Cash flow from investing activities. Cash dividend per share As of Sep. 30. As of Dec. 31

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1 (English Translation) 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 Delegate: Title: President, Representative Director Name: Jun Arai Contact: Title: Controller, Executive Officer Name: Tsutomu Yoshioka Phone: (03) 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) (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 ,629,261 (5.1) 14,697 (75.6) 12,674 (79.5) 1,013 (95.6) Full year ,771, , , , (Note) Comprehensive income for: FY ,366 million yen ((90.0)%) FY ,562 million yen (44.4%) Diluted earnings per Net income to net assets Ordinary income Operating income Earnings per share share (excl. minority interests) to total assets to sales Yen Yen % % % Full year Full year (Note) Equity in net earnings of affiliates for: FY 2012 (924) million yen FY ,804 million yen (2) Consolidated financial position Total assets Net assets Net assets (excl. minority Net assets (excl. minority interests) to total assets interests interests) per share % Yen Full year ,233, , Full year ,208, , (Note) Net assets (excluding minority interests): As of December 31, ,826 million yen As of December 31, ,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 ,992 (17,747) (21,391) 16,979 Full year ,551 (24,560) (31,159) 14, Dividends As of Mar. 31 As of Jun. 30 Cash dividend per share As of Sep. 30 As of Dec. 31 Total Total dividends paid Dividends payout ratio (Consolidated) Dividends on net assets (Consolidated) Yen Yen Yen Yen Yen % % Full year , Full year , Full year 2013 (Forecast) 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 ,340, ,000-19,000-11, Full year ,710, , , ,

2 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 ,457,814 (5.9) 21,942 (72.4) 22,320 (73.2) 3, Full Year ,631, , , ,184 (90.2) Earnings per share Diluted earnings per share Yen Full Year Full Year Yen (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 ,107, , Full Year ,080, , (Note) Net Assets (excluding minority interests): As of December 31, ,307 million yen As of December 31, ,171 million yen 2. Forecast of non-consolidated financial results for full year 2013(January 1 through December 31, 2013) Net sales Ordinary income Net income (Note) Percentages represent changes from previous year. Earnings per Share % % % Yen Interim ,220,000 (0.3) 18,000-12, Full Year ,490, , , 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.

3 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 P.11 Income (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 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

4 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 Full year Difference (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 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 -

5 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 -

6 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 -

7 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

8 (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 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 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 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 yen, down from 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 Year end 2009 Year end 2010 Year end 2011 Year end 2012 Year end Equity ratio (%) Market value equity ratio (%) Interest-bearing debts / Cash flow from operating (Times) activities Interest coverage ratio (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

9 (*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 of the Corporate Law

10 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, (SSSKK) Heiwa Kisen Niigata Joint Oil Stockpiling Stockpiling & Loading Showa Shell Sempaku Japan Oil Network (JONET) Sale of oil products (SSSKK) Tokyo Shell Pack Marubeni Energy (gasoline, LPG, kerosene, gas oil, fuel oil, Nippon Grease Sun Road Central Sekiyu Gas asphalt, lubricants, chemical products etc.) 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 Kyushu Enessance Service Enessance Chubu Enessance Hokkaido Butsuryu 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) Shoseki Engineering Rising Sun On-Site Power

11 Oil Business <Oil refinery, Manufacturing of oil products> Showa Yokkaichi Sekiyu (SYS) Toa Oil *1 Seibu Oil Nippon Grease Shoseki Kako <Crude & oil products transportation, Stockpiling & Loading> Showa Shell Sempaku Heiwa Kisen Niigata Joint Oil Stockpiling Japan Oil Network (JONET) <Sale of oil products> 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 petrochemical products, sales and purchase of oil products > TS Aromatics, Shell Chemicals Japan S S S K K Energy Solution Businesses Solar Frontier Genex *2 Ogishima Power Crude & oil products supply Other Business Rising Sun Shoseki Engineering Onsite Power Shell Eastern Trading (PTE) Limited Saudi Arabian Oil Company *1 Listed on Tokyo Stock Exchange (second section) *2 Consolidated subsidiary of Toa means other related companies and corporate shareholders, in the related parties

12 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, You can see the flash report of the previous year if you click the following URL. (Showa Shell Sekiyu) (Tokyo Stock Exchange) (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 costcompetitiveness 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

13 4. Consolidated Financial Statements (1) Consolidated Balance Sheet Previous year end As of December 31, 2011 (Unit: Millions of yen) Current year end As of December 31, 2012 Assets Current assets Cash and deposits 15,562 18,175 Notes and accounts receivable-trade 325, ,552 Merchandise and finished goods 143, ,362 Work in process 943 1,985 Raw materials and supplies 129, ,141 Deferred tax assets 7,322 6,642 Other 37,107 32,057 Allowance for doubtful accounts (856) (591) Total current assets 658, ,325 Noncurrent assets Property, plant and equipment Buildings and structures 314, ,429 Accumulated depreciation and impairment loss (204,785) (210,007) Buildings and structures, net 109, ,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, ,047 Accumulated depreciation and impairment loss (403,119) (427,637) Machinery, equipment and vehicles, net 167, ,409 Land 158, ,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, ,662 Intangible assets Goodwill 1,731 1,409 Leasehold right 4,057 4,025 Software 4,983 4,857 Other 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, ,867 Total assets 1,208,442 1,233,

14 Previous year end As of December 31, 2011 (Unit: Millions of yen) Current year end As of December 31, 2012 Liabilities Current liabilities Notes and accounts payable-trade 294, ,884 Short-term loans payable 58,340 65,933 Current portion of bonds 15,000 Accounts payable-other 177, ,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, ,297 Noncurrent liabilities Bonds payable 35,000 20,000 Long-term loans payable 133, ,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, ,111 Total liabilities 929, ,409 Net assets Shareholders' equity Capital stock 34,197 34,197 Capital surplus 22,113 22,113 Retained earnings 199, ,250 Treasury stock (184) (184) Total shareholders' equity 255, ,375 Valuation and translation adjustments Valuation difference on available-for-sale securities Deferred gains or losses on hedges 125 Total valuation and translation adjustments Minority interests 23,286 23,957 Total net assets 279, ,783 Total liabilities and net assets 1,208,442 1,233,

15 (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated Statement of Income (Unit: Millions of yen) Previous year From January 1, 2011 To December 31, 2011 Current year From January 1, 2012 To December 31, 2012 Net sales 2,771,418 2,629,261 Cost of sales 2,582,339 2,481,144 Gross profit 189, ,117 Selling, 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, ,419 Operating income 60,288 14,697 Non-operating income Interest income 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 5,161 Non-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 7,183 Ordinary income 61,807 12,674 Extraordinary income Gain on sales of noncurrent assets 8,951 1,733 Gain on sales of investment securities Reversal of provision for special repairs 62 Subsidy 3,546 1,871 Other 1, Total extraordinary income 14,094 3,

16 (Unit: Millions of yen) Previous year From January 1, 2011 To December 31, 2011 Current year From January 1, 2012 To December 31, 2012 Extraordinary loss Loss on disposal of noncurrent assets 3,210 1,943 Loss on valuation of investment securities Impairment loss 11, Expenses related to upgrading of equipment 517 Other 4, Total extraordinary losses 19,191 4,293 Income before income taxes and minority interests 56,710 12,379 Income taxes-current 4,136 8,163 Income taxes-deferred 28,445 1,744 Total income taxes 32,581 9,908 Income before minority interests 24,129 2,470 Minority interests in income 1,018 1,457 Net income 23,110 1,

17 Consolidated Statement of Comprehensive Income Previous year From January 1, 2011 To December 31, 2011 (Unit: Millions of yen) Current year From January 1, 2012 To December 31, 2012 Income before minority interests 24,129 2,470 Other 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 2,366 Comprehensive income attributable to Comprehensive income attributable to owners of the parent 22, Comprehensive income attributable to minority interests 1,012 1,

18 (3) Consolidated Statement of Changes in Shareholders Equity (Unit: Millions of yen) Previous year From January 1, 2011 To December 31, 2011 Current year From January 1, 2012 To December 31, 2012 Shareholders' equity Capital stock Balance at the beginning of current period 34,197 34,197 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 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, ,182 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, ,250 Treasury stock Balance at the beginning of current period (183) (184) 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, ,308 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, ,

19 (Unit: Millions of yen) Previous year From January 1, 2011 To December 31, 2011 Current year From January 1, 2012 To December 31, 2012 Accumulated other comprehensive income Valuation difference on available-for-sale securities Balance at the beginning of current period 1, 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 Deferred gains or losses on hedges Balance at the beginning of current 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, 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 Minority interests Balance at the beginning of current period 22,801 23,286 Purchase of shares of consolidated subsidiaries (214) Net changes of items other than shareholders' equity Total changes of items during the period Balance at the end of current period 23,286 23,957 Total net assets Balance at the beginning of current period 263, ,152 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, ,

20 (4) Consolidated Statement of Cash Flows (Unit: Millions of yen) Previous year From January 1, 2011 To December 31, 2011 Current year From January 1, 2012 To December 31, 2012 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, 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 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 41,922 Net 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)

21 (Unit: Millions of yen) Previous year From January 1, 2011 To December 31, 2011 Current year From January 1, 2012 To December 31, 2012 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) 2,783 Cash and cash equivalents at beginning of period 19,746 14,466 Decrease in cash and cash equivalents resulting from exclusion of subsidiaries from consolidation (111) (270) Cash and cash equivalents at end of period 14,466 16,

22 (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

23 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 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

24 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 years, which is the average number of remaining service years of employees. The past service liabilities are amortised evenly within 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

25 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