FINANCIAL SECTION
54

Ten-Year Summary and Business Highlights

56

Consolidated Balance Sheet

58

Consolidated Statement of Income

59	
Consolidated Statement of Comprehensive Income
60

Consolidated Statement of Changes in Equity

61

Consolidated Statement of Cash Flows

62

Notes to Consolidated Financial Statements

83

Independent Auditor’s Report

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

53

FINANCIAL SECTION

Ten-Year Summary and Business Highlights

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

RESULTS OF OPERATIONS:
Operating revenues¥1,251,922 ¥1,200,834 ¥1,236,520 ¥1,260,833 ¥1,282,374 ¥1,374,610 ¥1,396,708

Delivery

997,898

966,480

995,651

1,014,564

1,028,219

1,099,400

1,101,439

Non-delivery

254,024

234,354240,869

246,269

254,155

275,210295,269

Operating costs

1,167,764

1,110,971

1,143,006

1,163,777

1,181,834

1,274,471

1,290,715

Selling, general and administrative expenses

28,43728,47429,20030,40534,33737,04337,046

Operating profit

55,721

61,38964,314

66,651

66,20363,096

68,947

Profit before income taxes

48,99660,434

61,83645,81764,28465,882

69,158

Income taxes

23,34928,09628,491

26,05929,56331,00331,555

Profit attributable to owners of parent

25,52332,282

33,20819,78735,144

34,77637,533

PER SHARE OF COMMON STOCK:
Basic earnings
Diluted earnings
Cash dividends
Net assets per share
Stock price (closing), end of year¥    57.60 ¥    71.84 ¥    73.42 ¥    46.00 ¥    81.85 ¥    82.22 ¥    90.41
56.45
71.16
73.30
44.87
79.84
80.18
88.26
22.00
22.00
22.00
22.00
23.00
24.00
25.00
1,073.86
1,130.33
1,173.60
1,197.26
1,261.35
1,316.12
1,368.66
927
1,314
1,290
1,279
1,740
2,224
2,772

FINANCIAL POSITION:
Working capital
Total shareholders’ equity
Total assets
Capital expenditures
Depreciation and amortization
Net cash provided by operating activities¥  159,937 ¥  165,890 ¥  185,922 ¥  182,111 ¥  186,868 ¥  179,999 ¥  209,172
475,815
512,910515,602514,996
534,451
551,379
565,521869,606
878,641
899,363919,295
950,153 1,032,134 1,082,531
45,85639,70052,472
48,61548,052
79,53152,022
42,69739,88339,58338,68237,93642,26646,05884,46377,06487,89971,84373,95080,075
92,620

KEY RATIOS:
Operating profit margin (%)

4.45

5.11

5.20

5.29

5.16

4.59

4.94

Net margin (%)

2.04

2.69

2.69

1.57

2.74

2.53

2.69

2.93
5.42
158.00
54.72
1.44
58.57
16.1
0.9

3.69
6.53
159.82
58.38
1.37
88.35
18.3
1.2

3.74
6.46
170.34
57.33
1.39
73.71
17.6
1.1

2.18
3.84
164.50
56.02
1.39
90.52
27.8
1.1

3.76
6.70
162.3956.25
1.37
108.36
21.3
1.4

3.51
6.41
151.8253.42
1.39
153.41
27.0
1.7

3.55
6.75
158.5952.24
1.32
173.4530.7
2.0

170,662
82,601
88,061
1,232
646

167,555
82,39585,1601,262
624

171,642
83,427
88,215
1,348
609

177,301
84,29393,0081,423
600

177,108
84,422
92,6861,487
591

193,146
87,279105,867
1,665
574

197,056
88,247
108,809
1,622
595

2,231
65

2,262
65

2,312
64

2,187
62

2,112
61

2,084
61

1,901
61

Return on assets (ROA) (%)
Return on equity (ROE) (%)
Current ratio (%)
Shareholders’ equity ratio (%)
Assets turnover (Times)
Interest coverage ratio (Times)
Price earnings ratio (PER) (Times)
Price book-value ratio (PBR) (Times)
NON-FINANCIAL DATA:
Number of employees
Full-timePart-time
TA-Q-BIN delivery volume (Millions of parcels)
Unit price (Yen)
Kuroneko DM-Bin handling volume(Millions of units)
Unit price (Yen)

Foreign currency translation: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥106.24 to U.S.$1.
Note: On March 31, 2015, we ceased accepting items for Kuroneko Mail and from April 1 launched Kuroneko DM-Bin.

54

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

2016/3

2017/3

Millions of Yen
2018/3Thousands of
U.S. Dollars

Analysis of Operating Revenues

2018/3(¥ billion)

1,466.8

FY17/3¥1,416,413 ¥1,466,852 ¥1,538,813$14,484,313

1,111,867

1,151,028

1,201,745

11,311,609

304,546

315,824

337,068

3,172,704

BIZ-Logistics

1,306,200

1,385,492

1,452,485

13,671,742

Home Convenience (0.2)

41,673

46,47550,642476,675

68,54034,88535,686

335,896

68,07933,03833,123

311,779

Financial

28,415

14,673

14,435

135,873

Autoworks +0.0

39,42518,054

18,232

171,610

Yen

+50.7

Delivery

+13.2

+0.8

e-Business

+4.9

+2.3

Other

U.S. Dollars

1,538.8

FY18/3¥    96.45 ¥    45.37 ¥    46.24
95.64
—
—
28.00
27.00
27.00
1,349.56
1,367.51
1,395.74
2,247
2,332.5
2,668.5
Millions of Yen¥  235,884 ¥  214,661 ¥  183,844
537,821539,179
550,3081,089,437
1,114,672
1,115,434
53,94548,99454,482
46,73946,114
46,42349,71573,32551,728

$

0.44
—
0.25
13.14
—
Thousands of
U.S. Dollars$ 1,730,453
5,179,852
10,499,187
512,821436,968
486,899

YoY +71.9

Analysis of Operating Profit(¥ billion)

34.8

FY17/3+71.9

Revenue

Subcontracting
expenses+38.8

Vehicleexpenses

4.84

2.38

2.32

2.78

1.23

1.18

3.63
7.15
167.7649.37
1.30
125.33
23.3
1.7

1.64
3.35
157.73
48.37
1.33
81.45
51.4
1.7

1.64
3.35
146.5449.34
1.38
131.9457.7
1.9

196,582
89,112
107,470
1,731
578

201,784
90,737
111,047
1,867
559

213,096
93,534
119,562
1,836
597

1,536
57

1,542
55

1,464
56

+17.5

Personnel expenses

+19.1

Other
Consolidation
journal entries

+2.6

(6.9)
35.6

FY18/3

YoY +0.8

Quarterly YoY Growth Rates of TA-Q-BIN Delivery Volume
and Unit Price
(%)
20
15
10
5
0
(5)
(10)

1Q

2Q

3Q

4Q

1Q

2016/3TA-Q-BIN Delivery Volume Growth Rate
TA-Q-BIN Unit Price Growth Rate

2Q

3Q

2017/3

4Q

1Q

2Q

3Q

4Q

2018/3

Delivery Volume:YoY (1.7)%
Unit Price:
YoY +6.8%

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

55

FINANCIAL SECTION

Consolidated Balance Sheet
March 31, 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen

ASSETS

2018

2017

2018

¥ 204,422¥ 230,129$ 1,924,157  Trade224,099

208,1312,109,367   Installment (Note 3)

46,693

46,142439,504   Lease (Note 12)52,64250,777495,498   Allowance for doubtful accounts(1,365)(1,283)(12,849)

Inventories (Note 4)

2,816

2,775

26,505

Deferred tax assets (Note 11)

19,246

20,684

181,150

Prepaid expenses and other current assets

30,32829,155285,469    Total current assets

578,881586,510

5,448,801

PROPERTY, PLANT AND EQUIPMENT—At cost:
Land
Buildings and structures
Vehicles174,960
336,986
197,587

178,621341,134
194,073

1,646,836
3,171,934
1,859,819

128,454
15,67016,201

123,569
16,44911,7491,209,095
147,492
152,492

CURRENT ASSETS:
Cash and cash equivalents (Notes 2.d and 13)
Notes and accounts receivable (Note 13):

Machinery and equipment
Leased assets (Note 12)
Construction in progress
Others28,49023,492

268,165    Total

898,348

889,087

8,455,833(493,290)(484,017)(4,643,165)

405,058

405,070

3,812,668

36,23232,588341,038

25,293
1,167
17,26017,391
28,341

22,086968
18,14916,232
26,643

238,079
10,986
162,459
163,700
266,760

5,811

6,426

54,696

Accumulated depreciation     Net property, plant and equipment

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 5 and 13) Investments in and advances to unconsolidated subsidiaries and affiliates,
net of valuation allowance of ¥127 million ($1,193 thousand) in 2018 (Note 13)
Long-term loans
SoftwareLease deposits
Deferred tax assets (Note 11)
Other assets (Notes 2.k and 8)     Total investments and other assets
TOTAL
See notes to consolidated financial statements.

56

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

131,495

123,092

1,237,718¥1,115,434¥1,114,672$10,499,187

Thousands of
U.S. Dollars(Note 1)Millions of Yen

LIABILITIES AND EQUITY

2017

2018

2018

CURRENT LIABILITIES:
Short-term bank loans (Notes 7 and 13)

20,098$ 313,935

45,84043,304431,472  Trade155,324

155,736

1,462,009  Other

19,992

8,680

188,175

Income taxes payable

11,02014,400103,727

Accrued expenses

75,10068,166

706,888

Deferred profit on installment sales (Notes 3 and 13)

5,900

6,010

55,539Current portion of long-term debt (Notes 7, 13 and 14)¥

33,352¥

Notes and accounts payable (Note 13):

Provision for special wage payments (Note 2.j)Other current liabilities (Notes 9 and 11)    Total current liabilities

15,12948,50940,326456,603

395,037

371,849

3,718,348

LONG-TERM LIABILITIES:Long-term debt (Notes 7, 13 and 14)

73,849114,767

695,114

Liability for employees’ retirement benefits (Notes 2.k and 8)

75,49570,952

710,611

Deferred tax liabilities (Note 11)

4,651

3,162

43,771Other long-term liabilities (Note 9)

8,815

8,383

82,972

162,810

197,264

1,532,468

Common stock—authorized, 1,787,541,000 shares in 2018 and 2017;
issued, 411,339,992 shares in 2018 and 2017

127,235

127,235

1,197,617

Capital surplus

36,81336,813

346,509

Retained earnings

416,855

409,271

3,923,710

Treasury stock—at cost, 1
 7,064,197 shares in 2018 and
17,062,391 shares in 2017

(39,081)(39,078)(367,861)   Unrealized gain on available-for-sale securities

12,95910,975

121,975   Foreign currency translation adjustments

1,146

(423)

10,790   Remeasurements of defined employees’ retirement benefit plans (Notes 2.k and 8)(5,619)(5,614)(52,888)

550,308

539,179

5,179,852

7,279

6,380

68,519    Total long-term liabilities
COMMITMENTS LIABILITIES (Note 12)
EQUITY (Notes 10 and 18):

Accumulated other comprehensive income:    Total
Non-controlling interests    Total equity
TOTAL

557,587545,559

5,248,371¥1,115,434¥1,114,672$10,499,187

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

57

FINANCIAL SECTION

Consolidated Statement of Income
Year Ended March 31, 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen

OPERATING REVENUES

2018

2017

2018

¥1,538,813¥1,466,852$14,484,313

1,452,485

1,385,492

13,671,742

50,642

46,475

476,675

1,503,127

1,431,967

14,148,417

35,68634,885335,896

OPERATING COSTS AND EXPENSES:
Operating costs
Selling, general and administrative expenses   Total operating costs and expenses  Operating profit
OTHER INCOME (EXPENSES):Interest and dividend income

981

847

9,232

Interest expense

(272)

(430)

(2,556)

Loss on sales and disposal of property, plant and equipment—net(1,042)(66)(9,806)

Loss on impairment of long-lived assets (Note 6)(3,241)(1,284)(30,507)

Gain on sales of marketable and investment securities (Note 5)

1,639

600

15,428Loss on valuation of investment securities (Note 5)

(1)

(1)

(9)

Loss on valuation of investment in unconsolidated subsidiaries and affiliates

(55)

(209)

(514)

(1,355)(799)(12,758)

Share of loss of entities accounted for using equity method
Provision of allowance for investment loss of unconsolidated subsidiaries(127)

Provision of allowance for doubtful accounts(136)(1,193)(1,284)

Disaster recovery expenses for the Kumamoto Earthquake(886)

Other—net

1,046

381

9,850

  Other expenses—net(2,563)(1,847)(24,117)

PROFIT BEFORE INCOME TAXES

33,12333,038311,779

Current

14,62222,094

137,628

Deferred(187)(7,421)(1,755)   Total income taxes

14,435

14,673

135,873

PROFIT

18,68818,365

175,906

INCOME TAXES (Note 11):

PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTSPROFIT ATTRIBUTABLE TO OWNERS OF PARENT

311

456
¥

18,232¥

18,054

4,296$

171,610
U.S. Dollars(Note 1)

Yen
2018

2017

Basic earnings¥46.24¥45.37$0.44

Cash dividends applicable to the year

27.00

27.00

0.25

2018

PER SHARE OF COMMON STOCK (Notes 2.r and 16):

See notes to consolidated financial statements.

58

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen

PROFIT2018

2017¥18,688¥18,365$175,906

2018

OTHER COMPREHENSIVE INCOME (Note 15):
Unrealized gain on available-for-sale securities

2,514

1,269

23,665

Foreign currency translation adjustments

1,569(1,174)

14,773

1

4,456

5

1

(2)

Remeasurements of defined employees’ retirement benefit plans
Share of other comprehensive income of entities accounted for using equity method   Total other comprehensive income
COMPREHENSIVE INCOME

4,084

4,552

38,441¥22,772¥22,917$214,347¥21,780¥22,519$205,007

992

398

9,340

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of parent
Non-controlling interests
See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

59

FINANCIAL SECTION

Consolidated Statement of Changes in Equity
Year Ended March 31, 2018

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE,APRIL 1, 2016

Outstanding
Number of
Shares ofCommon Stock

Common Stock398,516¥127,235

Capital Surplus Retained Earnings Treasury Stock¥36,813¥402,376¥(29,076)

Remeasurements
Unrealizedof Defined
Foreign Currency
Employees’Gain onAvailable-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans¥ 9,790¥  751¥(10,068)

Non-controlling
Interests

Total¥537,821¥6,034

Total Equity¥543,855 Profit attributable toowners of parent

18,05418,05418,054 Cash dividends,¥28 per share(11,159)(11,159)(11,159)(10,002)(10,002) Purchase oftreasury stock(4,239) Disposal oftreasury stock

1(10,002)

Net change in the year
BALANCE,MARCH 31, 2017394,278

127,235

36,813409,271(39,078)

1,185(1,174)

4,454

4,465

346

4,811

10,975(423)(5,614)539,1796,380

545,559 Profit attributable toowners of parent

18,232

18,232

18,232 Cash dividends,¥27 per share(10,646)(10,646)(10,646)

(2)

(2)

(2)

(4)

(4)

 Adjustment of retained
earnings for changes
in the scope of equity
method Purchase oftreasury stock

(2)

(4)

 Disposal oftreasury stock

1

Net change in the year
BALANCE,MARCH 31, 2018394,276¥127,235¥36,813¥416,855¥(39,081)

1

1

1,984

1,569

(5)

3,548

899

4,447

¥12,959¥ 1,146¥ (5,619)¥550,308¥7,279¥557,587

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income

Common Stock

BALANCE,MARCH 31, 2017

$1,197,617

Capital Surplus Retained Earnings Treasury Stock$346,509$3,852,323$(367,821)

Remeasurements
Unrealizedof Defined
Foreign Currency
Employees’Gain onAvailable-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans$103,305$ (3,981)

Non-controlling
Interests

Total$(52,844) $5,075,108$60,050

Total Equity$5,135,158 Profit attributable toowners of parent

171,610

171,610

171,610 Cash dividends,$0.25 per share(100,202)(100,202)(100,202)

(21)

(21)

(21)

(40)

(40)

 Adjustment of retained
earnings for changes
in the scope of equity
method Purchase oftreasury stock(40) Disposal oftreasury stock
Net change in the year
BALANCE,MARCH 31, 2018

$1,197,617

See notes to consolidated financial statements.

60

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

$346,509$3,923,710$(367,861)

18,67014,771$121,975$10,790(44)

33,397

8,469

41,866$(52,888) $5,179,852$68,519$5,248,371

Consolidated Statement of Cash Flows
Year Ended March 31, 2018

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2017

2018

2018

OPERATING ACTIVITIES:Profit before income taxes¥ 33,123¥ 33,038$  311,779  Income taxes—paid(12,866)(32,138)(121,105)   Depreciation and amortization

46,435

46,126

437,078   Loss on sales and disposal of property, plant and equipment—net

1,042

66

9,806

   Loss on impairment of long-lived assets

3,241

1,284

30,507   Gain on sales of marketable and investment securities(15,428)

Adjustments for:(1,639)(600)   Loss on valuation of investment securities

1

1

9

   Loss on valuation of investment in unconsolidated subsidiaries and affiliates

55

209

514

1,355

799

12,758(176,717)   Share of loss of entities accounted for using equity method   Changes in assets and liabilities:    Increase in notes and accounts receivable(18,774)(15,594)   Decrease in inventories

227

20

2,141

    (Decrease) increase in notes and accounts payable

(478)

7,454

(4,498)    (Decrease) increase in provision for special wage payments(15,129)

15,129(142,407)    Increase in liability for employees’ retirement benefits

2,232

1,898

21,012  Other—net

12,903

15,633

121,450   Total adjustments

18,60540,287

175,120    Net cash provided by operating activities

51,72873,325486,899

6,632

1,874

62,421INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment(36,671)(43,987)(345,175)

Proceeds from sales of marketable and investment securities

2,672

1,600

25,151

Purchases of marketable and investment securities(790)(1,714)(7,435)(4,137)(22,507)(38,940)

Collection of loans

997

1,017

9,390

Payment of loans(1,197)(975)(11,265)

Increase in investments in and advances to unconsolidated subsidiaries and affiliates

Other    Net cash used in investing activities(8,680)(9,308)(81,705)(41,174)(74,000)(387,558)
100,552

FINANCING ACTIVITIES:
Proceeds from (repayments of) short-term debt—net

10,683(5,802)

Proceeds from long-term debt

4,000

43,72037,651

Repayments of long-term debt

(40,876)(35,499)(384,752)

Dividends paid

(10,733)(11,209)(101,023)(4)(10,005)(39)(36,930)(18,778)

313

(883)

2,947

NET DECREASE IN CASH AND CASH EQUIVALENTS(26,063)(20,336)(245,323)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

228,926

249,262

2,154,805

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.d)¥202,863¥228,926$1,909,482

Purchase of treasury stock—net
Other    Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS

17(347,611)

See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

61

FINANCIAL SECTION

Notes to Consolidated Financial Statements
Year Ended March 31, 2018

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act and its related accounting regulations, and in accordance with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the applicationand disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to
the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications and rearrangements have been made in the 2017 consolidated
financial statements to conform them to the classifications and presentations used in 2018.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yamato
Holdings Co., Ltd. (the “Company”) is incorporated and operates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of¥106.24 to $1, the approximate rate of exchange at March 31, 2018. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Consolidation—The consolidated financial statements as of March 31, 2018, include the accounts of the Company andits 40 significant (39 in 2017) subsidiaries (together, the “Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able toexercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influence are accounted for by the equity method.
YAMATO (CHINA) CO., LTD. was newly established and is included in the scope of consolidation effective from thefiscal year ended March 31, 2018.
The unconsolidated subsidiaries, whose combined assets, net sales, profit and retained earnings in the aggregate are
not significant to the consolidated financial statements, have not been consolidated with the Company.
There were 16 (14 in 2017) affiliates accounted for by the equity method.
Effective from the fiscal year ended March 31, 2018, the scope of equity method includes SCG YAMATO EXPRESS
CO., LTD. and one other company mainly due to their increased materiality.
Investments in the unconsolidated subsidiaries and several affiliates not accounted for by equity method are stated atcost, less a valuation allowance representing possible losses on the investments that are deemed to be other than temporary. If the equity method of accounting had been applied to the investments in such companies, the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized
profit included in assets resulting from transactions within the Group is also eliminated.
b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—
Under Accounting Standards Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements,” the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events undersimilar circumstances should in principle be unified for the preparation of the consolidated financial statements. However,financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards
or generally accepted accounting principles in the United States of America tentatively may be used for the consolidation
process, except for the following items which should be adjusted in the consolidation process so that profit is accounted
for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costs of R&D; and (d) cancellation of the fair value model accounting for property, plant andequipment and investment properties and incorporation of the cost model accounting.

62

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c. Recognition of Operating Revenues—The Group recognizes freight charge income as operating revenue at the time
when freight has been received from the shipping customer for transportation.
Fees from customers based on installment sales contracts are recognized by the equal installment method.
d. Cash Equivalents—Cash equivalents in the consolidated statement of cash flows are short-term investments that arereadily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents in the consolidated statement of cash flows include time deposits, certificates of deposit, and mutual funds investing in bonds that represent short-term investments, all of which mature or become due within three months of the date of acquisition.
The difference between cash and cash equivalents in the accompanying consolidated balance sheet and cash andcash equivalents in the accompanying consolidated statement of cash flows was as follows:
Thousands of
U.S. Dollars

Millions of Yen
2018

Cash and cash equivalents presented in the consolidated balance sheet
Time deposits due beyond three months
Cash and cash equivalents presented in the consolidated statement of cash flows

2017

2018

¥204,422¥230,129(1,559)(1,203)(14,675)¥202,863¥228,926$1,909,482$1,924,157

e. Inventories—Inventories are stated at the lower of cost determined by the first-in, first-out method or net selling value.
f. Marketable and Investment Securities—Marketable and investment securities are classified and accounted for,depending on management’s intent, as follows: (1) trading securities, which are held for the purpose of earning capitalgains in near term, are reported at fair value, and the related unrealized gains and losses are included in earnings; (2) heldto-maturity debt securities, for which there is a positive intent and ability to hold to maturity, are reported at amortized cost;and (3) available-for-sale securities, which are not classified as either of the aforementioned securities, are reported at fairvalue, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity. The Group
had no trading securities at March 31, 2018 and 2017.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge toincome.
g. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant andequipment excluding leased assets of the Company and its domestic consolidated subsidiaries is computed substantiallyby the declining-balance method, while the straight-line method is applied to buildings acquired on or after April 1, 1998,
and facilities attached to buildings and structures acquired on or after April 1, 2016. Depreciation of leased assets is computed by the straight-line method over the lease period with no residual value carried.
The depreciation of property, plant and equipment of foreign consolidated subsidiaries is computed by the straight-line
method over the estimated useful lives of the assets. The range of useful lives is principally as follows:
Buildings and structures
Vehicles		
Machinery and equipment

7–60 years
2– 7 years
2–20 years

Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
h. Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized
if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected toresult from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
i. Other Assets—Amortization of intangible assets is computed by the straight-line method.
Depreciation of leased assets is computed by the straight-line method over the lease period with no residual value carried.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

63

FINANCIAL SECTION

Notes to Consolidated Financial Statements

j. Provision for Special Wage Payments—The Group conducted investigation during the fiscal year ended March 31,
2017, in order to measure unrecognized working hours. The provision for special wage payments has been recorded on
the basis of the estimated amount of payment with regard to consideration for labor in accordance with the result of theinvestigation.
k. Retirement and Pension Plan—The Company and consolidated subsidiaries mainly have a contributory trusted pension plan and an unfunded retirement benefit plan. In addition, a defined contribution retirement plan was introduced alongwith these defined benefit pension plans.
In calculating the retirement benefit obligations, the straight-line basis is used in determining the amount of the expected
retirement benefit obligations attributed to service performed up to the end of the current fiscal year.
Past service costs are recognized in profit or loss in full in the fiscal year in which it arises. Actuarial gains and losses
are amortized on a straight-line basis over five years within the average remaining service period of the eligible employees
on and after the fiscal year following the fiscal year in which it arises.
Actuarial gains and losses are recognized within equity on the consolidated balance sheet after adjusting for tax effects,
and funded status is recognized as a liability or asset.
l. Asset Retirement Obligations—An asset retirement obligation is recorded for a legal obligation imposed either by law orcontract that results from the acquisition, construction, development, and normal operation of a tangible fixed asset and isassociated with the retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred,
the liability should be recognized when a reasonable estimate of the asset retirement obligation can be made. Upon initialrecognition of a liability for an asset retirement obligation, an asset retirement cost is capitalized by increasing the carrying
amount of the related fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to
expense through depreciation over the remaining useful life of the asset. Over time, the liability is accreted to its present
value each period. Any subsequent revisions to the timing or the amount of the original estimate of undiscounted cash
flows are reflected as reconciliation to the carrying amount of the liability and the capitalized amount of the related asset
retirement cost.
m. Leases—For a lessee, all finance lease transactions are capitalized to recognize lease assets and lease obligations in
the balance sheet.
For a lessor, all finance leases that deem to transfer ownership of the leased property to the lessee are recognized aslease receivables, and all finance leases that deem not to transfer ownership of the leased property to the lessee are recognized as investments in leases.
n. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated
statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets
and liabilities. Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.
o. Foreign Currency Transactions—All short and long-term monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange rates at the balance sheet date.
p. Derivative Financial Instruments—The Company and certain consolidated subsidiaries use derivative financial instruments to manage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the Company and theconsolidated subsidiaries to reduce interest rate risks. The Group has a policy not to enter into derivatives for trading or
speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured atmarket value but the differential paid or received under the swap agreements is recognized and included in interest
expense or income.

64

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Integrated Report 2018

q. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries aretranslated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences arising from such translation are shown as “Foreign currency translation adjustments” under accumulated other comprehensive income in a separate component of equity.
Revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rates as of the balance sheet date.
r. Per Share Information—Basic earnings per share is computed by dividing profit attributable to common shareholders
by the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits.
Diluted earnings per share reflects the potential dilution that could occur if securities were exercised or converted into
common stock. Diluted earnings per share of common stock assumes full conversion of the outstanding convertible notes
and bonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest
expense, net of tax, and full exercise of outstanding warrants.
For the years ended March 31, 2018 and 2017, diluted earnings per share is not disclosed because the Company had
no dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicableto the respective fiscal years, including dividends to be paid after the end of the year.
s. Accounting Changes and Error Corrections—Under ASBJ Statement No. 24, “Accounting Standard for Accounting
Changes and Error Corrections,” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting Changes
and Error Corrections,” accounting treatments are required as follows:(1) Changes in Accounting Policies—When a new accounting policy is applied following revision of an accounting standard, the new policy is applied retrospectively unless the revised accounting standard includes specific transitional provisions, in which case the entity shall comply with the specific transitional provisions. (2) Changes in Presentation—When thepresentation of financial statements is changed, prior-period financial statements are reclassified in accordance with thenew presentation. (3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in the
period of the change if the change affects that period only, and is accounted for prospectively if the change affects both theperiod of the change and future periods. (4) Corrections of Prior-Period Errors—When an error in prior-period financial
statements is discovered, those statements are restated.
t. New Accounting Pronouncements
Tax Effect Accounting—In February 2018, the ASBJ revised ASBJ Guidance No. 28, “Implementation Guidance on Tax
Effect Accounting,” and ASBJ Guidance No. 26, “Implementation Guidance on Recoverability of Deferred Tax Assets.”
The guidance has been revised mainly for accounting treatment of future taxable amount of stocks of subsidiaries, etc.
in individual financial statements and recoverability of deferred tax assets in companies corresponding to (Category 1).
The guidance will be applied from the beginning of the fiscal year that begins on or after April 1, 2018.
The Company is now in the process of measuring the effect of applying the guidance.
Accounting Standards for Revenue Recognition—In March 2018, the ASBJ issued ASBJ Statement No. 29,“Accounting Standard for Revenue Recognition,” and ASBJ Guidance No. 30, “Implementation Guidance on AccountingStandard for Revenue Recognition.” An entity should recognize revenue by applying the following steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The accounting standard and guidance will be applied from the beginning of the fiscal year that begins on or after
April 1, 2021.
The Company is now in the process of measuring the effect of applying the accounting standard and guidance.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

65

FINANCIAL SECTION

Notes to Consolidated Financial Statements

3. INSTALLMENT RECEIVABLES
Sales recorded on the installment basis were 0.3% of operating revenues in both 2018 and 2017.
Annual maturities of installment receivables at March 31, 2018, and related amortization of deferred profit on installment
sales are as follows:
Millions of Yen
Year Ending March 31

Receivables

Thousands of U.S. Dollars

Deferred Profit on
Installment Sales

Receivables

Deferred Profit on
Installment Sales

2019¥23,306¥2,314$219,369$21,7812020

11,448

1,624

107,756

15,286

2021

6,404

985

60,278

9,268

2022

3,195

522

30,073

4,919

2023

1,524

276

14,345

2,595

816

179

7,683

1,690

¥46,693¥5,900$439,504$55,5392024 and thereafter
Total

4. INVENTORIESInventories at March 31, 2018 and 2017, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Merchandise

2018

2017

2018

¥  750¥  740$ 7,057

146

216

1,380

Work in process
Raw materials and supplies

1,920

1,819

18,068

Total¥2,816¥2,775$26,505

5. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2018 and 2017, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2018

2017

¥34,218¥31,350$322,079

1,210

743

11,393

804

495

7,566

¥36,232¥32,588$341,038

2018

Non-current:
Marketable equity securities
Non-marketable equity securities
Other
Total

Information regarding each category of the securities classified as available-for-sale at March 31, 2018 and 2017, is as follows:
Millions of Yen
2018
Cost

Unrealized Gains

Unrealized Losses¥19,426¥6

Fair Value

Securities classified as:
Available-for-sale: Equity securities¥14,798¥34,218

Millions of Yen
2017
Cost

Unrealized Gains

Unrealized Losses¥15,540¥5Fair Value

Securities classified as:
Available-for-sale: Equity securities¥15,815¥31,350

Thousands of U.S. Dollars
2018
Cost

Unrealized Gains

Unrealized Losses$182,851$60

Fair Value

Securities classified as:
Available-for-sale: Equity securities

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YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

$139,288$322,079

Information for available-for-sale securities, which were sold during the years ended March 31, 2018 and 2017, is asfollows:
Millions of Yen
March 31, 2018

Available-for-sale:
Equity securities
Other
Total

Proceeds

Realized Gains

Realized Losses¥2,672¥1,639¥—¥2,672¥1,639¥—¥1,543¥600¥—

March 31, 2017

Available-for-sale: Equity securities

Thousands of U.S. Dollars
March 31, 2018

Available-for-sale:
Equity securities
Other
Total

Proceeds

Realized Gains

Realized Losses$25,151$15,428$—$25,151$15,428$—

Loss on valuation of available-for-sale equity securities for the year ended March 31, 2018 and 2017, were ¥1 million($9 thousand) and ¥1 million, respectively.

6. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of the years ended March 31, 2018 and 2017. As a result, theGroup recognized an impairment loss of ¥3,241 million ($30,507 thousand) as other expense for the asset groups of the
Miyagi Regional Branch of Yamato Transport Co., Ltd. and fourteen other asset groups for the year ended March 31, 2018,and ¥1,284 million as other expense for the asset groups of the Aomori Regional Branch of Yamato Transport Co., Ltd.
and nine other asset groups for the year ended March 31, 2017, due to continuous operating losses of those units or significant declines in market prices. The carrying amounts of the relevant asset groups were written down to their recoverable
amounts. In the case where the net selling prices were used as recoverable amounts, the relevant asset groups were evaluated mainly based on Real Estate Appraisal Standards, assessed value of fixed assets, and posted land prices. In thecase where the recoverable amounts were measured at its value in use, the discount rate used for computation of present
value of future cash flows was 5.26%.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

67

FINANCIAL SECTION

Notes to Consolidated Financial Statements

7. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans consisted of notes to banks at March 31, 2018, and notes to banks and bank overdrafts at March
31, 2017. The weighted-average interest rates applicable to the bank loans as of March 31, 2018 and 2017, were approximately 0.134% and 0.103%, respectively.
Long-term debt at March 31, 2018 and 2017, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2017

2018

0.010% to 0.299% loans from banks due 2018 to 2022

2018

¥ 93,900

0.010% to 0.430% loans from banks due 2017 to 2022$  883,847¥130,776

Lease obligations

5,789

7,295

54,485

Unsecured 0.050% bonds due in March 201910,00010,00094,127

Unsecured 0.090% bonds due in March 2021
Total
Less current portion

10,00010,00094,127

119,689

158,071

1,126,586(45,840)(43,304)(431,472)¥ 73,849¥114,767$  695,114

Millions of Yen

Thousands of
U.S. Dollars

2019¥ 45,840$  431,472

2020

42,541

400,4272021

16,452

154,860

2022

14,408135,613

2023

168

1,579

Total

Annual maturities of long-term debt at March 31, 2018, are as follows:Year Ending March 312024 and thereafter
Total

280

2,635

¥119,689$1,126,586

8. RETIREMENT AND PENSION PLANS
The Group has defined benefit pension plans and defined contribution retirement plans for employees.
The defined benefit pension plans provide, under most circumstances, that employees terminating their employment
are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service, andcertain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company
or from the consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if thetermination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain
specific ages exceeding the standard retirement age.
(1) Defined Benefit Pension Plans
The changes in defined benefit obligation for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2018

Balance at beginning of year

¥153,513$1,490,788

Service cost

12,221

11,520115,033

Interest cost

151

147

1,423

5,884

(49)

55,383

Actuarial loss (gain) arising during the year
Retirement benefits paid
Balance at end of year

68

2018

¥158,382

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

(6,985)(6,749)(65,742)¥169,653¥158,382$1,596,885

The changes in plan assets for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year

2018

2017

¥87,547¥82,016

Expected return on plan assets
Actuarial gain arising during the year2018

$824,047

875

820

8,240

3,565

2,486

33,552Contributions from the employer

4,343

4,313

40,882Retirement benefits paid

(2,043)(2,088)(19,232)¥94,287¥87,547$887,489

Balance at end of year

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2018

Defined benefit obligation of funded plan2018

¥ 64,355¥ 61,358$ 605,754

Plan assets(94,287)(87,547)(887,489)(29,932)(26,189)(281,735)

Defined benefit obligation of unfunded plan

105,298

97,024

991,131

Net liability arising from defined benefit obligation¥ 75,366¥ 70,835$ 709,396
Thousands of
U.S. Dollars

Millions of Yen

Liability for employees’ retirement benefits
Asset for employees’ retirement benefits
Net liability arising from defined benefit obligation

2018

2017

¥75,495¥70,952$710,611

(129)

(117)

(1,215)¥75,366¥70,835$709,396

2018

The amount of the liability and asset for employees’ retirement benefits that are offset individually by the Company andsubsidiaries are combined.
The components of net periodic benefit costs for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2018

2017

Service cost

¥12,221¥11,520$115,033

Interest cost

151

147

1,423

2018

Expected return on plan assets

(875)

(820)

(8,240)Recognized actuarial loss

2,321

3,966

21,844

OthersNet periodic benefit costs

(29)

(24)

(267)

¥13,789¥14,789$129,793

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

69

FINANCIAL SECTION

Notes to Consolidated Financial Statements

Amounts recognized in other comprehensive income (before income tax effect adjustments) in respect of defined retirement benefit plans for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2018

2018

Actuarial gain¥2

¥6,501

$13

Total

¥2

¥6,501$13

Amounts recognized in accumulated other comprehensive income (before income tax effect adjustments) in respect ofdefined retirement benefit plans as of March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2018

2017

2018

Unrecognized actuarial loss¥(8,028)¥(8,030)$(75,568)

Total¥(8,028)¥(8,030)$(75,568)

2018

2017

Plan assets as of March 31, 2018 and 2017, consisted of the following:
General accounts

30%

32%

Debt investments

25

26

Equity investments

23

23

Others

22

19

Total

100%

100%

Assumptions used for the years ended March 31, 2018 and 2017, were set forth as follows:
2018

2017

Discount rate

0.1%

0.1%

Expected rate of return on plan assets

1.0%

1.0%

The expected rate of return on plan assets is determined on the basis of the distribution of plan assets, past performance of respective assets that make up investments of plan assets, and market trends.
(2) Defined Contribution Retirement Plans
The amounts contributed to the defined contribution retirement plans of the Group for the years ended March 31, 2018and 2017, were ¥2,330 million ($21,931 thousand) and ¥2,235 million, respectively.

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Integrated Report 2018

9. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year
 Additional provisions associated with the acquisition of property,
plant and equipment
Reconciliation associated with passage of time

2018

2017

2018

¥5,535¥5,184$52,102

257

326

2,416

104

99

978

Reconciliation associated with changes in accounting estimates

(1)

15

(6)

Reduction associated with settlement of asset retirement obligations

(85)

(46)

(799)

OthersBalance at end of year

(10)

(43)

(101)

¥5,800¥5,535$54,590

Changes in accounting estimates were recorded as it became evident that the estimate of the discounted cash flows
required for future asset retirement would change at the beginning of the year. A reconciliation has been prepared for thechange, which resulted in a decrease and increase of the asset retirement obligation for the years ended March 31, 2018and 2017, by ¥1 million ($6 thousand) and ¥15 million, respectively.

10.		 EQUITY
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the
Companies Act that affect financial and accounting matters are summarized below:
a. Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders’ meeting. For companies that meet certain criteria such as (1) having a Board of
Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of
Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to acertain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.
b. Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity accountcharged upon the payment of such dividends until the aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal
reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional
paid-in capital, other capital surplus, and retained earnings can be transferred among the accounts within equity undercertain conditions upon resolution of the shareholders.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

71

FINANCIAL SECTION

Notes to Consolidated Financial Statementsc. Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution
to the shareholders, which is determined by a specific formula. The Companies Act also provides that companies canpurchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented asa separate component of equity.

11.		 INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes, which, in the aggregate, resulted in normal effective statutory tax rates of 30.9% for the years ended March 31, 2018 and 2017.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31, 2018and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2018

2017

¥ 10,146¥ 9,835$ 95,500

1,502

1,925

14,135

270

269

2,545

1,659

2,377

15,6192018

Deferred tax assets:
Current:  Accrued expenses  Enterprise tax   Allowance for doubtful accounts   Legal welfare expense   Provision for special wage payments

4,682   Tax loss carryforwards

4,323

192

40,687  Other

1,686

1,783

15,873   Less valuation allowance

(137)

(160)

(1,289)Deferred tax assets—current¥ 19,449¥ 20,903$ 183,070   Liability for employees’ retirement benefits¥ 23,184¥ 21,775$ 218,224   Loss on valuation of investment securities

1,731

1,872

16,293   Loss on valuation of land

20,75920,760195,400   Loss on impairment of long-lived assets

4,211

4,447

39,632

469

469

4,416

  Unrealized profit

2,457

2,278

23,124  Other

10,73910,479101,078

Non-current:   Loss on valuation of telephone subscription rights   Less valuation allowance(31,748)(32,085)(298,829)¥ 31,802¥ 29,995$ 299,338

Current—other

¥

(205)

¥

(220)

$

(1,936)

Deferred tax liabilities—current

¥

(205)

¥

(220)

$

(1,936)

Deferred tax assets—non-current
Deferred tax liabilities:

Non-current:   Unrealized gain on available-for-sale securities  Other
Deferred tax liabilities—non-current
Deferred tax assets—net

72

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

¥ (5,125)¥ (3,731)$ (48,240)(2,987)(2,783)(28,109)¥ (8,112)¥ (6,514)$ (76,349)¥ 42,934¥ 44,164$ 404,123

Reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statement of income for the year ended March 31, 2018, with the corresponding figures for 2017 was
as follows:
2017

2018

Normal effective statutory tax rate

30.9%

30.9%

Per capita levy of local taxes

9.2

8.9

Difference of tax rates for foreign subsidiaries

2.8

1.3

Valuation allowance

(0.0)

2.9

Other—net

0.7

0.4

Actual effective tax rate

43.6%

44.4%

12.		 LEASES(1) Lessee
The Group leases certain machinery, computer equipment and other assets.
Future rental payments under non-cancelable operating leases at March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2018

Due within one year

2018

¥164

¥ 3,066$ 28,865

Due after one year

32,812304

308,845

Total¥35,878¥468$337,710(2) Lessor
The net investments in lease as of March 31, 2018 and 2017, were summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen

Gross lease receivables

2018

2017

¥49,797¥48,7022018$468,725

Unguaranteed residual values

6,584

5,875

61,972

Unearned interest income(3,739)(3,800)(35,199)¥52,642¥50,777$495,498

Investments in leases—current

Maturities of lease receivables for finance leases that are deemed not to transfer ownership of the leased property to thelessee as of March 31, 2018, are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2019¥17,409$163,862

2020

13,645

128,438

2021

9,819

92,428Year Ending March 31

2022

6,250

58,831

2023

2,334

21,9692024 and thereafter
Total

340

3,197

¥49,797$468,725

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

73

FINANCIAL SECTION

Notes to Consolidated Financial Statements

The minimum rental commitments under non-cancelable operating leases at March 31, 2018 and 2017, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year
Due after one year
Total

2018

2017

¥ 4,399¥3,7352018$ 41,406

7,154

6,212

67,336¥11,553¥9,947$108,742

13.		 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly long-term debt including bank loans and bonds, in order to expand its business based on its investment plan to expand its network. Cash surpluses, if any, are invested in low risk financial assets.
Derivatives are used, not for speculative purposes, but to manage exposure to interest fluctuation risk. Certain consolidated subsidiaries conduct leasing or installment sales operations.
(2)	Nature and Extent of Risks Arising from Financial Instruments and the Risk Management for Financial Instruments
Receivables such as notes and accounts receivable and installment sales receivable are exposed to customer credit risk.
Therefore, the Group minimizes customers’ credit risk by monitoring collections and accrued receivables at due dates.
Marketable and investment securities are mainly equity securities of the companies with which the Group has business
relationships or capital alliances. Such securities are exposed to the risk of market price fluctuations.
Most payment terms of payables such as notes and accounts payable are less than one year.
Short-term bank loans and long-term bank loans are mainly related to a financial business. Most of the bank loans are
fixed interest rate loans.
Accounts payable and bank loans exposed to liquidity risks are managed by each company of the Group, such as
through fund settlement, bookkeeping, monitoring of the balances outstanding, and managing cash flows.
(3) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is not available, otherrational valuation techniques are used instead. The value could vary depending on the technique used.
Fair values of financial instruments at March 31, 2018 and 2017, were as follows:
Millions of Yen
March 31, 2018

Carrying Amount

Fair Value

Difference

Assets:Cash and cash equivalents¥204,422

Trade notes and accounts receivable

224,099   Allowance for doubtful accounts(113)
223,986

Installment sales receivable¥204,422

223,781¥ (205)

5,744

46,693   Allowance for doubtful accounts(755)   Deferred profit on installment sales(5,900)40,03845,782Available-for-sale securities

34,21834,218

Shares of affiliates

13,592

21,259Trade notes and accounts payable

155,324

155,324

Short-term loans

66,952

66,96614

Long-term loans

60,30060,283

(17)

7,667

Liabilities:

74

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Millions of Yen
March 31, 2017

Carrying Amount

Fair Value

Difference

Assets:Cash and cash equivalents¥230,129

Trade notes and accounts receivable

208,131   Allowance for doubtful accounts(134)
207,997

Installment sales receivable   Allowance for doubtful accounts   Deferred profit on installment sales¥230,129

207,984¥(13)

46,142(764)(6,010)39,36845,230Available-for-sale securities

31,35031,3505,862

Shares of affiliates

13,712

13,884

Trade notes and accounts payable

155,736

155,736

Short-term loans

60,97460,99723

Long-term loans

89,90089,897(3)

172

Liabilities:

Derivatives
Thousands of U.S. Dollars
March 31, 2018

Carrying Amount

Fair Value

Difference

Cash and cash equivalents$1,924,157$1,924,157

Trade notes and accounts receivable

2,109,367

Assets:   Allowance for doubtful accounts(1,061)
2,108,306

Installment sales receivable

2,106,368$ (1,938)

54,061

439,504   Allowance for doubtful accounts(7,098)   Deferred profit on installment sales(55,539)
376,867

430,928

Available-for-sale securities

322,079

322,079

Shares of affiliates

127,934

200,10272,168

Liabilities:
Trade notes and accounts payable

1,462,009

1,462,009

Short-term loans

630,200

630,329

129

Long-term loans

567,582

567,422(160)

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

75

FINANCIAL SECTION

Notes to Consolidated Financial Statements

Cash and cash equivalents

The carrying values of cash and cash equivalents approximate fair value because of their short maturities.
Trade notes and accounts receivable

The fair values of receivables are measured at the amount to be received at maturity discounted at the Group’s assumed
corporate discount rate. A portion of these receivables is determined by discounting the future cash flows related to thereceivables at the rate of government bonds.
Installment sales receivable

Allowances for doubtful accounts and deferred profit on installment sales are deducted from the fair values of installment
sales receivable, which are determined by discounting the future cash flows related to the installment sales receivable atthe market interest rate.
Marketable and investment securities

The fair values of marketable and investment securities are measured at the quoted market price of the stock exchange forthe equity instruments, and at the quoted price obtained from the financial institution for certain debt instruments. Fairvalue information for marketable and investment securities by classification is included in Note 5.
Trade notes and accounts payable

The fair values of payables, all of which are substantially paid within one year, are measured at the amount to be paid.
Short-term loans and long-term loans

The fair values of short-term bank loans and long-term loans are determined by discounting the future cash flows related tothe debt at the Group’s assumed corporate borrowing rate.
The current portion of long-term bank loans is included in short-term loans in the above table in addition to short-termbank loans on the consolidated balance sheet. Lease payments are not included in long-term loans in the above table.
Derivatives

Fair value information for derivatives is included in Note 14.
(4) Financial Instruments Whose Fair Value Cannot Be Reliably Determined
Thousands of
U.S. Dollars

Millions of Yen

76

2018

2017

2018

Shares of affiliates¥6,412¥5,862$60,350

Other

5,620

3,359

52,903

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen
Due in One Yearor Less

March 31, 2018

Due after One Yearthrough Five Years

Due after
Five Years

Cash and cash equivalents¥204,422

Trade notes and accounts receivable

205,743¥18,165

Installment sales receivable

23,306

22,571816¥433,471¥40,736¥1,007

¥214

Total

¥  191March 31, 2017

Cash and cash equivalents¥230,129

Trade notes and accounts receivable

191,192¥16,725

Installment sales receivable

22,982

22,412748¥444,303¥39,137

¥962

Total

Thousands of U.S. Dollars
March 31, 2018

Due in One Yearor Less

Cash and cash equivalents$1,924,157

Trade notes and accounts receivable

1,936,587$170,987

219,369

212,452

7,683$4,080,113$383,439$9,476

Installment sales receivable
Total

Due after One Yearthrough Five Years

Due after
Five Years$1,793(6) Maturity Analysis for Long-term Loans
Millions of Yen

Thousands of
U.S. Dollars

2019¥33,600$316,2652020

40,800384,036

2021

5,500

51,7692022

14,000131,777

Total¥93,900$883,847

Year Ending March 31

Please see Note 7 for annual maturities of long-term loans.

14.		 DERIVATIVESThe Company and certain consolidated subsidiaries use derivative financial instruments to manage their exposure to fluctuations in interest rates. Interest rate swaps are utilized by the Company and the consolidated subsidiaries to reduce interest rate risk. The Group has a policy not to enter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured atmarket value but the differential paid or received under the swap agreements is recognized and included in interest expense
or income.
Derivative Transactions to Which Hedge Accounting Is Applied
Millions of Yen
March 31, 2017

Hedged Item

Interest rate swaps(fixed rate payment, floating rate receipt)

Long-term bank loans

Contract AmountContract AmountDue after One Year

¥8,220¥—Fair Value*

There were no derivative transactions to which hedge accounting was applied at March 31, 2018.
* The fair value of interest rate swaps is included in that of hedged items (long-term bank loans due within one year is considered as short-term loans). Please see Note 13.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

77

FINANCIAL SECTION

Notes to Consolidated Financial Statements

15.		 OTHER COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2018 and 2017, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2018

2017

Adjustments arising during the year

¥ 5,567¥ 2,194$ 52,403

Reclassification adjustments to profit or loss

(1,639)(599)(15,428)

Amount before income tax effect

3,928

1,595

36,975

Income tax effect(1,414)(326)(13,310)

Total¥ 2,514¥ 1,269$ 23,665¥ 1,658¥(1,174)$ 15,608¥ 1,569¥(1,174)$ 14,773¥(2,319)¥ 2,535$(21,831)

2,321

3,966

21,844

Amount before income tax effect

2

6,501

13

Income tax effect(1)(2,045)(8)¥

1¥ 4,456

$

5

¥

—

¥

$

(2)

2018

Unrealized gain on available-for-sale securities:

Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss

(89)

Total

(835)

Remeasurements of defined employees’ retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss

Total
Share of other comprehensive income of entities accounted for using equity method:
Adjustments arising during the year
Total other comprehensive income¥ 4,0841¥ 4,552$ 38,441

16.		 EARNINGS PER SHARE
Basic earnings per share (“EPS”) for the years ended March 31, 2018 and 2017, was as follows:
Millions of Yen
Year Ended March 31, 2018

Basic EPS—Profit attributable to common shareholders

Thousands ofSharesProfit Attributable to Weighted-average
Owners of Parent
SharesYen

U.S. Dollars
EPS¥18,232

394,277¥46.24¥18,054

397,930¥45.37

Year Ended March 31, 2017

Basic EPS—Profit attributable to common shareholders

78

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018$0.44

17.		 SEGMENT INFORMATION(1) Description of Reportable Segments
The Group identifies operating segments as components of entity for which discrete financial information is available andwhose operating results are regularly reviewed by the Board of Directors in order to make decisions about resources to beallocated to the segments and assess their performance.
The Company, as a pure holding company, forms six reportable segments classified according to business content andmanages them based on these reportable segments. Therefore, the Group has the following six reporting segments:“Delivery,” “BIZ-Logistics,” “Home Convenience,” “e-Business,” “Financial,” and “Autoworks” based on the above policy.
The Group defines the reporting segments as follows:
Delivery:		Small-parcel delivery services such as TA-Q-BIN (door-to-door parcel delivery) andKuroneko DM-Bin (posting service)
BIZ-Logistics:		
Intercompany logistics services, aimed at the B2B supply-chain management market
Home Convenience:	Lifestyle support services intimately connected with the needs of local markets, such as moving andhousehold effects delivery services
e-Business:		Information services targeted at the business market, including ASP services and the development of
information systems
Financial:		Financial services targeted at business customers and consumers, such as settlement and collection
Autoworks:		Vehicle maintenance services and fuel supply targeted at transport companies(2) M ethods of Measurement for the Amounts of Segment Revenues, Segment Profit, Segment Assets, and Other
Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant
Accounting Policies.”

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

79

FINANCIAL SECTION

Notes to Consolidated Financial Statements(3) Information about Segment Revenues, Segment Profit, Segment Assets, and Other Items
Millions of Yen

2018
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated¥121,939
13,800¥135,739¥48,900
13,806¥62,706¥46,480
39,190¥85,670¥ 82,981
2,899¥ 85,880¥24,642
30,299¥54,941¥12,126
44,273¥56,399¥1,538,813
213,937¥1,752,750¥

Total segment revenues¥1,201,745
69,670¥1,271,415—(213,937)¥(213,937)¥1,538,813

Segment profit

¥

6,758
662,582¥  4,088
74,571¥ 523
21,993¥10,588
49,068¥  7,912
258,791¥ 4,141
28,014¥17,217
13,543¥ 51,227
1,108,562¥ (15,541)
6,872¥   35,686
1,115,434

32,916

2,157

582

4,120

5,233

696

374

46,078345

46,423

523

5,349

5,872

13,957

19,82934,3803,589

54,168314

54,482

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets¥1,538,813

Other:
Depreciation and amortization
Investment in entities  accounted for using
equity method
Increase of tangible and   intangible fixed assets

897

2,023

11,645830

804

Millions of Yen

2017Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated¥108,644
13,357¥122,001¥49,164
14,594¥63,758¥45,639
34,672¥80,311¥ 77,985
3,049¥ 81,034¥24,61428,186¥52,800¥ 9,778
60,875¥70,653¥1,466,852
221,294¥1,688,146¥

Total segment revenues¥1,151,028
66,561¥1,217,589—(221,294)¥(221,294)¥1,466,852

Segment profit

¥

5,638
638,180¥  4,072
69,957¥ 1,077
22,342¥ 9,368
47,879¥  8,244
252,745¥ 3,274
25,798¥35,477
11,941¥ 67,150
1,068,842¥ (32,265)
45,830¥   34,885
1,114,672

32,417

2,575

542

4,368

4,402

735

410

45,449665

46,114

305

5,057

5,362

13,712

19,074

31,611

4,798

48,796198

48,994

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets¥1,466,852

Other:
Depreciation and amortization
Investment in entities  accounted for using
equity method
Increase of tangible and   intangible fixed assets

708

3,445

7,379

264

591

Thousands of U.S. Dollars

2018
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated$1,147,773
129,892$1,277,665$460,281
129,946$590,227$437,501
368,882$806,383$  781,071
27,288$  808,359$231,946
285,194$517,140$114,132
416,728$530,860$14,484,313
2,013,710$16,498,023$

Total segment revenues$11,311,609
655,780$11,967,389

Segment profit$

63,614
6,236,650$   38,474
701,914$  4,920
207,013$ 99,657
461,861$   74,475
2,435,905$ 38,979
263,683$162,060
127,478$ 482,179
10,434,504$  (146,283) $ 335,896
64,683
10,499,187

5,482

38,78049,255

6,550

3,520

433,7233,245

436,968

55,271

131,376

186,647

509,8672,954

512,821

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets— $14,484,313(2,013,710)$(2,013,710) $14,484,313

Other:
Depreciation and amortization

309,832

20,304

Investment in entities  accounted for using
equity method

4,925

50,346

Increase of tangible and   intangible fixed assets

323,61133,782

8,446

19,037

109,610

7,817

7,564

Notes: “Other” includes JITBOX charter services and shared services.
	Segment revenues and segment profit of “Other” include dividends for the years ended March 31, 2018 and 2017, of ¥17,483 million ($164,558 thousand) and ¥34,410­million, respectively, which the Company received from its subsidiaries as a pure holding company.
Reconciliations are as follows:		 (1)	Reconciliations of segment profit for the years ended March 31, 2018 and 2017, of ¥15,541 million ($146,283 thousand) and ¥32,265 million, respectively, are intersegment eliminations and others.
		 (2)	Reconciliations of segment assets at March 31, 2018 and 2017, of ¥6,872 million ($64,683 thousand) and ¥45,830 million, respectively, include intersegment eliminations of assets and liabilities of ¥154,669 million ($1,455,844 thousand) and ¥150,292 million, and corporate assets which are not allocated to each reporting segmentof ¥161,541 million ($1,520,527 thousand) and ¥196,122 million, respectively.
		 (3)	Reconciliations of investments in entities accounted for using equity method at March 31, 2018 and 2017, of ¥13,957 million ($131,376 thousand) and ¥13,712 million,
respectively, are investments which are not allocated to each reporting segment.
		 (4)	Reconciliations of increases of tangible and intangible fixed assets at March 31, 2018 and 2017, of ¥314 million ($2,954 thousand) and ¥198 million, respectively,
include the Company’s capital investment.
Segment profit is reconciled with operating profit in the consolidated statement of income.

80

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

[Related Information about Reporting Segments](1) Information about Products and Services
Operating revenues from customers for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
2017

2018
TA-Q-BIN

Kuroneko DM-Bin¥1,035,053

Other¥78,789

Total¥424,971

TA-Q-BIN

Kuroneko DM-Bin¥981,002¥1,538,813

Other¥81,277

Total¥404,573¥1,466,852

Thousands of U.S. Dollars
2018
TA-Q-BIN

Kuroneko DM-Bin$9,742,589

Other$741,615

Total$4,000,109 $14,484,313(2) Information about Geographical Areas
Operating revenues for the years ended March 31, 2018 and 2017, were as follows:
Millions of Yen
2017

2018
Japan

North America¥1,510,742

Other¥10,848¥17,223

Total

Japan

North America¥1,538,813¥1,441,673

Other¥9,789Total¥15,390¥1,466,852

Thousands of U.S. Dollars
2018
Japan

North America$14,220,086

Other$102,110

Total$162,117 $14,484,313

Property, plant and equipment at March 31, 2018 and 2017, were as follows:
Millions of Yen
2017

2018
Japan

North America¥403,241

Other

¥370

Total

¥1,447

Japan

North America¥403,528¥405,058

Other

¥365

Total

¥1,177¥405,070

Thousands of U.S. Dollars
2018
Japan

North America$3,795,570$3,477

Other

Total

$13,621$3,812,668(3) Information about Loss on Impairment of Long-Lived Assets by Reporting Segments
Loss on impairment of long-lived assets by reporting segments for the years ended March 31, 2018 and 2017, wereas follows:
Millions of Yen
2018

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics

Home
Convenience¥2,426¥685¥38

e-Business

Financial

Autoworks

Other

¥92

Total

¥3,241Eliminations or
Corporate
Consolidated¥3,241Millions of Yen

2017

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics

Home
Convenience

¥765

¥322

¥178

e-Business

Financial

Autoworks

Other

¥19

Total

¥1,284

Eliminations or
Corporate
Consolidated¥1,284

Thousands of U.S. Dollars
2018
Delivery

BIZ-Logistics

Home
Convenience

Loss on impairmentof long-lived assets $22,838$6,450$358

e-Business

Financial

Autoworks

$861

Other

Total

$30,507

Eliminations or
Corporate
Consolidated$30,507

YAMATO HOLDINGS CO., LTD.
Integrated Report 201881

FINANCIAL SECTION

Notes to Consolidated Financial Statements

18.		 SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2018, was approved at the Company’s Board of Directors
meeting held on May 17, 2018:

Year-end cash dividends, ¥14.00 ($0.13) per share

82

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Millions of Yen

Thousands of
U.S. Dollars¥5,520$51,957

Independent Auditor’s Report

To the Board of Directors of
Yamato Holdings Co., Ltd.:We have audited the accompanying consolidated balance sheet of Yamato Holdings Co., Ltd. and its consolidated subsidiaries as ofMarch 31, 2018, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for theyear then ended, and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.

Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Yamato Holdings Co., Ltd. and its consolidated subsidiaries as of March 31, 2018, and the consolidated results of theiroperations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts arepresented solely for the convenience of readers outside Japan.

June 15, 2018

YAMATO HOLDINGS CO., LTD.
Integrated Report 201883