To our shareholders and investors ?

This is an update on how our business fared during Iino lines’ 121st fiscal term (from April 1, 2011 through September 30, 2011).

In the six months ended September 30, 2011, the risk of an economic downturn, particularly in developed countries, increased further in association with the growing severity of the fiscal crisis in Europe as well concerns about a US economic slowdown. In Japan, the economic situation remains adverse. In addition to the prolonged strength of the yen, deflation and the weak employment situation, there are concerns over the impact of the global economic slowdown and restrictions on power supply. In the Shipping business, freight rates dropped, both due to a downturn in transport volume of petrochemical products and iron ore brought on by the global economic slowdown, as well as the influx of newly-built vessels. In the Real Estate business, office floor vacancy rates remained high, reflecting the challenging domestic economy.

Amid this environment, the Company posted consolidated revenues of \38.1 billion, a consolidated operating loss of \0.4 billion, a consolidated recurring loss of \1.1 billion, and a consolidated net loss of \0.7 billion for the six months ended September 30, 2011. This was on account of the decline in revenues caused by the strong yen and the downturn in market conditions in the Oceangoing Shipping segment, and the posting of expenses incurred for the work carried out on the Iino Building.

This April, we marked out our new medium-term business plan “IEG14” (Iino’s Evolutionary Growth Plan to 2014 ? Growth and Evolution). The first year is critical to realizing the overall aims of the plan, so the Iino Group worked as one to implement the plan’s strategy. The first pillar of IEG14 set forth during this fiscal half is to restructure the Chemical Tanker division. To this end, we redeliver five 19,000 DWT vessels and newly deployed one 25,000DWT vessel and two 33,000DWT vessels in order to increase navigation efficiency and increase the level of profitability. The second pillar of the plan is to reinforce the stable earnings base including the real estate business. On this front, we reopened the Iino Building on October 1, and obtained leases for each office floor. We are also considering new projects aimed at enhancing the stable earnings base. The third pillar of IEG14 is to develop the small- and medium-size vessel business to capture emerging market demand. To achieve this, we are developing businesses, especially in Asia, and considering new projects.

In the third and fourth quarters of the 121st fiscal term, we are expecting some improvement in the business situation. Despite the fact that the strong yen and continued uncertainty in the tanker market will weigh on the Shipping business, the Iino Building will provide stable revenues for our Real Estate business.

As we announced on July 29, 2011, we will unfortunately not be paying an interim dividend this year. In the fiscal third quarter and beyond we expect stable revenues in the Real Estate business, but the Shipping business will be significantly impacted by the strong yen and the outlook for market conditions in the Shipping business is uncertain, and in view of this, our year-end dividend amount remains undecided for the time being.

I would like to express my appreciation for all of your support up until this point. Going forward, we will continue to work hard to meet your expectations and we look forward to your continued support.

Tomoyuki Sekine, President
Iino Kaiun Kaisha, Ltd.(Iino Lines)