Consolidated Financial Summary (For the Fiscal Year Ended March 31, 2017 (IFRS basis)) May 11, 2017 Listed company: Hitachi Chemical Co., Ltd. (Code number: 4217 Stock exchange: Tokyo) (URL http://www.hitachi-chem.co.jp/english/index.html) Representative: Hisashi Maruyama Position of the person: President, Chief Executive Officer and Director Person in charge of the reference: Akihiko Takamatsu Position of the person: General Manager, Corporate Communication Center Tel: 81-3-5533-7144 Date of annual stockholders' meeting (schedule): June 23, 2017 Date of the start of dividend payment: May 26, 2017 Date of the release of asset securities report (schedule): June 23, 2017 (Amounts rounded to the nearest million yen) 1. Consolidated Financial Highlights for the Fiscal Year Ended March 31, 2017 (April 1, 2016 through March 31, 2017) (1) Consolidated Financial Results (% indicates the rate of +/- compared with the previous fiscal year) Revenue Operating income Income before income taxes Net income Net income owners of the parent comprehensive income Million yen % Million yen % Million yen % Million yen % Million yen % Million yen % March, 2017 554,144 1.4 53,152 0.2 54,380 1.3 40,704 4.0 40,186 4.3 39,913 109.5 March, 2016 546,468 3.8 53,036 81.5 53,682 54.7 39,152 71.2 38,512 70.5 19,049 (56.2) Basic earnings per share Diluted earnings per share Return on equity owners of the parent Income before income taxes to total assets Operating income to revenue Yen Yen % % % March, 2017 192.99-11.1 9.6 9.6 March, 2016 184.95-10.9 10.0 9.7 Reference: Share of profits of investments accounted for using the equity method March, 2017: 3,549 million yen March, 2016: 3,223 million yen Note: Basic earnings per share is calculated based on net income owners of the parent. Note: The earnings capacity of the Company's ordinary operations, calculated by deducting the amounts for other income and other expenses from the figure for operating income noted in the consolidated statements of income, was 49,851 million yen in the fiscal year ended March 31, 2016. The consolidated result for earnings capacity of the Company's ordinary operations calculated by this method was 54,035 million yen in the fiscal year ended March 31, 2017. (2) Consolidated Financial Position assets equity Equity owners of the parent Ratio of equity owners of the parent to total assets Equity owners of the parent per share Million yen Million yen Million yen % Yen March, 2017 600,485 376,055 369,618 61.6 1,775.06 March, 2016 535,155 362,522 356,207 66.6 1,710.62 (3) Consolidated Cash Flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of term Million yen Million yen Million yen Million yen March, 2017 60,819 (34,606) (36,476) 107,649 March, 2016 95,069 (35,663) (22,123) 119,988 1
2. Dividend Dividend per Share 1st Quarter 2nd Quarter 3rd Quarter Year-End Dividends Paid () Dividends Payout Ratio (Consolidated) Dividends to equity owners of the parent (Consolidated) Yen Yen Yen Yen Yen Million yen % % March, 2016-25.00-25.00 50.00 10,412 27.0 3.0 March, 2017-25.00-30.00 55.00 11,453 28.5 3.2 March, 2018 (Forecast) - 30.00-30.00 60.00 29.4 3. Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2018 (April 1, 2017 through March 31, 2018) (% indicates the rate of +/- compared with the same term of the previous fiscal year) Revenue Operating income Income before income taxes Net income Net income owners of the parent Basic earnings per share Million yen % Million yen % Million yen % Million yen % Million yen % Yen Fiscal year 610,000 10.1 58,000 9.1 60,000 10.3 44,000 8.1 42,500 5.8 204.10 Note: The consolidated forecast for earnings capacity of the Company's ordinary operations calculated by deducting the amounts for other income and other expenses from the figure for operating income noted in the consolidated statements of income, is 61,000 million yen for the fiscal year ending March 31, 2018. * Notes (1) Changes in significant subsidiaries during the term (changes in specified subsidiaries resulting in the change in scope of consolidation): Yes Inclusion: 2 companies (FIAMM Energy Technology S.p.A., Societa' Italiana Accumulatori Produzione Ricerca Avezzano - SIAPRA S.p.A.) (2) Changes of Accounting Policies Applied, Changes in Accounting Estimates (a) Changes of accounting policies required by IFRS: None (b) Changes of accounting policies other than (a): None (c) Changes in accounting estimates: None (3) Number of Shares Issued (Common Stock): (a) Number of shares at the end of the term (Including treasury stock): March 31, 2017: March 31, 2016: 208,364,913 shares 208,364,913 shares (b) Number of treasury stock at the end of the term: March 31, 2017: March 31, 2016: 136,862 shares 132,735 shares (c) Average number of shares during the term: Fiscal 2016: Fiscal 2015: 208,230,237 shares 208,233,783 shares * These financial results are not subject to audit procedures. * Explanation on the appropriate use of financial forecasts and other important items The financial forecasts shown on this report are estimated based on information available as of the issuing date of this report, and therefore the actual results for the future terms may differ from these forecasted figures due to various unknown factors. 2
1. Consolidated Financial Statements (1) Consolidated Statements of Financial Position As of March 31, 2016 As of March 31, 2017 Assets Current assets Cash and cash equivalents 119,988 107,649 Trade receivables 109,249 133,520 Inventories 51,693 65,182 Other financial assets 16,527 21,460 Other current assets 3,200 4,251 current assets 300,657 332,062 Non-current assets Property, plant and equipment 170,332 186,633 Intangible assets 13,463 27,486 Net defined benefit assets 6,960 10,001 Deferred tax assets 11,566 11,827 Investments accounted for using the equity method 7,665 8,484 Other financial assets 18,183 17,819 Other non-current assets 6,329 6,173 non-current assets 234,498 268,423 assets 535,155 600,485 Liabilities Current liabilities Trade payables 51,926 80,924 Bonds and borrowings 32,564 27,351 Accrued expenses 24,149 27,251 Income tax payables 8,144 8,680 Provisions 500 - Other financial liabilities 15,128 22,907 Other current liabilities 1,784 3,787 current liabilities 134,195 170,900 Non-current liabilities Bonds and borrowings 18,144 18,545 Retirement and severance benefits 13,906 15,047 Provisions 1,158 1,368 Other financial liabilities 2,064 14,865 Other non-current liabilities 3,166 3,705 non-current liabilities 38,438 53,530 liabilities 172,633 224,430 Equity Common stock 15,454 15,454 Capital surplus 8,004 - Treasury stock, at cost (223) (234) Retained earnings 317,447 340,444 Accumulated other comprehensive income 15,525 13,954 equity owners of the parent 356,207 369,618 Non-controlling interests 6,315 6,437 equity 362,522 376,055 liabilities and equity 535,155 600,485 3
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated statements of income) Year ended March 31, 2016 (April 1, 2015 - March 31, 2016) Year ended March 31, 2017 (April 1, 2016 - March 31, 2017) Revenues 546,468 554,144 Cost of sales (399,374) (402,994) Gross profit 147,094 151,150 Selling, general and administrative expenses (97,243) (97,115) Other income *1 10,539 *1 7,720 Other expenses (7,354) (8,603) Operating Income 53,036 53,152 Financial income 1,038 886 Financial expenses (3,615) (3,207) Share of profits of investments accounted for using the equity method 3,223 3,549 Income before income taxes 53,682 54,380 Income taxes (14,530) (13,676) Net income 39,152 40,704 Net income : Owners of the parent 38,512 40,186 Non-controlling interests 640 518 Earnings per share owners of the parent (yen) Basic 184.95 192.99 Diluted - - 4
(Consolidated statements of comprehensive income) Year ended March 31, 2016 (April 1, 2015 - March 31, 2016) Year ended March 31, 2017 (April 1, 2016 - March 31, 2017) Net income 39,152 40,704 Other comprehensive income (OCI) Items that cannot be reclassified into profit or loss Net gains and losses from financial assets measured at fair value through OCI (968) 685 Remeasurements of defined benefit obligations (3,662) 1,753 items that cannot be reclassified into profit or loss (4,630) 2,438 Items that can be reclassified into profit or loss Foreign currency translation adjustments (15,262) (3,388) Cash flow hedges 37 129 Share of OCI of investments accounted for using the equity method (248) 30 items that can be reclassified into profit or loss (15,473) (3,229) Other comprehensive income (OCI) (20,103) (791) Comprehensive income 19,049 39,913 Comprehensive income : Owners of the parent 19,424 39,238 Non-controlling interests (375) 675 5
(3) Consolidated Statements of Cash Flows Year ended March 31, 2016 (April 1, 2015 - March 31, 2016) Year ended March 31, 2017 (April 1, 2016 - March 31, 2017) Cash flows from operating activities: Net income 39,152 40,704 Depreciation and amortization 29,404 28,114 Income tax expense 14,530 13,676 Interest and dividends income (859) (851) Interest expenses paid 1,471 1,098 Share of profits of investments accounted for using the equity method (3,223) (3,549) (Increase) decrease in trade receivables 8,461 (13,623) (Increase) decrease in accounts receivable other 4,486 (3,902) (Increase) decrease in inventories 7,218 (5,648) Increase (decrease) in trade payables 4,640 13,140 Increase (decrease) in retirement and severance benefits (802) (664) Other 584 5,212 Sub-total 105,062 73,707 Interest and dividends received 3,560 3,546 Interest paid (1,555) (1,193) Business structure improvement expenses paid (783) - Income taxes paid (12,227) (15,241) Income taxes refund 1,012 - Net cash provided by operating activities 95,069 60,819 Cash flows from investing activities: Expenses for property, plant and equipment acquired (29,856) (32,995) Income from sale of property, plant and equipment 1,459 2,326 Proceeds from redemption and sale of investments in securities 389 1,821 Purchase of investments in subsidiaries (900) (2,375) Purchase of investments accounted for using the equity method (2,240) - Expenses for investment securities acquired (3,263) (2,013) Sale of investments in subsidiaries resulting in change in scope of consolidation 677 - Sale of investments accounted for using the equity method - 351 Other (1,929) (1,721) Net cash provided by (used in) investing activities (35,663) (34,606) Cash flows from financing activities: Net increase (decrease) in short-term debt (4,226) (10,485) Proceeds from long-term debt 3,371 707 Payments on long-term debt (5,727) (5,367) Purchase of shares of consolidated subsidiaries from non-controlling interest holders (5,866) (393) Redemption of bonds - (10,000) Dividends paid to stockholders (8,954) (10,412) Dividends paid to non-controlling interests (218) (102) Other (503) (424) Net cash used in financing activities (22,123) (36,476) Effect of exchange rate changes on cash and cash equivalents (6,292) (2,076) Net increase (decrease) in cash and cash equivalents 30,991 (12,339) Cash and cash equivalents at beginning of year 88,997 119,988 Cash and cash equivalents at end of year 119,988 107,649 6
(4) Items Regarding Consolidated Financial Statements (Notes on premise of going concern) Not applicable (Consolidated statements of income) *1 Other income Fiscal Year ended March 31, 2016 (April 1, 2015 through March 31, 2016) Major factors included compensation received from Tokyo Electric Power Company, Incorporated in relation to the Fukushima Dai-ichi Nuclear Power Station accident. Fiscal Year ended March 31, 2017 (April 1, 2016 through March 31, 2017) Major factors included compensation received from Tokyo Electric Power Company Holdings, Incorporated in relation to the Fukushima Dai-ichi Nuclear Power Station accident. (Segment information) (1) Overview of reportable segment The Company's reportable segment includes items in the constituent units of our business, for which separate financial information is available, and those items to be reviewed periodically by the Board of Directors of the Company to determine the allocation of management resources and evaluate business results. The Company is developing business activities based on the organizational structure that is categorized depending on the degree of product processing, from materials through components to parts. Based on the above, according to the degree of product processing, the Company determines two reportable segments, namely categorizing materials as "Functional Materials Segment" and the components and parts as "Advanced Components and Systems Segment." In the "Functional Materials" business, the Company manufactures and sells Electronics Materials, Inorganic Materials, Polymer Science Materials, Printed Wiring Board Materials and the others. In the "Advanced Components and Systems" business, the Company manufactures and sells Automotive Products, Energy Storage Devices and Systems, Electronics Components and the others. Main products by Segments are as follows. Segment Functional Materials Advanced Components and Systems Main Products Electronics Materials Epoxy Molding Compounds for Semiconductors, Die Bonding Materials for Semiconductors, Slurry for Chemical Mechanical Planarization, Varnishes Inorganic Materials Carbon Anode Materials for Lithium Ion Batteries, Carbon Products Polymer Science Materials Functional Resins, Anisotropic Conductive Films for Displays, Touch Panel Supporting Materials, Adhesive Films Printed Wiring Board Materials Copper-Clad Laminates for Printed Wiring Boards, Photosensitive Dry Films for Printed Wiring Boards Automotive Products Plastic Molded Products, Friction Materials, Powder Metal Products Energy Storage Devices and Systems Vehicle Batteries, Industrial Batteries and Systems, Capacitors Electronics Components Printed Wiring Boards Others Diagnostics / Instruments 7
(2) Information related to revenue, income (loss), and others of reportable segments Fiscal Year ended March 31, 2016 (April 1, 2015 through March 31, 2016) Revenue Item Functional Materials Reportable segment Advanced Components and Systems Adjustment (Note) Revenue from outside customers 269,769 276,699 546,468-546,468 Intersegment revenue 5,855 2,122 7,977 (7,977) - 275,624 278,821 554,445 (7,977) 546,468 Segment profit (loss) 38,574 14,388 52,962 74 53,036 Financial income - - - - 1,038 Financial expenses - - - - (3,615) Share of profits of investments accounted for using the equity method - - - - 3,223 Income before income taxes - - - - 53,682 Other items Depreciation and amortization 14,397 15,007 29,404-29,404 Impairment losses - 1,227 1,227-1,227 Note: Segment profit adjustments are the amounts eliminated for intersegment transactions. Fiscal Year ended March 31, 2017 (April 1, 2016 through March 31, 2017) Revenue Item Functional Materials Reportable segment Advanced Components and Systems Adjustment (Note) Revenue from outside customers 272,994 281,150 554,144-554,144 Intersegment revenue 3,897 2,233 6,130 (6,130) - 276,891 283,383 560,274 (6,130) 554,144 Segment profit (loss) 44,241 8,824 53,065 87 53,152 Financial income - - - - 886 Financial expenses - - - - (3,207) Share of profits of investments accounted for using the equity method - - - - 3,549 Income before income taxes - - - - 54,380 Other items Depreciation and amortization 14,145 13,969 28,114-28,114 Impairment losses 156 780 936-936 Note: Segment profit adjustments are the amounts eliminated for intersegment transactions. 8