Annual Report 2013

Oil Exploration and Production Business:? New Hail Field development, etc. 127 billion yenOil Refi ning and Marketing Business: 122 billion yen? Refi nery facility updating Approx. 54 billion yen? Chiba Refi nery Revival Plan Approx. 28 billion yen? Marketing, administrative, and other departments Approx. 40 billion yenRenewable Energy Businesses:Overseas and Other Projects: 31 billion yen? Investments in new wind turbine construction, etc.FY2013-17 Total 280 billion yenOil Refining Oil E&P 45%and MarketingRenewable Energy 11%44%Refinery facilityupdating19%Chiba RefineryRevival Plan10%Marketing,administrative,andother departments14%Depreciation:180 billion yen Investment Costs:280 billion yenReturn on Investment:190 billion yenIncoming Cash: 370 billion yen Outgoing Cash: 280 billion yenFree Cash Flow: 90 billion yenInterest-bearing debt reductionDividend paymentInventory Reduction Effect (mainly from closingof the Sakaide Refinery): 50 billion yen850,000 kl inventory reductionOutlook for Cash Balance (FY2013-2017) Breakdown of the Investment Plan Business-Specifi c Investment SharesDuring the Fifth Consolidated Medium-Term Management Plan, the Group is clearly working tostabilize its oil refi ning and marketing operations while reaping the benefi ts of its growth initiatives.Could you please elaborate on how the Group plans to utilize the cash generated going forward? Q.10Please refer to the diagram above left. Incoming cash over the fi ve-year period from fi scal 2013 to fi scal 2017 isprojected to total ?370 billion. Outgoing cash, on the other hand, is estimated at ?280 billion. Plans are in place tofund investments from retained earnings, with the largest portion amounting to ?127 billion, or 45% allocated tothe principal oil exploration and production business as a growth driver. As a part of efforts to secure saferoperations and stable supply in the oil refi ning and marketing business, we will allocate ?122 billion, or 44%. Thisincludes the previously mentioned ?28 billion which has been earmarked to help carry out the Chiba Refi neryRevival Plan. With the bulk of the Group’s investment in the oil exploration and production business channeledtoward discovered as well as undeveloped areas of the Hail Oil Field, we remain confi dent that our exposure differsgreatly from the excessive risks generally associated with development investments and that there is a high probability ofsecuring a substantial return.For the aforementioned reasons, free cash fl ow over the fi ve-year period of the plan is anticipated to total ?90billion. After factoring in a further ?50 billion attributable to inventory reduction effects mainly from the closing ofthe Sakaide Refi nery, we plan to bolster our fi nancial position by reducing interest-bearing debt.With an eye toward providing adequate returns to shareholders, we are focusing on the early resumption ofdividend payments from fi scal 2013. The amount of cash dividends paid will be determined each fi scal year basedon the Group’s business earnings.