Taiyo Nippon Sanso Corporation
(Amounts less than ¥1 million are omitted) 1. Financial results for the FYE2018 (April 1, 2017 – March 31, 2018)
Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors (non-recurring items).
FYE2018: ¥2,836 million FYE2017: ¥2,397 million (2) Financial position
(3) Consolidated cash flows
3.
Forecasts for business operations for FYE2019 full term (April 1, 2018 – March 31, 2019)

(7.3%) 4. Explanation concerning the appropriate use of forecasts for business operations and other notable matters - The Taiyo Nippon Sanso Group has adopted International Financial Reporting Standards (IFRS) from the fiscal year under review. In addition, the consolidated financial statements for the previous fiscal year are presented based on IFRS. This report contains business forecasts and other forward-looking statements that are based on information . currently available to the Company and certain assumptions judged to be reasonable by management. The Company gives no assurances that business forecasts will be attained. Moreover, actual results may differ materially from business forecasts due to various factors.
5.   Overview of Business Results for the Fiscal Year Under Review
(1) Overview
In the fiscal year under review (from April 1, 2017 to March 31, 2018), the global economy saw the Chinese economy being underpinned by infrastructure investment led by the Chinese government, despite concerns about the need to curtail speculative real estate investment in the country together with the strengthening of environmental regulations, resulting in a steady performance. In the United States, the economy continued its moderate expansion, supported by improving employment and income levels. Moreover, corporate earnings are expected to be boosted by the significant tax reduction that was enacted in December 2017. Meanwhile, uncertainties have arisen in the global economy due to the impact of U.S. trade policies. In Japan, with an increase in exports primarily in the electronics and semiconductor-related sectors, there has been an upswing in production activity and moderate improvement in corporate earnings. Overall, economic conditions have been following a gradual recovery path. Against this backdrop, the Taiyo Nippon Sanso Group (TNSC Group) achieved the following results for the fiscal year under review. Revenue on a consolidated basis increased 11.1% year on year to ¥646,218 million, core operating income rose 9.7% to ¥60,033 million, operating income increased 11.5% to ¥59,862 million, and net income attributable to owners of the parent increased by 40.8% to ¥48,919million. Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors (non-recurring items).
(2) Overview of Business Performance by Reportable Segment
A breakdown of business performance by reportable segment is as follows. Segment income represents core operating income.
Gas Business in Japan
In the industrial gas-related business, revenue from air separation gases (oxygen, nitrogen, and argon), a core product, performed solidly for use primarily in the key industries of steel and chemicals. In addition, revenue from on-site business increased since a new on-site plant started operations in October 2017. Meanwhile, revenue from equipment and plants decreased, reflecting the absence of a large air separation unit project recorded in the previous fiscal year. In the electronics-related field, revenue from electronic materials gases trended favorably due to increased demand from the liquid crystal display (LCD) and semiconductor-related industries. In the energy-related field, revenue from liquid petroleum gas (LPG) jumped substantially year on year due to a higher sales price following an increase in the import price. As a result, in the Gas Business in Japan, revenue increased 6.5% year on year to ¥342,449 million, while segment income rose 4.4% to ¥30,760 million.
Gas Business in the United States
In the industrial gas-related business, there was a large contribution to revenue from the consolidation of a business acquired from Air Liquide Group since September 2016. In the existing business, revenue from bulk gas rose, due partly to increased shipments of carbon dioxide gas. Shipments of packaged gases and hard goods were firm in line with the economic recovery. As a result, in the Gas Business in the United States, revenue increased 17.2% year on year to ¥172,646 million, and segment income rose 12.3% to ¥13,559 million.
Gas Business in Asia & Oceania
In the industrial gas-related field, revenue increased in China and in Thailand, in addition to the consolidation of Supagas Holdings Pty Ltd in Australia as a subsidiary of the Company in December 2016 contributing to business results. In the electronics-related field, revenue from electronic materials gases increased significantly year on year, due to growth in demand in China, South Korea and Taiwan. As a result of the above, in the Gas Business in Asia & Oceania, revenue increased 20.1% year on year to ¥103,166 million, and segment income rose 78.8% to ¥9,236 million.
Thermos & Other Businesses
In the Thermos & Other Businesses, revenue increased steadily due to solid sales of vacuum insulated portable mugs and tumblers in Japan. As a result, in Thermos & Other Businesses, revenue increased 3.5% year on year to ¥27,956 million, while segment income decreased 16.5% to ¥8,366 million.
6. Segment information
The TNSC Group conducts gas businesses in Japan and overseas, mainly for customers in the steel, chemical, and electronics industries, and has built production and sales structures for its main products in Japan, the United States, and Asia & Oceania. In addition, the TNSC Group manufactures and sells housewares such as stainless steel vacuum bottles, and conducts real-estate rental and other businesses. Therefore, the Company has established the following four reportable segments: Gas Business in Japan, Gas Business in the United States, Gas Business in Asia & Oceania, and Thermos & Other Businesses.
The accounting methods adopted for the reported operating segments are the same as the methods adopted to prepare the consolidated financial statements. Revenue from inter-segment transactions and transfers is based primarily on prevailing market prices.
Notes: 1. The ¥1,970 million negative adjustment for segment income is comprised of ¥357 million of intersegment eliminations and companywide expenses of ¥1,613 million that were not allocated to any particular reportable segment. These companywide expenses related principally to basic research expenses that were not allocated to a particular reportable segment. 2. Segment income represents core operating income, which is calculated as operating income excluding certain gains or losses attributable to non-recurring factors (non-recurring items).
Notes: 1. The ¥1,888 million negative adjustment for segment income is comprised of ¥309 million of intersegment eliminations and companywide expenses of ¥1,578 million that were not allocated to any particular reportable segment. These companywide expenses related principally to basic research expenses that were not allocated to a particular reportable segment. 2. Segment income represents core operating income, which is calculated as operating income excluding certain gains or losses attributable to non-recurring factors (non-recurring items).
(2) Reconciliation of segment income with income before income taxes

7. Additional information
In the United States, the Tax Cuts and Jobs Act was enacted on December 22, 2017, and the federal corporate income tax rate after January 1, 2018 has been reduced. Accordingly, deferred tax assets and deferred tax liabilities as of the end of the third quarter of the consolidated fiscal year under review are calculated using an effective tax rate based on a revised tax rate that corresponds to the consolidated fiscal year in which the temporary differences are expected to be eliminated. As a result, during the first three quarters of the fiscal year under review, income taxes decreased by ¥12,193 million.