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4. Sumitomo Riko Co., Ltd.(Formerly, Tokai Rubber Industries)
5. Sumitomo Riko Co., Ltd. Business Report FY ended 2015

Contracts

<Toyota>
-The Company has developed a new fuel cell gasket for Toyota's all-new Mirai fuel cell vehicle (FCV) and has started supplying it to the automaker. The fuel cell gasket, jointly developed with Toyota, is a rubber sealant placed between titanium separators of a cell in a fuel cell (FC) stack. It was made by forming high-performance rubber with precision molding technology. The fuel cell gasket has two functions: a function as a sealant and another function to secure channels of hydrogen and oxygen in a fuel cell. These functions enable stable power generation in a FC stack. This is the first time for Sumitomo Riko to supply its product to FCV's key components. (From an article in the Nikkan Jidosha Shimbun on December 16, 2014)

-In addition, the following products are being installed on the Mirai.
Anti-vibration rubber
(1) Motormounts
(2) Stackmounts
Hoses
(3) Hydrogen hoses
(4) Air hoses
Urethane products
(5) Hydrogen tank pads
(6) Soundproofing covers

Business outside Japan

<Korea>
-The Company announced that it has raised its shares in Daeheung Rubber & Technical Co., Ltd. (DRT), its equity-method affiliate, from the previous level of 20 percent to 30 percent. DRT manufactures and sells automotive anti-vibration rubber in Korea. (From a press release on January 12, 2015)

Mid-term Management Plan

-The Company is conducting its business based on its mid-term plan it formed in November 2011, the 2015 TRI-Group Vision, which is scheduled to end at the close of the 2015 fiscal year. The following figures are the targets set under the plan.

• Operating revenue: 420 billion yen
• Operating income: 34 billion yen
• Operating income margin: 8%
• ROE: 10%
• ROA: 8%

-The Company is predicting that it will just about achieve its consolidated sales targets as a result of purchasing three companies in 2013 to expand its business operations (automotive rubber companies from Europe and Brazil); the U.S. market's continued strength, and favorable currency translation.

-The Company is predicting that it will be difficult to achieve its consolidated operating-profit because the economies of Europe and South America significantly slowed after its purchase of the three companies. It is feeling pressure in terms of profits in the regions where the companies, which form the basis of its operations in those regions, are located. In responding to environmental changes, it is reorganizing its profit basis by revising the management structure of Dytech and improving the business operations of Anvis.

-Sales at the automotive-parts business for the fiscal year ending March 2016 are forecast to increase 4.2% y/y. In Japan, the market is sluggish because of a reduction in production of automobiles. Sales in the U.S. and China are predicted to rise. Also, the market in Brazil is predicted to be flat, like it was in fiscal year 2014.

Initiatives for the fiscal year ending March 2016
・Initiatives for Dytech and Anvis, two subsidiaries
-Dytech, which strengthened its management framework and revised its organization in 2014, is advancing its plans to achieve synergy effects as soon as possible by integrating its management structure, selling vibration rubber through its sales channels, and conducting efficient R&D activities and cost reductions by standardizing parts and units throughout the entire Group.

-By the spring of 2015, Anvis has basically completed transferring the automotive-parts operations of its French subsidiary to Romania, which has been trying to improve its business operations since 2014. In addition, it reduced the headcount due to contracting business operations. As a result, Anvis predicts its automotive-parts operations, which were being run in France, will be profitable in FY2015 as a result of transferring them to Romania.

・Recent developments in the automotive-parts operations
-The Company is working to expand the market share not only of its existing businesses but also new ones it is trying to develop in emerging countries by optimizing the synergy effects with the subsidiaries it bought. Specifically, it will make effective use of the strong sales channels that the subsidiaries have with European OEMs and work to raise its global market share of automotive anti-vibration rubber to 25%. Also, the Company is aiming to become one of the top suppliers of automotive hoses.

>>>Financial Forecast for the Next Fiscal Year (Sales, Operating Income etc.)

R&D Structure

-The Company's R&D functions are being carried out by the materials R&D department that is advancing the Group's core technologies, and the new-business development department responsible for developing future products, with each of the departments collaborating with one another.

R&D Activities

-The Company is working on advanced technology that complies with environmental regulations, improves ride comfort, and responds and can respond to global markets.
- Recent achievements by its R&D functions include high-performance rubber capable of maintaining tight seals for long periods of time in wide-ranging heat ranges, from high to low temperatures, by making use of the Company's proprietary technology on compounding. In addition, the Company fused its precision-machining technology, which it acquired as a result of developing automotive anti-vibration rubber, and also developed a rubber "cell gasket", i.e., a rubber seal material for fuel-cell stacks, which are being equipped on fuel-cell vehicles.

Weight-saving Developments

Plastic filler-neck module
-The Company developed and commercialized a filler-neck module in which various parts have been integrated, from parts for the fuel-supply to parts for the filler tubes. Due to the module design, the module itself is indeed a value-added product that reduces the number of assembly processes required at OEMs. The Company changed the material used for the filler pipe, by which fuel is fed to the fuel tank, from metal to plastic, making it 40% lighter. Also, the module complies with environmental regulations due to its exceptional ability to control fuel permeation, i.e., fuel seeping out from the pipe.

-During the fiscal year ended March 2015, the automotive parts division invested mainly in production equipment to manufacture anti-vibration rubber and hoses at home and abroad.

Investment Outside Japan

<Mexico>
-The Company announced that it has held an opening ceremony at its Mexican subsidiary, TRI Anvis Mexico S.A.P.I de C.V. (TRAM), which manufactures automotive anti-vibration rubber. Tokai Rubber had previously established a Mexican subsidiary to supply anti-vibration rubber to Japanese automakers' local facilities in December 2012, while Anvis Group GmbH, a Germany-based manufacturer of automotive anti-vibration rubber that became a wholly-owned subsidiary of Tokai Rubber in May 2013, also had a subsidiary in the country. In order to improve business efficiency, Tokai Rubber in December 2013 integrated the two subsidiaries into TRAM and in January 2014 opened a new facility constructed by Anvis Group. TRAM was capitalized at MXN 439 million (approximately JPY 3.4 billion), of which 50.5 percent was provided by Anvis Netherlands, 44.5 percent was provided by Tokai Rubber, and the remaining 5 percent was provided by TRI America. Approximately MXN 277 million (JPY 2.2 billion) was invested in the new plant, which has a land area of about 14,400 square meters and a floor area of about 8,000 square meters. It has a production capacity worth MXN 360 million (JPY 2.8 billion). (From a press release on June 24, 2014)

<China>
-The Company announced that its Chinese subsidiary, Anvis Wuxi, which manufactures and sells automotive anti-vibration rubber, has completed the expansion of its office building and the construction of a new plant. Approximately EUR 3.3 million was invested in the plant. Based in Wuxi, Jiangsu Province, Anvis Wuxi has a land area of approximately 35,000 square meters, and a floor area, including the additional office space, of approximately 15,000 square meters. After adding the new plant, Anvis Wuxi will have a production capacity worth EUR 100 million. Sales are expected to reach approximately EUR 63 million in the fiscal year ending March 2015. (From a press release on December 10, 2014)

-The Company has completed a new plant in Tianjin City, China, to manufacture interior and sound-insulating parts. Tokai Rubber's subsidiary, Tokai Chemical Industries, Ltd., established the new plant at its subsidiary, Tokai Chemical (Tianjin) Auto Parts Co., Ltd. The sub-subsidiary had been established in 2004. The new plant covering a building area of 10,400 square meters was constructed with an investment of JPY 471 million. The plant commenced production in March 2014. It manufactures engine head covers, headrests and armrests utilizing urethane foaming technologies. Aiming to expand its business in China, Tokai Rubber intends to increase sales to Japanese automakers as well as to local carmakers. (From an article in the Nikkan Jidosha Shimbun on April 26, 2014)