MUTOH HOLDINGS CO.,LTD.

■Message to Shareholders

We would like to express our sincerest gratitude to all of the shareholders who have continued to support us.

We hereby present our 64th (Fiscal Year 2012) 1st Half Financial Report, covering the MUTOH Group's business performance and activities.

■Business Situation and Outcomes

Looking at the economic environment during the first half of the current consolidated fiscal year, there are concerns regarding the economic outlook due to factors such as the prolonged financial instability in Europe, a slowdown in the growth of emerging Asian countries that have driven the global economy, and weak performance by Japanese exporters due to protracted yen appreciation.

Against this background, in our Imaging and Information Equipment Business we have introduced the "ValueCut Series" as new global strategic models for cutting plotters in the signage industry. In addition to use as a cutting plotter in isolation, the "ValueCut Series" can also be used in combination with the large-format inkjet printer "ValueJet Series" to support professional user needs as a low-priced, high-performance print and cut system. Moreover, we have also worked to strengthen our product lineup going into the second half of the fiscal year, through efforts including the development of the "RJ-900X Series," as successor models for the CAD inkjet plotter "RJ-900 Series." The new models achieve up to 25% higher speeds than previous models.

In terms of business performance, for our core Imaging and Information Equipment Business, the business environment has been difficult due to factors including the economic climate in Japan, Europe, and North America, which has yet to fully recover; a decline in OEM production; and the adverse impact of significant yen appreciation on exchange rates. In the Real-Estate Leasing Business, accompanying the departure of tenants from the Head Office Building, earnings decreased as use of the Head Office Building was switched to internal use by the Group for the purposes of improving administrative efficiency and accelerating decision making within the building.

Looking at the consolidated business performance for the first half of the current fiscal year emerging from these circumstances, net sales stood at ¥8,690 million (down 17.9% year on year) and operating income came to ¥34 million (down 92.6% year on year) as cost reduction measures were not sufficient to absorb the drop in sales. Meanwhile, due to the posting of exchange losses of ¥299 million as a result of yen appreciation, an ordinary loss of ¥187 million (compared with ordinary income of ¥680 million in the same period last year) and a net loss of ¥317 million (compared with a net loss of ¥297 million in the same period last year) were incurred.

During the second half of the fiscal year the MUTOH Group will deploy an aggressive business strategy aimed at the recovery of business performance.
We greatly appreciate your support and ask for your continued assistance and cooperation.