2012 Review . Second Year Achievements of Medium-term Management Plan Despite signs of a positive turnaround in the piping equipment business due to such factors as the increase in housing starts during the second half, sales and profits in fiscal 2012, the second year of our medium-term management plan, fell short of initial forecasts. This was largely attributable to delays in reconstruction activity following the earthquake disaster and the failure of demand to gather full momentum. Trends in nursing care business sales and profits were also weak throughout the year due mainly to intense sales competition within the industry and the upswing in raw material prices. As a result, both businesses recorded a decrease in revenue and earnings year on year. Looking at efforts aimed at returning Mikuni Plastics Co., Ltd. to profitability, an issue of considerable concern, control of the company’s contract resin molding and rainwater-related businesses was transferred to Aronkasei Co., Ltd. Working diligently to optimize business operations within the Group, we were successful in securing a move back into the black. From a policy perspective, our focus was directed toward implementing two core measures with the aim of “getting back to basics, reestablishing monodukuri (excellence in manufacturing) and marketing capabilities, and shifting to more dynamic production and personnel systems in order to build a framework capable of rapidly advancing Aronkasei to the next generation,” the basic policy of our medium-term management plan. The first measure involved building and strengthening structures and systems at the Monodukuri Center, which was completed the year before last. In addition to the tangible effort of setting up the center, we adopted less tangible measures including the introduction of more flexible and efficient work styles that better match the specific attributes of operations such as a discretionary work system and flextime. In this manner, every effort is being made to promote a pleasant working environment that enables employees to make the most of their specialist expertise and unleash greater creativity. The second measure entailed the establishment of an order processing center. Historically, there had been no clear organizational distinction between order processing and sales operations. By separating these two functions and clearly defining roles and responsibilities, the sales department can now channel its energies toward specific duties that are inherently intrinsic to the sales department of a manufacturing company. Challenges in 2013 and Our Responses In fiscal 2013, the final year of the medium-term management plan, we will strengthen our monodukuri capabilities while streamlining and strengthening business operations. In working to strengthen our monodukuri capabilities, we will take full advantage of our comprehensive strengths and the integration effects generated from establishing Monodukuri Center. In addition to promoting the development of new products, we will bolster our technology development structure and systems. Moreover, we will endeavor to reinforce our operating environment and to enhance the efficiency of production facilities based on the concept of a future plant. In streamlining and strengthening business operations, we will strive to stabilize operations at the order processing center, launched during the previous year, at the earliest possible opportunity. At the same time, we will review sales and marketing activities with the aim of improving our Sales Department structure. Building on the aforementioned initiatives, we will crystallize efforts designed to expand downstream operations, a key component of the medium-term management plan of the Toagosei Group. In communicating closely with Toagosei Group companies, we will strive to create new products and businesses that embody the technological know-how of the Group as a whole. Finally, and as an underlying precondition of the measures outlined above, we recognize the critical need to maintain a sound and healthy position. To this end, we will strengthen our compliance structure and systems and promote measures aimed at ensuring optimal work-life balance as well as harmonious coexistence with society. Through these means, we will endeavor to become a company in which the community and households can take immense pride. Toagosei Co., Ltd. 19