Yamato : Integrated Report 2023

16-10, Ginza 2-chome,Chuo-ku, Tokyo

104-8125 Japan

Telephone: 81-3-3541-4141

Integrated Report 2023

"One

YAMATO 2023 "

Medium-Term Management Plan

Based on "YAMATO NEXT100"

01

VALUE CREATION BY THE YAMATO GROUP

01 The Yamato Group's Important Role as a Part of Social Infrastructure / Editorial Policy

02 Group Corporate Philosophy

04 History of Expanding the Value We Provide (100 Years of Progress)

44

CORPORATE GOVERNANCE

1. Outside Director Roundtable

1. Corporate Governance

58 Directors / Audit & Supervisory Board Members / Management System

Overseas development

24 countries and regions

Domestic parcel delivery market share*2

No. 1(47.5%)

Number of employees

Approx. 210,000

Annual parcel delivery amount

(TA-Q-BIN, TA-Q-BIN Compact, EAZY, and Nekopos)

Approx. 2.33 billionparcels

Sales drivers

Approx. 60,000

Number of Kuroneko

Members

Approx. 56 million

12

06 Expanding Value Provision to the "End to End"

1. Value Creation Process

1. Performance Highlights

DESTINATION OF ONE YAMATO

12 Message from the President

FINANCIAL SECTION

62

62 Ten-Year Summary and Business Highlights

64 Consolidated Financial Statements

COMPANY INFORMATION

96

1. Global Network
2. Corporate Data / Stock Information

*1 Warehouses, pickup and delivery facilities for corporate clients, and other locations

*2 Source: "Survey and Calculation Method for Parcel Delivery Amount" (provisional translation) compiled by Japan's Ministry of Land, Infrastructure, Transport and Tourism

32 Digital Strategy

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 available at the time this report was created. Furthermore, forward-looking statements are subject to a number of risks and uncertainties that include, but are not limited to, economic conditions, customer demand, foreign currency exchange rates, tax laws, and other regulations. Yamato Holdings therefore cautions readers that actual results may differ materially from these predictions.

Editorial Policy

Having built up long-standing relationships of trust with all of its many and varied stakeholders, the Yamato Group discloses not only information of a legal nature but also information considered necessary for those stakeholders. The Yamato Group adopted the policy that such information shall be conveyed promptly and accurately as well as fairly and equitably. Conveying informa- tion, including that of a non-financial nature, on such aspects as management strategies, business overviews, and environmental, social, and governance (ESG) activities, this integrated report is intended to deepen the reader's comprehensive understanding of the Yamato Group. Please visit our website for more detailed information.

Guidelines Referenced

• Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation 2.0, Ministry of Economy, Trade and Industry

• Integrated Reporting Framework, International Financial Reporting Standards Foundation (IFRS Foundation)

1. Environmental Strategy

1. Sustainable Management

38Strengthening of Sustainable

Management

40Sustainable Medium-Term Plans

2023

42Measures That Support Sustainable

Growth

Group Corporate Philosophy

The Yamato Group's foundation lies in its Core Values, which serve as the spirit of the Group's founding and have remained unchanged since their establishment in 1931. Supported by our Group Corporate Philosophy, created based on our unchanging Core Values, we aim to become a corporate group that can make sustainable contributions to the realization of an enriched society.

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.

Core Values

1. We all represent the Company.

This value represents the spirit of "inclusive management," whereby employees make decisions based on their own judgments and engage with our customers and business partners with an awareness that they represent the Company.

2. We connect our customers' hearts with every delivery.

This value defines deliveries as not simply the transportation of goods, but rather a chance for us to connect with our customers' hearts and offer them joy.

3. We conduct ourselves both professionally and ethically.

This value reflects the importance of ensuring that all our employees adhere to laws and regulations as members of society while conducting themselves in an ethical manner.

Mission

The mission and purpose the

Yamato Group should fulfill in society

Management Philosophy

Vision

Our vision for the Yamato Group

in the future

Transformation Plan "YAMATO NEXT100"

Medium-Term Management Plan "One YAMATO 2023"

Expansion of value provided to the "End to End" of supply chains

Values

Company founder Yasuomi Ogura

Incorporating the Founding Spirit within Our Core Values

Our Core Values, which were established by our founder Yasuomi Ogura in 1931 shortly after our founding, have always been considered something that should remain unchanged throughout our over 100-year history. When it came to corporate management, Yasuomi Ogura believed that no matter how logically a businessperson ran a company, the efforts of each individual employee are the most important aspect of preventing that company's organization from becoming a mere formality and of having that company be accepted by society.

• Personnel involved in our transport businesses work on their own individual routes on a daily basis, which means it can take a certain amount of time before the direction of upper management is communicated to them. Yasuomi Ogura believed that the independence of each employee who places importance on the Core Values could compensate for this time lag. He therefore took steps to spread awareness of the Core Values across the Company.

Values that are key to realizing the

Yamato Group's Mission

For more details, please refer to our corporate website.

Core Values

YAMATO HOLDINGS CO., LTD. 03

Integrated Report 2023

History of Expanding the Value We Provide

(100 Years of Progress)

The Yamato Group has developed into what it is today by accepting the changes each era brought and proposing products and services required by customers. We commenced a route-based, regular delivery service (Japan's first regular route transport service). Following this, we launched the TA-Q-BIN service to meet the delivery needs of countless customers and expanded the value we provide to meet the needs of varied customers, from individuals to corporate clients. In 2019, we celebrated our 100th anniversary. Based on the sudden and significant changes in the business environment, we embarked on structural reform to realize sustainable growth and improvement of medium- to long-term corporate value.

1919

Delivery company

Founding of

Yamato

Transport

Co., Ltd.

Around 1929

Around 1960

Rapid economic growth to stable growth improvement in standard of living and purchasing power

Around 1976

Launch of TA-Q-BIN service

Provision of products and services that meet consumer needs

Expansion of TA-Q-BIN network

products and services)

1929

Launch of regular route, combined-load transport service between Tokyo and Yokohama

1951

Conclusion of agent contract with C.A.T. (Civil Air Transport), a Taiwanese airline, and launch of air freight handling

Launch of TA-Q-BINEmail Notification service

2005

Launch of TA-Q-BINCollect, comprehensive payment settlement service for mail-order dealers

2012

Launch of Yamato Business Members, members-only service for corporate clients

2016

Establishment of PUDO Stations (open-type parcel lockers)

100th Anniversary of the

Company's Founding

The fiscal year ended March 31, 2020

¥1,630.1billion

From April 2021

Medium-Term Management Plan

Expanding Value Provision to the "End to End"

Recently, there have been major changes in the business environment surrounding Yamato, and changes to consumption behavior and logistics structures have accelerated. Accordingly, the active participation of corporations in resolving social and environmental issues is becoming increasingly important to the achievement of a sustainable society. Under such circumstances, the Yamato Group aims to realize sustainable business growth by expanding the value we provide to the "End to the End" of our customers' supply chains. We will achieve this through promotion of business structure reform centered on the structural reform of network operations and expansion of the corporate business domain based on the One YAMATO management structure, which centralizes the management resources of all Group companies.

Identification of Issues

We are embarking on Group management structure reform and business structure reforms to sustainably meet the expectations and needs of customers and society, based on the accelerating changes to the business environment and worsening social issues.

Group Management Structure Reform

Creation of One YAMATO Management Structure

Centralization and redeployment of management resources by integrating Yamato Transport with eight Group companies

Business Structure Reforms

Structural Reform of Network OperationsP18-21

Reinforcement of existing networks as well as creating and expanding designated networks

Point

Strengthening of response to logistics needs in growth domains as well as enhancement of network quality and efficiency

Expansion of Corporate Business DomainP22-25

Business Environment / Social Issues

Diversification of customer expectations and needs

Rapid progress of EC (e-com- merce) adoption in various industries

Declining population and rural depopulation

Declining workforce

Climate change and resource scarcity

Issues with the Management Structure

Decentralization of management resources of operating companies for each function (partial optimization)

Limits of conventional business model that utilizes TA-Q-BIN

Dependency on experience and intuition in individual decision-making

Corporate culture focused on self-reliance

Review of Business Portfolio

Transfer of shares issued by Yamato Lease Co., Ltd. and Yamato Home Convenience Co., Ltd. (wholly-owned subsidiary → equity-method affiliates)

Withdrawal from development of TA-Q-BIN in East Asia and Southeast Asia

Medium-Term Management Plan

Expansion of value provision by combining domestic and international facilities and transportation and delivery networks, third-party logistics, and international forwarding

Point

Expanding value provision to the "End to End" of domestic and global customer supply chains

Promotion of Fundamental Strategies

that Support Structural Reforms

Expanding value provision to the "End to End" of customer supply chains

Achievement of sustainable

business growth

Changes in Operating Revenues and Operating Profit Margin

(Fiscal Year Ended March 31, 2011, to Fiscal Year Ended March 31, 2020)

"One YAMATO 2023"-Results and Issues

Reinforcement of Foundation for Improving Sustainable Corporate Value

Strengthening of sustainable management × Strengthening of corporate governance

P38-43P44-61

Value Creation Process

Business Environment / Social Issues

• Diversification of customer expectations and needs  • Rapid progress of EC adoption in various industries
• • Declining population and rural depopulation  • Declining working population

• Climate change and resource scarcity

Rising costs due to changes in the external environment

• Now: Impact on infrastructure following uncertain international circumstances

• Future: Labor shortage (2024 problem and 2030 problem)

Sustainable

corporate value

improvement

×

×

Enhancement of profitability and growth potential through business structure

reform to integrate sales and operations

Expansion of Corporate Business Domain

Base network

Transportation

Logistics and delivery

Network network

Corporate operation facilities: Approx. 400

Sales offices (TA-Q-BIN):3,331

TA-Q-BINnetwork

Designated networks (EC logistics, refrigerated and frozen, and corporate)

International transport (forwarding and cross-border land transportation in Asia)

×

Structural Reform of Network Operations

Promotion of fundamental strategies that support structural reforms

×

Reinforcement of foundation to improve sustainable corporate value

Strengthening of corporate governance

Performance Highlights(Year Ended March 31, 2023)

Financial Information

Operating revenues amounted to ¥1,800,668 million, up 0.4% year on year, owing to an increase in the number of parcels handled by the Company in response to the continued growth of the EC domain, and Yamato's focus on the optimization of logistics for customers. As a result of rising fuel prices, hourly wages, electricity rates, and other expenses, and an increase in costs associated with the promotion of our medium-term management plan "One YAMATO 2023," such as structural reform of network operations, operating profit came to ¥60,085 million, down 22.2% year on year. Due to a decline in total income taxes, following the approval to liquidate overseas consolidated subsidiaries, profit attributable to owners of parent stood at ¥45,898 million, a decline of 18.0%, and ROE was 7.6%, decreasing 2.0 percentage points

Non-Financial Information

We are working to promote sustainable management to improve medium- to long-term corporate value and realize a sustainable soci- ety. During the fiscal year ended March 31, 2023, (the second year of these plans), we have been engaging in reducing GHG emissions through the introduction of EVs and solar power generation equipment, reinforcing the recruitment and development of specialized personnel, and creating a working environment that respects the diversity of human resources and enables employees to play an active role, based on Sustainable Medium-Term Plans 2023, which sets out targets and specific actions for material issues in 2023. We will continue promoting various measures leading to sustainable growth that supports business structure reform.

Operating Revenues

GHG Emissions*3 /

GHG Emission Intensity

(Thousand tCO2e)

(tCO2e/operating revenues of ¥100 million)

Employee Awareness Surveys*6

Percentage of Annual Paid Vacation Days Taken*7

Number of Women in Management / Percentage of Women in Management*3

Parcel delivery amount (left scale)

Parcel unit price growth rate (YoY) (right scale)

(%)

Employee-friendly  Rewarding

Desire to continue employment

Sense of growth

Sense of contribution to the Company

(%)

Percentage of annual paid vacation days taken

Number of women in management (left scale) Percentage of women in management (right scale)

Operating and Investing Cash Flows / Free Cash Flows*2

Cash flows from operating activities  Cash flows from investing activities Free cash flows

Total Shareholders' Equity / Shareholders' Equity Ratio

Total shareholders' equity (left scale)

Shareholders' equity ratio (right scale)

Number of Serious Traffic Accidents*8

• Number of Serious Occupational Diseases*9

Number of serious traffic accidents Number of serious occupational diseases

*1 Definition: TA-Q-BIN, TA-Q-BIN Compact, and EAZY

*2 Free cash flows = Cash flows from operating activities + Cash flows from investing activities *3 Scope: consolidated companies in Japan and Swan Co., Ltd.

*4 Electricity generated via renewable energy sources (MWh) ÷ Total power generated (MWh)

*5 (Consolidated operating revenues - consolidated subcontracting expenses) ÷ consolidated personnel expenses

*6 Awareness surveys regarding working styles administered on an annual basis (scope: full-time and part-time employees of Yamato Group companies in Japan)

*7 Number of employee resignations in respective fiscal year (of their own accord) ×100

Number of registered employees as of respective fiscal year-end + Number of employee resignations in the respective fiscal year

(including those due to retirement, etc.)

(Scope: Full-time employees of consolidated companies in Japan and Swan Co., Ltd.)

*8 Fatal traffic accidents (for which the employee is responsible)

*9 Incidents involving a fatality

Message from the President

Yutaka Nagao

Representative Director,

President and Executive Officer

Reinforcement of the TA-Q-BIN Network

As we have visualized the management resources of the entire Group, issues that need to be addressed have become clear. One of these issues is the structural reform of network operations. We are engaging in an enhancement of the quality and efficiency of the entire network to respond to various changes in the market environment, such as the expansion of online consumption and the development of small-lot,high-frequency logistics between companies.

• As part of these reforms, we first responded to the sudden expansion of EC demand during the COVID-19 pan- demic by creating an EC logistics network in collaboration with partner companies. Over the next four years, we will focus on reinforcing the existing TA-Q-BIN network. Now, three years away from celebrating the 50th anniversary of TA-Q-BIN's launch, the time has come to revise the way bases that make up the network are organized, in response to changing customer needs.
• Specifically, we will consolidate and enlarge the size of small, multi-store sales offices. TA-Q-BIN was originally launched as a service for individual customers and we allo- cated sales offices in smaller areas to collect small-lot deliv- eries from a wide variety of customers. As a result, our sales offices increased to approximately 4,000 at their peak. Now, however, there has been a change in the type of packages being shipped with 90% of deliveries being made for corpo- rate clients, and approximately half of those deliveries for

large-lot clients Accordingly, we are focusing on reviewing the purpose of facilities, particularly in urban areas with a high density of them, while consolidating and enlarging their size in line with changes to the flow and volume of pack- ages. While there is currently a total of approximately 3,300 sales offices, I think eventually having approximately 1,800 would be appropriate.

• Furthermore, we are advancing revisions to the pickup and delivery operations available at each facility, in conjunc- tion with the consolidation and enlargement of their size. We aim to standardize the workload for each driver by designing pickup and delivery operations through data utili- zation, not just entrusting the response to the fluctuating workload to the judgment and ingenuity of frontline staff.
• It is important to optimize facility allocation and opera- tions in line with regional and customer needs rather than aimlessly reducing the number of facilities. Naturally, it is essential we do not damage the national network as a social infrastructure. To maintain a national network in which all employees can respond to customers in all regions, we will enhance the safety, quality, and ease of operation for employees and partners even more than before. At the same time, we will increase the productivity of the entire network, optimize processes for transportation between facilities and sorting operations at each sales office, and further enhance the performance of employees.

Business Reform Over the Next Four Years

Establishment and Expansion of Dedicated Networks

-Expanding Value Provision to the "End to End" of Supply Chains

Structural Reforms Amid a Sense of Impending Crisis

In addition to reinforcing the existing TA-Q-BIN network, we are promoting the creation of dedicated networks. While one of these is an EC logistics network, we also estab- lished, in June 2023, a low temperature transportation and delivery center and began operation of a network dedicated to temperature-controlled operations. To date, the

behavior due to the recent COVID-19 pandemic, there has been a significant advancement of the shift to EC for food distribution. Under such circumstances, we will maintain and enhance quality while expanding transportation and delivery capacity to further meet demand by aggregating refrigerated and frozen delivery under a new, dedicated net-

In 2019, I was appointed the President of the Yamato Group during a time of impending crisis. An awareness of two major issues formed the background of this. The first issue being that our management structure did not provide services drawn from a customer standpoint in the face of changes to society and customers. Up to 2019, the Yamato Group was organized by function-such as a company that

as "effective utilization of management resources." No matter how many excellent management resources you gather, you cannot achieve the performance you are capable of if they are not optimally allocated. Accordingly, under YAMATO NEXT100, our grand design for management over the medium to long term announced in 2020, and Medium- Term Management Plan "One YAMATO 2023," launched in

Yamato Group has contributed to the culture of consumers ordering fresh produce directly from other regions and the development of related businesses by building a transportation and delivery network that handles three temperature ranges (room temperature, refrigerated, and frozen). Meanwhile, against a backdrop of changing consumption

work in urban areas, where demand is particularly concen- trated. Refrigerated transportation and delivery is a growth domain that is not limited to food. Demand is expected to increase for pharmaceuticals and we plan to expand this dedicated network as necessary.

provided TA-Q-BIN services, a company that provided logistics services for corporate clients, and a company that developed IT systems-and was partially optimized. The second issue I was aware of was that many of the managers responsible for the management of each operating company did not see this existing management structure as a problem and strongly felt that there was no sense of crisis.   I believe that "corporate management" can be rephrased

April 2021, we have been engaging in Group management structure reform. In other words, how to change the form of management to fully utilize management resources. By integrating nine existing operating companies into one entity, Yamato Transport, creating "One YAMATO structure", and centralizing and reallocating Group management resources, I believe we have been able to shift to a structure that directly addresses customer needs.

Expanding Value Provision to the "End to End" of Supply Chains

Message from the President

method for individual clients to obtain products purchased from overseas was via logistics by international and domestic operators. In recent years, however, individual clients have been able to directly purchase and receive products from overseas sellers. The Yamato Group has been focusing on this domain for many years and has been proposing the use of Yamato's logistics network to overseas sellers. The number of parcels we handle has expanded to a volume beyond our initial expectations. This was achieved through collaboration between domestic and overseas units of the Yamato Group, who worked together to establish operations and make proposals to customers. We could not have

realized this under the existing partially optimized structure and this achievement is one result of the Group management structure reform.

• Meanwhile, while we are still at the development stage for fields such as third-party logistics and international for- warding, I believe there is significant room for growth in light of the Yamato Group's management resources and poten- tial. Over the next four years, we aim to further reinforce the networks, operations, and corporate sales functions, includ- ing collaboration with other companies, to expand the scale of transactions.

Visualization of GHG Emissions as a New Differentiating Factor

at each terminal, where definitions of duties remained vague. Furthermore, while we have further clarified the

culture that enables employees to accomplish their tasks independently, enhance their performance, and feel their

We are currently developing tools for visualization of GHG emissions. These tools are expected to become a new strength aimed at expanding the value provided in corporate client supply chains. While to date there has been no global formula for calculating GHG emissions in logistics, the Yamato Group has signed a basic agreement for collaboration in the environmental domain with the major

on this standard. We plan to complete development this fall. For the Yamato Group, who have adopted the target of achieving virtually zero GHG emissions by 2050,* visualizing GHG emissions is an opportunity to further contribute to the sustainability of society and the environment. As interest in and standards for global GHG emissions increase, we expect that contributing to the optimization of distribution

duties of sales drivers, there is an increasing necessity to subdivide duties to meet diversifying customer needs, such as increasing the shipping ratio for large-lot clients. We are also adding new duties based on our management strategy, such as in the digital and corporate business domains. In light of such circumstances, we will cultivate a corporate

work is rewarding. We will achieve this by implementing a cycle of further clarifying the definitions of duties for all employees, establishing appropriate evaluation criteria for measuring performance according to these definitions, and holding meetings between evaluators and each employee to give detailed feedback.

European home delivery company, DPDgroup. We have been participating in the creation of ISO 14083:2023, an

and inventory while reducing these emissions through visualization of GHG emissions in the supply chains of corpo-

Response to the 2024 Problem

international standard related to transportation-based GHG emission calculation and reporting methods, and promoting the development of a tool for visualizing emissions based

rate clients will become a major differentiating factor in expanding the corporate business domain.

*Scope 1 and Scope 2

From April 2024, a cap on overtime work will be applied to automobile driving operations. The entire logistics industry is facing the serious issue of workstyle reforms for drivers

charter flights following a shift to small-lot,high-frequency delivery, loading operations outside of contracts, and long waiting times for cargo in logistics between companies.

Planning and Development of Human Resource Measures in Conjunction with Our Management Strategy

and securing transportation capability. We have already implemented workstyle reforms for Yamato Group employees and employee working hours have reached an appropriate level. However, we are now promoting cooperation with each partner company, such as reviewing the purpose of

Accordingly, we will make proposals for resolving such issues for corporate clients. For example, we can enable more efficient methods of delivery by combining packages from numerous clients through a package transportation service in pallet units, even if the cargo area of a charter

A major driving force in promoting a series of reforms and measures was the existence of professional human resources that have joined the Yamato Group over the past few years. Now, over 20% of Yamato Transport executive officers have outside knowledge and we have ensured we can set out new challenges and measures by gathering the appropriate people from within the Company to work under them.

• For the Yamato Group, our most important management resource is people. We plan and develop human resource measures under the recognition that our HR strategy is so important, it can be called a management strategy.
• Specifically, we are promoting the clarification of defini- tions of duties in line with our management strategy and new business structure. For example, this clarification has been implemented in some cases in the sorting operations

transportation and introducing a standardized contract system based on the transport distance and time period, to advance the workstyle reforms in our partner businesses that support trunk-route transportation.

• Furthermore, I feel it is necessary to improve inefficient business practices, which has previously been an issue, such as decreasing efficiency of loading operations for

flight is empty on the return journey. The Yamato Group has the knowledge to standardize transportation, as shown by TA-Q-BIN. We are pursuing sustainable logistics by standardizing transportation in logistics between companies and creating more efficient delivery methods that also contribute to even better workstyles for drivers.

I believe that the most important factor for the sustainable growth of a company is building up trust with customers. The growth the Yamato Group has achieved to date is a result of building up trust through provision of our TA-Q-BIN service. However, there have been changes to the business environment and customer needs. Simply maintaining the same services we have provided to date will not result in growth in the future.

• I view the year ending March 31, 2024, and the three years of the next medium-term management plan as four vital years in which the true value of reforms based on the

reallocation of management resources will be tested in order to achieve sustainable growth. We aim to be a company that is trusted by all our customers and stakeholders by fully utilizing Group management resources to pursue even better services that fit the times, rather than being content with our past experience of success.

October 2023

YAMATO HOLDINGS CO., LTD. 15 Integrated Report 2023

Message from the Chief Financial Officer

Contributing to Improving Shareholder Value and Corporate Value by Supporting Management Strategies from a Financial Perspective

Q1 Please share your approach to financial strategies and awareness of your role as CFO.

I believe that my role as CFO is to support management strategies from a financial perspective to realize sustainable growth and the improvement of corporate value in the medium to long term. I am also aware of the need to continuously enhance the overall market price of the shares as shareholders value and place importance on earnings per share (EPS) and ROE accord- ingly. By promoting medium- to long-term strategies centered on business structure reforms, the Yamato Group aims to achieve ROE of over 13%. As CFO, I engage in implementing investments that increase the profitability of the business and its growth potential while engaging in maintaining and strengthening shareholder returns and optimizing balance sheets. I hope to continuously enhance shareholder value by achieving ROE that fully exceeds shareholder capital costs.

Q2 Two years have passed since the launch of Medium-Term Management Plan "One YAMATO 2023." Please explain the second-year results and business performance evaluation.

When creating the "One YAMATO Structure," we engaged in formulating a plan to fully transform our business structure. While Yamato's performance in fiscal 2022 did not fully meet the targets adopted under the Medium-Term Management Plan "One YAMATO 2023," I believe that we are steadily implementing measures to enhance profitability, which is always a challenge, by defining our vision for facilities and personnel. By doing so, we can gradually generate results.

• In the structural reform of network operations, we are lower- ing the break-even point by reducing fixed costs through consol- idation and enlargement of sales offices. At the same time, we are optimizing all costs by flexibly allocating the management resources of both Yamato and our partners in response to fluc- tuations in workload. We are also aggregating and standardizing administrative operations in tandem with facility strategies, making steady progress toward our ideal cost structure.
• Furthermore, measures including a resolution to liquidate our overseas consolidated subsidiaries and the introduction of the Japanese Group Relief System helped to secure net income for the fiscal year ended March 31, 2023. We will strive to continue enhancing income by also addressing tax aspects as part of Yamato's financial strategies.

we are advancing the expansion of the corporate business domain and structural reform of network operations in an integrated manner.

• At the same time, we are optimizing balance sheets, promot- ing the selection and concentration of our businesses, products, and services to make full use of management resources, and actively examining collaboration with business partners. In addi- tion, we are continuing to reduce our cross-shareholdings and, while we sold four assets in fiscal 2022 for approximately ¥2.7 billion, we will continue to sell stocks that we deem to lack sig- nificance to the Company, as appropriate. Meanwhile, while condensing our balance sheets, we intend to maintain a certain level of shareholders' equity ratio, which is required as a corpo- rate group that serves as a crucial part of social infrastructure.

Q4 Please explain your approach toward and plans for investment.

My basic approach is investment that contributes to customer value. Regarding the establishment of large-scale facilities, which began in the fiscal year ending March 1, 2024, we are moving forward with a balance between properties we rent and properties we own with an emphasis on the speed of expansion. We will reinforce verification and monitoring of the results of investments to ensure that we can make a return on investments within as short a time as possible. We will also actively promote investment based on digital, human resource, and environmental strategies that support business structure reforms.

Q5 Please explain Yamato's capital policies going forward.

billion, to promote our environmental strategies. Meanwhile, we intend to continue utilizing debt in working capital and capital investments necessary for business structure transformation and will strive to manage our balance sheet based on capital effi- ciency, such as shareholders' equity ratio, while maintaining our credit rating (Rating and Investment Information, Inc.; AA-) with an awareness of optimal capital structure.

• Our basic policy for shareholder returns is to pay out stable dividends with an awareness of DOE (ratio of dividends to shareholders' equity) based on factors including growth poten- tial, profitability, financial soundness (cash and cash equivalents and shareholders' equity ratio), progress in investments, and capital efficiency. We aim for a dividend payout ratio of 30% or more and a total return ratio of 50% or more (cumulative for the period from the fiscal year ended March 31, 2021, to the fiscal year ending March 31, 2024). While we have implemented stable dividends over the long term, we believe that we should also be aware of dividend yield in the future, and will discuss capital policies and shareholder returns as we formulate the next medium-term management plan.

Shareholder Return Results (Fiscal Year Ended March 31, 2014, to Fiscal Year Ended March 31, 2023)

2014/3 2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3 2023/3

Dividend per share (left scale)  Dividend payout ratio (%) (right scale)  Total return ratio (%) (right scale)  DOE (right scale)

Q6 Finally, what is your message for stakeholders?

Two years have passed since the launch of "One YAMATO struc- ture." The numerical management systems of each company, which used to be separate, are gradually being developed and corporate activities can be visualized through various indicators. As a result, while reflecting these appropriately in management strategies and financial strategies, we are aiming for operating

Toshizo Kurisu

P R O F I L E

Representative Director,

Executive Officer and Vice President

Q3 Have you considered how to enhance ROE, which is a KPI, going forward?

Increasing operating revenues and operating profit-namely, strengthening earning power-are essential for enhancing ROE. To this end, it is important to expand value provision to the "End to End" and to receive corresponding compensation, and

We intend to carefully select and prioritize business investments (capital investments, strategic investments, and M&As) that will contribute to enhancing shareholder value through capital created from profit growth due to business structure reforms.

• Regarding fundraising, we issued our first green bonds in July 2023, with a five-year maturity and a total amount of ¥20.0

profit margin of 7% or more and ROE of 13% or more in the medium to long term. Additionally, at the same time as we show our concrete strategies to shareholders in our next medium-term management plan, we will realize sustainable growth and improvement of medium- to long-term corporate value through the implementation of these strategies and dialogues.