As for the domestic economy in the future, an upward momentum is expected to continue. However there are many destabilizing factors, such as slower trend in performances growth at business corporations, fluctuations of interests or foreign exchange rates accompanying to a lift of the government zero interest policy, and the surge in prices of crude oil and other raw materials, which may cause an economic downturn. Accordingly, an unpredictable situation is thought to continue.
In this environment, the Group has started a new three year medium-term management plan called “Growing Plan - 08,” which starts from the current year 2006 and is designed to achieve continued growth. Assuming an exchange rate of \100 to the US dollar, we are aiming to achieve 2008 targets, its final year, an annual sales amount of \31.0 billion, ordinary income of \3.3 billion, a ratio of ordinary income /total assets of 7%, a net worth ratio of 44% and a debt/total assets ratio of 28%, all on a consolidated basis.

Important implementation Issues

Our Group is taking steps to bolster its earnings structure by optimizing its business, promoting the development of high-value added product, and continuously making efforts to lower the production costs and other expenditures. Moreover, we are positioning 2006, the first year of Growing Plan - 08, as a year during which we must build the foundations for achieving our targets in 2008. In order to attain this target, we will implement the following important issues:

1:		We will establish a solid foundations for our graphite electrode business.
2:		We will expand sales of carbon fiber products, such as general-purpose carbon fiber (GF) and carbon fiber reinforced carbon composite materials (CCM). In addition, we will develop and commercialize next-generation Lithium-ion battery anode materials (LD) timely.
3:		We will increase the production capacity of carbon specialties.
4:		So that our Group companies can achieve further growth, we will endeavor to establish an efficient structure for executing operations through the restructuring of our systems, and through the development and invigoration of our human resources.

To carry out all these measures we will use all the resources available in our Group companies, and also take a number of initiatives to improve the Group’s competitiveness and profitability, raising our corporate value.
We are also aware that to achieve sustainable development, our Group must fulfill its corporate social responsibilities through proactive contributions to the community. We must become a group of companies that has the trust of society. To achieve these goals, we will continue to comply with ethical laws and regulations and work to conserve the environment.