April 28, 2005

Summary of Consolidated Business Results for the Year Ended March 31, 2005
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 28, 2005

1. March 31, 2005 Consolidated Results (April 1, 2004 – March 31, 2005)
1) Consolidated Operating Results
Net Sales¥ Millions
575,636
533,301

Period Ended March 31, 2005
Period Ended March 31, 2004

Net income

%
7.9
5.9
EPS

(Note: Amounts have been rounded off to the nearest million yen)
Operating Income
Recurring income¥ Millions%¥ Millions%
13,25629.4
15,158
15.6
10,24421.5
13,110
16.2
Fully Diluted
Shareholder Net
EPS
Income Rate for thisFiscal Year
¥
%
80.82
6.4
4.7

Shareholder'sEquity Ratio

Sales Operating
Income Rate

¥ Millions %¥%%Period Ended March 31, 2005
10,384 48.1 81.00
4.7
2.6
Period Ended March 31, 2004
7,010
67.4 54.69
4.4
2.5
Notes:
1. Gain (loss) on equity method investment
Period ended March 31, 2005: ¥312 million Period ended March 31, 2004: ¥437 million
2. Average number of shares during the consolidated accounting period
Period ended March 31, 2005: 127,269,620 Period ended March 31, 2004: 127,195,732
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, 2005
Period Ended March 31, 2004

Total Assets

Shareholder's Equity¥ Millions
335,290
310,793¥ Millions
167,092
156,210

Shareholder's Equity
Ratio
%
49.8
50.3

Shareholders Equity
Per Share¥
1,311.37
1,227.82

Notes:
Shares issued and outstanding at the end of the consolidated accounting period:
Year ended March 31, 2005: 127,361,107
Year ended March 31, 2004: 127,181,787
3) Consolidated Cash FlowsNet Cash fromoperating activities

Net Cash Used forInvestment Activities¥ Millions¥ Millions
Period Ended March 31, 2005
1,716
-1,412
Period Ended March 31, 2004
6,431
-1,6894) Scope of Consolidation and Application of Equity Method
Consolidated subsidiaries: 38
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-5,119-1,832

Balance of Cash andCash Equivalents at
Term End¥ Millions
17,21521,0335) Changes to Scope of Consolidation and Application of Equity Method
Consolidated Subsidiaries (New): 8 (Excluded): 1
Equity Method (New): 0(Excluded): 0
2. Consolidated Forecasts for the Year Ended March 31, 2006 (April 1, 2005 - March 31, 2006)
Net Sales
Recurring Income
Net Income¥ Millions¥ Millions¥ Millions
Interim Period
300,000
8,800
5,600
Whole Year
600,000
17,40010,800
Reference: Annual net income per share is projected to reach ¥84.21*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 and fairbusiness practices and, through continued growth and development, provide society with the goods andservices needed while improving the welfare of our employees.
With this management philosophy in mind, we have developed a slogan “technology- andintelligence-oriented company that turns wisdom into business”, and from April 2003, we adopted a newlong-term vision as follows.
To provide new “capabilities” and “services” worldwide based on our chemicals business, so as to become
a company that keeps creating value-added businesses capable of solving issues for customers. Our
business target in ten years is a consolidated operating income of ¥20 billion with gross profit ratio of 15%
and earnings higher than capital costs.
Our vision is based on the brief 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 with wisdom gained
through experience, and ultimately increase earnings.
Due to ever-diversifying customer demands, we cannot expect our business to grow steadily based on
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 to enhance ourfunctions in order to be chosen as a reliable business partner by customers without hesitation, andpersevere 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 cancontinue to generate steady dividends for our shareholders.

Based on our policy to pay steady dividends,

and in consideration of our good business performance, an ordinary dividend of ¥10 per share is projected
for this fiscal year, an increase from ¥9 per share in the previous fiscal year (consisting of an ordinary
dividend of ¥8 plus a commemorative dividend of ¥1), in appreciation of our shareholders’ support.
We intend to effectively use internal reserves to enhance our future business activities and managementfoundations.

In fiscal 2002, we introduced a stock option scheme aimed at boosting the motivation andmorale 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 fiscal year, we issued

rights to purchase new shares in the form of stock options to Directors, Auditors, Executive Officers andManagers of the Company, as well as Directors and individuals with an equivalent title in its subsidiaries.

3. Approach, Policy, etc. for Reduction of Investment Unit
We acknowledge that reduction of minimum investment unit is an effective means to encourage individual
investors to participate in the stock market, and improve the liquidity of stock.

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We have carefullyexamined the costs, effects, etc. of “stock split” and “revision of number of stocks per investment unit” inconcrete terms following the increase in the stock price, but decided not to go ahead with them at thisstage.

4. Target Management Performance Indicators and the Company’s Medium/Long-termManagement Strategies
We are currently pursuing a three year Medium-term Management Plan called “WIT21” (W: Wisdom, I:
Intelligence and T: Technology), launched in April 2003. WIT21 first assumed that the Company’s
ten-year target is to achieve “consolidated operating income of ¥20 billion, gross sales-to-profit ratio of
15%, and earnings exceeding capital cost in the year ending March 31, 2013,” based on the
aforementioned long-term vision.

As a steppingstone to reach this target, we set a medium-term target,that is, to achieve consolidated sales of ¥550.0 billion and consolidated operating income of ¥11.0 billion
in the year ending March 31, 2006, the final year of WIT21.
operating income as the performance indicator.

We have decided to give top priority toThis is based on the view that unlike indicators that can

only be expressed in terms of percentage such as Return on Equity (ROE), operating income clearly
represents the absolute value of and changes in the earnings performance of our core business, enabling us
to clearly show our aims for business expansion and growth.
The target was attained a year earlier than initially planned: we generated ¥575.6 billion in consolidated
sales and ¥13.2 billion in consolidated operating income in the year ending March 31, 2005, the second
year of WIT21.

We will continue to pursue WIT21 by revising the target upwards to ¥600.0 billion inconsolidated sales and ¥16.1 billion in consolidated operating income for the year ending March 31, 2006,
the final year of WIT21.
Our three basic strategies for the Medium-term Management Plan “WIT21” are as follows:(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.
We aim to take advantage of our relationships developed over many years with approximately 6,000
excellent client companies and Nagase Group’s research, development, manufacturing and marketing
functions, and provide clients with superior services and products needed in the market by proactively
making proposals and creating businesses, rather than merely serving as an intermediary.

These basic strategies will be implemented in the following priority business areas:(1) Electronics;(2) Life science;(3) Automotive; and(4) Overseas operations.
We will concentrate our management resources in these areas to increase earnings.

We believe we candemonstrate our strengths in these four areas based on our existing business foundations.

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We also expect

the market to grow substantially in these business areas.
We believe it is important that each and every employee takes on the spirit of an entrepreneur, sets highgoals for him/herself and persistently makes efforts to fulfill them, so that all employees within the Group
work together to “create businesses”.

As human resources development is also one of the key strategies

for achieving the targets under WIT21, we are continually conducting management education and training
programs aimed at improving their skills for planning and executing business strategies.

We are also

constantly giving employees the opportunity to discuss business strategies with the top management, sothat they will widely take on the “challenger’s spirit” through lively discussions.

5. Challenges to Be Made by the Company(1) Enhancement of Strategic Business Areas
We are taking various measures in fields defined as strategic business areas, including business investment,in order to fulfill the Medium-term Management Plan “WIT21” and to increase earnings in the long run.
Two out of three years subject to WIT21 have already passed.

While we have outperformed thenumerical targets set in the initial plan, we will continue to make efforts in order to become a company
that truly continues to create businesses.

(Electronics)
The growth of our business in the electronics sector has been based on chemical-based agents for the
production of semiconductors and liquid crystals and fine abrasives targeted at the electronics
components industry, rather than on the electronics components themselves.

In the process, we haveenhanced our relationship with existing clients and expanded our scope of business into optical films
for liquid crystals, liquid crystal modules, etc.

We are also working on businesses relating to theprocessing of these products, in an effort to increase added value. We even sell hardware such as
DVD players and final consumption goods such as movie software.
In order to promote such downstream operations, we need to reinforce our framework to enable
sustained growth while minimizing the impact of rapid changes in the balance between demand andsupply and price fluctuations.

It will be important to utilize the knowledge gained from final

consumption goods and other downstream sectors when expanding into upstream sectors such as
agents and raw materials, and to keep the combination and balance between trading-house-oriented
businesses and manufacturer-oriented businesses in an optimal state.
Further, we are globalizing the manufacturing functions of Nagase ChemteX Corporation (the biggest
manufacturer in the Group), and striving to make our overseas manufacturing bases such as Nagase
Finechem Singapore (Pte) Ltd. (a manufacturer of agents for semiconductors and liquid crystals) tocontribute to consolidated earnings as soon as possible.

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(Life Science)
Our life science business is wide ranging: while the pharmaceutical and agrichemical intermediates,
bulk and materials business and enzyme-related fermented products form the core, we also sell
reagents and diagnostic systems targeted at medical institutions, and even consumer products such as
cosmetics and health foods.

Among all strategic business areas, life science is the mostmanufacturer-oriented field for us.
In the pharmaceutical industry, massive development costs are incurred until a new drug is created
nowadays, while the number of new drugs is decreasing.

Pharmaceutical companies are engaged incompetition through expansion of scale based on mergers and alliances on a global level, with the aim
to secure the financial capacity required to develop new drugs.

In addition, there is a growing

demand to maintain health, prevent lifestyle-related diseases and provide desirable medical services,
due to people’s growing awareness of health, as medical expenses for the elderly and the burden of
nursing expenses are expected to increase, driven by the increase in lifestyle-related diseases in linewith the advancement of the aging society.
In these circumstances, we will continue to pursue high value-added products by applying proprietary
technologies.

We will aim to increase earnings based on technologies, by proposing to the market

technologies for manufacturing various artificial amino acids, technology to apply rosemary extracts
to cosmetics, and fermented products, health foods, etc. amid the growing fitness trend.

We will also

direct our efforts at expanding businesses with China and India, which are expected to experience
substantial progress in the future.

(Automotive)
The scope of our business in the automotive sector is expanding into the business of integrating
components designing with molding, and even into the business of purchasing and distributing raw
materials and components on behalf of clients’ overseas branches, based on the relationship we havebuilt with superior clients by selling plastic materials, molding facilities, etc. to various automotive
components manufacturers, including process manufacturers of automotive interior materials andmanufacturers of exterior components such as headlamps.

As overseas automotive production is

expected to increase further in the years ahead, we are aiming to build a framework that can meet therequirements of global production systems of automakers who form our clientele, and to become aunique proposal maker that cannot be imitated by our rivals.
In the Chinese market, where most of our efforts are currently directed at, our important challenge is
to not only promote sales activities through our local subsidiaries in Tianjin, Shanghai, Guangzhou,
etc., but to also operate the already-established Nagase Plastics Design and Die (Tianjin) Company
Ltd. on a full scale, and enhance mold-manufacturing functions. We plan to open a representative
office of Guangzhou Nagase Trading Ltd. in Wuhan in inland China, and examine the businesspossibilities.

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In North America and Europe, we will further reinforce the functions of our existing mold-related
business and materials & products businesses. In Southeast Asia, we have expanded our businessfocusing on Thailand, and even launched a business based on assembling components in Indonesia
and supplying them to other regions such as Europe.

We are committed to maintaining andexpanding these businesses in the future.

(Overseas Operations)
Our overseas operations are characterized by many branches in the ASEAN region, consisting of theso-called Greater China region (comprised of mainland China, Hong Kong and Taiwan) and Southeast
Asia.

Their strength lies in having many superior clients, including Japanese companies as well as

local companies.

In each region, we have a full-time resident executive officer taking charge of theregion, thereby establishing a framework for speedy decision-making.

In the process of further

expanding our overseas activities in each segment, we will encourage collaborative efforts within theregions and further enhance our framework so that we can demonstrate our collective strength.

6. Basic Approach to Corporate Governance and Implementation Status of Measures(Basic Approach to Corporate Governance)
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.

We also recognize

the importance of quick decision-making and action and securing transparency in management, tocontinually improve corporate value.

(Implementation Status of Measures for Corporate Governance)
1) Status of Management Organization for Decision-making, Execution and Supervision relating
to Corporate Management and Other Corporate Governance Structures(1) Nature of Company’s Institutions and Development Status of Internal Control System and
Risk Management System
Upon the adoption of the Board of Auditors system, we introduced a corporate executive officer
system in June 2001.

The current management team consists of ten Directors (including one

outside Director), nineteen Executive Officers (including eight Officers concurrently serving as
Directors) and four Auditors (including two outside Auditors).

The Board of Directors is clearly

defined as the body in charge of making decisions on management policies/strategies andsupervising the execution of operations. It convenes regular meetings of the Board of Directors on
a monthly basis, resolves important matters, discusses the progress in business performance,
examines measures and so on. Auditors audit the Directors’ performance of duties in accordancewith the auditing policies decided by the Board of Auditors and their respective share of
responsibilities, including attending the meetings of the Board of Directors and other important-7-

conferences, and demanding subsidiaries to submit reports as necessary.

Executive Officers

participate in the General Managers’ Meeting in relation to sales and the meeting of the Managers’
Meeting in relation to administration, and decides concrete measures, etc. through discussions basedon the reports about the current situations from each department.

Additionally, we haveestablished an advisory board based on the view that it is important to have the Company’s
management practices examined and checked objectively by two outside experts and listen to theiradvice.
Moreover, for compliance management, we established the Compliance Committee in 2001,
followed by the Nagase Group Code of Conduct.

We are striving to ensure compliance with laws

and regulations and enhance corporate ethics, by making sure the Code is thoroughly understood by
all officers and employees within the Group.

We have established Rules for Compliance Help

Desk, and set up a point of contact at the Compliance Committee’s office and with outside lawyers
where the Group’s employees can directly report and consult about any conduct that they comeacross within the Company which may be problematic in terms of compliance, regardless of theoccupational ladder.

As for the risk management system, our Security Trade Control and Chemical

Management Committee strictly enforces compliance in relation to freight and technology
transactions that are restricted by export laws and regulations (such as the Foreign Exchange andForeign Trade Control Law, which is partly aimed at maintaining international peace and security),
as well as compliance with the Law Concerning Examination and Regulation of Manufacture andHandling of Chemical Substances, the Pharmaceutical Affairs Law, etc.

Our Environment

Protection Committee engages in activities in line with our Environmental Policies, i.e., (1) comply
with environmental laws and regulations, (2) promote environmentally-friendly businesses, (3)coexist in harmony with society, (4) establish and continually improve environmental management
systems, and (5) publicly disclose and make the relevant parties fully aware of the Environmental
Policies.
(2) Internal Audit, Auditors’ Audit and Accounting Audit Status
In order to ensure the effectiveness of audits, the Board of Auditors periodically exchanges
information with the Audit Office in the internal audit division regarding internal audits and auditsof domestic and overseas subsidiaries, and holds liaison meetings with auditors of subsidiaries twicea year.

It also receives periodic reports on accounting items (including related internal control)from our accounting auditor Ernst & Young ShinNihon, and works with the accounting auditor
including being present at audits conducted by the accounting auditor.
Audits by certified public accountants (CPAs) are conducted from a fair and impartial standpoint by
nine audit staff members in total, including CPAs and junior accountants, in addition to thefollowing designated employees.
Name of Audit Staff
Designated employee Takayuki Nishida
Designated employee Yoshio Hayakawa
Designated employee Kiyokazu Furuta

Name of Audit Firm to which Audit Staff belongs
Ernst & Young ShinNihon-8-(3) Officers’ Remuneration and Audit Fee paid to Audit Firm
We paid remuneration to Directors and Auditors in the amount of ¥149 million and ¥47 million,
respectively, excluding employees’ salaries paid to employees who concurrently serve as Directors,
amounting to ¥89 million.
The fee paid to our audit firm Ernst & Young ShinNihon consisted of ¥39 million as the fee for audit
certificate based on the audit contract, and ¥1 million for other services.

2) Summary of Personal, Equity, Business or Other Stakeholding Relationships between the
Company and Its Outside Directors and Outside Auditors
There are no personal, equity, business or other stakeholding relationships between the Company andoutside Director Haruyuki Niimi and outside Auditors Hideo Yamashita and Eisaku Kimura.

At theOrdinary General Meeting of Shareholders scheduled in June 2005, we plan to invite Mr. Takuya Goto,
Chairman of the Board of Directors of Kao Corporation, as a candidate for Director. Although there arechemical sales and purchasing transactions between Kao Corporation and Nagase, they are based on thesame terms and conditions of transactions as other clients with whom we have no relationship.
3) Efforts Made to Enhance Nagase’s Corporate Governance over Past Year
In order to comply with the Act for Protection of Computer Processed Personal Data held by Administrative
Organs enforced in April 2005, the Group acknowledged the need to further strengthen its information
management system and launched a working team in the Compliance Committee to take charge of measures toprotect personal information in August 2004.

We also established the Rules for Protection of Personal

Information based on the Privacy Policy for Personal Information, and held study meetings targeted at officers
and employees, in an effort to make them fully aware of the Rules.
information management system in order to fulfill our social responsibility.

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We will continue enhancing ourNagase’s corporate governance structure is illustrated below.

General Meeting of Shareholders

Audit

Board of Directors(10 Directors including 1 outside Directors)

Board of Auditors

President

Advisory Board(2 outside experts)

Compliance Committee

Counsel & Advice

Supervision(4 auditors including 2 outside auditors)

Audit

Accounting Auditor

Auditors

Security Trade Control and Chemical Management Committee

Supervision

Environment Protection Committee

General Managers’ Meeting (Sales)

7. Matters relating to Parent Company, etc.
Not applicable.

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Managers’ Meeting (Administration)

Supervision

Business Results and Financial Position
I. Business Results
1. Overview of Fiscal Year
Overall Company Performance
In the fiscal year under review, the Japanese economy performed well overall, supported by the increase inexports and solid domestic demand driven by the strength of the world economy, despite the slowdown insome sectors in the latter half of the year.

While the materials market experienced an uptrend due to theincrease in crude oil prices, liquid-crystal-related components entered an adjustment phase as prices dropped
due to concerns about oversupply.
We strived to improve our business performance under these circumstances, and consequently, sales
increased 7.9% year-on-year to ¥575.63 billion, consisting of domestic sales in the amount of ¥363.7 billion,
up 4.0% year-on-year, and overseas sales in the amount of ¥211.92 billion, up 15.3% year-on-year.
On the income front, operating income increased 29.4% year-on-year to ¥13.25 billion, partly attributable tothe increase in sales, while recurring income increased 15.6% year-on-year to ¥15.15 billion despite thedecrease in gains on investment subject to the equity method.

Net income jumped 48.1% year-on-year to¥10.38 billion due to the declaration of gains on the sale of non-current assets and investment securities.
Segment Summaries[Chemicals]

Sales: Year-on-year increase of 8.8% to ¥251.72 billion

The chemicals segment performed well, thanks to the increase in sales of chemicals with final applications in
the computer peripherals sector and the automotive sector, in addition to the increase in sales ofgeneral-purpose chemicals partly driven by the uptrend in the materials market.
・In the color materials segment, where we run businesses related to “color”, pigments generally
performed well, including growth industries where we have been concentrating our efforts, namely,
ink materials and toner materials for printers and copiers, and materials for color filters used in liquid
crystals.

Sales increased overall, as chemicals used in plasma displays and DVDs increased, eventhough sales leveled off for color formers (i.e., materials for thermal and pressure-sensitive papers)
and other chemicals for papermaking, as well as dyestuffs.
・

There was an increase in sales of urethane materials used for cushioning (including automobile seats),
especially overseas, as the effects of establishing joint ventures in China (one of our strategic businessareas) became apparent. Sales of painting materials and additives for incombustible plastics also
increased, especially overseas, where our efforts have been concentrated.

Sales substantially

increased overall, helped by the growth in sales of general-purpose chemicals due to the effects of theuptrend in the materials market.
・In the specialty chemicals segment, where we deal in materials of special chemicals such as
surfactants for household toiletry products (e.g. detergents) and industrial-purpose oil solutions, steadysales were generated, especially in regards to products of Nagase ChemteX Corporation, the Group’s
core manufacturing company.

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・

In the fine chemicals segment, where we deal in raw materials and intermediates for pharmaceuticals
and agrichemicals, enzymes, etc., sales remained more or less the same overall.

This wasattributable to pharmaceuticals, which performed poorly in the first half but recovered in the second
half to the previous year’s level, and the growth of overseas sales of enzymes for beverage products
and fragrance materials, while the sales of agrichemicals decreased due to the impact of business
review aimed at improving profitability.
[Plastics]

Sales: Year-on-year increase of 10.2% to ¥188.45 billion

In the plastics segment, the continued increase in overseas sales and the uptrend in the materials
market pushed up sales.
・Overseas sales (mainly in Asia) of functional resins (engineering plastics) and general-purpose resins
substantially increased, due to the continued good performance especially in the so-called Greater
China region, where our overseas operations’ efforts are concentrated.

・

Sales of resin materials and components for the automotive industry and resin molding facilities
substantially increased, due to sales contributions made not only in Japan and the Asian region
including mainland China where we have expanded business bases, but also in North America andEurope.

However, sales generated by Canada Mold Technology Incorporated, our North American

mold manufacturer, decreased during the fiscal year under review.
・Sales of resin materials for casings, etc. of computer peripherals increased in Japan.

Sales ofmaterials and products for building materials and home facilities increased, assisted by the sales of our
products based on laminated wood materials.
・

Sales of resin materials targeted at the domestic packaging materials industry and consumer
electronics industry did not increase sufficiently, despite the uptrend in the materials market.

On theother hand, there was an increase in sales generated by Setsunan Kasei Co., Ltd., which is engaged in
the plastic coloring and compounds business.

Steady sales were generated by Totaku Industries, Inc.,

which manufactures various flexible hoses and pipes for consumer electronics and industrial purposes,
including those used in vacuum cleaners and washing machines, as well as Kotobuki Industries Co.,
Ltd., which manufactures trays for food packaging.
[Electronics] Sales: Year-on-year increase of 3.1% to ¥122.63 billion
In the electronics segment, sales only increased slightly overall, due to the impact of the fall in price in theliquid crystals industry and the decrease in communication-equipment-related sales, despite the good
performance of agents, equipment, fine abrasives, etc. targeted at the liquid crystals and semiconductor
industries.
・ Sales generated by the business centering on Nagase ChemteX Corporation’s formulated epoxy resin
increased overall, helped by the acquisition of new businesses targeted at the heavy electric machineryindustry in China, even though domestic sales increased only slightly.
・ There was an increase in sales generated by the business concerning photolithography agents used in-12-front-end liquid crystal and semiconductor processing and related feeding and management devices, assales of devices substantially increased overseas, such as in Taiwan, especially in regards to products
manufactured inside the Group.
・ Sales in the semiconductor post-processing segment remained more or less the same as in the previous
fiscal year overall, including Nagase ChemteX Corporation’s liquid encapsulants and otherhigh-value-added products based on our intensive efforts.
・ Sales generated by our business concerning fine abrasives used in silicon wafer processing, etc. relating
to semiconductors grew significantly, driven by the increase in both domestic and overseas sales.
・ Sales generated by our business concerning optical films, etc. used in liquid crystals were flat overall;sales were steady in the first half but the slowdown in the liquid crystals industry led to a decrease
especially in overseas sales in the second half.
・ Sales generated by our business relating to components such as liquid crystal modules decreased due tothe impact of fall in prices. On the other hand, there was an increase in sales generated by our business
relating to aluminum used in casings of mobile electronic equipment, etc., as well as our consumer
products business including DVD players and even movie software, where we are making intensive
efforts as part of our drive to expand into downstream sectors from liquid crystals.

However, theincrease was not enough to offset the decrease in sales of components.
・ Sales of components of power amplifiers, etc. used in base stations for mobile phones and Personal
Handyphone System (PHS) decreased dramatically from the previous fiscal year; after the demand in
China, etc. reached a saturation point, sales did not recover this fiscal year, even though we developed
products adapted to next-generation models and made efforts in sales activities.

Sales generated by ourbusiness relating to image processing and inspection equipment used in the manufacturing process of
optical films, etc. increased steadily, albeit on a small scale.
[Healthcare and Others]

Sales: Year-on-year increase of 7.2% to ¥12.82 billion

In healthcare and others, sales of cosmetics and health foods slightly increased, whereas sales generated by
medical care and radiation dosimetry segments remained more or less the same as in the previous fiscal year.
・ For cosmetics and health foods, we shifted our conventional door-to-door sales functions to Nagase
Beauty Care Co., Ltd. last fiscal year, and directed our efforts at community-based sales activities.

Inskincare, sales did not increase sufficiently due to the decrease in existing products, despite the effects of
the launch of new products.
・ Sales remained more or less the same as in the previous fiscal year in the medical care segment, where
we deal in reagents for clinical examination and medical information & clinical diagnostic systems
targeted at medical institutions, as well as in the radiation dosimetry business relating to the safety
management of radiation.
2. Forecast for the Next Fiscal Year
We expect to generate sales in the amount of ¥60 billion, operating income of ¥16.1 billion, recurring incomeof ¥17.4 billion and net income of ¥10.8 billion in the next fiscal year.

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The annual dividend is projected at¥12 per share.

Year ending March
31, 2006
Year ending March
31, 2005
Year-on-yearcomparison(Unit: million yen)
Recurring Income
Net income

Sales

Operating Income

600,000

16,10017,40010,800575,636

13,25615,158

10,384104.2%

121.5%

114.8%

104.0%

Our full-year forecast is calculated on the basis of information available at the time.

However, the forecast

may substantially differ from our actual performance, due to the impact of the prolonged surge in crude oil
prices, the balance between demand and supply for electronic equipment such as liquid crystals, economic
trends in the United States, countercyclical measures taken in China, and other unforeseeable changes in theeconomic climate and environment.
II.

Financial Position
1.

Overview of Current Perios(1) Status of Consolidated Balance Sheet
Total assets increased ¥24.49 billion year-on-year to ¥335.29 billion, owing to increases in accounts
receivable, inventory assets, etc.
Shareholders’ equity increased ¥10.88 billion year-on-year to ¥167.09 billion, due to the increase in the
declared amount of unrealized holding gains of other securities, in addition to retained earnings.
Consequently, the shareholders’ equity ratio declined by 0.5 percentage points, to 49.8%.
(2) Status of Consolidated Cash Flow
Net cash provided by operating activities totaled ¥1.71 billion, primarily due to the increase in working
capital, while income before income taxes and minority interests amounted to ¥17.55 billion.
Net cash used in investing activities totaled ¥14.1 billion, due to active capital investment, etc., which
exceeded the gains on sales of some investment securities.
Net cash used in financing activities amounted to ¥5.11 billion due to the redemption of corporate bonds andthe payment of dividends.
Consequently, the closing balance of cash and cash equivalents declined ¥3.81 billion year-on-year to ¥17.21
billion.

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2.

Trends in Cash Flow Indicators

Shareholders’Equity Ratio
Shareholders’Equity Ratio basedonMarket Value
Debt Repayment
PeriodInterest Coverage
Ratio

Year ended
March 31,
2001

Year ended
March 31,2002

Year ended
March 31,2003

Year ended
March 31,2004

Year ended
March 31,
2005

43.4%

48.0%

49.5%

50.3%

49.8%

21.0%

22.6%

23.2%

38.8%

40.8%

2.9 years

1.6 years

3.8 years

2.6 years

8.2 years

9.9

19.9

10.1

13.9

3.3

(Notes) Shareholders’ equity ratio = Shareholders’ equity / Total assets
Shareholders’ equity ratio based on market value = Market capitalization of shares / Total assets
Debt 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 at the 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
Statement of Cash Flows. Interest bearing debt refers to all debt for which interest is payable asdeclared in the Consolidated Balance Sheet. Interest payment refers to the amount of interest paid
as shown in the Consolidated Statement of Cash Flows.
III.

Operating Risks and Other Risks
The following describes major operating risks and other risks to which the Nagase Group is exposed, with thepossibility of materially affecting investors’ decisions.
Forward-looking statements in this Section are based on Nagase Group’s judgment as of March 31, 2005.

(1) Impact of Exchange Rate Fluctuations
The Nagase Group carries out import and export transactions based on foreign currencies. Exchange rate
fluctuations affect the yen-equivalent value of transactions denominated in foreign currencies.

While theNagase Group hedges these transactions using forward foreign exchange contracts in an effort to minimize therisks associated with exchange rate fluctuations, exchange rate fluctuations may still affect the Group’s businessperformance and financial position.

The Group also consists of companies incorporated in countries other thanJapan that prepare their financial statements in foreign currencies. When converting their financial statements
into Japanese yen for the purpose of preparing consolidated financial statements, there is a conversion risk
associated with exchange rate fluctuations.

-15-

(2) Potential Risks of Overseas Activities
An increasing percentage of the Nagase Group’s selling and manufacturing activities take place overseas,
primarily in Southeast Asia, Europe, the United States and China. As a matter of policy, the Nagase Groupmakes every effort to determine local market trends in a timely manner and respond appropriately to them.
However, the Group’s business performance and financial position may be affected if any unforeseeable
circumstances arise due to local legal restrictions, customs, etc.
(3) Impact of Stock Price Volatility
The Nagase Group holds a portfolio of stocks, primarily shares of client companies, which are exposed to risks
attributable to stock price volatility.

While the Nagase Group takes measures to reduce such risks by disposingof unnecessary shares, etc., they may still affect the Group’s business performance and financial position.
(4) Risks associated with New Investments
The Nagase Group is expanding beyond its low-margin intermediary business, into high-value-added businesses.
The Nagase Group is therefore actively investing in new businesses, purchasing strategic commercial rights andtaking other such measures, by capitalizing on the advanced technology and information provided by the Nagase
R&D Center and the Group’s manufacturing subsidiaries.

However, such measures are exposed to higher

potential risks than the Group’s conventional, low-risk intermediary businesses, which may affect the Group’sbusiness performance and financial position.

(5) Risks associated with Product Quality
The Nagase Group operates the Nagase R&D Center and manufacturing subsidiaries to provide higher
added-value to customers, and pays utmost attention to the quality of the technologies and products they provide.
However, in the event of any defects in their products, etc., the need to suspend sales or recall their products, etc.
may affect the Group’s business performance and financial position.

(6) Risk associated with Product Export Regulations
The Nagase Group exports a diverse array of products for a broad range of applications, mainly chemicals which
are subject to laws and regulations partly aimed at maintaining international peace and security, including theForeign Exchange and Foreign Trade Control Law and the Export Trade Control Order.

The Nagase Group has

established the Security Trade Control and Chemical Management Committee, and strives to assure compliancewith such laws and regulations.

However, in the event of any violation of such laws and regulations,

restrictions imposed on business activities may affect the Group’s business performance and financial position.

-16-

Summary of Non-Consolidated Financial Statements for the Year Ended March 31, 2005

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 28, 2005

President
Accounting Division Manager

Hiroshi Nagase
Takahide Osada Telephone (03) 3665-3103

Date of Board of Directors' Meeting for Settlement of Accounts: April 28,2005
Date of Regular General Meeting of Shareholders: June 28, 2005
Interim Dividend System: No
Unit Stock System: Yes (1 unit=1,000 shares)

1. Results for the Year Ended March 31, 2005 (April 1, 2004 - March 31, 2005)(1) Business Results(Note: Amounts have been rounded off to the nearest million yen.)

Net Sales\millionsOperating income\millions%

Recurring income\millions%%

Net income\millions%Year ended March 31, 2005

442,304

(2.0)

5,181

22.9

8,502

10.9

6,007

11.8

Year ended March 31, 2004

433,817

(3.8)

4,217

32.9

7,663

14.9

5,373

377.1

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

Net income
per share
\

\

%

%

%

Year ended March 31, 2005

46.67

46.57

4.9

3.3

1.9

Year ended March 31, 2004

41.84

－

4.8

3.2

1.8

Notes:

1. Average number of shares during accounting period
Year ended March 31, 2005: 127,312,351 Year ended March 31, 2004: 127,238,463
2. Changes to accounting policies: Yes
3. The percentage figures for sales, operating income, recurring income and net income represen
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, 2005

10.00

－

10.00

1,274

21.4

1.0

Year ended March 31, 2004

9.00

－

9.00

1,145

21.5

1.0

Notes: Breakdown of dividend for year ended March 31, 2004 Commemorative dividend \1.00 Bonus dividend \0.00(3) Financial Position
Total assets\millionsShareholders’ equity\millionsShareholders’ equity ratio Shareholders’ equity per share%\

Year ended March 31, 2005

259,654

126,29448.6

990.78Year ended March 31, 2004

253,810

119,85047.2

941.65

Notes:

1. Shares issued and outstanding at end of accounting period
Year ended March 31, 2005: 127,403,838 Year ended March 31, 2004: 127,224,518
2. Treasury stock at the end of accounting period
Year ended March 31, 2005: 11,004,447 Year ended March 31, 2004: 11,183,767

2. Forecasts for the Year Ended March 31, 2006 (April 1, 2005 - March 31, 2006)
Net SalesInterimRecurringincomeAnnual dividend per share

Net income

Interim\millions\millions\millions

229,000
459,000

6,000
10,200

3,800
6,400

Whole Year
Reference: Net income per share is projected to reach ¥49.72

Final
\

－
－

\

\

－
12.00

－
12.00

* 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.