NEW ERA OFGROWTH POTENTIAL

Advancing with “Value Networking” design
and forge a robust corporate culture

Annual Report 2015
For the year ended March 31, 2015

Management Philosophy

The Yamato Group helps enrich our society by enhancing the social
infrastructure of TA-Q-BIN networks, creating more convenient services
for comfortable lifestyles, and developing an innovative logistics system.
Yamato Group’s Precepts, Which Have Represented Its Corporate Spirit since Foundation

1. We ‘all’ represent the company
The Yamato Group is a company that was established based on the concept that people present a greater
asset than money and equipment. Our employees are regarded not simply as “human resources,” but asindividuals who benefit the company. Above all, we respect the individual. Each employee’s ability to provide balance, cooperation, cohesiveness, and symmetry strengthens the Yamato Group. Our employees
demonstrate the independence and initiative encompassed in the idea, “If I don’t do it, then who will?”
Each individual recognizes that their behavior must reflect their responsibility and role in representing
the Group through their interactions with customers and partners.

2. We deliver with a personal touch
The fundamental business of the Yamato Group is transportation business. Just like railway, telephone,gas, and water services, the delivery of goods is a highly public operation indispensable to society. Throughour transport services we take possession of our customer’s (sender’s) personal sentiments, and it is ouraim to speedily and accurately deliver the packages entrusted to us with a sense of responsibility, goodwill,
and sincerity.
To do so, it is important that every Yamato Group employee always possess an attentive and eager attitude that asks, “What can I do to bring the customer more satisfaction?” That kind of initiative translates toimproved performance that promises lasting growth and success for our company.
At the same time, Yamato Group employees must constantly strive to revise and improve our distribution network to streamline operations. It is also imperative that we prevent all accidents. Achieving thisrequires that the company and all employees continuously learn and work together.

3. We work with gratitude and politeness
Every Yamato Group employee is engaged in a highly public service indispensable to society, and must
always ask himself or herself, “How can I be useful to society and people’s lives?” At present, the important
responsibility that Yamato Group employees have been charged with is to take the capabilities we havebeen given and improve them by enhancing quality. Therefore, each and every employee must adhere tohigh moral principles (courtesy and moderation), and as a member of society, must strictly observe all laws
and ethics. Employees must make every effort towards self-improvement and self-growth.

Editorial Policy

Having built up long-standing relationships of trust with all its many and varied stakeholders, the Yamato Group discloses information not only of a legal nature but also information considered necessary for those stakeholders. The
Yamato Group adopted the policy that such information shall be conveyed promptly and accurately as well as fairly andequitably. Conveying information, including that of a nonfinancial nature, on such aspects as management strategies,
business overviews, corporate governance and corporate social responsibility (CSR) activities, this annual report isintended to comprehensively deepen the reader’s understanding of the Yamato Group. Please visit our website for moredetailed information.

Toward Further Evolution
with an Abiding Spirit
Contents
page 02

Business Foundation Expanded with TA-Q-BIN at Its Core

page 04

Management System That Creates New Value

page 06

Yamato Group’s Medium- to Long-Term Management Plan

ProfileThe special characteristic of management at the Yamato Group is its “management starts in thefield” way of thinking. Formulated in 1931 to serve as its founding spirit, the Company’s precepts,
which have not changed once since the TA-Q-BIN services were started in 1976, are positioned as
the genesis of the Yamato Group. The Yamato Group is a logistics company but has been creating
unprecedented services that are needed by society to keep pace with changes in the social structure, markets, and customers (companies and consumers) that have been subtly perceived by
employees in the field on the front line of business. These efforts have given the Yamato Group of
today its competitive edge.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201501

TOWARD FURTHER EVOLUTION WITH AN ABIDING SPIRITBusiness Foundation Expanded with
TA-Q-BIN at Its Core
TA-Q-BIN is the Yamato Group’s flagship service offering. Since its launch in 1976, we have pursued a strategy of differentiation based on the development of additional strategic offerings and an improvement in delivery quality. As a result of
these efforts, the Yamato Group has outperformed the growth in the express home delivery market as a whole and steadily
expanded its market share. The Yamato Group is currently developing its overseas TA-Q-BIN business across Asia.
Expansion of TA-Q-BIN Network

1976

1984

Area ratio

Area ratio

3.4%

Population ratio 25.4%

79.7%

Population ratio 95.1%

Founded in 1919, Yamato Transport Co., Ltd., launched its TA-Q-BIN business in
1976. Its initial delivery area was confined to the Kanto region, and businessstarted on the first day with a mere 11 shipping items.

The TA-Q-BIN network expanded to cover approximately 80% of Japan, and thenumber of TA-Q-BIN agencies reached 80,000 in 1984. The number of
employees exceeded 10,000, and Yamato had grown significantly as a company.

Provision of High-Value-Added Logistics Infrastructure
Not confining ourselves to simple “delivery,” we provide TA-Q-BIN
as a unique service that exceeds the expectations of society andcustomers and have put in place a business foundation that isused by a growing number of customers.
TA-Q-BIN Delivery Volume and Development History for Products and Services
TA-Q-BIN Delivery Volume

Number of Products/Services(Delivered within Japan)

1980

22.26

million parcels

2015

1.6

1980
billion parcels

2015

50

1

2,000 (Millions of parcels)

Cool TA-Q-BIN service
Need

1,800

Heightened awareness of food
freshness

1,600
1,400

1988

1976

1983/1984

1986

Launch of TA-Q-BIN service

Ski TA-Q-BIN service/
Golf TA-Q-BIN service

TA-Q-BIN Collect

Need

Rise of varied settlement needs, whenutilizing of mail order sales operators

1,200

Need

1,000

Increased proliferation of package delivery services between people

Need

Increase in lifestyles that emphasize theeasy enjoyment of leisure

800
600
400
200
0

1976

02

1980

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

1985

1990

TOWARD FURTHER EVOLUTION WITH AN ABIDING SPIRIT

1990
Area ratio

2015
99.5%

Shanghai

Population ratio 99.9%

Countries expanded
TA-Q-BIN service

TaiwanHong Kong

Important bases

Thailand
Vietnam
Malaysia
Singapore
Indonesia
TA-Q-BIN network coverage extended to 99.5% of Japan. We commenced
TA-Q-BIN services on the Bonin (Ogasawara) Islands in 1997, completing anationwide TA-Q-BIN network.

TA-Q-BIN business in Taiwan was commenced in 2000 as the first overseas basein Asia. As at the end of March 2015, the Company has a total of five overseas
bases in operation: Shanghai, Singapore, Hong Kong and Malaysia as well as
Taiwan. We will extend the TA-Q-BIN business to other parts of the world in theyears to come, focusing on East Asia and members of ASEAN.

Customer Base and Service Synergies
By increasing the numbers of customers who use TA-Q-BIN, we havereached the stage where we are able to subtly perceive changes andneeds called for by society, improve our high-quality services, andgenerate the synergies to expand our customer base.

Completion of Haneda
Chronogate, the largest
general logistics terminal
in JapanService diversification through proliferation of IT

Driver Direct service
Time Period Delivery

2013

Kuroneko Members service
Need

2004
1998

2007

Need

Need

Differentiation to speedily respondaccording to customers’ requests

Creation of value added through logistics

Need

Growing need for specific time zone fordelivery in keeping with changing
lifestyles

2013
International Cool TA-Q-BIN
service2010
TA-Q-BIN service expansion
in Asia

Need

Further diversification, sophisticated
TA-Q-BIN needs

Need

Development of logistics infrastructurein Asia

2000

2005

2010

2015

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201503

TOWARD FURTHER EVOLUTION WITH AN ABIDING SPIRITManagement System That
Creates New Value
Amid diversifying social needs, we generated business beyond the TA-Q-BIN framework, inaugurated a holdings
system in 2005 to continue business promotion, and formulated a new management philosophy.

Management Philosophy

The Yamato Group helps enrich our society
by enhancing the social infrastructure of
TA-Q-BIN networks, creating more convenientservices for comfortable lifestyles, and developing an innovative logistics system.
Japan6,893 bases
EuropeGrowing Number of Business Facilities
in Japan and Overseas
The Yamato Group is currently operating
7,033 business facilities in the world. With
the aim of becoming Asia’s No. 1 solution
provider in distribution and lifestyle support,
our goal in the final year of the long-term
DAN-TOTSU Management Plan 2019 that wasformulated in 2011, we are naturally making
progress as a unified Group with the enhancement of domestic business as well as overseas
business, including the growth market of Asia.
Creation of New Value following Organic
Integration of Delivery Business and
Non-Delivery Businesses
Under the previous operating holding company structure, Yamato Transport Co., Ltd.,
had both a management supervisory function
and a delivery business execution function.
Therefore, the management of the entire
Group was biased toward the delivery business. In November 2005, we launched a pureholding company, Yamato Holdings Co., Ltd.,
which assumed the decision-making andsupervisory functions, and under the new
structure each business company, including
Yamato Transport Co., Ltd., fulfills executivefunctions as part of the holding company.
This move was designed to grow not only thedelivery business but also the non-delivery
businesses by accelerating the management
speed.

United States

12 bases

25 basesAsia

103 bases

The fiscal year ended March 31, 2015

Operating Revenue¥1,396.7 billion
Composition Ratio of Operating Revenue■ Delivery■ BIZ-Logistics■ Home Convenience■ e-Business■ Financial■ Autoworks■ Other

04

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

78.9%
7.4%
3.5%
2.9%
4.8%
1.9%
0.6%

TOWARD FURTHER EVOLUTION WITH AN ABIDING SPIRITBusiness Description■ Delivery

Delivery Business

The Delivery Business provides small parcel delivery services for the general publicand corporations. Guided by its basic corporate philosophy of “Total Reliability,”
the business provides mainly TA-Q-BIN services to improve convenience in customers’ lives.

■ BIZ-Logistics
The BIZ-Logistics Business is a corporate distribution operation involved in services such as logistics and medical products distribution. The business provides
customers with an innovative logistics system by combining management
resources such as the TA-Q-BIN network with maintenance and recall response as
well as international transport functions.

■ Home Convenience
The Home Convenience Business is a community-based lifestyle support operation that provides services such as the pickup, delivery, and assembly and installation of home furnishings and appliances. The business provides lifestyle-related
services utilizing the Yamato Group’s nationwide network, with the aim of supporting the convenient and comfortable lifestyles of customers.

■ e-Business
The e-Business comprises operations in contract data processing and information
systems development. The e-Business provides solutions that integrate data, distribution, and settlement functions to raise business process efficiency and solve
potential business problems that customers face.

Non-delivery Businesses■ Financial
The Financial Business provides settlement services and financial products forcorporations and the general public. From payment collection on mail-orderproduct deliveries to B2B logistics settlement, the Financial Business is striving to
respond to every means of settlement to meet the needs of customers.

■ Autoworks
The Autoworks Business performs the maintenance and upkeep of trucks and othervehicles for logistics and distribution business operators under contract. Utilizing
technologies for reliably maintaining and repairing trucks, the Autoworks Businessprovides three forms of value: 1) compliance with statutory vehicle inspections, 2)convenient vehicle maintenance, and 3) reduced maintenance and repair costs.

■ Other
The Yamato Group’s Other segment provides box charter business, such as the
JITBOX Charter service, and extensive shared services centered on the trunk-routetransport business.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201505

TOWARD FURTHER EVOLUTION WITH AN ABIDING SPIRIT

Yamato Group’s Medium-to
Long-Term Management PlanThe Yamato Group is making headway in its aim to become Asia’s No. 1 solution provider in distribution
and lifestyle support to maximize both corporate earnings and corporate value.

Based on the nine-year, long-term DAN-TOTSU Management Plan
2019 that is designed to establish the Yamato Group in the position of being Asia’s No. 1 solution provider in distribution andlifestyle support by the fiscal year ending March 31, 2020, which
will mark the 100th anniversary of the Company’s founding, theGroup is aiming to create new businesses and accelerate growth.
Dividing the nine years into the three stages of HOP, STEP, and

JUMP, under the second-stage DAN-TOTSU Three-Year Plan STEP
medium-term management plan (from the year ended March
2015 to the year ending March 2017), the Group is leveraging andstrengthening the business foundation built under HOP and
ensuring a sure-footed leap in the final JUMP phase by enhancing its underpinning growth strategy.

STEP

Year Ended March 2015—Year Ending March 2017

HOP

Year Ended March 2012—Year Ended March 2014■

Leveraging the business foundation built
under HOP
■ Ongoing efforts to further strengthen
the business foundation and networks■

Further strengthening business foundationand networks

Overview of DAN-TOTSU Three-Year Plan STEP

Under DAN-TOTSU Three-Year Plan STEP, the Company is carrying out a plan based on two strategies: promoting the “Value
Networking” design and forging a robust corporate culture.
In promoting the “Value Networking” design, the Company
creates high-value-added business models by further strengthening the business foundation, such as Atsugi Gateway and Haneda
Chronogate, which were constructed under the previous mediumterm management plan HOP, and by promoting logistics network
innovation. By making thorough improvements in cost, quality,

Japanese economic recovery

Achieve greater
logistical visibility
Pursue network
innovations

E-commerce market expansion

06

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Intensifying legal risk surrounding our business

Promote the“Value Networking” design
Create high-value-added
business models

Asian economic growthand speed, the Company brought about an evolution in logistics
and the means to create value. In addition, from a global perspective, the Company is aiming to create new markets centered on
Yamato Asia, its supervisory company in the ASEAN region.
In forging a robust corporate culture, the Company has put inplace a framework to maintain quality that will be trusted bycustomers by further enhancing its governance and the promotion of CSR and by plans to build a stable business foundation tobring about business creation and growth.

Develop an operational framework thatheightens confidence

Operational Ensure systems arebalancedesigned to honor

Returning to service-first origins

customer promises
Increase employee
satisfaction

Forge a robust
corporate culture

Corporate social responsibility

TOWARD FURTHER EVOLUTION WITH AN ABIDING SPIRIT

Long-term DAN-TOTSU Management Plan 2019
Asia’s No. 1 solution provider in distribution
and lifestyle support
Year Ending March 2018—Year Ending March 2020

JUMP

Long-term DAN-TOTSU Management Plan 2019(1) Delivery: Secure growth resources for non-delivery businesses through recovery in TA-Q-BIN growth momentum(2) Non-delivery: Create businesses and accelerate growth momentum(3) Strengthen governance and promote CSR

Customer Satisfaction (CS)• Create DAN-TOTSU businesses through providing
high-quality service and CS• Enhancement of Asian network
Domestic parcel delivery market shareNon-delivery share of operating income
Over 20%

Overseas sales ratio

Over 50%

Over 50%

Business

Business

Business

Business groups utilizingcore competenceSocietal Satisfaction

Core competencies• Safety-Environment-CSR

IT

Become the company most loved
and trusted by society

LT

FT“Last mile” network

Employee Satisfaction• Invigorating and fulfilling workplace• Provision of improved labor
environment

Asia’s No. 1 solution provider
in distribution andBusiness
Business
lifestyle support
Business

Shareholder Satisfaction• Raise corporate value and pay stable high dividends
ROE

Over 11%

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201507

Performance Highlights
Fiscal years ended March 31

Operating Revenues

Operating Income(¥ billion)(¥ billion)

1,600

80

1,396.7

1,200

60

800

40

400

20

2011

0

Delivery Business

2012

2013

2014

2015

0

68.9

2011

2012

2013

2014

2015

Non-delivery Businesses

Operating revenues increased 1.6% year on year, to ¥1,396.7 billion, due toimproved TA-Q-BIN prices brought about by ongoing efforts in promoting the collection of adequate fees in the Delivery Business and the strong performance of nondelivery businesses centered on the BIZ-Logistics Business.

Operating income increased 9.3% year on year, to ¥68.9 billion—achieving an
all-time high—as a result of efforts to improve productivity that encompassed cost
control initiatives, which included pursuing efforts to keep costs in line with operating
volumes, and the creation of optimal designs for pickup and delivery operations andtransportation systems.

TA-Q-BIN Delivery Volume/
TA-Q-BIN Unit Price Growth Rate (YoY)

Net Income/
ROE(Millions of parcels)

1,622

1,800

(%)
8

3.7%

(¥ billion)

37.5

40

(%)
8

6.7%

30

6

4

900

20

4

10

2

0

0

2011

(900)

2012

2013

2014

2015

(4)

TA-Q-BIN Delivery Volume (left scale)
TA-Q-BIN Unit Price Growth Rate (YoY) (right scale)

0

2011

Net Income (left scale)

2012

2013

2014

2015

0

ROE (right scale)

TA-Q-BIN delivery volume decreased 2.6% year on year, to 1,622 million parcels,
due to such reasons as stagnation in personal consumption and the effect of surging
demand ahead of the consumption tax rate hike in the previous fiscal year. Thanks toongoing efforts in promoting the collection of adequate fees, the TA-Q-BIN unit pricerose 3.7% year on year.

Net income increased 7.9% year on year, to ¥37.5 billion. Consequently, ROE edged
up 0.3 of a percentage point, and stood at 6.7%.

Operating and Investing Cash Flows/Free Cash Flows*

Total Shareholders’ Equity/
Shareholders’ Equity Ratio(¥ billion)

92.6

100

(¥ billion)

565.5

600

(%)
60

80

34.1

60

400

40

52.2%

20

55

0
(20)

50

200

(40)

(58.4)

(60)
(80)

2011

2012

Cash Flows from Operating Activities
Free Cash Flows

2013

2014

2015

Cash Flows from Investing Activities

Due to the increase in income, net cash provided by operating activities rose approximately ¥12.5 billion year on year, and net cash used in investing activities decreased
approximately ¥6.4 billion. As a result, free cash flows grew approximately ¥19.0
billion year on year.
* Free Cash Flows = Cash Flows from Operating Activities + Cash Flows from Investing Activities

08

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

0

2011

2012

Total Shareholders’ Equity (left scale)

2013

2014

2015

Shareholders’ Equity Ratio (right scale)

Total shareholders’ equity increased 2.6% year on year, to ¥565.5 billion, but theshareholders’ equity ratio decreased 1.2 percentage points year on year, to 52.2%,
due to a 4.9% year-on-year rise in total assets to ¥1,082.5 billion.

0Contents

Toward Further Evolution with an Abiding Spirit

02 Business Foundation Expanded with
TA-Q-BIN at Its Core

04 Management System That Creates
New Value

06 Yamato Group’s Medium- to LongTerm Management Plan

08 Performance Highlights
Management Approach

Special Feature

22 Innovation for Our Future
24 Providing Optimal Solutions with “Value Networking” Design
26 Training and Producing Human Resources Who Will Go
Beyond the Boundaries of the Logistics Industry

28 Ensuring Long-Term Corporate Growth through Accelerated
Global Development

ANNUAL REPORT2015

NEW ERA OFGROWTHPOTENTIAL

30 Corporate Social Responsibility
Overview of Operations

34 At a Glance
35 Overview of Operations by Segment

10 Message from the Chairman
and the President

49

35 Delivery
38 BIZ-Logistics
40 Home Convenience
42 e-Business
44 Financial
46 Autoworks
48 Other
Organization
Corporate Governance

50 Corporate Governance
52 Message from Outside Directors
54 Directors
55 Outside Directors and Audit &12 Message from the President

56

Supervisory Board Members
Executive Officers
Financial Section

Forward-Looking Statements

18 Message from the Chief
Financial Officer

20 Ten-Year Summary andBusiness Highlights

This annual report contains forward-looking statements concerning Yamato Holdings’ future plans,
strategies, and performance.
These statements represent
assumptions and beliefs based on
information currently available andare not historical facts.
Furthermore, forward-looking
statements are subject to anumber of risks and uncertainties
that include, but are not limited to,
economic conditions, customer
demand, foreign currency
exchange rates, tax laws andother regulations.
Yamato Holdings therefore cautions readers that actual results
may differ materially from thesepredictions.

58 Consolidated Balance Sheet
60 Consolidated Statement of Income
61 Consolidated Statement of
62
63
64
86

Comprehensive Income
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
Notes to Consolidated Financial
Statements
Independent Auditor’s Report

87 Corporate Data/Stock Information

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201509

Message from the Chairman and the President

As a corporate entity that will
create new value in societies
across the world, we will havea sense of speed as we grow.
10

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Makoto Kigawa (left)
Representative Director and Chairman

Masaki Yamauchi (right)
Representative Director,
President and Executive Officer

The Yamato Group has set itself the major management objectiveof evolving to become Asia’s No. 1 solution provider in distribution and lifestyle support by fiscal 2020 (the fiscal year ending
March 31, 2020), the year in which we will be celebrating our100th anniversary. Specifically, by integrating the functions in
information technology (IT), logistics technology (LT), and financial settlement technology (FT) with the “last mile” network built
up through our TA-Q-BIN home delivery business, we would liketo provide customers with unprecedented services in key fields inthe four areas of e-commerce (EC), B2B logistics, international
logistics centered on Asia, and lifestyle support.
From April 2014, we implemented our DAN-TOTSU Three-Year
Plan STEP medium-term management plan, which we had positioned as the second phase to convert our management targets
into tangible forms. In the first fiscal year, which ended on March
31, 2015, we felt we made good progress, as our strategy to put
ourselves ahead of and set ourselves apart from other companies
steadily bore fruit, such as through the full-scale operations at
Haneda Chronogate, one of our main bases in the realization of
our “Value Networking” design that was launched under the plan.
Going forward, without making major changes to the focal pointsof our strategy, we will promptly implement the measures
adopted under DAN-TOTSU Three-Year Plan STEP: promote the“Value Networking” design and forge a robust corporate culture.
In doing so, we will achieve well-balanced management that
improves satisfaction for our shareholders, customers, ouremployees, local communities, and society as a whole.
During the course of our evolution to becoming a corporate
entity that creates new value in societies across the world, ourtactics and management systems continue to change in step withfactors that include the external environment and customer
needs. For the world outside of the Yamato Group, however, there
is no change and we will enduringly promote what is in our DNA,
namely of continuing to create new value for people.
Developed and created from the building blocks of that DNA
and launched in 1976, the TA-Q-BIN “last mile” network, which has
been extended throughout Japan, has now become a form oflifestyle and social infrastructure that simply cannot be done
without, in the same way as electricity and running water are
needed. We believe that the long-earned trust our customers
place in the Yamato brand and quality represents a major asset
for the Yamato Group and that our unique DNA led to the competitive edge we enjoy today.
Please expect the Yamato Group to continue facing up to thechallenging of establishing unprecedented logistics services tomake the leap to a new growth stage.
On behalf of all at the Yamato Group, we would like to takethis opportunity to express our gratitude for the ongoing supportand understanding of all our shareholders and investors.

September 2015

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201511

Message from the President

Toward Becoming Asia’s No. 1
Solution Provider in Distribution
and Lifestyle Support
I have taken over the reins of management from former President Makoto Kigawa, who was instrumental in shaping
the corporate image for which the Yamato Group should be aiming and in maximizing corporate value and creating social
value at a time of rapid change in the business environment. I would like to take this opportunity to explain how I willcontinue my predecessor’s work to forge a robust corporate culture and create a high-value-added business model.

The Yamato Group: The Company That
Repeatedly Innovates
The era of mass production and mass consumption is drawing to a close. In a time of mixed-modeland small-lot production, product lifecycles are
becoming shorter and the existence of industry
itself is undergoing change. These changes havebeen occurring for a long period of time and theirpace has been accelerating in recent years. This
does not apply Japan alone, as these changes are
happening across the world. Even the YamatoGroup, which assumes responsibility for the linchpin of the economy we call logistics, must constantly monitor those changes. Furthermore, therapid evolutionary changes in information technology are having an increasing impact on industry and business. The Yamato Group is no
exception, and I would like to integrate the management resources of information technology (IT),logistics technology (LT), which is centered on “lastmile” networks, and financial settlement technology(FT) functions to provide our customers with
unprecedented services in key fields in the four areasof e-commerce (EC), B2B logistics, international
logistics centered on Asia, and lifestyle support.
We are currently at a stage that will bring majorchanges to the Company. As the senior executiveof the Yamato Group, however, even if the businessenvironment or management system changes I
have no intention of changing the DNA that continues to create new value for people and for society as a whole and would like to pass on the YamatoGroup’s DNA for the future.
If you look back in history, there were only 204
trucks in Japan in 1919, but Yamato was founded asa transport company with four trucks in the Ginza
district of Tokyo. The first innovation came in 1929,

12

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Masaki Yamauchi
Representative Director,
President and Executive Officer

10 years after the Company was founded, when we
commenced Japan’s first fixed-route service thatallowed us to load up and combine several goods
shipments and transport them along a definedroute at a scheduled time.
Then, in 1976, we started our second innovation, the TA-Q-BIN service. Regardless of whether
the package was for a company or an individual,
we were able to easily deliver goods at any time tothe places people wanted to send them throughthe service. The service subsequently gave rise to a
succession of innovative services to meet customer
needs, including Cool TA-Q-BIN, Golf TA-Q-BIN, Ski
TA-Q-BIN, and Time Period Delivery.
—————
Facing the Challenges of the Third Innovation
The Yamato Group is now engaged in its third
innovation, the “Value Networking” design, the formof which is beginning to take shape. The “Value
Networking” design will add a range of functions andvalue to logistics itself, and I am expecting the design
will be able to bring to fruition a completely new
logistics system of a kind that has never been created within the framework of conventional logistics.
Furthermore, we will not confine ourselves merely
to logistics reform being carried out by an individualcompany, as the design will enable the building of alogistics platform capable of analyzing industryspecific conditions, matching them to the Company’s
IT, logistics (LT), and financial settlement (FT) functions, and mobilizing industry. As a result, we will
release our network to all our customers, including
corporate customers that do not possess their own
networks and corporate customers that would only
want to use the network when needed, and support
our customers’ logistics reforms.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201513

Making Quantum Leaps in the YamatoGroup’s Competitiveness in Partnershipwith Our Customers
By creating services that evolve logistics from theact of carrying to a “means for generating newvalue,” and by actually making those services available to customers, I feel we are responding to thehigh expectations customers have of us better thanever before. Going forward, we will take charge of
not only TA-Q-BIN services but also entire supply
chains, as we begin to be viewed by our customers
as a partner.
As a result, I will improve our profit structure.
This move will be because the part that provides
added value for our backbone Delivery Businessalso accumulates value-added profit. If one logistics platform is utilized by a large number of customers, economies of scale will be generated, andwe will be able to hold transportation costs at lower
levels than in the past. When the “Value Networking”
design has evolved and displays its true value,
the expectations are for increased profit from
non-delivery businesses and a significant improvement in profit margin due to decreased transportation costs.
Cooperation among the engines driving this“Value Networking” design—Haneda Chronogate,
Atsugi Gateway, Okinawa International Logistics
Hub, and domestic as well as overseas TA-Q-BIN
networks—is already initiating specific moves.

The challenge, however, is to enhance market
penetration. In response, based on the speed ofrecent changes in the environment, I would liketo approach external resources, such as businessalliances with other companies and M&A, moreproactively.
We will realize improvements in transport efficiency and same-day delivery to continue to growexponentially under the next medium-term DANTOTSU Three-Year Plan JUMP. In addition to theconstruction of gateways (logistics terminals) at
Chubu Centrair International Airport and KansaiInternational Airport and expanding and upgrading
the functions of the Okinawa International Logistics
Hub, we will unwaveringly continue the investments
necessary for growth, such as promoting a full-scalerevamp of the IT trunk systems that underpin the
Yamato Group’s logistics and services.
—————
Equally Displaying Our Presence Overseas
Set as a global strategy under the long-term
DAN-TOTSU Management Plan 2019 is theenhancement of distribution networks in Asia.
TA-Q-BIN in Japan has brought to fruition aservice that delivers important shipments
quickly and reliably to customers all over thecountry, and the TA-Q-BIN “last mile” network has
evolved into a form of lifestyle and social infrastructure. Our objective is to provide these types

When the “Value Networking” design has evolved anddisplays its true value, the expectations are forincreased profit from non-delivery businesses anda significant improvement in profit margin due todecreased transportation costs.

14

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

of services to customers in other parts of Asia.
We are currently providing high-value-added
services that combine TA-Q-BIN, logistics, andfinancial settlement service businesses in five
Asian regions. In the years ahead, it is anticipatedthat borderless business will make further
advances and that cross-border logistics, which do
not remain in the intraregional flow of goods, willcontinue to increase.
To plan for further business expansion, theCompany comprehensively covered each zone
area, including Southeast Asia and East Asia,
judged the necessity of implementing strategies—
including the strengthening of corporate governance—and established a local regional
supervisory company in Singapore in January
2014. The company is positioned to build theframework for further business expansion inSoutheast Asia.
Actually, the “last mile” network delivery service
is gradually gaining acceptance across Asia andwill surely continue to give rise to delivery needs.
Actually, the “last mile” network delivery service isgradually gaining acceptance across Asia and will
surely continue to give rise to delivery needs. Thatpath, however, is a sequence of trial and error, andintroducing a Japanese success story unchanged
overseas might not have been accepted in reverse
when not respecting local culture and customs. As
you would expect, an important aspect is thecreation of new value for people and society as awhole, and I would like to steadily increase thepresence of Yamato while taking a close look at thecustomers resident in each region.
—————
Converting Challenges Arising from Labor
Shortages into Opportunities for Growth
In Japan, the population is in a gradual decline,
and as the low birth rate continues and the proportion of elderly people grows, the working population will be diminished. We are quickly beginningto take steps against a potential risk of this kind,and I would like to overcome that risk by further
improvements in productivity. In the collection
and delivery setting, such factors exist as utilizing
IT to calculate the shortest delivery route and new
ways to communicate with customers, including
the Kuroneko Members membership service aimed
at reducing undelivered shipments due to therecipient not being present. We will also advanceworkplace environment maintenance services thatwill mobilize housewives and seniors.
At the latest logistics terminals like Haneda
Chronogate, we will promote mechanization andautomation that previously could not be fully
depended upon for manual tasks.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201515

Targeting Double-Digit ROE
In the fiscal year ended March 31, 2015, purchase oftreasury stock amounted to ¥30.0 billion andretirement of treasury stock amounted to ¥31.5
billion, with ROE subsequently at 6.7%. In concert
with boosting operating income by the steady
implementation of the value-added strategy,
including the “Value Networking” design, I would
like to achieve our ROE target for the fiscal year
ending March 31, 2020 of more than 11.0% by
continuing to implement capital policy measuresawaring the return to shareholders ratio.
Our annual cash dividends were ¥25 per share, a
year-on-year increase of ¥1 per share, for a payout
ratio of 27.7%. Going forward, I will continue tomeet the expectations of all shareholders by following the basic shareholder return policy of increasing
the return to shareholders ratio through a combination of dividends and purchase of treasury stock.

—————
Forging a Robust Corporate Culture
Another pillar of our Medium-Term Management
Plan is the forging of a robust corporate culture.
For the customer trust that the Yamato Group has
built up over many years to remain unshakeable,
we are making greater efforts than ever in
employee training, ingraining our corporate philosophy throughout the Group, and creating

16

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015a corporate culture that facilitates and encourages
communication.
We deeply apologize for the great inconvenience caused to all users with regard to the problems of inconsistent temperature management that
occurred in our handling of the Cool TA-Q-BIN service in 2013. In the previous fiscal year, improving
the quality of Cool TA-Q-BIN was deemed a toppriority issue, and the Company as a whole worked
to rebuild the quality control system anew.
Compliance is neither more nor less than thefoundation of management. We absolutely must
not lose our awareness of that in keeping our
promises and pursuing customer satisfaction,
including with TA-Q-BIN, which is built on customer trust. The managerial decision to discontinue the Kuroneko Mail service was based on thatawareness. To maintain society’s trust, I would likethe Company to continue to be honest and sincere
at all times. Essential elements in remaining
honest are the visualization of Group management
and the building of a highly transparent management structure, and I would like to actively convey
the Company’s direction and my way of thinking
to our many stakeholders, including shareholders
and investors, as well as encourage dialogue.

Always cherishing the innovation DNA that will continue
to create new value, I will embody the management
philosophy of “helping to enrich our society.”
In Closing
My desk motto is a Japanese term that, literallytranslated, means “through sincerity to heaven.”
If you do your best for another person in goodfaith, it is said that those thoughts will lead you toheaven or, in other words, customers and employees. Exercising your wisdom and taking action forpeople as well as making others happy can give
you a sense of happiness, too. If employees of thistype gather together, it is my belief that new services and ideas will arise from a variety of aspects.
Of the latest logistics terminals that have commenced operations, customer use of Haneda
Chronogate is progressing at a faster rate than
expected. Not pursuing expansion of scale alone
now or ever, we will always cherish our innovation
DNA that continues to give rise to new value andexemplify the Yamato Group’s management philosophy of helping to “enrich our society byenhancing the social infrastructure of TA-Q-BIN
networks, creating more convenient services for

comfortable lifestyles and developing an innovative logistics system.”
The preparations to establish a new businessmodel have been made. I am determined to vigorously lead the entire Yamato Group, including theemployees who are active on the front line, andaccelerate progress toward the Group becoming
Asia’s No. 1 solution provider in distribution andlifestyle support. I am gratefully anticipating theongoing understanding and support from all ourshareholders and investors.

September 2015

Masaki Yamauchi
Representative Director,
President and Executive Officer

Background to the Discontinuation of Kuroneko Mail Service
With regard to the discontinuation of Kuroneko Mail, the decision
was taken to avoid the risk, punishable by law, posed to customers using a delivery service to send “confidential documents”
such as letters to specific parties.
Treating with all due seriousness the situation that customers,
who were unaware that they were contravening the law, had sent
confidential documents by Kuroneko Mail and were in violationof the law, the Company sent letters to recipients of confidential
documents sent by customers via Kuroneko Mail, tightened
receipt of goods procedures so they would not be subject topunishment under the law, and worked to raise awareness bysending out notifications.
In December 2013, the Company proposed at meetings of theInformation and Communications Council and Postal Policy
Subcommittee at the Ministry of Internal Affairs andCommunications that the regulations pertaining to confidential
documents be reformed by introducing an “External Standard”

that would enable anyone to judge the material being sent by not
only by its content but also by its appearance. The Company had
complained that even if confidential documents were sent, only
the receiving transport business operator, not the customer
sender, should be responsible for any crime.
However, the Company’s proposals were not accepted, and thesituation remained that we were unable to avoid customer risk.
Having customers who were not aware of the law but at risk ofcommitting a crime runs contrary to the Company’s corporate
attitude and corporate responsibility. We determined that leaving
the situation as it was would make it difficult for us to continuously balance a “safe and secure use environment” and “convenience” by the Company’s efforts alone. This led to the decision to
discontinue Kuroneko Mail service.
On March 31, 2015, we ceased accepting items for Kuroneko
Mail and from April 1 launched the Kuroneko DM-Bin.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201517

Message from the Chief Financial Officer

We are working to improve profitability and capitalefficiency, while targeting ROE of 9.0% in thefiscal year ending March 31, 2017, the final yearof the medium-term management plan, and ROE ofmore than 11.0% in the fiscal year ending March 31, 2020,
the final year of the long-term management plan.
Kenichi Shibasaki
Managing Executive Officer
Responsible for Financing and Accounting and Investor Relations

Business Performance in Year Ended March 2015
In the fiscal year under review, operating income came in at arecord-high level due to the implementation of cost optimization, yet fell somewhat short of the ¥70.0 billion target because offactors that included the adverse impact of recoiling demandfollowing the pre-consumption tax hike surge in spending,lower-than-expected TA-Q-BIN and Kuroneko Mail service delivery
volumes in March, and increases in costs (advertising expenses)
involved in announcing our new service offerings. (TA-Q-BIN
Compact, Nekopos and Kuroneko DM-Bin).
In the fiscal year ended March 31, 2015, despite a visible trend
toward improvement in the overall economic environment inJapan amid higher corporate earnings, lagging recovery in personal consumption was evident as a result of a decline in demandthat accompanied the consumption tax rate hike, rising prices instep with the weakening yen, and other factors. Moreover, theYamato Group faced a harsh operating environment as tightlabor market conditions persisted.
Against this background, we worked to achieve the objectivesof the medium-term management plan DAN-TOTSU Three-Year
Plan STEP and the long-term DAN-TOTSU Management Plan 2019.
To this end, we focused our efforts on taking steps to create abusiness model for generating a high level of added value whilepursuing greater sophistication of our existing businesses byfusing logistics networks that have been developed with the business resources of individual Group companies.
In the Delivery Business, delivery volumes were sluggish due
in part to stagnating personal consumption and the effect ofsurging demand ahead of the consumption tax rate hike in theprevious fiscal year. Nevertheless, revenue increased ¥2.0 billion
amid gains in TA-Q-BIN unit prices as a result of our efforts to

18

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

promote the collection of adequate fees. With respect to profits,amid the tight labor market conditions and the deteriorating costenvironment, income also increased due to factors that included
thorough cost management in line with operating volumes
encompassing personnel expenses, costs of outsourcing work,and other expenses. Having included the promotion of measures
to improve productivity, cost optimization is determined to havebeen sufficiently beneficial.
In the non-delivery businesses, we took steps to expand ourexisting service offerings by enlisting the strengths of Group
companies, while drawing on Groupwide ties as we continued toaggressively pursue solution sales geared toward addressing
customers’ business challenges. The BIZ-Logistics Business inparticular acted as a driver of positive earnings results. Operating
revenue increased substantially, in line with new orders in sales
and logistics as well as in multi-maintenance. In contrast, thee-Business segment faced some difficulties. However, we expect thesegment to recover in the current fiscal year, given that the poor
performance was brought about by an accounting period mismatch between the timing of costs and revenues amid an increasein the amount of work in process related to the development of
information systems. The Home Convenience Business achieved aprofit for the second consecutive year by bringing about improvements in its weekday utilization rate. Having freed itself fromdeficit, the Home Convenience Business can be expected to contribute to the Group’s overall profit.
As a result, operating revenues for the fiscal year ended March
31, 2015, increased ¥22.0 billion year on year, or 1.6%, to ¥1,396.7
billion, and operating income rose a record-high ¥5.9 billion, or
9.3%, to ¥68.9 billion. Net income for the fiscal year under review
increased ¥2.7 billion, or 7.9%, to ¥37.5 billion.

Year Ending March 2016 Forecasts
In the fiscal year ending March 31, 2016, which marks the second
year of DAN-TOTSU Three-Year Plan STEP, our medium-term
management plan, we will create services that will convert into
more tangible forms our “Value Networking” design that targets
B2B logistics. In conjunction with these efforts, I feel it will benecessary to continue toward the stage where more customers
will be making easy use of our services. Furthermore, we willdraw up growth strategies from a long-term perspective andaccelerate our globalization efforts.
We forecast consolidated operating revenues will increase
2.4% year on year, to ¥1,430.0 billion, and operating income willrise 4.4%, to ¥72.0 billion. The forecast for operating income
factors in the negative impact of approximately ¥1.5 billion
increase in size-based business tax due to the government’s tax
reform plan. As a result of ongoing implementation of thoroughgoing cost optimization, we are expecting the operating income
margin to edge by up 0.1 of a percentage point, to 5.0%.
Long-Term Management Plan and ROE
The entire Yamato Group is pushing forward in unison with aview to converting into more tangible forms its management
philosophy of helping to “enrich our society by enhancing thesocial infrastructure of TA-Q-BIN networks, creating more convenient services for comfortable lifestyles and developing an innovative logistics system.” To this end, the Yamato Group
formulated DAN-TOTSU Management Plan 2019 in January 2011
and took on the challenge of becoming Asia’s No. 1 solution
provider in distribution and lifestyle support by the fiscal year
ending March 31, 2020, which marks the 100th anniversary of theCompany’s founding. Under this long-term plan, we aim to raise
the levels of satisfaction of all our stakeholders, including shareholders, customers, society at large, and employees.
In addition to bringing about improvements in profitability
by steadily carrying out the business plans, we are working toenhance capital efficiency by implementing capital measuresthat draw on our robust financial foundation. From thisperspective, we have set ROE targets to serve as an indicator thatwill raise awareness toward an improvement in shareholder
value, and in my view we will achieve the sum of business andfinancial strategies. Under the medium-term management
plan DAN-TOTSU Three-Year Plan STEP, which remains in effectuntil the fiscal year ending March 31, 2017 (fiscal year ended
March 31, 2015, to the fiscal year ending March 31, 2017), we areaiming to achieve ROE of 9.0%, and under the long-term DANTOTSU Management Plan 2019, which remains in effect until thefiscal year ending March 31, 2020, we are aiming to achieve ROE
of more than 11.0%.

Agility and Flexibility of Financing Activities
The Yamato Group consistently and continually generates
between ¥70.0 billion and ¥80.0 billion in cash annually to maintain the agility and flexibility of financial activities while sufficiently covering ordinary expenditures. As of March 2015,
Yamato Holdings received the following credit rating from Rating
and Investment Information, Inc. (R&I):

R&I AA–The Yamato Group will strive to remain aware of capital costs,
while at the same time maintain the existing credit rating tofacilitate smooth capital procurement.
Implementation Status of Capital Policies to Enhance
Financial Quality and Basic Policy on Shareholder Returns
The Yamato Group seeks to provide returns to shareholders
based on the return to shareholders ratio of 50%, a combinationof both dividends and purchase of treasury stock. Our basic
policy is to pay dividends with a targeted consolidated dividend
payout ratio of 30% of consolidated net income. During the fiscal
year ended March 31, 2015, we purchased ¥30.0 billion in treasury
stock and retired ¥31.5 billion of treasury stock. Although thenegative impact of new tax reform amounted to approximately¥3.5 billion, ROE edged up 0.3 of a percentage point comparedwith the previous fiscal year, to 6.7%, and the return to shareholders ratio, a combination of both dividends and purchase of treasury stock, exceeded 100%.
For the fiscal year ended March 31, 2015, dividends amounted
to ¥25 per share, ¥1 higher than in the previous fiscal year. For the
fiscal year ending March 31, 2016, we are planning a dividend of¥26 per share for the fourth consecutive year and a consolidated
dividend payout ratio of 25.2% and will take our earnings performance into consideration as we aim for a consolidated dividend
payout ratio of 30%. With regard to treasury stock, we will be
flexible in our considerations of its utilization for M&A as part ofour capital policies.
Change of Dividend(Yen)(%)

109.2%

35

27.7%

30

120

60

¥25.00
25

0

20

(60)

15

2007 2008 2009 2010 2011 2012 2013 2014 2015

Years Ended March 31
Cash dividend per share (left scale)
Total shareholders’ return ratio (right scale)(120)

Payout ratio (right scale)

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201519

Ten-Year Summary and Business Highlights
For the year ended March 31, 2015

Years ended March 31

RESULTS OF OPERATIONS:
Operating revenues
DeliveryNon-delivery
Operating costs
Selling, general andadministrative expenses
Operating income
Income before income taxes andminority interests
Income taxes
Net income (loss)
PER SHARE OF COMMON STOCK:
Basic net income (loss)
Diluted net income
Cash dividends
Net assets per share
Stock price (closing), end of year

2006

2007

2008

2009

2010

2011

2012

¥1,144,961
908,228
236,733
1,043,372¥1,161,568
934,607226,961
1,064,044¥1,225,974
981,142244,832
1,129,008¥1,251,922
997,898
254,024
1,167,764¥1,200,834
966,480
234,354
1,110,971¥1,236,520
995,651
240,869
1,143,006¥1,260,833
1,014,564
246,269
1,163,777

32,86868,72130,363
67,161

28,786
68,18028,43755,721

28,474
61,38929,20064,31430,40566,651

7,712
31,276(23,968)

66,82532,47033,81367,596
31,44735,353

48,99623,34925,52360,43428,09632,282

61,83628,491
33,20845,817
26,05919,78720.00
951.08
2,410

75.59
74.00
20.00
1,005.63
1,900¥ 123,483
423,690793,222
48,86535,003¥ 140,377
445,263829,72148,881
40,150¥ 125,355
465,801
874,219
124,832
44,772¥ 159,937
475,815
869,606
45,856
42,697¥ 165,890
512,910878,641
39,70039,883¥ 185,922
515,602899,363
52,47239,583¥ 182,111
514,996919,295
48,61538,682

84,67580,763116,896

84,46377,06487,89971,843

KEY RATIOS:
Operating income margin (%)

6.00

5.78

5.56

4.45

5.11

5.20

5.29

Net margin (%)(2.09)

2.91

2.88

2.04

2.69

2.69

1.57

(3.26)(5.43)
143.7753.41
1.56
137.92
2.5

4.17
7.78
149.3053.66
1.43
260.66
25.1
1.9

4.15
7.76
144.8953.28
1.44
223.00
18.3
1.4

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

152,787
75,552
77,235

157,653
77,17080,483

169,836
80,843
88,993

170,662
82,601
88,061

167,555
82,39585,160171,642
83,427
88,215

177,301
84,29393,008

1,128
653

1,174
647

1,236
644

1,232
646

1,262
624

1,348
609

1,423
600

1,734
69

1,970
66

2,206
64

2,231
65

2,262
65

2,312
64

2,187
62

FINANCIAL POSITION:
Working capital
Total shareholders’ equity
Total assets
Capital expenditures
Depreciation and amortization
Net cash provided by operating
activities¥

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 Mail handling volume(Millions of units)
Unit price (Yen)(53.47)

¥

¥

79.80
78.12
22.00
1,050.99
1,460

¥

57.60
56.45
22.00
1,073.86
927

Foreign currency translation: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥120.17 to U.S.$1.
Note: On March 31, 2015, we ceased accepting items for Kuroneko Mail and from April 1 launched the Kuroneko DM-Bin.

20

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

¥

71.84
71.16
22.00
1,130.33
1,314

¥

73.42
73.30
22.00
1,173.60
1,290

¥

46.00
44.87
22.00
1,197.26
1,279

Millions of Yen

Thousands of
U.S. Dollars

Analysis of Operating Revenues(¥ billion)

2013

2014

2015

2015

¥1,282,374
1,028,219
254,155
1,181,834¥1,374,610
1,099,400
275,210
1,274,471¥1,396,708
1,101,439
295,269
1,290,715$11,622,771
9,165,671
2,457,100
10,740,742

34,337
66,20337,04363,09637,046
68,947308,282
573,747

64,28429,56335,14465,88231,003
34,776

69,15831,55537,533

575,499
262,584
312,336

FY14/3

1,374.6+2.0

Delivery+13.5

BIZ-Logistics

Home Convenience (0.2)

Yen

¥

81.85
79.84
23.00
1,261.35
1,740

¥

82.22
80.18
24.00
1,316.12
2,224¥

U.S. Dollars

90.41
88.26
25.00
1,368.66
2,772$ 0.75
0.73
0.21
11.39
—

Millions of Yen

Thousands of
U.S. Dollars

e-Business (0.3)¥ 179,999
551,379
1,032,134
79,531
42,266¥ 209,172
565,521
1,082,531
52,022
46,058$1,740,632
4,706,009
9,008,333
432,905
383,277

73,95080,075

92,620770,744

5.16

4.59

4.94

2.74

2.53

2.69

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
173.45
30.7
2.0

+1.5

Autoworks
Other

+1.6
1,396.7

FY15/3

YoY+22.0

Analysis of Operating Income(¥ billion)

FY14/3¥ 186,868
534,451
950,153
48,05237,936+3.9

Financial

63.0
Revenue increase+22.0

Increase in personnel expenses+2.8

Increase in subcontracting expenses+13.3

Vehicle expenses 0.0
Other

+11.0

Elimination(10.9)
68.9

FY15/3

YoY+5.9

Quarterly YoY Growth Rates of TA-Q-BIN Delivery Volume andUnit Price(%)
20

177,108
84,422
92,686

193,146
87,279105,867

197,056
88,247
108,809

1,487
591

1,665
574

1,622
595

2,112
61

2,084
61

1,901
61

15
10

3.9%

5
0

–4.9%

(5)
(10)

1Q

2Q

3Q

4Q

1Q

2013
TA-Q-BIN Delivery Volume Growth Rate

2Q

3Q

2014

4Q

1Q

2Q

3Q

4Q

2015

TA-Q-BIN Unit Price Growth Rate

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201521

Innovation
for Our Future

The Yamato Group’s Unique Strategies toward Sustainable Development
1919

1929

1976

FoundedFirst innovation

Second innovation

2013
Third innovation

SPECIAL FEATURE

S

ince its foundation in 1919, the Yamato Group has continued
to create innovative services and value that have met society’s needs. Underpinning that growth have been unique innovations in which the Company has been engaged over many years.
For the shipping line business of 1929, our first innovation, theCompany succeeded in bringing more convenience to customers
by transporting consolidated goods that were delivered to different customers by truck. The second innovation was the TA-Q-BIN
business that was started in 1976. By updating the systems that
had been utilized up until that time for transporting shipments
between individuals and companies and, over and above that, by
responding to the variety of customer needs,

22

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

the Company built up TA-Q-BIN services as a form of lifestyleinfrastructure that cannot be done without, in the same way
electricity and running water are needed. The Company is currently promoting “Value Networking” design, its third innovation.
In this section, we focus on the “Value Networking” design,
which will drive the growth that will bring to fruition an improvement in the Yamato Group’s medium-to-long-term corporate
value. We will outline “Value Networking” design and explain its
initiatives, the human resource training that will underpin thoseinitiatives, and also the corporate image for which the YamatoGroup is ultimately aiming.

Innovation for Our Future

Toward an Innovative
Infrastructure to Underpin
Japanese Corporate
Growth Strategies
By causing logistics to evolve into a “means for generating
new value,” the Yamato Group will realize logistics reform

In July 2013, the Company commenced the “Value Networking”
design. By implementing domestic and overseas network innovations, the Company will cause logistics to evolve into a “means forgenerating new value” not only through costs, contribute to Japan’s
economic growth strategies, and engage in logistics reform.
Against this backdrop lies the issue of customers’ logistics costs
and logistics associated with changes in the market environment.
For distribution industry customers, logistics costs are increasing
due to the high-frequency transportation of small lots arising fromthe burgeoning e-commerce market. In the case of manufacturingindustry customers, increases in total distribution costs brought
about by the separation of the manufacturing base and productshipment destination, and increases in inventory are being cited asa cost pressure issue. The Company launched its “Value Networking”
design to address these very issues. While keeping down customers’
logistics costs, “Value Networking” design brings improvements inlogistics speed, a dramatic rise in quality, and fulfills the aim targeted from the outset of the bottom-up growth of Japanese companies as a whole. Seamlessly integrating its nationwide “lastmile” delivery networks in Japan and in other Asian countries—
networks that boast the Company’s unique information technology (IT), logistics technology (LT), and financial settlement
technology (FT) functions as well as core competencies—with theunparalleled speed provided by Haneda Chronogate, Atsugi
Gateway, and the Okinawa International Logistics Hub—

the Company is promoting the provision of innovative solutions
to raise the bar in all three areas: logistics speed, cost, and quality.

Implementing “Value Networking” Design Plan Basedon Five Engines of Reform
1. Non-stop logistics network
Full-scale operation of the multifunctional Haneda/Atsugi/Okinawa
super-hubs that integrate speed and value-added features (Please refer
to “Logistics Reform Case Studies” on pages 24 and 25.)

2. Cloud-based network
FRAPS* rapidly and reliably “consolidates, controls, and optimizes while
delivering to multiple locations,” interfaced via a cloud-based network

3. The world’s first integrated delivery network ofinternational refrigerated packages
Start of International Cool TA-Q-BIN (Please refer to “Logistics Reform
Case Study” on page 24.)

4. Logistics visualization
Seamless digital informatization enabling both senders and receivers tovisualize logistics from shipment to arrival

5. Demand chain-perspective innovation
Satisfying the needs of both purchasers and suppliers

By completing Haneda Chronogate, Japan’s largest logistics
terminal, in September 2013 as the core, the Company was able tobuild the foundation of a non-stop logistics network that will
generate speed and added value. In the years to come, theCompany will leverage and work on enhancing the networks thathave been built up over many years and realize improvements incustomer value by providing optimal solutions to a variety ofcustomers that transcend the nature or scale of their businesses.
Furthermore, the Yamato Group’s human resources that havedeveloped over the years will be nurtured through logistics
reform under the “Value Networking” design and efforts thereby
made to improve the Company’s management resources and,going forward, corporate value.
* FRAPS is an acronym for the Free Rack Auto Pick System, a cloud-based setup thatcan use “last mile” networks. This picking system uses proprietary flow-through racks.

Overall Diagram of “Value Networking” Design
Develop high-added-value business modelBusiness developmentin Asia

Expansion to businesslogistics

Community-based
lifestyle support services

Logistics network innovation

Speed up

Delivery

BIZ-Logistics

IT network innovation

Lower cost

Home
Convenience

e-Business

Higher quality

Financial

Autoworks

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201523

SPECIAL FEATURE 01

Providing Optimal Solutions with
“Value Networking” Design
Of the customers that utilize Haneda Chronogate, which forms the core of the “Value Networking” design,
the backbone is formed by overseas companies. Here we outline case studies ofthe logistics reform provided by the Yamato Group.

Case Study 1

International Cool TA-Q-BIN (Next-day delivery of fresh products to Asia)
Domestic primary industry/producers

Customer

Issue

Solution

Since international refrigerated transport services for small-lot
shipments previously did not exist, domestic producers werelimited to developing foodstuffs such as fresh products to be
produced in overseas markets.

Domestic producers in Japan are connected with the rest of
Asia via the Haneda Chronogate and Okinawa International
Logistics Hub operations. The shortened lead times and safe
refrigeration technologies have enabled very fresh products to
be delivered as they are to overseas customers.

Domestic Japanese producers: Expansion of sales channels
in Asia, no need for investment in logistics, quality maintained,
Added value logistics visualization
Purchasers: Quality maintained, early receipt of orders, transportation visualization“International Cool TA-Q-BIN” Japan to Hong Kong Delivery
Same dayJapanese
producers/
manufacturers

Next day

Early-evening –Late-night dispatch

Late-night –early-morning dispatch

Late-night dispatch

Haneda Airport/
Regional Airport

Yamato Transport

Naha Airport

Okinawa International
Logistics Hub
Cool storage/Customs clearing/Quarantine

Next-day delivery

Hong Kong
AirportHong Kong Yamato Transport
Import/Quarantine/
Customs clearing/Sorting

Speedy provision of refrigerated/frozen seamless refrigerated transportation

24

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Hong Kong User/
Restaurant/
FactoryInnovation for Our Future

Case Study 2

Parts Supply/Procurement

Customer

Machinery manufacturers developing business in Asia

Issue

In the case of the procurement of parts from suppliers scattered across Japan and other countries in Asia to manufacturers that have developed their business in Asia, time waslost due to customs clearance and the time needed forcompanies to send consignments to their own work sites.

Solution

The Company has established a Parts Center within theInternational Logistics Center adjoining the Okinawa
International Logistics Hub. The Parts Center supports
speedy parts supply and procurement for companies thathave developed their businesses overseas by enabling
daily, round-the-clock customs clearance and an extensive
network of nighttime cargo flights serving points in the restof Asia.

Manufacturers: Shortened lead times, procurement visualization, minimization of inventory and space taken up by
inventory, negated need for logistics investment
Added value
Suppliers: Reduction of operational pressures, extended
production time, logistics visualization, ensuring of production lead times

Parts Supply/Procurement between Japan and Asia Utilizing
Okinawa International Logistics Hub
Provide the following functions toenterprises operating in Asia
• Cross-merging• Equipment repair
and maintenance• BondingKansai Gateway

Haneda Chronogate
Atsugi Gateway
Mikawa Gateway

ShanghaiTaiwanHong Kong

Okinawa International
Logistics Hub
Established “parts center” inside theinternational logistics center

ThailandCountries expanded
TA-Q-BIN service

Vietnam
Malaysia

Important bases
Singapore

Indonesia

Case Study 3
Customer

Medical Device Cleaning/Maintenance
Medical device manufacturers

Issue

The lead times required for cleaning surgical medical
devices used at medical institutions in Japan had become
prolonged due to the need to transport the devices fromthe medical institutions and on occasion send them backand forth between cleaning/maintenance bases and storage locations.

Solution

The Company has enabled 24-hour cleaning, maintenance,and holding of inventory stock at its Haneda Chronogate
facility. By eliminating the previous need for sending surgical
medical devices to cleaning/maintenance bases, the numberof movements have been reduced and improvements ininventory turnover realized.

Manufacturers: Inventory turnover improvement, inventory
visualization, inventory reduction, logistic cost reduction from
eliminating need for cleaning/maintenance base system
Added value
Medical institutions: Procurement visualization, just-intime (JIT) procurement, ensuring of safe and hygienic
equipment

Medical Device Cleaning/Maintenance Realized byHaneda Chronogate
Medicalinstitution A

HanedaChronogate

Atsugi Gateway

Testing/inspection
High quality storage(medically licensed)
Cleaning/maintenance+Air-freight link

Medicalinstitution B

Medicalinstitution C

What Is Haneda Chronogate That Plays a Central Role in “Value Networking” Design?
Completed in September 2013, Haneda Chronogate is the largest
logistics base in Japan and where the Yamato Group’s functions havebeen consolidated. From its location, scale, and functions, Haneda
Chronogate is of paramount importance for its central role in the“Value Networking” design.
Directly adjoining Haneda Airport, which serves international
destinations, Haneda Chronogate serves as a hub connecting thedomestic TA-Q-BIN network with the Asia next-day delivery network.
Also in the vicinity are a Japan Railway
Company cargo container terminal aswell as the ports of Tokyo and
Yokohama. Affording excellent highway access, the special feature ofHaneda Chronogate is that the facility

enables speedy transportation by land, sea, and air.
Shipments that arrive at Haneda Chronogate are quickly sorted
by destination by means of state-of-the-art material handlingequipment, which is capable of round-the-clock sorting, on thefirst and second floors of the facility. Shipments that require thevalue-added functions provided at Haneda Chronogate are transported via a conveyor belt to value-added-function areas on thethird to the fifth floors. By providing customers, no matter thenature or scale of their businesses, with a wide range of valueadded functions around the clock—including fast-track customs
clearance; bonded storage/localization; cross-merging; medical
device cleaning/maintenance, kitting, assembly, maintenance, andrepair; and on-demand printing—the Company is bringing innovation to its customers’ logistics.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201525

SPECIAL FEATURE 02

Training and Producing Human
Resources Who Will Go Beyond theBoundaries of the Logistics Industry
To continue innovation that is in step with the times, the human resource strategies that raise
the competitiveness of the Group as a whole are contributing to corporate value creation from a long-term perspective.
Yamato Group Human Resource Strategies
Evolve in Conjunction with Management
Strategies
Human resources are needed for the YamatoGroup to continue to grow sustainably. These
are human resources who will create value insociety unfettered by the frameworks known astransportation and gather a wide range of
information and opinions.
In the past few years, amid increasing logistics
volumes brought about by such factors as the
expansion of the e-commerce market and thehigh-frequency transportation of small lots for
B2B logistics, corporate customer logistics costs
have been on an upward trend, and keeping costsin check has been cited as a problem area. I believe
we will shift toward value-added competition at an
early date, raising customer convenience bymeans of our delivery-plus-something-extra
strategy or, more specifically, by achieving logistics
reform in terms of cost, speed, and quality. To
make this strategy more definite, it will be of theutmost importance that we train and retain

26

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

human resources who are capable of providing
value that pushes the boundaries of the logistics
industry in its conventional form.

Tomoki Otani
Senior Executive Officer
Responsible for Human Resources
Strategy, Network Strategy, Legal
Affairs, CSR and Audit

Acquiring Abilities to Fight to Fullest awayfrom Base
There are two key expressions with regard to
training the human resources we require: “ability to fight away from base” and “unchanged
philosophy.”First, by “ability to fight away from base” I
mean displaying the capabilities of humanresources to the fullest extent, even in situations in which they do not have any experience,
while overlapping the Company’s management
strategies with their own roles and responsibilities, since such capabilities will enable theaccumulation of results that will lead thegrowth of the Company.
The Yamato Group is currently promoting its“Value Networking” design to offer a variety ofadded value during the process of carrying customer shipments. For example, medical device

Innovation for Our Future

manufacturer customers conventionally needed
to transport surgical medical devices to several
bases for each cleaning. Having the Company
assume responsibility for the cleaning operation,
however, has enabled the provision of added value
from the aspects of speed, quality, and cost, and it
has become unnecessary for the devices to passthrough cleaning/maintenance bases.
This is just one example, but in the years tocome the Company will provide added value to avariety of customers, no matter the nature or scaleof their businesses. Marketing capabilities will be
indispensable for broadening our customer baseand enabling us to subtly detect changes in markets and needs, which will never be detected byremaining only on Company premises. In addition
to personnel exchanges with Group companies,
the Group is implementing transfers outside theCompany, the aim being to acquire wide-ranging
ways of thinking, from fields that are not bound by
the Company’s common practices and culture, by
becoming acquainted with and absorbing theorganizational cultures of other companies as wellas the thoughts of those companies. As a result, I
am expecting these moves to lead to the creation of
new value that had not been considered previously.
In addition to in-house human resource
training, we are focusing efforts on hiring fromoutside the Company to enhance our “ability tofight away from base.” By enhancing the humanresources capable of being active in management posts, including at the director level, or
globally, we will bring diversity to the Company
and create the fertile soil in which a row ofseeds of new ideas will germinate and grow.
Factor that Remains Constant Even
amid Change
Amid these management strategies and changes
in human resource strategies, there is one factor
that must remain constant. This is our corporate
philosophy, which has been handed down in an
unbroken line as our guiding compass of growthsince the Company’s foundation. In the YamatoGroup, all employees, including drivers, collectively have an executive candidate awareness.
Since the Company’s foundation, the “allemployee management” philosophy of each andevery person leading the Company toward thesame goals has been passed down consistently.
For this philosophy to continue to be passed
down in the years to come, the Company has
been implementing a job rotation system since
1987, through which employees briefly experience logistics center operations for two years
immediately after joining the Company. By
experiencing the logistics center on the front

There are two key expressions with regard to
training the humanresources we require:“ability to fight away frombase” and “unchanged
philosophy.”line at an early stage, young employees naturally
understand the core elements of the Company’sbusiness model, the aim of which is to cultivate
an “all-employee management” attitude thatdesignates the customers as its starting point.
The sharing of the corporate philosophy will
not remain solely in Japan. We are also working
on ingraining the philosophy among our local
employees overseas. As one part of these efforts,
we brought together around 20 representatives
from Europe, the United Sates, and Southeast Asiaand conducted a training session related to thesharing of our philosophy. Previously, I had visited the sites and explained the philosophy, but it
had taken a considerable amount of time for the
explanation to be understood at an acceptablelevel. By gathering representatives from acrossthe world in one place and having them share
their similar thoughts and concerns, I believe thateven if they are faced with a problem locally thatthey will immediately recall our philosophy andstrive to overcome that problem. I feel there has
been a favorable response upon hearing feedback
from one training session participant, who said
that, “Previously we had the sense of working foran overseas logistics company, but now, throughthis training, we have reached the stage where wehave become more aware of a sense of pride as
Yamato Group employees.”
What has enabled the Yamato Group to growto where it is today have been the efforts of eachand every employee in Japan and overseas,
including the Sales Drivers (SDs) on the frontline.
Amid the ongoing advance of globalization ofsociety, we will aim to remain as ever a company
in which our employees can take lasting pride.We
will further raise the Group’s competitivenessby accurate human resource strategies tailoredto business strategies, and by the thoroughcross-fertilization of our philosophy that will
have remained a constant even in 100 or 200
years’ time.

Training and producing human resources
who will create value in society unfetteredby the frameworks known as transportationand gather a wide range of informationand opinions.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201527

SPECIAL FEATURE 03

Ensuring Long-Term Corporate
Growth through Accelerated
Global Development
The Yamato Group is promoting global development to ensure its long-term
growth over the next 20 to 30 years and beyond.

Richard Chua Khing Seng
Executive Officer,
Yamato Holdings Co., Ltd.
Managing Director,
Yamato Asia Pte. Ltd.

28

Yamato Asia Pte. Ltd.: Assuming Commandof Southeast Asia Strategy
Established in Singapore in January 2014,
Yamato Asia is an intermediate holding company in Southeast Asia responsible for supervising local subsidiaries that are deployed in
the region. The reason for establishing a base in
Singapore rather than in Japan was our belief
that a system was necessary in the vicinity of
our customers to enable rapid responses todiversifying needs. In addition to building
networks predominantly in Southeast Asia,
Yamato Asia’s role is to manage in such a waythat the subsidiaries’ business management
proceeds as planned. Our long-term vision calls
for the building of a “last mile” network thatcovers all of Southeast Asia and the developmentof global, cross-border small parcel transportation that is connected with Europe and theAmericas as well as East Asia and Japan.
A year and a half has passed since Yamato
Asia’s establishment, and our strategy has
started to produce results. In April 2014, we

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

inaugurated the Singapore-Malaysia CrossBorder Delivery Service. Combining regulartruck services between the two countries with
TA-Q-BIN networks, customers can now conductlogistics operations between the two countries
with ease thanks to the service’s consistent performance, from collection to customs clearance
and delivery. Furthermore, in July 2014 weacquired TIDIKI EXPRESS (Pte) Ltd., which owns
a domestic emergency delivery network in
Singapore. We believe this move will enable suchservices as emergency transportation within amatter of a few hours and large product delivery
as well as the provision of more advanced services in the B2B field. In addition, in April 2015,
in cooperation of the Singapore Economic
Development Board, we established in-house
R&D organizations with a view to creating abusiness model along industry lines in Southeast
Asia and an Asia Business Model Innovation
Centre within Yamato Asia. The pivotal base of
the global strategy at the Yamato Group remains
B2B services, but the “2B” can be said to be any

Innovation for Our Future

one of a wide range of industries, so it was necessary to create a sound business model throughresearch by industry to know whether providing
a particular solution would be the best for thatindustry. In the environment with which
Singapore is blessed, we are working to makeeffective use of our resources by consolidating
those resources that are distributed to eachregion. In this way, Yamato Asia spans nations
and, in addition to putting in place the systems
that will enable growth throughout the region, iscreating plans to make business inroads in new
countries and cities.
An Asset in Overseas Development:“Last Mile” Networks
As you may expect, it is the domestic “last mile”
networks, such as TA-Q-BIN in Japan, that holdthe key to the Yamato Group’s global development. It is our policy to accelerate growth using“last mile” networks as a lever. Why are “last mile”
networks important? Despite many corporate
customers who want to know reactions of consumers in a timely manner, there are fewer
business operators who are experts in the logistics business that can connect corporate customers and consumers. This represents a major
business opportunity for the Yamato Group. In
an era when consumers select goods, corporate
customers that include manufacturing companies, for example, will naturally verify for certainthat their products have been delivered, butthere is a growing need to instantly catch thereaction of customers (end-users). Possessing theknow-how to enable a response to that need,As you would expect, it is
the “last mile” networks
that hold the key to the
Yamato Group’s global
development.

Yamato Asia spans nations and, in addition to
putting in place the systems that will enablegrowth throughout the region, is creating plans
to make business inroads in new countries.

I believe the Yamato Group is working to set
itself apart from other companies.
Familiar for its black cat brand logo inJapan, where the Company is also the market
leader, the Yamato Group is recognized ashaving the smallest presence overseas. In termsof global development, we are very much awareof the necessity of speed to continue forging
ahead in business.
Human Resource Strategy to
Accelerate Growth
Language study is necessary to enable humanresources at the Yamato Group to develop
global business, and those human resourcesmust fully understand local factors and havethe courage to take risks. When a company
makes inroads overseas, all types of risks may
accompany such a move. Under such circumstances, I believe human resources need toeliminate all conceivable risks to determine
how big of a risk is worth taking to bring about
growth in business, and at times they must beable to judge when to take that type of risk.
Moreover, in the sense of business management or operational management and in B2B
management, they will need to elicit customer
needs when on site, and thus we need humanresources who possess the practical skills thatwill enable them to provide solutions.
I always want employees to give some additional thought as to what form the YamatoGroup should take in 30 years’ time. In this time,as the population continues to decline in Japan,
business growth is expected to slow. We should
be asking ourselves whether we will be satisfied
with being No. 1 when the overall market scale isshrinking, or whether we aim to be No. 1 in Asia,
growing to where global business accounts formore than half of the Yamato Group’s overallprofit in 20 or 30 years’ time, while maintaining
our position in the domestic market. All employees are required to have a strong sense ofurgency to take immediate action.

My mission is to continue establishing businesses in Southeast Asia according to plan, but
I am Yamato Group’s first non-Japanese director. I point out the Yamato Group’s strong
points and weak points from a non-Japanesepoint of view and recognize my own role ofproposing enhancements and improvements.
Going forward, I will devise strategies from along-term perspective and promote strategies
for Southeast Asia by constantly addressing
issues with a sense of urgency.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201529

Corporate Social Responsibility

Creating Shared Value (CSV) Initiatives
Make the Yamato Group Even Stronger
Rather than being passive with regard to various issues to be faced,
we are linking those issues with improvements in Yamato competitiveness by actively addressing them.

Yamato Group Risk/Issue Approach Policies
Risk/Issue

Labor-intensive business model

Yamato Group Approach Policies

Deliveries to coincide with time bands in which a high proportion of customers are at home and raiselabor productivity by customers by combining full-time Sales Drivers (SDs) and part-time field castmembers (workers involved in pickup and delivery)
Aim to combine increased pickup and delivery efficiency with improvements in customer convenience byrenewing mission-critical IT systems

Labor shortage

Improve efficiency in work that does not depend on manual labor by digitization and state-of-the-art
automated equipment at logistics terminals
Develop and encourage diverse ways of working, endeavor to create workplaces in which each and every
employee can feel actively engaged, irrespective of their gender, age or nationality

Reduction of shipments due toJapanese population decline

Create business opportunities and plan monetization through the TA-Q-BIN network that is deeply rooted
in local communities, such as addressing new needs brought about by an aging population

Convergence of mail order market
expansion in Japan

Raise Asia-centric overseas presence and implement growth strategies

Diversification of customer needs

Ascertain the needs of local communities through customer networks that are deeply rooted in local
communities, promote the development of new services in response to lifestyle changes

Increase in CO2 emissions and wastematerial volumes

30

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Aim to reduce CO2 emissions and fuel consumption by promoting Ecodrive and by not using vehicles for
pickups and collections

Society

Promotion of CSV in Collaboration with Local Communities
Based on its idea of CSV (Creating Shared Value), by which Yamato enterprises create common value with local communities
through their main businesses, the Group is providing the networks and functions, including information, logistics, and financial settlement, that each Group company possesses to local people, such as local governments, residents, and NPOs. The
Company is engaging in Project G (which stands for “government”) with the aim of revitalizing local communities by resolving
issues in cooperation with others.
Watch-Over Initiatives for Seniors Provided by Sales Drivers
Across Japan, the Yamato Group is
engaging in lifestyle support, which
includes confirming the well-being ofseniors and shopping for them, and insales promotion, such as expanding sales
channels for special products. Since April
2013, the Company has been delivering monthly periodicals toseniors living alone in the city of Kuroishi, Aomori Prefecture, andmaking efforts by which a report is made to the local government
if an elderly recipient has not been at home for a certain length oftime. Yamato Transport has been able to create a mechanism bywhich a local governmental agency can detect anomalies reliably
and at low cost. This has been achieved by having the fees borneby the city according to the number of deliveries, and limiting thework of the sales drivers (SDs) to the delivery and the reporting ofabsences to the city office. In April 2015, the Company beganproviding the service to roughly 550 targeted households where aperson aged 70 or over was living alone in the town of Fukaura,
which faces the same problem, and with which Yamato Transport
signed an agreement. Anomalies discovered when delivering aperiodical are reported to the town authorities, advancing an
initiative that supports the safety of seniors living alone throughcollaboration between the town and social welfare workers.

Regional Product Sales Channel Expanded Overseas
In July 2014, the Company constructed the Aomori Prefecture
General Distribution Platform tosupport the expanded distributionof the prefecture’s agricultural,
forestry, and fisheries products inJapan and overseas. Provision of
the “A! Premium” service commenced in April 2015. This service
enables agricultural, forestry, andfisheries products from Aomori
Prefecture to be delivered to western Japan the following morning and to other Asian destinations,such as Hong Kong, via the shortest or next-day deliveries. As a
new channel that even enables the sale of individual items of
produce that will have a certain value to producers, offering
shortened delivery times and undiminished freshness and quality, the Company is hoping this initiative will give rise to a newform of commercial distribution. Already attracting the attentionof the Ministry of Agriculture, Forestry and Fisheries of Japan,
I would like to see this developed into a direct delivery service
aimed at the higher socioeconomic groups in Asia.

Respect for Diversity
The employment of human resources from a variety of backgrounds develops a new sense of worth and will be linked to the creation of corporate value for the entire Group and the creation of social value for society as a whole. The Yamato Group endeavors tocreate workplaces in which each and every employee can feel actively engaged, irrespective of their gender, age, or nationality.
Encouraging the Creation of Workplacesin which Women Can Be Active
Ratio of Female Employees (as at March 31, 2015)

Approx.

35% (70,000)

About 70,000 women are engaged in business operations within
the Yamato Group, which means about 35% of all Group employees are female. Each business company creates its own systemand environment in which women can remain working. Based on
the Act on Advancement of Measures to Support Raising NextGeneration Children, Yamato System Development Co., Ltd.
(2011), Yamato Logistics Co., Ltd. (2013), Yamato Transport Co.,
Ltd. (2014) and Yamato Management Service Co., Ltd. (2015) wereaccredited by the Ministry of Health, Labour and Welfare for theirefforts in supporting child rearing. Centered on the Diversity
Promotion Department set up within Yamato Holdings in August
2014, the Yamato Group is making proactive efforts in the creation of workplaces that fully utilize women’s abilities.

Contributing to Employment Creation forPeople with Disabilities
Employment Ratio of People with Disabilities (as at March 31, 2015)

2.08% (2,187)

As stated in its corporate stance, the Yamato Group “assists andadvocates for persons with disabilities” and continues its efforts
to create employment opportunities for them. One of thoseefforts is the operation of Swan Co., Ltd., which assists people
with disabilities and supports their participation in society
through the manufacture and sale of bread. Established in 1998
by Yamato Transport Co., Ltd., and the Yamato Welfare
Foundation, Swan Bakery opened its first shop in Tokyo’s Ginza
district and currently operates 28 shops nationwide, including
directly managed and chain shops. The Yamato Group will continue to help in creating a society in which people with disabilities and able-bodied people can live together.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201531

Safety

Safety Measures toward Achievement of Zero Accidents
The Yamato Group deems community streets and roads as the places to carry out its business activities. Based on our
corporate stance of thorough safety management that keeps respect for human life as its top priority, the Group thoroughly
adheres to its philosophy of placing safety first and business second to maintain respect for human life priority at all times.
Safety Management Disclosure Information
With ensuring the safety of transport business operators as its
goal, the Yamato Group has built up a transport safety management system, based on the Transport Management Safety Systemstipulated by the Ministry of Land, Infrastructure, Transport andTourism, and remains actively involved in its implementation.
Results for the fiscal year ended March 2015 and part of the goals
for the fiscal year ending March 2016 are listed below.
Transport Safety Goals and Achievement Status(Yamato Transport Co., Ltd.)
Traffic Accidents
Item

Results for the fiscal year
ended March 2015

Goal numerical value for the
fiscal year ending March 201630

No. of serious traffic
accidents
No. of serious work-related
accidents
No. of traffic accidents00Year-on-year improvement
rate of 2.2%

Fewer than in previous
fiscal year

Introduction of See-T Navi Supports Safe Driving
Yamato Transport Co., Ltd., pickup and delivery vehicles areequipped with a unique See-T Navi safety and ecological navigation system. This system creates data from SDs’ driving and visualizes issues by acquiring and recording speed, distance, and time
information. We evaluate driving skills based on such data andrank skills on a seven-step scale from A to G. For example, driving
habits that present a low risk of accidents and low environmental
impact, such as low-gear starts and the observance of safe driving
speeds, raise the ranking. In conjunction with promoting the
introduction of See-T Navi, we are implementing initiatives,
which include sharing case studies at individual branch workshops, and actively supporting the safe driving of our SDs.

Budget/Results Relating to Transport Safety
Results for the Fiscal Year Ended March 2015
1. On-board See-T Navi system

Installation expenses .............................. ¥229.0 million
Maintenance fees................................... ¥313.0 million
2. Long-running no accident commendation awardees amount .................... ¥620.0 million
3. Expenses related to long-running no accident commendation ceremony .... ¥59.0 million
4. Expenses related to Nationwide Safety Meet ................................................ ¥6.8 million

Budget Plan for the Fiscal Year Ending March 2016
1. On-board See-T Navi system maintenance fees ....................................... ¥313.0 million
2. Long-running no accident commendation awardees amount .................... ¥575.0 million
3. Expenses related to long-running no accident commendation ceremony .... ¥64.0 million
4. Expenses related to Nationwide Safety Meet ................................................ ¥7.1 million

The See-T Navi system installed in a pickup and delivery vehicle

Supporting Safety by Thorough Maintenance Management
Thorough vehicle maintenance management is indispensable for ensuring transportation safety. The regular checks andmaintenance of all Yamato Group vehicles are undertaken by Yamato Autoworks Co., Ltd., which selects vehicles to purchase on the basis of past maintenance histories and conducts detailed checks at optimal times for replacement vehicles.

Covering the more than
4,000 pickup and delivery base locations of the
Yamato Group, Yamato
Autoworks is responsiblefor 50,000 vehicles andtheir maintenance
Laden with tools, Repair Works vehicles areinspections. Their major used to undertake roadside maintenance anddiagnostic testing
maintenance factories
are in operation around the clock throughout the year. Asidefrom naturally responding quickly in the event of an accident,
they also support the mandatory periodic inspections carried out

32

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

on vehicles by collective management throughout the year.
Furthermore, they perform preventive maintenance to carry out
maintenance before failures occur by frequently checking thestatus of vehicles and gathering information. Of the approximately 880 mechanics, the number that hold automobile inspector qualifications, which enable them to carry out complete
inspections to determine whether vehicles that meet safety standards once maintenance has been completed, has climbed tomore than 650 (as at March 31, 2015). During maintenance, theaccuracy of inspections is raised by double checks by anothermechanic who carries out interim and maintenance completion
inspections.

Environment

A Thoroughly Ecological Approach toTransportation to Achieve Cost Reduction

The Yamato Group refers to its environmental conservation initiatives as “Necology.” Environmental conservation is a partof a corporation’s responsibility to society, and we encourage every individual employee to be constantly aware of environmental conservation as they conduct their daily tasks in addition to ensuring that our corporate activities remain environmentally friendly. We establish environmentally friendly logistics by thoroughly ensuring the environmental friendliness of all
aspects, especially for “packaging,” “transportation” and “delivery.”Pursuit of Reasonably Priced, Environment-Friendly
Transportation
Shifting medium-to-long-distance trunk transportation, which
had previously mainly been by truck, to railway or water-borne
transportation, Yamato Transport Co., Ltd., is promoting trucks
and intermodal transport. Compared with trucks, railway andwater-based transport are highly energy efficient, significantly
reduce CO2 emission volumes, help to curb air pollution andalleviate road congestion, and also have a major effect on cost
reduction. Furthermore, with a view to reducing CO2 emission
volumes, the Company is engaged in expanding pickup anddelivery services by a new trolley (a trailer towed by an electricbicycle) instead of vehicles. Mainly in urban and densely populated areas, we have set up satellite centers to undertake pickups
and deliveries without using any vehicles at all, apart from theoccasional use of a mini vehicle. At centers that require the use ofvehicles for longer distances, the Company is working to reduce
the number of vehicles by selecting the pickup and delivery
method best suited to the area. For example, use is made of carts,
the new trolleys, and mini vehicles for pickups and deliveries innearby areas and a combination of vehicles and carts in areas
further afield.
Modal Shift Volume Trends (Yamato Transport Co., Ltd.)

By working to reduce the number of vehicles through collaboration between Group companies, seamless transportation
between railways and ferries, and utilization of carts and the newtrolleys, the Company is endeavoring to combine various formsof environmental safeguards with logistics solutions.
Development of Environment-Friendly Packaging Materials
At the same time as protecting customers’ important shipments,
Yamato Packaging Technology Institute Co., Ltd., is engaged in
the development of packaging materials that are easy to use, havehigh load efficiency, and are themselves made from materials
that are easily recyclable after use. Particularly in recent times,
there has been a growing need to meet the requests from customers who want to ensure impact buffer capability with cardboard
alone, without any of the foam cushioning material that had
previously been used. In this regard, we are heat sealing cardboard with a special film in a method that holds a notebook computer securely between the cardboard and the film. In addition to
enabling the packaging of PCs, which have different shapes
depending on the model, with one type of material, with thismethod we succeeded in reducing logistics costs, including
reducing the overall shipment volume by approximately 23%,
while ensuring shock-absorbing properties equal to those of
foam-cushioning material by overlapping the cardboard lid.

(Thousands of tons)
600

526.8

512.8
387.0

398.7

390.4

Low-Emission Vehicle Introduction Patterns(Yamato Transport Co., Ltd.)(Thousands of units)

400

25

200

0

105.8

2011

Years ended March 31
Railway transportation

87.7

2012

106.2

119.2

21.11

95.8

0.11

18.79
0.11

20

2013

2014

2015
15

13.56

Water-borne transportation
5.05

14.90
0.04

16.80
0.11

2.73
3.00

10

3.28
5

0.15
5.08

5.41

5.41

5.37

3.17

0.14

0.15

5.39

0.12

2.33
0.10
5.83

5.82

5.83
7.33

6.16

4.72
2.30

0

2011

2012

2013

2014

2015

Years ended March 31
Electric vehicles
Hybrid vehicles
Low-pressure gas (LPG) vehicles
Compressed natural gas (CNG) vehicles
New long-term compliance vehicles
New long-term compliance mail vehicles

The new trolley, about 4,700 of which have been introduced

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201533

At a Glance

Operating Revenues (Millions of Yen)

Delivery

1,200,000

60,000800,000

40,000400,000

20,0000

BIZ-Logistics

2013

2014

2015

0

120,000

6,000

80,0004,000

40,0002,000

0Home Convenience

Operating Income (Loss) (Millions of Yen)

2013

2014

2015

80,000

0

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

800
600

60,000The fiscal year ended
March 31, 2015

400
200

40,000Composition Ratio of
Operating Revenue

0
(200)

20,000(400)
0e-Business

2013

2014

2015

80,000

(600)

9,000

60,0006,000

40,000■ Delivery

78.9%

20,000■ BIZ-Logistics

7.4%

0

■ Home Convenience

3.5%■ e-Business

2.9%■ Financial

4.8%■ Autoworks

1.9%■ Other

0.6%

Financial

2013

2014

2015

0

80,00010,00060,0007,500

40,0005,000

20,0002,500

0Autoworks

3,000

2013

2014

2015

60,000

0

4,000
3,000

40,0002,000
20,000

0

Other

1,000

2013

2014

2015

80,00040,00060,00030,00040,00020,00020,00010,000

0

2013

2014

2015

Note: Operating income in Other includes dividends from Group companies.

34

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

00Overview of Operations by Segment

DeliveryWith the goal of being one of Japan’s “most recognized and mostendeared companies,” the Delivery Business is engaged in businessdevelopment centered on TA-Q-BIN services to help enrich society.

Yutaka Nagao
Representative Director,
President and Executive Officer of Yamato Transport Co., Ltd.

Business Profile
As a form of social infrastructure, theDelivery Business is committed to living
up to the trust society places in our operations while meeting society’s expectations. With the goal of being one ofJapan’s most recognized and mostendeared companies, the Delivery
Business leverages the Yamato Group’s
management resources to realize a society that makes it possible for anybody toobtain the items they want, when theywant and delivers a quality, convenient
lifestyle regardless of where the consumer lives. The company also works todevelop businesses that provide services
designed to bring more convenience tothe lives of its customers.
The environment in which the Delivery
Business operates is entering a period oftransition. In the Japanese market, thetrend is toward increases in volume
thanks to growth in both e-commerce(EC) and person-to-person trading markets as well as more frequent and smaller
lots becoming the norm in B2B logistics.
Moreover, the population is becoming
more concentrated in urban areas, andnew entrants into the distribution market
are emerging on the scene from different
types of industry, such as mail-ordercompanies. On the other hand, coinciding
with an increase in nuclear families anddual-income households, consumers havestarted to demand flexible services in linewith their own lifestyles, and the need is
growing for the acceptance of reasonable
shipments tailored to hectic lifestyles.
At the same time, we must contend
with the escalating effects of the personnel shortage due to Japan’s aging andshrinking population as well as to therural exodus. To maintain our TA-Q-BIN
networks and high-quality services, thepromotion of an environment that can
respond to changes in society is becoming a major management issue.
Against this background, in theJapanese market we will bolster solution
proposals for commercial distribution,
further enhance products and services in
response to the diverse needs of consumers, promote further evolution in our
responses to the needs associated with therevitalization of local communities, andmake improvements to customer convenience. In conjunction with these moves,
we will make progress with reinforcing
the systems necessary for maintaining
and upgrading our high-quality services.
At the same time, in the overseas
market, in step with the rapid economic

growth in developing countries in Asia,
we intend to further expand the TA-Q-BIN
business and promote the formulation of
an integrated overseas and domestic
delivery platform.
Through these initiatives under the“Value Networking” design, we will bringabout evolution in logistics not in termsof cost but by generating value and realizing logistics reform whatever the customer’s industry and regardless of thescale of their business.
—————
Review of the Year Ended March 2015
In the fiscal year under review, the firstyear under our medium-term management plan DAN-TOTSU Three-Year Plan
STEP, we strengthened the foundation forfurther growth that had been built up to
the end of the previous fiscal year. By
ensuring functionality, we also undertook measures to demonstrate our commitment, as a form of social
infrastructure, to live up to the trust
society places in us while meeting its
expectations.
I would like to provide three specificexamples. The first example concerns theefforts made to reform the income structure to provide a consistent quality of

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201535

service amid the changing environment.
As one part of the reform, with regard to
profit structure we worked to increase
revenue by steadily promoting measures
for the collection of adequate TA-Q-BIN
fees. Although the management environment in which the company operates
continues to be challenging, we
explained to customers the appropriate
costs required to maintain and improve
our services and were able to gain theirunderstanding with regard to fees commensurate with those services. With
regard to cost structure, however, we
worked to strengthen vehicle dispatch
planning and performance managementon the basis of improvements in operational design accuracy that drew on operating volume forecasts.
Second, in keeping with the expansionof the EC market, we have made detailed
service provision efforts to respond to
customer needs for improved convenience in the receipt of goods. For

36

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

customers using our Kuroneko Members
membership service, we worked to
upgrade and expand our TA-Q-BIN
Receipt Location Selection Service thatenables customers to select a store
directly managed by Yamato Transport,
or a convenience store, when purchasinga mail-order item. In addition, there wasfavorable utilization of Yamato
Transport’s proprietary Kuroneko Member
Discount, by which members can use
TA-Q-BIN services at a discounted priceby simply settling their accounts with an
e-money card.
For the third and final example, in the
promotion of our “Value Networking”
design collaboration is specifically getting under way between Haneda
Chronogate, Atsugi Gateway, Okinawa
International Logistics Hub, and ourdomestic and overseas TA-Q-BIN networks, and we made enterprising efforts
to expand and upgrade the network,
including the launch of International Cool

TA-Q-BIN to Taiwan, following on fromservice to Hong Kong. At the present
time, we are providing high-value-added
services that combine TA-Q-BIN, logistics,
and financial settlement business at five
regional bases, and we expect that theborderless business world will continue
to advance in the years ahead and crossborder logistics will not remain in theflow of items within a region.
As a result, the Delivery Businessrecorded increases in revenues andincome. Despite sluggish transaction
volume due to such factors as a drop in
consumer confidence and the absence ofthe last-minute demand that had preceded the consumption tax rate hike inthe previous fiscal year, operating revenues edged up 0.2% year on year, to¥1,101,439 million. Operating income
increased 9.6% year on year, to ¥39,205
million, as a result of cost control initiatives that included pursuing efforts tokeep costs in line with operating volumes.

Message from Top Management
With regard to the fiscal year ending
March 31, 2016, the second year under
our medium-term management plan
DAN-TOTSU Three-Year Plan STEP, we willcontinue to build a robust managementfoundation to respond to the changes in
the market environment. Regarding suchchanges in the environment as a new
business opportunity, we will build on
our foundation and generate new value
through further structural reforms andimplement measures to realize our threemanagement policies mentioned below.
Looking ahead to the fiscal year
ending March 31, 2020, we will expand
into innovative business domains, raisevalue added, and implement structuralreforms to enhance our business growthcapabilities.

Management Policy 1

Promote full participation of employees in management with an emphasison the front lines, raise the value of
the Yamato brandTo transform into an entity with anunshakeable foundation of trust that
underpins its corporate activities, andwhere each and every employee demonstrates his or her abilities and the Yamato
brand value is raised through growth as ateam, we will create overwhelming
Yamato quality with the full participationof our employees. We will therefore work
to improve frontline capabilities bystrengthening our training systems andenhancing our team capabilities as well
as further bolstering our “last mile” delivery network. In parallel with these initiatives, we will promote diversity, realignour organizational structure, and encourage the creation of environments inwhich employees are able to work insafety and comfort.
In addition, after deciding to rebuild
the core products of the Delivery
Business, with effect from March 2015 weceased our Kuroneko Mail service to avoid

exposing customers to risk and launched
Kuroneko DM-Bin as a new corporate
service in April 2015. That same month,for greater convenience we also launched
TA-Q-BIN Compact in-person delivery
service and Nekopos mailbox posting
service for small parcels in response toneeds of people requiring more reasonable rates for the carriage of small packets. In the years ahead, we will review ourlarge packet products, plan to expand
and upgrade our points of customer
contact, and provide society withnew value.

Management Policy 2

Reform the income structure andmaintain sustained growth for thecompany and good quality of life for
employees
By renovating our trunk network andmaking our “last mile” network for deliveries more sophisticated, we will create
systems that will realize total optimization that encompasses the Group to
bring about changes in the transportation and collection network structure. We
will therefore undertake a strategic relocation of logistics terminal bases andfull-scale operations of separate manufacturing and sales bases where parcel shipping and storage locations are notselected. In parallel with these initiatives,in targeting quality visualization we will
increase the speed of full digitization
with our Eighth NEKO System, our nextgeneration trunk system, improve collection and delivery efficiency, and reduce
failures by efficient delivery approaches
and accurately predicting delivery times,
as we balance improvements in customer
convenience and efficient management.

non-stop logistics to convert the “Value
Networking” design concept into tangible
forms. Upgrading infrastructure with the
Mikawa Gateway joining the Haneda
Chronogate and Atsugi Gateway and in the
Kansai area, we will further expand sameday delivery between major Japanesecities and next-day delivery to Asia andnext-day delivery within Asia throughcollaboration with the Okinawa
International Logistics Hub and domestic
and overseas TA-Q-BIN networks. In
addition, we will shorten lead times without stopping items and bring about further evolution in logistics, from carriage
to a “means for generating new value” byrealizing high value added for our customers, including reductions in inventories. We therefore brought together thevarious functions of the Yamato Groupand launched Yamato Ec Solutions (YES!)
in June 2015 as a package service thatprovides EC business operators with total
support. We will enterprisingly develop
YES! in combination with omnichannel
expansion in the years to come.
Moreover, we will promote the expansion in handling countries ofInternational Cool TA-Q-BIN with a view tooffering corporate management support
through Yamato Cloud Depot and thegrowth of our sales channels.
We will advance these solutions, notonly from the perspective of the sender(supply) side but also by emphasizing theperspective of the “demand chain” that
captures the needs of the recipient (procurement) side.
To achieve the targets set in themedium-term management plan, we will
steadily implement the plan while
responding flexibly to changes in theoperating environment with respect to thefiscal year ending March 31, 2016 measures centered on those mentioned above.

Management Policy 3

Pursue “Value Networking” design
and meet increasingly sophisticatedcustomer needs
As the Delivery Business, we will realize

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201537

BIZ-Logistics
Guided by the slogan of “LOGINNOVATION,” which encapsulates its
goal of achieving logistics innovation, the BIZ-Logistics Businessdevotes its efforts to satisfying and inspiring the Yamato Group’s
corporate customers, as well as the consumers they serve, throughthe creation of innovative logistics solutions.

Koji Homma
Representative Director,
President and Executive Officer of Yamato Logistics Co., Ltd.

Business Profile
The BIZ-Logistics Business provides
innovative logistics systems by combining a variety of functions—including
logistics, maintenance, and recall
response as well as international transport functions—with the Group’s management resources, which include the
TA-Q-BIN network.
In particular, at Haneda Chronogate,
where we commenced operations in
October 2013, we provide a new logistics
model that integrates speed transport,
leveraging a location directly connected
to all three transport modes of land, sea,
and air, with the value-added functionof round-the-clock operations, 365 daysa year.

—————Review of the Year Ended March 2015
On the basis of the Yamato Group’s“Value Networking” design, we worked to
expand our business domains in the year
ended March 31, 2015 by putting innovation into effect.
At Haneda Chronogate, we leveraged
our logistics functions and TA-Q-BIN
network in launching a transport service

38

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

for vision care (disposable contact lens)
products. By smoothly linking contact
lens shipping operations and nationwide
stores right up to deliveries to individual
customers, we brought about improvements in logistical efficiency and transport speed.
At Atsugi Gateway, we leveraged our
network capable of same-day delivery
and advanced the provision of mail-order
support services. By implementing ourInventory-free Model concept that hasbrought about both expansion of thenext-day delivery area and logisticalinventory optimization, small andmedium-sized mail-order business operators were able to provide services of thesame quality that are provided by major
mail-order business operators. These
services are now utilized by a large
number of mail-order business
operators.
Amid an increasing need for
responses to voluntary food recalls andother product recalls, we worked to
expand our recall support services that
rapidly set up points of contact for users
and assist in the processing of refunds.
Faced with the heightened safety

awareness of customers using products,
we leveraged our overall project coordination and TA-Q-BIN networks, with theresult that our speedy product recall
services have been highly rated, and wehave been able to introduce the services
to a large number of companies.
By these means, in B2B logistics thatdemand speed and multi-functionality,
we worked to organically bring aboutcollaboration with businesses and tostrengthen and accelerate systems toreach the stage where we are able toprovide optimal solutions.
As a result, the operating revenues of
the BIZ-Logistics Business rose 15.0%
compared with the previous fiscal year, to¥103,821 million, and operating income
increased 37.6% to ¥4,683 million.
—————
Message from Top Management
For Japan to remain a base that creates
world-leading innovation, it is anticipated that the country will become more
and more globalized.
In addition, looking ahead to the staging of the 2020 Summer Olympics andParalympics in Tokyo, the movement ofpeople across borders and the overseas
market penetration of corporations is
accelerating, so I believe global capital andhuman resources will gather in Tokyo.
The timing of these changes in theconventional supply chain represents
significant opportunities for each business in the BIZ-Logistics Business. Goingforward, we will grasp the opportunity toshow our leading-edge technology andculture to the people of the world andoffer a variety of solutions.
The first of these solutions is to provide total distribution outsourcing services, covering trade, storage, delivery,
recovery, and repair for overseas companies that do not possess distribution
networks in Japan.
The second solution is the provisionof lifestyle-related services from the user
perspective so that the increasing
number of foreign nationals coming toJapan will spend their time here conveniently and comfortably.
For the third solution, we will establish
sales chains that complexly support thetransfer of personnel, the transport ofequipment and furniture, goods procurement and trading, and local sales operations for corporations from Japan thatare relocating overseas. By leveraging our
expanding Group networks, we will also
address the building of a platform tosupport the overseas development ofJapanese corporations in a manner inkeeping with the borderless economy.
To become Asia’s No. 1 solution provider in distribution and lifestyle support,
as cited in the DAN-TOTSU Management
Plan 2019, the BIZ-Logistics Business will
fulfill the role of the logistics front line
between corporations.
We will thus accelerate the promotionof business structure reforms, which will
broaden the area of the value chains thatbusinesses have, and cost structuralreforms that realize dramatic cost
reductions.
In the years ahead, we will provide
new value added and contribute to therealization of more abundant lifestyles byraising the sophistication of the baseline
operations accumulated until now andby leveraging the resources of the Group.

FRAPS,* installed in parallel inside a TA-Q-BIN terminal* FRAPS is an acronym for the Free Rack Auto Pick
System, a cloud-based setup that can use “last mile”
networks. This picking system uses proprietary flowthrough racks.

New Logistics Model for Haneda Chronogate

By collaborating with the home appliance repair andmedical instrument cleaning functions, we shorten thecollection, maintenance, and delivery lead times.

TA-Q-BIN

Home appliance repair

Hospital

Household
User

Medical instrument cleaning

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201539

Home Convenience
In the Home Convenience Business, we provide lifestyle support
services that help solve inconveniences at home, along with moving
services and home furniture delivery, assembly, and installation
services. In addition, leveraging our networks, we provide a rangeof solutions to corporate customers in both the private and public
sectors to support sales growth and help reduce costs.

Atsushi Ichino
Representative Director,
President and Executive Officer of Yamato Home Convenience Co., Ltd.

Review of the Year Ended March 2015
Recognizing the fiscal year ended March
2015 as the first year of DAN-TOTSU
Three-Year Plan STEP, we addressed thestrengthening of the management basetoward creating value-added businessmodels and the fostering of a soundcorporate culture while endeavoring toenhance our management structure.
With regard to services for individual
customers, we officially launched
Comfortable Lifestyle Support Service in
October 2014 to help customers resolve
everyday inconveniences, such as housecleaning and the collection of unwanted
items. We stepped up campaigns promoting our existing services while also
engaging in nationwide sales. In addition,in our moving and furniture delivery
service, we commenced sales in May 2014of our Raku Raku Household TA-Q-BIN
E-commerce Total Support Service, which
can add value for mail-order business

operators at the time of delivery for discarded item transactions and the movingof furniture. Also, in September 2014, we
carried out a complete overhaul so that
we could add optional services, such as
handing over product initial settings andinstructions at the time of delivery. In
addition, we continued pushing forward
in promoting our traveling sales services,
under which we offer furniture andhousehold electrical appliances to customers in remote areas.
In services for corporate clients, weenhanced sales of our Technical Network
Business, through which we provide onestop support, ranging from the storage ofhousehold equipment, such as domestic
power generation equipment and storage
batteries, as well as business equipment,
including copiers, multifunction copiers,and digital signage, to equipment delivery, set-up, installation, repair and maintenance. In addition, we leveraged our

procurement capabilities that have been
built up in every region of Japan overmany years to initiate a local produce
procurement service that supports
improvements in the ability of corporateclient stores to attract customers and theenhancement of welfare programs.
Operating revenue grew in strategic
growth products, such as Comfortable
Lifestyle Support Service and TechnicalNetwork Business. However, as a result of adecrease in delivery volumes of consumer durables, such as furniture andhome appliances, in part as a result of apullback in demand following the consumption tax rate hike, operating revenues for Home Convenience edged
down 0.5% compared with the previous
fiscal year, to ¥48,475 million.
The Home Convenience Businessrecorded operating income of ¥613 million, an improvement of ¥396 million(181.9%) from the previous fiscal year. This

Raku Raku Household TA-Q-BIN E-commerce Total Support Service

Shipping
Preparation
through EDI(Electronic Data
Interchange)

Unpacking andinstallation

Mail Order Company

40

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Mounting/
assembly

Financialsettlement• Cash on delivery• Web

Trade-in

Returnedpurchase

Purchaser

Replacement

was attributable to stringent cost management involving personnel-related
expenses and weekday productivity gains.
—————
Message from Top Management
As the second year of medium-term
management plan DAN-TOTSU ThreeYear Plan STEP, in the fiscal year ending
March 31, 2016, we will promote management that aims to combine developing
business models that generate highadded value with strengthening of the
management base that aims to forge arobust corporate culture.
With regard to services for the individual, we will promote expansion of the
Comfortable Lifestyle Support Service product lineup that was launched nationwide
last year. In modern society, with thedevelopment of IT and distribution networks, a variety of processes and procedures can be carried out even at home,
and it has become a simple matter topurchase goods. In homes, where privacy
is protected, the trend will be for vitalization of consumer activities in the years tocome, since more than the need toremove simple inconveniences I feel that
consumption is progressing more andmore with the aim of establishing lifestyles that meet individual preferences,which is referred to as spending comfortable time with yourself. Yamato Home
Convenience is the only company thatpossesses a centralized nationwide network for dispatching two-person crews
for both heavy and bulky items.
Furthermore, our frontline employees
possess advanced skills and qualifications, including as electrical specialists,in the handling of antiques, and thecollection and transportation of industrial waste. We can also provide precise
services that draw on our moving andhomemaker services that we have built
up over many years. Furthermore, nothing is more reassuring than having theentrance of your home opened bysomeone in a uniform bearing our black
cat brand logo. Leveraging the Kuroneko
brand, we will continue to promote theprovision of services that both resolveinconveniences in the home and support
individual self-realization.
In services for corporate clients, inaddition to enhanced sales of ourTechnical Network Business, we will start
our Office Care Solution Service that leverages the knowhow accumulated in our
office moving and Comfortable LifestyleSupport Service and our two-man network. Centered on small- to mediumsized companies, we will promote asolutions business that, for example,
supports improvements in asset efficiency through the cleaning of furnitureand office equipment, supports cost
reductions such as electricity charges,
and supports procurement that offers
benefits of scale.
We will also work to develop services
in the “3R (Reduce, Reuse, Recycle)
market.” The company has been developing reuse, such as the rental reuse of thedisused furniture and domestic appliances generated during moving operations, via the company’s own recycle
centers, the sale of items at open-air
markets on remote islands where distribution is inconvenient and in depopulated rural areas. In addition, as part ofour service development in the 3R
market, 10 years will have elapsed sinceenergy-related equipment such as Eco
Cute and solar-powered equipment went
on sale and, in the years to come, we will
be acclaiming the service lives of theseproducts. Each company in the YamatoGroup will collaborate in this field anddevelop a one-stop service toward therecycling of resources, from simultaneous delivery and collection, construction
to disassembly and sorting. Furthermore,from this year we are delivering large
domestic appliances to mail order business operators and at the same time
selling Domestic Appliance Recycling

Moving of furniture

Cleaning of extrator fans

Support Services that bring them to local
assessment, recovery and specified recovery centers. At the same time as contributing to mail order business operator
compliance management, we will
strengthen promotion of these measureson the way to realizing a recycling oriented society.
Our management base will bestrengthened in accordance with theYHC* Code of Conduct we formulated asa guideline for enhancing the safety,
compliance, and customer relations of
Yamato Home Convenience Co., Ltd. In
combination with backup support forbusiness operations and cost structurereforms, this code will be applied to satisfy customers, society, and our
employees.
Looking ahead, we will strive to raise
our corporate value by developing services favored by customers and neededby society.
* YHC: Yamato Home Convenience

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201541

e-BusinessSupported by information and communication technology (ICT),the e-Business will incorporate “Value Networking” design andprovide optimal solutions that combine logistics functions withfinancial settlement functions—both management resources of the
Yamato Group—to contribute to customers’ business development.

Yoshihiko Hoshino
Representative Director,
President and Executive Officer of Yamato System Development Co., Ltd.

Business Profile
The e-Business is involved in a range of
information services for corporate customers, including cloud-based (ASP/SaaS)
services, and information system development and operation.
Utilizing ICT, the e-Business works inpartnership with customers to enhancebusiness process efficiency. Based on its
services, the e-Business seeks to help
resolve latent business issues and proactively propose solutions that result in sales
growth and cost reductions for customers.

—————

Administrative support for MVNO* business operators* MVNO (Mobile Virtual Network Operator): An operator
that does not have its own physical communication network, such as mobile phones and PHS, and provides
under its own company brand communications services that are actually borrowed from other operators.

42

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Review of the Year Ended March 2015
In the e-Business, we spent the year
under review actively proposing solutions that integrate data with distribution
and financial settlement functions toraise business process efficiency and help
resolve the hidden business issues of ourcustomers. Furthermore, we devoted
ourselves to developing and operating
ICT systems that were an integral part ofbusiness development for the YamatoGroup as a whole.
In collaboration with the Financial
Business in e-money services, we havebeen promoting the installation andoperation of the Multi e-money Settlement
Terminal, which is capable of processing
multiple brands of e-money for financial
settlement on a single platform. During
the year under review, we saw the

full-scale deployment of the terminals in
the amusement facilities market andtheir expanded installation and use.
In our e-Logistics Solution business,
we offer a service that visualizes delivery
flows and the locations of packages byapplying the tracking know-how gained
through our TA-Q-BIN business for customers, including telecommunications
equipment and cable television companies in need of managing and keeping
track of the individual terminals they
install. In the year under review, thedevice setting and revitalizing service
accelerated business development forcompanies that had entered the mobile
virtual network operator (MVNO)*
market, in line with expansion in thatmarket. This business became independent from the e-Logistics Solution business and is now managed as the Setup
and Logistics Solution business.
In e-On Demand Solutions, businessexpanded in the fiscal year under review
thanks to the development of services,
particularly for the pharmaceuticalindustry, that support improved sales
efficiency and inventory reductions forcustomers through the management,
on-demand printing, and just-in-time
delivery of sales promotion materials.
In Store ICT Solutions, we experienced
business growth by developing ICT services for supporting the delivery ofsummer and year-end gift packages byretailers, and product returns andexchanges by mail-order businesses.
Overseas, the Yamato Group provides
ICT backup support in its steps toadvance into the Asian market.
As a result, operating revenues edged
down 0.8% year on year, to ¥40,487 million, due to factors such as a pullback indemand in IT-related investment associated with the consumption tax rate hike.
Operating income decreased 3.7%, to¥7,757 million, due in part to increased
expenses associated with setting up
new offices.
—————
Message from Top Management
For our medium- to long-term strategies,
we will accelerate the incorporation of our“Value Networking” design by means of ICT.

We will therefore create a high-value-added
model and realize the steady growth of ourbaseline operations in conjunction withplanning to strengthen our management
practices so that they remain unaffected by
the external environment.
Considering the creation of a highvalue-added model, we will link YamatoGroup management resources anddevelop an ICT solution for each market
that will streamline customer administrative processes.
There are two strategies when considering the steady growth of our baseline operations. First, for businesses in which we haveaccumulated know-how, we will raise thesophistication of the business know-how inmarkets that will enable us to demonstrate
our own strengths. Second, with regard to
the main markets in which we haveclear-cut business, we will provide systems
that will streamline the overall businessprocesses of our customers so that we
support peripheral environments andthereby expand our business domains.
For the Group’s IT strategy, we will participate in the upstream processes of eachGroup company and research and utilize
innovative technologies as an IT strategy.
In addition to providing customers
with optimal solutions that combine
logistics functions and financial settlement functions, which are Yamato Groupmanagement resources that utilize ICT,the e-Business will support the continual
business growth of each Group company
and engage in the research and development of new technologies.

e-Logistics Solution

Yamato Group
Business Partner

Business Partner’s
Customers

Individual Product Management Enables Faster, More Accurate Response

Yamato Group Operations

Production BaseUsing Tracing to Achieve
Uniform Information
Management

Customer

Information and Tracking
Management Storage,
Transport, and Delivery

Distribution Base

Flow of Goods
Flow of
Information

Sales BaseYAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201543

Financial
Providing settlement and financial solutions in Japan and overseas,
the Financial Business aims to become a cooperative partner thatrealizes consumer convenience and business operator logistics
reform, while striving to respond to a variety of means of settlement.

Toshizo Kurisu
Representative Director,
President and Executive Officer of Yamato Financial Co., Ltd.

Management Plan 2019, we will
strengthen strategies in the e-commercemarket to command the No. 1 market
share as a settlement provider for mailorder businesses in particular whileworking to promote solution proposals
relating to financial settlement.
—————
E-money payment on delivery

Multi e-money Settlement Terminal

Business Profile
The Financial Business aims to become astrong partner that provides conveniencefor consumers and helps business operators overhaul their distribution systems
by providing settlement and other financial solutions in Japan and abroad. We
are determined to offer a variety of settlement methods to fulfill customer
requirements, such as collecting payment on delivery for mail-order companies and handling settlements between
companies. Under our DAN-TOTSU

44

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Review of the Year Ended March 2015
Addressing the continued growth of
online mail-order businesses, in the business-to-consumer (B2C) market we
expanded services not only in Kuroneko
Web Collect, a service package for mailorder businesses that helps integrate theirsales processing from receiving payment
to settlement, but also Kuroneko Pay On
Delivery Service, which enables payment atconvenience stores after confirmationthat goods have been received, and weworked on active sales development. To
give just some examples of the initiatives
we promoted, we strengthened functions,
including Continued Billing and Money
Changing, to bring about improvements
in convenience when a customer places
an order, and we strengthened our alliancewith e-commerce (EC) site construction
companies. In adapting to the market for
settling payments with e-money that has
been burgeoning in terms of penetration
rate and application, we leased the Group’s
Multi e-money Settlement Terminal to vendors and promoted proposals for totalsolutions in which we packaged the means
for accepting e-money as payment withassistance in sales promotion activities.
In the business-to-business (B2B)
market in Japan, we helped sellers
expand sales channels and buyers perform credit transactions through the
Kuroneko Anshin Kessai Service. This
service also provided the added value of
improving business efficiency, enabling
the management of trade receivables,and reducing the risk of those receivables going uncollected. Efforts were
geared toward improving the service byallowing buyers to submit applications
online and speeding up the screening
for approving their credit.
In leasing, we fulfilled the needs of ourcustomers and offered assistance andproposals for those searching for vehicles. By conducting proposals related tobringing down the repair costs by extending the service lives of vehicles and lowering leasing rates, we increased profit
from our strategic products, Three-Year
Operating Leases, and Used Car Leasing.
Overseas, we sought to differentiate
ourselves from local competitors in theareas in which we operate (Shanghai,
Singapore, Hong Kong, and Malaysia) andmade proposals in line with local customs
and customer needs. Furthermore,
overseas purchasers could pay by credit
card when using Japanese mail-ordercompanies and, with regard to theCross-border Settlement Service, we held
seminars on overseas mail-order business that targeted mail-order business
operators who would like to expand theiroverseas sales channels.
As a result of the above, operating
revenues in the Financial Business rose
6.3% year on year, to ¥66,658 million. This
improvement was mainly due to anincrease in contracts for truck leases in
the lease services business and an expansion in the number of e-money settlement transactions. Operating income
was ¥8,918 million, down 5.2% year on
year, due to such factors as the lagging
recovery in personal consumption.
—————
Message from Top Management
In the B2C market, where further expansion centered on EC is expected in the
mail-order market, we will provide mailorder operators with a range of settlement solutions. To that end, in addition
to enhancing the functions of our strategic Kuroneko Web Collect product, we will
implement innovative strategies, including the development of easy start-up
packaged products for business operators
who have newly decided to enter the
mail-order business. Furthermore, wewill proactively develop the area of promotion by, for example, revamping ourservice websites, as we increase its appeal
to mail-order business operators.
At the same time, for the benefit ofconsumers, we will respond flexibly totheir diversifying needs by expanding
convenience store financial settlement
through the Kuroneko Pay On Delivery
Service so that they can purchase theproducts they like safely, reliably, andconveniently.
Not remaining in providing thesimple function of financial settlementsin the years ahead, we will become moredeeply engaged so that both mail-orderbusiness operators and consumers enjoy
the convenience by proposing totalsolutions that leverage the Group’s overall capabilities.
In the B2B market, in addition toleveraging the Group’s marketing capabilities as a means to strengthen ourmarketing system for the Kuroneko
Anshin Kessai Service, we will give added
impetus to growth by solutions proposals
that group target customers in segments.
Moreover, we will actively take on thechallenges of new strategies, such as
collaborating on the financial settlement
functions and deliveries in the procurement delivery market.
In addition to financial leases centered on large and new vehicles, in theleasing business we will work to improve

revenue growth and profit margins bytotal solution proposals related to Group
networks and vehicles. These proposals
include operating leases that enable theprovision of cost-effective leasing rates,
even for a new car, and used car leasing,through which we ascertain beforehandand offer quality vehicles that have
expired leases.
In overseas markets, by positioning
cash on delivery as one of our top priorities in value-added TA-Q-BIN services in
the areas in which we already maintain apresence, we will support further quality
improvements. Further, as an innovative
revenue base in emerging countries, wewill promote the deployment of new
EC-related services tailored to consumer
needs and engage in expanding thefuture payment business. As a precursor,
we will promote financial settlement
Services involving international trade,such as our Global Procurement Support
Service in the B2B market.
In financial formation, we will propose solutions based on our “Value
Networking” design and aim to remain apartner for customers by upholding
consumer convenience and realizing
distribution reform for business operators by continuing to offer higher value
added from the position of financial
settlement technology (FT).

Kuroneko Web Collect Service Structure

Merchant’s management screen
Mail order business operators are able toconfirm, in real time via their merchant’s
management screens (Web), information on
credit card, convenience store (online),e-money and Internet banking transactions.

Payment confirmation via
management screen

Product order

Mail Order Business
Operators

Purchasers
Product procurement

Cash payment procedures

Yamato Financial
Lump-sum payment

Means of Settlement Selectableon the Internet
Credit card/Convenience store (online)/
E-money/Internet banking

Payment/payment information

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201545

Autoworks
Based on its vision to transform our vehicle maintenance services into
the No. 1 autoworks for logistics and distribution business operators,
the Autoworks Business is developing an around the clock, 365 daysa year vehicle maintenance without downtime service. The business
offers logistics and distribution operators value primarily in convenient
vehicle maintenance and reduced maintenance and repair costs.

Keishirou Sasaki
Representative Director,
President and Executive Officer of Yamato Autoworks Co., Ltd.

Business Profile
The Autoworks Business is not satisfied
with being a one-of-a-kind operation in
Japan. Our vision is to transform ourvehicle maintenance services into theNo. 1 autoworks for logistics and distribution business operators. “Transforminconvenience into convenience fromthe customer’s standpoint” is the corporate DNA of the Yamato Group. Based on
this perspective, the Autoworks Business
functions as a vehicle maintenance plantchiefly for logistics and distribution
companies. We have enhanced our operations in scope with groundbreaking
services in the industry that go beyond
vehicle maintenance to provide aroundthe-clock service 365 days a year, vehicle
maintenance without downtime, mandatory inspections around tight time schedules, and road service for vehicles. We
offer our customers the value of compliance with statutory vehicle inspections,convenient vehicle maintenance, andreduced maintenance costs.
As an adjunct to the facility and risk
management domains, to better provide
one-stop service solutions geared toward
customer business operations, we haveadded services for maintaining and safeguarding logistics facilities and equipment,along with auto and property insurance
agency services through which we offer
plans tailored to customer needs. We are
currently focusing on further management

46

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Basic Concept: 3C + 1C
The Autoworks Business provides onestop services based on observing thethree “Cs” underpinning management
support for logistics and distribution
business operators. The first “C” isCompliance, which is the foundation ofmanagement. In this regard, ourRepairworks road service has contributed
to improving the completion rate forstatutory vehicle inspections by ourcustomers. Next, we have Convenience,
where we pursue ever higher levels of
convenience for our customers. Based on
this concept, we aim to establish a framework that enables around-the-clock
operations 365 days a year in order tocarry out vehicle inspections when thevehicles are not in operation. Our third“C” stands for Cost Reduction, based on

Truck Solutions Company

Anshin Insurance Company

Vehicle maintenance/management
Fuel procurement

Non-life insurance agency
Life insurance agency

evolution and the realization of safe andsecure logistics infrastructure.
—————

3C + 1C
Compliance
Convenience
Cost Reduction
+

Clean

Facility Management Company

Facility/equipment maintenance
Cargo-handling equipment procurement(Purchasing support SU)

Basic Strategy 1

Build Closer, Far-reaching Trust to Create New Value Together

1. Build service networks closer in touch with customers
We will establish Superworks facilities in major Japanese cities and strengthen our roadservice equipped with vehicle diagnostics capabilities. This will be done to provide services
closely in touch with our customers in each local market and to help maintain delivery infrastructure from the standpoint of BCP.
A Repairworks purpose-built, with maintenancefunctions truck

2. Build far-reaching services providing management support
We will utilize IT to enhance our far-reaching repair and maintenance capabilities in supportof procurement, management of logistics vehicles, facilities, equipment and machinery, andrisk management. This will be carried out to upgrade the customer orientation of our services
and create an enduring value cycle by eliminating customer down time.

3. Create new value together
We will strengthen collaboration with business partner companies and expand our scope ofservices in vehicle, facility, and equipment maintenance. This will be done to help improve thequality of deliveries by logistics and distribution business operators so that we can create
new value together.
Checks include tire tread depth and air pressure
Basic Strategy 2

helping to improve utilization rates forcommercial vehicles while leveraging
procurement capabilities. By promoting
measures to limit the need for sparevehicles and increasing the completion
rate for statutory vehicle inspections, wehave made it possible to implement
preventive maintenance, which helps
limit occurrences of unexpected costs.
We will harness our nationwide network
to optimally procure parts and fuel so as
to provide customers with high-quality
products and services at low costs.
The last “C” stands for Clean. In keeping with the times, we have addressed
environmental accountability by deploying solar power systems, energy-efficient
LED lighting, and other facilities at
Superworks facilities. Also, we havestarted to build a system to be able tohandle new technologies in our maintenance operations, with an eye on theincreasing use of electric vehicles. In
addition, we are actively involved inrecycling, such as in recommending theuse of rebuilt and reused parts, in ourefforts to support the environmental
accountability of customers and society
at large.
—————
Review of the Year Ended March 2015
We posted increases in both revenues andprofit in the year under review. Our

Forge a Robust Corporate Culture

We will forge a robust corporate culture in line with the Yamato Group’s corporate philosophy
for the Autoworks Business. This will be accomplished by nurturing an environment of mutual
trust that endorses a culture in which employees encourage one another in realizing their fullpotential. To this end, we will also enhance corporate governance while strengthening ourlegal compliance and financial structure.

operating revenues were ¥27,153 million,
up 5.9% year on year. Operating income
increased 14.1%, to ¥3,733 million.
Having launched the Repair Network
as a standard service for vehicle members at 28 nationwide vehicle maintenance factory locations, we areundertaking the full gamut of services,such as oil changes and tire inspections,
not only at our own factories but throughperiodic visits to customers of our
Repairworks purpose-built trucks
equipped with maintenance equipment.
Furthermore, we are supporting planned
maintenance and eradicating the problems associated with vehicle management by having our mechanics, who holdnational qualifications, put questions tothose in charge of maintenance at customer sites.
As a result of leveraging our network
proposal capabilities in this way, mandatory inspections performed on vehicles
outside the Yamato Group, a key performance indicator, increased 1,050 fromthe previous year, to approximately
79,600 vehicles.

Message from Top Management
In the fiscal year ending March 31, 2020,
we are aiming to have become a management-efficient partner of distribution
and logistics operators, to have brought
about changes in our customers’ businessstructures, and have grown to contributeto not only cost reductions but also the
optimum circulation of goods, including
consumption price reductions.
In addition, we will further enhance
the all-in-one management functions inrisk management, facilities, and equipment through procurement support andinsurance, and we will aim to broaden
our management domains. Working tocreate new markets within customer
logistics operations, such as vehicle andlogistic machinery tracking and disasterprevention as well as supporting theenhancement of business continuity
planning (BCP), we will aim to capture
new targets, including the making of
inroads into the construction field anddeveloping business overseas.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201547

Other
The JITBOX Charter service provides transportation by transport box.
The service takes advantage of its network consisting of multiple companies and provides added value to customers through timely delivery
and frequent, right-volume delivery. In the fiscal year ended March 31,
2015, the service generated increased revenues as a result of developing
information systems and improving service quality, and also due tofavorable results from existing service offerings.
Operating income in Other excluding dividends which Yamato
Holdings Co., Ltd. received from the Group companies increased 65.2%
from the previous year, to 1,578 million yen.

JITBOX Charter

Operating Income

Track Record of JITBOX Charter(Millions of Yen)

(Units)24,95725,00024,144600,000

552,645
500,000

20,000471,018

18,763403,018

400,000
15,000300,000
2,000

1,578

1,500
1,000

955

898

200,000

100,000

500
0

2013

Including Yamato Holdings

48

2014
Excluding Yamato Holdings

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

2015

0

2013

2014

2015

Organization
As of March 31, 2015

Consolidated subsidiaries

Non-consolidated subsidiaries

Delivery■ Yamato Transport Co., Ltd.
■ Okinawa Yamato Transport Co., Ltd.
■ Yamato Global Express Co., Ltd.
■ Express Network Co., Ltd.
■ Yamato Contact Service Co., Ltd.
■ Yamato (China) Transport Co., Ltd.
■ Yamato Transport (HK) Ltd.
● Yamato Dialog & Media Co., Ltd.

BIZ-Logistics■ Yamato Logistics Co., Ltd.
■ Yamato Global Logistics Japan Co., Ltd.
■ Yamato Multi-Maintenance Solutions Co., Ltd.
■ Yamato Packing Service Co., Ltd.
■ Yamato Packing Technology Institute Co., Ltd.
■ Konan Industry Co., Ltd.
■ Yamato Transport U.S.A., Inc.
■ Yamato Transport Europe B.V.
■ Yamato International Logistics Co., Ltd.
■ Yamato International Logistics (Hong Kong) Ltd.
■ Taiwan Yamato International Logistics Inc.
■ Yamato Transport (S) Pte. Ltd.
■ Yamato Transport (M) Sdn. Bhd.
● Yamato Transport Mexico S.A.de C.V.
● Shanghai Wai Gao Qiao Bonded Logistics Zone Yamato Warehouse Co., Ltd.
● Yamato Logistics India Pvt. Ltd.
● PT. Yamato Indonesia● Yamato Logistics Vietnam Co., Ltd.
● Yamato Tidiki Express Pte. Ltd.

Home Convenience■ Yamato Home Convenience Co., Ltd.

e-Business■ Yamato System Development Co., Ltd.
■ Yamato Web Solutions Co., Ltd.

Financial■ Yamato Financial Co., Ltd.
■ Yamato Credit & Finance Co., Ltd.
■ Yamato Lease Co., Ltd.
■ Yamato Payment Service (HK) Ltd.

Autoworks■ Yamato Autoworks Co., Ltd.
■ Yamato Autoworks Iwate Co., Ltd.
■ Yamato Autoworks Hokushinetsu Co., Ltd.
■ Yamato Autoworks Shikoku Co., Ltd.
■ Yamato Autoworks Okinawa Co., Ltd.

Other

■ Yamato Asia Pte. Ltd.
■ BoxCharter Co., Ltd.
■ Yamato Box Charter Co., Ltd.
■ Yamato • Staff • Supply Co., Ltd.
■ Yamato Management Service Co., Ltd.
■ Yamato Multi Charter Co., Ltd.
■ Kobe Yamato Transport Co., Ltd.
● Swan Co., Ltd.

Yamato Holdings Co., Ltd.

Note: (1) From the fiscal year ended March 31, 2015, Yamato Contact Service that was
included under e-business are being included under Delivery Business.
(2) From the fiscal year ending March 31, 2016, Yamato·Staff·Supply that was included
under Other segment is being included under Delivery Business.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201549

Corporate GovernanceFor the year ended March 31, 2015

Basic Position on Corporate Governance
Based on its corporate philosophy, the Yamato Group carries out
business activities in accordance with the law and social norms
and actively promotes compliance management. Striving to maximize corporate value by effectively utilizing the management
resources of the Group is one of the top priorities of management,
and we have implemented measures and bolstered management
systems as part of our corporate governance initiative.

Characteristics of Corporate Governance System(As of June 23, 2015)
SystemCompany with auditors

Number of directors

6

Of which, outside directors

2

Number of audit & supervisoryboard members

4

Of which, outside auditors

2

Term of directors

1

Executive officer system in place

Yes

Independent auditor

Deloitte Touche Tohmatsu LLC

Corporate Governance Framework
General Meeting Shareholders
Elect

Elect

Elect
Nomination and Compensation
Committee

Audit & Supervisory Board
Audit

Elect/
Supervise
ReportManagement Advisory
Committee

Board of Directors

ReportMake decisions/Supervise

Independent
AuditorReportCSR Division

Executive Committee

Accounting
audit

Executebusiness

Audit Division

Propose/ReportLegal Advisor

Propose/ReportGroup Companies
Internal
audit

Concurrent Posts and Main Activities of Outside Directors and Outside Audit & Supervisory Board Members
NameToshitakaHagiwara

Masakatsu
Mori

Independent
Officer

50

Attendance at meetings ofthe Board of Directors and/or Audit & Supervisory Board
during the fiscal year ended
March 31, 2015

YES

Director Toshitaka Hagiwara has ample experience and extensive knowledge as abusinessperson. He comments and advises as needed on all aspects of business
management. Furthermore, his collaboration with the independent auditor and the
Audit Division enhances governance.

Board of Directors:
18 of 19 meetings

YES

Vice Chairman,
International University ofJapan

Director Masakatsu Mori has ample experience and extensive knowledge as abusinessperson. He comments and advises as needed on all aspects of business
management. Furthermore, his collaboration with the independent auditor and the
Audit Division enhances governance.

Board of Directors:
18 of 19 meetings

Audit & Supervisory Board Member Motoharu Yokose has ample experience infinance and accounting through his professional experience as a certified public
accountant. Furthermore, Mr. Yokose attends regular meetings to exchange
opinions with the representative director and president, outside directors, and Audit
and Supervisory Board members, monitoring directors’ execution of duties primarily
by asking questions related to finance and accounting.

Board of Directors:
19 of 19 meetings

YES• Outside Audit &Supervisory Board
Member, Yamato
Transport Co., Ltd.
• Corporate Advisor, of
Asahi Tax Corporation

Partner, Anderson Mori
and Tomotsune LPC

Audit & Supervisory Board Member Hiroyuki Kanae has ample experiencein finance and accounting through his professional experience as a lawyer.
Furthermore, Mr. Kanae attends regular meetings to exchange opinions with therepresentative director and president, outside directors, and Audit and Supervisory
Board members, monitoring directors’ execution of duties primarily by asking
questions related to overseas business risk.

Board of Directors:
19 of 19 meetings

Outside Audit& Supervisory
Board
Members
Hiroyuki
Kanae

Main Activities

Senior Adviser,
Komatsu Ltd.

OutsideDirectors

Motoharu
YokoseConcurrent Posts

YES

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Audit & Supervisory
Board:
14 of 14 meetings

Audit & Supervisory
Board:
14 of 14 meetings

Compensation of Directors and Audit & Supervisory
Board Members
Directors and Audit &Supervisory Board members

Total compensationand other
remuneration(Millions of yen)

Total by compensation
and remuneration
category(Millions of yen)
Basic compensation

Headcount of eligible
directors andAudit & Supervisory
Board members

Directors (excluding
outside directors)

243

243

5

Audit & Supervisory
Board members(excluding outside Audit& Supervisory Board
members)

20

20

2

Outside directors andAudit & Supervisory
Board members

26

26

5

■ Policies related to methods for calculation anddetermination of director compensation
To ensure the objectivity and transparency of policies for determining director compensation, deliberations are conducted
through the Nomination and Compensation Committee, morethan half of whose members are outside directors, with the Boardof Directors making resolutions.
Director compensation comprises fixed remuneration thatreflects external standards and performance-based amounts. The
compensation of Audit & Supervisory Board members and outside directors is fixed in keeping with the nature of their work.
Compliance■ Strengthening internal control for the Group overall
The Yamato Group has established an internal control system inorder to promote sound corporate culture in the group a whole,and to enable employees to perform their duties effectively andefficiently without any misbehavior or mistake.
Having stipulated its basic policy on the internal control
system in accordance with the Companies Act, each Group company is working on strengthening internal controls.
In addition, in order to respond to the internal control reportsystem pursuant to the Financial Instruments and Exchange Act,
we are promoting reviews of business rules and the standardization of operations, checking whether operations have been effectively performed in accordance with the rules, and establishing asystem to immediately put improvements in place should there
have been any shortcomings.
Internal control over the financial reporting of the YamatoGroup as of March 31, 2015 as considered valid, and a report was
submitted to the Kanto Local Finance Bureau.
■ Concerning inappropriate temperature management in
Cool TA-Q-BIN service
In October 2013, Yamato Transport received a report that sortingof parcels in violation of internal rules had been performed in the
Cool TA-Q-BIN service. In addition to providing thorough direction
on the operational rules, an investigation revealed that, despite
the sorting rules having been thorough, there had been occasions
in the peak shipment surge season in July when the rules had notbeen adhered to at 1,269 out of a nationwide total of 3,924 sites. We
immediately launched a Cool TA-Q-BIN Service Quality

Improvement Headquarters with President Masaki Yamauchi as
head, and drafted measures to discover the causes of the violations
and prevent recurrence. Specifically, we created an action structure by establishing a Cool TA-Q-BIN Service Quality Improvement
Department, assigning Quality Training Directors nationwide,
and appointing Cool TA-Q-BIN Work Leaders at each site. In addition, we put in place personnel, equipment, and materials that areappropriate to the volume of arriving parcels, and are implementing controls over modes of transport. We also adopted of a “total
volume management system” to assess in advance the total
volume of Cool TA-Q-BIN parcels that can be handled each day,and to accept parcels within that scope of total volume.
See the Yamato Transport website for details.
http://www.kuronekoyamato.co.jp/info/info_131128.html

Business Continuity Plan (BCP)■ Revisions and maintenance to prepare for unexpected,
large-scale natural disasters and power outages, basedon our experience in the Great East Japan Earthquake
The Yamato Group offers the TA-Q-BIN service as social infrastructure, and is expected to keep offering the steady service evenunder unforeseeable circumstances. In the wake of the emergence of novel influenza strain (H1N1) in May 2009, we formulated a business continuity plan (BCP).
Based on this BCP, formulated according to response guidelines focusing on maximum priority on human life and on continuation of the TA-Q-BIN business, we addressed the problems
caused by the Great East Japan Earthquake that occurred in 2011.
Our aim is to prepare for an earthquake occurring directly
beneath the Tokyo Metropolitan Area and an earthquake along
the Nankai Trough, which are likely to occur in the future and are
expected to cause large-scale damage.
Accountability
The Yamato Group considers the explanation of corporate andmanagement data to shareholders, investors, and other stakeholders to be an important corporate governance issue and is committed to the speedy, accurate, and fair disclosure of information.
The main investor relations activities are listed below.
Numberof times

Content

Settlement of Accounts
Meetings for analysts andinstitutional investors

4

Settlement of Accounts Meetings are held each quarter.
The first-quarter meeting is held by telephone withmanaging executive officers responsible for finance andinvestor relations strategy. Meetings for the second, third,
and fourth quarters are held with president.

Visits by the president
to investors in the U.S.,
Europe, and Asia.

1 or
more
per yearto eachregionThe president or chairman make regular overseas visits toinvestors in the United States, Europe, and Asia to explain
management policies.

Small meetings and facility
tours with the president

2 ormore peryear

Creating regular opportunities to promote understandingof business operations, in addition to opportunities for
direct dialogue with management

Website for investor
relations materials–

Financial results, news releases, securities reports, andquarterly reports; materials pertaining to settlement ofaccounts meetings, convocation notices for the ordinary
general meeting of shareholders, notices of resolution,and [disclosure of] voting results. Publication of mostimportant information in two languages – Japanese andEnglish – so that information can be communicated toforeign investors.

Establishment of IR
department–

Responsibility for IR strategy

Item

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201551

Message from Outside Directors

The responsibility of an outside director isto revitalize the Board of Directors
Toshitaka Hagiwara
Outside Director

Governance of the Yamato Group
Governance is the system that a company establishes tosecure the realization of sustained growth. The objectiveof governance should be not only continuity but also growthof business.
Corporate value represents the accumulation of trust thata company has built up with its shareholders, in addition to
all other stakeholders. I consider corporate governance to bea mechanism to raise the value of each stakeholder to theCompany, and to amplify this accumulation of trust. As an
outside director at Yamato Group, I volunteer various opinions to the Board of Directors based on this way of thinking.
I believe the responsibility of an outside director extends
beyond simply supervising management to revitalizing theBoard of Directors. I think this responsibility encompasses
the discussion of bills that are introduced, as well as active
discourse on the direction of the Group in regard to sustained growth and the appropriateness of its strategies.
I am also engaged as an outside director at other companies,
and I feel that the coordination of the Board of Directors andthe awareness of each individual director at the YamatoGroup compares very favorably in contrast.
Given that the objective of corporate governance is therealization of sustained corporate growth and the maximization of corporate value, governance must consider company
growth while, at the same time, continuously seeking
improvement. I consider the satisfaction that a company isalready functioning well enough under its current system ofgovernance to be rather presumptuous.

52

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Toward the Future Growth of the Yamato GroupI previously stated that the responsibility of an outside director is to revitalize the Board of Directors. However, eachdivision has various ideas and opinions about future direction and growth strategies. I would like to see more people inthese divisions refine their ideas and opinions into proposals
to present to the Board of Directors, which, in turn, would
lead to further revitalization of the Board of Directors.
I would like to consider our global strategy, which represents a significant management theme. I doubt there is asingle employee within the Company who believes that ourdomestic success to date naturally extrapolates to successoverseas. However, the issue of leveraging the know-how that
we have nurtured domestically to build international business models adapted to local culture and regional differences
is an important one. I anticipate a dynamic process where
global strategies, such as our Asia strategy, are assessed
based on information and data that has been obtained
through careful investigation. Discussions will then be heldby the Board of Directors to determine whether any problems exist with strategy direction and concrete, high-quality
proposals will be introduced to the Board of Directors at thenext step. The adoption of swift, powerful processes andproposals in this way will lead to further revitalization of theBoard of Directors and the Company as a whole.
On the other hand, I feel that further reinforcement ofour planning capabilities and strategy formulation expertiseis going to be essential in ensuring the Company’s sustained
growth into the future. More specifically, we need to focus onrefining our planning capabilities as a global corporation.
Moreover, although the cultivation of global humanresources is important, the most pressing issue for us is how
we need to change the attitude of our employees to promote
globalization. In particular, it is important for head office,including upper management, and management and staff
based at overseas locations to share strategies and problems
that need to be addressed. Globalization does not simply
denote the expansion of business overseas, and it is globalization at the head office that is most important. It takes fiveto ten years for businesses overseas to gain a foothold, andwe have only just set out on our journey. At Yamato, strategies to support the success of globalization are directly
linked to our growth strategy at once. I hope to see theCompany work tenaciously toward its goals by formulating
various proposals, discussing them and, on deciding a direction, working as a united whole to accomplish them.

Recognizing the importance of evaluating
managerial practices from an objective perspective
Masakatsu Mori
Outside Director

Governance of the Yamato GroupThe most important role of the Board of Directors is toreflect sound governance in the execution of corporate management. Governance is the process of building and operating frameworks to ensure sustained corporate growth while
carefully evaluating whether management strategies arebeing executed correctly from the perspective of stakeholders outside the Company. In this respect, I feel that the governance of the Yamato Group is top class, even among
Japanese corporations. For example, on the appointment of
a new president, the most suitable candidate is elected following discussions, which highlight the expertise required tolead the Yamato Group forward, with sufficient information
about each candidate. The process is extremely transparent
and straightforward.
I believe my responsibility as an outside director extends
beyond simply supervising management to actively offering
advice based on my personal experiences. When giving
advice, I appreciate that those most knowledgeable of managerial operations are the executive officers themselves. For
this reason, I endeavor to abstain from commenting on
small matters and instead try to consider matters from along-term perspective, for example, by judging whether aninvestment decision fits in with the direction of businessstrategies. Furthermore, I recognize the importance of evaluating matters, such as whether executive officers engaged inmanagement are suitable for their role, whether performance is being effectively improved, and whether

information is being disclosed to shareholders, investors,
and other stakeholders, with transparency from an objective
perspective.
As we push forward with globalization, the management
risks that surround the Company naturally increase. The
corporate governance framework at the Yamato Group is ofa higher level than at other companies; however, to further
reinforce this governance, a keen sense of urgency among
the Board of Directors and the executive officers that serve it,coupled with the enhancement of our compliance structure,is going to be essential. Along with the Audit & Supervisory
Board members, we, as outside directors, aspire tostrengthen the oversight of management going forward.

Toward the Future Growth of the Yamato GroupI feel the cultivation of global leaders is a crucial factor for
the Yamato Group to achieve sustainable growth. It goes
without saying that prestigious human resources are aninvaluable asset to businesses engaged in the provision ofservices, and an expansion of business will not be possible if
we are unable to secure a sufficient supply of these resources.
So how can we nurture human resources that understandthe Yamato philosophy and who can expand our business attheir respective locations? When employing humanresources to support the future of Yamato, we should consider their education as a strategic investment, rather than asa human resource cost. I believe the Yamato Group possesses
the elements required to achieve growth overseas. If Yamato
is able to build a foundation that expands across the globe by
fully leveraging its world-class strengths, such as its
employee education system and customer-oriented services,
corporate spirit, and culture, it should be able to achieve
continued growth on a global stage.
To assist the Yamato Group in realizing corporate growththrough the cultivation of global leaders, I intend to contribute to the improvement of human resource strategy frameworks by assessing whether they are constructed andmanaged effectively in the same way that I would assess
capital investments. Going forward, I aspire to support theBoard of Directors in making timely, accurate management
decisions while urging its members to consider growth strategies and human resource strategies as inseparable facets.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201553

Directors
As of June 23, 2015

Haruo Kanda

Makoto Kigawa

Masaki Yamauchi

Kaoru Seto

Makoto Kigawa

Masaki Yamauchi

Representative Director and Chairman

Representative Director, President and Executive Officer

Apr. 1973 Joined the Fuji Bank, Limited

Apr. 1984 Joined the Company

Apr. 2004 Managing Director, Chief Risk Officer / Head of Risk Management Group,and Chief Human Resources Officer / Head of Human Resources Group of
Mizuho Corporate Bank, Ltd.

Apr. 2005 Executive Officer

Apr. 2005 Joined the Company
Jun. 2005 Managing Director
Nov. 2005 Representative Managing Director
Apr. 2006 Representative Director and Managing Executive Officer
Jun. 2006 Representative Director and Senior Managing Executive Officer

Apr. 2005 President, Tokyo Branch
Nov. 2005 Executive Officer of Yamato Transport Co., Ltd.
Nov. 2005 General Manager of Human Resources and Administration
Mar. 2007 Executive Officer of the Company
Mar. 2007 Responsible for Human Resources Strategy
May 2007 Responsible for Management Strategy

Mar. 2007 Representative Director and Executive Officer

Apr. 2008 Representative Director, President and Executive Officer of
Yamato Logistics Co., Ltd.

Mar. 2007 Representative Director, President and Executive Officer of
Yamato Transport Co., Ltd.

Apr. 2011 Representative Director, President and Executive Officer of
Yamato Transport Co., Ltd.

Jun. 2008 Director and Executive Officer of the Company

Jun. 2011 Director and Executive Officer of the Company

Apr. 2011 Representative Director, President and Executive Officer

Apr. 2015 Representative Director, President and Executive Officer (current)

Apr. 2015 Representative Director and Chairman (current)

Haruo Kanda

Kaoru Seto

Representative Director, Vice President and Executive Officer

Director and Advisor

Jan. 1985 Joined the Company

Apr. 1970 Joined the Company

Apr. 2004 General Manager of Human Resources

Jun. 1997 President, Chugoku BranchAug. 2005 Executive Officer

Jun. 1999 Director

Nov. 2005 Executive Officer of Yamato Transport Co., Ltd.

Jun. 1999 President, Kansai BranchJul. 2006 Managing Executive Officer

Jun. 2004 Managing Executive Officer

Apr. 2008 Managing Executive Officer of the Company

Jun. 2004 Responsible for Human Resources and Business Improvement

Jun. 2008 Representative Director and Managing Executive Officer

Apr. 2005 Responsible for CSR Promotion Office and Human Resources and Information

Apr. 2013 Representative Director and Senior Managing Executive Officer

Apr. 2006 Responsible for Delivery, Home Convenience, and Group Support Businesses

Apr. 2014 Responsible for Human Resources Strategy, Network Strategy,
Legal Affairs, CSR Strategy and Audit

Jun. 2006 Representative Director, President and Executive Officer

Apr. 2015 Representative Director, Vice President and Executive Officer (current)

Apr. 2015 Director and Advisor (current)

54

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Apr. 2011 Representative Director and Chairman

Outside Directors and Audit & Supervisory Board Members
As of June 23, 2015

Outside Directors

Audit and Supervisory Board Members

Toshitaka Hagiwara

Kazuko Takahara

Etsuo Ogawa

Outside Director

Full-time Audit & Supervisory Board Member

Full-time Audit & Supervisory Board Member

Dec. 1969 Joined Komatsu Ltd.

Apr. 1978 Joined Ministry of Labour (currently:
Ministry of Health, Labour and Welfare)Nov. 1973 Joined the Company

Aug. 2003 Director-general, Gunma Labour Bureau,
Ministry of Health, Labour and Welfare

Jun. 2003 Director

May 2005 Deputy Director of Japan Advanced
Information Center of Safety and Health,Japan Industrial Safety and Health
Association

Jun. 2004 Director and Managing Executive Officer

Jun. 1990 Director
Jun. 1995 Managing Director
Jun. 1997 Executive Managing Director
Jun. 1999 Executive Vice President
Jun. 2003 Chairman and Representative Director of
the Board
Jun. 2007 Councilor and Senior Adviser
Jun. 2009 Director of the Company (current)
Jul. 2011 Senior Adviser of Komatsu Ltd.
Jul. 2013 Adviser (current)

Jun. 2002 President, Chugoku Branch
Apr. 2004 Responsible for Financing andAccounting
Jun. 2005 Managing Executive Officer

Jul. 2006 Director of Compliance Department,
Japan Industrial Safety and Health
Association

Oct. 2005 Representative Director, President
and Executive Officer of
Yamato Logistics Co., Ltd.

Jul. 2009 Director-general, Hokkaido Labour
Bureau, Ministry of Health, Labourand Welfare

Apr. 2008 Director and Chairman of the Board

Sep. 2012 Principal of Labour College, The Japan
Institute for Labour Policy and Training

Jun. 2014 Audit & Supervisory Board Member of
Yamato Transport Co., Ltd.

Apr. 2014 Joined the Company

Jun. 2015 Full-time Audit & Supervisory
Board Member of the Company (current)

Jun. 2014 Full-time Audit & Supervisory
Board Member (current)

Jun. 2009 Audit & Supervisory Board Member of
Yamato Home Convenience Co., Ltd.

Masakatsu Mori

Motoharu Yokose

Hiroyuki Kanae

Outside Director

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Apr. 1969 Joined Arthur Andersen & Co.
(currently: Accenture Japan Ltd.)

Jan. 1972 Joined Asahi & Co. (currently: KPMG
AZSA LLC)

Apr. 1979 Registered as lawyer (Daini Tokyo Bar
Association)

May 1972 Qualified as Certified Public Accountant

Oct. 1975 Registered as Certified Public Accountant

Sep. 1987 Joined Coudert Brothers LLP (New York)

Sep. 1981 Partner (business partner) of Arthur
Andersen & Co. (currently: Accenture
Japan Ltd.)May 1995 Representative Partner of
KPMG AZSA LLC

Jul. 1988 Registered as lawyer in New York State

Feb. 1989 President of Andersen Consulting(currently: Accenture Japan Ltd.)

Jun. 2006 Outside Audit & Supervisory Board
Member of Yamato Transport Co., Ltd.
(current)

Apr. 1992 Partner of Nishi, Tanaka & Takahashi
Law Office

Jul. 2006 Corporate Advisor of Asahi Tax
Corporation (current)

Oct. 2007 Joined Bingham McCutchen Murase,
Sakai Mimura Aizawa, Foreign Law Joint
Enterprise as partner due to consolidation

Board Member of Andersen Consulting(Global) (currently: Accenture)
Apr. 2003 Representative Director and Chairman ofAccenture Japan Ltd.
Sep. 2007 Corporate Advisor of Accenture Japan Ltd.
Oct. 2009 President of the International Universityof Japan (IUJ)
Apr. 2013 Senior Advisor of IUJJun. 2013 Director of the Company (current)

May 2001 Executive Partner of KPMG AZSA LLC

Jun. 2009 Audit & Supervisory Board Member of
the Company (current)

Sep. 1988 Joined Nishi, Tanaka & Takahashi
Law Office

May 2001 Joined Shin-Tokyo Law Office as partner

Jun. 2012 Audit & Supervisory Board Member of
the Company (current)
Apr. 2015 Through the consolidation of law offices,name change to Anderson Mori &Tomotsune LPC (Partner) (current)

Nov. 2013 Vice Chairman of IUJ (current)

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

55

Executive Officers
As of June 23, 2015

Kenji Minaki

Hitoshi Kanamori

Kenichi Shibasaki

Senior Managing Executive Officer
Responsible for East Asia regional
Headquarters

Senior Managing Executive Officer
Responsible for Corporate Strategy,
Information Technology Strategy, US
and European Regional Headquarters

Managing Executive Officer
Responsible for Financing andAccounting and Investor Relations

Hideo Tanzawa

Tomoki Otani

Senior Executive Officer
Responsible for Corporate Strategy,
Public Relations Strategy

Senior Executive Officer
Responsible for Human Resources
Strategy, Network Strategy, Legal
Affairs, CSR and Audit

Toshizo Kurisu

Atsushi Ichino

Keishirou Sasaki

Yoshihiko Hoshino

Executive Officer
Representative Director and President,
Yamato Financial Co., Ltd.

Executive Officer
Representative Director and President,
Yamato Home Convenience Co., Ltd.

Executive Officer
Representative Director and President,
Yamato Autoworks Co., Ltd.

Executive Officer
Representative Director and President,
Yamato System Development Co., Ltd.

Yutaka Nagao

Koji Homma

Richard Chua Khing Seng

Hiromitsu Aikawa

Executive Officer
Representative Director and President,
Yamato Transport Co., Ltd.

Executive Officer
Representative Director and President,
Yamato Logistics Co., Ltd.

Executive Officer
Responsible for Southeast Asia
Regional Headquarters
Managing Director, Yamato Asia Pte. Ltd.

Executive Officer
Responsible for Corporate Strategy

56

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Financial Section
58 Consolidated Balance Sheet
60 Consolidated Statement of Income
61 Consolidated Statement ofComprehensive Income

62 Consolidated Statement of
Changes in Equity

63 Consolidated Statement of
Cash Flows

64 Notes to Consolidated Financial
Statements

86 Independent Auditor’s Report

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201557

Consolidated Balance Sheet
March 31, 2015

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

ASSETS

2015

2014

2015

¥ 247,398¥ 220,148$ 2,058,737

Trade187,834

188,145

1,563,066

Installment (Note 5)

42,00839,480349,570

Lease (Note 14)

44,94835,329374,039

Allowance for doubtful accounts(1,338)(1,591)(11,139)

Inventories (Note 6)

3,336

3,237

27,760

Deferred tax assets (Note 13)

15,687

16,548130,542

Prepaid expenses and other current assets

26,33326,063

219,133

566,206

527,359

4,711,708

187,964
334,120
194,198

188,344329,289
187,882

1,564,152
2,780,392
1,616,027

123,025
24,02916,025

121,422
23,944
7,895

1,023,757
199,957
133,353

CURRENT ASSETS:
Cash and cash equivalents (Notes 2.d and 15)
Notes and accounts receivable (Note 15):

Total current assets

PROPERTY, PLANT AND EQUIPMENT—At cost:
Land
Buildings and structures
VehiclesMachinery and equipment
Leased assets (Note 14)
Construction in progress
Others
Total
Accumulated depreciation
Net property, plant and equipment

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 7 and 15)
Investments in and advances to unconsolidated subsidiaries and affiliates
Long-term loans
SoftwareLease deposits
Deferred tax assets (Note 13)
Other assets (Note 10)
Total investments and other assets
TOTAL
See notes to consolidated financial statements.

58

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

17,795

11,662148,088

897,156

870,438

7,465,726(477,055)(453,310)(3,969,837)

420,101

417,128

3,495,889

33,843724
1,040
12,646
17,902
21,97825,577644
961
12,343
18,46821,687

281,630
6,024
8,655
105,236
148,971
182,889

8,091

7,967

67,331

96,224

87,647800,736¥1,082,531¥1,032,134$ 9,008,333

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

LIABILITIES AND EQUITY

2014

2015

2015

CURRENT LIABILITIES:
Short-term bank loans (Notes 9 and 15)

19,256$ 147,842

29,071

21,941

241,920Trade

157,480

172,463

1,310,476

Other

10,47021,942

87,12620,02420,908

166,632

Current portion of long-term debt (Notes 9, 15 and 16)¥

17,766¥

Notes and accounts payable (Note 15):

Income taxes payable
Employees’ savings deposits

4,944

4,723

41,138

Accrued expenses

61,29561,535510,070

Deferred profit on installment sales (Notes 5 and 15)

5,655

5,349

47,061Other current liabilities (Note 11)50,32919,243418,811

Total current liabilities

357,034

347,360

2,971,076

Long-term debt (Notes 9, 15 and 16)

88,532

66,646

736,724

Liability for employees’ retirement benefits (Notes 2.j, 3 and 10)

53,02447,224441,237

Deferred tax liabilities (Note 13)

3,948

1,808

32,853

Other long-term liabilities (Note 11)

8,794

8,924

73,180Total long-term liabilities

154,298

124,602

1,283,994

Common stock—authorized, 1,787,541,000 shares in 2015 and 2014;
issued, 435,564,792 shares in 2015 and454,684,992 shares in 2014

127,235

127,235

1,058,790

Capital surplus

70,209100,863584,249

Retained earnings

395,353

371,965

3,289,947

Treasury stock—at cost, 22,370,985 shares in 2015 and35,742,057 shares in 2014

(43,008)(56,079)(357,891)

Unrealized gain on available-for-sale securities

13,8488,770

115,234

Foreign currency translation adjustments

1,169

342

9,728

715

(1,717)

5,952

Total

565,521551,379

4,706,009

Minority interests

5,678

8,793

47,254

LONG-TERM LIABILITIES:COMMITMENTS LIABILITIES (Note 14)
EQUITY (Notes 12 and 20):

Accumulated other comprehensive income:Remeasurements of defined employees’ retirement benefit plans (Notes 2.j and 10)

Total equity
TOTAL

571,199

560,172

4,753,263¥1,082,531¥1,032,134$9,008,333

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201559

Consolidated Statement of Income
Year Ended March 31, 2015

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2015

2014

2015

¥1,396,708¥1,374,610$11,622,771

1,290,715

1,274,471

10,740,742

37,04637,043308,282

1,327,761

1,311,514

11,049,024

68,94763,096

573,747

Interest and dividend income

674

622

5,604

Interest expense

(398)

(412)

(3,312)

(2)

1,461

(13)

(1,792)(217)(14,910)

7

1

58

1,722

1,334

14,325

211

2,786

1,752

69,15865,882575,499

Current

29,81532,604

248,106

Deferred

1,740(1,601)

14,47831,55531,003

262,584

37,60334,879312,91570

103

OPERATING REVENUESOPERATING COSTS AND EXPENSES:
Operating costs
Selling, general and administrative expenses
Total operating costs and expenses
Operating income
OTHER INCOME (EXPENSES):(Loss) gain on sales and disposal of property, plant and equipment—net
Loss on impairment of long-lived assets (Note 8)
Gain on sales of marketable and investment securities (Note 7)
Loss on valuation of investment securities (Note 7)(3)

Other—net
Other income—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTSINCOME TAXES (Note 13):

Total income taxes
NET INCOME BEFORE MINORITY INTERESTSMINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIESNET INCOME¥

37,533¥

34,776579$

312,336
U.S. Dollars(Note 1)

Yen
2015

2014

Basic net income¥90.41¥82.22$0.75

Diluted net income

88.26

80.18

0.73

Cash dividends applicable to the year

25.00

24.00

0.21

2015

PER SHARE OF COMMON STOCK (Notes 2.r and 18):

See notes to consolidated financial statements.

60

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2015

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

NET INCOME BEFORE MINORITY INTERESTS

2015

2014

¥37,603¥34,879$312,915

5,371

2,938

44,693

826

1,408

6,878

2015

OTHER COMPREHENSIVE INCOME (Note 17):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined employees’ retirement benefit plans
Total other comprehensive income
COMPREHENSIVE INCOME

2,443

20,328

8,640

4,346

71,899¥46,243¥39,225$384,814¥45,878¥38,825$381,774

365

400

3,040

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests
See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201561

Consolidated Statement of Changes in Equity
Year Ended March 31, 2015

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE,APRIL 1, 2013

Outstanding
Number of
Shares ofCommon Stock

Common Stock423,714¥127,235

Capital Surplus Retained Earnings Treasury Stock¥111,291¥347,358¥(56,496)

Remeasurements
Unrealizedof Defined
Gain onForeign Currency
Employees’
Available-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans¥ 6,095¥(1,032)

¥

–

Total

Minority Interests¥534,451¥ 8,464

Total Equity¥542,915

Net income

34,776

34,776

34,776

Cash dividends,¥24 per share(10,169)(10,169)(10,169)(10,012)(10,012)(10,012)11

1Purchase oftreasury stock(4,771)

Disposal oftreasury stock
Retirement oftreasury stock(10,428)

10,428Net change in the year
BALANCE,MARCH 31, 2014

418,943

127,235

100,863

371,965

127,235

100,863

367,885

Cumulative effects ofchanges in an accounting
policy (Note 3)

2,675

1,374

(1,717)

2,332

329

2,661

(56,079)

8,770

342

(1,717)551,379

8,793

560,172(4,080)(18)(4,098)(56,079)

8,770

342

(1,717)547,299

8,775

556,074(4,080)RESTATED BALANCE
Net income

37,53337,53337,533

Cash dividends,¥24 per share(10,065)(10,065)(10,065)(30,588)(30,588)(30,588)(405)

10,746

10,341

10,341(31,507)

31,507

1,258

1,406

2,664

2,664

Purchase oftreasury stock(12,235)

Disposal oftreasury stock

5,590

Retirement oftreasury stock
Change in equity related
to transaction with noncontrolling shareholders(Notes 3 and 4)

896

Net change in the year
BALANCE,MARCH 31, 2015

413,194¥127,235¥ 70,209¥395,353¥(43,008)

5,078

827

¥ 13,848¥ 1,169

¥

2,432

8,337

(3,097)

5,240

715

¥565,521¥ 5,678¥571,199

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

Common Stock

BALANCE,MARCH 31, 2014

Capital Surplus Retained Earnings Treasury Stock$1,058,790$839,341$3,095,325

1,058,790

839,341

3,061,371

Cumulative effects ofchanges in an accounting
policy (Note 3)
RESTATED BALANCE

Remeasurements
Unrealizedof Defined
Gain onForeign Currency
Employees’
Available-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans

Total

$(466,668)$ 72,980$2,850$(14,289) $4,588,329(466,668)

72,9802,850(14,289)(33,954)

Minority Interests$ 73,169

Total Equity$4,661,498(33,954)(143)(34,097)

4,554,375

73,026

4,627,401

Net income

312,336

312,336

312,336

Cash dividends,$0.20 per share(83,760)(83,760)(83,760)(254,537)(254,537)(254,537)

86,05186,051

22,171

22,171

Purchase oftreasury stock
Disposal oftreasury stock(3,369)89,420Retirement oftreasury stock(262,189)

262,189

10,466

11,705

Change in equity related
to transaction with noncontrolling shareholders(Notes 3 and 4)
Net change in the year
BALANCE,MARCH 31, 2015

$1,058,790

See notes to consolidated financial statements.

62

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

$584,249$3,289,947$(357,891)

42,254

6,878

20,241

69,373(25,772)

43,601$115,234$9,728$ 5,952$4,706,009$ 47,254$4,753,263

Consolidated Statement of Cash Flows
Year Ended March 31, 2015

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2014

2015

2015

OPERATING ACTIVITIES:
Income before income taxes and minority interests¥ 69,158¥ 65,882$ 575,499

Income taxes—paid(30,362)(35,437)(252,657)

Depreciation and amortization

46,07842,284383,443

Adjustments for:

Loss (gain) on sales and disposal of property, plant and equipment—net
Loss on impairment of long-lived assets
Gain on sales of marketable and investment securities

2(1,461)

13

1,792

217

14,910

(7)

(1)

(58)

Loss on valuation of investment securities

3

Changes in assets and liabilities:
Increase in notes and accounts receivable(11,898)(38,786)

(47)

401

(388)

(Decrease) increase in notes and accounts payable(14,666)

33,411(122,043)

Increase in liability for employees’ retirement benefits

2,796

6,278

23,265(Increase) decrease in inventories

Other—net(99,010)

29,774

7,284

247,770

Total adjustments

23,462

14,193

195,245

Net cash provided by operating activities

92,62080,075

770,744

2,539

4,238

21,124(54,308)(65,212)(451,927)

14

2

118

(1,021)(11)(8,498)INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Proceeds from sales of marketable and investment securities
Purchases of marketable and investment securities(Increase) decrease in investments in and advances to unconsolidated subsidiaries and affiliates

(127)

375

(1,059)Collection of loans

1,210

1,120

10,068

Payment of loans(1,292)(1,154)(10,748)

Other(5,500)(4,294)(45,767)(58,485)(64,936)(486,689)(6,757)(1,681)(56,225)

Net cash used in investing activities
FINANCING ACTIVITIES:
Repayments of short-term debt—net
Proceeds from long-term debt

60,40027,007

502,621

Repayments of long-term debt

(19,392)(14,145)(161,369)

Dividends paid

(10,146)(10,235)(84,433)

Purchase of treasury stock—net(30,592)(10,013)(254,570)

Other
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS

(682)

34

(5,680)(7,169)(9,033)(59,656)

690

648

5,742

NET INCREASE IN CASH AND CASH EQUIVALENTS

27,656

6,754

230,141

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

219,395

212,641

1,825,707

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.d)¥247,051¥219,395$2,055,848

¥

¥

$

NONCASH INVESTING AND FINANCING ACTIVITIES:
Decrease in capital surplus due to exercise of stock acquisition rights

(405)

–

(3,370)Decrease in treasury stock due to exercise of stock acquisition rights

10,74589,415Decrease in zero coupon convertible bonds due to exercise of stock acquisition rights

10,34086,045

See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201563

Notes to Consolidated Financial Statements
Year Ended March 31, 2015

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 application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated 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 2014 consolidated financial statements to conform them to the classifications and presentations used in 2015.
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 areincluded solely for the convenience of readers outside Japan and have been made at the rate of ¥120.17 to $1, the approximate
rate of exchange at March 31, 2015. 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, 2015, include the accounts of the Company and its 39
significant (41 in 2014) subsidiaries (together, the “Group”).
Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise
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.
The unconsolidated subsidiaries, whose combined assets, net sales, net income and retained earnings in the aggregate are notsignificant to the consolidated financial statements, have not been consolidated with the Company.
There were no affiliates accounted for by the equity method in 2015 or 2014.
Investments in the unconsolidated subsidiaries and affiliates are stated at cost, 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—In May 2006,
the Accounting Standards Board of Japan (the “ASBJ”) issued ASBJ Practical Issues Task Force (PITF) No. 18, “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.” PITF No. 18 prescribesthat the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events
under similar 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 thegenerally 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 net income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain orloss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costsof R&D; (d) cancellation of the fair value model accounting for property, plant and equipment and investment properties and incorporation of the cost model accounting; and (e) exclusion of minority interests from net income, if contained in net income.
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 are readily
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.

64

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

The difference between cash and cash equivalents in the accompanying consolidated balance sheet and cash and cash equivalents in the accompanying consolidated statement of cash flows is as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

2015

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

2015¥247,398¥220,148$2,058,737

(36)

(445)

(300)

(311)

(308)

(2,589)¥247,051¥219,395$2,055,848

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, dependingon management’s intent, as follows: (1) trading securities, which are held for the purpose of earning capital gains in near term
are reported at fair value, and the related unrealized gains and losses are included in earnings, (2) held-to-maturity debt securities, for which there is the positive intent and ability to hold to maturity are reported at amortized cost, and (3) available-for-salesecurities, which are not classified as either of the aforementioned securities, are reported at fair value, 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,
2015 and 2014.
Nonmarketable 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 to income.
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 substantially by
the declining-balance method, while the straight-line method is applied to buildings acquired after April 1, 1998. Depreciationof 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
VehiclesMachinery 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 circumstancesindicate 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 to result from the continued
use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which thecarrying 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.
j. 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 along with thesedefined 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.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

65

In May 2012, the ASBJ issued ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” and ASBJ Guidance
No. 25, “Guidance on Accounting Standard for Retirement Benefits,” which replaced the former standard and the other related
practical guidance.
Under the revised accounting standard, 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.
In addition, the Company changed its accounting policy for “Retirement and Pension Plan” from the beginning of the fiscal
year ended March 31, 2015 (see Note 3).
k. Asset Retirement Obligations—In March 2008, the ASBJ issued ASBJ Statement No. 18, “Accounting Standard for Asset
Retirement Obligations” and ASBJ Guidance No. 21, “Guidance on Accounting Standard for Asset Retirement Obligations.” Under
this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by law or contract that
results from the acquisition, construction, development, and normal operation of a tangible fixed asset and is associated with theretirement 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 berecognized when a reasonable estimate of the asset retirement obligation can be made. Upon initial recognition 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 theremaining 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.
l. 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 as leasereceivables, and all finance leases that deem not to transfer ownership of the leased property to the lessee are recognized as
investments in leases.
m. 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 tax laws to the temporary differences.
n. Appropriations of Retained Earnings—Appropriations of retained earnings at each year-end are reflected in the consolidated financial statements for the following year upon shareholders’ approval.
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—Certain consolidated subsidiaries use derivative financial instruments to manage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the consolidated subsidiaries to reduce interest rate risks. The
consolidated subsidiaries do not 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 at market
value but the differential paid or received under the swap agreements are recognized and included in interest expense or income.
q. Foreign Currency Financial Statements—The balance sheet accounts of the consolidated foreign subsidiaries are translated
into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historicalrate. Differences arising from such translation are shown as “Foreign currency translation adjustments” under accumulated othercomprehensive 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.

66

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

r. Per Share Information—Basic net income per share is computed by dividing net income available to common shareholders by
the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into
common stock. Diluted net income per share of common stock assumes full conversion of the outstanding convertible notes andbonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net oftax, and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to therespective years, including dividends to be paid after the end of the year.
s. Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement No. 24, “AccountingStandard for Accounting Changes and Error Corrections” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for
Accounting Changes and Error Corrections.” Accounting treatments under this standard and guidance are 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, inwhich case the entity shall comply with the specific transitional provisions. (2) Changes in Presentation—When the presentationof financial statements is changed, prior-period financial statements are reclassified in accordance with the new 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 the period 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.

3. ACCOUNTING CHANGE
Accounting Standard for Retirement Benefits—The ASBJ revised ASBJ Statement No. 26, “Accounting Standard for Retirement
Benefits” in May 2012, and ASBJ Guidance No. 25, “Guidance on Accounting Standard for Retirement Benefits” in March 2015.
The accounting standard revised calculation methods for defined benefit obligation and service cost.
The Company applied the revised accounting standard effective from the beginning of the fiscal year ended March 31, 2015.
In applying of the revised accounting standard, the Company reviewed the calculation method of retirement benefit obligations
and service cost and amended the determination of discount rate from one that is based on the period of years approximate to
the expected average remaining working lives of employees to one that uses a single weighted average discount rate reflecting theestimated timing and amount of benefit payment.
In applying the accounting standard, the effect of the review described above has been added to or deducted from retained
earnings as of the beginning of the fiscal year ended March 31, 2015.
As a result of this change, as of the beginning of the fiscal year ended March 31, 2015, liabilities for employees’ retirement
benefits increased by ¥6,262 million ($52,110 thousand), deferred tax assets increased by ¥2,215 million ($18,430 thousand), andretained earnings decreased by ¥4,080 million ($33,954 thousand).
In addition, the effects of this change on operating income and income before income taxes and minority interests for the
fiscal year ended March 31, 2015, are immaterial. Net assets per share decreased by ¥9.87 ($0.08).
Accounting Standards for Business Combinations—In September 2013, the ASBJ revised ASBJ Statement No. 21, “AccountingStandard for Business Combinations,” ASBJ Statement No. 22, “Accounting Standard for Consolidated Financial Statements,” ASBJ
Statement No. 7, “Accounting Standard for Business Divestitures” and related standards and implementation guidance.
The accounting standards revised mainly as follows: (a) accounting treatment of transactions with non-controlling interest;(b) accounting treatment of acquisition-related costs; and (c) provisional accounting treatments for a business combination.
The Company early applied the above revised accounting standards for (a) and (b), effective from the beginning of the fiscal
year ended March 31, 2015, and for (c), effective for a business combination occurring on or after the beginning of the fiscal year
ended March 31, 2015.
As a result, changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary are equity transactions, and acquisition-related costs shall be accounted as expenses in the periods in which the costs are
incurred and the services are received. Furthermore, adjustments to items recognized in the original accounting for a businesscombination, for a maximum of one year after the acquisition date, are made retrospectively as if those adjustments had been
made at the acquisition date when new information about facts and circumstances existing at the acquisition date is obtained.
The revised accounting standards are applied prospectively to business combinations for which the business combination
date is on or after the beginning of the fiscal year ended March 31, 2015.
YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201567

As a result of this change, as of March 31, 2015, capital surplus increased by ¥834 million ($6,942 thousand). In addition, theeffects of this change on operating income and income before income taxes and minority interests for the fiscal year ended
March 31, 2015, are immaterial. Net assets per share increased by ¥2.02 ($0.02).

4. BUSINESS COMBINATION
Transactions under common control(1) Outline of business combination

On September 1, 2014, the Company conducted a share exchange to make two consolidated subsidiaries wholly owned subsidiaries in order to further strengthen the Group management and construct a more effective consolidated management structure byaccelerating decision-making and increasing mobility and flexibility of the Group management.
Name and main business of the companies involved in the business combination
Combining entity (wholly owning parent company through share exchange)

Name:
Yamato Holdings Co., Ltd. (the “Company”)
Main business: Management control of Group companies and incidental operations thereof, on the basis of Group companies
share holdings
Combined entities (wholly owned subsidiaries through share exchange)

Name:
Yamato Global Express Co., Ltd. (“YGX”)
Main business: Domestic air cargo transport business
Name:
Yamato Global Logistics Japan Co., Ltd. (“YGL”)
Main business: International air cargo service, handling of marine cargo, import/export customs clearance services
Date of business combination

September 1, 2014 (effective date)
Legal form of business combination

Share exchange with the Company as a wholly owning parent company and YGX and YGL (“YGX & YGL”) as wholly owned subsidiaries(2) Outline of accounting treatment applied

The Company early applied ASBJ Statement No. 21, “Accounting Standard for Business Combinations,” and ASBJ GuidanceNo. 10, “Guidance on Accounting Standards for Business Combinations and Business Divestitures,” and accounted for the businesscombination as a transaction with non-controlling shareholders under common control.
(3) Additional acquisition of subsidiaries’ share
Acquisition cost

YGX
¥1,093 million ($ 9,097 thousand) Consideration: Common stock of the Company
YGL¥737 million ($ 6,132 thousand) Consideration: Common stock of the Company
Total acquisition cost ¥1,830 million ($15,229 thousand)

68

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Share exchange ratio, calculation method for exchange ratio and number of shares delivered
Share exchange ratio

Type of Stock: Common StockWholly owning parent company

Wholly owned subsidiary

The Company

YGX

YGL

1

41.297

5.621

Share exchange ratio
Calculation method for exchange ratio

The Company requested KPMG FAS Co., Ltd., a third-party institution that is independent from the Company and both YGX &YGL, to carry out the calculation of the share exchange ratios in order to ensure the fairness and validity of the calculation. KPMGFAS Co., Ltd. carried out the calculations of the share exchange ratios by using the average market share price method for calculating the Company’s stock value, taking into consideration the Company’s status as a listed company, and using the discounted
cash flow method for calculating YGX & YGL’s stock values, taking into consideration their status as unlisted companies. The
Company’s stock value was calculated based on the closing share price on the calculation base date (July 30, 2014) and the respective average closing price for the one-month period, three-month period and six-month period up to the calculation base date.
The Company conducted careful negotiation and discussion about the share exchange ratios with YGX & YGL, and decided theshare exchange ratios in reference to the result of the calculation by the third-party institution.
Number of shares delivered

896,425 shares
The Company applied treasury stock to the consideration of the share exchange and did not issue new stock.
(4) Change in equity related to transaction with non-controlling shareholders
Increase in capital surplus by transaction with non-controlling shareholders¥1,559 million ($12,972 thousand)Main reason for the change

The change was resulted from a difference between cost of additional acquisition of the subsidiaries’ shares and the decrease ofnon-controlling interest caused by the additional acquisition.

5. NOTES AND ACCOUNTS RECEIVABLE
Sales recorded on the installment basis were 0.3% of operating revenues in both 2015 and 2014.
Annual maturities of notes and accounts receivable—installment at March 31, 2015, and related amortization of deferred profit
on installment sales are as follows:
Millions of Yen
Receivables

Thousands of U.S. Dollars

Deferred Profit on
Installment Sales

Receivables

Deferred Profit on
Installment Sales

2016¥20,655¥2,199$171,885$18,2992017

10,482

1,544

87,22912,852

2018

5,906

966

49,146

8,035

2019

2,921

518

24,307

4,313

2020

1,421

276

11,8232,301

2021 and thereafter
Total

623

152

5,180

1,261

¥42,008¥5,655$349,570$47,061

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201569

6. INVENTORIESInventories at March 31, 2015 and 2014, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Merchandise

2015

2014

2015

¥ 722

¥ 780

$ 6,006

Work in process

512

235

4,265

Raw materials and supplies

2,102

2,222

17,489Total¥3,336¥3,237$27,760

7. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2015 and 2014, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2014

2015

2015

Noncurrent:
Marketable equity securities¥33,017¥24,796$274,750

Nonmarketable equity securities

730

685

6,076

Other

96

96

804

¥33,843¥25,577$281,630

Total

Information regarding each category of the securities classified as available-for-sale at March 31, 2015 and 2014, was as follows:
Millions of Yen
2015
Cost

Unrealized Gains

Unrealized Losses¥19,261¥38

Fair Value

Securities classified as:
Available-for-sale: Equity securities¥13,794¥33,017

Millions of Yen
2014
Cost

Unrealized Gains

Unrealized Losses¥12,038¥19

Fair Value

Securities classified as:
Available-for-sale: Equity securities¥12,777¥24,796

Thousands of U.S. Dollars
2015
Cost

Unrealized Gains

Unrealized Losses$160,279$315

Fair Value

Securities classified as:
Available-for-sale: Equity securities$114,786$274,750

Information for available-for-sale securities, which were sold during the years ended March 31, 2015 and 2014, was as follows:
Millions of Yen
March 31, 2015

Proceeds

Realized Gains

Realized Losses

¥14

¥7

¥–

¥14

¥7

¥–

¥2

¥1

¥–

¥2

¥1

¥–

Available-for-sale:
Equity securities
Other
Total
March 31, 2014

Available-for-sale:
Equity securities
Other
Total

70

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Thousands of U.S. Dollars
March 31, 2015

Proceeds

Realized Gains

Realized Losses

$118

$58

$–

$118

$58

$–

Available-for-sale:
Equity securities
Other
Total

Loss on valuation of available-for-sale equity securities for the year ended March 31, 2014 was ¥3 million.

8. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of the years ended March 31, 2015 and 2014. As a result, the Group
recognized an impairment loss of ¥1,792 million ($14,910 thousand) as other expense for the asset groups of Yamato (China)
Transport Co., Ltd. and ten other asset groups for the year ended March 31, 2015, and ¥217 million as other expense for the asset
groups of the Tomakomai Maintenance Factory of Yamato Autoworks Co., Ltd. and eleven other asset groups for the year ended
March 31, 2014, due to continuous operating losses of those units or significant declines in market prices. The carrying amountsof the relevant asset groups were written down to the recoverable amounts. In the case where 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 the case where the recoverable amounts were measured at its value in use, the discountrates used for computation of present value of future cash flows were 5.65% to 6.15%.

9. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2015 and 2014, consisted of notes to banks and bank overdrafts. The weighted-average interest
rates applicable to the bank loans as of March 31, 2015 and 2014, were approximately 0.755% and 0.450%, respectively.
Long-term debt at March 31, 2015 and 2014, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2015

0.120% to 6.400% loans from banks due 2015 to 2019

2014

2015

¥100,554

0.150% to 6.900% loans from banks due 2014 to 2017

$ 836,763¥ 59,422

Lease obligations

7,389

9,165

61,494

Zero coupon convertible bonds due in March 2016

9,660

20,00080,387

Total

117,60388,587

978,644(29,071)(21,941)(241,920)¥ 88,532¥ 66,646$ 736,724

Millions of Yen

Thousands of
U.S. Dollars

2016¥ 29,071$241,920

2017

34,210284,6762018

42,868356,728

2019

10,91190,795

2020

441

3,674

2021 and thereafter

102

851

¥117,603$978,644

Less current portion
Total

Annual maturities of long-term debt at March 31, 2015, were as follows:Year Ending March 31

Total

The conversion price of the convertible bonds due in March 2016 was ¥1,850 per share at March 31, 2015. If all the outstanding
convertible bonds had been exercised at March 31, 2015, 5,221,621 shares of common stock would have been issued.
The conversion price of the convertible bonds is subject to adjustments to reflect stock splits and certain other events. Eachstock acquisition right may be exercised at any time during the period from March 22, 2011 to February 22, 2016.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201571

10. 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 areentitled to retirement benefits determined based on the rate of pay at the time of termination, years of service, and certain otherfactors. 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 the termination is
involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior tothe mandatory retirement age.
(1) Defined Benefit Pension Plans
The changes in defined benefit obligation for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

2015

Balance at beginning of year
Cumulative effects of changes in an accounting policy¥119,1362015¥112,493$ 991,394

6,312

52,527

Restated balance

125,448

112,493

1,043,921

Service cost

9,704

8,910

80,749Interest cost

1,098

1,443

9,135

Actuarial loss arising during the year

1,917

744

15,955Retirement benefits paid

(5,041)(4,458)(41,945)¥133,126¥119,136

Past service cost arising during the year
Balance at end of year4
$1,107,815

The changes in plan assets for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year

2015

2014

¥72,079¥64,927

Expected return on plan assets

2015$599,807

721

649

5,998

Actuarial gain arising during the year

5,269

4,516

43,848Contributions from the employer

4,137

3,881

34,431Retirement benefits paid
Balance at end of year

(1,848)(1,894)(15,377)¥80,358¥72,079$668,707

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation andplan assets as of March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2014

Defined benefit obligation of funded plan

¥ 53,415¥ 50,035$ 444,494

Plan assets(80,358)(72,079)(668,707)(26,943)(22,044)(224,213)

79,711

69,101

663,321¥ 52,768¥ 47,057$ 439,108

Defined benefit obligation of unfunded plan
Net liability arising from defined benefit obligation

2015

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

2015

2014

¥53,024¥47,224

(256)

(167)

(2,129)¥52,768¥47,057$439,1082015$441,237

The amount of liability and asset for employees’ retirement benefits that are offset individually by the Company and subsidiaries are combined.

72

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2014

2015

Service cost

¥ 9,704¥ 8,910$80,749

Interest cost

1,098

1,443

9,135

Expected return on plan assets

(721)

(649)

(5,998)

Recognized actuarial loss

399

3,047

3,318

Past service cost

4

OthersNet periodic benefit costs

(13)

(6)

(102)

¥10,467¥12,749$87,102

Amount recognized in other comprehensive income (before income tax effect adjustments) in respect of defined retirement
benefit plans for the year ended March 31, 2015, was as follows:
Millions of Yen

Thousands of
U.S. Dollars

2015

2015

Actuarial gain and (loss)¥3,751$31,211

Total¥3,751$31,211Amounts recognized in accumulated other comprehensive income (before income tax effect adjustments) in respect of defined
retirement benefit plans as of March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2014

2015

Unrecognized actuarial gain and (loss)¥1,067¥(2,683)$8,881

Total¥1,067¥(2,683)$8,881

2015

2014

Plan assets as of March 31, 2015 and 2014, consisted of the following:
General accounts

31%

34%

Debt investments

24

26

Equity investments

24

21

Others

21

19

Total

100%

100%

Assumptions used for the years ended March 31, 2015 and 2014, were set forth as follows:
2015

2014

Discount rate

0.9%

1.3%

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 ofrespective 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, 2015 and 2014,
were ¥2,136 million ($17,775 thousand) and ¥2,089 million, respectively.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201573

11. ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2014

2015

¥4,789¥4,459$39,849

Additional provisions associated with the acquisition of property, plant and equipment

170

355

1,413

Reconciliation associated with passage of time

93

90

776

Balance at beginning of year

Reconciliation associated with changes in accounting estimates
Reduction associated with settlement of asset retirement obligations
OthersBalance at end of year

2

(1)

20

(80)

(110)

(670)

6

(4)

50

¥4,980¥4,789$41,438

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, which resulted from certain events such as obtaining new
information. A reconciliation has been prepared for the change, which resulted in an increase and decrease of the asset retirement obligation for the years ended March 31, 2015 and 2014, by ¥2 million ($20 thousand) and ¥1 million, respectively.

12. 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 is prescribedas one year rather than two years of normal 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 (noncash assets) to shareholders subject to a certain
limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or
the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but theamount 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 ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged
upon the payment of such dividends until the aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon 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 under certain conditions upon resolution of the shareholders.
c. Treasury Stock
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard 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 can purchase both treasury stockacquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity.

74

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

13. 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 35.6% and 38.0% for the years ended March 31, 2015 and 2014.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31, 2015 and2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2015

2014

¥ 9,711¥ 10,463$ 80,814

1,769

1,747

14,7162015

Deferred tax assets:
Current:
Accrued expenses
Enterprise tax
Allowance for doubtful accounts

216

196

1,799

Legal welfare expense

1,818

1,660

15,130

Other

2,466

3,067

20,519Less valuation allowance
Deferred tax assets—current(273)¥ 15,980¥ 16,860$ 132,978Noncurrent:
Liability for employees’ retirement benefits¥ 17,728¥ 16,998$ 147,520

Investment securities

1,992

2,199

16,579Loss on devaluation of land

21,89824,163

182,228

Loss on impairment of long-lived assets

4,188

4,225

34,853

495

546

4,118

Unrealized profit

1,914

1,840

15,923

Other

10,693

10,76488,984

Loss on devaluation of telephone subscription rights

Less valuation allowance(33,122)(35,505)(275,630)

Deferred tax assets—noncurrent¥ 25,786¥ 25,230$ 214,575

Current—other

¥

(293)

¥

(312)

$

(2,436)

Deferred tax liabilities—current

¥

(293)

¥

(312)

$

(2,436)

Deferred tax liabilities:

Noncurrent:
Unrealized gain on available-for-sale securities
Other
Deferred tax liabilities—noncurrent
Deferred tax assets—net¥ (4,740)¥ (2,871)$ (39,443)(3,016)(2,480)(25,096)¥ (7,756)¥ (5,351)$ (64,539)¥ 33,717¥ 36,427$ 280,578

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201575

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, 2015, with the corresponding figures for 2014 is as follows:
2014

2015

Normal effective statutory tax rate

35.6%

38.0%

Per capita levy of local taxes

4.2

4.3

Valuation allowance

(0.2)

1.2

Downward revision to deferred tax assets as of end of the period
due to the change in the corporate tax rate

5.0

1.8

Other—net

1.0

1.8

Actual effective tax rate

45.6%

47.1%

On March 31, 2015, new tax reform laws were enacted in Japan, which changed the normal effective statutory tax rate from 35.6%
to 33.1%, effective for the fiscal year beginning on April 1, 2015 and to 32.3% for the fiscal year beginning on or after April 1, 2016.
The effects of the reform were to decrease deferred tax assets (after subtraction of deferred tax liabilities) in the consolidatedbalance sheet as of March 31, 2015, by ¥3,277 million ($27,271 thousand), of which ¥2,912 million ($24,236 thousand) is the effect of
the change in tax rates, and to increase income taxes—deferred in the consolidated statement of income for the year then endedby ¥3,753 million ($31,232 thousand), of which ¥3,388 million ($28,197 thousand) is the effect of the change in tax rates.

14. LEASES(1) Lessee
The Group leases certain machinery, computer equipment and other assets.
Future rental payments under noncancelable operating leases at March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

2015

2015

Due within one year

¥ 85

¥ 76

Due after one year

65

123

540

¥150

¥199

$1,247

Total

$ 707

(2) Lessor
The net investments in lease as of March 31, 2015 and 2014, are summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen

Gross lease receivables

2015

2014

2015

¥44,580¥35,645

Unguaranteed residual values

4,207

2,948

35,007

Unearned interest income(3,839)(3,264)(31,943)¥44,948¥35,329$374,039

Investments in leases—current$370,975

Maturities of lease receivables for finance leases that are deemed not to transfer ownership of the leased property to the lessee asof March 31, 2015, are as follows:
Millions of Yen

Thousands of
U.S. Dollars

2016¥13,829$115,0782017

12,081

100,534

2018

9,662

80,400

2019

6,365

52,972

2020

2,331

19,398Year Ending March 31

2021 and thereafter
Total

76

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

312

2,593

¥44,580$370,975

The minimum rental commitments under noncancelable operating leases at March 31, 2015 and 2014, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year

2015

2014

2015

¥2,812¥2,069$23,397

Due after one year

5,846

4,385

48,649Total¥8,658¥6,454$72,046

15. 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 businessbased on its investment plan to expand its network. Cash surpluses, if any, are invested in low risk financial assets. Derivatives areused, not for speculative purposes, but to manage exposure to interest fluctuation risk. Certain consolidated subsidiaries conductleasing 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 maintains 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. Although a portion of such bankloans are exposed to market risks from changes in variable interest rates, those risks are mitigated by using derivatives such as
interest rate swaps. In addition, such interest rate swaps are contracted in accordance with internal rules, which prescribe theauthority over derivative transactions.
Accounts payable and bank loans exposed to liquidity risks are managed by each company of the Group, such as throughfund 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, other rational
valuation techniques are used instead. The value could vary depending on the technique used.
Fair values of financial instruments at March 31, 2015 and 2014, were as follows:
Millions of Yen
March 31, 2015

Carrying Amount

Cash and cash equivalents¥247,398

Trade notes and accounts receivable

187,834

Allowance for doubtful accounts

Difference¥247,398(122)
187,712Installment sales receivable

Fair Value

188,298

¥ 586

5,428

42,008

Allowance for doubtful accounts(802)

Deferred profit on installment sales(5,655)35,551

40,979Investment securities

33,01733,017

Trade notes and accounts payable

157,480

157,480

Short-term loans

34,44334,51572

Long-term loans

83,877

83,834(43)

Derivatives

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201577

Millions of Yen
March 31, 2014

Carrying Amount

Cash and cash equivalents¥220,148

Trade notes and accounts receivable

188,145

Allowance for doubtful accounts

Difference¥220,148(131)
188,014

Installment sales receivable

Fair Value

188,519

¥ 505

5,122

39,480Allowance for doubtful accounts(933)

Deferred profit on installment sales(5,349)33,19838,320Investment securities

24,796

24,796

Trade notes and accounts payable

172,463

172,463

Short-term loans

36,41236,49381

Long-term loans

42,26642,33468

Derivatives
Thousands of U.S. Dollars
March 31, 2015

Carrying Amount

Fair Value

Cash and cash equivalents$2,058,737$2,058,737

Trade notes and accounts receivable

1,563,066

Allowance for doubtful accounts(1,012)
1,562,054

Installment sales receivable
Allowance for doubtful accounts
Deferred profit on installment sales
Investment securities
Trade notes and accounts payable

Difference

1,566,931$ 4,877

295,835

341,01145,176

274,750

274,750

349,570(6,674)(47,061)

1,310,476

1,310,476

Short-term loans

286,626

287,215589

Long-term loans

697,979

697,630(349)

Derivatives

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 cash flows related to the receivables at the rate ofgovernment bonds.
Installment sales receivable

Allowances for doubtful accounts and deferred profit on installment sales are deducted from the fair values of installment salesreceivable, which are determined by discounting the cash flows related to the installment sales receivable at the 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 for theequity instruments, and at the quoted price obtained from the financial institution for certain debt instruments. Fair value information for marketable and investment securities by classification is included in Note 7.
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.

78

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Short-term loans and long-term loans

The fair values of short-term bank loans and long-term loans are determined by discounting the cash flows related to the 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-term bankloans 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 16.
(4) Financial Instruments Whose Fair Value Cannot Be Reliably Determined
Thousands of
U.S. Dollars

Millions of Yen

Investments in equity instruments that do not have a quoted market price inan active market

2015

2014

2015

¥1,551¥1,324$12,904(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen
March 31, 2015

Due in One Yearor Less

Due after One Yearthrough Five Years

Due after
Five Years

Cash and cash equivalents¥247,398

Trade notes and accounts receivable

174,738¥12,915

Installment sales receivable

20,655

20,730623¥442,791¥33,645

¥804

¥ 75

Total

¥181

March 31, 2014

Cash and cash equivalents¥220,148

Trade notes and accounts receivable

177,095¥10,975

Installment sales receivable

19,68819,154638¥416,931¥30,129

¥713

Total

Thousands of U.S. Dollars
March 31, 2015

Due in One Yearor Less

Cash and cash equivalents$2,058,737

Trade notes and accounts receivable

1,454,092$107,469

171,885

172,505

5,180$3,684,714$279,974$6,685

Installment sales receivable
Total

Due after One Yearthrough Five Years

Due after
Five Years$1,505

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201579

(6) Maturity Analysis for Long-term loans, Lease obligations and Convertible bonds
Millions of Yen
Long-term loans

Lease obligations

Zero coupon
convertible bonds

2016¥ 16,677¥2,734¥9,6602017

32,328

1,882

2018

41,549

1,319

2019

10,000911

Year Ending March 31

2020

441

2021 and thereafter

102

Total

¥100,554¥7,389¥9,660Thousands of U.S. Dollars
Long-term loans

Lease obligations

Zero coupon
convertible bonds

2016$138,784$22,749$80,387

2017

269,016

15,6602018

345,747

10,981

2019

83,216

7,579

Year Ending March 31

2020

3,674

2021 and thereafter

851

Total

$836,763$61,494$80,387

Please see Note 9 for annual maturities of long-term debt.

16. DERIVATIVES
Certain consolidated subsidiaries use derivative financial instruments to manage their exposure to fluctuations in interest rates.
Interest rate swaps are utilized by the consolidated subsidiaries to reduce interest rate risk. The consolidated subsidiaries do notenter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market
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
Contract AmountContract AmountDue after One Year

Long-term bank loans¥38,582¥26,376*

Long-term bank loans¥44,050¥29,050*

March 31, 2015

Hedged Item

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

Fair Value

March 31, 2014

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

Thousands of U.S. Dollars
March 31, 2015

Hedged Item

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

Long-term bank loans* The fair value of interest rate swaps is included in that of hedged items (see Note 15).

80

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Contract AmountContract AmountDue after One Year

$321,062$219,489

Fair Value*17. COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2015 and 2014, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2014

2015

2015

Unrealized gain on available-for-sale securities:
Gains arising during the year

¥ 7,258¥3,784$ 60,399

(7)

(1)

(58)

Amount before income tax effect

7,251

3,783

60,341

Income tax effect(1,880)(845)(15,648)

Total¥ 5,371¥2,938$ 44,693¥¥1,408$ 6,878¥$ 27,893

Reclassification adjustments to profit or loss

Foreign currency translation adjustments:
Adjustments arising during the year

826

Remeasurements of defined employees’ retirement benefit plans:
Adjustments arising during the year

¥ 3,352

Reclassification adjustments to profit or loss
Amount before income tax effect

–

399

3,318

3,751

31,211

Income tax effect(1,308)

Total¥ 2,443¥–$ 20,328¥ 8,640¥4,346$ 71,899

Total other comprehensive income(10,883)

18. NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2015 and2014, is as follows:Year Ended March 31, 2015

Basic EPS—Net income available to common shareholders
Adjustment in net income—Administrative fee (net of tax)

Millions of Yen

Thousands ofSharesNet Income

Weighted-average
Shares¥37,533

U.S. Dollars
EPS¥90.41

$0.75

$0.73

5

Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation

415,131

Yen

10,187¥37,538

425,318¥88.26¥34,776

422,941¥82.22¥34,776

433,752

Year Ended March 31, 2014

Basic EPS—Net income available to common shareholders
Effect of dilutive securities—Convertible bonds
Diluted EPS—Net income for computation

10,811¥80.18YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201581

19. SEGMENT INFORMATION(1) Description of Reportable Segments
The Group identifies operating segments as components of entity for which discrete financial information is available and whose
operating results are regularly reviewed by the Board of Directors in order to make decisions about resources to be allocated tothe segments and assess their performance.
The Company, as a pure holding company, forms six reportable segments classified according to business content and manages them based on these reportable segments. Therefore, the Group has the following six reporting segments; “Delivery,” “BIZLogistics,” “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 Mail (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) Methods of Measurement for the Amounts of Segment Revenues, Segment Income, 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.”

82

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

(3) Information about Segment Revenues, Segment Income, Segment Assets, and Other Items
Millions of Yen

2015
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated

Segment revenues:
Segment revenues
from customers
Total segment revenues¥1,101,439
63,411¥1,164,850¥103,821
12,151¥115,972¥48,475
14,546¥63,021¥40,487
28,253¥68,740¥ 66,658
3,402¥ 70,060¥27,153
28,558¥55,711¥ 8,675
59,229¥67,904¥1,396,708
209,550¥1,606,258–(209,550)¥(209,550)¥1,396,708

Segment income

¥

¥

4,683
61,508¥ 613
20,242¥ 7,757
40,377¥ 8,918
239,044¥ 3,733
24,794¥24,144
12,849¥ 89,053
1,059,110¥ (20,106)
23,421¥ 68,947
1,082,531

Intersegment revenues

Segment assets

39,205660,296¥¥1,396,708

Other:
Depreciation and amortization

34,792

1,818

557

3,761

3,437

768

261

45,394664

46,058

Increase of tangible andintangible fixed assets

33,832

3,201

711

4,965

8,397

455

220

51,781

241

52,022Millions of Yen

2014
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated

Segment revenues:
Segment revenues
from customers¥ 90,255
12,462¥102,717¥48,723
14,154¥62,877¥40,831
27,104¥67,935¥ 62,728
3,568¥ 66,296¥25,650
28,067¥53,717¥ 7,023
60,664¥67,687¥1,374,610
207,114¥1,581,724¥

Total segment revenues¥1,099,400
61,095¥1,160,495–(207,114)¥(207,114)¥1,374,610

Segment income

¥

¥

3,404
54,551¥ 217
19,017¥ 8,057
38,635¥ 9,406
233,495¥ 3,272
23,412¥24,957
11,169¥ 85,097
1,013,706¥ (22,001)
18,428¥ 63,096
1,032,134

Intersegment revenues

Segment assets

35,784
633,427¥1,374,610

Other:
Depreciation and amortization

31,849

1,561

575

3,712

2,721

907

285

41,610656

42,266

Increase of tangible andintangible fixed assets

64,479

4,250

700

3,366

5,493

380

564

79,232299

79,531Thousands of U.S. Dollars

2015
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated

Segment revenues:
Segment revenues
from customers$9,165,671
527,683$9,693,354$863,953
101,111$965,064$403,387
121,047$524,434$336,912
235,109$572,021$ 554,699
28,304$ 583,003$225,959
237,647$463,606$ 72,190 $11,622,771
492,874
1,743,775$565,064 $13,366,546$$ 326,250
5,494,681$ 38,969
511,840$

5,102
168,443$ 64,549
336,004$

74,213
1,989,219$ 31,065
206,326$200,912 $ 741,060
106,921
8,813,434$ (167,313) $ 573,747
194,899
9,008,333

Depreciation and amortization

289,520

15,1304,636

31,30228,606

6,390

2,169

377,7535,524

383,277

Increase of tangible andintangible fixed assets

281,537

26,633

5,919

41,31969,876

3,785

1,826

430,895

2,010

432,905

Intersegment revenues
Total segment revenues
Segment income
Segment assets– $11,622,771(1,743,775)$(1,743,775) $11,622,771

Other:

Notes: Effective from the fiscal year ended March 31, 2015, the Delivery Business segment includes the contact service business, previously included in the e-Business, due tochanges involving business segment categories made in accordance with actual circumstances related to management and administration. The segment information for the
fiscal year ended March 31, 2014 has been prepared and presented according to the new classification.
“Other” includes JITBOX charter services, staffing services, and shared services.
Segment revenues and segment income of “Other” include dividends for the years ended March 31, 2015 and 2014, of ¥21,910 million ($182,328 thousand) and ¥24,105 million,
respectively, which the Company received from its subsidiaries as a pure holding company.
Reconciliations are as follows:(1) Reconciliations of segment income for the years ended March 31, 2015 and 2014, of ¥20,106 million ($167,313 thousand) and ¥22,001 million, respectively, are intersegment eliminations and others.
(2) Reconciliations of segment assets at March 31, 2015 and 2014, of ¥23,421 million ($194,899 thousand) and ¥18,428 million, respectively, include intersegment eliminations of assets and liabilities of ¥166,006 million ($1,381,424 thousand) and ¥143,010 million, and corporate assets which are not allocated to each reporting segmentsof ¥189,427 million ($1,576,323 thousand) and ¥161,438 million, respectively.
(3) Reconciliations of increases of tangible and intangible fixed assets at March 31, 2015 and 2014, of ¥241 million ($2,010 thousand) and ¥299 million, respectively, include
the Company’s capital investment.
Segment income is reconciled with the consolidated statement of income.
The ASBJ revised ASBJ Statement No. 26, “Accounting Standard for Retirement Benefits” in May 2012, and ASBJ Guidance No. 25, “Guidance on Accounting Standard for
Retirement Benefits” in March 2015. The accounting standard revised calculation methods for defined benefit obligation and service cost. The Company applied the revised
accounting standard effective from the beginning of the fiscal year ended March 31, 2015. In applying of the revised accounting standard, the Company reviewed the calculation method of retirement benefit obligations and service cost and amended the determination of discount rate from one that is based on the period of years approximate to
the expected average remaining working lives of employees to one that uses a single weighted average discount rate reflecting the estimated timing and amount of benefit
payment. The effect of this change on segment income for the fiscal year ended March 31, 2015 is immaterial.

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201583

[Related Information about Reporting Segments](1) Information about products and services
Operating revenues from customers for the years ended March 31, 2015 and 2014, are as follows:
Millions of Yen
2014

2015
TA-Q-BIN¥912,563

Kuroneko Mail

Other

¥111,885¥372,260

Total

TA-Q-BIN¥906,057¥1,396,708

Kuroneko Mail

Other

¥120,800¥347,753

Total¥1,374,610

Thousands of U.S. Dollars
2015
TA-Q-BIN$7,593,934

Kuroneko Mail

Other

$931,058

Total$3,097,779 $11,622,771(2) Information about geographical areas
Operating revenues for the years ended March 31, 2015 and 2014, are as follows:
Millions of Yen
2014

2015
Japan

¥1,368,793

North America

Other¥10,261¥17,654

Total

Japan

¥1,396,708¥1,349,718

North America

Other¥10,461¥14,431

Total¥1,374,610

Thousands of U.S. Dollars
2015
Japan

$11,390,474

North America

Other$85,390

Total$146,907 $11,622,771

Property, plant and equipment at March 31, 2015 and 2014, are as follows:
Millions of Yen
2014

2015
Japan

¥418,202

North America

Other

¥442

¥1,457

Total¥420,101

Thousands of U.S. Dollars
2015
Japan

$3,480,089

84

North America$3,677

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Other

$12,123

Total$3,495,889

Japan¥415,013

North America

¥386

Other

¥1,729

Total¥417,128

(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, 2015 and 2014, are as follows:
Millions of Yen

2015
Delivery

Loss on impairment oflong-lived assets¥1,404

BIZ-Logistics

Home
Convenience

¥91

¥297

e-Business

Financial

Autoworks

Other

Eliminations or
Corporate

Total¥1,792

Consolidated¥1,792Millions of Yen

2014
Delivery

BIZ-Logistics

Home
Convenience

e-Business

Financial

Autoworks

Loss on impairment oflong-lived assets

Other

¥217

Eliminations or
Corporate

Total

¥217

Consolidated¥217

Thousands of U.S. Dollars

2015
Delivery

Loss on impairment oflong-lived assets$11,682

BIZ-Logistics

Home
Convenience$755$2,473e-Business

Financial

Autoworks

Other

Eliminations or
Corporate

Total$14,910

Consolidated$14,910

20. SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2015, was approved at the Company’s Board of Directors meeting
held on May 14, 2015:

Year-end cash dividends, ¥13.00 ($0.11) per share

Millions of Yen

Thousands of
U.S. Dollars¥5,372$44,699

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201585

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 of March 31,
2015, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year 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 in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonableassurance 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 theconsolidated 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 thatare 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 bymanagement, 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, 2015, and the consolidated results of their operations
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 are presented
solely for the convenience of readers outside Japan.

June 10, 201586

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 2015

Corporate Data/Stock Information
As of March 31, 2015

Company Name

Fiscal Year

Yamato Holdings Co., Ltd.

From April 1 to March 31

Head Office

Common Stock

16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125 Japan
Telephone: 81-3-3541-4141
Facsimile: 81-3-5565-3427

Authorized: 1,787,541,000 shares
Issued:435,564,792 shares

Stock Exchange Listing
Tokyo Stock Exchange

EstablishedTransfer Agent and Registrar

November 29, 1919

Mizuho Trust & Banking Co., Ltd.

RegisteredGeneral Meeting of Shareholders

April 9, 1929

Held in June

Paid-in Capital

Auditor127,234,791,077 yen

Deloitte Touche Tohmatsu LLC

WebsitePrincipal Shareholders

http://yamato-hd.co.jp/english/

Percentage of total
shares outstanding

The Master Trust Bank of Japan, Ltd. (Trust Account)
State Street Bank and Trust Company 505223
Yamato Employees’ Shareholding Association
Japan Trustee Services Bank, Ltd. (Trust Account)
Mizuho Bank, Ltd.
Nippon Life Insurance Company
Meiji Yasuda Life Insurance Company
Yamato Trading-Partner Shareholding Association
The Bank of New York Mellon SA/NV 10
Sompo Japan Insurance Inc.
Total

7.37%
6.28%
4.08%
3.82%
3.55%
3.28%
2.82%
2.08%
1.73%
1.39%
36.38%

Stock Price Range/Trading Volume (Tokyo Stock Exchange)
(Yen)

(Yen)

3,000

24,0002,400
16,000
1,800

1,200
8,000
600

0

4

5

6

7

8
9
2012

10

11

12

1

2

3

4

5

6
7
2013

8

9

10

11

12

1

2

3

4

5

6
7
2014

8

9

10

11

12

1

2
3
2015

6

7

8
9
2012

10

11

12

1

2

3

4

5

6
7
2013

8

9

10

11

12

1

2

3

4

5

6
7
2014

8

9

10

11

12

1

2
3
2015

(Thousand of Shares)

0

70,00060,00050,00040,00030,00020,00010,000045Trading Volume (left scale)

Stock Price Range (left scale)

Nikkei Stock Average (right scale)

YAMATO HOLDINGS CO., LTD. ANNUAL REPORT 201587

16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125 Japan
Telephone: 81-3-3541-4141
Facsimile: 81-3-5565-3427

Annual Report 2015

Printed in Japan