Consolidated Financial Statements for the Fiscal Year Ended March 31, 2009

April 30, 2009

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, Osaka (First Sections)
Code number: 8012
(http://www.nagase.co.jp)
Representative:
Hiroshi Nagase, Representative Director and President
Contact:
Masanori Furukawa, Manager, Corporate Accounting Division
Annual General Meeting of Stockholders (scheduled):
June 25, 2009
Start of distribution of dividends (scheduled):
June 26, 2009
Filing of Securities Report (Yuka Shoken Hokokusho) (scheduled):
June 26, 2009
(Note: Amounts have been rounded down to the nearest million yen.)

1． Consolidated Results for the Fiscal Year Ended March 31, 2009 (April 1, 2008 to March 31, 2009)(1) Consolidated Operating Results(Precentages represent changes compared with the previous fiscal year.)Net sales
Operating income
Ordinary income
Net income%

Millions of yen

Fiscal 2009
Fiscal 2008

715,238
764,755

(6.5)
9.0

%

Millions of yen

12,522
23,063(45.7)
6.4%

Millions of yen

13,052
24,823

5,808
10,005

Ordinary
income/total
assetsYen
Yen%%
Fiscal 2009
45.17
45.17
3.0
3.4
Fiscal 2008
77.86
77.79
4.9
5.9
(Reference) Equity in earnings of affiliates: FY2009: ¥(520) million (Fiscal 2008: ¥437 million)
Earnings
per share

Earnings per
share (diluted)%

Millions of yen(47.4)
6.9

Return on
equity(42.0)(26.3)

Operatingincome/net sales
%
1.8
3.0

(2) Consolidated Financial Position
Total assets

Net assets

Net assets per share%
Yen
March 31, 2009
340,968
191,93154.1
1,435.88
March 31, 2008
419,869
208,37747.8
1,559.97(Reference) Equity capital: March 31, 2009 ¥184,599 million (March 31, 2008: ¥200,554 million)
Millions of yen

Net worth ratio

Millions of yen(3) Consolidated Cash Flows
Cash flows fromoperating activities
Fiscal 2009
Fiscal 2008
2.

Cash flows frominvesting activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

36,161(2,586)(11,062)(7,009)(5,549)10,73836,13723,486

Dividends
Total
dividends
paid (fullfiscal year)

Dividends per share(Record date)Fiscal 2008
Fiscal 2009
Fiscal 2010
(est.)

3.

Cash and cash
equivalents at theend of the period

Cash flows fromfinancing activities

1Q

InterimFiscalYear-End

3Q

Annual

Yen

Yen

Yen

Yen

Yen

Millions of yen

—
—

0.00
8.00

—
—

17.00
8.00

17.00
16.00

2,186
2,057

—

7.00

—

7.00

14.00

Payout ratio(consolidated)

Dividends/net
assets(consolidated)

%
21.8
35.4

%
1.1
1.1

37.5

Projected Consolidated Results for the fiscal year ending March 31, 2010
(April 1, 2009 to March 31, 2010)(Percentages represent changes compared with the corresponding periods of the previous fiscal year as applicable)

Net salesInterim period
Fiscal 2010
(Full fiscal year)

Operating income

Ordinary income

Earnings
pershare

Net income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

271,000(29.5)

2,400(73.0)

2,700(72.6)

1,500(73.7)

11.67

564,000(21.1)

6,800(45.7)

7,700(41.0)

4,800(17.4)

37.34－1－

4. Other(1) Changes in major subsidiaries during the period (changes in specified subsidiaries due to changes in thescope of consolidated): None
New: — (Company name:)
Excluded: — (Company name:)(2) Changes in accounting principles, procedures and presentation methods in connection with the preparationof consolidated financial statements(Recorded under “Changes in important items considered fundamental to the preparation of consolidated
financial statements”).
i.
Changes in accordance with revisions to accounting and other standards: Yesii.
Changes in items other than (i) above: No(3) Number of share issued and outstanding (common stock)i.
Number of shares issued and outstanding as of the fiscal year-end (including treasury stock)
March 31, 2009:
138,408,285 shares
March 31, 2008:
138,408,285 sharesii.
Number of treasury stock as of the fiscal year-end
March 31, 2009:
9,846,589 shares
March 31, 2008:
9,844,934 shares(Reference) Summary of non-consolidated results
1. Non-Consolidated Results for the Fiscal Year Ended March 31, 2009 (April 1, 2008 to March 31, 2009)(1) Net Sales and Income(Precentages represent changes compared with the previous fiscal year.)Net sales
Operating income
Ordinary income
Net income%

Millions of yen

Fiscal 2009
Fiscal 2008

457,632
522,260(12.4)
5.1

Earnings
per share%

Millions of yen

2,573
7,292

(64.7)(11.6)

7,711
12,294(37.3)(4.5)

Millions of yen

4,621
2,728

%

69.4
(64.9)

Earnings per share(diluted)
Yen

Fiscal 2009
Fiscal 2008%

Millions of yen

Yen

35.93
21.22

35.93
21.20

(2) Non-Consolidated Financial Position
Total assets

Net assets

Net assets per share%
Yen
March 31, 2009
239,088
129,22854.0
1,003.09
March 31, 2008
301,354
138,14945.8
1,072.82(Reference) Equity capital: March 31, 2009 ¥128,992 million (March 31, 2008: ¥137,966 million)
Millions of yen

Net worth ratio

Millions of yen

2. Projected Non-Consolidated Results for the Fiscal Year Ending March 31, 2010
(April 1, 2009 to March 31, 2010)(Percentages represent changes compared with the corresponding periods of the previous fiscal year as applicable)

Net sales

Ordinary income

Earnings
pershare

Net income%

Millions of yen

100(96.9)

2,500%

Millions of yen(30.8)%

Millions of yen

183,000(65.5)

2,100(56.0)

16.33

381,000(16.7)

1,000(61.1)

4,500(41.6)

3,400(26.4)

26.44

Millions of yen

Interim period
Fiscal 2010
(Full fiscal year)

Operating income%

Yen

Notes: Cautionary Remark Regarding Forward-Looking Statements
Statements made in this document with respect to projected results and other statements that are not of historical fact are
forward-looking statements based on the assumptions, projections and plans of the Company as of the date of this report.
Readers are advised that actual results may differ materially from projections due to risks and uncertainties arising from avariety of factors including shifts in global economic and competitive conditions, foreign currency exchange rates andinterest rates. Please refer to 1. Business Performance on pages 3 to 8 of this document for additional information on
projected results.

－2－

1. Business Performance(1) Analysis of Business Performance(Performance for the Fiscal Year Ended March 31, 2009)a. General Summary of Results
Triggered by financial crisis in the United States, the downturn in the global economy assumed increasingly serious
proportions. In the fiscal year ended March 31, 2009 (fiscal 2009), conditions worsened noticeably in the UnitedStates and Europe, with Asia also incurring a heavy toll. In the automobile and electronics industries, the Nagase
Group’s principal fields of activity, business conditions experienced an abrupt and substantial downturn. This was
attributable to a variety of factors including large-scale cutbacks in production in each of the aforementioned
industries prompting a significant upswing in inventory adjustments.
Against this backdrop, total net sales contracted 6.5 percent compared with the previous fiscal year to ¥715.23 billion,
as domestic sales decreased 8.8 percent to ¥394.87 billion and overseas sales declined 3.5 percent to ¥320.36 billion.
On the earnings front, gross profit fell 11.2 percent year on year to ¥71.52 billion. This mainly reflected the upswing
in manufacturing costs at manufacturing subsidiaries due to rising raw material prices and the posting of a loss on
valuation of inventories. After taking into consideration such factors as the amortization of actuarial gain in retirement
benefit accounting, selling, general and administrative expenses increased. As a result, operating income fell 45.7
percent to ¥12.52 billion and ordinary income dropped 47.4 percent to ¥13.05 billion. Impacted by an extraordinary
loss on valuation of investment securities totaling ¥1.23 billion, net income for the fiscal year under review declined
42.0 percent to ¥5.80 billion.
b. Segment Summary[Chemicals]

Sales: ¥248.46 billion, a 7.2 percent decrease year on year

Overall sales in the Chemicals segment declined year on year. Despite robust results in Asia including the South
China region as well as the Association of South-East Asian Nations, this downturn was attributable to the slump in
domestic sales encompassing Nagase Group products.
In the colors and imaging business, which handles pigments, dyestuffs and other products related to color,
printing-related business sales expanded in the South China region. While sales of ink materials for printers edged
up slightly, results in products such as functional color pigments for plasma displays and other applications
contracted. Accounting for these factors as well as weak domestic and overseas dyestuff results, overall sales of
the colors and imaging business declined compared with the previous fiscal year.
In the performance chemicals business which in relative terms encompasses upstream fields, overall sales
decreased. In addition to lower sales of plastic raw materials and additives, results in urethane and coating
materials, mainly to the automotive industry, an area on which this business concentrates, were weak.
In the specialty chemicals business, sales of raw materials for cosmetics were firm. This was, however, more thanoffset by decreases in sales of oil solutions and organic synthesis materials as well as products for LCD and otherrelated applications manufactured by Nagase ChemteX Corp. As a result, overall specialty chemicals businesssales declined year on year.
[Plastics]

Sales: ¥253.02 billion, a 7.9 percent decrease year on year

Although sales to the automotive industry, particularly in the Greater China region including Hong Kong and Taiwan,
contributed to a slight upswing in results, the Plastics segment’s overall performance declined due mainly to theslump in sales both in Japan and the Association of South-East Asian Nations.
Sales decreased substantially in businesses centered on precision and electronic equipment applications such as
printers and copiers both abroad, focusing mainly on Asia, as well as Japan. In addition, sales of engineering
plastics for CDs, DVDs and other media applications and LCD components, primarily in Taiwan, contracted.
Sales to the automotive industry decreased slightly year on year. Despite an increase in domestic sales of interiormaterials and certain components for mechanical part application, this was mainly attributable to the drop in
product sales for lamps and other applications. Overseas, results were mixed. Sales were robust in the Southernand Northern regions of China and increased in Thailand and Indonesia, but declined in North America.
Accounting for the aforementioned factors, overall overseas sales improved compared with the previous fiscal
year.
－3－

In the housing equipment and building materials business, sales of building products and plastics, a key raw
material, slumped. In addition to lower sales to the packaging materials industry, results of the electronic
component assembly business, which is part of the downstream operations of the plastics business, decreased.
Among the Group’s domestic manufacturing companies, sales were flat at Totaku Industries, Inc., a manufacturerof various types of flexible hose and pipes for industrial applications and household appliances. Results fellmarginally at Kotobuki Kasei Corp., a manufacturer of plastic trays used in food packaging, and declined at
Setsunan Kasei Co., Ltd., which handles plastic coloring and compounding.
[Electronics]

Sales: ¥153.25 billion, a 6.5 percent decrease year on year

Sales in the Electronics segment saw an overall decline. Buffeted by the global downturn in semiconductor and
LCD-related industry demand from the second half of the fiscal year under review, sales of products including
chemicals for manufacturing LCDs and various materials for semiconductors and other applications stalled.
In the electronic chemicals business which is mainly comprised of original products manufactured by Nagase
ChemteX Corp. and other Group companies, sales of formulated epoxy resins and chemicals declined
substantially. At the same time, sales of supply and control equipment for front-end-of-line photolithography for
LCDs and semiconductors were weak. As a result, overall electronic chemicals business sales decreased year on
year.
In the LCD-related business, sales of optical film and other materials were robust. Overall business sales, on theother hand, declined slightly due mainly to the substantial drop in derivative business sales including LCD
component processing and aluminum housing materials for electronic equipment.
Sales of precision abrasive materials used in silicon wafer processing and encapsulants used in post-processing ofsemiconductors experienced a large-scale decline.
[Life Sciences]

Sales: ¥58.90 billion, a 4.3 percent increase year on year

In the Life Sciences segment, sales in the beauty care products business, which handles cosmetics and health foods,
decreased slightly, while sales of pharmaceutical raw materials and intermediates in the fine chemicals businessincreased, resulting in solid overall growth in sales.
In the fine chemicals business, sales of fermentation products declined marginally. Buoyed by growth inpharmaceutical raw materials and intermediates, however, as well as diagnostic agents and reagents, overall sales
in the fine chemicals business improved.
In the beauty care products business, which handles cosmetics and health foods, renewal of the mainstay healthfood product lineup contributed favorably to sales. Impacted by a decline in existing product sales including
cosmetics, however, overall results in the beauty care products business saw a slight decline.
[Other]Sales: ¥1.58 billion, an 18.1 percent decrease year on year

Sales of the Others segment contracted substantially due to the discontinuation of portable DVD player operations in
the previous fiscal year.
Forecast for the Fiscal Year Ending March 31, 2010
Fiscal year ending March 31, 2010
Fiscal year ended March 31, 2009
Year-on-year comparison

Net Sales
Operating Income Ordinary Income
564,000
6,800
7,700
715,238
12,522
13,052(21.1)%(45.7)%(41.0)%(Millions of yen)
Net Income
4,800
5,808
(17.4)%

a. Performance Forecast for the Fiscal Year Ending March 31, 2010 (Fiscal 2010)
The economic outlook for the fiscal year ending March 31, 2010 remains extremely clouded. Given the uncertainty
that surrounds future operating conditions, predicting an end to the global financial crisis and the timing for arecovery in the real economy is problematic. Turning to the domestic economy, careful consideration must be given to
the ability of pump priming measures to stimulate the economy. Under the prevailing circumstances, there is little
room for optimism.
Based on the aforementioned, consolidated net sales for the fiscal year ending March 31, 2010 are expected to fall
21.1 percent to ¥564.00 billion. From a profit perspective, operating income is projected to decline 45.7 percent to¥6.80 billion, ordinary income to decline 41.0 percent to ¥7.70 billion and net income to contract 17.4 percent to¥4.80 billion.
－4－

An exchange rate of ¥90 to US$1 is used as the basis of performance forecasts.
b. Forecast by Business Segment
In the Chemicals segment, sales are projected to drop 16.3 percent compared with the previous fiscal year to ¥208.00
billion. This is mainly attributable to the decline in domestic and overseas sales including coating and urethanematerials. In the Plastics segment, sales are forecast to decrease 25.9 percent to ¥187.50 billion due to a slump in sales
to the automotive, precision and electronic equipment industries. In the Electronics segment, sales are expected tocontract 30.8 percent to ¥106.00 billion owing to lower sales to the LCD- and semiconductor-related industries.
Buoyed by sales growth in pharmaceutical raw materials and intermediates, results in the Life Sciences segment are
anticipated to climb 3.6 percent to ¥61.00 billion. In the Other segment, sales are projected to decrease 5.4 percent
year on year to ¥1.50 billion.
The forecast for the fiscal year ending March 31, 2010 is based on information available to the Company’s
management as of the date of this report. Accordingly, forecasts may differ materially from actual results due to avariety of factors including unforeseen changes in economic conditions or the operating environment, including theeffect of economic trends in the United States and China and the effect of changes in the supply/demand balance inthe electronic equipment, automotive and related markets.
(2) Analysis of Financial Positiona. Summary of Consolidated Balance Sheets
Total assets decreased ¥78.90 billion compared with the end of the pervious fiscal year to ¥340.96 billion. Despite anincrease in fixed assets reflecting the purchase of property, plant and equipment, this decrease was attributable to thedrop in notes and accounts receivable on the back of lower sales and the decline in investments in securities due to thedecrease in stock prices.
Total liabilities contracted ¥62.45 billion compared with the previous fiscal year-end to ¥149.03 billion. Long-term
debt increased year on year. This was, however, more than offset by declines in notes and accounts payable andshort-term loans.
Net assets stood at ¥191.93 billion as of March 31, 2009, down ¥16.44 billion compared with March 31, 2008. Whileretained earnings climbed year on year, net assets decreased due mainly to the drop in net unrealized holding gain on
securities.
Accounting for the aforementioned factors, the net worth ratio rose 6.3 percentage points from 47.8 percent to 54.1
percent.
b. Summary of Consolidated Cash FlowsNet cash provided by operating activities was ¥36.16 billion, due to factors including a decrease in working capitaland income before income taxes and minority interests.
Net cash used in investing activities amounted to ¥11.06 billion. This reflected such factors as purchases of property,
plant and equipment.
Net cash used in financing activities totaled ¥5.54 billion. Major cash inflows including proceeds from long-term debt
were offset by the net increase in short-term loans.
As a result, the balance of cash and cash equivalents as of March 31, 2009 stood at ¥36.13 billion, up ¥12.65 billion
compared with the end of the previous fiscal year.
c.

Trends in Cash Flow Indicators
Fiscal 2005

Fiscal 2006

Fiscal 2007

Fiscal 2008

Fiscal 2009

Net worth ratio

49.8%

49.6%

48.5%

47.8%

54.1%

Net worth ratio based on market value

40.8%

51.0%

45.1%

31.2%

28.7%

Interest-bearing debt to cash flow ratio

8.2 years―

1.9 years―

0.9 years

3.3

―

12.6

―

36.0

Interest coverage ratio－5－Notes:-

Net worth ratio = (Net assets – Stock acquisition rights – Minoroty interests) / Total assets
Net worth ratio based on market value = Market capitalization of shares / Total assets
Interest-bearing debt to cash flow ratio = Interest-bearing debt / Operating cash flow
Interest coverage ratio = Operating cash flow / Interest expense
All indicators are calculated on the basis of consolidated financial figures.
Total market value of shares is calculated by multiplying the closing price of shares at the end of the period by the
total number outstanding shares at the end of the period.
Operating cash flow refers to net cash provided by operating activities in the Consolidated Statements of Cash
Flows. Interest-bearing debt refers to all debt for which interest is payable as declared in the Consolidated
Balance Sheets. Interest expense refers to the amount of interest paid as shown in the Consolidated Statements ofCash Flows.

(3) Dividend Policy and Dividends for the Fiscal Years Ended March 31, 2009 and Ending March 31, 2010
The Nagase Group’s basic policy is the further enhancement of its corporate structure and earnings capabilities tocontinue generating steady dividends for shareholders, based on comprehensive consideration of medium- tolong-term demand for funds to meet future growth and consolidated business performance trends. The Nagase Groupintends to use internal funds effectively to enhance future business activities and its management base.
Based on this policy, Nagase plans to pay a fiscal year-end dividend of ¥8.00 per share for the fiscal year ended
March 31, 2009. Together with the interim dividend, the Company therefore intends to pay an annual dividend of ¥16
per share, ¥1 per share lower than for the previous fiscal year.
For the fiscal year ending March 31, 2010, Nagase plans to pay a total cash dividend of ¥14 per share, consisting of
an interim and fiscal year-end dividend of ¥7 per share each.
(4) Operating and Other Risks
The Nagase Group is engaged in trading, marketing, research and development, manufacturing and processing, andconducts global business activities in the five segments of Chemicals, Plastics, Electronics, Life Sciences and Others.
The following presents an overview of major operating and other risks to which the Nagase Group’s businesses are
subject by their nature and that exert or could exert a significant influence on investor decisions. Forward-looking
statements are Nagase Group estimates as of March 31, 2009.
a. Overall Operating Risk
The Nagase Group conducts a wide spectrum of operations across five fields comprising chemicals, plastics,
electronics, life sciences and others, all from its base in chemicals. The chemical industry both in Japan andinternationally is subject to significant volatility that could impact the Group’s performance and financial position.
b. Product Market Conditions
The Nagase Group is extensively involved in the chemicals, plastics and other businesses that deal in petrochemicals
manufactured from naphtha.
Raw material market conditions and the balance of supply and demand are key factors determining market
conditions for each product. Changes in these conditions could impact the Group’s performance and financial
position.
c. Impact of Fluctuations in Foreign Currency Exchange Rates
The Nagase Group undertakes import and export transactions and non-trade business transactions that involve
foreign currencies. Fluctuations in foreign currency exchange rates impact the value of transactions denominated inforeign currencies when translated into yen. The Nagase Group works to minimize the risks associated withfluctuations in foreign currency exchange rates by hedging these transactions using forward foreign exchange
contracts. However, fluctuations in foreign currency exchange rates could exert a material impact on the Group’s
performance and financial position. The Nagase Group also includes corporations domiciled in countries other thanJapan that maintain their financial statements in currencies other than Japanese yen. Fluctuations in foreign currency
exchange rates could therefore impact the consolidated financial statements upon translation of the accounts of these
corporations into Japanese yen.
d. Risks Involved in Operating Overseas
A significant percentage of the Nagase Group’s activities involve selling and manufacturing overseas, principally in
China, Southeast Asia, Europe and North America. As a matter of policy, the Nagase Group makes every effort todetermine trends in markets overseas and respond appropriately to them. However, failure on the part of the Nagase－6－Group to make accurate projections due to unexpected events including factors related to the regulatory systems andcustoms of overseas countries could impact the Group’s performance and financial positions.
e. Impact of Changes in Stock Prices
The Nagase Group maintains a portfolio of marketable stock, primarily shares of companies with which the Grouptransacts business, and is subject to the risk of changes in the prices of these shares. As a matter of policy, the Nagase
Group seeks to reduce this risk by continuously reviewing and reorganizing its shareholdings. However, changes instock prices could impact the Group’s performance and financial position. Moreover, a drop in stock prices that
reduces return on pension plan assets could impact the Group’s profitability by increasing retirement benefit costs.
f. Counterparty Credit Risk
The Nagase Group is exposed to credit risk because it extends credit to buyers in a diverse array of transactions inJapan and overseas. As a matter of policy, the Nagase Group moves to reduce credit risk by taking measures such as
obtaining guarantees and collateral in correlation with the financial condition of buyers. In addition, although theNagase Group makes efforts to ensure stable, uninterrupted product procurement, the continuous supply of products
the Group handles could become difficult due to the deterioration of the financial condition or bankruptcy of
suppliers or other parties involved in transactions. Materialization of these risks could impact the Group’s
performance and financial position.
g. Risk of New Investments
The Nagase Group’s businesses are based on brokerage transactions, and the Group is working to develop
high-value-added businesses. As a matter of policy, the Nagase Group is therefore supporting the ability of theNagase R&D Center, Group manufacturing subsidiaries and other Group organizations to provide high-leveltechnologies and information through measures such as aggressively investing in new businesses and strategicacquisitions. However, this policy entails operating risks that are different from those inherent in the Group’s
conventional, low-risk brokerage businesses. The increased latent risks involved could impact the Group’s
performance and financial position.
h. Product Quality Risk
The Nagase Group operates the Nagase R&D Center and manufacturing subsidiaries to provide high added value tocustomers, and devotes scrupulous attention to the quality of the technologies and products the Group thus provides.
In addition, the Nagase Group assumes liability for the products it handles as an importer, and devotes the sameattention to the quality of these products. However, issues such as defects in these products would terminate sales
and require the Nagase Group to reimburse customers or pay compensation for damages, which could impact theGroup’s performance and financial position.
i. Risks of Handling Various Chemicals
Chemicals are a core business of the Nagase Group, which imports and exports a diverse array of products for abroad range of applications. The Group’s exports are therefore subject to the application of regulations that aim inpart to maintain international peace and safety, including the Foreign Exchange and Foreign Trade Control Law andthe Export Trade Control Order, and imports are subject to the Chemical Substances Control Law and other laws andregulations. The Nagase Group has therefore established the Security Trade Control Committee and the Chemical
Management Committee, which work to assure compliance with the above regulatory systems and with laws related
to chemical product management in China, Europe, North America and elsewhere. Contravention of these regulatory
systems would result in restrictions on business activities, and therefore could impact the Group’s performance andfinancial position.

2. Information on the Corporate Group
There are no material changes to the business activities of the Nagase Group or the status of affiliated companies
outlined in the Company’s Securities Report filed on June 27, 2008. Accordingly, this information has been omitted.

－7－3. Management Policies(1)

Basic Management Policy

Management Philosophy“The Nagase Group is a member of the world society. As such, it is our duty to maintain good and fair businesspractices and, through continued growth and development, provide society with the goods and services needed while
improving the welfare of our employees.”
Consistent with this management philosophy, the Company has positioned activities that contribute to society
including efforts to maintain good and fair business practices while ensuring continued growth and development as its
most important goal.
Underpinned by the Group slogan “a technology and intelligence oriented company that turns wisdom into business,”
Nagase seeks to become a unique company that combines the functions of a trading company and a manufacturer by
exploiting technology, information and wisdom enhanced by experience. We will continue reinforcing these functions
and offering business solutions in order to be our customers’ partner of choice in their business operations.
(2)Management Objectives and Medium-Term Strategies

Guided by the aforementioned management philosophy, Nagase has formulated the following objectives andstrategies as it works toward realizing its vision for the future.
-

Allow stakeholders to realize their dreams and ideals through our businesses-

Continue to grow and raise value with technology as the foundation in businesses in which we are strong-

Anticipate changes in market structure and the environment, and make progress with customers by proposing
original solutions-

Contribute to society and the global environment

Confronted by rapid structural and qualitative changes in its external environment, the Nagase Group recognizes theneed to secure sure-footed structural and operating business progress as it works toward realizing its vision for the
future. With this in mind, the Company formulated “CHANGE” 11, its new medium-term management plan, which
covers the three-year period commencing April 2009. By the final fiscal year of the plan, fiscal 2012, the fiscal year
ending March 31, 2012, Nagase has targeted consolidated net sales of ¥720.00 billion and consolidated operating
income of ¥15.00 billion. Recognizing the uncertainty that surrounds future economic conditions, however, theCompany is well aware of the need to adjust these numerical targets as changes in its operating environment dictate.
Looking ahead, the Nagase Group will continue to focus on consolidated operating income as its key numerical target,
representing the true nature and quality of its mainstay business activities. Positioning efforts to “enhance the qualityof its business and operations,” as the cornerstone of “CHANGE” 11, the Company has also identified thefollowing core initiatives.
1.
2.
3.
4.
5.
6.

Select and concentrate businesses
Build businesses around environment- and energy- related technologies
Strengthen R&D and manufacturing functions
Promote globalization
Strengthen risk management
Promote employee diversity and work-life balance(3) Issues to be Addressed by the Company
Responding to Changes in the Business Environment
Concentrating on areas of potential, the Nagase Group has adopted a “selection and focus” approach in its efforts tocombat sudden and dramatic changes in its business environment brought on by the worldwide financial crisis. With
regard to the Company’s existing businesses, particularly those that exhibit a weak operating foundation and arenotably affected by shifts in the environment, Nagase is undertaking a stringent review of new investment activity
encompassing investment details, timing and scale, and adopting wide-ranging countermeasures that include businesswithdrawal. At the same time, the Company is evaluating the probability of inventory sales and strengthening its
business risk management capabilities focusing on asset management and maintenance.

－8－Implementing Groupwide Strategies under the “CHANGE” 11 Medium-Term Management Plan
“ CHANGE ” 11, the Company’s three-year medium-term management plan was launched in April 2009.
Underpinned by the plan’s overarching basic strategy to “enhance the quality of its business and operations,” Nagase
will pursue the following core initiatives.

1. Select and concentrate businesses
Amid dramatic fluctuations in technological innovation and shifts in its operating environment, the Nagase Group isevaluating the quality and purport of its business strategies to ensure their continued relevance and value. For
businesses that exhibit a weak foundation and are easily affected by changes in business conditions, the Company isadopting wide-ranging countermeasures including business withdrawal. For businesses that exhibit growth potential,
Nagase is promoting Groupwide cooperation and is selectively channeling management resources to the priority
automotive, electronics and life science fields.
2. Build businesses around environment- and energy- related technologies
As concerns surrounding the global environment and energy conservation gather momentum, society’s needs both inJapan and overseas focus increasingly on environmental protection and resource recycling. Against this backdrop, theNagase Group is pioneering global technology innovation and working diligently to cultivate new businesses.
3. Strengthen R&D and manufacturing functions
The Nagase Group is endeavoring to further strengthen and expand the scope of its research, development andmanufacturing capabilities in an effort to provide higher added value to its customers. At the same time, the Group is
striving to lift the overall share of its proprietary high-value-added businesses.
4. Promote globalization
Constituting an increasingly higher proportion of its total turnover, the Nagase Group is placing additional weight onoverseas sales and the promotion of its global activities. In this context, and in an effort to secure optimal operations,the Company is endeavoring to strike a balance between its business and regional strategies. In Asia, Nagase isworking to further reinforce its business platform, while in Europe and the United States the Company is actively
rebuilding it existing business structure and systems. Looking ahead, the Group will focus on the chemical industry in
the Middle East, an area that is expected to experience solid growth.
5. Strengthen risk management
To comprehensively identify, control and reduce the various types of risk that arise in conjunction with its operations,
it is imperative that the Nagase Group further enhance its risk management system. Given this situation, the Groupwill continue to bolster its compliance, production and quality control systems, while adhering strictly to its businessrisk management and internal control systems.
6. Promote employee diversity and work-life balance
The Nagase Group is endeavoring to build a support structure that encompasses organizational reform. In promoting
an optimal workplace environment and corporate culture that takes into account the varied and diverse values andlifestyles of employees, Nagase is helping to maximize individual abilities and personalities.

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