Post on 14-Feb-2017
(Translation)
Securities Code: No. 5019
June 4, 2014
To the Shareholders:
NOTICE OF THE 99TH ORDINARY GENERAL MEETING
OF SHAREHOLDERS
Dear Shareholders:
We would like to express our appreciation for your continued good offices.
Please take notice that the 99th Ordinary General Meeting of Shareholders of the
Company will be held as described below and you are cordially requested to attend the
meeting.
If you do not expect to be present at the meeting, you may exercise your voting rights
either by returning to us by mail the enclosed voting form indicating your approval or
disapproval of the propositions or by accessing the website for the exercise of voting rights
stated in the enclosed voting form and exercising your voting rights by an electronic method
(such as the Internet). Hence, please review the accompanying Reference Document for the
General Meeting of Shareholders and exercise your voting rights in accordance with the
information on page 3 through page 5 no later than 5:00 p.m., Wednesday, June 25, 2014.
Yours very truly,
Takashi Tsukioka
President and Representative Director
Idemitsu Kosan Co., Ltd. 1-1, Marunouchi 3-chome,
Chiyoda-ku, Tokyo, Japan
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Description 1. Date and hour of the meeting:
Thursday, June 26, 2014, at 10:00 a.m. 2. Place of the meeting:
"Grand Ball Room", 3F, Grand Hyatt Tokyo
10-3, Roppongi 6-chome, Minato-ku, Tokyo, Japan 3. Matters forming the objects of the meeting:
Matters to be reported:
1. Report on the business report, the consolidated financial statements and the
results of audit of the consolidated financial statements by the account
auditors and the Board of Statutory Auditors for the 99th fiscal year (from
April 1, 2013 to March 31, 2014)
2. Report on the non-consolidated financial statements for the 99th fiscal year
(from April 1, 2013 to March 31, 2014)
Matters to be resolved:
Proposition No. 1: Amendment to the Articles of Incorporation
Proposition No. 2: Election of eleven (11) Directors
Proposition No. 3: Election of two (2) Statutory Auditors
- END -
The place of the meeting will be open to the shareholders at 9:00 a.m. on the date of the
meeting.
In attending the meeting, please present the enclosed voting form to a receptionist at the
place of meeting.
In the event of the revision of any matter in the business report, the consolidated financial
statements, the non-consolidated financial statements and the Reference Document for the
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General Meeting of Shareholders attached herewith prior to the date of the meeting, it will
be posted on our Internet website (http://www.idemitsu.co.jp).
Information Concerning Exercise of Voting Rights
I. If you expect to be present by proxy, please make a document evidencing his/her power
of attorney presented to a receptionist at the place of the meeting, together with the
enclosed voting form. (Such proxy must be another shareholder (being one (1)
person) of the Company entitled to vote.)
II. If any institutional investor or any other shareholder who holds shares on behalf of third
parties desires to diversely exercise voting rights, please give notice to that effect and of
the reason therefor to the Company in writing no later than three (3) days prior to the
date of the meeting.
III. If you do not expect to be present at the meeting, please exercise your voting rights by
either of the following methods:
1. [Exercise of voting rights by sending the voting form by mail]
Please indicate your votes for or against each of the propositions in the enclosed voting
form and return the form to reach us no later than 5:00 p.m., Wednesday, June 25, 2014.
2. [Exercise of voting rights via the Internet]
(1) Any exercise of voting rights via the Internet will be possible only on the following website for the exercise of voting rights specified by the Company. The website for
the exercise of voting rights is also accessible via mobile-phone Internet.*
URL of the website for the exercise of voting rights: http://www.web54.net
* By using a mobile phone installed with a bar-code reader, please
read the "QR Code®
" in the right and access the website for the
exercise of voting rights. For more information on the operation
procedure, please refer to the instruction manual of your mobile
phone.
("QR Code" is a registered trademark of Denso Wave
Incorporated.)
(2) To exercise voting rights via the Internet, please enter your votes for or against each of
the propositions in accordance with the guidance on the screen, by using the "code for
the exercise of voting rights" and the "password" printed in the enclosed voting form.
(3) Any exercise of voting rights via the Internet will be acceptable no later than 5:00 p.m.,
Wednesday, June 25, 2014. However, for the expedient counting of the voting rights
exercised, it would be appreciated if you could exercise your voting rights early.
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(4) If voting rights are exercised both in writing and via the Internet, the voting rights
exercised via the Internet shall be treated as effective.
(5) If voting rights are exercised via the Internet twice or more, the voting rights last
exercised shall be treated as effective.
(6) All fees payable to Internet service providers and telecommunication carriers (such as
phone line charges) in accessing the website for the exercise of voting rights must be
borne by the shareholders.
(7) To access the website for the exercise of voting rights, the following system
environments are necessary:
(i) Website for PCs:
a. The display resolution must be at least 800 pixels from side to side and 600
pixels from top to bottom (SVGA).
b. The PC must be installed with the following application software:
(a) Microsoft® Internet Explorer ver.5.01 SP 2 or above as a Web-browser; and
(b) Adobe®
Acrobat® ReaderTM ver.4.0 or above or Adobe
® Reader® ver. 6.0 or
above as a PDF file-browser.
(Internet Explorer is a registered trademark, trademark and product name of
Microsoft Corporation of the United States in the United States and other nations.
Adobe® Acrobat
® ReaderTM and Adobe
® Reader
® are registered trademarks,
trademarks and product names of Adobe Systems Incorporated of the United
States in the United States and other nations.)
(ii) If voting rights are exercised by using a mobile phone, it must be the one that
enables 128 bit SSL communications (encrypted communications).
(To ensure security, the website is compatible only with mobile phones that
enable 128 bit SSL communications (encrypted communications) and some
mobile phones may have no access thereto. Voting rights can be exercised via
full-browser functions of mobile phones, including smart phones; please be
advised in advance, however, that such service is not available to some models.)
3. [Platform for Electronic Exercise of Voting Rights for Institutional Investors]
"ICJ Platform", a platform for electronic exercise of voting rights for institutional
investors operated by ICJ Inc., a joint company incorporated by Tokyo Stock Exchange, Inc.
and others, will be available to nominee shareholders (including standing proxies), such as
custodian trust banks, as an electronic method of exercise of voting rights at the General
Meeting of Shareholders of the Company in addition to the above-mentioned method via the
Internet if they apply for the use of the platform in advance.
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[Contact for Inquires about Exercise of Voting Rights via the Internet]
If you have any questions about the exercise of voting rights via the Internet, please contact:
Share Registrar: Sumitomo Mitsui Trust Bank, Limited
Web Support Dedicated Dial
Stock Transfer Agency Business Planning Dept.
Dedicated Phone No.: 0120-652-031 (available at 9:00 a.m. through 9:00 p.m.)
Other inquiries: 0120-782-031 (available at 9:00 a.m. through 5:00 p.m.
on weekdays)
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(Attached document)
BUSINESS REPORT
(April 1, 2013 to March 31, 2014)
1. Current state of the Idemitsu Group (the "Group")
(1) Business activities for the fiscal year under review:
(i) General economic conditions and environment surrounding the Group:
During the fiscal year under review, the Japanese economy has advanced on the basis
of a moderate recovery trend that is showing some signs of pulling out of deflation,
including the recovery of stock prices and the continuing trend of weakening Japanese yen,
assisted in part by the government's fiscal policies and the monetary easing policy of the
Bank of Japan.
The domestic overall demand for petroleum products during the fiscal year under
review decreased compared with the previous fiscal year. While the demand for diesel oil
increased compared with the previous fiscal year, due to firm demand from the
transportation sector, the demand for kerosene decreased due to higher temperatures since
the fall, and the demand for fuel oils for power generation also fell from the level of the
previous fiscal year due to the effects of savings on electricity consumption.
Dubai crude oil prices fell below $100/bbl. temporarily, hit by concerns over the
decrease in demand due to factors including the worsening of the economic outlook for the
Chinese economy. However, the prices subsequently climbed to a level around $105/bbl.,
due partly to intensified concerns over geopolitical risks. As a result, the average price for
the fiscal year under review was $104.6/bbl., a drop of $2.5/bbl. compared with the previous
fiscal year.
Demand for petrochemical products during the fiscal year under review was consistent
with the previous fiscal year and the environment surrounding exports from Japan improved
due partly to the weakening of the Japanese yen. The average price for naphtha, a
petrochemical raw material, dropped to $939/ton, a decrease of $25/ton from the previous
fiscal year.
The exchange rate of the Japanese yen to the U.S. dollar fell by ¥17.1 from the
previous fiscal year to ¥101.2. As a result, the respective yen-denominated import prices
for crude oil and naphtha, among others rose substantially.
(ii) Operating results:
Under these circumstances, the Group's net sales for the fiscal year under review were
¥5,035.0 billion, up 15.1% on a year-on-year basis, due partly to rises in the import prices
for crude oil.
Operating income dropped by 29.4% on a year-on-year basis to ¥78.2 billion, mainly
affected by factors including the contraction in petroleum product margins due to the rise in
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the cost of crude oil imports hit by the progress of depreciation of the Japanese yen, despite
such factors as increased sales volume and higher margins of petrochemical products and
increased valuation gains on inventories due to the rise in yen-denominated crude oil prices.
Net non-operating income resulted in ¥3.7 billion, an increase of ¥5.3 billion compared
with net non-operating expense of ¥1.6 billion for the previous fiscal year, due mainly to
increased equity in earnings of affiliates. As a result, ordinary income was ¥81.9 billion, a
decrease of 24.9% from the previous fiscal year.
Net extraordinary loss resulted in ¥0.9 billion, a contraction of loss of ¥6.9 billion
compared to the previous fiscal year, mainly assisted by increased insurance proceeds,
despite an impairment loss on some of the oilfield equipment in the U.K. North Sea.
The total of income taxes and minority interests was ¥44.8 billion, representing a
decrease of 12.5% compared to the previous fiscal year.
As a result, net income for the fiscal year under review decreased by 27.7% on a
year-on-year basis to ¥36.3 billion.
(iii) Progress and results of business:
The Group implemented measures and activities in line with its Fourth Consolidated
Medium-term Management Plan, which was formulated in March 2013, during the fiscal
year under review. The progress and results of the business by segment are as follows:
Business segment
Net sales Operating income
Fiscal year under review
Increase (decrease) from the
previous fiscal year
Fiscal year under review
Increase (decrease) from the
previous fiscal year
(billion yen) (%) (billion yen) (%)
Petroleum products 4,116.5 12.9 18.9 -74.0
(Not including effects of
revaluation of inventories) - - (-22.1) -
Petrochemical products 675.1 27.8 36.5 113.4
(Not including effects of
revaluation of inventories) - - (34.6) (115.9)
Resources 193.6 19.3 24.5 7.2
Others 49.8 36.3 2.5 34.0
Adjustment - - -4.1 -
Total 5,035.0 15.1 78.2 -29.4
(Not including effects of
revaluation of inventories) - - (35.3) (-58.2)
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<Petroleum products business>
In the petroleum products business, the Company has set as its basic strategy the
reinforcement of the competitiveness of its domestic marketing and supply systems and the
expansion of business in overseas markets, and has taken the following actions:
(Fuel oil business)
In the supply of fuel products, the Company has carried out crude oil processing
according to the environment surrounding the demand and the sales conditions, and has
strived to promote a reduction in supply costs and the stable supply of the products.
In response to the termination of the crude oil processing function at the Tokuyama
Refinery in March 2014, the Company enhanced the acceptance and shipping capacity in
each of the Hokkaido, Chiba, and Aichi Refineries.
In the marketing and sales of fuel products, the Company reinforced the brand network
through the opening of new service stations, and the conversion and revitalization of
existing service stations. In order to strengthen the profitability of the group service
stations through an increase in the number of visiting customers and effective sales
promotion activities, the Company also decided to participate in the universal point card
system "R-Point Card" to be started by Rakuten, Inc.
As for business efforts in overseas markets, the Company decided on capital
participation in Laffan Refinery Company Limited 2 in Qatar. In addition, the Company
has made a final investment decision on the Nghi Son Refinery and Petrochemical Complex
in Vietnam, where construction work has already begun.
(Lubricants business)
In the fiscal year ended March 31, 2014, the total domestic and overseas sales volume
exceeded 1 million kl, representing the highest sales in the Company's history.
In order to further promote the business globally, the Company commenced operation
of a sales company in Mexico and opened its Chongqing Office, the fifth sales base in China.
In India and Vietnam, manufacturing plants were constructed by local subsidiaries and both
of them have started production and sales of the products.
As a result, net sales of the petroleum products business were ¥4,116.5 billion, an
increase of 12.9% compared with the previous fiscal year, due mainly to increases in the
import prices for crude oil. Operating income was ¥18.9 billion, representing a decrease of
74.0% compared with the previous year, due in part to a contraction in the margins for
petroleum products. Operating income includes valuation gains on inventories of ¥41.0
billion.
<Petrochemical products business>
In the petrochemical products business, the Company has set as its basic strategy the
reinforcement of the competitiveness of its basic chemicals business through the
restructuring of the supply system and the enhancement of the profitability of the
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performance materials business, and has taken the following actions:
(Basic chemicals business)
In the Chiba district, the Company has strived to optimize the production systems in
the ethylene complex and derivative products complex and to enhance cost competitiveness
through strengthening cooperation with Mitsui Chemicals, Inc. In February 2014, the
Company and Mitsui Chemicals, Inc. agreed to terminate the phenol plant of Chiba Phenol
Co., Ltd., a joint investment company owned by both companies, in the fiscal year ending
March 31, 2015.
Furthermore, after the termination of the crude oil processing function, the Tokuyama
Refinery was converted into the Tokuyama Complex. At the Tokuyama Complex, in order
to ensure stable supply of competitive olefin to the Shunan Petrochemical Complex, the
Company has carried out improvements of receiving facilities, such as the conversion of
crude oil tanks to naphtha tanks, in response to the importation of large-sized naphtha lots.
(Functional materials business)
Regarding the engineering plastics business, the Company decided to transfer the
production of its general-purpose polycarbonate resin (Product name: TARFLON®
) to the
joint venture plant in Taiwan, aiming to enhance cost competitiveness. Regarding SPS
resin (syndiotactic polystyrene (SPS) resin, Product name: XAREC®
), a material having
excellent water and heat resistance properties, the Company has made efforts to expand
sales in the area including electrical components for vehicles and electrical cooking
appliances.
In the adhesive materials business, the Company has promoted market development
globally for functional soft polypropylene (Product name: L-MODU®
), which has a melting
point that is substantially lower than existing crystalline polypropylene for use as an
adhesive for sanitary items, non-woven fabric polyesters, etc.
As a result, net sales for the petrochemical products business for the fiscal year under
review were ¥675.1 billion, an increase of 27.8% compared to the previous fiscal year,
partially assisted by increased naphtha prices on a customs clearance due to the weakening
of the Japanese yen. Operating income was ¥36.5 billion, up 113.4% from the previous
fiscal year, assisted in part by expanded product margins due mainly to increased sales
volumes and a trend of higher prices of styrene monomers. Operating income includes
valuation gains of ¥1.9 billion on inventories.
<Resources business>
In the resource businesses, the Company has set as its basic strategy the expansion of
production scale, securing reserves through exploration activities and the restructuring of
the coal business, and has taken the following actions:
(Oil exploration and production business)
As part of its production activities, the Company has commenced commercial
production at the Vigdis Northeast oil field in the Norwegian North Sea. The Company
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has also been promoting the necessary preparations for the early commencement of
commercial production at the Knarr and H Nord oil fields.
With regard to exploration activities, the Company has discovered an accumulation of
oil in the Wisting Central structure in the Norwegian Barents Sea. Going forward, the
Company will conduct a detailed evaluation and analysis of these reserves.
To secure increased reserves for the long term, the Company has participated in open
biddings for licensing oil fields implemented by the Norwegian government and acquired an
interest in two oil fields. The Company acquired an additional interest in the H Nord oil
field that is currently under development in Norway, and the Company's interest increased
to 40% from 15%.
Regarding oil and gas fields currently in operation, the Company produced 27 thousand
bbl. of crude oil and natural gas per day (barrels of oil equivalent per day) in the Norwegian
North Sea, the U.K. North Sea and Vietnam.
Net sales for the oil exploration and production business for the fiscal year under
review increased by 21.5% to ¥97.6 billion and operating income was ¥32.5 billion, up
27.0% from the previous fiscal year, due mainly to increased production and sales mainly in
the Norwegian North Sea.
(Coal business and others)
Regarding the coal business, the Company made efforts to enhance the competitiveness
of its Australian mines amid a fall in coal prices. The total production volume was 10.58
million tons, up 1.44 million tons from the previous year, due partly to increased production
at the Boggabri Mine, the Company's core coal mine in Australia. The Company has
strived to implement cost reduction measures in each mine by reviewing the production sites
and reducing various charges such as mining charges, transport charges and loading and
unloading charges.
As for the uranium business, the Company has commenced the production of uranium
ore at the Cigar Lake Mine in Canada.
With regard to the geothermal energy business, the Company has continued
commercial operations smoothly in the Takigami area in Oita prefecture. Furthermore, the
Company has commenced an investigation of the underground structure in two regions
where it has been carrying out investigations in an aim to develop the business, namely the
Amemasudake district of Hokkaido and the Oyasu district of Akita prefecture. The
Company also has participated in a geothermal resources development project in Fukushima
prefecture and started ground surface research in the area surrounding the Bandaisan.
Net sales for the coal and other business for the fiscal year under review were ¥95.9
billion, an increase of 17.1% from the previous fiscal year due to increased production and
sales of coal. Operating loss was ¥8.0 billion, an increase in loss of ¥5.3 billion compared
to the previous fiscal year due to the fall in coal prices, even though the Company had
implemented its scheduled cost reduction measures.
As a result, total net sales for the resources businesses increased by 19.3% compared
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with the previous fiscal year to ¥193.6 billion, and operating income increased by 7.2%
against the previous fiscal year to ¥24.5 billion.
<Other businesses>
As for the electronic materials business, the agricultural biotechnology business, the
gas business and the renewable energy business among other businesses, the Company has
achieved the following:
(Electronic materials business)
In the field of OLED (organic light-emitting diode) materials, the Company has
conducted the stable supply of products to large manufacturers in Japan, South Korea,
Taiwan, etc. from its two OLED materials manufacturing bases in Paju-city, South Korea
and Omaezaki city, Shizuoka prefecture, and also has strived to expand the sales volume in
response to customer demand by utilizing technology development through joint
development and other means.
(Agricultural biotechnology business)
SDS Biotech K.K., a consolidated subsidiary of the Company, has made a decision to
acquire a 15% interest of both Jiangsu Xinhe Agrochemical Co., Ltd. and Jiangsu Xinyi
Thai Harvest Chemical Co., Ltd. in China for the purpose of ensuring the stable supply of an
antimicrobial "Dakonil", its main product, and the enhancement of competitiveness.
In the feed additive business, the Company continued the development of a new
product and launched "RUMINUP®-GL", thus enhancing the line-up of the RUMINUP
series of products.
(Gas business)
AltaGas Idemitsu Joint Venture Limited Partnership ("AIJVLP"), which the Company
established jointly with AltaGas Ltd. in Canada, has been pursuing opportunities for
commercialization of the exportation of LNG (liquefied natural gas) and LPG (liquefied
petroleum gas) bound for Asia from North America.
Towards the early realization of exports of LPG, AIJVLP acquired two-thirds of the
outstanding shares of Petrogas Energy Corp., whose main businesses include the marketing,
distribution and storage of NGL (natural gas liquid), LPG and crude oil in Canada and the
U.S.
(Renewable energy business)
As renewable energy projects through utilizing idle land, the Company has constructed
solar energy generation facilities (mega solar power plants) in Moji-ku, Kitakyushu city
(power output: 2,900 kW) and Himeji city, Hyogo prefecture (power output: 10,000 kW),
which have started operation.
As a result, net sales for other businesses for the fiscal year under review increased by
36.3% from the previous fiscal year to ¥49.8 billion, and operating income increased by
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34.0% from the previous fiscal year to ¥2.5 billion.
(iv) Investment in plant and equipment:
The amount of investment in plant and equipment of the Group for the fiscal year under
review totaled ¥107.5 billion, which was principally used as follows:
Business sector Principal investment in plant and equipment
Petroleum products Restructuring, maintenance and renewal of facilities of the
refineries; enhancement, maintenance and renewal of sales
facilities of service stations
Petrochemical products Restructuring, maintenance and renewal of production
facilities
Resources Development and maintenance of oil fields; expansion,
maintenance and renewal of coal production facilities;
geothermal facilities, etc.
Others Business offices, etc.
(v) Financing:
The Group's working capital requirements derive mainly from purchases of raw
materials to manufacture products, and fluctuate in response to crude oil prices and foreign
exchange rates. During the fiscal year under review, its working capital requirements
increased due principally to an increase in prices of raw materials arising from the weaker
yen and the balance of short-term borrowings and commercial paper increased by ¥115.3
billion compared with the previous fiscal year.
With regard to capital investment, an investment of ¥476.0 billion is planned to be made
in the areas of core business, resources business and functional materials business for three
fiscal years from April 1, 2013 through March 31, 2016 in line with the basic strategy under
the Medium-term Management Plan. The Group raised a loan of approximately ¥160.0
billion required for the fiscal year under review, ¥60.0 billion of which was raised through a
syndicated loan. In addition, the Company issued its third unsecured bonds (issue amount:
¥25.0 billion, maturity: five years) in July 2013 to diversify financing methods.
As a result, the balance of interest-bearing debt as at the end of the fiscal year under
review was ¥1,081.9 billion, an increase of ¥185.5 billion compared with the previous fiscal
year.
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(2) Assets and income/loss
Item
96th year April 1, 2010 - Mar. 31, 2011
97th year April 1, 2011 - Mar. 31, 2012
98th year April 1, 2012 - Mar. 31, 2013
99th year (current year) April 1, 2013 - Mar. 31, 2014
Net sales
(million yen)
3,659,301 4,310,348 4,374,696 5,034,995
Ordinary income
(million yen)
128,015 133,559 109,122 81,921
Net income
(million yen)
60,683 64,376 50,167 36,294
Net income per share
(yen) 379.36 402.46 313.63 226.90
Total assets
(million yen)
2,517,849 2,682,139 2,728,480 2,995,063
Net assets
(million yen)
540,880 614,513 687,948 743,786
Net assets per share
(yen)
3,216.19 3,667.05 4,085.83 4,391.46
(Note) As of January 1, 2014, the Company conducted a stock split at the rate of four shares for
each share for the shareholders appearing in the final register of shareholders on
December 31, 2013. Net income per share and net assets per share were calculated on
the assumption that the stock split had been conducted at the beginning of the fiscal year
ended March 31, 2011.
(3) Major parent company and subsidiaries:
(i) Relationship with the parent company:
Not applicable.
(ii) Major subsidiaries:
Name Capital
Ratio of voting
rights of the
Company (%)
Main business
Idemitsu Tanker Co., Ltd. ¥1,000 million 100.0 Transportation of crude oil
and petroleum products of the
Company
Idemitsu Retail Marketing Co.,
Ltd.
¥80 million 100.0 Sale of petroleum products
S.I. Energy Co., Ltd. ¥500 million 100.0 Sale of petroleum products
Idemitsu Unitech Co., Ltd. ¥2,600 million 100.0 Manufacture and sale of
plastic products
Idemitsu Oil & Gas Co., Ltd. ¥8,275 million 100.0 Acceptance of operations of
oil exploration and production
companies of the Group
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Name Capital
Ratio of voting
rights of the
Company (%)
Main business
Idemitsu Snorre Oil
Development Co., Ltd.
¥12,096 million 50.5 Investigation, exploration,
development and sale of oil
resources
Idemitsu Cuu Long Petroleum
Co., Ltd.
¥3,537 million 82.9 Investigation, exploration,
development and sale of oil
resources
Idemitsu Petroleum Norge AS NOK727,900
thousand
50.5 Investigation, exploration,
development and sale of oil
resources
Idemitsu Australia Resources
Pty Ltd
A$106,698
thousand
100.0 Investigation, exploration,
development and sale of coals
SDS Biotech K.K. ¥810 million 69.7 Production, import and sales
of agricultural chemicals
Idemitsu Canada Resources
Ltd.
C$131,167
thousand
100.0 Investigation, exploration,
development and sale of
uranium resources in Canada
Idemitsu Canada Corporation C$334,000
thousand
100.0 Investigation and promotion of
gas and related businesses in
Canada
(4) Issues to be tackled:
[Medium- and long-term corporate management strategy]
In March 2013, the Group formulated and released its "Fourth Consolidated
Medium-term Management Plan" that covers the three-year period from April 1, 2013
through March 31, 2016.
Under the Fourth Consolidated Medium-term Management Plan, the Group will
complete structural reforms of all business units as soon as possible, assuming the following
business environments:
<Business environments>
• Decreasing domestic demand for fuel oils and overseas transfer of the
manufacturing industry
• Faster economic growth and expansion of demand in emerging countries mainly
in Asia
• Changes in the supply and demand structure for energy
(Increasing demand for LNG power generation and renewable energy as
alternatives to nuclear power, and the rise of unconventional energy resources)
• Expansion of new business opportunities (in the fields of environment and food)
driven by the global increase in the population and economic growth in
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emerging countries
Under those business environments, in core business, the Group will reinforce
competitiveness in the domestic market to achieve long-term stable profitability, as well as
expand overseas business in the areas where a high rate of economic growth is expected, in
particular, emerging countries.
In resources business, the Group will increase the production volume in oil and gas
in oil exploration and production business and will build a base for robust profitability in
coal business.
In functional materials business, the Group will further expand sales of functional
materials products to which its expertise is utilized in the overseas markets and will put each
business on a growth track.
(i) Management policy:
The Group sets the management policy "to contribute to a society with harmony
between the economy and the environment by effectively securing and using energy and by
developing functional materials business on a global scale".
Under this policy, the Company is committed to "Contributing to the domestic
energy security and economic development of Asian countries" and "Contributing to the
realization of a society in harmony with the environment based on the proprietary
technologies of Idemitsu".
(ii) Investment strategy:
Total investment for three years from April 1, 2013 through March 31, 2016 will be
¥476.0 billion, which was originally planned to be ¥450.0 billion but increased due
primarily to the weakening of the Japanese yen.
The Group will reinforce strategic investment for the reform of the business
structure and approximately 80% of the investment will be allocated to investment overseas.
(iii) Promotion of rationalization and streamlining:
Following the Third Consolidated Medium-term Management Plan, the Company
will, in its core business, in particular, promote the rationalization of marketing and
distribution divisions, energy-saving activities at refineries and plants, cost reductions in
resources divisions and streamlining activities for administrative divisions and indirect
divisions, and aims to reduce costs by ¥20.0 billion in total under the Fourth Consolidated
Medium-term Management Plan and ¥70.0 billion on an cumulative basis through the Third
and Fourth Consolidated Medium-term Management Plans.
(iv) Management indicators targeted:
The Company is committed to achieving the following management indicators in
the fiscal year ending March 31, 2016, the final year of the Fourth Consolidated
Medium-term Management Plan, by realizing the business strategy under the Medium-term
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Management Plan: an operating income of ¥150.0 billion (including income/losses from
equity-method investments and dividend income), a net income of ¥53.0 billion, a return on
invested capital of 8.6%, an equity ratio of 24.8% and a net debt/equity ratio of 1.2.
[Matters to be addressed by the Company]
(i) Environment recognition:
In the domestic economy, there are some signs of a mild recovery and in the U.S.,
the expectation of an economic recovery has surfaced. On the other hand, there are some
aspects causing anxiety and other uncertain factors, including fiscal and financial problems
in other developed countries, the slowdown in the Chinese economy and the uncertainty
about the government's growth strategy in Japan.
Regarding the demand for energy, a continuous decline in the demand for fuel oils
is inevitable in Japan, while an expansion in the demand for energy is expected overseas, in
particular, in Asian emerging countries.
(ii) Matters to be addressed:
(a) Core business (Fuel oils, basic chemicals and renewable energy)
In the fuel oil business, the Company terminated the crude oil processing functions
at the Tokuyama Refinery in March 2014, and will maintain efficient production
under a system consisting of the three refineries located in Hokkaido, Chiba, and
Aichi. The Company will construct competitive supply systems through
cooperation in the distribution and mutual supply of petroleum products among
other companies, and will reinforce the domestic sales network. Furthermore, the
Company is intending to expand its businesses in Asian markets where the demand
for fuel products is expected to grow, based on the construction of the Nghi Son
Refinery in Vietnam and the core marketing base of Singapore.
In the basic chemicals business, the Company will make efforts to optimize the
supply chain for the ethylene line including derivative products, and to expand
production of aromatic compounds by taking advantage of its petrochemical
complexes that use naphtha, etc. as raw materials.
In the renewable energy business, the Company aims to expand its electric power
business, including biomass power generation and mega-solar power generation,
and will promote the development of a new project for geothermal generation and
the commercialization of biofuels in Indochina.
(b) Resources business (Oil exploration and production, coal, uranium, gas and
unconventional resources)
In the oil exploration and production business, the Company aims at an early
start-up of production in both the Knarr oil field and H Nord oil field, and will
promote the expansion of reserves through exploration activities.
In the coal business, the Company will promote cost reduction activities, and at the
- 17 -
same time aims to reform the profit structure through means including an increase
in the production of high-grade coal by taking advantage of the expanded Boggabri
Mine. The Company also intends to meet wide-ranging customer needs through
the stocking of Indonesian coal, for which exports to Asian countries have been
increasing.
As for the uranium business, the Company has commenced production at the Cigar
Lake Mine in Canada and aims to sell products from this operation as soon as
possible.
As for unconventional resources business, the Company will investigate the
feasibility of the export and sales of LNG and LPG from North America to Asian
countries, and promote studies on participation in the shale gas business, etc. in
North America.
(c) Functional materials business (Lubricants, performance materials, electronic
materials and agricultural biotechnology)
In the lubricants business, the Company will promote the development of
environment-friendly products and the products meeting local needs in emerging
countries. The Company also will further enhance the business overseas by
expanding production bases.
In the performance materials business, the Company will center its management
resources on such fields as adhesive materials and SPS resin.
In the electronic materials business, the Company will respond to expanding
demand for OLED displays and lighting, etc. through the Company's technologies
for manufacturing high-quality and inexpensive OLED materials. In order to
respond to the trend towards mass production by OLED panel manufacturers
among other manufacturers, the Company aims to expand its sales in this business,
with efforts to shorten the delivery term through the rationalization of production
and distribution systems and with enhanced cost competitiveness.
In the agricultural biotechnology business, the Company will deploy
needs-responsive businesses that are contributable to "food safety" and meet
"increasing demand for food" through products that are developed using the
Company's own technologies, including microbial pesticides and "RUMINUP®"
series, a feed mix for cows that maintains the health of other farm animals. The
Company also will globally expand its agricultural biotechnology business to
emerging countries where demands are growing, among others.
The above descriptions about the future are based on information available as of
the date hereof. The actual operating results may differ from the forecasts due to various
factors in the future.
In addition, details of the assumptions for the Fourth Consolidated Medium-term
Management Plan (for the fiscal years from April 1, 2013 through March 31, 2016) can be
accessed at the following URLs:
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(Website of the Company)
http://www.idemitsu.com/ir/manage/message/plan/index.html
(Website of the Tokyo Stock Exchange (Page for "Quick search for a listed
company"))
http://www.tse.or.jp/listing/compsearch/index.html
The Company sincerely hopes that its shareholders will continue giving the
Company their full support and encouragement.
(5) Major businesses (as of March 31, 2014):
Business sector Major business
Petroleum products Import, refining, production and sale of crude oil, petroleum
products and lubricants, and transportation and storage
relating thereto; sale of service station products
Petrochemical products Production and sale of petrochemical products
Resources Investigation, exploration, development and sale of oil
resources, coal, uranium and geothermal resources
Others Import, purchase and sale of gas; production and sale of
electronic materials; design, construction, maintenance and
management of petroleum-related facilities; insurance sales
business; credit card services; production, import and sale of
agricultural chemicals; renewable energy business
- 19 -
(6) Major business offices and plants (as of March 31, 2014): (i) The Company
Category Offices
Head office 1-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
Refineries Hokkaido (Tomakomai), Chiba (Ichihara), Aichi (Chita),
Tokuyama (Shunan)
Petrochemical plants Chiba (Ichihara), Tokuyama (Shunan)
Sales branches Hokkaido Nos. 1, 2, 3 (Sapporo), Tohoku No. 1 (Sendai),
Tohoku No. 2 (Morioka), Kanto Nos. 1, 2, 3 (Chuo-ku,
Tokyo), Kita-Kanto Nos. 1, 2 (Saitama), Niigata (Niigata),
Matsumoto (Matsumoto), Tokai Nos. 1, 2 (Nagoya),
Hokuriku (Kanazawa), Kansai No. 1 (Kyoto), Kansai No. 2
(Osaka), Kansai No. 3 (Kobe), Chugoku No. 1 (Hiroshima),
Chugoku No. 2 (Okayama), Shikoku (Takamatsu), Kyushu
Nos. 1, 2 (Fukuoka), Kyusyu No. 3 (Kagoshima)
Business branches Hokkaido (Sapporo), Tohoku (Sendai), Kanto (Chuo-ku,
Tokyo), Tokai (Nagoya), Kansai (Osaka), Chugoku/Shikoku
(Hiroshima), Kyushu (Fukuoka)
Overseas office Middle East (Abu Dhabi)
Laboratories Advance Technology Laboratory (Sodegaura), Business
Laboratory (Ichihara), Functional Materials Laboratory
(Ichihara)
(Note) The Company terminated the crude oil processing function at the Tokuyama
Refinery in March 2014 and integrated the refinery and petrochemical plant as a
Tokuyama Complex as of April, 2014.
(ii) Subsidiaries
Name Address
Idemitsu Tanker Co., Ltd. 3-4, Okubo 2-chome, Shinjuku-ku, Tokyo
Idemitsu Retail Marketing Co., Ltd. 18-8, Shintomi 1-chome, Chuo-ku, Tokyo
S.I. Energy Co., Ltd. 1-18, Agebacho, Shinjuku-ku, Tokyo
Idemitsu Unitech Co., Ltd. 2-3, Shiba 4-chome, Minato-ku, Tokyo
Idemitsu Oil & Gas Co., Ltd. 1-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
Idemitsu Snorre Oil Development Co., Ltd. 1-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
Idemitsu Cuu Long Petroleum Co., Ltd. 1-1, Marunouchi 3-chome, Chiyoda-ku, Tokyo
Idemitsu Petroleum Norge AS Oslo, Norway
Idemitsu Australia Resources Pty Ltd Brisbane, Australia
SDS Biotech K.K. 1-5, Higashi Nihonbashi 1-chome, Chuo-ku,
Tokyo
Idemitsu Canada Resources Ltd. Calgary, Canada
Idemitsu Canada Corporation Calgary, Canada
- 20 -
(7) Employees (as of March 31, 2014): (i) Employees of the Group
Segment Number of employees Change from the end of the
previous fiscal year
Petroleum products 5,775 (3,603) + 32
Petrochemical products 1,735 (76) - 47
Resources 598 (38) - 14
Others 641 (162) + 94
Total 8,749 (3,879) + 65
(Note) The number of employees represents the number of those actually at work: the
number of temporary workers is shown in the parentheses separately.
(ii) Employees of the Company
Number of
employees
Change from the end
of the previous fiscal
year
Average years of
age
Average length of
service
4,203 (784) + 3 42 y/s and
6 m/s
20 y/s and
8 m/s
(Note) The number of employees represents the number of those actually at work: the
number of temporary workers is shown in the parentheses separately.
(8) Major lenders (as of March 31, 2014):
Lender Debt payable
Sumitomo Mitsui Banking Corporation ¥149,750 million
Sumitomo Mitsui Trust Bank, Limited ¥120,192 million
Japan Oil, Gas and Metals National Corporation ¥110,703 million
The Bank of Tokyo-Mitsubishi UFJ, Ltd. ¥110,625 million
Mizuho Bank, Ltd. ¥50,083 million
Development Bank of Japan ¥50,030 million
Mitsubishi UFJ Trust and Banking Corporation ¥44,740 million
The Norinchukin Bank ¥43,822 million (9) Other important matters concerning the current state of the Group: Not applicable.
- 21 -
2. Current state of the Company (1) Shares (as of March 31, 2014): (i) Total number of authorized shares: 436,000,000 shares
(Note) As a result of the stock split (at the rate of four shares for each share)
conducted as of January 1, 2014, the total number of authorized shares has
increased by 327,000,000 shares. (ii) Total number of issued shares: 160,000,000 shares
(Note) As a result of the stock split (at the rate of four shares for each share), the
total number of issued shares has increased by 120,000,000 shares. (iii) Number of shareholders: 11,176 persons (iv) Major shareholders (top eleven):
Name Number of shares
(thousand shares) Shareholding ratio
(%)
Nissho Kosan K.K. 27,120 16.95
Idemitsu Culture and Welfare Foundation 12,392 7.75
Idemitsu Museum of Arts Foundation 8,000 5.00
Idemitsu Employee Stockholders Committee 6,596 4.12
The Bank of Tokyo-Mitsubishi UFJ, Ltd. 5,142 3.22
Sumitomo Mitsui Banking Corporation 5,142 3.22
Sumitomo Mitsui Trust Bank, Limited 5,142 3.22
Japan Trustee Services Bank, Ltd. (Trust account) 4,491 2.81
The Master Trust Bank of Japan, Ltd. (Trust account) 2,626 1.64
Masakazu Idemitsu 2,416 1.51
Masamichi Idemitsu 2,416 1.51
(Note) The shareholding ratios are calculated by excluding the shares of treasury stock of
the Company (46,696 shares).
(2) Stock acquisition rights, etc.:
Not applicable.
- 22 -
(3) Corporate officers:
(i) Directors and Statutory Auditors (as of March 31, 2014):
Position Name Duties and major concurrent office
Chairman and
Representative Director
Kazuhisa Nakano
President and
Representative Director
Takashi Tsukioka
Executive Vice President
and Representative Director
Kenichi Matsui Assistant to President (corporate division),
responsible for Safety and Environmental
Protection and Quality Assurance
Department, General Affairs Department,
Personnel Department and Information
System Department, and Division
Manager, Safety and Environmental
Protection Division, and Division
Manager, Quality Assurance Division and
Chairman of Compliance & Risk
Management Committee
Executive Vice President
and Representative Director
Yoshihisa
Matsumoto
Assistant to President (petrochemicals,
functional materials and research
divisions), responsible for Intellectual
Property Division, Lubricating Oil
Department, Electronic Materials
Department and Advance Technology
Laboratory
Managing Director Yasunori Maeda In charge of overseas fuels business
(International Petroleum Business
Department, Vietnam Business Office,
Idemitsu Asia and Idemitsu Tanker Co.,
Ltd.)
Managing Director Osamu Kamimae In charge of chemicals and North America
AO promotion (Chemicals Management
Department)
Managing Director Daisuke Seki In general control over sales and supply
and demand (Sales Department, New
Energy Department, Supply and Demand
Department, Distribution Department,
Astomos Energy Corporation and
Idemitsu Credit Co., Ltd.)
Managing Director Hiroshi Seki In general control over resources
(Resources Department I, Resources
Department II and Gas Business Office)
Director Katsumi Saito In charge of agricultural biotechnology
and functional materials (Agribio Business
Div., Functional Materials Department
and Idemitsu Unitech Co., Ltd.)
- 23 -
Position Name Duties and major concurrent office
Director Takashi Matsushita In general control over manufacturing and
engineering (Manufacturing &
Technology Department, refineries,
petrochemical plants, Technology &
Engineering Center and Idemitsu
Engineering Co., Ltd.), and Managing
Executive Officer and General Manager of
Manufacturing & Technology Department
Director Shunichi Kito In charge of accounting, public relations
and CSR (Accounting Department and
Public Relations and CSR Office) and
Managing Executive Officer and General
Manager of Treasury Department
Full-time Statutory
Auditor
Kiyonobu
Kobayashi
Full-time Statutory
Auditor
Katsuo Sato
Statutory Auditor Minoru Koyama Attorney at law (Koyama and Miyano
Law Office)
Statutory Auditor Taigi Ito Certified Public Accountant (Ito Taigi
Office)
Statutory Auditor, IT Holdings
Corporation
Statutory Auditor Michiyoshi
Kuriyama
Corporate Auditor, The Zenitaka
Corporation
Director, Hanshin Electric Railway Co.,
Ltd.
Corporate Auditor, DMG Mori Seiki Co.,
Ltd.
(Notes) 1. Statutory Auditors Messrs. Minoru Koyama, Taigi Ito and Michiyoshi Kuriyama
are outside statutory auditors.
2. Statutory Auditor Mr. Kiyonobu Kobayashi, who has had experience as Deputy
General Manager of Treasury Department of Idemitsu Petrochemicals Co., Ltd.,
has considerable knowledge of financing and accounting.
3. Statutory Auditor Mr. Taigi Ito, who has had experience as a certified public
accountant and a university professor, has considerable knowledge of financing
and accounting.
4. Statutory Auditor Mr. Michiyoshi Kuriyama, who has had experience as an
officer of a financial institution, has considerable knowledge of financing and
accounting.
5. Statutory Auditors Messrs. Minoru Koyama, Taigi Ito and Michiyoshi Kuriyama
are independent officers who have been registered in accordance with the rules of
the Tokyo Stock Exchange.
- 24 -
(ii) Total amount of remuneration, etc. payable to corporate officers:
(a) Total amount of remuneration, etc. by categories of officers, the total number of
remuneration, etc. by types thereof and the number of officers eligible therefor:
Category Number Total amount of
remuneration, etc.
Director
(excluding Outside Director) 12 ¥650 million
Statutory Auditor
(excluding Outside Statutory Auditor) 2 ¥57 million
Outside Statutory Auditor 4 ¥30 million
Total 18 ¥738 million
(Note) Remuneration of the Directors and Statutory Auditors includes basic remuneration
but does not include any stock options, bonuses, salaries and wages of employees or
retirement gratuities.
(b) Contents and the method of determination, of the policy on the determination of
the amount of remuneration, etc. of officers, etc. and the method of calculation
thereof:
With regard to remuneration of officers, the maximum amount of remuneration
of Directors was determined to be ¥1,200 million per annum and that of
Statutory Auditors was determined to be ¥120 million per annum, respectively,
by resolution of the 91st Ordinary General Meeting of Shareholders held on
June 27, 2006. The remuneration of Directors are determined by the
Representative Directors upon authorization from the Board of Directors and in
accordance with a report from the Directors' Remuneration Advisory
Committee, which shall be comprised of four members including two Outside
Statutory Auditors, and the remuneration of Statutory Auditors are determined
upon consultation among the Statutory Auditors.
(iii) Matters concerning outside officers:
(a) Outside officers' major concurrent offices of executive directors, etc. for other
corporations and the Company's relationships with such other corporations:
Not applicable.
(b) Outside officers' major concurrent offices of outside offices of other
corporations and the Company's relationships with such other corporations:
Statutory Auditor Mr. Taigi Ito is serving as an outside Statutory Auditor for IT
Holdings Corporation. The Company has no special relationship with the
corporation.
Statutory Auditor Mr. Michiyoshi Kuriyama is serving as outside Statutory
Auditor for The Zenitaka Corporation, outside Statutory Auditor for DMG Mori
- 25 -
Seiki Co., Ltd. and outside Director for Hanshin Electric Railway Co., Ltd.
The Company has no special relationship with these corporations.
(c) Outside officers' kinship with the executives of the Company or other
businesses having specific relationships with the Company:
Not applicable.
(d) Major activities during the fiscal year under review:
Attendance at the meetings of the Board of Directors and the Board of Statutory
Auditors:
Board of Directors Board of Statutory
Auditors
Meetings
attended
Rate of
attendance
Meetings
attended
Rate of
attendance
Statutory Auditor Minoru Koyama 18/18 100% 16/16 100%
Statutory Auditor Taigi Ito 18/18 100% 16/16 100%
Statutory Auditor Michiyoshi
Kuriyama
13/13 100% 12/12 100%
Statutory Auditor Mr. Minoru Koyama, principally from a legal standpoint as
an attorney at law, Statutory Auditor Mr. Taigi Ito, principally from the
standpoint of accounting with broad experience as a certified public accountant
and a university professor, and Statutory Auditor Mr. Michiyoshi Kuriyama,
principally from the standpoint as an corporate management professional with
broad experience as an officer of a banking institution, have respectively
expressed their opinions at the meetings of the Board of Directors and the
Board of Statutory Auditors and provided advice and recommendations for
securing the properness of decision-making by the Board of Directors.
(e) Outline of the content of liability limitation agreements:
In accordance with Article 427, paragraph 1 of the Companies Act of Japan, the
Company has entered into an agreement with each outside Statutory Auditor to
limit the liability for any damage as provided for in Article 423, paragraph 1 of
the said act. The maximum liability amount under such agreement is an
amount as provided for in laws or ordinances.
(4) Account auditors:
(i) Names of the account auditors:
Deloitte Touche Tohmatsu LLC
- 26 -
(ii) Amount of remuneration, etc. payable to the account auditors for the fiscal year
under review:
Deloitte Touche Tohmatsu LLC
Amount of remuneration, etc. payable to the account
auditors for the fiscal year under review: ¥144 million
Total amount of money and other proprietary benefits
payable to the account auditors by the Company and its
subsidiaries: ¥230 million
(Notes) 1. The amount of remuneration, etc. payable to the account auditors for audits under
the Companies Act of Japan and the amount of remuneration, etc. payable for
audits under the Financial Instruments and Exchange Act of Japan are not
separated in the audit agreement between the Company and the account auditors.
Hence, the above amount of remuneration, etc. payable to the account auditors for
the fiscal year under review includes both amounts.
2. The total amount of money and other proprietary benefits payable to the account
auditors by the Company and its subsidiaries includes remuneration for services
(non-auditing services), which are not covered by Article 2, paragraph 1 of the
Certified Public Accountant Act of Japan, entrusted to Deloitte Touche Tohmatsu
LLC.
(iii) Content of non-auditing services:
The Company has paid the account auditors remuneration for services, including
advisory and guidance services related to internal audits (non-auditing services)
which are not covered by Article 2, paragraph 1 of the Certified Public Accountant
Act of Japan.
(iv) Policy on the determination of dismissal and non-reappointment of the account
auditors:
In the event that there arises any problem with the performance by the account
auditors of their duties or otherwise the Board of Directors or the Board of Statutory
Auditors considers it necessary, the Board of Directors or the Board of Statutory
Auditors shall take a procedure to dismiss or not to reappoint the account auditors
pursuant to the Companies Act of Japan.
(5) Policy on the determination of distribution of retained earnings, etc.:
The Board of Directors of the Company considers the return of profits to its
shareholders as one of the most important management issues.
The Company will continue to pay dividends on a constant basis after taking into
due consideration strategic investments to enhance existing businesses and develop
future business operations, the improvement of corporate financial structure and
balance with business performances. With respect to the payment of the year-end
dividends for the fiscal year ended March 31, 2014, the Company has decided to pay
¥25 per share. As a result, annual dividends for the fiscal year will be ¥50 per
share.
- 27 -
The Company conducted a stock split at the rate of four shares for each share as of
January 1, 2014. The amount was determined in consideration of the stock split.
With respect to the dividends (annual dividends) for the fiscal year ending March 31,
2015, the Company plans to pay ¥50 per share.
As provided for in its Articles of Incorporation, the Company may make
distributions of retained earnings by a resolution of its Board of Directors pursuant
to the provisions of Article 459, paragraph 1 of the Companies Act. For the year
ended March 31, 2008 and thereafter, the Company has paid dividends twice a year,
as interim dividends and year-end dividends.
(6) Systems to secure the properness of business activities (so-called "internal control
systems"):
With regard to basic policies on internal control systems, the Board of Directors has
adopted resolutions as described below, for the systems to secure the properness of
business activities.
In addition, the Board of Directors checks whether the internal control systems have
properly been established and operated and revises them to make them more
effective.
(i) Systems to secure the execution by the Directors and employees of their duties to
comply with laws or ordinances and the Articles of Incorporation:
(a) The Board of Directors shall, pursuant to the Regulations of the Board of
Directors, determine important matters and supervise the execution of
business.
(b) Pursuant to the Compliance Regulations, the Company shall establish a
Compliance Committee to promote compliance activities.
(c) The Company shall make use of the Compliance Handbook that sets action
guidelines on compliance with law to raise awareness of compliance.
(d) The Company shall make use of its Compliance Contact Offices established
within and outside of the Company to help solve questions and problems
with regard to compliance.
(e) The Internal Audit Office shall conduct audits to verify the appropriateness
of business activities and the state of execution of business pursuant to the
internal rules at each business division.
(ii) Systems concerning storage and management of information on the execution by the
Directors of their duties: Information on the execution by the Directors of their duties shall be stored and
managed pursuant to the Regulations of the Board of Directors, the Document
- 28 -
Handling Regulations, the Circular Decision Document Handling Regulations and
other internal rules.
(iii) Regulations concerning management of exposure to the risk of loss and other
systems: (a) Pursuant to the Risk Management Regulations, the Company shall establish a
Risk Management Committee to promote risk management activities.
(b) Pursuant to the Manual for Measures upon Outbreak of Crises and other
internal rules, the Company shall take measures promptly and properly upon
the outbreak of any serious crisis.
(c) The Company shall institute a Business Continuity Plan (BCP) for measures
against an epicentral earthquake in the Tokyo metropolitan area, measures
against a new type of influenza, etc., and exert group-wide efforts to
implement, maintain and manage the BCP.
(d) Each business division shall, pursuant to the Self-Management Regulations,
inspect risks to business by using the voluntary inspection list, etc.
(e) The Internal Audit Office shall, pursuant to the Internal Control Regulations,
conduct audits to verify the state of risk management by each business
division.
(iv) Internal control over financial reporting: (a) Pursuant to the Regulations of Internal Control over Financial Reporting, the
Company shall establish a system to ensure reliability of financial reporting
of the whole Group for the purpose of adequate improvement and
administration of internal control on financial reporting.
(b) Pursuant to the regulations set forth in (a) above, the Company shall establish
a Committee for Evaluation of Internal Control over Financial Reporting,
which shall deliberate on and investigate matters concerning annual
improvement and administration policies and evaluation plans, matters
concerning the determination of the evaluation scope, etc.
(c) The Internal Audit Office shall conduct periodic evaluation of the
effectiveness of internal control, as well as necessary improvements thereof.
(v) Severance of all relations with antisocial forces: (a) The Company shall deal with any person or group, including any crime
syndicate and corporate racketeer, who engages in antisocial activities,
violence and illegitimate demand in a resolute attitude and sever all relations
therewith. (b) In the event that any antisocial force sets on, the Company shall resolutely
refuse without giving in and act properly pursuant to the Manual for
Measures against Antisocial Forces.
- 29 -
(vi) Systems to secure efficient execution by the Directors of their duties:
(a) To secure efficient execution of business, the Company shall have Executive
Officers. (b) Pursuant to the Regulations of Duties and Powers and the Regulations of
Execution of Business, the Company shall clearly define the roles and
authorities of the Board of Directors, Representative Directors and other
Directors. (c) As an organ to discuss and deliberate on management strategies and
managerial issues of the whole Group and each business division, the
Company shall establish a Management Committee comprised of the
President acting as chairman and other members appointed by the chairman,
which shall meet twice a month, in principle.
(vii) Systems to secure the properness of business activities of the corporate group
comprised of the Company, its parent company and its subsidiaries:
(a) In the Affiliated Companies Management Regulations, the Company shall
specify affiliated companies under direct control of the President and
affiliated companies for which each relevant division shall be responsible, to
clearly define responsibilities for business administration. (b) In the Affiliated Companies Management Regulations, the Company shall
provide a fundamental policy to the effect that "transactions with affiliated
companies shall be based on market prices, in principle", to prevent conflicts
of interest. (c) In the Affiliated Companies Management Regulations, the Company shall
provide for the rules for assumption of office of directors and statutory
auditors of affiliated companies, pursuant to which the Directors of the
Company shall not assume office of directors of its affiliated companies, in
principle. (d) The Internal Audit Office shall conduct audits of affiliated companies
pursuant to the Internal Audit Regulations. (e) The Company shall allow the employees of affiliated companies to make use
of its Compliance Contact Offices established within and outside of the
Company to help solve questions and problems with regard to compliance.
(viii) Matters concerning the employees to assist the Statutory Auditors to execute their
duties when the Statutory Auditors request the assignment thereof:
The Company shall, upon request from the Statutory Auditors, assign its employees
as Statutory Auditors' staff to assist the Statutory Auditors to execute their duties. (ix) Matters concerning the independence of the employees set forth in (viii) above from
the Directors:
- 30 -
(a) The final decision on personnel changes, evaluations, etc. of the Statutory
Auditors' staff shall be subject to consent of the Statutory Auditors, which
shall be provided for in the internal rules of the Personnel Department.
(b) In the Regulations of Segregation of Duties, the Company shall provide for
the duties of the Statutory Auditors' staff. (x) System for reporting by the Directors and employees to the Statutory Auditors (the
Board of Statutory Auditors) and other systems for reporting to the Statutory
Auditors:
(a) The Directors, the head of each business division and the General Manager
of Safety and Environmental Protection and Quality Assurance Department
shall, pursuant to the Regulations of Execution of Business, report the
specified matters to the Statutory Auditors.
(b) The Internal Audit Office shall, pursuant to the Internal Audit Regulations,
report the results of audits to the Statutory Auditors.
(c) The Compliance Committee shall periodically report the state of
consultations and measures at the Compliance Contact Offices to the
Statutory Auditors. (xi) Other systems to ensure effective audits by the Statutory Auditors (the Board of
Statutory Auditors):
(a) The Representative Directors shall hold a regular meeting with the Statutory
Auditors quarterly, in principle.
(b) The Internal Audit Office shall closely coordinate and cooperate with the
Statutory Auditors and the account auditors with regard to internal audit
schedules, visiting audits, etc. (7) Fundamental policy on corporate control:
The Company has exerted its efforts to attain constant and sustainable growth to
secure and enhance the corporate value of the Group and the common interests of its
shareholders.
Hence, in the event that any party engages in any large purchase action with regard
to the shares of the Company and consequently, it threatens to prejudice the
corporate value of the Group and the common interests of its shareholders, it is the
Company's fundamental policy to take any appropriate measure to the extent
permitted by laws or ordinances and the Articles of Incorporation.
- 31 -
CONSOLIDATED BALANCE SHEET
(As of March 31, 2014)
(million yen)
ASSETS
Current assets: 1,422,469
Cash and deposit 161,522
Notes and accounts receivable, trade 418,883
Inventories 717,368
Deferred tax assets 11,229
Other current assets 115,239
Allowance for doubtful accounts (1,774)
Fixed assets: 1,572,593
Tangible fixed assets 1,087,611
Buildings and structures 143,506
Machinery, equipment and vehicles 232,026
Lands 591,503
Construction in progress 77,218
Other tangible fixed assets 43,356
Intangible fixed assets 54,327
Goodwill 39,421
Other intangible fixed assets 14,905
Investment and other assets 430,654
Investment securities 199,698
Investments in capital of affiliates 31,342
Long-term loans receivable 8,792
Deferred tax assets 12,331
Oil field premium assets 97,477
Other investments 81,248
Allowance for doubtful accounts (237)
TOTAL ASSETS 2,995,063
(Note) Figures are indicated by discarding fractions of one million yen.
- 32 -
(million yen)
LIABILITIES
Current liabilities: 1,302,039
Accounts payable, trade 438,594
Short-term borrowings 434,476
Commercial paper 59,995
Accounts payable, other 234,872
Accrued income taxes 18,907
Deferred tax liabilities 7,944
Allowance for bonuses 6,907
Other current liabilities 100,340
Long-term liabilities: 949,236
Bonds 45,000
Long-term debt 539,546
Deferred tax liabilities 38,350
Deferred tax liabilities upon revaluation 103,027
Liability for employees' retirement benefits 13,071
Reserve for repair works 23,267
Oil field premium liabilities 100,804
Asset retirement obligations 55,422
Other long-term liabilities 30,745
Total liabilities 2,251,276
NET ASSETS
Shareholders' equity 539,542
Common stock 108,606
Additional paid-in capital 71,131
Retained earnings 359,934
Treasury stocks (130)
Accumulated other comprehensive income 162,886
Unrealized holding gains on other securities 4,523
Deferred gains (loss) on hedges (1,196)
Revaluation difference of lands 147,714
Translation adjustments 12,016
Retirement benefit liability adjustment (172)
Minority interests 41,358
Total net assets 743,786
TOTAL LIABILITIES AND NET ASSETS 2,995,063
(Note) Figures are indicated by discarding fractions of one million yen.
- 33 -
CONSOLIDATED STATEMENT OF INCOME
(April 1, 2013 to March 31, 2014)
(million yen)
Net sales 5,034,995
Cost of sales 4,684,470
Gross profit 350,524
Selling, general and administrative expenses 272,326
Operating income 78,197
Non-operating income
Interest income 1,716
Dividend income 5,161
Subsidy income 7,626
Equity in earnings of affiliates 6,820
Others 3,564 24,888
Non-operating expenses
Interest expenses 12,678
Loss on foreign exchange 5,029
Others 3,457 21,165
Ordinary income 81,921
Extraordinary gain
Gain on sales of fixed assets 1,172
Gain on sales of investment securities 2,750
Insurance proceeds 20,539
Others 2,841 27,303
Extraordinary expenses
Impairment loss on fixed assets 19,056
Loss on sales of fixed assets 483
Loss on disposal of fixed assets 2,710
Loss on termination of feasibility study 4,215
Others 1,700 28,165
81,058
Income before income taxes and minority interests
Income taxes - current 34,067
Income taxes - deferred 4,393 38,461
Income before minority interests 42,597
Minority interests 6,302
Net income 36,294
(Note) Figures are indicated by discarding fractions of one million yen.
- 34 -
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY, ETC.
(April 1, 2013 to March 31, 2014)
(million yen)
Shareholders' equity
Common stock Additional
paid-in capital Retained earnings
Treasury stocks Total
shareholders' equity
Balance at April 1, 2013 108,606 71,131 331,529 (118) 511,148
Cumulative effects of
changes in accounting
policies (1,240) (1,240)
Restated balance 108,606 71,131 330,288 (118) 509,908
Changes during the year
Distribution of retained
earnings (7,997) (7,997)
Net income 36,294 36,294
Change in scope of
consolidation (260) (260)
Acquisition of treasury
stocks (11) (11)
Reversal of revaluation
difference of lands 1,609 1,609
Change in items other than
shareholders' equity during
the year (net)
Total changes during the year - - 29,645 (11) 29,634
Balance at March 31, 2014 108,606 71,131 359,934 (130) 539,542
Accumulated other comprehensive income
Minority
interests
Total net
assets
Unrealized
holding
gains on
other
securities
Deferred
gains (loss)
on hedges
Revaluation
difference of
lands
Translation
adjustments
Retirement
benefit
liability
adjustment
Total
accumulated
other
compre-
hensive
income
Balance at April 1, 2013 3,818 (3,281) 149,782 (7,905) - 142,413 34,386 687,948
Cumulative effects of
changes in accounting
policies
(1,240)
Restated balance 3,818 (3,281) 149,782 (7,905) - 142,413 34,386 686,707
Changes during the year
Distribution of retained
earnings
(7,997)
Net income 36,294
Change in scope of
consolidation
(260)
Acquisition of treasury
stocks
(11)
Reversal of revaluation
difference of lands (1,609)
(1,609) -
Change in items other than
shareholders' equity during
the year (net) 705 2,085 (458) 19,921 (172) 22,082 6,971 29,054
Total changes during the year 705 2,085 (2,068) 19,921 (172) 20,472 6,971 57,078
Balance at March 31, 2014 4,523 (1,196) 147,714 12,016 (172) 162,886 41,358 743,786
(Note) Figures are indicated by discarding fractions of one million yen.
- 35 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Important matters forming the basis of preparation of consolidated financial statements
(1) Matters concerning the scope of consolidation
(i) Consolidated subsidiaries:
・ Number of consolidated subsidiaries: 62 companies
・ Names of major consolidated subsidiaries:
Idemitsu Tanker Co., Ltd.
Idemitsu Retail Marketing Co., Ltd.
S.I. Energy Co., Ltd.
Idemitsu Unitech Co., Ltd.
Idemitsu Oil & Gas Co., Ltd.
Idemitsu Snorre Oil Development Co., Ltd.
Idemitsu Cuu Long Petroleum Co., Ltd.
Idemitsu Petroleum Norge AS
Idemitsu Australia Resources Pty Ltd
SDS Biotech K.K.
Idemitsu Canada Resources Ltd.
Idemitsu Canada Corporation
(ii) Non-consolidated subsidiaries
・ Names of major non-consolidated subsidiaries:
Shanghai Idemitsu Lube Trading Co., Ltd.
Tomatoh Oil Storage Co., Ltd.
・ Reason for excluding the non-consolidated subsidiaries from the scope of
consolidation:
The scale of business conducted by each of the non-consolidated
subsidiaries is small, and the total assets, net sales, net income or loss
(based on the Company's equity interest) and retained earnings (based
on the Company's equity interest) of each non-consolidated subsidiary
do not have a material impact on the consolidated financial
statements.
(iii) Company in which the Company holds a majority of voting rights but which is not
treated as a subsidiary:
・ Name of the company: Astomos Energy Corporation
・ Reason for not treating it as a subsidiary:
- 36 -
Astomos Energy Corporation has been determined to be a jointly
controlled company pursuant to Article 175 of the "Implementation
Guidance on the Accounting Standard for Business Combinations and
the Accounting Standard for Business Divestitures" (the Accounting
Standards Board of Japan ("ASBJ") Accounting Standard
Implementation Guidance No. 10) and excluded from the scope of
consolidation to apply the accounting method similar to the equity
method.
(2) Matters concerning the application of the equity method
(i) Non-consolidated subsidiaries and affiliates to which the equity method is applied
・ Number of non-consolidated subsidiaries or affiliates to which the equity
method is applied: 28 companies
・ Names of the major companies: Astomos Energy Corporation
Idemitsu Credit Co., Ltd.
PS Japan Corporation
Prime Polymer Co., Ltd.
(ii) Non-consolidated subsidiaries and affiliates to which the equity method is not
applied:
・ Names of the major companies: Union Sekiyu Kogyo Co., Ltd.
Kuo Horng Co., Ltd.
・ Reason for not applying the equity method to such companies:
The net income or loss (based on the Company's equity interest) and
retained earnings (based on the Company's equity interest) of each
company have no significant impact on the consolidated financial
statements and is of no importance in general.
(iii) Special matter concerning the procedure to apply the equity method:
With regard to the equity method companies whose balance sheet dates do not
correspond to the consolidated balance sheet date, the financial statements for the
fiscal years of the respective equity method companies are used.
Astomos Energy Corporation has applied the equity method to its subsidiaries.
Hence, the net incomes or losses (based on the company's equity interest) are
included in its income or loss.
(3) Matters concerning changes in the scope of consolidation and the scope of application
of the equity method
(i) Change in the scope of consolidation:
・ Number of newly consolidated
subsidiaries
5 companies
・ Names of the consolidated subsidiaries:
Idemitsu Green Power Co., Ltd.
- 37 -
Premium Green Power Co., Ltd.
Idemitsu Electronic Materials Korea Co.,
Ltd.
Idemitsu Canada Corporation
Idemitsu Canada Gas Inc.
Idemitsu Green Power Co., Ltd., Premium
Green Power Co., Ltd. and Idemitsu
Electronic Materials Korea Co., Ltd. are
included in the scope of consolidation
because of their increased importance.
Idemitsu Canada Corporation and its 100%
subsidiary Idemitsu Canada Gas Inc are
included in the scope of consolidation as a
result of their new incorporation.
・ Number of companies excluded
from consolidation:
2 companies
・ Names of the consolidated
subsidiaries:
Idemitsu Techno Fine Co., Ltd.
Idemitsu E&P UK Ltd.
Idemitsu Techno Fine Co., Ltd. and
Idemitsu E&P UK Ltd. were excluded from
consolidation in terms of their importance.
(ii) Change in the scope of application of the equity method
・ Number of new equity method
companies:
10 companies
・ Names of the equity method company:
Nghi Son Refinery and Petrochemical
Limited Liability Company
AltaGas Idemitsu Management Inc.
AltaGas Idemitsu Joint Venture Limited
Partnership
Triton LNG Inc.
Triton LNG Limited Partnership
Triton LPG Inc.
Triton LPG Limited Partnership
Triton Energy Inc.
Triton Energy Limited Partnership
Petrogas Energy Corp.
Nghi Son Refinery and Petrochemical
Limited Liability Company is newly
included in the scope of application of the
equity method because of its increased
importance; AltaGas Idemitsu Management
Inc. and seven other companies are newly
included in the scope of application of the
- 38 -
equity method as a result of their new
incorporation; and Petrogas Energy Corp. is
newly included in the scope of application
of the equity method as a result of the new
investment in its stock by the Company.
・ Number of companies excluded
from the scope of application of
the equity method:
1 company
・ Name of the company excluded
from the scope of application of
the equity method:
Panasonic Idemitsu OLED Lighting Co.,
Ltd.
Panasonic Idemitsu OLED Lighting Co.,
Ltd. was excluded from the scope of
application of the equity method in terms of
their importance.
(4) Matters concerning the fiscal years of consolidated subsidiaries
With regard to any consolidated subsidiary whose balance sheet date does not
correspond to the consolidated balance sheet date, the financial statements for the fiscal
year of such any consolidated subsidiary are used. However, with regard to any
important transaction that took place after the end of the relevant fiscal year and prior
to the consolidated balance sheet date, necessary adjustments are made for the purpose
of preparation of the consolidated financial statements.
(5) Notes on accounting standards
(i) Basis and method of valuation of major assets
(a) Basis and method of valuation of securities:
Bonds to be held to maturity: At amortized cost (straight-line method)
Subsidiaries' stock and affiliates' stock:
At cost, determined by the moving average
method
Other securities:
・ Those with market value: At market value, which is determined by
the average of the closing market prices for
one month prior to the close of the fiscal
year. Revaluation differences are all
transferred directly to net assets.
Acquisition costs, which shall be compared
with market value, are determined by the
moving average method, in principle.
・ Those without market value: At cost, determined by the moving average
method
- 39 -
(b) Basis and method of evaluation of inventories:
At cost, determined by the gross average
method, in principle
The balance sheet values are calculated by
the write-down method based on declined
margins.
(c) Basis and method of evaluation of derivatives:
At market value
(ii) Method of depreciation of important depreciable assets:
(a) Tangible fixed assets
(excluding lease assets): By the straight-line method, in principle
(b) Intangible fixed assets
(excluding lease assets): By the straight-line method, in principle;
provided, however, that software for
internal use is amortized by the
straight-line method on the estimated useful
life of internal use (five years).
(c) Lease assets: By the straight-line method on the
assumption that the lease period is the
useful life of the property and the residual
value is zero
In addition, finance lease transactions
which do not transfer ownership, for which
the commencement date of the transactions
was March 31, 2008 or theretofore, an
accounting method similar to the method
for ordinary lease transactions is applied.
(iii) Basis for accounting for important allowances and reserves:
(a) Allowance for doubtful accounts: To meet losses from loan default, the
Company sets aside an estimated
uncollectible amount, by taking into
consideration the actual loss rate in respect
of general credits and the individual
possibilities of collection in respect of
specific claims, such as probable
non-performing credits.
(b) Allowance for bonuses: To meet the payment of bonuses to
employees, the Company sets aside the
portion for the fiscal year under review of
- 40 -
an estimated amount of bonuses to be paid
in the future.
(c) Reserve for repair works: To meet the payment for repair expenses in
the future, the Company sets aside the
portion for the fiscal year under review of
an amount of expenses of inspection and
repair to be defrayed in respect of the oil
tanks and machinery and equipment and
vessels that require periodic repairs in the
future.
(iv) Method of important hedge accounting:
(a) Method of hedge accounting: Deferral hedge accounting is applicable.
(b) Hedging instruments and hedged items:
Hedging instruments: Forward exchange contracts, foreign
currency debts payable, currency option
transactions, crude oil and petroleum
products swap transactions, futures
transactions, interest rate swaps and option
transactions
Hedged items: Foreign currency receivables and payables,
foreign currency investment securities, crude
oil and petroleum products, equity interests
in overseas subsidiaries, debts payable and
fixed assets
(c) Hedging policy: The Company and some of its consolidated
subsidiaries, in accordance with their
respective rules, carry out hedge transactions
within the scope of actual requirements to
hedge risk of price changes, interest rate and
currency fluctuations with regard to the
hedged items.
(d) Method of evaluating the effectiveness of a hedge:
The method of evaluating the effectiveness
of a hedge is to confirm the compliance of
the hedging instruments with the hedged
items. No evaluation is made as to the
effectiveness of any transaction in which
important conditions are common for the
hedged assets and liabilities or scheduled
transactions and price changes or cash flow
changes are assumed in advance to be offset
upon the commencement of the hedging and
continue to be offset thereafter.
- 41 -
(v) Amortization of goodwill:
Goodwill is amortized using the straight-line method over the estimated useful life
of goodwill (five years to 20 years).
(vi) Other important matters forming the basis of preparation of consolidated financial
statements:
(a) Basis of translation of assets and liabilities denominated in foreign currencies into
the Japanese currency:
Foreign currency receivables and payables
are translated into Japanese yen at the spot
rate prevailing on the balance sheet date and
translation differences are treated as gains
and losses. Assets and liabilities of
overseas subsidiaries are translated into
Japanese yen at the spot rate prevailing on
the balance sheet date. Income and
expenses are translated into Japanese yen at
the average rate for the period and
translation differences are included in
translation adjustments and minority
interests under the net assets section on the
consolidated balance sheet.
(b) Basis of accounting for liability for employees' retirement benefits:
To meet the payment of retirement benefits
to employees, the Company provides an
amount obtained by deducting the amount
of plan assets from retirement benefit
obligations, based on their respective
estimated amounts as of the end of the
fiscal year under review, as a liability for
employees' retirement benefits.
Actuarial differences are treated as
expenses, based on the straight line method
for a specific period of years (ten years) not
exceeding the average remaining years of
service of employees, from the fiscal year
next following the fiscal year when such
differences occur.
Prior year service liabilities are treated as
expenses in a lump sum during the fiscal
year when such liabilities occur.
Unrecognized actuarial differences, after
adjusting for taxes, are recognized as a
retirement benefit liability adjustment
under accumulated other comprehensive
income in the net assets section.
- 42 -
(c) Accounting treatment of deferred assets:
Bond issuing expenses are all treated as
expenses upon payment thereof.
(d) Accounting treatment of consumption taxes, etc.:
Consumption taxes and local consumption
taxes are excluded from each account
subject to such taxes.
(e) Oil premium liquidation assets and liabilities:
With regard to premiums payable to the
assigner of the Snorre mining lot pursuant to
the agreement entered into upon the
purchase of the mining lot, the Company has
estimated an amount to be payable in the
future based on the crude oil reserves and
crude oil futures prices to recognize an
amount after deductions as oil premium
liquidation liabilities and the same amount
as oil premium liquidation assets
simultaneously. Oil premium liquidation
assets will be depreciated in proportion to
the yield and oil premium liquidation
liabilities will be accrued in the actual
amount of payment.
(6) Change in accounting policies:
(Adoption of Accounting Standard for Retirement Benefits)
Effective March 31, 2014, the Company adopted ASBJ Accounting Standard No.
26, "Accounting Standard for Retirement Benefits" and ASBJ Accounting
Standard Implementation Guidance No. 25, "Implementation Guidance on
Accounting Standard for Retirement Benefits", except for certain provisions
prescribed in paragraph 35 of ASBJ Accounting Standard No. 26 and paragraph
67 of ASBJ Accounting Standard Implementation Guidance No. 25. Under the
revised accounting standard, the Company recognizes liability for employees'
retirement benefits, measured as the amount of retirement benefit obligations after
deducting plan assets. As a result, previously unrecognized actuarial gains and
losses are recognized as part of the liability. In accordance with the transitional
provisions prescribed in the revised standard, the Company accounted for the
effect from the adoption of the revised standard as an adjustment to retirement
benefit liability adjustment recognized in accumulated other comprehensive
income.
The effect of the change in the accounting policy is not material.
- 43 -
(Adoption of Accounting Standard for Stripping Costs in the Production Phase of
a Surface Mine)
Effective January 1, 2013, the Company's certain overseas subsidiaries adopted
IFRIC (International Financial Reporting Interpretations Committee)
Interpretation No. 20, "Stripping Costs in the Production Phase of a Surface
Mine." As a result, there is a certain change in the recognition of production
stripping costs.
The effect of the change in the accounting policy is not material.
(7) Change in presentation methods:
Not applicable
(8) Change in accounting estimates:
Not applicable
(9) Matters concerning error correction:
Not applicable
2. Notes on the consolidated balance sheet
(1) Assets pledged and corresponding liabilities
(i) Factory foundation mortgage:
Lands ¥337,963 million
(ii) Other pledges:
Investment securities ¥5,571 million
Total ¥343,535 million
The assets of the above factory foundation during the fiscal year under review were
subjected to revolving mortgage related to bank transactions but substantially, no
liabilities with assets pledged existed.
(2) Accumulated depreciation of tangible fixed assets ¥2,097,025 million
(3) Contingent liabilities:
Guarantee of obligations ¥8,367 million
Management directive memorandums ¥134 million
Total ¥8,501 million
(4) Land revaluation
In accordance with the Land Revaluation Act (Act No. 34, promulgated on March 31,
- 44 -
1998) of Japan and the Act to Amend Part of the Land Revaluation Act (Act No. 19,
promulgated on March 31, 2001) of Japan, the Company's lands used for business are
revaluated and an amount equivalent to taxes on the difference on revaluation is
included in liabilities as "deferred tax liabilities upon revaluation" and the difference
on revaluation minus the amount of such taxes is included in net assets as
"revaluation difference of lands".
(i) Method of revaluation:
Land revaluation is made in accordance with the method of calculation by making
reasonable adjustments to the assessed value of fixed assets as set forth in Article 2,
item 3 of the Ordinance to Implement the Land Revaluation Act (Cabinet Order No.
119, promulgated on March 31, 1998; the "Ordinance"), the method of calculation by
making reasonable adjustments to the land values that form the basis of land tax
calculations as set forth in Article 2, item 4 of the Ordinance, and appraisals by real
estate appraisers as set forth in Article 2, item 5 of the Ordinance.
(ii) Revaluation date: March 31, 2002
(iii) Difference of the market value as at the end of the fiscal year under review of the
lands revaluated and the book value thereof after such revaluation:
(¥148,744 million)
3. Notes on the consolidated statement of income
Loss on termination of feasibility study
As the Company determined to terminate feasibility study on alpha olefin business in
North America following a course of assessment, the amount already paid out for the
assessment such as assessment of engineering is accounted for as "Loss on termination
of feasibility study".
4. Notes on the consolidated statement of shareholders' equity, etc.
(1) Matters concerning the total number of issued shares
Class of shares Number of shares as
of April 1, 2013
Increase in the number of shares during the year
Decrease in the number of shares during the year
Number of shares as of March 31, 2014
Shares of
common stock
40,000 thousand
shares
120,000 thousand
shares -
160,000 thousand
shares
(Note) The total number of issued shares increased as a result of the stock split.
(2) Matters concerning the number of shares of treasury stock
Class of shares Number of shares as
of April 1, 2013
Increase in the number of shares during the year
Decrease in the number of shares during the year
Number of shares as of March 31, 2014
Shares of
common stock 10 thousand shares 36 thousand shares - 46 thousand shares
- 45 -
(Note) The number of shares of treasury stock increased by 33 thousand shares as a result of the
stock split and by 3 thousand shares as a result of the shareholders' requests for purchases
by the Company of less-than-one-unit shares.
(3) Matters concerning the distribution of retained earnings (i) Amount of payment for dividends, etc.:
Matters concerning the dividends by resolution of the Board of Directors held on
May 2, 2013:
・ Aggregate amount of dividends ¥3,998 million
・ Amount of dividend per share ¥100
・ Record date March 31, 2013
・ Effective date June 6, 2013
Matters concerning the dividends by resolution of the Board of Directors held on
November 5, 2013:
・ Aggregate amount of dividends ¥3,998 million
・ Amount of dividend per share ¥100
・ Record date September 30, 2013
・ Effective date December 6, 2013
(ii) Dividends for which the record date falls during the fiscal year under review but the
effective date falls during the next fiscal year:
The following matters were determined at the meeting of the Board of Directors
held on May 2, 2014:
・ Aggregate amount of dividends ¥3,998 million
・ Amount of dividend per share ¥25
・ Record date March 31, 2014
・ Effective date June 5, 2014
5. Notes on financial instruments (1) Matters relating to the status of financial instruments
The Group raises required funds (principally by bank loans and the issuance of bonds)
according to plant and equipment plans. The Group invests temporary surplus funds in
high-security deposits and others and raises operating funds through bank loans and
commercial paper.
The Group utilizes derivatives to mitigate risk relating to its actual requirements and
engages in no speculative transaction.
To reduce clients' credit risks relating to notes and accounts receivable-trade, the Group
has stipulated its credit management rules and credit sales management rules. With
regard to investment securities, which are principally stocks of client companies with
which the Group has business ties, the market prices of listed stocks are recognized for
each quarter and with regard to unlisted stocks, the financial positions of the issuers are
- 46 -
recognized for each fiscal year.
With regard to foreign currency accounts payable-trade relating to imports of raw
materials, the Group utilizes exchange contracts to reduce foreign currency risk.
To avert interest-rate risk relating to long-term loans payable, the Group engages in
interest rate swaps and fixes interest expenses. In addition, to reduce market risk
relating to crude oil and petroleum products, the Group engages in product swap
transactions and future transactions.
The Group engages in derivatives all in accordance with the policy approved for each
fiscal year based on its internal trading rules and within actual requirements. (2) Matters concerning fair values, etc. of financial instruments
The following chart shows the balance sheet amounts of financial instruments as of
March 31, 2014, along with their fair values and the variances: (million yen)
Balance sheet
amount Fair value Variance
(1) Cash and deposit 161,522 161,522 -
(2) Notes and accounts
receivable-trade 418,883 418,883 -
(3) Investment securities 31,489 31,489 0
(4) Long-term loans
receivable 8,792 8,845 52
Total assets 620,689 620,742 53
(1) Accounts payable-trade 438,594 438,594 -
(2) Short-term borrowings 434,476 434,476 -
(3) Commercial paper 59,995 59,995 -
(4) Bonds 45,000 45,606 606
(5) Long-term debt 539,546 543,276 3,729
Total liabilities 1,517,612 1,521,949 4,336
Derivatives (*) (3,882) (3,882) -
(*) Net receivables and payables resulting from derivatives transactions are presented on
net base. If total net is payables, it is presented in parentheses.
(Note) Matters concerning the calculation method of the fair values of financial
instruments, as well as securities and derivatives:
Assets:
(1) Cash and deposit
The book value is used for deposits, as the fair value is nearly equal to the book value
as a result of their short terms.
(2) Notes and accounts receivable-trade
The book value is used for these items, as the fair value is nearly equal to the book
- 47 -
value as a result of their short settlement periods.
(3) Investment securities
With regard to investment securities with market value, the fair value of stocks is
determined by the price thereof traded on an exchange. For bonds, the value is
determined by the price announced by the Company's financial institutions. Unlisted
shares (¥168,209 million) that have no market price are not included in the above table
as determining the market value is recognized as being extremely difficult.
(4) Long-term loans receivable
The fair value is calculated from the present value of the future cash flow discounted at
a rate supposing a similar loan is newly extended.
Liabilities:
(1) Accounts payable-trade, (2) Short-term borrowings and (3) Commercial paper
The book value is used for these items, as the fair value is nearly equal to the book
value as a result of their short settlement periods.
(4) Bonds
The fair value is based on the market price.
(5) Long-term debt
The fair value is calculated from the present value of the total principal and interest
discounted at a rate supposing similar borrowings are newly conducted.
Derivatives:
The fair value is calculated based on the forward exchange rate, the futures price and
the price and other information shown by the Company's counterparties.
6. Notes on real estate for lease, etc.
(1) Matters relating to the status of real estate for lease, etc.
The Company and some of its subsidiaries possess office buildings for lease, oil
storage tanks, commercial establishments, etc. (including lands) in Tokyo, Osaka and
other areas in Japan and overseas. For the year ended March 31, 2014, with regard to
real estate for lease, etc., income on lease was ¥733 million (lease income and lease
expenses are accounted for in net sales and selling, general and administrative
expenses, respectively, in principle), gain on disposal and sales of fixed assets was
¥184 million (it is accounted for in extraordinary gain/expenses) and impairment loss
on fixed assets was ¥1,558 million (it is accounted for in extraordinary expenses).
- 48 -
(2) Matters concerning fair values, etc. of real estate for lease, etc.
(million yen)
Balance sheet amount Fair value
104,436 94,008
(Note 1) The balance sheet amount is an amount obtained by deducting from the
acquisition cost the accumulated depreciation of tangible fixed assets and the
accumulated loss on impairment.
(Note 2) The fair value as at the close of the fiscal year under review is an amount
(including any adjustment made using indexes, etc.) calculated by the
Company principally in accordance with its "Real Estate Appraisal
Standards".
7. Notes on the information per share
(1) Net assets per share (yen): 4,391.46
(2) Net income per share (yen): 226.90
(3) Net income per share (diluted) (yen): 226.89
(Note) As of January 1, 2014, the Company conducted a stock split at the rate of four
shares for each share. Net assets per share, net income per share and net income
per share (diluted) are calculated on the assumption that the stock split was
conducted at the beginning of the fiscal year under review.
8. Notes on asset retirement obligations
Asset retirement obligations recorded on the consolidated balance sheet:
(1) Summary of the asset retirement obligations:
Restitution obligations in connection with real estate lease agreements with regard to
lands for facilities of service stations, expenses of removal of oil and coal production
facilities upon termination of production or mining rights and other items are
reasonably estimated and recorded as asset retirement obligations.
(2) Method of calculation of the amounts of the asset retirement obligations:
The periods projected prior to defrayment are based on, with regard to service stations,
the useful lives of principal facilities thereof and with regard to oil development, coal,
etc., mining lives from the commencement of operations. Applicable discount rates
range from 1.5% to 5.9%.
- 49 -
(3) Changes in the total amount of the asset retirement obligations during the fiscal year
under review:
(million yen)
Balance at beginning of year 44,686
Increased amount in connection with the
acquisition of tangible fixed assets 5,675
Adjustments by lapse of time 1,672
Decreased amount as a result of asset retirement (36)
Other increased (decreased) amount (see Note) 4,694
Balance at end of year 56,692
(Note) "Other increased (decreased) amount" was generated principally by exchange
rate fluctuations.
- 50 -
NON-CONSOLIDATED BALANCE SHEET
(As of March 31, 2014)
(million yen)
ASSETS
Current assets: 1,191,205
Cash and deposit 67,635
Notes receivable, trade 311
Accounts receivable, trade 354,901
Merchandise and finished goods 335,052
Raw material and supplies 326,289
Prepaid expenses 2,707
Short-term loans receivable 28,070
Deferred tax assets 7,818
Other current assets 70,121
Allowance for doubtful accounts (1,703)
Fixed assets: 1,217,146
Tangible fixed assets 831,735
Buildings 51,082
Structures 60,404
Oil tanks 23,452
Machinery and equipment 94,322
Vehicles and transportation equipment 458
Tools, furniture and fixtures 6,642
Lands 589,479
Construction in progress 5,892
Intangible fixed assets 10,433
Leasehold rights 8,169
Software 1,852
Other intangible fixed assets 412
Investments and other assets: 374,977
Investment securities 39,875
Investments in shares of affiliates 293,113
Long-term loans receivable 12,137
Deferred tax assets 5,899
Other investments 24,159
Allowance for doubtful accounts (209)
TOTAL ASSETS 2,408,351
(Note) Figures are indicated by discarding fractions of one million yen.
- 51 -
(million yen)
LIABILITIES
Current liabilities: 1,145,987
Accounts payable, trade 390,974
Short-term borrowings 391,913
Commercial paper 59,995
Accounts payable, other 228,833
Accrued expenses 2,742
Advances received 24,217
Deposit received 36,724
Allowance for bonuses 5,390
Other current liabilities 5,196
Long-term liabilities: 724,684
Bonds 45,000
Long-term debt 520,474
Deferred tax liabilities upon revaluation 103,027
Retirement allowances for employees 10,219
Reserve for repair works 22,082
Other long-term liabilities 23,880
Total liability 1,870,672
NET ASSETS
Shareholders' equity 391,908
Common stock 108,606
Additional paid-in capital 67,599
Capital reserve 57,245
Other additional paid-in capital 10,354
Retained earnings 215,832
Retained earnings reserve 1,081
Other retained earnings 214,751
Reserve for special depreciation 2,650
Reserve for loss on overseas investment, etc. 627
Reserve for deferred income tax on fixed assets 33,011
Retained earnings carried forward 178,460
Treasury stocks (130)
Valuation and translation adjustments 145,770
Unrealized holding gains on other securities 3,680
Deferred gains (loss) on hedges (5,624)
Revaluation difference of lands 147,714
Total net assets 537,678
TOTAL LIABILITIES AND NET ASSETS 2,408,351
(Note) Figures are indicated by discarding fractions of one million yen.
- 52 -
NON-CONSOLIDATED STATEMENT OF INCOME
(April 1, 2013 to March 31, 2014)
(million yen)
Net sales 4,200,335
Cost of sales 3,970,470
Gross profit 229,865
Selling, general and administrative expenses 196,257
Operating income 33,607
Non-operating income
Interest income 483
Dividend income 14,052
Gains in foreign exchange, net 358
Subsidy income 7,626
Others 2,687 25,208
Non-operating expenses
Interest expenses 11,261
Others 3,152 14,414
Ordinary income 44,402
Extraordinary income
Gain on sales of fixed assets 770
Gain on sales of investment securities 2,750
Indemnification income 2,525
Others 235 6,281
Extraordinary expenses
Impairment loss on fixed assets 4,544
Loss on sale of fixed assets 337
Loss on disposal of fixed assets 2,667
Loss on termination of feasibility study 4,215
Others 1,096 12,862
Income before income taxes 37,821
Income taxes - current 6,466
Income taxes - deferred 3,890 10,356
Net income 27,465
(Note) Figures are indicated by discarding fractions of one million yen.
- 53 -
NON-CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY, ETC.
(April 1, 2013 to March 31, 2014)
(million yen)
Shareholders' equity
Common
stock
Additional paid-in capital Retained earnings
Capital reserve
Other additional
paid-in capital
Total additional
paid-in capital
Retained earnings reserve
Other retained earnings
Total retained earnings
Reserve for special
depreciation
Reserve for loss on
overseas investment,
etc.
Reserve for deferred
income tax on fixed assets
Retained earnings carried forward
Balance at April 1, 2013 108,606 57,245 10,354 67,599 1,081 - 709 28,775 164,189 194,755
Changes during the year
Distribution of retained earnings (7,997) (7,997)
Net income 27,465 27,465
Acquisition of treasury stocks
Additions to other retained earnings 2,650 2 7,182 (9,834) -
Reversal of other retained earnings (83) (2,945) 3,029 -
Reversal of revaluation difference of lands 1,609 1,609
Changes in items other than
shareholders' equity during the year
(net)
Total changes during the year - - - - - 2,650 (81) 4,236 14,271 21,076
Balance at March 31, 2014 108,606 57,245 10,354 67,599 1,081 2,650 627 33,011 178,460 215,832
- 54 -
(million yen) Shareholders' equity Valuation and translation adjustments
Total net assets Treasury stocks
Total
shareholders'
equity
Unrealized
holding gains on
other securities
Deferred gains
(loss) on hedges
Revaluation
difference of
lands
Total valuation
and translation
adjustments
Balance at April 1, 2013 (118) 370,843 3,291 (4,075) 149,782 148,998 519,841
Changes during the year
Distribution of retained earnings (7,997) (7,997)
Net income 27,465 27,465
Acquisition of treasury stocks (11) (11) (11)
Additions to other retained earnings - -
Reversal of other retained earnings - -
Reversal of revaluation difference of lands
1,609 (1,609) (1,609)
-
Changes in items other than
shareholders' equity during the year
(net) 389 (1,548) (458) (1,618) (1,618)
Total changes during the year (11) 21,065 389 (1,548) (2,068) (3,227) 17,837
Balance at March 31, 2014 (130) 391,908 3,680 (5,624) 147,714 145,770 537,678
- 55 -
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
1. Matters concerning significant accounting policies
(1) Basis and method of valuation of assets:
(i) Basis and method of valuation of securities: a. Bonds to be held to maturity: At amortized cost (straight-line method) b. Capital stocks of affiliates: At cost, determined by the moving average
method c. Other securities:
・ Those with market value: At market value, which is determined by the
average of the closing market prices for one
month prior to the close of the fiscal year.
Revaluation differences are all transferred
directly to net assets.
Acquisition costs, which shall be compared
with market value, are determined by the
moving average method.
・ Those without market value: At cost, determined by the moving average
method
(ii) Basis and method of evaluation of inventories:
Merchandise and finished goods
Raw material and supplies: At cost, determined by the gross average
method, in principle (the balance sheet
values are calculated by the write-down
method based on declined margins).
(iii) Basis and method of evaluation of derivatives:
At market value
(2) Method of depreciation of fixed assets:
(i) Tangible fixed assets
(excluding lease assets): By the straight-line method
(ii) Intangible fixed assets
(excluding lease assets): By the straight-line method; provided,
however, that software for internal use is
amortized by the straight-line method on the
estimated useful life of internal use (five
years).
- 56 -
(iii) Lease assets: By the straight-line method on the
assumption that the lease period is the useful
life of the property and the residual value is
zero.
In addition, finance lease transactions which
do not transfer ownership, for which the
commencement date of the transactions was
March 31, 2008 or theretofore, an
accounting method similar to the method for
ordinary lease transactions is applied.
(3) Basis for accounting for allowances and reserves:
(i) Allowance for doubtful accounts: To meet losses from loan default, the
Company sets aside an estimated
uncollectible amount, by taking into
consideration the actual loss rate in respect
of general credits and the individual
possibilities of collection in respect of
specific claims, such as probable
non-performing credits.
(ii) Allowance for bonuses: To meet the payment of bonuses to
employees, the Company sets aside the
portion for the fiscal year under review of an
estimated amount of bonuses to be paid in
the future.
(iii) Retirement allowances for employees: To meet the payment of retirement benefits
to employees, the Company provides an
amount estimated to accrue at the close of
the fiscal year under review, based on the
estimated retirement benefit obligations and
pension plan assets as of the close of each
such fiscal year.
Actuarial differences are treated as expenses,
based on the straight line method for a
specific period of years (ten years) not
exceeding the average remaining years of
service of employees, from the fiscal year
next following the fiscal year when such
differences occur. Prior year service
liabilities are treated as expenses in a lump
sum when such liabilities occur.
(iv) Reserve for repair works: To meet the payment for repair expenses in
the future, the Company sets aside the
portion for the fiscal year under review of an
amount of expenses of inspection and repair
- 57 -
to be defrayed in respect of the oil tanks and
machinery and equipment that require
periodic repairs in the future.
(4) Method of hedge accounting:
(i) Method of hedge accounting: Deferral hedge accounting is applicable.
(ii) Hedge instruments and hedged items:
Hedge instruments: Forward exchange contracts, currency option
transactions, foreign currency debts payable,
futures transactions, crude oil and petroleum
products swap transactions, interest rate
swaps and option transactions Hedged items: Foreign currency receivables and payables,
foreign currency investment securities,
equity interests in overseas subsidiaries,
crude oil and petroleum products and debts
payable
(iii) Hedging policy: The Company, in accordance with its rules,
carries out hedge transactions within the
scope of actual requirements to hedge risk of
price changes, interest rate and currency
fluctuations with regard to the hedged items.
Trading volumes in interest rate swaps and
forward exchange contracts are limited
within actual requirements.
(iv) Method of evaluating the effectiveness of a hedge:
The method of evaluating the effectiveness
of a hedge is to confirm the compliance of
the hedging instruments with the hedged
items. No evaluation is made as to the
effectiveness of any transaction in which
important conditions are common for the
hedged assets and liabilities or scheduled
transactions and price changes or cash flow
changes are assumed in advance to be offset
upon the commencement of the hedging and
continue to be offset thereafter. (5) Other important matters forming the basis of preparation of financial statements:
(i) Accounting treatment of deferred assets:
Bond issuing expenses are all treated as
expenses upon payment thereof.
- 58 -
(ii) Accounting treatment of consumption taxes, etc.:
Consumption taxes and local consumption
taxes are excluded from each account
subject to such taxes. (6) Changes in presentation methods:
Non-consolidated balance sheet: As from the fiscal year under review,
"Advance payments, trade" (¥31 million for
the previous fiscal year) and "Accounts
receivable, other" (¥56,311 million for the
previous fiscal year), which were presented
individually in the previous fiscal year, are
presented by inclusion in the item of "Other
current assets" under "Current assets" as they
are less important. Likewise, "Patents"
(¥316 million for the previous fiscal year)
are presented by inclusion in the item of
"Other intangible fixed assets" under
"Intangible fixed assets" and "Equity
contribution" (¥178 million for the previous
fiscal year) is presented by inclusion in the
item of "Other investments" under
"Investments and other assets".
"Asset retirement obligations" (¥2,478
million for the previous fiscal year), which
were presented individually in the previous
fiscal year, are presented by inclusion in the
item of "Other long-term liabilities" under
"Long-term liabilities" as they are less
important. 2. Notes to the non-consolidated balance sheet
(1) Assets pledged and corresponding liabilities
(i) Factory foundation mortgage:
Lands ¥337,963 million
(ii) Other pledges:
Investment securities ¥5,571 million
Total ¥343,535 million
The assets of the above factory foundation during the fiscal year under review were
subjected to revolving mortgage related to bank transactions but substantially, no
liabilities with assets pledged existed.
- 59 -
(2) Accumulated depreciation of tangible fixed assets ¥1,696,085 million (3) Contingent liabilities:
Guarantee of obligations ¥107,569 million
Management directive memorandums ¥134 million
Total ¥107,704 million (4) Receivables from associates and payables to associates:
(i) Short-term receivables from associates: ¥175,509 million
(ii) Long-term receivables from associates: ¥11,692 million
(iii) Short-term payables to associates: ¥68,102 million
(iv) Long-term payables to associates: ¥531 million (5) Land revaluation
In accordance with the Land Revaluation Act (Act No. 34, promulgated on March 31,
1998) of Japan and the Act to Amend Part of the Land Revaluation Act (Act No. 19,
promulgated on March 31, 2001) of Japan, the Company's lands used for business
are revaluated and an amount equivalent to taxes on the difference on revaluation is
included in liabilities as "deferred tax liabilities upon revaluation" and the difference
on revaluation minus the amount of such taxes is included in net assets as
"revaluation difference of lands".
(i) Method of revaluation:
Land revaluation is made in accordance with the method of calculation by making
reasonable adjustments to the assessed value of fixed assets as set forth in Article 2,
item 3 of the Ordinance to Implement the Land Revaluation Act (Cabinet Order No.
119, promulgated on March 31, 1998; the "Ordinance"), the method of calculation by
making reasonable adjustments to the land values that form the basis of land tax
calculations as set forth in Article 2, item 4 of the Ordinance, and appraisals by real
estate appraisers as set forth in Article 2, item 5 of the Ordinance.
(ii) Revaluation date: March 31, 2002
(iii) Difference of the market value as at the end of the fiscal year under review of the
lands revaluated and the book value thereof after such revaluation:
(¥148,744 million)
3. Notes on the non-consolidated statement of income Transactions with associates:
(i) Sales: ¥818,657 million
(ii) Purchases: ¥319,981 million
(iii) Transactions other than ordinary business: ¥10,857 million
- 60 -
4. Notes on the non-consolidated statement of shareholders' equity, etc.
Matters concerning the number of shares of treasury stock:
Class of shares Number of shares as of April 1, 2013
Increase in the number of shares during the year
Decrease in the number of shares during the year
Number of shares as of March 31,
2014
Shares of
common stock 10 thousand shares 36 thousand share - 46 thousand shares
(Note 1) As of January 1, 2014, the Company conducted a stock split at the rate of four shares for
each share.
(Note 2) The number of shares of treasury stock increased by 33 thousand shares as a result of the
stock split and by 3 thousand shares as a result of the shareholders' requests for purchases
by the Company of less-than-one-unit shares.
5. Notes on tax effect accounting
Principal components of deferred tax assets and deferred tax liabilities:
(Deferred tax assets) (million yen)
Impairment loss on fixed assets 11,621
Reserve for repair works 7,142
Retirement allowances for employees 6,528
Estimated selling prices 4,508
Deferred loss on hedges 3,690
Software 3,271
Tax effect on investments 2,696
Allowance for bonuses 1,920
Business structure improvement expenses 1,203
Unrealized holding gains on other securities 155
Others 4,818
Subtotal of deferred tax assets 47,557
Valuation reserve (7,334)
Total deferred tax assets 40,222
(Deferred tax liabilities)
Reserve for deferred income tax on fixed assets (18,280)
Adjustments for revaluation of inventories (3,746)
Unrealized holding gains (loss) on other securities (2,085)
Reserve for special depreciation (1,467)
Deferred gains (loss) on hedges (576)
Reserve for loss on overseas investment (347)
Total deferred tax liabilities (26,505)
Net deferred tax assets 13,717
6. Notes on the fixed assets used by lease
Financial lease transactions other than those in which ownership of leased property
is considered to be transferred to borrowers:
- 61 -
(1) Amounts equivalent to the acquisition prices, accumulated depreciation and balance
at the end of the year, of leased property:
(million yen)
Amount
equivalent to the
acquisition prices
Amount
equivalent to
accumulated
depreciation
Amount
equivalent to
balance at the end
of the year
Machinery, equipment and vehicles 34 31 2
Tools, furniture and fixtures 12 11 0
Total: 47 43 3
(2) Amount equivalent to the balance of unearned rent at the end of the year:
Lease within one year: ¥4 million
Lease exceeding one year: ¥0 million
Total: ¥4 million
(3) Rent paid for the year, the amount equivalent to depreciation costs and the amount
equivalent to interest paid:
Rent paid: ¥45 million
Amount equivalent to depreciation costs: ¥40 million
Amount equivalent to interest paid: ¥0 million
(4) Method of calculation of the amount equivalent to depreciation costs:
By the straight-line method on the assumption that the lease period is the useful life
of the leased property and the residue value is zero.
(5) Method of calculation of the amount equivalent to interest paid:
The difference between the total rents paid for the year and the amounts equivalent
to the acquisition prices of leased property shall be deemed to be the amount
equivalent to interest and the distribution thereof to each fiscal year shall be made
by the interest method.
- 62 -
7. Notes on transactions with related parties
Attribute Trade name Capital stock
(million yen)
Principal
business
Ratio of voting
rights owned
by the
Company
(owned in the
Company)
Relationship Transaction
Transaction
amount
(million yen)
Account item
End-of-year
balance
(million yen)
Affiliate
Idemitsu
Credit Co.,
Ltd.
1,950
Credit card
and credit
guarantee
business
50.0% Interlocking
directorate
Collection of
trade
receivables
(Note 1)
558,163
(Note 2)
Account
receivable-
other
42,153
Affiliate
Nghi Son
Refinery and
Petrochemical
Limited
Liability
Company
US$1,359,828
thousand
Oil refinery
and
production
and sale of
petrochemical
products
35.1% None
Underwriting
of capital
increase
40,620 - -
Subsidiary
Idemitsu
Canada
Corporation
C$334,000
thousand
Investigation
and promotion
of gas and
related
businesses in
Canada
100% None
Underwriting
of capital
increase
29,714 - -
(Note 1) The Company receives from Idemitsu Credit Co., Ltd. part of trade receivables of petroleum products, etc. for exclusive distributors (after offsets by such
exclusive distributors against credit receivables from Idemitsu Credit Co., Ltd.).
(Note 2) The transaction amount represents a total annual collection amount.
- 63 -
8. Notes on the information per share
(1) Net assets per share (yen): 3,361.47
(2) Net income per share (yen): 171.70
(Note) As of January 1, 2014, the Company conducted a stock split at the rate of four
shares for each share. Net assets per share and net income per share are
calculated on the assumption that the stock split was conducted at the beginning
of the fiscal year under review.
- 64 -
COPY OF ACCOUNT AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL
STATEMENTS
INDEPENDENT AUDITORS' REPORT
April 30, 2014
To: The Board of Directors
Idemitsu Kosan Co., Ltd.
Deloitte Touche Tohmatsu LLC Masahiko Tezuka (seal)
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant Masahiko Inoue (seal)
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
Dai Yamamoto (seal)
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
We have audited the consolidated financial statements, namely, the consolidated
balance sheet, the consolidated statement of income, the consolidated statement of changes
in shareholders' equity, etc. and the notes to consolidated financial statements of Idemitsu
Kosan Co., Ltd. (the "Company"), applicable to its consolidated fiscal year from April 1,
2013 to March 31, 2014 pursuant to Article 444, paragraph 4 of the Companies Act of
Japan.
Management's Responsibility for Consolidated Financial Statements
The responsibility of the Company's management is to prepare and present properly
these consolidated financial statements in accordance with corporate accounting standards
generally accepted in Japan. This includes maintaining and improving internal control
considered necessary by management to prepare and present properly these consolidated
financial statements free of material misstatement by fraud or error.
Account Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements
from an independent standpoint, based on our audit conducted. We conducted our audit in
accordance with auditing standards generally accepted in Japan. Those standards require
- 65 -
us to formulate an audit plan and conduct an audit based thereon to obtain reasonable
assurance about whether these consolidated financial statements are free of material
misstatement.
In an audit, procedures are taken to obtain audit evidence as to the amount in
consolidated financial statements and disclosure thereof. Audit procedures, on our own
judgment, are selected and applied based on our risk assessment of material misstatement in
the consolidated financial statements by fraud or error. An audit is not contemplated to
express an opinion on the effectiveness of internal control. However, in assessing risk, we
assess internal control related to the preparation and proper presentation of these
consolidated financial statements to form a plan for adequate audit procedures according to
conditions. An audit also includes assessing the accounting policies and methods of
application thereof employed by management and estimates made by management, as well
as evaluating the overall consolidated financial statement presentation.
We believe that our audit provides sufficient and appropriate audit evidence forming
a basis for our opinion.
Account Auditors' Opinion
We are of the opinion that the above consolidated financial statements present
properly the financial position and profit and loss of the corporate group comprised of
Idemitsu Kosan Co., Ltd. and its consolidated subsidiaries for the period related to the
consolidated financial statements in all material respects in conformity with the corporate
accounting standards generally accepted in Japan.
Financial Interest
Our firm and the engagement partners do not have any financial interest in the
Company for which disclosure is required under the provisions of the Certified Public
Accountant Act of Japan.
- END -
- 66 -
COPY OF ACCOUNT AUDITORS' REPORT ON THE NON-CONSOLIDATED
FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
April 30, 2014
To: The Board of Directors
Idemitsu Kosan Co., Ltd.
Deloitte Touche Tohmatsu LLC
Masahiko Tezuka (seal)
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
Masahiko Inoue (seal)
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
Dai Yamamoto (seal)
Designated Unlimited Liability Partner,
Engagement Partner,
Certified Public Accountant
We have audited the non-consolidated financial statements, namely, the
non-consolidated balance sheet, the non-consolidated statement of income, the
non-consolidated statement of changes in shareholders' equity, etc. and the notes to
non-consolidated financial statements, and the accompanying supplemental schedules of
Idemitsu Kosan Co., Ltd. (the "Company"), applicable to its 99th fiscal year from April 1,
2013 to March 31, 2014 pursuant to Article 436, paragraph 2, item 1 of the Companies Act
of Japan.
Management's Responsibility for Financial Statements, etc.
The responsibility of the Company's management is to prepare and present properly
these financial statements and the accompanying supplemental schedules in accordance with
corporate accounting standards generally accepted in Japan. This includes maintaining and
improving internal control considered necessary by management to prepare and present
properly these financial statements and the accompanying supplemental schedules free of
material misstatement by fraud or error.
- 67 -
Account Auditors' Responsibility
Our responsibility is to express an opinion on these non-consolidated financial
statements and the accompanying supplemental schedules based on our audit conducted.
We conducted our audit in accordance with auditing standards generally accepted in Japan.
Those standards require us to formulate an audit plan and conduct an audit based thereon to
obtain reasonable assurance about whether these non-consolidated financial statements and
the accompanying supplemental schedules are free of material misstatement.
In an audit, procedures are taken to obtain audit evidence as to the amount in
non-consolidated financial statements and accompanying supplemental schedules and
disclosure thereof. Audit procedures, on our own judgment, are selected and applied based
on our risk assessment of material misstatement in the non-consolidated financial statements
and the accompanying supplemental schedules by fraud or error. An audit is not
contemplated to express an opinion on the effectiveness of internal control. However, in
assessing risk, we assess internal control related to the preparation and proper presentation
of these non-consolidated financial statements and the accompanying supplemental
schedules to form a plan for adequate audit procedures according to conditions. An audit
also includes assessing the accounting policies and methods of application thereof employed
by management and estimates made by management, as well as evaluating the overall
presentation of these non-consolidated financial statements and the accompanying
supplemental schedules.
We believe that our audit provides sufficient and appropriate audit evidence forming
a basis for our opinion.
Account Auditors' Opinion
We are of the opinion that the non-consolidated financial statements and the
accompanying supplemental schedules referred to above present properly the financial
position and profit and loss of the Company for the period related to the non-consolidated
financial statements and the accompanying supplemental schedules in all material respects
in conformity with the corporate accounting standards generally accepted in Japan.
Financial Interest
Our firm and the engagement partners do not have any financial interest in the
Company for which disclosure is required under the provisions of the Certified Public
Accountant Act of Japan.
- END -
- 68 -
COPY OF THE BOARD OF STATUTORY AUDITORS' AUDIT REPORT
AUDIT REPORT
We, the Board of Statutory Auditors of the Company, based on the audit report
prepared by each Statutory Auditor on the performance by the Directors of their duties
during the 99th fiscal year from April 1, 2013 to March 31, 2014, have prepared this audit
report upon deliberation and hereby report unanimously as follows:
1. Method of audit by the Statutory Auditors and the Board of Statutory Auditors and the
particulars thereof:
The Board of Statutory Auditors determined the audit policy and audit plans for the
fiscal year under review, received from each Statutory Auditor reports on the state of his
performance of audits and the results thereof, and also received from the Directors, etc. and
the account auditors reports on the state of performance of their duties and demanded their
explanations whenever necessary.
Each Statutory Auditor, pursuant to the rules of audits by the Statutory Auditors
determined by the Board of Statutory Auditors and in accordance with the audit policy,
assignment of duties among them, etc., maintained constant communication with the
Directors, the Internal Audit Office and other employees, etc. in an effort to collect
information and improve the environment for auditing, attended meetings of the Board of
Directors and other important meetings, received from the Directors and employees, etc.
reports on the state of performance of their duties, demanded their explanations whenever
necessary, inspected important decision documents, etc., and made investigation into the
state of activities and property at the head office and principal business offices of the
Company. We also monitored and verified the details of the resolutions of the Board of
Directors for establishing systems to secure that the performance by the Directors of their
duties will comply with laws or ordinances and the Articles of Incorporation and such other
systems provided for in Article 100, paragraphs 1 and 3 of the Regulations to Enforce the
Companies Act of Japan as necessary to secure the adequacy of business of joint-stock
corporations, as well as the status of the formulation and operation of the systems (internal
control systems) established pursuant to such resolutions.
With regard to internal control over financial reporting, we received from the
Directors, etc. and the account auditors reports on the state of evaluation and audits of the
internal control and demanded explanations whenever necessary.
With regard to its subsidiaries, we maintained constant communication and
exchanged information with the directors, statutory auditors, etc. thereof and required the
subsidiaries to render reports on their business operations or made on-site investigation into
the state of their activities and property whenever necessary.
In accordance with such methods, we investigated the business report and its
supplementary schedules for the fiscal year under review.
- 69 -
We also monitored and verified whether the account auditors had maintained an
independent position and conducted adequate audits, and received from the account auditors
reports on the state of performance of their duties and demanded their explanations
whenever necessary. In addition, we received from the account auditors a notice that the
"systems to secure adequate performance of duties" (as listed in the items of Article 131 of
the Regulations on Corporate Accounts) had been established in accordance with the
"Standard for Quality Control Concerning Audits" (the Accounting Standards Board of
Japan, October 28, 2005) and demanded their explanations whenever necessary. In
accordance with such methods, we investigated the non-consolidated financial statements
(the non-consolidated balance sheet, the non-consolidated statement of income, the
non-consolidated statement of changes in shareholders' equity, etc. and the notes to
non-consolidated financial statements) and the accompanying supplemental schedules, as
well as the consolidated financial statements (the consolidated balance sheet, the
consolidated statement of income, the consolidated statement of changes in shareholders'
equity, etc. and the notes to consolidated financial statements), for the fiscal year under
review. 2. Results of audit: (1) Results of audit of the business report, etc.:
We are of the opinion:
(i) That the business report and its supplementary schedules present fairly the state of
the Company in accordance with laws or ordinances and the Articles of
Incorporation;
(ii) That in connection with the performance by the Directors of their duties, no
dishonest act or material fact of violation of laws or ordinances or the Articles of
Incorporation exists; and
(iii) That the details of the resolutions of the Board of Directors on internal control
systems are proper and that the performance by the Directors of their duties
concerning such internal control systems, including internal control over financial
reporting, contains nothing to be pointed out. With regard to internal control over
financial reporting, we have received from the Directors, etc. and the account
auditors reports that there exists no material inadequacy to be disclosed at the time
of preparing this audit report.
(2) Results of audit of the non-consolidated financial statements and the accompanying
supplemental schedules:
We are of the opinion that the method and results of the audit made by the account
auditors are proper. (3) Results of audit of the consolidated financial statements:
We are of the opinion that the method and results of the audit made by the account
auditors are proper.
- 70 -
May 12, 2014
The Board of Statutory Auditors
Idemitsu Kosan Co., Ltd.
Kiyonobu Kobayashi (seal)
Full-time Statutory Auditor
Katsuo Sato
Full-time Statutory Auditor
Minoru Koyama (seal) (Outside) Statutory Auditor
Taigi Ito (seal)
(Outside) Statutory Auditor
Michiyoshi Kuriyama (seal)
(Outside) Statutory Auditor
- END -
- 71 -
Reference Document for the General Meeting of Shareholders
Proposition No. 1: Amendment to the Articles of Incorporation
1. Reasons for the amendment:
It is hereby proposed that upon appointing outside Directors, the Company be allowed
to enter into agreements with them to limit their liabilities.
Each Statutory Auditor has consented to this proposition.
2. The particulars of the proposed amendment:
The particulars of the proposed amendment are as follows:
(The underlines show the portions to be amended.)
Existing Articles of Incorporation Proposed amendment
(Limitation of Liability of Directors)
Article 27. According to Article 426,
paragraph 1 of the Companies Act, this
company may exempt a director (including a
person used to be a director) from his or her
liability regarding damages arising from the
negligence in performing his or her duties as
a director up to the amount that may be
exempted pursuant to laws or ordinances by
a resolution of the Board of Directors.
(To be newly established)
(Limitation of Liability of Directors)
Article 27. According to Article 426,
paragraph 1 of the Companies Act, this
company may exempt a director (including a
person used to be a director) from his or her
liability regarding damages arising from the
negligence in performing his or her duties as
a director up to the amount that may be
exempted pursuant to laws or ordinances by
a resolution of the Board of Directors.
2. According to Article 427, paragraph 1
of the Companies Act, this company may
enter into an agreement with outside
director(s) to exempt the outside director
from his or her liability regarding damages
arising from the negligence in performing
his or her duties as a director, provided
however that the limitation of the liability
thereof shall be up to the amount that is
prescribed in laws or ordinances.
- 72 -
Proposition No. 2: Election of eleven (11) Directors
The term of office of all of the Directors will expire at the close of this Ordinary
General Meeting of Shareholders. Hence, it is hereby proposed that eleven (11) Directors
be elected.
The candidates for Director are as follows:
Candidate
No.
Name
(Date of birth)
Brief history and position and assignment in the Company
(and important concurrent office)
Number of shares
of the Company
held by Candidate
1. Kazuhisa Nakano
(January 4, 1948)
April 1971 Joined the Company
37,996 shares
June 2002 President of Idemitsu Oil & Gas Co., Ltd.
April 2003 Executive Officer and General Manager of Personnel Department
June 2004 Director and General Manager of Personnel Department
June 2005 Managing Director and General Manager
of Personnel Department
June 2006 Managing Director
June 2007 Executive Vice President and Director
June 2009 President
June 2013 Chairman (to date)
2. Takashi Tsukioka
(May 15, 1951)
April 1975 Joined the Company
26,360 shares
July 2002 General Manager of Kobe Branch
April 2005 General Manager of Chubu Branch
June 2007 Executive Officer and General Manager of Supply and Demand Department
June 2008 Managing Executive Officer and General Manager of Supply and Demand Department
June 2009 Director and General Manager of Supply and Demand Department
June 2010 Managing Director and Executive Corporate Officer and General Manager of Corporate Planning Department
April 2011 Managing Director
June 2012 Executive Vice President and Director
June 2013 President (to date)
- 73 -
Candidate
No.
Name
(Date of birth)
Brief history and position and assignment in the Company
(and important concurrent office)
Number of shares
of the Company
held by Candidate
3.
Yoshihisa
Matsumoto
(January 9, 1953)
April 1977 Joined the Company
23,457 shares
April 2007 General Manager of Corporate Planning Office
June 2008 General Manager of Corporate Planning Department
June 2008 Executive Officer and General Manager of Electronic Materials Department
June 2009 Managing Executive Officer and General Manager of Electronic Materials Department
June 2010
June 2012
Managing Director
Executive Vice President and Director
(to date)
Assistant to President (petrochemicals, functional materials and research divisions), responsible for Intellectual Property Division, Lubricating Oil Department, Electronic Materials Department and Advance Technology Laboratory
4. Daisuke Seki
(September 2, 1954)
April 1977 Joined the Company
April 2007 Deputy General Manager of Chiba Refinery and Deputy General Manager of Chiba Plant
June 2009 Executive Officer and General Manager of Sales Department
April 2011 Executive Officer and General Manager of Supply and Demand Department
July 2011 Managing Executive Officer and General Manager of Supply and Demand Department
12,908 shares
June 2012 Director, Managing Executive Officer and General Manager of Supply and Demand Department
June 2013 Managing Director (to date)
In general control over sales and supply
and demand (Sales Department, New
Energy Department, Supply and Demand
Department, Distribution Department,
Astomos Energy Corporation and
Idemitsu Credit Co., Ltd.)
- 74 -
Candidate
No.
Name
(Date of birth)
Brief history and position and assignment in the Company
(and important concurrent office)
Number of shares
of the Company
held by Candidate
5. Yasunori Maeda
(July 15, 1952)
April 1976 Joined the Company
22,721 shares
April 2003 General Manager of Hokuriku Branch
April 2005 General Manager of New Business
Promotion Department
June 2009 Director
June 2010 Director and Managing Executive
Officer and General Manager of Supply
and Demand Department
April 2011 Director
June 2011 Managing Director (to date)
In charge of overseas fuels business
(Vietnam Business Office, Idemitsu Asia
and Idemitsu Tanker Co., Ltd.)
6. Hiroshi Seki
(November 1, 1954)
April 1977 Joined the Company
12,142 shares
April 2005 General Manager of Hokuriku Branch
April 2007 Executive Officer and General Manager of Industrial Energy Department
June 2008 Executive Officer and General Manager of Lubricating Oil Department
April 2011 Executive Officer and General Manager of Corporate Planning Department
July 2011 Managing Executive Officer and General Manager of Corporate Planning Department
June 2012 Director, Managing Executive Officer and General Manager of Corporate Planning Department
April 2013 Director, Managing Executive Officer and General Manager of Resources Department
Responsible for New Energy Office and Resources Department
June 2013 Managing Director (to date)
In general control over resources
(Resources Department I, Resources
Department II and Gas Business Office)
- 75 -
Candidate
No.
Name
(Date of birth)
Brief history and position and assignment in the Company
(and important concurrent office)
Number of shares
of the Company
held by Candidate
7. Katsumi Saito
(August 8, 1955)
April 1978 Joined the Company
6,985 shares
July 2005 Deputy General Manager of Kansai
Branch Office
April 2007 Deputy General Manager of Corporate
Planning Office
June 2008 Deputy General Manager of Corporate
Planning Department
April 2010 Executive Officer and General
Manager of Agribio Department
June 2013 Director (to date)
In charge of agricultural biotechnology
and functional materials (Agribio
Business Div, Functional Materials
Department and Idemitsu Unitech Co.,
Ltd.)
8.
Takashi Matsushita
(July 9, 1956)
April 1979 Joined the Company
6,536 shares
Oct. 2004 Deputy General Manager of Hokkaido
Refinery
April 2007 Deputy General Manager of
Manufacturing Department
April 2010 Executive Officer and General
Manager of Tokuyama Refinery and
General Manager of Tokuyama Plant
April 2013 Executive Officer and General
Manager of Manufacturing and
Engineering Department
June 2013 Director, Managing Executive Officer
and General Manager of
Manufacturing & Technology
Department (to date)
In general control over manufacturing
and engineering (Manufacturing &
Technology Department, refineries,
petrochemical plants, Technology &
Engineering Center and Idemitsu
Engineering Co., Ltd.)
- 76 -
Candidate
No.
Name
(Date of birth)
Brief history and position and assignment in the Company
(and important concurrent office)
Number of shares
of the Company
held by Candidate
9.
Shunichi Kito
(April 6, 1956)
April 1980 Joined the Company
5,736 shares
April 2005 Deputy General Manager of Personnel
Department
July 2008 Deputy General Manager of
Accounting Department
June 2011 Executive Officer and General
Manager of Accounting Department
June 2013 Director, Managing Executive Officer
and General Manager of Accounting
Department (to date)
In charge of accounting, public
relations and CSR (Accounting
Department and Public Relations and
CSR Office)
10. Eri Yokota
(August 25, 1960)
April 1995 Full-time Lecturer, Faculty of
Economics of Musashi University
-
April 2001 Professor of Musashi University after
serving as Assistant Professor
April 2005 Professor, Faculty of Business and
Commerce of Keio University
(current) (to date)
11. Ryosuke Ito
(January 26, 1955)
April 1983 Registered as attorney at law
Joined Nishimura and Sanada
June 1988 Graduated from New York University
School of Law (M.C.J.)
Joined De Bandt, van Hecke & Lagae in
Brussels, Belgium
Sept. 1988 Joined Graham & James in San
Francisco
June 1989 Admitted to the bar in New York -
Nov. 1990 Admitted to the bar in California
Dec. 1991 Joined TMI Associates as partner
(current)
June 2001 Part-time Lecturer, Doshisha University,
Graduate School (current)
Oct. 2005 Part-time Lecturer, Hitotsubashi
University, Law School (current)
(to date)
(Notes) 1. There is no special relationship between any candidate for Director and the
Company.
2. Ms. Eri Yokota and Mr. Ryosuke Ito are candidates for outside Director.
3. It is hereby proposed that Ms. Eri Yokota be elected as outside Director to reflect
her long experience and wide knowledge as a university professor. She has not
engaged in corporate management. However, management has judged that she
will be able to perform her duties as an outside Director properly as she is familiar
with corporate accounting as a university professor and has full knowledge about
corporate management.
- 77 -
4. It is hereby proposed that Mr. Ryosuke Ito be elected as outside Director to reflect
his long experience and wide knowledge as an attorney at law. He has not
engaged in corporate management. However, management has judged that he
will be able to perform his duties as an outside Director properly as he is familiar
with corporate legal affairs as an attorney at law and has full knowledge about
corporate management.
5. The Company plans to enter into an agreement with each of Ms. Eri Yokota and
Mr. Ryosuke Ito to limit the liability for damages provided for in Article 423,
paragraph 1 of the Companies Act of Japan pursuant to the provision of Article
427, paragraph 1 of the said act. The limit on the liability under the agreement
shall be the amount as provided for in laws or ordinances.
6. Ms. Eri Yokota and Mr. Ryosuke Ito satisfy the requirements for an independent
officer under the rules of the Tokyo Stock Exchange. The Company plans to
register them as independent officers with the Tokyo Stock Exchange.
7. The number of shares of the Company held by each Candidate for Director
includes his interests in the Idemitsu Officer Stockholders Committee.
- 78 -
Proposition No. 3: Election of two (2) Statutory Auditors
Statutory Auditors Messrs. Kiyonobu Kobayashi and Minoru Koyama will retire upon
expiration of the term of office at the close of this Ordinary General Meeting of Shareholders.
Hence, it is hereby proposed that two (2) Statutory Auditors be elected.
The Board of Statutory Auditors has consented to this proposition.
The candidates for Statutory Auditor are as follows:
Candidate
No.
Name
(Date of birth)
Brief history and position and assignment in the
Company (and important concurrent office)
Number of shares
of the Company
held by Candidate
1.
Takanori
Kuniyasu
(March 26,
1957)
April 1979 Joined the Company
5,230 shares
April 2006 Deputy General Manager of General Affairs Department of the Company
June 2010 President, Idemitsu Techno Fine Co., Ltd.
July 2013 Principal Associate of General Affairs Department of the Company (to date)
2.
Shoichiro
Niwayama
(January 11,
1946)
April 1971 Registered as attorney at law
-
April 1994 Executive Governor, Japan Federation of Bar Associations
Vice Chairman, Daini Tokyo Bar Association
April 1999 Director, Yamato Servicer, Co., Ltd.
Oct. 1999 Special Committee Member, Central Construction Dispute Committee, Ministry of Construction (currently, Ministry of Land, Infrastructure, Transport and Tourism) (current)
May 2004 Representative Director, Japan Civil Liberties Union
April 2008 Vice President, Japan Federation of Bar Associations
President, Daini Tokyo Bar Associations
July 2008 Chairman, Legislative Measures Center, Japan Federation of Bar Associations
April 2009 Vice President, Japan Political Association of Attorneys (current)
Oct. 2010 Executive Director, Japan Law
Foundation (current) (to date)
(Notes) 1. There is no special relationship between each of the candidates for Statutory
Auditor and the Company.
2. Mr. Shoichiro Niwayama is a candidate for outside Statutory Auditor.
- 79 -
3. It is hereby proposed that Mr. Shoichiro Niwayama be elected as outside
Statutory Auditor to reflect his long experience and wide knowledge as an
attorney at law. Management has judged that he will be able to perform his
duties as an outside Statutory Auditor properly as he has engaged in
corporate management and also is familiar with, and has full knowledge
about, corporate legal affairs as an attorney at law.
4. The Company plans to enter into an agreement with Mr. Shoichiro Niwayama
to limit the liability for damages provided for in Article 423, paragraph 1 of
the Companies Act of Japan pursuant to the provision of Article 427,
paragraph 1 of the said act. The limit on the liability under the agreement
shall be the amount as provided for in laws or ordinances.
5. Mr. Shoichiro Niwayama satisfies the requirements for an independent officer
under the rules of the Tokyo Stock Exchange. The Company plans to
register him as an independent officer with the Tokyo Stock Exchange.
6. The number of shares of the Company held by each Candidate for Statutory
Auditor includes his interests in the Idemitsu Employee Stockholders
Committee.
- END -