(English Translation) Summary of Consolidated Full Year ... · PDF file(English Translation)...

(English Translation)

(Amount unit: Millions of yen, unless otherwise stated) (Fractions less than one million yen are rounded off.)

1. Consolidated financial results for full year 2012 (January 1 thorough December 31, 2012) (1) Consolidated financial results (Note) Percentages represent changes from previous year.

Net sales Operating income Ordinary income Net income

％％％％

Full year 2012 2,629,261 (5.1) 14,697 (75.6) 12,674 (79.5) 1,013 (95.6) Full year 2011 2,771,418 18.1 60,288 64.3 61,807 46.6 23,110 44.8

(Note) Comprehensive income for: FY 2012 2,366 million yen ((90.0)%) FY 2011 23,562 million yen (44.4%)

Earnings per share Diluted earnings per share

Net income to net assets (excl. minority interests)

Ordinary income to total assets

Operating income to sales

Yen Yen ％％％ Full year 2012 2.69 - 0.4 1.0 0.6 Full year 2011 61.36 - 9.3 5.1 2.2

(Note) Equity in net earnings of affiliates for: FY 2012 (924) million yen FY 2011 1,804 million yen

(2) Consolidated financial position

Total assets Net assets Net assets (excl. minority

interests) to total assets interests

Net assets (excl. minority interests) per share

% Yen

Full year 2012 1,233,193 273,783 20.3 663.33 Full year 2011 1,208,442 279,152 21.2 679.37

(Note) Net assets (excluding minority interests): As of December 31, 2012 249,826 million yen As of December 31, 2011 255,865 million yen (3) Consolidated cash flow position

Cash flow from

operating activities Cash flow from

investing activities Cash flow from

financing activities Cash and cash equivalents

at end of period

Full year 2012 41,992 (17,747) (21,391) 16,979 Full year 2011 50,551 (24,560) (31,159) 14,466

2. Dividends

Cash dividend per share Total dividends

paid

Dividends payout ratio

(Consolidated)

Dividends on net assets

(Consolidated) As of

Mar. 31 As of

Jun. 30 As of

Sep. 30 As of

Dec. 31 Total

Yen Yen Yen Yen Yen % % Full year 2011 - 9.00 - 9.00 18.00 6,780 29.3 2.7 Full year 2012 - 9.00 - 9.00 18.00 6,780 669.3 2.7 Full year 2013

(Forecast) - 9.00 - 9.00 18.00 26.1

3. Forecast of consolidated financial results for full year 2013 (January 1 through December 31, 2013) (Note) Percentages represent changes from previous year.

Net sales Operating income Ordinary income Net income Earnings per share

％％％％ Yen

Interim 2013 1,340,000 2.2 19,000 - 19,000 - 11,000 - 29.21 Full year 2013 2,710,000 3.1 46,000 213.0 45,000 255.1 26,000 - 69.03

Summary of Consolidated Full Year Results for 2012 February 14, 2013 Listed Company Name: Showa Shell Sekiyu K.K. Listed Stock Exchange: Tokyo Stock Exchange 1st Section Code number: 5002 （URL http://www.showa-shell.co.jp/） Delegate: Title: President, Representative Director Name: Jun Arai Contact: Title: Controller, Executive Officer Name: Tsutomu Yoshioka Phone: (03) 5531-5591 Date of annual shareholders meeting : March 28, 2013 Expected date of dividend payment: March 29, 2013 Expected date of security report submission: March 28, 2013

Supporting material for full year results: Applicable The briefing session of full year results: Applicable (For analysts and institutional investors)

4. Others (1) Important changes in scope of significant consolidated subsidiaries during the period : None

(2) Changes in accounting principles, accounting estimates and restatement a) Changes in accounting principles due to amendment of accounting standards : None b) Changes in accounting principles due to the reason except a) : None c) Changes in accounting estimates : None d) Restatement : None (3) Number of shares issued (Common shares)

( I ) Number of shares issued (Including treasury shares) As of December 31, 2012 : 376,850,400 As of December 31, 2011 : 376,850,400

( II ) Number of treasury shares As of December 31, 2012 : 227,342 As of December 31, 2011 : 226,299

(III) Average number of shares As of December 31, 2012 : 376,623,640 As of December 31, 2011: 376,624,751

【Reference】Summary of Non-consolidated Financial Results 1. Non-consolidated financial results for full year 2012 (January 1 through December 31, 2012)

(1) Non-consolidated financial results (Note) Percentages represent changes from previous year.

Net sales Operating income Ordinary income Net income

％％％％

Full Year 2012 2,457,814 (5.9) 21,942 (72.4) 22,320 (73.2) 3,015 38.0 Full Year 2011 2,631,231 18.6 79,557 117.1 83,227 108.2 2,184 (90.2)

Earnings per share Diluted earnings per share

Yen Yen Full Year 2012 8.00 - Full Year 2011 5.80 -

(2) Non-consolidated financial position Total assets Net assets Net assets(excl. minority

interests) to total assets Net assets (excl. minority

interests) per share

％ Yen

Full Year 2012 1,107,732 214,307 19.3 568.92 Full Year 2011 1,080,445 218,171 20.2 579.18

(Note) Net Assets (excluding minority interests): As of December 31, 2012 214,307 million yen As of December 31, 2011 218,171 million yen

2. Forecast of non-consolidated financial results for full year 2013(January 1 through December 31, 2013) (Note) Percentages represent changes from previous year.

Net sales Ordinary income Net income Earnings per

Share

％％％ Yen Interim 2013 1,220,000 (0.3) 18,000 - 12,000 - 31.86

Full Year 2013 2,490,000 1.3 32,000 43.4 19,000 530.2 50.44 Indication of audit procedure implementation status This report is exempt from audit procedure based upon the Financial Instruments and Exchange Act. It is under the audit procedure process at the time of disclosure of this report. * Explanation regarding appropriate use of the forecast, other special instructions Figures in the above forecast are based on currently available information, and includes various risks and uncertainty. Actual results could differ from this forecast due to changes in economic conditions, market trends, exchange rate and other factors. Please refer to “Outlook for 2013” on page 5 for the details of this forecast of business performance.

〔 Supporting Material 〕 Contents

1.Business Results P.2 (1) Analysis of Business Results P.2 (2) Analysis of Financial Conditions P.6 (3) Basic Policy for Distributions of Profits and Dividend Payments P.6 2. Scope of Consolidation and Equity Associates P.7 3. Management Policy P.8 4. Consolidated Financial Statements P.9 (1) Consolidated Balance Sheet P.9 (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive

Income P.11

(3) Consolidated Statement of Changes in Shareholder’s Equity P.14 (4) Consolidated Statement of Cash Flows P.16 (5) Notes for Premises of Going Concern P.18 (6) Basis of Presenting Consolidated Financial Statements P.18 (7) Additional Information P.22 (8) Notes to Consolidated Financial Statements P.23

Consolidated Balance Sheet P.23 Consolidated Statement of Changes in Shareholder’s Equity P.24 Consolidated Statement of Cash Flows P.25 Segment Information P.26 Information on Per Share Data P.28 Significant Subsequent Event P.28

5. Non-consolidated Financial Statements P.29 (1) Non-consolidated Balance Sheet P.29 (2) Non-consolidated Statement of Income P.32 (3) Non-consolidated Statement of Changes in Shareholder’s Equity P.34 (4) Notes for Premises of Going Concern P.37

- 1 -

1．Business Results (1) Analysis of Business Results

A. Business Results for the Current Period [Analysis of Consolidated Business Results]

Despite growing concern over the global economic slowdown triggered by the European debt crisis and slowing growth in

Asian emerging markets, the Japanese economy in the period picked up in the middle of the year due to such circumstances

as demands for post-Great East Japan Earthquake reconstruction funds. In the second half of the year, however, while

international financial markets settled down, the situation became more severe with the effect from removal of recovery

policy and decrease in exports.

The crude oil price was at 105 dollars per barrel for Dubai crude oil at the beginning of the period. The price, after

approaching 125 dollars per barrel in March, gradually went down until the price hit 89 dollars per barrel in June, but rose

again to reach 115 dollars per barrel in September. The Dubai crude oil price subsequently hovered between 105 and 110

dollars per barrel and the price at the end of the period was 107 dollars per barrel.

In the foreign exchange market, the exchange rate for the Japanese yen to the U.S. dollar started at 76 yen at the beginning of

the year. The yen had continued to be sold since middle of February, before weakening to 84 yen in the middle of March.

However the Japanese yen then got stronger and from May basically stayed below 80 yen. In October, the U.S. dollar

strengthened against the yen, and the exchange rate ended at 86 yen for the period.

(Crude oil prices and foreign exchange rate)

The Dubai crude

oil price

(USD/Barrel)

Exchange rate

(JPY/USD)

Exchange rate

(JPY/EUR)

Full year 2011 106.3 79.8 111.1 Full year 2012 109.0 79.8 102.6

Difference 2.7 0.0 (8.5)

(Note) These are the average figures during the period.

Regarding the consolidated business results for this period, the net sales were 2,629.2 billion yen, a decrease of 5.1%

compared with the previous period, because we decreased export volume with the closure the Ogimachi Factory at the

Keihin Refinery in September 2011.

Operating income was 14.6 billion yen, a decrease of 45.5 billion yen compared with the previous period. This was partly

because the domestic margin of oil products subsequently remained at low levels. Ordinary income was 12.6 billion yen, a

decrease of 49.1 billion yen compared with the previous period. Ordinary income without the effect of inventory valuation

was 11.2 billion yen, a decrease of 18.7 billion yen compared with the previous period.

Regarding extraordinary income and loss, the balance was a 0.2 billion yen loss, because of a loss on disposal of noncurrent

assets such as service stations and impairment loss exceed a gain on subsidies and a gain on sale of unutilized assets.

Income before income taxes was 12.3 billion yen, a decrease of 44.3 compared with the previous period. Net income after

taxes, tax adjustments and minority interest was 1.0 billion yen, a decrease of 22.0 billion yen compared with the previous

- 2 -

period.

The business results by segment are as follows.

[Oil Business]

In crude oil acquisition, we maintained our relationship with Saudi Aramco as our main supplier, coordinating in addition

with other Middle East oil producers and the Shell Group, and carried out flexible crude oil acquisition in order to optimize

the crude oil mix for our refineries.

In manufacturing and supply, we endeavoured to optimize our future production to correspond to gradually decreasing

domestic demand. We also maintained the stable and efficient operation of the group refineries. In addition, we made efforts

to improve the ratio of higher value-added products in our product mix and make cost reductions. Closure of the Ogimachi

Factory at the Keihin Refinery in September 2011 mainly enabled the Group as a whole to maintain high utilization ratios

throughout the period.

In domestic sales, we continued to develop various goods and services responding to customer needs in order to attract new

and repeat customers. The number of member merchants of “Ponta”, a common customer-reward point system started from

March 2010, reached 56 and that of the customer members exceeded approximately 50 million as of the end of December.

As Ponta has had a major impact, helping us to further pull in new customers from the member merchants, we continue to

use it as a tool to expand our customer base. Additionally, the number of issued “Shell EasyPay” key Fobs, a system that

enables customers to refuel and make payment by passing their IC key holder instead of a credit card over a card reader,

exceeded 420,000 as of the end of December and many customers enjoy using this convenient settlement system. On top of

that, we started to roll out a new brand design “RVI-E” that was deployed at 321 service stations as of the end of December.

Besides, we further worked on boosting customer satisfaction by starting to lay out a new concept sales room “Shell Time”

to provide customers with space to spend waiting time with comfort as well as renewing uniforms of service station staff to

freshen up our stations and update our image. As a result of these measures, we achieved solid sales despite decreasing

domestic demand of gasoline.

In value-added products sales, we expanded lubricant oil and asphalt sales such as long-life and energy-saving product and

environment-responsive goods that enable promotion of recycling pavement materials through emphasizing on making

proposals to customers. And we continued to sell our own product “Shell Heat Clean" through its outlets and nationwide

internet sales. The product is a special kerosene for kerosene fan heaters produced with Gas to Liquids (GTL) technology,

which permits us to compound liquidity fuels from natural gas. As for biomass fuel, we blend bio-ETBE (Ethyl Tertiary

Butyl Ether), which was made from bio-ethanol, with regular gasoline at Keihin Refinery.

As a result, the Oil business segment reported net sales of 2,539.7 billion yen (a decrease of 5.8% from the previous year)

and an operating income of 28.1 billion yen (a decrease of 59.1 billion yen from the previous year), due to the low margins

in the petroleum product market in the first half of this year. The operating income without the effect of inventory valuation

was 26.6 billion yen (a decrease of 28.8 billion yen from the previous year).

[Energy Solution Business] With regards to Solar business, we expanded sales activities in Japan and overseas. Especially in Japan, in order to react

promptly to meet a growing demand driven by the new feed-in tariff (FIT) scheme for renewable energy that came into

- 3 -

effect in July 2012, we significantly strengthened our sales structure and captured robust demand.

In the domestic market, due to the reputation we received for generation of high levels of electricity under real conditions

relating to sales for industrial uses, we were chosen by Lawson, Inc. as one of two domestic panel manufacturers to supply

solar panels as part of plans to install solar power system on 2,000 of its Japan-based stores. We endeavoured to develop

potential demand and our commencement of sales of small-scale power plant packs, a solar power generation package

product targeting individuals and companies who own small-scale idle land, through our dealers around the country was

well received. In relation to sales for residential uses, we achieved significant sales growth as a result of our efforts to

reinforce our sales agent network and enhance the recognition of our brand as well as the advantages of the high levels of

electricity generation of our CIS thin-film solar modules. In overseas markets, we expanded our sales network through

supply of CIS thin-film solar modules to leading users including NRG Solar LLC and EDF Renewable Energy, formerly

enXco, which are the owner and operator of several world's-largest-scale solar power plants in the United States.

With regards to our efforts to develop new business models, we launched several solar power generation projects in

Kunitomi-cho, Miyazaki as an individual solar power supply distributor. Regarding overseas market, to undertake all-in

engineering, procurement, and construction business (EPC) for power generation plants, Solar Frontier K.K., a 100 percent

subsidiary of the Company, and BELECTRIC (Germany), one of the world’s largest solar power generation system

integrators, formed a new joint venture company.

By means of cost reduction through our continuous cost-cutting efforts in addition to the above measures, we improved our

performance, and we achieved a positive cash flow in operating income without depreciation expense in the fourth quarter

of this period.

Regarding research and development for further advanced technology, we worked on improving conversion efficiency of

CIS thin-film solar modules and developing CZTS (copper, zinc, tin, sulfur, and selenium) thin-film solar modules that are

seen as next-generation solar module technology.

In respect of CIS thin-film solar modules, we set a new world record when we achieved an energy conversion efficiency of

17.8% (measured by the Company) on 30 centimeter square solar cell sub-module in February. (* We announced officially

on 8th January, 2013 that we had achieved an energy conversion efficiency of 19.7% , which is a new world record as

compact cell, as research and development results in this year.) These improvements in production technology have made

our key products achieve output of 165W and conversion efficiency of 13%, catching up conversion efficiencies of

preceding crystalline silicon solar modules. Meanwhile, our ability to generate electricity under real conditions (kWh) per

installed capacity (kW) exceeds that of our competitors. Additionally, we became the first manufacturer to obtain the

“JETPVm Certification (JIS Q 8901)”, a new certification that verifies the long-term reliability of a manufacturer’s

modules and an organization’s ability to provide product warranty and customer support, from Japan Electrical Safety &

Environment Technology Laboratories.

Also for CZTS thin-film solar modules, joint research with IBM Corporation etc., on CZTS thin-film solar modules

achieved a world-record 11.1% energy conversion efficiency. Also regarding research and development for technology to

achieve higher efficiency on CZTS thin-film solar modules, we were selected by Japan’s New Energy and Industrial

Technology Development Organization (NEDO) as a future partner in a joint research project.

As for the electric power business, we continued stable operation of Ogishima Power Station, a natural gas fired

high-efficiency and large-scale electric power generation plant sponsored by the Company, to meet the demand of retail

electricity users and help close the gap of demand and supply after the Great East Japan Earthquake. Furthermore, based on

- 4 -

our basic strategy to expand electric power generation, we started to build the additional Third Ogishima Power Station

(approximately 400,000kW) and expanded the scale of construction of solar plants using CIS thin-film modules of Solar

Frontier K.K.

As a result, the sales proceeds of the Energy Solution Segment were 78.2 billion yen (an increase of 18.9% from the

previous year) and operating loss was 15.4 billion yen (13.4 billion yen better than the previous year).

[Other Business]

Other business segment, which includes construction, sale of automobile accessories, office building lease business and

other various businesses, reported sales of 11.2 billion yen (an increase of 8.8% from the previous year) and an operating

income of 2.0 billion yen ( in line with the previous year) for the period.

B. Outlook for 2013

As for the outlook for 2013, we estimate profit and loss as follows;

In oil business segment, we will continue to strengthen our customer base through our strategic tools, and to offer high

value- added activities responding to customer needs in terms of the commercial sales. And we estimate supply/demand

balance will remain stable. In energy solution segment, we expect profits of the power business to be stable also in 2013,

based on stable plant operation. And in solar business, we will steadily capture domestic demand and will further improve

the effectiveness of plant operation.

In consideration of the above, we estimate that consolidated net sales will be 2,710.0 billion yen (2,490.0 billion yen on a

nonconsolidated basis), consolidated ordinary income for the period will be 45.0 billion yen (32.0 billion yen on a

nonconsolidated basis) and consolidated net income for the period will be 26.0 billion yen (19.0 billion yen on a

nonconsolidated basis). The above forecast is calculated on the assumption that crude oil price will be 106 dollars per barrel

and that the exchange rate will be 84 yen per dollar, and we estimate no effect of inventory valuation.

- 5 -

(2) Analysis of Financial Conditions

A. Balance Sheet Analysis Consolidated total assets as of the end of the year were 1,233.1 billion yen, an increase of 24.7 billion yen compared with

the end of the previous year. This was mainly attributable to the increase in accounts receivables, which were caused by the

hike in sales prices due to the depreciation of yen. Consolidated net assets as of the end of the year were 273.7 billion yen, an

decrease of 5.3 billion yen compared with the end of the previous year. This was mainly attributable to negative factors like

the interim and final dividend exceeding positive factors such as net income for the current year.

Consolidated total liabilities were 959.4 billion yen, an increase of 30.1 billion yen compared with the end of the previous

year. This was chiefly due to increases in accounts payable, caused by the hike in crude oil prices on a yen basis. Short and

long-term interest-bearing liabilities (borrowings, CP, and bonds) were 265.7 billion yen, a decrease of 12.6 billion yen

from the end of the previous year.

As a result, equity ratio at the end of the year was 20.3%. The net assets (excluding minority interests) per share based on the

total number of shares issued as of the end of the year were 663.33 yen, down from 679.37 yen for the previous year.

B. Cash Flow Analysis The cash and cash equivalents (hereinafter referred to as funds) as of the end of the year was 16.9 billion yen, an increase of

2.5 billion yen from the end of the previous year. The details are as follows:

a) Cash flows from operating activities

As a result of operating activities, 41.9 billion yen was generated, chiefly attributable to positive factors such as net income

before income tax (12.3 billion yen) and depreciation expense (43.6 billion yen).

b) Cash flows from investing activities

As a result of investing activities, 17.7 billion yen was used, mainly due to capital investment in fixed assets for renovation

of service stations in Oil business and research and development facilities in Solar business.

c) Cash flows from financing activities

As a result of financing activities, 21.3 billion yen was used, mainly because negative factors such as decrease in

interest-bearing liabilities and dividend payment.

The Group’s cash flow indicators are summarised as follows.

2008 Year end 2009 Year end 2010 Year end 2011 Year end 2012 Year end

Equity ratio (%) 25.4 20.1 20.1 21.2 20.3

Market value equity ratio (%) 27.3 24.3 23.5 16.2 14.9 Interest-bearing debts / Cash flow from operating activities

(Times) 10.5 - 3.4 5.5 6.3

Interest coverage ratio 5.5 - 24.7 12.4 9.7

(Note) Equity ratio: (Net assets – Minority interest) / Total assets Market value equity ratio: Gross market capitalisation (*1) / Total assets Interest-bearing debts / Cash flow from operating activities: (*2) / (*3) Interest coverage ratio: Cash flow from operating activities / Interest payment (*3)

Each indicator is calculated by the numbers in the consolidated financial statements.

- 6-1 -

(*1) Gross market capitalisation is calculated by multiplying the closing price of the Company's shares at the year-end by the number of shares issued and outstanding (excluding treasury shares) at the year-end.

(*2) Debts include all the interest-bearing liabilities in the consolidated balance sheets. (*3) Cash flow from operating activities is the "cash flow from operating activities" in the consolidated cash flow

statement. Interest payments equate with the amount of interest paid in the consolidated cash flow statements.

C. Commitment-Line Contract

In order to finance working capital efficiently, we have concluded commitment-line contracts (credit line amount: 150,000

million yen) with a banking syndicate group and a commitment-line contract (overdraft agreement for the current

account/credit line amount: 10,000 million yen) with Mizuho Corporate Bank, Ltd. As of the end of this year, there is no

outstanding loan balance for the contracts above mentioned.

(3) Basic Policy for Distribution of Profits and Dividend Payments

In consideration of our business performance and financial position, as well as of the financial market conditions, we make

it a basic policy to realise distribution of profits that are lucrative and stable enough to satisfy shareholders. At the same

time, we strive to attain sufficient retained earnings in order to accomplish our mid-and-long-term growth strategy for the

purpose of maximising corporate value. In order to do this, our policy is to distribute profits twice a year, a year-end

dividend (base date: 31 December) based on resolutions approved at meetings of the general shareholders and an interim

dividend (base date: 30 June) based on resolutions approved by the board in accordance with the provisions of Article 454-5

of the Corporate Law.

- 6-2 -

2. Scope of Consolidation and Equity Associates

Consolidated subsidiaries of Showa Shell Sekiyu (SSSKK) are 31, and equity associates are 13. Our core business is oil business. In addition we also run energy solution (solar cell and electricity), and other businesses such as property letting, construction, sales of motorcar parts and distributed power supply. The following shows the subsidiaries' segment and positioning.

Kinds of Business Detail of Business Consolidated Subsidiaries Equity Associates Oil Business Oil refining, manufacturing of oil products (SSSKK) Nippon Grease Seibu Oil

Toa Oil Shoseki Kako Showa Yokkaichi Sekiyu (SYS) Crude & oil products transportation,

Stockpiling & Loading (SSSKK) Heiwa Kisen Niigata Joint Oil Stockpiling

Showa Shell Sempaku Japan Oil Network (JONET) Sale of oil products

(gasoline, LPG, kerosene, gas oil, fuel oil, asphalt, lubricants, chemical products etc.)

(SSSKK) Tokyo Shell Pack Marubeni Energy Nippon Grease Sun Road Central Sekiyu Gas Shoseki Kako Shinyo Sekiyu Shell Sekiyu Osaka Hatsubaisho Petro Star Kansai Wakamatsu Gas Dia Shoseki Chuo Shell Sekiyu Hanbai Nissho Koyu Toyotsu Sekiyu Hanbai Leef Energy Nagase Sekiyu Jyoyo Shell Sekiyu Hanbai

Nakagawa Sekiyu Jonen Mie-seki Shoji Enessance Holdings Enessance Hokkaido Shell Tokuhatsu Enessance Touhoku Enessance Niigata Enessance Kanto Enessance Chubu Enessance Kyushu Enessance Hokkaido Butsuryu Enessance Service

Sales of Petrochemicals TS Aromatics

Energy Solution Solar cell and electricity (SSSKK) Genex Ogishima Power Business Solar Frontier

Other Business Property letting, Construction, sales of motor car parts and distributed power supply, etc.

(SSSKK) Rising Sun Shoseki Engineering

On-Site Power

- 7-1 -

O i l B u s i n e s s

Showa Yokkaichi Sekiyu (SYS) Toa Oil *１ Seibu Oil Nippon Grease Shoseki Kako

＜Oil refinery, Manufacturing of oil products＞

＜Crude & oil products transportation, Stockpiling & Loading＞

Shoseki Kako Leef Energy Sun Road Nakagawa Sekiyu Wakamatsu Gas Tokyo Shell Pack Nagase Sekiyu Enessance Hokkaido Enessance Touhoku Enessance Kanto Enessance Hokkaido Butsuryu Dia Shoseki Central Sekiyu Gas Jyoyo Shell Sekiyu Hanbai Marubeni Energy

Nippon Grease Petro Star Kansai Chuo Shell Sekiyu Hanbai Shinyo Sekiyu Nissho Koyu Jonen Enessance Holdings Enessance Niigata Enessance Chubu Enessance Kyushu Enessance Service Shell Sekiyu Osaka Hatsubaisho Shell Tokuhatsu Mie-seki Shoji Toyotsu Sekiyu Hanbai

＜Sale of oil products＞

Showa Shell Sempaku Heiwa Kisen Niigata Joint Oil Stockpiling Japan Oil Network (JONET)

＜Sale of petrochemical products, sales and purchase of oil products ＞

SS SS SS KK KK

Shell Eastern Trading (PTE) Limited Saudi Arabian Oil Company

Crude & oil products supply

Energy Solution Businesses

Solar Frontier Genex *２ Ogishima Power

*１・・・Listed on Tokyo Stock Exchange (second section)

*２・・・Consolidated subsidiary of Toa

means other related companies and corporate shareholders, in the related parties.

TS Aromatics, Shell Chemicals Japan

O t h e r B u s i n e s s

Rising Sun Shoseki Engineering Onsite Power

- 7-2 -

3. Management Policy

(1) Fundamental policy of management, (2) Targeted corporate index and (3) Medium- and long-term strategies Disclosure is omitted for these items because there is no material change from the Management Policy in the flash report of the previous year released on February 16, 2010. You can see the flash report of the previous year if you click the following URL. (Showa Shell Sekiyu) http://www.showa-shell.co.jp/english/ir/index.html (Tokyo Stock Exchange) http://www.tse.or.jp/listing/compsearch/index.html (4) Action measures

In the petroleum business, the global energy environment is marked by an ongoing state of insecurity as characterized by the sanctions against Iran and geopolitical risks in the Middle East. At the same time, there is considerable uncertainty due in part to the emergence of shale oil and gas and rapid fluctuations in currency exchange rates. Domestically, the energy environment encompasses many indeterminate emerging factors such as shrinking demand for petroleum and energy policy. Operating within such an environment, we quickly reduced excess refining capacity, raised the decomposition equipment ratio at Group refineries, developed a framework of high-capacity operations, and realized a highly competitive system of production and supply. In order to achieve further improvements in profitability, we are going to study the feasibility of increasing the production of high value-added products by shifting production from gasoline to chemicals. In the area of sales, we will further fortify retail measures that are in place and endeavor to expand our client base. In addition, we will optimize our sales portfolio by supplying products for which a demand-and-supply equilibrium is maintained through the expansion of middle distillate sales based on the use of our network and the importation and exportation of products based on the use of Shell Group’s trading network. In the solar-cell business, product sales price remains a downside over the world due to excess in supply, but future demand is estimated to be continuing with strong growth. Therefore we are going to strengthen cost-competitiveness through concentrating factory activities on our most-advanced Kunitomi Plant, improving the stability and efficiency of our production system and improving production technologies. On the retail end, we will improve new business models in downstream area as the combination of project development, design, financing, construction, operation and sale of mega-solar power-generation plants and focus on selling in the domestic market which is relatively profitable and has active demands. In respect of research and development, at our Atsugi Research Center we aim to make further highly-efficient and high-quality products by raising energy transformation efficiency and moving new technologies to high-volume manufacturing processes.

- 8 -

http://www.showa-shell.co.jp/english/ir/index.html

http://www.tse.or.jp/listing/compsearch/index.html

(1) Consolidated Balance Sheet(Unit: Millions of yen)

Previous year endAs of December 31, 2011

Current year endAs of December 31, 2012

Assets　Current assets　　Cash and deposits 15,562 18,175　　Notes and accounts receivable-trade 325,622 377,552　　Merchandise and finished goods 143,721 152,362　　Work in process 943 1,985　　Raw materials and supplies 129,280 123,141　　Deferred tax assets 7,322 6,642　　Other 37,107 32,057　　Allowance for doubtful accounts (856) (591)　　Total current assets 658,704 711,325　Noncurrent assets　　Property, plant and equipment　　　Buildings and structures 314,271 313,429　　　　Accumulated depreciation and impairment loss (204,785) (210,007)　　　　Buildings and structures, net 109,486 103,422　　　Oil tanks 84,071 84,564　　　　Accumulated depreciation and impairment loss (73,179) (74,249)　　　　Oil tanks, net 10,892 10,314　　　Machinery, equipment and vehicles 570,366 575,047　　　　Accumulated depreciation and impairment loss (403,119) (427,637)　　　　Machinery, equipment and vehicles, net 167,247 147,409　　　Land 158,856 157,735　　　Construction in progress 1,843 5,478　　　Other 26,006 26,655　　　　Accumulated depreciation and impairment loss (19,761) (20,351)　　　　Other, net 6,245 6,303　　　Total property, plant and equipment 454,571 430,662　　Intangible assets　　　Goodwill 1,731 1,409　　　Leasehold right 4,057 4,025　　　Software 4,983 4,857　　　Other 259 240　　　Total intangible assets 11,031 10,532　　Investments and other assets　　　Investment securities 38,701 37,684　　　Long-term loans receivable 6,159 5,740　　　Deferred tax assets 22,977 21,614　　　Other 17,047 16,306　　　Allowance for doubtful accounts (750) (672)　　　Total investments and other assets 84,135 80,672　　Total noncurrent assets 549,737 521,867　Total assets 1,208,442 1,233,193

4. Consolidated Financial Statements

- 9 -

(Unit: Millions of yen)



Liabilities　Current liabilities　　Notes and accounts payable-trade 294,276 336,884　　Short-term loans payable 58,340 65,933　　Current portion of bonds ― 15,000　　Accounts payable-other 177,452 172,522　　Income taxes payable 3,725 6,604　　Accrued expenses 10,341 9,840　　Provision for bonuses 2,359 2,359　　Provision for directors' bonuses 32 4　　Commercial papers 52,000 26,000　　Other 39,824 47,148　　Total current liabilities 638,351 682,297　Noncurrent liabilities　　Bonds payable 35,000 20,000　　Long-term loans payable 133,022 138,794　　Deferred tax liabilities 3,711 3,539　　Provision for retirement benefits 75,335 74,493　　Provision for directors' retirement benefits 479 ―　　Provision for special repairs 16,308 15,890　　Other 27,080 24,394　　Total noncurrent liabilities 290,938 277,111　Total liabilities 929,290 959,409Net assets　Shareholders' equity　　Capital stock 34,197 34,197　　Capital surplus 22,113 22,113　　Retained earnings 199,182 193,250　　Treasury stock (184) (184)　　Total shareholders' equity 255,308 249,375　Valuation and translation adjustments　　Valuation difference on available-for-sale securities 557 325　　Deferred gains or losses on hedges ― 125　　Total valuation and translation adjustments 557 450　Minority interests 23,286 23,957　Total net assets 279,152 273,783Total liabilities and net assets 1,208,442 1,233,193

- 10 -

Consolidated Statement of Income

(Unit: Millions of yen)Previous year

From January 1, 2011To December 31, 2011

Current yearFrom January 1, 2012To December 31, 2012

Net sales 2,771,418 2,629,261Cost of sales 2,582,339 2,481,144Gross profit 189,078 148,117Selling, general and administrative expenses　Freightage related expenses 37,521 38,787　Personal expenses 35,990 35,536　Rent expenses 6,013 6,225　Depreciation 7,274 7,294　Other 41,990 45,576　Total selling, general and administrative expenses 128,790 133,419Operating income 60,288 14,697Non-operating income　Interest income 213 165　Dividends income 258 1,583　Foreign exchange gains 1,507 ―　Reversal of allowance for doubtful accounts ― 317　Equity in earnings of affiliates 1,804 ―　Gain on investments in silent partnership 1,472 1,421　Other 1,385 1,673　Total non-operating income 6,642 5,161Non-operating expenses　Interest expenses 2,423 2,365　Sales discounts 1,700 1,936　Foreign exchange losses ― 175　Equity in losses of affiliates ― 924　Other 998 1,781　Total non-operating expenses 5,123 7,183Ordinary income 61,807 12,674Extraordinary income　Gain on sales of noncurrent assets 8,951 1,733　Gain on sales of investment securities 284 1　Reversal of provision for special repairs 62 ―　Subsidy 3,546 1,871　Other 1,251 392　Total extraordinary income 14,094 3,998

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income

- 11 -




Extraordinary loss　Loss on disposal of noncurrent assets 3,210 1,943　Loss on valuation of investment securities 53 20　Impairment loss 11,423 978　 Expenses related to upgrading of equipment ― 517　Other 4,504 834　Total extraordinary losses 19,191 4,293Income before income taxes and minority interests 56,710 12,379Income taxes-current 4,136 8,163Income taxes-deferred 28,445 1,744Total income taxes 32,581 9,908Income before minority interests 24,129 2,470Minority interests in income 1,018 1,457Net income 23,110 1,013

- 12 -

Consolidated Statement of Comprehensive Income




Income before minority interests 24,129 2,470Other comprehensive income　Valuation difference on available-for-sale securities (477) (214)　Deferred gains or losses on hedges ― 125　 Share of other comprehensive income of associates accounted for using equity method (89) (14)

　Total other comprehensive income (566) (104)Comprehensive income 23,562 2,366Comprehensive income attributable to　Comprehensive income attributable to owners of the parent 22,549 906　Comprehensive income attributable to minority interests 1,012 1,460

- 13 -




Shareholders' equity　Capital stock　　Balance at the beginning of current period 34,197 34,197　　Changes of items during the period　　　Total changes of items during the period ― ―　　Balance at the end of current period 34,197 34,197　Capital surplus　　Balance at the beginning of current period 22,113 22,113　　Changes of items during the period　　　Disposal of treasury stock (0) ―　　　Total changes of items during the period (0) ―　　Balance at the end of current period 22,113 22,113　Retained earnings　　Balance at the beginning of current period 182,959 199,182　　Changes of items during the period　　　Dividends from surplus (6,780) (6,780)　　　Net income 23,110 1,013　　　Change of scope of consolidation (107) (164)　　　Total changes of items during the period 16,222 (5,932)　　Balance at the end of current period 199,182 193,250　Treasury stock　　Balance at the beginning of current period (183) (184)　　Changes of items during the period　　　Purchase of treasury stock (0) (0)　　　Disposal of treasury stock 0 ―　　　Total changes of items during the period (0) (0)　　Balance at the end of current period (184) (184)　Total shareholders' equity　　Balance at the beginning of current period 239,087 255,308　　Changes of items during the period　　　Dividends from surplus (6,780) (6,780)　　　Net income 23,110 1,013　　　Purchase of treasury stock (0) (0)　　　Disposal of treasury stock 0 ―　　　Change of scope of consolidation (107) (164)　　　Total changes of items during the period 16,221 (5,932)　　Balance at the end of current period 255,308 249,375

(3) Consolidated Statement of Changes in Shareholders’ Equity

- 14 -




Accumulated other comprehensive income　Valuation difference on available-for-sale securities　　Balance at the beginning of current period 1,117 557　　Changes of items during the period　　　Net changes of items other than shareholders' equity (560) (231)　　　Total changes of items during the period (560) (231)　　Balance at the end of current period 557 325　Deferred gains or losses on hedges　　Balance at the beginning of current period ― ―　　Changes of items during the period　　　Net changes of items other than shareholders' equity ― 125　　　Total changes of items during the period ― 125　　Balance at the end of current period ― 125　Total accumulated other comprehensive income　　Balance at the beginning of current period 1,117 557　　Changes of items during the period　　　Net changes of items other than shareholders' equity (560) (106)　　　Total changes of items during the period (560) (106)　　Balance at the end of current period 557 450Minority interests　Balance at the beginning of current period 22,801 23,286　Changes of items during the period　　Purchase of shares of consolidated subsidiaries ― (214)　　Net changes of items other than shareholders' equity 485 884　　Total changes of items during the period 485 670　Balance at the end of current period 23,286 23,957Total net assets　Balance at the beginning of current period 263,006 279,152　Changes of items during the period　　Dividends from surplus (6,780) (6,780)　　Net income 23,110 1,013　　Purchase of treasury stock (0) (0)　　Disposal of treasury stock 0 ―　　Change of scope of consolidation (107) (164)　　Purchase of shares of consolidated subsidiaries ― (214)　　Net changes of items other than shareholders' equity (74) 778　　Total changes of items during the period 16,146 (5,368)　Balance at the end of current period 279,152 273,783

- 15 -




Net cash provided by (used in) operating activities　Income before income taxes and minority interests 56,710 12,379　Depreciation and amortization 43,329 43,620　Impairment loss 11,423 978　Loss (gain) on disposal of noncurrent assets 3,210 1,943　Loss (gain) on sales of noncurrent assets (8,951) (1,733)　Loss (gain) on valuation of investment securities 53 20　Increase (decrease) in allowance for doubtful accounts 476 (342)　Increase (decrease) in provision for retirement benefits 2,943 (842)　Increase (decrease) in provision for special repairs 4,621 (417)　Interest and dividends income (472) (1,748)　Interest expense and sales discount 4,124 4,301　Decrease (increase) in notes and accounts receivable-trade (34,817) (51,930)　Decrease (increase) in inventories (37,663) (3,542)　Increase (decrease) in notes and accounts payable-trade 22,406 35,216　Other, net (9,697) 12,564　Subtotal 57,698 50,466　Interest and dividends income received 480 1,756　Interest expenses paid (4,061) (4,304)　Income taxes (paid) refund (3,565) (5,996)　Net cash provided by (used in) operating activities 50,551 41,922Net cash provided by (used in) investing activities　Purchase of property, plant and equipment (42,900) (20,041)　Purchase of intangible assets (2,193) (2,058)　Proceeds from sales of property, plant and equipment 15,886 3,427　Purchase of investment securities (8) (74)　Proceeds from sales of investment securities 14 6　Net decrease (increase) in short-term loans receivable 4,091 2,203　Payments of long-term loans receivable (4) (942)　Collection of long-term loans receivable 4 4　Other, net 550 (272)　Net cash provided by (used in) investing activities (24,560) (17,747)

(4) Consolidated Statement of Cash Flows

- 16 -




Net cash provided by (used in) financing activities　Net increase (decrease) in short-term loans payable 8,471 17,561　Net increase (decrease) in commercial papers (63,000) (26,000)　Proceeds from long-term loans payable 35,300 8,500　Repayment of long-term loans payable (3,260) (12,696)　Redemption of bonds (200) ―　Purchase of treasury stock (0) (0)　Repayments of lease obligations (1,165) (1,400)　Cash dividends paid (6,780) (6,780)　Cash dividends paid to minority shareholders (544) (575)　Other, net 20 ―　Net cash provided by (used in) financing activities (31,159) (21,391)Net increase (decrease) in cash and cash equivalents (5,168) 2,783Cash and cash equivalents at beginning of period 19,746 14,466Decrease in cash and cash equivalents resulting from exclusion ofsubsidiaries from consolidation (111) (270)

Cash and cash equivalents at end of period 14,466 16,979

- 17 -

(5) Notes for Premises of Going Concern

Not applicable

(6) Basis of Presenting Consolidated Financial Statements

1. Scope of consolidation

(1) Consolidated Subsidiaries 31

Showa Yokkaichi Sekiyu, Toa Sekiyu, Showa Shell Sempaku, Heiwa Kisen, Shoseki Engineering, Nippon

Grease, Shoseki Kako, Rising Sun, Sun Road, Chuo Shell Sekiyu Hanbai, Leef Energy, Shinyo Sekiyu,

Tokyo Shell Pack, Nakagawa Sekiyu, Petro Star Kansai, Wakamatsu Gas, Genex, On-Site Power, Nissho

Koyu, Solar Frontier, Nagase Sekiyu, Jonen, Enessance Holdings, Other 8 companies

Enessance Sapporo and Hakodate Gas, which had previously been our consolidated subsidiaries, were

merged with Enessance Hokkaido. The number of consolidated subsidiaries decreased as a result of this

merger.

Shoseki Overseas Oil Development Co., Ltd., which had previously been our consolidated subsidiary, has

dissolved and stopped all operating activities; consequently, the subsidiary was found to have little

importance and was excluded from our consolidated subsidiaries. The number of consolidated subsidiaries

decreased as a result of this exclusion.

(2) Primary Nonconsolidated Subsidiaries

Watani Energy

(Reasons for removing the scope)

Those companies are excluded from consolidation because their influence is immaterial to the consolidated

financial statements.

2. Scope of equity associates (1) Equity-method Affiliates 13

Seibu Oil, Dia Shoseki, Shell Sekiyu Osaka Hatsubaisho, Central Sekiyu Gas, Mie-seki shoji, Niigata Joint

Oil Stockpiling, Shell Tokuhatsu, JONET, Jyoyo Shell Sekiyu hanbai, Marubeni Energy, Toyotsu Sekihan,

TS Aromatics , Ogishima Power

(2) Other Main Affiliates

Kyoudou Gas

Those companies are excluded from the consolidated financial statements because their influence is

immaterial.

(3) When the account closing dates of the equity-method affiliates are different from SSSKK’s account closing

date, the financial statements of those companies of their own account closing date are adopted.

- 18 -

3. Account closing date of consolidated subsidiaries

Account closing dates of the consolidated subsidiaries are as follows.

September 30 7 subsidiary

October 31 1

December 31 23

The consolidated financial statements incorporated its accounts and the other subsidiaries accounts of their

accounts closing dates, with adjustments for significant trades occurring after the accounts closed.

4. Important accounting standards (1) Valuation method for major assets

① Securities

Other Securities

Securities with market value

Stated at market value as of account closing date

(Any valuation differences are directly charged or credited to shareholders’ equity, and cost of

securities sold is calculated primarily by the moving average method.)

Securities with no market value

Stated at historical cost based on the moving average method

② Derivatives

Stated at market value

③ Inventories

Stated at historical cost mainly based on the weighted average method (Values on the balance sheet are

subject to the book value reduction method based on decreased profitability.)

(2) Depreciation

① Tangible Fixed Assets (Excluding lease asset)

Straight-line method

The same standard as stipulated in the Corporate Tax Law is applied to the useful economic lives and

the residual values.

The main refining facilities at the Yokkaichi Refinery of Showa Yokkaichi Sekiyu are depreciated with

an estimated useful economic life of 20 years.

② Intangible Fixed Assets (Excluding lease asset)

Straight-line method

Software for own use is amortised based on the straight-line method over an expected useful economic

life of 5 years.

③ Leased Assets

Finance lease transaction for which ownership of the leased assets is not considered to transfer to

leasees (hereinafter “ownership non-transfer finance lease”)

With regard to the depreciation method of leased assets, the straight-line method is applied where the

lease period is taken as useful economic life and the residual value is zero.

- 19 -

Ownership non-transfer finance lease transactions, where the start-up dates are prior to 31 December

2009, continue to be accounted by the accounting method in conformity with the method of operating

lease transactions.

(3) Basis of provisions

① Doubtful debts

For doubtful debts, provisions are calculated individually based on the estimated uncollectible amounts.

For other debts, provisions are calculated based on the actual ratio of the past doubtful debt losses.

② Employees’ bonuses

Accrued bonuses for the current financial year are provided based on the estimated bonuses to be paid

in the following year.

③ Directors’ bonuses

For directors’ bonuses, provisions are calculated based on the estimated bonuses to be paid in the

following year.

④ Retirement benefits

Accrued retirement benefits are provided based on the estimated PBO and pension assets as at the

current financial year-end. Actuarial differences are amortised evenly within the following 10-14 years,

which is the average number of remaining service years of employees.

The past service liabilities are amortised evenly within 10-14 years, which was the average number of

remaining service years of employees at the time the liabilities arise.

Differences due to changes in the accounting standards are amortised evenly over the following 15

years, which was the average number of remaining service years of employees at that time.

⑤ Special maintenance

The company is required to have periodical inspections and repairs for oil tanks under the Fire Defense

Law. The company is also carrying out periodical repairs of machinery at oil refineries. Estimated

accrued expenses for these inspections and repairs are provided for.

(4) Hedge accounting

① Hedge accounting

Deferral hedge accounting is adopted.

For interest rate swaps, special treatment is applied if the swaps satisfy the requirements for special

treatment.

② Hedging instruments and hedged items

(Hedging instruments) (Hedged items)

· Forward exchange Foreign currency credit and debt

· Interest rate swap Borrowings

·Crude oil and oil product futures trading Crude oil and oil product trading

- 20 -

③ Hedging policy

Based on the internal risk management rules regarding derivative transactions, expected risks such as

fluctuations in foreign exchange, interest rate and commodity prices are hedged within certain extent.

④Assessment of hedge effectiveness

Hedge effectiveness is assessed using a ratio analysis based on the amount of change in the hedged item

and hedging instrument by comparing the fluctuations in their values during the period between the

inception of the hedge and the time of assessment of effectiveness. The assessment of hedge

effectiveness excludes any transaction where critical terms and conditions related to the hedging

instrument and hedged item match and is deemed to completely offset the fluctuations in the value. This

assessment is also omitted for interest rate swaps that are treated under special exceptions.

(5) Amortization of goodwill

Goodwill are amortised over a period not exceeding 20 years, determined in consideration of the source

of goodwill. When the amount of goodwill is small, they are expensed in the year it arises.

(6) Scope of funds in the consolidated cash flow statement

The funds (cash or cash equivalents) in the consolidated cash flow statement consists of cash-in-hand,

deposits readily convertible into cash, and short-term investments with low risk of price fluctuations and

with a maturity of 3 months or less at the time of acquisition.

(7) Accounting for consumption tax

The net of tax method is adopted for the Consumption Tax treatment.

- 21 -

(7) Additional Information

a) Application of “Accounting Standard for Accounting Changes and Error Corrections”

For accounting changes and error corrections made after the beginning of this year, the “Accounting

Standard for Accounting Changes and Error Corrections” (ASBJ Statement No.24, December 4, 2009) and

the “Guidance on Accounting Standards for Accounting Changes and Error Corrections” (ASBJ Guidance

No.24, December 4, 2009) have been applied.

b) Application of Hedge accounting

Until last year, gains and losses with respect to forward exchange contract for hedging of forecasted

transactions denominated in foreign currencies and commodity futures contract for hedging of export of

oil products had been recognized by estimating the fair value of the contract. However, the Group has

adopted hedge accounting and has applied deferred hedge accounting for the contract which meets the

criteria of hedge accounting from this year.

The Group has adopted hedge accounting because the Group reviewed the risk management system

regarding financial instruments and improved the environment for the adoption of hedge accounting. This

change was made in order to present the Group’s financial position and financial results more properly,

by appropriately reflecting in financial statements its initiatives to manage the risk of exchange rate and

price variation of commodities.

c) Directors’ retirement benefits

Some consolidated subsidiaries had been provided with payments for the mandatory retirement benefits to

directors and auditors as a reserve based on internal rules. However, in accordance with the abolishment

of the executive retirement benefit system, a resolution was passed at the annual shareholders’ meeting

concerning the previous business year to approve final payments to incumbent directors and auditors for

the retirement benefits that had accrued in their respective terms of office.

As a result, the provision for directors’ and auditors’ retirement benefits was completely written off in the

current consolidated fiscal year and the amount of 347 million yen for outstanding final payments of

retirement benefits has been included in “Other” in the noncurrent liabilities section.

- 22 -

(8) Notes to Consolidated Financial Statements (Consolidated Balance Sheet)

(Unit: Millions of yen) 1. Collateral assets & Secured debts

Details of collateral assets are as follows.

Previous Year End (As of Dec. 31, 2011)

Current Year End (As of Dec. 31, 2012)

Cash and Deposits 4,751 [-] 3,568 [-] Notes & Account receivable 1,314 [-] 1,445 [-] Inventories 75 [-] 76 [-] Buildings & Structures 14,917 [14,557] 13,721 [13,361] Tanks 4,442 [4,442] 4,596 [4,596]

Machinery & Equipment 60,447 [60,447] 52,398 [52,398] Lands 21,597 [ 6,081] 21,583 [ 6,081] Others 0 [0] 0 [0] Total 107,547 [ 85,530] 97,391 [ 76,438] Details of secured debts are as follows.



Long-term debts 6,872 [6,607] 5,404 [4,871] Short-term debts 1,604 [-] 1,301 [-] Accounts payable 68,962 [27,414] 55,468 [29,631] Total 77,440 [34,201] 62,174 [34,503]

* Figures in the brackets ([ ]) are the collateral assets in factory foundation and its secured debts. In addition, assets below listed are pledged as collateral for the borrowing of Genex, which is a consolidated subsidiary.



Shares of Genex 1,680 1,680 Long-term loans to Genex 2,520 2,520 2. Contingent liabilities 1) Guarantees for borrowings of companies that are not consolidated subsidiaries



Japan Biofuels Supply LLP 3,482 2,175 JLS 13 - Total 3,495 2,175 2) Guarantees for employees housing loan



Guaranteed amount 748 649

- 23 -

(Consolidated Statement of Changes in Shareholders’ Equity) Previous year （January 1 through December 31, 2011） (A) Issued shares

At the beginning of current period Increase Decrease At the end of

current period Common shares 376,850,400 －－ 376,850,400

（Note） Number of shares has not been changed. (B) Treasury shares


current period Common shares 225,209 1,184 94 226,299 （Note）

Increase in purchase of odd shares, etc. 1,184 shares Decrease in sales of odd shares 94 shares

(C) Dividends 1. Dividends paid

Resolution Class of shares

Total amount of dividends

（Millions of yen）

Dividend per share （Yen） Record date Payment date

The annual shareholders’ meeting on

March 30,2011

Common shares 3,390 9.00 December 31,

2010 March 31,

2011

The directors’ meeting on

August 4, 2011

Common shares 3,390 9.00 June 30, 2011

September 7, 2011

2. Dividends planned to be paid after this period end


Resource of dividend


（Millions of Yen）

Dividend per share （Yen）

Record date Payment date


March 29, 2012

Common shares

Retained earnings 3,390 9.00 December 31,

2011 March 30, 2012

- 24 -

Current year （January 1 through December 31, 2012） (A) Issued shares


current period Common shares 376,850,400 －－ 376,850,400

（Note） Number of shares has not been changed. (B) Treasury shares


current period Common shares 226,299 1,043 － 227,342 （Note）

Increase in purchase of odd shares, etc. 1,043 shares

(C) Dividends 1. Dividends paid




Dividend per share （Yen） Record date Payment date


March 29, 2012

Common shares 3,390 9.00 December 31,

2011 March 30,

2012

The directors’ meeting on

August 7, 2012

Common shares 3,390 9.00 June 30, 2012

September 6, 2012

2. Dividends planned to be paid after this period end


Resource of dividend



Dividend per share （Yen）

Record date Payment date


March 28, 2013

Common shares

Retained earnings 3,390 9.00 December 31,

2012 March 29, 2013

(Consolidated Statements of Cash Flows) (Unit: Millions of yen)

Reconciliation between “Cash and cash equivalents” in the consolidated cash flow statement and those in the consolidated balance sheet.



Cash and deposits 15,562 18,175

Time deposit exceeding 3 months (1,095) (1,196)

Cash and cash equivalents 14,466 16,979

- 25 -

(Segment Information) 1. Outline of business segments reported Segregated financial statements for the Group’s reporting segments out of our structural units are available. The board of directors regularly reviews the statements to determine the distribution of management resources and evaluate financial results. The Group mainly manufactures and sells oil products and energy related products, such as solar cell products and electricity. The Company and consolidated subsidiaries separately draft comprehensive strategies and conduct business activities for products and services they handle as individual management units. The Group therefore consists of segments sorted by products and services that each segment handles and thus the Group designates two segments: the oil business and the energy solution business as reporting segments. And the businesses which are not included in reporting segments are aggregated in Others. The Oil business segment manufactures and sells oil products, such as gasoline, naphtha, kerosene, diesel oil, fuel oil, lubricants, LPG, bitumen, and chemicals. The Energy solution business segment manufactures and sells solar cell modules and electricity. 2. Method of calculating sales and income (loss), identifiable assets, and other items by business segment

reported Accounting method for business segment reported is the same as presentations on “Basis of presenting consolidated financial statements.” In-house intersegment sales and transfers are based on market prices. Income by business segments reported are calculated based on operating income. 3. Information on Net sales, Income, Assets and Other items by business segment reported Year to date of 2011 (January 1 through December 31, 2011)


Oil Business Energy Solution Business

Subtotal Others Total Adjustment Consoli-

dated

Sales (1) Sales to customers 2,695,278 65,799 2,761,078 10,339 2,771,418 - 2,771,418 (2) Inter-segment sales and

transfers 2,640 4,956 7,596 3,865 11,462 (11,462) -

Total 2,697,918 70,756 2,768,674 14,205 2,782,880 (11,462) 2,771,418

Operating Income/(loss) 87,267 (28,895) 58,371 2,056 60,427 (138) 60,288

Assets 1,029,751 156,915 1,186,666 35,283 1,221,950 (13,507) 1,208,442

Other items

Depreciation expense 27,754 14,939 42,693 636 43,329 - 43,329

Amortization of Goodwill 371 (28) 342 - 342 - 342

Equity in net earnings of affiliates

1,870 (66) 1,804 - 1,804 - 1,804

Impairment loss 2,841 8,581 11,423 - 11,423 - 11,423

Unamortized amount of Goodwill (136) (115) (251) - (251) - (251)

Capital Expenditures 14,465 27,272 41,738 177 41,915 - 41,915

- 26 -

Notes: 1. The “Others” category incorporates operations not included in business segments reported, including leasing and administration of properties, construction works, sale and lease of auto accessories etc.

2. Adjustment of operating income (loss) refers to elimination of intersegment transactions. 3.

Adjustment of assets is due primarily to eliminating intersegment receivables by offsetting.

4. Operating income (loss) for segment is adjusted on operating income on the consolidated statement of

income for the year to date of the current consolidated financial year. Year to date of 2012 (January 1 through December 31, 2012)


Oil Business Energy Solution Business

Subtotal Others Total Adjustment Consoli-

dated

Sales (1) Sales to customers 2,539,754 78,262 2,618,016 11,245 2,629,261 - 2,629,261 (2) Inter-segment sales and

transfers 9,284 7,451 16,735 4,328 21,064 (21,064) -

Total 2,549,038 85,713 2,634,752 15,574 2,650,326 (21,064) 2,629,261

Operating Income/(loss) 28,128 (15,435) 12,693 2,031 14,724 (27) 14,697

Assets 1,053,639 156,166 1,209,806 35,523 1,245,329 (12,135) 1,233,193

Other items

Depreciation expense 26,649 16,412 43,062 557 43,620 - 43,620

Amortization of Goodwill 212 (28) 183 - 183 - 183

Equity in net earnings of affiliates

(974) 49 (924) - (924) - (924)

Impairment loss 978 - 978 - 978 - 978

Unamortized amount of Goodwill (228) (86) (314) - (314) - (314)

Capital Expenditures 18,325 4,635 22,961 294 23,256 - 23,256

Notes: 1. The “Others” category incorporates operations not included in business segments reported, including leasing

and administration of properties, construction works, sale and lease of auto accessories etc. 2. Adjustment of operating income (loss) refers to elimination of intersegment transactions. 3.

Adjustment of assets is due primarily to eliminating intersegment receivables by offsetting.

4. Operating income (loss) for segment is adjusted on operating income on the consolidated statement of

income for the year to date of the current consolidated financial year.

- 27 -

(Information on Per Share Data) (Unit: Yen)

Previous Year Current Year (From January 1, 2011 (From January 1, 2012 To December 31, 2011) To December 31, 2012) Net assets per share 679.37 663.33 Net income per share 61.36 2.69

Diluted net income per share Due to no diluted share, the information is omitted.

Due to no diluted share, the information is omitted.

(Note) 1. Diluted net income per share data is not applicable, because of no contingent shares. 2. Basis of calculation

Net income per share Previous Year Current Year (From January 1, 2011 (From January 1, 2012 To December 31, 2011) To December 31, 2012) Net income/ (loss) (¥M) 23,110 1,013 Amount not belonging to common shareholders (¥M) - - Net income / (loss) related to common stock (¥M) 23,110 1,013 Average number of common shares (1,000shares) 376,624 376,623 (Significant Subsequent Event) None (Omission of Disclosure) Disclosure is omitted for the notes to trade with related parties, differed taxation, financial instruments, securities, derivatives, retirement benefit, asset retirement obligation and rental property, because those information provided as in the flash report is less important.

- 28 -

(1) Non-consolidated Balance Sheet(Unit: Millions of yen)



Assets　Current assets　　Cash and deposits 4,777 8,635　　Notes receivable-trade 113 127　　Accounts receivable-trade 308,997 354,438　　Lease receivables 73 77　　Lease investment assets 804 752　　Merchandise and finished goods 129,722 129,635　　Raw materials and supplies 117,500 111,531　　Advance payments-trade 142 1,239　　Prepaid expenses 1,016 1,318　　Deferred tax assets 5,967 4,936　　Short-term loans receivable 63 49　　Short-term loans receivable from subsidiaries and affiliates 183,338 195,624　　Accounts receivable-other 13,862 5,049　　Derivatives 702 2,069　　Other 738 655　　Allowance for doubtful accounts (618) (552)　　Total current assets 767,203 815,589　Noncurrent assets　　Property, plant and equipment　　　Buildings 102,263 100,923　　　　Accumulated depreciation and impairment loss (59,597) (60,485)　　　　Buildings, net 42,666 40,437　　　Structures 65,524 65,927　　　　Accumulated depreciation and impairment loss (45,987) (47,097)　　　　Structures, net 19,536 18,830　　　Oil tanks 29,939 29,988　　　　Accumulated depreciation and impairment loss (25,294) (25,880)　　　　Oil tanks, net 4,645 4,108　　　Machinery and equipment 63,232 64,248　　　　Accumulated depreciation and impairment loss (49,428) (50,350)　　　　Machinery and equipment, net 13,804 13,897　　　Vehicles 93 69　　　　Accumulated depreciation and impairment loss (63) (46)　　　　Vehicles, net 29 23　　　Tools, furniture and fixtures 14,375 14,522　　　　Accumulated depreciation and impairment loss (12,420) (12,332)　　　　Tools, furniture and fixtures, net 1,954 2,190　　　Land 105,342 104,607　　　Lease assets 228 339　　　　Accumulated depreciation and impairment loss (70) (107)　　　　Lease assets, net 158 232　　　Construction in progress 941 2,309　　　Total property, plant and equipment 189,079 186,635

5. Non-Consolidated Financial Statements

- 29 -




　　Intangible assets　　　Patent right 0 0　　　Leasehold right 3,828 3,796　　　Software 3,164 3,293　　　Right of using facilities 67 55　　　Total intangible assets 7,061 7,147　　Investments and other assets　　　Investment securities 7,543 7,392　　　Stocks of subsidiaries and affiliates 64,996 53,025　　　Investments in capital 2,009 1,954　　　Investments in capital of subsidiaries and affiliates 1 1　　　Long-term loans receivable 322 272　　　 Long-term loans receivable from subsidiaries and affiliates 12,062 7,500

　　　Long-term prepaid expenses 893 717　　　Deferred tax assets 17,590 16,331　　　Lease and guarantee deposits 8,771 8,623　　　Claims provable in bankruptcy, claims provable in rehabilitation and other 22 31

　　　Other 3,095 2,660　　　Allowance for doubtful accounts (209) (153)　　　Total investments and other assets 117,100 98,359　　Total noncurrent assets 313,241 292,142　Total assets 1,080,445 1,107,732Liabilities　Current liabilities　　Accounts payable-trade 281,485 319,016　　Short-term loans payable 42,647 59,485　　Current portion of long-term loans payable 9,000 ―　　Current portion of bonds ― 15,000　　Lease obligations 207 239　　Accounts payable-other 119,515 125,227　　Accrued taxes 41,681 29,729　　Accrued consumption taxes 5,792 6,622　　Income taxes payable 398 4,470　　Accrued expenses 12,221 12,253　　Advances received 19,444 27,038　　Deposits received 17,430 18,972　　Deposits from dealers 12,407 12,047　　Provision for bonuses 809 760　　Provision for directors' bonuses 26 ―　　Deposits received from employees 447 438　　Commercial papers 52,000 26,000　　Derivatives liabilities 479 545　　Other 214 136　　Total current liabilities 616,209 657,983

- 30 -




　Noncurrent liabilities　　Bonds payable 35,000 20,000　　Long-term loans payable 125,000 133,000　　Lease obligations 762 757　　Provision for retirement benefits 63,364 62,339　　Provision for special repairs 2,378 2,585　　Long-term guarantee deposited 2,568 1,768　　Other 16,990 14,990　　Total noncurrent liabilities 246,063 235,441　Total liabilities 862,273 893,424Net assets　Shareholders' equity　　Capital stock 34,197 34,197　　Capital surplus　　　Legal capital surplus 22,045 22,045　　　Other capital surplus 28 28　　　Total capital surpluses 22,074 22,074　　Retained earnings　　　Legal retained earnings 6,749 6,749　　　Other retained earnings　　　 Reserve for advanced depreciation of noncurrent assets 14,745 14,756

　　　　General reserve 5,550 5,550　　　　Retained earnings brought forward 134,552 130,776　　　Total retained earnings 161,597 157,832　　Treasury stock (134) (135)　　Total shareholders' equity 217,734 213,968　Valuation and translation adjustments　　Valuation difference on available-for-sale securities 437 213　　Deferred gains or losses on hedges ― 125　　Total valuation and translation adjustments 437 338　Total net assets 218,171 214,307Total liabilities and net assets 1,080,445 1,107,732

- 31 -

(2) Non-consolidated Statement of Income




Net sales 2,613,231 2,457,814Cost of sales　Beginning merchandise and finished goods 70,133 93,137　Cost of products manufactured 1,252,733 1,070,986　Gasoline tax and diesel oil tax 354,997 312,403　Cost of purchased goods 915,869 1,015,989　Others 26,152 30,751　Transfer to other account 76,867 76,222　Total 2,543,019 2,447,046　Ending merchandise and finished goods 93,137 98,037　Total cost of sales 2,449,881 2,349,009Gross profit 163,349 108,804Selling, general and administrative expenses　Haulage expenses 29,418 30,018　Warehousing expenses 7,618 7,373　Repair expenses 3,184 3,793　Provision for special repairs 177 173　Promotion expenses 5,411 6,795　Research and development expenses 4,022 4,551　Employees' salaries and bonuses 9,201 9,024　Provision for bonuses 739 697　Provision for directors' bonuses 26 ―　Retirement benefit expenses 3,865 3,858　Depreciation 2,426 2,676　Rent expenses 3,266 3,101　Taxes and dues 1,309 1,006　Subcontract expenses 5,157 5,450　Commission fee 2,747 2,794　Other 8,798 9,116　Deductions (3,580) (3,572)　Total selling, general and administrative expenses 83,791 86,862Operating income 79,557 21,942Non-operating income　Interest income 1,027 937　Dividends income 3,846 3,017　Foreign exchange gains 1,597 ―　Gain on investments in silent partnership 1,472 1,421　Other 494 734　Total non-operating income 8,439 6,111Non-operating expenses　Interest expenses 1,765 1,741　Interest on bonds 398 398　Sales discounts 1,783 2,023　Foreign exchange losses ― 149　Other 823 1,421　Total non-operating expenses 4,770 5,733Ordinary income 83,227 22,320

- 32 -




Extraordinary income　Gain on sales of noncurrent assets 8,731 1,680　Gain on sales of investment securities 10 0　Reversal of provisions for estimated loss on assets disposal 91 ―　Subsidy 240 724　Other 1,502 284　Total extraordinary income 10,576 2,690Extraordinary loss　Loss on disposal of noncurrent assets 2,707 1,582　Loss on sales of investment securities 1 0　Loss on valuation of investment securities 5 10　Loss on valuation of stocks of subsidiaries and affiliates 53,703 12,203　Impairment loss 2,821 822　Other 3,705 122　Total extraordinary losses 62,944 14,741Income before income taxes 30,858 10,269Income taxes-current 29 5,113Income taxes-deferred 28,645 2,140Total income taxes 28,674 7,254Net income 2,184 3,015

- 33 -




Shareholders' equity　Capital stock　　Balance at the beginning of current period 34,197 34,197　　Changes of items during the period　　　Total changes of items during the period ― ―　　Balance at the end of current period 34,197 34,197　Capital surplus　　Legal capital surplus　　 Balance at the beginning of current period 22,045 22,045　　　Changes of items during the period　　　　Total changes of items during the period ― ―　　　Balance at the end of current period 22,045 22,045　　Other capital surplus　　 Balance at the beginning of current period 28 28　　　Changes of items during the period　　　　Disposal of treasury stock (0) ―　　　　Total changes of items during the period (0) ―　　　Balance at the end of current period 28 28　　Total capital surplus　　 Balance at the beginning of current period 22,074 22,074　　　Changes of items during the period　　　　Disposal of treasury stock (0) ―　　　　Total changes of items during the period (0) ―　　　Balance at the end of current period 22,074 22,074　Retained earnings　　Legal retained earnings　　 Balance at the beginning of current period 6,749 6,749　　　Changes of items during the period　　　　Total changes of items during the period ― ―　　　Balance at the end of current period 6,749 6,749　　Other retained earnings　　　　Reserve for advanced depreciation of　　　　noncurrent assets　　 Balance at the beginning of current period 13,596 14,745　　　　Changes of items during the period　　　　　　　Provision of reserve for advanced　　　　　　　depreciation of noncurrent assets 1,148 11

　　　　　Total changes of items during the period 1,148 11　　　　Balance at the end of current period 14,745 14,756

(3) Non-consolidated Statement of Changes in Shareholders’ Equity

- 34 -




　　　General reserve　　　　Balance at the beginning of current period 5,550 5,550　　　　Changes of items during the period　　　　　Total changes of items during the period ― ―　　　　Balance at the end of current period 5,550 5,550　　　Retained earnings brought forward　　　　Balance at the beginning of current period 140,297 134,552　　　　Changes of items during the period　　　　　Dividends from surplus (6,780) (6,780)　　　　　Net income 2,184 3,015　　　　　Provision of reserve for advanced depreciation of noncurrent assets (1,148) (11)

　　　　　Total changes of items during the period (5,744) (3,776)　　　　Balance at the end of current period 134,552 130,776　　Total retained earnings　　　Balance at the beginning of current period 166,193 161,597　　　Changes of items during the period　　　　Dividends from surplus (6,780) (6,780)　　　　Net income 2,184 3,015　　　　Provision of reserve for advanced depreciation of noncurrent assets ― ―

　　　　Total changes of items during the period (4,596) (3,765)　　　Balance at the end of current period 161,597 157,832　Treasury stock　　Balance at the beginning of current period (134) (134)　　Changes of items during the period　　　Purchase of treasury stock (0) (0)　　　Disposal of treasury stock 0 ―　　　Total changes of items during the period (0) (0)　　Balance at the end of current period (134) (135)　Total shareholders' equity　　Balance at the beginning of current period 222,331 217,734　　Changes of items during the period　　　Dividends from surplus (6,780) (6,780)　　　Net income 2,184 3,015　　　Purchase of treasury stock (0) (0)　　　Disposal of treasury stock 0 ―　　　Total changes of items during the period (4,596) (3,765)　　Balance at the end of current period 217,734 213,968

- 35 -




Valuation and translation adjustments　Valuation difference on available-for-sale securities　　Balance at the beginning of current period 891 437　　Changes of items during the period　　　Net changes of items other than shareholders' equity (454) (223)　　　Total changes of items during the period (454) (223)　　Balance at the end of current period 437 213　Deferred gains or losses on hedges　　Balance at the beginning of current period ― ―　　Changes of items during the period　　　Net changes of items other than shareholders' equity ― 125　　　Total changes of items during the period ― 125　　Balance at the end of current period ― 125　Total valuation and translation adjustments　　Balance at the beginning of current period 891 437　　Changes of items during the period　　　Net changes of items other than shareholders' equity (454) (98)　　　Total changes of items during the period (454) (98)　　Balance at the end of current period 437 338Total net assets　Balance at the beginning of current period 223,222 218,171　Changes of items during the period　　Dividends from surplus (6,780) (6,780)　　Net income 2,184 3,015　　Purchase of treasury stock (0) (0)　　Disposal of treasury stock 0 ―　　Net changes of items other than shareholders' equity (454) (98)　　Total changes of items during the period (5,051) (3,864)　Balance at the end of current period 218,171 214,307

- 36 -

(4) Notes for Premises of Going Concern Not applicable

- 37 -

(English Translation) Summary of Consolidated Full Year ... · PDF file(English Translation)...

Documents

Transcript of (English Translation) Summary of Consolidated Full Year ... · PDF file(English Translation)...