April 28, 2006

Summary of Consolidated Business Results for the Year Ended March 31, 2006
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, 2006

1. March 31, 2006 Consolidated Results (April 1, 2005 – March 31, 2006)
1) Consolidated Operating Results

Period Ended March 31, 2006
Period Ended March 31, 2005

Net Sales¥ Millions
648,023575,636

%
12.6
7.9

Net income

EPS(Note: Amounts have been rounded off to the nearest million yen)
Operating Income
Recurring income¥ Millions%¥ Millions%
17,59632.7
18,79824.0
13,25629.4
15,158
15.6

Fully Diluted
Shareholder Net
EPS
Income Rate for thisFiscal Year¥¥%
100.33100.05
7.1
81.00
80.82
6.4

Shareholder'sEquity Ratio

Sales Operating
Income Rate

¥ Millions %%%Period Ended March 31, 2006
12,892 24.2
5.1
2.9
Period Ended March 31, 2005
10,384 48.1
4.7
2.6
Notes:
1. Gain (loss) on equity method investment
Period ended March 31, 2006: ¥120 million Period ended March 31, 2005: ¥312 million
2. Average number of shares during the consolidated accounting period
Period ended March 31, 2006: 127,703,315 Period ended March 31, 2005: 127,269,620
3. Changes to Accounting policies: No
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, 2006
Period Ended March 31, 2005

Total Assets

Shareholder's Equity¥ Millions
396,773335,290¥ Millions
196,620
167,092

Shareholder's Equity
Ratio
%
49.6
49.8

Shareholders Equity
Per Share¥
1,535.70
1,311.37

Notes:
Shares issued and outstanding at the end of the consolidated accounting period:
Year ended March 31, 2006: 127,981,411
Year ended March 31, 2005: 127,361,107
3) Consolidated Cash FlowsNet Cash fromoperating activities

Net Cash Used forInvestment Activities¥ Millions¥ Millions
Period Ended March 31, 2006
-2,341-3,809Period Ended March 31, 2005
1,716
-1,412
4) Scope of Consolidation and Application of Equity Method
Consolidated subsidiaries: 40
Non-consolidated affiliated companies covered by equity method accounting: 0
Affiliated companies covered by equity method accounting: 8

Net Cash Used for
Financial Activities¥ Millions
9,330-5,119Balance of Cash andCash Equivalents at
Term End¥ Millions
22,936
17,2155) Changes to Scope of Consolidation and Application of Equity Method
Consolidated Subsidiaries (New): 5 (Excluded): 3 (resulting from merger of consolidated subsidiaries)
Equity Method (New): 1(Excluded): 2
2. Consolidated Forecasts for the Year Ended March 31, 2007 (April 1, 2006 - March 31, 2007)
Net Sales
Recurring Income
Net Income¥ Millions¥ Millions¥ Millions
Interim Period
347,000
11,3006,700
Whole Year
694,000
22,70013,600
Reference: Annual net income per share is projected to reach ¥106.27*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 fair business practices and, through continued growth and development, provide
society with the goods and services needed while improving the welfare of our employees
and contributing to our society.
As stated in our Management Philosophy, we believe that in order to contribute to our society,
it is essential to consistently maintain good and fair business practices while sustaining
growth and development as a corporation.
With this Management Philosophy in mind, we are endeavoring to live up to our slogan of“the technology- and intelligence-oriented company that turns wisdom into business” byutilizing our “wisdom” arising out of our experience together with our “technology” and our“information” to create an unique existence for ourselves, which cannot be clearly defined as
trading house nor manufacturer but having both functions. Moreover, we intend to reinforce
our functions and continue to provide business solutions so that we are selected by ourcustomers as a reliable partner in their execution of businesses.
In view of the above, we have designed a new Medium-term Management Plan “WIT 2008”
for the three years commencing on April 2006 to set out the “Best form of the Company” asfollows:(1) Maintain and expand the Company’s solid business foundation, which will enable
sustained growth(2) Being recognized us by the market possessing a unique corporate structure to utilize
its strategically accumulated technology(3) Higher percentage of Nagase-led businesses, in which the Nagase function createsvalue added(4) Practice business management with emphasis on CSR (Corporate Social
responsibility)
Due to greater diversity in the needs of our customers and the market, we cannot expect tofulfill them by simply adhering to our conventional intermediary functions. Thus we believe
it is our highest mission to implement and thoroughly practice at every organization within
the Group any and all actions for the “Best form of the Company” mentioned above.
2. Basic Policy of Profit Distribution
With our basic policy of endeavoring to further enhance the corporate structure and improvethe earning capacity to continue to pay steady dividends to our shareholders, it is our policy totake a comprehensive view of our medium- to long-term performance trends and perspectiveof fund demands for future growth in order to pay dividends. As for our internal reserves, we
intend to make effective use of such funds in our future business activities and theenhancement of our business foundations.
3. Our Approach and Policy Toward the Reduction of the Investment Unit

We acknowledge that the reduction of the minimum investment unit is an effective means toencourage individual investors to participate in the stock market, and improve the liquidity ofstock. In regard to measures concerning the reduction of the investment unit, it is our very
intention to address this task with careful consideration of our business results, market
conditions, the anticipated expenses and effects thereof. However, at the moment concretemeasures or the timing of its implementation are uncertain.
4. Targeted Management Performance Indicators and the Company’s Medium/Longterm Management Strategies<Summary of the Medium-term Management Plan “WIT 21”>Since April 2003, the Company had been pursuing the 3-year Medium-term Management
Plan “WIT 21” (W: Wisdom, I: Intelligence, T: Technology). WIT 21 adopted theconsolidated operating income as a management performance indicator and initially set thegoal of achieving consolidated sales of ¥550 billion and consolidated operating income of ¥11billion during the year ending March 31, 2006 corresponding to the final year of the plan.
However these goals were met into the second year of the plan, in the year ending March 31,
2005, one year earlier than planned, when consolidated sales of ¥575.6 billion andconsolidated operating income of ¥13.2 billion were achieved. During the final year, the year
ending March 31, 2006, the Company continued to pursue the plan by upwardly revising thegoals to ¥600 billion in consolidated sales and ¥16.1 billion in consolidated operating income
and ultimately concluded the 3-year plan by achieving record consolidated sales of ¥648
billion and consolidated sales of ¥17.5 billion.
<The New Medium-term Management Plan “WIT 2008”>
Following the success of WIT 21, the Company started another 3-year Medium-termManagement Plan “WIT 2008” from April 2006. In preparing WIT 2008, we have held
numerous discussions on determining what is necessary in the future to achieve our goal of
the “Best form of the Company” mentioned in the first above “Basic Management Policy.”
From these discussions we have concluded that, as our business performance do well, it is thetime to “reinforce our corporate structure” in order to maintain long-term sustained growth.
Thus we have designated WIT 2008 as the period for “reinforcement of the corporate
structure to enable sustained growth,” and intend to maintain the fine balance between“aggressive” and “defensive” and reinforce both styles together.
Taking the above into account, we have set out the numerical goal in WIT 2008 as follows:
the attainment of consolidated sales of ¥770 billion and consolidated operating income of¥24.0 billion in the final year, fiscal year 2008 (the year ending March 31, 2009).
Under the new Medium-term Management Plan, consolidated operating income is the mostimportant management indicator, as was the case with WIT 21. Our reasoning behind this isbecause consolidated operating income quantifies the results of our main line of business into
an absolute amount and clearly indicates its gains and losses, it is a clear reflection of the
stance of the Company aiming to expand its business and maintain sustained growth.
For the specific company-wide strategies, “Aggressive” strategies intended to “deepen thebusiness portfolio strategy” will include;
1. Expansion of the Company’s business foundations

2. Aggressive investments into priority areas
3. Improvement of the corporate structure for higher profits“Defensive” strategies intended to “strengthen the internal system of the Company” will
include:4. Maintenance of a sound financial standing
5. Thorough risk management
6. Development of a consolidated management structure
Moreover, as a pre-condition of all of the above strategies, the following is implemented:
7. Improvement in the quality/quantity of human resource.
The priority areas will also follow WIT 21 and will include:
Electronics
Life Science
Automotive
Overseas operations
We believe that, among business foundations constructed by the Company, these areas canshow their certain strengths while at the same time we are expected to see the greatest market
expansion in the future.
5. Tasks to be addressed by the Company<Execution of Company-Wide Strategies in the Medium-term Management Plan “WIT2008”>(1) Expansion of the Company’s Business Foundation
The business foundation means the relationship with our many prime customers that we haveacquired until now, the numerous business locations worldwide mainly in Asia, and theCompany’s status, which has been built within the industry to date as a result of our various
business activities. Consequently, we believe that the expansion of the Company’s businessfoundation is the primary condition to realize sustained growth.
(2) Aggressive Investments into Priority Areas
Aggressive and concentrated investments into priority areas are essential to maintain thesustained growth of the Company in the future. The Company believes that these investments
will lead to the new expansion of its business foundations. We are planning on greater
increases in investments, compared to WIT 21 period, for a total of approximately ¥30 billion
in the next three years. However, it should be noted that such investments require a thoroughexamination of its consistency with technological and market strategies, we must carefully
select the matters to be invested.
(3) Improvement of the Corporate Structure for Higher Profits
In order to achieve the consolidated operating income established as our management goals, itis necessary to increase the percentage of our high-profit businesses. Not only does theCompany increase the sales share of the products manufactured by the Group, but as entire
Group also increase the percentage of high value-added businesses having the initiative, theCompany tries to improve its profit margin. We also intend to continue our various efforts,
including the review of our unprofitable businesses.
(4) Maintenance of Sound Financial Standing

The Company continues its management with emphasis on the cash flow. The Company tries
to improve its cash flow from operating activities, and focuses on the maintenance of soundfinancial structure while reviewing its assets.
(5) Thorough Risk Management
We estimate that various new types of risk are occurred in the process of transforming theCompany’s business structure. For this reason, it will become essential for the entire Nagase
Group to establish a comprehensive risk management system. The Company will implement
measures to recognize, understand and control these risks at any time. We will at the sametime prepare internal control system to address the complete understanding and regulation of
the compliance.
(6) Development of Consolidated Management Structure
We will continue to enhance our consolidated management structure and intensify Groupmanagement by having Group companies share their strategies and information within theGroup and by the efficient use of management resources. We will also develop the Groupmanagement structure to allow sustained growth by newly establishing and reorganizing its
affiliates in domestic and abroad.
(7) Improvement in the Quality and Quantity of Human Resources
The Company still recognizes that our greatest assets is our personnel, and will aggressively
ensure a wide variety of highly specialized human resources to address changes in the
Company’s business structure and new businesses and undertake systematic training todevelop human resources for next leader.
6. Matters pertaining to the Parent Company
Not applicable.

Business Results and Financial Position
I. Business Results(1) Overview of the Fiscal Year
Overall Company Performance
Looking back on the Japanese economy during the period under review, there has been a
gradual but certain trend toward economic recovery supported by boosts in corporate
capital investments and private consumption. It shows a promising sign in theemployment environment, despite some concerns including the effects of the economic
tends of the U.S. and China and surge in crude oil prices, Japan is going to put theeconomy to a new growth path.
As a result of our efforts to maximize our business performance under suchcircumstances, domestic sales increased by 6.8% (compared to the previous fiscal year)to ¥388.47 billion and overseas sales by 22.5% to ¥259.55 billion to record total sales of¥648.02 billion, which constitutes a year-on-year increase of 12.6%.
As for our profits, increased sales resulted in the recording of an operating income of¥17.59 billion (a 32.7% increase compared to the previous fiscal year) and an ordinary
income of ¥18.79 billion (a 24.0% increase). Recognition of gains on sales of plant,
property and equipment and investment securities resulted in the current net income
increasing by 24.2% to ¥12.89 billion.
Segment Summaries[Chemicals] Sales: ¥269.26 billion, 7.0 % increase compared to the previous year
The chemicals segment, on the whole, recorded gains thanks to increase in sales ofchemicals with final applications mainly in the automotive sector, in addition to
substantial sales to the Greater China region including Taiwan and Hong Kong.
- Performance chemicals-related products, which constitute one of our more upstream
businesses, recorded gains both domestic and abroad in the automotive sectorrelated field of paint materials and urethane materials. Despite general-use chemicals
showing only marginal increases, with increases in sales, mainly overseas, of suchproducts including flame-retardants for plastics, overall sales increased during theperiod under review.
- Our Colors and Imaging products, which cover the businesses having to do with“color” including pigments and dyestuffs, showed gains in pigments for liquid
crystal color filters and dyes used for plasma displays and DVDs. Despite decreased
sales in dyestuffs and the thermal- and pressure sensitive paper materials, overallsales in this category increased slightly.
- In the specialty chemical segment, where we deal in materials for specialty
chemicals such as surface active agents and industrial purpose oil solutions used inhousehold toiletry products including detergents and cosmetics, sales increases wereseen in the epoxy compound products of Nagase ChemteX Corporation, the Group’s
core manufacturer, and products used for high-precision processing of metals.
- In the fine chemicals segment, where we deal in raw materials and intermediaries forpharmaceuticals and agrichemicals, enzymes, etc., sales of enzyme products
including food additives increased slightly while sales of pharmaceuticals showedslight decreases and sales of agrichemicals also continued to decline, therefore,
overall sales in this segment decreased during the current fiscal year.

[Plastics] Sales: ¥229.27 billion, 21.7% increase compared to the previous fiscal
year
The Plastics segment recorded substantial increase in sales, owing to the continued
increase in sales overseas, mainly to the Greater China region and to domestic sales
centering on the automotive sector.
- Owing to our concentrated efforts in the Greater China region, overseas (mainlyAsia) sales of functional resins (engineering plastics) and general-use resins
continued from the previous term to mark substantial increases in the resins for use
in armoring materials for precision equipment and in media-related uses such as
CDs and DVDs. Sales of resins for precision equipment increased in domestic as
well.
- Sales of resin materials and components for the automotive industry and resin
molding facilities increased, mainly through sales of resins for use in automobileinteriors in North America, while sales of domestic resin materials also increased,
resulting in an overall increase in this segment.
- Sales of materials and products for housing equipment and building materials
including our original product, the laminated wood materials, remained the same as
the previous year.
- Despite sales on a limited scale, the electronic machinery parts-assembly operations,which we are conducting as part of our resin products business, continued toincrease this term.
- Totaku Industries, Inc., the Group’s domestic manufacturer of various flexible hoses
and pipes for both household and industrial electricals including those used in
vacuum cleaners and washing machines, increased its sales, while sales for Setsuan
Kasei Co., Ltd., the Group’s manufacturer of plastic coloring and compounds,
remained flat, and sales for Kotobuki Industries Co., Ltd., the Group’s manufactureof food packaging trays, decreased.
[Electronics] Sales: ¥137.86 billion, 12.4% increase compared to the previous fiscal
year
The electronics segment recorded increased sales, due to gains from the sales of theaccompanying parts derived from precision abrasive materials and liquid crystals-related
businesses.
- Despite increased sales of formulated epoxy resins, through sales of the Group’s
original products by Nagase ChemteX Corporation and other companies are slightly
decreased as a whole, due to deflated sales from the photolithography agents used in
front-end liquid crystal and semiconductor processing and related feeding andmanagement devices.
- In the liquid crystal display-related business including post-processing, sales fromoptical films and the intermediary business for liquid crystal modules declined,
while liquid crystal component processing and derivative businesses such asaluminum casings for liquid crystal display device-related electronic machinery
increased to mark an overall increase in this segment.
- Businesses dealing with precision abrasive materials used in silicon wafer
processing increased both domestic and abroad. Businesses related to encapsulants
used in post-processing of semi-conductors also showed steady growth.
- Sales generated by our image processing and surface inspection equipment used in
our original products grew favorably.
- Sales of peripheral products intended for the general consumer such as liquid crystal
display outfitted DVD players and DVD software, which have been promoted as thedownstream sector of our liquid crystal-related business, also increased during theperiod under review.
[Health Care and Others] Sales: ¥11.61 billion, 9.4% increase compared to theprevious fiscal year
In healthcare and others, despite marginal growth in cosmetics and health foods, overallsales declined because of the sales decrease in healthcare.
- By concentrating our management resources in door-to-door sales, certain sectionsof our health food business showed signs of improvement for an overall marginal
growth in the cosmetics and health food businesses.
- Sales from our medical care segment, which deals in reagents for clinicalexaminations and medical information & clinical diagnostic systems intended for
medical institutions, and from our radiation dosimetry business, which is engaged in
the safety management of radiation, declined, as a consequence of our drastic
overhaul of our unprofitable businesses.
(2) Forecast for the Next Fiscal YearFor the next fiscal year, we expect to record sales of ¥694 billion, an operating incomeof ¥21.2 billion, ordinary income of ¥22.7 billion and a net income of ¥13.6 billion.
Thus the annual dividend is scheduled as ¥15 per share, of which the interim and yearend dividends will both be ¥7.5 per share.
(Unit: million yen)
Sales
Operating Income
Ordinary Income
Net Income
Year ending
694,000
21,20022,70013,600March 31, 2007
Year ending
648,023
17,596
18,79812,892
March 31, 2007
Year-on-year
107.1%
120.5%
120.8%
105.5%
Comparison
Our forecast for the next fiscal year is calculated on the basis of information available atthis time. However, the forecast may substantially differ from our actual performance,
due to the effects of U.S. and Chinese economic trends, the prolonged surge in crude oil,prices and its effects on the materials industry, the balance between demand and supply
for electronic equipment such as liquid crystals and other unforeseeable changes in theeconomic climate and environment.
II. Financial Position
1. Overview of the Current Period(1)

Status of Consolidated Balance Sheet
Total assets increased ¥61.48 billion compared to the end of the previous fiscal yearto ¥396.77 billion, due to the increase in accounts receivable accompanying theincrease in sales and the increase in investment securities reflecting the rise in shareprices.
Shareholders’ equity increased ¥29.52 billion compared to the end of the previous
fiscal year to ¥196.62 billion, due to the increase in the unrealized gains on othersecurities declared as shareholders’ equity, in addition to increases in retained
earnings.

As a result, shareholders equity ratio declined by 0.2 points to 49.6%.
(2)

Status of Consolidated Cash Flow
Despite net income before income taxes and minority interests totaling ¥20.58
billion, net cash used in operating activities amounted to ¥2.34 billion, due mainly tothe increase in working capital accompanying increases in sales and the payment ofcorporate income taxes.
Despite sales of a portion of the investment securities, net cash used in investment
activities amounted to ¥3.8 billion, due to such factors as active capital investments
and acquisition of investment securities and capital contributions.
Net cash provided by financing activities amounted to ¥9.33 billion, due to funds
raised through commercial papers and borrowings, which exceeded the payment ofdividends.
As a result, the outstanding balance of cash and cash equivalents at the end ofcurrent fiscal year increased ¥5.72 billion compared to the previous fiscal year to¥22.93 billion.

2. Trends in Cash Flow Indicators

Shareholders’Equity Ratio
Shareholders’Equity Ratio
based on Market
Value
Debt Repayment
PeriodInterest
Coverage Ratio

Year ended
March 31,2002

Year ended
March 31,2003

Year ended
March 31,2004

Year ended
March 31,2005

Year ended
March 31,
2006

48.0%

49.5%

50.3%

49.8%

49.6%

22.6%

23.2%

38.8%

40.8%

51.0%

1.6 years

3.8 years

2.6 years

8.2 years

-

19.9

10.1

13.9

3.3

-

(Notes) Shareholders’ equity ratio = Shareholders’ equity / Total assets
Shareholder’ 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 indices are calculated on the basis of consolidated financial figures.
* Market capitalization of shares is calculated by multiplying the closing price of shares atthe end of the period by the total number of outstanding shares as at the end of the period.
* Operating cash flow refers to net cash provided by operating activities in the Consolidated
Statement of Cash Flows. Interest bearing debt refers to all debt for which interest is
payable as declared in the Consolidated Balance Sheet. Interest payment refers to theamount 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 of the Company, which may
materially affect the decisions of the investors.
Forward-looking statements in this Section are based on the Group’s decision on said matters
as of March 31, 2006.
1. Impact of Exchange Rate Fluctuations
The Group’s operations include import and export transactions based on foreign currencies.
Exchange rate fluctuations affect the yen-equivalent value of such foreign-denominatedtransactions. While the Group makes every effort to hedge these transactions using forward
foreign exchange contracts in order to minimize the risks associated with exchange rate
fluctuations, exchange rate fluctuations may still affect the Group’s business performance andfinancial position. The Group has a number of overseas subsidiaries and prepares theirfinancial statements in foreign currencies. When converting such statements into yen in
preparing the consolidated financial statements, the Group is subject to conversion risks
associated with exchange rate fluctuations.
2. Potential Risks of Overseas Activities
There is an increasing percentage of the Group’s selling and manufacturing activities abroad,
namely in Southeast Asia, Europe, the U.S. and China. While the Group makes every effort
to understand local market trends in a timely manner and address appropriately, the Group’sbusiness performance and financial position may be affected by unforeseeable circumstances
arising out of local legal restrictions, customs, etc.
3. Impact of Stock Price Volatility
The Group’s portfolio consists, to a large extent, of marketable securities of its clientcompanies, which are exposed to risks associated with stock price volatility. While the Grouptakes measures against such risks including the disposal of unnecessary shares, they may stillaffect the Group’s business performance and financial position.
4. Risks associated with New Investments
In accordance with its business expansion plans, the Group tries to transform itself by
expanding its low-margin intermediary business into high-value added businesses. The
Group, therefore, is actively investing in new businesses, purchasing strategic commercial
rights and implementing other measures by making use of the advanced technology andinformation provided by the Group’s R&D Center and the Group’s manufacturingsubsidiaries. However, such measures are subject to higher potential risks than the Group’s
conventional, low-risk intermediary businesses, which may affect the Group’s businessperformance and financial position.
5. Risks associated with Product Quality
In order to provide customers with higher value added, the Group operates its R&D Centerand its manufacturing subsidiaries. The Group pays the utmost attention to the technologies
and the products they provide, however, accidents may happen, such as the need to suspend
sales or recall due to defects in said products, which may affect the Group’s businessperformance and financial position.
6. Risks associated with the Handling of Many Types of Chemicals

The Group exports and imports a wide variety of products, namely chemicals, for a broad
range of applications. Said exports are subject to the laws and regulations such as the Foreign
Exchange and Foreign Trade Control Law and the Export Trade Control Order aiming tomaintain international peace and security; and imports are subject to the laws and regulations
such as the Law Concerning the Evaluation of Chemical Substances and Regulation of the
Manufacture, etc. (Chemical Substances Law). In view of the above, the Group has
established the Security Trade Control and Chemical Management Committee in order toensure compliance to such laws and regulations. In the event of any violation of such laws
and regulations, restrictions imposed on the Group’s business activities may affect its
business performance and financial position.