ANNUAL REPORT 2013 Year Ended March 31,2013

Japan Oil Transportation Co.,Ltd.

010_0638001372509.indd 2 2013/10/10 11:41:08 THE INTEGRATED LOGISTICS COMPANY We lead the transportation business for the next generation

SAFETY 1st

Trucking transportation Cooperating companies Safety

Rail transportation

Group Economic Intermodal transportation efficiency

Rail transportation, Trucking transportation, Sea transportation Utilizing diverse modes of transportation, the JOT Group facilitates the modal shift

Trucking transportation

Environment Sea transportation Cooperating companies

02 ANNUAL REPORT 2013

010_0638001372509.indd 2 2013/10/10 11:41:14 To Our Shareholders

Committed to providing safe and high- quality transportation services as a distribution partner trusted by customers

Before presenting the business report for the 96th term (April 1, 2012 to March 31, 2013), I would like to take this opportunity to thank our shareholders for their support throughout the year. Although a mild recovery is anticipated in the Japanese economy including improved corporate performance backed by the government’s economic measures and monetary policies, the risk of a worldwide economic downturn lingers, and the situation is expected to remain unpredictable. As for the distribution industry in which the JOT Group operates, the pace of recovery in domestic cargo transportation volume has been sluggish, and harsh conditions are expected to continue in the future. In response to this difficult business environment, in which overall demand for oil products continues to decline, the JOT Group is making maximal use of its strengths as a business group offering both rail and trucking transportation services in order to respond swiftly and accurately to customer needs. In addition, with a view to future growth, we are further strengthening our LNG transportation and chemical transportation including overseas business development, while proactively seeking to create new businesses and to develop new types of transportation containers. In addition to these efforts, we are working to promote even safer and more reliable transportation by continuing to strengthen our safety promotion activities and further enhancing our vehicle and container inspection and servicing system. The year-end dividend for the year under review has been set at the same level as the previous term at ¥4 per share. Combined with the interim dividend of ¥3 per share, this amounts to an annual dividend of ¥7 per share. I continue to count on your unwavering support and cooperation.

June 2013

Kimio Morita President and Representative Director

ANNUAL REPORT 2013 03

010_0638001372509.indd 3 2013/10/10 11:41:15 Review of Operations

Results for the 96th Term Sales by business segment Chemical and container The JOT Group aims continually to provide safe and high-quality transportation as a transportation business 22.75% distribution partner chosen by customers on the basis of trust. In the year under review, ¥6,932 million the Group implemented an organizational reform of our sales division with a view to Other business strengthening relationships with existing customers as well as capturing new customers, 0.01% and developed sales activities taking advantage of our strengths as a business group ¥2 million offering both rail and trucking transportation services. In addition, in order to enhance our management base, the Group was actively engaged in efforts including the development of new types of transportation containers, as well as new entry to the solar power generation business and expansion of the rental space business. After having been Net Sales suspended due to the effects of the earthquake disaster, rail tank car transportation from ¥30,472 million the Sendai area resumed in September 2012. In the consolidated year under review, the impact of oil refinery and oil terminal closures and the conclusion of shipments transferred to us in the wake of the earthquake disaster contributed to an 8.9% year-on-year decline in net sales to ¥30,472 million, a Oil transportation 28.0% year-on-year decline in operating income to ¥554 million, and an 18.3% year-on- business year decline in ordinary profit to ¥773 million. However, net income rose by 100.9% year 52.92% on year to ¥543 million, partly due to a decrease in extraordinary expenses and income ¥16,127 million High-pressure gas taxes—deferred. transportation business 24.32% ¥7,410 million Oil Transportation Business In the oil transportation business, despite greater demand for fuel oils for winter heating requirements due to the effect of a drop in temperature in the winter, transportation volume decreased due to the substantial impact of oil refinery and oil terminal closures, in addition to an overall drop in demand for oil products due to factors such as the spread of fuel-efficient vehicles. As a result, net sales in the oil transportation business declined 13.8% year on year to ¥16,127 million.

High-Pressure Gas Transportation Business In the high-pressure gas transportation business, despite an increase in transportation of city gas raw materials due to greater demand for heating and cooling requirements, in addition to an acquisition of new transportation business through the Group’s united sales activities, LNG (liquid natural gas) transportation volume declined due to the shift to pipelines in some transportation zones and lower industrial demand as a result of the economic slump. As a result, net sales for high-pressure gas transportation business decreased 6.4% year on year to ¥7,410 million.

Chemical and Container Transportation Business Although the chemical transportation business saw a drop in demand for chemical products due to a stagnant economy, the efforts of proactive sales activities aimed at capturing new customers resulted in growth in leasing of transportation containers. The container transportation business saw an increase in such items as the already strong shipments of vegetables, and machine industrial products on the back of recovery in production activities. However, demand for transportation lowered due to a significant impact of frequent disruption to freight train operations caused by typhoons, heavy snowfalls, and other natural disturbances, as well as the derailment accident in the Hokkaido area. As a result, net sales in the chemical and container transportation business showed a year-on-year increase of 1.5% to ¥6,932 million.

Other Business The JOT Group entered the solar power generation business in March 2013, with net sales of ¥2 million.

04 ANNUAL REPORT 2013

010_0638001372509.indd 4 2013/10/10 11:41:17 TOPICS

With the aim of achieving a society where people can live in security, the JOT Group has entered the solar power generation business.

Renewable energy has been promoted and encouraged in recent

years as an effective means of reducing the volume of CO2 emissions in order to cope with the problem of global warming. Solar panels Furthermore, there has been growing interest in power generation Power generation using renewable energy as a result of the problems of shortage in electric power supply that arose in the aftermath of the nuclear power Direct current plant accident following the earthquake disaster. In particular, solar Power conditioner power generation has been on the increase due to the ease they offer Alternate current in terms of installation location and maintenance. The JOT Group has thus far played a part in supplying domestic Power company energy through the transportation of oil products and high-pressure gases such as LNG and LPG. Now, with the aim of realizing a society where people can live in security while also taking the environment into consideration, the Group wishes to make a contribution, however small, by entering the solar power generation business starting from March 2013 with the construction of the “JOT Solar Station” in Kamisu-shi, Ibaraki, and Koriyama-shi, Fukushima.

This business takes advantage of the “Feed-in Tariff” based on the “Act on Special Measures concerning the Procurement of Renewable Electric Energy by Operators of Electric Utilities.” We have been making effective use of assets in our possession by installing solar power generating equipment in Kamisu-shi, Ibaraki, on land adjoining the Kanto Branch, Kashima Office of our subsidiary ENEX Inc., and on repurposed land in the yard (storage track for rail tank freight cars) in Koriyama-shi, Fukushima. A total of 2.6 megawatts of power will be generated per year, which can cover annual electrical power for approximately 780 average households. With the addition of the new solar power generation business, the JOT Group will continue to contribute to the development of a sustainable society as a business group that fulfills its social mission by supplying the energy indispensable to economic society.

JOT Solar Station Kamisu JOT Solar Station Koriyama

Adopting a unique construction method based on existing train lines.

ANNUAL REPORT 2013 05

010_0638001372509.indd 5 2013/10/10 11:41:20 Consolidated Financial Statements (Summarized) Japan Oil Transportation Co., Ltd. and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS Millions of Millions of yen As of March 31, 2013 and 2012 U.S. dollars Assets 2012 2013 2013 Current assets: Cash and cash equivalents ¥ 892 ¥ 373 $ 3.9 Notes and accounts receivable—trade 3,843 3,258 34.6 Inventories 49 44 0.4 Deferred tax assets 322 341 3.6 Other current assets 311 220 2.3 Total current assets 5,419 4,238 45.0 Fixed assets: Property, plant and equipment 17,476 18,117 192.6 Buildings and structures 1,103 1,687 17.9 Machinery, equipment and vehicles 4,620 5,440 57.8 Containers 2,482 2,263 24.0 Land 5,261 5,111 54.3 Lease assets 3,817 3,533 37.5 Other assets 190 81 0.8 Intangible fixed assets 11 — — Investments and other assets 4,800 4,939 52.5 Investment in securities 3,861 3,996 42.4 Deferred tax assets 487 486 5.1 Other assets 451 456 4.8 Total fixed assets 22,288 23,057 245.1 Total assets ¥27,708 ¥27,296 $290.2

Millions of Millions of yen U.S. dollars Liabilities 2012 2013 2013 Current liabilities: Notes and accounts payables—trade ¥ 2,132 ¥ 1,747 $ 18.5 Short-term loans 527 1,076 11.4 Lease obligations 1,291 1,188 12.6 Accrued expenses 819 445 4.7 Income taxes payable 278 109 1.1 Other current liabilities 1,571 1,349 14.3 Total current liabilities 6,621 5,918 62.9 Long-term liabilities: Lease obligations 2,605 2,393 25.4 Deferred tax liabilities 263 356 3.7 Reserve for retirement 2,460 2,507 26.6 Reserve for vehicle repairs 260 279 2.9 Other long-term liabilities 211 179 1.9 Total long-term liabilities 5,801 5,716 60.7 Total Liabilities ¥12,422 ¥11,634 $123.7

Net Assets Shareholders’ equity 14,606 14,917 158.6 Common stock 1,661 1,661 17.6 Capital surplus 290 290 3.0 Retained earnings 12,684 12,996 138.1 Treasury stock, at cost (30) (30) (0.3) Accumulated other comprehensive income 679 744 7.9 Net unrealized gains on other securities 679 744 7.9 Total net assets 15,285 15,662 166.5 Total liabilities and net assets ¥27,708 ¥27,296 $290.2

06 ANNUAL REPORT 2013

010_0638001372509.indd 6 2013/10/10 11:41:21 CONSOLIDATED STATEMENTS OF INCOME Millions of Millions of yen Years ended March 31, 2013 and 2012 U.S. dollars 2012 2013 2013 Net sales ¥33,466 ¥30,472 $323.9 Cost of sales 30,654 27,905 296.7 Gross profit 2,811 2,567 27.2 Selling, general and administrative expenses 2,041 2,013 21.4 Operating income 769 554 5.8 Non-operating income 489 480 5.1 Dividend income 88 99 1.0 Rent income on fixed assets 240 225 2.3 Other non-operating income 160 154 1.6 Non-operating expenses 311 260 2.7 Interest expenses 119 95 1.0 Rent expenses on fixed assets 96 93 0.9 Other non-operating expenses 95 72 0.7 Ordinary profit 947 773 8.2 Extraordinary income 263 245 2.6 Extraordinary expenses 325 132 1.4 Income before income taxes 884 886 9.4 Income taxes—current 324 298 3.1 Income taxes—deferred 289 43 0.4 Income before minority interests 270 543 5.7 Minority interests in net income — — — Net income ¥ 270 ¥ 543 $ 5.7

CONSOLIDATED STATEMENTS OF CASH FLOWS Millions of Millions of yen Years ended March 31, 2013 and 2012 U.S. dollars 2012 2013 2013 Net cash provided by operating activities ¥ 4,440 ¥ 3,736 $ 39.7 Net cash used in investing activities (2,192) (3,234) (34.3) Net cash used in financing activities (1,925) (1,020) (10.8) Increase (decrease) in cash and cash equivalents 322 (518) (5.5) Cash and cash equivalents at beginning of year 570 892 9.4 Cash and cash equivalents at end of year ¥ 892 ¥ 373 $ 3.9

Note: The approximate exchange rate in effect on March 31, 2013 was ¥94.05 = U.S. $1.

ANNUAL REPORT 2013 07

010_0638001372509.indd 7 2013/10/10 11:41:21 Corporate Information

Company Profile (As of March 31, 2013) Company Name: Japan Oil Transportation Co., Ltd. Established: March 27, 1946 Head Office: WEST BLDG. Gate City Ohsaki 11-1, Ohsaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan TEL: 81-3-5496-7671 URL: http://www.jot.co.jp/ (in Japanese only) Paid-in Capital: ¥1,661 million Number of Employees: 1,324 (consolidated); 166 (non-consolidated)

Business Activities 1. Transportation of oil products (gasoline, kerosene, etc.) by rail tank car and truck 2. Transportation of high-pressure gas (LNG, etc.) by rail container, truck, and intermodal transportation 3. Transportation of petrochemical and related products by rail container, truck, and intermodal transportation; leasing of a range of containers 4. Rental and leasing of railway refrigerated containers and freezer containers and related items 5. Solar power generation business

Rail Vehicle Fleet Oil tank cars 1,354 (59,745 t)

Container Fleet LNG containers 144 (1,568 t) Chemical product containers 6,264 (73,422 t) Refrigerated and freezer containers 8,092 (41,641 t)

Major Subsidiaries (As of July 1, 2013) Paid-in Equity Company Name Main Business Capital Ownership

ENEX, Inc. ¥100 million 100.0% Trucking transportation of oil products, high-pressure gas, and related products, disaster prevention at petroleum industry complexes Kinki Oil Transportation Co., Ltd. ¥ 75 million 100.0% Trucking transportation of oil products, high-pressure gas, and related products NICHIYU CO., LTD. ¥ 40 million 100.0% Sales and leasing of rail vehicle and container accessories, insurance agency New J’s Co., Ltd. ¥ 48 million 100.0% Trucking transportation of petrochemical and related products, automobile services JK TRANS Co., Ltd. ¥100 million 100.0% Trucking transportation of oil products, petrochemical and related products

Japan Oil Transportation Co., Ltd. WEST BLDG. Gate City Ohsaki 11-1, Ohsaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan

Printed in Japan

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