Nitto Denko Group Report 2013 · Group 2 Nitto Denko Group 3 Report 2013 Nitto Denko Group Report 2013 Contents Our Relationship with Our Stakeholders Corporate Vision “Creation

Nitto Denko Group Report 2013

Shareholders, individual and

institutional investors

Employees andtheir families

Administrativeagencies

Procurementand

business partners

NPOs and NGOs

Globalenvironment

Customers

• Supply of products

• Improvement ofcustomer satisfaction

• Quality control

• Product safety • Return of pro�ts

• Corporate governance

• Timely disclosure of information

• Use of diversity of human resources

• Cultivation of human resources

• Management of health and safety

• Respect for human rights

• Application for approvals and licenses

• Compliance

• Research and development

• CSR procurement

• Green procurement

• Environmental conservation activities

• Biodiversity conservation

• Sustainable productsLocal

communities

• Interaction with local communities

• Social contributions • Partnerships

NittoDenkoGroup

2 3Nitto Denko Group Report 2013


ContentsOur Relationship with Our Stakeholders

Corporate Vision

“Creation of New Value”Guided by “Open, Fair and Best” as the very basis of our actions, Nitto Denko Group will contribute to people’s daily life and industry’s future with its power to generate innovative and unique ideas.

Nitto Denko Group will:•Swiftlycreateproductsandservicesofferingnewfunctionsthatgivesatisfactiontocustomers

•Honorautonomyandoriginalitytoenhancetheworkingenvironmentwiththetotalfreedomfortheemployeestotakeonchallenges

•Pursuesoundbusinessactivitiesandcontinuallyearnshareholderstrustthroughappropriateinformationdisclosuresandcommunications

•Alwaysbemindfulofcorporatesocialresponsibilityincludingsustainabilityandcommunityrelations

Guiding Principles

With the pride and resolve of a Nitto Denko Group employee, we will always act with integrity in accordance with “Open, Fair and Best”.

We will:1.Provideourcustomerswiththehighestqualityinproductsand

services

2.Placesafetybeforeeverythingelse

3.Alwaysactwithachallengingspirit

4.Conductourselveswithgoodsense,guidedbylawsandethics

5.Keepinmindtohelpprotecttheglobalenvironmentandconserveresources

ForfurtherdetailsonmattersrelatedtothisNittoDenkoGroupReport,pleaserefertoNittoDenko’swebsite:

Page Contents NittoDenkoWebsiteURL

4 HistoryoftheNittoDenkoGroup

4 SynergyfromTechnologyCombination

13 BusinessConductGuidelines

13 BasicPolicyonHumanRights

14−15,36−39 BusinessReport

16−17 EmploymentandCultivationofHumanResources

18 OccupationalHealthandSafetyPolicy

18,20−27 ISO/OHSASCertification

19 Procurement

22 CorporateEnvironmentalPolicy

23−25 EnvironmentalData

27 EnvironmentalConservationActivities

40−42 SocialActionProgram

43 GRIContentIndex

The Nitto Denko Group engages with our stakeholders through various activities.

Company Information ................................................................ 4

Highlights ................................................................................... 6

Top Message ............................................................................. 8

Mid-term Management Plan and Business Model ................... 10

Governance ............................................................................. 11

Compliance and Human Rights ............................................... 13

Associated Business Risks Listed in the Financial Report ...... 14

Employment and Cultivation of Human Resources ................. 16

Occupational Health and Safety .............................................. 18

Procurement ............................................................................ 19

Chemical Substance Management, Quality Management and QES Audits ..................................... 20

Our Policy on the Environment ................................................ 22

Organization for Environmental Management ……………… 22

Promotion of Environmental Management …………………… 22

Environmental Impact of Our Business Activities …………… 23

Our Approach to Climate Change …………………………… 24

Management of Water Resources …………………………… 25

Effective Utilization of Fossil Fuels …………………………… 25

Management of Waste ………………………………………… 25

Management of Organic Solvents……………………………… 25

Providing Sustainable Products ……………………………… 26

Biodiversity Conservation ……………………………………… 27

Supporting UNEP Activities …………………………………… 27Highlights of Environmental Conservation Activities in Fiscal 2012 …………………………………………………… 27

Environmentally Friendly MARINGLIDE™ Film Protects Ship Hulls ……………………………………………… 28

Nitto Denko Participates in National R&D Project to Develop Flexible OLED Lighting ……………………………… 29

R&D Center Established in Switzerland for Materials related to the Environment and Life Sciences ……………… 29

Using Molecular Targeting DDS in the Development of Therapeutic Agents for Organ Fibrosis ……………………… 28

Intellectual Property ................................................................. 31

Expansion into the Fitness and Wellness Market …………… 30

Industrial Tape Business (Functional Base Products) ............ 32

Optronics Business ................................................................. 34

Medical and Membrane Businesses ....................................... 35

Consolidated Balance Sheet ................................................... 36

Consolidated Statement of Income ......................................... 37

Consolidated Statement of Cash Flows .................................. 37

Consolidated Statement of Changes in Net Assets ................ 38

10-Year Summary (consolidated) ............................................ 39

Promoting Education and International Interaction ................. 41

Contributing to Local Communities ......................................... 40

Supporting Sports ................................................................... 42

Environmental Conservation Activities

Research and Development

Business Activities

Financial News

Social Action Program



Company Information

Here we present an outline of the business activities of the Nitto Denko Group

1918

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

20120 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000

Sales (Million yen)

• Nitto Electric Industrial Co., Ltd. forms in Osaki, Tokyo, to produce electrical insulating materials in Japan.

Launch dates for major products

Printed wiring material for HDD(used for wireless suspension)

Retardation film for LCDs

Protective films for automotives

NIPOCS™

（Year）

Consolidated Non-consolidated

• Company introduces electrical insulating varnishes.

• Company produces first vinyl tapes in Japan.

• Company opens its first overseas office in New York.

• Company forms Nitto Denko America, Inc.

• Company forms Nitto Denko Taiwan, its first overseas manufacturing base.

• Company forms Nitto Belgium NV. (now called Nitto Europe NV.)

• Company acquires Hydranautics of the U.S.A.

• Company forms Nitto Denko (Shanghai Pu Dong New Area) Co., Ltd.

• Company forms Nitto Denko (Philippines) Corp.

• Company acquires Acoustiseal of the U.S.A.

• Company forms Nitto Denko Asia Technical Center in Singapore.

• Company forms Nitto Denko India Private, Ltd.

• Company acquires Avecia Biotechnology, Inc. of the U.S.A.

• Company forms Nitto Denko Material (Thailand) Co., Ltd.

• Company forms P.T. Nitto Materials Indonesia.

• Company forms Nitto Denko Vietnam Co., Ltd.

• Company forms Korea Nitto Optical Co., Ltd.

• Company acquires Bento of Turkey.

• Company forms Nitto Denko Europe Technical Centre Sarl. in Switzerland.

• Head Office is relocated to Osaka.

• Company begins production of black tape.

Doubled-faced tape

Black tape

Vinyl tape

Medical adhesive tape

NITOFLEX® EPT SEALER™

Polarizing filmfor LCDs

NITREAT™

NITOHARD™

Transdermal drug delivery patches

NITOFLON®

Reverse osmosis membraneand Ultrafiltration membrane

Combined strength of technologies

Wehavecreatednumerousnewtechnologiesbasedonourfourcoretechnologies.

Bycombiningthesetechnologies,wehavecreatedadiversityofproductsaddingvaluetosheetingandfilm.

Sanshin Katsudo

Bydeveloping“newapplications”andcreating“newproducts”,westimulate“newdemand”,givingrisetonewmarkets.

TheNittoDenkoGrouphasgrownthroughsuchactivity,whatwecall‘SanshinKatsudo.’

Sales trends and the commencement of manufacture of major products

Strengths of the Nitto Denko Group

History of the Nitto Denko Group Business fields and major products

AdhesionTechnology

CoatingTechnology

PolymerAnalysis andEvaluationTechnology

PolymerFunctionControl

Technology

Automotive and Transportation EquipmentOurproductsimprovetheperformanceandefficiency,aswellasreducetheenvironmentalimpact,oftransportationequipmentsuchasautomobilesandtrains.

Infrastructure

Ourproductsareusedintheproduction,constructionandmaintenanceofequipmentessentialforeverydaylife.

Home Appliance and Electrical Industries

Ourproductsrespondtotheevolvinghomeappliancemarketanditscustomers’needswhilealwaysconsideringtheenvironmentalimpact.

Electronic Devices

Ourproductsareusedinelectroniccomponentsinawiderangeoffields,fromelectronicstotheenvironmentandenergy.

Packaging Industry

Ourproducts,suchasadhesivetapesandtapingmachinesolutions,whichrespondtoourcustomers’variousneeds,playanimportantroleinlogistics.

Consumer Products

Ourproductsareusedtocreatecomfortable,convenientandinnovativesolutionsforpeople’slives.

Medical Industry

Ourproductsareusedtocreateproductsgentleonthehumanbodyandhelpwiththepreventionandtreatmentofdiseaseandinjury.

Displays

OurproductsareusedinapplicationssuchasTVs,tabletPCs,smartphonesandportablegamingdevices.

Materials Industry

Ourproductsareusedbythematerialsindustrytooperatemoreefficientlyandreducetheuseofmaterialswithanegativeenvironmentalimpact.

Housing and Housing EquipmentOurproductsprovidevarioussolutionstoimprovethesecurity,comfortandenvironmentalperformanceofhousing.

Thin-filmmetalbaseboardwithhighresolutioncircuit–CISFLEX®

Packagingtape COLOCOLO® Energy-savingwindowinsulationfilm

ELEPHOLDER™

Cartonsealer

Transparentconductivefilm–ELECRYSTA™

Oligonucleotidemedicine

Steelplatereinforcingmaterials–NITOHARD™

Surfaceprotectivematerials–E-MASK®

SeawaterdesalinationspiralROmembraneelement

Polyimideseamlessbelts EPTSEALER™

CuringtapeWaterproofandairprooftaping–HYPERFLASH™

Internalpressureregulator–TEMISH®

Maskingtape

Transparentdouble-coatedadhesivetapeLUCIACS®

Yu-KiBan™

Existingbussines

Cultivatenew

applica-tions

Createnew

demand

Developnew

products Existingbussines

Cultivatenew

applica-tions

Createnew

demandDevelop

new products Existingbussines

Cultivatenew

applications

Createnew

demand

Developnew products

Prevailing NewPrev

ailin

gN

ew

Market

Tech

nolo

gy



Highlights

Sales 675,614 million yen

OperatingIncome 68,672 million yen

IncomebeforeIncomeTaxes 63,455 million yen

NetIncome 43,840 million yen

R&DExpenses 27,573 million yen

CapitalInvestment 49,807 million yen

DepreciationCost 36,467 million yen

Amount per Share

NetIncomeperShare 266.3 yen

DividendsperShare 100 yen

Regional Breakdown of Sales

Japan 192,600 million yen

TheAmericas 40,014 million yen

Europe 31,057 million yen

Asia&Oceania 411,942 million yen

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2011 20122011 2012

242,986

359,105

33,384

Total: 607,639

Sales

−27,835

256,194

410,725

33,769

Total: 675,614

−25,074

13,874

42,162

2,930

Total: 56,491

−2,476

12,209

56,593

359

Total: 68,672

−489

Operating income

■ Industrial tape ■ Optronics ■ Medical & Membrane ■ Intercompany eliminations

(FY)

(Millions of yen) (Millions of yen)

0

10

20

30

40

50

60

0

1.0

2.0

3.0

4.0

5.0

6.0

2008 2009 2010 2011 2012

55.9

21.7

37.1

20.8

26.8

21.9

33.7

25.0

49.8

27.5

(%)

3.83.5 3.4

4.1 4.1

(FY)

(Billions of yen)

■ Capital Investment (Completed contract method) ■ R&D Expenses R&D / Sales Ratio

0

500

1,000

1,500

2,000

0

2.0

4.0

6.0

8.01,763

4.4

1,183

4.8

1,207

6.3

519

2.6

1,045

3.5

(%)

2008 2009 2010 2011 2012(FY)

(Millions of yen)

■ Environmental equipment investment Percentage of total equipment investment

0

10,000

20,000

30,000

40,000

50,000

60,000

2008 2009 2010 2011 2012

267

37,570

55,743

31,066

43,840

(FY)

(Millions of yen)

0

20

40

60

80

100

(%)

32

5

3

46

14

28

5

3

46

18

28

6

3

46

17

28

6

3

43

20

30

8

4

40

18

■ South Asia　■ East Asia

■ Europe

■ The Americas

■ Japan

Mar. 31,2009

Mar. 31,2010

Mar. 31,2011

Mar. 31,2012

Mar. 31,2013

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

2008 2009 2010 2011 2012(FY)

577,922 601,859638,556

607,639

675,614

(Millions of yen)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Mar. 31,2009

Mar. 31,2010

Mar. 31,2011

Mar. 31,2012

Mar. 31,2013

28,64031,288

33,192 32,19830,382

(Employees)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

312,267

368,588

216,465

256,235

377,550

2008 2009 2010 2011 2012(FY)

(Thousands of yen)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

49,234

65,32163,47966,032

59,059

Mar. 31,2009

Mar. 31,2010

Mar. 31,2011

Mar. 31,2012

Mar. 31,2013

(Shareholders)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000(GJ/year)

1990 2005 2008 2009 2010 2011 2012

3,095,438

4,945,574

6,013,203 5,886,111 5,923,551 5,904,233 5,860,448

Benchmark year ofKyoto Protocol

(FY)( )

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000(CO2-metric tons/year)

1990 2005 2008 2009 2010 2011 2012

231,095

719,472 686,094 689,659 707,221 681,349 707,776

(FY)Benchmark year ofKyoto Protocol( )

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000(Metric tons/year)

2010 2011 2012

5,149,258

4,284,808

4,784,542

(FY)

Sales

FY2012 Highlights

Total Amount Donated (non-consolidated)Number of Employees Energy Purchased

Net Income Number of Shareholders (non-consolidated)Breakdown of Employees by Region CO2 Emissions

Business Performance of Each Segment Environmental Investment (non-consolidated)Capital Investment and R&D Expenses Water Usage (Nitto Denko Corporation and domestic group companies)

TotalAssets 741,473 million yen

Equity 488,703 million yen

ROE 9.5%

Japan: 20 companies

Nitto Denko Group Companies: 107 companies (as of March 2013)

South Asia: 18 companies

East Asia: 34 companies

The Americas: 21 companies

Europe: 16 companies



To Our StakeholdersTop Message

IwouldliketoexpressmyappreciationfortheunderstandingandpatronagethattheNittoDenkoGroupcontinuestoreceivefromourshareholders,investors,customers,businesspartnersandlocalcommunities.OnbehalfoftheNittoDenkoGroup,thisreportwilloutlineourfiscal2012activitiesandpresentourkeypoliciesforfiscal2013.

Business Summary of Fiscal 2012

Asforthebusinessenvironmentthroughoutfiscal2012abroad,theU.S.economycontinuedonapathtoamildrecovery.However,duenotonlytoEurope’songoingdebtcrisis,butalsothedeceleratingeconomiesofdevelopingcountries,thebusinessenvironmentwasharsh.Inthedomesticbusinessenvironment,inlinewithsomemildsignsofapick-upandagainstabackgroundofrestorationindemandsincetheGreatEastJapanEarthquake,ourhopesfornear-termeconomicrecovery,ourchiefpriority,rose.Thiswasduetofactorsfromtheweakyentothenewfinancialandfiscalpoliciesaccompanyingthechangeofgovernment.

WeattheNittoDenkoGroupconsideredfiscal2012asthe“YeartoOvercomeChallenges,”goingbeyondourfiscal2011mottoofthe“YeartoTakeonChallenges,”strivingtosucceedinthemarketplace,getaheadofourcompetitionand“overcome”ourownlimitations.Intheelectronicsindustry,whereourprimaryproductscompete,weintroducednewproductsforsmartphonesandtabletPCs,deviceswhosemarketsaregrowingdramatically.Intheautomotiveindustry,weexpandedoursalesofindustrialtapes,mainlyinlinewitharecoveryinproductionvolumeofvehicles.Simultaneously,duetoouractivelypromotingamultiprongedstrategy,creatingamplenewbusinessopportunitiesandfurtherglobalizing,wesenseashifttonewgrowthinourindustrialtapesandmedicalbusiness.Overall,salesincreasedby11.2%to675.6billionyenandoperatingincomeincreased21.6%to68.6billionyen,whencomparedtofiscal2011.

Approaches for Fiscal 2013

Asforeconomicforecastsforfiscal2013,duetovariouspolicymeasuresandeconomicstimuluspoliciestaken,theriskofeconomiccrisishasdecreasedandeconomicgrowthhasbeenboostedabroad.Athome,itispredictedthateconomicmeasuresbythenewadministrationwillencouragegrowthintheshortrun.However,itisconsideredthatthebusinessenvironmentwillremainuncertain.

Insuchanenvironment,theNittoDenkoGroupconsidersfiscal2013asthe“YeartoEnteraNewPhase”.Wheneveryemployeestrivesunflinchingly,boostingtheirlevelofawareness,theywilldeveloptheabilitytotakeonchallengesintheworld.

Furthermore,wewillreformourlogothisfiscalyear,aimingnotonlytoenhancebothourappealbygainingmorerecognitionofourcorporationandourcapacitytogatherandtransmitinformation,buttoalsothoroughlyinstillcommonvalueswhichwillbecomeaunifyingforcewithintheGroup.

Inourindustrialtapebusiness,wewillestablishasystemwhichwillenableustoconsistentlymanagearangeofprocesses,fromthedevelopmentofproductsandtheprocurementofrawmaterialstotheproductionandsalesofproductsonsite,furtherpromotingourglobalization.Inparticular,indevelopingcountries,wewillsupplyproductscommensuratewiththelevelofindustrialdevelopmentofeachparticularmarket,creatingAreaNicheTop(ANT)products.

Weanticipatethatproductsofouroptronicsbusiness,centeredoninformationfinematerialsforsmartphonesandtabletPCs,willenjoycontinuedstronggrowthindemand.

Inourmedicalandmembranebusinesses,wewillenhanceouroperatingbaseandincreasetotalprofitability.Inparticular,inourmedicalbusiness,wewillpourmanagementresourcesintoouroligonucleotidemedicinebusiness,withitspotentialtogrowinthefuture,inordertoimproveourmanufacturinganddevelopmentfunctionsglobally.Inourmembranebusiness,wewillraiseprofitabilitybymakingashortlistofmarketstopursue.

Infiscal2013,wewillconsidercapitalinvestmentsofarecord-setting90billionyeninordertoseizebusinessopportunities.Wewillrealizesoundgrowthwithspeedyandnimblejudgment.

Infiscal2013weaimtoachievearecord-settingincreaseof13.2%to765billionyeninsalesandof39.8%to96billionyeninoperatingincome,whencomparedtofiscal2012.

Mid-term Management Plan

Infiscal2013wehavelaunchedathree-yearmid-termmanagementplan,“NITTO-2015”.Weaimtoachieve920billionyeninsalesand120billionyeninoperatingincomeinfiscal2015.Inthisplan,wewilladdressthreechallengesunderourbasicconceptof“improvementof‘healthy

businessgrowth’basedonasafeandcomfortableworkingenvironment.”

Thefirstofthesechallengesis“businessgrowth”.Inlinewithseekingabalancebetweenexpansionofourpresentbusinessandthecreationofnewbusiness,wewillestablishnewthemescenteredonthegrowthfieldsof“Green(Environment),Clean(Energy)andFine(LifeScience)”.Welaunchedsalesofanewenergy-saving(thermalinsulationandheatinsulation)windowfilm,“PENJEREX®”,andnewdevelopmentofantifoulingprotectionfilmformarineapplications,“MARINGLIDE™”,infiscal2012,andwillcontinuetocreatenewbusiness.Furthermore,wewilldevelopouranticorrosionandwaterproofmaterialsbusinessatfacilitiesinChinabytakingadvantageofourcultivatedtechnologiesandactualperformanceovertheyears.

Thesecondchallengeis“qualitativeimprovement”.Itisdifficulttorealizecorporategrowththroughpursuingbusinessperformancealone.Itisnecessarytoimprovequality,too.Byunitingbusinessgrowthwithsuchpoliciesas“providingeco-friendlyproducts,”“pursuingqualityandmakingcustomershappy”and“engaginginsocialresponsibility,”wewillaccomplishanimprovementincorporatevalueandrealizecorporategrowth.

Thethirdchallengeis“humanresourcedevelopment”.Intheprocessofourgrowingintheworld,notonlytheabilitytoaccomplishbusinessperformance,butalsohumanresourceswhounderstandourcorporatecultureandpossessthecorporateethosofNitto,areindispensable.Regardlessofnationalityorgender,weratehumanresourceswiththeabilitytobecomenextgenerationleaders,“NittoPerson”,andcultivatethemthrougheducationalprograms,includingevaluations.

Profit Allotment Policy

Weconsiderthereturnofprofitstoourstakeholderstobeofthehighestpriority.Asamanufacturer,inordertokeeppacewithrapidtechnologicalinnovationandourneedtoserveourcustomersinatimelyfashion,itisimperativethatwemakepositivepriorinvestmentsinthefieldsofresearchanddevelopmentandproduction.Whendeterminingcashallotments,wecomprehensivelyassessthefinancialstandingofouraccounts,profitlevelsanddividendpayouts.

Theyear-enddividendforfiscal2012was50yenpershare,whilsttheannualdividendpersharewas100yen,equivalenttofiscal2011.Forthcomingannualdividendsare

projectedtobe100yen,equivalenttofiscal2012andinlinewithcomprehensivecalculationsregardingfutureprofitsandbusinessinvestment.

Corporate Social Responsibility

TheNittoDenkoGroupregards“CreationofNewValue”asourcorporatevisionandthereasonforourbeing.“Open,FairandBest”areourguidingprinciplestorealizethiscorporatevision.

Infacingabigturningpointfortheworldeconomy,businesscorporationsarerequiredtoshowflexibleandexpeditiousresponsestochangesinsociety’sexpectations.Itisparticularlyatsuchtimesthatapproachestosocialresponsibilityreflectuponthecomprehensivestrengthofacorporation.

Webelievethatnotonlybycontributingtosocietythroughourbusinessperformance,butalsobyreturningagaintoourguidingprinciplesof“Open,FairandBest”,andapproachingsincerelyeachofouractivitieswithprideandpluck,wewillbesuccessfulinrealizingtheexpectationsofourstakeholders.

TheNittoDenkoGrouplooksforwardtoyoureverdeeperpatronageandfurtherguidance.

Yukio NagiraBoardMemberandPresident,NittoDenkoCorporation



The Mid-term Management Plan (2013-2015) has been launched. We will promote “healthy business growth,” based on a comfortable and safe workplace.

The Nitto Denko Group aims at sound and transparent management in order to implement long-lasting harmonious activities involving all stakeholders.

Governance

312,267 thousand yen

Social contributions(non-consolidated)

230,474 ton

Raw materials(non-consolidated)

707,776 t-CO2

CO2 emissions1,330 ton

Solvent emissions

4,333,073 ton

Water discharge(non-consolidated)

121,061 tonIndustrial waste

27,573 million yen

675,614 million yen

R&D expenses

49,807 million yen

Capital investment

Recycling

5,860,448 GJEnergy

4,784,542 tonWater (Domestic)

30,382 employeesHuman resources

Corporate governance Management

SalesProducts

Industrial tape

68,672 million yen

Operating Income

100 yen

Dividends per share

Fiscal 2012 performance

Optronics

Medical & Membrane

New technology Intellectualproperty

Procurementand

business partners

Employees andtheir families

Shareholders, individual and

institutional investorsCustomers

Localcommunities

Globalenvironment

NPOs and NGOs

Administrativeagencies

Businessactivity

Raw materials

CO2 emissions Solvent emissions

Water discharge Industrial waste

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources


Products

New technologyIntellectual

property

Businessactivity

Sales

OperatingIncome

Dividends

SocialcontributionsMid-term

Management Plan – “Nitto-2015”

Basic Policy

TheNittoDenkoGroupbelievesintheimportanceofprofitforallofitsstakeholders.Inordertomaximizeshareholdervalueonacontinuouslong-termbasis,itisveryimportanttoupholdcorporategovernance.

Generalpoliciesforallemployeestofollowinordertofunctioneffectivelyasmembersofabusinessenterpriseandsocietyareoutlinedinour“CorporateVision,”“GuidingPrinciples,”and“BusinessConductGuidelines.”

OurCorporateVisionandGuidingPrinciplesarebasedonthe“Open,FairandBest”concept,inwhichinformationistobesharedopenly,decisionsaretobemadefairly,andourbesteffortsaretobemadeineveryactivity.Inthisway,westriveforhealthy,transparentgovernance.

Infurthereffortstoachievefairandtransparentmanagement,basicpolicieshavebeendesignedforeachfieldofspecializationofourbusiness,andgovernanceiscarriedoutbasedonthesepolicies.

Governance System

Directors, Board of Directors, and Corporate Vice Presidents

TheBoardofDirectorsmakesdecisionsonimportantmanagement-relatedmattersandoverseesthebusinessaffairsofdirectorsandthecorporatevicepresidents.ThedirectorsandcorporatevicepresidentsundertakebusinessaffairsaccordingtothebasicpoliciesdeterminedbytheBoardofDirectors.Inordertostrengthenthehealthandtransparencyofmanagement,directorsandthecorporatevicepresidentsserveaone-yearterm,withexternaldirectorsbeingappointedsince2007.

Management and Remuneration Advisory Committee

TheManagementandRemunerationAdvisoryCommitteewasformedasanadvisorygrouptothepresident,consistingofoutsideexpertsofferingadviceonimportantmanagementissuesanddirectorcompensationfromadifferentperspective.

Corporate Auditors and Board of Corporate Auditors

CorporateauditorsattendBoardofDirectorsmeetingstoauditthebusinessaffairsofdirectors.Inaddition,theirtasksincludeattendingotherimportantmeetings;listeningtotheactivitystatusofdirectors,corporatevicepresidentsandemployees;viewingapprovalpapersandotherformal

documents;inspectingthemainoffice,technologyandbusinessdivisions,plantsandsubsidiariesinJapanandoverseas;andexchangingopinionsandsharingsuchreportsandhearingswithaccountingauditors.

Audits and Internal Controls

Inordertomeetoursocialresponsibilitiesasabusiness,theNittoDenkoGrouphasindependentdivisionsunderacheck-and-balancesystemperforminginternalaudits,whichareusefulforachievingeffectiveinternalcontrolsandmanagementobjectives.

Audits

Internalauditsareconductedtoensuremanagementactivitiesarebeingperformedaccurately,legitimatelyandreasonably,byallofthecompanieswithintheNittoDenkoGroup,soastocontributetoimprovementsinbusinessoperationsandperformance.Externalauditsarealsoconductedperiodically.

Internal Controls

Basicpoliciesoninternalcontrolshavebeencreatedtoensuresuitablebusinesspractices.Internalcontrolsforfinancialreportinghavealsobeendevelopedinanefforttoensuretheappropriatemaintenanceandoperationofthecontrolenvironment,riskevaluationandresponse,controlactivities,informationandtransmission,monitoring,andhandlingofIT.

General Meeting of Shareholders

Board of Directors

Representative Directors

Corporate Vice Presidents

Business divisions, HQ divisions,Group companies

CSR Committee

Internal ControlCommittee

CorporateGovernanceDepartment

CorporateStrategy

Committee

elections / dismissalselections / dismissals

elections / dismissals

elections / dismissals / supervision

Eight Directors (Two External Directors)Board of Corporate

AuditorsFive Corporate Auditors

(Three ExternalCorporate Auditors)

Monitoring

Cooperation

Cooperation

Cooperation

AccountingAuditorMonitoring

President

Management andRemuneration

AdvisoryCommittee

Corporate Governance System <July2013>

1. Action Plan

Proactively take on new challenges and achieve continuous innovation to revive our growth potential

2. Performance Plan 3. Sales budgets by area

Healthy business growthGet back on the growth track

•Continuousgrowthofexistingbusinesses

•Pursuitofnewbusinesses

Further globalizationStrengthen emerging market development efforts•Enterthemarketonourown•EnterthroughM&Aandexternal

collaboration

Qualitative improvementSimultaneously pursue business growth (integrate both efforts)

•Reformcorporateculture•Developmanagementinfrastructure

Human resources growthDevelop “Nitto Persons”

•Companymanagementby"NittoPersons",regardlessofgenderornationality, who have Nitto DNA

0

200

400

600

800

1,000(%)

*Assuming an exchange rate of USD/JPY = 95 in fiscal 2013 and 2015

0

3

6

9

12

15

2012 2013 2015

675.6

68.6

765

96

920

120

10.1%

12.5% 13.0%

(FY)

(Billions of yen) ■ Sales ■ OP OP / Sales Ratio

0

200

400

600

800

1,000

2012 2013 2015

Total: 675.6

31.1%

52.5%

5.8%5.6%5.0%

Total: 765

Total: 920

27%

54%

7%7%5%

25%

55%

7%

7%

6%

■ Europe

■ The Americas

■ South Asia　■ East Asia

■ Japan

(Billions of yen)

Business Model



Governance

In order to fulfill our social responsibility, the Nitto Denko Group implements a number of activities.

Raw materials



R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources


Products


property

Businessactivity

Sales

OperatingIncome

Dividends

SocialcontributionsCompliance

and Human Rights

Whenanyviolationofthelaworethics,anydisservicetothepublic,oranycorruptionisuncovered,thefirststepundertakenisfortheemployeetoinformandconsulttheirmanageroranydivisionsinvolved.Incaseswherethesituationisnotresolvableorurgent,itisthenlikelyfortheemployeetocontacttheCSRDepartmentdirectly.

Infiscal2012,thereweretenorsoemployeeswhoutilizedthesystem.Wesettleissueswhileensuringtheprotectionofwhistleblowers.

Human Rights Activities

TheNittoDenkoGrouphasintroduceda“BasicPolicyonHumanRights,”asdescribedbelowandimploreseveryemployeeintheGrouptoconductbusinessactivitieswhilerespectingthehumanrightsofeachother.

EachdomesticbasecallsforslogansandconductstrainingsessionsalongwithanannualHumanRightsWeekinNovember.

Inaddition,weparticipateinanactivityasamemberofTheCorporateFederationforDowaandHumanRightsIssue,Osaka,wherecorporationsworktowardsolutionsofhumanrightsissuesfromacorporatestandpoint.

Infiscal2012,weintroducedapolicyacrossthewholegrouponthehandlingofconflictminerals*,whichhavebecomecontroversialinrecentyears.

* IntheDemocraticRepublicofCongoandneighboringcountries,domesticconflictsaccompaniedbyserioushumanrightsviolationshaveoccurred.Itissaidthatarmedgroupsobtainingmoneyfrommininghaveahandintheconflicts.

Risk Management

Weinvestigatefromaglobalstandpointanyriskareasthatmaypresentasseriousconcernstomanagementandbusinessactivities.Anypotentialriskareasareprioritizedandcountermeasuresaimedatprevention,avoidance,measurementandtransformationaretaken.(RefertoAssociatedBusinessRisksListedintheFinancialReportonpp.14-15)

Furthermore,weimplementthefollowingapproaches:

Emergency Reporting System and Supporting System

Ifalarge-scaledisasterorseriousaccidentoccurs,asystemdevelopedbytheNittoDenkoGroupimmediatelycontactstopmanagement.Ifnecessary,topmanagementwillauthorizeaDisasterResponseHeadquarterstobeestablished,andallafflictedgroupcompaniesandbaseswillreceivethesupportoftheentireNittoDenkoGroup.

Business Continuity Plan

OnthebasisofourexperienceoftheGreatEastJapanEarthquake,theNittoDenkoGroupissuedarevisededition

NittoDenkowasselectedasacomponentoftheDowJonesSustainabilityAsiaPacificIndex,anindexoftheworld’sleadingSociallyResponsibleInvestments,forthefirsttime.

TheDowJonesSustainabilityIndexassessesenterprisesaround

theworldintermsoftheeconomy,environmentandsociety,andisoneofthemostimportantmeasurescitedbyinvestorsconcernedwithcorporatesocialresponsibility(CSR).

Asamemberofsociety,weattheNittoDenkoGroupwill,whileapplyingourselvestothedevelopmentofourbusiness,fulfilloursocialresponsibilitieswithintegrityandgivedueconsiderationtohumanrights,theenvironment,andcommunities.

•Wewillensurethateveryemployeerespectshumanrightsintheirworkaswefosteraculturethatencouragesopencommunicationinaccordancewiththeguidingprinciplesof“Open,FairandBest.”

•Wewillnotdiscriminateagainstanyemployeebasedonrace,color,gender,language,religion,belief,nationality,origin,age,orphysicalormentaldisabilities.

•Wewilltakeeveryopportunitytoeducateemployeesonhumanrightssothatwemayremainatrustworthymemberofsociety.

Inclusion in Dow Jones Sustainability Asia Pacific Index

Nitto Denko Group Basic Policy on Human Rights

Issuance and Distribution of “Business Conduct Guidelines”

“BusinessConductGuidelines”aretheprinciplesthatweshouldabideby.Thatis,concreteactionsadheringtoour“CorporateVision”and“GuidingPrinciples”aredescribedinthem.

TheGuidelineshavebeentranslatedinto16differentlanguagesforemployeesaroundtheworldtoread,andhavebeendistributedtoallemployeesoftheNittoDenkoGroup.

Activities for Internalizing CSR

Forsoundmanagement,itisindispensibleforeveryemployeeoftheNittoDenkoGrouptounderstandthe“BusinessConductGuidelines”.WeexplainthemtoemployeeswhentheyjoinourGroup.

CSR Workshops for management-level employees

Weconductannual“CSRWorkshops”formanagement-levelemployeesandsupervisors.IntheWorkshopsweconsider“governance,”“compliance,”“crisis&risks”and“communication”together,enhancingawarenessofCSR.

Infiscal2012,theWorkshopswereheldat87basesthroughouttheworld.

Reporting and Counseling System on Corporate Ethics

Wehaveanin-housereportingandcounselingsystemusinge-mail,whichisavailabletoeveryemployee.

ofthe“BusinessContinuityManual(EarthquakeEdition)”inSeptember2011onfourbasicpolicies:Respectforhumanlife;Preventionofsecondarydisasters;Responsibilityforsupplyingproducts;andSupportingthelocalcommunity.

InFebruary2013,basedonthis,weconductedanearthquakedrillincooperationwithtwobasesforthefirsttime.Thedrillwasakindofevaluationofhowpartieswithnopriordetailednoticeofthedrillactedinareal-lifesimulationofanearthquakeandresultingaccidents.Throughthisdrill,someissuesemergedandtheteamworkoftheDisasterResponseHeadquarterswasenhanced.

Inthefuture,wewillimprovetheBusinessContinuityPlanbycontinuingtoconductdisastertrainingdrillsandidentifyingandremedyinganyproblems.

Emergency & IncidentReporting GuidebookEmergency reports should be made to Nitto Denko Corporation HQ and the organizations concerned separately and incident reports should be made to Specialty Sectors.

This guidebook is kept by selected management members. If you leave your position or your company, your responsibility has to be transferred to another responsible employee and the guidebook should be passed to your successor.

Nitto Denko Group Business Conduct Guidelines

Earthquakedrill

Guidebookwithcontactinformationinanemergency

AworkshopwasheldforthefirsttimeatNittoDenkoAmericaLatinainBrazil,whereanewfactoryisunderconstructionandtheworkenvironmentishectic.

AWorkshopwasheldatTaiwanNittoOptical,whereaCSRcommitteeisregularlyconvenedandproactiveactionstaken.

“BusinessConductGuidelines”



Associated Business Risks Listed in the Financial Report as of March 2013

Potentialriskswhichcanhaveanadverseeffectonouroperationalresults,sharepriceandfinancialstandingareindicatedbelow.

(1) Optoelectronics Business

MaterialsproducedbyouroptoelectronicsbusinessandusedinLCD-relatedandtouchpanelproductsconstitutethecoreoftheGroup’ssales.Manycompaniesparticipateinthismarketandcompetitioncontinuestobestiff.OurrelationshipswithLCDpanelmanufacturersandtouchpanelmanufacturers(ourcustomers),animbalancebetweensupplyanddemandintheindustry,decliningprices,corporatereorganizationandtheswitchingofstrategyamongpanelmakers,technicalinnovation,intensifiedpricecompetitionduetonewplayersenteringthemarket,capacitylimitationsofmaterialssuppliersandsharpincreasesinmaterialcostscouldallnegativelyaffecttheperformanceoftheGroup.

(2) Overseas Operations

TheGroupconductsbusinessinmanycountriesthroughouttheworld,activelypursuingpossiblefutureglobalbusinessopportunities.Dependingonthecountry,thereareinherentunavoidablerisksthatcanoccur.Suchrisksinclude:unanticipatedchangesto,ordiscrepanciesintheinterpretationoflawsandordinances;taxesandregulations;differingbusinesscustoms;deterioratingemploymentrelationships;increasinglaborcosts;transportationdelays;poweroutages;socialdisorderfrompoliticaldisturbances;andwarandterrorism.Ifsuchaneventweretomaterialize,theperformanceoftheGroupcouldbeadverselyaffected.

(3) Global Politics and Economic Currents

TheGroupmanufacturesandmarketsitsproductsthroughouttheworld.Therefore,itsbusinessisaffectedbytrendsinglobalpoliticsandeconomics,andfinancialsysteminstability.Unexpectedeconomiccircumstancescausedbydrasticchangesinglobalpolitics,fluctuationsinexchangeratesorasupplydeficiencyofrawmaterialssuchaspetroleumoilorraremetalscouldhaveadverseeffectsontheperformanceoftheGroup.

(4) Mergers and Acquisitions

ItisindispensablefortheGrouptoconstructrelationshipswithothercompanieswithsuperiortechnologyindiversewayssuchasthroughacquisitionsandaffiliations.Ifsuch

anacquisitiondidnotprovetobeasprofitableasexpected,theperformanceoftheGroupcouldbeadverselyaffected.

(5) Raw Materials Vendors

Forsomekeyrawmaterials,theGroupdependsonspecificvendors.Althoughitdoesendeavortofindmultiplerawmaterialsvendorssoastoreducetheriskofbeingunabletoprocurekeymaterials,forsomerawmaterialsweneedtodependonspecificvendors.Failuretoobtainthenecessarykeyrawmaterialsduetoapossibledisaster,accidentorbankruptcyofavendor,animbalancebetweensupplyanddemand,oracostincreasecouldadverselyaffecttheperformanceoftheGroup.

(6) Financial Standing of Our Customers

TheGroupdealswithcustomersworldwidewhomeetitsstrictfinancialcriteria.However,somecustomersareinrapidlychangingbusinessenvironmentsandseriousfinancialproblemscouldoccurwithsuchcustomerswithwhomtheGrouphasaccountsreceivable.Inparticular,LCD-relatedandtouchpanelproductsrepresentasignificantlylargesourceofrevenuecomparedwithotherproductsoftheGroup.Ifadefaultweretooccur,theamountinvolvedwouldtendtobequitesignificant.

(7) New Product Development

Aimingatmeetinghighmarketexpectations,theGroupstrivestowardtechnologicalinnovationandcompetitivepowerofcostingacrossallareasofourbusiness.TheGroupcontinuestopursuethedevelopmentofnewtechnologies,products,goalsandmarkets,withresearchanddevelopmentinvestmentnecessaryforproductionprocessinnovation,aswellasplantandequipmentinvestmentbasedonour“AreaNicheTop”strategy,inwhichwesupplyproductsmeetingspecificneedsinthearea,inadditiontoour“GlobalNicheTop”strategy.However,itisnoteasytoaccuratelyforecastchangesinanindustryinwhichmarketchangesaresodrastic.ItispossiblethatanothercompanycouldunexpectedlydevelopanewtechnologyoranewproductthatrendersaproductoftheGroupobsolete.Theoccurrenceofsuchaneventbeyondcontingencyexpectationscouldaffectthemanagementofthecompany.

(8) Intellectual Property

TheGroupowns,maintainsandmanagesvaluable

intellectualpropertyrights.However,thereexiststhepossibilitythatathirdpartycouldclaimtheserightstobeinvalidandtheGroupmightnotenjoycompleteprotection.TheGroup’spropertycouldbeimitatedinsomearea,withtheGroupbecominginvolvedinlitigation.Therefore,intellectualpropertyrightsinfringementscouldnegativelyaffecttheperformanceoftheGroup.

(9) Product Defects

TheGroupmanufacturesproductsaccordingtoISO9000qualitystandardsandcarriesoutqualityassurancemanagement,trustedbyitscustomers.ThebusinessactivitiesoftheGroupmainlyinvolvethesellingofpartstocompaniesengagedinmanufacturing.AlthoughtheprobabilityoftheGroupbeingforcedtodirectlycompensateendusersforitsproductsortoconductaproductrecallislow,theGroupcannotcompletelyeliminatetheriskofliabilityassociatedwithproductdefects.Ifcompensationweretoexceedthecoverageofproductliabilityinsurance,thiscouldnegativelyaffecttheperformanceoftheGroup.

(10) Environmental Issues

TheGroupregardsenvironmentalpreservationmeasuresasoneofitskeybusinesspoliciesandactsfromapositionwherebyitacceptsitssocialresponsibility,focusingonreducingwasteandpreventingglobalwarmingandairpollution.TheGrouphasnotcausedanyseriousenvironmentalproblemstodate.Toprotecttheglobalenvironment,theGroupestablishedavoluntaryreductionplan,whichitdulyobserves.However,thereexiststhepossibilitythatunforeseenenvironmentalpollutioncausedbyanaccidentornaturaldisaster,orchangesinfuturelawsandregulationsresultinginsignificantexpensesduetoenvironmentalissuescouldhaveadverseeffectsontheperformanceoftheGroup.

(11) Compliance and Legal Regulations

TheGroupcarriesoutbusinessnotonlyinJapan,butalsooverseas.ProductsoftheGroupareunique,someofwhicharepatentedmedicines.TheGroupendeavorstoabidebythevariouslawsandregulationsofdifferentcountriespertainingtosuchbusiness.However,iftheselawsandregulationsweretobestrengthenedorchangedsignificantly,atemporarydeficiencyininternalcontroloftheseissuescouldoccurandtheactivitiesoftheGroupmightbeimpaired,ortheGroupmightincuradditionalcostswhichcouldadverselyaffectitsperformance.

(12) Lawsuits

InthebusinessactivitiesoftheGroup,thereexiststhepossibilitythattheGroupcouldbecomeembroiledinlegalproceedingswithacustomerorthirdparty.Inaddition,theGroupconductsbusinessinvariouscountriesandcouldgointounexpectedlitigation.TheriskthattheoutcomeoflitigationdidnotproperlyreflecttheopinionoftheGroupandthusdifferedfromtheGroup’sforecastsmightbeineluctableandthiscouldadverselyaffecttheperformanceoftheGroup.

(13) Accidents and Disasters

TheGrouphasaBusinessContinuityPlantoprotectitselffromaccidentsanddisastersbyfollowingasafetyfirstpolicy.Inparticular,Japanhasahighoccurrenceofearthquakes.Ifalarge-scaleearthquakeweretooccurinaparticularareawithinJapan,directdamagecouldresultorinjuriescouldoccurwithintheproductionprocessduetofireorchemicals.Theeffectsofanearthquake,tsunamiorfloodwouldnotbelimitedtotheGroup,butwouldbewide-ranging,withdamagetoinfrastructuresuchaselectricityandgassupplies,damagetosupplychainssuchasinterruptiontotheprocurementofrawmaterialsandthedistributionofproducts,andlossesorinconveniencetoourcustomers,whichcouldcauseaninterruptiontobusiness.Despitetheexistenceofdisasterinsurance,coveragewouldbelimitedandcostsincurredcouldaffecttheperformanceoftheGroup.Moreover,ifthereweretobeamassiveoutbreakofnewinfectionsaffectinghumanlife,dependingonthenatureoftheoutbreak,itcouldimpactontheglobaleconomy.Inaddition,theGroup’sinformationsystemassumesaveryimportantrole.However,thereisnoallowanceforthepossibilityoftroubleoccurringwithourinformationsystemcausedbydisasterorcyberterrorism.ThismightinfluencethebusinessresultsoftheGroup.

(14) Retirement Benefit Liability

EmployeeaccruedbenefitcostsandliabilitiesoftheGrouparecalculatedonthebasisofvariousexperienceassumptionsusedinactualcalculationsandinvestmentyieldsofpensionassets.Inlinewiththedevaluationofpensionassetsatmarketprice,interest-ratetrendsandchangesintheretirementallowancesystemandpensionsystem,recognizedandcalculatedliabilitiesmaybeaffected.ThismightinfluencethebusinessresultsoftheGroup.



Employment and Cultivation of Human Resources

We promote the employment of highly-diverse human resources and the cultivation of “Nitto Persons” indispensable for the realization of the “Second Stage of Globalization”.

Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources


Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Solvent emissions

Industrial waste

Intellectualproperty

Employment

Promoting employment of highly-diverse human resources

Inordertodevelopourbusinessmoreglobally,wehavebeenactivelypromotingtheemploymentofhighly-diversehumanresourcesinrecentyears.Ofthe28companyfreshmenhiredbyNittoDenkoHeadOfficeinfiscal2013,sevenwerenon-Japanese.Theirnationalitiesarewide-rangingandtheyplayactiverolesinvariouslinesofwork,suchasresearchanddevelopment.

Asoneaspectofourpromotionofdiversity,wehavebeenmoreactivelyemployingfemalesrecently,withthemconstituting30%ofcompanyfreshmenin2013.

Asweprogressfurtherglobally,weexpectthemtobringnewdynamism.

Globalization

1. Global Conference Held for Sharing of Management Policy and Objectives with Top Leaders

Followingonfromlastfiscalyear,aGlobalConferencewasheldonMarch26and27,2013,attheToyohashiPlant.Itwasattendedby101participants,including29topleaders,from13countriesaroundtheworld.ThisisaneventatwhichleadersofeachcompanyoftheGroupfromaroundtheworldsharemanagementpolicyandpledgetoachievetheobjectives.

Firstofall,theChiefExecutiveOfficermadeanannouncementonthepoliciesforfiscal2013.Subsequently,theChiefFinancialOfficerprovidedanoverviewofthebudgetbeforeeachexecutiveofficerexplainedthepoliciesinthebudgetapplicabletoeachbusiness.

Underthe“One-BasicEnergy”concept,theNittoDenkoGroupiscommittedtopursuingbusinessendeavorsbyleveragingourgroup-wideresources.TheconferenceservesasanidealopportunitytoexploretheGroup’sfuturebusinessdevelopmentthroughthesharingofinformation.

2. Considering and promoting reform of human resource management globally

Inresponsetorapidglobalization,theNittoDenkoGroupisreformingitshumanresourcemanagement.Aspartofthatreformprocess,twoGlobalHumanResourcesSummitswereheldinNovember2012andApril2013.Humanresourcemanagementpersonnelfromacrosstheglobeattended.

ThesummitsservedasanidealopportunitytosharetheNittoDenkoGroup’shumanresourcepolicies.Attendeesparticipatedinvariousdiscussionsandgavepresentationsontopicssuchasreviewingtherolesandfunctionsofhumanresourcemanagementsectors;contributingtotheGroup’sbusinessfromahumanresourcemanagementperspective;anddevelopingwaystoshareinformationontalentacrosstheGroup’svariouslocations.Othertopicsincludedjobrotationandcareerdevelopment.

Humanresourcemanagementpersonnelarenowhardatworktorealizethedualgoalsof“developingtalentwhichcantrulybenefittheGroup”and“cultivating‘NittoPersons,’withadeepunderstandingofNitto’sDNA.”

3. Leadership development program for “high potentials” fully launched

TheGlobalBusinessAcademy(GBA)waslaunchedinJuly2011,aimingtodevelopfuturebusinessleadersglobally.Infiscal2012theentireprogramwasfine-tunedandisnowfullyoperational.

InSeptember2012,NittoDenkoMaterial(Thailand)receivedtheThaiLaborBenefitProviderAward2012fromThailand’sMinistryofLabor,anawardgiventocorporationswhichprovideexcellentbenefitsandwelfaretotheirlaborforce.

TheawardwasinpartrecognitionofthecompassionatewelfareshownbyNittoDenkoMaterial(Thailand)toitsstaffmembers,maintainingtheiremploymentstatus,continuingtopaytheirwagesandsupplyingfooddonationstothem.Thaiofficialsalsorecognizedtheunitedeffortsofthecompany,whichledtoaswiftrecoveryofitsoperations.

Incontinuationfromfiscal2011,fiscal2012saw47newemployeesparticipateinvolunteeractivitiesinconjunctionwiththeAssociationfortheRevitalizationofIshinomaki,inareasdevastatedbytheGreatEastJapanEarthquake.

Thevolunteerswereplacedintotwogroups.ThefirstgroupwenttoOnagawaTowninMiyagiPrefecturefromNovember8to11andleveledlandinordertoconvertwastelandsituatednexttotemporaryhousingintofarmland.ThesecondgroupwenttoOhashi,IshinomakiCityinMiyagiPrefectureandclearedsideditches.

Itwasforonlyashortperiodoftime,butwewantedtheparticipantstoexperiencemakingasocialcontributionwiththehopethattheywouldmatureintohumanresourcesabletoliveinharmonywithsociety.

Award from Thailand’s Ministry of Labor for our Response during the Thailand Floods

Volunteer Activities by New Employees in Areas Devastated by the Great East Japan Earthquake

GBAprovidesfourcourselevels

Eachcourseleveltargetsemployeesofgroupcompaniesaroundtheworld,where“NittoPersons”aretobedevelopedtoplayactiverolesin“thesecondstageofglobalization”ofNittoDenko.

Infiscalyear2012,59participantstookpartinuniquetrainingprograms.Theparticipantsincluded2fromtheUS,3fromEurope,2fromSouthAsiaand6fromEastAsia.

ThroughouteachGBAcourse,participantsnotonlyobtainmanagementcapabilitiesbutalsohaveheateddebatesonsolutionstoglobalbusinesschallenges.

Promoting Females Playing Active Roles

Promoting the Advancement of Females Playing Active Roles

Asoffiscal2012,thepercentageoffemalemanagement-levelemployeesaswellasfemaleemployeesofNittoDenko(non-consolidated)hadstillnotreachedasufficientlevelcomparedtoothermajormanufacturingcorporations.Itis“NittoPersons,”regardlessofnationalityorgenderwhowillsupportourfutureprogress.Infiscal2012,aimingtobeacorporationinwhichfemaleemployeesareabletoplayanactiverole,welaunchedaprojecttoreviewthesystemsupportingfemaleactivitiesandanapproachpromotingchangesinattitudesintheworkplace.

LevelingoflandCountlessstonescomeoutthickandfastinthedigging.Volunteersinteractwithresidentsoftemporaryhousing.

ClearingofsideditchesVolunteerscleanupsludgefromthetsunami.

Employeesfromvariouscountriesgatherfordiscussions

Awardceremony,HeadOffice,MinistryofLabour(Thailand),BangkokThenPresidentTakami,NittoDenkoMaterial(Thailand)(left)

CEOexplainspolicy

GBA-E(Executive)

GBA-A(Advanced)

GBA-F(Fundamental)

GBA-C(Challenge)

Development of and networking opportunities for the next generation of global business leaders in each region and business sector

Development of global business leaders

Leadership development globally integrated

The focus is on a practical approach with projects based on Nitto Denko’s corporate strategy

Leadership development for functional managers and employees with high potential

Aiming to hold training sessions in each region throughout the world in the future

Development of next generation business leaders among globally available candidates

Development of core talent in order to become a learning organization



Placing safety before everything else – for peace of mind for us, the local community and the global community–

Occupational Health and Safety

ProcurementWe aim for fair dealings, considering our suppliers as business partners.

Procurement Policy

TheNittoDenkoGrouppromotesfairandhonestprocurementunderapolicyencapsulatingourspiritofbeing“Open,FairandBest”and“Partnership”.Furthermore,inaccordancewith“NittoDenkoGroupBusinessConductGuidelines”,notonlyiseachemployeeintheGroupengagedinprocurementactivitiessubjecttolawsandregulations,butwealsoendeavortobeundeviatingfromcorporateethicsandsocietalnorms.

Inaddition,intheeventthatanemployeeoftheNittoDenkoGroupviolatesorappearstoviolatealaworregulation,agreementwithasupplier,the“NittoDenkoGroupBusinessConductGuidelines,”orthe“CSR-BasedProcurementPolicy”intheirprocurementactivities,a“PartnerHotline”existsasapointofcontactforinformingusofproblemsandcorrectingthem.

Toward BCM Enhancement

Recently,naturalcalamitiessuchastheGreatEastJapanEarthquakeandtheThailandfloodsandcomplexaccidentswiththepotentialtointerruptsupplychainshavesometimesoccurred.WepromotetheenhancingofprocurementBCM,dealingwiththepossibilityofnaturaldisasters,fireandequipmenttrouble.Aboveall,formulationofBCPandadvancingexecutionofitcanexistonlywiththecooperationofourbusinesspartners.WelookforwardtotheircontinuedcooperationindrawingupBCP.

Promoting Global Green Procurement

Yearbyyear,regulationsgoverningchemicalsubstancesarebeingenhancedineachcountry.Inordertoensurecompliancewithregulationsandtheminimizationofenvironmentalloadandtomanufactureenvironmentally-friendlyproducts,weestablished“NittoDenkoGroupGreenProcurementStandards,”promotinggreenprocurement.

Weintroducedthe“NittoDenkoGroupChemicalInformationSystem(CHI),”incooperationwiththeCorporateChemicalSubstancesDepartment,infiscal2009.ThroughusingCHI,weconductresearchtimelyandpromptlyonchemicalsubstancescontainedintherawmaterialswhichwebuy.Infiscal2012,thissystemcametobeusedatbasesinChina.Wewillcontinuetopromotetheinvestigationandmanagementofchemicalsubstancesglobally.

Occupational Health and Safety Policy

Underourcorporatevisionof“CreationofNewValue”,weoperatebusinessinconformitywithourguidingprincipleof“Placesafetybeforeeverythingelse”.Wecontinuetotakeprecautionsagainstaccidents,aimingtocreateandmaintainaworkingenvironmentinwhicheveryemployeecanworkwithpeaceofmind.

Our Approach of Proactive Safety Activities in Fiscal 2013

Infiscal2013,wewillimplementproactivesafetyactivities.

Thesepreemptivesafetyactivitiesaretopreventhazardsourceswhichcancauseaccidents.Thiswillenableustobuildaworkingenvironmentfreefromaccidents,whereeveryemployeeisabletoworkwithpeaceofmind.Wehavealreadybeguntoreduceriskbytakingpreventivemeasuresorprecautionsagainstaccidents.Inaddition,byadoptingproactivesafetyactivities,weaimtocreateasafeandcomfortableworkingenvironment.

Aimingtoenrichoursuppliers’understandingofandcooperationwithouractivities,weholdpartnermeetingsregularly.Infiscal2012,meetingswereheldattheToyohashiPlantinJulyandattheKameyamaPlantinNovember.InMarch2013,apresentationmeetingonchemicalsubstanceinvestigationwasheldatNittoDenko(ShanghaiSongjiang)inChina,andwasattendedby33participantsfrom15companies.

Infiscal2013,withoursuppliers’cooperation,wewillperiodicallyconductnecessaryresearchonpurchasedrawmaterialsforreasonssuchastoascertainwhetherornottheycontainsubstancesonthecandidatelistofSVHC.

Approach to Conflict Minerals

Recently,itisaninternationalconcernthatmineralsproducedintheDemocraticRepublicofCongoandneighboringcountriesarebecomingasourceofmoneyforarmedgroups.Therehasbeenagrowingtendencytorequestdisclosureofinformationrelatedtotheprocurementoftheseminerals.

TheNittoDenkoGrouphasastatedpolicyofnotusingconflictminerals.Inordertoexecutethepolicy,andtoprovideinformationforourcustomers,wepromoteinvestigationofoursupplychainsincooperationwithoursuppliers.Infiscal2013,wewillcontinuetomakesuchinvestigations.

Activities in Fiscal 2012

Inordertopromotesafetyactivities,itisessentialtoshareinformationthroughoutthewholegroup.Weregularlyholdan“EnvironmentalandSafetySectorGlobalMeeting”asaninformation-sharingforum.Infiscal2012,wehadapproximately200participantsfrom50basesattheconferenceandhelddiscussionsonthesafetyactivitiesoftheNittoDenkoGroup.

Attheconferenceweintroducedanewprograminordertoshareandexchangeinformationmoreactivelyaboutsafetyactivitiesateachbase.First,wehelddebriefingsessionsonsafetyactivitiesinposter-sessionstyleandsharedsomeexamplesofimprovementsmadeateachbase.Wealsoheldround-tablediscussionstoenableparticipantstoexchangeopinions.

MeetingheldatNittoDenko(ShanghaiSongjiang)

Approachesfrom 2013

Present

Establishment of Safety Peace of Mind

■ Safety measures to prevent the recurrence of industrial accidents • Improvement of dangerous places similar to where accidents have occurred

■ Preventive safety activity (Risk assessment)• Determining and reducing overt and potential risk

■ Proactive safety activity• Establishment of design standards • Development of new techniques • Cultivation of culture (Globalization)

■ Establishment of Nitto safety culture

0

5

10

15

20

25

30

35

40

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

3737 2424 2828 1717 88 1616 1818 15152005 20072006 2008 2009 2010 2011 2012

0.69

0.69

0.48

0.350.280.38 0.41

0.290.13

0.240.28 0.25

Critical industrial accidents: Industrial accidents resulting in long-term injury (disability)Serious industrial accidents: Industrial accidents with the potential for long-term injury

(disability)N accident frequency rate: Number of critical or serious industrial accidents per total

1 million labour hours

N accident frequency rate

Num

ber o

f crit

ical

/ser

ious

acc

iden

ts N accident frequency rate

Number of critical/serious accidents

Goal of N accident frequency rate

(FY)

Postersessions

Round-tablediscussions

TheNittoDenkoGroupcontinuestoimplementsafetyactivitiesinordertoachieveourGroup’sgoalof“ZeroCriticalandSeriousAccidents”.Theoccurrenceofsuchaccidentshasbeenonadecliningtrendinthemediumandlongterms.However,overthepastfewyears,thenumberofaccidentsoccurringhasremainedsomewhatconstant.OnDecember12,2012,anaccidentoccurredatoneofourgroupcompaniesinTaiwan.Anemployeediedafterbecomingentangledinmachinery.Topreventsuchanaccidentfromoccurringagain,aspecialteamisinvestigatingwhetherthesamehazardsourceexistsinotherGroupcompanies.Byenhancingexistingmeasuresanddevelopingproactivesafetyactivities,weaimtocreateasaferandmorecomfortableworkingenvironmentacrossthewholegroup.

Occurrence of Accidents

Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources

Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions


Solvent emissions

Industrial waste


Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources

Corporate governance

Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Management

Solvent emissions

Industrial waste




Delivering safe and outstanding quality products

Chemical Substance Management, Quality Management and QES Audits

Chemical Substance ManagementManaging in-house information on chemical substances properly

Our Position on Chemical Substance Management

Asamanufacturerdealingwithchemicalsubstances,wehavearesponsibilitytounderstandsufficientlythedangersofchemicalsubstances,topreventenvironmentalpollution,disastersandaccidentsandtoensurethechemicalsubstancesweemploydonotadverselyaffecthumanhealth,ecosystemsortheenvironment.ThisledustoestablishtheCorporateChemicalSubstancesDepartmenttomanagechemicalsubstances.

Our Risk Management of Chemical Substances

Weconductactivitiesfromthreestandpointsasstatedbelowinordertodeliversafeproductstoourcustomersandtoallowlocalresidentsandemployeestolivewithpeaceofmind.

Activities for preventing disasters and accidents caused by chemical substances

Weconductriskmanagementtopreventpotentialfiresorindustrialaccidentsfromoccurringresultingfromtheuseofchemicalsubstances.Ifitisdeterminedthatseriousrisksexist,wereviewfacilitiesandworkpracticestoreducetherisks.

Activities for preventing adverse affects on human health

WeestablishchemicalmanagementlevelsbyassessingtheoverallrisksofchemicalsubstancesusedwithintheGroupfromthestandpointoftheirharmfuleffectsonhumanhealth.Asaresultoftheassessment,highriskchemicalsubstancesarebannedfromuseorrestrictedintheamountused.

Activities for preventing adverse affects on ecosystems and the environment

Weexecuteproperprocessingin-houseinorderforchemicalsubstancesusedinourmanufacturingsettingsnottohaveharmfuleffectsontheenvironment.Wealsoregularlyholdpresentationstoobtainlocalcommunityunderstandingofourhandlingprocesses.

Theseactivitiesareconductedinconformitywith“Nitto

DenkoGroupRegulationsonVoluntaryManagementofChemicals.”Furthermore,sinceDecember2008wehavebeenmakinguseofthe“NittoDenkoGroupChemicalSubstancesManagementSystem(NCM),”avoluntarymeasure,asatooltomanagesmoothlyinformationonindividualchemicalsandinformationontheregulationofsubstances.

Quality ManagementIn order to constantly enhance customer satisfaction with our outstanding quality and services

Quality Standards to Ensure Customer Satisfaction

UnderourCorporateVisionof“Swiftlycreateproductsandservicesofferingnewfunctionsthatgivesatisfactiontocustomers”and“Alwaysbemindfulofcorporatesocialresponsibility,includingsustainabilityandcommunityrelations”,andaimingtoconstantlyenhancecustomersatisfactionwithouroutstandingqualityandservice,wesetup“QualityStandardstoEnsureCustomerSatisfaction”asourpolicyonqualityandputitintopractice.

Quality Risk Management

Fortheestablishmentof“QualityStandardstoEnsureCustomerSatisfaction”,weintroduced“AdvancedQualityManagement(AQM)”infiscal2005,inordertosolveproblemsbeforetheoccurrenceofqualityissuesoranyclaims.Whilewehadpreviouslyconductedactivitiestoenhanceourqualityassurancesystemwitha“QualityManagementSystem,”weareabletoenactmoreeffectiveimprovementswithAQM.

Cultivation of Human Resources and Information Sharing

Howevercautiousanemployeemightbe,humanerrorsoccur.Inordertomaintainsuperiorquality,itisaprioritytoimproveourworkplacetothepointwherewedonotmakehumanerrors,orinthecaseoferrors,sucherrorsdonotmanifestasseriousissues.Tothatend,educationisnecessary.Weinitiallycultivated40instructorsfrom17basesintheEastAsiaarea,wherethenumberofemployeesislargest.

Weconductthisactivityin“QualitySectorAreaExchangeMeetings,”whichareheldinEastAsia,SouthAsia,theAmericasandEuropeeveryyear,aimingforthesharing

andsolvingofissuesrelatedtoqualitymanagementandthefacilitatingofinteractions.Infiscal2012,48employeesfrom42basesparticipatedinthemeeting.

QES* AuditFor better quality, environmental and safety activities across the whole group

Visualization of Risks and Improvement of Activities

Bymeansofourstandard,weascertainwhereandwhatkindofrisksthereexistinqualityassurance,environmental

conservationandsafetyactivities.Througheachbaseorworkplacerecognizingtheresults,weaimtomanufacturebetterproducts.Inaddition,werelatecasesofimprovementobservedintheauditstootherbases.

Wecarryoutfollow-upauditstoauditsdone6monthsearliertoassessprogress.Infiscal2012,wevisited15basesforinitialauditsand12basesforfollow-upaudits.

Future Policy

Infiscal2013,byauditingpromptlycompaniesnewtotheNittoDenkoGroup,orplantsnewlyconstructed,wewillgetagraspofeachinitiallevelofsafetyandfocusonactivitiesleadingtoearlyimprovement.

Furthermore,wewillcultivatehumanresourcesbyutilizingaudits,havingemployeeswhoareinchargeofqualityassurance,environmentalconservationandsafetyactivitiesparticipateinauditsofotherbases.Byhavingemployeessharecasesofgoodpracticeobservedduringauditswiththeirownworkplaces,weaimforahighlevelofhumanresourcesandactivitiesateachbase.

Throughsuchactivities,weaimtoraisethelevelnotonlyofaudits,butalsoofmanufacturing.

*QES＝quality,environmentandsafety

Inlinewiththerecentworldwideescalationininterestinenvironmentalconcerns,thenumberofcustomerinquiriesaboutthesafetyofourproductsisincreasing.Mostofthemareastowhetherourproductscontainchemicalsubstancesbannedbythecustomersorsubstancescontrolledbyeachcountry.

TheNittoDenkoGrouphasadepartmenttodealwith

suchinquiriesandprovidesaccurateinformationpromptlytoourcustomers.

Infiscal2012,weintroducedanewITtoolinordertocreate“SafetyDataSheet(SDS),”reflectinginformationonlawsandregulationsinourcustomers’countries.Inthefuture,wewillcontinueeffortstosatisfyourcustomers.

Information Supplement on Chemical Substances Contained in Our Products

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources

Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions


Raw materials

Management

Solvent emissions

Industrial waste


QualitySectorAreaExchangeMeetingintheAmericas

QualitySectorAreaExchangeMeetinginEurope




Protecting our valuable Earth and passing it onto future generations

Inorderforacorporationandasocietytocontinuesustainabledevelopment,theNittoDenkoGroupbelievesthatasamemberofsociety,wehavearesponsibilitytoconductmanagementinharmonywiththeglobalenvironment.TheNittoDenkoGrouphasbeenimplementingenvironmentalconservationactivitiesaccordingtoanindependentgoalsincethe1960’s.Weestablishedour“CorporateEnvironmentalPolicy”in1996andour“EnvironmentalManagementIndex”in2004,

showingandevaluatingourconceptofenvironmentalmanagement.Sincethen,wehavebeenpromotingenvironmentalmanagementglobally.

InordertoprotectthevaluableEarthwherewelive,andpassitontofuturegenerations,theNittoDenkoGroupcontinuestoimplementenvironmentally-friendlybusinessactivitiesunderourCorporateVisionof“CreationofNewValue”.

0

200

400

600

800

1,000

1,200

0

20

40

60

80

100

120(1000ton-EI) (Index)

2005

100

2008 2009 2010 2011 2012<Base year>

363

162

201

151

101

434

202

179

101

423

178

221

111

448

209

159

111

431

195

201

109

426

202

217

(FY)

■ Energy ■ Solvent ■ Industrial Waste ■ Other GHG Index

FY 2005 2008 2009 2010 2011 2012AddedValue(millionyen) 318,098 328,264 298,890 332,153 300,365 332,860EnvironmentalImpact(ton-El) 876,846 815,973 814,210 826,178 822,979 845,349

Productivity 0.363 0.402 0.367 0.402 0.365 0.394RelativeIndex 100 111 101 111 101 109

Raw materials purchased(Excluding solvents) Raw materials

181,857 ton

230,474 ton

Water4,492,199 ton

Effluent water4,333,073 ton

Air emissions441,315 ton

Waste disposal51,221 ton

Products142,360ton

Energy5,829,463 GJ

Purchased solvents 42,978 tonMaterials from material recycling 5,639 ton

Materials from material recycling 18,012 ton

Plastics* 5,639 tonSolvents 12,374 ton

Waste incinerated (Recycled energy) 47,364 ton （1,922,382 GJ）Waste incinerated* 6,045 tonSolvents incinerated 41,259 ton

Purchased electricity

(of which 3,905,400 GJ purchased)

1,277,219 GJ

Other energy 2,628,181 GJRecycled energy 1,922,382 GJIn-house power generation 1,681 GJ

Externallyrecycled waste 50,937 ton

11,684 ton

Landfill 284 ton

CO2 440,342 ton

Organic solvents 973 ton

Public water area 2,739,864 ton

Sewerage system 244,344 ton

Tap water & Industrial water 2,155,494 ton

Groundwater 2,195,677 tonRecycled water 141,028 ton

Energyrecycling

Water recycling

Materialrecycling

Manufacturingprocess

In-houserecycled waste*

* In-house recycling of industrial waste: Industrial waste is recycled into plastic or incinerated to produce energy.

Promotion of Environmental Management

Our Concept of Environmental Management

InconformitywithourcorporatevisionandourCorporateEnvironmentalPolicy,weimplementenvironmentalmanagementthroughtwoapproaches:a“reductionofenvironmentalloadassociatedwithourbusinessactivity”;andthe“developmentofbusinessconducivetoenvironmentalconservation”.

Doubling our Environmental Efficiency – Environmental Management Index

Byestablishingan“EnvironmentalManagementIndex”(EnvironmentalImpactValue-addedProductivity),weaimtodoubleourenvironmentalefficiencybetweenfiscal2005and2015.TheEnvironmentalImpactValue-addedProductivityisanindexwhichindicatestheenvironmental

Organization for Environmental Management

InordertopromotebusinessactivitiesunderourcorporatevisionandCorporateEnvironmentalPolicy,wehaveestablishedanexpertteam,whoseheadisarepresentativedirector,promotingenvironmentalconservationactivitiesglobally.

1.Wewilldevelopaninternalenvironmentalmanagementsystemthatpromoteseffectiveenvironmentalpreservation.

2.Withaproperunderstandingoftheenvironmentalimpactofouroperations,wewilldevelopinternalenvironmentalobjectivesandtargetsasfarasistechnicallyandeconomicallypracticable;moreover,wewillpursuetheseobjectivesandtargetsinanorganizedmannertoensurethecontinualimprovementofourenvironmentalpreservationefforts.

3.Ourtechnicalandproductdevelopmentwillfocusonthereductionofenvironmentalload.

4.Wewillcontinueoureffortstoconserveresourcesandenergy,reduceindustrialwaste,andpromoterecyclinginallaspectsofouroperations.

5.Aspartofourdedicationtoreducingtheloadontheenvironment,wewilldevelopalternativetechnologiesintendedtoreduceconsumptionofthesourcesofenvironmentalpollutionaswellastocontrolemissionsofenvironmentalpollutantstothegreatestextentfeasible.

6.Wewillcomplyfullywithenvironmentallaws,regulationsandagreements,andwillimposeourownenvironmentalcriteriaasrequiredintheinterestsofenvironmentalpreservation.

7.WewillmakesurethatouremployeesreceiveenvironmentaltrainingandinformationsothatallunderstandthesignificanceofourCorporateEnvironmentalPolicy,haveincreasedawarenessoftheimportanceofenvironmentalpreservation,andactonourCorporateEnvironmentalPolicy.

8.Wewillconductperiodicenvironmentalauditsinordertomonitortheeffectivenessofourenvironmentalmanagementstrategyandidentifyareasrequiringimprovement.

9.Aspartofoursocialcontribution,wewillpublicizeproprietarytechnologiesandinformationthatarelikelytobenefittheenvironment.

loadfromcorporateactivityvis-a-vistheaddedvaluecreatedfromthatactivity.Itisobtainedbydividingtheaddedvalue*1createdfromcorporateactivitybyEnvironmentalImpact*2entailedinthecreationoftheaddedvalue.

Environmental Impact Value-added Productivity in fiscal 2012

0.394 million yen/ton-El Index*3: 109

Infiscal2012,theEnvironmentalImpactValue-addedProductivityIndexroseslightlyonthepreviousfiscalyear.ThatwasbecauseEnvironmentalImpactremainedmostlyunchangedwhileAddedValuerose.However,inordertoachieveourgoalsforfiscal2015,morereductionsofEnvironmentalImpactandanincreaseoftheAddedValuewillbenecessary.Togetherwewillmakeconcertedeffortsgloballytotacklesuchproblems.

*1 Addedvalue=sales–(materialcosts+outsideorderexpenses+energycosts)

*2 AuniqueunitutilizedbytheNittoDenkoGroup,indicatingEnvironmentalImpact(quantityofCO2equivalentemissions),intowhichweconvertenergypurchased,industrialwastegenerated,solventpurchasedandthelikethroughtheuseofacoefficient.(unit:ton-El).

*3 IndexshowsvariationinEnvironmentalImpactValue-addedProductivitybysettingtheindexat100asoffiscal2005

Environmental Impact of Our Business Activities – Material Flow of Business Activities (non-consolidated)

Our Policy on the Environment – The Nitto Denko Group’s Corporate Environmental Policy

Environmental Impact Value-added Productivity (Environmental impact and Relative index) (consolidated)

Environmental Impact Value-added Productivity (consolidated)

CEO

Environmental expert teamEnvironment and Safety Committee

Global environmental strategy

Head: Board Member and Senior Executive Vice President

Improvement of global total safety

Occupational safety

Occupational health

Traffic safety

Environmental conservation

Fire protection and prevention

Planning

Development ofenvironmental technology

Raw materials



R&D expenses

Capitalinvestment

Recycling

Energy

Water


Products


property

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Humanresources




Our Approach to Climate Change

Our Policy on Climate Change

AlmosthalfofCO2emissionsgeneratedbytheconsumptionofenergyintheworldarecausedbyindustry.Therefore,areductioninCO2emissionsisasignificantissuefortheNittoDenkoGroup.InconformitywithourEnvironmentalPolicy:“Wewillcontinueoureffortstoconserveresourcesandenergy,reduceindustrialwaste,andpromoterecyclinginallaspectsofouroperations”,weareimplementingreductionsinCO2emissions.

CO2 Emissions (Scopes 1+2)

Total CO2 emissions in fiscal 2012:

707,776 CO2-metric tons (consolidated)

TotalCO2emissionsinfiscal2012increasedoverthepreviousfiscalyear.Ontheotherhand,ourunitCO2emissions(CO2emissionsper1millionyenofproductionoutput)decreasedto899CO2-kg/millionyen.TotalCO2emissionsincreasedmainlybecausetheamountofenergyused,whichaccountsfor71%ofCO2emissions,didnotdecline,whiletheCO2emissionfactorsforelectricitypurchasedatproductionbasesinJapandeteriorated,asaresultofthehaltinoperationsofdomesticnuclearpowerplants.

Inthefuture,wewillimplementthedevelopmentofproductsandprocesseswhichareenergy-efficientatthetimeofmanufacture.

Visualization of CO2 Emissions throughout the Entire Supply Chain (Scope 3)

Wearetryingtograspwhatkindofinfluencetheentiresupplychainhasonclimatechange.Infiscal2012,wecalculatedCO2emissionsgeneratedfromthetransportationofourproductstoourcustomers.

Inordertograspthesituationacrossentiresupplychains,wewillestablishamethodforcalculatingotherobjects.

Japan 66%

Taiwan 8%

China 10%

South Korea 8%

Belgium 4%

Malaysia 2%U.S. 1%Vietnam 1%

Electricityand fuel:

71%

Incineration ofsolvent vapors:

27%

Incineration of industrial waste:

2%

CO2 Emissions in Fiscal 2012:

707,776CO2-metric tons

CO2 Emissions in Fiscal 2012:

707,776CO2-metric tons

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1990 2005 2008 2009 2010 2011 2012

231,095

547,155

28,423

143,893

■ ■ ■

1,6411,481

414,516

27,672

243,906

1,225

418,207

27,766

243,685

1,023

424,347

28,877

253,997

1,023

406,264

27,519

247,566

1,015

440,342

24,089

243,345

899

(CO2-metric tons/year) (CO2-kg/million yen)

(FY)Nitto Denko Corporation

Domestic group companies

Overseas group companies

Unit emissions

Benchmark year ofKyoto Protocol( )

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2008 2009 2010 2011 2012

3,768,2224,462,787

309,035

4,840,223

306,270

3,978,538

292,343

4,492,199

(FY)■ ■Nitto Denko Corporation Domestic group companies

(metric tons/year)

0

1,500,000

3,000,000

4,500,000

6,000,000

7,500,000

0

5

10

15

20

25

1990 2005 2008 2009 2010 2011 2012

3,095,4383,658,988

235,859

1,050,727

22.0

10.2

3,882,619

218,095

1,892,032

10.7

3,804,466

226,521

1,761,502

8.7

3,818,774

233,853

1,763,228

8.5

3,771,279

241,455

1,781,091

8.7

3,905,400

206,244

1,641,173

7.3

(GJ/year) (GJ/million yen)

(FY)Benchmark year ofKyoto Protocol( ) ■ ■ ■Nitto Denko

CorporationDomestic group companies


Unit emissions

0

30,000

60,000

90,000

120,000

150,000

0

40

80

120

160

200

2005 2008 2009 2010 2011 2012

62,674

3,03213,284

163

56,761

3,023

43,536

185

59,946

2,849

50,545

168

61,069

3,171

52,614

169

59,446

3,265

54,815

176

62,905

3,407

54,749

154

(metric tons/year) (kg/million yen)

■ ■ ■(FY)

Nitto Denko Corporation



Unit emissions

0

500

1,000

1,500

2,000

0

1.5

3.0

4.5

6.0

2005 2008 2009 2010 2011 2012

1,131

125

597

868

57

297

779

64

296

1,099

62

350

747

53

313

973

52

305

5.26

2.181.69

2.201.67 1.69

(metric tons/year) (kg/million yen)

■ ■ ■Nitto Denko Corporation



Unit emissions

(FY)

*Scopes1,2and3describedonthispageshowtherangeofestimatescoveredbythe‘GreenhouseGasProtocol’.

Management of Water Resources

Amount of water consumption in fiscal 2012:

4,784,542 metric tons (domestic bases)

Largeamountsofwaterareusedintheproductionofpolarizingfilmsandflexibleprintedcircuitboards.Wetackletheeffectiveutilizationofwaterresourcesbyutilizingourmembraneproductsandrecyclingdrainagewater.Asmuchwaterisnecessaryintheproductionprocess,wedonotmanufactureourproductsinareasthatsufferfromphysicalandeconomicwaterscarcity(whereusageratesofwaterresourcesexceed75%).

Indischargingwaterusedintheproductionprocess,weadequatelyprocessandthendrainitbeforeitisreleasedintotheenvironment.

Effective Utilization of Fossil Fuels

Amount of energy from fossil fuels used in fiscal 2012:

5,752,818 GJ (consolidated)

Formanufacturerslikeus,theexhaustionoffossilfuelsusedasrawmaterialsorenergyisaseriousproblem.Withtheaimofsustainabledevelopment,weputeffortintotheeffectiveutilizationofmaterialsandenergybymeansofsavingenergyandreducingwaste.Inaddition,wepromotetheintroductionofrawmaterialsfromnon-fossilfuelsandrenewableenergy.

Management of Waste

Unit generation of waste in fiscal 2012:

154kg/million yen (consolidated)

WastewithintheNittoDenkoGroupismainlylogrolledgesoftapeandoffcutsoffilmgeneratedfromthecuttingprocess.WeadequatelydealwithwastewithintheGroupinconformitywiththeNittoDenkoGroup’s“RegulationsforWasteManagement”.Furthermore,werecycleasmuchwastegeneratedaspossible.

Management of Organic Solvents

Amount of solvent emissions in fiscal 2012:

1,330 metric tons (consolidated)

Inordertominimizeairpollutiongeneratedfromorganicsolvents,weinstallincinerationequipmentusedforsolventgasesorsolventrecoveryunits,oneveryproductionlineasneeded.Furthermore,weareaggressivelyengagedinreducingthequantityoforganicsolventsused.Theamountofsolventemissionshasbeendecliningyearafteryear.

Total and Unit CO2 Emissions (Scopes 1+2) (consolidated)

Water Consumption (including water recycled at domestic bases)

Total and Unit Energy Purchased (from fossil fuels) (consolidated)

Total and Unit Generation of Industrial Waste (consolidated)

Total and Unit Solvent Emissions (consolidated)

CO2 Emissions by Source (consolidated)

CO2 Emissions by Country (consolidated)

Total amount of greenhouse gas emissions in fiscal 2012 (Scopes 1, 2 and 3) (non-consolidated): 449,039 t-CO2

Purchased electricity147,132 t-CO2 293,210 t-CO2

8,697 t-CO2

Scope 2

Manufacturing

Scope 1

Partners

TransportatitonOur customers

Scope 3

The method of calculation is now under consideration.

TheNittoDenkoGroupreleasesinformationonclimatechangethroughtheCarbonDisclosureProject.




Providing Sustainable Products

Asabusinesscontributingtoenvironmentalconservation,westrivetodevelopandsupplysustainableproducts.

Sustainable Products

ProductscontributingtoenvironmentalconservationarereferredtoassustainableproductsintheNittoDenkoGroup.Bygivingthemauniquedefinition,evaluatingproductsaccordingtothetwocriteriaof“Beingusefulforsolvingglobalenvironmentalproblems”and“Effectivelyutilizingresourcesthroughthelife-cycleofproducts”andmeasuringtheircontributiontoenvironmentalconservation,

Biodiversity Conservation

Inordertocontributetowardsasustainablesociety,NittoDenkohasbeeninvolvedinbiodiversityconservationactivitiesasadrivingpartnerof“DeclarationofBiodiversitybyNipponKeidanren”since1997.

Inconformitywiththebasicstandpointofthisdeclaration,weapproachbusinessactivitieswithdueconsiderationtobiodiversity.

Supporting UNEP Activities

TheNittoDenkoGroupcooperateswithUnitedNationsEnvironmentProgramme(UNEP)inplayinganactiveroletorealizeasustainablesocietyandhasbeenasupportingcompanysincefiscal2010.WesupportthepublicationanddistributionoftheJapaneseversionofOur Planet and TUNZA,whichareofficialUNEPmagazines.

Highlights of Environmental Conservation Activities in Fiscal 2012

Sharing Policy and Cases of Environmental Conservation Activities across the Whole Group

TheNittoDenkoGrouphasheldanEnvironmentGlobalConferenceonceeverythreeyearssince2003,asanopportunitytoexchangeopinionsonapproachestowardenvironmentalconservationacrossthewholeGroup.Thefiscal2012conferencewasheldinJapan.

Approximately200participantsfrom50basestalkedwithoneanotheraboutworldtrendsintheenvironment,ourposition,ouridealsandourgoalsinenvironmentalconservationactivities.Wewilladopttheissuescoveredattheconferenceintoouractionpolicyandsteadilyengagethem.

E-BOX Receives Award in World Packaging Organization Contest

Environmentally-friendlypackagingmaterialE-BOXreceivedaWorldStarAwardandaSustainabilityAwardin2012attheWorldStarAwards,hostedbytheWorldPackagingOrganization.

E-BOXwonapprovalforreducingCO2emissionsby57%comparedtotraditionalpackagingandraisingloadefficiencyintransportation.

Employees Practice Energy Conservation at Home, Cutting 40 ton of CO2

Wehavebeenimplementinga“GreenDesignAction”sincefiscal2009inordertoimproveemployees’awarenessoftheenvironment.

Infiscal2012,employeespracticedenergysavingintheirownbackyard,suchasintheirhomesandreducedCO2emissionsby40ton.

Subcategoryname No. Definition

A. Low Environmental Impact Products

A-1

Productsthatdonotcontainanyprohibitedsubstancesspecifiedbycustomerrequest,legalregulations,orintheGroupRegulationsonVoluntaryManagementofChemicals,orproductswhosecontentofsubstancesspecifiedforreductionbycustomerrequest,legalregulations,orintheGroupRegulationsonVoluntaryManagementofChemicalshavebeenreduced.

A-2

Productsthatnotonlyhavelowerenvironmentalimpact(e.g.,energyconsumption,industrialwastereduction)duringanyprocessfromcollectionofrawmaterialstotheGroupprocesses(manufacturing,disposal,andlogistics),butalsohavealowertotalenvironmentalimpactfromcollectionofrawmaterialstoGroupproductionprocesses,incomparisonwithotherGroupproductsorcompetingproducts.

B. Positive Environmental Impact Products

B-1 Productsthatnotonlyhavealowerenvironmentalimpactduringanycustomerprocessfromusetodisposal,butalsoalowertotalenvironmentalimpactfromusetodisposalbythecustomer,incomparisonwithotherGroupproducts,competingproducts,orconventionaltechnologies.

B-2

Productsthathelpresolveglobalenvironmentalissues.Thissubcategoryalsoappliestoproductswhosetotalenvironmentalimpactgeneratedovertheirlifecycle,fromcollectionofrawmaterialstomanufactureanddisposal,hasapositiveeffectontheglobalenvironmentaccordingtotheLifeCycleAssessment*oranotherassessmentmethod. Wehaveintroducedtheconceptof‘life-cycle

assessment’toassesssustainableproducts.Life-cycleassessmentisatechniquetoassessenvironmentalimpactsassociatedwithallthestagesofaproduct’slifefromrawmaterialextractionthroughmanufacture,use,disposalandtransportation.

Life-cycleassessmentconsistsoffourstages.Thefirststagebeginswithaclearstatementofthegoalandscopeofthestudy.Thesecondstageisaninventoryanalysis,thethirdisanimpactassessmentandthefourthisinterpretation.Infiscal2012,weconductedananalysisofCO2emissionsfortwoproducts.

Infiscal2013,wewillproceedwithananalysisofourproductsotherthanCO2emissionstoquantitativelyassesswhatimpactourproductshaveonsociety.

* Life Cycle Assessment

weclassifyourproductsas“LowEnvironmentalImpactProducts”or“PositiveEnvironmentalImpactProducts”.

Definition of Sustainable Products

Infiscal2012,wereviewedthedefinitionsforandthenamesofthetwosubcategories.Weclassifysustainableproductsaccordingtothedefinitionsinthetablebelow.

The Number of Products Qualifying as Sustainable

Infiscal2012,2,050productsqualifiedasLowEnvironmentalImpactProductsand20asPositiveEnvironmentalImpactProducts.

Life Cycle Assessment*1

Global Environmental Problems2

Life-cycle assessment

Industrialwaste

Production of raw materials

A-1 Low Environmental Impact Products B-1 Positive Environmental Impact Products

A-2 Low Environmental Impact Products B-2 Positive Environmental Impact Products

•Production•Business activities

Energy

IndustrialwasteEnergy

IndustrialwasteEnergy

IndustrialwasteEnergy Energy Energy

CO2

Promoting positive effectsContributing to recovery of the environment and solving environmental problems

Suppressing negative effects

Reducing use of environmentally harmful materials

Materials manufacturers

Industrial wasteProcessing Consumers




The Nitto Denko Group combines its core technologies – adhesion, coating, polymer function control and polymer analysis and evaluation – with new technologies to carry out research and development primarily focused around our growth strategy of “Green, Clean and Fine”.

Environmentally Friendly MARINGLIDE™ Film Protects Ship Hulls

Ifyoulookatthehullsofshipsandboats,youwilloftenseemanymarineorganisms,suchasbarnacles.Howdidtheygetthere?Thelarvaeoftheseorganismswerefloatingintheoceanandattachedthemselvestothehullofthevesselasitpassedby.Oncetheyhaveattachedthemselves,thentheyrapidlygrowinsizeandnotonlylookbad,butalsoincreasewaterresistance,whichinturnhasamajorimpactonfuelconsumptionandspeed.Becausetheybecomeattachedsofirmly,insomecasesthehullisdamagedwhentheyarescrapedoff.

Upuntilnow,antifoulingpainthasbeenthemainmethodofpreventingbarnaclesfromattachingthemselvestothehullsofvessels.However,itisfearedthatthesubstancescontainedinsuchpaintstorepelbarnaclesmayhaveadetrimentaleffectontheenvironment.

NittoDenkohasthereforedevelopedMARINGLIDE™,theindustry’sfirstadhesivefilmthatrepelsbarnacles.Themaincharacteristicsofthisfilmareshownbelow.

1. Easy Maintenance

WhenMARINGLIDE™isappliedtothehullofavessel,averysmallamountofoilisreleasedfromthesurfaceofthefilm,whichmakesitdifficultforbarnaclelarvaetoattachthemselvestothehull.

Evenifthefilmbecomesfouled,itcanbeeasilycleanedbywaterblastingandremainseffectiveforaboutthreeyears,afterwhichitcanbeeasilypeeledoffandreplaced.Itiseasytoworkwith,doesnotdamagethehullsofvesselsandreducesvesselmaintenancecosts.

2. Reduced Water Resistance

AsthesurfaceofMARINGLIDE™issmoothanddoesnothavetheroughfinishofpaint,frictionalresistanceisextremelylow.This,combinedwiththefactthatbarnaclescannotattachthemselvestothehull,meansthatwaterresistancecanbereducedbyabout10%ormore.Itisgenerallysaidthatiffrictionalresistancecanbereducedby10%,thenthiswillresultinanimprovementinfuelefficiencyof7%to8%andalsopotentiallyresultinanincreaseinspeed.

TherewasagreatdealofinterestregardingMARINGLIDE™amongboatownersattheJapanInternationalBoatShowheldinMarch2013.Theproductisexpectedtogoinsalein2014afterfurthertestingandimprovement.

Using Molecular Targeting DDS in the Development of Therapeutic Agents for Organ FibrosisInitiates Clinical Trials for Liver Cirrhosis Therapy Drug

NittoDenkohasworkedwithProfessorYoshiroNiitsuatSapporoMedicalUniversitysince2008onthedevelopmentofantifibroticdrugsforconditionssuchascirrhosisoftheliver.Basicpatentswereacquiredregardingthis

revolutionarytreatmentforfibrosisinJapan,theUS,ChinaandAustralia,andclinicaltrialsarescheduledtostartin2013.

Livercirrhosis,whichisoneformoforganfibrosis,issaidtobeincurableand6millionpeoplethroughouttheworldaresufferingfromthisintractabledisease.Thisdiseaseiscausedbychronicinflammationoftheliverwherebyexcessamountsofcollagen,whichplayaroleinrepairingareasofinflammationsite,aresynthesizedfromhepaticstellatecellsandthendeposited.ProfessorNiitsuthoughtofawayofdeliveringdrugsdirectlytothehepaticstellatecellsinordertopreventtheexcessivesynthesisofcollagen,howeverthereweretwoissues.

Thefirstwasthedevelopmentofadrugthatcouldsuppressthesynthesisofcollagen.Nucleicacidmedicinewasusedtoprovideasolution,wherebysiRNAwasusedtosuppressaspecificRNAfunction.Bysuppressingthisimportantfactorinthesynthesisofcollagenitispossibletosuppressthesynthesisofcollagenitself.

ThesecondissuewashowtodeliveritexclusivelytothetargethepaticstellatecellswithoutdegradingthesiRNA.ProfessorNiitsusawthepotentialofvitaminAbecausehepaticstellatecellswillspecificallytakeupvitaminA.

UsingthisideacoupledwithNittoDenko’spatenteddrugdeliverysystem(DDS),siRNA(cargo)wasinsertedintoaspecialcarrier(vessel)andvitaminA(navigator)appliedtotheoutsidetocreatearevolutionarynewtherapeuticagent.

BasicpatentsregardingthisnewdrugweregrantedfirstlyinJapan,ChinaandAustralia,followedinMay2012bytheUS.

InMarch2013,anInvestigationalNewDrug(IND)applicationwasfiledwiththeUSFoodandDrugAdministrationtousethistherapeuticagentasatreatmentforlivercirrhosisandclinicaltrialswillcommenceduringthisfiscalyear.Currentlythereisnodrugthatwillcurelivercirrhosisandifthistherapeuticagentcanbecommercializeditwillbethefirstofitskindintheworld.

NittoDenkoiscarryingoutfurtherresearchtoapplythistherapeuticagentnotonlywithregardtolivercirrhosis,butalsotootherformsoforganfibrosistohelppeoplesufferingfromthisintractabledisease.

NittoDenkoParticipatesinNationalR&DProjecttoDevelopFlexibleOLEDLighting

Infiscal2012,theNittoDenkoGroupparticipatedintheNewEnergyandIndustrialTechnologyDevelopmentOrganization’s(NEDO)R&Dprojectregardingthedevelopmentofareel-typevacuumdepositionmethodfortheefficientproductionofflexibleorganiclight-emittingdiode(OLED)lighting.OLEDlightingisgainingmuchattentionasthenextgenerationofenergy-efficientlightingthatwillfollowtherapidlyexpandinguseofLEDs.ItishopedthatthepracticalapplicationofthisprocesswillcontributetothepopularizationofOLEDlightingandtherealizationofanenergy-efficientsociety,andthattheflexiblenatureofthetechnologywillenablethedevelopmentofuniquelightingproductsthatupuntilnowhavenotbeenpossible.

R&DCenterEstablishedinSwitzerlandforMaterials related to the Environment and Life Sciences

InJuly2012,NittoDenkoestablishedNittoDenkoEuropeTechnicalCentreSàrl(NET)intheInnovationSquareoftheÉcolePolytechniqueFédéraledeLausanne(EPFL)inwesternSwitzerland.Thenewfacility,whichstartedR&DoperationsinOctoberofthesameyear,ispartofthecompany’sglobalcorporateR&Dsetup,togetherwiththreeotherfacilitiesinJapan,theUSandAsia(Singapore).

EPFLisoneofthetopuniversitiesinEurope,witharichpooloftalentedpersonnelfromthroughouttheworld,anditishopedthatNETwillbeabletoutilizetheuniversity’snetworktodevelopnewresearchthemes–especiallyinenvironmentalandlifescience-relatedfields,andconductcollaborativeresearchanddevelopmentwiththeuniversity’sresearchersinbiosciencesandchemistryandoutsideresearchinstitution.

An overview of the new drug <The vessel and navigator deliver the drug.>

Thecarrier(vessel)deliversthesiRNAdrug(cargo)exclusivelytothehepaticstellatecellsbymeansofthevitaminAtargetingagent(navigator).

Drug (Cargo)siRNA suppresses the synthesis of collagen produced by hepatic stellate cells, which is the cause of liver cirrhosis.

Carrier (Vessel)Protects the drug in blood circulation

Targeting Agent (Navigator)Vitamin A. Navigates the drug and carrier to only the target hepatic stellate cells.

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources

Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions


Raw materials

Management

Solvent emissions

Industrial waste


Hull

Oil

MARINGLIDE™

Film

Oil prevents barnacle larvae from attaching themselves to the hull.

MARINGLIDE™’s barnacle-repelling mechanism

Averysmallamountofoilisreleasedfromthesurfaceofthefilmtopreventbiofouling.

Aboathullshowingbarnaclegrowth

MARINGLIDE™isalmostunnoticeableafterapplication.

MARINGLIDE™isatransparentadhesivefilmthatcanbeeasilyappliedtothehull.



NEThasmid-termgoals(milestones)tohelpseethetransitionofR&Dthemesintoproductdevelopmentinthefollowingthreetosixyears.ThemainR&Dthemesatpresentarethedevelopmentofmedicaldevice-relatedproducts,suchassurgicaltapeutilizingbio-basedmaterials,whicharebeingjointlydevelopedbyteamsofresearchersspecializinginbiosciencesandchemistry.

AsofMay2013thecenterhadastaffofeight,butthisisexpectedtoincreaseto20withinthenextfiveyearsinordertostrengthenR&Dactivities.WearealsokeentosourceinternsfromEPFLandotherresearchinstitutionsandtrainthem,alongwithotherR&DpersonnelfromwithinNETandthewiderNittoDenkoGroup,tobranchoutintomanyothernewthemes.

ExpansionintotheFitnessandWellnessMarket

SinceR&Dactivitiescommencedin2008,theNittoDenkoAsiaTechnicalCentre(NAT)hasbeendevelopingnewproductsinthelifesciencesectorbasedontheproprietaryopticalsensingtechnologiesdeveloped.Recently,theysucceededindevelopingauniquelifestyleproductforthemobilefitnessandwellnessmarket.

Therehasbeenanincreasedawarenessregardinghealthevidentaroundtheworld,andavisibleindicatoristhemajorgrowthoffitnessandwellnessrelatedmarketstogetherwiththevariantofrelatedproductsbroughttomarket.

Mobiledevicesthatareabletomonitorthestateofone’slifestyleatanytimeinanyplacearehelpfulinmaintainingday-to-dayfitnessandwellnessandimprovingoverallawareness.

Knownastinké™mobilelifestylesensordevelopedbyNATworksbyconnectingitintothedockconnectorofiOSdeviceandrestingyourthumboverthesensingplatformtomonitoryourheartrate,respiratoryrate,bloodoxygenlevelandheartratevariability*inrealtime.

Eachmeasurementcanbesavedashistorywhereyoucan

observethetrendorsharedwithfamilyandfriendsusingsocialmedia.

Whereasinthepastmostmobilehealthdevicesweremainlyusedformonitoringpeople’sphysicalactivities,suchaspedometers,tinké™canmonitorinformationfromyourbodythatprovidesadirectindicationofone’sfitnessandwellness.Thisinformationisprocessedbytheproprietarysoftwaredevelopedtoprovideindexesthatcanbeeasilyunderstoodbythegeneralconsumer.

InDecember2011,NATestablishedabusinessoperationentity,Zensorium,tointroducetinké™intotheconsumermarkets.tinké™hasbeendisplayedatvarioustradeshowsandbeenfeaturedinthemediaasauniqueopticalsensingdevice.

AsamemberoftheNittoDenkoGroup,NATiscommittedtocreatingnewbusinessesfocusedaroundour“Green,CleanandFine”themeinordertodevelopproductsthatcancontributetopeople’shealthandmaketheirlivesmorecomfortable.

Moreinformationregardingthisdevicecanbefoundatthefollowingwebsite:

http://www.zensorium.com/tinke

*HeartRateVariabilityUsedasanindextoshowfluctuationsinheartrate,thisvariesinaccordancewithchangesinautonomicnerveactivity.Bymonitoringheartrateinformationitispossibletoascertainpsychologicalconditions,suchasstress.

Value Improvement as an Intangible Asset

Inlinewithourbusinessactivitiesbeingdevelopedglobally,theimportanceofintellectualpropertyrelatedtoourbusinessandproductsisever-increasing.WithrealignmentwithintheGroup,wewillcontinuetoenhancenotonlytheimpactofnewbusinessandproductlaunches,butalsoourcompetitivepower.Furthermore,wewilltakeactionsinconjunctionwiththethemeofR&D,aimingtoensurethatour“strongintellectualproperty”isacountermeasureagainstcounterfeitgoodsindevelopingcountries.

Nitto Denko Receives Thomson Reuters Top 100 Global Innovator Award for Second Consecutive Year

NittoDenkoreceivedtheThomsonReutersTop100GlobalInnovatorAwardforthesecondconsecutiveyearin2012.

Thisawardisofferedto“Top100GlobalCorporations”selectedbyThomsonReutersProfessionalKK,withitsinnovationcriteria,developedutilizingitsuniqueintellectualdataandthecooperationofanumberofexternalinstitutions.

Theselectionofaward-winningcompaniesisbasedonfourcriteria:Success;Global;Influence;andVolume.Top100GlobalCorporationsinventonasignificantscaleandhaveoutstandingintellectualpropertymanagementstrategies;workondevelopmentswhichareacknowledgedasinnovativebypatentofficesacrosstheworldandtheirpeers;andtheirinventionsaresoimportantthattheyseekglobalprotectionforthem.Theyarealsoknowntohaveinventionswiththepotentialtoinfluenceworldmarkets.

Receivingtheawardforasecondyearinsuccessionshowsthatourstrategyforintellectualpropertyisregardedhighlythroughouttheworld.

Nitto Denko Fourth on Patent Board Chemicals Ranking in Wall Street Journal

NittoDenko,whichhadalreadybeenconsistentlyhighly-ranked,wasranked4thonthePatentBoardChemicalsPatentScorecard,publishedinTheWallStreetJournalintheweekendingFebruary15,2013,makingitthehighest-rankingJapanesecompanylisted.

Nitto Denko Innovative Production Method Receives the Invention Prize of the National Commendation for Invention

InJune2012,NittoDenkoreceivedtheInventionPrizeofthe2012NationalCommendationforInvention(Host:Japan

InstituteofInventionandInnovation)forits“InventionofContinuousManufacturingProcessandAssociatedApparatusfortheProductionofLiquidCrystalDisplayElements”.Theawardisgiventoaninventionwhichistechnologicallysuperiorandhasdistinguishedpracticalbenefits.

NittoDenkomanufacturespolarizingfilm,whichisindispensableinLCDsanddeliveriesittoLCDpanelmanufacturers.Previously,wedeliveredthefilmtocustomersafterthecutting,inspectionandpackingprocessandcustomersunpackedandattacheditindividuallytoeachLCDpanel.Thismethodhadanumberofdisadvantages,suchasthelabor-intensiveinspectionprocessandtheneedforpackagingandstoringofthefilm.Therefore,productionandtransportationcostswereseenincreasingeveryyear.

Againstthisbackground,wedevelopedadevicewithwhichtodeliverpolarizingfilminrollstoLCDmanufacturerstoenablethemtocutandattachthefilmuninterruptedlyintheirplants.Thisledtosignificantreductionsinproductioncosts,transportationcostsandinthegrossweightofsuppliesshipped.Inaddition,productionefficiencyimproveddramatically.

Thismethodwillbecomeastandardmanufacturingprocessthroughouttheworldinthefuture.Notonlyourtechnologicalcapability,butalsoitspowertoinfluence,receivedrecognitionandledtoourearningofthisyear’sprize.

TheexterioroftheNittoDenkoEuropeTechnicalCentreSàrl(NET)

Nitto Denko Group Patent Application (Japan and other major countries)

Intellectual Property

Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources


Products


property

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Solvent emissions

Industrial waste


0

500

1,000

1,500

2,000

2,500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(Number of Application)

(Year of Application)

■ WIPO

■ EPO

■ Taiwan　■ Korea

■ China

■ United States

■ Japan

tinké™

Personnelinvolvedindevelopmentofthenewprocess

tinké™inaction



Business Activities

Contributing to society with “Green, Clean and Fine” products produced according to our corporate vision of “Creation of New Value”

Industrial Tape Business (Functional Base Products)

Inouradhesivetapesandhigh-functionproductsfortheautomobileindustry,inspiteoftheimpactofproblemsbetweenJapanandChina,salesremainedstrongasawhole,inlinewithhealthysalesintheNorthandSouthAmericanmarketsandtheSouthAsiamarket.

Withregardstotapesfortheelectronicsindustry,salesofdouble-coatedadhesivetapesandsealingmaterialsremainedstronginthefirsthalfofthefiscalyear,notonlybecauseofthegrowingmarketforsmartphonesandtabletPCs,butalsotheincreasingnumberofourproductsnewlyutilizedinsuchdevices.However,inthelatterpartofthefiscalyear,wewereaffectedbyourcustomers’adjustingtheirproductionbeyondourassumptions.

Ouradhesivetapesforelectroniccomponentsandharddiscdriveswereweak,inlinewithadownturnexperiencedinthemarketforPCsanddigitalappliances.

Asforsalesofdouble-coatedadhesivetapes,surfaceprotectivematerialsandfluoroplasticproductswithhighgeneralversatilityforgeneralindustrialapplicationdidnotshowstrongrecoveryasawhole,inspiteofanincreaseinsalesofsomekindsofproducts.

Turningnowtotapesforhygienicuse,weimplementedanenhancementofoursystemwiththeacquisitionofBento,Turkey’stoptapemanufacturer.

InrapidlydevelopingBrazil,theautomotiveindustryissteadilyexpanding,withmajorautomotivepartsmanufacturersacceleratingpenetrationofthemarketandlocalproduction.Inordertoexpandmarketsharethere,NittoDenkoAmericaLatinaisconstructinganewplantinSaoPaulo,Brazil.ConstructionbeganinFebruary2013andcompletionisexpectedtobeinDecember2013.Therewillbe55employeesatstart-up.Thepresentofficeistomoveintothenewplant.

Atthenewplant,wewillmanufacturevariouskindsofhigh-functioncomponentsandprocessedgoodscontributingtoimprovementoffuelefficiencyand

reductionofnoiseandvibrationofcars,withtheaimofexpandingourbusinessinSouthAmerica.

InOctober2012,NitomsreleasedtheGroup’sfirststationerybrandcalled“STÁLOGY®,”coinedfromthewords“stationery,”“standard”and“technology.”STÁLOGY®provides“Whatshouldhavebeen,is”:qualitystationerywhichisgoodindesignandfunctionandisprovidedataffordableprices.

UniqueandstylishstationeryisproducedfromacollaborationbetweenthetechnologiesofNitomsand“totaldirection”ofGoodDesignCompany.NitomstechnologiesincludecoretechnologiesofNittoDenko,suchasouradhesivestechnology.Thestationerylineupincludesdouble-coatedtapes,ultra-transparenttapes,circularmaskingtapepatches,stickynotesanderasers.

InJanuary2013webegansellinganewenergy-savingwindowfilm,featuringtheindustry’shighest-levelthermalinsulationalongwithsolarheatrejection,allowinguserstoachieveenergysavingsyear-round.

Insummer,thefilmrejectsapproximately50%ofsolarheat,whichimprovescoolingefficiency.Ontheotherhand,itsuppressesheatflowinwinterbyapproximately35%,reducingheatingloadandmaintainingwarmth.Bysimplyapplyingthefilmtowindows,aneasyconvenientandenergy-savingimprovementisrealized,blockingultravioletlightandactingasaglassscatteringpreventionfunction.

Thefilm’stransparency,highthermalinsulationandadiabaticityhaveattractedpublicattention.Wehavehadnumerousbusinessinquiriessinceitsintroductionandithasalreadybeenusedinpublicoffices,officecomplexes,plantsandhospitalsinJapan.

InordertoshowcasetheNittoDenkoGroup’stechnologiesandproductstocustomersintheburgeoningChinesemarket,weestablishedNittoDenko(Shanghai)InnovationCenteratNittoDenko(ShanghaiSongjiang)inJuly2013.Withtheaimofallowingourcustomerstoexperienceourproductsandtechnologiesfirst-handandthuscreatenewbusinessopportunitieswiththem,wewelcomethemwithvariousmachinesanddevices.

Construction of New Plant for High-function Automotive Components in Brazil

Entry into Personal Stationery Market

Release of PENJEREX® Transparent Energy-saving Window Insulation Film

Establishment of Innovation Center in Shanghai

Fiscal2011 Fiscal2012Year-on-yearcomparison

Sales 242,986 256,194 105.4%

Operatingincome 13,874 12,209 88.0%Yeninmillions

Infiscal2013,wewillfurtherpromoteourglobalization,focusingondevelopingcountriesandcreatingAreaNicheTopproductsbymanagingarangeofprocesses,fromthedevelopmentofproductsandtheprocurementofrawmaterials,totheproductionandsaleofproductsonsite.

STÁLOGY®lineup

InnovationCenternewlyopenedinShanghai

ApplyingPENJEREX®towindowsconservesenergy

Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources


Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Solvent emissions

Industrial waste


2011 20120

50,000

100,000

150,000

200,000

250,000

300,000■ Sales

■ Operating income

242,986 256,194

13,874 12,209

(FY)

(Millions of yen)

Brazil

Province of Sao Paulo

Nitto Denko America Latina

Argentina

Chile

Uruguay

Paraguay

Bolivia

Peru

Ecuador

ColombiaVenezuela

Guyana

トリニダード・トバゴ

バルバドスセントビンセント= グレナディーン諸島グレナダ

セントルシア

パナマコスタリカニカラグアホンジュラス

SurinameGuiana

Address: Rua Charles Goodyear, 460 – Bairro Cururuquara – Santana do Parnaiba – SP – CEP 06524-105

Sao Paulo

Construction sitefor new plant



Business Activities

Optronics Business

Ourinformationfinematerials,suchasLCD-relatedproducts,werestrong,inlinewithfirmdemandfortelevisionsandthecontinuousexpansionofthemarketforsmartphonesandtabletPCs.OurtransparentconductivefilmusedontouchpanelsinstalledonsmartphonesandtabletPCsremainedstrong,notonlybecauseofexpansioninthemarket,butalsobecauseofourdifferentiationstrategyinqualityandtechnologicalcapabilities.

Inoursemiconductormaterials,weassignedoursemiconductorencapsulatingmaterialsbusiness,excludingthatpartforopticalsemiconductors,toHitachiChemicalCo.,Ltd.onOctober1,2012,resultinginadropinsales.

DemandforourprintedcircuitboardsrecoveredfromtheimpactoftheThailandfloodsatthebeginningofthefiscalyear.However,therecoveryinthemarketforharddiscdriveswasslow,inlinewiththedeclineindemandforPCs.Asaresult,saleswereweak.

Inelectronicprocessingmaterials,asdeclininginvestmentinplantandequipmentinthesemiconductorindustrycontinues,demandforcartonsealerswasweak.Ontheotherhand,tapesfortheproductionofsemiconductorsusedinsmartphonesandtabletPCswerestrong.Overall,saleswerestrong.

Medical and Membrane Businesses

Inourmedicalbusiness,medicalandhygienicmaterialswerestrong.However,transdermaldrugdeliverypatcheswereaffectedbypricerevisionsinJapanandinventorybuild-upsonthepartofourcustomersaftertheGreatEastJapanEarthquake.Inaddition,oneofourgroupcompanieswhichmanufacturesoligonucleotidemedicinewasaffectedbyadelayinanorder,resultingindifficultcircumstances.

Ontheotherhand,astudyoftheworld’sfirsttransdermalpatchformulationforschizophreniatreatmentisprogressing.Inaddition,“PENLES™,”oneofourtransdermaldrugdeliverypatches,whichisanadhesivepatchforregionalanesthetics,wasdeterminedefficientinthereliefofpainassociatedwithextirpationofmolluscumcontagiosum.Thisleadtothepositivestateofactivebusinessoperations.

Infiscal2013,wewillcontinuetodeveloptransdermaldrugdeliverypatches,oligonucleotidemedicineandmoleculartargetDDSinourstrategicareasthroughouttheworld.Inautumn,atransdermaldrugdeliverypatchforhighbloodpressureisscheduledtogoonsale.

Ourmembranebusinesswasstrongthroughouttheyear,inlinewiththechangingofourfocustogeneralindustryin

Recently,LEDlightshavebeenattractingattentionasproductscontributingtoenergyconservation,becomingimmenselypopular.

AsLEDelementsemitbluelight,theyareencapsulatedbycompoundingliquidresinwithfluorescentsubstances(yellow,redandgreen)toemitwhitelight.Insuchaprocess,thereexiststheproblemofcolorvariation.

NittoDenkohasnewlydevelopedathermosettingthermalresistantencapsulationsheetforLEDscontainingfluorescent

substances.ThesheetdoesnotcauseanydamagetoLEDbondingwireswhenlaminatedontoLEDdevices,becauseofitsgel-like,semi-hardproperties,resultinginsimplificationofthewholeencapsulationprocess.Furthermore,thesheetdemonstratesuniformityofthickness.Inaddition,controllingtheplacementoffluorescentsubstanceslessenscolorvariation.Throughtheseproperties,wehaverealizedhighquality,highreliabilityandhighproductivity.

WebegansalesofthesheetinJanuary2013.

NittoDenkoacquiredalloftheassets,includingpatents,trademarksandlaboratoryequipmentrelatedtoActiveTransdermalTherapeuticSystemtechnology,ofAlteaTherapeuticsCorporationandlaunchedfull-scaleresearchinApril2012attheSanDiegolaboratory.Thetechnologyacquiredthistimeisanewtransdermaldrugdeliverytechnology.Bymakingporesonthesurfaceoftheskinusingheatinasafeandhygienicmannerandapplyingthepatchcontainingthedrug,thedrugisdeliveredintothebody.

NittoDenkohasalreadydevelopedandmanufacturedtransdermaldrugdeliverypatcheswhichdeliverdrugstotheaffectedareathroughtheskin.Withthisnewtechnology,however,itwillbepossibletopreparetransdermaldrugdeliverypatchesforpolymerdrugssuchaspeptideandgenemedicine,andhydrophilicdrugs,whichweredifficulttopreparepreviously.Weaimtorespondmorewidelytotheneedsofpatientsandmedicalexperts.

NittoDenkoandNittoDenkoAveciaconductresearchinto,developandmanufactureoligonucleotidemedicine,withthepotentialforgrowthinthefuture.InJanuary2013,weacquiredtheassetsofGirindusAmerica,Inc.(Ohio,U.S.A.),whichisinthetherapeuticoligonucleotidemedicinemanufacturingbusiness.Throughthisacquisition,themanufactureoftherapeuticoligonucleotidemedicineandexpansionofourorganicsynthesisbusinessbecamepossible.

Inthefuture,wewilldevelopouroligonucleotidemedicinebusinessglobally.

New Development and Release of Thermosetting Thermal Resistant Encapsulation Sheet for LEDs

Acqusition of Entire Assets of Altea Therapeutics

Acquisition of Assets of Girindus America, Inc.

Fiscal2011

Fiscal2012

Year-on-yearcomparison

Sales Informationfinematerials

291,699 348,708 119.5%

Semiconductormaterials

11,720 8,335 71.1%

Printedcircuitboards

43,855 41,323 94.2%

Processingmaterials

11,830 12,357 104.5%

Total 359,105 410,725 114.4%

Operatingincome

Total 42,162 56,593 134.2%

Yeninmillions

Fiscal2011

Fiscal2012

Year-on-yearcomparison

Sales Medical 16,869 15,165 89.9%

Membrane 16,515 18,604 112.6%

Total 33,384 33,769 101.2%

Operatingincome

Total -2,476 359 –

Yeninmillions

NewlydevelopedthermosettingthermalresistantencapsulationsheetforLEDs

LEDsbondedwithoursheetlightupLEDsbondedwithathermally-hardenedsheetofuniformthickness,whichprotectstheLEDs

Makingporesonthesurfaceoftheskinandapplyingthepatchjustminuteslaterwithanapplicator

NittoDenkoAvecia,Cincinnati(formerGirindusAmerica)

developingcountriesandtheshipmentofapreviousorderofourseawaterdesalinationproject.

2011 20120

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000■ Sales of processing materials

■ Sales of printed circuit boards

■ Sales of semiconductor materials

■ Sales of information fine materials


291,699

Total: 359,105

42,162 56,593

11,720

43,855

11,830

348,708

Total: 410,725

8,335

41,323

12,357

(FY)

(Millions of yen)

-5,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

■ Sales of membrane

■ Sales of medical


16,869

Total: 33,384

-2,476

359

16,515

15,165

Total: 33,769

18,604

2011 2012 (FY)

(Millions of yen)



FinancialNews

Consolidated Financial Statements

Consolidated Balance SheetConsolidated Financial Statements

Consolidated Statement of IncomeConsolidated Financial Statements

Consolidated Statement of Cash Flows

(YeninMillions)

AssetsAmount

AsofMarch31,2013

AsofMarch31,2012

Current assets: 483,546 422,989

Cashanddeposits 217,095 209,855

Notesandaccountsreceivable-trade

162,807 126,840

Merchandiseandfinishedgoods

21,836 20,152

Workinprocess 43,176 33,355

Rawmaterialsandsupplies 17,337 14,037

Deferredtaxassets 10,445 6,480

Other 11,672 12,807

Allowancefordoubtfulaccounts

-825 -541

Noncurrent assets: 257,926 228,919

Property, plant and equipment 213,391 190,074

Buildingsandstructures 93,860 86,335

Machinery,equipmentandvehicles

72,038 62,234

Tools,furnitureandfixtures 7,799 6,609

Land 19,647 19,053

Constructioninprogress 20,045 15,842

Intangible assets: 13,963 8,955

Goodwill 3,052 1,246

Software 6,450 3,986

Other 4,460 3,722

Investments and other assets: 30,572 29,889

Investmentsecurities 8,040 9,000

Deferredtaxassets 8,583 9,986

Prepaidpensioncost 10,424 7,238

Other 3,655 3,870

Allowancefordoubtfulaccounts

-131 -207

Total assets 741,473 651,908

(YeninMillions)

LiabilitiesAmount

AsofMarch31,2013

AsofMarch31,2012

Current liabilities: 175,683 138,487

Notesandaccountspayable-trade

88,101 78,730

Short-termloanspayable 11,137 2,978

Accruedexpenses 22,537 16,136

Incometaxespayable 13,915 3,507

Other 39,990 37,135

Noncurrent liabilities: 74,161 77,486

Bondspayable 50,000 50,000

Long-termloanspayable 987 6,000

Provisionforretirementbenefits

19,757 18,994

Provisionfordirectors’retirementbenefits

374 394

Deferredtaxliabilities 1,256 353

Other 1,785 1,743

Total liabilities 249,844 215,973

(Netassets)

Shareholders’ equity 490,722 462,073

Capitalstock 26,783 26,783

Capitalsurplus 56,170 56,160

Retainedearnings 440,173 412,784

Treasurystock -32,405 -33,655

Accumulated other comprehensive income

-2,019 -28,532

Valuationdifferenceonavailable-for-salesecurities

1,901 1,178

Deferredgainsorlossesonhedges

-1,638 -661

Foreigncurrencytranslationadjustment

-2,282 -29,049

Subscription rights to shares 773 963

Minority interests 2,152 1,430

Total net assets 491,628 435,935

Total liabilities and net assets 741,473 651,908

(YeninMillions)

April1,2012-March31,2013


Net sales 675,614 607,639

Costofsales 484,184 439,938

Gross profit 191,429 167,701

Selling,generalandadministrativeexpenses

122,757 111,210

Operating income 68,672 56,491

Non-operating income: 4,983 4,529

Interestanddividendsincome 851 432

Foreignexchangegains — 391

Miscellaneousincome 4,132 3,705

Non-operatingexpenses: 6,284 2,583

Interestexpenses 966 907

Equityinlossesofaffiliates 635 369

Foreignexchangeloss 2,489 —

Miscellaneousloss 2,193 1,306

Ordinary income 67,372 58,436

Extraordinaryincome: 969 1,138

Gainonsalesofnoncurrentassets

86 31

Gainonsalesofsubsidiariesandaffiliates’stocks

— 745

Other 883 361

Extraordinaryloss: 4,886 9,726

Lossonsalesandretirementofnoncurrentassets

1,307 1,023

Impairmentloss 627 3,238

Specialretirementexpenses 343 70

Lossondisaster — 1,335

Lossonsalesofstocksofsubsidiariesandaffiliates

2,154 2,213

Lossonliquidationofsubsidiariesandaffiliates

— 1,584

Other 453 260

Incomebeforeincometaxes 63,455 49,848

Incometaxes-current 21,709 14,984

Incometaxes-deferred -2,595 3,517

Income before minority interests 44,341 31,346

Minorityinterestsinincome 501 279

Net income 43,840 31,066

(YeninMillions)



I. Net cash provided by (used in) operating activities

Incomebeforeincometaxes 63,455 49,848Depreciationandamortization 36,467 36,806Impairmentloss 627 3,238Lossonsalesofstocksofsubsidiariesandaffiliates

2,154 2,213

Loss(gain)onliquidationofsubsidiariesandaffiliates

-377 1,584

Decrease(increase)innotesandaccountsreceivable-trade

-19,025 5,498

Decrease(increase)ininventories -9,382 -5,626Increase(decrease)innotesandaccountspayable-trade

7,731 -1,482

Interestexpensespaid -971 -955Incometaxes(paid)refund -8,735 -33,106Other,net -3,791 471

Net cash provided by (used in) operating activities

68,152 58,492

II. Net cash provided by (used in) investing activities

Decrease(increase)intimedeposits 62 -1,390Purchaseofnoncurrentassets -52,869 -35,249Proceedsfromsalesofnoncurrentassets 420 129Purchaseofinvestmentsinsubsidiariesresultinginchangeinscopeofconsolidation

-7,703 —

Proceedsfromsalesofinvestmentsinsubsidiariesresultinginchangeinscopeofconsolidation

3,536 427

Other,net 283 -981Net cash provided by (used in) investing activities

-56,269 -37,064

III. Net cash provided by (used in) financing activities

Increase(decrease)inshort-termloanspayable

-140 291

Proceedsfromlong-termloanspayable 834 —Repaymentoflong-termloanspayable — -7,954Decrease(increase)intreasurystock 965 160Cashdividendspaid -16,450 -16,443Cashdividendspaidtominorityshareholders

-31 -32

Net cash provided by (used in) financing activities -14,822 -23,978

IV.Effectofexchangeratechangeoncash and cash equivalents

8,496 -26

V. Net increase (decrease) in cash and cash equivalents

5,556 -2,576

VI. Cash and cash equivalents at the beginning of period

145,712 148,289

VII. Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation

1,006 —

VIII. Cash and cash equivalents at the end of period

152,275 145,712

Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water

Humanresources


Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Solvent emissions

Industrial waste




Consolidated Financial Statements

Consolidated Statement of Changes in Net AssetsBusiness Results

10-Year Summary (consolidated)

April1,2012throughMarch31,2013 (YeninMillions)

Shareholders’equity

Paid-incapital

Capitalsurplus

Retainedearnings

Treasurystock

TotalShareholders’

equity

Balance as of April 1, 2012 26,783 56,160 412,784 -33,655 462,073

Changes of items during the period

Dividendsfromsurplus -16,450 -16,450

Netincome 43,840 43,840

Purchaseoftreasurystock -1 -1

Disposaloftreasurystock 10 1,250 1,260

Netchangesofitemsotherthanshareholders’equity duringtheperiod

Total changes of items during the period

— 10 27,389 1,249 28,648

Balance as of March 31, 2013 26,783 56,170 440,173 -32,405 490,722

(YeninMillions)

Accumulatedothercomprehensiveincome

Subscriptionrights

toshares

Minorityinterests

Totalnetassets

Valuationdifferenceonavailable-for-salesecurities

Deferredgainsorlossesonhedges

Foreigncurrencytranslationadjustment

Totalaccumulated

othercomprehensive

income

Balance as of April 1, 2012 1,178 -661 -29,049 -28,532 963 1,430 435,935

Changes of items during the period

Dividendsfromsurplus -16,450

Netincome 43,840

Purchaseoftreasurystock -1

Disposaloftreasurystock 1,260

Netchangesofitemsotherthanshareholders’equity

723 -977 26,766 26,513 -189 721 27,044

Total changes of items during the period

723 -977 26,766 26,513 -189 721 55,693

Balance as of March 31, 2013 1,901 -1,638 -2,282 -2,019 773 2,152 491,628

April 1 - March 31

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012

Statement of income

Netsales 452,726 514,867 626,316 679,822 745,259 577,922 601,859 638,556 607,639 675,614 7,183,562

Operatingincome 55,912 70,018 89,224 69,037 77,954 13,838 56,086 85,245 56,491 68,672 730,165

ratiotonetsales 12.4% 13.6% 14.2% 10.2% 10.5% 2.4% 9.3% 13.3% 9.3% 10.2% 10.2%

Ordinaryincome 58,045 71,828 90,196 67,319 74,468 14,807 58,833 85,143 58,436 67,372 716,342


Netincome 33,386 41,842 55,306 41,201 46,634 267 37,570 55,743 31,066 43,840 466,135


Segment information by geographic area

Japan............................................Netsales 286,322 295,115 271,186 268,364 256,288 207,263 203,982 218,528 194,636 192,600 2,047,847


TheAmericas.................... Netsales 37,216 35,836 38,580 42,349 45,054 39,002 37,766 36,116 35,739 40,014 425,455

Operatingincome -2,399 -2,479 -1,078 -663 338 -1,298 2,012 -289 -1,363 1,768 18,799

Europe............................... Netsales 16,422 17,392 19,395 23,787 29,172 25,519 26,933 23,245 21,189 31,057 330,218

Operatingincome 509 246 693 1,587 2,178 -20 1,147 1,471 480 898 9,548

Asia&Oceania.................. Netsales 112,764 166,522 297,153 345,321 414,743 306,136 333,177 360,665 356,074 411,942 4,380,032


Per share information Yen U.S.dollars

Netassetspershare 1,360.7 1,583.8 1,943.7 2,192.3 2,297.1 2,148.2 2,320.9 2,540.3 2,635.9 2,965.1 31.53

Netincomepershare 198.0 252.7 332.3 248.3 280.1 1.6 225.5 337.4 188.9 266.3 2.83

Dividendspershare 40.0 50.0 60.0 70.0 80.0 80.0 40.0 90.0 100.0 100.0 1.06

Sharesoutstanding(thousands) 173,758 173,758 173,758 173,758 173,758 173,758 173,758 173,758 173,758 173,758 —

Numberofshareholders 20,999 16,725 16,057 35,224 41,309 63,479 66,032 59,059 65,321 49,234 —

Balance sheet

Totalassets 389,525 443,264 556,934 604,208 595,972 558,258 624,992 653,961 651,908 741,473 7,883,817

Equity 223,114 261,090 321,464 364,942 382,627 357,839 386,664 417,606 433,541 488,703 5,196,204

ROA 8.7% 10.0% 11.1% 7.1% 7.8% 0.0% 6.4% 8.7% 4.8% 6.3% —

ROE 14.5% 17.3% 19.0% 12.0% 12.5% 0.1% 10.1% 13.9% 7.3% 9.5% —

Equitytototalassets 57.3% 58.9% 57.7% 60.4% 64.2% 64.1% 61.9% 63.9% 66.5% 65.9% —

Capitalinvestment 31,731 40,101 60,889 75,324 59,406 55,926 37,147 26,882 33,758 49,807 529,580

Depreciationcost 21,386 24,681 31,470 40,169 49,617 50,556 44,810 39,940 36,806 36,467 387,741

R&Dexpenses 15,822 16,739 20,489 21,733 22,096 21,716 20,876 21,949 25,003 27,573 293,174

Numberofemployees(Note1) 18,926 22,454 27,865 32,101 33,663 28,640 31,288 33,192 32,198 30,382 —

Note1.Part-timeemployeesareincluded. 2.TheexchangerateJapaneseyenandUSdollarsistherateatMarch31,2013,whichwasJPY94.05toUSD1.00.

Yenin

Millions

U.S.dollarsin

Thousands(Note2)

FinancialNews




AteamselectedintheToyohashiRegionQualifyingRoundinwascommendablyawardedthesecondprizeatthesubsequentnationalconvention.

Receipt of Letter of Appreciation for Monetary Donation to Thailand flood relief efforts from the Provincial Red Cross Chapter of Ayutthaya

OnOctober25,2012,wereceivedaletterofappreciationandareportontheapplicationofourmonetarydonationtotheThailandfloodsreliefeffortsfromtheProvincialRedCrossChapterofAyutthaya.Theyreportedthat25,000,000yen(approximately10,000,000baht)fromtheNittoDenkoGroupwasutilizedfortheconstructionofdwellingsforpeoplewhohadlosttheirhomes,themendingofdamagedhouses,thereestablishmentoflibrariesinelementaryschoolsandthepurchaseofbooks.

Contributing to Local Communities

Supporting Disaster Victims of Hurricane Sandy

AttheendofOctober2012,HurricaneSandystruckthenortheastUScausingenormouspropertydamageandlossoflife.

TheU.S.companiesoftheNittoDenkoGroupmovedinsupportofthevictims.Notonlydidtheysupportaffectedemployees,buttheyalsodonatedmoneytotheAmericanRedCross,raisingmoneyfrombothemployeesandthecompany.Thetotalamountofdonations,includingmatchingcontributionsfromeachcompany,reachedUSD6,112(approximately550,000yen).

Christmas Philanthropy in Singapore

EmployeesofNittoDenkoAsiaTechnicalCentreandZensoriumweresplitupintotwogroups,withonevisitingLeeAhMooiOldAgeHomeandtheotheraNationalKidneyFoundationdialysiscentreonDecember21,2012.TheemployeesgaveChristmasgiftstopatients,playedmusicandgames,andassistednurses.

Attheendoftheday,theysharedstorieswitheachotheroftheiractivitesandraisedfundsforthetwofacilities.

Donation of Scrap Packaging Material to High School In Virginia

NittoDenkoAutomotiveVirginiadonatedscrappackagingmaterialtoKempsvilleHighSchoolonOctober27,2012.ThescrapisusedingoalpostpaddingonAmericanfootballfieldstohelppreventplayerinjuries.

Thiskindofusealsohelpsthecompany’srecyclingprogramstoreduceindustrialwaste.

Producing a Culture of Volunteerism in the Philippines

ThePhilippinesisoneofthemostdisaster-pronecountriesintheworld.InsupportofthemissionofthePhilippinesRedCross(PRC)tocreateacultureofvolunteerismasameansofsavinglives,NittoDenkoPhilippinesjoinedtheMillionVolunteerRun2onFebruary10,2013.Allproceedsoftheevent,suchasparticipationfees,willgotovolunteerprogramsofthePRC.

Currently,thecompanyhasthreeemployeeswhohavebeenqualifiedandcertifiedbythePRCandcanprovidevolunteerstandardfirstaidandbasiclifesupportproceduresduringcatastrophes.

Challenges Contest – Offering Assembly Hall as Venue for Toyohashi Region Qualifying Round –

TheNittoDenkoToyohashiPlantsupportsToyohashi-shiBoys&GirlsInventionClubbygivinglecturesattheworkshopeverysummer.

Inaddition,theplantalsoofferedtheclubuseofitsassemblyhallasavenueforaregionalqualifyingroundofthethirdNationalBoys&Girls“CreativeChallenges”ContestonSeptember1,2012.Inthisyear’sevent,participantsweretoldtocomeupwithaminiaturehybridcarpoweredbymotorandrubber.Eachteamcompetedforspeedanddesign,bylininguptheirideas.

Goalpostswrappedinscrappackagingmaterial

Childrenoperateminiaturecars

LibrariesandhousesrebuiltwithmonetarydonationfromtheNittoDenkoGroup

Employeessingsongsandplayinstruments

Promoting Education and International Interaction

Acceptance of Interns from Abroad

Aimingtofurtherdiversifyitspooloftalent,NittoDenkoacceptsinternsfromabroad.

FromMaytotheendofAugust2012,twouniversitystudentsfromThailandandtheU.S.undertookworkexperienceattheNittoDenkoIbarakiPlant.Overmorethantwomonths,eachofthemundertookstudy,takingadvantageoftheirownareaofexpertise.Theyappearedtogainahands-onfeelingfordevelopingprofitablenewproductsthroughtheirinternshipexperience.

Aspiration Fukaya Science Workshop Participants Visit Nitto Denko Kanto Plant

TheNittoDenkoKantoPlantwelcomed44elementaryandjuniorhighschoolstudentsonAugust24,2012.ThevisitwaspartoftheAspirationFukayaScienceWorkshop,aneducationaleventorganizedbytheFukayaCityGovernment,whichaimstostimulatechildren’sinterestinscienceandtechnology.

Thestudentsexperiencedcutting-edgetechnologiesthroughexperimentsandapopquiz.“Thisexperienceinspiredmetovaluesciencemore.”aparticipantsaid.

Childrenlistenearnestlytoanexplanation

Aiming to peacefully coexist with society, we return our profits and personnel and intellectual property to it.

Raw materials

CO2 emissions

Water discharge

R&D expenses

Capitalinvestment

Recycling

Energy

Water


Products

New technology

Businessactivity

Sales

OperatingIncome

Dividends

Socialcontributions

Humanresources

Solvent emissions

Industrial waste





Idea Contest

Weagainhelda“GrowingFuture!TheSecondIdeaContest”thisyear.Wecalledforlatitudinousideaswiththepotentialtomakeourlivesmoreconvenientandcomfortable.Wereceivedatotalof754submissions.Thehighestawardwasgivento“KimochiTebukuro”,withwhichweunderstandthefeelingsofpeopleandthingsbytouchingthem.

Wealsomanufacturedapieceofdemonstrationequipment,makinguseofourproductsinaccordancewiththeconceptof“NikonikoHatsudensho”,whichreceivedthehighestawardlastyear.Itwasexhibitedattheeventsite.

Million Step Challenge

Thisisaneventwhosegoalwastowalk1,000,000stepsinthe100daysleadinguptothedayoftheOsakaInternationalLadiesMarathon.IncontinuationfromlastyearandwiththepurposeofsupportingareasaffectedbytheGreatEastJapanEarthquake,wedonatedreliefsuppliessuchaskerosenestoves,worth350,000yen,inresponsetothetotalcombineddistanceof320,000kilometerswalkedbyallparticipantstoSendaiTsunamiFukkoShienCenter.

Supporting Sports

32nd Osaka International Ladies Marathon

OnJanuary27,2013,inlinewiththethemeof“WeSupporttheChallengerswithSharedEnthusiasm!”wecosponsoredtheOsakaInternationalLadiesMarathonagainthisyear,fortheninthtime.Approximately2,300employeesandtheirfamiliesfromtheNittoDenkoGroupvisitedthestadium,withabout685oftheemployeesparticipatingintheeventasvolunteers.Somehelpedcleanthesitewhilstothersofferedatapingservicetotherunners.

Thisyearwecosponsored“OsakaEnjoyRun”onceagain,inwhich1,530entrantsfromelementaryschoolstudentstotheelderlyenjoyeda3.2kilometerrun.WeofferedspeciallocalproductsfromtheTohokudistrictas‘NittoDenkoPrizes’towinnersselectedbylotfromamongthosewhoansweredquizquestionscorrectly.

Thisreportcontainsfutureprojectionsaswellaspastandpresentfacts

relatedtoNittoDenkoCorporation(non-consolidated)andtheNittoDenko

Group(consolidated).Thesestatementsarebasedoninformationatthetime

ofcreationandmaynotbecompletelyaccurateatthetimeofreading.

Pleasebeadvisedthatactualbusinessactivityresultsmaydiffermaterially

fromthosedescribedintheprojections.

Alllogos,productnames,andotherrelatednamesarethetrademarksand

theregisteredtrademarksofNittoDenkoCorporationanditsrespective

companiesinJapanand/orothercountries.

Cheerfulandfunctionalbeautyisexpressedbysoftandgentlecurvedlines.Alargegloverepresentstheglobalhorizon,withimagesdepictingbusinessactivitiesspreadingthroughouttheworld.

Withcoloursevokingwarmlights(orange),water(blue)andplants(green),considerationforsocietyandtheenvironmentisshown.

IllustratorTakashiYamasaki

ThisNittoDenkoGroupReportwasprintedbyNittoDenkoHimawariCo.,Ltd,.amemberoftheNittoDenkoGroup.

NittoDenkoHimawariwasestablishedwiththeprinciplethatdisabledpersonswhohavethewilltostandontheirowntwofeetandelderlypersonswithapositiveviewofthemcanworktogetherandengageinunlimitedpossibilities.NittoDenkoHimawarioperatesabusinesscenteringaroundtheprinting,cleaning,cutting,wrappingandpackagingofvarioustapes,computerizeddocumentation,thesortingofrecyclablematerialsandtreeplanting.

URL:http://www.nitto.co.jp/himawari/

Figuresforpastyearshavebeenpartlyalteredtoreflecttheincreaseor

decreaseinnumberofgroupcompaniescoveredorchangesincalculational

procedures.

TheNittoDenkoGrouppresentsNittoDenkoGroupReport2013,whichhasbeenupdatedfrompastCSR&AnnualReports.InordertoinformeverystakeholderabouttheNittoDenkoGroupandourfiscal2013businessactivitiesintheirentirety,wehaveamalgamatedourfinancialandnon-financialinformation.

Asspaceislimited,pleaserefertoourwebsiteformoredetails.

TheNittoDenkoGrouplooksforwardtoyourcontinuedpatronageandunderstanding.

Thisreportrelatestothebusinessactivitiesofthe109companiesoftheNittoDenkoGroupasof31March2013,ofwhich99areconsolidatedsubsidiariesandtheremaining9consistofnon-consolidatedsubsidiariesandaffiliatedcompanies.WeconsultedtheSustainability Reporting Guidelines 2006issuedbytheGlobalReportingInitiativeandusedthemforguidanceonthedisclosureofnon-financialrelatedinformation.WealsoreferredtotheprinciplesoftheInternationalIntegratedReportingCommittee(IIRC).

Theterm“base”usedinthisreportreferstoaplantorofficeofagroupcompanyorNittoDenko(non-consolidated).


URL:http//www.nittodenko.com/　DateofIssue 31July2013

PublishingOffice NittoDenkoCorporationCSRDepartment HerbisOsaka,2-5-25Umeda,Kita-ku,Osaka530-0001,JapanTel:+81-6-6452-2101Fax:+81-6-6452-2102

On August 19, 2013, we will move to the following address: 32-33F,TowerA,GrandFrontOsaka,4-20Ofuka-cho,Kita-ku,Osaka530-0011,Japan Tel:+81-6-7632-2101Fax:+81-6-7632-2102

PersoninChargeofIssue KaoruAizawa BoardMemberandSeniorExecutiveVicePresident,NittoDenkoCorporation

Design AdmirationCenter,Inc

PrintingandBindingNittoDenkoHimawariCo.,Ltd.

About Our Trademarks

About the Front Cover

Printing and Binding

About Data Related to the Environment


Disclaimer

Thestart(Photocredit–SankeiShimbun)

OsakaEnjoyRun

VolunteersdrapetowelsoverrunnersintheOsakaHalfMarathon

Ideacontestawardceremony

“NikonikoHatsudensho”demonstrationequipment

Nitto

Den

ko G

rou

p R

epo

rt 2013

http//www.nittodenko.com/

Herbis Osaka, 2-5-25 Umeda, Kita-ku, Osaka 530-0001, JapanTel: +81-6-6452-2101 Fax: +81-6-6452-2102

On August 19, 2013, we will move to the following address:32-33F, Tower A, Grand Front Osaka, 4-20 Ofuka-cho, Kita-ku, Osaka 530-0011, Japan Tel:+81-6-7632-2101 Fax:+81-6-7632-2102

CATALOG CODE: 01500

Documents

Nitto Denko Group Report 2013 · Group 2 Nitto Denko Group 3 Report 2013 Nitto Denko Group Report 2013 Contents Our Relationship with Our Stakeholders Corporate Vision “Creation