NAGASE & CO., LTD.

May 21, 2001

Consolidated Brief Financial Reports(April 1,2000March 2001 to March 31,2001)
Code No: 8012.
Date held Board of Directors for settlement of accounts: May 21, 2001.
Application of Accounting Standards of the U.S.A. (yes or no): No.
Listed stock Exchange : Tokyo and Osaka
Location of the Head Office: Osaka.
1. Consolidated performance for from April 1, 2000 to March 31, 2001
(1) Consolidated management performance

Term ending March, 2001
Term ending March, 2000

Sales

Operating income

Ordinary income

Net income(Million yen㧛%)(Million yen㧛%)(Million yen㧛%)(Million yen㧛%)559,372 (ٌ1.6)
568,293( 0.9)

7,752 (ٌ4.9)
8,147 ( 4.6)

10,282 ( 4.0)
9,885 (16.3)

4,945 (ٌ22.4)
6,371( 78.9)
Sales ordinary
income rate(%)

Earnings per Share

Return on
Equity(ROE)

(Yen)

(%)

Return on
Assets(ROA)(%)

Term ending March,2001

35.28

3.4

3.1

1.8

Term ending March,2000

44.25

4.9

3.2

1.7

(Note)
Ԙ Investments profit and loss by the equity method ;375 million yen (Term ending March,2001) , 770 million yen (Term ending March,2000)
ԙ Shares number averaged during age (consolidated) ;140,173,640 shares(Term ending March,2001) , 143,992,725 shares (Term ending March,2000)
Ԛ The changes in the mode of accounts treatment ; None.
ԛ Sales,Operating income,Ordinary income, Net income are shown in % change against previous year.
(2) Consolidated financial position
Total assets

Shareholders' equity

Ratio of
Shareholders' equity

Book value per
share(Million yen)

(Million yen)

(%)

(Yen)

Term ending March, 2001

353,776

153,498

43.4

1,104.81

Term ending March, 2000

316,657

134,83842.6

952.67(Note)The issued and outstanding at the end of a term (consolidated);
138,936,961 shares(Term ending March,2001) , 141,536,533 shares (Term ending March,2000)

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NAGASE & CO., LTD.

(3) Conditions of consolidated cash flow
Operating activit ies

Investing activit ies

Financing activities Cash and cash

equivalents
ending balance(Million yen)

(Million yen)

(Million yen)

(Million yen)

Term ending March, 2001

8,165

ٌ4,162

ٌ8,306

18,465

Term ending March, 2000

3,613

ٌ2,607

ٌ28

ٌ21,015(4) The matter concerning consolidated range and application of one -line consolidation.
Number of consolidated subsidiaries: 28
Number of unconsolidated subsidiaries accounted for by the equity method: 0
Number of affiliates (possession of 15-50% shares) accounted for by the equity method; 8(5) Changes in the consolidated range and application of by the equity method
Consolidated(New): one(Exclusion): one
The equity method(New): one(Exclusion): one
2. Prospects for consolidated performance at the term ending March 2002
( from April 1, 2001 to March 31, 2002)
Sales

Ordinary income

Net income(Million yen)

(Million yen)

(Million yen)

266,000

4,700

2,600

Through the term
532,000
9,500(Reference): Expected earning per share (through the term) 37.43 yen

5,200

Mid-term.

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NAGASE & CO., LTD.

Management policy
1.Basic policy of management
Management Philosophy
The Nagase Group is a member of society and, as such, it is our duty to behave in a manner inkeeping with this role by maintaining good and fair business practices and providing society with thegoods and services it needs. Through continued growth and development, Nagase can improve thewelfare of its employees, while making a contribution to society.
Keeping in mind of the above Mana gement Philosophy, we are looking forward to bě The
Technology and Intelligence Oriented Company that turns wisdom into business̍as the 21st century new
management vision.
This vision is based on a thought ̌that there is every answer in the market̍and without adhering to
the type of trading operation as ̌a business firm̍, we do our best to develop of our business by driving
customer oriented business with wisdom added experience to our technology and information.
Trading with simple intermediary function is no longer to meet diversifying customer needs and wecannot hope to stay with the stable commercial rights. Being fully aware of passing the time of simple
intermediary business, we also think it's a time than no single one company is able to play all functions
only by itself. We are going to build up the strength of our functions listed below so that our customers
select us without hesitation as their partner when they create new value:-Substantiation of R&D and production function-Investment along with our business strategy and new business- development-Reinforcement of physical distribution capability-Maintenance and expansion of mutual confidence among many domestic and overseas
business partners cultivated for long years-Reinforcement our own human resources
We will continue to offer our business proposal to the market focusing on the business fields based on
the above.
2. Basic policy concerning profit distribution
Securing the retained earnings available for intensification of corporate strength and prospective
business development, we will continue to keep a stable dividend distribution as our basic policy.
We will make good use of our internal reserves to effective investment on our prospective business infuture as well as intensifying our financial capability under severer business environment foreseeable.
Also we want to make profit return regularly to shareholders by implementing depreciation by purchase3

NAGASE & CO., LTD.

of treasury stocks by our profit.
3.Mid-to-long term management strategy
We have introduced Medium-term management plan "WIT2000" (W:Wisdom / I: Intelligence / T:
Technology) for three year beginning from April, 2000 to March, 2003 setting forth important businessstrategy and objective to be achieved. In order to gain more profit tha n capital cost to keep growing withprofit, we started to use Nagase style ROE (NROE) as new management indicator with which we set ourtarget up 7% in fiscal 2003 on consolidated basis. Our program for the above plan is as follows:-Aiming at the earnings more than capital cost to continue profitable growth, we will, within
Nagase's profit, more positively invest in our most important fields of electronics and health careindustries.
-We put more emphasis on consolidated management. We will reinforce and bring up our
manufacturing group of companies and strengthen operational expertise of marketing andservicing group of companies to promote efficiency of Nagase group and improvement of
productivity.
-We divided our business into four segments of chemical products, plastics, electronics and healthcare to make core, challenge task for each segments for concentration of our resources.
(Note)
NROE = Nagase profit / equity capital at the beginning of the period
Nagase profit = Profit after tax + (depreciation r appraisal profit/loss)(1㧙effective tax rate)
Nagase profit means so called business cash flow created with business activity.
4. A policy concerning maintenance of company's management organization
We adopted a resolution to introduce new executive officer regime at Board of Directors' meeting in
April, this year after the 86th ordinary general meeting of stockholders (June 28, 2001). We make clear
the position of Board of Directors as "organization for decision making in management policy andstrategy" for supervising performance of operations " and separate the function of management (Boardof Directors) and of operations (executive officer regime) for the purpose of speed up decision- making
and reinforced operations.
By this separation, we are going build up the company status suitable for 21st century and speedup of
the performance of medium-term management plan "WIT2000" prepared with the aim of earning-power
improvement as a group and the achievement of the objective.
5. Objective the Company should deal with
Toward implementation of Medium-term management plan "WIT2000", we are going to deal with4

NAGASE & CO., LTD.

the following important issues to improve our earning-power, and to strengthen and grade up ourmanagement status.
5-1. Reinforcing R&D and production function
In order to proceed business developmentally going above the framework of trading house, we aregoing to reinforcing R&D and production function. For the purpose of strengthen production
function by merging four companies of (old company name) Nagase-Chiba Ltd., Teikoku Chemical
Industries Co., Ltd., Nagase Chemicals Ltd., Nagase Biochemicals Ltd., we have organized Nagase
ChemteX Ltd. as a new regime since April, this year. Because of starting this new company, we are
now ready to respond to wide range of market needs in electronic field from synthesis of raw
material for electronics to such application products as centering on liquid encapsulation material fornext generation semiconductor package. In the field of pharmaceutical, we are driving fusion oforganic synthesis technology with biotechnology including enzyme technology, and we are going todevelop application of kiral technology our R&D Center has.
We are looking forward to seeking overseas production by our affiliates, foundation of JV, andbusiness tie-up with overseas firms for reinforcement of our R&D and production function. Our
research and development capability and manufacture function have been strengthening.
5-2. Investments along with business strategy and upbringing of new business
Concentrating management resources to highly strategic business to strengthen our businessfoundation and competitiveness, we have been making strategic investment countinusly.
Along this line, we will introduce new technology of semiconductor wafer from Pack Tech,
Germany in our electronics business and have established Alpha Bumping Technology (K.K) in
cooperation with Kiyokawa Plating Industry Co.,Ltd.. Furthermore, Nagase ChemteX Ltd. hasstarted local production of chemicals for liquid crystal display in Taiwan and completed production
network at world production center of liquid crystal panel in Japan, Korea and Taiwan. They are now
under consideration to set up a new plan to strengthen manufacturing function furthermore in
Southeast Asia / China where world electronic component manufacturing bases is located. And wewill also positively introduce new technology in this field.
For reinforcement and upbringing of our Health Care business, we entered into a business tie- up
in respect to capital and business with Japan Medical Bank System Co., Ltd.. Thus we haveparticipated as a new comer to electronic chart business that is expected very high growth in future.
In addition to the above, we have been exerting our efforts to build up new sales network by
establishing Herbal Care Co., Ltd. with the purpose to sell health food and cosmetic throughmail-order system and/or at shop.
For plastic business, we have made a business tie-up with Kasai Kogyo Co., Ltd. that is one of the5

NAGASE & CO., LTD.

largest car interior decoration component manufacturers in order to strengthen our business in theauto industry that globalization is still underway. And Kotobuki Industries Co., Ltd. has also
completed their new plant for food packaging material fully complied with HACCP at kanuma,
Tochigi Pref. to meet requirements of the food industry.
As for a new business, we started sales of DVD-R drive in advance to others at "Nagase Direct",
EC site that we operate marketing and distribution. And we have initiated dealings including
personal image editing business in which we play unique role in the field of DVD/image where highgrowth is expected.
5-3. Importance of consolidated management
Not only integrating our manufacturing group, but also our marketing group of four dyestuff sales
firms are integrated into Nagase Colors & Chemicals Co.,Ltd. for intensification of our sales
strength. In addition, Nagase Business Support Corp. was established last October and Nagase Trade
Management. Ltd. was established, this April, both for the purpose to promote Group Management.
5-4. Reinforcing overseas business development
As we operate six sales bases and three production bases in China as world manufacturing center,
we tried to expand the plastic and electronic materials more. And we are about to reinforce our deals
with synthetic dyes and pharmaceutical raw material, which are our core businesses. And at the sametime, we have opened Nagase Middle East office, an our representative office at Dubai, that is a
distribution center connecting Europe and Asia to reinforce our overseas chemical business development.
We look forward to reinforce our overseas base time to time.
5-5. Reinforcement of IT
The ups and downs of firms are decided by how to make good use of IT. We are tackling withconstruction of IT business including SCM construction with overseas corporation, cooperation inbusiness with European and American IT venture, investment to domestic IT venture, and operationof our own EC site. Also in reply to the requests of our customers who are shifting their production
to overseas, we will continue to propose business to create added value together with our customers
through not only providing information requested by our customers' but also try to improve physicaldistribution by building up IT network between Japan and Asia.
5-6. Intensification of human resources
We are facing at a big turning point of business circumstances including progress ofinternationalization, diversification of transaction field, changes in industrial structure. To cope withthese trends, we think we need such organization to create new added-value services and business

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NAGASE & CO., LTD.

and have introduced new personnel management system mainly consisting of open call forparticipants system, FA system. We also continue our efforts to bringing up talented person byoffering training program for business study and on-job training at our overseas office etc.
5-7. Considerations to environment problem
We have declared " business promotion taken considerations to environment " as a policy anddecided it as features of our environmental protection activity to contribute to circumstances throughexpansion and creation of Eco-business. This is to reduce environmental load charged as a result ofour business activities.
Particularly taking advantage of our standing as technology-information enterprise, we will
aggressively make suggestions for Eco- material, Device and System that contributes to reduction inenvironmental loads through providing information on safety of chemicals as well as on
zero-emission.

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NAGASE & CO., LTD.

Business Performance
1. Outlook for this term
Circumstances
Japanese economy during the term was firm in respect to private investment both by manufacturing
and non- manufacturing sector with increasing tone but it was not yet attain full-scale recovery keeping
low level personnel consumption and fair ly high jobless rate and leveling personnel income. Under thecircumstances, domestic economy has been in mild deflation with fear for dark and uncertain future.
For overseas economy, though European economy was firm and steady, Asian economy became dullin business expansion. In addition, slowdown of the U.S.A. economy became remarkable and concerned
it's influence on the world economy.
Consolidated sales
Net sales of the term decreased by 1.6% over the previous year to 559.37 billion yen of whichdomestic sales was 392.55 billion yen (by 2.9% down) and overseas sales was 166.81 billion yen (by1.6 % up).
Outlook by division
ChemicalSales: 237.87 billion yen (4.8% down over previous year)

‫ޣ‬

‫ޤ‬

(Situation during the term)
Business of Chemical Division during the term was firm and steady in the sales of pigments, dyes,
paints, recording material related product, despite dull domestic chemical market; however, dull
pharmaceutical-related business and partially separation and transfer of the business affected wholly to
get reduction in sales against the previous year.
- For recording material related business, export of thermal paper and pressure sensitive papermaterial mainly to Europe was good and smooth. Color and paint & ink material related businessshowed growth both in sales and profit through our thorough customer-oriented sales activity.
-Bulk pharmaceuticals and pharmaceutical intermediates related business were substantially down due
to a partial loss of commercial rights. And resin material-related business faced poor growth in tradewith large domestic users. Also flavoring material, surfactants and toiletry-related business were dull
due to influence of decreased export.
-Because of establishment of new organization to promote business, sales of electronics related
chemicals were continued firm and steady with brisk sales of cleaners for precision parts etc. fromthe previous year.
-For dyestuff, farming and life style related business sales companies were organized to intensify the8NAGASE & CO., LTD.

activities while livestock related business was transferred to DeLaval Nagase KK.
(Situations of Group Company)-Teikoku Chemical Industries Co., Ltd., Nagase(Europe) Ltd., Nagase America Corp. showed poor
performance comparing to previous year due to partial loss of commercial rights in somepharmaceutical related business.
- Nagase Biochemicals, Ltd. recorded firm and good enzyme sales mainly on catalase.
-Nagase Chemicals Ltd. showed poor performance over last year due to unfavorable export ofchemical related products.

‫ ޣ‬Plastics ‫ ޤ‬Sales: 205.46 billion yen (by 6.6% up over previous year )(Business situations)
For plastics business, as growth was not expected in material sales, domestic sales of finishedproducts and environmentally safety material related products was focused. For overseas, sales ofindustrial plastics for information device and equipment grew substantially centering on East Asia
backed by customers' production shifting to overseas and/or demand expansion of personal computer.
-For automobile field, tho ugh registered number of domestic cars remained slight increase, plastic forheadlamps and interior decoration showed growth.
-For electrical machinery & appliances /information machine and device field, domestic sales
remained as almost same level as last year by off setting loss in sales of industrial plastics due to
production shifting to overseas with sales of magnesium alloy and plastics/  equipment forphoto-conductive plate, etc. For overseas, sales of polycarbonate resin for optical disk in Taiwan, andsales of industrial plastic for body/ interior parts in Hong Kong and China due to production
shifting of PC related device and equipment were all recorded substantial growth. For electric wire
field, though remained sluggish in domestic wire business, sales of covering material for submarine
cable and waterproofing material for optical cable showed firm and steady growth.
- For packaging and building materials field, it was firm and steady in sales because of starting deal
with high value-added products of packing material for electronic parts while trying to maintainsales of general purpose plastics for film, sheet and pipe.
-For environmentally related business field, various products using our original new recyclable
material "PLUSWOOD" was started. And sales of natural biodegradable resins also grew well andsmooth.
(Situations of Group Company)-Totaku Industries, Inc. showed growth in sales due to sales promotion of new products including

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NAGASE & CO., LTD.

non-PVC hose and discharged air-cycling horse for cleaners. Kotobuki Industries Co., Ltd.
decreased sales due to partially sluggish sales while Setsunan Kasei Co., Ltd. did the same byreviewing non-profitable business.
- Asian overseas local subsidiaries, Nagase Singapore (Pte) Ltd., Nagase (Hong Kong) Ltd, andNagase (Thailand ) Co., Ltd. showed significant growth in sales of industrial plastics due to
production shifting from Japan and/or increased production of OA equipment.
-Nagase America Corp. showed growth in sales of plastics and hardware for automobile, while
Nagase Europe recorded poor performance against last year both in mold and parts business.

‫ ޣ‬Electronics‫ ޤ‬Sales: 103.38 billion yen (by 5.8% down over previous year )(Business situations)
For electronics business, chemical supply system for LCD production, plastic for semiconductor
manufacturing unit, encapsulation-related products and IC chip related for communication recorded thegrowth. However overall performance scored less than that of previous year as a whole because harddisk plate-related products were influenced by reduced amount of media due to technical innovation ofrecording density technology and as due to substantial decrease in sales because of reduction in selling
unit price of LCD.
-For LCD-related business, chemical supply system for LCD production was continue to be favorable
in line with domestic new investment as well as manufacturers' investments in Republic of Korea
and Taiwan. And polarizing plate for domestic handy phone, glass processing business and device
manufacturing business in China showed the growth respectively but on the other hand LCD was
influenced by large price reduction in the market.
-For semiconductor and functional-related material, export of encapsulation material for Taiwan andSingapore as well as fluorine material for electronic part and the second battery-related were firmand smooth in growth and did the same for communication device due to spread of cellular phone.
-For precision grinding-related business, sales of quartz crystal material for cellular phone andabrasive material for silicon wafer increased but reduced the material sales for hard disk plate.
(Situations of Group Company)- Nagase ChemteX Ltd. performed well because of expansion of electronic parts market.
- Nagase Electronic Equipment Service Co.,Ltd. recorded the growth in sales due to favorable sales of
vacuum pump and chemical supply system for LCD and semiconductor industries.
- Nagase (Taiwan) Co., Ltd. and Nagase (Hong Kong) showed favorable performance with chemicals
for LDC production and device production business in China due to increased production of
peripheral parts.

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- Nagase California Corp.recorded unfavorable results over previous year due to substantial reduction
in material sales for hard disk-related material.

‫ ޣ‬Health Care ‫ޤ‬Sales: 12.65 billion yen (by 20.1 % down over previous year )(Business situations)
For Health Care business, cosmetics and health food-related door to door sales remained at same level
as previous year but remarkable reduction in sales of medical-related business was seen due to partial
business transfer resulting as a whole large reduction in sales over last year.
-For health food-related business, it was firm and smooth centering on new product "BM Royal" thatwas formulated with new ingredients which improve immune system to the conventional productfocused on balance of autonomic nerves. For cosmetics-related business, makeup products recorded
well performance through introduction of new makeup series, "Alneidje" but remained at the samelevel as previous year as a whole due to sluggish sales of diet-related products.
- For medical-related business, significant reduction in sales was seen because it was greatly
influenced by transfer of biochemical inspection-related business to other company and furthermore,
due to poor performance both in medical information-related and radiation control-related business.
-For new business, Herbal Care Co.,Ltd. was established in October, and started its operation in orderto develop health food for lifestyle-related diseases precaution in fact through sales by newly started
mail-order/at shop sales based on know- how accumulated by door to door sales. In medical field, an
investment was made on Japan Medical Bank System Co., Ltd. for placing more emphasis onelectronic chart business in future.
Consolidated profit and loss
Operating income decreased by 4.9 % over previous year to 7.75 billion- yen but recurrent profit
increased by 4.0% over previous year to 10.28 billion yen because of reduced appraisal loss of securities
by application of new accounting standards concerning financial instruments.
And saving shortage occurs with introduction of retirement payment accounts but lump sum refund
was made by financial funds through contribution to the retirement payment trust sale gain on holding
securities, etc. Net income was down 22.4 % against previous year to 4.94 billion yen.
Consolidated cash flow situations
Cash flow by operating activities increased by 8.16 billion yen mainly from business proceeds. And
cash flaw by investing activities decreased by 4.16 billion yen, due to positive increased buying ofaffiliated companies' share.
Also cash flow by financ ing activities decreased by 8.3 billion yen due to repayment of bank loan /11NAGASE & CO., LTD.

commercial paper debt and dividend payment as well as implementation of buyback of treasury stock as
profit return program to stockholders.
As a result of having adjusted the amount of conversion balance and cash and cash equivalents withmerger of consolidated subsidiary to this, the balance of cash and cash equivalents of the end of thecurrent term decreased by 2.55 billion yen over the previous year to 18.46 billion yen.
On the current dividend and implementation of buyback of treasury stock
Dividend is scheduled to continue to be paid 8 yen per share as same as previous year based on stabledividend management policy. As the results, dividend payment ratio is 37.0 % Net earnings on
stockholders' equity for the current term is to be 2.6 % and dividend rate of stockholders' equity is to be
0.9 %. And for the purpose to make profit return to shareholders while continue to carry on buyback oftreasury stocks from the last year, so actual buyback during this term is to be 260 million shares of 1.256
billion yen.
2. Prospects of the next term(Million yen)
Sales

Ordinary income

Net income

Term ending in March 2001

532,000

9,500

5,200

Term ending March 2000
Against previous year

559,372
95.1%

10,282
92.4%

4,945
105.1%

As for future economy prospects, it seems continue still severe conditions due to dull domestic plantand equipment investment as well as slowdown of the U.S.A. economy and sluggish domestic personal
consumption. Under these conditions, the next term prospects of each operating division will be as
follows:‫ ޣ‬Chemical‫ޤ‬Sales: 239 billion yen (0.5% up over previous year)
Recording material-related, colors, paints, and electronics-related chemical that were comparatively
well during the term will continue to be firm and smooth and we will try to expand sales of dyestuff,
farming and life style related business through sales companies. And, chemical division as a whole will
put more emphasis on overseas development including China.

‫ ޣ‬Plastics ‫ޤ‬Sales: 174 billion yen (15.3% down over previous year)
With transfer of exclusive agency of GE products in Japan, sales of next term will substantially dropless than that of this year. While trying to maintain existing business, we will put more emphasis on
finished product business cored with "PLUSWOOD" products. We are going to make global business

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development in the field of automobile.

‫ޤ‬‫ޣ‬Electronics Sales: 105 billion yen (1.6% up over the previous year)
We will much more strengthen our group's integrated power in display and communication andrecording field. In the field of display, we will put emphasis on material and equipment system for LCD
production. In the field of communication, we will do global development and sales of various next
generation devices in cooperation with our partners. Also in the field of recording device, we will
promote sales of material for magnetic and opt device.

‫ ޣ‬Health Care and Others‫ޤ‬Sales: 14 billion yen (10.6% up over the previous year)
For health food-related business, we will make product renewal of "Belmash" on June, this year anddo best to expand sales of it. For medical-related business, we will participate in management of (K.K)
Japan Medical Bank System and enter into the field of electronic chart business in full scale. And fornurse-related business, we started sales of adult dipper waste system " OMUTSUPOI" May, this year.
As a result of the above, Sales for next term will be 532 billion yen, 9.5 billion yen for Ordinary
income, and 5.2 billion yen for Net income . We will plan to pay dividend of 8 yen per share.

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