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NIPPON YAKIN KOGYO CO., LTD.

Annual Report 2016From April 1, 2015 to March 31, 2016

Dear Shareholders

I would like to extend my heartfelt gratitude for the continued support and patronage of our shareholders.In presenting the annual report for our 134th year (from April 1, 2015 to March 31, 2016), 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 sales-related 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

Dear Shareholders ...................................................................... 1

Business Overview ..................................................................... 3

Consolidated Financial Statements ............................................ 9

Non-consolidated Financial Statements ................................... 11

Corporate Directory .................................................................. 13

Topics ....................................................................................... 14

[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.

in sales volumes, especially for the Company’s high-performance 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 9.0%, standard grade stainless steel: up 0.5%), while net sales for the consolidated fiscal year under review were ¥121,044 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 FY2010, but as of the end of fiscal year under review (FY 2016), 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

90th 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 2014, 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 2016

Financial Highlights

200,000

150,000

100,000

50,000

0

95,890

121,044

84,340

108,817

95,215

119,903

106,281

129,500

131stFY2013

132ndFY2014

133rdFY2015

134thFY2016

Net Sales(¥ million)

ConsolidatedNon-consolidated

5,000

10,000

△5,000

△10,000

101524

△6,461

322613

△6,310

5361,307

131stFY2013

132ndFY2014

133rdFY2015

134thFY2016

0

Ordinary Income (Loss)(¥ million)


△10,000

20,000

10,000

△20,000

821845

△7,365

480

△430

△7,378

2,0921,339

131stFY2013

132ndFY2014

133rdFY2015

134thFY2016

0

Profit (Loss) Attributable to Owners of Parent(¥ million)


60.00

120.00

△60.00

△120.00

5.465.31

△2.78

△47.61

3.10

△47.69

8.6513.52

131stFY2013

132ndFY2014

133rdFY2015

134thFY2016

0.00

Earnings (Loss) Per Share(¥)


President

Contents

1 2

Business Overview

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 sales-

related 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 9.0% and standard grade stainless steel up 0.5%, while net sales decreased by

¥8,455 million year on year to ¥121,044 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%)

(1) Overview (3) Net Sales Breakdown

Description133rdFY2015

(A)

134thFY2016

(B)

year on year

(B)/(A)

High-performance alloysSales volume Thousand tons 43.8 39.9 91.0%Sales amount ¥ million 39,017 32,681 83.8%

Stainless steel flat productsSales volume Thousand tons 203.5 204.6 100.5%Sales amount ¥ million 65,795 62,276 94.7%

Other Sales amount ¥ million 1,469 932 63.5%Total Sales amount ¥ million 106,281 95,890 90.2%Export Sales amount ¥ million 31,283 24,401 78.0%

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 2014 are available on the Company’s corporate website: http://www.nyk.co.jp/files/pdf/ja/ir_news_140328.pdf (Japanese only)

(6) Overview of Basic Strategy for Strengthening Profitability and Reinforcing Financial Standing as Set Forth in the Medium-Term Management Plan 2014

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 ¥4,004 million in the consolidated fiscal year under review.

(4) Capital Investment

Working capital and capital investment funds were allocated from the Company’s own funds and bank borrowings.

(5) Fund Procurement

(2) Net SalesNet Sales (Consolidated)

200,000

150,000

100,000

50,000

0

121,044

28,773

92,271

108,817

27,141

81,676

119,903

30,632

89,271

129,500

35,471

94,029

132ndFY2014

133rdFY2015

131stFY2013

134thFY2016

(¥ million)

Japan Export

Net Sales (Non-consolidated)

200,000

150,000

100,000

50,000

0

95,890

62,276

32,681

932

71,489

24,401

84,340

52,427

30,498

1,416

60,992

23,348

95,215

62,062

31,804

1,350

68,948

26,267

106,281

65,795

39,017

1,469

74,998

31,283

132ndFY2014

133rdFY2015

131stFY2013

134thFY2016

(¥ million)

Stainless steel �at products High-performance alloys Other

Japan Export

3 4

1. Four fiscal years ended March 31 (consolidated)

Description 131stFY2013

132ndFY2014

133rdFY2015

134thFY2016

Net sales (¥ million) 108,817 119,903 129,500 121,044

Ordinary income (loss) (¥ million) △ 6,461 613 1,307 524

Profit (loss) attributable to owners of parent (¥ million) △ 7,365 480 2,092 821

Earnings (loss) per share (¥) △ 47.61 3.10 13.52 5.31

Total assets (¥ million) 140,808 137,370 141,015 134,774

Net assets (¥ million) 30,461 30,998 34,254 34,150

(7) Results of Operations and Assets1. Consolidated subsidiaries

(8) Major Subsidiaries etc.

Name of company Common stock Holding ratio of voting rights Main lines of business

NAS TOA CO., LTD.¥ million100

%100.00 Production and sales of stainless steel and high-

performance alloy welded pipes & tubes

NAS Stainless Steel Strip MFG. Co., Ltd. 682 100.00 Production and sales of stainless steel precision strip

NAS TRADING CO., LTD. 785 100.00 Sales and processing of stainless steel, specialty steel and processed products

Clean Metals Co., Ltd. 200 100.00 Sales and processing of stainless steel, specialty steel and processed products

NAS CREATE CO., LTD. 90 100.00 Sales of packaging materials for stainless steel products and non-life insurance agency business

NAS ENGINEERING CO., LTD. 102 100.00 Equipment installation and other engineering business

NAS TEC CO., LTD. 100 100.00 Contract work services involving production and processing of specialty steel and stainless steel

Miyazu Kairiku Unnyu Co., Ltd. 32 100.00 Harbor transport, truck transport, customs brokerage and sales of processed sand

NAS TOA (THAILAND) CO., LTD.Thousands of THB

220,000 100.00 Production and sales of stainless steel pipes & tubes and processed products

(Notes)1. Figures provided for holding ratio of voting rights include indirect holdings.2. Effective March 31, 2016, we carried out a capital increase for NAS TRADING CO., LTD.

2. Equity-method affiliates

Name of company Common stock Holding ratio of voting rights Main lines of business

Mitoyo Kinzoku K.K.¥ million20

%49.00 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 BusinessProduction 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

2. Four fiscal years ended March 31 (non-consolidated)

Description 131stFY2013

132ndFY2014

133rdFY2015

134thFY2016

Net sales (¥ million) 84,340 95,215 106,281 95,890

Ordinary income (loss) (¥ million) △ 6,310 322 536 101

Profit (loss) (¥ million) △ 7,378 △ 430 1,339 845

Earnings (loss) per share (¥) △ 47.69 △ 2.78 8.65 5.46

Total assets (¥ million) 127,443 122,715 126,785 121,351

Net assets (¥ million) 33,694 33,277 35,382 35,466

5 6

(Note) Details and figures presented in (8) to (17), on pages 6 to 8, are current as of March 31, 2016.

Group Company Average age Average length of service

Number of employees (Persons) 1,998 1,046 39 years old, 4 months 17 years, 6 months

Year-on-year change Increase 16 Increase 17

(11) Employees of the Group and the Company

(Note) The number of employees is the number of persons actually at work.

Common Stock 558,000,000 shares

(13) Number of Authorized Shares

Common Stock 154,973,338 shares

(Including 286,221 shares of treasury stock)

(14) Number of Issued Shares

26,461

(16) Number of Shareholders (Persons)

100 shares

(15) Number of Shares per Unit

(17) Major Shareholders (Top 10)

Shareholder name Number of shares held Share-holding ratio

The Master Trust Bank of Japan, Ltd. (Trust Account) 3,178Thousands of shares 2.05

%

Nippon Yakin Associates Stock Holding Partnership 3,125 2.02

Mizuho Bank, Ltd. (Standing proxy: Trust & Custody Services Bank, Ltd.) 3,115 2.01

CBNY DFA INTL SMALL CAP VALUE PORTFOLIO (Standing proxy: Citibank Japan Ltd.) 3,016 1.95

STATE STREET BANK WEST CLIENT – TREATY 505234 (Standing proxy: Mizuho Bank, Ltd.) 2,206 1.42

Japan Trustee Services Bank, Ltd. (Trust Account) 2,119 1.37

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 1,800 1.16

Mitsubishi UFJ Trust and Banking Corporation (Standing proxy: The Master Trust Bank of Japan, Ltd.) 1,775 1.14

Japan Trustee Services Bank, Ltd. (Trust Account 6) 1,679 1.08

Japan Trustee Services Bank, Ltd. (Trust Account 2) 1,670 1.08

(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).

Creditor Balance at the end of the fiscal year

Mizuho Bank, Ltd. 17,539 ¥ million

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 1,301

(12) Major Creditors

(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 ¥2,400 million

1. The Company

(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.

Head office 5-8, Kyobashi 1-chome, Chuo-ku, Tokyo, Japan

Branch Tokyo, Osaka, Kyushu (Fukuoka-shi, Fukuoka), Nagoya, Hiroshima, Niigata

Manufacturing base Kawasaki Plant (Kawasaki-shi, Kanagawa), Oheyama Plant (Miyazu-shi, Kyoto)

(10) Main Business Locations

2. Subsidiaries

NAS TOA CO., LTD. Head office (Chuo-ku, Tokyo)

Branch : Osaka

Factory: Chigasaki Plant (Kanagawa)

NAS Stainless Steel Strip MFG. Co., Ltd. Head office (Osaka-shi, Osaka)

Branch : Tokyo, Osaka

Factory: Shiga Plant

NAS TRADING CO., LTD. Head office (Chuo-ku, Tokyo)

Branch : Tokyo, Nagoya, Osaka

Division: Processing Center (Osaka, Aichi)

NAS TOA (THAILAND) CO., LTD. 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.

7 8

Consolidated Financial Statements

Consolidated Statements of Operations(¥ million)

Ordinary incomePOINT

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 ¥800 million year on year.

Net salesPOINT

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 high-performance 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 ¥8,500 million year on year.

Item Term ended March 31, 2016

Term ended March 31, 2015

Net sales 121,044 129,500

Cost of sales 109,518 117,414

Selling, general and administrative expenses 9,635 9,768

Operating income 1,892 2,318

Non-operating income 387 623

Interest and dividends received 130 77

Other non-operating income 257 546

Non-operating expenses 1,755 1,634

Interest paid 1,214 1,151

Other non-operating expenses 540 482

Ordinary income 524 1,307

Extraordinary profits 418 88

Extraordinary losses 292 76

Profit before income taxes 651 1,319

Income taxes (corporate tax, residential tax and enterprise tax)

228 80

Income tax adjustment ▲ 398 ▲ 861

Profit (loss) attributable to non-controlling interests ▲ 0 8

Profit attributable to owners of parent 821 2,092

Consolidated Statements of Cash Flows(¥ million)



Cash flows from operating activities 6,770 1,162

Cash flows from investing activities ▲ 2,738 ▲ 3,975

Cash flows from financing activities ▲ 4,061 1,077

Foreign currency translation adjustment of cash and cash equivalents

▲ 122 138

Net increase (decrease) in cash and cash equivalents ▲ 151 ▲ 1,598

Cash and cash equivalents at the beginning of the term 4,980 6,579

Balance of cash and cash equivalents at the end of the term 4,830 4,980

(Note) Term ended March 31, 2016 Term ended March 31, 2015Earnings per share 5.31 13.52

Consolidated Statements of Changes in Equity (Term ended March 31, 2016)(¥ million)

Equity

Common stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity

Balance as of April 1, 2015 24,301 9,542 ▲ 2,697 ▲ 138 31,008Changes of items during the period:

Profit attributable to owners of parent – – 821 – 821Purchase of treasury stock – – – ▲ 1 ▲ 1Disposal of treasury stock – – ▲ 0 0 0Change of scope of equity method – – – – –Reversal of land revaluation reserve – – 24 – 24Changes outside scope of equity – net – – – – –

Total changes of items during the period – – 846 ▲ 1 845Balance as of March 31, 2016 24,301 9,542 ▲ 1,851 ▲ 139 31,853

Accumulated other comprehensive income

Non-controlling interests Total net assets

Net unrealized gain on

available-for-sale securities

Net deferred loss on hedges

Land revaluation reserve

Foreign currency translation

adjustments

Total accumulated

other comprehensive

income

Balance as of April 1, 2015 1,370 ▲ 0 1,724 147 3,241 5 34,254Changes of items during the period:

Profit attributable to owners of parent – – – – – – 821Purchase of treasury stock – – – – – – ▲ 1Disposal of treasury stock – – – – – – 0Change of scope of equity method – – – – – – –Reversal of land revaluation reserve – – – – – – 24Changes outside scope of equity – net ▲ 863 1 9 ▲ 97 ▲ 949 ▲ 0 ▲ 949

Total changes of items during the period ▲ 863 1 9 ▲ 97 ▲ 949 ▲ 0 ▲ 104Balance as of March 31, 2016 507 1 1,733 50 2,292 5 34,150

Consolidated Balance Sheets

Item As of March 31, 2016 As of March 31, 2015

Assets

Current assets 53,860 59,158

Cash and deposits 4,900 5,042

Notes and accounts receivable 20,177 20,966

Marketable securities 30 30

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 66 81

Other current assets 774 899

Allowance for doubtful receivables ▲ 538 ▲ 564

Fixed assets 80,866 81,796

Tangible fixed assets 75,179 75,037

Buildings and structures 11,318 11,986

Machinery, equipment and vehicles 22,028 22,506

Land 38,694 38,784

Construction in progress 1,500 336

Other tangible fixed assets 1,639 1,425

Intangible fixed assets 1,555 1,162

Software 498 986

Other intangible fixed assets 1,058 176

Investments and other assets 4,131 5,597

Investment securities 3,233 4,913

Deferred tax assets 107 99

Other investments and other assets 813 608


Deferred assets 49 61

Bond issuance cost 49 61

Total assets 134,774 141,015


Liabilities

Current liabilities 58,311 62,043

Notes and accounts payable 15,199 17,485

Short-term debt 26,093 27,470

Current portion of bonds 600 600

Current portion of long-term debt 9,728 10,423

Accrued income taxes 257 64

Accrued consumption taxes 850 820

Reserve for employees’ bonuses 716 690

Other current liabilities 4,868 4,492

Long-term liabilities 42,313 44,717

Bonds payable 1,800 2,400

Long-term debt 20,249 22,651

Deferred tax liabilities 7,292 7,933

Deferred tax liabilities on land revaluation 912 958

Net defined benefit liabilities 9,437 9,067

Reserve for environmental measures 12 30

Reserve for prevention of metal mine pollution 5 5

Other long-term liabilities 2,606 1,674

Total liabilities 100,624 106,761

Net assets

Equity 31,853 31,008

Common stock 24,301 24,301

Capital surplus 9,542 9,542

Retained earnings ▲ 1,851 ▲ 2,697

Treasury stock ▲ 139 ▲ 138

Accumulated other comprehensive income 2,292 3,241

Unrealized gain on available-for-sale securities 507 1,370

Net deferred losses on hedges 1 ▲ 0

Land revaluation reserve 1,733 1,724

Foreign currency translation adjustments 50 147

Non-controlling interests 5 5

Total net assets 34,150 34,254

Total liabilities and net assets 134,774 141,015

(¥ million)

(Note) As of March 31, 2016 As of March 31, 2015Assets pledged as collateral


(Note) As of March 31, 2016 As of March 31, 2015Guarantee liabilities 6 16

Notes discounted 2,408 3,773Notes endorsed 478 393

Net assetsPOINT

The shareholders’ equity ratio was 25.3% as of March 31, 2016.Inventories (the total of merchandise and finished products, work in progress, and raw materials and purchased supplies) have decreased by approximately ¥4,300 million in comparison with the level on March 31, 2015 due mainly to a decline in raw materials prices.

Current assetsPOINT

The Group made investments to enhance the competitiveness of high-performance 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 ¥1,200 million and other intangible fixed assets increased by around ¥900 million.

Fixed assetsPOINT

9 10

Non-consolidated Financial Statements

Non-consolidated Statements of Operations(¥ million)

Non-consolidated Statements of Changes in Equity (Term ended March 31, 2016)(¥ million)

Equity

Common stock

Capital surplus Retained earnings

Treasury stockTotal

shareholders’ equityStatutory reserve Total capital

surplus

Other retained earnings

Total retained earningsRetained

earnings brought forward

Balance as of April 1, 2015 24,301 9,542 9,542 ▲ 197 ▲ 197 ▲ 133 33,513

Changes of items during the period:Profit – – – 845 845 – 845Purchase of treasury stock – – – – – ▲ 0 ▲ 0Disposal of treasury stock – – – ▲ 0 ▲ 0 0 0Reversal of land revaluation reserve – – – 24 24 – 24Changes outside scope of equity – net – – – – – – –

Total changes of items during the period – – – 869 869 ▲ 0 869Balance as of March 31, 2016 24,301 9,542 9,542 673 673 ▲ 134 34,382

Valuation and translation adjustmentsTotal net assetsNet unrealized gain on

available-for-sale securities Land revaluation reserve Total valuation and translation adjustments

Balance as of April 1, 2015 1,195 674 1,869 35,382

Changes of items during the period:Profit – – – 845Purchase of treasury stock – – – ▲ 0Disposal of treasury stock – – – 0Reversal of land revaluation reserve – – – 24Changes outside scope of equity – net ▲ 783 ▲ 2 ▲ 785 ▲ 785

Total changes of items during the period ▲ 783 ▲ 2 ▲ 785 84Balance as of March 31, 2016 412 672 1,084 35,466

Net salesPOINT

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 ¥10,400 million year on year.

Ordinary incomePOINT

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 ¥400 million year on year.



Net sales 95,890 106,281

Cost of sales 89,971 99,741

Selling, general and administrative expenses 5,224 5,457

Operating income 695 1,083

Non-operating income 886 839

Interest and dividends received 404 215

Other non-operating income 482 624

Non-operating expenses 1,480 1,387

Interest paid 1,063 999

Other non-operating expenses 417 388

Ordinary income 101 536

Extraordinary profits 410 34

Extraordinary losses 198 71

Profit before income taxes 312 499

Income taxes (corporate tax, residential tax and enterprise tax)

▲ 95 ▲ 12

Income tax adjustment ▲ 438 ▲ 828

Profit 845 1,339

(Note) Term ended March 31, 2016 Term ended March 31, 2015Earnings per share 5.46 8.65

Non-consolidated Balance Sheets(¥ million)


Assets

Current assets 44,775 50,075

Cash and deposits 2,419 2,548

Notes receivable 6,465 6,327

Accounts receivable 9,057 11,299

Merchandise and finished products 2,637 3,810

Work in progress 15,325 14,822

Raw materials and purchased supplies 4,769 6,941

Prepaid expenses 85 90

Short-term loans receivable 3,617 4,067

Other current assets 402 171

Fixed assets 76,527 76,649


Buildings 7,428 7,801

Structures 2,650 2,791

Machinery and equipment 20,266 20,636

Vessels 1 1

Vehicles and other land delivery equipment 14 4

Tools, furniture and fixtures 142 114

Land 34,416 34,459

Lease assets 749 565

Construction in progress 1,388 280

Intangible fixed assets 1,449 1,045

Software 467 960

Other intangible fixed assets 983 85

Investments and other assets 8,024 8,952

Investment securities 2,545 4,146

Shares of subsidiaries and affiliates 4,822 4,372

Long-term prepaid expenses 289 88

Other investments and other assets 370 348


Deferred assets 49 61

Bond issuance cost 49 61

Total assets 121,351 126,785


LiabilitiesCurrent liabilities 47,509 50,724

Notes payable 6,431 6,702 Accounts payable 5,159 7,495 Short-term debt 19,633 20,195 Current portion of bonds 600 600 Current portion of long-term debt 9,011 9,641 Lease obligations 431 222 Accounts payable - other 1,172 943 Accrued expenses 1,838 2,049 Deposits received 871 1,081 Reserve for employees’ bonuses 388 370 Notes payable - equipment 1,123 742 Other current liabilities 853 685

Long-term liabilities 38,375 40,678

Bonds payable 1,800 2,400 Long-term debt 18,953 21,309 Lease obligations 1,270 412 Deferred tax liabilities 7,683 8,334 Deferred tax liabilities on land revaluation 404 438

Reserve for employees’ retirement benefits 7,206 6,936

Reserve for environmental measures 12 26

Reserve for prevention of metal mine pollution 5 5

Asset retirement obligations 220 220 Long-term accounts payable - other 812 580 Other long-term liabilities 10 19

Total liabilities 85,885 91,402

Net assetsEquity 34,382 33,513

Common stock 24,301 24,301 Capital surplus 9,542 9,542

Statutory reserve 9,542 9,542 Retained earnings 673 ▲ 197

Other retained earnings 673 ▲ 197 Retained earnings brought forward 673 ▲ 197

Treasury stock ▲ 134 ▲ 133 Valuation and translation adjustments 1,084 1,869

Unrealized gain on available-for-sale securities 412 1,195

Land revaluation reserve 672 674 Total net assets 35,466 35,382

Total liabilities and net assets 121,351 126,785

(Note) As of March 31, 2016 As of March 31, 2015Monetary claims against subsidiaries (short-term) 11,715 12,621Monetary claims against subsidiaries (long-term) 23 –

(Note) As of March 31, 2016 As of March 31, 2015Monetary debt against subsidiaries (short-term) 4,010 4,368Guarantee liabilities 6 16

Interest-bearing debtPOINT

The total amount of combined short-term debt, long-term debt and bonds payable decreased by approximately ¥4,100 million year on year.

Net assetsPOINT

The shareholders’ equity ratio was 29.2% as of March 31, 2016.

Fixed assetsPOINT

The Company made investments to enhance the competitiveness of high-performance 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 ¥1,100 million and other intangible fixed assets increased by around ¥900 million.

Inventories (the total of merchandise and finished products, work in progress, and raw materials and purchased supplies) have decreased by approximately ¥2,800 million in comparison with the level on March 31, 2015 due mainly to a decline in raw materials prices.

Current assetsPOINT

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Corporate Directory

Accounting AuditorAs of June 28, 2016

Yaesu Audit Company

Locations Outside JapanAs of June 28, 2016

Nippon Yakin America, Inc. (subsidiary in Chicago) 5600 N River Road Suite 800, Rosemont, Illinois 60018, U.S.A.Phone: +1 (847) 685-6644 Fax: +1 (847) 292-4404

Nippon Yakin Shanghai Co., Ltd. (subsidiary in Shanghai)Rm.1018, Shanghai International Trade Centre, 2201 Yan An Road(W.), Shanghai, ChinaPhone: +86 (21) 5239-2670 Fax: +86 (21) 5239-2679

Nippon Yakin Europe Limited (subsidiary in London)72 Hammersmith Road, London, W14 8TH, United KingdomPhone: +44 (20) 7858-0948 Fax: +44 (870) 928-9968

Nippon Yakin Asia Pte. Ltd. (subsidiary in Singapore)10 Anson Road, #31-09 International Plaza, Singapore 079903Phone: +65-6226-2376 Fax: +65-6226-3426

Locations in JapanAs of June 28, 2016

Head OfficeSanei Bldg., 5-8, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8365, JapanPhone: +81-(0)3-3272-1511

Osaka BranchKogin Bldg., 1-1, Korai-bashi 4-chome, Chuo-ku, Osaka-shi, Osaka 541-0043, JapanPhone: +81-(0)6-6222-5411

Nagoya BranchNBF Nagoya Hiroko-ji Bldg., 3-6, Sakae 2-chome, Naka-ku, Nagoya-shi, Aichi 460-0008, JapanPhone: +81-(0)52-211-1102

Kyushu BranchAyasugi Bldg., 15-6, Tenjin 1-chome, Chuo-ku, Fukuoka-shi, Fukuoka 810-0001, JapanPhone: +81-(0)92-722-4170

Hiroshima BranchHiroshima Kogin Bldg., 1-22, Kamiya-cho 2-chome, Naka-ku, Hiroshima-shi, Hiroshima 730-0031, JapanPhone: +81-(0)82-243-0039

Niigata BranchHokuetsu Daiichi Bldg., 2-25, Higashi Odori 1-chome, Niigata-shi, Niigata 950-0087, JapanPhone: +81-(0)25-247-9261

Kawasaki Plant4-2, Kojima-cho, Kawasaki-ku, Kawasaki-shi, Kanagawa 210-8558, JapanPhone: +81-(0)44-271-3012

Oheyama Plant413, Suzu, Miyazu-shi, Kyoto 629-2251, JapanPhone: +81-(0)772-46-3121

Success in the manufacture of 4-feet wide coils of corrosion-resistant high Ni alloy NAS625 and NASNW276

Topics

Illustration of rolling process of hot rolling (NCH mill) Cold-rolled coil of NASNW276 after pickling

The Company succeeded in manufacturing 4-feet (1219 mm) wide coils of NAS625 (62Ni-22Cr-9Mo-3.7 Nb-0.2Ti-0.2Al) at the

Company’s Kawasaki Plant.

Before this success, at the end of 2015, 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 2018.

The Company has already started sales of 4-feet wide coils of NASNW276 and expects sales volumes of 400-500 tons per year

in fiscal 2017.

Executive OfficersAs of June 28, 2016

President and Executive Officer Hajime Kimura

Senior Managing Officer Hisashi Kubota

Managing Officer Tomiki Oota

Managing Officer Akira Horiuchi

Managing Officer Masato Noda

Managing Officer Wang Kun

Executive Officer Yasuhiko Kobayashi

Executive Officer Yasuhiro Kiuchi

Executive Officer Syuuichi Sasaki

Executive Officer Shingo Kobayashi

Board of Directors and Audit & Supervisory Board MembersAs of June 28, 2016

(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.

Representative Director and President Hajime Kimura

Representative Director Hisashi Kubota

Director Tomiki Oota

Director Akira Horiuchi

Director Kazuhiko Okada

Director Takashi MichibayashiAudit & Supervisory Board Member (Full time) Hiromi MaedaAudit & Supervisory Board Member (Full time) Mamoru Kishida

Audit & Supervisory Board Member Masahiko Kishiki

Audit & Supervisory Board Member Koichi Sano

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NIPPON YAKIN KOGYO CO., LTD.(http://www.nyk.co.jp/)

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