Consolidated Financial Statements for the Second Quarter of the Fiscal YearEnding March 31, 2011
<Under Japanese GAAP>

October 29, 2010
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
Filing of Quarterly Report (scheduled): November 12, 2010
Supplementary documents or quarterly financial results: No
Quarterly investors’ meeting: Yes(Note: Amounts have been rounded down to the nearest million yen.)

1． Consolidated Results for the Second Quarter of the Fiscal Year Ending March 31, 2011
(April 1, 2010 to September 30, 2010)(1) Consolidated Operating Results (Percentages represent changes compared with same period of the previous fiscal year.)
For the second quarter
ended
September 30, 2010
September 30, 2009

Net sales
Millions of yen%

Operating income
Millions of yen%

Ordinary income
Millions of yen%

331,311
281,368

17.8(26.8)

10,533
5,262

11,3695,796

Earnings
per share
For the second quarter
ended
September 30, 2010
September 30, 2009100.2(40.9)

96.1(41.1)Net income
Millions of yen
6,849
3,095%
121.3(45.8)

Earnings per share(diluted)

Yen

Yen——

53.29
24.08

(2) Consolidated Financial Position
Total assets

Net assets

Net worth ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

September 30, 2010

370,197

203,35352.9

1,524.00

March 31, 2010

368,088202,75353.1

1,519.61(Reference) Equity capital: As of September 30, 2010: ¥195,905 million As of March 31, 2010: ¥195,344 million

2. Dividends
Dividends per share(Record date)

1Q

For the year ending

Yen

Interim

3Q

Yen

Yen

March 31, 2010

—

7.00

March 31, 2011
March 31, 2011
(estimate)

—

9.00

Fiscal Year-End

Annual

Yen

Yen

—

9.00

16.00

—

9.00

18.00

Note: Revisions to projected dividends during the three months ended September 30, 2010: No－1－

3. Projected Consolidated Results for the Fiscal Year Ending March 31, 2011
(April 1, 2010 to March 31, 2011)(Percentages represent changes compared with the corresponding periods of the previous fiscal year as applicable)
Net sales
Fiscal 2010
(Full fiscal year)

Operating income

Ordinary income

Millions of yen%

Millions of yen%

Millions of yen

655,000

8.5

18,00037.1

19,600%Earnings
per shareYen

59.2

93.35

Net income% Millions of yen
33.2

12,000Note: Revisions to projected consolidated results during the three months ended September 30, 2010: Yes
4. Other (For details, please see “2. Others” on page 4.)(1) Changes in major subsidiaries during the period (changes in specified subsidiaries accompanying changes
in the scope of consolidation): None
New: — (Company name:)

Excluded: — (Company name:)(2) Application of simplified accounting methods or special accounting methods to the preparation of quarterly
financial statements: No(3) Changes in accounting principles, procedures and presentation methods in connection with the preparation ofconsolidated financial statements(Recorded under “Changes in significant items considered fundamental to the preparation of consolidatedfinancial statements.”)i.
Changes in accordance with revisions to accounting and other standards: Yesii.

Changes in items other than (i) above: No(4) Number of shares issued and outstanding (common stock)i. Number of shares issued and outstanding as of the fiscal period end (including treasury stock)
As of September 30, 2010:
138,408,285 shares
As of March 31, 2010:
138,408,285 shares
ii. Number of treasury stock as of the fiscal period end
As of September 30, 2010:
9,861,844 shares
As of March 31, 2010:
9,859,357 sharesiii. Average number of shares during the period:
Six months ended September 30, 2010:
128,547,717 shares
Six months ended September 30, 2009:
128,560,183 shares
Indication of quarterly review procedure implementation status
This quarterly earnings report is exempt from the quarterly review procedure based upon the Financial Instruments
and Exchange Act. Furthermore, quarterly consolidated financial statements were undergoing the review procedure
process at the time of release.
Cautionary Statement with Respect to Forecasts of Consolidated Business Results
The results forecasts presented in this document are based upon currently available information and assumptions
deemed rational. A variety of factors could cause actual results to differ materially from forecasts. Please refer to“Qualitative Information on Projected Consolidated Results” in the “Qualitative Information and FinancialStatements” on page 4.

－2－1. Qualitative Information and Financial Statements(1) Qualitative Information and Overview of Consolidated Business Resultsa. General Summary of Results
During the period under review, the Japanese economy remained steady owing to a surge in consumer demand on theback of government subsidies and active demand in Asia, primarily in China. This occurred amid increasing
uncertainty about the future primarily due to concerns over an economic slowdown overseas and the ongoing strengthof the yen.
Reflecting these circumstances, domestic sales for the second quarter rose 13.6 percent compared with thecorresponding period of the previous fiscal year to ¥196.32 billion and overseas sales jumped 24.4 percent to ¥134.98
billion. Total net sales for the period under review were ¥331.31 billion, up 17.8 percent year on year.
On the earnings front, operating income surged 100.2 percent to ¥10.53 billion and ordinary income jumped 96.1
percent to ¥11.36 billion due to the increase in net sales. As a result, net income for the second quarter of the fiscal
year under review increased 121.3 percent year on year to ¥6.84 billion.
b. Segment Summary[Chemicals]

Sales: ¥126.59 billion, a 14.0 percent increase from the same period of the previous fiscalyear

Such factors as a recovery in demand in the chemicals industry overall affected Nagase’s chemical businesses acrossthe board. Reflecting this, sales improvements were recorded by the performance chemicals business, which handles
coating materials, urethane materials, plastic raw materials and additives; the colors and imaging business, whichhandles dyestuffs, pigments, digital print processing materials, functional dyes and other products related to color; andthe speciality chemicals business, which handles a wide range of materials such as surfactants, industrial oil solutions,organic synthesis materials and sealants, which have applications related to fluorochemicals and are used by thesemiconductor industry. Overseas, overall sales increased despite decreased printing-related sales in South China.
[Plastics]

Sales: ¥110.06 billion, a 27.5 percent increase from the same period of the previous fiscal year

During the period under review, overseas sales in the business areas of Northeast Asia, Southeast Asia and North
America grew substantially. In Japan, although sales of functional film sheets and sheet molding-related products fell,sales of materials for office automation equipment, consumer electronics, automotives rose. As a result, overall sales
in this segment increased significantly.
[Electronics]

Sales: ¥68.54 billion, a 21.0 percent increase from the same period of the previous fiscal year

Despite indications of the beginnings of a trend toward inventory adjustments for a portion of products related toLCDs and semiconductors, sales of display-related products, including LCD display films and touch-panelcomponents, grew substantially owing to an increase in new materials. In addition, sales of precision abrasive
materials for the hard disk and semiconductor industries improved as did sales of chemicals used in manufacturing
LCDs and semiconductors, reflecting favorable demand. The epoxy business also grew substantially, owing to arecovery in applications related to automobiles and strong demand for such mobile phones as smartphones.
Furthermore, overseas sales showed considerable growth in all regions, resulting in a drastic increase in overallresults.
[Life Sciences]

Sales: ¥25.68 billion, a 4.2 percent decrease from the same period of the previous fiscal year

In the Life Sciences segment, although sales of enzymes and fermentation products in the fine chemicals businessgrew, sales of household products fell. In the pharmaceutical industry, sales dipped slightly despite improved
performance for consignment projects. Sales of newly introduced items in the Beauty Care products business, whichhandles cosmetics and health foods, remained strong. However, these results failed to counter a drop in sales ofexisting products, leading to a slight decrease in results.
[Other]Sales: ¥0.41 billion, a 26.2 percent decrease from the same period of the previous fiscal year

No specific items to report in this segment during the period under review－3－(2) Qualitative Information on Consolidated Financial Position
Assets, Liabilities and Net Assets
Total assets increased ¥2.10 billion to ¥370.19 billion during the period under review, in spite of such factors as adecrease in the market value of investment securities due to a drop in share prices as well as a decrease in cash andcash equivalents due to a rise in working capital. This was primarily attributable to an increase in notes and accounts
receivable and inventories due to a growth of sales.
Total liabilities amounted to ¥166.84 billion, up ¥1.50 billion from the previous fiscal year-end primarily due to anincrease in short-term loans. This result occurred despite such factors as a decrease in deferred tax liabilities.
Net assets rose ¥0.60 billion to ¥203.35 billion mainly because of a rise in retained earnings. This increase occurred inspite of such factors as a decrease in net unrealized holding gain on securities.
As a result, the net worth ratio fell 0.2 percentage points to 52.9 percent compared with the previous fiscal year-end’s
53.1 percent.
Cash FlowsNet cash provided by operating activities was ¥2.45 billion. This was mainly attributable to ¥11.09 billion in income
before income taxes and minority interests, which offset an increase in working capital due to a rise in notes andaccounts receivable and inventories stemming from sales expansion.
Net cash used in investing activities totaled ¥5.85 billion, reflecting such factors as purchases of property, plant andequipment.
Net cash provided by financing activities amounted to ¥2.54 billion due to an increase in short-term loans. Thisoccurred in spite of such factors as the payment of dividends.
Including ¥0.20 billion cash and cash equivalents recorded due to the inclusion of a subsidiary in consolidation, thebalance of cash and cash equivalents at September 30, 2010 was ¥41.44 billion, a decrease of ¥1.36 billion from theend of the previous fiscal year.
(3) Qualitative Information on Projected Consolidated Results
There are indications that the pace of global economic growth—which has been supported by economic recovery
powered by increasing demand in emerging economies and has been on a resurgent expansion track—is slowing
down. At the same time, uncertainty is increasing with regard to the Japanese economy due to such factors asconcerns about the diminishing impact of government policies related to individual consumption; an increase in crude
oil prices—which were relatively stable until the second quarter of the current fiscal year—from October onward; andthe ongoing strength of the yen.
Under these circumstances, the Nagase Group will continue to undertake measures in the Chemicals, Plastics andElectronics segments to expand businesses and strengthen its functions in Asia (where growth centered on ongoing
demand is anticipated), while strengthening its functions in businesses related to automobiles in Europe and North
America. Moreover, Nagase will take steps to select and concentrate business in Japan as it bolsters measures toprimarily expand its environment- and energy-related businesses. In the Life Sciences segment, Nagase is working tostrengthen its technologies and manufacturing functions in order to further reinforce its business foundation.
Nagase aims to meet performance forecasts through the aforementioned measures. Moreover, mainly reflecting anupward revision of initial projections during the cumulative second quarter, full-year consolidated performance
forecasts have been revised as follows: net sales of ¥655.00 billion (an 8.5 percent increase year on year), operating
income of ¥18.00 billion (a 37.1 percent rise year on year), ordinary income of ¥19.60 billion (a 33.2 percent
improvement year on year) and net income of ¥12.00 billion (a 59.2 percent jump year on year).
2. Others(1) Changes in Significant Consolidated Subsidiaries
No(2) Application of Accounting Methods for Quarterly Consolidated Financial Statements That Are Simplified
or ExtraordinaryNo(3) Outline of Changes in Significant Accounting Policies, Procedures and Presentation:－4－(i) From the first quarter of the fiscal year ending March 31, 2011, Nagase applies the “Accounting Standard forEquity Method of Accounting for Investments” (ASBJ Statement No. 16, March 10, 2008) and the “PracticalSolution on Unification of Accounting Policies Applied to Associates Accounted for Using the Equity Method”(ASBJ PITF No. 24, March 10, 2008).
This change has had no impact on consolidated operating income and ordinary income.
(ii) From the first quarter of the fiscal year ending March 31, 2011, Nagase applies the “Accounting Standard for
Asset Retirement Obligation” (ASBJ Statement No. 18, March 31, 2008) and the “Guidance on Accounting Standardfor Asset Retirement Obligations” (ASBJ Guidance No. 21, March 31, 2008).
This change has had no impact on consolidated operating income and ordinary income.
(iii) From the first quarter of the fiscal year ending March 31, 2011, Nagase applies the “Accounting Standard forBusiness Combinations” (ASBJ Statement No. 21, December 26, 2008), “Accounting Standard for Consolidated
Financial Statements” (ASBJ Statement No. 22, December 26, 2008), “Partial Amendments to Accounting Standard
for Research and Development Costs” (ASBJ Statement No. 23, December 26, 2008), “Revised Accounting Standard
for Business Divestitures” (ASBJ Statement No. 7, December 26, 2008), “Revised Accounting Standard for Equity
Method of Accounting for Investments” (ASBJ Statement No. 16, released December 26, 2008), and “RevisedGuidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures”(ASBJ Guidance No. 10, December 26, 2008).

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