(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

- 2 -

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

- 3 -

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.

- 5 -

[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)

- 6 -

(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)

- 8 -

<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

- 10 -

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.

- 13 -

(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

- 14 -

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

- 15 -

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

- 16 -

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:

- 18 -

(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 -