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Message from the President
Yoshio Inoue

‘ About Consolidated Financial Results of the Fiscal Year ended March 31,2017

During the Fiscal Year 2016 (April 1, 2016 through March 31, 2017), the world economy overall showed a U.S.-led mild recovery, even though there were some occasions of temporal economic risk surge.

Under such circumstances, TOMOEGAWA recorded revenues of \32,379 million, which was ’1,123million or ’3.4% lower than that of the previous year. The markets of existing products, such as products in the Functional paper business and the magnetic related business, continued to shrink. To the contrary, sales of new adhesive Flat Panel Display (FPD) related products and the tape products used in semiconductor manufacturing process have remained strong. Toner related business sales volumes were also increased.

As for the profit, our consolidated Operating Income was \863 million (+\573 million, +197.5%). Productivity improvement effort and the effect of energy and materials cost reduction gradually came into effect as the year progressed. In addition, there was some positive consolidation treatment impact derived from Yen depreciation that started in the middle of 3rd Quarter. Our consolidated Ordinary Income was \465 million, which was +\483 million higher than previous FYfs ’\18 million. The consolidated treatment impact mentioned above was offset at this stage. The foreign exchange losses caused mainly by the rapid Yen appreciation during the 1st Quarter was negative for profit, but the substantial improvement in equity method investment gain from FPD business affiliates contributed to keep Ordinary Income at this level.

Net Income attributable to owners of parent company was \252 million, which was a significant recovery, as it is +\1,182 million higher than ’\929 million Net Loss of previous FY. Even though there were extraordinary losses from the demolition cost of the water intake equipment at our closed factory, and the extraordinary loss from U.S. subsidiary restructuring, they were covered by the extraordinary income from the sale of investment securities, and we were able to return to the positive Net Income status after recording Net Loss in previous FY.

‘ Rolling over the Sixth Mid-Term Management plan

TOMOEGAWA has established Mid-Term Management plan, which will end on March 31, 2019 (FY 2018). Under this plan, we have chosen the area of control materials for heat, electricity and electromagnetic wave as the key factor for our success, and actively invest our resources in those fields. In addition to the structural improvement of existing business and continuation of steady sales promotion effort, we will proceed with the energy and materials cost reduction effort and productivity improvement to bring us back to the growth path.

‘ Forecast of Current Fiscal Year, that will end on March 31,2018

Our FY2017 target sales revenue is \33,000 million (+1.9%). The sales of FPD related adhesive products and the tape products for semiconductor manufacturing are projected to be steady, and we will actively push the toner related product sales to reach the overall sales number.

Our targets of FY2017 consolidated Operating Income and consolidated Ordinary Income are \500 million (’42.1%) and \500 million (+7.4%), respectively. Those numbers are based on the assumption that the short-term expenses will increase as the result from increased capital investment, and there will be no profit/loss from foreign exchange fluctuation since the planned exchange rate of 1$110 yen is supposed to be stable. Target Net Income attributable to owners of parent company is \100 million, the demolition cost accompanied to the capital investment execution is reflected in this number. Currently, our subsidiaries in China use calendar year (January to December) as their Fiscal Year. TOMOEGAWA will integrate them to parent companyfs Fiscal Year (April to March), starting in FY2017. Although this effect will raise the consolidated sales amount slightly, there will be little impact on profits of FY2017.

Lastly, stable dividend payment is our basic policy, so we decided that the next Fiscal Yearfs dividend payment will be 5 Yen per share.

Your continuous support and guidance as a shareholder will be greatly appreciated.

Yoshio Inoue, President & CEO

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