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 Financial Results for the first half 2017

In the first half 2017, Showa Shell Sekiyu recorded consolidated net sales of 947.4 billion yen (an increase of 11.3 % year on year), consolidated operating income of 23.3 billion yen (an increase of 7.6 billion yen year on year), consolidated ordinary income of 27.3 billion yen (an increase of 14.0 billion yen year on year), and net income attributable to owners of the parent of 16.0 billion yen (an increase of 10.8 billion yen year on year).
Ordinary income on a current cost of supply (CCS*) basis was 20.4 billion yen (an increase of 3.8 billion yen year on year). CCS ordinary income in the oil business was 20.3 billion yen, which decreased from the same period last year but was in line with the plan during the regular maintenance of our main Yokkaichi Refinery. Furthermore, domestic fuel margins improved as the industry completed the Phase 2 of Kodokaho, among other factors.

On the other hand, operating loss in the energy solutions business was 4.2 billion yen (a decrease of 0.8 billion yen year on year). In the solar business, although panel prices keeps declining, we focused on domestic market following the new business strategy, and the operating loss improved during the second quarter alone. The power business generated stable profit because group power plants continued to operate stably and efficiently and sales in both the high-voltage and low-voltage markets expanded steadily.
In addition, we have decided to further expand the sales area of low-voltage markets for households and companies.

 Business alliance with Idemitsu Kosan

With declining oil product demands in Japan, We're facing more challenging oil business environment. So, Showa shell Sekiyu and Idemitsu Kosan have signed an agreement regarding formation of an alliance between both company groups on 9 May 2017 in order to promote business collaboration and generate synergy prior to the business integration. We named the alliance as "Brighter Energy Alliance". Through this alliance, we carry out specific activities in various fields, including purchase of crude oil, supply, manufacturing, logistics, and sales. The fruits of these activities will appear in our financial results. As the "run-up period" aiming for the integration, we will accelerate business collaboration in broad areas and harmonization among personnel of both companies by deepening the alliance. I firmly believe that these activities will help both companies improve competitiveness and make a huge step toward establishing the new integrated company.

■ Synergy results

We aim to generate more than 25 billion yen of annual synergies within three years. Synergy results

 Shareholders' return

Based on our "stable and attractive" dividend policy, we plan to provide an annual dividend of 38 yen per share in 2017, which is the same level as the previous year. Meanwhile, we maintained interim dividend in 2017 at 19 yen, also the same level as the previous year.
Through the current Medium-Term Business Action Plan, we have enhanced our ability to generate cash flows and strengthened our financial health. We're considering our future dividend policy in formulating the New Medium-Term Business Strategy.

Diversity & Inclusiveness(D&I)

Poster Showa Shell Sekiyu has thus far made efforts to promote D&I as an important management issue. We have employed people of all ages, nationalities and genders, and with a wide variety of frameworks, placed value on creating a corporate culture that respects abilities and values of various employees. This is because we firmly believe that establishing a corporate culture respecting diversity enhances our competitiveness. With diverse people aiming to improve their performance, differences of opinions and conflicts will naturally occur. However, such differences and conflicts will be the energy to create unique products and services as well as innovative solutions. In order for the innovation, we need to further improve the Inclusiveness by accepting and integrating our employees' diversity.
We established the Showa Shell Women's Network as an internal organization in 2015, with the aim of promoting an even more active role for women in the workplace. As we strengthen our efforts towards diversity, the second phase of the Network's activities in 2016 included both men and women. In 2017, the third phase of the Network aims for "the permeation and practice of D&I" among all employees. We also established the "Takumi Network" for veterans in July 2017 to activate their roles even more.
Furthermore, in August 2017, we held a conference for female managers with a foreign company. We will actively build such networks with global companies onwards. Through these various activities, we will further promote D&I and improve our competitiveness through D&I activities.