REFORM FOR
THE NEXT
100 YEARSStrengthening Our Management
Foundation for Sustainable GrowthIntegrated Report 2018

Masaki Yamauchi
Representative Director,
President and Executive Officer

A Letter to Our Stakeholders
The Yamato Group is pursuing business activities under its Management Philosophyof enriching 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. The Group is currently facing significant changes
in the business environment, including the recent rapid expansion of the e-commercemarket and tightening labor market conditions. Amid these changes, the Group has
been promoting its medium-term management plan “KAIKAKU 2019 for NEXT100”(hereinafter, “KAIKAKU 2019”), starting from the fiscal year ended March 31, 2018,with the aim of enhancing its management foundation to achieve sustainablegrowth for the next 100 years.
Under KAIKAKU 2019, which concludes in the fiscal year ending March 31, 2020,
we are aiming to realize our Vision for 2025 through the earnest pursuit of threereforms: “Structural Reform in the Delivery Business,” “Reform of Revenue andBusiness Structure Geared to Achieving Discrete Growth,” and “Reform of GroupManagement Structure Geared to Achieving Sustainable Growth,” while also placing“Reforming Working Styles” at the center of our management. In the fiscal year
ended March 31, 2018, we prioritized the issue of “Reforming Working Styles”
so that we could implement “inclusive management,” which is a Yamato Group
founding principle. To that end, we achieved steady results with efforts to establish
a work environment that is more employee friendly, offers rewarding experiences,and encourages a high level of motivation. We have positioned the fiscal year
ending March 31, 2019 as a year in which we will establish the framework of ourmanagement foundation, and we will continue to make Groupwide efforts toachieve this aim.
Also, we deeply regret the actions that occurred at Yamato Home Convenience
Co., Ltd. related to the inappropriate billing of corporate clients for its moving
services. I will lead the way in reforming the Group’s corporate governance toensure that such an incident never occurs again. By instilling a strong sense of
ethics in each employee throughout the Group and working together toward realizing our Management Philosophy, we will aim to once again become a company
that earns the trust of all our stakeholders, starting with our clients.
Going forward, we will steadily implement the reforms I mentioned above so that
we can continue to achieve sustainable growth well beyond our 100-year anniversary,
which we will celebrate in November 2019, and contribute to an enriched society.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201801

Inappropriate Billing for Moving-Related Services to Employeesof Corporate Clients at Yamato Home Convenience
In regard to the inappropriate billing for moving-related services to the employees of corporate clients that occurredat Yamato Home Convenience Co., Ltd. (hereinafter, “YHC”), a company under our corporate umbrella, we sincerely
apologize for betraying the trust of our customers, shareholders, investors, and all other affected parties and forany inconvenience and concerns these actions may have caused. This section summarizes the results of the investigation carried out by an in-house investigative committee consisting of independent experts from outside theCompany (hereinafter, “the investigative committee”). We will also provide an explanation regarding our efforts toprevent a reoccurrence of such incidents in light of the recommendations made by the investigative committee
and the administrative sanctions and business improvement orders from the Ministry of Land, Infrastructure,
Transport and Tourism (MLIT) on January 23, 2019.
Note: The information below is as of January 31, 2019.

Summary of Investigation Results
 HC had significant inadequacies in terms of product design, employee education, corporate contracts, organizationalY
structure, employee treatment, internal whistle-blower system, and internal audits.
As a result, employees were unaware of the potential for revising initial estimates, which tended to overestimate costs
based on the uncertainties involved in moving and preventing left-off cargo, under a clause in the contracts of numerous
customers. Accordingly, it became common practice for YHC to bill customers based on the initial estimate that waspreviously agreed upon, even if there was a change in the actual load.
In some cases, employees exploited YHC’s inadequacies to deliberately overcharge customers.
Furthermore, YHC failed to discover these significant inadequacies nor take drastic measures to resolve them despite
reports from both inside and outside the company.

Overview

Circumstances
Leading up to
the Incident

02

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

The Company and YHC conducted an in-house investigation regarding the amounts charged toall 3,367 corporate clients to which YHC provided the Hikkoshi Rakuraku Timely Service (herein­
after, “Timely”) and the Tanshin Hikkoshi Just Service (hereinafter, “Just”), two moving-related
services provided to employees of corporate clients, over the past 26 months (May 2016–June2018). This investigation determined that a total of 48,000 cases of overbilling occurred that
impacted 2,640 companies, with the total amount overbilled coming to ¥1.7 billion.
In addition, an investigation by the in-house investigative committee estimated that 16% of the¥1.7 billion that was inappropriately billed came from the deliberate overcharging of customers.
The remaining portion of the ¥1.7 billion of inappropriate billing resulted from taking too muchleeway in initial estimates, which were based on the uncertainties involved in moving and aiming toprevent left-off cargo, and failing to revise unfixed estimates regardless of the change in circumstances after providing the estimate, such as the disposal of household belongings.
Sales of the Timely and Just services, which were designed by YHC, commenced in 2008.
However, YHC did not appropriately carry out trial operation of the services nor did it verify results
based on the opinions of those working on the front lines before commencing sales of these
services. Furthermore, YHC failed to provide appropriate education to employees before launchingthese services, and it did not sufficiently verify and analyze the operation and profitability of these
services post launch. Additionally, in terms of clauses within contracts, YHC did not examine andverify estimate revisions and calculations through the use of specific cases.
Fees for the Timely and Just services were determined in accordance with a point system basedon the amount of household belongings. Accordingly, this made it easy for personnel providing
estimates to add extra amounts, which eventually led to the inappropriate billing.

Efforts toPrevent
Reoccurrence

The Company takes the results of these investigations and the recommendations by the investigative committee very seriously, and will reexamine means for ensuring compliance with contract
clauses for all of YHC’s moving services, including those offered to individual customers. YHC hassuspended new orders for all services with compliance violations until products are redesigned toensure strict compliance with contract clauses. Moreover, in light of the recommendations madeby the investigative committee and the administrative sanctions and business improvement
orders from the MLIT, the Company and YHC are currently undertaking the following drastic
efforts to prevent such an incident from reoccurring. The following are the main initiatives undertaken by the Company and YHC.

Efforts by YHC
Strengthening of Governance he Company’s Representative Director, Vice President, and Executive Officer serves concurrentlyT
as the chairman of YHC’s board of directors and is in charge of implementing and supervising allreoccurrence-prevention efforts.

Redesign of Moving Products and Services
 HC has established the Division of Moving Services and is currently working to identify issues
Y
related to product standards, manuals, workflow, and other matters. YHC is also moving ahead
with the redesign of its moving products and services based on the needs of customers, theestablishment of a structure and system for conducting proper estimates, and the formulationof appropriate clauses.

Clarification of Divisions Responsible for Employee Education andManagement of Corporate Clients HC has established the Division of Human Resource Development. The company has alsoYheld panel discussions at all branch offices and its head office to ensure a shared awarenessof issues by both the upper management and employees. Furthermore, YHC is implementing
training and other educational activities for all employees according to their position within thecompany to improve awareness of compliance and corporate ethics.
YHC has established the Division of Corporate Sales and is working to improve its moving
contracts with corporate clients through such measures as establishing standards and rules forapproving discount rates and contracts, updating corporate contract records, and developing
an appropriate, highly transparent pricing system.

Other HC is promoting the review of such matters as employee treatment, performance evaluation,Ydocument storing standards, data management standards, whistle-blower system, and­auditing operations.

Efforts by the Entire Yamato GroupStrengthening of Governance o enhance its management soundness, the Yamato Group has established the GroupT
Governance Project, which is under the direct control of the president, and is promoting drastic
and comprehensive measures to reestablish governance on a Groupwide basis.

Comprehensive Examination of Products and Services
 or the products and services of each domestic Group company, the Group is comprehensively
Fexamining such matters as compliance with laws and regulations, management of necessary
documents, risk monitoring functions, and risk response.

Improvement to the Operation of Whistle-Blower System o promptly discover and appropriately respond to law and/or internal regulation violations,Tthe Group is revamping specific shared response procedures, handling methods, and risk
assessment criteria.

Implementation of Ethics Education
 o spread awareness of the Yamato Group’s corporate philosophy, which is grounded on a strongTsense of ethics, we provide all Group employees with ethics training according to their position.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201803

ABOUT THE YAMATO GROUP

Core Values
1. We all represent the company.
2. We connect our customers’ hearts with every delivery.
3. We conduct ourselves both professionally and ethically.

Management Philosophy
Yamato helps enrich our society by enhancing our social infrastructure,creating more convenient services for evolving lifestyles and industries,
and developing innovative logistics and distribution systems.

Editorial Policy
Having built up long-standing relationships of trust withall of its many and varied stakeholders, the Yamato Group
discloses not only information of a legal nature but also
information considered necessary for its stakeholders. The
Yamato Group adopted the policy that such information
shall be conveyed promptly and accurately as well as fairly
and equitably.
This document, Integrated Report 2018, contains information on our efforts to improve corporate value over the
medium to long term, centered on measures put forth basedon our medium-term management plan, “KAIKAKU 2019
for NEXT100,” and includes information on current­company conditions.

04

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

Domestic Parcel Delivery
Market Share(Year Ended March 31, 2018)

1

No.

43.6%

Proportion of Japan Coveredby TA-Q-BIN Network(As of March 2018)

TA-Q-BIN Annual
Delivery Volume(Year Ended March 31, 2018)

Approx.

100

1.8

%

billion parcels

Employees(As of March 2018)

Approx.

210,000
Sales Drivers

TA-Q-BIN Centers(As of March 2018)(As of March 2018)

Approx.

Approx.

60,0007,000** Number of organizations

YAMATO HOLDINGS CO., LTD.
Integrated Report 201805

ABOUT THE YAMATO GROUP

Business Structure

Delivery Business

Composition Ratio of
Operating Revenuesn Delivery

78.1%

Operating Revenues¥1,538.8 billion

In the Delivery Business, the Yamato Group concentrated on TA-Q-BIN-centeredbusiness development, aiming to provide infrastructure that best suits our customers
and contribute to enriching people’s lives.

Non-Delivery Businesses
7.9%

n BIZ-Logistics
In the BIZ-Logistics Business, the Yamato Group is providing customers
with innovative logistics systems by combining management resources suchas the TA-Q-BIN network with logistics functions, maintenance and recall­handling functions, cleansing functions for medical devices, and internationaltransportation functions.

3.2%

n Home Convenience
In the Home Convenience Business, the Yamato Group is working toward
enabling customers to achieve greater convenience and comfort in their lives
through lifetime lifestyle support businesses and corporate enterprise support
business that draw on the Yamato Group’s nationwide network.

n e-Business3.0%

In the e-Business, the Yamato Group helps customers streamline their businessprocesses and solve potential issues by proactively developing the solution platformbusiness that combines logistics technology and financial technology with information
technology. In addition, with the aim of helping to accelerate growth of Yamato Groupbusinesses, we have been moving beyond conventional information technologies
through efforts geared to promoting use of emerging technologies that harness
artificial intelligence (AI), the Internet of Things (IoT), and other such innovations.

n Financial

5.4%

In the Financial Business, the Yamato Group has been developing settlement
and financial services tailored to a range of customer needs for payment
collection of mail-order products, business-to-business transaction settlement,
and vehicle leasing.

n Autoworks

1.6%

In the Autoworks Business, the Yamato Group develops its “24-hour-a-day,365-day-a-year service that enables customers to service their vehicles without
stopping operation,” thereby providing value to logistics operations and logistics
service providers in the form of “improvement of vehicle maintenance convenience”
and “reduced maintenance expenses.” Furthermore, to better provide one-stop
service solutions geared toward customer business operations, we have added
services for “maintaining and safeguarding logistics facilities and equipment, andimproving such workplace environments,” along with “offering insurance plans tailored to customer risk management needs,” which provide coverage for such assets.

n Other Services

0.8%

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

(Year Ended March 31, 2018)06

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Organization
As of March 31, 2018

n Consolidated subsidiaries 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.
SCG Yamato Express 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 9 other companies
GD Express Carrier Bhd.
Guangzhou Wisepower Transportation & Distribution Group Co., Ltd.
12 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

n Yamato (China) Company Limited.
n Yamato Investment (Hong Kong) Ltd.
n Yamato Asia Pte. Ltd.
n Box Charter 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.
l Swan Co., Ltd.
YAMATO HOLDINGS CO., LTD.
Integrated Report 201807

ABOUT THE YAMATO GROUP

Performance Highlights
Performance Highlights for the Fiscal Year Ended March 31, 2018
Operating revenues rose 4.9% year on year, to ¥1,538.8 billion.
In addition to an increase in the TA-Q-BIN unit price, this rise wasdue to our efforts to enhance existing services in non-delivery
businesses, which leveraged the strengths of each Group company, and the active promotion of solution-based sales. These
positive factors helped offset the decrease in TA-Q-BIN delivery
volume that followed the promotion of “Structural Reform in the
Delivery Business.”
Operating profit was up 2.3%, to ¥35.6 billion, as growth inoperating revenues outpaced increases in operating expenses.
This growth helped outweigh such factors as an increase inlabor costs, including those for outsourcing our workforce,
which occurred in conjunction with a rise in TA-Q-BIN delivery
volume in the first half of the fiscal year and efforts to reduce
employee workloads.
As a result, profit attributable to owners of parent increased
1.0%, to ¥18.2 billion, while ROE edged down 0.1 of a percentage point, to 3.3%.

Operating Revenues

Operating Profit
1,538.8(¥ billion)
1,600(¥ billion)
80

1,200

60

800

40

400

20

0

2014/3

Delivery Business2015/3

2016/32017/3

2018/3035.6

2014/3

2015/3

2016/32017/3

2018/3

Non-Delivery Businesses

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

Profit Attributable to Owners of Parent / ROE
1,836
6.8

(Millions of parcels)
2,000

1,000

(%)

(¥ billion)

(%)

8

45

9

4

30

6

18.2
0

2014/3

2015/3

2016/32017/3

2018/3

0

15

(4)

0

TA-Q-BIN Delivery Volume (left scale)
TA-Q-BIN Unit Price Growth Rate (YoY) (right scale)2014/3

2015/3

2016/3

Profit Attributable to Owners of Parent (left scale)2017/3

3

2018/30

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

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

(¥ billion)

100

600

550.3

60
40

10.6

20

60

55

400

49.3

0
(20)

200

50

(41.1)

(40)
(60)
(80)

(%)

51.7

80

2014/3

2015/3

Cash Flows from Operating Activities
Free Cash Flows

2016/32017/3

2018/3

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

08

3.3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20180

2014/3

2015/3

Total Shareholders’ Equity (left scale)2016/32017/3

2018/3

Shareholders’ Equity Ratio (right scale)0Contents

01

A Letter to Our Stakeholders

02	Inappropriate Billing for Moving-Related
Services to Employees of Corporate
Clients at Yamato Home Convenience

THE YAMATO GROUP’S ESGABOUT THE YAMATO GROUP
04	Core Values / Management Philosophy /Editorial Policy / Profile
06	Business Structure
07

Organization

08	Performance Highlights

36

Corporate Governance

42	Directors / Audit & Supervisory Board
Members / Executive Officers
46	Discussion between the Outside Directors
and Chairman on Corporate Governance
50	Promotion of CSV in Cooperation
with Local Communities
51	Safety Measures to Support BusinessContinuity
52	Environmental Measures for Realizing
a Sustainable Society

THE YAMATO GROUP GOING FORWARD
10	Long-Term Vision and Medium-Term
Management Plan
12

Message from the President

18

Message from the Chief Financial Officer

SPECIAL FEATURE
20	Reforming Working Styles to Implement“Inclusive Management”
22

Structural Reform in the Delivery Business

FINANCIAL SECTION
54

Ten-Year Summary and Business Highlights

56

Consolidated Balance Sheet

58

Consolidated Statement of Income

59	Consolidated Statement ofComprehensive Income
60

Consolidated Statement of Changes in Equity

61

Consolidated Statement of Cash Flows

62

Notes to Consolidated Financial Statements

83

Independent Auditor’s Report24	Continuously Evolving Our“Value Networking” Design
27

Responding to Digital Innovation

COMPANY INFORMATIONOVERVIEW OF OPERATIONS BY SEGMENT
28

84

Global Network

85

Corporate Data / Stock Information

Delivery29

BIZ-Logistics

30

Home Convenience31

e-Business

32

Financial

33

Autoworks

34

Other Services

Forward-Looking Statements
This integrated report contains forward-looking statements concerning Yamato
Holdings’ future plans, strategies, and performance. These statements represent
assumptions and beliefs based on information currently available and are nothistorical facts. Furthermore, forward-looking statements are subject to a numberof 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 materiallyfrom these predictions.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201809

THE YAMATO GROUP GOING FORWARD

Long-Term Vision and Medium-Term Management Plan
In order to realize its long-term vision for 2025, the Yamato Group is moving forward with its
three-year 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 will reinforce amanagement foundation that will allow it to realize sustainable growth for the next 100 years.

Overview of “KAIKAKU 2019 for NEXT100”

 eforming Working Styles toR
Implement “Inclusive Management”

Reform01(1) Make new working styles a reality
 rastically reduce total working hours
DAdopt personnel systems that enable working styles
tailored to an individual’s stage of life
Develop programs that enable part-time employees(temporary and permanent) to enhance their abilities
Promote work–life balanceEnhance managerial assignments exhibiting greater
care toward employees

Structural Reform in
the Delivery Business

Reforming
Working Styles

Reform02

Reform of Revenue andBusiness Structure
Geared to Achieving
Discrete Growth(2) Maximize “individual capabilities”

Reform stablish an educational system
ESet up a framework for leveraging the opinions of
employees in management
Encourage the active role of overseas, elderly, and female
employees through the further promotion of diversity
Realize an employment ratio for persons withdisabilities of 2.5%

03

Reform of GroupManagement Structure
Geared to Achieving
Sustainable Growth102

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

Respond to Digital Innovations

U
KA* Pick Up & Drop Off station

Strengthen Governance eform 01: Structural ReformRin the Delivery Business

K

K
I
A

(1) Rebuild business structure to enable sustainablegrowth(2) Recover profit margins by implementing a pricing
strategy and thoroughly streamlining operations(3) Develop foundations for businesses that can solve
community issues

 eform 02: Reform of Revenue andR
Business Structure Geared toAchieving Discrete Growth
20

17

/3

(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)

10YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

N
r

o
f
9

(3) Thoroughly streamline operations

Yamato Group's Long-Term Vision

Vision for 2025

0
0
1

25
20

At the Yamato Group, with transportation itself as the catalyst,
we will create new value by developing open platform solutions
through leveraging the strengths of our points of contact withlocal communities and companies based in Japan and overseas,
and the information these provide.

T
X
E

N

N

T
X
E

0
0
1

2
an (100 020/
niv -y 3
ers earary)

Reform 03: Reform of GroupManagement Structure Geared toAchieving Sustainable Growth(1) A “function-oriented organizational structure” toa “customer-oriented organizational structure”(2) “ Individual optimization” to “overall optimization”(3) “ Income and expenditure controls per verticallysegmented organization unit” to “accountmanagement”(4) “ Investment on a per-business function basis” to“forward-looking investment through an ‘R&D + D’
approach”(5) “Self-sufficiency” to an “open approach”

Respond to Digital Innovations(1) Three-pronged “R&D + D” strategy
Develop and use a Kuroneko big data approach
Use a corporate venturing approach
Promptly identify business models that can bringabout disruptive innovation, and draw up actionplans in that regard(2) E stablished Yamato Digital Innovation Center(YDIC) in April 2017

Strengthen Governance
Promote Group governance reform to enhancesound Group management

Key Management Indicators
Proactive Investments¥200 billion

Recurring investment*1

¥150 billion

Growth investment*2

350 billion¥

Total

*1 Land, buildings, cargo handling equipment, vehicles, etc.
*2 Digital innovation, alliances with outside entities, “Reforming Working Styles,” etc.

Targets
Consolidated operating revenues 
2017/3 (actual result)¥1,466.8 billion

2020/3 (plan)+¥203.1 billion (+13.8%)

1,670.0 billion¥

Consolidated operating profit 
2017/3 (actual result)¥34.8 billion

2020/3 (plan)+¥37.1 billion (+106.4%)

72.0 billion¥

Consolidated operating margin 
2017/3 (actual result)

2.4%

2020/3 (plan)+1.9 percentage points

4.3%

ROE 
2017/3 (actual result)

3.4%

2020/3 (plan)+4.3 percentage points

7.7%

YAMATO HOLDINGS CO., LTD.
Integrated Report 201811

THE YAMATO GROUP GOING FORWARD

Message from the President

The fiscal year ended March 31,2018 was a year in which the
Yamato Group took a significant
first step toward reform.
By implementing “inclusive
management,” we will realize
sustainable growth for the next
100 years. To this end, we will
steadily promote the next step
toward reform.

Masaki Yamauchi
Representative Director,
President and Executive Officer

12

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Since the fiscal year ended March 31, 2018, we have been moving forward withthe medium-term management plan “KAIKAKU 2019 for NEXT100.” I would liketo take this moment to explain the current state of the Yamato Group andprovide an outline of our vision for beyond our 100-year anniversary.

“Inclusive Management” Represents the Yamato Group’s
Greatest Strength“At Yamato, we believe there are things thatshould change and then there are things thatshould not change.” These are the words of
Masao Ogura, the inventor of TA-Q-BIN. Thesewords have been passed down over many years
and are shared to this day within the Group. They
therefore provide the guiding principles for theentire Group.
The things that should change for the YamatoGroup include its services, frameworks, andnetworks. These represent things that need tochange in accordance with the needs of the times
and conditions in the business environment.
On the other hand, the things that should notchange are the beliefs we have valued since ourfoundation. These include ensuring that ouremployees understand the concerns of ourcustomers, providing services catered to ourcustomers that will bring them joy, and ultimately
contributing to the realization of a more enrichedsociety. These beliefs are something that YamatoGroup employees should take pride in. At thesame time, these beliefs help us achieve “inclusive management,” where each employee gives

consideration to our customers and makes
decisions based on their own judgment.
“Inclusive management” therefore represents the
Yamato Group’s greatest strength. To put it indifferent terms, if we are not able to leverage thisstrength sufficiently, then our very meaning forexistence as a company would be cast into doubt.
Recently, we have been facing massive changes
in the business environment, such as the rapid
expansion of the e-commerce market and tightening labor conditions. As a result, we have beenfalling behind in terms of building an operationalframework, which has placed a heavy burden
on the employees working on the front lines. Our
sales drivers therefore had their hands full simply
from delivering packages, which gave them lessand less time to interact with our customers. Thisin turn led to a state in which we were unable toproperly implement “inclusive management.” To
overcome this crisis, we focused on returning toour guiding principles. Accordingly, we decided
to take a thorough look at the things we shouldchange so that we can continue to pass down
and implement the things we should not change.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201813

THE YAMATO GROUP GOING FORWARD

Message from the President

Reform for the Next 100 Years
Implementing Decisions That Change
the Entire GroupIn the fiscal year ended March 31, 2018, we setout on a path toward significant reform. To achievesustainable growth beyond our 100-year anniversary, a major milestone that will be reachedin November 2019, we determined that not only
do we need to respond to the market changes
that are occurring right before our eyes, we alsoneed to steadily implement drastic structuralreforms with our sights set on the next 100 years.
To this end, we formulated a long-term vision thattargets 2025. In addition, we decided to transition
from the “DAN-TOTSU Management Plan 2019”
to the new three-year medium-term management
plan “KAIKAKU 2019 for NEXT100” (hereinafter,“KAIKAKU 2019”), which places “Reforming
Working Styles” at the center of our management.
Steadily Taking the First Step toward“Reforming Working Styles”
In the fiscal year ended March 31, 2018, the firstyear of KAIKAKU 2019, I believe we took a genuine first step toward reform by steadily promoting efforts that focus on the issues we need toaddress. For “Reforming Working Styles,” which
is our highest priority issue, we made concerted
efforts to improve labor management throughsuch means as integrating methods to control
working hours and increasing the number ofmanagers. In addition, we took steps to revise
the content of our services. These included
changing the framework for designated delivery
times and moving up the cut-off time for accepting

14

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

requests for redelivery. By doing so, we steadily
set up a structure for alleviating the burden placedon our employees on the front lines. Throughthese efforts, we have ensured that our sales
drivers are able to properly take breaks, andI believe that this has brought us closer to realizing an ideal working environment.
The aim of “Reforming Working Styles” is to
not only make the working environment more
employee-friendly but also to make the work
itself more rewarding. This means that in addition
to establishing a better working environment
through rules and frameworks and other measures, we also have to change the awarenessof our employees. As an effort to do so, we haveincreased the number of opportunities for dialogue
between management and employees working
on the front lines through such means as panel
discussions. In our initiatives toward “Reforming
Working Styles,” we have been working to change
the awareness of our employees by encouraging
their understanding of what we as a company
are thinking, what are goals are, what kinds ofmeasures we will implement going forward, andwhat the overall direction of the Group is.
As we have progressed in these efforts, wehave started to see major changes in employee
awareness. The driving force behind thesechanges has been the presence of our customers.
In October 2017, we took steps to change our
pricing schemes for both our individual andcorporate customers, starting with revising thebasic TA-Q-BIN fees for individual customers forthe first time in 27 years. The number of customers

who understood and cooperated with these pricechanges was far greater than we expected. To
have our customers understand and accept our
fee revisions sends a clear message to our sales
drivers that they wish to continue to rely on the
Yamato Group. This understanding also meansthat our customers recognize the value we offer.
I therefore believe that our front-line employees
were able to reaffirm the meaningfulness of therole they play and also understand the great
responsibilities and rewards that come with that job.
However, these results represent nothing morethan the first step toward realizing “Reforming
Working Styles.” For the fiscal year ending
March 31, 2019, we are taking steps to establish
a new diversified “last mile” network. By setting
up a delivery-specific driver network that specializes in early evening and night deliveries, we will
reduce our sales drivers’ overtime hours. At thesame time, we will create time for sales drivers toengage in dialogue with our customers. If we canenhance dialogue with our customers, I believe thiswill increase the number of opportunities to offer
them convenient and useful services, in addition
to providing a more fulfilling work experience forour employees. Going forward, we will continue
to pursue the necessary measures to establish
a more employee-friendly working environmentand create a more rewarding work experience.

Steadily Taking the Next Steps
to Complete Our Reform
By returning TA-Q-BIN prices to an adequatelevel, we will establish a business structure thatcan generate stable profits. While there havebeen times where we have offered discounted
prices taking into account TA-Q-BIN delivery
volume, we believe that providing valuable
services and securing appropriate profit forthese services are what will enable us to fulfill
our social responsibility as a crucial part ofsocial infrastructure.
In addition to continuing adequate pricing
initiatives, we will pursue efforts to expand points
at which customers can receive packages in such
ways as rebuilding our “last mile” network andestablishing Pick Up & Drop Off (PUDO) stations.
By steadily promoting these efforts as the next
steps toward reform, we will successfully complete “Structural Reform in the Delivery Business,”a business that represents the foundation of theGroup. In turn, we will leverage this foundation
to realize growth in our non-delivery businesses.
At the same time, we will work to further
strengthen the Group’s corporate governance.
In these ways, we will continue to improve corporate value and make great strides toward
growth for the next 100 years.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201815

THE YAMATO GROUP GOING FORWARD

Message from the President

Vision for 2025—Looking Beyond Reform
After completing KAIKAKU 2019 and welcoming
our 100-year anniversary, we aim to realize ourlong-term vision for 2025.
I believe there are two engines that will drive
growth beyond our 100-year anniversary. The
first engine is the global domain. Amid the further
progression of borderless businesses, the production, consumption, and corporate activities
that have been carried out solely in Japan thus
far will, without a doubt, become borderless as
well. The second engine is the corporate domain.
In around 2025, we anticipate e-commerce toextend beyond the B2C domain and become
widespread in the B2B domain as well due to thefurther progression of digitalization. As a result,goods will flow directly between companies
without the need for wholesalers or retail shops.
In light of these future conditions, what we areaiming for is the establishment of a platform. The
Yamato Group has developed a solid networkand formed connections with its individual andcorporate customers, centered on TA-Q-BIN.
Using this physical logistics network as a foundation, we will combine the customer information
we have collected through this network, as well
as data on future customer needs, with digitaltechnologies in the form of big data. By doing
so, we will establish a platform that integrates
both physical and virtual aspects. Also, we will
establish this platform as an open platform sothat it can be used by anybody, not just specificpeople in specific locations. In this way, we willaddress various needs and issues around theworld, including those related to consumers,
corporations, and society as a whole.
Moving beyond our 100-year anniversary, we
will aim for further growth by offering the newvalue created from this integration of physicaland virtual aspects to not only corporations andconsumers in Japan but to those overseas as well.

Turning Risks into Growth Opportunities by Assessing Changes
in the External Environment
In a society where birthrates are declining
and the population is aging, the ability toprovide services via people will becomea significant competitive edge.
To realize our vision and continue to grow wellinto the future, it is crucial that we accurately
assess the changes occurring in the external
environment. This is because such changes
bring about both risks and opportunities.
The most significant change that the YamatoGroup is dealing with is to its labor supply structure as a result of the declining birthrate andaging population. As the workforce shrinks,
securing employees will become our mostimportant issue.
However, if we look at this issue from a different
angle, the ability to provide services throughpeople is an excellent way to set us apart fromother companies amid the trend of a declining
birthrate and aging population, and such differentiation will tie directly into enhanced competitiveness. Viewing this as an opportunity, we arehiring drivers for early evening and night deliveries
as full-time employees to act as the core of ourdiversified “last mile” network. While doing so will

16

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

increase fixed costs, securing human resourcesthat can work in a stable manner will allow us toincrease our pickup capacity and maintain andimprove our service quality, which in turn will
help us sharpen our competitive edge.
Incorporating New Technologies andTurning Them into Growth Engines
Another significant environmental change isdigitalization. Advances in digitalization will resultin greater risks of the emergence of new rivals
and businesses that use digitalization to completely change the way business is done. If wefall behind in riding this wave of change causedby digitalization, then we risk losing our position
as a leading company and having to adapt toan entirely transformed industry structure.
To respond to such risks, we established the
Yamato Digital Innovation Center (YDIC) in 2017.
YDIC was established with the aim of raisingawareness of new global trends and technologies
and promptly incorporating them into our services.
For functions and technologies that the Group
does not possess, we will actively pursue partnerships with external organizations. We cannot

create the platform we are aiming for simply
through the Group’s strengths alone, and external
partnerships will not only help us improve thequality of this platform, it will also accelerate its
establishment. Accordingly, under KAIKAKU
2019, we will proactively invest in this area.
Although digitalization can bring about several
risks and threats, it can also act as a major
growth engine if we respond to it appropriately.
Behind the roughly five million packages wedeliver each day are roughly five million customers
and approximately one million corporate clients.

The number of participants in our Kuroneko
Members service, a members-only service forindividual customers, has grown to over 25
million and continues to increase even further.
The big data we possess and the information
we collect on a daily basis through our customer
contact points only become more valuable withadvances in digitalization. By leveraging this dataand information in high-value-added services
for our customers, we will expand profits whileworking to enhance operational productivity.

Continuing to Be a Company That Is Needed by Society
for the Next 100 YearsThe Yamato Group promotes the concept ofCreating Shared Value (CSV), which involves
realizing both economic and social value while
addressing the needs of customers through ourbusinesses. The foundation of CSV is “inclusive
management,” in which all of our employees giveconsideration to people and society as a wholeas they make decisions based on their own
judgment. Recently, awareness toward environmental, social, and governance (ESG) factors
has been rising. In addition, there have been
more extensive efforts made by companies toresolve social issues, including addressing the
Sustainable Development Goals (SDGs). Amidthese trends, we will continue to share our guiding principles on a Groupwide basis and leverage
our network that spans across various regions.
By doing so, we will contribute to the resolutionof social issues.

In November 2019, the Yamato Group will
welcome its 100-year anniversary, and from April
2020, the next 100 years for the Group will begin.
We aim to continue to contribute to a moreenriched society through our business activities
so that we can remain a necessary presence for
not only our customers but also our employees,
shareholders, and society at large. To accomplish this aim, we will steadily complete KAIKAKU
2019 and work to create new value over the
next 100 years.

February 2019

YAMATO HOLDINGS CO., LTD.
Integrated Report 201817

THE YAMATO GROUP GOING FORWARD

Message from the Chief Financial Officer

We will actively carry out the­necessary investments to enhance
our management foundation andfurther strengthen business growth
while bearing in mind our financial
stability. In doing so, we aim toincrease our corporate value overthe medium to long term.

Kenichi Shibasaki
Director
Senior Managing Executive Officer
Responsible for overseeing
Financing and Investor Relations

Review of the Fiscal Year Ended March 31, 2018 and Key Initiatives for the Fiscal Year Ending March 31, 2019
During the fiscal year ended March 31, 2018, our financial
performance progressed toward recovery despite the increased
expenses incurred from our promotion of “Reforming Working
Styles.” Under “Structural Reform in the Delivery Business,”one of our key measures under the medium-term management
plan “KAIKAKU 2019 for NEXT100” (herein­after, “KAIKAKU
2019”), we made progress in negotiations for review of ourrates with respect to our corporate clients and adjustments toshipping schedules based on our requests to some large-lot
corporate clients. Accordingly, since the third quarter, TA-Q-BIN
delivery volume has taken a downward turn while TA-Q-BIN
unit price has risen due to our adequate pricing initiatives.

18

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

As a result of the above, operating revenues amounted to¥1,538.8 billion, up ¥71.9 billion (4.9%) from a year ago, while
operating profit amounted to ¥35.6 billion, up ¥0.8 billion fromthe previous year.
In the fiscal year ending March 31, 2019, the second year of
KAIKAKU 2019, we are advancing structural reforms centeredon continuing our adequate pricing initiatives and “Reforming
Working Styles.” In light of this, we are working to expand ourdelivery capacity for the Delivery Business by promoting suchmeasures as establishing a diversified “last mile” network
through the use of “Anchor Cast” (drivers for early evening
and night deliveries).

Investment and Financial Strategies in Creating Future Cash Flows
Investment Strategies
Regarding our investment decisions, they will be based onwhether or not the investment leads to the maintenance andimprovement of our corporate value over the medium to longterm. Over the three-year period of KAIKAKU 2019, covering
the fiscal year ended March 31, 2018 through the fiscal year
ending March 31, 2020, we are anticipating investments of¥350.0 billion. This amount will likely consist of recurringinvestments for the maintenance and expansion of networks,
including land, buildings, and vehicles, as well as growthinvestments for “Reforming Working Styles” and alliances withoutside entities (overseas expansion, digital innovation, etc.).
We will continue to focus on “Reforming Working Styles,” which
we place as an utmost priority for implementing “inclusive
management,” one of the Yamato Group’s founding principles.
In particular, we intend on taking a proactive approach toinvestments in our efforts to establish working environments
where our employees can work with high levels of enthusiasm.

Through these investments, we will accelerate structuralreform in the Delivery Business, a Group foundation, and build
a management structure that generates stable profits. In addition, we will strive to further expand our profit margin throughthe growth of our non-delivery businesses, thereby improving
our corporate value over the medium to long term.
Financial Strategies
The Yamato Group will continue to work to bolster its management foundation and corporate value by maintaining andimproving financial stability, which represents the basic policyof its financial strategy.
We intend on procuring funds through investments while
regarding the importance of improving our financial stability
and efficiency. Further, we will strive to maintain our credit
rating (AA-, Rating and Investment Information, Inc.) while
keeping in mind a shareholders’ equity ratio of around 50%
to ensure financial stability.

Improving Corporate Value over the Medium to Long Term
The Yamato Group considers ROE to be an important indicator for increasing shareholder value and accordingly, will work
to enhance ROE by improving its profit margin.
Meanwhile, we will work to achieve honest and fair disclosureof management conditions, including ESG (environmental,social, governance) and other non-financial information, growthstrategies going forward, important risk information, etc., andproactively implement IR and SR activities such as conducting
constructive dialogues with all shareholders and investors.
For the fiscal year ending March 31, 2020, the final yearof KAIKAKU 2019, we are targeting operating revenues of¥1,670.0 billion, operating profit of ¥72.0 billion, operating
margin of 4.3%, and ROE of 7.7%.

Basic Policy on Shareholder Returns
Regarding returns to shareholders, we will flexibly review anddeliver returns with a targeted consolidated dividend payout
ratio of 30% of profit attributable to owners of parent.
In the fiscal year ended March 31, 2018, our cash dividend
per share was ¥27.00 and our dividend payout ratio was 58.4%.

Returns to Shareholders(Yen)(%)
160

40

58.4%

35

30

80

0

¥27.00

(80)

25

0

2010/3 2011/3 2012/3 2013/3 2014/3 2015/3 2016/3 2017/3 2018/3

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

Total Shareholders’ Return Ratio (right scale)

YAMATO HOLDINGS CO., LTD.
Integrated Report 201819

SPECIAL FEATURE

1. 

Reforming Working Styles to
Implement “Inclusive Management”

The Yamato Group has made the notion of “Reforming Working Styles” a matter of priority
in order to continue to provide high-quality services. By enhancing “employee-friendly” and“rewarding” working environments across the entire Group and implementing “inclusive
management,” a Yamato Group founding principle, we aim to realize sustainable growth.

Establishment of the Yamato Group Working Styles Innovation Committee
Committee Chair
Masaki Yamauchi, Representative Director, President and Executive Officer
Head of secretariat: Tomoki Otani,
Managing Executive Officer
Secretariat: Yamato Holdings Human Resources
Division / Diversity Promotion Office

Yamato Group
Workers’ Union Association

Promotional chairperson: President of each operating company
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

We established the Yamato Group Working
Styles Innovation Committee, which is chairedby the president of Yamato Holdings, in April
2017 with the aim of moving forward withreforming working styles on a Groupwide
basis. The committee has laid out “observanceof compliance,” “promotion of diversity,” and“work process revision and enhancement andcommunication” as its three main principles andis promoting efforts to realize these principles
through collaboration between management
and labor unions.

Working styles innovation committee of each company

The Yamato Group’s Main Initiatives for Reforming Working Styles
Strengthening Management Structure
April 2017– | Yamato Transport

Revising Rules for Managing Working Hours andDigitizing Building Exit and Entry Data
To manage working hours in an easy-to-understand and highly
transparent manner, Yamato Transport transitioned from rules stipulating that working hours be managed via mobile terminals to rulesthat establish the time employees arrive at and leave the office as theirworking hours. Starting from August 2017, the time employees startand finish work has been digitized and determined by registeringbuilding entry and exit times via a tablet device.
April 2017– | Yamato Transport

Reorganizing Regional Branches(Transitioning from 71 branches to 88)
To strengthen the foundation of the Delivery Business through suchmeans as maintaining and improving the quality of services we offer
our customers, recruiting new talent, and cultivating our employees,
we reorganized the management structure of our regional branches,
which act as the core of our regional management across Japan.
Through this reorganization, we established 17 new regional branches.

20

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

	Revitalizing Communication andPromoting Diversity
June 2017– | The Yamato Group

Sharing Insights between the President, Executive Officers, andEmployees at Panel Discussions
The Yamato Group holds panel discussions on a continuous basis
in order to realize even better working styles. These discussions
provide an opportunity for the Group’s president and executive
officers to directly communicate the purpose and vision behind“Reforming Working Styles” to Group employees. At the same time,these discussions allow employees on the front lines to directly
communicate their opinions and proposals for improving work
processes to the president and executive officers.
March 2017– | The Yamato Group

Supporting Career
Development through theFemale Leaders Meeting
With the aim of supporting careerdevelopment, the Yamato Grouphas held the Female Leaders
Meeting—a Groupwide programthat encourages female employees to achieve self-fulfillment—a totalof nine times, with 260 employees participating. In addition, theGroup conducts training for the supervisors of meeting participants
geared toward the empowerment of female employees. The Female
Leaders Meeting gives participants a chance to consider their own
career path and helps enhance their motivation.

Introducing New Working Styles

strength due to aging. Under this system, employees can choose
the number of hours they work in a day, anywhere from four to eight.
In addition, these employees can select the number of days theywork in a week, which includes the option of working only three orfour days a week.

	Improving Working Environments andEnhancing Support for License Acquisition

March 2017 and gradually onward | Yamato Logistics, Yamato Transport, etc.

June 2018 – | Yamato Transport

Implementing a Work Interval System
To ensure employees have ample time for their private life and sleep,
and to establish a working environment that promotes work–lifebalance, Yamato Logistics, Yamato Transport, and other Group
companies have introduced a system whereby employees are
required to take a certain amount of time off between their checkout time and their check-in time the following day.

Carrying Out Construction
to Improve Office Working
Environments
With the aim of realizing officeenvironments that allow employees to work in a safe, secure,and comfortable manner, Yamato
Transport has established officerestoration criteria, starting withthe establishment of breakrooms
and changing rooms. Based on these criteria, and upon on-site
inspections performed by contractors, the company has beenpromoting restoration efforts to improve its office environments.

May 2018 – | Yamato Transport

Implementing the Use of “Anchor Cast”(Drivers for early evening and night deliveries)
To reform the working styles of its sales drivers and secure its pickup
and delivery capacity, Yamato Transport has implemented a newworking style involving the handling of early evening and nightdeliveries and introduced a new personnel system accordingly.
 lease refer to Establishing a New Diversified “Last Mile” NetworkPon page 23 for more details.
May 2018 – | Yamato Transport

Introducing a System Allowing Transition to
Permanent Employment Contracts
To create a working environment where employees can work witheven greater peace of mind, Yamato Transport has introduceda system that allows full-time employees on fixed-term contracts
who have worked continuously for over three years to transition
to permanent employment contracts ahead of the five-year period
designated by law. This system can also be used by part-time
employees on fixed-term contracts who have met certain requirements under Yamato Transport’s internal “step up” system.** A system that evaluates employees’ individual skills and approach to work andpromotes them to higher positions in accordance with their level of growth.

May 2018 – | Yamato Transport

Expediting the Process for Sales Drivers to
Become Permanent Employees
Yamato Transport has revised its process for promoting full-timesales drivers to permanent employees with the aim of establishinga working environment that offers employees peace of mind andsecuring human resources on a continuous basis. Up until now,
employees were hired as contract workers and promoted to permanent positions after going through an in-house “challenge” system,a process that took approximately two years. Yamato Transport hasrevised this process and is now hiring new talent immediately aspermanent employees.

October 2018 – | Yamato Transport

Enhancing the Support System for Semi-Medium-Sized
Vehicle License Acquisition
In regard to licenses required for working as a sales driver, a newsemi-medium-sized vehicle license category was established on
March 12, 2017, and this license is now required for operating
two-ton trucks and other similar-sized delivery vehicles. In light of
this, Yamato Transport has introduced a system that provides support
to its sales drivers for acquiring the semi-medium-sized vehicle license.
The system also covers the expenses involved in changing froman ordinary driver’s license to a semi-medium-sized vehicle license.
Furthermore, to boost the competitiveness of its recruiting activities
and secure human resources on a continuous basis, and to continue
to provide high-quality services to its customers, Yamato Transport
has enhanced its system to provide support for sales drivers who
are new graduates, or who have graduated recently and have priorwork experience, upon entering the company.

Revising Services and Fees
April 2017– | Yamato Transport

Changing the Framework for Designated Delivery Times
As part of its efforts to maintain and improve the working environment
for its employees, Yamato Transport moved up the cut-off time for
accepting requests for redeliveries from 8 p.m. to 7 p.m. Additionally,in June 2017, the company changed its designated delivery timeslots for the TA-Q-BIN service. Through these changes, the company
changed its 8 p.m. to 9 p.m. time slot to 7 p.m. to 9 p.m. and eliminated the 12 p.m. to 2 p.m. time slot, thereby reducing the total
number of delivery time slots from six to five.

September 2018 – | Yamato Transport

October 2017– | Yamato Transport

Introducing a System Allowing Employees to
Choose Number of Work Days and Work Hours
To establish an environment in which employees can continue to workwith peace of mind, Yamato Transport has introduced a system thattargets employees who wish to limit their number of work days andwork hours because of personal circumstances such as raisingchildren, providing nursing care, or managing the loss of physicalRevising TA-Q-BIN Basic Fees
As part of the Group’s efforts to achieve “Structural Reform in the
Delivery Business,” Yamato Transport revised the basic fees for its
TA-Q-BIN service for the first time in 27 years. This revision was
carried out in order to secure labor capacity, improve employee
treatment, and strengthen the “last mile” network.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201821

SPECIAL FEATURE

2. 

Structural Reform in
the Delivery BusinessIn response to rapid changes in the business environment, including the shrinking workforce
and the growth of the e-commerce market, we are promoting “Structural Reform in the Delivery
Business” to ensure that we continue to provide high-quality services to our customers well into
the future. By reinforcing the Delivery Business, which serves as the foundation for the YamatoGroup, and restoring its profitability, we will realize further growth across the entire Group.

Changes in the External
Environment

Impact on
Management

Response by
the Yamato GroupDecline in TA-Q-BIN unit priceTightening labor market conditions
Increase in delivery volume due togrowth of the e-commerce market

Promotion of “Structural Reformin the Delivery Business” with theaim of restoring profitability andestablishing a business foundationthat can realize sustainable growthIncreased costs to secure workforce capacity,
including outsourced capacity, to maintainthe “last mile” network eteriorating working environment forD
employees
Insufficient pickup and delivery capacity

Main Initiatives of “Structural Reform in the Delivery Business”

Implementing a Pricing Strategy for Restoring Profitability
With a view to implementing adequate pricing initiatives, in the fiscal
year ended March 31, 2018, we negotiated the revision of contract
fees with our corporate clients. Also, for our individual customers,
we revised the basic fees in our TA-Q-BIN service.
In the fiscal year ending March 31, 2019, we are continuing­negotiations with our corporate clients on adopting a “corporateclient pricing system” that incorporates not only shipping volumes
but also costs related to rate of absence during delivery and cost
fluctuations caused by changes in the external environment, among
other factors. By doing so, we are continuously working to implement adequate pricing initiatives.

Revision of basic TA-Q-BIN feesFirst fee revision in 27 years

Corporate Clients

92%

Request to large-lot and low-price clients tocontrol shipping volume
Negotiations with large-lot and small-lot clientsto revise fees determined under contracts
Continuous revisions by utilizing “corporateclient pricing system”

TA-Q-BIN Delivery Volume Individual
customers

8%

8%

Individual Customers

2018/3

Breakdown ofDelivery Volume

Large-lotcorporateclients

50%

2017/3

1,867.56
million parcels

2018/3–30.88 million parcels(–1.7%)

TA-Q-BIN Unit Price 
2017/3
Small-lotcorporateclients

42%

22

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

1,836.68

million parcels¥559

2018/3+¥38(+6.8%)

597¥

Establishing a New Diversified“Last Mile” Network

BeforeTo establish an even more efficient “last mile” network, we haveintroduced a network centered on “Anchor Cast” (drivers who handle
TA-Q-BIN delivery during the early evening and nighttime hours).
In addition to reducing the long working hours of our employees
and establishing a more “employee-friendly” working environment,
the aim of establishing a diversified “last mile” network is to increase
the amount of time our sales drivers interact with our customers andto respond to the growing need for nighttime deliveries.

Sales drivers

After“Anchor Cast”
BeforeAfter

Full-day work by sales drivers
Increase in working hours
Insufficient time interacting withcustomers reation of employee-friendly workingCenvironment
Response to increasing need fornighttime deliveriesMore time interacting with customers

Sales
drivers
Create pickup anddelivery capacity

Increase time interactingwith customers
Transfer control to“Anchor Cast”

Efforts to Improve Productivity
We are moving forward with efforts to increase the productivity of ourbusiness processes in order to expand our pickup and delivery capacity
while at the same time establishing a more employee-friendly working environment. These efforts include the utilization of our “gateways”
and the new Super-Full Trailer 25, automation of business processes
through the use of technology, and the expansion of customer contact points. In these ways, we are working to increase the efficiency
of both our trunk-route and “last mile” networks.

Improve Transportation Efficiency(Trunk-route transportation / within sorting terminals)

Optimize entire Group network requent trunk-route transportation that makesF
use of gateways
Utilize Super-Full Trailer 25

Enhance efficiency by leveraging
optimal technologies
Automate sorting terminals

Improve Delivery Efficiency(“Last mile” network) requent trunk-routeFtransportation that makes
use of gateways Improvement of vehicle
loading and operating
efficiency

Sorting terminal utomation of sortingA
terminals
Implementation of sortingby center  Reduction in personnel atterminals and centers

Expand customer contact points
 romote use of PUDO stations, which offerP
open-type parcel lockers
Strengthen communication with membersof Kuroneko Members service

Enhance efficiency of pickup and delivery
operations through utilizing technologies

GatewayLeverage the 8th NEKO System
Sorting terminal

TA-Q-BIN
center trengthening of mutualS
communication withcustomers through the
Kuroneko Members service Reduction in rate of absence romotion of use ofP
open-type lockers (PUDO) Increase in rate of receiving
packages in locations otherthan households

TA-Q-BIN center ollection of data, route design,Cetc., using the 8th NEKO System Enhanced efficiency of pickup
and delivery operations

YAMATO HOLDINGS CO., LTD.
Integrated Report 201823

SPECIAL FEATURE

3. 

Continuously Evolving Our“Value Networking” Design

The “Value Networking” design, which we commenced in 2013, revolutionizes logistics operations by combining our “last mile” network in Japan and Asia—the core competence of the
Yamato Group—and our non-delivery businesses to evolve logistics from simply moving things
to a means of creating value, thereby giving birth to high-value-added business models. This
design continues to gradually evolve over the years through such means as establishing maincore terminals, centered on Haneda Chronogate, and logistics networks both in Japan andoverseas, as well as through the creation of services that offer added value.

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

Expansion tobusiness logistics

Revolutionary logistics network

Delivery

BIZ-Logistics

Home Convenience

Speedy Transportation Essential for
Added Value Creation
Through our gateways established in Kanto, Chubu, andKansai, and our frequent trunk-route transportation, we areable to offer our customers logistics solutions for the management issues they face. These solutions include the integration of inventory storage locations and the adjustment of
product inventories.

Commencement of Operations of Kansai Gateway
In November 2017, we commenced full-scale operationsof Kansai Gateway in the Kansai region, which represents the economic and industrial center and largest
consumer market of western Japan. By combining the
Yamato Group’s highly regarded “last mile” network andhigh-quality logistics processing functions through theuse of cutting-edge material handling equipment,* Kansai
Gateway revolutionizes
logistics operations in termsof enhancing speed andshortening process times.
* Manufacturing equipment that
automates sorting and transportation
processes

24

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Community-based lifestylesupport services

Value-added functions of each Group company(information, financial settlements, logistics)

e-Business

Financial

Autoworks

Speedy Transportation Network
Atsugi Gateway(commenced operations inAugust 2013)
Chubu Gateway(commenced operations in
October 2016)

Haneda Chronogate(commenced operations in
September 2013)

Industry-Wide Platforms—The Key to Evolving Our“Value Networking” Design

 ickup and deliveryPLogistics bases
Forwarding functions
Overseas networks

Foundation ofindustry C

Accumulation of
information regarding
each industry

B

Customer-specificsolutions(customization)

Foundation ofindustry B

Foundation ofindustry Asic nst i o
gi at
Lo nd
u
fo

With the aim of further evolving our “Value Networking”
design, we are working to establish industry-wide platforms in the corporate and global domain. By leveraging
the broad range of data we receive in each industry via
our daily contact with clients and organically combining
our long-cultivated, innovative network foundation withfunctions for creating added value, we are offering solutions that address the needs and issues shared acrossvarious industries. By doing so, we are expanding theareas in which we can contribute to the business growthof our customers.

ig
da
ta

Platform for Healthcare Industry That Leverages Our
Abundant Track Record and Advanced Know-How
Logistics operations for medical devices and pharmaceuticals
require a safe, secure, and high-quality logistics structure. Such
operations also require logistics facilities that fulfill the standards
laid out in the Pharmaceuticals and Medical Devices Law and thesubmission of requests to various institutions, starting with the
Ministry of Health, Labour and Welfare. Yamato Logistics is leveraging its over 10 years of experience and solid track record related
to medical logistics to not only carry out the transport of medical
devices and pharmaceuticals on behalf of companies in the healthcare industry but also provide “loaner support services,” which
offer comprehensive support that covers everything from lending
surgical equipment used at hospitals to cleaning, maintaining,
and relending such equipment. By conducting the cleaning andmaintenance of this equipment at locations within
the Yamato Group’s
speedy transportation
network, Yamato Logistics
is reducing the lead times
for each loan and drastically improving inventory
turnover.
“Loaner support services” in operation

structure for providing support for the products of manufacturers
throughout their entire lifecycle.
Until now, YMM developed its business centered on so-called“reverse logistics,” which entails after-sales services such as
maintenance services for products after they have reached theend user and recall support. However, by integrating YMM into
YLC, we will now be able to conduct forward logistics operations,which handle products before they reach the end user. We will
also be able to offer comprehensive support to manufacturers
throughout the entire lifecycle of their products, from procurement
and manufacturing to sale, maintenance, recall, refurbishing,resale, and disposal. In these ways, we will provide new value
going forward.

Functions for Support throughout Product Lifecycle
Forwarding

Procurement
ResalesupportResaleDisposal

Manufacture

Kitting support

DeliverySupport for Manufacturers’ Products throughout
Their Entire Lifecycle
In April 2018, the Group was restructured, transferring the­Multi-Maintenance Business and Risk Management Businessof Yamato Multi-Maintenance Solutions Co., Ltd. (YMM), theTechnical Network Business of Yamato Home Convenience Co.,
Ltd. (YHC), and the Setup and Logistics Solution Business of
Yamato System Development Co., Ltd. (YSD) to Yamato Logistics
Co., Ltd. (YLC). Through this reorganization, we put in place a(Including support fordelivery of medium- andlarge-sized items)
RecallsupportProduct
accident

Sale
Delivery
Failure eriodic inspectionPMaintenance support
Service parts supply

Extended
warranty
Establishment
and installation
Rental support

 roduct returnPand exchange
supportYAMATO HOLDINGS CO., LTD.
Integrated Report 201825

SPECIAL FEATURE

Accelerating Expansion witha Global Five-Zone System
Events such as the addition of Hong Kong and ASEAN to
the Free Trade Agreement (FTA) denote an accelerating
movement toward a “mega FTA,” which sees economic
zones in terms of entire regions and not single countries.
As the flow of people, goods, and money is becoming moreborderless, production systems are becoming dispersed
across countries and regions, with distribution processing
needs in the supply chain steadily increasing in kind.
To respond quickly to these changes in the global economic environment and support the business of Japanesemanufacturers and producers, the Yamato Group is promoting global expansion via a five-zone system targeting Japan,
East Asia, Southeast Asia, Europe, and the Americas.

Moving to a Cross-Border
Networking Platform
Currently, we are working to create added value by establishing our
five-zone system and making connections at each of these zones.
As part of these efforts, in addition to our “last-mile” speedy transportation network, we are building a platform that offers functional
solutions for our forwarding and trunk-route transport services aswell as for distribution processing, and other operations at our­logistics bases.
What is important to this process is expanding our network in a swift
manner while leveraging the strengths of the Yamato Group, namely
our understanding of the demand chain from a customer point of viewand the expertise that we have developed over the years. Instead of
relying on self-sufficient policies, we are building a global platform
while utilizing M&A and our partnerships with other companies,
which include our acquisition of the Malaysia-based Overland Total
Logistic (OTL) Group and investment in the Guangzhou Wisepower
Transportation & Distribution Group based in Guangzhou, China.

Globally Expanding the Cold Chain
Cross-border transport is not limited to industrial and consumer
goods, and is expanding to include foodstuffs such as agriculturaland marine goods. Leveraging the certification of international standards related to small-lot, chilled and frozen delivery services, theYamato Group is taking active steps to build a cross-border networkwith high added value.

26

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

East Asia

EuropeSoutheast Asia

Japan

AmericasAcquisition of PAS1018, International Standard
for Small-Lot, Chilled and Frozen Delivery,and Its Expansion Worldwide
PAS1018 was adopted as an international standard in orderto establish an environment for the safe and secure use ofsmall-lot, chilled and frozen delivery services across theglobe, particularly in Asia. PAS1018 was also adopted to
improve convenience in day-to-day life, stimulate regional
economies, and contribute to the growth of markets related
to chilled and frozen parcel delivery services.
Headed by the Yamato Group, this standard was formulated in collaboration with 21 institutions from four countries,
including Japanese logistics companies, overseas organizations and shipping companies, and various experts, via afair and neutral process. The standard was launched by
the British Standards Institution* in February 2017.
As of December 31, 2018, eight companies within the
Yamato Group have obtained certification, and we areworking with our partners—including JD.com, one ofChina’s largest retailers—to create a cross-border networkwith high added value.
*T he British Standards Institution is a professional standards formulation
organization that was established in 1901, and is the world’s first national
standards institution and a founding member of ISO.

4. 

Responding to Digital Innovation

The environment surrounding the Yamato Group is going through a period of major change,
including a shrinking workforce, diversifying lifestyles, and changes to industry structure causedby technological innovation. As part of “KAIKAKU 2019 for NEXT100,” we will strengthen thefunctionality of our “R&D + D,”* allowing us to incorporate digital technology into the Group, andto create new businesses and strengthen and revolutionize existing businesses. At the sametime, we will prepare for the emergence of new business models that could potentially “disrupt”
our existing businesses. In these ways, we will aim for further growth.
* Research and Development + “Disruption.” Disruption refers to the disruption of previous modes of thought.

Establishing the Digital Innovation Center
To promote digital transformation, create digital business,and evolve our logistics platform, we established the in-house
Yamato Digital Innovation Center (YDIC) in April 2017. Using
this facility, we are working to create businesses that meetneeds and resolve issues within the Group and society as
a whole based on advanced technology, business ventures,and big data analysis.

Seeds
Advanced
technology

Needs

Prominent advanced
technological domains

Business
ventures

Promisingbusiness ventures

Big data

Analysis results
and data

Promotingcommercialization
based onpromising ideas

Social trends
and challenges
Businessissues within
the YamatoGroup

Conducting R&D for Next-Generation
Logistics Services
Creating a New Air-Transport ModeIn order to provide even higher quality delivery services to our customers, we have begun a partnership with Bell Helicopter, a subsidiaryof U.S.-based Textron. By fully leveraging next-generation solutions
and combining our collective expertise, we will work to create a newmode of air transport. Both companies aim to realize the practicalapplication of this mode by the mid-2020s.
Roles of Each Company

Bell Helicopter

Yamato Holdings

Planning, development, andmanufacturing of Autonomous
Pod Transport (APT)

Development of external shipping
containers (pods) by leveraging
logistics expertise

Rendering of Bell Helicopter electric vertical takeoff and landing vehicle APT70
Flight speed: Over 160 km/h
Load capacity: 35 kg (demo experiments show a potential increase to 450 kg
in the future)

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

27

OVERVIEW OF OPERATIONS BY SEGMENT

DeliveryIn the Delivery Business, the Yamato Group concentrated on TA-Q-BIN-centered businessdevelopment, aiming to provide infrastructure that best suits our customers and contributeto enriching people’s lives.

A Look Back at the Year Ended March 31, 2018

Composition Ratio of Operating Revenues• Promoted “Structural Reform in the Delivery Business,” while placing“Reforming Working Styles” at the center of our management• In addition to moving up the cut-off time for accepting TA-Q-BIN
collection and delivery requests, revised the number of time slots for
TA-Q-BIN deliveries from six to five in an effort to ensure our employees
can properly take breaks and prevent long working hours

78.1%

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

71.4%■ Kuroneko DM-Bin

5.4%■ Express

2.8%■ Others

6.7%

Eliminations(8.2)%• Revised TA-Q-BIN basic fees in October 2017. Negotiated revisions tofees for our corporate clients and made progress with requests to certain
large-lot clients to adjust TA-Q-BIN shipment volumes• Raised TA-Q-BIN unit price from the third quarter on. Realized a recovery
in business performance amid rising investments and expenses due topromoting “Reforming Working Styles” and other measures• Promoted the expansion of sales of TA-Q-BIN Compact and Nekopos
to respond to the continued growth in the e-commerce market. At thesame time, collaborated with multiple flea market websites to expand
shipment counter• As a result of the above, revenues and profit increased year on year

Operating Revenues (¥ million)

Efforts to Upgrade Touchpoints as Part of“Structural Reform in the Delivery Business”

1,500,000

1,201,745

1,000,000

500,0000

2014/3

2015/3

2016/32017/3

2018/3Operating Profit (¥ million)
45,00030,00015,000

0

28

6,758
2014/3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20182015/3

2016/32017/3

2018/3

As part of our efforts to reform ourbusiness structure in order to realize
sustainable growth, we are working
to upgrade the touchpoints where
customers can receive packages. In
the fiscal year ended March 31, 2018,
we promoted the establishment of designated Pick Up & Drop
Off (PUDO) stations, which function as re-delivery locations whenrecipients are not home as well as delivery points for products
purchased through ­e-commerce websites, and increased thenumber of stations, primarily at train stations, supermarkets, anddrugstores in the Tokyo metropolitan area. These efforts were
undertaken in order to reduce the number of re-deliveries andimprove the convenience of receiving packages in accordancewith customer lifestyles.
Additionally, we have been collaborating with e-commerce companies to create a service environment where customers who havepurchased a product are able to specify either a business officeof Yamato Transport, a convenience store, or a PUDO station asa pickup location. At the same time, we have been taking othersteps to improve the convenience of receiving packages for ourcustomers. These include the My Calendar service for Kuroneko
Members, which allows customers to select the most convenient
day and time for deliveries, as well as the addition of a new featurethat allows customers to designate pickup locations.
By continuing these efforts, we will establish a foundation thatallows us to adapt to the changing business environment as we
aim to realize sustainable business growth going forward.

BIZ-Logistics
In the BIZ-Logistics Business, the Yamato Group is providing customers with innovative
logistics systems by combining management resources such as the TA-Q-BIN network withlogistics functions, maintenance and recall handling functions, cleansing functions for medical
devices, and international transportation functions.

A Look Back at the Year Ended March 31, 2018

Composition Ratio of Operating Revenues• Offered a wide variety of logistics support services for the ­e-commerceindustry, including services for placing and accepting orders, visuallymonitoring inventories, and promoting speedier shipments, on a onestop basis in line with customer needs. Realized solid performance interms of revenues due to the favorable performance of existing services

7.9%

Breakdown of the Composition Ratio of Operating Revenues• Expanded use by new customers through services that help revolutionize
logistics operations, including medical device loaner support (storage,
cleaning, and delivery), a service we developed for medical service
providers■ Trading logistics service

2.5%• As a result of the above, revenues and profit rose year on year

■ Sales and Logistics

3.0%■ Multi maintenance

1.0%■ Products Logistics

0.3%■ Others

3.0%

Eliminations(2.0)%

Operating Revenues (¥ million)

Introduction of Japan’s First Automated Fit-To-Size Packing
System at Atsugi Gateway

150,000

121,939

100,000

50,0000

2014/3

2015/3

2016/32017/3

2018/3Operating Profit (¥ million)
6,000

4,087
4,000

2,000

0

2014/3

2015/3

2016/32017/3

2018/3

The Yamato Group is working toenhance its value-added functions withthe aim of further evolving its “Value
Networking” design. In addition, we are
actively promoting the digitization andautomation of our overall logistics
operations in order to respond to social issues such as the declining
workforce, which will become an even more serious problem going
forward, as well as the expansion of the e-commerce market. As
part of these efforts, Yamato Packing Technology Institute Co., Ltd.,
which develops packing materials used in the transportation field,
introduced a fit-to-size packing system at the Atsugi Gateway.
Operations of this system were commenced in October 2017.
This fit-to-size packing system automatically measures the threesides of a product and creates the most appropriately sized cardboard
box for that product. In addition, the system automates various
processes, including processes for packing and attaching invoices.
By doing so, the fit-to-size packing system achieves productivity
levels that are approximately 10 times higher than those of conventional packing done by hand. Also, through packing that best suits
the shape of the product, this system contributes to reducing
environmental burden by improving loading efficiency during shipping
and reducing the amount of cushioning materials that need to be
used. Furthermore, this system helps reduce the amount of spaceneeded to store packing materials.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

29

OVERVIEW OF OPERATIONS BY SEGMENT

Home Convenience
In the Home Convenience Business, the Yamato Group is working toward enabling customers
to achieve greater convenience and comfort in their lives through lifetime lifestyle support
businesses and corporate enterprise support business that draw on the Yamato Group’s
nationwide network.

A Look Back at the Year Ended March 31, 2018

Composition Ratio of Operating Revenues• Worked to increase volume of the Raku Raku Household TA-Q-BIN
service, which makes it easier to send large packages, in collaboration
with flea market apps. At the same time, actively promoted the expansion of sales of the Comfortable Lifestyle Support service, which works
to reduce daily household inconveniences

3.2%

Breakdown of the Composition Ratio of Operating Revenues■ Home convenience

2.7%■ Business convenience

1.1%■ Technical Network

0.3%• Promoted “Reforming Working Styles” and engaged in efforts to control
workloads during peak moving and relocation season

Eliminations(0.9)%• Despite the above, revenues and profit declined year on year

Operating Revenues (¥ million)

Commencement of Delivery Service for Large Products
in Collaboration with Flea Market Apps

60,00048,90040,00020,0000

2014/3

2015/3

2016/32017/3

2018/3Operating Profit (¥ million)
1,200

800

522

400

0

30

• Steadily acquired orders for office relocations and other projects
through our business support services for corporate clients, including
the one-stop Technical Network Business service that covers everything from household equipment delivery and setup to installationand maintenance2014/3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20182015/3

2016/32017/3

2018/3

Yamato Home Convenience Co., Ltd.
collaborated with Mercari, Inc. tocommence the provision of Large-Item
Raku Raku Mercari Delivery, a newdelivery service for the flea market
app Mercari, in April 2017. Mercari is
a rapidly growing service, with monthly distribution volumes totaling¥10.0 billion and the number of items listed per day reaching over1 million. While Yamato Transport has been working with Mercari inthe provision of the Raku Raku Mercari Delivery service since April
2015, there were instances where this service could not respond totransactions involving larger items such as furniture and household
appliances. In light of this, we received a large number of requests
from customers for a service that could handle such transactions.
Yamato Home Convenience offers services including the shippingof furniture and household appliances. The company also possesses
a nationwide shipping network for large items. With the Large-Item
Raku Raku Mercari Delivery service, staff members from Yamato
Home Convenience visit the homes of sellers to pack and pick up
items being sold. In addition, these staff members unpack and set
up items once they have reached their destination and collect usedpacking materials. In these ways, Large-Item Raku Raku Mercari
Delivery is an easy-to-use, highly convenient service.

e-BusinessIn the e-Business, the Yamato Group helps customers streamline their business processes andsolve potential issues by proactively developing the solution platform business that combines
logistics technology and financial technology with information technology. In addition, withthe aim of helping to accelerate growth of Yamato Group businesses, we have been moving
beyond conventional information technologies through efforts geared to promoting use of
emerging technologies that harness artificial intelligence (AI), the Internet of Things (IoT), andother such innovations.
A Look Back at the Year Ended March 31, 2018

Composition Ratio of Operating Revenues• Against a backdrop of e-commerce market growth, expanded
service use particularly among existing large-lot customers throughthe Web-Based Shipment Control service, which provides comprehensive support for such operations as dispatch information processing,­delivery slip printing, and package tracking

3.0%

Breakdown of the Composition Ratio of Operating Revenues■ e-logistics solution

0.8%■ Credit card solution

0.6%■ IT operating*

0.5%■ Web-based mail order solution

0.4%■ Others

3.6%

Eliminations(2.8)%• Increased use of services among new and existing customers throughthe e-On Demand Solutions business, which is geared toward customers
who mainly make use of pamphlets, catalogues, and other such promotion materials in their marketing activities and involves the provisionof total solutions in terms of systems for ordering promotion products,
warehouse storage, administration, delivery and other logistic functions,and printing• As a result of the above, revenues and profit increased year on year

* Starting with the fiscal year ended March 31, 2018, the name of IT operating
solution has been changed to “IT operating.”

Operating Revenues (¥ million)
46,48050,00040,00030,00020,00010,0000

2014/3

2015/3

2016/32017/3

2018/3Operating Profit (¥ million)
10,587

12,000
9,000
6,000
3,000
0

2014/3

2015/3

2016/32017/3

2018/3

Provision of Online Service to General Insurance Companies forCollecting Documentation
Yamato System Development Co., Ltd.
offers an online service for collecting
documentation. With this service,personal identification and other necessary documents can be submitted
online easily and with peace of mind via
smartphone, PC, and other devices, without having to downloada specialized app. Users are able to submit documents via thisservice 24 hours a day, 365 days a year, for processes wheresubmitting documentation is necessary, such as opening a bankaccount, applying for a credit card loan, and receiving an inspection
for leasing real estate. Accordingly, this service helps corporations
resolve the issue of lengthy response time due to inadequate document preparation. It also eliminates the need for users to make copies
of documents and send them via mail. In these ways, the service
improves convenience levels for both corporations and users. In
addition, as this service guarantees high levels of security, including
conformance with PCI DSS,* it enables the secure transmission,
receipt, and management of personal information.
Receiving high praise for these various features, this service wasintroduced at SBI Insurance Co., Ltd. in 2018. Going forward, we
intend to actively promote the introduction of this service at not only
general insurance companies but also life insurance companies. We
also plan on expanding the service’s features in such ways as enabling
the collection of necessary documentation for insurance productapplications, insurance payments, and various other procedures.
*A n abbreviation for Payment Card Industry Data Security Standard, a global security
standard for the credit card industry

YAMATO HOLDINGS CO., LTD.
Integrated Report 201831

OVERVIEW OF OPERATIONS BY SEGMENT

Financial
In the Financial Business, the Yamato Group has been developing settlement and financial
services tailored to a range of customer needs for payment collection of mail-order products,
business-to-business transaction settlement, and vehicle leasing.

A Look Back at the Year Ended March 31, 2018

Composition Ratio of Operating Revenues• Provided a wide range of payment settlement services to our customers
by promoting use of the Kuroneko Web Collect and Kuroneko Pay After
Delivery services• Launched sales of the Raku-uru Cart service to enable business operators to enter the e-commerce market, which is expected to continue toexpand going forward. Promoted efforts to enhance our services in such
ways as providing one-stop options in terms of payment settlement,delivery support, and shopping cart features

5.4%

Breakdown of the Composition Ratio of Operating Revenues■ Payment

2.3%■ Lease

2.6%■ Credit & Finance

0.2%■ Others

0.4%

Eliminations(0.2)%

Operating Revenues (¥ million)
82,98190,00060,00030,0000

2014/3

2015/3

2016/32017/3

2018/3Operating Profit (¥ million)
12,000

7,912

9,000
6,000
3,000
0

32

2014/3

YAMATO HOLDINGS CO., LTD.
Integrated Report 20182015/3

2016/32017/3

2018/3• Generated favorable sales in the lease services business with regard to
financial leases primarily involving trucks, and installment sales. At thesame time, developed peripheral operations, including vehicle referrals
and resale support, and promoted proposals for total solutions related
to vehicles• Experienced a decline in the delivery volume of the mainstay service
TA-Q-BIN Collect following the shrinking market for cash on delivery• As a result of the above, revenues increased year on year while profit
decreased

Provision of Platforms That Simplify Operation of
E-Commerce Businesses
Many new e-commerce business
operators have to undertake a wide
range of duties with only a small teamof people, and there is often little room
to sufficiently allocate management
resources toward efforts to improvecustomer satisfaction. In particular, to manage an e-commerce
website, business operators must conclude contracts with eachvendor that provides functions, and the online administration
screen for managing these functions differ from function to function. These factors have made operating an e-commerce website
extremely complex.
To address this issue, Yamato Financial Co., Ltd. establisheda new shopping cart feature for e-commerce websites and, inJanuary 2018, began offering this feature as the Raku-uru Cart
service, which integrates the payment settlement and delivery
support functions of the Yamato Group. The Raku-uru Cart service
can be easily introduced even by operators who lack sufficientknow-how related to websites, including on how to launch a new
e-commerce site. In addition, users are able to manage invoiceissuance and payment settlement functions via the same screen,allowing for the highly efficient management of online stores. Also,
Raku-uru Cart offers a diverse range of payment settlement services
and services that allow users to select their desired pickup location.
In this manner, Raku-uru Cart links the various services of the YamatoGroup to offer enhanced functions that can be used in accordancewith consumers’ lifestyles.

Autoworks
In the Autoworks Business, the Yamato Group develops its “24-hour-a-day, 365-day-a-year
service that enables customers to service their vehicles without stopping operation,” thereby
providing value to logistics operations and logistics service providers in the form of “improvementof vehicle maintenance convenience” and “reduced maintenance expenses.” Furthermore, tobetter provide one-stop service solutions geared toward customer business operations, we haveadded services for “maintaining and safeguarding logistics facilities and equipment, and improving
such workplace environments,” along with “offering insurance plans tailored to customer risk
management needs,” which provide coverage for such assets.
A Look Back at the Year Ended March 31, 2018

Composition Ratio of Operating Revenues• Took steps to expand sales through such means as proactively
promoting sales of our Repairworks service, which entails periodic
on-site customer visits• Realized an increase in the number of vehicles serviced

1.6%• Made progress with regard to streamlining business processes such as
standardizing and visually monitoring business operations• As a result of the above, both revenues and profit were up year on year

Breakdown of the Composition Ratio of Operating Revenues■ Truck solution

3.2%■ Others

0.6%

Eliminations(2.1)%

Operating Revenues (¥ million)

Commenced Inspection and Maintenance Services forCommercial Electric Vehicles as a New Business Domain

24,641

30,00020,00010,0000

2014/3

2015/3

2016/32017/3

2018/3Operating Profit (¥ million)
4,141

4,500

3,000

1,500

0

2014/3

2015/3

2016/32017/3

2018/3In the Autoworks Business, we commenced
inspection and maintenance services forcommercial electric vehicles. As the use ofcommercial electric vehicles in logistics operations is expected to become more widespreadgoing forward, we view these services asa new business domain that focuses on thechanging business environment. In the fiscal
year ended March 31, 2018, Yamato Transport introduced compact
electric trucks, which significantly reduce environmental burden due tothe fact that they do not generate exhaust emissions. In addition, as
these trucks require significantly less components for assembly, they
reduce the number of disposal parts that need to be replaced within
a set time cycle. Accordingly, the trucks help reduce running costs.
These trucks also have less oscillation compared with diesel vehicles, reducing the physical burden on our sales drivers. Furthermore,
Yamato Autoworks Okinawa Co., Ltd. has commenced inspection
and maintenance services for large-sized electric buses that havebeen introduced by Okinawa Ship’s Agency Corporation, a company
that conducts ship agency operations for cruise ships. In these ways,
we are actively promoting expansion into this new business domain.
Going forward, we will promote inspection and maintenanceservices for our customers without stopping operations. We will also
work to make these services more sophisticated. At the same time,by promptly responding to new technologies and features such as
low-emission vehicles, we will provide support for high-quality
logistics services going forward.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201833

OVERVIEW OF OPERATIONS BY SEGMENT

Other Services
Through Other Services, we provide a broad range of shared services
such as the arterial route 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, 2018, service use grew steadily due to favorable
results with respect to existing services.
Excluding such factors as dividends that Yamato Holdings received
from Group companies, operating profit of Other Services increased
3.2%, to ¥2,252 million.

JITBOX Charter

Operating Profit (¥ million)
35,47736,00030,000Track Record of JITBOX Charter (Units)855,397900,000

730,479
26,515630,173
600,000

24,00017,21718,000300,000

12,000

2,108

2,000

2,182

2,252

1,000
0

2016/3

Including Yamato Holdings

34

YAMATO HOLDINGS CO., LTD.
Integrated Report 20182017/3
Excluding Yamato Holdings

2018/30

2016/32017/3

2018/3

THE YAMATO GROUP’S ESG

36

Corporate Governance

42	Directors / Audit & Supervisory Board Members /Executive Officers

46	Discussion between the Outside Directors andChairman on Corporate Governance

50	Promotion of CSV in Cooperation with
Local Communities

51

Safety Measures to Support Business Continuity

52	Environmental Measures for
Realizing a Sustainable Society

YAMATO HOLDINGS CO., LTD.
Integrated Report 201835

THE YAMATO GROUP’S ESG

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

Characteristics of Corporate Governance System (As of January 31, 2019)
SystemCompany with auditors

Number of directors

9Outside directors

4

Number of Audit & Supervisory Board members

4

Outside auditors

2

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

Make decisions / Supervise

Executive
ConferenceManagement Committee
ReportAudit Division

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Propose / Report

Internal
audit

Executebusiness

CSR Division

Propose / Report

Group Companies

Legal Advisor

Independent Auditor

ReportExecutebusiness

36

Board of Directors

Audit

ReportAccounting
audit

Nomination andCompensation
Committee

Efforts to Improve Corporate GovernanceMedium-Term Management Plan
DAN-TOTSU Three-Year Plan HOP
2002

2011

DAN-TOTSU Three-Year Plan STEP
2014

Board of Directors and Audit & Supervisory Board
Shortened the term of directors to one year (June 2003)

KAIKAKU 2019 for NEXT100
2017–

Implemented evaluation of effectiveness of the Board of Directors(June 2016)T ransitioned to a structure in which outside directors made up one-third of
all directors (June 2015)
Appointed a female outside director(June 2017)

Appointed outside directors (June 2005)

Committees, etc.
Established the Nomination and Compensation Committee (June 2005)
Established the Compliance and Risk Committee (August 2006)
Corporate Structure and Other Systems and Initiatives
Introduced executive officer system (June 2004)
Eliminated retirement benefit system for corporate officers (June 2004)
Disclosed ROE target in medium-term management plan (January 2005)

E stablished interim holding companies to be responsible for regional management(Southeast Asia and East Asia)
Southeast Asia (January 2014), East Asia (April 2017)
Abolished adviser position
Established an advisory board (October 2014)(June 2018)

Introduced performance-based compensation system (April 2005)

Established Corporate Governance Guidelines (September 2015)

Transitioned to a pure holding company (November 2005)

Implemented corporate officer training (October 2015)

Introduced succession plans (July 2006)

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

NameToshitakaHagiwara

Masakatsu
Mori

Independent
officer

Concurrent posts(As of June 28, 2018)

Main activities

Attendance at meetingsof the Board of Directors
and/or Audit &Supervisory Board
during the fiscal year
ended March 31, 2018

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.

Board of Directors:
17 of 18 meetingsYes•S enior Advisor of International
University of Japan•O
 utside Director of Stanley ElectricCo., Ltd.
•O
 utside Audit & Supervisory Board
Member of Kirin Holdings Company,
LimitedMasakatsu Mori 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.

Board of Directors:
18 of 18 meetingsYes• Outside Director of Happinet
Corporation• Outside Director of Mitsubishi
Materials Corporation

Mariko Tokuno 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.

Board of Directors:
14 of 14 meetingsYes•V ice Chairman of ITOCHU
Corporation

Yoichi Kobayashi 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.

Appointed inJune 2018

Yes• Partner, Anderson Mori andTomotsune LPC

Hiroyuki Kanae provides necessary advice based on hishigh level of expertise and abundance of experience as
an international lawyer. Furthermore, he attends regularmeetings to exchange opinions with the representative
director and president, outside directors, and Audit &Supervisory Board members, monitoring directors’ execution of duties primarily by asking questions related tooverseas business risk.

Board of Directors:
18 of 18 meetings
Audit & Supervisory
Board: 20 of 20
meetings

Yes• Representative of Takashi Yamashita
CPA Office• Outside Director of Shin Nippon
Biomedical Laboratories, Ltd.

Takashi Yamashita possesses sufficient insight into financeand accounting through his work as a Certified Public
Accountant. Furthermore, he attends regular meetings to
exchange opinions with the representative director andpresident, outside directors, and Audit & Supervisory Board
members, monitoring directors’ execution of duties primarily
by asking questions related to finance and accounting.

Board of Directors:
11 of 14 meetings
Audit & Supervisory
Board: 14 of 14
meetings

OutsideDirectors

MarikoTokunoYoichi
Kobayashi

Hiroyuki
Kanae
OutsideAudit &
Supervisory
Board
members
TakashiYamashita

YAMATO HOLDINGS CO., LTD.
Integrated Report 201837

THE YAMATO GROUP’S ESG

Corporate Governance

The Company is a company with an Audit & Supervisory Board. In addition to important management decision-making
and the supervision of business execution by the Board of Directors, Audit & Supervisory Board members and the
Audit & Supervisory Board, which are independent from the Board of Directors, shall audit the status of executionof duties by directors.
Also, to complement the functions of the Board of Directors, the Company established a Nomination andCompensation Committee comprising a majority of outside directors. At the same time, the Company has adopted
an executive officer system to ensure prompt decision-making related to business execution.

Board of Directors
Roles and duties
 he Board of Directors shall make important decisions
Tconcerning the Company’s business and supervises
the execution of duties by executive directors andexecutive officers.
The Board of Directors shall recognize the mediumterm management plan as one of the commitments
to shareholders and do its utmost to achieve the goalsof the plan. Moreover, the Board of Directors shallsufficiently analyze the initiatives aimed at realizing thegoals of the medium-term management plan as wellas the extent to which the plan’s objectives are being
achieved. In addition to providing explanations toshareholders, such analyses shall be reflected infuture 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 thesame time establishing a framework that enables
it to ensure accountability.
The scope of responsibility of each executive officer
shall be decided by the Board of Directors and disclosed. Executive officers shall execute businessin accordance with internal regulations.

Management
 o allow Board of Directors meeting attendees theTopportunity to prepare for meetings in advance, theBoard of Directors secretariat shall send agenda items
and related materials to directors well in advance ofthe 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 this information shall be provided todirectors and Audit & Supervisory Board members.
The number of issues to be deliberated as well as thefrequency of meetings shall be appropriately set, andthe time of meetings shall be 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.

38

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018 he effectiveness of the Board of Directors shall beTevaluated through questionnaires and interviews
performed by the chair.

Evaluation of effectivenessTo verify the effectiveness of the Board of Directors, theCompany listens to the individual opinions of all directors
and Audit & Supervisory Board members regarding thecomposition and operational status of the Board of
Directors. Based on these opinions, the Company carries
out an evaluation on the Board’s effectiveness in termsof such matters as the condition of the Board’s operationand the state of deliberation held at Board meetings.
By sharing the issues brought to light through theevaluation at Board of Directors meetings, the Company
makes efforts to examine and implement measures
toward realizing improvements.

Results of Evaluation for the Fiscal Year
Ended March 31, 2018
The evaluation deemed that the composition, operating
conditions, and state of deliberations of the Board of
Directors are generally appropriate for an organizationthat fulfills a supervisory function. The evaluation also
determined that the Board has fostered an environmentthat allows its members to actively participate in Board
meetings and hold open-minded discussions.
The fiscal year ended March 31, 2018, was a year inwhich the Company made a dramatic change in coursewith its policies, as reflected by revisions to the content
of TA-Q-BIN services and their fees.
The lively discussions held by the Board of Directors,
which centered on reforming working styles, provided
the backdrop to this kind of dramatic decision-making.
Accordingly, the Company believes that the Board has
sufficiently fulfilled its responsibility in implementing
important measures during the fiscal year ended
March 31, 2018.
In light of this, the Company confirmed that the Boardof Directors is functioning in an effective manner that
contributes to its Corporate Governance Guidelines of“securing sound management” and “achieving prompt
and accurate decision-making and business execution.”

Going forward, the Company will enhance the effectiveness of its working style reforms. At the same time,
the Company will continue to maintain and improve theeffectiveness of its Board of Directors with a view to

executing its growth strategy aimed at the next 100 years
upon celebrating its 100-year anniversary in the fiscal
year ending March 31, 2020.

Audit & Supervisory Board
Roles and duties
 he Audit & Supervisory Board and its members shallT
exercise their authority actively and proactively, andthey shall appropriately state their opinions at Boardof Directors meetings as well as to members ofsenior management.
The full-time Audit & Supervisory Board members
shall attend Board of Directors meetings and otherimportant meetings related to the execution ofbusiness, express reasonable opinions, hold effective
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 holdinformation exchange meetings for the purpose of
sharing information with outside directors, thereby
ensuring more robust gathering of information andencouraging teamwork.

Nomination and Compensation Committee he Nomination and Compensation Committee shallT
comprise outside directors and the same number ofor fewer internal directors with an outside director
serving as the committee chair.
The committee shall deliberate on matters related tothe appointment or removal of senior management
members based on business performance and multifaceted observations and evaluation, thereby verifying
the validity of such decisions, and decide policies oncompensation and other matters related to senior
management members.
The committee shall propose candidates as successors to the representative director to the Board of
Directors, following deliberation based on multifaceted
observations and evaluations of candidates’ trackrecords, human nature, and other factors, thereby
increasing management transparency.

Support Framework for Directors and Audit & Supervisory Board Members
 he Company shall establish a support framework
Tthat enables it to provide necessary and adequate
information at the necessary time to allow 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 businesssites, including those overseas, participants are able
to better understand the business strategies andprovide opportunities to see how these strategies
are being advanced.
As a system to help Audit & Supervisory Board members smoothly perform their duties, employees in theinternal audit division shall be appointed to assist
Audit & Supervisory Board members.

 udit & Supervisory Board members shall exerciseA
their authority to perform investigations in accordancewith the Companies Act. In addition, if a director or
employee discovers a fact that could potentially inflictmarked damage on the Company, he/she shall immediately report this fact to an Audit & Supervisory Board
member, even if there is no request to do so froman Audit & Supervisory Board member.
If a director or Audit & Supervisory Board member
believes it to be necessary, he/she shall obtain advice
from an outside expert at the Company’s expense.
The internal audit division shall regularly hold meetings
with the full-time Audit & Supervisory Board members,
and provide audit reports in a planned manner to theBoard of Directors and the Audit & Supervisory Board,
thereby enhancing the provision of information to as
well as bolstering coordination with outside directors
and outside Audit & Supervisory Board members.

YAMATO HOLDINGS CO., LTD.
Integrated Report 201839

THE YAMATO GROUP’S ESG

Corporate GovernanceCompensation of Directors and Audit & Supervisory Board Members
Total by compensation
Head count of eligible
and remuneration
directors and Audit &category
Supervisory Board(Millions of yen)members
Basic compensation

Directors and Audit & Supervisory
Board members

Total compensationand other
remuneration(Millions of yen)

Directors(excluding outside directors)

274

274

5

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

48

48

2

Outside directors and Audit &Supervisory Board members

61

61

6

 olicies related to methods for calculationPand determination of director compensation
To ensure the objectivity and transparency of policies

for determining director compensation, deliberations are
conducted through the Nomination and Compensation
Committee, more than half of whose members areoutside directors, with the Board of Directors
making resolutions.
Director compensation comprises fixed remunerationthat reflects external standards and performance-based
amounts. In addition, a certain percentage of their compensation is allocated to purchasing shares of theCompany through the Officers and Executives’
Shareholding Association. The compensation of Audit &Supervisory Board members and outside directors isfixed in keeping with the nature of their work.

Policy on Cross-Shareholdings
The Company shall maintain a policy of owning stocks
that are deemed meaningful, based on a comprehensive
consideration from a medium- to long-term perspectiveof the relationship with the Group’s businesses, theprofitability of the Company, and the potential for creating new business opportunities, among other factors.
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 previous business transactions with theCompany and the market price of the shares, and after

verifying the benefits and risks associated with holding
the stocks from a quantitative and qualitative perspective.
The Company works to reduce the number of stocks it
owns that are deemed to be of little significance.
In exercising the voting rights of shares held, thedecision to support or oppose agenda items at theshareholders’ meeting shall be made on a case-by-casebasis, with consideration given to the issuing company’s
enhancement of corporate value, the issuing company’s
compliance framework, and the possibility of a negative
impact on the Group’s business, among other factors.

Compliance trengthening internal control forS
the Group overall
The Yamato Group has established an internal control
system in order to promote sound corporate culturein the Group as a whole and to enable employees toperform their duties effectively and efficiently without any
misbehavior or mistakes. Having stipulated its basic
policy on the internal control system in accordance with
the Companies 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 andExchange Act, we are promoting reviews of businessrules and the standardization of operations, checking
whether operations have been effectively performedin accordance with the rules, and establishing a system
to immediately put improvements in place should there
be any shortcomings.
Internal control over the financial reporting of the
Yamato Group as of March 31, 2018, was consideredvalid, and a report was submitted to the Kanto Local
Finance Bureau.

40

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Reinforcing the Whistle-Blower System
With regard to compliance violations by the Company,
employees, directors, and other members, the YamatoGroup ensures an appropriate framework related towhistle-blowing by having in place a contact point for thepresident, a contact point managed by the Complianceand Risk Committee, and a contact point managed byan outside attorney. The Company shall secure a framework in which employees who report on such violations
are protected under whistle-blower regulations.
Furthermore, to promptly discover violations of laws,
internal regulations, and other regulations and enact anappropriate response, the Company is moving forwardwith various operational improvements, including determining a specific whistle-blowing response process
shared across the Group, in addition to establishinghandling methods and risk assessment standards.
Violations and responses to violations shall be regularly
reported to the Compliance and Risk Committee andthe Board of Directors.

Business Continuity Plan (BCP)
As a corporate group that offers the TA-Q-BIN service
as a part of social infrastructure, the Yamato Group has
formulated a business continuity plan (BCP) to ensurethat it can keep offering services in a steady manner
even under unforeseeable circumstances. Based on
the experience gained after the Great East Japan
Earthquake and other disasters, we are anticipating
various emergency scenarios in an effort to reinforce
our crisis management system on a Groupwide basis.
We have also established the Yamato Group BCP
Basic Policy, which is supported by the three pillars ofgiving the utmost priority to human life, aiming for the
prompt recovery of operations at each Group company,and meeting the expectations of local community members as a part of social infrastructure. Guided by thispolicy, we have determined various Groupwide standards
and have created a wide range of manuals in accordancewith the business continuity of each Group company.
Going forward, we will strengthen our response todealing with damage from natural disasters such as
earthquakes, for which damage is expected to be large
in scale, and flooding caused by heavy rain and otherfactors. At the same time, we will promote extensive
examinations of various risks that could impact ourbusiness continuity.

Accountability
The Yamato Group considers the explanation of corporate
and management data to shareholders, investors, andother stakeholders to be an important corporate governance issue and is committed to the speedy, accurate,
and fair disclosure of information. Furthermore, the Group
Item

Number of times

has established the Disclosure Policy in order to discloseand manage information in a more appropriate mannerand enhance the reliability of that information.
The main investor relations activities are listed below.

Content

Settlement of Accounts Meetings foranalysts and institutional investors

4

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

1 or more per year to The president or chairman makes regular overseas visits to investors in the United
each region
States, Europe, and Asia to explain management policies.

Small meetings with the 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

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.

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 of shareholders, notices of resolution, and disclosure of voting results.
Publication of most important information in two languages–Japanese and English–sothat information can be communicated to foreign investors.

Establishment of IR department

Responsible for developing IR strategies to initiate dialogue with shareholders and otherinvestors and disclosing information—

YAMATO HOLDINGS CO., LTD.
Integrated Report 201841

THE YAMATO GROUP’S ESG

Directors
As of January 31, 2019

Makoto Kigawa

Masaki Yamauchi

Haruo Kanda

Director and Chairman

Representative Director,
President and Executive Officer———————

Representative Director,
Vice President and Executive Officer———————

Apr. 1973 Joined the Fuji Bank, Limited
Apr. 2004	Managing Director, Chief Risk Officer / Head of
Risk Management Group, and Chief Human
Resources Officer / Head of Human ResourcesGroup of Mizuho Corporate Bank, Ltd.
Apr. 2005 Joined the Company
Jun. 2005 Managing Director
Nov. 2005 Representative Managing Director
Apr. 2006	Representative Director and Managing
Executive Officer
Jun. 2006	Representative Director and Senior Managing
Executive Officer
Mar. 2007	Representative Director and Executive Officer
Mar. 2007	Representative Director, President andExecutive Officer of Yamato Transport Co., Ltd.
Jun. 2008 Director and Executive Officer of the Company
Apr. 2011	Representative Director, President andExecutive Officer
Apr. 2015 Representative Director and Chairman
Apr. 2018 Director and Chairman (current)

Apr. 1984 Joined the Company
Apr. 2005 Executive Officer
Apr. 2005 President, Tokyo Regional OfficeNov. 2005 Executive Officer of Yamato Transport Co., Ltd.
Nov. 2005 	General Manager of Human Resources andAdministration
Mar. 2007 Executive Officer of the Company
Mar. 2007 Responsible for Human Resources Strategy
May 2007 Responsible for Management Strategy
Apr. 2008 	Representative Director, President andExecutive Officer of Yamato Logistics Co., Ltd.
Apr. 2011 	Representative Director, President andExecutive Officer of Yamato Transport Co., Ltd.
Jun. 2011 Director and Executive Officer of the Company
Apr. 2015 	Representative Director, President andExecutive Officer (current)

Jan. 1985 Joined the Company
Apr. 2004 General Manager of Human Resources
Aug. 2005 Executive Officer
Nov. 2005 Executive Officer of Yamato Transport Co., Ltd.
Jul. 2006 Managing Executive Officer
Apr. 2008 Managing Executive Officer of the Company
Jun. 2008 	Representative Director and Managing
Executive Officer
Apr. 2013 	Representative Director and Senior Managing
Executive Officer
Apr. 2014 	Responsible for Human Resources Strategy,
Network Strategy, Legal Affairs, CSR Strategy
and Audit
Apr. 2015 	Representative Director, Vice President andExecutive Officer (current)

Kenichi Shibasaki

Yutaka Nagao

Director,
Senior Managing Executive Officer———————

Director,
Executive Officer———————

Apr. 1980 Joined the Company
Jun. 1997 	Regional Branch Manager of Saitama Regional
BranchJun. 1999 General Manager of Education Division
Apr. 2003 General Manager of Operation DivisionFeb. 2006 	Representative Director, President andExecutive Officer of Yamato Financial Co., Ltd.
Apr. 2006 Executive Officer of the Company
Apr. 2012 Managing Executive Officer
Apr. 2016 Senior Managing Executive Officer (current)
Apr. 2017 	Responsible for Financing Strategy and
Coordinator-General of Investor Relations
Strategy (current)
Jun. 2018 	Director, Senior Managing Executive Officer(current)

Apr. 1988 Joined the Company
Apr. 2004 	Regional Branch Manager of Yamaguchi
Regional Branch
Apr. 2006 	Regional Branch Manager of Saitama Regional
Branch of Yamato Transport Co., Ltd.
Apr. 2009 	General Manager of TSS Sales Promotion Office
Apr. 2010 	Executive Officer and President of Kanto
Regional Office
Apr. 2013 Managing Executive Officer
Apr. 2015 Executive Officer of the Company
Apr. 2015 	Representative Director, President andExecutive Officer of Yamato Transport Co., Ltd.
(current)
Jun. 2017 	Director and Executive Officer of the Company(current)———————

42

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Toshitaka Hagiwara

Masakatsu Mori

Outside Director

Outside Director——————————————

Dec. 1969 Joined Komatsu Ltd.
Jun. 1990 Director
Jun. 1995 Managing Director
Jun. 1997 Executive Managing Director
Jun. 1999 Executive Vice President
Jun. 2003 	Chairman and Representative Director of
the Board
Jun. 2007 Councilor and Senior Adviser
Jun. 2009 Director of the Company (current)
Jul. 2011 Senior Adviser of Komatsu Ltd.
Jul. 2013 Adviser (current)

Apr. 1969 	Joined Arthur Andersen & Co.
(currently: Accenture Japan Ltd)May 1972 Qualified as Certified Public Accountant
Sep. 1981 	Partner (business partner) of Arthur Andersen& Co. (currently: Accenture Japan Ltd)
Feb. 1989 	President of Andersen Consulting(currently: Accenture Japan Ltd)		Board Member of Andersen Consulting (Global)(currently: Accenture)
Apr. 2003 	Representative Director and Chairman ofAccenture Japan Ltd
Sep. 2007 Corporate Advisor of Accenture Japan Ltd
Oct. 2009 	President of the International University ofJapan (IUJ)
Apr. 2013 Senior Advisor of IUJJun. 2013 Director of the Company (current)
Nov. 2013 Vice Chairman of IUJApr. 2018 Senior Advisor of IUJ (current)

Mariko Tokuno

Yoichi Kobayashi

Outside Director

Outside Director——————————————

Jan. 1994 Joined Louis Vuitton Japan KK
Apr. 2002 Senior Director for Sales Administration
Mar. 2004 Vice President of Tiffany & Co. Japan Inc.
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)

Apr. 1973 Joined ITOCHU Corporation
Jun. 2004 Executive Officer
Apr. 2006 Managing Executive Officer
Jun. 2006 Representative Executive Managing Director
Apr. 2008 Representative Senior Managing Director
Apr. 2011 	Representative Director and Executive Vice
President
Apr. 2015 Senior Advisor
Apr. 2016 Vice Chairman (current)
Jun. 2018 Outside Director of the Company (current)

YAMATO HOLDINGS CO., LTD.
Integrated Report 201843

THE YAMATO GROUP’S ESG

Audit & Supervisory Board Members
As of January 31, 201944

Etsuo Ogawa

Mamoru Matsuno

Full-time Audit & Supervisory Board Member

Full-time Audit & Supervisory Board Member——————————————

Nov. 1973 Joined the Company
Jun. 2002 President, Chugoku Branch
Jun. 2003 Director
Apr. 2004 Responsible for Financing and Accounting
Jun. 2004 Director and Managing Executive Officer
Jun. 2005 Managing Executive Officer
Oct. 2005	Representative Director, President andExecutive Officer of Yamato Logistics Co., Ltd.
Apr. 2008	Director and Chairman of the Board of
Yamato Logistics 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)

Apr. 1981 Joined the Company
Jun. 2000	Manager of Audit Section No. 1 of Audit
Division
Jun. 2002 Manager of Audit Section of Audit Division
Jul. 2006 Audit Function Manager
Apr. 2012 Audit Function Senior Manager
Apr. 2018 Attached to the President
Jun. 2018	Full-time Audit & Supervisory Board Member(current)

Hiroyuki Kanae

Takashi Yamashita

Outside Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member——————————————

Apr. 1979	Licensed and registered as an attorney at law(Bengoshi) at Daini Tokyo Bar Association
Sep. 1987	Coudert Brothers LLP (New York)Jul. 1988	Licensed and registered as an attorney at law in
the State of New York
Sep. 1988 Joined Nishi, Tanaka & Takahashi Law Office
Apr. 1992 Partner of Nishi, Tanaka & Takahashi Law Office
May 2001 Joined Shin-Tokyo Law Office as partner
Oct. 2007	Through the consolidation of law offices, namechange to Bingham McCutchen Murase, Sakai
Mimura Aizawa, Foreign Law Joint Enterprise(Partner)
Jun. 2012	Outside Audit & Supervisory Board Member of
the Company (current)
Apr. 2015	Through the consolidation of law offices, namechange to Anderson Mori & Tomotsune LPC(Partner) (current)

Oct. 1983 Joined Asahi Accounting Company
Mar. 1987 Registered as a Certified Public Accountant
May 2003	Representative Partner of Asahi & Co.
(currently: KPMG AZSA LLC)
Aug. 2014	Established Takashi Yamashita CPA Office,Representative (current)
Jan. 2015 Registered as a Certified Tax Accountant
Jun. 2017	Outside Audit & Supervisory Board Member of
the Company (current)

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Executive Officers
As of January 31, 2019

Kenji Minaki

Hideo Tanzawa

Shinji Makiura

Tomoki Otani

Executive Officer and Vice President
Global Business in Charge, President,
Yamato (China) Co., Ltd.

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

Managing Executive Officer
Responsible for Corporate Strategy and
Yamato Digital Innovation Center

Managing Executive Officer
Responsible for Human Resources
Strategy and Work Style Reform

Seiichi Awa

Katsuhiko Umetsu

Atsushi Kashimoto

Yoshihiko Hoshino

Managing Executive Officer
Responsible for General Affairs, CSR, andInternal Audit

Senior Executive Officer
Director and Chairman, Yamato Global
Logistics Japan Co., Ltd.
Responsible for Global Strategic Planningand Development, Group Cold Chain
Platform Development

Senior Executive Officer
Responsible for Investor Relations Strategy

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

Tetsuya EgashiraNaomi Ogata

Makoto Wada

Tsutomu Sasaki

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

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

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

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

Richard Chua Khing Seng

Yorimasa Tanaka

Ryutaro Narui

Hiroyuki Yasuda

Executive Officer
Chairman and Director, Yamato Asia Pte. Ltd.
Responsible for M&A Collaboration,
Partnership

Executive Officer
Responsible for Technology Strategy

Executive Officer
Responsible for Planning andManagement of Strategic Alliance

Executive Officer
Responsible for Legal Affairs

YAMATO HOLDINGS CO., LTD.
Integrated Report 201845

THE YAMATO GROUP’S ESG

Discussion between the Outside Directors andChairman on Corporate Governance

Masakatsu Mori

Outside Director

Makoto Kigawa

Director and Chairman

Toshitaka Hagiwara

Outside Director

Mariko Tokuno

Outside Director

Realizing Sustainable Growth for the Next 100 Years————————In June 2018, a discussion was held between outside directors Toshitaka Hagiwara, Masakatsu Mori, andMariko Tokuno and the Company’s chairman Makoto Kigawa. These four participants exchanged opinions
regarding a variety of topics, including the decision-making process behind moving forward from “DAN-TOTSUManagement Plan 2019” to “KAIKAKU 2019 for NEXT100,” the steps necessary for the Company to improve
corporate value in a sustainable manner over the next 100 years, and the effectiveness of the Board of
Directors, which holds discussions and makes decisions pertaining to these matters, as well as the issues
facing the Board.

Decisions of the Board of Directors to Address the Rapidly Changing Business Environment
Promoting Adequate Pricing Initiatives to
Maintain Social Infrastructure————
Kigawa We have been fortunate enough to celebrate the43rd year since the start of TA-Q-BIN in 1976. Over this long
history, 2017 represented a year in which the Yamato Groupreached a major turning point. The e-commerce market, which
we hoped would help us realize further growth, expanded at
a rate that far exceeded our expectations, and we were unable
to keep up in terms of establishing an operational structure in
response to this expansion. As a result, a heavy burden wasplaced on our sales drivers and other employees working on

46

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

the front lines. These circumstances provided us with theimpetus to pursue dramatic reforms under “KAIKAKU 2019
for NEXT100.” I would like to ask the outside directors toprovide their candid opinion regarding the conditions of theGroup and the decision-making by the Board of Directors
leading up to “KAIKAKU 2019 for NEXT100.”
Hagiwara I have been an outside director of the Company
since 2009. Regardless of the various changes that haveoccurred over the years, the Company has continued to­provide high-quality services based on an understanding of
its role as a part of social infrastructure, while also making

Yamato Group is truly working in behalf of society. This isprecisely why I feel the fee revisions made by the Company
were accepted so positively.

Companywide efforts to maintain its low rates. However, due
to the particularly remarkable changes in recent years, suchas the rapid increase in delivery volumes and severe personnel
shortages, the Company has not only struggled to generate asufficient amount of profits, but has also been unable to respondto its current shipping volumes. While it is important for the
Yamato Group to be aware of its role as a part of social infrastructure, that awareness is meaningless if it is unable to fulfill
that role and function. In light of this situation, I stated myopinion that the Company should take the lead over its­competitors in promoting adequate pricing initiatives. I alsoemphasized the need for the Company to temporarily containits delivery volumes. As an outside director, I have strongly
encouraged the Company to gain an understanding of its
customers and other stakeholders by properly explaining its
current business conditions and maintaining full accountability.
Mori
Throughout the decision-making process leading up
to these reforms, I consistently placed emphasis on ensuringthat the Group, as a corporate group that makes up a part ofsocial infrastructure, does not engage in any action that would
halt the flow of goods. I specifically focused on helping theGroup make management decisions that were meaningful
for both itself and society as a whole. A corporation needs tomaintain a cycle in which it generates an appropriate level ofprofit and invests that profit toward further growth. If a corporation is unable to maintain such a cycle, it will fail. Recently,
Yamato has requested the understanding of both its individualand corporate clients regarding fee revisions. In particular, theCompany has begun negotiating with customers that havebeen making use of services at discounted rates, even preparing for an outcome in which these customers discontinue
the use of such services. With a year gone by since thesedecisions were made, I believe they were the right course ofaction to take.
Also, what makes me especially happy as an outside director is that these decisions gained the understanding of society.
Starting with the media, the overall reception of these decisions
was positive, and I believe this underscores the fact that theTokuno I was appointed as an outside director of theCompany exactly one year ago. At the time, news reports
on Japan’s home delivery crisis had slowly started to taper off.
Before becoming an outside director, I viewed the YamatoGroup from the perspective of a consumer. What I found particularly surprising was that there was really no difference
between my view of the Group before joining, which was basedon my observations of the employees working on the front lines,
and my view of the Group now as one of its members. I havegained a sense of the strong solidarity among the sales drivers.
I believe this sense of solidarity comes from the fact that thesedrivers place fulfilling their social mission as the precedent for
their work. I previously worked at a foreign-owned company,
and to be honest I sometimes wonder if it is necessary fora private enterprise to place such a heavy social and public
responsibility on itself. However, the Group’s strong adherence
to fulfilling its mission is what assures me that it will be able toovercome any difficulty it faces.

Reforming Working Styles—
Enhancing Employee Motivation and Productivity————
As you all have stated, the Group’s most importantcharacteristics are its awareness of fulfilling its role as a part ofsocial infrastructure and its adherence to realizing its mission.
To maintain high levels of these characteristics, we are implementing a strategy that focuses our management on adequate pricing initiatives and working style reforms, which will
boost our employees’ overall level of satisfaction. We at theGroup believe that we are playing a leading role in Japan with
our pursuit of “Reforming Working Styles,” but I would like to
ask the outside directors on how you view these reforms.
KigawaMori
I feel that the most important issue to address in“Reforming Working Styles” is improving productivity. While

YAMATO HOLDINGS CO., LTD.
Integrated Report 201847

THE YAMATO GROUP’S ESG

Discussion between the Outside Directors and Chairman on Corporate Governanceestablishing choices for service specifications and changing
working styles accordingly. Customers have renewed theirawareness that home delivery services are not free of charge
and their operation requires time and money. Going forward,
the Group needs to promote efforts that provide mutual benefit
to itself and its customers through a trial-and-error process,including the expansion of contact points with customers suchas parcel lockers.

there are many methods to do this, including the use of IT
and automation, the true key to boosting productivity lies in
the motivation of each employee. Employee productivity canchange significantly depending on their level of motivation.
Simply reducing working hours leads to a decline in morale,
which consequently lowers productivity as well. If the Group
does not implement working style reforms in a well-balancedmanner, then it will become a slow-moving company with lowlevels of productivity and will eventually lose out against thecompetition. I believe that close communication between the
Company’s management and its employees is crucial for
improving productivity while maintaining high levels of
employee motivation.
Hagiwara From the standpoint of productivity, the Group hastaken steps to revise its service specifications as part of its
efforts under “Reforming Working Styles,” and I think this movehas provided both the Group and its customers with a major
realization. The Group has realized that it can increase productivity by shifting away from its conventional approach ofproviding services to all its customers in a uniform manner toTokuno Customers want to be able to select service specifications that meet their individual lifestyles. Therefore, allowing
them to do so is a significant initiative for the Group. In addition,
I strongly believe that the value provided by the service industry in Japan has yet to receive the praise it deserves. I will bevery interested to see how the Group’s efforts under “Reforming
Working Styles” will impact and contribute to Japanese society
as a whole.

In 2017, the Group began taking action to establish
a new operational structure that will allow it to continue tofunction as a part of social infrastructure. At the same time,
we started to pursue structural reforms to ensure that we cancontinue to grow while securing appropriate levels of profit.
Under the deflation-oriented economy in Japan several years
ago, these kinds of continuous reforms would not have been
accepted by society. However, if we delayed our efforts tocarry out these reforms any further, we certainly would havefallen far behind the changing business environment by now.
I therefore believe that we made the managerial decision to
implement these reforms at the appropriate time.
Also, as Mr. Mori mentioned, we were extremely encouragedby the fact that the media, society, and, above all else, ourcustomers were so accepting of the Group’s new approach.
While there are plenty of issues we still need to address, I believe
we have been making solid progress in the right direction.
KigawaImproving the Effectiveness of the Board of Directors
Kigawa Next, I would like to ask all of you about your evaluation regarding the effectiveness of the Board of Directors.
Coming from the executive side of things, I believe that themost important thing for all members involved in the Company’sbusiness execution is to never be satisfied with the status quo
and to constantly maintain an appropriate sense of crisis. As
we use this sense of crisis to carefully consider our next move,the outside directors question us on whether our actions are
sufficient enough. This process leads to thorough and meaningful debate. I believe that the opinions and suggestions we
receive from the outside directors on a daily basis help us
sharpen our awareness of the next issue we need to tackle.

48

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Mori
What I pay the closest attention to from the perspective of effectiveness is whether or not appropriate authority isdevolved to the executive side. The Board of Directors is thehighest decision-making body of the Company. The Board
firmly decides on the major direction of management and theexecutive side is responsible for taking action to pursue thisdirection. If decision-making is entrusted 100% to the Boardof Directors, the speed of the Company’s business execution
will decline. As an outside director, I therefore place my focus
on determining if the executive side is operating at a high speedwith an appropriate level of authority.

I have been a member of the Board of Directors fornine years now, and I feel that the effectiveness of the Board
has improved over this time. Personally, I have always madesure to question the actions made on the executive side.
Of course, there are still issues that need to be addressed.
While the front lines operate in a swift manner, the management level needs to accelerate the PDCA cycle when it comesto the implementation of important strategies. The greater theimportance of a strategic theme, the greater the need for a
detailed plan that addresses that theme. The Board needs toclosely monitor the status of progress and issues regarding
such plans and analyze the relevant circumstances at times
when a plan’s goals are not met. The Board also needs topromptly engage in discussion related to the next step of aplan. By doing so, I believe the Board can further enhance
its effectiveness.
Hagiwara

The discussions held at Board of Directors meetingsare extremely lively. However, there are certain times when
discussions become too one-sided. As outside directors witha wide range of experience in various fields, we expect theactions of the Board to be carried out at a high level, and to
this end we ask numerous questions and provide guidance.
Sometimes, our approach to Board meetings can cause thoseon the executive side to become rather passive. However, it
is important for the executive side to be exposed to various
ways of thinking and for opposing opinions to be voiced­internally, as this will enable more meaningful discussions.
Accelerating the pace of decision-making is an issue of focus,
but I feel it is also necessary to make discussions more indepth for both the supervising side and the executive side.
TokunoThe Company’s Board of Directors maintains a strong
sense of urgency. Certain things we could only see from one
angle in the past are now seen from a variety of perspectives
thanks to having outside members join the Board. This keeps
us constantly aware of new outlooks and issues. We willcontinue to view the speed of decision-making and in-depth
discussions as important issues going forward. We have ouroutside directors participate in a variety of other meetingsand events aside from Board of Directors meetings, which
may mean that we place a greater burden on them than othercompanies. However, we strongly believe that doing so will
help us improve the soundness and effectiveness of ourcorporate governance.
KigawaYamato Holdings is a company with an Audit & Supervisory
Board, it has voluntarily established a Nomination andCompensation Committee. In examining new management
structures and the appointment of personnel, the Group has
created opportunities for all members of the executive side
to come together at least once a year to spend two days
engaging in open discussion on various themes.
Mori
I am truly grateful for the range of opportunities tovisit the front lines and meet a variety of people. Such efforts
by the Company are extremely helpful in allowing me to fulfill
my duties as an outside director.
Tokuno Based on my experience with the Company, theother companies I am involved with have introduced meetings
between outside directors and the managerial candidates whoalone are not enough to base our decisions on. Accordingly,
I view the Company’s efforts to have the outside directors be
active in a variety of settings as an example for other companies to follow.
Kigawa Thank you all very much for the opinions you haveoffered us today. They will play a major part in invigorating andsupporting the Company going forward.
The Yamato Group is currently entering into a period ofdramatic change. In light of these circumstances, the Group’s
management began to undertake major challenges in thefiscal year ended March 31, 2018. At the moment, our pursuitof these challenges is going as planned overall, but the true
test is still in front of us. To engage in lively discussion andmake appropriate decisions that will help us improve corporate value over the next 100 years starting from 2020, we ask
that our outside directors continue to provide us with a varietyof candid opinions.
Note: At the 153rd Ordinary General Meeting of Shareholders, which was held after this
discussion, the Company decided to increase the number of outside directors to four
(appointing one new director), thereby further enhancing its governance.

Hagiwara We periodically visit Company offices and havediscussions with those working on the front lines, and thatcertainly requires a large investment of time. With that said,
such visits allow us to gain a clearer understanding of theactual conditions of the Group than solely from the explanations provided before Board meetings. In addition, while

YAMATO HOLDINGS CO., LTD.
Integrated Report 201849

THE YAMATO GROUP’S ESG

Society

Promotion of CSV in Cooperation with Local Communities
The Yamato Group aims to become the “company most loved and trusted by society.” Based on the concept ofCreating Shared Value (CSV), which involves realizing both economic and social value as a company while addressing
the needs of customers and local communities, the Group is collaborating with local governments in such efforts as
supporting watch-over services for the elderly, promoting tourism, and helping expand sales channels for local products.

Number of Project G Solutions:953(As of December 31, 2018)

Breakdown of the 373 Project Agreements with Local Governments■ Watch-over support

143■ Hometown tax payments

9■ Shopping support services

14■ Environmental conservation3■ Product support services

12■ Combined passenger-cargo operations using buses

9■ Tourism promotion support

13■ Comprehensive support

34■ Event support

3■ Other7■ Disaster relief support

As of December 31, 2018126

 roviding Day-To-Day Support Utilizing Locations inP
the Community
Amid the declining birthrate and aging population, the populationin Japan is centralizing in certain urban areas while thinning out inregional communities. In such communities, it is anticipated that
community members will face various lifestyle-related issues going
forward due to the rapid progression of the aging population. On
April 28, 2016, the Yamato Group launched the lifestyle support
service Nekosapo with the aim of enriching the lives of people
living in Tokyo’s Tama New Town area.
At Nekosapo Stations, which have been set up within housing
complexes, we communicate local information and hold exchange
events in an effort to revitalize the community. In addition, we arecollaborating with the local government and private companies tooffer a wide range of lifestyle-related services, including taking careof housework and shopping needs on behalf of local community
members. We also offer a consolidated delivery service that includes
delivering parcels of other providers so that residents can receive
all their parcels at the same time.
To ensure that our efforts to invigorate the community around
Tama New Town become a prototype for urban revitalization in the
future, we will work in collaboration with the Urban RenaissanceAgency, the city of Tama, and members of local communities topromote new efforts going forward.

 ursuing Initiatives for CombinedP
Passenger-Cargo Operations
Yamato Transport is collaborating with local governments and bus
and railway companies to promote combined passenger-cargo
operations, which involve moving passengers and parcels at thesame time. By doing so, Yamato is helping to maintain bus and railway networks in hilly and mountainous areas where the population issubstantially declining and aging, and improve lifestyle-related services for local community members through more-efficient logistics.

areas, allowing access to various public facilities such as hospitals
and supermarkets. In this way, combined passenger-cargo operations help reinforce lifestyle support services in these areas. These
operations also increase the amount of time our sales drivers spend
in local communities, thereby further enhancing the convenienceof our TA-Q-BIN services in such ways as enabling customers toextend parcel pickup deadlines. Furthermore, combined passengercargo operations help improve traffic safety and benefit the environment by reducing the number of vehicles driven in local communities.
Bus and Railway Companies

By transporting TA-Q-BIN in areas not occupied by passengers,
bus and railway operators can improve productivity and secure
new sources of revenue to help maintain routes.
Promoting “Hands-Free Travel” through Japan’s First
Tourism-Oriented Combined Passenger-Cargo Operations
Beppu City in Oita Prefecture is
widely known among Japaneseand overseas visitors alike as being
home to one of the highest numberof hot springs in Japan, making it ahighly visited tourist spot. However,
due to a lack of coin lockers forstoring luggage, among other circumstances, tourists have had
trouble moving around the city as they often have to carry theirluggage with them.
To resolve this issue, Yamato Transport collaborated with Oita
Transportation Co., Ltd. and Oita Air Terminal Co., Ltd. to commence Japan’s first tourism-oriented combined passenger-cargo
operations in April 2018. By transporting luggage from Oita Airport
to Yamato Transport’s Oita base using an airport limousine bus,
luggage can be delivered to hotel facilities throughout Beppu City andthe central area of Oita City on the day of arrival, allowing tourists
to move around freely without any luggage soon after they arrive.
Going forward, these three companies will look at extending
luggage receipt times and expanding the coverage area, thereby
further enhancing this service and revitalizing local communities.

Merits of Combined Passenger-Cargo Operations
Regional Customers

For regional customers, combined passenger-cargo operations
help maintain and stabilize public transportation in underpopulated

50

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018 lease visit Yamato Transport’s corporate website for specific examples of its
Pongoing initiatives.
http://www.kuronekoyamato.co.jp/ytc/government/ (in Japanese only)Safety

Safety Measures to Support Business Continuity
The Yamato Group deems community streets and roads as the places to carry out its business activities. Based on
our corporate stance of thorough safety management that places respect for human life as its top priority, the Groupthoroughly adheres to its philosophy of placing safety first and business second to position respect for human life asa priority at all times.

Safety Management Disclosure Information

Training of Sales Drivers

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 Systemstipulated by the Ministry of Land, Infrastructure, Transport andTourism, and remains actively involved in its implementation. Results
for the fiscal year ended March 31, 2018, and part of the goals forthe fiscal year ending March 31, 2019, are listed below.

Transport Safety Goals and Achievement Status(The Yamato Group)

To develop excellent drivers who strictly practice safe driving,
the Group provides them with detailed guidance on a daily basis.
Yamato Transport drivers hired following a rigorous aptitude test
receive training upon joining the Company that includes safety
training and other forms of training for approximately one month.
After acquiring their Company license, they are able to engage indriving operations for the first time. Even after that, they continue
to hone their driving skills through training sessions one year after
joining, regular ride-along guidance and on-the-road patrols bysafety experts and managers, and a driving aptitude examination
once every three years.

Traffic Accidents
2018/3(Results)

2019/3(Targets)

No. of serious
traffic accidents*1

7

4

4

0

No. of serious
work-related accidents*2

0

0

1

0

· Ride-along guidance andon-the-road patrols by safety
experts and managers at least
once a year
· Driving aptitude examinations
once every three years

Commendation awards forzero traffic accidentsDriver Aptitude Examination
Automotive transportation operators are required to have theirdrivers take an aptitude examination that is recognized by the
Ministry of Land, Infrastructure, Transport and Tourism. The driversof the Yamato Group undergo driver aptitude examinations on atimely basis. These examinations consist of two types: mandatory
examinations, which include post-employment examinations, age
suitability examinations, and specific examinations; and voluntary
examinations, which include general examinations. In addition to
the mandatory examinations, Group drivers take voluntary examinations once every three years to ensure safe driving.

Driving operations

Based on the Yamato Group’s Safety Management Regulations, eachGroup company has established a safety management structure.
Guided by the leadership of its top management, the Group has
set up an organizational management structure involving collaboration between those on the transportation front lines and those inadministrative divisions, in order to enhance the effectiveness of
its transportation safety management.
Also, in regard to important information on such matters as
serious transportation-related accidents, the Group maintains
a framework for sharing such information with Yamato Holdings,
which oversees the Group, in an effort to promote transportation
safety on a Groupwide level.

Training after first yearof employment

Safety Management Structure

Post-employment training

Note: *1 and *2 are defined as follows*1 Deaths from traffic accidents (including accidents where driver was not at fault)*2 Deaths from disasters
Reference: Y amato Transport’s publicly disclosed “Transport Safety Management” information(in Japanese only)
http://www.kuronekoyamato.co.jp/ytc/corporate/pdf/csr/anzen_management.pdf

Outline of Internal Education

Renewal of Company license (onceevery three years)

2017/3(Results)

Acquisition of Company license

2016/3(Results)

Item

Safety Expert System (Yamato Transport)
Yamato Transport introduced the Safety Expert System in 1974.
Since then, this system has helped the company continue to steadily
support safety and provided the foundation for its safety strategy.
Safety experts are assigned to each regional branch and specialize in safety measures. As of April 2018, Yamato Transport
employed 325 safety experts. In addition to making rounds between
their designated areas, these safety experts work on a daily basis
to ensure strict compliance with laws and regulations, improve theabilities of individual drivers, and thoroughly prevent traffic andwork-related accidents.
The Safety Expert System and related systems have been
established at other Group companies aside from Yamato
Transport. Please refer to our ESG-related data for the numberof safety experts at each company.
http://yamato-hd.co.jp/english/csr/esg/performance.html

 or more detailed information, please see the CSR section ofF
the corporate website.
http://www.yamato-hd.co.jp/english/csr/index.html

YAMATO HOLDINGS CO., LTD.
Integrated Report 201851

THE YAMATO GROUP’S ESG

Environment

Environmental Measures for Realizing a Sustainable Society
The Yamato Group recognizes climate change, air pollution, depletion of resources, and loss of biodiversity as important
issues to address in order to realize a sustainable society, and is working to enhance its environmental efforts.

CO2 Emissions Targets and Results
The Yamato Group has formulated targets for mitigating CO2
emissions, which serve as concrete environmental goals.
CO2 Emissions Targets for 2019
Reduce CO2 emissions per unit (t-CO2 / ¥100 million of operating revenues) by 10%
by the fiscal year ending March 31, 2020 (compared with the fiscal year ended
March 31, 2010).

Results for the Fiscal Year Ended March 20182010/3(Base year)

2018/3(Results)

57.6

52.1

CO2 emissions per unit
(t-CO2 / ¥100 million ofoperating revenues)

Comparativechange–10%(target reached)

80
Trend
in CO2 emissions per unit

(t-CO2 / ¥100 million of operating revenues)
60

57.6

54.0

53.9

51.9

52.1

2015/3

2016/32017/3

2018/340

Introduction of Low-Carbon Pickup and Delivery and
Low-Carbon Vehicles
To the best of its ability, Yamato Transport has been providing
pickup and delivery services to urban and densely populated
residential areas without using vehicles. In addition, Yamato
Transport is also continuing its shift toward low-emission vehicles.
For instance, 128 electric vehicles were in use as of March 2018.
Greater Trunk-Route Transportation Efficiency
To provide more efficient trunkroute transportation to major
cities, Yamato Transport has
introduced the Super-Full Trailer
25 (a 25 meter long connected
Super-Full Trailer 25
trailer) for the first time ever inJapan, and commenced its operations between Atsugi Gateway,
Chubu Gateway, and Kansai Gateway. Through such methods, we
are working to enhance the efficiency of trunk-route transportation
and reduce CO2 emissions.

2002010/3

Initiatives to Address
Climate Change

Trend in Number ofElectrically Power
Assisted Bicycles

Climate change is one of thehighest priority issues facing(Thousand t-CO )international society. The Yamato
6,000
5,216 5,273
4,985
Group believes that climate
4,736
4,516
change can lead to an increase in
4,000
areas where it would be difficult tosustain the TA-Q-BIN business.
2,000This increase stems from higher
costs related to stricter environ0
2014/3 2015/3 2016/3 2017/3 2018/3
mental regulations on facilities,
vehicles, and fuel as well as theeffects of abnormal weather. Under the “eco in transport” and“eco in facilities” sections of its statement on environmental protection policies, the Group is introducing low-emission vehicles
and utilizing hand-pushed trolleys for pickup and delivery. The
Group is also promoting other energy conservation efforts andworking to mitigate climate change risks, thereby enhancing
the continuity of its services.
Furthermore, the Group is
focused on switching to lowemission vehicles and othersimilar efforts, which it views
as important measures forcontrolling air pollution.
2

Electric bicycle with attached rear car

52

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Services That Contribute to Lower Carbon
The reduction of redeliveries within our TA-Q-BIN business is not
only related to the provision of high-quality services that are tailored
to meeting the schedules of our customers but is also directly linked
to reducing CO2 emissions. Yamato Transport has been making
efforts to upgrade its services, such as the establishment of opentype parcel lockers* and services for Kuroneko Members, to provide greater convenience to customers receiving packages, thereby
increasing efficiency of deliveries and lowering CO2 emissions.
* Lockers established at 3,200 locations as of October 31, 2018

Trend in Introduction of Low-Emission Vehicles(Yamato Transport Co., Ltd.)(Units)(%)
30,00020,00018,90343.2%

21,10947.8%

23,21853.0%

25,02927,010

57.5%

61.7%

10,000

0

90

60

30

2014/3

2015/3

2016/32017/3

2018/3

Electric vehicles
Low-pressure gas (LPG) vehicles
New long-term compliance vehicles
Hybrid vehicles
Compressed natural gas (CNG) vehicles
Replacement for new long-term compliance vehicles
Percentage of low-emission vehicles among all Yamato Transport vehicles (right scale) or more detailed information, please see the CSR section ofF
the corporate website.
http://www.yamato-hd.co.jp/english/csr/index.html

0FINANCIAL SECTION
54

Ten-Year Summary and Business Highlights

56

Consolidated Balance Sheet

58

Consolidated Statement of Income

59	
Consolidated Statement of Comprehensive Income
60

Consolidated Statement of Changes in Equity

61

Consolidated Statement of Cash Flows

62

Notes to Consolidated Financial Statements

83

Independent Auditor’s Report

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

53

FINANCIAL SECTION

Ten-Year Summary and Business Highlights

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

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

Delivery

997,898

966,480

995,651

1,014,564

1,028,219

1,099,400

1,101,439

Non-delivery

254,024

234,354240,869

246,269

254,155

275,210295,269

Operating costs

1,167,764

1,110,971

1,143,006

1,163,777

1,181,834

1,274,471

1,290,715

Selling, general and administrative expenses

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

Operating profit

55,721

61,38964,314

66,651

66,20363,096

68,947

Profit before income taxes

48,99660,434

61,83645,81764,28465,882

69,158

Income taxes

23,34928,09628,491

26,05929,56331,00331,555

Profit attributable to owners of parent

25,52332,282

33,20819,78735,144

34,77637,533

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

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

KEY RATIOS:
Operating profit margin (%)

4.45

5.11

5.20

5.29

5.16

4.59

4.94

Net margin (%)

2.04

2.69

2.69

1.57

2.74

2.53

2.69

2.93
5.42
158.00
54.72
1.44
58.57
16.1
0.9

3.69
6.53
159.82
58.38
1.37
88.35
18.3
1.2

3.74
6.46
170.34
57.33
1.39
73.71
17.6
1.1

2.18
3.84
164.50
56.02
1.39
90.52
27.8
1.1

3.76
6.70
162.3956.25
1.37
108.36
21.3
1.4

3.51
6.41
151.8253.42
1.39
153.41
27.0
1.7

3.55
6.75
158.5952.24
1.32
173.4530.7
2.0

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

167,555
82,39585,1601,262
624

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

177,301
84,29393,0081,423
600

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

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

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

2,231
65

2,262
65

2,312
64

2,187
62

2,112
61

2,084
61

1,901
61

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

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

54

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

2016/3

2017/3

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

Analysis of Operating Revenues

2018/3(¥ billion)

1,466.8

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

1,111,867

1,151,028

1,201,745

11,311,609

304,546

315,824

337,068

3,172,704

BIZ-Logistics

1,306,200

1,385,492

1,452,485

13,671,742

Home Convenience (0.2)

41,673

46,47550,642476,675

68,54034,88535,686

335,896

68,07933,03833,123

311,779

Financial

28,415

14,673

14,435

135,873

Autoworks +0.0

39,42518,054

18,232

171,610

Yen

+50.7

Delivery

+13.2

+0.8

e-Business

+4.9

+2.3

Other

U.S. Dollars

1,538.8

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

$

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

YoY +71.9

Analysis of Operating Profit(¥ billion)

34.8

FY17/3+71.9

Revenue

Subcontracting
expenses+38.8

Vehicleexpenses

4.84

2.38

2.32

2.78

1.23

1.18

3.63
7.15
167.7649.37
1.30
125.33
23.3
1.7

1.64
3.35
157.73
48.37
1.33
81.45
51.4
1.7

1.64
3.35
146.5449.34
1.38
131.9457.7
1.9

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

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

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

1,536
57

1,542
55

1,464
56

+17.5

Personnel expenses

+19.1

Other
Consolidation
journal entries

+2.6

(6.9)
35.6

FY18/3

YoY +0.8

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

1Q

2Q

3Q

4Q

1Q

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

2Q

3Q

2017/3

4Q

1Q

2Q

3Q

4Q

2018/3

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

55

FINANCIAL SECTION

Consolidated Balance Sheet
March 31, 2018

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

ASSETS

2018

2017

2018

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

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

46,693

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

Inventories (Note 4)

2,816

2,775

26,505

Deferred tax assets (Note 11)

19,246

20,684

181,150

Prepaid expenses and other current assets

30,32829,155285,469    Total current assets

578,881586,510

5,448,801

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

178,621341,134
194,073

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

128,454
15,67016,201

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

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

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

268,165    Total

898,348

889,087

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

405,058

405,070

3,812,668

36,23232,588341,038

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

22,086968
18,14916,232
26,643

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

5,811

6,426

54,696

Accumulated depreciation     Net property, plant and equipment

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

56

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

131,495

123,092

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

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

LIABILITIES AND EQUITY

2017

2018

2018

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

20,098$ 313,935

45,84043,304431,472  Trade155,324

155,736

1,462,009  Other

19,992

8,680

188,175

Income taxes payable

11,02014,400103,727

Accrued expenses

75,10068,166

706,888

Deferred profit on installment sales (Notes 3 and 13)

5,900

6,010

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

33,352¥

Notes and accounts payable (Note 13):

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

15,12948,50940,326456,603

395,037

371,849

3,718,348

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

73,849114,767

695,114

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

75,49570,952

710,611

Deferred tax liabilities (Note 11)

4,651

3,162

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

8,815

8,383

82,972

162,810

197,264

1,532,468

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

127,235

127,235

1,197,617

Capital surplus

36,81336,813

346,509

Retained earnings

416,855

409,271

3,923,710

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

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

12,95910,975

121,975   Foreign currency translation adjustments

1,146

(423)

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

550,308

539,179

5,179,852

7,279

6,380

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

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

557,587545,559

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

57

FINANCIAL SECTION

Consolidated Statement of Income
Year Ended March 31, 2018

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

OPERATING REVENUES

2018

2017

2018

¥1,538,813¥1,466,852$14,484,313

1,452,485

1,385,492

13,671,742

50,642

46,475

476,675

1,503,127

1,431,967

14,148,417

35,68634,885335,896

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

981

847

9,232

Interest expense

(272)

(430)

(2,556)

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

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

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

1,639

600

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

(1)

(1)

(9)

Loss on valuation of investment in unconsolidated subsidiaries and affiliates

(55)

(209)

(514)

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

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

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

Disaster recovery expenses for the Kumamoto Earthquake(886)

Other—net

1,046

381

9,850

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

PROFIT BEFORE INCOME TAXES

33,12333,038311,779

Current

14,62222,094

137,628

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

14,435

14,673

135,873

PROFIT

18,68818,365

175,906

INCOME TAXES (Note 11):

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

311

456
¥

18,232¥

18,054

4,296$

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

Yen
2018

2017

Basic earnings¥46.24¥45.37$0.44

Cash dividends applicable to the year

27.00

27.00

0.25

2018

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

See notes to consolidated financial statements.

58

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2018

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

PROFIT2018

2017¥18,688¥18,365$175,906

2018

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

2,514

1,269

23,665

Foreign currency translation adjustments

1,569(1,174)

14,773

1

4,456

5

1

(2)

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

4,084

4,552

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

992

398

9,340

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

59

FINANCIAL SECTION

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

Thousands

Millions of Yen
Accumulated Other Comprehensive Income

BALANCE,APRIL 1, 2016

Outstanding
Number of
Shares ofCommon Stock

Common Stock398,516¥127,235

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

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

Non-controlling
Interests

Total¥537,821¥6,034

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

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

1(10,002)

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

127,235

36,813409,271(39,078)

1,185(1,174)

4,454

4,465

346

4,811

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

545,559 Profit attributable toowners of parent

18,232

18,232

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

(2)

(2)

(2)

(4)

(4)

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

(2)

(4)

 Disposal oftreasury stock

1

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

1

1

1,984

1,569

(5)

3,548

899

4,447

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

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

Common Stock

BALANCE,MARCH 31, 2017

$1,197,617

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

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

Non-controlling
Interests

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

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

171,610

171,610

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

(21)

(21)

(21)

(40)

(40)

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

$1,197,617

See notes to consolidated financial statements.

60

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

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

33,397

8,469

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

Consolidated Statement of Cash Flows
Year Ended March 31, 2018

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

2018

2018

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

46,435

46,126

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

1,042

66

9,806

   Loss on impairment of long-lived assets

3,241

1,284

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

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

1

1

9

   Loss on valuation of investment in unconsolidated subsidiaries and affiliates

55

209

514

1,355

799

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

227

20

2,141

    (Decrease) increase in notes and accounts payable

(478)

7,454

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

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

2,232

1,898

21,012  Other—net

12,903

15,633

121,450   Total adjustments

18,60540,287

175,120    Net cash provided by operating activities

51,72873,325486,899

6,632

1,874

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

Proceeds from sales of marketable and investment securities

2,672

1,600

25,151

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

Collection of loans

997

1,017

9,390

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

Increase in investments in and advances to unconsolidated subsidiaries and affiliates

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

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

10,683(5,802)

Proceeds from long-term debt

4,000

43,72037,651

Repayments of long-term debt

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

Dividends paid

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

313

(883)

2,947

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

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

228,926

249,262

2,154,805

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

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

17(347,611)

See notes to consolidated financial statements.

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

61

FINANCIAL SECTION

Notes to Consolidated Financial Statements
Year Ended March 31, 2018

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

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

62

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

Millions of Yen
2018

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

2017

2018

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

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

7–60 years
2– 7 years
2–20 years

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

63

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

64

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

65

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

Receivables

Thousands of U.S. Dollars

Deferred Profit on
Installment Sales

Receivables

Deferred Profit on
Installment Sales

2019¥23,306¥2,314$219,369$21,7812020

11,448

1,624

107,756

15,286

2021

6,404

985

60,278

9,268

2022

3,195

522

30,073

4,919

2023

1,524

276

14,345

2,595

816

179

7,683

1,690

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

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

Millions of Yen

Merchandise

2018

2017

2018

¥  750¥  740$ 7,057

146

216

1,380

Work in process
Raw materials and supplies

1,920

1,819

18,068

Total¥2,816¥2,775$26,505

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

Millions of Yen
2018

2017

¥34,218¥31,350$322,079

1,210

743

11,393

804

495

7,566

¥36,232¥32,588$341,038

2018

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

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

Unrealized Gains

Unrealized Losses¥19,426¥6

Fair Value

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

Millions of Yen
2017
Cost

Unrealized Gains

Unrealized Losses¥15,540¥5Fair Value

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

Thousands of U.S. Dollars
2018
Cost

Unrealized Gains

Unrealized Losses$182,851$60

Fair Value

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

66

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

$139,288$322,079

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

Available-for-sale:
Equity securities
Other
Total

Proceeds

Realized Gains

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

March 31, 2017

Available-for-sale: Equity securities

Thousands of U.S. Dollars
March 31, 2018

Available-for-sale:
Equity securities
Other
Total

Proceeds

Realized Gains

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

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

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

67

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

Millions of Yen
2017

2018

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

2018

¥ 93,900

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

Lease obligations

5,789

7,295

54,485

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

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

10,00010,00094,127

119,689

158,071

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

Millions of Yen

Thousands of
U.S. Dollars

2019¥ 45,840$  431,472

2020

42,541

400,4272021

16,452

154,860

2022

14,408135,613

2023

168

1,579

Total

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

280

2,635

¥119,689$1,126,586

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

Millions of Yen
2017

2018

Balance at beginning of year

¥153,513$1,490,788

Service cost

12,221

11,520115,033

Interest cost

151

147

1,423

5,884

(49)

55,383

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

68

2018

¥158,382

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

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

Millions of Yen

Balance at beginning of year

2018

2017

¥87,547¥82,016

Expected return on plan assets
Actuarial gain arising during the year2018

$824,047

875

820

8,240

3,565

2,486

33,552Contributions from the employer

4,343

4,313

40,882Retirement benefits paid

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

Balance at end of year

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

Millions of Yen
2017

2018

Defined benefit obligation of funded plan2018

¥ 64,355¥ 61,358$ 605,754

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

Defined benefit obligation of unfunded plan

105,298

97,024

991,131

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

Millions of Yen

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

2018

2017

¥75,495¥70,952$710,611

(129)

(117)

(1,215)¥75,366¥70,835$709,396

2018

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

Millions of Yen
2018

2017

Service cost

¥12,221¥11,520$115,033

Interest cost

151

147

1,423

2018

Expected return on plan assets

(875)

(820)

(8,240)Recognized actuarial loss

2,321

3,966

21,844

OthersNet periodic benefit costs

(29)

(24)

(267)

¥13,789¥14,789$129,793

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

69

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

Millions of Yen
2017

2018

2018

Actuarial gain¥2

¥6,501

$13

Total

¥2

¥6,501$13

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

Millions of Yen
2018

2017

2018

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

Total¥(8,028)¥(8,030)$(75,568)

2018

2017

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

30%

32%

Debt investments

25

26

Equity investments

23

23

Others

22

19

Total

100%

100%

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

2017

Discount rate

0.1%

0.1%

Expected rate of return on plan assets

1.0%

1.0%

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

70

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

Millions of Yen

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

2018

2017

2018

¥5,535¥5,184$52,102

257

326

2,416

104

99

978

Reconciliation associated with changes in accounting estimates

(1)

15

(6)

Reduction associated with settlement of asset retirement obligations

(85)

(46)

(799)

OthersBalance at end of year

(10)

(43)

(101)

¥5,800¥5,535$54,590

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

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

71

FINANCIAL SECTION

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

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

Millions of Yen
2018

2017

¥ 10,146¥ 9,835$ 95,500

1,502

1,925

14,135

270

269

2,545

1,659

2,377

15,6192018

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

4,682   Tax loss carryforwards

4,323

192

40,687  Other

1,686

1,783

15,873   Less valuation allowance

(137)

(160)

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

1,731

1,872

16,293   Loss on valuation of land

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

4,211

4,447

39,632

469

469

4,416

  Unrealized profit

2,457

2,278

23,124  Other

10,73910,479101,078

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

Current—other

¥

(205)

¥

(220)

$

(1,936)

Deferred tax liabilities—current

¥

(205)

¥

(220)

$

(1,936)

Deferred tax assets—non-current
Deferred tax liabilities:

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

72

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

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

2018

Normal effective statutory tax rate

30.9%

30.9%

Per capita levy of local taxes

9.2

8.9

Difference of tax rates for foreign subsidiaries

2.8

1.3

Valuation allowance

(0.0)

2.9

Other—net

0.7

0.4

Actual effective tax rate

43.6%

44.4%

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

Millions of Yen
2017

2018

Due within one year

2018

¥164

¥ 3,066$ 28,865

Due after one year

32,812304

308,845

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

Millions of Yen

Gross lease receivables

2018

2017

¥49,797¥48,7022018$468,725

Unguaranteed residual values

6,584

5,875

61,972

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

Investments in leases—current

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

Thousands of
U.S. Dollars

2019¥17,409$163,862

2020

13,645

128,438

2021

9,819

92,428Year Ending March 31

2022

6,250

58,831

2023

2,334

21,9692024 and thereafter
Total

340

3,197

¥49,797$468,725

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

73

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

Millions of Yen

Due within one year
Due after one year
Total

2018

2017

¥ 4,399¥3,7352018$ 41,406

7,154

6,212

67,336¥11,553¥9,947$108,742

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

Carrying Amount

Fair Value

Difference

Assets:Cash and cash equivalents¥204,422

Trade notes and accounts receivable

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

Installment sales receivable¥204,422

223,781¥ (205)

5,744

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

34,21834,218

Shares of affiliates

13,592

21,259Trade notes and accounts payable

155,324

155,324

Short-term loans

66,952

66,96614

Long-term loans

60,30060,283

(17)

7,667

Liabilities:

74

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Millions of Yen
March 31, 2017

Carrying Amount

Fair Value

Difference

Assets:Cash and cash equivalents¥230,129

Trade notes and accounts receivable

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

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

207,984¥(13)

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

31,35031,3505,862

Shares of affiliates

13,712

13,884

Trade notes and accounts payable

155,736

155,736

Short-term loans

60,97460,99723

Long-term loans

89,90089,897(3)

172

Liabilities:

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

Carrying Amount

Fair Value

Difference

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

Trade notes and accounts receivable

2,109,367

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

Installment sales receivable

2,106,368$ (1,938)

54,061

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

430,928

Available-for-sale securities

322,079

322,079

Shares of affiliates

127,934

200,10272,168

Liabilities:
Trade notes and accounts payable

1,462,009

1,462,009

Short-term loans

630,200

630,329

129

Long-term loans

567,582

567,422(160)

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

75

FINANCIAL SECTION

Notes to Consolidated Financial Statements

Cash and cash equivalents

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

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

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

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

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

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

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

Millions of Yen

76

2018

2017

2018

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

Other

5,620

3,359

52,903

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

March 31, 2018

Due after One Yearthrough Five Years

Due after
Five Years

Cash and cash equivalents¥204,422

Trade notes and accounts receivable

205,743¥18,165

Installment sales receivable

23,306

22,571816¥433,471¥40,736¥1,007

¥214

Total

¥  191March 31, 2017

Cash and cash equivalents¥230,129

Trade notes and accounts receivable

191,192¥16,725

Installment sales receivable

22,982

22,412748¥444,303¥39,137

¥962

Total

Thousands of U.S. Dollars
March 31, 2018

Due in One Yearor Less

Cash and cash equivalents$1,924,157

Trade notes and accounts receivable

1,936,587$170,987

219,369

212,452

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

Installment sales receivable
Total

Due after One Yearthrough Five Years

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

Thousands of
U.S. Dollars

2019¥33,600$316,2652020

40,800384,036

2021

5,500

51,7692022

14,000131,777

Total¥93,900$883,847

Year Ending March 31

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

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

Hedged Item

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

Long-term bank loans

Contract AmountContract AmountDue after One Year

¥8,220¥—Fair Value*

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

77

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

Millions of Yen
2018

2017

Adjustments arising during the year

¥ 5,567¥ 2,194$ 52,403

Reclassification adjustments to profit or loss

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

Amount before income tax effect

3,928

1,595

36,975

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

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

2,321

3,966

21,844

Amount before income tax effect

2

6,501

13

Income tax effect(1)(2,045)(8)¥

1¥ 4,456

$

5

¥

—

¥

$

(2)

2018

Unrealized gain on available-for-sale securities:

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

(89)

Total

(835)

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

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

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

Basic EPS—Profit attributable to common shareholders

Thousands ofSharesProfit Attributable to Weighted-average
Owners of Parent
SharesYen

U.S. Dollars
EPS¥18,232

394,277¥46.24¥18,054

397,930¥45.37

Year Ended March 31, 2017

Basic EPS—Profit attributable to common shareholders

78

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

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

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

79

FINANCIAL SECTION

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

2018
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

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

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

Segment profit

¥

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

32,916

2,157

582

4,120

5,233

696

374

46,078345

46,423

523

5,349

5,872

13,957

19,82934,3803,589

54,168314

54,482

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets¥1,538,813

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

897

2,023

11,645830

804

Millions of Yen

2017Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

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

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

Segment profit

¥

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

32,417

2,575

542

4,368

4,402

735

410

45,449665

46,114

305

5,057

5,362

13,712

19,074

31,611

4,798

48,796198

48,994

Segment revenues:Segment revenues
from customers
Intersegment revenues

Segment assets¥1,466,852

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

708

3,445

7,379

264

591

Thousands of U.S. Dollars

2018
Delivery

BIZ-Logistics

Home Convenience

e-Business

Financial

Autoworks

Other

Total

Reconciliation

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

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

Segment profit$

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

5,482

38,78049,255

6,550

3,520

433,7233,245

436,968

55,271

131,376

186,647

509,8672,954

512,821

Segment revenues:Segment revenues
from customers
Intersegment revenues

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

Other:
Depreciation and amortization

309,832

20,304

Investment in entities  accounted for using
equity method

4,925

50,346

Increase of tangible and   intangible fixed assets

323,61133,782

8,446

19,037

109,610

7,817

7,564

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

80

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

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

2018
TA-Q-BIN

Kuroneko DM-Bin¥1,035,053

Other¥78,789

Total¥424,971

TA-Q-BIN

Kuroneko DM-Bin¥981,002¥1,538,813

Other¥81,277

Total¥404,573¥1,466,852

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

Kuroneko DM-Bin$9,742,589

Other$741,615

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

2018
Japan

North America¥1,510,742

Other¥10,848¥17,223

Total

Japan

North America¥1,538,813¥1,441,673

Other¥9,789Total¥15,390¥1,466,852

Thousands of U.S. Dollars
2018
Japan

North America$14,220,086

Other$102,110

Total$162,117 $14,484,313

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

2018
Japan

North America¥403,241

Other

¥370

Total

¥1,447

Japan

North America¥403,528¥405,058

Other

¥365

Total

¥1,177¥405,070

Thousands of U.S. Dollars
2018
Japan

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

Other

Total

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

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics

Home
Convenience¥2,426¥685¥38

e-Business

Financial

Autoworks

Other

¥92

Total

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

2017

Loss on impairmentof long-lived assets

Delivery

BIZ-Logistics

Home
Convenience

¥765

¥322

¥178

e-Business

Financial

Autoworks

Other

¥19

Total

¥1,284

Eliminations or
Corporate
Consolidated¥1,284

Thousands of U.S. Dollars
2018
Delivery

BIZ-Logistics

Home
Convenience

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

e-Business

Financial

Autoworks

$861

Other

Total

$30,507

Eliminations or
Corporate
Consolidated$30,507

YAMATO HOLDINGS CO., LTD.
Integrated Report 201881

FINANCIAL SECTION

Notes to Consolidated Financial Statements

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

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

82

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Millions of Yen

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

Independent Auditor’s Report

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

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

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

June 15, 2018

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

83

COMPANY INFORMATION

Global Network
As of March 31, 201827

overseas subsidiaries

24

countries and regions of operation (including representative offices)

Americas

EuropeAsia

Americas

Asia

South
Korea
China

CanadaShanghaiTaiwanIndia

United Statesof America

Hong Kong
MyanmarVietnamPhilippines

Thailand
MexicoMalaysia
SingaporeCountries and regions with local subsidiaries
Countries and regions with representative offices

Indonesia

EuropeUnitedKingdom

Netherlands
Belgium
Germany

Czech Republic

FranceSpain

84

YAMATO HOLDINGS CO., LTD.
Integrated Report 2018

Hungary

ItalyCorporate Data / Stock Information
As of March 31, 2018

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
Stock Exchange Listing
Tokyo Stock Exchange

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

Percentage of total
shares outstanding

The Master Trust Bank of Japan, Ltd. (Trust Account)

10.58%

Japan Trustee Services Bank, Ltd. (Trust Account)

6.25%

Yamato Employees’ Shareholding Association

4.97%

JP Morgan Chase Bank, N.A. 380055

4.33%

Nippon Life Insurance Company

3.75%

Meiji Yasuda Life Insurance Company

3.63%

Mizuho Bank, Ltd.

2.98%

Yamato Trading-Partner Shareholding Association

2.18%

State Street Bank and Trust Company 505223

2.17%

Japan Trustee Services Bank, Ltd. (Trust Account 5)

1.61%

Total

42.45%

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
2015

10

11

12

1

2

3

4

5

6
7
2016

8

9

10

11

12

1

2

3

4

5

6
7
2017

8

9

10

11

12

1

2
3
2018

7

8
9
2015

10

11

12

1

2

3

4

5

6
7
2016

8

9

10

11

12

1

2

3

4

5

6
7
2017

8

9

10

11

12

1

2
3
2018

0

(Thousands of shares)
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 201885

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

Printed in Japan
Published in March 2019