, recorded lower sales, mainly due to
weakness in the performance of existing products, despite growth in new product sales.
As a result, the segment recorded sales of ¥84.9 billion for the year, representing a ¥660 million (0.8%) decrease compared tothe prior consolidated fiscal year. Operating income for the segment was ¥3.33 billion, which was ¥530 million (13.8%) lower.
This decrease was mainly due to lower profits in connection with lower sales of cosmetics and health foods.

Other
No special matters to disclose.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

(Forecast for the Fiscal Year Ending March 2018)
a. Performance Forecast for the Fiscal Year Ending March 2018
Personal spending is expected to remain strong throughout the next fiscal year, buoyed by an improving picture in domestic
employment and payrolls. Overseas, corporate earnings and strong personal spending in the United States is expected tocontinue. However, the impact of policies introduced by the new U.S. administration on China and other emerging economies
is unclear, leading to continued instability in the overall business environment.
For the year ending March 2018, we forecast consolidated net sales of ¥732 billion (1.3% year-on-year increase), operating
income of ¥19.1 billion (27.1% increase), ordinary income of ¥20.9 billion (27.7% increase), and profit attributable to ownersof the parent in the amount of ¥12.5 billion (21.0% increase).
These forecasts have been developed based on a currency conversion rate of ¥108 to the US dollar.
(Millions of yen)
Net sales
Fiscal Year ending March 31,

Operating income

Ordinary income

Profit attributable toowners of the parent

732,000

19,10020,90012,500Fiscal Year ended March 31,
2017722,384

15,03016,361

10,331

Change＋1.3％+27.1%+27.7%+21.0%

2018

b. Net Sales Forecast by Business Segment(Millions of yen)
Fiscal year ended March2017 Actual

Fiscal year ending March2018 Forecast

ChangeFunctional Materials
Advanced Materials & Processing
Electronics
Automotive & EnergyLife & Healthcare
Other

153,546
242,609
127,722112,956
84,904644

159,500
257,400
109,200
119,600
85,800
500

+3.9%
+6.1%
(14.5％)+5.9%+1.1%(22.5％)

Total Sales

722,384

732,000＋1.3％(Note) Next-period forecasts are based on information available at the time. Actual earnings may differ from forecasts due to avariety of factors, including, but not limited to, overseas and domestic business conditions, foreign exchange rate
fluctuations, etc.

-4-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017(2) Review of Financial Positiona. Summary of Consolidated Balance Sheets
As of the end of the consolidated fiscal year, current assets amounted to ¥321.21 billion. This represents an increase of ¥8.88
billion compared to the end of the prior consolidated fiscal year, mainly due to increases in accounts receivable in excess ofdecreases in cash and time deposits. Non-current assets amounted to ¥209.55 billion, up ¥9.81 billion. Although the Company
sold shares of affiliates during the period, higher fair values for shares retained resulted in an increase in investments insecurities. As a result of these various factors, total assets increased by ¥18.69 billion, up to ¥530.77 billion as of the end of theconsolidated fiscal year.
Liabilities amounted to ¥235.57 billion, a ¥2.64 billion increase compared to the end of the prior consolidated fiscal year. This
increase was mainly due to increases in accounts payable and long-term deferred tax liabilities.
Net assets amounted to ¥295.19 billion, up ¥16.04 billion. This increase was mainly due to ¥10.33 billion in profit attributableto owners of the parent and an increase in net unrealized holding gain in securities.
As a result, the Company recorded a shareholders’ equity ratio of 54.7%, up 1.2 points compared to the end of the priorconsolidated fiscal year.

b. Summary of Consolidated Cash Flows
Cash and cash equivalents (Cash) decreased by ¥3.17 billion (7.4%) compared to the end of the prior consolidated fiscal year,
amounting to ¥39.73 billion. Cash from operating activities amounted to ¥14.52 billion, while cash used in investing activities
came to ¥6.51 billion, and cash used in financing activities amounted to ¥10.59 billion. In addition, effects of exchange ratechanges had a ¥590 million negative impact on Cash balances, while a merger with a non-consolidated subsidiary had a ¥10
million positive impact.

(Cash Flows from Operating Activities)
Cash flows from operating activities for the consolidated fiscal year amounted to ¥14.52 billion. While the Company paid
¥7.73 billion in income taxes, we also recorded income before profit before income taxes of ¥16.1 billion and depreciation andamortization in the amount of ¥9.38 billion.

(Cash Flows from Investing Activities)
Cash used in investing activities during the consolidated fiscal year amounted to ¥6.51 billion. This result was mainly due tocash outlays of ¥11.53 billion for purchases of property, plant and equipment and intangible fixed assets, as well as ¥1.82
billion used for purchases of investments in securities. These factors offset cash proceeds of ¥4.65 billion in proceeds fromsales of investments in securities.

-5-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

(Cash Flows from Financing Activities)
Cash used in financing activities for the consolidated fiscal year amounted to ¥10.59 billion. This result was mainly due to¥9.18 billion in repayments of long-term loans and ¥4.05 billion in dividend payments.
FYE March
2013

FYE March
2014

FYE March
2015

FYE March
2016

FYE March2017

Shareholders' equity ratio

46.9%

49.5%

51.5%

53.5%

54.7%

Shareholders' equity ratio basedon market value

29.9%

32.5%

36.6%

30.7%

36.9%

Interest-bearing debt to cash
flow ratio

5.3

7.3

6.4

3.0

5.6

Interest coverage ratio

17.7

11.3

13.7

29.0

13.9

Shareholders’ equity ratio: Equity capital/total assets
Shareholders' equity 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 flow provided by operating activities as shown in the consolidated statementsof cash flows.
Interest-bearing debt is all liabilities in the consolidated balance sheets for which interest is payable.
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 Ending March 2017 and 2018
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 ofconsolidated 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 function.
The NAGASE Group declared a year-end dividend of ¥17 per share based on this policy, a ¥1 increase compared to the priorfiscal year. As a result, the scheduled full-year cash dividend will amount to ¥33 per share.
We forecast a full-year dividend of ¥35 per share for the next fiscal year, ¥2 higher than the prior year. This dividend willconsist of a ¥17 per-share interim dividend and a ¥18 per share year-end dividend.

2. 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
comparability.
We have been studying the adoption of International Financial Reporting Standards (IFRS) for some time, and plan to make theappropriate policy choice in the future, considering external trends and other factors.

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NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Millions of yen)
Prior Consolidated Fiscal Year
(March 31, 2016)

Current Consolidated Fiscal Year
(March 31, 2017)

43,283
196,335
57,404
1,726
3,789
2,842
7,843
(890)
312,334

39,830206,846
58,162
1,309
3,648
2,375
9,681
(638)
321,215

55,731(29,915)
25,816
62,660(47,245)
15,414
18,91022,962(16,629)
6,333
66,47454,911(30,879)
24,032
62,929(47,552)
15,376
21,93922,850(16,578)
6,271
67,61924,582
15,366
4,567
44,51623,034
13,791
3,916
40,742

81,345
1,023
1,544
5,017
(174)
88,755
199,747
512,081

94,548
482
1
1,524
4,930
(289)
101,197
209,559
530,775

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
Other
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-7-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

(Millions of yen)
Prior Consolidated Fiscal Year
(March 31, 2016)

Current Consolidated Fiscal Year
(March 31, 2017)

97,80025,294
8,823
4,305
13
4,224
194
15,461
156,118

102,076
28,162
3,522
10,000
1,849
37
4,512
171
16,161
166,494

30,00023,1088,433
14,0601,211
76,813232,932

20,00020,07813,503
14,625874
69,082
235,576

9,699
11,615
213,572(230)
234,657

9,699
11,590219,721(1,337)
239,674

37,074(9)
4,411(2,169)39,3055,185
279,149
512,081

47,683
4
3,129
(274)
50,542
4,981
295,198
530,775

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
Non-controlling interests
Total net assets
Total liabilities and net assets-8-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Millions of yen)
Prior Consolidated Fiscal Year
(April 1, 2015 March 31, 2016)

Current Consolidated Fiscal Year
(April 1, 2016 March 31, 2017)

742,194
650,530
91,663722,384
630,881
91,503

11,21422,0202,861
177

10,84322,124
2,739
166

4,343

4,259

403
37
(23)
1,634
30,96773,63918,024

4,487
32
(4)
1,543
30,28076,472
15,030

202
1,360
293
643
2,499

195
1,616
296
217
589
2,915

1,048
48
401
635
2,133
18,390

1,032
79
473
1,584
16,361

57
70
33
161

239
2,006
314
79
2,639

47
251
2,756
9
70
177
3,313
15,2396,536(3,763)
2,772
12,466150
12,316

60
227
290
1,398
25
106
290
500
2,901
16,100
5,020
417
5,437
10,662330
10,331

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
Employee salaries and allowances
Provision for accrued bonuses for employees
Provision for accrued bonuses for directors
Depreciation and amortization other than amortizationof goodwill
Retirement benefit expenses
Provision for retirement benefits for directors
Allowance for doubtful accounts
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rent income
Equity in earnings of affiliates
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 sale of non-current assets
Gain on sale of investment securities
Gain on sales of shares of subsidiaries and affiliates
Subsidy income
Other
Total extraordinary gains
Extraordinary losses
Loss on sale of non-current assets
Loss on disposal of non-current assets
Loss on reduction of non-current assets
Impairment losses
Loss on sale of investments securities
Loss on valuation of investments securities
Loss on sales of shares of subsidiaries and affiliates
Other
Total extraordinary losses
Income before income taxes and non-controlling interests
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of the parent-9-

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

(Quarterly Consolidated Statements of Comprehensive Income)(Millions of yen)
Prior Consolidated Fiscal Year
(April 1, 2015 March 31, 2016)

Current Consolidated Fiscal Year
(April 1, 2016 March 31, 2017)12,466

10,662(7,844)(13)(5,065)(2,835)

10,60214(1,223)
1,895

(553)

(152)

(16,312)(3,845)

11,135
21,798(3,446)(399)

21,622
175

Net income
Other comprehensive income
Net unrealized holding (loss) 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:
Owner of parent
Non-controlling interests- 10 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017(3) Consolidated Statement of Changes in Shareholders’ Equity
Prior Consolidated Fiscal Year (April 1, 2015 to March 31, 2016)(Millions of yen)
Shareholders’ equity
Common stock
Balance, beginning of period

Capital surplus

9,699

Retained earnings

11,654

Less treasury stock,at cost205,203

Total shareholders’equity(228)

226,328

ChangesCash dividends(3,937)(3,937)

Profit attributable to ownersof the parent

12,316

12,316

Purchases of treasury stock(1)

Equity transactions with
non-controlling interests

(1)

(38)

(38)

Changes in scope of
consolidation
Changes other thanshareholders’ equity
accounts (net)(9)

Total changes
Balance, end of period

(9)

-

(38)

8,368

(1)

8,328

9,699

11,615

213,572(230)

234,657

Accumulated other comprehensive income (loss)

Balance, beginning of period

Net unrealized
holding gain on
securities

Deferred (loss)
gain on hedges

Translation
adjustments

44,920

3

9,478

Total
Remeasurements accumulated
otherof defined benefit
comprehensive
plansincome666

55,069Non-controllinginterests

Total net assets

6,102

287,500

ChangesCash dividends(3,937)

Profit attributable to ownersof the parent

12,316

Purchases of treasury stock(1)

Equity transactions with
non-controlling interests(38)

Changes in scope of
consolidation
Changes other thanshareholders’ equity
accounts (net)(9)(7,845)(13)(5,067)(2,835)(15,763)(916)(16,679)

Total changes(7,845)(13)(5,067)(2,835)(15,763)(916)(8,351)

Balance, end of period

37,074(9)

4,411(2,169)39,3055,185

279,149- 11 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

Current Consolidated Fiscal Year (April 1, 2016 to March 31, 2017)(Millions of yen)
Shareholders’ equity
Common stock
Balance, beginning of period

Capital surplus

9,699

Less treasury stock,at costRetained earnings

11,615

213,572

Total shareholders’equity(230)

234,657

ChangesCash dividends(4,050)(4,050)

Profit attributable to ownersof the parent

10,331

10,331

Purchases of treasury stock
Disposal of treasury stock0

Equity transactions with
non-controlling interests(25)

Balance, end of period(1,107)00(25)Changes resulting frommerger with unconsolidated
subsidiaries
Changes in scope of equity
affiliates
Changes other thanshareholders’ equity
accounts (net)Total changes(1,107)

0

0

(132)

(132)

-

(25)

6,149

(1,107)

5,016

9,699

11,590219,721(1,337)

239,674

Accumulated other comprehensive income (loss)

Balance, beginning of period

Net unrealized
holding gain on
securities

Deferred (loss)
gain on hedges

Translation
adjustments

37,074

(9)

4,411

Total
Remeasurements accumulated
otherof defined benefit
comprehensive
plansincome(2,169)39,305

Non-controllinginterests

Total net assets

5,185

279,149

ChangesCash dividends(4,050)

Profit attributable to ownersof the parent

10,331

Purchases of treasury stock(1,107)

Disposal of treasury stock0

Equity transactions with
non-controlling interests(25)

Changes resulting frommerger with unconsolidated
subsidiaries
Changes in scope of equity
affiliates
Changes other thanshareholders’ equity
accounts (net)

0(132)
10,60914(1,281)

1,895

11,236(204)

11,032

Total changes

10,60914(1,281)

1,895

11,236(204)

16,049Balance, end of period

47,683

4

3,129

(274)

50,542

4,981

295,198- 12 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017(4) Consolidated Statements of Cash Flows(Millions of yen)
Prior Consolidated Fiscal Year
(April 1, 2015 March 31, 2016)

Current Consolidated Fiscal Year
(April 1, 2016 March 31, 2017)15,23916,100

9,493

9,381

1,634
2,756
(848)
(1,562)
1,048
(640)
(10)

1,543
1,398
(314)
290
3,297
(1,812)
1,032
345
(178)

(94)

(1,690)

6,784
3,162
(3,829)(168)
32,964
1,965(1,013)(4,540)29,376(11,885)(1,017)
5,198(614)
21,0752,235(1,045)(7,737)
14,527(8,937)414(10,667)976(1,898)(867)(2,129)213(358)(1,825)
4,658
(53)

-

293

(177)

434

(351)
623
(12,600)

274
314
(54)
(6,518)(3,764)
1,976(6,440)
9,949(10,000)(1)(3,937)(421)(182)(12,822)3,232
950(9,182)(1,107)(4,050)(254)(181)(10,592)

Operating activities
Profit before income taxes
Depreciation and amortization other than amortizationof goodwill
Amortization of goodwill
Loss on impairment of fixed assets
Subsidy income
Loss on reduction of non-current assets(Decrease) increase in liability for retirement benefits
Interest and dividend income
Interest expenses
Exchange gain, net
Gain on sales of property plant and equipment, net(Loss) gain on sales of investment securities,
investments in capital, shares of subsidiaries andaffiliates, and investments in capital of subsidiaries andaffiliates, net
Increase in notes and accounts receivable(Increase) decrease in inventories(Decrease) increase in notes and accounts payable
Other, net
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 included in otherassetsPurchases of investments in securities
Proceeds from sales of investments in securities
Purchases of investments
Proceeds from sales of shares of subsidiaries resulting
in change in scope of consolidation
Increase on short-term loans receivable included inother current assets, net
Decrease in time deposits, net
Proceeds from subsidy income
Other, net
Net cash used in investing activities
Financing activities
Decrease in short-term loans, net
Proceeds from long-term loans
Repayments of long-term loans
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Other, net
Net cash used in financing activities- 13 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

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 resulting frommerger with unconsolidated subsidiaries
Cash and cash equivalents, at end of the period- 14 -(1,575)

(596)

2,377
40,522(3,180)42,900-1042,90039,730NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017(5) Notes related to Consolidated Financial Statements(Assumption for Going Concern)
No matters to report.

(Change in Accounting Policy)
The Company and certain domestic affiliates had valued inventory according to the weighted-average method. In the
consolidated second quarter of the current fiscal year, these entities have changed to the moving-average method of inventory
valuation. This change in inventory valuation method was made in conjunction with the adoption of a new enterprise system inAugust 2016. By calculating payout costs on a more timely basis, the Company believes it will be able to determine periodic
income or loss more promptly and accurately.
The Company has not applied this change retroactively to restate prior financial statements, as management has not judged theimpact of this change to be material.

(Additional Information)(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company has adopted Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26;
March 28, 2016), effective the current consolidated fiscal year.

(Revised Balances for Deferred Tax Assets and Deferred Tax Liabilities due to Change in Corporate Tax Rates)
The Act for Partial Revision of Acts, Including Partial Revision of the Consumption Tax Act for the Fundamental Reform of
the Taxation System to Achieve a Stable Source of Revenue for Social Security and the Act for Partial Revision of Acts,
Including Partial Revision of the Local Tax Act and the Local Allocation Tax Act for the Fundamental Reform of the Taxation
System to Achieve a Stable Source of Revenue for Social Security (Act No.86, 2016) were enacted by the Japanese
government on November 18, 2016. In conjunction with these acts, the effective date for the increase in Japanese consumption
tax rate to 10% was extended from April 1, 2017 to October 1, 2019.
Accordingly, the effective dates of the abolition of the local corporation special tax, the accompanying restoration of thecorporate enterprise tax, and changes in statutory tax rates for local corporation taxes and corporate inhabitant taxes have been
extended from consolidated fiscal years beginning April 1, 2017 or later to consolidated fiscal years beginning October 1, 2019or later.
While these revisions do not affect statutory effective tax rates, a reclassification in tax rates has arisen between national taxes
and local taxes. The Company and certain consolidated subsidiaries have been using the consolidated tax payment system.
Accordingly, deferred tax assets have decreased for consolidated subsidiaries whose judgments regarding recoverability ofdeferred tax assets differ between national taxes based on the consolidated tax payment system and local taxes based on nonconsolidated local tax payments. At the same time, deferred income taxes have increased by the same amount.
This change does not have a material impact on the Company.

- 15 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

(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 next stage of the value chain), Electronics, Automotive & Energy, andLife & Healthcare (these last three segments functioning across all industries).
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, auxiliaries, plastic
materials, plastic additives, industrial oil solutions, surfactants, fluorochemicals, encapsulant materials, silicone materials, andmore for the paints/inks, resins, urethane foam, organic synthesis, surfactants, and semiconductor industries.
The Advanced Materials & Processing segment is engaged in sales of dyestuffs, dyes, functional dyes, digital print processing
materials, thermoplastic resins, thermosetting resins, conductive coatings, synthetic rubber, inorganic materials, plastics
products, resins molding tools/dies, and external inspection equipment for the dye/additive, digital print processing material,
fiber processing, raw resin material, resin molding, functional film and sheet, construction, and other industries.
The Electronics segment is engaged in the sales of pre-processing materials and devices for LCD/semiconductors, materials fordisplay panels, materials and devices for semiconductor assembly, low-temperature/vacuum equipment, high-function epoxy
resins, precision electronics abrasives, and more for the display, touch panel, semiconductor, hard disk drive, electronic
components, and heavy electrical industries.
The Automotive & Energy segment is engaged in the sales of plastic products, thermoplastic resins, thermosetting resins,
silicone products, resin molding tools/dies, battery materials, solar cell/secondary battery materials and more for the
automotive, automotive component, and energy industries.
The Life & Healthcare segment is engaged in the sales of pharmaceutical/agricultural chemicals and materials, research
products, in vitro diagnostics, enzymes, food additives, additives for cosmetics, feeds/fertilizers, and surfactants for thepharmaceutical, food, and cosmetics industries. The segment offers radiation measurement as one of its main services. In
addition, this segment sells cosmetics, health foods, and beauty foods directly to consumers.

2. Net Sales, Profit (Loss), Assets, Liabilities, and Other by Segment
Accounting treatment in each reportable segment follows the principles and procedures of the accounting treatments used toprepare the Company’s consolidated financial statements.
Profit in reportable segments is defined as operating income. Inter-segment profits and transfers are based on actual market
prices.

- 16 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

3. Information related to Net Sales, Profit (Loss), Assets, Liabilities, and Other by Segment
Prior Consolidated Fiscal Year (April 1, 2015 to March 31, 2016)

Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1

Total(Millions of yen)Toconsolidated
Corporate Adjustments
financial(Note) 2(Note) 3
statements(Note) 4

Net sales
Sales tocustomers
Intersegment
sales/transfers
Total
Segment income(loss)
Segment assets

157,149

255,505

127,926

115,351

85,571

741,505

689

742,194--742,194

1,955

2,241

1,211

2,626

514

8,549

5,851

14,401-(14,401)-

159,105

257,747

129,138

117,978

86,086750,055

6,540

756,595-(14,401)

742,194

3,679

4,979

6,255

1,300

3,864

20,079215

20,295(2,725)455

18,024

71,042

122,80262,912

42,136

99,620398,5147,213

405,728

145,038(38,685)

512,081

509

859

2,672

157

3,258

7,458

208

7,667

1,826

-

9,493

-

-

132

-

1,502

1,634

-

1,634

-

-

1,634

-

-

672

-

23,90924,582-

24,582--

24,582

1,752

2,389

1,968

1,355

2,385

9,852

1,944

11,797-(53)

11,743

1,690

1,466

2,855

244

2,341

8,598

158

8,757

2,368

-

11,125

Other
Depreciation
and amortization
Amortization of
goodwill
Unamortizedbalance of
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 logistics
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 transactions.
4. The sum of Segment income (loss), Corporate, and Adjustments is equivalent to operating income as presented in the
consolidated statements of income.

- 17 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

Current Consolidated Fiscal Year (April 1, 2016 to March 31, 2017)

Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics
Materials& Energy Healthcare
Processing

Total

Other
(Note) 1

Total(Millions of yen)Toconsolidated
Corporate Adjustments
financial(Note) 2(Note) 3
statements(Note) 4

Net sales
Sales tocustomers
Intersegment
sales/transfers
Total
Segment income(loss)
Segment assets

153,546

242,609

127,722112,956

84,904

721,739644

722,384--

722,384

2,000

2,414

1,977

2,619

472

9,483

5,432

14,916-(14,916)-

155,546

245,024

129,699

115,576

85,376731,223

6,077

737,300-(14,916)

722,384

4,185

5,093

6,333

1,539

3,332

20,484

148

20,633(6,153)550

15,03072,576

121,346

65,61046,25898,221

404,013

5,089

409,102

149,020(27,347)

530,775

476

809

2,524

219

3,412

7,442

216

7,658

1,722

-

9,381

-

-

41

-

1,502

1,543

-

1,543

-

-

1,543

-

-

627

-

22,407

23,034-23,034--23,034

1,716

1,394

2,318

1,235

2,476

9,140

-

9,140

-

(1)

9,139

297

3,561

1,825

284

4,906

10,875190

11,066

1,107-

12,173

Other
Depreciation
and amortization
Amortization of
goodwill
Unamortizedbalance of
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 logistics
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 transactions.
4. The sum of Segment income (loss), Corporate, and Adjustments is equivalent to operating income as presented in the
consolidated statements of income.

- 18 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017b. Other Information
Prior Consolidated Fiscal Year (April 1, 2015 to March 31, 2016)
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

Greater China

363,038

ASEAN

207,191

109,837

Americas

Europe32,016

Other

13,992

Total

16,117742,194(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
59,646

3.

Total
6,828

66,474

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, 2016 to March 31, 2017)
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

369,365

Greater China

193,784

ASEAN

101,998

Americas29,573

Europe11,975(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.
3. Major countries in each region(1) Greater China.......China, Hong Kong, Taiwan(2) ASEAN...............Thailand, Singapore(3) Americas..............U.S., Mexico(4) Europe..................Germany(5) Other.....................Korea- 19 -

Other

15,687

Total

722,384

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017

4. Change in region classifications
The Company had classified its regions as Northeast Asia, Southeast Asia, North America, and Europe & Others. Beginningwith the current consolidated fiscal year, the Company has renamed and reclassified its regions for coordination with theCompany’s ACE-2020, our mid-term management plan. Regional information for the prior consolidated fiscal year has been
prepared based on the new regional classifications.
(1) Northeast Asia renamed as Greater China; Southeast Asia renamed as ASEAN; North America renamed as
Americas. Europe & Others categorized separately into Europe and Other.
(2) Brazil, formerly classified under Europe & Others, now included in Americas(3) Korea, formerly classified under Northeast Asia, now included in Other(2) Property, plant and equipment(Millions of yen)
Japan

Other

Total

61,666

5,952

67,6193. Major Customers
Information not presented here, since no single customer accounts for 10% or more of consolidated net sales.

c. Impairment Losses of Non-Current Assets for Each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2015 to March 31, 2016)(Millions of yen)
Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics& Energy Healthcare
Materials
Processing
Impairment

－

loss

818

1,862

－

36

Corporate/
Elimination

Other
Total
－

2,717

39

Total

2,756

(Note) The profitability of the business assets in the color former manufacturing business of the Advanced Materials & Processing
segment has degraded significantly. Accordingly, the Company has written down the book value of these assets to recoverable
amounts, recording ¥500 million in related impairment costs. The profitability of the business assets in the plastic materials
processing business of the same segment has also degraded significantly. Accordingly, the Company has written down thebook value of these assets to recoverable amounts, recording ¥304 million in related impairment costs.
At present, the Company does not believe the commercial adhesive development and manufacturing business of theElectronics segment will return profits as originally projected. Accordingly, the company has written down the book value ofthe associated goodwill of this business to recoverable amounts, recording ¥1,364 million in impairment costs. The profitabilityof the business assets in the thin glass processing business for glass substrate of the same segment has also degradedsignificantly. Accordingly, the Company has written down the book value of these assets to recoverable amounts, recording¥440million in related impairment costs.

Current Consolidated Fiscal Year (April 1, 2016 to March 31, 2017)(Millions of yen)
Reportable Segments
Advanced
Functional
Automotive
Life &
Materials & Electronics& Energy Healthcare
Materials
Processing
Impairment
loss

－

1,352

1

－

38

Corporate/
Elimination

Other
Total

1,392

－

6

Total

1,398

(Note) The Advanced Materials & Processing segment recorded impairment loss of ¥1,249 million in the color former manufacturingbusiness assets due to decreasing profitability. The Company wrote down the book value of these assets to their recoverable
amounts.
- 20 -

NAGASE & CO., LTD. (8012)
Consolidated Financial Statements for the Fiscal Year Ended March 31, 2017d. Amortization and Unamortized Balance of Goodwill for Each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2015 to March 31, 2016)
Omitted, as the same information has been disclosed under Segment Information.

Current Consolidated Fiscal Year (April 1, 2016 to March 31, 2017)
Omitted, as the same information has been disclosed under Segment Information.

e. Information about Gain on Negative Goodwill for Each Reportable Segment
Prior Consolidated Fiscal Year (April 1, 2015 to March 31, 2016)
No matters to report.

Current Consolidated Fiscal Year (April 1, 2016 to March 31, 2017)
No matters to report.

(Per-Share Data)

Prior Consolidated Fiscal Year
(April 1, 2015 - March 31, 2016)

Current Consolidated Fiscal Year
(April 1, 2016 - March 31, 2017)

Net assets per share¥2,156.67¥2,301.10

Earnings per share¥96.96¥81.65(Note) 1. Information for 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 shown below.

Prior Consolidated Fiscal Year
(April 1, 2015 - March 31, 2016)

Current Consolidated Fiscal Year
(April 1, 2016 - March 31, 2017)

Profit attributable to owners of the parent(millions of yen)

12,316

10,331

Profit attributable to common stock owners of theparent (millions of yen)

12,316

10,331

Average number of outstanding shares of common
stock (shares)

127,031,413

126,541,671(Significant Subsequent Events)
No matters to report.

- 21 -