Summary of Consolidated Financial Results [Japanese GAAP]                           for the Fiscal Year Ended May 31, 2011...
(3) Status of Consolidated Cash Flows                                                                                     ...
4. Other(1) Major changes in subsidiaries occurring during the fiscal period (changes in designated subsidiaries that invo...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                      Summary of Consolidated Financial Results [Japanese GAAP]    ...
Nippon Kayaku Co., Ltd.                                      Summary of Consolidated Financial Results [Japanese GAAP]    ...
Nippon Kayaku Co., Ltd.                                      Summary of Consolidated Financial Results [Japanese GAAP]    ...
Nippon Kayaku Co., Ltd.                                      Summary of Consolidated Financial Results [Japanese GAAP]    ...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                    Summary of Consolidated Financial Results [Japanese GAAP]      ...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                    Summary of Consolidated Financial Results [Japanese GAAP]      ...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                    Summary of Consolidated Financial Results [Japanese GAAP]      ...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                    Summary of Consolidated Financial Results [Japanese GAAP]      ...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                       Summary of Consolidated Financial Results [Japanese GAAP]   ...
Nippon Kayaku Co., Ltd.                                     Summary of Consolidated Financial Results [Japanese GAAP]     ...
Nippon Kayaku Co., Ltd.                                         Summary of Consolidated Financial Results [Japanese GAAP] ...
Nippon Kayaku Co., Ltd.                                         Summary of Consolidated Financial Results [Japanese GAAP] ...
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Transcript of "Nippon kayaku fs_summary_may_ 2011"

  1. 1. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011 June 30, 2011Listed company: Nippon Kayaku Co., Ltd. (URL http://www.nipponkayaku.co.jp/)Code No.: 4272Listed stock exchange: Tokyo Stock Exchange, First SectionRepresentative: (Position) President, (Name) Akira MandaiPerson in charge of inquiries: (Position) Member of the Board, Head of Financial Group, (Name) Ryoichi ArakiScheduled date of ordinary general meeting of shareholders: August 30, 2011Scheduled date for start of dividend payments: August 30, 20111. Consolidated Business Results for Fiscal Year Ended May 2011 (June 1, 2010–May 31, 2011) (Figures shown are rounded down to the nearest million yen.)(1) Consolidated Operating Results (Percentages indicate amount of change from the same period in the previous fiscal year.) Net sales Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen %Fiscal year ended 148,879 5.6 20,829 30.2 20,282 26.4 13,004 31.7May 31, 2011Fiscal year ended 141,032 5.0 15,995 70.8 16,052 98.8 9,871 165.5May 31, 2010Note: Comprehensive income Fiscal year ended May 31, 2011 11,741 million yen (14.8%) Fiscal year ended May 31, 2010 – million yen (–%) Ordinary income Operating income Net income per Diluted net income Return on equity to to share per share total assets ratio net sales ratio Yen Yen % % %Fiscal year ended 71.70 – 10.5 9.9 14.0May 31, 2011Fiscal year ended 54.39 54.39 8.4 7.9 11.3May 31, 2010Note: Equity consists of shareholders’ equity and valuation and translation adjustments.Reference: Equity in earnings of non-consolidated subsidiaries and affiliated companies Fiscal year ended May 31, 2011: 298 million yen Fiscal year ended May 31, 2010: 97 million yen(2) Consolidated Financial Position Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % YenAs of May 31, 2011 205,110 135,796 62.3 704.57As of May 31, 2010 202,641 127,829 59.4 663.88Reference: Equity As of May 31, 2011: 127,752 million yen As of May 31, 2010: 120,441 million yen This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
  2. 2. (3) Status of Consolidated Cash Flows Cash and cash Cash flows from Cash flows from Cash flows from equivalents at operating activities investing activities financing activities end of year Millions of yen Millions of yen Millions of yen Millions of yenFiscal year ended May 31, 2011 18,969 (7,132) (5,992) 41,304Fiscal year ended May 31, 2010 20,284 (5,817) (13,590) 35,8132. Status of Dividends Dividend amount per share Dividend Total dividend Dividend End of End of End of payout to net End of payment payout ratio first second third Year assets ratio year (year) (consolidated) quarter quarter quarter (consolidated) Millions of Yen % % yenFiscal year ended – 10.00 – 10.00 20.00 3,629 36.8 3.1May 31, 2010Fiscal year ended – 10.00 – 10.00 20.00 3,627 27.9 2.9May 31, 2011Fiscal year endingMay 31, 2012 – 10.00 – 10.00 20.00 27.9(forecast)3. Consolidated Business Results Forecast for Fiscal Year Ending May 2012 (June 1, 2010–May 31, 2011) (Percentages indicate amount of change from the same period in the previous fiscal year.) Net income per Net sales Operating income Ordinary income Net income share Millions of Millions of Millions of Millions of % % % % Yen yen yen yen yenFirst half 78,000 5.5 10.500 (0.6) 11,000 10.8 6.000 24.8 33.09Full year 162,000 8.8 22,500 8.0 23,000 13.4 13,000 (0.0) 71.70 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
  3. 3. 4. Other(1) Major changes in subsidiaries occurring during the fiscal period (changes in designated subsidiaries that involve changes in scope of consolidation): None(2) Changes to accounting principles, procedures, methods of notation, or other items related to creation of the consolidated financial statements (listed as changes to major items that form the basis for creation of the consolidated financial statements) [1] Changes involving revision of accounting standards or similar items: Yes [2] Changes other than [1]: None(3) Number of shares issued (common stock) [1] Number of shares issued at end of year (including treasury stock) As of May 31, 2011: 182,503,570 shares As of May 31, 2010: 182,503,570 shares [2] Number of treasury stock shares at end of year As of May 31, 2011: 1,182,975 shares As of May 31, 2010: 1,083,291 shares [2] Average number of shares during the fiscal period Fiscal year ended May 31, 2011: 181,371,479 shares Fiscal year ended May 31, 2010: 181,479,723 sharesReference: Overview of Non-consolidated Business Results1. Non-consolidated Business Results for the Year Ended May 2011 (June 1, 2010–May 31, 2011)(1) Non-consolidated operating results (Percentages indicate amount of change from the previous fiscal year.) Net sales Operating income Ordinary income Millions of yen % Millions of yen % Millions of yen %Fiscal year ended May 31, 2011 105,292 2.1 14,914 13.7 15,822 16.7Fiscal year ended May 31, 2010 103,086 6.0 13,116 52.7 13,563 51.3 Diluted net income Net income Net income per share per share Millions of yen % Yen YenFiscal year ended May 31, 2011 9,386 2.3 51.75 —Fiscal year ended May 31, 2010 9,177 50.1 50.57 —(2) Non-consolidated Financial Position Total assets Net assets Equity ratio Net assets per share Millions of yen Millions of yen % YenAs of May 31, 2011 164,662 110,937 67.4 611.81As of May 31, 2010 163,219 105,587 64.7 581.99Reference: Equity As of May 31, 2011: 110,937 million yen As of May 31, 2010: 105,587 million yen* Explanation related to appropriate use of the business results forecast and other notes The forecast above is based on information that was obtainable and on assumptions pertaining to uncertain factors that can affect future business results, as of the date this report was announced. The actual business results may vary greatly due to a variety of future factors. For details on the business results forecasts, refer to “1. Operating Results” > “(1) Analysis Related to the Operating Results” > “(Forecast for the Next Fiscal Year)” on page 3 of the Supplemental Information. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
  4. 4. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011Supplemental InformationTable of Contents1. Operating Results (1) Analysis Related to the Operating Results 2 (2) Analysis Related to the Financial Position 3 (3) Basic Policy Concerning Profit Dividends and Dividends for Fiscal year ended May 31, 5 2011 and Fiscal Year ending May 31, 20122. Consolidated Financial Statements (1) Consolidated Balance Sheets 6 (2) Consolidated Profit and Loss Statement and Consolidated Comprehensive Income Statement 8 (3) Consolidated Statement of Changes in Shareholders’ Equity 10 (4) Consolidated Statement of Cash Flows 12 (5) Notes Concerning Going Concern Assumption 14 (6) Segment Information 14 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―1―
  5. 5. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 20111. Operating Results(1) Analysis Related to the Operating ResultsThe Japanese economy during the fiscal year ended May 31, 2011 began to emerge from its period of stagnation,supported by exports to China and other emerging nations. However the future remains uncertain as a result offactors including a reduction in corporate production activities due to concerns over the high value of the yen, andthe effects of the Great East Japan Earthquake. In industries such as semiconductors and electrical and electronic devices, steady growth—particularly in Chinaand other emerging nations—aided our company’s growth and improved the business results for the Group. In the pharmaceuticals industry, with the downward revision of drug prices in April 2010, trends towardrestricting drug prices are growing in strength, and the global competition for research, development, and sales ofnew drugs is becoming increasingly fierce. In many ways, the struggle for survival between companies is becomingincreasingly intense. Domestic sales in the automobile industry were largely affected by the end of the eco-car subsidy and thedisruption of the supply chain caused by the Great East Japan Earthquake. In contrast, the market for overseas salesis growing due to growth in China and other emerging nations, as well as other factors. Under these conditions, the Nippon Kayaku Group launched Phase I of its three-year mid-term business plan,working for the optimal allocation of business resources to key business areas, strengthening our overseas operations,reinforcing the profit structure, further reducing costs, refining our product lineup, and optimizing our productionsites. The Great East Japan Earthquake did not result in injuries to personnel, serious damage to production equipment,or similar problems in the Nippon Kayaku Group. The effect on the business results during this fiscal year waslimited. As a result of the above, and due to growth in the functional chemicals business and strong performance by thepharmaceuticals business and safety systems business, consolidated sales for this fiscal year were 148.879 billionyen, an increase of 7.846 billion yen (5.6%) from the previous fiscal year. Consolidated operating income increased by 4.834 billion yen (30.2%) to reach 20.829 billion yen due to greatlyexpanded sales in the functional chemicals business and to reductions in costs. Consolidated ordinary income was 20.282 billion yen, an increase of 4.230 billion yen (26.4%) from theprevious fiscal year. Consolidated net income was 13.004 billion yen, an increase of 3.133 billion yen (31.7%) from the previousfiscal year. Compared to our company’s business results, consolidated sales in the Nippon Kayaku Group for this fiscal yearwere 1.41 times that of the company on its own, while consolidated net income was 1.39 that of the company on itsown.Performance by business segment is as described below.[1] Functional chemicals businessIn the functional chemicals business, although sales of epoxy resins for semiconductor encapsulation were affectedby customer production adjustments, results overall were on approximately the same level as the previous fiscal year.Sales of UV-curing resins were down from the level of the previous fiscal year, and sales for the functional materialsbusiness as a whole were also down. In the electronic materials business, sales of resins for optical disks, colors for inkjet printers, and films forplasma displays were higher than the previous fiscal year. At Polatechno, sales of polarizing films for LCD displayswere strong and exceeded the level from the previous fiscal year. Sales for the electronic materials business as awhole also exceeded the level from the previous fiscal year. In the catalysts business, there was a recovery in demand for catalysts used in the production of acrylic acid, andsales were higher than the previous fiscal year. In the color chemicals business, sales exceeded the level from the previous fiscal year due to strong sales oftextile dyes. As a result of the above, sales in the functional chemicals business were 71.759 billion yen (up 11.6% from theprevious fiscal year), and segment income was 12.116 billion yen (up 45.1% from the previous fiscal year).[2] Pharmaceuticals businessIn the area of anti-cancer drugs for the Japanese domestic market, sales of “BICALUTAMIDE Tab. NK,”“PACLITAXEL Inj. NK,” and “CARBOPLATIN Intravenous Inj. NK” were strong and exceeded the levels of theprevious fiscal year. On the other hand, the effects of competitor products and other factors resulted in lower sales of“arterial-injection IA CALL” and “RANDA Inj.” compared with the previous fiscal year. Sales of pharmaceuticalproducts for the Japanese domestic market as a whole were higher than the previous fiscal year. In the area of exports, sales of “BLEO” (anti-cancer drug) were lower than the previous fiscal year, and exportsas a whole were lower. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―2―
  6. 6. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011In the area of active pharmaceutical ingredients for the Japanese domestic market, sales of raw materials for drugswere strong, and sales of active pharmaceutical ingredients for the Japanese domestic market as a whole alsoexceeded the level of the previous fiscal year. As a result of the above, sales were 50.339 billion yen (up 1.3% from the previous fiscal year) and segmentincome was 10.544 billion yen (up 4.5% from the previous fiscal year).[3] Safety systems businessDue to the effects of the Great East Japan Earthquake, there was a sharp decline in domestic sales and exports fromJapan during the fourth quarter. However as a result of increased sales of airbag inflators in China, sales for thefiscal year were higher than in the previous fiscal year. Sales of micro gas generators for seatbelt pretensioners weredown from the previous fiscal year. As a result of the above, sales were 17.918 billion yen (up 1.4% from the previous fiscal year) and segmentincome was 1.063 billion yen (up 174.2% from the previous fiscal year).[4] OthersIn the agrochemicals business, both domestic sales and exports were down from the previous fiscal year. Sales in real estate and other businesses were also down from the previous fiscal year. As a result of the above, sales in other businesses were 8.862 billion yen (down 5.5% from the previous fiscalyear) and segment income was 2.273 billion yen (down 0.6% from the previous fiscal year).(Forecast for the Next Fiscal Year)It is expected that uncertain conditions will continue for the Japanese economy due to factors including uncertaintyin the future of the global economy, changes in the exchange rate, and the adverse economic effects of the GreatEast Japan Earthquake. Under these conditions, the Nippon Kayaku Group will construct a solid financial structurethat can adapt to changes in the business environment, accelerate our entry into new growth markets, and work toincrease profits. The strategy for each business segment is described below.• In the functional chemicals business, we will further refine the strengths of our existing business and take steps to reinforce the profit structure while conducting R&D related to next-generation materials for environmental and energy-saving purposes.• In the pharmaceuticals business, we will work to expand sales of generic pharmaceuticals and proceed with development of anti-cancer biosimilar drugs and polymer micelle DDS anti-cancer drugs.• In the safety systems business, we will conduct global business expansion focused on the China market where growth is expected.Sales for the fiscal year ending May 31, 2012 are expected to be 162.0 billion yen (up 8.8% year-on-year).Operating income is expected to be 22.5 billion yen (up 8.0% year-on-year). Ordinary income is expected to be 23.0billion yen (up 13.4% year-on-year), and net income is expected to be 13.0 billion yen (down 0.0% year-on-year). The exchange rate is forecast to be 82 yen/USD.(2) Analysis Related to the Financial Position[1] Status of Assets, Liabilities, and Net AssetsAssets increased by 2.468 billion yen from the previous fiscal year to reach 205.110 billion yen. The primaryincreases were 4.485 billion yen in securities and 5.157 billion yen in advance payments. The primary decreaseswere 3.386 billion yen in deferred tax assets and 1.084 billion yen in tangible fixed assets. Liabilities decreased by 5.499 billion yen from the previous fiscal year to become 69.313 billion yen. Theprimary decreases were 1.758 billion yen in loans payable, 1.162 billion yen in the allowance for employeeretirement benefits, and 864 million yen in long-term deposits payable. The primary increase was 400 million yen inaccrued expenses. Net assets increased by 7.967 billion yen from the previous fiscal year to reach 135.796 billion yen. The primaryincreases were 13.004 billion yen in net income and 656 million yen in minority interests. The primary decreaseswere 3.628 billion yen for payment of dividends, 1.653 billion yen for translation adjustments, and 328 million yenfor net unrealized holding gains on other securities. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―3―
  7. 7. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011[2] Cash Flows Status (Unit: Million yen) Fiscal year ended Fiscal year ended Comparative May 31, 2010 May 31, 2011 Change Cash flows from operating activities 20,284 18,969 (1,314) Cash flows from investing activities (5,817) (7,132) (1,315) Cash flows from financing activities (13,590) (5,992) 7,598 Cash and cash equivalents at end of year 35,813 41,304 5,491Net cash provided by operating activities amounted to 18.969 billion yen. (Net cash provided during the previousfiscal year was 20.284 billion yen.) Despite corporate tax payments of 4.214 billion yen, an increase in advancepayments for raw materials of 5.153 billion yen, and a gain of 2.145 billion yen on reversal of foreign currencytranslation adjustments resulting from the completed liquidation of a US subsidiary, this positive cash flow was theresult of net income before taxes and minority interests of 21.308 billion yen and depreciation and amortization of9.029 billion yen. Net cash expended in investing activities totaled 7.132 billion yen. (Net cash expended during the previous fiscalyear was 5.817 billion yen.) Despite income of 800 million yen resulting from sales of stocks of subsidiaries andaffiliates, this result was primarily due to payments of 8.110 billion yen for the purchase of tangible fixed assets. Net cash expended in financing activities was 5.992 billion yen. (Net cash expended during the previous fiscalyear was 13.590 billion yen.) Despite income of 5.0 billion yen from long-term loans, this was primarily due topayments of 5.794 billion yen for repayment of long-term loans, a 3.615 billion yen payment of dividends, and a985 million yen repayment of the construction cooperation fund. As a result of the above, the balance of cash and cash equivalents at the end of this fiscal year was 41.304 billionyen, an increase of 5.491 billion yen from the end of the previous fiscal year.Reference: Trends in Cash Flow Indicators Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year ended May ended May ended May ended May ended May 2007 2008 2009 2010 2011 Equity ratio (%) 56.7 57.2 56.0 59.4 62.3 Market-value-based 82.0 61.6 52.4 66.1 67.5 equity ratio (%) Ratio of cash flow to interest-bearing liabilities 1.1 1.4 1.9 1.4 1.4 (years) Interest coverage ratio 37.2 31.7 37.4 39.6 52.7 Equity ratio: Equity divided by total assets Market-value-based equity ratio: Total market value of shares divided by total assets Ratio of cash flow to interest-bearing liabilities: Interest-bearing debt divided by operating cash flow Interest coverage ratio: Operating cash flows divided by interest payments Note 1: Each indicator is calculated using consolidation-based financial figures. 2: The total market value of shares is calculated as follows: Stock closing price at end of year × No. of issued shares at end of year (after deduction of treasury stock). 3: Operating cash flows makes use of the cash flows from operating activities 4: Interest-bearing debt includes all liabilities declared in the Consolidated Balance Sheets on which interest is paid. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―4―
  8. 8. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011(3) Basic Policy Concerning Profit Dividends and Dividends for Fiscal year ended May 31, 2011 and Fiscal Year ending May 31, 2012At Nippon Kayaku, we have long concentrated on returning profits to all our shareholders. In order to further clarifythis policy, the payment of dividends has been linked to the consolidated performance results for each year. Withconsideration for stable and continuing profit returns and for the level of internal profit retention, we haveestablished a mid-range target of 40% of consolidated net income as the dividend payout ratio. However, this figurewill be adjusted as necessary if any special variable factors occur. Profits retained by the company will be allocatedto capital investment, research and development, and other needs for growth fields, in order to raise the value of thecompany. The year-end dividend for the fiscal year ended May 31, 2011 is expected to be 10 yen per share. Together withthe second quarter dividend, this results in an annual dividend of 20 yen per share. The expected dividends for the fiscal year ending May 31, 2012 are 10 yen per share for the second quarterdividend and 10 yen per share for the year-end dividend. The result is expected to be a continued annual dividend of20 yen per share. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―5―
  9. 9. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 20112. Consolidated Financial Statements(1) Consolidated Balance Sheets As of May 31, 2010 As of May 31, 2011 Millions of yen Assets Current assets Cash and savings 17,427 18,427 Notes and accounts receivable 47,181 46,945 Marketable securities 18,512 22,998 Merchandise and products 16,342 15,515 Work in process 1,927 2,088 Raw materials and stores 6,886 7,043 Deferred tax assets 6,068 2,682 Other 3,371 7,468 Allowance for doubtful receivables (145) (36) Total current assets 117,572 123,132 Fixed assets Tangible fixed assets Buildings and structures, net 31,800 31,372 Machinery and transport equipment, net 15,957 14,632 Land 7,898 7,852 Construction in progress 4,000 4,804 Other, net 1,980 1,891 Total tangible fixed assets 61,637 60,553 Intangible fixed assets Goodwill 1,835 1,423 Other 2,442 2,248 Total intangible fixed assets 4,277 3,671 Investments and other assets Investment securities 13,896 13,323 Long-term loans receivable 2,283 1,856 Long-term prepaid expenses 1,089 820 Deferred tax assets 315 329 Other 1,255 1,209 Allowance for doubtful receivables (110) (88) Total investments and other assets 18,730 17,451 Total fixed assets 84,646 81,676 Deferred assets Start-up costs 422 301 Total deferred assets 422 301 Total assets 202,641 205,110 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―6―
  10. 10. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011 As of May 31, 2010 As of May 31, 2011 Millions of yenLiabilities Current liabilities Notes and accounts payable 14,531 14,262 Short-term loans payable 12,147 10,917 Accrued amount payable 6,782 6,917 Accrued expenses 4,740 5,141 Corporation tax payable 2,055 1,633 Accrued income taxes 0 0 Allowance for sales returns 44 26 Allowance for rebates 379 393 Allowance for directors’ bonuses 204 257 Reserve for loss on liquidation of subsidiaries and 566 – affiliates Notes payable-facilities 38 0 Other 1,457 1,343 Total current liabilities 42,947 40,893 Fixed liabilities Long-term loans payable 11,672 11,143 Deferred tax liabilities 3,128 2,594 Allowance for employee retirement benefits 4,584 3,421 Allowance for directors’ retirement benefits 41 33 Allowance for repairs 783 702 Long-term deposits payable 10,363 9,499 Negative goodwill 643 490 Other 646 534 Total fixed liabilities 31,864 28,419 Total liabilities 74,812 69,313Net assets Shareholders’ equity Common stock 14,932 14,932 Capital surplus 17,264 17,265 Retained earnings 88,613 97,990 Treasury stock (713) (797) Total shareholders’ equity 120,097 129,391 Accumulated other comprehensive income Net unrealized holding gains on other securities 460 131 Translation adjustments (116) (1,769) Total accumulated other comprehensive income 343 (1,638) Minority interests 7,387 8,044 Total net assets 127,829 135,796Total liabilities and net assets 202,641 205,110 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―7―
  11. 11. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011(2) Consolidated Profit and Loss Statement and Consolidated Comprehensive Income StatementConsolidated Profit and Loss Statement Fiscal year ended Fiscal year ended May 31, 2010 May 31, 2011 Millions of yen Net sales 141,032 148,879 Cost of sales 84,974 88,187 Gross profit on sales 56,058 60,692 Reversal of allowance for sales returns 41 44 Provision of allowance for sales returns 44 26 Net gross profit 56,055 60,709 Selling, general, and administrative expenses Selling expenses 19,683 20,165 General and administrative expenses 20,376 19,714 Total selling, general, and administrative expenses 40,060 39,880 Operating income 15,995 20,829 Non-operating income Interest income 148 94 Dividend income 316 308 Amortization of negative goodwill 119 152 Equity in earnings of affiliates 97 298 Insurance dividends received 67 161 Other miscellaneous income 744 923 Total non-operating income 1,495 1,939 Non-operating expenses Interest expense 484 358 Exchange loss 437 1,452 Other miscellaneous losses 516 675 Total non-operating expenses 1,438 2,486 Ordinary income 16,052 20,282 Extraordinary income Income on sale of fixed assets 849 394 Reversal of foreign currency translation adjustments – 2,145 Total extraordinary income 849 2,540 Extraordinary loss Fixed asset disposal loss 671 979 Loss on valuation of investment securities 2,148 169 Loss on disaster – 298 Loss on adjustment for changes of accounting – 68 standard for asset retirement obligations Impairment loss 2,366 – Provision of reserve for loss on liquidation of 614 – subsidiaries and affiliates Total extraordinary loss 5,802 1,514 Net income before income taxes and minority interest 11,099 21,308 Corporation tax, inhabitant tax, and business tax 4,033 3,749 Income taxes deferred (3,216) 3,630 Total income taxes 816 7,379 Income before minority interests – 13,928 Minority interests in income/(loss) 412 924 Net income 9,871 13,004 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―8―
  12. 12. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011Consolidated Comprehensive Income Statement Fiscal year ended Fiscal year ended May 31, 2010 May 31, 2011 Millions of yen Income before minority interests – 13,928 Other comprehensive income Unrealized holding gains on other securities – (321) Translation adjustments – (1,858) Share of other comprehensive income of associates – (7) accounted for using equity method Total other comprehensive income – (2,187) Comprehensive income – 11,741 Comprehensive income attributable to: Owners of the parent company – 11,022 Minority interests – 718 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―9―
  13. 13. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011(3) Consolidated Statement of Changes in Shareholders’ Equity Fiscal year ended Fiscal year ended May 31, 2009 May 31, 2011 Millions of yen Shareholders’ equity Common stock Balance at end of the previous fiscal year 14,932 14,932 Changes during the fiscal year Total changes during the fiscal year – - Balance at end of the fiscal year 14,932 14,932 Capital surplus Balance at end of the previous fiscal year 17,263 17,264 Changes during the fiscal year Disposal of treasury stock 1 0 Total changes during the fiscal year 1 0 Balance at end of the fiscal year 17,264 17,265 Retained earnings Balance at end of the previous fiscal year 82,373 88,613 Changes during the fiscal year Dividends paid (3,630) (3,628) Net income 9,871 13,004 Total changes during the fiscal year 6,240 9,376 Balance at end of the fiscal year 88,613 97,990 Treasury stock Balance at end of the previous fiscal year (623) (713) Changes during the fiscal year Acquisition of treasury stock (96) (85) Disposal of treasury stock 6 2 Total changes during the fiscal year (90) (83) Balance at end of the fiscal year (713) (797) Total shareholders’ equity Balance at end of the previous fiscal year 113,946 120,097 Changes during the fiscal year Dividends paid (3,630) (3,628) Net income 9,871 13,004 Acquisition of treasury stock (96) (85) Disposal of treasury stock 7 2 Total changes during the fiscal year 6,151 9,293 Balance at end of the fiscal year 120,097 129,391 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―10―
  14. 14. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011 Fiscal year ended Fiscal year ended May 31, 2010 May 31, 2011 Millions of yenAccumulated other comprehensive income Unrealized holding gains on other securities Balance at end of the previous fiscal year 45 460 Changes during the fiscal year Net change in items other than shareholders’ 414 (328) equity Total changes during the fiscal year 414 (328) Balance at end of the fiscal year 460 131 Translation adjustments Balance at end of the previous fiscal year 214 (116) Changes during the fiscal year Net change in items other than shareholders’ (331) (1,653) equity Total changes during the fiscal year (331) (1,653) Balance at end of the fiscal year (116) (1,769) Total accumulated other comprehensive income Balance at end of the previous fiscal year 260 343 Changes during the fiscal year Net change in items other than shareholders’ 83 (1,981) equity Total changes during the fiscal year 83 (1,981) Balance at end of the fiscal year 343 (1,638)Minority interests Balance at end of the previous fiscal year 11,605 7,387 Changes during the fiscal year Net change in items other than shareholders’ equity (4,217) 656 Total changes during the fiscal year (4,217) 656 Balance at end of the fiscal year 7,387 8,044Total net assets Balance at end of the previous fiscal year 125,812 127,829 Changes during the fiscal year Dividends paid (3,630) (3,628) Net income 9,871 13,004 Acquisition of treasury stock (96) (85) Disposal of treasury stock 7 2 Net change in items other than shareholders’ equity (4,134) (1,325) Total changes during the fiscal year 2,017 7,967 Balance at end of the fiscal year 127,829 135,796 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―11―
  15. 15. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011(4) Consolidated Statement of Cash Flows Fiscal year ended Fiscal year ended May 31, 2010 May 31, 2011 Millions of yen Cash flows from operating activities Net income before income taxes 11,099 21,308 Depreciation and amortization 10,028 9,029 Impairment loss 2,366 – Increase (decrease) in reserve allowance 216 (1,723) Interest and dividend income (465) (402) Interest expense 484 358 Exchange loss (gain) 308 897 Equity in (earnings) losses of affiliates (97) (298) Loss (gain) on sale of tangible fixed assets (849) (394) Loss (gain) on disposal of tangible fixed assets 671 979 Loss (gain) on sale of investment securities (3) (2) Loss (gain) on valuation of investment securities 2,148 169 Loss (gain) on sales of stocks of subsidiaries and – (0) affiliates Loss (gain) on reversal of foreign currency translation (2,145) – adjustments (Increase) decrease in notes and accounts receivable (3,220) (117) (Increase) decrease in inventory assets (1,722) 153 (Increase) decrease in prepaid expenses (229) (41) (Increase) decrease in accrued revenue 292 (384) (Increase) decrease in advance payments – (5,153) Increase (decrease) in notes and accounts payable 2,364 (2) Increase (decrease) in accrued amount payable 134 (123) Increase (decrease) in accrued expenses 680 130 Other 718 713 Subtotal 24,928 22,948 Interest and dividends received 578 588 Interest paid (512) (360) Income tax paid (5,041) (4,214) Income tax refund 332 7 Net cash provided by operating activities 20,284 18,969 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―12―
  16. 16. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011 Fiscal year ended Fiscal year ended May 31, 2010 May 31, 2011 Millions of yenCash flows from investing activities Purchase of time deposits (121) (0) Proceeds from repayment of time deposits 97 1 Purchase of tangible fixed assets (6,786) (8,110) Proceeds from sales of tangible fixed assets 976 414 Purchase of intangible fixed assets (97) (330) Purchase of securities (1,499) (2,997) Proceeds from redemption of securities 1,499 2,997 Purchase of investment securities (47) (15) Proceeds from sales of investment securities 55 24 Proceeds from sales of stocks of subsidiaries and 800 800 affiliates Payments for long-term loans receivable (95) – Payments for long-term prepaid expenses (80) (54) Removal loss of fixed assets (214) (413) Purchase of investments in subsidiaries (256) – (Increase) decrease in short-term loans receivable (115) 243 Other 67 306 Net cash used in investing activities (5,817) (7,132)Cash flows from financing activities Increase (decrease) in short-term loans payable, net (1,350) (345) Proceeds from long-term loans payable 1,500 5,000 Repayment of long-term loans (5,325) (5,794) Repayment of construction cooperation fund (985) (985) Purchase of treasury stock of subsidiaries in (3,463) – consolidation Dividends paid (3,616) (3,615) Dividends paid to minority shareholders (219) (114) Other (129) (136) Net cash provided by financing activities (13,590) (5,992)Effect of exchange rate changes on cash and cash (124) (352)equivalentsIncrease (decrease) in cash and cash equivalents 751 5,491Cash and cash equivalents at beginning of year 35,061 35,813Cash and cash equivalents at end of year 35,813 41,304 This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―13―
  17. 17. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011(5) Notes Concerning Going Concern Assumption No items to report(6) Segment Informationa. Segment information by type of business Fiscal year ended May 31, 2010 (June 1, 2009–May 31, 2010) Functional Pharma- Safety Elimina- Other Consoli- chemicals ceuticals systems Total tions and businesses dated business business business corporate Millions of yen I. Sales and operating income (loss): Sales Sales to third parties 64,299 49,692 17,665 9,375 141,032 – 141,032 Intersegment sales and 54 18 – 27 100 (100) – transfers Total 64,354 49,710 17,665 9,402 141,133 (100) 141,032 Operating expenses 56,005 39,620 17,277 7,116 120,019 5,018 125,037 Operating income 8,348 10,090 387 2,286 21,113 (5,118) 15,995 II Asset, depreciation, and . capital expenditures: Total assets 70,484 43,823 23,324 21,766 159,400 43,241 202,641 Depreciation and 3,902 2,425 2,439 841 9,609 419 10,028 amortization Impairment loss – – 2,366 – 2,366 – 2,366 Capital expenditures 2,693 2,333 1,510 326 6,863 169 7,033 Note 1: The business segments are based on the sales summary classification. Note 2: Primary products in each segment Business segment Sales segment Primary products Functional Functional Epoxy resins, Epoxy resin curers, Combustion retardants for synthetic chemicals business materials resins, UV-curing type resins, Polyimide/polyamide resins, Advanced chemicals Electronic Components for LCD displays, LCD projector components, materials Components for X-ray analysis systems, Functional films, Resins for optical disks, Sealants for LCD displays, Resist for MEMS, Functional colors, Colors for inkjet printers, Thermal developers Catalysts Catalysts for the production of acrylic acid and methacrylic acid, Plant licensing business Color chemicals Disperse dyes, Cationic dyes, Acidic dyes, Reactive dyes, Direct dyes, Sulfur dyes, Fluorescent dyes, Functional chemicals for textiles and paper, Special dyes for non-textile applications Pharmaceuticals Pharmaceuticals Anti-cancer agents, Neurological agents, Circulatory system agents, business Digestive system agents, Vitamin compounds and other metabolic agents, Radiopharmaceuticals, Chemotherapeutics, Anti-inflammatory analgesic agents, In vitro diagnostic pharmaceuticals, Medical devices, Pharmaceutical API and intermediates, Food and food additives, Preservatives for food quality Safety systems Safety systems Airbag inflators, Micro gas generators for seatbelt pretensioners, Squibs business Other businesses Others Insecticides, Herbicides, Fungicides, Acaricide, Public hygiene insecticides, Soil disinfectant, Animal repellents, Biological pesticides, Real estate business This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―14―
  18. 18. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011 Note 3: The amounts and primary contents included in “Eliminations and corporate” are as shown below. Fiscal year ended May 31, 2010 (June 1, 2009 Primary contents –May 31, 2010) Millions of yen Amount of unallocated operating Expenses related to the administrative expenses included in the “Eliminations 5,140 divisions of the parent company head office and corporate” item Surplus funds (cash and securities) and Amount of corporate assets included in 43,389 long-term investments (including investment the “Eliminations and corporate” item securities) at the parent company Note 4: Depreciation and amortization, and capital expenditures do not include the amounts for long-term prepaid expenses.b. Information by geographic segment Fiscal year ended May 31, 2010 Eliminations Other Japan Total and Consolidated regions corporate Millions of yen I. Sales and operating income Sales Sales to third parties 122,468 18,564 141,032 – 141,032 Intersegment sales and transfers 5,492 5,595 11,088 (11,088) – Total 127,961 24,160 152,121 (11,088) 141,032 Operating expenses 107,727 23,257 130,984 (5,947) 125,037 Operating income 20,233 903 21,136 (5,141) 15,995 II. Total assets 146,578 29,664 176,242 26,399 202,641 Note 1: The country and region segments are based on geographic proximity. Note 2: Primary countries and regions in segments other than “Japan” Other regions: USA, China, Czech Republic Note 3: The amounts and primary contents included in “Eliminations and corporate” are the same as those listed under “Note 3” in “Segment information by type of business.”c. Overseas sales Fiscal year ended May 31, 2010 Other Asia Total regions I. Overseas sales (millions of yen) 28,306 17,483 45,790 II. Consolidated sales (millions of yen) — — 141,032 III. Percentage of consolidated sales occupied by overseas sales 20.1 12.4 32.5 Note 1: The country and region segments are based on geographic proximity. 2: Primary countries and regions in each segment (1) Asia: China, Hong Kong, Taiwan (2) Other regions: USA, Germany 3: Overseas sales are the sales by Nippon Kayaku and its consolidated subsidiaries in countries and regions outside of Japan. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―15―
  19. 19. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011[Segment information][1] Summary of reportable segmentsThe reportable segments of the Nippon Kayaku Group are structural units of the Group for which separate financialinformation can be acquired. These segments are subject to be examined periodically by the Board of Directors inorder to evaluate business results and make decisions on the allocation of business resources. Groups are established by product for the reportable segments within the Nippon Kayaku Group. Each groupdevelops comprehensive domestic and overseas strategies for the products it handles, and introduces businessactivities accordingly. Therefore, the Nippon Kayaku Group primarily consists of product- and service-specific segments that arebased on business divisions. “Functional chemicals business,” “pharmaceuticals business,” and “safety systemsbusiness” are three reportable segments. The types of primary products and services provided by the reportable segments are shown in the table below. Reportable segment Sales segment Primary products Functional Functional Epoxy resins, Epoxy resin curers, Combustion retardants for synthetic chemicals business materials resins, UV-curing type resins, Polyimide/polyamide resins, Advanced chemicals Electronic Components for LCD displays, LCD projector components, materials Components for X-ray analysis systems, Functional films, Resins for optical disks, Sealants for LCD displays, Resist for MEMS, Functional colors, Colors for inkjet printers, Thermal developers Catalysts Catalysts for the production of acrylic acid and methacrylic acid, Plant licensing business Color chemicals Disperse dyes, Cationic dyes, Acidic dyes, Reactive dyes, Direct dyes, Sulfur dyes, Fluorescent dyes, Functional chemicals for textiles and paper, Special dyes for non-textile applications Pharmaceuticals Pharmaceuticals Anti-cancer agents, Neurological agents, Circulatory system agents, business Digestive system agents, Vitamin compounds and other metabolic agents, Radiopharmaceuticals, Chemotherapeutics, Anti-inflammatory analgesic agents, In vitro diagnostic pharmaceuticals, Medical devices, Pharmaceutical API and intermediates, Food and food additives, Preservatives for food quality Safety systems Safety systems Airbag inflators, Micro gas generators for seatbelt pretensioners, Squibs business[2] Methods of calculating the amounts for sales, income (loss), assets, and other items by reportable segmentThe income reported in each reportable segment is operating income. Intersegment internal sales and transfers arecalculated based primarily on market prices and manufacturing costs. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―16―
  20. 20. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011[3] Information concerning the amounts for sales, income (loss), assets, and other items by reportable segmentFiscal year ended May 31, 2010 (June 1, 2009–May 31, 2010) Reportable segment Adjust- Consoli- Functional Pharma- Safety Others Total ments dated chemicals ceuticals systems Total (Note 1) (Note 2) (Note 3) business business business Millions of yen Sales Sales to third parties 64,299 49,692 17,665 131,657 9,375 141,032 – 141,032 Intersegment sales 54 18 – 72 27 100 (100) – and transfers Total 64,354 49,710 17,665 131,730 9,402 141,133 (100) 141,032 Segment income 8,348 10,090 387 18,827 2,286 21,113 (5,118) 15,995 Segment assets 70,484 43,823 23,324 137,633 21,766 159,400 43,241 202,641 Other items Depreciation and 3,902 2,425 2,439 8,767 841 9,609 419 10,028 amortization Amortization of 391 – – 391 – 391 – 391 goodwill Impairment loss – – 2,366 2,366 – 2,366 – 2,366 Changes in the amount of tangible fixed assets and 2,693 2,333 1,510 6,537 326 6,863 169 7,033 intangible fixed assetsNote 1: “Others” indicates business segments that are not included in the reportable segments, including the agrochemicals business and real estate business.Note 2: The amounts of adjustments are as shown below. (1) The -5.118 billion yen adjustment to segment income includes a -5.140 billion yen corporate expense not allocated to the reportable segments and a 21 million yen elimination of intersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments. (2) The 43.241 billion yen adjustment to segment assets includes 43.389 billion yen in corporate assets not allocated to reportable segments and a -148 million yen elimination of intersegment transactions. The corporate assets are mainly excess operating funds (cash and securities) and long-term investment funds (investment securities, etc.) of the parent company. (3) The 419 million yen adjustment to amortization and depreciation is related to corporate assets. (4) The 169 million yen increase adjustment to tangible and intangible fixed assets is related to the administrative divisions of the parent company head office.Note 3: Adjustments to segment income are made along with operating income from the consolidated profit and loss statement. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―17―
  21. 21. Nippon Kayaku Co., Ltd. Summary of Consolidated Financial Results [Japanese GAAP] for the Fiscal Year Ended May 31, 2011Fiscal year ended May 31, 2010 (June 1, 2009–May 31, 2010) Reportable segment Adjust- Consoli- Functional Pharma- Safety Others Total ments dated chemicals ceuticals systems Total (Note 1) (Note 2) (Note 3) business business business Millions of yen Sales Sales to third parties 71,759 50,339 17,918 140,017 8,862 148,879 – 148,879 Intersegment sales 43 29 - 73 28 101 (101) – and transfers Total 71,803 50,368 17,918 140,091 8,890 148,981 (101) 148,879 Segment income 12,116 10,544 1,063 23,724 2,273 25,998 (5,168) 20,829 Segment assets 72,595 49,107 19,544 141,246 21,479 162,726 42,383 205,110 Other items Depreciation and 3,502 2,357 1,932 7,792 852 8,644 384 9,029 amortization Amortization of 409 – – 409 - 409 – 409 goodwill Changes in the amount of tangible fixed assets and 4,161 2,867 1,194 8,223 354 8,577 257 8,834 intangible fixed assetsNote 1: “Others” indicates business segments that are not included in the reportable segments, including the agrochemicals business and real estate business.Note 2: The amounts of adjustments are as shown below. (1) The -5.168 billion yen adjustment to segment income includes a -5.187 billion yen corporate expense not allocated to the reportable segments and a 19 million yen elimination of intersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments. (2) The 42.383 billion yen adjustment to segment assets includes 42.600 billion yen in corporate assets not allocated to reportable segments and a -216 million yen elimination of intersegment transactions. The corporate assets are mainly excess operating funds (cash and securities) and long-term investment funds (investment securities, etc.) of the parent company. (3) The 384 million yen adjustment to amortization and depreciation is related to corporate assets. (4) The 257 million yen increase adjustment to tangible fixed assets and intangible fixed assets is related to the administrative divisions of the parent company head office.Note 3: Adjustments to segment income are made along with operating income from the consolidated profit and loss statement. This document is an English translation of parts of the Japanese-language original. All financial information has been prepared in accordance with generally accepted accounting principles in Japan. ―18―

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