October 28, 2005

Impact of the Fire at Sanix Energy’s Tomakomai Power Plant
on the Company’s Business Performance


The Sanix Group would like to apologize once again for the fire that occurred on August 25, 2005, at the Tomakomai Power Plant (Tomakomai City, Hokkaido; Plant manager: Masahiro Morooka) of Sanix Energy Incorporated (President and CEO: Shin-ichi Munemasa), one of our Group companies. We are especially sorry for all those living in the vicinity of the plant, as well as to other stakeholders for the concerns and troubles that the fire has inflicted.

Operations at the power plant partially resumed on October 7, 2005, using a temporary fuel supply line. At the same time, we are making every effort to completely restore the plant as immediately as possible. Described below are the outlook for the resumption of full-scale operations and the impact of the fire on our business performance.

1. Outlook for the resumption of full-fledged operations

Restoration work of the damaged equipment and systems is scheduled to be completed by mid-November. After completion, it will take about two weeks to regulate the equipment and systems, and to start up the furnace. Full-fledged operations are expected to resume in December 2005.

2. Equipment and systems that need restoration

Because of the damage from the fire, fuel tanks and their related systems need restoration, the expenses of which are estimated to be approximately 700 million yen. Since the damaged equipment and systems are covered by property and casualty insurance, the restoration expenses are predicted to be fully paid by the insurance.

3. Impact of the fire at the Tomakomai Power Plant on company performance

Because of the suspended operations of the power plant, revenues from electric power sales will decline during the partial and full-scale suspension periods. Regarding profits/loss, slow fuel consumption due to the limited operations will entail additional costs for fuel storage. These additional costs will be listed as a special loss for both the interim period and the second half of the fiscal year.

We estimate the impact of the fire at the Tomakomai Power Plant on our consolidated performance of FY 2006 ending March 2006 as follows.

(Millions of Yen)      
First Half
as of September 30
Second Half
from October 1 to March 31
Full Year
ending March 31
Amount of the Impact
on Net Sales
（250） 
(300) 
（550） 
Amount of the Impact
on Recurring Profit/Loss
（20） 
(60) 
（80） 
Amount of the Impact
on Net Income/Loss
（240） 
(330) 
（570） 

During restoration of the power plant, we will improve the disaster prevention systems for the plant. At the same time, we are fully determined to make every possible effort to restore society’s trust in the Sanix Group. In this regard, we would greatly appreciate your generous understanding and continuous support.

Thank you.

For more information, please contact:
Kozo Inoue, Managing Director
Sanix Incorporated
E-mail: k-inoue@sanix.co.jp