2 Annual Report 2008 Message from the President President Review of Fiscal 2008 and Performance Results During the reporting term (January 1 to December 31, 2008) crude oil prices, which had continued to rise, fell suddenly in the autumn as the global economy was rocked by the fullscale financial sector crisis in the United States. As a result of these and other factors, by the end of the year it had become clear that the economy was entering a severe downturn. For the chemical industry in which Toagosei operates, the year 2008 was divided sharply into two contrasting halves. Conditions deteriorated rapidly in the second half, particularly in the October- December quarter, when demand for our products dropped steeply. In these circumstances, the Toagosei Group focused on cost-reduction initiatives while negotiating raises in selling prices to offset the high prices of fuel and raw materials. We also worked to expand sales of high value-added products, but despite our efforts, we were unable to avoid a decrease in earnings due to the difficulty in pushing through price hikes and the sharp decline in demand toward the end of the term. Basic Policy on Shareholder Return Regarding shareholder return, in principle our policy is to pay dividends of 6 yen per share annually, taking into account the performance for the term in question, the future outlook, and forecast performance figures. However, we also place great