We trust this finds all our shareholders in good health, and we thank you for your ongoing support.

The cumulative second quarter of our 120th business term (for the financial year April 1, 2011 through March 31, 2012) completed as of September 30, 2011 and we hereby inform you of our semiannual business overview.

Although production activities are beginning to recover from the stagnant condition following the Great East Japan Earthquake, the Japanese economy during the cumulative second quarter still remains unclear due to a global slowdown, continuing strong yen, shortage of power supply, and financial insecurity in Europe.

In the metal recycling industry, the price of gold set a record high in September, almost 31 years since 1980, due to a record high value in the overseas market which outweighed a record high yen value against dollar. Despite the plunge in the overseas market, the value stayed strong as a whole.

In our mainstay Precious Metal Business Division, sales reinforcement efforts have borne fruit in the commercial and jewelry sections. However, production and sales decreased in the manufacturing section because we could not acquire sufficient amounts of raw materials for refinement as planned, and sales amounted to 14,720 million yen, down by 81 million yen on a year-on-year basis.

In our Real Estate Business Division, the business remains in a severe condition due to the increasing vacancy rate of office buildings and commercial facilities in the major cities. However, due to tax breaks such as reduction in income tax for new homeowners, business remained stable without any significant changes and the sales amounted to 83 million yen, up by 58 million yen on a year-on-year basis.

In our Machinery Business Division, orders received in Japan for machine tools remain sluggish despite the slow business recovery due to economic expansion in the emerging countries in the Asian region and progress in inventory adjustment. However, because of our efforts in purchasing secondhand machinery, the sales amounted to 936 million yen, up by 97 million yen on a year-on-year basis.

In our Investment Business Division, we could not post sales figures as we posted operating losses.

As a result, the consolidated net sales amounted to 15,741 million yen, down by 240 million yen on a year-on-year basis.

Although we incurred an operating profit in our Precious Metal Business Division, because our Real Estate Business Division, Machinery Business Division, and Investment Business Division ended in heavy deficits, the consolidated operating loss was 770 million yen (compared to 70 million yen profit in the same period last year).

Non-operating income including interest earned was 11 million yen, however, with non-operating expenditure including interests paid was 42 million yen, we posted a consolidated recurring loss of 801 million yen (compared to 43 million yen profit in the same period last year).
During the second quarter, we posted an extraordinary profit of 15 million yen, including reversal of provision for loss on guarantees; on the other hand, we posted an extraordinary loss of 122 million yen including 15 million yen provision of allowance for doubtful accounts, 104 million yen loss from impairment, and 2 million yen loss on retirement of fixed assets. We thus recorded a net loss of 857 million yen (compared to 270 million yen loss in the same period last year).
We regret having to inform our shareholders that we will therefore have to forgo the interim dividend.

We look to our shareholders for their ongoing support.

Michiaki Ando
CEO and Representative Director