Annual Report From April 1, 2015 to March 31, 2016 NIPPON YAKIN KOGYO CO., LTD.

Transcription

1 Annual Report 216 From April 1, 215 to March 31, 216 NIPPON YAKIN KOGYO CO., LTD.

2 Dear Shareholders President I would like to extend my heartfelt gratitude for the continued support and patronage of our shareholders. In presenting the annual report for our year (from April 1, 215 to March 31, 216), I would like to offer a few words. In the domestic economy during the consolidated fiscal year under review, improvements in corporate profitability, employment conditions and the like maintained the overall tone of moderate recovery. However, concerns about the deceleration in overseas economies, including those of emerging and resource-rich countries, and the appreciation of the yen from the beginning of the year onward led to a situation of increasingly poor visibility. In the stainless and specialty steel industry, domestic demand showed resilience, but problems of oversupply in Asia, primarily China, and the downward trend of the nickel market made for a severe operating environment. Amid these business conditions, the Group focused on achieving more appropriate selling prices, mostly in the area of standard grade stainless steel. In addition it implemented diverse initiatives such as unified management of salesrelated data in readiness for expanding sales in the strategic field of high-performance alloys, developing technology to improve competitiveness, and strategic production activities. However, due to the slowdown in the Chinese economy and the slump in energy investments following lower oil prices, demand from applications in the oil and gas industries has stagnated, resulting in an unavoidable decline in sales volumes, especially for the Company s highperformance alloys. As a result, the Company s sales volumes for the fiscal year under review declined 1.1% year on year (high-performance alloys: down 9.%, standard grade stainless steel: up.5%), while net sales for the consolidated fiscal year under review were 121,44 million, falling 8,455 million year on year. With regard to profits, the fall in nickel prices led to an inventory revaluation loss and ordinary income came to 524 million, a decline of 783 million year on year, while profit attributable to owners of parent was 821 million, a decline of 1,271 million year on year. On the subject of dividends of surplus, our basic policy is one of paying stable dividends while taking into account the investments necessary to maintain the business foundation and the outlook for business results, in addition to working to further improve the financial condition of the Company. Out of necessity, the Company has not paid a dividend for the past six fiscal years since FY21, but as of the end of fiscal year under review (FY 216), there was a certain degree of improvement in its financial standing and the retained earnings recovered to a level that makes a dividend possible. In addition, this year marks the milestone 9th anniversary of the founding of the company. By implementing a dividend of 1.5 per share, for the first time in seven years we plan to make a return to shareholders. The Group will continue, in this final year of the ongoing Medium-Term Management Plan 214, to put in place various measures ranging from materials procurement to production and sales in order to strengthen profitability, with the highest priority given to expanding sales and improving competitiveness in the high-performance alloys business. As well as expressing our deepest gratitude to shareholders for their support thus far, we humbly request their continued understanding and support going forward. June 216 Financial Highlights Net Sales Ordinary Income (Loss) Profit (Loss) Attributable to Owners of Parent Earnings (Loss) Per Share ( ) 2, Non-consolidated Consolidated 1, Non-consolidated Consolidated 2, Non-consolidated Consolidated 12. Non-consolidated Consolidated 15, 5, 1, 6. 1, 84,34 18,817 95, ,93 16, ,5 95,89 121, , ,92 1, , 5, 1, 7,365 7, ,31 6,461 1, 2, 12. Contents Dear Shareholders... 1 Business Overview... 3 Consolidated Financial Statements... 9 Non-consolidated Financial Statements Corporate Directory Topics [Notes on rounding] The figures presented in this report are generally rounded to the nearest one million yen. For instance, on page 3 the right-hand chart of (2) Net Sales, Net Sales (Non-consolidated) contains two bars for each respective fiscal year, with the bar on the left showing results broken down by sales of stainless steel flat products, high-performance alloys and other, and one on the right showing results broken down by Japan and exports. Although respective totals are equal before rounding, in some cases the totals shown for each left bar and the corresponding right bar may not equal the sums of the components due to rounding errors. Moreover, in some cases the sum of individual figures presented for financial statement items may not equal the respective totals stated due to such rounding error. 1 2

3 Business Overview (1) Overview (3) Net Sales Breakdown The following is an overview of the Group s stainless steel flat products and processed goods business. Domestic demand showed resilience, but problems of oversupply in Asia, including China, and the downward trend of the nickel market made for a severe operating environment. Amid these business conditions, the Group focused on achieving more appropriate selling prices, mostly in the area of standard grade stainless steel. In addition it implemented diverse initiatives such as unified management of salesrelated data in readiness for expanding sales in the strategic field of high-performance alloys, developing technology to improve competitiveness, and strategic production activities. However, due to the slowdown in the Chinese economy and the slump in energy investments following lower oil prices, demand from applications in the oil and gas industries has stagnated, resulting in an unavoidable decline in sales volumes, especially for the high-performance alloys. As a result, during the consolidated fiscal year under review overall sales volume decreased by 1.1% year on year, with high-performance alloys down 9.% and standard grade stainless steel up.5%, while net sales decreased by 8,455 million year on year to 121,44 million. Of this amount, sales in Japan were 92,271 million while export sales came to 28,773 million. (Ratio of domestic to export: 76.2% : 23.8%) (2) Net Sales Net Sales (Consolidated) 2, 2, Net Sales (Non-consolidated) Description (A) (B) year on year High-performance alloys Sales volume Thousand tons % Sales amount million 39,17 32, % Stainless steel flat products Sales volume Thousand tons % Sales amount million 65,795 62, % Other Sales amount million 1, % Total Sales amount million 16,281 95,89 9.2% Export Sales amount million 31,283 24,41 78.% (4) Capital Investment Taking into account trends in the business environment, the Group made investment to enhance the competitiveness of high-performance alloys, considered as the Group s most important strategic product, while also investing in the environment and energy saving fields, along with initiatives to strengthen the Group s business foundations. As a result, capital investments totaled 4,4 million in the consolidated fiscal year under review. (5) Fund Procurement Working capital and capital investment funds were allocated from the Company s own funds and bank borrowings. (B)/(A) 15, 1, 5, 18,817 27,141 81, ,93 3,632 89, ,5 35,471 94,29 Japan 121,44 28,773 92,271 Export 15, 1, 5, 84,34 1,416 23,348 3,498 6,992 52,427 95,215 1,35 26,267 31,84 68,948 62,62 16,281 1,469 31,283 39,17 74,998 65,795 95, ,41 32,681 71,489 62,276 Stainless steel flat products High-performance alloys Other Japan Export (6) Overview of Basic Strategy for Strengthening Profitability and Reinforcing Financial Standing as Set Forth in the Medium-Term Management Plan 214 A. Refine strategy to expand sales of high-performance alloys i. Initiatives in growth business fields and industries ii. Enhancement of overseas and domestic sales system B. Measures to enhance competitiveness of high-performance alloys business i. Reforming of manufacturing and technological processes by developing high-performance alloy manufacturing in line with that of standard grade stainless steel ii. Enhancement of competitive strengths by diversifying sources of raw materials (cost-cutting promotion) iii. Active leveraging of business alliances iv. Fortification of competitive strengths with respect to delivery lead times C. Strengthen quality of service to meet customer needs i. Heightened added value of high-performance alloys D. Strengthen standard grade stainless steel business (Note) Further details on the Medium-Term Management Plan 214 are available on the Company s corporate website: ir_news_14328.pdf (Japanese only) 3 4

4 (7) Results of Operations and Assets (8) Major Subsidiaries etc. 1. Four fiscal years ended March 31 (consolidated) 1. Consolidated subsidiaries Description Net sales 18, ,93 129,5 121,44 NAS TOA CO., LTD. Name of company Common stock million 1 Holding ratio of voting rights % 1. Main lines of business Production and sales of stainless steel and highperformance alloy welded pipes & tubes Ordinary income (loss) 6, , NAS Stainless Steel Strip MFG. Co., Ltd Production and sales of stainless steel precision strip Profit (loss) attributable to owners of parent 7, , NAS TRADING CO., LTD Sales and processing of stainless steel, specialty steel and processed products Earnings (loss) per share ( ) Clean Metals Co., Ltd Sales and processing of stainless steel, specialty steel and processed products Total assets 14,88 137,37 141,15 134,774 Net assets 3,461 3,998 34,254 34,15 NAS CREATE CO., LTD Sales of packaging materials for stainless steel products and non-life insurance agency business NAS ENGINEERING CO., LTD Equipment installation and other engineering business 2. Four fiscal years ended March 31 (non-consolidated) NAS TEC CO., LTD Contract work services involving production and processing of specialty steel and stainless steel Description Miyazu Kairiku Unnyu Co., Ltd Harbor transport, truck transport, customs brokerage and sales of processed sand Net sales 84,34 95,215 16,281 95,89 NAS TOA (THAILAND) CO., LTD. Thousands of THB 22, 1. Production and sales of stainless steel pipes & tubes and processed products Ordinary income (loss) 6, Profit (loss) 7, , Earnings (loss) per share ( ) Total assets 127, , , ,351 Net assets 33,694 33,277 35,382 35,466 (Notes) 1. Figures provided for holding ratio of voting rights include indirect holdings. 2. Effective March 31, 216, we carried out a capital increase for NAS TRADING CO., LTD. 2. Equity-method affiliates Mitoyo Kinzoku K.K. Name of company Common stock million 2 Holding ratio of voting rights % 49. Main lines of business Sales and processing of stainless steel and non-ferrous metal materials (Note) The figure provided for holding ratio of voting rights includes indirect holdings. (9) Main Lines of Business Production and sales of stainless steel, heat resistant steel, high-nickel alloy steel plate (sheet, medium-thick plate, strip), steel forgings and processed products, and production of ferro-nickel 5 6

5 (1) Main Business Locations 1. The Company Head office Branch Manufacturing base (Note) Locations outside Japan include local subsidiaries, Nippon Yakin Shanghai Co., Ltd. in Shanghai, China, Nippon Yakin America, Inc. in Chicago, U.S.A., Nippon Yakin Europe Limited in London, U.K., and Nippon Yakin Asia Pte. Ltd. in Singapore. 2. Subsidiaries NAS TOA CO., LTD. NAS Stainless Steel Strip MFG. Co., Ltd. NAS TRADING CO., LTD. NAS TOA (THAILAND) CO., LTD. (11) Employees of the Group and the Company Number of employees (Persons) Group Company Year-on-year change Increase 16 Increase 17 (Note) The number of employees is the number of persons actually at work. (12) Major Creditors 5-8, Kyobashi 1-chome, Chuo-ku, Tokyo, Japan Tokyo, Osaka, Kyushu (Fukuoka-shi, Fukuoka), Nagoya, Hiroshima, Niigata Kawasaki Plant (Kawasaki-shi, Kanagawa), Oheyama Plant (Miyazushi, Kyoto) Head office (Chuo-ku, Tokyo) Branch : Osaka Factory: Chigasaki Plant (Kanagawa) Head office (Osaka-shi, Osaka) Branch : Tokyo, Osaka Factory: Shiga Plant Head office (Chuo-ku, Tokyo) Branch : Tokyo, Nagoya, Osaka Division: Processing Center (Osaka, Aichi) Head office & Factory (Thailand) (Note) Locations outside Japan include NAS KOTAI (THAILAND) CO., LTD., which is an overseas subsidiary of NAS Stainless Steel Strip MFG. Co., Ltd. in Bangkok, Thailand, and NAS TRADING (THAILAND) CO., LTD., which is an overseas subsidiary of NAS TRADING CO., LTD. Average age Average length of service 1,998 1,46 39 years old, 4 months 17 years, 6 months Creditor Balance at the end of the fiscal year million Mizuho Bank, Ltd. 17,539 Mitsubishi UFJ Trust and Banking Corporation 6,485 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 5,774 Development Bank of Japan Inc. 4,368 Sumitomo Mitsui Trust Bank, Limited 1,31 (13) Number of Authorized Shares Common Stock (14) Number of Issued Shares Common Stock 558,, shares 154,973,338 shares (Including 286,221 shares of treasury stock) (15) Number of Shares per Unit 1 shares (16) Number of Shareholders (Persons) (17) Major Shareholders (Top 1) 26,461 Shareholder name Number of shares held Share-holding ratio The Master Trust Bank of Japan, Ltd. (Trust Account) Thousands of 3,178 shares 2.5 % Nippon Yakin Associates Stock Holding Partnership 3, Mizuho Bank, Ltd. (Standing proxy: Trust & Custody Services Bank, Ltd.) CBNY DFA INTL SMALL CAP VALUE PORTFOLIO (Standing proxy: Citibank Japan Ltd.) STATE STREET BANK WEST CLIENT TREATY (Standing proxy: Mizuho Bank, Ltd.) 3, , , Japan Trustee Services Bank, Ltd. (Trust Account) 2, The Bank of Tokyo-Mitsubishi UFJ, Ltd. 1, Mitsubishi UFJ Trust and Banking Corporation (Standing proxy: The Master Trust Bank of Japan, Ltd.) 1, Japan Trustee Services Bank, Ltd. (Trust Account 6) 1, Japan Trustee Services Bank, Ltd. (Trust Account 2) 1, (Notes) 1. Figures stated for number of shares held have been rounded down to the nearest one thousand shares. 2. Share-holding ratio has been calculated deducting treasury stock (286,221 shares). (Note) In addition to the aforementioned, the Company issues unsecured bonds to qualified institutional investors with the financial institution below as guarantor. (Guarantor) (Bonds outstanding) Sumitomo Mitsui Trust Bank, Limited 2,4 million (Note) Details and figures presented in (8) to (17), on pages 6 to 8, are current as of March 31,

6 Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Cash Flows Item As of March 31, 216 As of March 31, 215 Item As of March 31, 216 As of March 31, 215 Item March 31, 216 March 31, 215 Item March 31, 216 March 31, 215 Assets Current assets 53,86 59,158 Cash and deposits 4,9 5,42 Notes and accounts receivable 2,177 2,966 Marketable securities 3 3 Merchandise and finished products 6,992 9,193 Work in progress 15,934 15,584 Raw materials and purchased supplies 5,524 7,927 Deferred tax assets Other current assets Allowance for doubtful receivables Fixed assets 8,866 81,796 Tangible fixed assets 75,179 75,37 Buildings and structures 11,318 11,986 Machinery, equipment and vehicles 22,28 22,56 Land 38,694 38,784 Construction in progress 1,5 336 Other tangible fixed assets 1,639 1,425 Intangible fixed assets 1,555 1,162 Software Other intangible fixed assets 1, Investments and other assets 4,131 5,597 Investment securities 3,233 4,913 Deferred tax assets Other investments and other assets Allowance for doubtful receivables Deferred assets Bond issuance cost Total assets 134, ,15 (Note) As of March 31, 216 As of March 31, 215 Assets pledged as collateral Tangible fixed assets 72,283 77,66 Liabilities Current liabilities 58,311 62,43 Notes and accounts payable 15,199 17,485 Short-term debt 26,93 27,47 Current portion of bonds 6 6 Current portion of long-term debt 9,728 1,423 Accrued income taxes Accrued consumption taxes Reserve for employees bonuses Other current liabilities 4,868 4,492 Long-term liabilities 42,313 44,717 Bonds payable 1,8 2,4 Long-term debt 2,249 22,651 Deferred tax liabilities 7,292 7,933 Deferred tax liabilities on land revaluation Net defined benefit liabilities 9,437 9,67 Reserve for environmental measures 12 3 Reserve for prevention of metal mine pollution 5 5 Other long-term liabilities 2,66 1,674 Total liabilities 1,624 16,761 Net assets Equity 31,853 31,8 Common stock 24,31 24,31 Capital surplus 9,542 9,542 Retained earnings 1,851 2,697 Treasury stock Accumulated other comprehensive income 2,292 3,241 Unrealized gain on available-forsale securities 57 1,37 Net deferred losses on hedges 1 Land revaluation reserve 1,733 1,724 Foreign currency translation adjustments Non-controlling interests 5 5 Total net assets 34,15 34,254 Total liabilities and net assets 134, ,15 (Note) As of March 31, 216 As of March 31, 215 Guarantee liabilities 6 16 Notes discounted 2,48 3,773 Notes endorsed Net sales 121,44 129,5 Cost of sales 19, ,414 Selling, general and administrative expenses 9,635 9,768 Operating income 1,892 2,318 Non-operating income Interest and dividends received Other non-operating income Non-operating expenses 1,755 1,634 Interest paid 1,214 1,151 Other non-operating expenses Ordinary income 524 1,37 Extraordinary profits Extraordinary losses Profit before income taxes 651 1,319 Income taxes (corporate tax, residential tax and enterprise tax) Income tax adjustment Profit (loss) attributable to noncontrolling interests 8 Profit attributable to owners of parent 821 2,92 (Note) March 31, 216 March 31, 215 Earnings per share Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Foreign currency translation adjustment of cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the term Balance of cash and cash equivalents at the end of the term Net sales The Group focused on more appropriate selling prices, mostly in the area of standard grade stainless steel. In addition it implemented diverse initiatives such as unified management of sales-related data in readiness for expanding sales in the strategic field of high-performance alloys, manufacturing technology development to improve competitiveness, and strategic production activities. Despite this, sales volumes for highperformance alloys fell by around 9% due to the slowdown in Chinese economy and also to the decline in demand from applications in the oil and gas industries caused by the stagnation of energy-related investments, which was the result of lower oil prices. As a result, net sales for the consolidated fiscal year under review declined by approximately 8,5 million year on year. Ordinary income Consolidated Statements of Changes in Equity ( March 31, 216) 6,77 1,162 2,738 3,975 4,61 1, ,598 4,98 6,579 4,83 4,98 In addition to the above-mentioned fall in sales volumes, loss on valuation of inventory, etc. caused by falling nickel prices pushed down profits by around 8 million year on year. Equity Common stock Capital surplus Retained earnings Treasury stock Total shareholders equity Balance as of April 1, ,31 9,542 2, ,8 Changes of items during the period: Profit attributable to owners of parent Purchase of treasury stock 1 1 Disposal of treasury stock Change of scope of equity method Reversal of land revaluation reserve Changes outside scope of equity net Total changes of items during the period Balance as of March 31, ,31 9,542 1, ,853 Accumulated other comprehensive income Current assets Inventories (the total of merchandise and finished products, work in progress, and raw materials and purchased supplies) have decreased by approximately 4,3 million in comparison with the level on March 31, 215 due mainly to a decline in raw materials prices. Fixed assets The Group made investments to enhance the competitiveness of highperformance alloys, investments in the environment and energy saving fields, and investments to strengthen the Group s business foundations. Accordingly, construction in progress for tangible fixed assets rose by around 1,2 million and other intangible fixed assets increased by around 9 million. Net assets The shareholders equity ratio was 25.3% as of March 31, 216. Net unrealized gain on available-forsale securities Net deferred loss on hedges Land revaluation reserve Foreign currency translation adjustments Total accumulated other comprehensive income Non-controlling interests Total net assets Balance as of April 1, 215 1,37 1, , ,254 Changes of items during the period: Profit attributable to owners of parent 821 Purchase of treasury stock 1 Disposal of treasury stock Change of scope of equity method Reversal of land revaluation reserve 24 Changes outside scope of equity net Total changes of items during the period Balance as of March 31, , , ,15 9 1

7 Non-consolidated Financial Statements Non-consolidated Balance Sheets Item As of March 31, 216 As of March 31, 215 Assets Current assets 44,775 5,75 Cash and deposits 2,419 2,548 Notes receivable 6,465 6,327 Accounts receivable 9,57 11,299 Merchandise and finished products 2,637 3,81 Work in progress 15,325 14,822 Raw materials and purchased supplies 4,769 6,941 Prepaid expenses 85 9 Short-term loans receivable 3,617 4,67 Other current assets Fixed assets 76,527 76,649 Tangible fixed assets 67,54 66,652 Buildings 7,428 7,81 Structures 2,65 2,791 Machinery and equipment 2,266 2,636 Vessels 1 1 Vehicles and other land delivery equipment 14 4 Tools, furniture and fixtures Land 34,416 34,459 Lease assets Construction in progress 1, Intangible fixed assets 1,449 1,45 Software Other intangible fixed assets Investments and other assets 8,24 8,952 Investment securities 2,545 4,146 Shares of subsidiaries and affiliates 4,822 4,372 Long-term prepaid expenses Other investments and other assets Allowance for doubtful receivables 2 2 Deferred assets Bond issuance cost Total assets 121, ,785 (Note) As of March 31, 216 As of March 31, 215 Monetary claims against subsidiaries (short-term) 11,715 12,621 Monetary claims against subsidiaries (long-term) 23 Current assets Inventories (the total of merchandise and finished products, work in progress, and raw materials and purchased supplies) have decreased by approximately 2,8 million in comparison with the level on March 31, 215 due mainly to a decline in raw materials prices. Fixed assets The Company made investments to enhance the competitiveness of highperformance alloys, investments in the environment and energy saving fields, and investments to strengthen the Company s business foundation. Accordingly, construction in progress for tangible fixed assets rose by around 1,1 million and other intangible fixed assets increased by around 9 million. Item As of March 31, 216 As of March 31, 215 Liabilities Current liabilities 47,59 5,724 Notes payable 6,431 6,72 Accounts payable 5,159 7,495 Short-term debt 19,633 2,195 Current portion of bonds 6 6 Current portion of long-term debt 9,11 9,641 Lease obligations Accounts payable - other 1, Accrued expenses 1,838 2,49 Deposits received 871 1,81 Reserve for employees bonuses Notes payable - equipment 1, Other current liabilities Long-term liabilities 38,375 4,678 Bonds payable 1,8 2,4 Long-term debt 18,953 21,39 Lease obligations 1, Deferred tax liabilities 7,683 8,334 Deferred tax liabilities on land revaluation Reserve for employees retirement benefits 7,26 6,936 Reserve for environmental measures Reserve for prevention of metal mine pollution 5 5 Asset retirement obligations Long-term accounts payable - other Other long-term liabilities 1 19 Total liabilities 85,885 91,42 Net assets Equity 34,382 33,513 Common stock 24,31 24,31 Capital surplus 9,542 9,542 Statutory reserve 9,542 9,542 Retained earnings Other retained earnings Retained earnings brought forward Treasury stock Valuation and translation adjustments 1,84 1,869 Unrealized gain on available-for-sale securities 412 1,195 Land revaluation reserve Total net assets 35,466 35,382 Total liabilities and net assets 121, ,785 (Note) As of March 31, 216 As of March 31, 215 Monetary debt against subsidiaries (short-term) 4,1 4,368 Guarantee liabilities 6 16 Interest-bearing debt The total amount of combined short-term debt, long-term debt and bonds payable decreased by approximately 4,1 million year on year. Net assets The shareholders equity ratio was 29.2% as of March 31, 216. Non-consolidated Statements of Operations Item Non-consolidated Statements of Changes in Equity ( March 31, 216) Common stock Statutory reserve Capital surplus Total capital surplus Equity Other retained earnings Retained earnings brought forward Retained earnings Total retained earnings Treasury stock Total shareholders equity Balance as of April 1, ,31 9,542 9, ,513 Changes of items during the period: Profit Purchase of treasury stock Disposal of treasury stock Reversal of land revaluation reserve Changes outside scope of equity net Total changes of items during the period Balance as of March 31, ,31 9,542 9, ,382 Net unrealized gain on available-for-sale securities Valuation and translation adjustments Land revaluation reserve Total valuation and translation adjustments Total net assets Balance as of April 1, 215 1, ,869 35,382 Changes of items during the period: March 31, 216 March 31, 215 Net sales 95,89 16,281 Cost of sales 89,971 99,741 Selling, general and administrative expenses 5,224 5,457 Operating income 695 1,83 Non-operating income Interest and dividends received Other non-operating income Non-operating expenses 1,48 1,387 Interest paid 1, Other non-operating expenses Ordinary income Extraordinary profits Extraordinary losses Profit before income taxes Income taxes (corporate tax, residential tax and enterprise tax) Income tax adjustment Profit 845 1,339 (Note) March 31, 216 March 31, 215 Earnings per share Net sales Profit 845 Purchase of treasury stock Disposal of treasury stock Reversal of land revaluation reserve 24 Changes outside scope of equity net Total changes of items during the period Balance as of March 31, ,84 35,466 In the stainless and specialty steel industry, domestic demand showed resilience, but due to the slowdown in the Chinese economy and also to the decline in demand from applications in the oil and gas industries caused by the stagnation of energy-related investments, which was the result of lower oil prices, sales volumes for high-performance alloys fell by around 9%, with net sales for the fiscal year under review falling by about 1,4 million year on year. Ordinary income In addition to the above-mentioned fall in sales volumes, loss on valuation of inventory, etc. caused by falling nickel prices pushed down profits by around 4 million year on year

8 Corporate Directory Topics Board of Directors and Audit & Supervisory Board Members Representative Director and President Representative Director Director Director Director Director Audit & Supervisory Board Member (Full time) Audit & Supervisory Board Member (Full time) Audit & Supervisory Board Member Audit & Supervisory Board Member Hajime Kimura Hisashi Kubota Tomiki Oota Akira Horiuchi Kazuhiko Okada Takashi Michibayashi Hiromi Maeda Mamoru Kishida Masahiko Kishiki Koichi Sano (Reference) Among the Directors, Messrs. Kazuhiko Okada and Takashi Michibayashi serve as Outside Directors. Among the Audit & Supervisory Board Members, Messrs. Mamoru Kishida, Masahiko Kishiki and Koichi Sano serve as Outside Audit & Supervisory Board Members. Accounting Auditor Yaesu Audit Company Locations in Japan Head Office Sanei Bldg., 5-8, Kyobashi 1-chome, Chuo-ku, Tokyo , Japan Phone: +81-() Osaka Branch Kogin Bldg., 1-1, Korai-bashi 4-chome, Chuo-ku, Osaka-shi, Osaka , Japan Phone: +81-() Nagoya Branch NBF Nagoya Hiroko-ji Bldg., 3-6, Sakae 2-chome, Naka-ku, Nagoya-shi, Aichi 46-8, Japan Phone: +81-() Kyushu Branch Ayasugi Bldg., 15-6, Tenjin 1-chome, Chuo-ku, Fukuoka-shi, Fukuoka 81-1, Japan Phone: +81-() Success in the manufacture of 4-feet wide coils of corrosion-resistant high Ni alloy NAS625 and NASNW276 The Company succeeded in manufacturing 4-feet (1219 mm) wide coils of NAS625 (62Ni-22Cr-9Mo-3.7 Nb-.2Ti-.2Al) at the Company s Kawasaki Plant. Before this success, at the end of 215, the Company successfully manufactured 4-feet wide coils of NASNW276 by reducing the rolling load during hot rolling. This time, by utilizing this knowledge gained from NASNW276 production, the Company discovered suitable conditions for NAS625, leading to the successful manufacture of 4-feet wide coils. Very few manufacturers anywhere in the world have the ability to produce 4-feet wide coils of this alloy. Corrosion-resistant high Ni alloys such as NAS625 and NASNW276 are used under various severe corrosive environments, and in recent years, there have been increasing needs for wider coil products in order to achieve high efficiency in welding work, etc. Expected fields of demand include plate-type heat exchangers, oil and gas refining equipment, chemical tanks and water treatment equipment, among others. Going forward, the Company will work to further optimize manufacturing conditions and plan to begin full-scale production and sales in fiscal 218. The Company has already started sales of 4-feet wide coils of NASNW276 and expects sales volumes of 4-5 tons per year in fiscal 217. Executive Officers Hiroshima Branch Hiroshima Kogin Bldg., 1-22, Kamiya-cho 2-chome, Naka-ku, Hiroshima-shi, Hiroshima 73-31, Japan Phone: +81-() President and Executive Officer Senior Managing Officer Managing Officer Managing Officer Managing Officer Managing Officer Executive Officer Hajime Kimura Hisashi Kubota Tomiki Oota Akira Horiuchi Masato Noda Wang Kun Yasuhiko Kobayashi Niigata Branch Hokuetsu Daiichi Bldg., 2-25, Higashi Odori 1-chome, Niigata-shi, Niigata 95-87, Japan Phone: +81-() Kawasaki Plant 4-2, Kojima-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa , Japan Phone: +81-() Oheyama Plant 413, Suzu, Miyazu-shi, Kyoto , Japan Phone: +81-() Executive Officer Executive Officer Yasuhiro Kiuchi Syuuichi Sasaki Locations Outside Japan Illustration of rolling process of hot rolling (NCH mill) Cold-rolled coil of NASNW276 after pickling Executive Officer Shingo Kobayashi Nippon Yakin America, Inc. (subsidiary in Chicago) 56 N River Road Suite 8, Rosemont, Illinois 618, U.S.A. Phone: +1 (847) Fax: +1 (847) Nippon Yakin Shanghai Co., Ltd. (subsidiary in Shanghai) Rm.118, Shanghai International Trade Centre, 221 Yan An Road(W.), Shanghai, China Phone: +86 (21) Fax: +86 (21) Nippon Yakin Europe Limited (subsidiary in London) 72 Hammersmith Road, London, W14 8TH, United Kingdom Phone: +44 (2) Fax: +44 (87) Nippon Yakin Asia Pte. Ltd. (subsidiary in Singapore) 1 Anson Road, #31-9 International Plaza, Singapore 7993 Phone: Fax:

9 NIPPON YAKIN KOGYO CO., LTD. (