ANNUAL R EP O RT 2018Year Ended March 31, 2018

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
I am Shoichiro Hara, the recently appointed President and Representative Director of Japan Oil Transportation.
Before presenting the business report for the 101st term (April 1, 2017 to March 31, 2018), I would like totake this opportunity to thank our shareholders for their support throughout the year.
Going forward, we expect the tone of recovery in the Japanese economy to continue, supported by strong
corporate earnings, but on the other hand there are concerns that the outlook for overseas economies willremain uncertain.
In the logistics industry, challenging conditions are expected to continue due to such factors as the problem oftruck driver shortages and a rise in personnel costs. Furthermore, amidst the outlook for a protracted decreasein domestic demand for oil products, we expect the movement towards consolidation and rationalization of oil
manufacturing companies to have various effects on the JOT Group in the future.
Amid these conditions, the JOT Group has drawn up a medium-term management plan under the slogan “Shiftfor the Next - We fulfill our responsibility to the future with thorough safety and high-quality service,” and will
move ahead with initiatives to achieve the plan’s objectives.
In Fiscal 2018, the first year of the medium-term management
plan, we made satisfactory progress, and in Fiscal 2019 we aim
to continue to work on strengthening profitability, acquiring
new customers in all areas of the transportation business, andmaintaining and expanding our transportation market share.
Moreover, we will take an active approach to capital expenditures
for growth areas such as LNG (liquid natural gas) transportation,hydrogen transportation, and international chemicaltransportation, accelerating our initiatives to expand the business.
In addition, with regard to the problem of truck driver shortages,
we will secure personnel by striving to improve the employment
environment, and generally work to maintain the stability oftransportation operations.
Implementing these initiatives in parallel, we will strive toenhance safety education so as to provide a high-quality service
going forward that customers can use without worry.
I will dedicate all my efforts to the development of the Company’sbusiness, and humbly request the continued support and thegood offices that you showed my predecessor, Kimio Morita.

Shoichiro Hara
President and Representative Director

1

ANNUAL REPORT 2018

August 2018

Results for the 101st term (Consolidated)
With the aim of achieving the objectives of the medium-term management plan, the Company worked tostrengthen profitability by maintaining and expanding its transportation market share, promote growth areas
such as LNG transportation, hydrogen transportation, and international chemical transportation, and improve
productivity through increased collaboration among the JOT Group.
In addition, in terms of safety, we strove to further enhance training facilities related to safety education forGroup companies.
As a result, net sales in the fiscal year under review showed a year-on-year increase of 6.4%, to ¥32,951
million due to strong performance in the respective transportation businesses.
Furthermore, operating income rose by 6.4% year-on-year to ¥1,224 million, ordinary income rose by 0.1%
year-on-year to ¥1,467 million, and profit attributable to owners of parent rose by 2.2% year-on-year to¥1,037 million.

Net Sales

(Millions of yen)

Operating Income
1,150

30,92130,96099th term- Fiscal 2016

100th term
- Fiscal 2017

32,951994

101st term
- Fiscal 2018

99th term- Fiscal 2016

Profit Attributable to Owners(Millions of yen)of Parent
1,014

1,037

Total Assets

16,754

Ordinary Income

1,224

100th term
- Fiscal 2017

101st term
- Fiscal 2018

Net Assets

32,352

17,91999th term- Fiscal 2016

100th term
- Fiscal 2017

101st term
- Fiscal 2018

99th term- Fiscal 2016

1,467

1,467

100th term- Fiscal 2017

101st term
- Fiscal 2018

Dividend Per Share
First six months (Interim period)

34,228

19,163100th term
- Fiscal 2017

101st term
- Fiscal 2018

(Yen)
Year-end

90

60

30
99th term- Fiscal 2016

(Millions of yen)

1,298

Total Assets / Net Assets
(Millions of yen)

30,271

786(Millions of yen)

99th term- Fiscal 2016

80

80

40

40

40

40

100th term
- Fiscal 2017

101st term
- Fiscal 2018*‌Effective October 1, 2016, we undertook a 1-for-10 stock
consolidation, and for dividend calculations before the interim
dividend for the 100th term, we have presented ourcalculations based on the number of shares post-consolidation.
*‌Year-end dividend per share for the 99th term includes a ¥20
commemorative dividend.

ANNUAL REPORT 2018

2Segment overview (consolidated)
Business description

OilTransportation
Business

High-Pressure
Gas
Transportation
Business

Chemical andContainer
Transportation
Business

Other
Business

3

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 truck transportation, which is agile and flexible,
the JOT Group conducts transportation of fuel oils such as
gasoline, diesel, and kerosene.

Net sales - ¥15,740 million

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

Net sales - ¥8,445 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 - ¥8,584 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
solar power plants locatedaround Japan.

ANNUAL REPORT 2018

Operating income - ¥606 million
In the oil transportation business, amid the progressing
consolidation and rationalization of oil manufacturing
companies, we took aggressive steps to maintain and expand
our share of the transportation market, in addition to which
there was a recovery effect from the impact of periodic
refinery maintenance during the previous fiscal year, leading
to increases in both net sales and operating income.
As a result, net sales in the oil transportation business rose by
6.1% year-on-year to ¥15,740 million, and operating income
rose by 12.8% year-on-year to ¥606 million.

Operating income - ¥471 million
In the high-pressure gas transportation business, in addition
to beginning new LNG transportations, growth in hydrogentransportation resulted in higher net sales.
However, due to increases in fuel costs and in personnel andother expenses, operating income declined.
As a result, net sales in the high-pressure gas transportation
business rose by 3.6% year-on-year to ¥8,445 million, andoperating income decreased by 3.3% year-on-year to ¥471million.

Operating income - ¥89 million
In the chemical transportation business, besides the growthof domestic transportation as a result of proactive
development of sales activities, international transportation
was supported by an increase in the number of ISO tankcontainers and efforts in expanding sales channels, resulting
in a net sales increase.
On the other hand, expenses related to investments
increased, and led to a fall in operating income.
In the container transportation business, due to strong
growth in cargo of vegetables from the summer onward, anddue to our acquisition of stable long-term lease contracts,
both net sales and operating income posted increases.
As a result, net sales in the container transportation businessrose by 10.2% year-on-year to ¥8,584 million, and operating
income rose by 13.7% year-on-year to ¥89 million.

Net sales - ¥181 million
Operating income - ¥56 million
In the solar power generation business, net sales rose by
0.5% year-on-year to ¥181 million, and operating income
rose by 22.7% year-on-year to ¥56 million due to smooth
operation of the solar power plants.

TOPICS & COLUMNInternational transportation business : Topics for Fiscal 2018
∙ Establishment of the Singapore branch

The JOT Group’s international transportation business has grown satisfactorily since we began full-scale operations in October 2013.
In April 2015 we established a representative office in Singapore for the purpose of collecting information, such as market research.
Furthermore, with the aim of further expanding the international transportation business, we have upgraded this representative office to abranch office, and have been shifting to full-scale activities there since April 2018.
By enabling not only information collection, but also local sales activities, we have prepared an environment in which we can focus on
expanding sales channels.

∙ Additional launch of ISO tank containers

In the international transportation business, in order to handle the number of items dispatched, which rises every year, we are continually
manufacturing new containers, and we launched 500 units in Fiscal 2018. As a result of this, the number of ISO tank containers for use in theinternational transportation business exceeded 1,600 units.
On this occasion, in order to differentiate our newly manufactured containers from those of competitors, we made the insulation that covers
the tank body thicker than that of existing containers in order to reduce the heating time and cut costs, in addition to which we fitted lids tothe loading and unloading valves to improve insulation performance.
Also, as an initiative to improve safety, we increased the surface area of the walkway fixed to the upper section of the container relative tothat of existing containers, changing the specification to one that takes into account safety during loading and unloading operations.
Making full use of the establishment of the Singapore branch, and the containers with improved performance and safety characteristics, wewill devote all our energies to further expanding the business platform.

Upper section of existing container

Upper section of container newly manufactured on this occasion

Introduction to domestic oil transportation business (rail transportation)
Here we will take a look at domestic rail tank car transportation, a business that has continued since the establishment of the Company.
Crude oil that is imported to Japan from overseas by ship is refined at refineries located along the coasts, and becomes various kinds ofpetroleum products.
Our rail tank cars are responsible mainly for transportation between refineries and the oil tanks spread throughout the country as storage points for
petroleum products.
The advantage of rail transportation lies in the high volume transported and the low number of personnel required, and the JOT Group has
continued to prioritize research and development in order to make rail tank cars larger and faster to increase the amount of producttransported.
The rail tank car in use at the time of the establishment of the Company had a top speed of around 60 km/h and a small body that held less than
30,000 L of gasoline.
As a result of the progress made in technology, research, and development since that time, in 1993, the 47th year after the establishment ofthe Company, we succeeded in developing what is now the mainstream TAKI 1000-series of freight cars.
In addition to running at a maximum of 95 km/h, this model can hold around 60,000 L of gasoline per train car.
If we assume that the average vehicle has a tank capacity of 50 L, 10 train cars of this model can fill up tanks of more than 10,000 vehicles.
As for the number of personnel required, the amount carried by around 30 tanker trucks can be transported by one train driver.
As a result of the spread of fuel-efficient vehicles, and the progress of the conversion to alternate fuels, demand for oil is decreasing year byyear, however the JOT Group will utilize both rail and truck transportation to contribute to the stable supply of the petroleum products thatare indispensable to our lives.

The rail tank car used at the time of the establishment of the Company

The current mainstay rail tank car

ANNUAL REPORT 20184

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
OtherTotal 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, 2018 and 2017

2017

2018

2018

¥ 2,311
3,541
50
293
390
6,587

¥ 2,856
3,922
38
339
571
7,727

$
26.9
36.9
0.4
3.2
5.4
72.7

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

20,316
1,869
3,846
3,052
5,486
5,917
59
84
62
60
2
6,121
5,201
45
411
463
26,501¥
34,228

191.2
17.6
36.2
28.7
51.6
55.7
0.6
0.8
0.6
0.6
0.0
57.6
49.0
0.4
3.9
4.4
249.4
$ 322.2
Millions of
U.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
OtherTotal current liabilities
Long-term liabilities:
Lease obligations
Deferred tax liabilities
Reserve for vehicle repairs
Net defined benefit liability
OtherTotal 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 2018201720182018¥ 1,938
407
1,454
655
307
648
92
752
6,259

¥ 2,033
433
1,531
576
332
707
84
990
6,690

$
19.1
4.1
14.4
5.4
3.1
6.7
0.8
9.3
63.0

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

4,433
695
244
2,566
434
8,374
¥15,065

41.7
6.5
2.3
24.2
4.1
78.8
$ 141.8

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

17,762
1,661
290
15,845
(35)
1,400
1,497
(3)
(93)
19,163¥
34,228

167.2
15.6
2.7
149.1
(0.3)
13.2
14.1
(0.0)
(0.9)
180.4
$ 322.2

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
OtherOrdinary 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

2017

2018

2018

¥
30,96027,863
3,096
1,946
1,150
525
0
93
235
113
20
61
208
69
81
45
11
1,467
76
47
1,495
546
(65)
1,014
—
¥
1,014

¥
32,951
29,797
3,154
1,930
1,224
500
0
98
256
62
26
57
257
73
91
51
40
1,467
269
45
1,692
590
64
1,037
—
¥
1,037

$
310.2
280.5
29.7
18.2
11.5
4.7
0.0
0.9
2.4
0.6
0.3
0.5
2.4
0.7
0.9
0.5
0.4
13.82.50.4
15.9
5.6
0.6
9.8—$
9.8

CONSOLIDATED STATEMENTS OF CASH FLOWSMillions ofU.S. dollars

Millions of yen

Years ended March 31, 2018 and 2017

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, 2018 and 2017201720182018¥ 4,115(2,356)(1,327)3433
1,878¥ 2,311¥ 4,223(2,979)
(691)
(8)
544
2,311
¥ 2,856$
39.8(28.0)
(6.5)
(0.1)
5.1
21.8$
26.9

Note: The approximate exchange rate in effect on March 31, 2018 was ¥106.24 = U.S. $1.

ANNUAL REPORT 20186

Corporate Information

Company Profile (As of March 31, 2018)
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: 1,451 (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, 2018)
Paid-inCapital

EquityOwnership

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 Name

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