Annual Report 2013

Please tell us about the basic policies of the Fifth Consolidated Medium-Term Management Plan?Over the long term, the Cosmo Oil Group aims to become a vertically integrated global energy company.Five years to establisha solid businessfoothold for furtherexpansion? Regain profi tability in the refi ning &marketing sector? Secure stable income from investmentsmade during the previous medium-termmanagement plan? Further strengthen alliances with IPIC andHyundai Oilbank? Further enhance CSR managementImprovement in theGroup’s fi nancialframework throughprofi tability and pursuitof an early resumption ofdividend paymentsto shareholdersBasic PolicyQ.03Under our new fi ve-year medium-term management plan, we will establish a solid business foothold for furtherexpansion. Under this overarching theme, we have identifi ed four basic policies. (Please refer to the diagram above.)First and foremost, we will pursue measures to arrest the decline in profi tability caused by the prolongedshutdown of operations at the Chiba Refi nery. From a marketing perspective, we will establish an earnings structurethat is insulated from downturns in domestic oil demand, place considerable emphasis on expanding car careearnings, and take bold steps toward transforming our business model as a company that provides car life value.From fi scal 2013, we will harvest the seeds sown during the period of the previous plan, taking steps to realizereturns on strategic investments. As a result, we will generate concrete earnings in our three oil exploration andproduction, petrochemicals, and renewable energy businesses.We will strengthen our alliances with International Petroleum Investment Company (IPIC),* our principalshareholder, and South Korea-based Hyundai Oilbank Co., Ltd. (HDO), with whom we have formed a joint venture.We engage in periodic discussions with IPIC, focusing on upstream businesses with an eye toward uncovering newopportunities in our value chain.Finally, we engage in CSR management in order to fulfi ll our corporate social responsibility. In addition tocomplying with regulations and engaging in business activities in a conscientious manner, we employ athoroughgoing PDCA cycle to ensure ongoing improvement of our operating structure.Based on the aforementioned policies, we aim to become a vertically integrated global energy company overthe long term.* Established in 1984, IPIC is an energy-related investment company that is wholly owned by the Emirate of Abu Dhabi. The companyinvests in oil and gas projects outside the Emirate over the long term. IPIC acquired approximately 20% of the Company’s sharesfollowing a third-party allocation on September 18, 2007.A.03