In April 2011, to provide assistance to the Great East Japan Earthquake reconstruction effort, the Yamato Group began donating 10 yen for every TA-Q-BIN parcel it delivered. During the one-year period from April 2011 to March 2012, we handled a total of 1,423,608,136 TA-Q-BIN parcels, which translates into 14,236,081,360 yen in donations. These donations were given exclusively to the restoration and revitalization of fisheries and agricultural industries as well as local infrastructure. A third-party committee consisting of experts selected by the Yamato Welfare Foundation chose projects that had difficulty receiving government subsidies and projects that helped contribute to immediate employment creation to receive the funding, based on a policy to provide "visible assistance, prompt assistance and highly effective assistance."

Thus far, 24 different projects have received a total of 10,600 million yen (as of February 29, 2012), including construction for a temporary fish market in the disaster-affected area, as well as the purchase of ice-making and processing equipment for the fisheries industry, the reconditioning and consolidation of farmland and the relocation of children's day care facilities to higher ground.

I would like to take this opportunity to express my heartfelt appreciation once again to customers who used our TA-Q-BIN service during this period, as well as our shareholders and government officials who have endorsed and supported our activities. I sincerely hope that our efforts can form the impetus for developing a new culture of giving among private-sector businesses throughout Japan.

The Yamato Group will celebrate its 100th anniversary in 2019. Our new long-term management plan called the "DAN-TOTSU Management Plan 2019," which commenced in 2011, sets forth key targets that we would like to achieve by our 100th anniversary.

Our goals for the Yamato Group's 100th anniversary can largely be categorized into two areas. First, we will expand our overseas network, especially in Asia, to bring our services to the world as the global economy grows more borderless. Specifically, we will aim to become Asia's number one logistics solutions provider by the year 2019.

Second, in Japan, we will fulfill our social responsibilities toward local communities and individuals as a company that supports people's lifestyles. I am convinced that the Yamato Group's role in society will grow even larger amid the structural changes taking place in Japan's society, such as the country's dwindling birth rate and aging population, as well as the increase in depopulated areas.

"More global" and "focused upon local communities, one person at a time" appear to be conflicting goals at first glance, but we believe these represent the same target from the standpoint of building a platform for a better society in which people, companies, governments and local communities are connected to one another.

DAN-TOTSU Management Plan 2019 also calls for the Yamato Group to strengthen its non-delivery businesses. The Yamato Group is perhaps best known for its TA-Q-BIN parcel delivery service, but we actually provide integrated logistics solutions to a large number of companies. Today, our non-delivery businesses account for about 38% of our operating income. We plan to increase this share to more than 50% by 2019.

To achieve this, we established the target to set up 100 projects across the entire Yamato Group. Currently, we have launched about 50 of these, so we must redouble our efforts going forward. I do not believe this is an impossible number to achieve, if we are able to capitalize on the Yamato Group's strength of providing a comprehensive network that spans from the "first one mile" where parcels are collected from the consumer to the "last one mile" where parcels are delivered to the consumer.

These projects will eventually give rise to solutions for our corporate customers. I would like to reemphasize here that the Yamato Group stands committed to utilizing its collective strengths to provide a wide range of useful solutions to its corporate customers.

In the year 2000, Taiwan became the first market in Asia into which the Yamato Group expanded its TA-Q-BIN service. In the more than ten years that has passed since then, TA-Q-BIN has grown to become an important part of Taiwan's social infrastructure, just like in Japan. Starting in 2010, we began a full-fledged expansion of our TA-Q-BIN network into major Asian regions.

First, we launched services in Singapore and Shanghai in January 2010, in Hong Kong in February 2011, and in Malaysia in September 2011. We have set a target to achieve greater than 20% of our net sales from our overseas business in fiscal 2019. In addition to our proprietary services like Time Zone Delivery, COOL TA-Q-BIN and TA-Q-BIN COLLECT, we will provide the same top quality customer service and hospitality through our local sales drivers as we do in Japan. Our ultimate goal is to contribute to the betterment of society in each country by making TA-Q-BIN the new de facto parcel delivery standard in Asia.

The mail-order business is witnessing rapid growth in Asia on the back of the region's robust economic growth. This trend will likely accelerate further in the future. We are already providing integrated support to many Japanese companies as they expand their mail-order services in the Asia region. This support extends from product deliveries to include total support throughout processes such as receiving and placing orders, export / import operations, inventory storage, and sorting.

Following the Great East Japan Earthquake, Japanese logistics has seen a rapid shift toward decentralization. This is because Japanese companies found that their efficiency-centered, centralized logistics models were susceptible to disasters and required too much time to restore. In light of the costs and risks, today the decentralization of production and sales sites is fast becoming the new norm. Therefore, we need new logistics solutions that align with these changing times.

In the past, decentralization was associated with higher costs. Many of our client companies, however, have found that visualizing the entire logistics process through "Mieruka" (Visualization) solutions and controlling inventory and components using high-frequency, small-volume shipments helps to eliminate excessive inventory and significantly reduce total logistics costs, including costs of warehouses and international shipments.

For example, our clients in the mail-order business succeeded in reducing inventory, increasing sales through service-level improvements and reducing merchandise return rate by combining inventory site decentralization with same-day shipment to customers. In addition, our clients in manufacturing succeeded in significantly reducing component procurement costs to production sites in Asia. This was achieved by utilizing an information system built together by the Yamato Group and government bodies alongside a high-frequency, small-volume shipment platform for exports and imports, and having the company's suppliers in Japan jointly use these same systems.

Using our platform that combines the last one mile network of TA-Q-BIN with the Yamato Group's accumulated information technology (IT), logistics technology (LT) and financial technology (FT) solutions will enable a company to provide high-quality production and services as well as dramatically reduce total distribution costs.

The Yamato Group has been considering ways that it can make broad contributions to the revitalization of local communities as well as the revitalization of Japan. Logistics is a form of social infrastructure, just like electricity and water, and the Great East Japan Earthquake reminded us of this fact, although not by choice.

The earthquake has shed even greater light on major social issues facing Japan, such as national and local government financial woes, a dwindling birthrate and aging population, and the depopulation of rural areas. As a result, it has become clear that we need to take urgent measures to address these structural changes taking place in our society. Our long-term plan to utilize our TA-Q-BIN network to provide a lifestyle assistance platform including public services perfectly aligns with this need.

The depopulation and aging occurring in rural areas has meant that more consumers are finding it difficult to go shopping. Online supermarket providers that provide people with a convenient means to buy groceries are contributing to the revitalization of everyone involved in the local community, including the people that live there and the companies that do business there.

There are also many ways in which we can help revitalize local shopping streets, which have been on the decline as of late. We have already begun testing out various solutions across Japan, including the use of e-money as a local currency, a loyalty reward point system for purchases, and a system where we deliver consolidated purchases from a local shopping street to the home of the consumer at the time they choose.

Healthy shopping streets inevitably lead to healthy communities, which in turn helps revitalize all of Japan. I also believe that our service where we collect home appliances in need of repair directly from consumers' homes and redeliver them a few days after repair represents a positive example of new lifestyle assistance that fuses our platform with a manufacturer's after-sales services. This is also a field that we should focus on going forward, I believe.

We are currently moving forward with construction on Japan's largest logistics facility "Haneda Chronogate" at Tokyo International Airport (Haneda Airport), which is set to become an important "node" connecting Asia and Japan. This name was chosen because it combines the name of the ancient Greek god of time "Chronos" with the term "Gateway." In addition to the airport, Haneda is also closely located to the ports of Tokyo and Yokohama and offers excellent access to Japan's expressway and railway networks. This major facility will help us create a new logistics model that connects Asia and Japan.

Haneda Chronogate is not your ordinary warehouse, because it actually generates value by moving parcels 24 hours a day. Specifically, we aim to provide the following four logistics functions using this facility.

First, a "manufacturing / processing added-value function for logistics."
For example, based on client needs, as the final step of product assembly, we can manufacture or process groups of components delivered from countries throughout Asia. Once completed, we will then ship these promptly as the final product.

Second, a "high-speed distribution function," targeting parcels requiring time-sensitive delivery.
We will perform maintenance and cleaning of urgent parts as well as high-priced medical devices and deliver them promptly to destinations in Japan and Asia.

Third, a "collection function" using the Yamato Group's network.
The facility will be used as a site for collecting products and machine tools from Asia or Japan in need of repair or recall.

Fourth, a "direct distribution function" that connects logistics globally.
The facility will enable 24-hour customs clearance, meaning we can seamlessly and promptly deliver parcels from abroad in much the same way as our domestic TA-Q-BIN service.

In this manner, by consolidating all of the abilities held by the Yamato Group into one facility at Haneda, and providing them as a wide variety of functions, we aim to establish a platform that contributes to the development of companies, governments, society, and local communities throughout Asia and Japan.

YamatoSolutions.com introduces case studies where client companies have dramatically improved their business by implementing logistics solutions provided by the Yamato Group to resolve issues throughout the entire logistics process. Please look over this website and contact us with any questions or enquiries.

We can be reached through our dedicated organization, "Solutions Lab," or through a sales representative at any of your Yamato Group partner companies. Haneda Chronogate will also serve as a showroom for the solutions the Yamato Group provides, so we welcome you to arrange a visit after the facility opens to see how your company stands to benefit from our myriad of solutions.