Basic Management Policy

In Japan where the resources are scarce, development of natural gas which is a valuable domestic resource and the supply of the gas to the customers are the main businesses of the KNG Group. Additionally, the Group manufactures and sells iodine which is a valuable resource worldwide.

As a corporation group involved in the basic businesses which support industries and life in the region, the Group places importance on the stable supply of gas. At the same time, by reinforcing the price competitiveness with cost reduction or by developing new businesses, the Group is trying to deal appropriately with the changes in the situation such as the intensification of the competition between energy types, etc. due to more and more deregulation. Moreover, the Group is responding to the social credibility by achieving a balance between the business activities and the natural environment by promoting the development of environment-friendly natural gases.

As a leading producer of iodine in the world, we are striving for a stable supply of iodine along with promotion of streamlining and improvement in the efficiency of the production system to further improve our ability to compete in overseas markets. Also, We are continuously engaged in the development of high-value-added products since iodine is an essential element to the human body, and is widely used as a raw material for pharmaceutical producta and industrial products.

While the core of our business development is gas and iodine, the Group is also putting efforts into the peripheral businesses aiming at growth and development of the entire group.

Issues to be Addressed

In the gas business, which is the key business of Group, cross-industry competition is expected to intensify further due to more and more deregulation and competition with other energies in the gas market. Moreover, as there is a concern of impact on the revenue and expenditure due to the changes in the prices of imported energy, we are putting efforts into the expansion of sales using an optimal mix of the gas sources centered on domestic production of natural gas which can be provided stably for a long period of time and into setting sales prices according to the procurement situation.

In the iodine and brine business, as there are issues such as the delay in product development research as compared to Europe and the United States and responding to the internationally expanding demand of iodine, we are putting efforts into the streamlining of the production system and improvement of our supply capacity and along with this, we are also working on pioneering new usage fields and providing high value added products through our research and development activities conducted in multiple fields.

Moreover, the Company is working hard to procure orders and is striving for technology improvement and cost reduction in order to cope with the intense order and price competition in the construction business and other businesses.

In addition, while working towards improving the efficiency extending over the entire management to achieve the mid-term management plan and accomplishing our public mission of a stable supply of valuable domestic resources, we sincerely hope to respond to the social trust bestowed on our company group through compliance management, securing perfect security systems and promoting eco-friendly business activities.

Basic Policy Concerning Profit Distribution

To produce and to steadily supply valuable domestic resources for a long term, We have set the enhancement of internal reserves that form the foundation of the management base and continuous stable dividends as our basic policy.

As for the internal reserve fund we will allot it for investment in production and transportation equipment of natural gas and research and development of the extraction technology, etc. and use it effectively to improve our business performance in the future.

Based on this policy, dividends are basically paid twice a year during each fiscal year, i.e. the interim dividends and year-end dividends. As for the decision-making bodies concerning dividends, the year-end dividend is decided in the shareholders' meeting and the interim dividend is decided in the board meeting according to the articles of incorporation.