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Effective July 1, 2022, Cosmo Energy Holdings Co., Ltd. officially became a DX-Certified Operator (DX-Ready) under the Digital Transformation (DX) Certification system established by Japan’s Ministry of Economy, Trade and Industry (METI).

Digital Transformation Certification

DX Vision

Along with increased momentum in a shift away from fossil fuels due to the recent tightening of environmental regulations and the Fourth Industrial Revolution, the use of renewable energy and electric vehicles is expanding rapidly along with our sharing economy. In particular, since we formulated the Sixth Consolidated Medium-Term Management Plan, the use of big data, the Internet of Things (IoT), artificial intelligence (AI), and other technologies has become so widespread that it can greatly influence our business growth.

Amid such changes, the Cosmo Energy Group is swiftly refocusing our business portfolio under the slogan "Oil & New." This plan calls for us to reinvest profits in growth drivers such as our renewable energy (wind power) business as well as maintain competitiveness and earnings in petroleum-related businesses.

We also seek to swiftly undertake a fundamental transformation of our business model through digitalization. Our goal is to utilize digital tools and platforms to enhance the customer experience and increase the value we offer in line with the basic policy of the Sixth Consolidated Medium-Term Management Plan.

As our CEO mentioned in his 2022 New Year message, we welcomed Noriko Rzonca as Chief Digital Officer (CDO) last year. Under her leadership, we will further step up our digital transformation (DX) efforts under the catchphrase, "Full-fledged DX."

As society moves beyond a dependence on oil and the world undergoes rapid change, DX is even more crucial for Cosmo's survival. With this in mind, we are committed to improving the digital literacy of the Cosmo Energy Group as a whole and to accelerating our transition to data-driven management.

Reference source: 2022 CEO New Year Message (Japanese only)

Long-Term Environmental Awareness

・The transition to a fossil-free society is accelerating in response to the Paris Agreement
・Renewable energy will increase although demand for petroleum will remain unchanged through 2030

Paris Agreement (Sets target for greenhouse gas reduction)
										The Fourth Industrial Revolution (Technological innovation)
										Acceleration toward a fossil fuel-free society
										Global
										Increase in population
										Demand for petroleum is stable, but may level off in 2030 onwards
										Global demand for petrochemicals is stable (Capacity expansion is underway)
										Japan
										Decrease in population
										Widespread use of EV
										*Including PHV
										Expansion of sharing economy
										Decline in oil demand (Still a certain demand for gasoline)
										Growing renewable energy market (Acceleration of wind power capacity development)

Basic Policy: Oil&New Everything About Oil – And Beyond

Oil

Increase the profitability of the petroleum business by, for example, complying with IMO regulations and becoming a leader in the supply of clean marine fuels
Strengthen the financial standing of the business based on earning power

New

Invest in wind power generation and other businesses that will drive the next growth stage
Contribute to the achievement of SDGs through business activities

Secure profitability to enable reinvestment
										Establish a safe and stable operational structure
										Take action before IMO regulations come into force
										Shift to a bottomless-barrel refining and increase profitable products*
										Aim for highly competitive refineries that supply only relatively high valued-added petroleum products
										Strengthen the "Vehicle life" business
										Achieve synergy with petrochemical business
										Steadily recover the investment in the Hale Oil Field
										Improve financial position
										Enhance our net worth based on earnings
										Strengthen cash management
										Make careful investments with a long-term view of the environment
										Swiftly realize management goals
										Reinforce future growth drivers
										Increase competitiveness of petrochemicals and expand product lineup
										Undertake the early development of offshore wind power plants
										Explore new businesses for future growth in domestic and overseas markets (Asia and Abu Dhabi)
										Strengthen the Group's management foundation
										Promote sustainable management
										Pursue sustainability in society and within the Group
										Make improvements in terms of key ESG issues
										Develop and implement the Consolidated Medium-term Sustainability Management Plan  (FY2018-FY2022)
										Increase productivity through workstyle reforms and operational innovation
										Promote diversity
										Robotic Process Automation (RPA)
										Thoroughly improve operational efficiency using AI
										Robotic Process Automation:Automate business processes using robots
										DX initiatives

Reference source:Cosmo Report 2021, The Sixth Consolidated Medium-Term Management Plan

DX Strategy

At a time when companies are being called upon to provide new energy solutions that harness the power of digital technology, the Cosmo Energy Group is committed to undertaking the following business model reforms to achieve more robust data-driven management.

We believe that bolstering our digital capabilities and promoting a corporate culture of change management is vital to enhancing the customer experience and rapidly upgrading our operations.

First, we must undertake the three actions outlined in the diagram below to increase our digital capabilities: develop digital know-how and expertise, promote partnering, and strengthen data utilization infrastructure.

In addition, we need to cultivate DX human resources, establish diversified organizations, and strike a balance between innovation and traditional corporate culture to promote change management as our other strategic pillar.

We will pursue "Cosmo's 5Cs," a set of five indicators to motivate individual employees as well as encourage them to change how they view DX and take ownership in the Group's DX efforts.

CDO (Chief Digital Officer)

at Cosmo Energy Holdings Co., Ltd.

Noriko Rzonca

Chance
Challenge
Change
Communicate
Commit

Cosmo's Vision House

Cosmological Evolution to a next-generation business model through DX leveraging Cosmo's strengths
									Cosmo DX Strategy
									Business model transformation (CX improvement, swift operational upgrades)
									Digital capabilities
									Development of digital know-how & expertise
									Partnering
									Building of data utilization infrastructure
									Change management
									Cultivation of DX human resources
									Establishment of diversified organizations
									Balancing of innovation & traditional corporate culture
									Mindset reform to raise morale of individual employees and ensure they take ownership in DX efforts(Cosmo's 5Cs)
									Chance
									Do you see the present as an opportunity?
									Challenge
									Are you taking on new challenges in your daily work?
									Change
									Are you bringing about change in your regular duties?
									Communicate
									Are you communicating with others to improve mutual understanding?
									Commit
									Are you carrying out tasks with a commitment to excellence?

DX Promotion Framework

To realize our DX Vision, the Cosmo Energy Group must undertake change management that supports data-driven business model transformation.

With this in mind, we have set forth "Cosmo's 5Cs: Chance, Challenge, Change, Communicate, Commit" as the mindset we will adopt when promoting DX. In doing so, we aim to raise the morale of individual employees as well as encourage them to change how they view DX and take ownership in the Group's DX efforts. At the same time, we are committed to creating an environment where employees across all group companies can acquire the skills necessary for data-driven management and to hiring and training personnel with these skill sets.

Reference source:Announcement of Changes to Organizational Structure (Effective April 1, 2022), Announcement on Appointment of New Executive Officer and DX Strategy of Cosmo Energy Group

Promotion Framework / Partnering

To strengthen our DX efforts, we established the Corporate DX Strategy Department in November 2021 and appointed Ms. Noriko Rzonca as Chief Digital Officer. The newly established department will formulate DX strategies for the Cosmo Energy Group and support group companies to undertake DX. It will also develop IT infrastructure and data analytics platforms, hire and train DX personnel, and establish partnerships with outside parties.

Key Performance Indicators

To ensure the successful cultivation of DX human resources, we will establish metrics and build a monitoring system to measure and evaluate our progress. The development of such human resources will serve as the basis for change management and will be crucial in promoting DX across the Cosmo Energy Group.

Human resource acquisition and development

Results of in-house fixed-point observational surveys (Level of DX awareness, willingness to participate, etc.)

Number of training sessions, number of participants, and ratio of participants to total employees

Investment Plan / System Infrastructure

Since the start of the Sixth Consolidated Medium-Term Management Plan, we increased investment in businesses that will support our next growth stage as well as the development IT and digital infrastructure. In the future, we will build cloud-based data lakes, data warehouses, and data analytics platforms as we seek to integrate individually optimized systems and utilize data in a more agile way.

Digital Platform (Cloud based)
									Database
									Customer data
									IoT & Sensors
									Core systems
									External data
									Image analysis
									Behavior optimization
									Data utilization & analysis platform
									Anomaly detection
									Demand forecasting
									High-speed calculation

Examples of DX at Cosmo

At the Cosmo Energy Group, we are working to enhance the customer experience and rapidly upgrade our operations to ensure the successful transformation of our business model. Below are some examples of our DX efforts and digital service offerings thus far.

Cosmo Zero Carbon Solutions

Cosmo Zero Carbon Solutions
Advantages for customers

Cosmo Zero Carbon Solutions is a green power-based mobility platform that offers customers an innovative experience. When it comes to energy management, we have partnered with REXEV Inc. to help us speed up the process of developing solutions to the energy management challenges faced by our customers.

Digitalization of Service Stations

Digitalization of Service Stations

We have worked on coming up with new ways to utilize data through the digitalization of service stations with tools including the Digital Station System (DSS), the Carlife Square app (CLS), and Customer Relationship Management (CRM).

We established a solid customer base by acquiring and linking customer data throughout each phase of the customer journey to strengthen our interaction with customers at onsite (DSS), offsite (CLS) and follow-up (CRM) touchpoints.

Visualization of Refinery Operations

Visualization of Refinery Operations

We upgraded operations at our oil refineries by visualizing how they operate.

Introduction of Drones at Refineries

Introduction of Drones at Refineries

We introduced a sophisticated safety monitoring system at our oil refineries. The system utilizes drones to patrol and inspect equipment and high places in plants.

Workstyle Reforms

Workstyle Reforms

We are raising productivity and operational efficiency across the Cosmo Energy Group by introducing various new office systems and implementing workstyle reforms.

RPA

RPA

We are improving operational efficiency by adopting Robotic Process Automation (RPA).

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