Consolidated Statements of Income

¥ million

	2007/03	2008/03	2009/03	2010/03	2011/03
I Net sales	969,712	1,202,965	1,076,164	840,427	943,080
II Cost of sales	343,794	390,554	319,038	298,167	334,833
Gross profit	625,918	812,410	757,126	542,259	608,247
III Exploration expenses (After deducting Exploration subsidies)	17,688	34,095	25,982	15,710	12,000
IV Selling, general and administrative expenses	49,152	64,104	67,877	64,880	66,504
Operating income	559,077	714,211	663,266	461,667	529,742
V Other income
1. Interest income	12,843	10,984	9,535	4,353	4,110
2. Dividend income	2,291	5,439	12,338	9,476	5,721
3. Equity in earnings of affiliates	1,349	1,764	946	—	4,933
4. Gain on change in equity	—	—	—	—	3,644
5. Gain on transfer of mining rights	33,533	—	—	—	7,333
6. Net gain on redetermination of unitized field	—	4,005	—	—	—
7. Net gain on taking effect of exploration and production agreement	—	3,481	—	—	—
8. Foreign exchange gain	5,738	2,747	—	—	—
9. Other	4,322	4,666	9,214	7,643	5,432
Total other income	60,079	33,089	32,034	21,473	31,176
VI Other expenses
1. Interest expense	12,389	10,887	3,934	1,274	1,073
2. Equity in losses of affiliates	—	—	—	1,919	—
3. Provision for allowance for doubtful accounts	—	—	—	—	9,132
4. Provision for allowance for recoverable accounts under produciton sharing	6,176	20,586	16,642	6,028	11,481
5. Provision for exploration projects	2,973	3,104	3,386	8,594	3,082
6. Provision for investments in exploration	—	—	—	5,408	—
7. Loss on valuation of investment securities	—	21,349	31,798	—	—
8. Foreign exchange loss	—	—	14,570	13,263	11,539
9. Other	11,355	5,572	8,801	4,624	14,466
Total other expenses	32,893	61,501	79,134	41,113	52,331
Ordinary income	586,262	685,799	616,166	442,027	508,587
Income before income taxes and minority interests	586,262	685,799	616,166	442,027	508,587
Income taxes–current	432,894	496,852	488,262	322,993	367,082
Income taxes–deferred	-19,655	-5,502	-17,883	2,132	1,614
Minority interests	7,932	21,204	725	9,691	11,190
Net income	165,091	173,245	145,062	107,210	128,699

Consolidated net sales increased by ¥102.6 billion, or 12.2%, to ¥943.0 billion from the previous fiscal year due to an increase in sales price of crude oil and natural gas, despite a decrease in sales volume of natural gas and a negative effect of appreciation of the Japanese yen against the U.S. dollar. The increase of ¥102.6 billion in net sales was derived mainly from the following factors: a decrease in sales volume of ¥7.8 billion, an increase in unit sales price of ¥177.0 billion, the appreciation of the Japanese yen against the U.S. dollar of ¥68.4 billion and an increase in net sales excluding crude oil and natural gas of ¥1.8 billion.
Cost of sales increased by ¥36.6 billion, or 12.3%, to ¥334.8 billion due mainly to an increase in net purchase of natural gas in Japan and an increase in depreciation owing to the commencement of production. Exploration expenses decreased by ¥3.7 billion, or 23.6%, to ¥12.0 billion, and selling, general and administrative expenses increased by ¥1.6 billion, or 2.5%, to ¥66.5 billion. As a result, operating income increased by ¥68.0 billion, or 14.7%, to ¥529.7 billion. Other expenses increased by ¥11.2 billion, or 27.3%, to ¥52.3 billion due to an increase in provision for allowance for doubtful accounts and provision for allowance for recoverable accounts under production sharing owing to the withdrawal from the Azadegan oil field in Iran. As a result, ordinary income increased by ¥66.5 billion, or 15.1%, to ¥508.5 billion. Net income increased by ¥21.4 billion, or 20.0%, to ¥128.6 billion from the previous fiscal year.

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