Consolidated Financial Summary (For the Fiscal Year Ended March 31, 2016 (IFRS basis)) April 25, 2016 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 17, 2016 Date of the start of dividend payment: May 27, 2016 Date of the release of asset securities report (schedule): June 17, 2016 (Amounts rounded to the nearest million yen) 1. Consolidated Financial Highlights for the Fiscal Year Ended March 31, 2016 (April 1, 2015 through March 31, 2016) (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, 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) March, 2015 526,687 7.8 29,226 (20.1) 34,692 (12.1) 22,867 (21.5) 22,587 (23.3) 43,538 3.2 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, 2016 184.95-10.9 10.0 9.7 March, 2015 108.47-6.8 6.7 5.5 Reference: Share of profits of investments accounted for using the equity method March, 2016: 3,223 million yen March, 2015: 3,431 million yen Note: Basic earnings per share is calculated based on net income owners of the parent. Note: From the first quarter ended June 30, 2015, "royalty income," which was previously included in "other income" on the consolidate statements of income, will be included in "revenues." Figures for the fiscal year ended March 31, 2015, have been restated to reflect this change. (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, 2016 535,155 362,522 356,207 66.6 1,710.62 March, 2015 542,535 357,334 348,241 64.2 1,672.33 (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, 2016 95,069 (35,663) (22,123) 119,988 March, 2015 34,009 (22,258) (16,874) 88,997 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, 2015-18.00-18.00 36.00 7,497 33.2 2.3 March, 2016-25.00-25.00 50.00 10,412 27.0 3.0 March, 2017 (Forecast) - 25.00-25.00 50.00 27.0 3. Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2017 (April 1, 2016 through March 31, 2017) (% 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 First half 265,000 (3.8) 23,000 (6.0) 23,500 (0.5) 16,500 (3.3) 16,000 (4.0) 76.84 Fiscal year 550,000 0.6 54,000 8.3 55,000 2.5 39,200 0.1 38,500 0.0 184.89 Important: For the consolidated financial forecast for the fiscal year ending March 31, 2017, in order to display the earnings capacity of the Company's ordinary operations, the figure for operating income uses the figure for operating income from the consolidated statements of income minus the amounts for other income and other expenses. The operating income figure calculated in this manner was 24,472 million in the first half ended September 30, 2015, and 49,851 million in the fiscal year ended March 31, 2016. The forecast for consolidated operating income calculated under the standard calculation method is 23,000 million (down 1.5% year on year) for the first half ending September 30, 2016, and 54,000 million (up 1.8%) for the fiscal year ending March 31, 2017. * Notes (1) Changes in significant subsidiaries during the term (changes in specified subsidiaries resulting in the change in scope of consolidation): Yes Exclusion: 3 companies (Shin-Kobe Electric Machinery Co., Ltd. Hitachi Storage Battery (Thailand) Co., Ltd. Hitachi Chemical Research Center, Inc.) (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, 2016: March 31, 2015: 208,364,913 shares 208,364,913 shares (b) Number of treasury stock at the end of the term: March 31, 2016: March 31, 2015: 132,735 shares 128,401 shares (c) Average number of shares during the term: Fiscal 2015: Fiscal 2014: 208,233,783 shares 208,240,078 shares * Indication of audit procedure implementation status These financial results are not subject to audit procedures. Thus, at the time of disclosure of these financial results, the financial statement audit procedures based on the Financial Instruments and Exchange Law, have not been completed. * 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, 2015 As of March 31, 2016 Assets Current assets Cash and cash equivalents 88,997 119,988 Trade receivables 123,949 109,249 Inventories 61,909 51,693 Other financial assets 23,659 16,527 Other current assets 2,324 3,200 current assets 300,838 300,657 Non-current assets Property, plant and equipment 179,196 170,332 Intangible assets 12,301 13,463 Net defined benefit assets 10,093 6,960 Deferred tax assets 10,684 11,566 Investments accounted for using the equity method 5,216 7,665 Other financial assets 17,591 18,183 Other non-current assets 6,616 6,329 non-current assets 241,697 234,498 assets 542,535 535,155 Liabilities Current liabilities Trade payables 51,354 51,926 Bonds and borrowings 33,658 32,564 Accrued expenses 24,251 24,149 Income tax payables 6,758 8,144 Provisions 500 500 Other financial liabilities 19,702 15,128 Other current liabilities 1,471 1,784 current liabilities 137,694 134,195 Non-current liabilities Bonds and borrowings 26,619 18,144 Retirement and severance benefits 13,345 13,906 Provisions 1,143 1,158 Other financial liabilities 3,051 2,064 Other non-current liabilities 3,349 3,166 non-current liabilities 47,507 38,438 liabilities 185,201 172,633 Equity Common stock 15,454 15,454 Capital surplus 10,498 8,004 Treasury stock, at cost (213) (223) Retained earnings 287,498 317,447 Accumulated other comprehensive income 35,004 15,525 equity owners of the parent 348,241 356,207 Non-controlling interests 9,093 6,315 equity 357,334 362,522 liabilities and equity 542,535 535,155 3
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated statements of income) Year ended March 31, 2015 (April 1, 2014 - March 31, 2015) Year ended March 31, 2016 (April 1, 2015 - March 31, 2016) Revenues 526,687 546,468 Cost of sales (396,908) (399,374) Gross profit 129,779 147,094 Selling, general and administrative expenses (91,120) (97,243) Other income *1 10,101 *1 10,539 Other expenses (19,534) (7,354) Operating Income 29,226 53,036 Financial income 3,804 1,038 Financial expenses (1,769) (3,615) Share of profits of investments accounted for using the equity method 3,431 3,223 Income before income taxes 34,692 53,682 Income taxes (11,825) (14,530) Net income 22,867 39,152 Net income : Owners of the parent 22,587 38,512 Non-controlling interests 280 640 Earnings per share owners of the parent (yen) Basic 108.47 184.95 Diluted - - 4
(Consolidated statements of comprehensive income) Year ended March 31, 2015 (April 1, 2014 - March 31, 2015) Year ended March 31, 2016 (April 1, 2015 - March 31, 2016) Net income 22,867 39,152 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 1,115 (968) Remeasurements of defined benefit obligations 2,887 (3,662) items that cannot be reclassified into profit or loss 4,002 (4,630) Items that can be reclassified into profit or loss Foreign currency translation adjustments 15,643 (15,262) Cash flow hedges (59) 37 Share of OCI of investments accounted for using the equity method 1,085 (248) items that can be reclassified into profit or loss 16,669 (15,473) Other comprehensive income (OCI) 20,671 (20,103) Comprehensive income 43,538 19,049 Comprehensive income : Owners of the parent 42,390 19,424 Non-controlling interests 1,148 (375) 5
(3) Consolidated Statements of Cash Flows Year ended March 31, 2015 (April 1, 2014 - March 31, 2015) Year ended March 31, 2016 (April 1, 2015 - March 31, 2016) Cash flows from operating activities: Net income 22,867 39,152 Depreciation and amortization 27,271 29,404 Income tax expense 11,825 14,530 Impairment losses 763 1,227 Interest and dividends income (750) (859) Interest expenses paid 1,736 1,471 Business structure improvement expenses 12,882 - Share of profits of investments accounted for using the equity method (3,431) (3,223) (Increase) decrease in trade receivables (1,372) 8,461 (Increase) decrease in accounts receivable other (4,533) 4,486 (Increase) decrease in inventories (3,646) 7,218 Increase (decrease) in trade payables (5,847) 4,640 Increase (decrease) in retirement and severance benefits (4,793) (802) Other 1,712 (643) Sub-total 54,684 105,062 Interest and dividends received 3,350 3,560 Interest paid (1,701) (1,555) Business structure improvement expenses paid (13,583) (783) Income taxes paid (10,190) (12,227) Income taxes refund 1,449 1,012 Net cash provided by operating activities 34,009 95,069 Cash flows from investing activities: Expenses for property, plant and equipment acquired (22,896) (29,856) Income from sale of property, plant and equipment 1,125 1,459 Proceeds from redemption and sale of investments in securities 2,118 389 Purchase of investments in subsidiaries (3,146) (900) Purchase of investments accounted for using the equity method - (2,240) Expenses for investment securities acquired (2,887) (3,263) Sale of investments in subsidiaries resulting in change in scope of consolidation - 677 Proceeds from withdrawal of deposits paid in subsidiaries and affiliates 7,000 - Other (3,572) (1,929) Net cash used in investing activities (22,258) (35,663) Cash flows from financing activities: Net increase (decrease) in short-term debt 157 (4,226) Proceeds from long-term debt 1,058 3,371 Payments on long-term debt (4,370) (5,727) Purchase of shares of consolidated subsidiaries from non-controlling interest holders (5,671) (5,866) Dividends paid to stockholders (7,497) (8,954) Dividends paid to non-controlling interests (134) (218) Other (417) (503) Net cash used in financing activities (16,874) (22,123) Effect of exchange rate changes on cash and cash equivalents 6,468 (6,292) Net increase in cash and cash equivalents 1,345 30,991 Cash and cash equivalents at beginning of year 87,652 88,997 Cash and cash equivalents at end of year 88,997 119,988 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, 2015 (April 1, 2014 through March 31, 2015) 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, 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. (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, 2015 (April 1, 2014 through March 31, 2015) Revenue Item Functional Materials Reportable segment Advanced Components and Systems Adjustment (Note) Revenue from outside customers 277,127 249,560 526,687-526,687 Intersegment revenue 9,071 2,911 11,982 (11,982) - 286,198 252,471 538,669 (11,982) 526,687 Segment profit (loss) 23,494 5,846 29,340 (114) 29,226 Financial income - - - - 3,804 Financial expenses - - - - (1,769) Share of profits of investments accounted for using the equity method - - - - 3,431 Income before income taxes - - - - 34,692 Other items Depreciation and amortization 13,574 13,697 27,271-27,271 Impairment losses 476 287 763-763 Note: Segment profit adjustments are the amounts eliminated for intersegment transactions. 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. 8