ANNUAL R EP O RT 2017
Year Ended March 31, 2017

Japan Oil Transportation Co.,Ltd.

To Our Shareholders

Shift for the Next
We fulfill our responsibility to the futurewith thorough safety and high-quality service
Before presenting the business report for the 100th term (April 1, 2016 to March 31, 2017), I would like totake this opportunity to thank our shareholders for their support throughout the year.
We expect that the Japanese economy will remain unpredictable with concerns over the risk of an economic
downturn in overseas economies, although a moderate expansion is expected with support notably fromfavorable corporate earnings, along with an improvement in employment and income situations.
In the distribution industry, truck driver shortage, a rise in personnel cost, and other costs are issues of concern.
Furthermore, amidst the outlook for a protracted decrease indomestic demand for oil products, moves toward management
integration among the primary distributors of oil, including JXTGGroup, which started operation on April 1, 2017, are likely tohave various impacts on the JOT Group.
Amid these conditions, we have formulated a medium-term
management plan that runs from Fiscal 2018 through Fiscal
2020, to achieve a continued growth of the JOT Group under
the catchphrase “Shift for the Next - We fulfill our responsibility
to the future with thorough safety and high-quality service.”
In the management plan, we have set our targets of net sales of¥33 billion or more, operating income of ¥1.2 billion or more,and ordinary income of ¥1.5 billion or more in Fiscal 2020. Toachieve these goals, we will secure profitability by maintaining
and expanding our share of the transportation market, promote
such growth areas as LNG (liquid natural gas) transportation,hydrogen transportation, and overseas chemical transportation,
and will work on improving productivity through enhanced
group-wide collaboration and other means.
I continue to count on your generous support and cooperation.
August 2017

Kimio Morita
President and Representative Director

1

ANNUAL REPORT 2017

Results for the 100th term (Consolidated)
In order to secure stable earnings, the JOT Group continued its efforts to ensure thorough safety and provide
high-quality service, actively pursuing marketing activities in the LNG transportation business as well as inoverseas chemical transportation business as we strove to expand our revenue base for the future.
Furthermore, we worked on expanding hydrogen transportation, a new source of energy that the supply
infrastructure development is making progress in.
As a result, net sales in the fiscal year under review showed a year-on-year increase of 0.1%, to ¥30,960 million.
Furthermore, operating income rose by 15.7% year-on-year to ¥1,150 million, ordinary income rose by 13.0%
year-on-year to ¥1,467 million, partly due to the decrease in expenses accompanying the drop in the fuel oil
price, and profit attributable to owners of parent rose 28.9% year-on-year to ¥1,014 million.

Net Sales

(Millions of yen)

Operating Income(Millions of yen)

Ordinary Income

1,467

1,150
30,45230,921

1,298

994

30,960

1,022

732

98th term- Fiscal 2015

99th term- Fiscal 2016

100th term
- Fiscal 2017

Profit Attributable to Owners(Millions of yen)of Parent

98th term- Fiscal 2015

99th term- Fiscal 2016

100th term
- Fiscal 2017

Total Assets / Net Assets
(Millions of yen)
Total Assets

Net Assets

98th term- Fiscal 2015

28,598First six months (Interim period)

30,27132,352100th term
- Fiscal 2017

(Yen)
Year-end

8（80）
7（70）
6（60）

16,53499th term- Fiscal 2016

100th term
- Fiscal 2017

9（90）

570

98th term- Fiscal 2015

99th term- Fiscal 2016

Dividend Per Share


1,014
786

(Millions of yen)

98th term- Fiscal 2015

16,75499th term- Fiscal 2016

17,919100th term
- Fiscal 2017

4（40）

4（40）

3（30）

3（30）

98th term- Fiscal 2015

99th term- Fiscal 2016

4（40）100th term
- Fiscal 2017*‌Year-end dividend per share for the 99th term includes a ¥2commemorative dividend.
*‌Effective October 1, 2016, we undertook a 1-for-10 stock
consolidation. Figures in ( ) of the dividends reflect this stock
consolidation.

ANNUAL REPORT 20172

Segment overview (consolidated)
Business description

OilTransportation
Business

High-PressureGas
Transportation
Business

Chemical andContainer
Transportation
Business

OtherBusiness3

Overview of the period

Making use of two
different modes oftransportation, namely
rail tank cartransportation, whichenables thetransportation of highvolumes at low cost andwith little environmental
impact, and trucking transportation, which is agile andflexible, the JOT Group conducts transportation of fuel oils
such as gasoline, diesel, and kerosene.

Net sales - ¥14,892 million

The JOT Group conducts
multimodaltransportation by tanker
truck and rail tankcontainers. We link ourcustomers’ satellite
stations and plants, etc.,
to LNG (liquid natural gas) import terminals around Japan, as
well as to domestic gas fields.

Net sales - ¥8,096 million

In the chemical transportation business,
the JOT Group is developing the leasingof containers for the transport of liquidand powder chemicals and foodstuffs, aswell as multimodal transportation,
combining various methods oftransportation.

Net sales - ¥7,790 million

In the container transportation business,
the JOT Group is also engaged in rental
and leasing of various types of rail
containers, such as for agricultural
products, food products, industrialproducts, and courier services, in order to meet the needs of ourcustomers.

With regard to the solar
power generation business,there are currently four JOT
solar stations locatedaround Japan.

ANNUAL REPORT 2017

Operating income - ¥583 million
In the oil transportation business, although cold weather wasaccompanied by a growth in demand, net sales decreased
due to effects such as periodic refinery maintenance.
As a result, net sales in the oil transportation businessshowed a year-on-year decrease of 1.2% to ¥14,892 million.

Operating income - ¥493 million
In the high-pressure gas transportation business, our corebusiness of LNG transportation more or less maintained thepreceding year’s levels as we secured new transport routes
which helped to offset the decrease in some existingtransport routes. Additionally, increase in hydrogentransportation helped to boost net sales in this segment.
As a result, net sales in the high-pressure gas transportation
business showed a year-on-year increase of 1.5% to ¥8,096
million.

Operating income - ¥26 million
In the chemical transportation business, domestictransportation continued at the preceding year’s levels, while
overseas transportation was supported by an increase in thenumber of ISO tank containers and efforts in expanding sales
channels, resulting in a net sales increase.
In the container transportation business, net sales decreased
as a result of frequent service disruptions to freight trains in
the Hokkaido area due to typhoons, as well as the partial
termination of refrigerated container operations at the endof the preceding fiscal year.
As a result, net sales in the chemical and containertransportation business showed a year-on-year increase of
1.2% to ¥7,790 million.

Net sales - ¥180 million
Operating income - ¥46 million
In the solar power generation business, net sales increased
due to an expanded operation with a solar power station
completed during the preceding fiscal year, as well as smooth
operation of the stations.
As a result, net sales in the other business showed a year-onyear increase of 8.8% to ¥180 million.

TOPICS- Medium-term management plan has been formulated In a business environment that is undergoing significant changes, we have formulated a medium-term management
plan for the Fiscal 2018 through Fiscal 2020 period, setting the following numerical targets and basic policies toachieve a continued growth of the JOT Group.

1

Net Sales

Targets

Operating Income
Ordinary Income
ROE
Dividend Payout Ratio
Total Investment

Basic Policies

2¥33.0 billion or more (Fiscal 2020)¥1.2 billion or more (Fiscal 2020)¥1.5 billion or more (Fiscal 2020)
5%(Fiscal 2020)
30 %(Fiscal 2018 - Fiscal 2020)¥12.5 billion or more (Total of Fiscal 2018 - Fiscal 2020)

Secureprofitability· Maintain‌our share of the transportation market, secure stable earnings [Oil / LPG / Chemicals /Containers]‌· Further expand the market share through M&As and other means [Truck transportation company]

Growth areas· ‌Steadily capture the growing demand [LNG]· ‌Expand investment in new areas [Overseas business / hydrogen / air cargocontainers]

Improveproductivity· ‌Strengthen our sales capabilities through group-wide collaboration (improvelabor productivity) [Work-style reforms]· ‌Build a strong and flexible corporate group [Reorganization / Recruitment]- The LNG Training Center has been expanded The environment surrounding LNG transportation is changing more significantly than ever before; nationwide
construction and planned construction of new LNG terminals has continued inrecent years along with the growth in LNG demand; additionally, full
liberalization of town gas retail market started in April 2017.
Under these conditions, in April 2017, the LNG Training Center for the JOTGroup was revamped and relocated to a new site in Hitachinaka City in Ibaraki
Prefecture, where enhanced education and training programs are offered. It ispart of our efforts to further upgrade our LNG transportation business wherecontinued growth is expected, in order to become a corporate group that
responds to clients’ needs, and is our clients’ first choice.
Lecture on LNG transport
The Training Center provides drivers with an opportunity to experience anintegrated program of education, training, and exercise in LNG transport, which extends from acquiring basic
knowledge to receiving practical skills in cargo handling operation. For instance, drivers first learn how to operate
LNG transport vehicles using models of LNG transport vehicles and cutaway models of equipment, upon which theyreceive practical, technical guidance using actual LNG tanker trucks and piping devices for training.
Making use of the enhanced training facilities and teaching materials, we seek to deepen drivers’ knowledge andexperience in LNG transport to further promote our commitment towards thorough safety in transportation.

Cargo handling simulation

Lecture using an actual LNG tanker truck

ANNUAL REPORT 20174Consolidated Financial Statements (Summarized)
Japan Oil Transportation Co., Ltd. and its Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS
AssetsCurrent assets:
Cash and deposits
Notes and accounts receivable - trade
Inventories
Deferred tax assets
Other
Total current assets
Non-current assets:
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Containers
Land
Lease assets
Construction in progress
Other
Intangible assets
Software
Software in progress
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Other
Total non-current assets
Total assets

Millions ofU.S. dollars

Millions of yen

As of March 31, 2017 and 2016

2016

2017

2017

¥1,878
3,465
28
245
119
5,737

¥
2,311
3,541
50
293
390
6,587

$
20.6
31.6
0.5
2.6
3.5
58.7

19,803
1,821
4,426
3,039
5,428
4,998
13
75
25
25
—
4,704
3,674
51
507
471
24,533¥30,271

20,237
1,707
4,299
2,617
5,487
5,754
302
67
58
18
39
5,468
4,462
48
493
464
25,764¥
32,352

180.4
15.2
38.3
23.3
48.9
51.3
2.7
0.6
0.5
0.2
0.4
48.7
39.8
0.4
4.4
4.1
229.7
$ 288.4
Millions ofU.S. dollars

Millions of yen

Liabilities
Current liabilities:
Notes and accounts payable - trade
Short-term loans payable
Lease obligations
Accrued expenses
Income taxes payable
Provision for bonuses
Provision for directors' bonuses
Other
Total current liabilities
Long-term liabilities:
Lease obligations
Deferred tax liabilities
Reserve for vehicle repairs
Net defined benefit liability
Other
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury shares, at cost
Accumulated other comprehensive income
Net unrealized gains on other securities
Deferred gains or losses on hedges
Remeasurements of defined benefit plans
Total net assets
Total liabilities and net assets
5

ANNUAL REPORT 2017

2016

2017

2017

¥1,808
447
1,389
691
397
589
89
808
6,222

¥
1,938
407
1,454
655
307
648
92
752
6,259

$
17.3
3.6
13.0
5.8
2.7
5.8
0.8
6.7
55.8

3,647
300
326
2,635
385
7,295
¥13,517

4,346
461
322
2,616
427
8,173
¥
14,432

38.7
4.1
2.9
23.3
3.8
72.9
$ 128.6

16,3081,661
290
14,389
(33)
446
571
(0)
(125)
16,754¥30,271

16,9901,661
290
15,073
(34)
929
1,083
(11)
(143)
17,919¥
32,352

151.4
14.8
2.6
134.4
(0.3)
8.3
9.7
(0.1)
(1.3)
159.7
$ 288.4

CONSOLIDATED STATEMENTS OF INCOME
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rent income on fixed assets
Gain on sales of non-current assets
Share of profit of entities accounted for using equity method
Other
Non-operating expenses
Interest expenses
Rent expenses on fixed assets
Loss on sales and retirement of non-current assets
Other
Ordinary income
Extraordinary income
Extraordinary expenses
Profit before income taxes
Income taxes - current
Income taxes - deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

2016

2017

2017

¥30,921
28,001
2,919
1,925
994
548
090
236
140
2061
245
68
102
48
25
1,298
68
85
1,280
526(33)
786
—
¥786

¥
30,96027,863
3,096
1,946
1,150
525093
235
113
20
61
208
69
81
45
11
1,467
76
47
1,495
546
(65)
1,014
—
¥
1,014

$
276.0
248.4
27.6
17.3
10.3
4.7
0.0
0.8
2.1
1.0
0.2
0.5
1.9
0.6
0.7
0.4
0.1
13.1
0.7
0.4
13.3
4.9
(0.6)
9.0
—
$
9.0

CONSOLIDATED STATEMENTS OF CASH FLOWSMillions of
U.S. dollars

Millions of yen

Years ended March 31, 2017 and 2016

Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Millions ofU.S. dollars

Millions of yen

Years ended March 31, 2017 and 2016

2016

2017

2017

¥4,371(3,098)
(462)
(0)
810
1,067
¥1,878¥
4,115(2,356)(1,327)
3433
1,878
¥
2,311

$
36.7
(21.0)(11.8)
0.0
3.9
16.7$
20.6

Note: The approximate exchange rate in effect on March 31, 2017 was ¥112.19 = U.S. $1.

ANNUAL REPORT 2017

6Corporate Information

Company Profile (As of March 31, 2017)
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/en

Paid-in Capital:¥1,661 million

Number of Employees: 1,396 (consolidated); 161 (non-consolidated)

Primary Business1. 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 domestic and international 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

Major Subsidiaries (As of March 31, 2017)
Paid-in
CapitalEquityOwnership

ENEX, Inc.

¥100 million

100.0%

Trucking transportation of oil products, high-pressure gas, and relatedproducts, disaster prevention at petroleum industry complexes

Kinki Oil Transportation Co., Ltd.

¥ 75 million

100.0%

Trucking transportation of oil products, high-pressure gas, andrelated products

NICHIYU CO., LTD.

¥ 40 million

100.0%

Sales and leasing of rail vehicle and container accessories, insurance
agencyNew 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 andrelated productsCompany NamePrimary BusinessJapan Oil Transportation Co., Ltd.
WEST BLDG. Gate City Ohsaki
11-1, Ohsaki 1-chome, Shinagawa-ku, Tokyo 141-0032, Japan
Printed in Japan