REFORM FOR THE
NEXT 100 YEARSStrengthening Our Management
Foundation for Sustainable GrowthIntegrated Report 2017

Masaki Yamauchi
Representative Director,
President and Executive Officer

A Letter to Our Stakeholders
Centered on its core business of TA-Q-BIN, theYamato Group has achieved steady growth bycombining its core competencies of information technology (IT), logistics technology (LT), and financial
settlement technology (FT) to provide added value toits customers. However, the Group has recently been
dealing with the significant changes that are occurringin the business environment, such as the shrinking
workforce and the rapid expansion of the e-commercemarket that has followed the diversification of consumer
behavior. As a result, the Group has been falling behindwith respect to building an operational framework to
respond to these changes, and this has placed aheavy burden on the employees who work on thefront lines. We are reflecting deeply on our inability tokeep up with the changes in the business environment, which has led to a downturn in our businessperformance. At the same time, to realize further
growth in the future, we are committed to achieving
success in carrying out reforms to our business andmanagement structures.
The Yamato Group is approaching its 100-year
anniversary in November 2019, and we believe that
this anniversary represents a major milestone for us asa corporate group. To resolve the issues we currently
face and achieve sustainable growth for the next 100
years, we have formulated a new long-term vision for2025 and commenced a new three-year medium-term
management plan, “KAIKAKU 2019 for NEXT100.”
Amid a business environment that is undergoingsignificant changes, our new long-term vision wasformulated to provide a pathway and a blueprint forrealizing sustainable growth. Going forward, we will

maintain our corporate stance of enriching our society
as a crucial part of social infrastructure, which wehave continued to place great importance on throughout the years. Meanwhile, with the further progressionof digitization, we will incorporate the information we
obtain through our daily business activities in our
logistics operations, which will not only allow us tocontinue moving packages but also help us reducesocial costs and realize an optimal logistics frameworkthat leverages the latest information. In doing so, wewill offer new added value to our customers.
One of the Group’s founding principles is “inclusive
management.” Inclusive management entails having
all our employees give consideration to our customers
and make decisions based on their own judgment.
This style of management represents a significant
Groupwide strength that we can leverage to its fullest
by enabling our employees to work in a highly motivated and energetic manner.
We have positioned the three-year period leading
up to our 100-year anniversary as a time in which wewill solidify our management foundation. To this end,
we are pursuing three kinds of reforms: “Structural
Reform in the Delivery Business,” “Reform of Revenue
and Business Structure Geared to Achieving Discrete
Growth,” and “Reform of Group Management
Structure Geared to Achieving Sustainable Growth,”
while also placing “Reforming Working Styles” at thecenter of our management. Leveraging this solidified
foundation, we will realize steady growth for the next
100 years.


December 2017

Vision for 2025
At the Yamato Group, with transportation itself as the catalyst, we will create newvalue by developing open platform solutions through leveraging the strengths ofour points of contact with local communities and companies based in Japanand overseas, and the information these provide.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201701

Company Precepts

1. We ‘all’ represent the company
2. We deliver with a personal touch
3. We work with gratitude and politenessEditorial Policy

ProfileHaving built up long-standing relationships of trust with all of its
many and varied stakeholders, the Yamato Group discloses not
only information of a legal nature but also information considerednecessary for its stakeholders. The Yamato Group adopted thepolicy that such information shall be conveyed promptly and accurately as well as fairly and equitably.
Following our recent announcement of a new long-term
vision and medium-term management plan, we have published
Integrated Report 2017. In addition to the content found in Annual
Review 2017, which we published in September 2017, this integrated report also includes information on our efforts to improve
corporate value over the medium to long term.

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

Annual Review 2017*
Business performance and initiatives
implemented in thefiscal year ended
March 31, 2017
* Published in September 201702

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017+

Mediumto long-term
initiatives, including
the long-term visionand medium-term
management plan=

Integrated
Report2017

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.

Domestic Parcel Delivery Market Share

TA-Q-BIN Annual Delivery Volumes

Sales Drivers(Year Ended March 31, 2017)(Year Ended March 31, 2017)(As of September 2017)

46.9%

1.8

1

No.

Proportion of Japan Covered by
TA-Q-BIN Network (As of September 2017)100%

Approx.

60,000billion parcels

TA-Q-BIN Centers

Employees(As of September 2017)(As of September 2017)

Approx.

208,000

Approx.

7,000** Number of organizations

YAMATO HOLDINGS CO., LTD.
Integrated Report 201703

Performance Highlights

Performance Highlights for the Fiscal Year Ended March 31, 2017
TA-Q-BIN delivery volumes increased in the Delivery Business due
to expansion of the e-commerce market and the growth of the
TA-Q-BIN Compact and Nekopos services, which largely stemmed
from business via flea market websites. In addition, existing services
in non-delivery businesses showed a solid performance. As a result,operating revenues rose 3.6% year on year, to ¥1,466.8 billion.
Meanwhile, amid tight labor market conditions, expenditures tosecure labor capacity to respond to increased business volumerose, and payments for specially acknowledged working hours

were additionally recognized. Accordingly, operating profit*1
declined 49.1% year on year, to ¥34.8 billion.
As a result of the above, profit attributable to owners of parent*2
fell 54.2% year on year, to ¥18.0 billion, and ROE declined 3.7
percentage points compared with the previous fiscal year, standingat 3.4%.

Operating Revenues

Operating Profit(¥ billion)(¥ billion)

1,466.8

1,600*1 Operating profit is referred to as “operating income” in the financial statements.
*2 P rofit attributable to owners of parent is referred to as “net income attributable to owners ofparent” in the financial statement.

80

1,200

60

800

40

400

20

0

2013/3

Delivery Business2014/3

2015/3

2016/32017/30

34.8

2013/3

2014/3

2015/3

2016/32017/3Non-delivery Businesses

TA-Q-BIN Delivery Volumes /TA-Q-BIN Unit Price Growth Rate (YoY)(Millions of parcels)

Profit Attributable to Owners of Parent / ROE
1,867

2,000

1,000

(%)

(¥ billion)

(%)

8

45

9

4

30

6

0

15

18.0
0

3.4%

3

2017/30(3.3)%
2013/3

2014/3TA-Q-BIN Delivery Volumes (left scale)scale)

2015/3

2016/32017/3(4)

TA-Q-BIN Unit Price Growth Rate (YoY) (right0

2013/3

2014/3

2015/3

Profit Attributable to Owners of Parent (left scale)2016/3

ROE (right scale)Operating and Investing Cash Flows / Free Cash Flows*3

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

100

600

73.3

80

539.1

(%)
60

60
40

(0.6)

20

400

55

200

50

0
(20)
(40)
(80)

2013/3

2014/3

Cash Flows from Operating Activities

2015/3

2016/32017/3

Cash Flows from Investing Activities

Free Cash Flows*3 Free Cash Flows = Cash Flows from Operating Activities + Cash Flows from Investing Activities

04

48.4%

(73.9)(60)

YAMATO HOLDINGS CO., LTD.
Integrated Report 20170

2013/3

2014/3

Total Shareholders’ Equity (left scale)2015/3

2016/32017/3

Shareholders’ Equity Ratio (right scale)0Contents

MESSAGE FROM THE PRESIDENT01

A Letter to Our Stakeholders
ABOUT THE YAMATO GROUP

02

Company Precepts / Management Philosophy / Editorial Policy / Profile

04

Performance Highlights
NEW MEDIUM-TERM MANAGEMENT PLAN

06	The Yamato Group’s New Medium-Term Management Plan “KAIKAKU 2019 for NEXT100”
09

Interview with the President

18

Message from the Chief Financial Officer
OVERVIEW OF OPERATIONS IN THE YEAR ENDED MARCH 31, 201720

Organization

21

Overview of Operations by Segment
21 Delivery

25 Financial

22 BIZ-Logistics

26 Autoworks

23 Home Convenience

27 Other Services

24 e-Business
ESG
28	The Yamato Group: Creating Shared Value (CSV) Initiatives
32

Corporate Governance
35

Directors / Audit & Supervisory Board Members / Executive Officers
FINANCIAL SECTION

40	Ten-Year Summary and Business Highlights
42	Consolidated Balance Sheet
44	Consolidated Statement of Income
45	Consolidated Statement of C
­ omprehensive Income46	Consolidated Statement of Changes in Equity
47	Consolidated Statement of Cash Flows48	Notes to Consolidated Financial Statements
68	Independent Auditor’s Report69	Corporate Data / Stock Information

Forward-Looking Statements
This integrated report contains forward-looking statements concerning Yamato Holdings’ future plans, strategies, andperformance. These statements represent assumptions and beliefs based on information currently available and are not historicalfacts. Furthermore, forward-looking statements are subject to a number of risks and uncertainties that include, but are not limited
to, economic conditions, customer demand, foreign currency exchange rates, tax laws, and other regulations. Yamato Holdings
therefore cautions readers that actual results may differ materially from these predictions.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201705

The Yamato Group’s New Medium-Term Management Plan

“KAIKAKU 2019 for NEXT100”
In September 2017, the Yamato Group announced its new medium-term management plan
“KAIKAKU 2019 for NEXT100.” In November 2019, the Group will celebrate its 100-year anniversary,
which it views as a major milestone. Looking beyond this milestone, the Group will strive to realize its aim of“Reforming Working Styles” as well as carrying out three major structural reforms. In doing so, the Group willreinforce a management foundation that will allow it to realize sustainable growth for the next 100 years.

KAIKAKU 2019 for NEXT100DAN-TOTSU
2017/3

NEXT100
2020/3(100-year anniversary)

Overview of “KAIKAKU 2019 for NEXT100”

Reform01

Structural Reform in the
Delivery Business

Reforming
Working Styles

Reform02

Reform of Revenue
and Business Structure
Geared to Achieving
Discrete Growth

ReformRespond to Digital Innovations

Strengthen Governance

06

YAMATO HOLDINGS CO., LTD.
Integrated Report 201703

Reform of GroupManagement Structure
Geared toAchieving
SustainableGrowthReforming
Working Styles

Reforming Working Styles to Implement “Inclusive Management”
We will make the notion of “Reforming Working Styles” a matter of priority, thereby practicing“inclusive management,” a Yamato Group founding principle, by developing “employee-friendly” and“rewarding” working environments across the entire Yamato Group.
(1) Make new working styles a reality
Drastically reduce total working hours
 dopt personnel systems that enable working styles tailored toA
an individual’s stage of life evelop programs that enable part-time employeesD(temporary and permanent) to enhance their abilities
Promote work-life balance

Upgrade to an attractive
personnel system thatgathers together a diverse
group of talent in order tosecure workforce capacity

Enhance managerial assignments exhibiting greater care toward employees(2) Maximize “individual capabilities”
Establish an educational system
 et up a framework for leveraging the opinions of employeesSin management
 ncourage the active role of overseas, elderly, and female employeesEthrough the further promotion of diversity

Enhance employee
awareness of management
planning; establish anenvironment that fosters
employee pride andmotivation

Realize an employment ratio for persons with disabilities of 2.5%

(3) Thoroughly streamline operations
 xpand open-type parcel lockers (PUDO*)E
Enhance efficiency of pickup and delivery operations throughthe 8th NEKO System
Fully leverage technologies such as AI and robotics

Thoroughly reinforce
operational efficiency,
which provides the foundation for an employeefriendly workplace*P ick Up & Drop Off station

Three
Structural
Reforms

Reform 01: Structural Reform in the Delivery Business
By rebuilding our “last mile” network to make it more efficient and carrying out continuous and adequate
pricing initiatives, we will strike a balance between expanding pickup and delivery capacity and regaining
profitability.
(1) Rebuild business structure to enable sustainable growth(2) Recover profit margins by implementing a pricing strategy and thoroughly ­streamlining operations(3) Develop foundations for businesses that can solve community issues

Reform 02: Reform of Revenue and Business Structure Geared toAchieving Discrete Growth
Our “Value Networking” design combines value-added functions with the rapid transportation network.
We aim to further develop this by organically linking our main core terminals, including Haneda Chronogate, the Atsugi Gateway, the Chubu Gateway, the Kansai Gateway, and the Okinawa International
Logistics Hub Okinawa Southern Gate, to our cross-border network extending primarily throughout Asia.
(1) Develop an industry-wide platform(2) Develop a cross-border platform(3) Promote an account management approach(4) Develop a platform for e-commerce (EC)Reform 03: Reform of Group Management Structure Geared toAchieving Sustainable Growth
To heighten our “capacity to generate earnings,” leveraging the collective strengths of the Group, we will
pursue structural reforms throughout its organization and upgrade to a management system thatcombines three components: accounts management, managerial accounting, and human resources(performance evaluation).
Implement the following five reforms by transitioning from:(1) A “function-oriented organizational structure” to a “customer-oriented organizational structure”(2) “Individual optimization” to “overall optimization”(3) “Income and expenditure controls per vertically segmented organization unit” to “accountmanagement”(4) “Investment on a per-business function basis” to “forward-looking investment throughan ‘R&D + D’ approach”(5) “Self-sufficiency” to an “open approach”
YAMATO HOLDINGS CO., LTD.
Integrated Report 201707

Strengthen
Management
Foundation

Respond to Digital Innovations
The Group will incorporate cutting-edge digital technologies as it creates new businesses and evolves
and innovates its existing ones. In addition, the Group will flexibly respond to the changing businessenvironment by pushing forward with the introduction of groundbreaking business models in its existing
businesses.
(1) Three-pronged “R&D + D” strategy
Develop and use a Kuroneko big data approach
Use a corporate venturing approach romptly identify business models that can bring about disruptive innovation, and draw up action plans inPthat regard(2) Established Yamato Digital Innovation Center (YDIC) in April 2017

Strengthen GovernanceAmid progressing globalization, we will upgrade to a governance structure befitting of a global corporationand strengthen our risk management.

Key Management Indicators
Proactive Investments

Recurring investment

Growth investment

Land, buildings, cargohandling equipment,
vehicles, etc.

Digital innovation, alliances with outside
entities, “Reforming
Working Styles,” etc.

200 billion

Total

350 billion¥¥

150 billion¥

Targets
Consolidated operating revenue

Consolidated operating profit

Consolidated operating margin

ROE

2017/3 (actual result)2017/3 (actual result)2017/3 (actual result)2017/3 (actual result)¥1,466.8 billion¥34.8 billion+¥203.1 billion (+13.8%)
2020/3 (plan)

2020/3 (plan)¥¥

1,670.0 billion

08+¥37.1 billion (+106.4%)

YAMATO HOLDINGS CO., LTD.
Integrated Report 201772.0 billion

2.4%+1.9 percentage points
2020/3 (plan)

4.3%

3.4%

+4.3 percentage points
2020/3 (plan)

7.7%

Interview with
the President
This section explains the aim andspecific initiatives of each reform wewill carry out under “KAIKAKU 2019
for NEXT100” as well as our vision
going forward.

Q
1. Could you please tell us the aim ofyour newly formulated medium-term
management plan?

2. How do you assess the various challenges the
Yamato Group is facing at the moment?

3. Could you please tell us about the measures
you have in place to maintain and enhance theDelivery Business?

5. What is the future outlook of the “Value
Networking” design, which the Company
has thus far promoted?

6. H
 ow will you evolve the management of theGroup going forward?

7. Could you please tell us about the YamatoGroup’s basic approach to addressing
environmental and social issues?

4. Could you please talk about the specificinitiatives you will undertake to grow profitability in the Delivery Business?

YAMATO HOLDINGS CO., LTD.
Integrated Report 201709

Interview with the President

Q1
A

Could you please tell us the aim of your newly formulated
medium-term management plan?

Under the new plan, we aim to rebuild our management foundation
and realize further growth.
With our new medium-term management plan (hereinafter, “the plan”), we are targeting operating revenues of ¥1,670.0 billion, an operating profit margin of
4.3%, and ROE of 7.7%, and these targets merely
represent a checkpoint for us, as we have our sights
set on even higher targets for the future. The YamatoGroup is approaching a major milestone with its
100-year anniversary coming up in November 2019,
and I hope that the Group can remain a corporate
entity that continues to realize growth for the next
100 years and onward. In addition to the plan, we

10

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

have formulated a long-term vision that targets 2025.
We have clarified the issues we must tackle toaccomplish this vision within the plan, and we position the plan’s three years as a period in which wewill solidify a management foundation for sustainable growth. Accordingly, in the upcoming three
years, we will pursue three kinds of reforms while
also placing “Reforming Working Styles” at thecenter of our management. The title of the plan—“KAIKAKU 2019 for NEXT100”—reflects our aim torealize these reforms.

Q2
A

How do you assess the various challenges the Yamato Group isfacing at the moment?

I think our management will benefit from the fact that we have now clarified
the issues we need to tackle to realize future growth.
To prepare for the changes that have been occurring in the business environment thus far, such as
the declining population, the shrinking workforce,and the growth of the e-commerce market, wehave been making concerted efforts to revise our
network based on a gateway design andstrengthen our “last mile” network. However, wehave faced difficulties due to the fact that thesechanges have occurred at a far greater pace than
we anticipated. As a result, we have not been able
to keep up in terms of establishing an operational
structure, which has placed a heavy burden on our
employees working on the front lines. In responseto this issue, we will bring together the comprehensive strengths of the Group to accelerate theprocess of structurally reforming our businesses
during the period of the plan.
Among these reforms, we are giving the utmost
importance to realizing the aim of “Reforming
Working Styles,” placing it at the center of ourmanagement, and we are drawing up a wide range
of initiatives to accomplish this task. However,these reforms will not simply be limited to theadjustment of working hours. Rather, they willentail drastic revisions to our profit structure itself.
The Yamato Group has achieved reliable growth
for many years by meeting the expectations andearning the trust of all its customers, both individual and corporate. This growth has undoubtedly
been supported by all our employees, including
our sales drivers and guest operators, who havedirect contact with our customers. This means
that, as the point of contact with our customers,
our employees provide the foundation for theGroup’s strengths and the source of its competitiveness. By allowing our employees to work in a
comfortable, highly motivated, and energetic
manner, we are able to offer even better services
to our customers, thereby allowing us to further
deepen our trust-based relationships with them. If
we do not reinforce our base of employees, whoprovide the foundation for establishing these trustbased relationships with customers, then we will
not be able to achieve further growth.

Response to the Rapid Changes in the External Environment

Drastic increase in TA-Q-BIN
delivery volumes due to the
expansion of the
e-commerce market
Accelerated progression oftight conditions in thelabor market

Inability to establish an
operational structure tokeep up with theunexpected level ofchanges in the businessenvironment, which hasbrought to light various
management issues

Growth model
reformDrastic revisions to profit
structure itself centeredon management thatemphasizes “Reforming
Working Styles”

YAMATO HOLDINGS CO., LTD.
Integrated Report 201711

Interview with the President

Q3
A

Could you please tell us about the measures you have in place to maintain andenhance the Delivery Business?

We are working to rebuild our business structure to realize sustainable growth.
We are moving forward with efforts to rebuild ourbusiness structure in the Delivery Business with theaim of realizing sustainable growth.
The first step we are taking is to rebuild andenhance the efficiency of our “last mile” network to
respond to the rapid growth in TA-Q-BIN delivery
volumes caused by such factors as the expansion of
the e-commerce market amid tightening labor
conditions. This will be accomplished through theestablishment of a new diversified “last mile”
network. Specifically, in addition to our conventional
multi-function driver network, which handles TA-QBIN pickup and delivery as well as overall sales
operations, the rebuilt “last mile” network will introduce a series of new networks, including a deliveryspecific driver network, i.e., drivers for early evening
and night deliveries, which will handle mailed goods
such as Kuroneko DM-Bin and Nekopos as well as
conduct deliveries during the high-demand time
between early evening and late night. There will also
be an intra-region network, which will handle largelot and large-sized packages. With the introductionof this network comprising drivers for early evening
and night deliveries, we aim to hire approximately
10,000 new employees. And, by introducing work
environments and frameworks that allow all employees, regardless of gender or age, to play an

12

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

extensive and active role, we believe we will be able
to secure the necessary workforce capacity to carryout our business. Furthermore, by introducing
systems that work to optimize pickup and delivery
routes using AI, we will provide support that allows
our employees to boost their work performance.
Most importantly, to maintain and improve the trustbased relationships we have with our customers, wewill make even greater efforts to improve educational
activities for employees and increase our number ofmanagers. In these ways, we will establish a structure that enables us to offer high-quality services.
Additionally, we are promoting the structuralreform of our trunk-route network. Leveraging integrated logistics terminals called “gateways,” which
we have established in the high-consumption areasof Kanto, Chubu, and Kansai, we will realize
frequent operation, circular operation, and “backand-forth” operation between these major urban
areas. In addition, we will introduce newly standardized connected trailers and other vehicles (see page31), which have a greater overall length comparedwith conventional models, with the aim of achieving
even faster and more efficient transportation. We
will also streamline overlapping functions within theGroup to further enhance efficiency. In doing so, wewill achieve an optimal Groupwide network.

Developing a New Diversified “Last Mile” Network
8:00

12:00

15:00

18:00

21:00

1) Multi-function driver network(Primarily sales drivers and part-time staff)

Delivery of TA-Q-BIN
Pickup and sales2) Delivery-specific driver network(Drivers for early evening and night deliveries)(Delivery drivers, including partners)

Mailbox item and evening TA-Q-BIN deliveries3) Intra-region network
Pickup of large-lot and other items
too big for TA-Q-BIN

Delivery of large-lot and other items
too big for TA-Q-BIN

Transport between base terminals and
TA-Q-BIN centers

Structural Reform of Trunk-Route Network
Optimizing the entire Group network by consolidating Groupwide functions and streamlining operations

Sorting
terminals

Frequent trunk-routetransportation

Gateway

OverallGroup-oriented
optimization

Gateway

Optimal delivery
vehicle dispatch

Frequent­ peration viaocircular routes

Automation oftask planning

YAMATO HOLDINGS CO., LTD.
Integrated Report 201713

Interview with the President

Q4A

Could you please talk about the specific initiatives you will undertake to growprofitability in the Delivery Business?

Giving the utmost priority to maintaining and improving the work environment
for our employees, we will establish a new foundation for profitability throughstructural reforms.
First off, to promote our most important initiative of
maintaining and improving the work environment forour employees, we will encourage primarily ourlarge-lot corporate clients to temporarily control
TA-Q-BIN delivery volumes. We will also enhance
our pickup and delivery capacity through a series ofstructural reforms, such as securing workforce
capacity and bolstering our delivery network.
Through these means, we will establish a structurethat can handle an increase in delivery volumes fromthe fiscal year ending March 31, 2020, and onward.
In addition, we are gradually conducting pricenegotiations centered on our large-lot corporateclients. On October 1, 2017, we revised our

TA-Q-BIN fees for individual customers for the firsttime in 27 years. To standardize the process ofrevising the fees we have agreed upon with our
corporate clients going forward, we have incorporated not only shipping volumes but also destination, size, pickup methods, and rate of absence,in addition to external factors such as fuel costs
and hourly wages for employees, in our pricing
schemes, thereby realizing appropriate pricing
on a continuous basis.
By implementing these kinds of initiatives, we will
expand our pickup and delivery capacity andrestore profitability in the Delivery Business.

3.0
TA-Q-BIN
Delivery Volumes / Operating Profit

120(Billions of parcels)

(¥ billion)

Striking a balance between expanding pickup anddelivery capacity and regaining profitability

2.7

100

2.4

80

2.1

39.6

1.87
38.1

1.83

1.77

1.8

1.73

50.0

60

1.84

40

34.0

1.62
1.5

20

5.6
0

2015/3

2016/3TA-Q-BIN Delivery Volumes (left scale)

14

YAMATO HOLDINGS CO., LTD.
Integrated Report 20172017/33.0
2018/3

2019/32020/3(Plan)(Plan)(Plan)

Operating Profit (right scale)

0

Q5
A

What is the future outlook of the “Value Networking” design, which theCompany has thus far promoted?

We will further evolve the “Value Networking” design, which combines value-addedfunctions with our speedy transportation network. To this end, we will establish anindustrial platform that caters to customer value chains in corporate and global domains.
To date, we have worked diligently to construct ahighly competitive logistics network for Japan andgreater Asia, centered on the Haneda Chronogate. In
addition to logistics, we have steadily moved forwardwith the construction of a foundation that meets thediversifying needs of customers, including the needto incorporate high-value-added services such asassembly, merging, and maintenance.
We will form more organic connections within
this foundation and accelerate the provision ofsolutions that help our customers grow theirbusiness. We will also adopt trends based on digital transformation. While doing so, we will work toestablish an industrial platform that allows us toexpand the areas in which we can provide benefits
to our customers.
In these ways, we will pursue efforts in corporate
and global domains in order to evolve the “Value
Networking” design so that it can contribute moresignificantly to the Group’s performancein the future.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201715

Interview with the President

Q6A

How will you evolve the management of the Group going forward?

We will transition from a function-oriented organizational
structure to a customer-oriented one.
Through the combination of the added value
provided by IT, LT, and FT, I believe the Group has afoundation for offering integrated services that go
far beyond transportation. With that said, there has
been a larger number of cases where we haveprovided these value-added functions on an
individual basis. To accelerate the Group’s global
development in the future, we must continue toleverage Groupwide strengths to provide highadded value to our customers. If we fail to do so,then we will not be able to win out against the fierce
competition we are facing. To this end, we will
combine the various functions we possess on aGroupwide basis so that we are able to make better
proposals to our customers. In doing so, I believe
we can offer even more significant value. We will
therefore transition to a customer-orientedorganizational structure that incorporates anapproach focused on account management so that
we are able to develop even deeper relationships
with our customers. Also, we will make thoroughefforts to enhance the efficiency of management
resources, which have overlapped within the Groupand become inefficient. In these ways, we will
upgrade to a management structure that will
optimize Groupwide operations.

Promoting Five Transformative Changes to Heighten Our Capacity to Generate ­Earnings,
Leveraging the Group’s Collective Strengths

16

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Function-orientedorganizational structure

Customer-orientedorganizational structure

Individual optimization

Overall optimization

Income / expenditure controls pervertically segmented organization unit

Account management

Investment on a per-business
function basis

Forward-looking investment throughan “R&D + D” approach

Self-sufficiency

Open approach

Q7
A

Could you please tell us about the Yamato Group’s basic approach toaddressing environmental and social issues?

We believe the series of structural reforms we are carrying out
will help us resolve environmental and social issues.
Increases in delivery volumes naturally require us to
use a greater number of vehicles for transportationand delivery. As a result, the amount of greenhousegas emissions rises, as does the number of traffic
accidents. As part of our responsibilities as acompany that uses a large number of vehicles andconducts its business on public roads, we will
promote efforts related to traffic safety, such asproviding safety training to our drivers. At the sametime, we will actively introduce vehicles that have a
low burden on society, such as electric vehicles. Not
limiting ourselves to only these efforts, we willremain committed to contributing to the resolutionof social issues, including environmental issues,
which in turn will help us further improve our corporate value.
For example, if we are able to lower the rate ofcustomer absence upon delivery, then we canreduce our burden on the environment and society
as a whole. This can be accomplished in a variety ofways, such as by establishing systems for delivering
numerous packages to the same address all at
once, expanding TA-Q-BIN locker services andservices that allow customers to pick up packages
at convenience stores, and improving mutualcommunication with customers by enhancing the
Kuroneko Members service. The target we adopted
under the plan of raising the percentage of packages received at locations other than households to
10% reflects our aim to reduce our environmental
and social burden.
Japan is a country that already faces a great
number of modern social issues, and more issues
are likely to occur in the future. We at the YamatoGroup believe we can play a key role in resolving
these issues. To this end, we will work to resolve
social issues through ESG-related initiatives with theaspiration of becoming a corporate group that istreasured and trusted by society at large.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201717

Message from the Chief Financial Officer

We will actively carry out the necessary
investments for reforms while continuing toadhere to a basic policy of maintaining andimproving our financial stability. In doing so,
we aim to bolster our management foundationand increase our corporate value.
Kenichi Shibasaki
Senior Managing Executive Officer
Responsible for overseeing Financing and Investor Relations

Business Performance Overview
Review of the Fiscal Year Ended March 31, 2017
In the fiscal year ended March 31, 2017, operating revenues
increased ¥50.4 billion year on year, to ¥1,466.8 billion. With
respect to the Delivery Business, this increase was due to therecord-high TA-Q-BIN delivery volumes that stemmed from not
only an expansion in the e-commerce market but also from thegrowth of TA-Q-BIN Compact and Nekopos, which centered on
business via flea-market websites. Meanwhile, operating profit
declined ¥33.6 billion year on year, to ¥34.8 billion. This decline
was attributable to a variety of factors. For example, our efforts toestablish an operational structure were unable to keep up with therapid growth of package volumes and the tightening labor market,
and we incurred higher costs in order to secure the necessary
workforce capacity, including outsourced capacity, to maintain
service quality. In addition, after conducting independent investigations of employee working hours centered on the sales drivers at
our TA-Q-BIN centers, we discovered that a large number of
employees were unable to take long enough breaks. In responseto this issue, payments for specially acknowledged working hours
totaling nearly ¥19.0 billion were additionally recognized.

18

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Overview of the First Half of the Fiscal Year Ending
March 31, 2018
To respond to the changes in the external environment and cost
increases going forward and to continue to provide high-quality
services well into the future, we have been moving forward with
“Structural Reform in the Delivery Business” centered on thefollowing key measures: “improving and developing the employee­working environment,” “placing controls on total TA-Q-BIN
volume,” “optimizing the entire TA-Q-BIN delivery network,”“boosting efficiency by enhancing the ‘last mile’ network,” and“revising TA-Q-BIN basic fees and respective service standards.”
Specifically, in terms of controlling total TA-Q-BIN delivery
volume, we have asked nearly 1,000 of our large-lot corporateclients to adjust shipping volumes from the second half of thecurrent fiscal year. We have also negotiated new shipping rates
with these customers.
Meanwhile, the increase in costs to secure workforce capacity,
including outsourced capacity, that has followed the rise in­TA-Q-BIN delivery volumes continues to put downward pressure
on profits. In addition, we have incurred expenses related to suchfactors as the recording of additional payments, which followed
further confirmation on a fact-finding investigation into working
hours of employees. As a result, operating profit declined ¥33.8
billion compared with the first half of the previous fiscal year, resulting in operating loss of ¥12.8 billion.

The New Medium-Term Management Plan
“KAIKAKU 2019 for NEXT100”
Targets
Our new medium-term management plan “KAIKAKU 2019 for
NEXT100” (hereinafter, “the plan”) will run through the fiscal year
ending March 31, 2020. By the final year of the plan, we aim torealize the following targets:• Operating revenues: ¥1,670.0 billion(an increase of ¥203.1 billion, or 13.8%,
compared with the fiscal year ended March 31, 2017)• Operating profit: ¥72.0 billion(an increase of ¥37.1 billion, or 106.4%)• Operating profit margin: 4.3%
• ROE: 7.7%
With regard to the outlook for the plan’s first year, the year
ending March 31, 2018, we project operating revenues of¥1,502.0 billion, a year-on-year increase of ¥35.1 billion, or 2.4%,
and operating profit of ¥25.0 billion, a year-on-year decrease of¥9.8 billion, or 28.3%. We also expect TA-Q-BIN delivery volumes
to decline 41.56 million parcels, or 2.2%, to 1,826 million parcels.
In addition, we anticipate that costs will decline in the second halffollowing efforts to place controls on total TA-Q-BIN volumes. We
also expect that the effects of reasonable pricing initiatives will
emerge to a greater extent during this period.
We will temporarily decrease TA-Q-BIN delivery volumes until
the fiscal year ending March 31, 2019, through the negotiations
we are currently having with our large-lot corporate clients.
However, by promoting “Structural Reform in the Delivery
Business,” we will expand our pickup and delivery capacity andestablish a structure that can handle increases in delivery volumes
starting from the fiscal year ending March 31, 2020, and onward.

Meanwhile, during the period of the plan, our basic shareholder
return policy will remain unchanged. This means that, while placingemphasis on profit growth, we will continue to flexibly review anddeliver returns to all our shareholders with a targeted consolidated
dividend payout ratio of 30% of consolidated profit.
Going forward, we will pursue a basic policy of maintaining
and improving our financial stability as we work to enhance ourmanagement foundation and increase our corporate value.

Returns to Shareholders(Yen)(%)
40

160

114.7%
59.5%

35

30

80

0

¥27.00

(80)

25

0

2009/3 2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3

Cash Dividends per Share (left scale)
Payout Ratio (right scale)(160)

Total Shareholders’ Return Ratio (right scale)

Investment and Financial Strategies and Basic Policy on
Shareholder Returns
Over the three-year period of the plan, we intend to implement
investments amounting to ¥350.0 billion, using the maintenanceand improvement of corporate value as our decision-making criterion. Of this amount, we intend to allocate ¥200.0 billion for recurring investments, such as purchases of land, b­ uildings, andvehicles, and ¥150.0 billion for growth investments, such as initiatives to reform working styles and establish alliances with othercompanies. We will set aside capital to establish a working environment in which our employees can work with high levels ofenthusiasm to ensure that we are able to continue to provide
high-quality services. At the same time, with the aim of bolstering
the Group’s management foundation to realize sustainablegrowth, we will pursue investments that target three kinds ofreforms: “Structural Reform in the Delivery Business,” “Reform of
Revenue and Business Structure Geared to Achieving Discrete
Growth,” and “Reform of Group Management Structure Geared toAchieving Sustainable Growth.”

YAMATO HOLDINGS CO., LTD.
Integrated Report 201719

Organization
As of March 31, 2017n Consolidated subsidiarie l Non-consolidated subsidiaries◆ Equity-method affiliates

Deliveryn Yamato Transport Co., Ltd.
n Okinawa Yamato Transport Co., Ltd.
n Yamato Global Express Co., Ltd.
n Express Network Co., Ltd.
n Yamato Dialog & Media Co., Ltd.
n Yamato Contact Service Co., Ltd.
n Yamato Staff Supply Co., Ltd.
n Yamato (China) Transport Co., Ltd.
Packcity Japan Co., Ltd.

BIZ-Logistics

Yamato Holdings Co., Ltd.

n Yamato Logistics Co., Ltd.
n Yamato Global Logistics Japan Co., Ltd.
n Yamato Multi-Maintenance Solutions Co., Ltd.
n Yamato Packing Service Co., Ltd.
n Yamato Packing Technology Institute Co., Ltd.
n Konan Industry Co., Ltd.
n Yamato Transport U.S.A., Inc.
n Yamato Transport Europe B.V.
n Yamato International Logistics Co., Ltd.
n Yamato Logistics (Hong Kong) Ltd.
n Taiwan Yamato International Logistics Inc.
n Yamato Transport (S) Pte. Ltd.
n Yamato Transport (M) Sdn. Bhd.
l Yamato Transport Mexico S.A. de C.V.
l Shanghai Wai Gao Qiao Bonded Logistics Zone Yamato Warehouse Co., Ltd.
l Yamato Logistics India Pvt. Ltd.
l PT. Yamato Indonesia
l Yamato Logistics Vietnam Co., Ltd.
l Yamato Tidiki Express Pte. Ltd.
l CKE Transport Agency Sdn. Bhd.
l 3 other companies
GD Express Carrier Bhd.
Guangzhou Wisepower Transportation & Distribution Group Co., Ltd.
11 other companies

Home Conveniencen Yamato Home Convenience Co., Ltd.

e-Businessn Yamato System Development Co., Ltd.
n Yamato Web Solutions Co., Ltd.

Financialn Yamato Financial Co., Ltd.
n Yamato Credit & Finance Co., Ltd.
n Yamato Lease Co., Ltd.

Autoworksn Yamato Autoworks Co., Ltd.
n Yamato Autoworks Iwate Co., Ltd.
n Yamato Autoworks Hokushinetsu Co., Ltd.
n Yamato Autoworks Shikoku Co., Ltd.
n Yamato Autoworks Okinawa Co., Ltd.

Other Services

Note: In June 2016, Yamato Transport (HK), Yamato International Logistics (Hong Kong),
and Yamato Payment Service (HK) merged to establish Yamato Logistics (HK).

20

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017n Yamato Asia Pte. Ltd.
n BoxCharter Co., Ltd.
n Yamato Box Charter Co., Ltd.
n Yamato Management Service Co., Ltd.
n Yamato Multi Charter Co., Ltd.
n Kobe Yamato Transport Co., Ltd.
n Yamato Investment (Hong Kong) Ltd.
l Swan Co., Ltd.

Overview of Operations by Segment

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

A Look Back on the Year Ended March 31, 2017

Composition Ratio of Operating Revenues• Delivery volumes grew due to such factors as the continued rise insales to mail-order business operators and efforts to increase use of
the TA-Q-BIN Compact and Nekopos services

78.5%• Promoted collaboration with multiple flea market websites, thereby
offering delivery services at a greater number of access points

Breakdown of the Composition Ratioof Operating Revenues■ TA-Q-BIN

71.4%■ Kuroneko DM-Bin

5.8%■ Express

2.9%■ Others

6.8%• Established a system to improve the workplace environment andreform working arrangements for employees with the aim of securinglabor capacity in response to the significant rise in parcel volumes,
which has been brought about by the recent rapid expansion of the
e-commerce market, and the tightening labor market• Cost increase due to external factors such as a rise in labor costs,
including those involving outsourcing workforce in order to maintain
service quality, and the expansion of size-based enterprise tax• Payments for specially acknowledged working hours were additionallyrecognized• As a result of the above, operating revenues increased while operating
profit decreased

Operating Revenues (¥ million)

Commenced Operation of Open-Type Parcel Lockers

1,200,000

800,000

400,0000

2013/3

2014/3

2015/3

2016/32017/3

2015/3

2016/32017/3Operating Profit (¥ million)
45,00030,00015,0000

2013/3

2014/3

Recently, nearly 20% of
packages delivered to homes
end up having to be re-delivered,and reducing the number of
re-deliveries has become asignificant issue for the entire
home delivery industry. To
address this issue and improve the level of convenience for usersof our services, we established the joint venture Packcity Japan
together with the France-based Neopost Group in May 2016 andcommenced the operation of open-type parcel lockers that canbe used jointly by numerous operators. By establishing parcel
lockers in train stations and other locations to serve as not only
a destination for re-delivery when the recipient is not at home but
also as a delivery point for products purchased throughe-commerce websites, we make it possible for users to receive
their packages in a way that best fits their individual lifestyle andcontribute to reducing the percentage of re-deliveries. By the endof the fiscal year ending March 31, 2018, we intend to establish a
total of 3,000 parcel lockers, primarily in the Tokyo metropolitan
area. In the second half of the fiscal year, we will further enhance
the convenience and usability of this service in such ways as
incorporating a feature that allows users to not only receive
packages but also send them.
YAMATO HOLDINGS CO., LTD.
Integrated Report 201721

Overview of Operations by Segment

BIZ-Logistics
Guided by the slogan of “LOGINNOVATION,” which encapsulates its goal ofachieving logistics innovation, the BIZ-Logistics Business devotes its efforts tosatisfying and inspiring the Yamato Group’s corporate customers, as well as
the consumers they serve, through the creation of innovative logistics solutions.

A Look Back at the Year Ended March 31, 2017

Composition Ratio of Operating Revenues• Favorable results from services related to B2B logistics• Actively promoted sales in such ways as acquiring new customers forservices that help revolutionize logistics operations, including medical
device loaner support (storage, cleaning, and delivery) for medical
service providers

7.4%• Sluggish movement of goods in the trading logistics services of theoverseas business• Number of recalls decreased for multi maintenance services comparedwith the previous fiscal year

Breakdown of the Composition Ratioof Operating Revenues■ Trading logistics service

2.4%■ Sales and Logistics

2.8%■ Multi maintenance

0.9%■ Products Logistics*

0.3%■ Others

3.0%• As a result of the above, operating revenues rose while operating profit
declined* Starting with fiscal year ended March 31, 2017, the name of“Export Factory” has been changed to “Products Logistics.”

Operating Revenues (¥ million)

Total Support for Japanese Companies Entering the
E-Commerce Industry in China

120,000

80,00040,0000

2013/3

2014/3

2015/3

2016/32017/3

2015/3

2016/32017/3Operating Profit (¥ million)
6,000

4,000

2,000

0

22

2013/3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20172014/3

At Yamato Global Logistics
Japan Co., Ltd., which provides
international logistics services,
we commenced one-stop
support services for Japanesecompanies utilizing JD
Worldwide, a cross-border
e-commerce platform in China that handles Japanese products.
These services cover everything from setting up stores todisplaying and delivering products. Collaborating with the major
Chinese e-commerce mall operator JD.com, Inc. and with
JD.com’s official partner in overseas e-commerce malls FRANK,
we are providing guidance to Japanese manufacturers, retailers,and e-commerce business operators on opening stores anddisplaying products on JD.com’s e-commerce websites. In
addition, by leveraging the parcel shipping service Yamato China
Direct, products can be shipped from designated warehouses inJapan to buyers in China in as little as four days. This service
allows sellers and store operators to totally outsource operations,from backyard operations to store management and delivery to
end users. The service also allows buyers to easily purchase
Japanese products via the Internet.

Home Convenience
We provide lifestyle support services that help solve inconveniences at home.
In addition, leveraging our networks, we provide a range of solutions tocorporate customers in both the private and public sectors to support sales
growth and help reduce costs.

A Look Back at the Year Ended March 31, 2017

Composition Ratio of Operating Revenues• Solid results from the Comfortable Lifestyle Support Service and otherservices that help address everyday inconveniences, including thoserelating to house cleaning, home organization and storage, andpurchase of unwanted items

3.4%• Actively promoted sales of procurement services for return goods from
Furusato Nozei (a tax scheme that allows taxpayers to divert part oftheir residential tax to a specified local government) and other goods,
as well as office support services

Breakdown of the Composition Ratioof Operating Revenues■ Home convenience

2.9%■ Business convenience

1.2%■ Technical Network

0.3%

Operating Revenues (¥ million)

40,00020,0002013/3

2014/3

2015/3

2016/32017/3

2015/3

2016/32017/3Operating Profit (¥ million)
1,200

600

0

(600)

2013/3

2014/3• As a result of the above, operating revenues was up while operating
profit was down

Commenced Operations of Home Appliances
Recycling Service

60,0000• Decreased sales in the “Technical Network Business” due to the­shrinking market in household-energy equipment as well as adecrease in highly profitable one-off projects

In October 2016, we
commenced operations of theKuroneko Home Appliances
Recycling Service in collaboration
with authorized home appliancebusiness operators. This service
allows customers to recycle
electrical appliances that are covered under the Home Appliance
Recycling Act at the same time as they use other Yamato Home
Convenience services such as moving services, the Comfortable
Lifestyle Support Service, and the Raku Raku Household TA-QBin E-Commerce Total Support Service. Leveraging the knowhow we have cultivated in moving services and household goods
delivery, this service handles all aspects of home appliancerecycling, from the pickup of electronic appliances and transport
to the nearest collection center to product confirmation anddelivery to recycling facilities. In these ways, the service eliminates
the need for customers to recycle items through separate
collection services or transport large electronic appliances torecycling facilities themselves.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201723

Overview of Operations by Segment

e-BusinessSupported by ICT (Information and Communication Technology), thee-Business will incorporate the “Value Networking” design and provide optimal
solutions that combine logistics functions with financial settlement functions tocontribute to customers’ business development.

A Look Back at the Year Ended March 31, 2017

Composition Ratio of Operating Revenues• Continued strong results from the “Setup and Logistics Solution
Business,” which is geared toward mobile virtual network operators(MVNOs)• Centered on existing large-lot customers, use of the Web-Based
Shipment Control Service, which provides comprehensive support forsuch operations as dispatch information processing, printing ofdelivery slips, and freight tracking, increased on the back of growth in
the e-commerce market

3.1%

Breakdown of the Composition Ratioof Operating Revenues• As a result of the above, both operating revenues and operating profit
increased■ e-logistics solution

0.8%■ Credit card solution

0.7%■ IT operating solution

0.5%■ Web-based mail order solution

0.4%■ Others

3.7%

Operating Revenues (¥ million)

Providing Cutting-Edge Logistics Services Using
3D Printers

50,00040,00030,00020,00010,0000

2013/3

2014/3

2015/3

2016/32017/3

2015/3

2016/32017/3Operating Profit (¥ million)
12,000
9,000
6,000
3,000
0

24

2013/3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20172014/3

The 3D printing market is
expected to grow further in the
future. For this market, we started
the provision of the On Demand
3D Printing Service, the firstservice in Japan to combine anationwide speedy transportation
network with 3D printing functions. We also established the 3D
Printing Center at Haneda Chronogate, which provides made-toorder products and mixed model/low-volume production services
needed by business operators on a one-stop basis, covering
everything from the creation of 3D printing data to molding andproduct delivery. At the moment, the center primarily handles
products for medical use, such as therapeutic equipment and 3Dmodels. The services the center provides allow for substantial
reductions in both production time and delivery time.
Going forward, we hope to expand such services beyond
products for medical use to include such areas as made-to-ordertrial products for manufacturers. At the same time, we will set oursights on entering markets in overseas countries, starting with theASEAN region.

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

A Look Back at the Year Ended March 31, 2017

Composition Ratio of Operating Revenues• Encouraged use of Kuruneko Web Collect and Kuroneko Pay After
Delivery services with customers who use TA-Q-BIN collect• Generated steady results in the lease services businesses with respect
to financial leases, primarily involving trucks, and installment sales

5.3%• For e-money related services, promoted efforts to increase sales
generated by our Multi e-money Settlement Terminals Rental Service• Stagnant growth in the payment business (formerly the TA-Q-BIN
Collect business) due to the shrinking market for cash-on-delivery
settlements

Breakdown of the Composition Ratioof Operating Revenues■ Payment*

2.5%■ Lease2.5%■ Credit & Finance

0.2%■ Others

0.3%• As a result of the above, operating revenues rose while operating profit
declined* Starting with the fiscal year ended March 31, 2017, the name of
TA-Q-BIN Collect has been changed to “Payment”

Operating Revenues (¥ million)

Offering New Payment Functions in Collaboration withFintech Operators in Malaysia

80,00060,00040,00020,0000

2013/3

2014/3

2015/3

2016/32017/3

2015/3

2016/32017/3Operating Profit (¥ million)
12,000
9,000
6,000
3,000
0

2013/3

2014/3The e-commerce market in
Malaysia is expanding rapidly,with an average annual growthrate of 17%. At Yamato Financial
Co., Ltd., we are collaboratingwith the Malaysian Fintech
operator Soft Space Sdn. Bhd.
and began providing new payment functions that leverage“mPOS”*, which settles payments using smartphones and tablets,
in October 2016. These functions help meet the needs of
e-commerce business operators in Malaysia. Through theintroduction of “mPOS” in the Credit Card On Delivery Service
offered by Yamato Transport (M) Sdn. Bhd., we are making it
possible to simultaneously conduct deliveries and settle payments.
This, in turn, helps eliminate buyer uneasiness regarding settling
payment before a product is delivered and realizes smoothpayment and receipt at the entrance of a buyer’s residence. In
addition, by offering buyers a wide range of payment options, weare increasing opportunities for repeat and additional sales,
thereby helping to improve the sales levels of distributors.
* Abbreviation for “mobile point of sales.”

YAMATO HOLDINGS CO., LTD.
Integrated Report 201725

Overview of Operations by Segment

Autoworks
Based on a vision to transform our vehicle maintenance services into the No. 1
autoworks for logistics and distribution business operators, the Autoworks
Business is developing a vehicle maintenance service offered around the clock,
365 days a year without downtime.

A Look Back at the Year Ended March 31, 2017

Composition Ratio of Operating Revenues• Increased number of vehicles serviced due to the aggressive
promotion of Repairworks road service, which entails periodic on-site
customer visits

1.7%• Unit price of fuel declined and initial investment in new services was
carried out• As a result of the above, operating revenues rose while operating profit
declined

Breakdown of the Composition Ratioof Operating Revenues■ Truck solution

3.2%■ Others

0.5%

Operating Revenues (¥ million)

Promoting Accident Prevention with the
Repair Network

30,00020,00010,0000

2013/3

2014/3

2015/3

2016/32017/3

2015/3

2016/32017/3Operating Profit (¥ million)
4,000
3,000
2,000
1,000
0

26

2013/3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20172014/3In terms of vehicle repair, aservice that is evolving on a
day-to-day basis, the workloadof service operators is gradually
increasing due to such factors
as the strict adherence to legal
inspections, repairs resulting from the wide variety of car models
of numerous manufacturers, and declining vehicle maintenancecosts. At Yamato Autoworks Co., Ltd., to address such issues
through a one-stop process, we added a service within our
Repairworks road service, which handles customer inquiries byvisiting their offices with purpose-built trucks equipped withmaintenance equipment. This newly added service, entitled
Repair Network, involves regular visits by expert licensed
mechanics and is being offered at all our plants across Japan.
In addition to steadily implementing legal inspections, Repair
Network also conducts regular service and inspections to predictand prevent accidents. In these ways, Repair Network supports
the continuous operation of safe logistics.

Other Services
Through Other Services, we provide a broad range of shared services
such as the arterial rout transportation business and the box charterbusiness. The JITBOX Charter service provides transportation bytransport box. The service takes advantage of a network consisting ofmultiple companies and provides added value to customers throughtimely delivery and frequent, right-volume delivery. In the fiscal year
ended March 31, 2017, service use grew steadily due to favorable
results with respect to chilled transport and other optional services, inaddition to existing services.
Excluding dividends that Yamato Holdings Co., Ltd., received fromthe Group companies, operating profit in Other Services increased
3.5% from the previous year, to ¥2,182 million.
JITBOX Charter

Operating Profit

Track Record of JITBOX Charter(¥ million)

35,47736,00030,000(Units)800,000

730,479
630,173

26,515600,000

23,940552,645

24,000

2,108

2,000

2,182

400,000

1,500
1,000

1,145

200,000

500
0

2015/3*

Including Yamato Holdings

2016/32017/30

2015/3

2016/32017/3

Excluding Yamato Holdings* A mounts for the fiscal year ended March 31, 2015, have been reclassified to thereportable segments for the fiscal year ended March 31, 2016.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201727

The Yamato Group: Creating Shared Value (CSV) Initiatives
Based on the concept of Creating Shared Value (CSV), which involves realizing both economic and social value asa company while addressing the needs of customers, the Yamato Group is collaborating with local governments
nationwide in an effort to create a totally new business structure.

Establishment of the Next Delivery SQUARE in
the Fujisawa Sustainable Smart Town
Making life more comfortable through smart, eco-friendly distribution services

In November 2016, Yamato Transport Co., Ltd. opened the Next
Delivery SQUARE in the Fujisawa Sustainable Smart Town (hereinafter, Fujisawa SST).* The Next Delivery SQUARE serves as an
infrastructure for comprehensive distribution for all of Fujisawa
SST. By providing total support for the day-to-day needs ofresidents of Fujisawa SST in such ways as on-demand distribution, the Next Delivery SQUARE is contributing to more convenient, comfortable, and secure lifestyles. In doing so, the Next
Delivery SQUARE is helping Fujisawa SST, which encourages
sustainable lifestyles, progress its transformation into a more
open, easy-to-live-in town.
* Fujisawa SST is a “smart town” in Fujisawa City, Kanagawa Prefecture, that aims
for sustainable town development over the next 100 years by encouraging sustainable lifestyles for its residents and introducing new services and technologies.

In addition, Yamato Transport employees are conducting
programs for children attending kindergartens and elementaryand junior high schools located near Fujisawa SST that convey
knowledge on traffic safety and the importance of having a job.
Through efforts such as these, Yamato Transport employees
are working to establish sustainable communities within
Fujisawa SST.
Going forward, we will create new ideas grounded in the concept of improving the quality of life for Fujisawa SST residents,
including the introduction of systems that allow residents toconfirm where a sales driver is and about how long it will take forthe driver to arrive, as well as unmanned facilities that enable
parcel pickup even late at night.

Overview of the Next Delivery SQUARE
Packages in Fujisawa SST were previously delivered via different door-to-door delivery service providers. Through the Next Delivery SQUARE,
Yamato Transport provides a centralized delivery service that makes it possible to deliver packages all at once without having to rely on separate
service providers. In addition, the Next Delivery SQUARE integrates all package information and offers delivery notification services through smart
TVs installed in all residences in Fujisawa SST. These services transmit all scheduled deliveries for the day and inform residents if a package has
arrived while they were away from home. As residents are able to change delivery dates and times and designate delivery locations on the smart TV
screen, they no longer need to spend time and effort contacting each individual courier company to receive packages separately. This in turnenables eco-friendly and smart home deliveries.

BeforeAfter

Company A

Package information• Scheduled delivery time
• Notification of absence

Company A
Destination A

Destination A
Company B

Company B

Company C

Company C
Destination B

28

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Next
Delivery
SQUARE

Changing date,time, etc.
Destination B

Society
Change: Advance of social issues, such as Japan’s decreasing birthrate and aging population

Promotion of CSV in Cooperation with Local Communities (Project G)
In aiming to become the “company most loved and trusted by society,” the Yamato Group is promoting Project G,
which engages in revitalizing local communities and resolving issues in cooperation with local governments andlocal government agencies. Project G’s solutions include expanding the sales channels for specialty products andwatch-over service support for the elderly all over Japan.

Number of Project G Solutions:

1,971(As of June 30, 2017)

As of June 30, 2017

Breakdown of the 368 Project Agreements with Local Governments
Watch-over support

145

Disaster relief support

Shopping support services

20

Hometown tax payments

Product support services

15

Combined passenger-cargo operations using buses

6

Tourism promotion support

20

Comprehensive support

13

Event support

6

Other

18

Concluded Agreement with the Tokyo Metropolitan
Government to Support the Elderly
To realize local communities in which elderly people and theirfamilies can continue to live comfortably and with peace of mind,
Yamato Transport entered into an agreement with the Tokyo
Metropolitan Government to help support the elderly. Under thisagreement, our sales drivers will not only watch over elderly
residents, they will also provide support to elderly people suffering from dementia and their families by notifying relevant institutions in cases where they observe signs of fraud or other actsthat harm consumers. In doing so, our drivers will help address
local issues and invigorate local communities.

Watching Over Elderly People Living Alone
In communities where the population has aged anddecreased, Yamato Transport is drawing on its TA-Q-BIN
network in collaboration with local governments to monitor
the health, safety, and other conditions of elderly people
living by themselves in a convenient and low-cost manner.
Yamato Transport is expanding these efforts to watch overthe elderly on a nationwide basis.
We are also working with local governments to regularly
deliver periodicals and other materials, and we summarize
and report the results of these deliveries to local government
agencies. For communities with a large number of elderly
people who have difficulty shopping on their own, we offer
services that provide shopping assistance to the elderly, in
addition to watching over their health. In these ways, wecustomize our services based on the issues facing individual
communities.

117
8

Expanding the Development of Combined Passenger-Cargo
Operations — TA-Q-BIN Transportation via Bus Routes
Our combined passenger-cargo operations represent efforts toswitch over a certain portion of truck transportation to transportation via bus by removing a number of seats from buses tomake room for cargo. These efforts help bus operators secure
new sources of revenue to help maintain bus routes. For local
governments in mountainous areas where the population has
aged and decreased, these efforts help maintain and improve
lifestyle services for local residents through stable public transportation. These efforts also increase the amount of time oursales drivers spend in local communities, thereby allowing themto provide services that are more connected to local community
needs. Furthermore, combined passenger-cargo operations
help us reduce our environmental burden.
These operations, which commenced in 2015 in Iwate
Prefecture, have now been expanded to cover Miyazaki,
Hokkaido, Kumamoto, Hyogo, Nagano, and Wakayama prefectures. In addition, starting from January 2017, we began bus
operations in Miyazaki Prefecture that allow for Cool TA-Q-BIN
transportation using special refrigerated boxes.

Bus used in combined passenger-cargo
operations (Miyazaki Prefecture)
Special refrigerated box

YAMATO HOLDINGS CO., LTD.
Integrated Report 201729

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. Basedon our corporate stance of thorough safety management that keeps respect for human life as its top priority, theGroup thoroughly adheres to its philosophy of placing safety first and business second to maintain respect forhuman life as a 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 Safety
Management System stipulated by the Ministry of Land,
Infrastructure, Transport and Tourism, and remains actively
involved in its implementation. Results for the fiscal year ended
March 31, 2017, and part of the goals for the fiscal year ending
March 31, 2018, are listed below.

Transport Safety Goals and Achievement Status(Yamato Transport Co., Ltd.)

Ingraining Safety Awareness into EmployeesWith the aim of improving the safety driving levels of its
professional drivers, maintaining Companywide safety
awareness, and improving driving techniques, Yamato Transport
holds the Yamato Transport Nationwide Safety Meet. At the
Sixth Annual Yamato Transport Nationwide Safety Meet held in
October 2016, a new category for two-ton multipurpose
automatic transmission vans was added to the existing category
for two-ton multipurpose manual transmission vans to respondto the increase in the number of drivers who only have licenses
for vehicles with automatic transmission.

Traffic Accidents
Item

No. of serious traffic
accidents
No. of serious workrelated accidents

Results for the fiscal year
ended March 31, 2017

Goal for the fiscal year
ending March 31, 2018

4

0

0

0

Source: Y amato Transport’s publicly disclosed “Transport Safety Management”
information (Japanese-language only)

Results for the Fiscal Year Ended March 31, 2017

Skill test for driving two-ton multipurpose vehicles

Results for the Fiscal Year Ended March 31, 2017

1. Operating expenses for on-board See-T Navi systems�������������������¥336.0 million
2. L ong-running no accident commendation awardees amount���������¥604.5 million

3. Expenses related to long-running noaccident commendation ceremony���������������������������������������������������¥62.0 million
4. Expenses related to Nationwide Safety Meet��������������������������������������¥7.1 million
5. Introduction of Event Data Recorders�����������������������������������������������¥62.0 million

Budget Plan for the Fiscal Year Ending March 31, 2018

1. Operating expenses for on-board See-T Navi systems�������������������¥312.0 million

2. L ong-running no accident commendation awardees amount���������¥567.0 million
3. Expenses related to long-running noaccident commendation ceremony���������������������������������������������������¥71.5 million
4. Expenses related to Nationwide Safety Meet��������������������������������������¥8.2 million
5. Introduction of Event Data Recorders���������������������������������������������¥383.0 million
6. Safety-related training for team leaders����������������������������������������������¥6.0 million

Training of Sales Drivers Who Prioritize Safety Above All ElseTo train excellent drivers who prioritize safety above all else, theYamato Group has expanded and upgraded its training systemand engages in the provision of detailed guidance on a daily
basis. Yamato Transport drivers hired following a rigorous
aptitude test receive training when they join the Company that
includes safety training and other training for approximately one
month after they have entered the Company. After earning theirinternal Yamato licenses, they come to the actual business ofdriving for the first time. Even after that, they hone their driving
skills through training sessions one year after joining, regular ridealong instruction and on-the-road patrols by safety experts andmanagers, and a driving manager aptitude examination once
every three years.

30

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Supporting Safety by Thorough Maintenance Management
Covering the more than 4,000 pickup and delivery baselocations of the Yamato Group, Yamato Autoworks is
responsible for 50,000 vehicles and their maintenanceinspections. Their major maintenance factories are in operation
around the clock throughout the year. Aside from naturally
responding quickly in the event of a breakdown, they support
the mandatory periodic inspections carried out on vehicles bycollective management throughout the year. Furthermore, they
perform preventive maintenance to carry out maintenancebefore breakdowns occur by frequently checking the status ofvehicles and gathering information. Of the approximately 940
mechanics, the number that hold automobile inspector
qualifications, which enable them to carry out complete
inspections to determine whether vehicles meet safety
standards once maintenance has been completed, has
climbed to 600 (as at March 31, 2017). During maintenance,
the accuracy of inspections is raised by double checks byanother mechanic who carries out interim and maintenancecompletion inspections.

Environment

A Thoroughly Ecological Approach to Transportation to Achieve Cost Reduction
By considering that efforts form part of a corporation’s responsibility to society, the Yamato Group refers to its
environmental conservation initiatives as “Necology.” The Group establishes environment-friendly logistics bythoroughly ensuring the environmental friendliness of all aspects, especially for packaging, transportation,and delivery.
Companywide Promotion of Modal Shift
As an initiative designed to reduce CO2 emissions, the YamatoGroup is encouraging all its companies to perform a modal shift toutilize railways as their trunk-route transport. The Group’s efforts
to bring about an increasing shift away from trucks, by switching
to railways or ships when shipping freight from Hokkaido to
Kanagawa Prefecture, helped realize a decrease in CO2 emissionsof about 285 tons.
Following an assessment of this initiative, Yamato received theModal Shift Excellent Business Entity Award (New Development
Division) at the 14th Annual Awards Ceremony for Excellent
Business Entities Working on Modal Shift that has the Japan
Association for Logistics and Transport as its main sponsor.

Introduction of Semi-trailers and Full Trailers with
New Standards
Through collaboration with automobile and other manufacturers,
Yamato Transport has developed and introduced newly standardized connected trailers, the first of their kind in Japan, whichhave a greater overall length compared with conventionalmodels. These trailers will help us improve the efficiency of highfrequency, trunk-route transportation between Atsugi Gateway,
Chubu Gateway, and Kansai Gateway. At the same time, thetrailers will help us reduce our CO2 emissions.

Utilizing Railways and Ships for Long-Distance Transportation• Van-type full trailer������������ 23% higher loading capacity than conventional models

Introduced Vehicle
Vehicles introduced in November 2016

• Van-type semi-trailer����������� 8% higher loading capacity than conventional models

Vehicles introduced in September 2017•S
 uper-full trailer 25 (25 meter-long connected trailer)���������������������������������������� 46% higher loading capacity than conventional models

BeforeIndividually sorted at
our plants and warehouse in Hokkaido anddelivered to end users
all over the country

Base in Sapporo,
Hokkaido

Low-Emission Vehicle Introduction Patterns(Yamato Transport Co., Ltd.)(Units)
30,00025,22925,000After

Utilization of trucks,
railways, and ships inaccordance with volume
and delivery date

Base in Sapporo,
Hokkaido

20,00016,809110

18,903
113

21,109
110

1,865
76

5,406
2,334
106

2,727
118

3,003

10,000

5,334

5,394

5,414

15,00023,218106140

12,331Modal Shift Volume Trends (Yamato Transport Co., Ltd.)(Thousands of tons)

2013/3

398.7

390.4

379.7

368.9

600

484

400
400
200

0

106.2

2013/3

Railway Transportation

2014/3

2015/3

Low-pressure gas (LPG) vehicles
Compressed natural gas (CNG)
vehicles

2016/32017/3

New long-term compliance vehicles
Replacement for new
long-term compliance vehicles

CO2 Emissions from Vehicles (Yamato Transport Co., Ltd.)

600

387.0

4,715

2,309
0

5,994

10,017

7,331

Electric vehicles
Hybrid vehicles

1,494
53

5,834

5,833

Delivered via TA-Q-BIN to end
users all over the country

5,254

5,820

5,824

5,000

Base in Yokohama,
Kanagawa

103

119.2

2014/395.8

2015/3

69.5

65.6

2016/32017/3

Waterborne Transportation

459

458

465

469

276

282

269

252

2014/3

2015/3

2016/32017/3217
200

01990/3CO2 emissions (thousand t-CO2)*1

CO2 emissions per basic unit (g-CO2)*2

Notes: *1. Figures are calculated in accordance with the Ministerial Ordinance on Calculation of Greenhouse Gas
Emissions Arising from Business Activities of Specified Emitters.
*2. CO2 emissions per basic unit = Total CO2 emissions / Number of parcels delivered via TA-Q-BIN service
YAMATO HOLDINGS CO., LTD.
Integrated Report 201731

Corporate GovernanceFor the year ended March 31, 2017

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 andactively 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 partof our corporate governance initiative.

Characteristics of Corporate Governance System(As of July 1, 2017)
SystemCompany with auditors

Number of directors

8Outside directors

3

Number of Audit & Supervisory Board members
Outside auditors

42

Term of directors

1

Executive officer system in place

Yes

Independent auditor

Deloitte Touche Tohmatsu LLC

Corporate Governance Framework

General Meeting of Shareholders
Elect

Elect

Coordinate

Elect

Audit & Supervisory
Board
ReportBoard of Directors

Audit

ReportMake decisions / Supervise

Independent
AuditorExecutive
Conference

Accounting
audit

Nomination andCompensation
Committee

Execute business

Audit Division

Propose / ReportManagement Committee
ReportExecute business

Internal
audit

Legal
AdvisorCSR Division

Propose / Report

Group Companies

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

OutsideAudit &
Supervisory
Board
members

32

Concurrent posts

Main activities

Attendance at meetings of theBoard of Directors and/or
Audit & Supervisory Board
during the fiscal year ended
March 31, 2017

YES

• Adviser of Komatsu Ltd.
• Outside Director of Zensho Holdings Co., Ltd.
• Outside Director of Hino Motors, Ltd.
• Outside Director of Takamatsu Construction
Group Co., Ltd.

Toshitaka Hagiwara has ample experience and extensive
knowledge as a businessperson, and he comments andadvises as needed on all aspects of business management.
Furthermore, his collaboration with the independent auditor
and the Audit Division enhances governance.

Masakatsu
Mori

YES

• Vice Chairman of the International Universityof Japan• Board of Director of SKY Perfect JSAT Holdings Inc.
• Board of Director of Stanley Electric Co., Ltd.
• Outside Audit & Supervisory Board Member ofKirin Holdings Company, Limited

Masakatsu Mori has ample experience and extensive knowledge as a businessperson, and he comments and advises as
Board of Directors:
needed on all aspects of business management. Furthermore,
17 of 17 meetings
his collaboration with the independent auditor and the Audit
Division enhances governance.

MarikoTokunoYES• Outside Director of Happinet Corporation• Outside Director of Mitsubishi Materials
Corporation(Appointed in June 2017)—

Board of Directors:
16 of 17 meetings
Audit & Supervisory
Board:
17 of 18 meetings—

ToshitakaHagiwara

OutsideDirectors

Independent
officer

Hiroyuki
Kanae

YES

• Partner, Anderson Mori and Tomotsune LPC

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

TakashiYamashita

YES•R epresentative of Takashi Yamashita CPA Office•O utside Director of Shin Nippon Biomedical
Laboratories, Ltd.

(Appointed in June 2017)

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Board of Directors:
16 of 17 meetings

The Company is a company with an Audit & Supervisory Board. In
addition to the Board of Directors supervising important management decision-making and business execution, Audit& Supervisory
Board members and the Audit & Supervisory Board which are independent from the Board of Directors shall audit the status of execution of duties by directors.

Board of Directorsn Roles and duties• The Board of Directors shall make important decisions concerning
the Company’s business and supervises the execution of duties byexecutive directors and executive officers.
• The Board of Directors shall recognize the medium-term management plan as one of the commitments to shareholders and do its
utmost to achieve the goals of the plan. Moreover, the Board of
Directors shall sufficiently analyze the initiatives aimed at realizing thegoals of the medium-term management plan as well as the extent
to which the plan’s objectives are being achieved. In addition toproviding explanations to shareholders, such analyses shall bereflected in future management plans.
• The Board of Directors shall encourage executive officers to demonstrate a healthy entrepreneurial spirit and not excessively avoid or
curb risk, while at the same time establishing a framework thatenables it to ensure accountability.
• The scope of responsibility of each executive officer shall bedecided by the Board of Directors and disclosed. Executive officers
shall execute business in accordance with internal regulations.
n Management• To allow Board of Directors meeting attendees the opportunity to
prepare for meetings in advance, the Board of Directors secretariat
shall send agenda items and related materials to directors well inadvance of the meeting date and provide explanations in advanceas needed.
• The annual schedule of Board of Directors meetings as well as
anticipated agenda items shall be decided in advance, and thisinformation shall be provided to directors and Audit & Supervisory
Board members.
• The number of issues to be deliberated as well as the frequency of
meetings shall be appropriately set, and the time of meetings shallbe decided so as to allow sufficient time for deliberations.
• As needed, meetings comprising Board of Directors meeting
attendees shall be held for the purpose of exchanging ideas,
thereby encouraging lively debate.
• The effectiveness of the Board of Directors shall be evaluatedthrough questionnaires and interviews performed by the chair.

Audit & Supervisory Boardn Roles and duties• The Audit & Supervisory Board and its members shall exercise theirauthority actively and proactively, and they shall appropriately state
their opinions at Board of Directors meetings as well as to membersof senior management.
• The full-time Audit & Supervisory Board members shall attend
Board of Directors meetings and other important meetings related
to the execution of business, express reasonable opinions, holdeffective Audit & Supervisory Board meetings, and ensure that
information is shared and that members work together in a coordinated manner.
• The Audit & Supervisory Board shall regularly hold informationexchange meetings for the purpose of sharing information withoutside directors, thereby ensuring more robust gathering of information and encouraging teamwork.

Nomination and Compensation Committee• The Nomination and Compensation Committee shall compriseoutside directors and the same number or fewer internal directors
with an outside director serving as the committee chair.
• The committee shall deliberate on matters related to the appointment
or removal of senior management members based on businessperformance and multifaceted observations and evaluation, thereby
verifying the validity of such decisions, and decide policies on compensation and other matters related to senior management members.
• The committee shall propose candidates as successors to therepresentative director to the Board of Directors, following deliberation based on multifaceted observations and evaluations of candidates’ track records, human nature, and other factors, thereby
increasing management transparency.
Support Framework for Directors andAudit & Supervisory Board Members• The Company shall establish a support framework that enables it toprovide necessary and adequate information at the necessary time toallow directors to effectively fulfill their roles and duties.
• By participating in key business strategy meetings for the overall
Group, such as the “Business Summit,” “Business Conference,”
and “Management Plan Unveiling,” as well as by observing key
Group business sites, including those overseas, participants areable to better understand the business strategies and provide
opportunities to see how these strategies are being advanced.
• As a system to help Audit & Supervisory Board members smoothly
perform their duties, employees in the internal audit division shall be
appointed to assist Audit & Supervisory Board members.
• Audit & Supervisory Board members shall exercise their authority toperform investigations in accordance with the Companies Act.
In addition, if a director or employee discovers a fact that could
potentially inflict marked damage on the Company, he/she shallimmediately report this fact to an Audit & Supervisory Board
member, even if there is no request to do so from an Audit &Supervisory Board member.
• If a director or Audit & Supervisory Board member believes it to benecessary, he/she shall obtain advice from an outside expert at theCompany’s expense.
• The internal audit division shall regularly hold meetings with the fulltime Audit & Supervisory Board members, and provide audit reports
in a planned manner to the Board of Directors and the Audit &Supervisory Board, thereby enhancing the provision of information
to as well as bolstering coordination with outside directors andoutside Audit & Supervisory Board members.
Compensation of Directors andAudit & Supervisory Board Members
Directors and Audit & Supervisory
Board members

Total compensationand other
remuneration(Millions of yen)

Total by compensation
Headcount of eligible
and remuneration
directors and Audit &category
Supervisory Board(Millions of yen)members
Basic compensation

Directors(excluding outside directors)

284

284

4

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

46

46

2

Outside directors and Audit &Supervisory Board members

46

46

4

YAMATO HOLDINGS CO., LTD.
Integrated Report 201733

Corporate Governancen 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 theNomination and Compensation Committee, more than half of whose
members are outside directors, with the Board of Directors making
resolutions.
Director compensation comprises fixed remuneration that reflects
external standards and performance-based amounts. The compensation of Audit & Supervisory Board members and outside directors isfixed in keeping with the nature of their work.
In addition, for executives at or above the level of executive officer,
a certain percentage of their compensation is allocated to purchaseshares of Company through the Officers and Executives’ Share­
holding Association.

Policy on cross-shareholdings
The Company shall maintain a policy of owning stocks that are
deemed meaningful, based on a comprehensive consideration of therelationship with the Group’s businesses and the profitability of thecompany, among other factors. With respect to the key stocks that theCompany owns, a decision shall be made every year at the Board of
Directors meeting concerning whether to continue holding the stocks,
based on careful consideration of various factors including the effect ofholding the stock on strengthening the alliance, the business trackrecord with the company, and the market price of the shares.
In exercising the voting rights of shares held, decisions on supporting or opposing shareholders’ meeting agenda items shall be madeon a case-by-case basis, with consideration given to the issuing
company raising its corporate value, the issuing company’s compliance framework, and the possibility that the issue will have a negative
impact on the Group’s business, among other factors.
Compliancen Strengthening internal control for the Group overall
The Yamato Group has established an internal control system in orderto promote sound corporate culture in the Group as a whole and toenable employees to perform their duties effectively and efficiently
without any misbehavior or mistakes. Having stipulated its basic
policy on the internal control system in accordance with theCompanies Act, each Group company is working on strengthening
internal control.
In addition, in order to respond to the internal control report system
pursuant to the Financial Instruments and Exchange Act, we arepromoting reviews of business rules and the standardization of operations, checking whether operations have been effectively performed inaccordance with the rules, and establishing a system to immediately
put improvements in place should there have been any shortcomings.
Internal control over the financial reporting of the Yamato Group asof March 31, 2017, was considered valid, and a report was submitted
to the Kanto Local Finance Bureau.
n Reinforcing the Whistle-Blower System
With regard to compliance violations by the Company, employees,
directors, and other members, the Yamato Group ensures anappropriate framework related to whistle-blowing by having in placea contact point for the president, a contact point managed by theCompliance and Risk Committee, and a contact point managed byan outside attorney. The Company shall secure a framework in

34

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

which employees who report on such violations are protected underwhistle-blower regulations. Violations and responses to violations
shall be regularly reported to the Compliance and Risk Committee,
as well as reported to the Board of Directors if deemed necessary
by the responsible officer.

Business Continuity Plan (BCP)n 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 it is expected to keep offering the steady service even underunforeseeable circumstances. Therefore, we formulated a business
continuity plan (BCP) to prepare for these circumstances.
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 theGreat East Japan Earthquake that occurred in 2011 and the 2016
earthquakes with epicenters in Kumamoto and Oita. Our aim is toprepare 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 tothe speedy, accurate, and fair disclosure of information. Furthermore,
the Group has established the Disclosure Policy in order to discloseand manage information in a more appropriate manner and enhance
the reliability of that information.
The main investor relations activities are listed below.

Item

Number of times

Content

Settlement of Accounts
Meetings for analysts andinstitutional investors

4

Settlement of Accounts Meetings are heldeach quarter.
The first-quarter meeting is held by telephone with
the Chief Financial Officer. Meetings for the second,
third, and fourth quarters are held with the president.

Visits by the president
to investors in the
United States, Europe,and Asia

1 or more
per year toeach region

The president or chairman make regular overseas
visits to investors in the United States, Europe,and Asia to explain management policies.

Small meetings withthe president

2 per year

Creating regular opportunities for direct dialogue
with management

Facility tours

2 or more
per year

Creating regular opportunities to promote
understanding of business operations

Website for investor
relations materials—

Financial results, news releases, securities
reports, and quarterly reports; materials pertaining to settlement of accounts meetings, convocation notices for the ordinary general meeting ofshareholders, notices of resolution, and disclosure of voting results. Publication of mostimportant information in two languages –Japanese and English – so that information canbe communicated to foreign investors.

Establishment of IR
department—

Responsible for developing IR strategies toinitiate dialogue with shareholders and otherinvestors and disclosing information

Directors
As of June 23, 2017

Yutaka Nagao

Hitoshi Kanamori

Haruo Kanda

Masaki Yamauchi

Makoto Kigawa

Toshitaka Hagiwara

Masakatsu Mori

Makoto Kigawa

Masaki Yamauchi

Representative Director and Chairman

Representative Director, President and Executive Officer

Mariko Tokuno

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

Apr. 2005 Executive Officer

		 Resources Officer / Head of Human Resources

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

		 Group of Mizuho Corporate Bank, Ltd.

Nov. 2005 General Manager of Human Resources and Administration

Apr. 2005 Joined the Company

Mar. 2007 Executive Officer of the Company

Jun. 2005 Managing Director

Mar. 2007 Responsible for Human Resources Strategy

Apr. 2005 President, Tokyo Branch

Nov. 2005 Representative Managing Director

May 2007 Responsible for Management Strategy

Apr. 2006 Representative Director and Managing Executive Officer

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

Jun. 2006 Representative Director and Senior Managing Executive Officer
Mar. 2007 Representative Director and Executive Officer

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

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

Jun. 2011 Director and Executive Officer of the Company

Jun. 2008 Director and Executive Officer of the Company

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

Apr. 2011 Representative Director, President and Executive Officer
Apr. 2015 Representative Director and Chairman (current)

YAMATO HOLDINGS CO., LTD.
Integrated Report 201735

Directors

Haruo Kanda

Hitoshi Kanamori

Representative Director, Vice President and Executive Officer

Director, Senior Managing Executive Officer

Jan. 1985 Joined the Company

Apr. 1979 Joined Yamato System Development Co., Ltd.

Apr. 2004 General Manager of Human Resources

Feb. 1996 General Manager of System Equipment Sales Division

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

Apr. 2006	General Manager of Division of Information Systems of
Yamato Transport Co., Ltd.

Jul. 2006 Managing Executive Officer

Apr. 2007 Executive Officer, General Manager of Management Strategy

Apr. 2008 Managing Executive Officer of the Company

Apr. 2008 Managing Executive Officer

Jun. 2008 Representative Director and Managing Executive Officer

Apr. 2009 Representative Director and Managing Executive Officer

Apr. 2013 Representative Director and Senior Managing Executive Officer

Apr. 2011 Executive Officer of the Company

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

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

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

Apr. 2015 Senior Managing Executive Officer
Apr. 2017	Coordinator-General of Management Strategy, Global Business Strategy,
IT Strategy, Key Account Management (current)
Jun. 2017 Director and Senior Managing Executive Officer (current)

Yutaka Nagao

Toshitaka Hagiwara

Director, Executive Officer

Outside Director

Apr. 1988 Joined the Company

Dec. 1969 Joined Komatsu Ltd.

Apr. 2004 Regional Branch Manager of Yamaguchi Regional Branch

Jun. 1990 Director

Apr. 2006 	Regional Branch Manager of Saitama Regional Branch of
Yamato Transport Co., Ltd.

Jun. 1995 Managing Director

Apr. 2009 General Manager of TSS Sales Promotion OfficeJun. 1999 Executive Vice President

Apr. 2010 Executive Officer and President of Kanto Regional OfficeJun. 2003 Chairman and Representative Director of the Board

Apr. 2013 Managing Executive Officer

Jun. 2007 Councilor and Senior Adviser

Apr. 2015 Executive Officer of the Company

Jun. 2009 Director of the Company (current)

Apr. 2015	Representative Director, President and Executive Officer of
Yamato Transport Co., Ltd. (current)

Jul. 2011 Senior Adviser of Komatsu Ltd.

Jun. 2017 Director and Executive Officer (current)

Jul. 2013 Adviser of Komatsu Ltd. (current)

Masakatsu Mori

Mariko Tokuno

Outside Director

Outside Director

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

Jan. 1994 Joined Louis Vuitton Japan KK

May 1972 Qualified as Certified Public Accountant

Apr. 2002 Senior Director for Sales Administration

Sep. 1981	Partner (business partner) of Arthur Andersen & Co.
(currently: Accenture Japan Ltd.)Mar. 2004 Vice President of Tiffany & Co. Japan Inc.

Feb. 1989	President of Andersen Consulting(currently: Accenture Japan Ltd.)Board Member of Andersen Consulting (Global) (currently: Accenture)
Apr. 2003 Representative Director and Chairman of Accenture Japan Ltd.
Sep. 2007 Corporate Advisor of Accenture Japan Ltd.
Oct. 2009 President of the International University of Japan (IUJ)
Apr. 2013 Senior Advisor of IUJJun. 2013 Director of the Company (current)
Nov. 2013 Vice Chairman of IUJ (current)

36

Jun. 1997 Executive Managing Director

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Aug. 2010 Representative Director and President of Christian Dior Japan KK
Sep. 2013 Representative Director, President and CEO of Ferragamo Japan KK
Jun. 2017 Director of the Company (current)Audit & Supervisory Board Members
As of June 23, 2017

Etsuo Ogawa

Kazuko Takahara

Hiroyuki Kanae		 Takashi Yamashita

Kazuko Takahara

Etsuo Ogawa

Full-time Audit & Supervisory Board Member

Full-time Audit & Supervisory Board Member

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

Jul. 2006	Director of Compliance Department, Japan Industrial Safety and
Health Association
Jul. 2009	Director-general, Hokkaido Labour Bureau, Ministry of Health,Labour and Welfare
Sep. 2012	Principal of Labour College, The Japan Institute for Labour
Policy and Training
Apr. 2014 Joined the Company
Jun. 2014 Full-time Audit & Supervisory Board Member (current)

Jun. 2002 President, Chugoku Branch
Apr. 2004 Responsible for Financing and Accounting
Jun. 2005 Managing Executive Officer
Oct. 2005	Representative Director, President and Executive Officer of
Yamato Logistics Co., Ltd.
Apr. 2008 Director and Chairman of the Board of Yamato Logstics Co., Ltd.
Jun. 2009	Audit & Supervisory Board Member of
Yamato Home Convenience Co., Ltd.
Jun. 2014 Audit & Supervisory Board Member of Yamato Transport Co., Ltd.
Jun. 2015 Full-time Audit & Supervisory Board Member of the Company (current)

Hiroyuki Kanae

Takashi Yamashita

Audit & Supervisory Board Member (Independent)

Audit & Supervisory Board Member (Independent)

Apr. 1979	Licensed and registered as an attorney at law (Bengoshi) at
Daini Tokyo Bar Association

Oct. 1983	Joined Asahi Accounting Company

Sep. 1987	Joined Coudert Brothers LLP (New York)May 2003	Representative Partner of Asahi & Co. (currently: KPMG AZSA LLC)

Jul. 1988	Licensed and registered as an attorney at law in the State of New York

Aug. 2014	Established Takashi Yamashita CPA Office, Representative (current)

Mar. 1987	Registered as a Certified Public Accountant

Sep. 1988	Joined Nishi, Tanaka & Takahashi Law OfficeJan. 2015	Registered as a Certified Tax Accountant

Apr. 1992	Partner of Nishi, Tanaka & Takahashi Law OfficeJun. 2017	Audit & Supervisory Board Member of the Company (current)

May 2001	Joined Shin-Tokyo Law Office as partner
Oct. 2007	Through the consolidation of law offices, name change to	Bingham McCutchen Murase, Sakai Mimura Aizawa,
Foreign Law Joint Enterprise (Partner)
Jun. 2012	Audit & Supervisory Board Member of the Company (current)
Apr. 2015	Through the consolidation of law offices, name change toAnderson Mori & Tomotsune LPC (Partner) (current)

YAMATO HOLDINGS CO., LTD.
Integrated Report 201737

Executive Officers
As of June 23, 2017

Kenji Minaki

Kenichi Shibasaki

Hideo Tanzawa

Shinji Makiura

Senior Managing Executive Officer
Responsible for East Asia regional
headquarters

Senior Managing Executive Officer
Responsible for overseeing Financing
and Investor Relations

Managing Executive Officer
Responsible for Public Relations
Strategy, Business Strategy, Tokyo
Olympic and Paralympic Promotion

Managing Executive Officer
Responsible for Corporate Strategy

Tomoki Otani

Katsuhiko Umetsu

Koji Homma

Atsushi Ichino

Senior Executive Officer
Responsible for Human Resources
Strategy, Logistics Network Strategy,
Internal Audit, CSR and Audit of theCompany

Senior Executive Officer
Director and Chairman, Yamato Global
Logistics Japan Co., Ltd.

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

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

Yoshihiko Hoshino

Tetsuya EgashiraNaomi Ogata

Richard Chua Khing Seng

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

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

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

Executive Officer
Responsible for Southeast Asia
regional headquarters
Managing Director, Yamato Asia Pte. Ltd.

Hiromitsu Aikawa

Yorimasa Tanaka

Ryutaro Narui

Atsushi Kashimoto

Executive Officer
Responsible for Global Marketing andDevelopment, US and European
regional headquarters

Executive Officer
Responsible for Technology Strategy

Executive Officer
Responsible for Planning andManagement of Strategic Alliance

Executive Officer
Responsible for Investor Relations

Tsutomu Sasaki
Executive Officer
Responsible for Corporate Strategy

38

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Financial Section
40	Ten-Year Summary and Business Highlights
42

Consolidated Balance Sheet

44

Consolidated Statement of Income

45	Consolidated Statement of Comprehensive Income46	Consolidated Statement of Changes in Equity
47	Consolidated Statement of Cash Flows48	Notes to Consolidated Financial Statements
68

Independent Auditor’s Report

YAMATO HOLDINGS CO., LTD.
Integrated Report 201739

Ten-Year Summary and Business Highlights

2008/3

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

RESULTS OF OPERATIONS:
Operating revenues¥1,225,974 ¥1,251,922 ¥1,200,834 ¥1,236,520 ¥1,260,833 ¥1,282,374 ¥1,374,610

Delivery

981,142

997,898

966,480

995,651

1,014,564

1,028,219

Non-delivery

244,832

254,024

234,354240,869

246,269

254,155

275,210

Operating costs

1,129,008

1,167,764

1,110,971

1,143,006

1,163,777

1,181,834

1,274,471

Selling, general and administrative expenses

28,78628,43728,47429,20030,40534,33737,043Operating income
Income before income taxes
and minority interests

68,18055,721

61,38964,314

66,651

66,20363,096

67,59648,99660,434

61,83645,81764,28465,882

Income taxes
Net income attributable to owners of parent

31,44735,353

23,34925,52328,09632,28228,491
33,20826,05919,78729,56335,14431,003
34,776PER SHARE OF COMMON STOCK:
Basic net income
Diluted net income
Cash dividends
Net assets per share
Stock price (closing), end of year¥    79.80 ¥    57.60 ¥    71.84 ¥    73.42 ¥    46.00 ¥    81.85 ¥    82.22
78.12
56.45
71.16
73.30
44.87
79.84
80.18
22.00
22.00
22.00
22.00
22.00
23.00
24.00
1,050.99
1,073.86
1,130.33
1,173.60
1,197.26
1,261.35
1,316.12
1,460
927
1,314
1,290
1,279
1,740
2,224

FINANCIAL POSITION:
Working capital
Total shareholders’ equity
Total assets
Capital expenditures
Depreciation and amortization
Net cash provided by operating activities¥  125,355 ¥  159,937 ¥  165,890 ¥  185,922 ¥  182,111 ¥  186,868 ¥  179,999
465,801
475,815
512,910515,602514,996
534,451
551,379874,219
869,606
878,641
899,363919,295
950,153 1,032,134
124,832
45,85639,70052,472
48,61548,052
79,531
44,772
42,69739,88339,58338,68237,93642,266
116,896
84,46377,06487,89971,84373,95080,075

KEY RATIOS:
Operating income margin (%)

5.56

4.45

5.11

5.20

5.29

5.16

4.59

Net margin (%)

2.88

2.04

2.69

2.69

1.57

2.74

2.53

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

3.76
6.70
162.3956.25
1.37
108.36
21.3
1.4

3.51
6.41
151.8253.42
1.39
153.4127.0
1.7

169,836
80,843
88,993
1,236
644

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

167,555
82,39585,1601,262
624

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

177,301
84,29393,0081,423
600

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

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

2,206
64

2,231
65

2,262
65

2,312
64

2,187
62

2,112
61

2,084
61

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

Foreign currency translation: U.S. dollar amounts have been translated, for convenience only, at the rate of ¥112.19 to U.S. $1.
Note: On March 31, 2015, we ceased accepting items for Kuroneko Mail and from April 1 launched Kuroneko DM-Bin.

40

1,099,400

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

2015/3

2016/3

Millions of Yen
2017/3Thousands of
U.S. Dollars
2017/3¥1,396,708 ¥1,416,413 ¥1,466,852$13,074,713

1,101,439

10,259,634

1,111,867

1,151,028

295,269

304,546

315,824

2,815,079

1,290,715

1,306,200

1,385,492

12,349,517

37,046

41,673

46,475414,247

68,947

68,54034,885

310,949

69,15868,07933,038294,479

31,55537,53328,41539,425

14,67318,054

130,784
160,921

Yen¥    90.41 ¥    96.45 ¥    45.37
88.26
95.64
—
25.00
28.00
27.00
1,368.66
1,349.56
1,367.51
2,772
2,247
2,332.5
Millions of Yen¥  209,172 ¥  235,884 ¥  214,661
565,521537,821539,179
1,082,531
1,089,437
1,114,672
52,022
53,94548,99446,05846,73946,114
92,62049,71573,325

4.94

4.84

2.38

2.69

2.78

1.23

3.55
6.75
158.5952.24
1.32
173.45
30.7
2.0

3.63
7.15
167.7649.37
1.30
125.33
23.3
1.7

1.64
3.35
157.73
48.37
1.33
81.45
51.4
1.7

U.S. Dollars$ 0.40
—
0.24
12.19
—
Thousands of
U.S. Dollars$1,913,373
4,805,949
9,935,576
436,704
411,037
653,575

Analysis of Operating Revenues(¥ billion)

1,416.4

FY16/3+39.1

Delivery+1.8

BIZ-Logistics

Home Convenience +0.1
e-Business

+2.2
+5.5

Financial

Autoworks +0.1

+1.3

Other

1,466.8

FY17/3

YoY +50.4

Analysis of Operating Income(¥ billion)

68.5

FY16/3
Revenue increase+50.4

Increase in personnel expenses+50.2

Subcontracting
expenses+38.2

Vehicleexpenses (0.2)

+9.0

Other

(13.1)

Elimination

34.8

FY17/3

YoY (33.6)

Quarterly YoY Growth Rates of TA-Q-BIN Delivery Volume
and Unit Price(%)

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

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

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

1,901
61

1,536
57

1,542
55

20
15
10
5
0
(5)
(10)

1Q

2Q

3Q

4Q

1Q

2015/3TA-Q-BIN Delivery Volume Growth Rate
TA-Q-BIN Unit Price Growth Rate

2Q

3Q

2016/3

4Q

1Q

2Q

3Q

4Q

2017/3

Delivery Volume:
YoY + 7.9%
Unit Price:
YoY (3.3)%

YAMATO HOLDINGS CO., LTD.
Integrated Report 201741

Consolidated Balance Sheet
March 31, 2017

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

ASSETS

2017

2016

2017

¥ 230,129¥ 249,594$ 2,051,241  Trade208,131

197,382

1,855,165   Installment (Note 4)

46,142

43,648411,280   Lease (Note 13)

50,77748,894

452,601   Allowance for doubtful accounts(1,283)(1,079)(11,433)

Inventories (Note 5)

2,775

2,858

24,735

Deferred tax assets (Note 12)

20,684

14,907

184,370

Prepaid expenses and other current assets

CURRENT ASSETS:
Cash and cash equivalents (Notes 2.d and 14)
Notes and accounts receivable (Note 14):

29,15527,778259,870    Total current assets

586,510

583,982

5,227,829

PROPERTY, PLANT AND EQUIPMENT—At cost:
Land
Buildings and structures
Vehicles178,621341,134
194,073

176,139
326,889
196,054

1,592,127
3,040,683
1,729,860

123,569
16,44911,749126,243
15,411
23,538

1,101,430
146,615
104,725

Machinery and equipment
Leased assets (Note 13)
Construction in progress
Others23,492

21,700209,396    Total

889,087

885,974

7,924,836

Accumulated depreciation(484,017)(480,332)(4,314,260)     Net property, plant and equipment

405,070

405,6423,610,576

INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 6 and 14)
Investments in and advances to unconsolidated subsidiaries and affiliates (Note 14)
Long-term loans
SoftwareLease deposits
Deferred tax assets (Note 12)

32,58822,086968
18,14916,232
26,64330,3291,169
1,010
14,526
16,45327,008290,474
196,859
8,631
161,772
144,683
237,481

Other assets (Notes 2.k and 9)     Total investments and other assets
TOTAL
See notes to consolidated financial statements.

42

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

6,426

9,318

57,271

123,092

99,813

1,097,171¥1,114,672¥1,089,437$ 9,935,576

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

LIABILITIES AND EQUITY

2016

2017

2017

CURRENT LIABILITIES:
Short-term bank loans (Notes 8 and 14)
Current portion of long-term debt (Notes 8, 14 and 15)¥

23,615$ 179,143

43,30434,829385,987

155,736

148,456

1,388,147

20,098¥Notes and accounts payable (Note 14):  Trade  Other

8,680

14,461

77,365

Income taxes payable

14,40019,783

128,353

Accrued expenses

68,16662,508607,591

Deferred profit on installment sales (Notes 4 and 14)

6,010

5,895

Provision for special wage payments (Note 2.j)15,129Other current liabilities (Note 10)

53,571
134,854

40,32638,551

359,445

371,849

348,098

3,314,456

Long-term debt (Notes 8, 14 and 15)

114,767

115,903

1,022,966

Liability for employees’ retirement benefits (Notes 2.k and 9)

70,952

71,551

632,428

Deferred tax liabilities (Note 12)

3,162

2,800

28,187

Other long-term liabilities (Note 10)

8,383

7,230

74,725

197,264

197,484

1,758,306

Common stock—authorized, 1,787,541,000 shares in 2017 and 2016;
issued, 411,339,992 shares in 2017 and 2016

127,235

127,235

1,134,101

Capital surplus

36,81336,813

328,132

Retained earnings

409,271402,376

3,648,015

Treasury stock—at cost, 17,062,391 shares in 2017 and
12,823,544 shares in 2016

(39,078)(29,076)(348,314)

10,975

9,790

97,826(423)

751(3,770)    Total current liabilities
LONG-TERM LIABILITIES:    Total long-term liabilities
COMMITMENTS LIABILITIES (Note 13)
EQUITY (Notes 11 and 19):

Accumulated other comprehensive income:   Unrealized gain on available-for-sale securities   Foreign currency translation adjustments   Remeasurements of defined employees’ retirement benefit plans (Notes 2.k and 9)    Total
Non-controlling interests    Total equity
TOTAL(5,614)(10,068)(50,041)

539,179

537,8214,805,949

6,380

6,034

56,865545,559543,855

4,862,814¥1,114,672¥1,089,437$9,935,576

YAMATO HOLDINGS CO., LTD.
Integrated Report 201743

Consolidated Statement of Income
Year Ended March 31, 2017

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

2016

2017

¥1,466,852¥1,416,413$13,074,713

1,385,492

1,306,200

12,349,517

46,47541,673414,247

1,431,967

1,347,873

12,763,764

34,88568,540310,949

Interest and dividend income

847

833

7,548

Interest expense

(430)

(548)

(3,835)

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

(66)

(91)

(590)

(1,284)(1,155)(11,447)

600

54

5,347

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

Loss on impairment of long-lived assets (Note 7)
Gain on sales of marketable and investment securities (Note 6)
Loss on valuation of investment securities (Note 6)
Loss on valuation of investment in unconsolidated subsidiaries and affiliates

(1)

(5)

(209)

(1,867)

Share of loss of entities accounted for using equity method(799)(7,123)

Disaster recovery expenses for the Kumamoto Earthquake(886)(7,897)

Other—net

381

446

3,399

  Other expenses—net(1,847)(461)(16,470)

INCOME BEFORE INCOME TAXES

33,03868,079294,479

Current

22,09427,435

196,932

Deferred(7,421)

980(66,148)   Total income taxes

14,67328,415

130,784

NET INCOME

18,36539,664

163,695

INCOME TAXES (Note 12):NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTSNET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT

239

311
¥

18,054¥39,425

2,774$

160,921
U.S. Dollars(Note 1)

Yen
2017

2016

¥45.37¥96.452017

PER SHARE OF COMMON STOCK (Notes 2.r and 17):
Basic net income
Diluted net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

44

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

$0.40

95.64
27.00

28.00

0.24

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2017

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

2016

¥18,365¥ 39,664

Unrealized gain (loss) on available-for-sale securities

1,269(3,976)

11,311

Foreign currency translation adjustments(1,174)(419)(10,468)

Remeasurements of defined employees’ retirement benefit plans

4,456(10,787)

39,722

4,552(15,182)

40,572¥22,917¥ 24,482$204,267¥22,519¥ 24,166$200,718

398

316

3,549

NET INCOME

2017$163,695

OTHER COMPREHENSIVE INCOME (Note 16):

Share of other comprehensive income of entities accounted for using equity method   Total other comprehensive income (loss)
COMPREHENSIVE INCOME

1

7

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 201745

Consolidated Statement of Changes in Equity
Year Ended March 31, 2017

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE,APRIL 1, 2015

Outstanding
Number of
Shares ofCommon Stock

Common Stock413,194¥127,235

Capital Surplus Retained Earnings Treasury Stock¥ 70,209¥395,353¥(43,008)

Remeasurements
Unrealizedof Defined
Foreign Currency
Employees’Gain onAvailable-for-Sale
Translation
Retirement Benefit
Securities
Adjustments
Plans¥13,848¥ 1,169¥715

Non-controlling
Interests

Total¥565,521¥5,678

Total Equity¥571,199 
Net income attributableto owners of the parent

39,42539,42539,425 
Cash dividends,¥26 per share(10,674)(10,674)(10,674)

88

88

88

(50,006)(50,006)(50,006)

11,207

9,570

9,570

 
Adjustment of retained
earnings for changes
in the scope of
consolidation 
Purchase oftreasury stock(19,851) 
Disposal oftreasury stock

5,173(1,637) 
Retirement oftreasury stock(30,915) 
Change in equity related
to transaction with noncontrolling shareholders(21,816)

52,731

(844)

(844)

 
Net change in the year
BALANCE,MARCH 31, 2016

398,516

127,235

36,813402,376(29,076)(844)(4,058)(418)(10,783)(15,259)356(14,903)

9,790

751

(10,068)

537,8216,034

543,855 
Net income attributableto owners of the parent

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

1(10,002) 
Net change in the year
BALANCE,MARCH 31, 2017394,278¥127,235¥ 36,813¥409,271¥(39,078)

1,185(1,174)

4,454

4,465

346

4,811

¥10,975¥  (423)¥ (5,614)¥539,179¥6,380¥545,559

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

Common Stock

BALANCE,MARCH 31, 2016

$1,134,101

Capital Surplus Retained Earnings Treasury Stock$328,132$3,586,554$(259,163)

Foreign
Currency
Translation
Adjustments$87,267$ 6,691

Remeasurementsof Defined
Employees’
Retirement Benefit
Plans

Non-controlling
Interests

Total$(89,740) $4,793,842$53,786

Total Equity$4,847,628 
Net income attributableto owners of the parent

160,921

160,921

160,921 
Cash dividends,$0.25 per share(99,460)(99,460)(99,460)(89,155)(89,155) 
Purchase oftreasury stock(89,155) 
Disposal oftreasury stock4 
Net change in the year
BALANCE,MARCH 31, 2017

$1,134,101

See notes to consolidated financial statements.

46

Unrealized
Gain onAvailable-for-Sale
Securities

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

$328,132$3,648,015$(348,314)

4
10,559(10,461)$97,826$ (3,770)

39,6994

39,7973,079

42,876$(50,041) $4,805,949$56,865$4,862,814

Consolidated Statement of Cash Flows
Year Ended March 31, 2017

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2016

2017

2017

OPERATING ACTIVITIES:
Income before income taxes¥ 33,038¥ 68,079$ 294,479  Income taxes—paid(32,138)(29,228)(286,461)   Depreciation and amortization

46,12646,758411,142

Adjustments for:   Loss on sales and disposal of property, plant and equipment—net

66

91

590

   Loss on impairment of long-lived assets

1,284

1,155

11,447   Gain on sales of marketable and investment securities

(600)

(54)

(5,347)   Loss on valuation of investment securities

1

5   Loss on valuation of investment in unconsolidated subsidiaries and affiliates

209

1,867

   Share of loss of entities accounted for using equity method

799

7,123

   Changes in assets and liabilities, net of effects from newly consolidated subsidiaries:    Increase in notes and accounts receivable(15,594)(15,422)(138,998)

20

473

173

    Increase (decrease) in notes and accounts payable

7,454(9,137)    Increase in provision for special wage payments

15,129   Decrease in inventories

66,441
134,854    Increase in liability for employees’ retirement benefits

1,898

2,376

16,915  Other—net

15,633(15,376)

139,345    Total adjustments

40,287(18,364)

359,096     Net cash provided by operating activities

73,32549,715653,575

INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment

1,874

17,273

16,708(43,987)(37,426)(392,075)

1,600

110

14,258Purchases of marketable and investment securities(1,714)(1,846)(15,272)

Increase in investments in and advances to unconsolidated subsidiaries and affiliates(22,507)(591)(200,614)

Purchases of property, plant and equipment
Proceeds from sales of marketable and investment securities

Collection of loans

1,017

1,054

9,062

Payment of loans(975)(1,020)(8,691)(9,308)(7,784)(82,967)(74,000)(30,230)(659,591)

Other     Net cash used in investing activities
FINANCING ACTIVITIES:(Repayments of) proceeds from short-term debt—net(5,802)

2,708(51,719)

Proceeds from long-term debt

43,72058,865

389,698

Repayments of long-term debt

(35,499)(16,857)(316,419)

Dividends paid

(11,209)(10,721)(99,908)

Purchase of treasury stock—net(10,005)(50,013)(89,180)

17

(815)

156

(18,778)(16,833)(167,372)

Other     Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(883)

(654)

(7,868)(20,336)

1,998(181,256)

CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES,BEGINNING OF YEAR

213

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

249,262

247,051

2,221,781

CASH AND CASH EQUIVALENTS, END OF YEAR (Note 2.d)¥228,926¥249,262$2,040,525¥¥ (1,637)$

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Decrease in capital surplus due to exercise of stock acquisition rights—

Decrease in treasury stock due to exercise of stock acquisition rights

11,207

Decrease in zero coupon convertible bonds due to exercise of stock acquisition rights

9,570

—

See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201747

Notes to Consolidated Financial Statements
Year Ended March 31, 2017

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 2016 consolidated financial statements to conform them to the classifications and presentations used in 2017.
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 ¥112.19 to $1, the approximate
rate of exchange at March 31, 2017. 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, 2017, include the accounts of the Company and its 39
significant (40 in 2016) 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 14 affiliates accounted for by the equity method in 2017. No affiliates were accounted for by the equity method
in 2016.
Effective from the fiscal year ended March 31, 2017, the scope of equity method includes GD EXPRESS CARRIER BHD.,
Packcity Japan Co., Ltd. and GUANGZHOU WISEPOWER TRANSPORTATION & DISTRIBUTION GROUP CO., LTD. following the
new acquisition of shares, and also includes 11 subsidiaries of GD EXPRESS CARRIER BHD.
Investments in the unconsolidated subsidiaries and several affiliates not accounted for by equity method are stated at cost,less a valuation allowance representing possible losses on the investments that are deemed to be other than temporary. If theequity method of accounting had been applied to the investments in such companies, the effect on the accompanying consolidated financial statements would not be material.
All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Group is also eliminated.
b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements—Under
Accounting Standards Board of Japan (“ASBJ”) Practical Issues Task Force (“PITF”) No. 18, “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements,” the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in
principle be unified for the preparation of the consolidated financial statements. However, financial statements prepared by foreignsubsidiaries in accordance with either International Financial Reporting Standards or generally accepted accounting principles in
the United States of America tentatively may be used for the consolidation process, except for the following items which should be
adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP, unless they are notmaterial: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity
through other comprehensive income; (c) expensing capitalized development costs of R&D; and (d) cancellation of the fair value
model accounting for property, plant and equipment and investment properties and incorporation of the cost model accounting.
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.

48

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

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.
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 was as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

Cash and cash equivalents presented in the consolidated balance sheet
Time deposits due beyond three months¥230,129

2016

2017

¥249,594(1,203)

Bank overdraft$2,051,241(10,716)(332)

Cash and cash equivalents presented in the consolidated statement of cash flows¥228,926¥249,262$2,040,525

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 a 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 31,2017 and 2016.
Non-marketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.
g. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment excluding leased assets of the Company and its domestic consolidated subsidiaries is computed substantially by the­declining-balance method, while the straight-line method is applied to buildings acquired on or after April 1, 1998, and facilities
attached to buildings and structures acquired on or after April 1, 2016. Depreciation of leased assets is computed by the straightline method over the lease period with no residual value carried.
The depreciation of property, plant and equipment of foreign consolidated subsidiaries is computed by the straight-line
method over the estimated useful lives of the assets. The range of useful lives is principally as follows:
Buildings and structures
Vehicles		
Machinery and equipment

7–60 years
2– 7 years
2–20 years

Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
h. Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in 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. Provision for Special Wage Payments—The Group conducted investigation during the fiscal year ended March 31, 2017, inorder to measure unrecognized working hours. The provision for special wage payments has been recorded on the basis of theestimated amount of payment with regard to consideration for labor in accordance with the result of the investigation.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201749

Notes to Consolidated Financial Statements

k. Retirement and Pension Plan—The Company and consolidated subsidiaries mainly have a contributory trusted pension
plan and an unfunded retirement benefit plan. In addition, a defined contribution retirement plan was introduced along withthese defined benefit pension plans.
In calculating the retirement benefit obligations, the straight-line basis is used in determining the amount of the expected
retirement benefit obligations attributed to service performed up to the end of the current fiscal year.
Past service costs are recognized in profit or loss in full in the fiscal year in which it arises. Actuarial gains and losses areamortized on a straight-line basis over five years within the average remaining service period of the eligible employees on andafter the fiscal year following the fiscal year in which it arises.
Actuarial gains and losses are recognized within equity on the consolidated balance sheet after adjusting for tax effects, andfunded status is recognized as a liability or asset.
l. Asset Retirement Obligations—An asset retirement obligation is recorded for a legal obligation imposed either by law orcontract that results from the acquisition, construction, development, and normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of the discounted cash flows required for the future asset retirement
and is recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If a reasonable estimate of
the asset retirement obligation cannot be made in the period the asset retirement obligation is incurred, the liability should 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.
m. Leases—For a lessee, all finance lease transactions are capitalized to recognize lease assets and lease obligations in thebalance 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.
n. Income Taxes—The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes
are measured by applying currently enacted tax rates to the temporary differences.
The Company applied ASBJ Guidance No. 26, “Guidance on Recoverability of Deferred Tax Assets,” effective April 1, 2016.
There was no impact from this for the year ended March 31, 2017.
o. Foreign Currency Transactions—All short and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date.
p. Derivative Financial Instruments—The Company and certain consolidated subsidiaries use derivative financial instruments tomanage their exposures to fluctuations in interest rates. Interest rate swaps are utilized by the Company and the consolidated subsidiaries to reduce interest rate risks. The Group has a policy not to enter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market
value but the differential paid or received under the swap agreements is 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.

50

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

r. Per Share Information—Basic net income per share is computed by dividing net income attributable 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.
For the year ended March 31, 2017, diluted net income per share is not disclosed because the Company had no dilutive securities.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to therespective years, including dividends to be paid after the end of the year.
s. Accounting Changes and Error Corrections—Under ASBJ Statement No. 24, “Accounting Standard for Accounting Changes
and Error Corrections,” and ASBJ Guidance No. 24, “Guidance on Accounting Standard for Accounting Changes and Error
Corrections,” accounting treatments are required as follows:(1) Changes in Accounting Policies—When a new accounting policy is applied following revision of an accounting standard,
the new policy is applied retrospectively unless the revised accounting standard includes specific transitional provisions, 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 CHANGESApplication of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016—Following the revision to
the Corporation Tax Act, the Company has applied the “Practical Solution on a Change in Depreciation Method Due to Tax Reform
2016” (ASBJ PITF No.32) since the fiscal year ended March 31, 2017, and changed the depreciation method for facilities attached
to buildings and structures acquired on or after April 1, 2016, from the declining-balance method to the straight-line method.
As a result of this change, operating income and income before income taxes increased by ¥189 million ($1,685 thousand) for
the fiscal year ended March 31, 2017.

4. NOTES AND ACCOUNTS RECEIVABLE
Sales recorded on the installment basis were 0.3% of operating revenues in both 2017 and 2016.
Annual maturities of notes and accounts receivable—installment at March 31, 2017, and related amortization of deferredprofit on installment sales are as follows:
Millions of Yen
Year Ending March 31

Receivables

Thousands of U.S. Dollars

Deferred Profit on
Installment Sales

Deferred Profit on
Installment Sales

Receivables

2018¥22,982¥2,346$204,848$20,9092019

11,403

1,657

101,638

14,776

2020

6,422

1,023

57,240

9,120

2021

3,123

531

27,835

4,730

2022

1,464

276

13,0482,4582023 and thereafter
Total

748

177

6,671

1,578

¥46,142¥6,010$411,280$53,571

YAMATO HOLDINGS CO., LTD.
Integrated Report 201751

Notes to Consolidated Financial Statements

5. INVENTORIESInventories at March 31, 2017 and 2016, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen

Merchandise

2017

2016

2017

¥  740¥  738$ 6,594

Work in process

216

184

1,929

Raw materials and supplies

1,819

1,936

16,212

Total¥2,775¥2,858$24,735

6. MARKETABLE AND INVESTMENT SECURITIESMarketable and investment securities as of March 31, 2017 and 2016, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2016

2017

2017

Non-current:
Marketable equity securities¥31,350¥29,216$279,435

Non-marketable equity securities

743

719

6,627

Other

495

394

4,412

¥32,588¥30,329$290,474

Total

Information regarding each category of the securities classified as available-for-sale at March 31, 2017 and 2016, is as follows:
Millions of Yen
2017
Cost

Unrealized Gains

Unrealized Losses¥15,540¥5Fair Value

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

Millions of Yen
2016
Cost

Unrealized Gains

Unrealized Losses¥14,048¥84

Fair Value

Securities classified as:
Available-for-sale: Equity securities¥15,252¥29,216

Thousands of U.S. Dollars
2017
Cost

Unrealized Gains

Unrealized Losses$138,514$47

Fair Value

Securities classified as:
Available-for-sale: Equity securities$140,968$279,435

Information for available-for-sale securities, which were sold during the years ended March 31, 2017 and 2016, is as follows:
Millions of Yen
March 31, 2017

Available-for-sale: Equity securities

Proceeds

Realized Gains

Realized Losses¥1,543

¥600

¥—

¥110

¥54

¥—

March 31, 2016

Available-for-sale: Equity securities

Thousands of U.S. Dollars
March 31, 2017

Available-for-sale: Equity securities

Proceeds$13,751

Realized Gains

Realized Losses$5,347$—

Loss on valuation of available-for-sale equity securities for the year ended March 31, 2017, was ¥1 million ($5 thousand).

52

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

7. LONG-LIVED ASSETSThe Group reviewed its long-lived assets for impairment as of the years ended March 31, 2017 and 2016. As a result, the Group
recognized an impairment loss of ¥1,284 million ($11,447 thousand) as other expense for the asset groups of the Aomori Regional
Branch of Yamato Transport Co., Ltd. and nine other asset groups for the year ended March 31, 2017, and ¥1,155 million as otherexpense for the asset groups of the Tokushima Regional Branch of Yamato Transport Co., Ltd. and eight other asset groups for theyear ended March 31, 2016, due to continuous operating losses of those units or significant declines in market prices. The carrying amounts of the relevant asset groups were written down to their recoverable amounts. In the case where the net selling prices
were used as recoverable amounts, the relevant asset groups were evaluated mainly based on Real Estate Appraisal Standards,
assessed value of fixed assets, and posted land prices.

8. BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2017 and 2016, consisted of notes to banks and bank overdrafts. The weighted-average interest
rates applicable to the bank loans as of March 31, 2017 and 2016, were approximately 0.103% and 0.708%, respectively.
Long-term debt at March 31, 2017 and 2016, consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2017

0.010% to 0.430% loans from banks due 2017 to 2022

2016

2017

¥130,776

0.010% to 5.500% loans from banks due 2016 to 2020

$1,165,665¥122,834

Lease obligations

7,295

7,898

65,018

Unsecured 0.050% bonds due in March 201910,00010,00089,135

Unsecured 0.090% bonds due in March 2021

10,00010,00089,135

158,071

150,732

1,408,953

Total
Less current portion(43,304)(34,829)(385,987)¥114,767¥115,903$1,022,966

Millions of Yen

Thousands of
U.S. Dollars

2018¥ 43,304$  385,987

2019

45,680407,1702020

42,327377,275

2021

16,246

144,8092022

10,231

91,191

Total

Annual maturities of long-term debt at March 31, 2017, are as follows:Year Ending March 312023 and thereafter
Total

283

2,521

¥158,071$1,408,953

YAMATO HOLDINGS CO., LTD.
Integrated Report 201753

Notes to Consolidated Financial Statements

9. 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 exceeding the standard retirement age.
(1) Defined Benefit Pension Plans
The changes in defined benefit obligation for the years ended March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2017

Balance at beginning of year

2017

¥153,513¥133,126$1,368,330

Service cost

11,52010,074

102,683

Interest cost

147

1,147

1,310

Actuarial (gain) loss arising during the year(49)

14,943(442)(6,749)(5,777)(60,157)¥158,382¥153,513$1,411,724

Retirement benefits paid
Balance at end of year

The changes in plan assets for the years ended March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Balance at beginning of year

2017

2016

¥82,016¥80,358$731,048

Expected return on plan assets

2017

820

804

7,310

Actuarial gain (loss) arising during the year

2,486

(1,445)22,160Contributions from the employer

4,313

4,261

38,445Retirement benefits paid

(2,088)(1,962)(18,619)¥87,547¥82,016$780,344

Balance at end of year

Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation andplan assets as of March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

Defined benefit obligation of funded plan

¥ 61,358¥ 60,980$ 546,910

Plan assets(87,547)(82,016)(780,344)(26,189)(21,036)(233,434)

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

2017

97,02492,533864,814¥ 70,835¥ 71,497$ 631,380
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

2017

2016

¥70,952¥71,5512017$632,428

(117)

(54)

(1,048)¥70,835¥71,497$631,380

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

54

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

The components of net periodic benefit costs for the years ended March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

¥11,520¥10,074

Interest cost

147

1,147

1,310

Expected return on plan assets

(820)

(804)

(7,310)Recognized actuarial loss

3,966

790

35,350

(24)

5

(208)

¥14,789¥11,212$131,825

Service cost

OthersNet periodic benefit costs

2017$102,683

Amounts recognized in other comprehensive income (before income tax effect adjustments) in respect of defined retirement
benefit plans for the years ended March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

2017

Actuarial gain and (loss)¥6,501¥(15,598)$57,952

Total¥6,501¥(15,598)$57,952

Amounts recognized in accumulated other comprehensive income (before income tax effect adjustments) in respect of defined
retirement benefit plans as of March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

2017

Unrecognized actuarial loss¥(8,030)¥(14,531)$(71,573)

Total¥(8,030)¥(14,531)$(71,573)

2017

2016

Plan assets as of March 31, 2017 and 2016, consisted of the following:
General accounts

32%

34%

Debt investments

26

27

Equity investments

23

21

Others

19

18

Total

100%

100%

Assumptions used for the years ended March 31, 2017 and 2016, were set forth as follows:
2017

2016

Discount rate

0.1%

0.1%

Expected rate of return on plan assets

1.0%

1.0%

The expected rate of return on plan assets is determined on the basis of the distribution of plan assets, past performance 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, 2017 and 2016,
were ¥2,235 million ($19,920 thousand) and ¥2,193 million, respectively.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201755

Notes to Consolidated Financial Statements

10.		 ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

2017

¥5,184¥4,980$46,203Additional provisions associated with the acquisition of property,
plant and equipment

326

150

2,905

Reconciliation associated with passage of time

99

95

886

Reconciliation associated with changes in accounting estimates

15

30

133

Reduction associated with settlement of asset retirement obligations

(46)

(61)

(408)

Others

(43)

(10)

(380)

¥5,535¥5,184$49,339

Balance at beginning of year

Balance at end of year

Changes in accounting estimates were recorded as it became evident that the estimate of the discounted cash flows required
for future asset retirement would change at the beginning of the year. A reconciliation has been prepared for the change, which
resulted in an increase of the asset retirement obligation for the years ended March 31, 2017 and 2016, by ¥15 million ($133 thousand) and ¥30 million, respectively.

11.		 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 being­prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders subject to 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 capitalsurplus, and retained earnings can be transferred among the accounts within equity under certain conditions upon resolutionof 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.

56

YAMATO HOLDINGS CO., LTD.
Integrated Report 201712.		 INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes, which, in the aggregate,
resulted in normal effective statutory tax rates of 30.9% and 33.1% for the years ended March 31, 2017 and 2016.
The tax effects of significant temporary differences, which resulted in deferred tax assets and liabilities at March 31, 2017 and2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

¥ 9,835¥ 9,441$ 87,666

1,925

1,774

17,1582017

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

269

184

2,392

   Legal welfare expense

2,377

1,524

21,188   Provision for special wage payments

4,682  Other

1,975   Less valuation allowance(160)

Deferred tax assets—current¥ 20,903¥ 15,138$ 186,315¥ 21,775¥ 22,029$ 194,092

41,7342,215

17,600(1,423)

Non-current:   Liability for employees’ retirement benefits   Loss on valuation of investment securities

1,872

1,881

16,687   Loss on valuation of land

20,76020,759185,037   Loss on impairment of long-lived assets

4,447

4,575

39,635

469

468

4,180

2,278

2,138

20,306   Loss on valuation of telephone subscription rights  Unrealized profit  Other

10,47910,28893,406   Less valuation allowance(32,085)(31,943)(285,988)¥ 29,995¥ 30,195$ 267,355

Current—other

¥

(220)

¥

(231)

$

(1,959)Deferred tax liabilities—current

¥

(220)

¥

(231)

$

(1,959)Deferred tax assets—non-current
Deferred tax liabilities:

Non-current:   Unrealized gain on available-for-sale securities  Other
Deferred tax liabilities—non-current
Deferred tax assets—net¥ (3,731)¥ (3,405)$ (33,255)(2,783)(2,582)(24,806)¥ (6,514)¥ (5,987)$ (58,061)¥ 44,164¥ 39,115$ 393,650

YAMATO HOLDINGS CO., LTD.
Integrated Report 201757

Notes to Consolidated Financial Statements

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, 2017, with the corresponding figures for 2016 was as follows:
2016

2017

Normal effective statutory tax rate

30.9%

33.1%

Per capita levy of local taxes

8.9

4.3

Valuation allowance

2.9

0.8

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

2.7

Other—net

1.7

0.8

Actual effective tax rate

44.4%

41.7%

13.		 LEASES(1) Lessee
The Group leases certain machinery, computer equipment and other assets.
Future rental payments under non-cancelable operating leases at March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2016

2017

2017

Due within one year

¥164

¥153

$1,460Due after one year

304

408

2,715

Total

¥468

¥561

$4,175(2) Lessor
The net investments in lease as of March 31, 2017 and 2016, were summarized as follows:
Thousands of
U.S. Dollars

Millions of Yen

Gross lease receivables

2017

2016

¥48,702¥47,4962017$434,105

Unguaranteed residual values

5,875

5,069

52,371

Unearned interest income(3,800)(3,671)(33,875)¥50,777¥48,894$452,601

Investments in leases—current

Maturities of lease receivables for finance leases that are deemed not to transfer ownership of the leased property to the lessee asof March 31, 2017, are as follows:Year Ending March 31

Thousands of
U.S. Dollars

2018¥16,986$151,405

2019

13,781

122,839

2020

9,656

86,068

2021

5,656

50,418

2022

2,287

20,3842023 and thereafter
Total

58

Millions of Yen

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

336

2,991

¥48,702$434,105

The minimum rental commitments under non-cancelable operating leases at March 31, 2017 and 2016, are as follows:
Thousands of
U.S. Dollars

Millions of Yen

Due within one year

2017

2016

2017

¥3,735¥3,361$33,290

Due after one year

6,212

6,416

55,374

Total¥9,947¥9,777$88,664

14.		 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 minimizes customers’ credit risk by monitoring collections and accrued receivables at due dates.
Marketable and investment securities are mainly equity securities of the companies with which the Group has business relationships or capital alliances. Such securities are exposed to the risk of market price fluctuations.
Most payment terms of payables such as notes and accounts payable are less than one year.
Short-term bank loans and long-term bank loans are mainly related to a financial business. 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 policies, 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, 2017 and 2016, were as follows:
Millions of Yen
March 31, 2017

Carrying Amount

Fair Value

Difference

Assets:Cash and cash equivalents¥230,129

Trade notes and accounts receivable

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

Installment sales receivable¥230,129

207,984¥(13)

45,2305,862

46,142   Allowance for doubtful accounts(764)   Deferred profit on installment sales(6,010)39,368Available-for-sale securities

31,35031,350Shares of affiliates

13,712

13,884

Trade notes and accounts payable

155,736

155,736

Short-term loans

60,97460,99723

Long-term loans

89,90089,897(3)

172

Liabilities:

Derivatives

YAMATO HOLDINGS CO., LTD.
Integrated Report 201759

Notes to Consolidated Financial Statements

Millions of Yen
March 31, 2016

Carrying Amount

Fair Value

Difference

Assets:Cash and cash equivalents¥249,594

Trade notes and accounts receivable

197,382   Allowance for doubtful accounts(125)
197,257

Installment sales receivable

198,154¥  897

37,10742,933

5,826

29,216

29,216

43,648   Allowance for doubtful accounts(646)   Deferred profit on installment sales(5,895)

Available-for-sale securities¥249,594

Liabilities:
Trade notes and accounts payable

148,456

148,456

Short-term loans

55,93456,01884

Long-term loans

90,51590,859344

Derivatives
Thousands of U.S. Dollars
March 31, 2017

Carrying Amount

Fair Value

Cash and cash equivalents$2,051,241$2,051,241

Trade notes and accounts receivable

1,855,165

Difference

Assets:   Allowance for doubtful accounts(1,193)
1,853,972

Installment sales receivable

1,853,851

$

(121)

411,280   Allowance for doubtful accounts(6,807)   Deferred profit on installment sales(53,571)
350,902403,153

Available-for-sale securities

279,435

279,435

Shares of affiliates

122,215

123,756

52,251
1,541

Liabilities:
Trade notes and accounts payable

1,388,147

1,388,147

Short-term loans

543,489543,690

201

Long-term loans

801,319

801,291(28)

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 future cash flows related to the receivables at therate of government bonds.
Installment sales receivable

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

60

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017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 6.
Trade notes and accounts payable

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

The fair values of short-term bank loans and long-term loans are determined by discounting the future cash flows related to thedebt 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 15.
(4) Financial Instruments Whose Fair Value Cannot Be Reliably Determined
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

2017

Shares of affiliates¥5,862¥   74$52,250

Other

3,359

2,208

29,939(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
Millions of Yen
March 31, 2017

Due in One Yearor Less

Due after One Yearthrough Five Years

Due after
Five Years

Cash and cash equivalents¥230,129

Trade notes and accounts receivable

191,192¥16,725

Installment sales receivable

22,982

22,412748¥444,303¥39,137

¥962

¥201

Total

¥214

March 31, 2016

Cash and cash equivalents¥249,594

Trade notes and accounts receivable

181,984¥15,197

Installment sales receivable

21,43821,631579¥453,016¥36,828

¥780

Total

Thousands of U.S. Dollars
March 31, 2017

Due in One Yearor Less

Cash and cash equivalents$2,051,241

Trade notes and accounts receivable

1,704,177$149,084

204,848

199,761

6,671$3,960,266$348,845$8,575

Installment sales receivable
Total

Due after One Yearthrough Five Years

Due after
Five Years$1,904

YAMATO HOLDINGS CO., LTD.
Integrated Report 201761

Notes to Consolidated Financial Statements(6) Maturity Analysis for Long-term loans
Year Ending March 31

2018

Millions of Yen

Thousands of
U.S. Dollars¥ 40,876$   364,346

2019

33,600299,492

2020

40,800363,669

2021

5,500

49,0242022

10,00089,134

Total¥130,776$1,165,665

Please see Note 8 for annual maturities of long-term loans.

15.		 DERIVATIVESThe Company and certain consolidated subsidiaries use derivative financial instruments to manage their exposure to fluctuationsin interest rates. Interest rate swaps are utilized by the Company and the consolidated subsidiaries to reduce interest rate risk. The
Group has a policy not to enter into derivatives for trading or speculative purposes.
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured 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¥8,220¥—*Long-term bank loans¥26,376¥8,220*March 31, 2017

Hedged Item

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

Fair Value

March 31, 2016

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

Thousands of U.S. Dollars
March 31, 2017

Hedged Item

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

Long-term bank loans

Contract AmountContract AmountDue after One Year

$73,269$—

Fair Value** The fair value of interest rate swaps is included in that of hedged items (long-term bank loans due within one year is considered as short-term loans). Please see Note 14.

62

YAMATO HOLDINGS CO., LTD.
Integrated Report 201716.		 OTHER COMPREHENSIVE INCOME
The components of other comprehensive income (loss) for the years ended March 31, 2017 and 2016, were as follows:
Thousands of
U.S. Dollars

Millions of Yen
2017

2016

2017

Unrealized gain (loss) on available-for-sale securities:
Adjustments arising during the year

¥ 2,194¥ (5,252)$ 19,557

Reclassification adjustments to profit or loss

(599)

(53)

(5,341)

Amount before income tax effect1,595(5,305)

14,216

Income tax effect

(326)

1,329

(2,905)¥ 1,269¥ (3,976)$ 11,311¥(1,174)¥(419)$(10,468)

Total
Foreign currency translation adjustments:
Adjustments arising during the year
Remeasurements of defined employees’ retirement benefit plans:
Adjustments arising during the year

¥ 2,535¥(16,388)$ 22,602

Reclassification adjustments to profit or loss

3,966

790

35,350

Amount before income tax effect

6,501(15,598)

57,952

Income tax effect(2,045)

4,811(18,230)

Total¥ 4,456¥(10,787)$ 39,722¥¥$

Share of other comprehensive income of entities accounted for using equity method:
Adjustments arising during the year
Total other comprehensive income (loss)

1¥ 4,552—¥(15,182)7$ 40,572

17.		 NET INCOME PER SHARE
Reconciliation of the differences between basic and diluted net income per share (“EPS”) for the years ended March 31, 2017 and2016, was as follows:
Millions of Yen

Year Ended March 31, 2017

Basic EPS—Net income available to common shareholders

Thousands ofSharesNet Income
Attributable to
Weighted-average
Owners of the Parent
SharesYen

U.S. Dollars

EPS¥18,054

397,930¥45.37¥39,425

408,743¥96.45$0.40

Year Ended March 31, 2016

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

15

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

3,644¥39,440

412,387¥95.64

YAMATO HOLDINGS CO., LTD.
Integrated Report 201763

Notes to Consolidated Financial Statements

18.		 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 DM-Bin (posting service)
BIZ-Logistics:
Intercompany logistics services, aimed at the B2B supply-chain management market
Home Convenience:	Lifestyle support services intimately connected with the needs of local markets, such as moving and­household effects delivery services
e-Business:	Information services targeted at the business market, including ASP services and the development of­information 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.”

64

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

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

2017Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated

Total segment revenues¥1,151,028
66,561¥1,217,589¥108,644
13,357¥122,001¥49,164
14,594¥63,758¥45,639
34,672¥80,311¥ 77,985
3,049¥ 81,034¥24,61428,186¥52,800¥ 9,778
60,875¥70,653¥1,466,852
221,294¥1,688,146¥—(221,294)¥(221,294)¥1,466,852

Segment income

¥

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

32,417

2,575

542

4,368

4,402

735

410

45,449665

46,114

305

5,057

5,362

13,712

19,074

31,611

4,798

48,796198

48,994

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets¥1,466,852

Other:
Depreciation and amortization
Investment in entities  accounted for using
equity method Increase of tangible andintangible fixed assets

708

3,445

7,379

264

591

Millions of Yen

2016
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated¥106,823
12,553¥119,376¥48,981
15,247¥64,228¥43,358
30,367¥73,725¥ 72,446
3,343¥ 75,789¥24,459
27,539¥51,998¥ 8,470
49,860¥58,330¥1,416,413
204,990¥1,621,403¥

Total segment revenues¥1,111,876
66,081¥1,177,957—(204,990)¥(204,990)¥1,416,413

Segment income

¥

¥

4,906
60,471¥ 1,147
21,437¥ 9,00943,620¥  8,703
242,963¥ 3,373
24,264¥26,515
11,268¥ 91,829
1,053,923¥ (23,289)
35,514¥   68,540
1,089,437

33,961

2,161

532

4,241

4,066

783

296

46,040699

46,73934,977

2,840

716

6,414

7,466

696

692

53,801

144

53,945

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets

38,176649,900¥1,416,413

Other:
Depreciation and amortization Increase of tangible andintangible fixed assets

Thousands of U.S. Dollars

2017
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

Consolidated$  968,393
119,061$1,087,454$438,220130,083$568,303$406,803
309,045$715,848$  695,116
27,179$  722,295$219,394
251,234$470,628$ 87,153
542,609$629,762$13,074,713
1,972,495$15,047,208$

Total segment revenues$10,259,634
593,284$10,852,918

Segment income$

50,2555,688,381$   36,298
623,558$  9,595
199,144$ 83,504
426,770$   73,482
2,252,832$ 29,178
229,950$316,224
106,436$$   (287,587) $ 310,949
408,505
9,935,576

4,829

38,934

39,239

6,554

3,655

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets

598,536
9,527,071— $13,074,713(1,972,495)$(1,972,495) $13,074,713

Other:
Depreciation and amortization

288,946

22,950Investment in entities  accounted for using
equity method

2,722

45,074

Increase of tangible and   intangible fixed assets

281,759

42,7696,312

30,70865,775

2,348

5,272

405,107

5,930

411,037

47,796122,215

170,011434,9431,761

436,704

Notes:	“Other” includes JITBOX charter services and shared services.
	Segment revenues and segment income of “Other” include dividends for the years ended March 31, 2017 and 2016, of ¥34,410 million ($306,709 thousand) and ¥24,890 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, 2017 and 2016, of ¥32,265 million ($287,587 thousand) and ¥23,289 million, respectively, are intersegment eliminations and others.
		 (2)	Reconciliations of segment assets at March 31, 2017 and 2016, of ¥45,830 million ($408,505 thousand) and ¥35,514 million, respectively, include intersegment eliminations of assets and liabilities of ¥150,292 million ($1,339,619 thousand) and ¥164,798 million, and corporate assets which are not allocated to each reporting segment of¥196,122 million ($1,748,124 thousand) and ¥200,312 million, respectively.
		 (3)	Reconciliations of investment in entities accounted for using equity method at March 31, 2017, of ¥13,712 million ($122,215 thousand) are investments which are not­allocated to each reporting segment.
		 (4)	Reconciliations of increases of tangible and intangible fixed assets at March 31, 2017 and 2016, of ¥198 million ($1,761 thousand) and ¥144 million, respectively, include
the Company’s capital investment.
Segment income is reconciled with operating income in the consolidated statement of income.
	As stated in Note 3, “Accounting Changes,” the Company has applied the “Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016” from the fiscal
year ended March 31, 2017, and changed the depreciation method for facilities attached to buildings and structures acquired on or after April 1, 2016, from the decliningbalance method to the straight-line method. As a result, segment income of the Delivery Business increased by ¥169 million ($1,507 thousand) for the fiscal year ended March
31, 2017. The effect of this change on other segments is immaterial.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201765

Notes to Consolidated Financial Statements[Related Information about Reporting Segments](1) Information about products and services
Operating revenues from customers for the years ended March 31, 2017 and 2016, were as follows:
Millions of Yen
2016

2017
TA-Q-BIN¥981,002

Kuroneko DM-Bin¥81,277

Other¥404,573

Total

TA-Q-BIN¥939,470¥1,466,852

Kuroneko DM-Bin¥82,701

Other¥394,242

Total¥1,416,413

Thousands of U.S. Dollars
2017
TA-Q-BIN$8,744,115

Kuroneko DM-Bin$724,457

Other

Total

$3,606,141 $13,074,713(2) Information about geographical areas
Operating revenues for the years ended March 31, 2017 and 2016, were as follows:
Millions of Yen
2016

2017
Japan

¥1,441,673

North America

Other¥9,789¥15,390

Total

Japan

¥1,466,852¥1,390,082

North America

Other¥11,481¥14,850

Total¥1,416,413

Thousands of U.S. Dollars
2017
Japan

$12,850,278

North America

Other$87,258

Total$137,177 $13,074,713

Property, plant and equipment at March 31, 2017 and 2016, were as follows:
Millions of Yen
2016

2017
Japan

¥403,528

North America

Other

¥365

¥1,177

Total¥405,070

Thousands of U.S. Dollars
2017
Japan

$3,596,827

66

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

North America$3,252

Other$10,497

Total$3,610,576

Japan¥404,092

North America

¥432

Other

¥1,118

Total¥405,642

(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, 2017 and 2016, were as follows:
Millions of Yen
2017Delivery

BIZ-Logistics

Home
Convenience

¥765

¥322

¥178

Loss on impairmentof long-lived assets

e-Business

Financial

Autoworks

Other

¥19

Eliminations or
Corporate
Consolidated

Total¥1,284¥1,284

Millions of Yen

2016
Delivery

BIZ-Logistics

¥817

¥192

Loss on impairmentof long-lived assets

Home
Convenience

e-Business

Financial

Autoworks

¥10

¥136

Other

Eliminations or
Corporate
Consolidated

Total¥1,155¥1,155

Thousands of U.S. Dollars
2017

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics

Home
Convenience$6,818$2,873$1,588e-Business

Financial

Autoworks

$2

$166

Other

Eliminations or
Corporate
Consolidated

Total$11,447$11,447

19.		 SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2017, was approved at the Company’s Board of Directors meeting
held on May 17, 2017:

Year-end cash dividends, ¥14.00 ($0.12) per share

Millions of Yen

Thousands of
U.S. Dollars¥5,520$49,201

YAMATO HOLDINGS CO., LTD.
Integrated Report 201767

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,
2017, 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, 2017, 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 21, 2017

68

YAMATO HOLDINGS CO., LTD.
Integrated Report 2017

Corporate Data / Stock Information
As of March 31, 2017

Company Name
Yamato Holdings Co., Ltd.

Fiscal Year
From April 1 to March 31

Head Office16-10, Ginza 2-chome, Chuo-ku, Tokyo
104-8125 Japan
Telephone: 81-3-3541-4141
Facsimile: 81-3-5565-3427

Common Stock
Authorized:
1,787,541,000 shares
Issued:411,339,992 shares

Established
November 29, 1919

Transfer Agent and Registrar
Mizuho Trust & Banking Co., Ltd.

Registered
April 9, 1929

General Meeting of Shareholders
Held in June

Paid-in Capital
127,234,791,077 yen

Auditor
Deloitte Touche Tohmatsu LLC

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

Principal Shareholders

Stock Exchange Listing
Tokyo Stock Exchange

Percentage of
total shares
outstanding

The Master Trust Bank of Japan, Ltd. (Trust Account)
State Street Bank and Trust Company 505223
Japan Trustee Services Bank, Ltd. (Trust Account)
Yamato Employees’ Shareholding Association
Nippon Life Insurance Company
Meiji Yasuda Life Insurance Company
Mizuho Bank, Ltd.
Yamato Trading-Partner Shareholding Association
Japan Trustee Services Bank, Ltd. (Trust Account 5)
State Street Bank West Client Treaty 505234
Total

8.79%
6.30%
5.47%
4.55%
3.59%
3.48%
3.22%
2.13%
1.60%
1.54%
40.67%

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
2014

10

11

12

1

2

3

4

5

6
7
2015

8

9

10

11

12

1

2

3

4

5

6
7
2016

8

9

10

11

12

1

2
3
2017

7

8
9
2014

10

11

12

1

2

3

4

5

6
7
2015

8

9

10

11

12

1

2

3

4

5

6
7
2016

8

9

10

11

12

1

2
3
2017

(Thousand of Shares)

0

70,00060,00050,00040,00030,00020,00010,00004

56Trading Volume (left scale)

Stock Price Range (left scale)

Nikkei Stock Average (right scale)

YAMATO HOLDINGS CO., LTD.
Integrated Report 201769

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

Printed in Japan