April 30, 2004

Summary of Consolidated Business Results for the Year Ended March 31, 2004
Company Name
Nagase & Co., Ltd
Listing Code8012
(URL http://www.nagase.co.jp)
Representative
Position President
Hiroshi Nagase
Contact Details
Position Accounting Division Manager Takahide Osada
Date of Board of Director's Meeting for Settlement of Accounts
Adoption of U.S. GAAP: No

Stock Exchanges Listed: Tokyo, Osaka
Location of Head Office: Osaka Prefecture

Telephone (03) 3665-3103
April 30, 2004

1. March 31, 2004 Consolidated Results (April 1, 2003 – March 31, 2004)
1) Consolidated Operating Results
Net Sales¥ Millions
533,301
503,688

Period Ended March 31, 2004
Period Ended March 31, 2003

Net income

%
5.9
2.7
EPS

(Note: Amounts have been rounded off to the nearest million yen)
Operating Income
Recurring income¥ Millions%¥ Millions%
10,24421.5
13,110
16.2
8,433
403.9
11,284
138.1
Fully Diluted
Shareholder Net
EPS
Income Rate for thisFiscal Year
¥
%
4.7
2.9

Shareholder'sEquity Ratio

Sales Operating
Income Rate

¥ Millions %¥%%Period Ended March 31, 2004
7,010
67.4 54.69
4.4
2.5
Period Ended March 31, 2003
4,186
31.72
3.9
2.2
Notes:
1. Gain (loss) on equity method investment
Period ended March 31, 2004: ¥437 million Period ended March 31, 2003: ¥485 million
2. Average number of shares during the consolidated accounting period
Period ended March 31, 2004: 127,195,732 Period ended March 31, 2003: 130,109,906
3. Changes to Accounting policies: Yes
4. The percentage figures for sales, operating income, recurring income, and net income represent increases (decreases) relative to theprevious year's results.
2) Consolidated Financial Position

Period Ended March 31, 2004
Period Ended March 31, 2003

Total Assets

Shareholder's Equity¥ Millions
310,793284,800¥ Millions
156,210140,944

Shareholder's Equity
Ratio
%
50.3
49.5

Shareholders Equity
Per Share¥
1,227.82
1,107.55

Notes:
Shares issued and outstanding at the end of the consolidated accounting period:
Year ended March 31, 2004: 127,181,787
Year ended March 31, 2003: 127,204,375
3) Consolidated Cash FlowsNet Cash fromoperating activities

Net Cash Used forInvestment Activities¥ Millions¥ Millions
Period Ended March 31, 2004
6,431
-1,689Period Ended March 31, 2003
4,392
963
4) Scope of Consolidation and Application of Equity Method
Consolidated subsidiaries: 31
Non-consolidated affiliated companies covered by equity method accounting: 0
Affiliated companies covered by equity method accounting: 9

Net Cash Used for
Financial Activities¥ Millions-1,832-7,643

Balance of Cash andCash Equivalents at
Term End¥ Millions
21,03319,0445) Changes to Scope of Consolidation and Application of Equity Method
Consolidated Subsidiaries (New): 2 (Excluded): 0
Equity Method (New): 1(Excluded): 1
2. Consolidated Forecasts for the Year Ended March 31, 2005 (April 1, 2004 - March 31, 2005)
Net Sales
Recurring Income
Net Income¥ Millions¥ Millions¥ Millions
Interim Period
284,000
6,900
4,000
Whole Year
568,000
14,2009,500
Reference: Annual net income per share is projected to reach ¥74.30*The above forecasts were prepared on the basis of information available on the date of release. Actual results may differ from these
forecasts due to various factors.

Management Policy
1． Basic Management Policy
Management Philosophy
The Nagase Group is a member of the world society. As such, it is our duty to maintain good andfair business practices and, through continued growth and development, provide society with thegoods and services needed while improving the welfare of our employees.
With this management philosophy in mind, we have developed a new slogan “technology- andintelligence-oriented company that turns wisdom into business”, and from April 2003, we adopted along-term vision as follows.
To provide new “capabilities” and “services” worldwide based on our chemical business, so as tobecome a company that keeps creating value-added businesses capable of solving issues forcustomers. Our business target in ten years is a consolidated operating income of ¥20 billion withgross profit ratio of 15% and earnings higher than capital costs.
Our vision is based on the belief that all answers can be found in the market. Our aim is to strictly
apply a customer-oriented approach, make use of our technology and intelligence, along withwisdom gained through experience, provide our functions and services worldwide, and ultimately
increase earnings.
Due to ever-diversifying customer demands, we cannot expect our business to grow steadily basedon simple intermediary functions. We do, however, acknowledge that no company can fulfill all
functions by itself in this day and age. To help customers create new value, we will continue toenhance our functions in order to be chosen as a reliable business partner by customers without
hesitation, and persevere in proposing businesses to the market.
2. Basic Profit Sharing Policy
Our basic policy is to strive to further enhance our corporate structure and earning power, so that we
can continue to generate steady dividends for our shareholders.
Dividends for this fiscal year are projected at ¥9 per share, including an ordinary
dividend of ¥8 plus a commemorative dividend of ¥1 paid in celebration of the 40th
anniversary of Nagase’s listing on the Stock Exchange.
We intend to effectively use internal reserves to enhance our future business activities andmanagement foundations. In fiscal 2002, we introduced a stock option scheme aimed at boosting
the motivation and morale of employees within the Group to improve their performance, and at
further increasing Nagase’s corporate value by sharing common interests with our shareholders.
During this consolidated fiscal year, we issued rights to purchase new shares in the form of stock
options to Directors, Auditors, Executive Officers and Managers of the Company, as well as
Directors and individuals with an equivalent title in its subsidiaries, increased the number of stocks
granted under the scheme, expanded the scope of individuals subject to the scheme.
3. Approach, Policy, etc. for Reduction of Investment Unit
We acknowledge that the reduction of minimum investment unit is an effective means to encourage
individual investors to participate in the stock market, and ultimately improve the liquidity of stock.
We intend to look into measures to reduce the minimum investment unit, taking into account ourbusiness performance, market conditions and other factors, after carefully examining their costs andbenefits.

4. Targeting Management Performance Indicators and Company’s Mid-term and Long-termManagement Strategy
In April 2003, the Company launched a new three-year Medium-term Management Plan dubbed“WIT21” (W: Wisdom, I: Intelligence, T: Technology). Based on the aforementioned new1

long-term vision, WIT21 first envisioned the Company’s status in ten years time, that is, to post
consolidated operating income of ¥20 billion and a consolidated gross profit margin of 15% in theyear ended March 2013, generating earnings in excess of capital costs. As a stepping stone toachieve this, we have set targets at ¥550 billion in consolidated net sales and ¥11 billion inconsolidated operating income for the year ended March 2006, which is the final year for WIT21.
At this rate, however, we are likely to achieve these targets earlier than expected, in the year ended
March 2005, which is the second year of WIT21. As for the management performance indicator,
we have decided to give top priority to operating income. This is based on the view that Return on
Equity (ROE), which can only be expressed in terms of a percentage, does not necessarily accuratelyreflect the earnings performance, whereas operating income clearly shows the absolute value andchanges in business results.
The basic strategy for achieving this is to tackle three areas, namely,（ⅰ）Differentiate Nagase from the competition by strictly taking a customer-oriented approach;（ⅱ）Nurture and strengthen market-leading businesses; and（ⅲ）Make use of Nagase Group’s functions and distinctive identity to create new businesses.
Our aim is to provide customers with superior products and services that are in demand in themarketplace, by creating business models and through proposal-oriented activities that enable us totake the initiative and maintain it, rather than by merely acting as an intermediary, while taking
advantage of our excellent relationship with as many as 6,000 blue-chip client companies, which wehave developed over many years, in addition to our production, R&D and sales functions within theGroup.
The areas in which these basic strategies will be implemented are:
(1) Electronics;(2) Life science;(3) Automotive; and(4) Overseas operations.
These are defined as strategic business areas, where we will concentrate our management resources
and strive to increase operating revenues. We believe we can demonstrate our strengths in thesefour areas based on our existing business foundations. At the same time, we expect the market togrow substantially with respect to these business areas.
We believe it is important that each and every employee takes on the spirit of an entrepreneur,sets high goals for him/herself and persistently makes efforts to fulfill them, so that all employees
within the Group “create businesses” through concerted efforts. Accordingly, human resources
development is also one of the crucial strategies for achieving the targets under WIT21. We arethus enhancing our management education programs and training programs aimed at improving theirskills for planning and executing business strategies. We are also constantly giving employees theopportunity to discuss business strategies with the top management, so that they will widely take on
the “challenger’s spirit” through lively discussions.
As a result of these efforts, we posted ¥533.3 billion in consolidated net sales, ¥10.2 billion inconsolidated operating income, and a consolidated gross profit margin of 10.0% for the year ended
March 2004, which was the first year for WIT21.

5．Challenges to be made by the Company(1) Enhancement of Strategic Business Areas
We are concentrating our management resources in the strategic business areas, including business
investment, in order to fulfill the aforementioned Medium-term Management Plan “WIT21” and tofurther increase earnings in the long run.
(Electronics)
The electronics industry is expected to continue experiencing dramatic growth on a global scale in2the future. In an effort to bolster our presence in the electronics market, we are expanding into
non-chemical periphery materials and into downstream operations—such as the sale, processing andassembly of components and even the sale of final consumption goods—based on our chemical
products business targeting the electronics industry which we have nurtured over many years,
including agents and abrasives for semiconductor production, materials for LCD devices, etc. We
established manufacturing subsidiaries in Singapore and China (Wuxi), aimed at applying Nagase
ChemteX Corporation’s expertise in manufacturing proprietary products overseas, especially in Asia.
Nagase Finechem Singapore (Pte) Ltd. is now operating commercially, having completed theconstruction of facilities for the recycling of agents, a task in which we excel domestically, in
addition to producing agents used in the manufacturing of semiconductors and liquid crystal. Also,
Nagase ChemteX (Wuxi) Corp., which is a manufacturer of formulated epoxy resins in China, also
started operating commercially in December 2003, and will expand its manufacturing capacity andpromote the local procurement of raw materials in fiscal 2004, to improve its cost competitiveness.
We also established Nagase International Electronics Ltd. in March 2004, aimed at further
reinforcing our existing business concerning the processing and assembly of LCD devices overseas.
Through this new company, we will strive to enhance and expand processing plants in South China
and improve their efficiency. Regarding the sale of final consumption goods, we are investing in asales management system, etc. for the purpose of further improving our competitiveness by raising
the efficiency of sales.
(Life Science)
The pharmaceutical industry is currently undergoing reorganization on a global scale, due to the race
to develop new drugs, especially genome drug discovery. Further, competition between
pharmaceutical companies is intensifying in Japan, due to the impact of the reduction in National
Health Insurance (NHI) drug prices. Pharmaceutical companies are expected to heavily promote
the outsourcing of drug manufacturing tasks, based on the revision of the Pharmaceutical Affairs
Law scheduled in 2005.
In these circumstances, we are engaging in activities aimed at assisting the streamlining ofcustomers, utilizing R&D functions and manufacturing functions. Specifically, our businessfocuses on three areas: support for new drug development; support for existing and generic drugs;
and support for drug discovery. To achieve their goals, Nagase R&D Center engages in research
activities, while Nagase ChemteX Corporation operates a small-scale production facility forpharmaceutical intermediates. As for the original plan to establish a full-fledged mass production
facility with Current Good Manufacturing Practice (c-GMP) approval, we decided to postpone its
establishment for the time being, due to the need to review the items that can be manufactured and to
make the facility more versatile and flexible. We will further deepen the collaboration between
Nagase R&D Center and outside research institutes, and enhance our contract pharmaceuticalsynthesis business.
For the sale of cosmetics and health foods, we have shifted the sales functions to Nagase
Beauty Care Co., Ltd. in order to further improve our mobility and competitiveness. We will
generate synergy effects based on the diversification of sales channels, combined with sales at retail
outlets in the Tokyo Metropolitan Area.
(Automotive)
The automobile industry is in the era of full-fledged global production, encompassing not only
automakers but also components manufacturers. Production plants are increasingly shifting to theUnited States, Central Europe, China, etc. Opportunities to build new businesses are also
increasing, as the scope of their demand-and-supply relationship is broadening to the extent ofundermining the traditional “keiretsu” framework.
Based on our relationship with clients which we have built by selling them raw materials forplastics, we have been expanding our business domain, including expanding into the molding
business for automotive components, integrating the components design business with the molding
business, executing purchases on behalf of customers at overseas plants, and developing a supply
management system in both Japan and overseas. We have enhanced our sales offices to improvethese functions since fiscal 2001 (including incorporating the Guangzhou office as Guangzhou
Nagase Trading Ltd., and establishing Nagase Plastics America Corp.), and established Design &3

Die Co., Ltd., which integrates the design and mold production of automotive components. In
fiscal 2002, we even opened a representative office in Hungary. In fiscal 2003, we reinforced thestructure of the sales office in London by placing the branch under the direct control of the head
office, and incorporated the office in Tianjin, which is the automobile industry’s hub in North China,
into Tianjin Nagase International Trading Ltd. We also established Nagase Plastics Design and Die(Tianjin) Company Ltd. as the overseas version of Design & Die Co., Ltd. in term of functionality,
and made equity contributions to Design & Die USA Inc. (Michigan, USA) established in October
2002, which is making preparations towards full-scale operation. We also increased the capital of
Toyo Quality One Ningbo Co., Ltd. and Guangzhou Kurabo Chemicals Co., Ltd., which are bothurethane-related joint ventures in China, in order to expand their capacity. We will continue toexpand our business domain through collaborative efforts within the Group, not only in the field ofplastics and chemicals, but also in relation to block materials for model molds (DENATOOL)
manufactured by Nagase ChemteX Corporation in the electronics business.
(Overseas Operations)
In addition to the aforementioned overseas operations in the electronics and automobile sectors, weare making efforts to expand our overseas businesses especially in the so-called Greater China
region (consisting of mainland China, Hong Kong and Taiwan) and Southeast Asia.
An example is the so-called East China region (centering on Shanghai, China), where Nagase’sclients are continually branching out, led by Japanese and Taiwanese companies. This is giving
rise to a complex demand-and-supply framework in which these companies, plus local firms, aresupplying their own products to each other. We are establishing a framework and increasing our
personnel so that we can supply our products and services to these companies as comprehensively
and effectively as possible.

4(2) Enhancement of Corporate Structure
a. Review of Retirement Benefits Scheme and Revision of Accounting Standards
We shifted to a new retirement benefit scheme for the purpose of reducing the excessive costburden relating to retirement benefits for the future, revised the accounting standards for retirement
benefits, and wrote off ¥8.232 billion in actuarial differences (loss) and ¥4.2 billion in past service
liability (gain) accumulated in enormous amounts in the past. Additionally, as the return of pension
assets regarding the substitutional portion of the welfare pension fund plan (past portion) wasapproved, we declared a gain on the return of the substitutional portion in the amount of ¥3,396
million.
b. Enhancement of Corporate Structure of Domestic Sales Subsidiaries
We have been examining how to restructure businesses, in order to strengthen the corporate structureof domestic sales subsidiaries. We are reorganizing domestic sales subsidiaries, including theconsolidation of Shizuoka Nagase Co., Ltd. into Nagase Chemical Co., Ltd. (the resulting company
being “Nagase Chemical Co., Ltd.”) and similarly, Kyushu Nagase Co., Ltd. into Nishinihon Nagase
Co., Ltd. (the resulting company being “Nishinihon Nagase Co., Ltd.”) in April 2004.
We will continue to restructure the businesses of domestic sales subsidiaries and streamline their
management, to enhance their corporate structure.
6. Basic Approach to Corporate Governance and Implementation Status of Measures
Our management policy has always been to carry out good and fair business practices. We
acknowledge the need to enhance corporate governance in the face of accelerated globalization, andthe importance of quick decision-making and action and the importance of securing transparency inmanagement, to continually improve corporate value.
We introduced the executive officers system in June 2001, and reduced the term of office of
Directors and Executive Officers to one year in fiscal 2002, in an effort to build a management
structure that is capable of flexibly responding to changes in the business environment. The current
management team consists of 8 Directors (none of whom are outside Directors), 19 Executive
Officers (including 6 Officers concurrently serving as Directors) and 4 Auditors (including 2 outside
Auditors). The Board of Directors is clearly defined as the body in charge of making decisions on
management policies/strategies and supervising the execution of operations, whereas the Board of
Executive Officers takes charge of prompt decision making regarding the execution of operations.
Both the Board of Directors and the Board of Executive Officers each hold regular meetings once amonth. The Board of Auditors decides the auditing policy of Auditors in accordance with laws andthe Articles of Incorporation, and forms an audit opinion based on a report by each Auditor. The
Auditors always attend the meeting of the Board of Directors, and express their opinions asnecessary. Additionally, we have established an advisory board based on the view that it is importantto have the Company’s management practices examined and checked objectively by outside experts(2 experts) and listen to their advice. Auditing by certified public accountants is commissioned toShin Nihon & Co., which conducts an audit from a fair and impartial standpoint.
Moreover, for compliance management, we established the Compliance Committee in 2001,
and have since endeavored to ensure compliance with laws and regulations and enhance corporate
ethics. In November 2003, we established the “Nagase Group Code of Conduct”, and in December
2003, held more than 10 briefing sessions targeting officers and employees of the Nagase Group, tomake sure it is thoroughly understood by everyone.
At the meeting of the Board of Directors held on March 26, 2004, we invited Mr. Haruyuki
Niimi as a candidate for outside Director. Mr. Niimi is the Chairman & Representative Director ofShowa Shell Sekiyu K.K., is globally-minded, and has a wealth of management experience.
Of note, none of the outside Directors and outside Auditors who will be asked to attend theordinary general meeting of shareholders scheduled on June 29, 2004 have any personal, capital or
business relationship with, or any interest in the Company, including the current outside Auditors.

5

Business Results and Financial Position
Ⅰ Business Results
Overall Company Performance
During the fiscal year, the Japanese economy experienced gradual recovery. Although consumer
spending still lacked momentum due to concerns over the labor market, business performance ofcompanies improved as a result of the improvement in exports, assisted by the psychological boost
stemming from the rise in stock prices.
In these circumstances, we made efforts to improve our business performance. As a result,domestic sales increased 3.6% year-on-year to ¥349.55 billion, while overseas sales rose 10.6% to¥183.74 billion. Sales increased 5.9% to ¥533.3 billion.
On the income front, operating income increased 21.5% from the previous year to ¥10.24 billion,
due to the increase in gross profit on sales and the reduction in selling, general and administrative
expenses. Recurring income amounted to ¥13.11 billion, up 16.2% year-on-year. Net income
increased 67.4% to ¥7.01 billion, as the valuation loss on investment securities substantiallydecreased, more than offsetting the extraordinary loss declared in association with the revision of theaccounting standards for retirement benefits.
Segment Summaries【Chemicals】 Sales: Year-on-year increase of 3.4% to ¥231.36 billion
In the chemicals segment, sales increased on the whole from the previous year, due to the increasein sales generated by the automotive-related urethane business and sales of specialty chemicals
relating to oil solutions and paints.
・ Sales of plastic additives slightly increased overall. While domestic sales increased as a resultof continual customer-oriented activities, exports to South Korea, which were strong in theprevious year, decreased this year due the reduction in production volume by customers. Sales
generated by the urethane business increased, as a result of its positioning in the strategic
automotive-related business area, and our active expansion into overseas markets incollaboration with customers, especially in China. Our filter-related business featuringin-house products also experienced steady growth. Sales of pigments slightly increased as awhole, due to the growth of new printing businesses and solid sales to major customers.
・ Sales of recording materials slightly increased on the whole, as efforts made to expand the sales
in inkjets, plasma displays, DVDs and other growth markets offset the decrease in domestic
sales of materials of heat-sensitive and pressure-sensitive paper.
・ In the field of pharmaceuticals and food additives in the strategic life science segment, sales ofimported bulk pharmaceuticals and domestic sales of antibiotic intermediates, etc. expanded.
In Healthcare, the reagents-related business was consolidated in order to bring about synergy
effects. Notwithstanding the decline in the import agent business targeting the United Statesand Europe and exports of food additives, sales increased on the whole.
・ Sales of specialty chemicals increased overall, as sales of special epoxy compounds made by
Nagase ChemteX Corporation remained constant, while sales of imported specialty chemicals
related to oil solutions and sales of exports to China both increased.
・ Sales of dyestuffs slightly decreased as a whole, as the fall in domestic sales eclipsed the efforts
made in overseas sales, especially in China, amid the shift towards markets overseas.
【Plastics】
Sales: Year-on-year increase of 3.1% to ¥170.99 billion
In the plastics segment, sales on the whole increased from the previous year, as the increase insales in the Greater China region, especially locally-procured products, more than offset thedecrease in exports from Japan.
・ Overseas sales of functional resins increased, thanks to reinforcements in the sales force basedon the expansion of sales offices, while customers continued to relocate their production bases
into the Greater China region. However, exports of optical disc applications from Japandecreased due to intensified price competition, and sales in Southeast Asia declined partly due tothe relocation of customers’ production bases to China. As a result, sales only slightly
increased on the whole.
6

・ Exports of liquid crystal-related components and molding machines increased especially in
Taiwan, as a result of intensive marketing activities in growth sectors.
・ The strategic automotive business expanded, as a result of the dramatic increase in sales to
North America, combined with the thoroughly customer-oriented approach in Japan andenhanced procurement intermediary functions.
・ Sales in the field of electric and electronic equipment were strong, as a result of an increase insales in the field of mobile phones and the launch of a new components business for industrial
electronic equipment.
・ Sales in the field of packaging materials and housing/building materials remained more or lessthe same as in the previous year. There was no substantial increase in sales this year, despite
our efforts to switch to a business model that will enable us to sell our own products and take theinitiative.
・【Electronics】
Sales: Year-on-year increase of 19.3% to ¥118.97 billion
In the electronics category, we are directing our efforts towards the segment that forms the core of
our strategic electronics business. During the fiscal year, the liquid crystal-related businessperformed extremely well and dramatically expanded, acting as the driving force behind the good
performance by the Company as a whole.
・ In the field of liquid crystal, sales of materials for displays were extremely strong in Japan, as
were exports, especially to the Greater China region. Sales of modules, etc. also substantially
increased. Assembly and processing of components overseas, in which we have traditionallymade strategic efforts, also performed well.
・ Our business relating to agents used in the production of semiconductors and liquid crystal also
performed well, especially with respect to the Group’s own products manufactured by Nagase
ChemteX Corporation. Sales substantially increased, in combination with sales of related
devices.
・ Sales of communication components (which dramatically increased in the previous year)
decreased this year, as the demand for wireless base stations in China reached a saturation point.
・ Sales of fine abrasives increased, due to the strong performance of exports especially in Asia.
Sales of hard disk drive-related components were also strong. As a result, sales on the whole
exceeded the level posted in the previous year.
・ In the field of functional materials, sales of the Group’s own products manufactured by Nagase
ChemteX Corporation were strong. Sales of formulated epoxy resin targeting heavy and lightelectric machinery industries were also solid, as were semiconductor encapsulants. On theother hand, sales of packaging materials for electronic components slightly decreased. As aresult, sales on the whole were more or less the same as in the previous year.
・ Sales increased dramatically with respect to DVD-related equipment and periphery media
products for recording purposes, in which we have been making efforts in recent years as part ofour drive to expand into the downstream of the electronics category. Also, sales to end-users
over the Internet substantially increased, with the addition of DVD movie titles.
【Healthcare and Others】 Sales: Year-on-year decrease of 17.3% to ¥11.96 billion
In the healthcare segment, sales in the field of cosmetics, health foods, medical information andclinical examination were more or less the same as in the previous year, while sales in the field ofradiation measure decreased.
・ In the field of cosmetics and health foods, we transferred the traditional door-to-door sales
functions to Nagase Beauty Care Co., Ltd. and thereby improved our mobility. We are also
operating eight “Pour Toi” retail outlets primarily in department stores in the Tokyo
Metropolitan Area, aimed at diversifying our sales channels. However, sales were more or lessthe same as in the previous year, as their effects were limited during this fiscal year.
・ In the field of medical information and clinical examination, sales were roughly the same as thelevel posted in the previous year. Sales declined in the field of radiation measure, as there wasno spot demand for facilities this year, in contrast to the previous year. Sales on the wholedecreased, as the reagents-related business was consolidated into the pharmaceuticals secotr in
the chemicals segment, where greater synergy effects are expected.
7

2. Full-year Forecast
Operating Income

Recurring Income(Unit: million yen)
Net Income

568,000

12,00014,2009,500

533,301

10,244

13,1107,010

106.5%

117.1%

108.3%

135.5%Sales
For the year ended
March 2005
For the year ended
March 2004
Year-on-year
Comparison

As for the economic outlook, the economy is expected to remain in good shape, as the scope of
economic recovery is expanding, despite concerns over the sudden appreciation of the yen anddelays in the improvement of the labor market.
The following is an overview of each business segment.
【Chemicals】 Sales: Year-on-year increase of 5.0% to ¥243 billion
In the field of life science, the pharmaceuticals and food additives markets targeted by our Groupare expected to grow. Also, as Japanese automakers are expected to further expand production
overseas, demand for plastic additives and paints are likely to grow especially overseas, not tomention the urethane business. We will make efforts to expand products manufactured by Nagase
ChemteX Corporation, and boost earnings by focusing on inkjets, plasma displays, DVDs andother growth sectors.
【Plastics】 Sales: Year-on-year increase of 3.5% to ¥177 billion
In the automotive-related business, demand is expected to grow on a global scale, driven by China.
Based on our business foundations in Japan, we will engage thoroughly in customer-oriented
activities and make efforts to expand the scale of the business. In the field of housing andbuilding materials, where no substantial increase in domestic demand is expected, we will expand
the sales of our own products and consistently expand the business foundations from upstream todownstream, in order to build a highly profitable structure that will enable us to maintain ourleadership. The demand for plastics in the so-called Greater China region is expected to continue
increasing, especially in mainland China. At the same time, however, it is turning into a market
that cannot be satisfied just by exports from Japan. We will strive to enhance our framework to
adapt to such changes in the market structure and to increase earnings.
【Electronics】 Sales: Year-on-year increase of 13.5% to ¥135 billion
The liquid crystal industry is expected to continue growing in the future. We will further
strengthen the business foundations we have built over the years, and strive to broaden the range ofitems manufactured by Nagase and within the Group, and expand the scope of our business in theliquid crystal industry, spanning from upstream to downstream. In the field of semiconductors
and functional materials, we will expand our business by building a robust framework focusing on
our own products, taking advantage of Nagase ChemteX Corporation’s domestic and overseas
functions for manufacturing products. We will also further enhance our sales framework for
consumer products in an effort to increase earnings.
【Healthcare and Others】Sales: Year-on-year increase of 8.6% to ¥13 billion
In the field of cosmetics and health foods, we will further reinforce our nationwide sales networks,
which we have developed over many years, and continue launching new attractive products. At
the same time, we will continue to diversify our sales channels through retail outlets. In the fieldof medical information, we will thoroughly narrow down and concentrate our business, and direct
our efforts at expanding sales.
Based on the above, we expect to generate ¥568 billion in sales, ¥12 billion in operating income,¥14.2 billion in recurring income, and 9.5 billion in net income for next fiscal year. The annual
dividend is projected at ¥8 per share.
8Due to the nature of the business, there are concerns about various risks, including market risks(e.g., the slowdown of the economy attributable to general economic conditions and market trends,
including those overseas), product risks (e.g., fluctuations in the price of traded products, loss
arising from complaints), credit risks (e.g., nonpayment by clients), the possibility of making a loss
on investment for launching a new business or expanding a business, risks associated with foreignexchange volatility, risks of making a loss due to fluctuations in the price of securities being held,
and risks associated with the success/failure of new strategies. We have developed necessary risk
control and risk aversion systems in regard to the risks mentioned above, and we are doing
everything possible to deal with them. However, our business performance forecasts may
substantially differ from the actual business performance, as unpredictable risk factors anduncertainty factors may affect business results, financial conditions, etc.

9

Ⅱ Financial Position
1．Overview of Current Period(1) Status of Consolidated Balance Sheet
Total assets increased ¥25.99 billion year-on-year to ¥310.79 billion, due to the increase in accounts
receivable, investments in securities, etc.
Shareholders’ equity increased ¥15.26 billion to ¥156.21 billion, due to the increase in the
declared amount of the unrealized holding gain on securities, combined with retained earnings.
As a result, the shareholders’ equity ratio increased by 0.8 percentage points, to 50.3%.
(2) Consolidated Cash Flow Status
Net cash provided by operating activities amounted to ¥6.43 billion. This is primarily due to theincrease in working capital, which partly offset income before income taxes and minority interests inthe amount of ¥11.72 billion.
Net cash used in investing activities totaled ¥1.68 billion. This is the result of the sale of someof the investment securities, active capital investment, etc. and the increase in short-term loans
receivable.
Net cash used in financing activities amounted to ¥1.83 billion, as a result of the repayment ofbank loans and payment of dividends.
Consequently, the balance of cash and cash equivalents increased ¥1.98 billion year-on-year to¥21.03 billion.
2. Outlook for Fiscal 2005
Net cash provided by operating activities is expected to include an increase in income before income
taxes and minority interests.
Net cash used in investing activities is expected to include outlays for the construction of amanufacturing facility by our manufacturing subsidiary.
Net cash used in financing activities is expected to include outlays attributable to the redemption ofbonds.
As a result of the above, the balance of cash and cash equivalents is likely to decrease in the next
fiscal year.
3．Trends in Cash Flow Indicators
For the year
For the year
For the year
For the year
For the year
ended March
ended March
ended March
ended March
ended March
2000
2001
2002
2003
2004
Shareholders’
42.6%
43.4%
48.0%
49.5%
50.3%
equity ratio
Shareholders’equity ratio
17.7%
21.0%
22.6%
23.2%
38.8%
based onmarket value
Debt
8.2
2.9
1.6
3.8
2.6
repayment
period (year)
Interest
5.0
9.9
19.9
10.1
13.9
coverage ratio(Note) Shareholders’ equity ratio = Shareholders’ equity / Total assets
Shareholders’ equity ratio based on market value = Market capitalization of shares / Total
assetsDebt repayment period = Interest-bearing debt / Operating cash flow
Interest Coverage Ratio = Operating cash flow / Interest payment＊ All indexes are calculated on the basis of consolidated financial figures.
＊ Market capitalization of shares is calculated by multiplying the closing price of shares atthe end of the period by the total number of outstanding shares as at the end of the period.
＊ Operating cash flow refers to net cash provided by operating activities in the Consolidated
10

Statement of Cash Flows. Interest bearing debt refers to all debt for which interest is
payable declared in the in the Consolidated Balance Sheet. Interest payment refers to theamount of interest paid as shown in the Consolidated Statement of Cash Flows.

11Summary of Non-Consolidated Financial Statements for the Year Ended March 31, 2004

Stock Exchanges Listed:Tokyo, Osaka
Location of Head Office:Osaka Prefecture

Company Name:
Nagase & Co., Ltd.
Listing Code:8012(URL http://www.nagase.co.jp)
Representative
Contact Details

Position
Position

April 30, 2004

President
Accounting Division Manager

Hiroshi Nagase
Takahide Osada Telephone (03) 3665-3103

Date of Board of Directors' Meeting for Settlement of Accounts: April 30,2004
Date of Regular General Meeting of Shareholders: June 29, 2004
Interim Dividend System: No
Unit Stock System: Yes (1 unit=1,000 shares)

1. Results for the Year Ended March 31, 2004 (April 1, 2003 - March 31, 2004)(1) Business Results(Note: Amounts have been rounded off to the nearest million yen.)

Net Sales\millionsOperating income\millions%Year ended March 31, 2004

433,817

(3.8)

4,217

Year ended March 31, 2003

418,004

(2.5)

3,171

Recurring income\millions

%
32.9

－

Net income\millions

%

7,663

14.9

5,373

377.1

6,671

141.6

1,126

－

SalesAfter
Return on
Return on
ordinary
adjustment for
equity (ROE) assets (ROA)
income ratio
latent shares

Net income
per share
\

\

%

%

%

Year ended March 31, 2004

41.84

－

4.8

3.2

1.8

Year ended March 31, 2003

8.27

－

1.0

2.8

1.6

Notes:%

1. Average number of shares during accounting period.
Year ended March 31, 2004: 127,238,463 Year ended March 31, 2003: 130,152,743
2. Changes to accounting policies: Yes.
3. The percentage figures for sales, operating income, recurring income and net income represent
increases (decreases) relative to the previous year's result.

(2) Dividends
Dividend per share
Interim\

Total annual
dividend

Final\

Dividendshareholders'equity ratio

Dividend
propensity\\millions%%Year ended March 31, 2004

9.00

－

9.00

1,145

21.5

1.0

Year ended March 31, 2003

8.00

－

8.00

1,017

96.7

0.9

Notes: Breakdown of dividend for year ended March 31, 2004 Commemorative dividend \1.00 Bonus dividend \0.00(3) Financial Position
Total assets

Shareholders’ equity\millions\millionsShareholders’ equity ratio Shareholders’ equity per share%\

Year ended March 31, 2004

253,810

119,85047.2

941.65

Year ended March 31, 2003

230,052

105,33245.8

827.38Notes:

1. Shares issued and outstanding at end of accounting period
Year ended March 31, 2004: 127,224,518 Year ended March 31, 2003: 127,247,212
2. Treasury stock at the end of accounting period
Year ended March 31, 2004: 11,183,767 Year ended March 31, 2003: 11,161,073

2. Forecasts for the Year Ended March 31, 2005 (April 1, 2004 - March 31, 2005)
Net SalesInterimRecurringincomeAnnual dividend per share

Net income

Interim\millions\millions\millions

222,000
445,000

4,500
8,300

3,000
5,400

Whole Year
Reference: Net income per share is projected to reach ¥42.05

Final
\

－
－

\

－

\

－
8.00

8.00

* The above forecasts were prepared on the basis of information available on the date of release. Actual results may differ from these forecasts due to various factors.