Consolidated Financial Result Digest

FY2018 Q2 (Fiscal Year Ending March 31, 2018)

October 31, 2017

Z TAIYO HOLDINGS CO., LTD.

Any information incorporated in this document is not intended for suggestion of purchase or sale of equity share

of the company. All the description and projection are based on the company's own analysis at the time of

compilation, and their accuracy is not guaranteed. These data may be revised without prior announcement. The

company will neither assume nor compensate any loss of anybody resulting from decision based on information

provided here.

Terminology

Term Definition

PWB Printed wiring boards

SR “Solder resist ink” or “Solder mask”

PKG Semiconductor packages

1

Classification of Product

Group Category Type Remarks

PWB

insulating

materials

Rigid

high-end

Liquid

・SR materials for insulation and surface

protection use

regular

PKG Liquid/Dry Film

FPC Liquid/Dry Film

Build-up Liquid/Dry Film・build-up materials for interlayer insulation and

hole plugging use

Other

related

products

Other Liquid

・marking, etching, plating materials

・flux, solvent etc.

・conductive silver paste

2

1

3

2

4

3 FY2018 Q2 Overview

Sales volume increased year-on-year particularly in DF (Dry Film)

Revision to consolidated earnings forecasts for FY2018

Established a pharmaceutical business subsidiary,

TAIYO Pharma Co., Ltd.

Actual exchange rate of the yen against U.S. dollar almost the same as

expectation *Estimated exchange rate:1USD=111yen

Results summary

FY2018

FY2017 FY2018 FY2018 full year

Q2 Q2 Q2 new

results results forecasts forecasts

Net sales 23,442 25,784 +2,342 +10% 25,000 103% 50,000

Operating

income4,557 5,744 +1,187 +26% 5,200 110% 10,200

Ordinary

income4,602 5,690 +1,088 +24% 5,100 112% 10,100

Net income 3,623 3,998 +375 +10% 3,600 111% 7,000

progress

rate%YoY

4

JPY millions

FY2018 Q2 Consolidated Financial Results

25,78423,442

+179

+1,768

+395

5 FY2018 Q2 Net Sales (YoY)

Analysis of Net Sales JPY millions

Increase in

sales volume

of PWB etc.

Increase in

sales volume

of DF

Foreign currency

fluctuation,

change in product

mix, etc.

FY2017 Q2 FY2018 Q2

4,557 5,744

+91

+881

+215

6 FY2018 Q2 Operating Income (YoY)

Analysis of Operating Income JPY millions

FY2017 Q2 FY2018 Q2

Increase in

sales volume

of PWB etc.

Increase in

sales volume

of DF

Foreign currency

fluctuation,

change in product

mix, etc.

・Increase in assets due to strong sales and

increased foreign currency denominated assets

from depreciation of the yen

・Increase in short-term loans payable for the

purpose of hedging exchange risk

・Increase in retained earnings

24,903 25,657

14,267 15,493

4,416 4,464

48,800 50,005

92,38695,619

0

20,000

40,000

60,000

80,000

100,000

FY2017

full year

FY2018

Q2

71,846 74,134

20,540 21,485

92,386 95,619

0

20,000

40,000

60,000

80,000

100,000

FY2017

full year

FY2018

Q2

7

BS (YoY)

JPY millions

Assets Liabilities and Equity

Cash

Inventories

Other Current Assets

Fixed Assets

Liabilities

Equity

FY2018 Q2 BS Highlights

204

(2,038)

(2,000)

(1,000)

0

1,000

2,000

3,000

4,000

5,000

FY2017

Q2

FY2018

Q2

3,701

4,807

(2,000)

(1,000)

0

1,000

2,000

3,000

4,000

5,000

FY2017

Q2

FY2018

Q2

(656)

(1,907)

(2,000)

(1,000)

0

1,000

2,000

3,000

4,000

5,000

FY2017

Q2

FY2018

2Q

8

Operating CF Investing CF Financing CF

・Increase in net income

before income taxes

・FY2017 Q2: Cancellation of fixed

deposit

・Purchases of investment securities

・Increase in payment of dividend

・Acquisition of shares of

subsidiary

FY2018 Q2 CF Highlights

CF (YoY)

JPY millions

10,320

7,741

4,746

867

1,726

10,123

6,400

4,531

8651,523

10,903

6,637

5,144

1,3121,785

0

5,000

10,000

15,000

Rigid (high-end) Rigid (regular) PKG Build-up/FPC Other

9

Sales Results by Product Group Category JPY millions

FY2017 Q2

FY2018 Q2

FY2016 Q2

*This category differs from the classification of “sales results by product group category” mentioned in consolidated financial

results and annual securities report, etc.

FY2018 Q2 Sales Results by Product Group Category

862

2,387

833 605 295

1,622

2,463

960 846

2130

1,000

2,000

3,000

Japan China Taiwan Korea Other

8,59410,439

4,128 4,0731,990

9,56811,078

4,579 5,035

2,0980

2,000

4,000

6,000

8,000

10,000

12,000

Japan China Taiwan Korea Other

10% 23% 20% 15% 15%17% 22% 21% 17% 10%

10 FY2018 Q2 Segment InformationSales by Segment (including inter-segment sales or transactions)

Operating Income by Segment (including inter-segment sales or transactions)

JPY millions

JPY millions

FY2017 Q2

FY2018 Q2

Operating

Income Ratio

●

11 Trend of Quarterly Performance

Net Sales & Operating Income JPY millions

Net sales（left axis）

Operating income (right axis）

(500)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4Q1 Q2 Q3Q4 Q1 Q2Q3 Q4 Q1Q2 Q3 Q4

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

12 Revision to FY2018 Consolidated Earning Forecasts

Forecasts Revision Summary JPY millions

FY2018 FY2018

FY2018 full year full year

Q2 previous new Change Change

results forecasts(A) forecasts(B) (B-A) (%)

Net sales 25,784 48,200 50,000 1,800 4%

Operating

income5,744 9,200 10,200 1,000 11%

Ordinary

income5,690 9,100 10,100 1,000 11%

Net income 3,998 6,400 7,000 600 9%

Exchange rate of

JPY/USD111 106 108

In light of the higher-than-expected demand and the higher-than-anticipated depreciation

of the yen, consolidated earnings forecasts for FY2018 were revised as mentioned above.

Medium-Term Business Plan

Targets

Profit structure Operating margin: 20% or more

Profitability

Shareholder return

Operating results

ROE (Return on Equity ratio): 11% or more

DOE (Dividend on Equity ratio): 5% or more

Achieve a new record high in term of operating profit

We have formulated the Next Stage 2020 three-year medium-term business plan to extricate

the Group from this business structure and make the leap to becoming a comprehensive chemical

company, based on the keyword, “chemicals,” which we have adopted as our guideline.

14 Medium-Term Business Plan “Next Stage 2020”

15

Basic Policy

１ Improve profitability of solder resist (SR)

２３４

Expand into areas related to printed wiring board (PWB)

other than solder resist

Launch a medical and pharmaceutical business

Move the energy and food businesses into the black

９

５６７８

Strengthen basic research capabilities

Business alliance with DIC Corporation

Execute M&A strategy

Expand CSR activities

Develop and utilize self-sufficient personnel capable

of acting independently

医療・医薬品事業

Medium-Term Business Plan “Next Stage 2020”

Medical and Pharmaceutical

Business Subsidiary

17 Management Policy for Future

New Business Creation18

New Business (Beginning to explore the medical and pharmaceutical manufacturing businesses)19

Points of Similarity between Pharmaceuticals and the Manufacturing

Processes of the Taiyo Group20

Areas where the Taiyo Group can Manifest its Strengths21

Proprietary products

Means of Entry

Assume long listed drugs

Corporate acquisition

Plant acquisition

Own plant

Growth Strategy

Overseas Production

・No drug development

・Improve profitability of long listed drugs

・Assume additional long listed drugs

・Authorized generics (including antibody drugs)

・Super generics

・Low cost operation for proprietary products

・Consignment production using a technology

platform

・Out-in contract plant

22 Considering Entry

Initiatives in ESG

Initiatives in ESG24

Environmental

Social

Governance

・Bringing floating solar power plant online (October 2015 onward)

・Bringing plant factory online (November 2015 onward)

・Installing energy-saving production equipment

・Switching plant lighting to LED lighting

・Opening a daycare center inside the office and accepting local children (December 2015 onward)

・Holding plant tours and chemistry labs for local elementary school children (November 2014 onward)

・Supporting and participating in local events (Ogawa Washi Marathon, 2014 onward; Nerima Kobushi Marathon, 2015

onward)

・Donation of solar power generation equipment to communities during disasters (Received “Medal with Dark Blue

Ribbon” (national award) in September 2016)

・Early use of employee stress checks (September 2012 onward)

Taiyo Group floating solar power plant (1.2MW)

・Establishment of Compensation Advisory Committee and Nomination Advisory Committee as discretionary

organizations (Compensation: December 2009 onward; Nomination: November 2015 onward)

・Appointment of two or more outside directors (June 2015 onward)

・Introducing a results-based system of compensation through the award of shares with multiple year restrictions on

transfer (June 2014 onward)

・Rapid disclosure of summary financial statements (January 2017 onward)

・Early disclosure of agenda for general shareholders’ meetings, and early mailing of invitation notices (from fiscal year

ending March 31, 2015 onward)