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0 20 40 80 60 (%) 09 10 11 12 13 Net worth ratio Management’s Discussion & Analysis 0 50,000 100,000 150,000 (Millions of yen) 0.0 5.0 10.0 15.0 (%) 09 10 11 12 13 Net worth / ROE 0 50,000 100,000 200,000 (Millions of yen) 0.0 2.0 4.0 8.0 150,000 6.0 (%) 09 10 11 12 13 Total assets / ROA Net worth (left scale) ROE (right scale) Total assets (left scale) ROA (right scale) Business Risks (1) Cost competition The Group manufactures and sells many products that are difficult to differentiate from those of other companies in terms of their function and performance. Given the present trend of intensifying price competition, there is a possibility that the Group, despite its efforts to strengthen marketing activities and reduce costs, may not be able to maintain its competitive edge over rival companies that are able to sell products with the same qualities at lower prices. This could adversely affect the business performance and financial position of the Group. (2) Changes in the price of crude oil and naphtha The purchase prices of the major raw materials of products manufactured and sold by the Group are affected by changes in crude oil and naphtha prices. Therefore, if the Group is unable to sufficiently raise its product prices, and/or if the Group is unable to rationalize its operations sufficiently to offset the rising prices of crude oil and naphtha, there is a possibility that the Group’s business performance and financial position will be adversely affected. (3) Product liability In spite of our efforts to ensure a high level of product quality, there is a possibility that a customer or other party may experience financial losses or other forms of damage as a result of an unexpected defect in products manufactured and sold by the Group. As not all losses incurred will be covered by product Cash Flow Prospects for Fiscal 2014 Net cash provided by operating activities is expected to be \18.0 billion, despite an increase in income taxes paid. Net cash used in investing activities is expected to total \15.0 billion due to increased purchases of property, plant and equipment. Net cash used in financing activities is expected to total \3.0 billion mainly due to dividend payments. Basic Policy on Shareholder Returns and Dividends for Fiscal 2013 and 2014 Our basic shareholder return policy is to pay stable dividends of \10 per share annually, taking into account the performance for the fiscal year in question, the future outlook, and forecast performance figures. However, we also place importance on ensuring a sufficient amount of retained earnings to maintain a sound financial position. We must secure sufficient funding to finance R&D activities and capital investment needed to prepare us for an expected increase in competition. For fiscal 2013, ended December 31, 2013, we made a termend dividend payment of \5 per share. We have already paid an interim dividend of \5 per share, bringing the total annual dividend to \10 per share. For the current term, ending December 31, 2014, we are planning an interim dividend payment of \5 per share, and a term-end payment of the same sum, for an annual dividend of \10 per share. 30 Annual Report 2013