2015 - jp.yusen-logistics.com€¦ · President’s Message At a Glance Hiromitsu Kuramoto, President 2 Annual Report 2015. Evaluation of the First Year of the Medium-Term Business

2015Annual Report

For the Year Ended March 31, 2015

Contents

At a Glance Financial Data

p.2 President's Message p.37 Financial Highlights

p.5 Business Model p.39 Consolidated Six-Year Summary

p.7 Review of Operations p.41 Management's Discussion and Analysis

p.10 FY2014 Topics p.46 Business Risks

p.14 Human Resources p.50 Consolidated Financial Statements

p.16 Global Network p.60 Notes to Consolidated Financial Statements

Medium-Term Business Plan p.94 Independent Auditor's Report

p.18 Medium-Term Business Plan Company Data

Governance p.95 Company Profi le

p.24 Corporate Governance p.96 History

p.30 Board of Directors, Auditors and Executive 0fficers p.97 Investor Information

p.34 Corporate Social Responsibility (CSR)

Forward-Looking StatementsThis annual report contains operating results forecasts of the company and certain other statements that are not historical facts. These forward-looking statements are based on information currently available to management when the annual report was produced and contain many uncertainties. Actual performance may differ from projections for various reasons. Furthermore, the information contained in this annual report and other information on the company's website referred to herein includes information for reference in making investment decisions. However, this does not constitute solicitation to buy or sell the company's shares. The final investment decision rests solely with the user of this website and its content.

Editorial PolicyThe company issues this annual report only on its website.

In principle, figures contained in graphs, tables, etc., in this annual report have been rounded to the nearest billion yen or million yen or to the nearest whole number in the case of percentages, unless otherwise stated.

Please NoteThis annual report contains links to the company's website, which includes the latest information on the company and is outside the reporting scope of this annual report.

The fiscal year ended March 31, 2015, marked the first year of the new Medium-Term Business Plan and was positioned as an important year toward achievement of the plan. Results for the year exceeded initial projections due to steady implementation of the Medium-Term Business Plan's basic strategies in the favorable business environment.

We will steadily implement the basic strategies stated in the Medium-Term Business Plan and continue to strive to achieve our goal.

Business Environment and Results

In the fiscal year ended March 31, 2015, both ocean and air

freight forwarding progressed steadily in international

logistics markets, driven by recovery in the U.S. economy. Air

freight handling volume in particular was brisk centered on

the U.S.

In regard to our handling volume, it was solid from the start

of the fiscal year in the air freight forwarding business, and

especially in the second half it increased significantly due to

the port congestion on the U.S. West Coast. In the ocean

freight forwarding business, the handling volume decreased

slightly year on year since we could not reach our target

volume in freight originating mainly from Asia, although it

was increased in Japan by active sales expansion.

Additionally, we continued to implement Project Re-engineering to boost operational efficiency and improve profitability.

As a result, our consolidated net sales increased 13.5% year on year to ¥461.0 billion and operating income advanced 105.7%

year on year to ¥9.3 billion.

.

President’s MessageAt a Glance

Hiromitsu Kuramoto, President

2 Annual Report 2015

Evaluation of the First Year of the Medium-Term Business Plan

Under our Medium-Term Business Plan, "GO FORWARD, Yusen Logistics —Next Challenges—," we aim to achieve sustainable

growth for the future with three key strategies, "Growth Strategy," "Operational Strategy" and "Investment Strategy," on top

of our basic strategy of reinforcing our business foundation. In the first year of the plan, we worked to expand sales to outstrip

the global competition in our Growth Strategy. In our Operational Strategy, we established a Global BPM(*) Department to

improve operational efficiency, streamline operations and promote standardization throughout the YLK Group. In our

Investment Strategy, we steadily executed measures targeting future growth that included active investment in South Asia,

where there are still expectations of growth, and we injected capital into a logistics company in Turkey. In terms of management

indicators, we also achieved year-on-year improvements in net sales and operating income as well as the operating income ratio

and return on equity (ROE), making the year a very productive one overall.

*BPM stands for Business Process Management and general improvement of corporate performance by managing and optimizing a company's business processes.

Development of Global Human Resources

October 2015 will mark the fifth year since the birth of Yusen Logistics. Ever since the integration, the YLK Group has been

implementing development of human resources in wide and various ways for not only Japanese but also foreign personnel,

based on the philosophy that personnel are our key assets. As an example, in the Global Sales Enrichment Program (GSEP), a

sales training program for mid-level sales representatives in Japan and overseas, we aim to enhance both sales capabilities

and proposal-making capabilities as a way to develop human resources that can provide total services in ocean freight, air

freight and logistics businesses. In addition to learning how to grasp business from a global standpoint as well as from a

Group-wide position, the program gives participants the opportunity to deepen their connections with each other, and share

information after they return to their home countries. These measures have also achieved synergistic effects by creating a

human network.

Management System to Reinforce Our Business Foundation

With regard to corporate governance, we added one outside

director in June 2014, in addition to two independent

corporate auditors. In June 2015, we appointed one additional

outside director to enhance our governance system.

As a further measure to strengthen our governance system, we

will continue to strive to comply with Japan's Corporate

Governance Code as shown on the right-hand side. Further

details can be found on the Corporate Governance page, or

click "more details."

In terms of compliance, we strengthened our legal compliance

system further, mainly by establishing the Legal Affairs

Department in April 2014 and by appointing an active-duty

attorney as a specialized legal advisor.

3Annual Report 2015

Plan for FY2015

We will expand our business further in ocean freight forwarding, air freight forwarding and logistics businesses. Along with

sales expansion with a growing economy in the U.S. in the background, we will continuously expand our businesses in the

areas including Asia designated for enhancing sales as stated in the Medium-Term Business Plan.

Considering these points, we forecast net sales of ¥500.0 billion, operating income of ¥9.5 billion, ordinary income of

¥10.0 billion, and net income of ¥3.3 billion for the fiscal year ending March 31, 2016.

We will do our utmost to ensure sustainable growth and achieve our long-term objectives of combining our strengths to be No. 1

in Asia and one of the Top 5 logistics providers worldwide.

Shareholder Returns

We recognize that return of profits to shareholders is

one of our top priorities, and our basic policy is to

offer a stable dividend within the limits set by

business results. For the fiscal year ended March 31,

2015, we set the annual dividend at ¥19 per share,

an increase of ¥1 per share compared to the previous

year, supported by results that exceeded our initial

projections.

While continuing to provide a stable dividend going

forward, we will work to achieve a dividend payout

ratio of around 25% as one of the benchmarks of our

profit return.


Business ModelAt a Glance

What Kind of Business Does the Company Do?

The foundation of the business consists of services such as International Freight Forwarding (by ocean or air), Contract Logistics

(such as Warehousing), and Transportation (such as trucking).

These services can act as stand-alone products or as part of our broader offering as a supply chain provider.

With the core supply chain elements in place, Yusen Logistics designs, implements, and manages supply chains specific to global

industry markets, or bespoke solutions for more complex transportation models.

As a service provider, Yusen Logistics manages these elements with a focus on developing strong relationships with its

customers to ensure long-term success for their transportation program.

Supply Chain Management across Industries

Supply Chain Management is the integration of our main services of Freight Forwarding and Contract Logistics to provide a

seamless distribution process for our customers. This means arranging the movement of goods from any point in the supply

chain (as early as manufacturing or even sourcing) through to delivery at the final destination.

This service has evolved over the years into a highly specialized area that can be implemented as a standard management

solution, a specific industry solution, or as a custom-designed solution for a specific customer requirement.

A well-managed supply chain improves efficiencies and streamlines a company's inventory, reducing overall costs.

5Annual Report 2015

Freight Forwarding

A forwarder manages shipping and logistics on behalf of its customers at

any point of a product's lifecycle, from manufacturing through to delivery to

the customer.

Because a forwarder is managing many customers' cargo, there are many

benefits to this, including logistics expertize, shipment flexibility, reliability,

and competitive pricing.

At Yusen Logistics:

1. We manage the most appropriate transport service for the customer

by combining ocean/air freight forwarding and land transport.

2. We secure the cargo space required by the customer.

3. We support export/import customs clearance

4. We manage any additional distribution to a warehouse, distribution

center, or to a customer.

In other words, the company provides services to meet all logistics and

distribution needs of the customers with extensive experience and expertise.

Contract Logistics and Transportation

These are the services including warehousing, inventory management,

distribution, and transport management that are based on a contract between

Yusen Logistics and the customer.

This includes:

1. Cargo collection and delivery arrangement

2. Distribution processing services, including cargo packing, labeling

and sorting

3. Storage and delivery services is provided at Yusen Logistics facilities


Review of OperationsWith regard to the global economy in fiscal 2014, the fiscal year ended March 31, 2015, there were signs of a moderate

recovery in Japan following the weak consumer confidence that persisted after an increase in the consumption tax rate. The

economic recovery in the U.S. was firm due to an upswing in personal consumption supported by improvement in the

employment environment and the low price of crude oil.

Low growth continued in the European economy, although there was some variation by region. Asia once again maintained a

stable economic growth rate, particularly in South Asia, while the effects of an economic slowdown in China were felt in

neighboring countries.

In the international logistics market, both ocean freight and air freight forwarding were steady partly reflecting economic

recovery in the U.S. Specifically, freight movement in air freight forwarding was brisk, centered on the U.S.

In these conditions, ocean freight volume handled by the YLK Group decreased year on year due to continued sluggish shipment

volume originating from Asia, which offset steady shipments of cargo originating from Japan on the whole. In the air freight

forwarding business, results exceeded the previous fiscal year in all regions due in part to a continuation of robust freight

movement in line with the U.S. economic recovery. In particular, a significant increase in shipment volume was posted in the

fourth quarter due mainly to the impact of port congestion on the U.S. West Coast. We continued with initiatives in the

operational strategy project and worked to raise business efficiency and enhance cost-competitiveness.

Japan

In ocean freight forwarding business, the volume of ocean freight

exports on a TEU basis rose 13.7% year on year. In addition to

steady exports of such items as automotive components and

machine tools, we handled spot cargo. In ocean freight imports,

freight volumes increased 2.7% year on year due to the handling of

apparel and consumer goods-related products, which offset

concerns over the impact of yen depreciation.

In the air freight forwarding business, the volume of air freight

exports increased 18.0% year on year. In addition to steady

shipments of automotive components, aircraft components and

electronics, we handled spot cargo for the U.S. upon entering the

fourth quarter. In air freight imports, the volume handled decreased

1.9% year on year due to the impact of the consumption tax rate

hike and the weak yen, despite solid freight movement for

automotive components and food-related items.

At a Glance

7Annual Report 2015

Despite expectations of an increase in freight movement in line

with economic recovery, prolonged port congestion on the U.S.

West Coast impacted each of the ocean freight, air freight and

logistics businesses.

In ocean freight exports, freight volume increased a moderate

1.2% year on year in volume handled on a TEU basis, and in

ocean freight imports, freight volume handled increased a mere

2.6%, despite handling of such items as automotive

components and consumer goods-related products.

In air freight exports, freight volume handled rose 22.9% year on year due to a continued shift away from ocean freight

forwarding as a result of port congestion in the second half coupled with export shipments of automotive components and spot

shipments of food-related items. In air freight imports, freight volume increased 22.9% year on year due in part to brisk freight

movement of automotive components and aircraft components.

In the logistics business, we handled consumer goods-related products following improvement in personal consumption in line

with U.S. economic recovery, but the business environment remained severe due to a shift to an oligopoly-type structure by

railway and truck companies. In addition, the volume handled fell short of expectations due to a buildup of cargo resulting from

port congestion.

Americas

Europe

In the ocean freight forwarding business, ocean exports

handled on a TEU basis decreased 1.6% year on year despite

handling of automotive components and consumer goods-

related products due to a lack of vigor in freight movement

owing to persistent economic uncertainty in Europe.

Meanwhile, ocean imports handled increased 5.4% from the

previous fiscal year.

In air freight exports, volume handled increased 15.8% year on

year due to shipments of medical equipment-related products

and electronics. In air freight imports, volume handled

decreased 2.1% year on year due to weak freight movement despite the handling of automotive components, among

other items.

For the logistics business, efforts were made to enhance business efficiency, but they were insufficient to cover costs associated

with sales expansion, and the tough business environment persisted on the whole.


East Asia

South Asia & Oceania

In the ocean freight forwarding business, the volume of ocean

freight exports handled on a TEU basis decreased 8.2% year on

year as freight movement fell short of expectations due in part

to the impact of the economic stagnation in China and a shift

to air freight forwarding of cargo for the U.S. This occurred

despite handling of shipments of consumer goods-related

products and electronics. In ocean freight imports, freight

volume handled increased 3.4% year on year due in particular

to the handling of electronics.

In air freight exports, the volume handled rose 3.9% year on

year due mainly to shipments of electronics and aircraft

components. In air freight imports, the volume handled increased 4.2% year on year due mainly to freight movement of

automotive components and electronics.

In the logistics business, we worked actively to enhance business efficiency, which included warehouse reorganization,

in addition to handling such items as apparel and electronics.



year despite shipments mainly of automotive components and

electronics. The decline was due in part to a shift to air freight

forwarding resulting from port congestion and to the impact of

an economic slowdown in the region. The volume of ocean

freight imports increased 8.6% year on year due primarily to

solid results in handling of automotive components and

consumer goods-related products.

In the air freight business, export volume handled rose 12.0%

and import volume handled increased 3.6% year on year. This was due to continued solid freight movement of such items as

automotive components and electronics in Asia coupled with a shift from ocean freight forwarding.

In the logistics business, the volume handled of automotive components and electronics in particular expanded due in part to

persistent proactive investment that included enhancing and expanding warehousing in Vietnam and Malaysia.

9Annual Report 2015

Yusen Logistics Launched South East Asia Link "SEAL"

Trucking Service-Connecting Indochina

Yusen Logistics launched the South East Asia Link service

(SEAL) - a cross border trucking service for Indochina. By

offering a road solution which is more economical than air

freight forwarding and quicker than ocean freight forwarding,

Yusen now provides a new alternative in response to the

increasingly varied logistics requirements from customers in

the region.

Yusen Logistics Expanded in Indonesia with new Warehouse

Yusen Logistics announced further expansion of its services in

Indonesia, with the opening of a new warehouse in Jababeka,

in the suburbs of Jakarta.

Yusen Logistics Celebrated Presence in 40 Countries at

Myanmar Inauguration

The recent official inauguration of Yusen Logistics (Myanmar)

Co., Ltd. saw Yusen Logistics’ presence increased to a total of

40 countries spanning the globe.

1Q

April

June

FY2014 TopicsAt a Glance


Yusen Logistics Innovated with Vibration-Control Pallets

as an Alternative Technology to Air-Suspension Trucks in

China and SE Asia

Yusen Logistics developed an innovative land transportation

solution which offers an alternative to air-suspension trucks.

Yusen Logistics Celebrated Asia Pacific 3PL Excellence

Award Win

Yusen Logistics won the Asia Pacific 3PL Excellence Award

at the SCM Logistics and Manufacturing World 2014 event

in Singapore.

Yusen Logistics Concluded Multilateral e-AWB Agreement

with IATA - Digitization of Air Waybills to Be Accelerated

Yusen Logistics concluded a Multilateral Electronic Air Waybill (e-AWB) Agreement with the International Air

Transport Association (IATA). This Agreement enables Yusen Logistics to simplify contract procedures, as individual

contracts with IATA member airlines for e-AWB implementation will no longer be necessary.

2Q

July

11Annual Report 2015

Major Partnership between Yusen Logistics and Inci Logistics

Leading Japan-based, global logistics company Yusen

Logistics signed an important and strategic collaboration

agreement with Turkish Inci Logistics. Yusen Logistics entered

a partnership with Inci Logistics, which is a subsidiary of Inci

Holding. This collaboration in the logistics sector signifies a

crucial step for both parties, not only for Turkey but also for

the international sector.

Yusen Logistics Participated in Oishii JAPAN Japanese Food Trade Show

Yusen Logistics exhibited as a freight forwarder for the first

time at Oishii Japan 2014, ASEAN's largest comprehensive

Japanese food trade show held in Singapore between

October 16 and 18, 2014.

Yusen Logistics Continues its Expansion in Vietnam withNew Warehouse in Hai Phong City

Yusen Logistics (Vietnam) Co. Ltd. (YL-VN) expanded

in Vietnam with a new warehouse in Hai Phong City,

northern Vietnam.

3Q

October

November


Yusen Logistics' Subsidiary Opened Strategic Warehouse in Malaysia

TASCO Berhad, a Yusen Logistics subsidiary in Malaysia,

opened and commenced operations of a new warehouse

in Tanjung Pelepas, a port in the south of Malaysia.

Yusen Logistics Won First Awards from Indonesian Customs

PT. Yusen Logistics Indonesia recently won the Best TPS

(Temporary Bonded Storage for Airport) Entrepreneurs award.

The award, given by the Indonesia's Ministry of Finance’s

Soekarno-Hatta Customs Office, recognized the company for

having the most outstanding bonded storage facilities.

Yusen Logistics Expanded Global Project Cargo Network to Brazil

To meet the growing demand for project cargo services in South America, Yusen Logistics Do Brasil Ltda.

established a dedicated project cargo team in Brazil. The team, based in Sao Paulo, supports the company’s

overall project network and develop its services for this vital business segment in Brazil.

4Q

February

March


Human Resources

Human Resource Initiatives

The YLK Group has been implementing human resource development initiatives for both Japanese and overseas personnel from

a wide range of perspectives, to maintain sustainable growth as a Global Logistics Provider that can meet the requirements of

customers around the world.

For example, we conduct an overseas trainee program to foster young Japanese employees as candidates for future senior

management, as well as the acquisition of language skills and relevant business knowledge. We also conduct the Global Sales

Enrichment Program (GSEP) for mid-level sales representatives in Japan and overseas to nurture human resources who can provide

total logistics services in ocean freight, air freight and logistics businesses while enhancing their sales capabilities and global network.

In addition, we offer a variety of training programs such as training by rank and annual training to develop managers across the

world. Below, we introduce details of the GSEP training and the opinions of participants in the overseas trainee program.

"GSEP"

The Global Sales Enrichment Program (GSEP) transcends borders to share the experience and knowledge of our sales

representatives from around the world. The training develops human resources that can provide total logistics services in ocean

freight, air freight and logistics businesses, a key objective of the company, as well as play a role in global human resource

activities to create a global network among employees.

The training consists of coursework that supports participants in acquiring expertise in the Group's main business areas.

Outside lecturers are also invited to teach the knowledge and skills required to respond to the current business environment.

Case studies based on the experiences of participants are shared to provide insights into actual sales activities and learn related

expertise. In addition, roleplaying is used to simulate the case studies, so that everyone involved in the training can identify and

discuss the best solutions to challenges our customers might face. This helps to reinforce abilities to resolve issues and propose

solutions among participating members.

In October 2014, the fourth edition of the GSEP took place, with a total of 28 sales representatives participating from overseas

as well as Japan.

The GSEP serves as a platform to confirm progress toward goals

during a year and a half, and it is conducted at actual work sites.

Participants are given the opportunity to provide feedback on what

was learned in the training at a later date, while extra training and

on-the-job training are offered to add to employees’ knowledge

base. In addition, leaders are selected from the personnel who took

an active role in the training from around the world to help

strengthen sales abilities throughout the YLK Group.

At a Glance


"Overseas Trainee Program"

(1) Saki Anami: Corporate Planning Section, Corporate Planning Department

Location: Yusen Logistics Hong Kong Ltd.

I was given the opportunity to participate in an overseas

trainee program at an affiliate in Hong Kong for the period

of one year from July 2011. I shifted between work at the

airport office and at a warehouse every few months, and

took part in actual operations for import and export of

ocean freight, air freight and logistics businesses, which

served to deepen my knowledge. During my stay in Hong

Kong, I learned many new things, such as experiencing

work and life abroad and how to communicate with local

staff, and I became more aware of the need to approach

work flexibly depending on the situation and person.

I am currently in charge of administrative duties for the subsidiaries in Japan as part of Corporate Planning Department. The

operational experiences in all businesses I gained through the overseas trainee program are a huge advantage when analyzing

business results or dealing with business management-related issues in my current department.

(2) Hiroaki Manga: Sales Section 4, Osaka Branch, West Japan Sales Division

Location: Yusen Logistics Turkey Lojistik Hizmetleri Ltd. Sti.

I returned to Japan in September 2014 after completing the

first overseas trainee program in Turkey for Yusen Logistics.

Turkey has developed as a center of trade between Asia

and Europe, and its importance is growing more and more

as a key junction for logistics business. During the training,

I experienced actual operations in ocean freight import,

export and management, particularly in sales activities, and

had the chance to gain first-hand experience of the unique

circumstances surrounding the logistics business in an

emerging country as well as in an Islamic culture.

Currently, I work in sales for ocean and air freight export in

the Kansai region. The experience I gained locally during the training has been invaluable in dealing with constant inquiries for

emerging countries such as Turkey, where there is still a lack of sufficient information. At the same time, I have realized how

important the company’s network is.

I hope to enhance our services by sharing the knowledge and experience I gained in Turkey with other employees in the

near future.


Global Network (As of March 31, 2015)

Japan

Number of locations 70

Warehouse space 70,000m2

Priority Measures

- Reinforcement of forwarding business of offshore trades- Expansion of import business and project cargo handling- Expansion of total logistics service

Area Strategy

- Increase of import and export handling volume by expanding customer base- Service development of import, offshore business and ocean LCL- Sales reorganization and development of human resources focused on growing industry verticals- Further expansion of business locations

Americas



Priority Measures - Expansion of businesses with global customers

Area Strategy

- Expand intra-region, trans-Atlantic, and further develop trans-Pacific forwarding business- Expand and deepen relationships with customers who have a global reach (sourcing or operations) e.g. retailers- Expand logistics business in each domestic market, grow revenue of domestic transportation in the U.S.- Develop supply chain solution products- Improve operational efficiency- Specific focus on business development in/with Mexico

At a Glance


Europe



Priority Measures- Expand forwarding business through approach to global customers- Re-engineer contract logistics and transport business in the region

Area Strategy

- Facilitate and enhance transportation network within the region- Optimize gateway function of forwarding business- Promote sales activities in priority industries (automobile, healthcare, retail and high technology)- Expand businesses in Turkey and the Black Sea area- Explore markets in Eastern Russia and North Africa

East Asia



Priority Measures- Expand forwarding business through "Selection and Focus" strategies- Reform contract logistics and transport business

Area Strategy

- Expand businesses to Europe and to the Americas- Promote LCL product sales- Induce various logistics business models in China as a consuming market- Reinforce inland logistics capabilities in China (automobile industry, Yangtze River transportation)

South Asia & Oceania



Priority Measures - Expand business scale through aggressive investments in growing/newly emerging countries

Area Strategy- Facilitate and enhance multi-modal transportation network within the region- Promote sales activities in priority industries (automobile, aircraft, project cargo, retail and healthcare)- Induce various logistics business models in the region as a consuming market


Medium-Term Business Plan

New Medium-Term Business Plan"GO FORWARD, Yusen Logistics —Next Challenges—"

When formulating the new Medium-Term Business Plan starting in FY2014, we reiterated the MISSION, VISION and VALUES set

forth in the previous Medium-Term Business Plan and articulated the Group's mission: Contribute to enriching society and to

enhance the value of our Group through logistics services that meet clients' needs.

Overview

Under our new Medium-Term Business Plan "GO FORWARD, Yusen Logistics —Next Challenges—," we have established

performance targets for the year ending March 31, 2017 of ¥530.0 billion in consolidated net sales and ¥12.0 billion in consolidated

operating income with handling targets of 770,000 TEU for ocean freight forwarding and 370,000 tons for air freight forwarding. In

order to achieve these numerical targets, we will reinforce our business foundation of promoting sustainable growth for the future

through our three key strategies: "Growth Strategy," "Operational Strategy" and "Investment Strategy."

We recognize our new Medium-Term Business Plan as being important in positioning Yusen Logistics to achieve the long-term

objective of combining our strengths to be the No.1 in Asia and one of the Top 5 logistics providers worldwide.

Revision of Numerical Targets under the Medium-Term Business Plan

We have revised the numerical targets for the Medium-Term Business Plan as we announced on April 30, 2015. The following

targets have been revised in light of conditions in the market environment that deviated from our initial expectations. We

recognize that the achievement of the revised targets by steadily implementing the basic strategy stated in the Medium-Term

Business Plan is one of our top priorities. With this in mind, we will make the utmost efforts to attain these goals.


Basic Strategy

As our basic strategy, we will reinforce our business foundations in order to minimize any adverse economic impact on the company.

Following this, we will implement our "Growth Strategy," "Operational Strategy" and "Investment Strategy" in order to achieve

sustainable growth.

Growth Strategy

We aim to increase our handling of ocean and air freight cargo and to expand our logistics business. To achieve this, we will

enhance our service menu to enable us to serve the diversifying needs of our customers. While strengthening Ready-Made

Products(*1) in the freight forwarding service for ocean and air freight businesses and continuing to expand investment in

South Asia in the logistics businesses, we aim to make effective use of the warehouses, trucks and other resources we currently

have around the world to improve our earnings and to continuously streamline our operations. We will leverage our know-how

in ocean freight, air freight and logistics with a focus on growth industries and emerging markets to deliver value-added total

logistics services (Tailor-Made Services(*2)).

(*1) Ready-Made Products:

Ready-Made Products are the standard services we offer to customers at a competitive rate with high-quality operations and freight tracking

information, primarily in the area of freight forwarding services.

(*2) Tailor-Made Services:

Tailor-Made Services are the services we propose and offer to customers by combining logistics technology, IT and Ready-Made Products with the

aim of optimizing logistics on a global scale in the areas of contract logistics and freight forwarding services that require high added value.


Operational Strategy

In the fiscal year ended March 31, 2014, we set up Project Re-engineering with the aim of streamlining operations in our

administration, sales and business divisions and enhancing cost-competitiveness.

Under the new Medium-Term Business Plan, we will further improve our operations by developing our Global BPM capabilities,

coordinating our IT on a global level to increase operational efficiency, as we aim to improve competitiveness. We will pursue

operation excellence through Global BPM as one of the centerpieces of the new Medium-Term Business Plan.

Investment Strategy

We will make strategic investments in three main areas which are "investment in employees," "investment in systems" and

"investment in regions."

We will promote "investment in employees" with the goal of training our global human resources to handle ocean and air

freight businesses as well as our total logistics services, "investment in systems" to improve our backbone systems and

establish infrastructure for BPM and total logistics solutions, and "investment in regions" that includes expansion of our

facilities and transportation networks with the aim of increasing our business in the Asian market.

Sales Composition by Segment

We aim to increase sales in each business segment to support our overall growth, with a particular focus on expanding the

ocean freight forwarding business.

For our regional growth, we will continue our aggressive investment in Asia to further expand sales, while maintaining a

balanced geographical portfolio.

3D Management Strategy

We will promote our Business Strategy, Sales Strategy, and Area Strategy founded on our Basic Management Strategy.


Basic Management Strategy

We will promote our Business Strategy, Sales Strategy, and Area Strategy founded on our Basic Management Strategy.

1. HR Strategy / Organization Strategy

We will continue to develop our overall international capabilities by encouraging employee networking and communication

between regions, and promoting global transfer programs across the business.

We are also promoting a HR Strategy that includes providing management and sales programs aimed at fostering professional

managers and salespersons, as well as initiatives to promote women to managerial positions.

2. Strategy to Enhance Compliance

In addition to assigning compliance officers to each of the five global regions under the Chief Compliance Officer (CCO), we

established the Compliance Committee at each Group company as we seek to enhance and disseminate our global compliance

system.

3. Financial Strategy

We will strengthen our financial standing by improving the efficiency of financial flows within the Group.

In particular, we will promote reduction of external interest-bearing liabilities and aim to streamline settlements for intra-Group

transactions.

4. IT Strategy

We will promote innovation in our IT infrastructure by reviewing our groupware and global network and shifting them to an

environment that is suited to the times. At the same time, we aim to strengthen our IT governance.

5. Contribution to Stakeholders

In addition to strengthening the fair and impartial disclose of information inside and outside the company, we will promote our

branding strategy as we work to increase corporate value.

Business Strategy

Forwarding Business

Ocean freight handling target for FY2016: 850,000 TEU

Air freight handling target for FY2016: 370,000 tons

We will deliver high-quality and competitive services in our forwarding business by combining our growth strategy with

operational reform.

Aiming for the same direction in the ocean and air forwarding businesses, on the sales front we will promote expansion in

handling our Ready-Made Products and global accounts, chiefly in freight cargo to and from Asia. In terms of purchasing, we

will further boost our purchasing power through strategic partnerships with core carriers.

We aim to be a leading world-class forwarder based on these strategies.


Contract Logistics Business

Aim to be No.1 'Kaizen' (improvement) company

We deliver high-quality services that are selected and continue to be selected by customers across the globe, utilizing our

warehousing network of our two million square meters.

We continue to promote the building of a strong 'Gemba' or frontline as the nucleus of our total logistics business by

combining product enhancement and profitability. At the core of our strategy, we will pursue the development of global human

resources and the strengthening of logistics technology and IT, aiming to be the No.1 'Kaizen' (improvement) company.

Sales Strategy

We aim to be a world-class Global Logistics Service Provider that is capable of supporting our customers by combining Ready-

Made Product sales with global logistics sales.

Ready-Made Products sales are sales activities that offer competitive rates, high-quality operations and freight tracking

information, primarily in the area of freight forwarding services. Global logistics sales, or Tailor-Made Services, are proposed and

delivered by combining logistics technology, IT and Ready-Made Products with the aim of delivering logistics solutions on a

global basis.


Global Logistics Sales Approach

We intend to take a sales approach by identifying seven industries where we will strengthen our operations, and five countries

and regions, chiefly emerging countries, to be strengthened.

In terms of industry sectors, we will seek to further increase sales for industries where we have already established a

track record.

Moreover, we established a new Project Cargo Team to handle specialized transportation like project cargo, thereby establishing

a track record while building up know-how.


Corporate GovernanceGovernance

Basic Stance on Corporate Governance, Capital Structure, Corporate Attributes, and Other Basic Information

The YLK Group's mission is to maximize the Group's corporate value by offering sophisticated, high-quality logistics services

that fulfill customer needs, and thereby contribute to the enrichment of society. For the accomplishment of this mission, we

recognize the importance of ensuring management transparency with timely and appropriate disclosure and strengthening

management supervision.

We endeavor to continually reinforce and enrich corporate governance systems with the objective of progressively enhancing

corporate value and spurring growth of the company, thereby seeking to merit the confidence of shareholders and other

stakeholders.

Governance Support System for the Outside Directors and Outside Corporate Auditors

Yusen Logistics does not have an organization or employees assigned specifically for the purpose of supporting the outside

directors and outside corporate auditors in the execution of their duties. However, support systems are in place. Regarding

proposals to be deliberated by the Board of Directors, the outside directors are briefed in advance by the departments making

the proposals. Outside corporate auditors are briefed on such matters by full-time corporate auditors in advance and receive

additional explanation, as necessary, from a person responsible for the organization concerned with the proposal to be

deliberated on by the Board of Directors.

Matters Relating to Business Execution, Audit and Supervision, Nomination, Compensation Setting and Other Functions (Overview of the Current Corporate Governance Framework)

Yusen Logistics has a system where the directors perform their duties properly and efficiently in accordance with their authority

and the decision-making rules stipulated in the regulations of the Board of Directors and the rules for submitting proposals to

the Board of Directors. We have eight directors. The directors pass resolutions about matters stipulated in laws and regulations,

the Articles of Incorporation, and other important management issues at ordinary Board of Directors meetings, which are held

once a month, or extraordinary Board of Directors meetings, which are held as needed.

Furthermore, we have introduced an executive officer system. The Board of Executive Officers, which is made up of 20 executive

officers, including executives who are also directors, meets twice a month. All executive officers perform their duties under the

direction and supervision of the representative directors. This system accelerates decision making, clarifies responsibility in the

execution of duties and raises management transparency and efficiency.

Corporate auditors attend meetings of the Board of Directors and Board of Executive Officers to stay abreast of business

challenges. Furthermore, in order to develop a deeper understanding of the actual status of operations, they also attend other


Position Number of recipients* Amount of payment(Millions of Yen)

Directors

(Of whom, outside directors)

7

(1)

210

(8)

Corporate auditors

(Of whom, outside corporate auditors)

5

(2)

63

(21)

Total

(Of whom, outside officers)

12

(3)

273

(29)

*"Number of recipients" include corporate auditor who resigned on June 2014.

important company-wide meetings, including sales meetings and budget meetings. Moreover, corporate auditors conduct proper

audits designed to prevent violations of laws and regulations and the Articles of Incorporation.

We have established the Internal Auditing Office, which carries out planned internal audits. Corporate auditors conduct hearings

on the audit plans of the Accounting Auditor at the beginning of the fiscal year and receive reports on audit results at the end

of the fiscal year. Corporate auditors are also present when the Accounting Auditor conducts audits to confirm the audit

methodology. Moreover, corporate auditors cooperate with the Internal Auditing Office and receive regular reports on the

audit results.

The certified public accountants that have performed the accounting audit of our company were Toshiyuki Ono, Kenji Morita,

and Tomoya Noda, who all belong to Deloitte Touche Tohmatsu LLC. In addition, six other certified public accountants and four

other people have assisted with accounting audit work.

The company concludes agreements with outside directors and outside corporate auditors that limit the liability for damages

due to negligence in the performance of his or her duty as provided for in Article 30, Paragraph 2 and Article 39, Paragraph 2 of

the Articles of Incorporation as set based on Article 427, Paragraph 1 of the Companies Act of Japan. These agreements limit

the maximum amount of their liabilities to the higher of either ¥15 million or the amount prescribed in Article 425, Paragraph 1

of the Companies Act.

Reasons for Selecting the Current Corporate Governance Framework

Board of Directors of Yusen Logistics has eight members. In order to inspect the decision making of the Board of Directors from

an objective and neutral viewpoint, four corporate auditors, including two outside corporate auditors, conduct audits.

For the purpose of enriching the corporate governance system by incorporating an external, independent perspective in the

management decision-making process, we appointed an additional outside director, who is an independent director, at the

Ordinary General Meeting of Shareholders held on June 26, 2015.

Accordingly, we adopted a system under which the Board of Directors (eight directors), including two outside directors, and the

Board of Corporate Auditors (four corporate auditors), including two outside corporate auditors, supervise and audit the

execution of business.

Total Amount of Remuneration Paid to Directors and Corporate Auditors

(From April 1, 2014 to March 31, 2015)


Attendance of Meetings of the Outside Director and Outside Corporate Auditors

Hiroshi Toda, Director

Hiroshi Toda attended 10 Board of Directors meetings during the fiscal year, which comprised all of those held after his

appointment on June 27, 2014. He provides advice and suggestions to ensure the suitability and appropriateness of the

decisions by the Board of Directors.

Makoto Satani, Corporate Auditor

Makoto Satani attended 13 of the 14 Board of Directors meetings and all 14 Board of Corporate Auditors meetings held during

the fiscal year, where he monitors management and provides suitable advice.

Setsuko Egami, Corporate Auditor

Setsuko Egami attended 13 of the 14 Board of Directors meetings and all 14 Board of Corporate Auditors meetings held during

the fiscal year, where she monitors management and provides suitable advice.

Approaches to the Corporate Governance Code

Yusen Logistics recognizes that responding to Japan's Corporate Governance Code, which went into force on June 1, 2015, is

one of the top priorities of management, and is implementing the initiatives to enhance the corporate governance system in

accordance with the Code's five General Principles.

(1) Securing the rights and equal treatment of shareholders

We engage in broad disclosure to shareholders in Japan and overseas, including web-based disclosure of the notice of the

general meeting of shareholders in Japanese and English.

(2) Appropriate cooperation with stakeholders other than shareholders

We disclose information such as the company's Medium-Term Business Plan, management philosophy and CSR activities.

(3) Ensuring appropriate information disclosure and transparency

We promote further enhancement of information disclosure through website renewal.

(4) Responsibilities of the Board

We appointed an outside director in FY2014 and have decided to appoint one additional outside director in FY2015.

(5) Dialog with shareholders

We provide the opportunity for direct interaction with shareholders through events such as financial results briefings and

explanatory meetings on the Medium-Term Business Plan for institutional investors, as well as other briefings for individual

investors. We are also creating a structure to report the opinions of shareholders and investors to the management team.

Further details will be announced within this year.

(As of March 31, 2015)


Basic Policy for and Status of the Internal Control System

Yusen Logistics is putting in place the necessary mechanism (internal control system) to ensure that work is done appropriately,

based on the Companies Act and in compliance with laws and regulations. Our basic policies are set out below.

(1) System ensuring that the directors and other officers' performance of their duties complies with laws and regulations

a. Considering that fulfilling corporate social responsibility (CSR) is a core management principle, Yusen Logistics has

developed the Compliance Manual and the Code of Conduct. The Code of Conduct stipulates guidelines that the

directors, executive officers, council members, and employees should follow. The directors take the lead in complying with

the Code of Conduct, and make sure that a workable internal system is in place to keep concerned parties within and

outside of the company informed about the Code of Conduct.

b. We have established the Compliance Committee as an organization to ensure that the directors and executive officers

and council members comply with laws and regulations and perform their duties appropriately.

c. The Board of Directors is seeking to maintain an environment where the corporate auditors can carry out effective audits.

(2) System ensuring that the employees' performance of their duties complies with laws and regulations

a. Yusen Logistics has prepared the Compliance Manual, a handbook consisting of the Code of Conduct and other

compliance regulations, so that the employees of the Group will comply with laws and regulations and will perform

corporate activities and day-to-day operations in compliance with corporate ethical guidelines.

b. To promote corporate compliance and ethical behavior, we have established the Compliance Committee, chaired by the

President, and appointed a Chief Compliance Officer (CCO). The Legal Affairs Department serves as the secretariat of the

Compliance Committee, and CSR leaders have been appointed in each office, including at our Group companies, to

promote compliance.

c. To promote compliance, we formulate a Group compliance program each year to run education and training programs,

and maintains whistle-blowing and consulting systems to identify compliance risks. By the end of each fiscal year, a

general review of compliance is carried out, and the results are reported to the Compliance Committee.

(3) System for storage and management of information on the directors' performance of their duties

a. Documents and other information relating to the performance of duties of the directors are stored and managed properly

under internal regulations including the document management rules.

b. Critical documents are managed and stored and are available for inspection in accordance with their levels of importance

and confidentiality.

(4) Regulations and system relating to management of risks of loss

a. The Legal Affairs Department is responsible for managing significant risks that may affect the management of the

company or may have company-wide effects. The Legal Affairs Department conducts company-wide compliance risk

investigations each fiscal year; compiles the results of identification, analysis, and assessment of compliance risks

performed at all workplaces and actions taken; and reports to the Compliance Committee chaired by the President.

b. Each division manages risks relating to its operations appropriately in accordance with relevant internal regulations.


c. The General Affairs Department has established a basic policy for business continuity planning to deal with emergencies,

such as a major disaster or disruption. Yusen Logistics has formulated a Business Continuity Plan (BCP) in accordance

with this basic policy and has established a crisis management system. The General Affairs Department periodically

reviews the BCP system and reports at the Disaster Risk Management Meeting, which all executive officers attend.

d. We have established the Personal Information Management Regulations to protect personal information.

(5) System ensuring that the directors and other officers perform their duties efficiently

a. There is a system where the directors perform their duties properly and efficiently in accordance with their authority and

the decision-making rules stipulated in the regulations of the Board of Directors and the rules for submitting proposals to

the Board of Directors.

b. The directors pass resolutions about matters stipulated in laws and regulations, the Articles of Incorporation, and other

important management issues at ordinary Board of Directors meetings, which are held once a month, or extraordinary

Board of Directors meetings, which are held as needed.

c. The executive officers pass resolutions on necessary issues and deliberate on issues to be submitted to the Board of

Directors in advance at meetings of the Board of Executive Officers, which are, in principle, held twice a month, based on

the regulations of the Board of Executive Officers. The executive officers thereby ensure prompt and efficient decision

making by the Board of Directors.

d. The Board of Directors determines the rank and responsibilities of each director and executive officer and discloses them

immediately after they are determined.

(6) System ensuring appropriate operations at the company and the Group, consisting of the parent company and subsidiaries

a. To ensure the healthy and efficient management of the Group, Yusen Logistics has established the Group Management

Basic Policy and develops Group management strategies and systems based on the policy.

b. We have established sections at head office responsible for the operations of its subsidiaries in Japan and overseas.

Those sections manage the subsidiaries appropriately based on the situation of the subsidiaries under the affiliate

management regulations.

c. We have each Group company seek to comply with laws, regulations, and norms through compliance activities under the

Code of Conduct in developing and operating an internal control system.

d. The internal auditing department assesses the status of risk management and compliance activities at each Group

company through internal audits and gives advice and makes suggestions for improvement as needed.

(7) Corporate auditors' requests to have employees who will support their performance of duties

The directors maintain a structure to respect the corporate auditors' requests to have employees who will support the

performance of their duties.

(8) Independence of the employees mentioned in the preceding item from the directors

If the corporate auditors have employees who will support the performance of their duties, the directors maintain a

structure to respect the opinion of the corporate auditors about securing of independence of employees from the directors.


(9) System for the directors and employees to report to corporate auditors and systems relating to other reports to corporate auditors

a. The Board of Directors ensures that the corporate auditors perform their duties stipulated in the regulations of the Board

of Corporate Auditors.

b. Corporate auditors exercise the authority granted them under laws and regulations and communicate with the directors,

executive officers, council members, and employees to carry out fair audits and ensure the legality and efficiency of their

duties.

c. Corporate auditors carry out fair audits to prevent violations of laws and regulations and the Articles of Incorporation,

seeking to assess business challenges and actual business conditions through the following activities:

- Attendance at meetings of the Board of Directors and the Board of Executive Officers

- Attendance at important company-wide meetings, including sales meetings and budget meetings

- Attendance at compliance meetings and disaster risk management meetings

- Holding regular meetings for exchanging opinions with the representative directors, including the President

- Perusing important documents relating to the execution of business, including the minutes of Board of Directors

meetings and circulars sent to obtain approval for decisions on proposals made at meetings of the Board of Directors

and the Board of Corporate Auditors

(10) Another system for ensuring efficient audits by corporate auditors

Corporate auditors maintain a system for enhancing the effectiveness and efficiency of audits in which they cooperate

and exchange opinions with the accounting auditor and the Internal Audit Chamber.

(11) System for ensuring compliance with the Financial Instruments and Exchange Act

Yusen Logistics has built an internal control system necessary for preparing adequate financial statements under the

Financial Instruments and Exchange Act and assesses the effectiveness of the development and operation of the system.


Board of Directors, Auditors and Executive 0fficers

HiromitsuKuramoto

ShojiMurakami

KenichiKotoku

AkioFutami

ToshiyukiKimura

KunihikoMiyoshi

HiroshiToda

HideoEgawa

President andRepresentativeDirector

RepresentativeDirector, SeniorManagingExecutive Offi cer

Director,ManagingExecutive Offi cer



Director,Executive Offi cer

Outside Director(Part-time)

Outside Director(Part-time)

Board of Directors

Governance


Auditors

HitoshiSakurada

HidetoshiNakanishi

MakotoSatani

SetsukoEgami

Auditor(Full-time)

Auditor(Full-time)

Auditor(Part-time),IndependentAuditor

Auditor(Part-time),IndependentAuditor

TatsuhikoSaeki

EiichiSuzuki

MinoruFutonaka

ToruKamiyama

YasuhikoUeda

MasayukiYokoyama

TakeshiHagiwara

Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer

Executive Officers

ToshioKawashima

MakotoSuzuki

IanVeitch

LeeCheck Poh

YasumasaChudo

YoshiakiShirata

MichiyoOno

Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer Executive Offi cer


Board of Directors

Auditors

Appointment Name Management Area

President and Representative Director Hiromitsu Kuramoto

Representative Director Shoji MurakamiBusiness Development & Planning Dept., Global Air Freight Business Dept., Global Ocean Freight Business Dept., Contract Logistics & Transport Dept., Global BPM Dept.

Director Kenichi KotokuInternal Audit Chamber, Legal Affairs Dept., General Affairs Dept., Human Resources Dept., Information Business System Dept., Operation Administration Dept., Customs Clearance Control Chamber

Director Akio Futami Accounting Dept., Finance Dept., Corporate Communication Dept., Corporate Planning Dept.

Director Toshiyuki KimuraJapan Region (East Japan Export Sales Div., East Japan Import Sales Div., Central Japan Sales Div., West Japan Sales Div., Contract Logistics Sales Dept.)Corporate Officer of Nippon Yusen Kabushiki Kaisha

Director Kunihiko Miyoshi

Outside Director (Part-time) Hiroshi Toda Independent Director

Outside Director (Part-time) Hideo Egawa Independent Director

Appointment Name

Auditor (Full-time) Hitoshi Sakurada

Auditor (Full-time) Hidetoshi Nakanishi

Auditor (Part-time), Independent Auditor Makoto Satani

Auditor (Part-time), Independent Auditor Setsuko Egami


Executive Officers

Appointment Name Management Area

President Hiromitsu Kuramoto

Senior Managing Executive Offi cer Shoji MurakamiBusiness Development & Planning Dept., Global Air Freight Business Dept., Global Ocean Freight Business Dept., Contract Logistics & Transport Dept., Global BPM Dept.

Managing Executive Offi cer Kenichi KotokuInternal Audit Chamber, Legal Affairs Dept., Human Resources Dept., Information Business System Dept., Operation Administration Dept.,In charge of General Affairs Dept., Customs Clearance Control Chamber

Managing Executive Offi cer Akio Futami Accounting Dept., Finance Dept., Corporate Planning Dept.,In charge of Corporate Communication Dept.

Managing Executive Offi cer Toshiyuki KimuraCentral Japan Sales Div., West Japan Sales Div.,In charge of East Japan Export Sales Div., East Japan Import Sales Div., Contract Logistics Sales Dept.

Executive Offi cer Kunihiko Miyoshi In charge of Americas Region, President of Yusen Logistics (Americas) Inc.

Executive Officer Tatsuhiko Saeki In charge of Contract Logistics & Transport Dept. (General Manager)

Executive Officer Eiichi Suzuki In charge of Internal Audit Chamber, Legal Affairs Dept., ChiefCompliance Offi cer

Executive Officer Minoru Futonaka In charge of Global Ocean Freight Business Dept., Global BPMDept. (General Manager)

Executive Officer Toru Kamiyama In charge of Global Air Freight Business Dept. (General Manager)

Executive Offi cer Yasuhiko Ueda In charge of Human Resources Dept.

Executive Offi cer Masayuki Yokoyama In charge of Corporate Planning Dept. (General Manager)

Executive Offi cer Takeshi Hagiwara In charge of Executive Offi cer of TRANSCONTAINER LIMITED

Executive Offi cer Toshio Kawashima In charge of Business Development & Planning Dept. (General Manager)

Executive Offi cer Makoto Suzuki In charge of Information Business System Dept., Operation Administration Dept.

Executive Offi cer Ian Veitch In charge of Europe Region, Managing Director of Yusen Logistics (Europe) B.V.

Executive Offi cer Lee Check Poh In charge of South Asia & Oceania Region, Chairman of YusenLogistics (Singapore) Pte. Ltd.

Executive Offi cer Yasumasa Chudo In charge of Central Japan Sales Div., West Japan Sales Div.

Executive Offi cer Yoshiaki Shirata In charge of Accounting Dept., Finance Dept. (General Manager)

Executive Offi cer Michiyo Ono In charge of East Asia Region, Chairman of Yusen Logistics (China) Co., Ltd.


Corporate Social Responsibility (CSR)

CSR Activity Policy

Given the meaning of CSR, corporate activities that focus only on compliance are incomplete.

Indeed, companies today are required to go a step further and understand that they are members of society and must therefore

give due consideration to social ethics, human rights, the global environment and local communities. Embracing this change in

the social environment, the YLK Group is tackling its corporate social responsibility sincerely, determined to meet the

expectations of shareholders while aiming to achieve sustainable development.

Environment

Globalization of trade has improved the lives of countless people around the world, but there are inevitable environmental costs.

As a leading international freight forwarder, we believe we have a vital role to play by managing environmental risks.

CSR Activities

1. Document Revision, Training and Practice for BCP Improvement at Yusen Logistics Japan

In order to improve disaster response capability, Yusen Logistics Japan has been implementing document revision, training and

practice concerning BCP. Regarding document revision, the current Business Continuity Plan will be revised and a new Disaster

Prevention Handbook will be produced to distribute to employees. For training, a workshop was held with the participation of

15 directors and 10 department heads under the theme of "Effective BCP." For the practice stage, simulating training was held

on the premise of initial response to an earthquake directly under the Tokyo metropolitan area. There were 36 participants in

total, comprising department heads and various managers. In a questionnaire handed out after the practice, approximately 80%

of participants responded that their expected role and conduct in the event of a disaster occurring had become clearer,

reemphasizing the importance of these kinds of activities.

Governance


2. "Coral Saving Project Year 1" in Yusen Logistics Thailand

Our damaged coral reefs exacerbate drastic climate changes, and we

owe it to our planet and all that lives in it with us – plants and animals –

to take responsibility for the damage we inflict on our ecosystem as a

result of our development. On Friday, March 6, 2015, Yusen Logistics

Thailand, launched a new CSR project called "Coral Saving Project Year 1"

at the Marine Science Activity and Conservation Foundation (MACF),

located at Samaesarn Beach, Sattahip, Chonburi Province. The event

began with an honorary speech by the president of the foundation,

Professor Prasan Sangpaiboon, who provided his knowledge and insight on coral reefs, their value and impact on our

ecosystem, and the importance of their conversation. Afterward, the foundation's staff guided Yusen participants to a boat to

skin dive and observe the beauty of Samaesarn's coral. The experience was an enlightenment to the more than 100 Yusen

employees who were there that day, and subsequently to our company. We intend to have a "Year 2" of this activity in order to

help keep in mind that there is a valuable resource under the sea that needs our attention.

3. Yusen Logistics China has started using low emission trucks

In order to meet national regulation aiming to cut emission and reduce

pollution, according to annual truck upgrade plan, by December of last year

Yusen Logistics China Transportation Department replaced all "yellow

label" trucks that do not meet exhaust emission standards with new

standard low emission trucks. Additionally, two LNG trucks were also

purchased as a further step toward the company's environmental goal to

operate in a more environmentally friendly way.

ISO14001 Certification

The YLK Group including the company acquired ISO14001 certification at 14 European and other companies and 52 sites via

the company's Global Multi-Site System.

The Group acquired this certification for its forwarding services including global logistics services.

Based on the ISO14001 certification, internal audit and investigation by a third party are being conducted to ensure that the

environmental management system of the YLK Group is effectively functioning. At the same time, necessary corrective actions

are implemented.

The renewal of the certification was approved following the investigation conducted by a third party in February 2014, and it

will be effective until March 31, 2017.


Compliance

In order to maintain being the "Trustworthy" logistics service provider to our worldwide customers, Yusen Logistics believes that

establishment and maintenance of a Group compliance system is one of our highest priorities.

Unlike a product manufacturer or a carrier who operates ships and aircrafts, we are the company that is based on the

day-to-day activities of our employees. We understand that our most important assets are our employees, and their knowledge

and experience.

In order to maintain this trust and ensure our employees can act to the best of their abilities, our Group's officers and

employees act in accordance within all local and international laws, and understand the significance and importance of

compliance in our daily activities.

Yusen Logistics has established a "Code of Conduct" which officers and employees of the Group must comply in performing

our day-to-day business activities.

We believe that compliance to this "Code of Conduct" is the first step of providing superior service and obtaining the trust of

our customers.


Financial HighlightsFinancial Data

03/2011 03/2012 03/2013 03/2014 03/2015FY 160,788 309,004 339,049 406,040 460,9683Q 121,667 232,280 248,634 303,536 334,1922Q 80,467 153,363 161,818 199,450 213,5271Q 41,769 76,521 77,658 99,270 103,658

03/2011 03/2012 03/2013 03/2014 03/2015FY 6,068 7,485 2,744 4,942 10,0073Q 4,831 6,193 3,078 3,740 6,8962Q 3,492 3,194 2,040 1,897 4,0381Q 1,920 1,064 1,107 186 1,409

03/2011 03/2012 03/2013 03/2014 03/2015FY 85.85 59.91 26.53 31.17 65.813Q 67.84 77.84 35.44 21.65 44.682Q 50.80 42.37 31.90 6.68 16.491Q 27.57 11.26 30.04 (14.03) (12.29)

03/2011 03/2012 03/2013 03/2014 03/2015FY 4,947 6,272 1,659 4,523 9,3033Q 4,007 5,234 2,210 3,478 6,2952Q 3,011 2,538 1,235 1,538 3,6301Q 1,673 777 447 (140) 1,295

03/2011 03/2012 03/2013 03/2014 03/2015FY 3,621 2,526 1,119 1,315 2,7753Q 2,861 3,283 1,494 913 1,8842Q 2,142 1,787 1,345 282 6951Q 1,163 475 1,267 (592) (518)

● Net Sales

● Ordinary Income

● Net Income per Share

● Operating Income

● Net Income

(Millions of Yen)

(Millions of Yen)

(Yen)

(Millions of Yen)

(Millions of Yen)


03/2011 03/2012 03/2013 03/2014 03/2015

FY 3.1 2.0 0.5 1.1 2.0

03/2011 03/2012 03/2013 03/2014 03/2015

FY 3.8 2.4 0.8 1.2 2.2

03/2011 03/2012 03/2013 03/2014 03/2015

FY 2.3 0.8 0.3 0.3 0.6

03/2011 03/2012 03/2013 03/2014 03/2015

FY 6.9 4.6 1.8 2.0 3.8

03/2011 03/2012 03/2013 03/2014 03/2015

FY 60.2 38.2 36.7 36.0 34.6

3Q 63.6 38.6 36.6 35.9 34.7

2Q 63.5 40.1 36.1 35.9 35.4

1Q 62.0 40.8 36.4 36.1 35.1

03/2011 03/2012 03/2013 03/2014 03/2015

FY 4.3 2.1 0.7 0.7 1.3

● Operating Income to Net Sales

● Net Income to Net Sales

● ROE ● Shareholders' Equity Ratio

● Ordinary Income to Net Sales

● Net Income to Total Assets

(%)

(%)

(%) (%)

(%)

(%)


Results of OperationsMillions of Yen Thousands of

U.S. Dollars

2010 2011 2012 2013 2014 2015 2015

Net sales ¥123,453 ¥160,788 ¥309,004 ¥339,049 ¥406,040 ¥460,968 $3,835,968

Cost of sales 92,127 124,514 257,296 286,734 341,112 384,208 3,197,207

Gross profit 31,326 36,274 51,708 52,315 64,928 76,760 638,761

Selling, general andadministrative expenses 29,016 31,327 45,436 50,656 60,405 67,457 561,345

Operating income 2,310 4,947 6,272 1,659 4,523 9,303 77,416

Income before income taxes andminority interests 3,004 5,887 6,673 4,074 5,157 7,687 63,968

Net income 1,545 3,621 2,526 1,119 1,315 2,775 23,094

Financial PositionMillions of Yen Thousands of

U.S. Dollars

2010 2011 2012 2013 2014 2015 2015

Current assets ¥52,690 ¥60,883 ¥93,907 ¥104,700 ¥115,068 ¥142,923 $1,189,338

Current liabilities 21,462 22,538 52,580 62,025 68,794 85,030 707,581

Equity (Note 2) 51,668 53,164 57,708 63,263 68,290 76,968 640,491

Total equity (Note 3) 53,663 55,360 79,558 92,290 100,450 113,904 947,859

Total assets 81,443 88,363 151,115 173,664 189,923 222,736 1,853,511

Net cash provided by operating activities 840 5,675 2,719 8,910 6,280 9,345 77,764

Free cash flow (Note 4) (796) 6,970 (11,182) (784) (616) 841 6,997

Sales by Geographical

Segments

Millions of Yen Thousands ofU.S. Dollars

2010 2011 2012 2013 2014 2015 2015

Japan ¥61,227 ¥77,635 ¥83,761 ¥74,853 ¥76,212 ¥92,196 $767,215

Americas 10,782 13,471 70,056 77,269 91,709 108,119 899,714

Europe 11,888 15,022 76,822 76,157 92,289 103,498 861,264

East Asia 22,315 31,705 39,884 54,988 75,074 77,094 641,543

South Asia and Oceania 19,332 25,742 42,440 60,483 78,476 94,573 786,997

Inter-segmentsales/transfers (2,091) (2,787) (3,959) (4,701) (7,720) (14,512) (120,765)

Net sales 123,453 160,788 309,004 339,049 406,040 460,968 3,835,968

Consolidated to non-consolidated

ratio (times) 2.21 2.26 4.00 4.95 5.87 5.40 -

Consolidated Six-Year SummaryFinancial Data

Yusen Logistics Co., Ltd. and Consolidated Subsidiaries

Years Ended March 31


Per Share DataYen U.S. Dollars

2010 2011 2012 2013 2014 2015 2015

Basic net income (Note 5) ¥36.63 ¥85.85 ¥59.91 ¥26.53 ¥31.17 ¥65.81 $0.548

Cash dividends (full year) (Note 5) 16.00 18.00 20.00 18.00 18.00 19.00 0.158

Net assets (Note 5) 1,225.21 1,260.69 1,368.47 1,500.21 1,619.42 1,825.21 15.189

Key Ratios%

2010 2011 2012 2013 2014 2015

Gross profit to net sales 25.4 22.6 16.7 15.4 16.0 16.7

Operating income to net sales 1.9 3.1 2.0 0.5 1.1 2.0

Cost of sales to net sales 74.6 77.4 83.3 84.6 84.0 83.3

Selling, general and

administrative expenses to net sales23.5 19.5 14.7 14.9 14.9 14.6

Net income to net sales 1.3 2.3 0.8 0.3 0.3 0.6

Return on equity (ROE) 3.1 6.9 4.6 1.8 2.0 3.8

Net income to total assets 2.0 4.3 2.1 0.7 0.7 1.3

Asset turnover (times) 1.6 1.9 2.6 2.1 2.2 2.2

Equity ratio (Note 5) 63.4 60.2 38.2 36.4 36.0 34.6

Other Year-End Data 2010 2011 2012 2013 2014 2015

Number of shares

outstanding (Note 5)42,220,800 42,220,800 42,220,800 42,220,800 42,220,800 42,220,800

Notes:

1. 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 ¥120.17 to $1, the approximate rate of exchange at March 31, 2015.

2. Equity (¥76,968 million in 2015) = total equity - minority interests.

3. Total equity includes minority interests in accordance with the enforcement of Japan's Corporate Law.

4. Net cash provided by operating activities + net cash used in investing activities

5. The above figures included treasury stock of 50,296 shares in 2010, 50,734 shares in 2011, 50,862 shares in 2012, 50,958 shares in 2013, 51,350

shares in 2014, and 51,566 shares in 2015.


Management's Discussion and AnalysisAs of March 31, 2015, the Yusen Logistics Group (YLK Group) comprised of Yusen Logistics Co., Ltd. (the company), Nippon

Yusen Kabushiki Kaisha (parent company), 71 consolidated subsidiaries and 5 equity-method affiliates. The YLK Group's major

business activity is the ocean freight forwarding, air freight forwarding and logistics businesses, which the YLK Group is

developing globally.

Overview of Fiscal 2014

With regard to the global economy in fiscal 2014, the fiscal year ended March 31, 2015, there were signs of a moderate

recovery in Japan following the weak consumer confidence that persisted after an increase in the consumption tax rate. The

economic recovery in the U.S. was firm due to an upswing in personal consumption supported by improvement in the

employment environment and the low price of crude oil.

Low growth continued in the European economy, although there was some variation by region. Asia once again maintained a

stable economic growth rate, particularly in South Asia, while the effects of an economic slowdown in China were felt in

neighboring countries.

In the international logistics market, both ocean freight and air freight forwarding were steady partly reflecting economic

recovery in the U.S. Specifically, freight movement in air freight forwarding was brisk, centered on the U.S.

In these conditions, ocean freight volume handled by the YLK Group decreased year on year due to continued sluggish shipment

volume originating from Asia, which offset steady shipments of cargo originating from Japan on the whole. In the air freight

forwarding business, results exceeded the previous fiscal year in all regions due in part to a continuation of robust freight

movement in line with the U.S. economic recovery. In particular, a significant increase in shipment volume was posted in the

fourth quarter due mainly to the impact of port congestion on the U.S. West Coast. We continued with initiatives in the

operational strategy project and worked to raise business efficiency and enhance cost-competitiveness.

As a result, in the fiscal year ended March 31, 2015, consolidated net sales increased 13.5% year on year to ¥460,968 million

and operating income advanced 105.7% year on year to ¥9,303 million.

(1) Japan

In ocean freight forwarding business, the volume of ocean freight

exports on a TEU basis rose 13.7% year on year. In addition to

steady exports of such items as automotive components and

machine tools, we handled spot cargo. In ocean freight imports,

freight volumes increased 2.7% year on year due to the handling

of apparel and consumer goods-related products, which offset

concerns over the impact of yen depreciation.

In the air freight forwarding business, the volume of air freight

exports increased 18.0% year on year. In addition to steady

shipments of automotive components, aircraft components and

Financial Data


electronics, we handled spot cargo for the U.S. upon entering the fourth quarter. In air freight imports, the volume handled

decreased 1.9% year on year due to the impact of the consumption tax rate hike and the weak yen, despite solid freight

movement for automotive components and food-related items.

As a result, net sales of the company and its domestic consolidated subsidiaries rose 21.0% year on year to ¥92,196 million

and operating income was ¥2,111 million, up 85.9% year on year.

(2) Americas

Despite expectations of an increase in freight movement in line

with economic recovery, prolonged port congestion on the U.S.

West Coast impacted each of the ocean freight, air freight and

logistics businesses.

In ocean freight exports, freight volume increased a moderate

1.2% year on year in volume handled on a TEU basis, and in

ocean freight imports, freight volume handled increased a mere

2.6%, despite handling of such items as automotive components

and consumer goods-related products.

In air freight exports, freight volume handled rose 22.9% year on

year due to a continued shift away from ocean freight forwarding

as a result of port congestion in the second half coupled with export shipments of automotive components and spot shipments

of food-related items. In air freight imports, freight volume increased 22.9% year on year due in part to brisk freight movement

of automotive components and aircraft components.

In the logistics business, we handled consumer goods-related products following improvement in personal consumption in line

with U.S. economic recovery, but the business environment remained severe due to a shift to an oligopoly-type structure by

railway and truck companies. In addition, the volume handled fell short of expectations due to a buildup of cargo resulting from

port congestion.

As a result, net sales in the Americas advanced 17.9% year on year to ¥108,119 million and operating income was

¥549 million, compared with a loss of ¥119 million in the previous fiscal year.

The yen-to-dollar exchange rate was ¥109.19/US$1 for the fiscal year under review and ¥99.75/US$1 for the previous year.

(3) Europe

In the ocean freight forwarding business, ocean exports handled

on a TEU basis decreased 1.6% year on year despite handling of

automotive components and consumer goods-related products

due to a lack of vigor in freight movement owing to persistent

economic uncertainty in Europe. Meanwhile, ocean imports

handled increased 5.4% from the previous fiscal year.

In air freight exports, volume handled increased 15.8% year on

year due to shipments of medical equipment-related products

and electronics. In air freight imports, volume handled decreased

2.1% year on year due to weak freight movement despite the

handling of automotive components, among other items.


For the logistics business, efforts were made to enhance business efficiency, but they were insufficient to cover costs associated

with sales expansion, and the tough business environment persisted on the whole.

As a result, the Europe segment recorded net sales of ¥103,498 million, up 12.1% year on year, however recorded an operating

loss of ¥1,155 million, compared with a loss of ¥1,112 million in the previous year.

The yen-to-euro exchange rate was ¥139.38/€1 for the fiscal year under review and ¥133.38/€1 for the previous year.

(4) East Asia



year as freight movement fell short of expectations due in part to

the impact of the economic stagnation in China and a shift to air

freight forwarding of cargo for the U.S. This occurred despite

handling of shipments of consumer goods-related products and

electronics. In ocean freight imports, freight volume handled

increased 3.4% year on year due in particular to the handling

of electronics.

In air freight exports, the volume handled rose 3.9% year on year

due mainly to shipments of electronics and aircraft components. In

air freight imports, the volume handled increased 4.2% year on year due mainly to freight movement of automotive

components and electronics.

In the logistics business, we worked actively to enhance business efficiency, which included warehouse reorganization,

in addition to handling such items as apparel and electronics.

As a result, net sales rose 2.7% year on year to ¥77,094 million. Operating income was ¥1,442 million, compared with a loss

of ¥120 million in the previous fiscal year due to stabilization in the purchasing environment, particularly in the ocean freight

forwarding business, expansion in the air freight forwarding business and the effects of enhanced efficiency in the logistics

business.

(5) South Asia & Oceania



year despite shipments mainly of automotive components and

electronics. The decline was due in part to a shift to air freight

forwarding resulting from port congestion and to the impact of an

economic slowdown in the region. The volume of ocean freight

imports increased 8.6% year on year due primarily to solid results

in handling of automotive components and consumer goods-

related products.

In the air freight business, export volume handled rose 12.0% and

import volume handled increased 3.6%. This was due to continued

solid freight movement of such items as automotive components and

electronics in Asia coupled with a shift from ocean freight

forwarding.43Annual Report 2015

In the logistics business, the volume handled of automotive components and electronics in particular expanded due in part to

persistent proactive investment that included enhancing and expanding warehousing in Vietnam and Malaysia.

As a result, net sales advanced 20.5% year on year to ¥94,573 million and operating income surged 26.7% to ¥6,464 million.

Financial Position

As of March 31, 2015, total assets amounted to ¥222,736 million, up ¥32,813 million, or 17.3%, year on year. This change

mainly reflected increases in the total of cash and cash equivalents and time deposits of ¥6,387 million, trade notes and

accounts receivable of ¥17,448 million, other current assets of ¥3,163 million, property and plant and equipment of

¥4,294 million.

Total liabilities were ¥108,832 million, up ¥19,359 million, or 21.6% year on year. The main factors were increases in trade

notes and accounts payable of ¥7,929 million, provision for alleged antitrust law violation of ¥1,753 million, other current

liabilities of ¥4,916 million, and long-term debt of ¥2,898 million.

Total equity amounted to ¥113,904 million, mainly due to increases in retained earnings and foreign currency translation

adjustments. The equity ratio was 34.6%.

Cash Flows

Cash and cash equivalents at March 31, 2015 were ¥32,107 million, up ¥4,413 million year on year. This was the result of net

cash provided by operating activities of ¥9,345 million, net cash used in investing activities of ¥8,504 million, and net cash

provided by financing activities of ¥672 million as well as the impact of foreign currency translation adjustments.

Net cash provided by operating activities

Net cash provided by operating activities increased ¥3,065 million year on year to ¥9,345 million.

The main factors were the recording of ¥11,833 million in increase in trade notes and accounts receivable (compared with a

decrease of ¥2,548 million in the previous fiscal year) as well as income before income taxes and minority interests of ¥7,687

million (up ¥2,530 million year on year), depreciation and amortization of ¥6,468 million (up ¥562 million year on year) and

increase in trade notes and accounts payable of ¥4,806 million (up ¥3,914 million).

Net cash used in investing activities

Net cash used in investing activities was ¥8,504 million, up ¥1,608 million year on year.

The main uses of cash were ¥5,450 million for proceeds from withdrawal of time deposits (up ¥1,950 million year on year) as

well as ¥6,634 million for purchase of property, plant and equipment (up ¥42 million year on year) and ¥7,016 million for

payments into time deposits (up ¥2,831 million year on year).


Net cash provided by financing activities

Net cash provided by financing activities decreased ¥1,809 million year on year to ¥672 million.

This mainly reflected cash used of ¥5,410 million for the repayment of long-term debt, up ¥4,356 million year on year, and

¥892 million for cash dividends paid to minority shareholders (up ¥523 million year on year). On the other hand, cash of

¥7,034 million was provided by a net increase in long-term debt, up ¥2,575 million year on year.

Dividend Policy

The company recognizes the return of profits to shareholders as one of its top priorities. The company's policy is to offer a stable

dividend within the limits set by business results. The company's basic policy is also to further raise shareholder returns by

working to increase corporate value through YLK Group business expansion and growth.

In addition, the company's basic policy is to provide dividends from retained earnings twice a year with an interim dividend and

a year-end dividend.

The amounts for dividends from retained earnings are decided at the general meeting of shareholders for the year-end dividend

and at the Board of Directors meeting for the interim dividend.

The interim dividend is provided on the record date of September 30 each year pursuant to a resolution made at the Board of

Directors meeting, as stated in the Articles of Incorporation.

Based on the above policy, the company decided to set the year-end dividend at ¥10 per share for the fiscal year. This brought

the annual dividend to ¥19 per share, after including an interim dividend of ¥9 per share paid on December 5, 2014.


Business RisksThe following risks could affect the business performance and financial position of the YLK Group. Forward-looking statements in the

text of this report are based on the judgment of the YLK Group as of the date of submission of the Annual Securities Report.

(1) Risks Arising from General Economic Trends

In addition to economic trends in target countries and regions, international logistics demand could be affected by economic

trends in Europe and Americas that have a substantial impact on the global economy. In particular, products and components

for personal consumption such as IT-related and digital devices account for a high proportion of the demand for air freight

forwarding and can be strongly affected by economic trends in the countries of consumption.

The YLK Group has been working to increase its handling of items such as medical devices, consumer products and food-related

products, which are relatively immune to economic fluctuations, in addition to automobile-related parts and other items. In

doing so, it aims to achieve a business structure that ensures sustainable growth.

(2) Risks Arising from Changes in Fuel Surcharge

Fuel surcharges from aviation companies, in addition to short-term fluctuations in fuel charges, are usually paid by customers

separately from air freight rates and should not, therefore, have a serious impact on the business performance and financial position of

the YLK Group. However, a sharp increase in fuel surcharges could temporarily reduce the profitability of the YLK Group.

(3) Potential Risks Accompanying the Global Expansion of Business

The YLK Group has expanded its business to encompass not only Japan but also the Americas, Europe, Asia, Oceania, and the

Middle and Near East, and the majority of the Group's overall sales activities are conducted in overseas markets. The risks listed

below are consistently inherent in such global expansion.

a. Political and economic factors

b. The effect of public regulations, including business and investment approvals, taxation, currency exchange controls, trade restrictions, etc.

c. The impact of natural disasters, including earthquakes, tsunamis, typhoons, hurricanes, etc.

d. Social turmoil due to wars, international disputes, riots, terrorism, strikes, and other factors

e. Global economic turmoil due to rapid and drastic fluctuations in currency exchange rates

f. Spread of extremely contagious diseases with high mortality rates, such as new strains of influenza

The YLK Group carries out a full study of the local political situation and economy as well as the culture and customs, health,

and other factors when it expands to a new overseas market to address all possible risks at the time to the maximum extent.

Nevertheless, a variety of unforeseen events, including increasing sophistication of telecommunications technology, economic

and cultural globalization, frequent incidence of terrorist acts, and the spread of new infectious diseases, have been occurring

around the world. The business performance and financial position of the YLK Group could be affected by such events and

changes in the international situation that the YLK Group is unable to predict.

Financial Data


(4) Risks Arising from Computer Viruses, Hacker Activities and Cyberterrorism

The YLK Group has installed back-up systems for its computer networks and is working to further strengthen its backups

structure for hardware and data to reduce damage caused by natural disasters, such as earthquakes, storms and flooding, to a

minimum and enable prompt recovery. Moreover, the YLK Group has installed firewalls and virus detection software into its

e-mail servers and terminals, to prevent unauthorized external access and infection by computer viruses. Nevertheless, the

business performance and financial position of the YLK Group could be affected by a temporary failure of its computer systems

or a leakage of information due to unforeseeable circumstances such as the invasion to the internal information systems using

technology beyond the estimated security level.

(5) Risks from Deterioration of Social Credibility or Claim forDamages Arising from Leakage of Customer Information

The YLK Group handles a large volume of customer information. Moreover, the Group also provides customs clearance services,

with a duty of confidentiality for customer information and therefore strives to prevent the leakage of such information.

Nevertheless, the business performance of the YLK Group could be affected by deterioration of social credibility in the Group or

claims for damages in the event of leakage of information to any third party due to unforeseen circumstances.

(6) Risks Arising from Fluctuations in Currency Exchange Rates

Although the YLK Group has foreign currency-denominated claims and obligations, it uses forward exchange contracts to

reduce the impact of currency exchange rate fluctuations. Therefore, there is no risk for a major impact to the YLK Group.

However, the figures included in the financial statements of overseas consolidated subsidiaries are converted into Japanese yen

when preparing the consolidated financial statements of the YLK Group, and fluctuations in currency exchange rates could

affect the business performance and financial position of the YLK Group.

(7) Legal Regulations

The businesses of the YLK Group are subject to a variety of legal regulation applicable throughout the world. These primarily

include social regulations (regulations for ensuring safety) and legal regulations concerning the transport industry. In Japan, the

YLK Group engages in the freight forwarding business, its principal business, with permission from the Ministry of Land,

Infrastructure, Transport and Tourism as "the Second Class Consigned Freight Forwarding Business" under Article 20 of the

Consigned Freight Forwarding Business Act. Without any specific term of validity for the permission, the whole or part of the

business can be suspended for a specified period, or the permission rescinded for any event that falls under any of the reasons

for suspension of business or rescission of permission stipulated in Article 33 of the Act. As of the date of submission of the

Securities Report, none of these reasons apply to the YLK Group. However, in the event that a situation in which the permission

was rescinded was to arise for any reason in the future, this could seriously affect the business performance and financial

position of the YLK Group.


In addition, in the execution of its businesses, the YLK Group may be subject to financial penalties such as fines and surcharges under

measures, action and other legal procedures by regulatory authorities. Execution of such measures, actions and other legal procedures

could affect the performance and financial position of the YLK Group.

(8) Relationship with NYK Group

a. Position within NYK Group

As of March 31, 2015, Nippon Yusen Kabushiki Kaisha Group (NYK Group) is composed of 574 consolidated subsidiaries and 145

equity-method affiliates and is a comprehensive logistics enterprise centered on the ocean transportation business.

The YLK Group is mainly involved in the freight forwarding business and the warehousing business, and no other NYK Group company

engages in the same air freight forwarding business as the company with permission from the Minister of Land, Infrastructure, Transport

and Tourism as a Second Class Consigned Freight Forwarding Business (Air).

As a listed company, Yusen Logistics also strives to ensure its independence, and none of the decisions made by the company require the

prior approval of NYK.

b. Personnel relationships with NYK Group

As of the date of submission of the Securities Report, one of the company's 12 officers serves concurrently at an NYK Group company.

The position and name of this officer at the company and the position at the NYK Group are as shown below.

Name of permission/approval

Second Class Consigned Freight Forwarding Business

Air Transport Agent

Customs Clearance Business

First Class Consigned Freight Forwarding Business

Warehousing Business

Medical Devices Manufacturer

Specially Controlled Medical Devices Sales and Leasing Business

Ministry/agency with jurisdiction

Minister of Land, Infrastructure, Transport and Tourism

Director-General of Customs with regional jurisdiction

Director of the Transport Bureau with regional jurisdiction

Prefectural Governor

Content of permission/approval

Permission for business operation

Notifi cation of business operation

Registration of business operation

Term of validity

No specifi c term of validity

Same as above

September 26, 2010 to September 25, 2015

June 12, 2013 to June 11, 2019

The main permissions and approvals, including "the Second Class Consigned Freight Forwarding Business," are listed below.

Changes to the legal regulations concerning these permissions and approvals or the rescission of permissions and approvals

could affect the business performance and financial position of the YLK Group.


c. Transactions with NYK and consolidated subsidiaries of NYK (excluding YLK Group)

The principal transactions between the company and NYK and the consolidated subsidiaries of NYK during the consolidated fiscal year

under review are as below. Business transactions are conducted on the same terms as those of regular transactions taking into account

the actual market conditions.

i. Transactions with NYK

The principal transactions between the company and NYK concerns delegation of NYK for the transportation of some

marine freight handled by the company. Business transactions during the consolidated fiscal year under review amounted

to ¥2,143 million.

ii. Transactions with consolidated subsidiaries of NYK

The principal transactions between the company and consolidated subsidiaries of NYK concerns delegation to UNI-X

Corporation and 24 other companies of marine transportation and associated operations. Business transactions during

the consolidated fiscal year under review amounted to ¥5,815 million.

Position at the company Director, Managing Executive Offi cer

Name Toshiyuki Kimura

Position at NYK Group Company

(excluding YLK Group)Corporate Offi cer, Nippon Yusen Kabushiki Kaisha


Consolidated Financial StatementsFinancial Data

Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Consolidated Balance Sheet March 31, 2015

Millions of Yen

Thousands of U.S. Dollars

(Note 1) ASSETS 2015 2014 2015 CURRENT ASSETS: Cash and cash equivalents (Note 10) ¥ 32,107 ¥ 27,694 $ 267,177 Time deposits (Note 10) 4,496 2,522 37,413 Trade notes and accounts receivable (Note 10) 93,641 76,193 779,239 Deferred tax assets—current (Note 8) 1,964 1,205 16,347 Other current assets 11,756 8,582 97,825 Allowance for doubtful accounts (1,041 ) (1,128 ) (8,663 ) Total current assets 142,923 115,068 1,189,338 PROPERTY, PLANT AND EQUIPMENT: Land 18,138 16,922 150,938 Buildings and structures 52,163 47,095 434,078 Furniture and fixtures 16,886 15,513 140,521 Machinery, equipment and vehicles 23,414 21,413 194,837 Construction in progress 1,127 962 9,379 Total 111,728 101,905 929,753 Accumulated depreciation (52,392 ) (46,863 ) (435,984 ) Total property, plant and equipment 59,336 55,042 493,769 INVESTMENTS AND OTHER ASSETS: Investments in securities (Notes 4 and 10) 1,218 1,004 10,132 Investments in unconsolidated subsidiaries and affiliated companies 2,107 2,335 17,532

Net defined benefit asset (Note 6) 1,639 284 13,640 Goodwill 2,932 2,962 24,401 Deposits 3,374 3,141 28,080 Deferred tax assets—non-current (Note 8) 2,657 3,241 22,109 Other assets 6,550 6,846 54,510 Total investments and other assets 20,477 19,813 170,404 TOTAL ¥222,736 ¥189,923 $ 1,853,511


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Consolidated Balance Sheet March 31, 2015

Millions of Yen


(Note 1) LIABILITIES AND EQUITY 2015 2014 2015 CURRENT LIABILITIES: Trade notes and accounts payable (Note 10) ¥ 46,939 ¥ 39,010 $ 390,602 Short-term loans payable (Notes 5 and 10) 3,052 3,030 25,398 Current portion of long-term debt (Notes 5, 10 and 17) 4,668 5,359 38,848 Accrued income taxes (Note 10) 2,192 1,217 18,238 Accrued bonuses to employees 3,741 2,386 31,131 Provision for alleged antitrust law violation 1,753 – 14,587 Deferred tax liabilities—current (Note 8) 86 79 714 Other current liabilities (Note 17) 22,599 17,713 188,063 Total current liabilities 85,030 68,794 707,581 LONG-TERM LIABILITIES: Long-term debt (Notes 5, 10 and 17) 15,933 12,940 132,587 Accrued pension and severance costs for directors and audit & supervisory board members 388 306 3,227 Net defined benefit liability (Note 6) 5,789 5,553 48,170 Deferred tax liabilities—non-current (Note 8) 362 371 3,015 Other long-term liabilities 1,330 1,509 11,072 Total long-term liabilities 23,802 20,679 198,071 EQUITY (Notes 7 and 16): Common stock, no par value— authorized; 160,000,000 shares in 2015 and 2014, issued; 42,220,800 shares in 2015 and 2014 4,301 4,301 35,791 Capital surplus 4,733 4,733 39,388 Retained earnings 60,340 57,516 502,115 Treasury stock—at cost; 51,566 shares in 2015 and 51,350 shares in 2014 (70 ) (70 ) (581 ) Accumulated other comprehensive income Unrealized gains or losses on available-for-sale securities 400 221 3,332 Pension liability adjustment (705 ) (718 ) (5,866 ) Deferred gains or losses on hedges 1 (5 ) 8 Foreign currency translation adjustments 7,968 2,312 66,304 Total 76,968 68,290 640,491 Minority interests 36,936 32,160 307,368 Total equity 113,904 100,450 947,859 TOTAL ¥222,736 ¥189,923 $ 1,853,511 See notes to consolidated financial statements.


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Income Year Ended March 31, 2015

Millions of Yen


(Note 1) 2015 2014 2015

NET SALES ¥ 460,968 ¥ 406,040 $ 3,835,968 COST OF SALES 384,208 341,112 3,197,207 Gross profit 76,760 64,928 638,761 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 13)

67,457 60,405 561,345

Operating income 9,303 4,523 77,416 OTHER INCOME (EXPENSES): Interest and dividend income 399 264 3,321 Interest expense (477 ) (422 ) (3,973 ) Foreign currency exchange gain—net 248 25 2,061 Equity in earnings of unconsolidated subsidiaries and affiliated companies 99 59 823 Loss on revaluation of investments in securities (149 ) – (1,241 ) Loss related to competition law case (186 ) – (1,545 ) Provision for alleged antitrust law violation (1,478 ) – (12,304 )

Impairment loss (Note 3) (369 ) (55 ) (3,074 ) Special retirement expenses (170 ) – (1,406 )

Other—net 467 763 3,890 Other income (expenses)—net (1,616 ) 634 (13,448 ) INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 7,687 5,157 63,968 INCOME TAXES (Note 8): Current 3,825 2,608 31,829 Deferred (709 ) (170 ) (5,895 ) Total income taxes 3,116 2,438 25,934 NET INCOME BEFORE MINORITY INTERESTS 4,571 2,719 38,034 MINORITY INTERESTS IN NET INCOME 1,796 1,404 14,940 NET INCOME ¥ 2,775 ¥ 1,315 $ 23,094

Yen U.S. Dollars PER SHARE: Basic net income per share (Note 16) ¥ 65.81 ¥ 31.17 $ 0.548 Cash dividends 19.00 18.00 0.158 See notes to consolidated financial statements.


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Comprehensive Income Year Ended March 31, 2015

Millions of Yen


(Note 1) 2015 2014 2015 NET INCOME BEFORE MINORITY INTERESTS ¥ 4,571 ¥ 2,719 $ 38,034 OTHER COMPREHENSIVE INCOME (Note 14):

Unrealized gains or losses on available-for-sale securities 180 134 1,496 Deferred gains or losses on hedges 11 5 93 Foreign currency translation adjustments 9,040 6,161 75,235 Share of other comprehensive income in associates 97 105 808 Pension liability adjustment 5 (55 ) 40 Gains or losses on change in shares in consolidated subsidiaries 53 – 439 Total other comprehensive income or loss 9,386 6,350 78,111

COMPREHENSIVE INCOME ¥ 13,957 ¥9,069 $116,145

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:

Owners of the parent ¥ 8,751 ¥ 5,644 $72,821 Minority interests 5,206 3,425 43,324

See notes to consolidated financial statements.



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

sdnasuohTOutstandingNumber ofShares of Common

Stock Common

Stock Capital Surplus

RetainedEarnings

TreasuryStock

071,24 3102 ,13 HCRAM ,ECNALAB ¥ 4,301 ¥ 4,733 ¥ 56,866 ¥ (69)

Net income for the year ended March 31, 2014 – – – 1,315 – – )erahs rep 0.81¥( sdnedivid hsaC – – (759) – 0( kcots yrusaert fo esahcruP ) – – – (1)

Adjustment of retained earnings for newly – seiraidisbus detadilosnoc – – 36 –

Adjustment due to change in the fiscal period of consolidated subsidiaries – – – 58 –

– raey eht ni egnahc teN – – – –

071,24 4102 ,13 HCRAM ,ECNALAB 4,301 4,733 57,516 (70)Cumulative effect of change in accounting policies – – – 902 – BALANCE, MARCH 31, 2014, AS RESTATED 42,170 4,301 4,733 58,418 (70)

Net income for the year ended March 31, 2015 – – – 2,775 –

– )erahs rep 0.91¥( sdnedivid hsaC – – (759) – 1( kcots yrusaert fo esahcruP ) – – – (0)

Adjustment of retained earnings for newly – seiraidisbus detadilosnoc – – (147) –

Gains or losses on change in shares in consolidated subsidiaries – – – 53 –

– raey eht ni egnahc teN – – – –

961,24 5102 ,13 HCRAM ,ECNALAB ¥ 4,301 ¥ 4,733 ¥ 60,340 ¥ (70)


Millions of Yen emocnI evisneherpmoC rehtO detalumuccA

Unrealized Gains or Losses on Available-for-sale

Securities Pension Liability

Adjustment

Deferred Gains or

Losses on Hedges

Foreign Currency

Translation Adjustments Total

Minority Interests

TotalEquity

¥ 87 ¥ (421) ¥ (7) ¥ (2,227) ¥ 63,263 ¥ 29,027 ¥ 92,290

– – – – 1,315 – 1,315– – – – (759) – (759)– – – – (1) – (1)

– – – – 36 – 36

– – – – 58 – 58 134 (297) 2 4,539 4,378 3,133 7,511

221 (718) (5) 2,312 68,290 32,160 100,450– – – – 902 – 902

221 (718) (5) 2,312 69,192 32,160 101,352

– – – – 2,775 – 2,775– – – – (759) – (759)– – – – (0) – (0)

– – – – (147) – (147)

– – – – 53 – 53 179 13 6 5,656 5,854 4,776 10,630

¥ 400 ¥ (705) ¥ 1 ¥ 7,968 ¥ 76,968 ¥ 36,936 ¥ 113,904



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

CommonStock

Capital Surplus

Retained Earnings

Treasury Stock

BALANCE, MARCH 31, 2014 $ 35,791 $ 39,388 $ 478,620 $ (579)Cumulative effect of change in accounting policies – – 7,502 –BALANCE, MARCH 31, 2014, AS RESTATED 35,791 39,388 486,122 (579)

Net income for the year ended March 31, 2015 – – 23,094 – Cash dividends ($0.158 per share) – – (6,316) –

– kcots yrusaert fo esahcruP – – (2) Adjustment of retained earnings for newly

– seiraidisbus detadilosnoc – (1,224) – Gains or losses on change in shares in consolidated

subsidiaries – – 439 – – raey eht ni egnahc teN – – –

197,53 $ 5102 ,13 HCRAM ,ECNALAB $ 39,388 $ 502,115 $ (581)

See notes to consolidated financial statements.


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

Unrealized Gains or Losses on Available-for-sale

Securities Pension Liability

Adjustment

Deferred Gains or Losses on

Hedges

Foreign Currency

Translation Adjustments Total

Minority Interests

Total Equity

$ 1,837 $ (5,974) $ (41) $ 19,236 $ 568,278 $ 267,620 $ 835,898– – – – 7,502 – 7,502

1,837 (5,974) (41) 19,236 575,780 267,620 843,400

– – – – 23,094 – 23,094– – – – (6,316) – (6,316)– – – – (2) – (2)

– – – – (1,224) – (1,224)

– ––

– 439 – 439 1,495 108 49 47,068 48,720 39,748 88,468

$ 3,332 $ (5,866) $ 8 $ 66,304 $ 640,491 $ 307,368 $ 947,859


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Cash Flows Year Ended March 31, 2015

Millions of Yen


(Note 1) 2015 2014 2015

OPERATING ACTIVITIES: Income before income taxes and minority interests ¥ 7,687 ¥ 5,157 $ 63,968 Adjustments for: Depreciation and amortization 6,468 5,906 53,822

Amortization of goodwill 377 875 3,136 Increase (decrease) in net defined benefit liability 695 41 5,782 Interest and dividend income (399 ) (264 ) (3,321 ) Interest expense 477 422 3,973 Loss (gain) on foreign currency exchange, net 207 24 1,722 Equity in earnings of unconsolidated subsidiaries and affiliated companies (99 ) (59 ) (823 ) Decrease (increase) in trade notes and accounts receivable (11,833 ) 2,548 (98,467 ) Increase (decrease) in trade notes and accounts payable 4,806 892 39,997 Loss (gain) on sale of property, plant and equipment, net (123 ) (304 ) (1,026 ) Impairment loss 369 55 3,074 Loss (gain) on sale of investments in securities (39 ) (48 ) (326 ) Loss on revaluation of investments in securities 149 – 1,241 Loss (gain) on liquidation of investments in securities – 15 – Increase (decrease) in allowance for doubtful accounts (364) 79 (3,030 ) Increase in provision for alleged antitrust law violation 1,753 – 14,587 Other—net 2,163 (5,013 ) 17,992 Total 12,294 10,326 102,301 Interest and dividend received 433 332 3,607 Interest paid (467 ) (426 ) (3,882 ) Fine for alleged violation of antitrust law paid (186 ) (1,518 ) (1,545 ) Income taxes paid (2,729 ) (2,434 ) (22,717 ) Net cash provided by (used in) operating activities 9,345 6,280 77,764 INVESTING ACTIVITIES: Payments into time deposits (7,016 ) (4,185 ) (58,387 ) Proceeds from withdrawal of time deposits 5,450 3,500 45,355 Purchase of property, plant and equipment (6,634 ) (6,592 ) (55,206 ) Proceeds from sale of property, plant and equipment 433 1,220 3,602 Purchase of investments in securities (332 ) (412 ) (2,760 ) Proceeds from sale of investments in securities 52 142 430 Lending of loans receivable (71 ) (398 ) (592 ) Collection of loans receivable 78 126 650 Purchase of investments in subsidiaries (219 ) – (1,826 ) Payments for investments in capital of affiliates – (74 ) – Proceeds from liquidation of affiliates – 39 –

Purchase of investments in subsidiaries resulting in change in scope of consolidation (238) – (1,981 )

Other—net (7 ) (262 ) (52 ) Net cash provided by (used in) investing activities (8,504 ) (6,896 ) (70,767 ) FORWARD ¥ 841 ¥ (616 ) $ 6,997


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Consolidated Statement of Cash Flows Year Ended March 31, 2015

Millions of Yen


(Note 1) 2015 2014 2015

FORWARD ¥ 841 ¥ (616 ) $ 6,997 FINANCING ACTIVITIES: Short-term loans payable, net 112 244 934 Proceeds from long-term loans payable 7,034 4,459 58,531 Repayment of long-term debt (5,410 ) (1,054 ) (45,023 ) Repayment of obligations under finance lease (192 ) (190 ) (1,600 ) Proceeds from share issuance to minority shareholders 780 151 6,488 Cash dividends paid (759 ) (759 ) (6,313 ) Cash dividends paid to minority shareholders (892 ) (369 ) (7,421 ) Other—net (1 ) (1 ) (2 ) Net cash provided by (used in) financing activities 672 2,481 5,594 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 2,494 1,557 20,750 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,007 3,422 33,341 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 27,694 24,467 230,457 CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR 406 118 3,379 INCREASE (DECREASE) IN BEGINNING BALANCE OF CASH AND

CASH EQUIVALENTS DUE TO CHANGES IN FISCAL PERIODS OF CONSOLIDATED SUBSIDIARIES – (313 ) –

CASH AND CASH EQUIVALENTS, END OF YEAR ¥ 32,107 ¥ 27,694 $ 267,177 See notes to consolidated financial statements.


Yusen Logistics Co., Ltd. and Consolidated Subsidiaries Notes to Consolidated Financial Statements Year Ended March 31, 2015 1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Companies Act and Financial Instruments and Exchange Act and their related accounting regulations and in conformity with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to application and 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 have been made in the 2014 financial statements to conform to the classifications used in 2015. The consolidated financial statements are stated in Japanese yen, the currency of the country in which Yusen Logistics 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 ¥120.17 to $1, the approximate rate of exchange at March 31, 2015. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Consolidation—The consolidated financial statements as of March 31, 2015, include the accounts of the Company and its 71 significant (69 in 2014) subsidiaries (together, the "Group") listed below:

Consolidated Subsidiaries

Equity Ownership

Percentage*1 Capital Stock*1

Yusen Logistics (Americas) Inc. 51.00% USD 70,976 thousand Yusen Logistics (Hong Kong) Limited 100.00 HKD 55,000 thousand Yusen Air & Sea Service (China) Ltd. 100.00*2 HKD 11,000 thousand Yusen Logistics (Singapore) Pte.Ltd. 79.30 SGD 16,950 thousand Yusen Logistics (Benelux) B.V. 100.00*3 EUR 50 thousand Yusen Logistics (Deutschland) GmbH 100.00*3 EUR 2,638 thousand Yusen Air & Sea Service (U.K.) Ltd. 100.00*3 GBP 1,050 thousand Yusen Logistics (Australia) Pty.Ltd. 50.97*4 AUD 15,478 thousand Yusen Logistics (Canada) Inc. 100.00 CAD 5,000 thousand Yusen Logistics (France) S.A.S. 100.00*3 EUR 14,185 thousand Yusen Logistics (Taiwan) Ltd. 95.30*5 TWD 157,398 thousand Beijing Yusen Freight Service Co.,Ltd. 100.00*2 CNY 9,312 thousand Yusen Logistics (Italy) S.P.A. 100.00*3 EUR 3,326 thousand PT. Yusen Logistics Indonesia 67.62*6 USD 3,048 thousand Yusen Logistics (Europe) B.V. 53.69 EUR 39,493 thousand Yusen Logistics (Korea) Co.,Ltd. 100.00 KRW 2,000 million Shanghai Yusen Freight Service Co.,Ltd. 100.00*2 CNY 16,457 thousand Yusen Air & Sea Service Management

(Thailand) Co.,Ltd.

95.00*7 THB 10,000 thousand Yusen Logistics International (Vietnam) Co.,Ltd. 49.00*8 USD 600 thousand Yusen Logistics Philippines, Inc. 51.00 PHP 500,000 thousand Guangdong Yusen Freight Service Co.,Ltd. 100.00*2 CNY 8,009 thousand Yusen Logistics (India) Private Limited*26 51.00*9 INR 1,094 million Shanghai Yusen Logistics Service (W.G.Q.) Co.,Ltd. 100.00*2 CNY 5,380 thousand Suzhou Yusen Logistics Service Co.,Ltd. 100.00*2 CNY 6,844 thousand

Notes to Consolidated Financial StatementsFinancial Data


Consolidated Subsidiaries

Equity Ownership

Percentage*1 Capital Stock*1 ETA TOO, INC. 100.00*10 USD 0 BRUNI INTERNATIONAL DE MEXICO,

S.A.DE C.V.

100.00*11 MXN 350 thousand Yusen Logistics (UK) Ltd. 100.00*3 GBP 44,130 thousand Yusen Logistics (Iberica) S.A. 100.00*3 EUR 585 thousand Yusen Logistics (Polska) Sp.z o.o. 100.00*3 PLN 2,400 thousand Yusen Logistics (Hungary) KFT. 100.00*3 HUF 12,420 thousand Yusen Logistics (Edam) B.V. 100.00*12 EUR 18 thousand Yusen Logistics (Czech) s.r.o. 100.00*3 CZK 431,729 thousand Yusen Logistics (Vietnam) Co.,Ltd. 99.00*13 VND 6,375 million NANHAI BUSINESS SOLUTIONS PTE LTD. 100.00*14 SGD 100 thousand Yusen Logistics & Kusuhara Lanka (Pvt.) Ltd. 51.00 LKR 6,500 thousand Yusen Logistics RUS LLC 100.00*3 RUB 1,000 thousand Yusen Logistics Center,Inc. 100.00*15 PHP 35,000 thousand Yusen Logistics (Thailand) Co.,Ltd. 87.80*16 THB 70,000 thousand PT. Puninar Yusen Logistics Indonesia 51.00 USD 13,000 thousand Yusen Logistics Do Brasil Ltda. 61.88 BRL 14,492 thousand Yusen Logistics (China) Co.,Ltd. 51.00 CNY 158,047 thousand PT. Yusen Logistics Solutions Indonesia 51.00 USD 5,100 thousand TASCO Berhad 53.19*17 MYR 100,000 thousand Baik Sepakat Sdn Bhd 100.00*18 MYR 100 thousand Tunas Cergas Logistik Sdn Bhd 100.00*18 MYR 100 thousand Emulsi Teknik Sdn Bhd 100.00*18 MYR 100 thousand TASCO Express Sdn Bhd 100.00*18 MYR 100 thousand Maya Kekal Sdn Bhd 100.00*18 MYR 2 Precious Fortunes Sdn Bhd 100.00*18 MYR 8,000 thousand Trans-Asia Shipping Pte Ltd 100.00*18 SGD 100 thousand Piala Kristal (M) Sdn Bhd 51.22*19 MYR 205 thousand Omega Saujana Sdn Bhd 51.22*19 MYR 205 thousand Titian Pelangi Sdn. Bhd. *25 100.00*18 MYR 3,380 thousand Shenzhen Yusen Freight Service Co.,Ltd. 100.00*2 CNY 11,430 thousand Double Wing Spirit Service Co.,Ltd. 80.00*20 THB 7,000 thousand Yusen Real Estate (Hai Phong) Co.,Ltd. 100.00*14 VND 126,216 million Yusen Logistics (Mexico), S.A. de C.V. *24 100.00*21 MXN 46,800 thousand Yusen Logistics Turkey Lojistik Hizmetleri Limited

Sirketi*24

100.00*22 TRY 14,680 thousand Yusen Logistics and Transportation (Vietnam)

Co.,Ltd.*24

49.00*8 VND 2,104 million Yusen Keihin Trans Co., Ltd. 100.00 JPY 36 million Yusen Logistics (Kitakanto) Co., Ltd. 100.00 JPY 50 million Yusen Logistics (Tsukuba) Co., Ltd. 100.00 JPY 50 million Yusen Logistics (Shinshu) Co., Ltd. 90.00 JPY 50 million Yusen Logistics (Tohoku) Co., Ltd. 100.00 JPY 30 million Yusen Logistics (Kyushu) Co., Ltd. 100.00 JPY 30 million Yusen Logistics (Chugoku) Co., Ltd. 80.00 JPY 30 million Yusen Logistics (Hokuriku) Co., Ltd. 100.00 JPY 20 million Yusen Logitec Co., Ltd. 100.00 JPY 20 million Yusen Travel Co., Ltd. 100.00 JPY 270 million Ryowa Diamond Air Service Co., Ltd. 99.17*23 JPY 50 million Yusen Loginet Co., Ltd. 100.00 JPY 20 million

*1 as of March 31, 2015 *2 owned 100.00% by Yusen Logistics (Hong Kong) Limited *3 owned 100.00% by Yusen Logistics (Europe) B.V. *4 owned 32.04% by the Company, 18.93% by Yusen Logistics (Singapore) Pte.Ltd. *5 owned 57.20% by the Company, 38.10% by Yusen Logistics (Hong Kong) Limited


*6 owned 8.88% by the Company, 58.74% by Yusen Logistics (Singapore) Pte.Ltd. *7 owned 49.00% by Yusen Logistics (Singapore) Pte.Ltd., 46.00% by Yusen Logistics (Thailand) Co.,

Ltd. *8 owned 49.00% by Yusen Logistics (Singapore) Pte.Ltd. *9 owned 31.53% by the Company, 19.47% by Yusen Logistics (Singapore) Pte.Ltd. *10 owned 100.00% by Yusen Logistics (Americas) Inc. *11 owned 99.71% by Yusen Logistics (Americas) Inc., 0.29% by Yusen Logistics (Mexico), S.A. de

C.V. *12 owned 100.00% by Yusen Logistics (Benelux) B.V. *13 owned 99.00% by Yusen Logistics (Singapore) Pte.Ltd *14 owned 100.00% by Yusen Logistics (Singapore) Pte.Ltd. *15 owned 100.00% by Yusen Logistics Philippines, Inc. *16 owned 33.46% by the Company, 10.80% by Yusen Air & Sea Service Management (Thailand) Co.,

Ltd. *17 owned 29.20% by the Company, 23.99% by Yusen Logistics (Singapore) Pte.Ltd. *18 owned 100.00% by TASCO Berhad *19 owned 51.22% by TASCO Berhad *20 owned 80.00% by Yusen Logistics (Thailand) Co., Ltd. *21 owned 74.8% by the Company, 12.60% by Yusen Logistics (Americas) Inc., 12.60% by ETA TOO,

INC. *22 owned 0.59% by the Company, 99.41% by Yusen Logistics (Europe) B.V. *23 owned 99.17% by Yusen Travel Co., Ltd. *24 became newly consolidated companies since materiality has increased *25 became newly consolidated company as the result of the acquisition of the stock *26 changed their company name in this fiscal year

Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Group has the ability to exercise significant influences are accounted for by the equity method.

Yusen Logistics Transporte S.A. de C.V. was merged into Yusen Logistics (Mexico), S.A. de C.V. and

excluded from the scope of consolidation. NYK LOGISTICS (AUSTRALIA) PTY.LTD. was excluded from the scope of consolidation due to liquidation.

Investments in three (three in 2014) unconsolidated subsidiaries and two (two in 2014) affiliated companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliated companies are stated at cost, which is determined by the moving-average method. If the equity method of accounting had been applied to the investments in these companies, the effect on the accompanying consolidated financial statements would not be material. The excess of the cost of an acquisition over the fair value of the net assets of the acquired subsidiary at the date of acquisition is being amortized using the straight-line method principally over a period not exceeding 20 years. 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 eliminated.

b. Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial

Statements—In May 2006, the Accounting Standards Board of Japan ("ASBJ") issued ASBJ Practical Issues Task Force (PITF) No. 18, “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.” PITF No. 18 prescribes: (1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements, (2) financial statements prepared by foreign subsidiaries in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States of America tentatively may be used for the consolidation process, (3) however, the following items should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP unless they are not material: 1) amortization of goodwill; 2) scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in the equity; 3) expensing capitalized development costs of R&D; 4) cancellation of the fair value model accounting for property, plant, and equipment and investment properties and incorporation of the cost model accounting; and 5)


exclusion of minority interests from net income, if contained. c. Business Combination In October 2003, the Business Accounting Council (“BAC”) issued a Statement

of Opinion, “Accounting for Business Combinations,” and in December 2005, the ASBJ issued ASBJ Statement No. 7, “Accounting Standard for Business Divestitures” and ASBJ Guidance No. 10, “Guidance on Accounting Standard for Business Combinations and Business Divestitures.” The accounting standard for business combinations allowed companies to apply the pooling of interests method of accounting only when certain specific criteria are met such that the business combination is essentially regarded as a uniting-of-interests. For business combinations that do not meet the uniting-of-interests criteria, the business combination is considered to be an acquisition and the purchase method of accounting is required. This standard also prescribes the accounting for combinations of entities under common control and for joint ventures. In December 2008, the ASBJ issued a revised accounting standard for business combinations, ASBJ Statement No. 21, “Accounting Standard for Business Combinations.” Major accounting changes under the revised accounting standard are as follows: (1) The revised standard requires accounting for business combinations only by the purchase method. As a result, the pooling of interests method of accounting is no longer allowed. (2) The previous accounting standard required research and development costs to be charged to income as incurred. Under the revised standard, in-process research and development costs (IPR&D) acquired in the business combination are capitalized as an intangible asset. (3) The previous accounting standard provided for a bargain purchase gain (negative goodwill) to be systematically amortized over a period not exceeding 20 years. Under the revised standard, the acquirer recognizes the bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the liabilities assumed have been identified after a review of the procedures used in the purchase allocation. This standard was applicable to business combinations undertaken on or after April 1, 2010. The Company adopted this standard on April 1, 2010.

d. Cash Equivalents—Cash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits which mature or become due within three months of the date of acquisition.

e. Investments in Securities—Securities are classified into three categories, depending on management's

intent: trading, available-for-sale, or held-to-maturity. The Company classifies all investments in securities as available-for-sale securities. Marketable available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported under accumulated other comprehensive income in a separate component of equity. Non-marketable available-for-sale securities are stated at cost determined by the moving-average method. For other than temporary declines in fair value, non-marketable investment securities are reduced to net realizable value by a charge to income.

f. Property, Plant and Equipment—Property, plant and equipment are stated at cost. Depreciation of

property, plant and equipment of the Company and domestic consolidated subsidiaries is computed substantially by the declining-balance method at rates based on the estimated useful lives of the assets, except for the buildings and structures at the Toyooka distribution center, Iwata distribution center and Yusen Logi Fukumoto building, which are depreciated by the straight-line method. The depreciation of property, plant and equipment of foreign consolidated subsidiaries is generally 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 3–60 years Furniture and fixtures 2–20 years Machinery, equipment and vehicles 4–6 years

g. Other Assets—Amortization of intangible assets included in other assets is computed by the straight-line

method. Software for internal use is amortized over a five-year period. h. Long-lived Assets—The Group reviews its long-lived assets for impairment whenever events or changes in

circumstance 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 to result from the continued use and eventual disposition of the asset or asset group. The impairment loss is 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. Allowance for Doubtful Accounts—The Group provides an allowance for doubtful accounts based on the

aggregated amount of estimated credit losses for doubtful receivables, plus an amount for receivables other than doubtful receivables calculated using historical write off experience over a certain period.

j. Accrued Bonuses to Employees—Employees are paid bonuses in July and December of every year. The

bonuses include amounts for services rendered during the previous fiscal year which are recorded as accrued bonuses on the balance sheet as of the respective fiscal year-end.

k. Retirement and Pension Plans

Employee's retirement and pension plans—The Company and certain domestic consolidated subsidiaries have a non-contributory funded defined benefit pension plan and an unfunded retirement benefit plan. Certain of the Company’s domestic consolidated subsidiaries have a contributory funded defined contribution pension plan, while certain foreign consolidated subsidiaries have either a non-contributory funded defined benefit pension plan or a contributory funded defined contribution pension plan. The liability for employees' retirement benefits is accounted for based on projected benefit obligations and plan assets at the balance sheet date. Retirement allowance for directors and audit & supervisory board members—Retirement allowance for directors and audit & supervisory board members for certain subsidiaries are recorded to state the liability at the amount that would be required if all directors and audit & supervisory board members retired at each balance sheet date.

l. Provision for alleged antitrust law violation The Company has recorded a provision against possible

future losses that can be reasonably estimated at the present time associated with a class action lawsuit for alleged violation of the U.S. antitrust law in connection with freight forwarding services for international air cargo shipments.

m. Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, “Accounting Standard for Lease

Transactions,” which revised the previous accounting standard for lease transactions issued in June 1993. The revised accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008.

Under the previous accounting standard, finance leases that were deemed to transfer ownership of the leased property to the lessee were capitalized. However, other finance leases were permitted to be accounted for as operating lease transactions if certain “as if capitalized” information was disclosed in the note to the lessee’s financial statements. The revised accounting standard requires that all finance lease transactions be capitalized to recognize lease assets and lease obligations in the balance sheet. In addition, the accounting standard permits leases which existed at the transition date and do not transfer ownership of the leased property to the lessee to continue to be accounted for as operating lease transactions.

The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company continues to account for leases which existed at the transition date and does not transfer ownership of the leased property to the lessee as operating lease transactions.

All other leases are accounted for as operating leases.

n. Income Taxes—The provision for income taxes is computed based on the pretax income included in the

consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.

o. Treasury Stock—Under the Japanese Companies Act, the Company is allowed to acquire its own shares to

the extent that the aggregate cost of treasury stock does not exceed the maximum amount available for dividends. Treasury stock is stated at cost in the equity of the accompanying consolidated balance sheet. Net gain on disposal of treasury stock is presented under "Capital surplus'' in the equity of the accompanying consolidated balance sheet.


p. Foreign Currency Transactions—All short-term 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. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income.

q. Foreign Currency Financial Statements—The balance sheet accounts of foreign consolidated subsidiaries

and foreign subsidiaries accounted for by the equity method are translated 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 translations are shown as "Foreign currency translation adjustments" under accumulated other comprehensive income in a separate component of equity. Revenue and expense accounts of foreign consolidated subsidiaries are translated into Japanese yen at the average exchange rates.

r. Derivatives—The Group uses derivative financial instruments to manage its exposures to fluctuations in

foreign exchange and interest rates. Foreign exchange forward contracts are utilized by the Group. The Group does not enter into derivatives for trading or speculative purposes. Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income and (2) for derivatives used for hedging purposes, if derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions. The foreign exchange forward contracts employed to hedge foreign exchange exposures in the Group's operating activities are measured at the fair value and the unrealized gains or losses are recognized in consolidated statement of income.

s. Accounting Changes and Error Corrections―In December 2009, the ASBJ issued 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 under this standard and guidance are as follows: (1) Changes in Accounting Policies - When a new accounting policy is applied with revision of accounting standards, the new policy is applied retrospectively, unless the revised accounting standards include specific transitional provisions. When the revised accounting standards include specific transitional provisions, an entity shall comply with the specific transitional provisions. (2) Changes in Presentations - When the presentation of financial statements is changed, prior-period financial statements are reclassified in accordance with the new presentation. (3) Changes in Accounting Estimates - A change in an accounting estimate is accounted for in the period of the change if the change affects that period only, and is accounted for prospectively if the change affects both the period of the change and future periods. (4) Corrections of Prior Period Errors - When an error in prior-period financial statements is discovered, those statements are restated. This accounting standard and the guidance are applicable to accounting changes and corrections of prior- period errors, which are made from the beginning of the fiscal year that begins on or after April 1, 2011.

t. Per Share Information—Net assets per share are computed based on the outstanding shares of common

stock at relevant balance sheet dates. Basic net income per share is computed by dividing net income available to shareholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share for the years ended March 31, 2015 and 2014, is not presented since the Company had no securities with a dilutive effect. Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years including dividends to be paid after the end of the year.

u. Change in Accounting Standard for Retirement Benefits—In May 2012, the ASBJ issued ASBJ


Statement No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on Accounting Standard for Retirement Benefits," which replaced the accounting standard for retirement benefits that had been issued by the Business Accounting Council in 1998 with an effective date of April 1, 2000, and the other related practical guidance, and were followed by partial amendments from time to time through 2009.

(1) Under the revised accounting standard, actuarial gains and losses and past service costs that are yet to

be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects, and any resulting deficit or surplus is recognized as a liability (net defined benefit liability) or asset (net defined benefit asset).

(2) The revised accounting standard does not change how to recognize actuarial gains and losses and past

service costs in profit or loss. Those amounts are recognized in profit or loss over a certain period no longer than the expected average remaining service period of the employees. However, actuarial gains and losses and past service costs that arose in the current period and have not yet been recognized in profit or loss are included in other comprehensive income and actuarial gains and losses and past service costs that were recognized in other comprehensive income in prior periods and then recognized in profit or loss in the current period, are treated as reclassification adjustments.

(3) The revised accounting standard also made certain amendments relating to the method of attributing

expected benefit to periods, the discount rate, and expected future salary increases. This accounting standard and the guidance for (1) and (2) above are effective for the end of annual periods

beginning on or after April 1, 2013, and for (3) above are effective for the beginning of annual periods beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1, 2015, subject to certain disclosure in March 2015, all with earlier application being permitted from the beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application of this accounting standard to consolidated financial statements in prior periods is required.

The Company applied the revised accounting standard and guidance for retirement benefits for (1) and (2)

above, effective March 31, 2014, and for (3) above, effective April 1, 2014 With respect to (3) above, the Company changed the method of attributing the expected benefit to periods

from a straight-line basis to a benefit formula basis, the method of determining the discount rate from using the period which approximates the expected average remaining service period to using a single weighted average discount rate reflecting the estimated timing and amount of benefit payment, and recorded the effect of (3) above as of April 1, 2014, in retained earnings. As a result, asset for retirement benefits and retained earnings as of April 1, 2014, increased by ¥857 million ($7,135 thousand), and ¥902 million ($7,502 thousand), respectively, and liability for retirement benefits as of April 1, 2014, decreased by ¥543 million ($4,522 thousand), and operating income and income before income taxes and minority interests for the year ended March 31, 2015 is immaterial. In addition, basic net assets per share for the year ended March 31, 2015, increased by ¥21.09 ($0.176) and basic net income per share for the year ended March 31, 2015 is immaterial.

v. New Accounting Pronouncements

Accounting Standards for Business Combinations and Consolidated Financial Statements —On September 13, 2013, the ASBJ issued revised ASBJ Statement No. 21, "Accounting Standard for Business Combinations," revised ASBJ Guidance No. 10, "Guidance on Accounting Standards for Business Combinations and Business Divestitures," and revised ASBJ Statement No. 22, "Accounting Standard for Consolidated Financial Statements." Major accounting changes are as follows: (1) Transactions with non-controlling interest A parent's ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of minority interest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while the parent retains its controlling interest in its subsidiary. Under the current accounting standard, any difference between the fair value of the consideration received or paid and the amount by which the minority interest is adjusted is accounted for as an adjustment of goodwill or as profit or loss in the consolidated statement of income. Under the revised accounting standard, such difference shall be accounted for as capital surplus as long as the parent retains control over its subsidiary.


(2) Presentation of the consolidated balance sheet In the consolidated balance sheet, "minority interest" under the current accounting standard will be changed to "non-controlling interest" under the revised accounting standard. (3) Presentation of the consolidated statement of income In the consolidated statement of income, "income before minority interest" under the current accounting standard will be changed to "net income" under the revised accounting standard, and "net income" under the current accounting standard will be changed to "net income attributable to owners of the parent" under the revised accounting standard. (4) Provisional accounting treatments for a business combination If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. Under the current accounting standard guidance, the impact of adjustments to provisional amounts recorded in a business combination on profit or loss is recognized as profit or loss in the year in which the measurement is completed. Under the revised accounting standard guidance, during the measurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have affected the measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business combination had been completed at the acquisition date.

(5) Acquisition-related costs Acquisition-related costs are costs, such as advisory fees or professional fees, which an acquirer incurs to effect a business combination. Under the current accounting standard, the acquirer accounts for acquisition-related costs by including them in the acquisition costs of the investment. Under the revised accounting standard, acquisition-related costs shall be accounted for as expenses in the periods in which the costs are incurred. The above accounting standards and guidance for (1) transactions with non-controlling interest, (2) presentation of the consolidated balance sheet, (3) presentation of the consolidated statement of income, and (5) acquisition-related costs are effective for the beginning of annual periods beginning on or after April 1, 2015. Earlier application is permitted from the beginning of annual periods beginning on or after April 1, 2014, except for (2) presentation of the consolidated balance sheet and (3) presentation of the consolidated statement of income. In the case of earlier application, all accounting standards and guidance above, except for (2) presentation of the consolidated balance sheet and (3) presentation of the consolidated statement of income, should be applied simultaneously. Either retrospective or prospective application of the revised accounting standards and guidance for (1) transactions with non-controlling interest and (5) acquisition-related costs is permitted. In retrospective application of the revised standards and guidance, the accumulated effects of retrospective adjustments for all (1) transactions with non-controlling interest and (5) acquisition-related costs which occurred in the past shall be reflected as adjustments to the beginning balance of capital surplus and retained earnings for the year of the first-time application. In prospective application, the new standards and guidance shall be applied prospectively from the beginning of the year of the first-time application. The revised accounting standards and guidance for (2) presentation of the consolidated balance sheet and (3) presentation of the consolidated statement of income shall be applied to all periods presented in financial statements containing the first-time application of the revised standards and guidance. The revised standards and guidance for (4) provisional accounting treatments for a business combination are effective for a business combination which occurs on or after the beginning of annual periods beginning on or after April 1, 2015. Earlier application is permitted for a business combination which occurs on or after the beginning of annual periods beginning on or after April 1, 2014. The Company expects to apply the revised accounting standards and guidance for (1), (2), (3) and (5) above from April 1, 2015, and for (4) above for a business combination which will occur on or after April 1, 2015, and is in the process of measuring the effects of applying the revised accounting standards and guidance in future applicable periods.


neY fo snoilliM Thousands ofU.S. Dollars

5102 2014 2015

Proceeds from sale of available-for-sale securities ¥ 10 ¥ 95 $82 Total amount of gain on sale of available-for-sale securities 7 51 61 Total amount of loss on sale of available-for-sale securities – 3 –

3. LOSS ON IMPAIRMENT OF FIXED ASSET

The Group reviewed its long-lived assets for impairment as of the year ended March 31, 2015, and as a result, recognized an impairment loss of ¥369 million ($3,074 thousand) as other expenses. The impairment loss for the year ended March 31, 2015, was recorded on certain buildings and land in Osaka and Kobe, Japan. The Group reduced the book value of these assets to their recoverable amounts due to a significant decline in market value of certain fixed assets which were planned to be disposed of by sale. Assets in use comprised ¥155 million for buildings and ¥214 million for land. The recoverable amounts of those assets planned to be disposed by sale were measured at their net selling price determined by quotation from a third party vendor.

4. INVESTMENTS IN SECURITIES

The cost and aggregate fair values of the investments classified as "available-for-sale securities" at March 31, 2015 and 2014, are as follows:

(1) Available-for-sale securities for which market quotations are available:

(2) Proceeds from sale of available-for-sale securities and total amounts of gain and loss on sale of available-for-sale securities:

(3) The impairment losses on securities for the year ended March 31, 2015, amounted to ¥149 million ($1,241 thousand)　 for the securities of non-consolidated subsidiaries.

There were no impairment losses of securities for the year ended March 31, 2014.

Millions of Yen Thousands of U.S. Dollars 2015 2014 2015

Cost

Fair Value(Carrying Amount) Difference Cost

Fair Value(Carrying Amount) Difference Cost

Fair Value(Carrying Amount) Difference

Securities for which market value exceeds cost— Equity securities Government bonds Securities for which market value does not exceed cost— Equity securities 49

Total ¥ 413

5156(3)46 (5) 411 385 (26)

¥ 894 ¥ 481 ¥ 408 ¥ 697 ¥ 289 $ 3,434 $ 7,439 $ 4,005

¥ ¥ ¥304 788 484 ¥ 293 ¥ 586 ¥ 293 $ 2,529 $ 6,556 $ 4,027

60 60 0 59 60 1 494 498 4


5. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT

Short-term loans payable at March 31, 2015, consisted of notes to financial institutions and bank overdrafts. The weighted-average interest rates applicable to the short-term loans payable were 3.57% and 3.95% at March 31, 2015 and 2014, respectively. Long-term debt at March 31, 2015 and 2014, consisted of the following:

Millions of Yen Thousands of U.S. Dollars

2015 2014 2015

Loans from banks and other financial institutions, due serially to 2025 with average interest rates of 1.14% (2015) and 0.93% (2014); Collateralized ¥ – ¥ – $ – Unsecured 20,222 18,046 168,282 Finance lease obligation 379 253 3,153 Total 20,601 18,299 171,435 Less current portion (4,668 ) (5,359 ) (38,848 ) Long-term debt, less current portion ¥15,933 ¥12,940 $132,587

Annual maturities of long-term debt including financial lease obligation at March 31, 2015, were as follows:

Year Ending March 31 Millions of Yen


2016 ¥ 4,668 $ 38,848 2017 5,614 46,716 2018 1,365 11,355 2019 309 2,572 2020 and thereafter 8,645 71,944 Total ¥ 20,601 $171,435

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it has

borrowings. Such deposit balances are not legally or contractually restricted as to withdrawal. General agreements with respective banks provide, as is customary in Japan, that additional collateral must be provided under certain circumstances if requested by such banks and that certain banks have the right to offset cash deposited with them against any long-term or short-term debt or obligation that becomes due and, in case of default and certain other specified events, against all other debt payable to the banks. The Company has never been requested to provide any additional collateral.


6. RETIREMENT AND PENSION PLANS The Company and certain consolidated subsidiaries have severance payment plans for employees, directors, and audit & supervisory board members. Under most circumstances, employees terminating their employment are entitled to retirement benefits determined based on the rate of pay at the time of termination, years of service, and certain other factors. Such retirement benefits are made in the form of a lump-sum severance payment from the Company or from certain consolidated subsidiaries and annuity payments from a trustee. Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory retirement age, by death, or by voluntary retirement at certain specific ages prior to the mandatory retirement age. For the years ended March 31, 2015 and 2014

1. The changes in projected benefit obligation for the years ended March 31, 2015 and 2014, are as follows:

Millions of Yen Thousands of

U.S. Dollars

2015 2014 2015 Balance at beginning of year ¥ 18,191 ¥ 16,204 $ 151,383

Cumulative effect of accounting change (1,400 ) – (11,657 ) Balance at beginning of year, as restated 16,791 16,204 139,726

Current service cost 961 750 7,993 Interest cost 444 502 3,694 Actuarial gains and losses 1,607 (37) 13,370 Benefits paid (954 ) (794) (7,942 ) Past service cost 104 16 866 Others 451 1,550 3,760

Balance at end of year ¥ 19,404 ¥ 18,191 $ 161,467

2. The changes in plan assets for the years ended March 31, 2015 and 2014, are as follows:


U.S. Dollars

2015 2014 2015 Balance at beginning of year ¥ 12,922 ¥ 10,759 $ 107,532 Expected return on plan assets 461 401 3,834

Actuarial gains and losses 1,231 58 10,242 Contributions from the employer 955 895 7,944 Benefits paid (623 ) (550) (5,180 )

Others 308 1,359 2,565 Balance at end of year ¥ 15,254 ¥ 12,922 $ 126,937


3. Reconciliation between the liability recorded in the consolidated balance sheet and the balances of projected benefit obligation and plan assets as of March 31, 2015 and 2014


U.S. Dollars

2015 2014 2015 Funded projected benefit obligation ¥ 15,126 ¥ 15,293 $ 125,875 Plan assets (15,254 ) (12,922) (126,937 ) (128 ) 2,371 (1,062 ) Unfunded projected benefit obligation 4,278 2,898 35,592 Net liability (asset) for defined benefit obligation ¥ 4,150 ¥ 5,269 $ 34,530


U.S. Dollars

2015 2014 2015 Net defined benefit liability ¥ 5,789 ¥ 5,553 $ 48,170 Net defined benefit asset (1,639 ) (284) (13,640 ) Net liability (asset) for defined benefit obligation ¥ 4,150 ¥ 5,269 $ 34,530

4. The components of net periodic benefit costs for the years ended March 31, 2015 and 2014, are as follows:


U.S. Dollars

2015 2014 2015 Current service cost ¥ 961 ¥ 778 $ 7,993 Interest cost 444 502 3,694 Expected return on plan assets (461 ) (429) (3,834 ) Amortization of unrecognized actuarial loss 329 341 2,737 Amortization of past service cost 104 16 866 Others 0 4 1

Net periodic benefit costs ¥ 1,377 ¥ 1,212 $ 11,457 5. Other comprehensive income on projected retirement benefit plans (before income tax effect) for the years ended March 31, 2015 and 2014


U.S. Dollars

2015 2014 2015 Actuarial gains and losses ¥ 56 ¥ 8 $ 466 Total ¥ 56 ¥ 8 $ 466


6. Accumulated other comprehensive income on projected retirement benefit plans (before income tax effect) as of March 31, 2015 and 2014


U.S. Dollars

2015 2014 2015 Unrecognized actuarial gains and losses ¥ (1,474 ) ¥ (1,379) $ (12,262) Total ¥ (1,474 ) ¥ (1,379) $ (12,262)

7. Plan assets as of March 31, 2015 and 2014

(1) Components of plan assets Plan assets consisted of the following:

2015 2014 Equity investments 43 % 43 % Debt investments 34 32 Cash and cash equivalents 1 2 Others 22 23

Total 100 % 100 % (2) Method of determining the expected rate of return on plan assets

Expected rate of return on plan assets is determined considering the long-term rates of return which are currently expected and expected in the future from the variety of asset portfolio components.

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

2015 2014 Discount rate Principally 0.50 3.10% Principally 2.00% Expected rate of return on plan assets Principally 1.25 3.10% Principally 3.00%

9. Defined Contribution Plan

The amount of contributions which certain consolidated subsidiaries should contribute under the defined contribution plan is ¥746 million ($6,208 thousand) and ¥557 million for the years ended March 31, 2015 and 2014, respectively.


7. EQUITY

Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:

a. Dividends

Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteria such as: (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The Company meets all the above criteria. Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but 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 account charged upon the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 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 under certain conditions upon resolution of the shareholders.

c. Treasury Stock and Treasury Stock Acquisition Rights

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. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.


8. INCOME TAXES The Company and domestic consolidated subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory rate of approximately 35.6% and 38.0% for the years ended March 31, 2015 and 2014, respectively. The tax effects of significant temporary differences resulted in deferred tax assets and liabilities at March 31, 2015 and 2014, are as follows:


2015 2014 2015 Deferred tax assets:

Net defined benefit liability ¥ 1,486 ¥ 1,650 $ 12,368 Accrued bonuses to employees 775 713 6,449 Accrued enterprise tax 86 59 712 Accrued pension and severance costs for directors and audit & supervisory board members 126 108 1,052 Allowance for doubtful accounts 121 329 1,006 Depreciation 376 384 3,132 Tax loss carryforwards 3,129 2,574 26,035 Loss on impairment of fixed assets 99 15 821 Loss on revaluation of investments in securities 25 88 211 Loss on write-down of golf club membership 102 110 847 Stock of affiliated company 124 142 1,030 Provision for alleged antitrust law violation 580 – 4,828 Other 902 933 7,504 Total 7,931 7,105 65,995 Less valuation allowance (1,585 ) (1,688 ) (13,185 ) Total deferred tax assets 6,346 5,417 52,810 Deferred tax liabilities: Depreciation 1,191 819 9,914

Net defined benefit asset 408 70 3,393 Other 574 532 4,776 Total deferred tax liabilities 2,173 1,421 18,083 Net deferred tax assets ¥ 4,173 ¥ 3,996 $ 34,727


The reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate

reflected in the accompanying consolidated statements of income for the years ended March 31, 2015 and 2014 is as follows:

2015 2014

Normal effective statutory tax rate 35.6% 38.0% Adjustments: Entertainment expenses and other non-deductible permanent differences 3.1 4.7 Dividend income not taxable (6.0) (6.1 ) Effect of elimination of intercompany dividends received 9.6 8.8 Per share levy of local tax 0.6 1.0 Lower income tax rates applicable to income in certain foreign countries (13.5) (7.1 ) Valuation allowance on deferred tax 4.6 0.7 Equity in earnings of affiliated companies and unconsolidated companies (0.3) (0.4 ) Effect of tax reduction 2.6 1.1 Amortization of goodwill 1.0 5.4 Foreign exchange adjustment for provision – (1.3) Tax credits (0.6) – Loss related to competition law case 0.9 – Other—net 2.9 2.5 Actual effective tax rate 40.5% 47.3%

Adjustment of deferred tax assets and liabilities pursuant to the change in the corporate tax rate New tax reform laws enacted in 2015 in Japan changed the normal effective statutory tax rate for the fiscal year beginning on or after April 1, 2015, to approximately 33.1% and for the fiscal year beginning on or after April 1, 2016, to approximately 32.3%. The effect of these changes was to decrease deferred tax assets, net of deferred tax liabilities, by ¥199 million ($1,655 thousand), decrease pension liability adjustment by ¥5 million ($45 thousand) and increase accumulated other comprehensive income for unrealized gain on available-for-sale securities by ¥8 million ($67 thousand) in the consolidated balance sheet as of March 31, 2015, and to increase income taxes—deferred in the consolidated statement of income for the year then ended by ¥202 million ($1,677 thousand). 9. LEASES

The Group has various lease agreements whereby the Group acts as lessee. The minimum rental commitments under non-cancelable operating leases at March 31, 2015 and 2014, were as follows:

Thousands of Millions of Yen U.S. Dollars 2015 2014 2015 Due within one year ¥ 10,718 ¥ 9,657 $ 89,189 Due after one year 20,851 20,743 173,511 Total ¥ 31,569 ¥ 30,400 $262,700


10. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

In March 2008, the ASBJ revised ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” and issued ASBJ Guidance No. 19 “Guidance on Accounting Standard for Financial Instruments and Related Disclosures.” This accounting standard and the guidance were applicable to financial instruments and related disclosures at the end of the fiscal years ending on or after March 31, 2010. The Group applied the revised accounting standard and the new guidance effective March 31, 2010.

(1) Group policy for financial instruments The Group limits the use of financial instruments for fund management purposes to short-term bank deposits. It is the basic policy of the Group to use the cash management system operated within the Group and bank loans to fund its ongoing operations. Derivatives are used, not for speculative purposes, but to manage exposure to financial risks as described in (2) below.

(2) Nature and extent of risks arising from financial instruments Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign currencies, is hedged by using forward foreign currency contracts. Investment securities, mainly equity securities of customers and suppliers of the Group, are exposed to the risk of market price fluctuations. Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign currencies are exposed to the market risk of fluctuation in foreign currency exchange rates, those risks are netted against the balance of receivables denominated in the same foreign currency as noted above. Loans, principally from financial institutions, in short-term loans payable are mainly for financing related to business transaction. Loans, principally from financial institutions, in long-term debt are mainly for financing related to business integration and investment in property. Derivatives, which are forward foreign currency contracts, are used to manage exposure to market risks from changes in foreign currency exchange rates of receivables and payables. Please see Note 11 for more details about derivatives.

(3) Risk management for financial instruments Credit risk management Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include monitoring of payment term and balances of major customers by each business administration department to identify the default risk of customers in the early stage. The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31, 2015. Market risk management (foreign exchange risk and interest rate risk) Foreign currency trade receivables and payables are exposed to market risk resulting from fluctuations in foreign currency exchange rates. Such foreign exchange risk is hedged principally by forward foreign currency contracts. In addition, when foreign currency trade receivables and payables are expected from forecasted transactions, forward foreign currency contracts may be used under the limited contract term of a quarter of a year. Investment securities are managed by monitoring market values and financial position of issuers on a regular basis. The execution and management of derivative transactions are approved by the CFO or the board of directors according to the internal guidelines which prescribe the authority and the limit for each transaction. Counterparties to these derivative transactions are limited to major financial institutions in order to mitigate credit risks.


Liquidity risk management Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on maturity dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets, along with adequate financial planning by the corporate treasury department.

(4) Fair values of financial instruments Fair values of financial instruments are based on quoted prices in active markets. If quoted prices are not available, other rational valuation techniques are used instead. As the valuation of financial instruments requires various assumptions, the fair values of financial instruments are subject to change when different assumptions are used. Please see Note 11 for fair value information for derivatives.

(a) Fair value of financial instruments

Millions of Yen

March 31, 2015 Carrying Amount Fair Value

Unrealized Gain/Loss

Cash and cash equivalents ¥ 32,107 ¥ 32,107 – Time deposits 4,496 4,496 – Trade notes and accounts receivable 93,641 93,641 – Investments in securities:

Available-for-sale securities 894 894 – Total ¥ 131,138 ¥ 131,138 – Trade notes and accounts payable ¥ 46,939 ¥ 46,939 – Short-term loans payable 3,052 3,052 – Current portion of long-term debt 4,668 4,668 – Accrued income taxes 2,192 2,192 – Long-term debt 15,933 16,036 ¥ 103 Total ¥ 72,784 ¥ 72,887 ¥ 103

Millions of Yen

March 31, 2014 Carrying Amount Fair Value

Unrealized Gain/Loss

Cash and cash equivalents ¥ 27,694 ¥ 27,694 – Time deposits 2,522 2,522 – Trade notes and accounts receivable 76,193 76,193 – Investments in securities:

Available-for-sale securities 697 697 – Total ¥ 107,106 ¥ 107,106 – Trade notes and accounts payable ¥ 39,010 ¥ 39,010 – Short-term loans payable 3,030 3,030 – Current portion of long-term debt 5,359 5,359 – Accrued income taxes 1,217 1,217 – Long-term debt 12,940 12,955 ¥ 15 Total ¥ 61,556 ¥ 61,571 ¥ 15



March 31, 2015 Carrying

Amount Fair Value Unrealized Gain/Loss

Cash and cash equivalents $ 267,177 $ 267,177 – Time deposits 37,413 37,413 – Trade notes and accounts receivable 779,239 779,239 – Investments in securities:

Available-for-sale securities 7,439 7,439 –

Total $1,091,268 $1,091,268 –

Trade notes and accounts payable $390,602 $390,602 – Short-term loans payable 25,398 25,398 – Current portion of long-term debt 38,848 38,848 – Accrued income taxes 18,238 18,238 – Long-term debt 132,587 133,441 $ 854

Total $605,673 $606,527 $ 854

Current assets and liabilities The fair value of all current assets and liabilities (cash and cash equivalents, time deposit, trade notes and accounts receivable, trade notes and accounts payable, short-term loans payable, current portion of long-term debt, and accrued income taxes) is considered to be equivalent to their carrying amount due to their short-term maturities.

Investments in securities (available-for-sale securities) The fair values of investments in securities are measured at the quoted market price of the stock exchange of the equity instruments, and at the quotes obtained from the financial institution for certain debt instruments. All investments in securities are classified as available-for-sale securities. The fair value information for investments in securities is included in Note 4.

Long-term debt

-Long-term loans payable Long-term loans payable with variable interest rates are stated at book value as the interest rate on these loans reflects the market rate in the short term and their market values approximate book values. Long-term loans payable with fixed interest rates are stated at present value. The present value is calculated by discounting a periodically divided portion of the principal and interest of these loans*, using the assumed rate applied to a similar loan. *As to the long-term loans payable related to the interest rate swap agreements that meet the requirements for exceptional accounting (Refer to Note 11, “Derivatives”), the total amount of principal and interest income at the post-swap rate is applied. - Lease obligations

The fair value of lease obligations approximates carrying amount.


Derivatives The fair value information for derivatives is included in Note 11.

(b) Financial instruments whose fair value cannot be reliably determined

Carrying Amount


Investments in equity instruments that do not have 2015 2014 2015 a quoted market price in an active market ¥ 324 ¥ 307 $2,693

(5) Maturity analysis for financial assets and securities with contractual maturities

Millions of Yen Due after Due after one year five years Due in one through through Due after

March 31, 2015 year or less five years ten years ten years Cash and cash equivalents ¥ 32,107 – – – Time deposits 4,496 – – – Trade notes and accounts receivable 93,641 – – – Investments in securities:

Available-for-sale securities with contractual maturities – ¥ 60 – –

Total ¥ 130,244 ¥ 60 – –

Millions of Yen Due after Due after one year five years Due in one through through Due after

March 31, 2014 year or less five years ten years ten years Cash and cash equivalents ¥ 27,694 – – – Time deposits 2,522 – – – Trade notes and accounts receivable 76,193 – – – Investments in securities:

Available-for-sale securities with contractual maturities – ¥ 60 – –

Total ¥ 106,409 ¥ 60 – –


Thousands of U.S. Dollars Due after Due after one year five years

Due in one through through Due after March 31, 2015 year or less five years ten years ten years

Cash and cash equivalents $267,177 – – – Time deposits 37,413 – – – Trade notes and accounts receivable 779,239 – – – Investments in securities:

Available-for-sale securities with contractual maturities – $499 – –

Total $1,083,829 $499 – –


11. DERIVATIVES

The Group enters into foreign exchange forward contracts, interest rate swaps and currency swaps to reduce the exposure to fluctuations in interest rate risks and foreign exchange rates associated with certain assets and liabilities denominated in foreign currencies.

All derivative transactions are entered into to hedge interest and foreign currency exposures incorporated within the Group's business. Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged assets or liabilities.

Because the counterparties to these derivatives are limited to major international financial institutions, the Group does not anticipate any losses arising from credit risk.

Derivative transactions entered into by the Group have been made in accordance with internal policies which regulate their authorization.

The Group had the following derivative contracts outstanding at March 31, 2015 and 2014:

Derivative transactions to which hedge accounting is not applied.

Currency related

The contract or notional amounts of foreign currency forward contracts which are shown in the above table do not represent the amounts exchanged by the parties and do not measure the Group's exposure to credit or market risk. Fair values of currency swaps are calculated using the prices offered by transacting financial institutions.


Contracts Contracts Contracts Outstanding Outstanding Outstanding

Contracts Due Over Fair Contracts Due Over Fair Contracts Due Over FairOutstanding One Year Value Outstanding One Year Value Outstanding One Year Value

Foreign currency forward contracts:

Selling U.S. dollarSelling euro

–––

– –– ––

– –

–

–

–

––

––

Selling British pound ––

¥ – 2,8665,868

– (87) – $Buying U.S. dollar

Buying Hong Kong dollar Buying Thai baht Buying euro

Currency swaps: Receipts - Singapore dollar, payments - U.S. dollar

2015 2014 2015

Buying Singapore dollar

261

Buying Canadian dollar

Receipts - Thai baht, payment - euro

¥ ¥

(4)2,169 $

¥ (2)¥

1¥

¥

(7)¥

(4)¥705 ¥ (14) ¥

715

¥ 185

473¥ 555

¥ 538

1,680(10) 13

$110

(114) – 7,343 $883

¥

¥ (39) (326)

–– 1,424 – $171 ¥ (1) (7)

1¥¥ 158 –– $ – $¥ ¥ (0) (2) 63 5241¥¥ 305

¥ 602

–– $ – $¥ ¥ (4) (32) 273 1,974–

–– –

–

–

$

$

$ $ $ $

$¥ ¥ (4) (29) 335 2,791

$ $¥ ¥ (95) (789) 685 ¥ 617 5,698 $ 5,136

$ $¥ ¥ 138 1,1441,110 9,237

¥¥ ¥ 344¥

–

–


Derivative transactions to which hedge accounting is applied.

(1) Currency related

(2) Interest related

Fair values are calculated using the prices offered by transacting financial institutions.

Fair values are calculated using the prices offered by transacting financial institutions.


2015 2014 2015

2015 2014 2015

Contracts Contracts Contracts Outstanding Outstanding Outstanding Hedged Contracts Due Over Fair Contracts Due Over Fair Contracts Due Over Fair item Outstanding One Year Value Outstanding One Year Value Outstanding One Year Value

Derivative transactions qualifying for general accounting policies, deferral hedge accounting Currency swaps:

Receipts - U.S. dollar, payments - Malaysian Ringgit

Long-term debt

Receipts - Singapore dollar,

payments - U.S. dollar Long-term

loan ––– – – –Total


Contracts Contracts Contracts Outstanding Outstanding Outstanding Hedged Contracts Due Over Fair Contracts Due Over Fair Contracts Due Over Fair item Outstanding One Year Value Outstanding One Year Value Outstanding One Year Value

Interest-rate swap derivative transactions qualifying for exceptional accounting Interest-rate swaps:

Receipts floating, payments fixed

Long-term debt

Total

¥ 1,867 ¥ 1,352 ¥209 ¥ 760

¥ 104

¥ 412

¥ 104

¥ 15

¥ (2)

$15,534 $11,250 $1,736

¥ 2,973 ¥ 2,865 ¥(47) ¥ 515 ¥ 463 ¥ (15) $24,743 $23,843 $(387)¥ 2,973 ¥ 2,865 ¥(47) ¥ 515 ¥ 463 ¥ (15) $24,743 $23,843 $(387)

¥ 1,867 ¥ 1,352 ¥209 ¥ 864 ¥ 516 ¥ 13 $15,534 $11,250 $1,736


12. COMMITMENTS AND CONTINGENT LIABILITIES The Group was contingently liable for guarantees of trade payables and bank loans owed mainly by their unconsolidated subsidiaries and affiliated companies in the amount of ¥370 million ($3,080 thousand) and ¥82 million at March 31, 2015 and 2014, respectively.

13. BREAKDOWN OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the years ended March 31, 2015 and 2014, are summarized as follows:

Millions of Yen Thousands of U.S. dollars

2015 2014 2015 Labor and payroll cost ¥ 31,865 ¥ 27,900 $265,167 Provision for accrued bonuses to employees 2,774 1,910 23,087 Provision for accrued pension and severance costs for:

Employees 1,265 1,134 10,529 Directors and audit & supervisory board members 118 134 985

Provision for doubtful accounts 92 246 766 Depreciation 2,519 2,389 20,962 Other 28,824 26,692 239,849 Total ¥ 67,457 ¥ 60,405 $561,345


14. COMPREHENSIVE INCOME

For the years ended March 31, 2015 and 2014

The components of other comprehensive income consist of the following:


2015 2014 2015 Unrealized gain (loss) on available-for-sale securities

Gains arising during the year ¥ 200 ¥ 229 $ 1,662 Reclassification adjustments to profit or loss (8 ) (47 ) (61 ) Amount before income tax effect 192 182 1,601 Income tax effect (12 ) (48 ) (105 ) Total 180 134 1,496

Deferred gains or losses on hedges Gains arising during the year 11 5 93 Reclassification adjustments to profit or loss – – – Amount before income tax effect 11 5 93 Income tax effect – – – Total 11 5 93

Foreign currency translation adjustments Adjustments arising during the year 9,040 6,161 75,235 Reclassification adjustments to profit or loss – – – Amount before income tax effect 9,040 6,161 75,235 Income tax effect – – – Total 9,040 6,161 75,235

Share of other comprehensive income in associates Gains arising during the year 97 105 808

Pension liability adjustment Adjustments arising during the year (273 ) (258 ) (2,271 ) Reclassification adjustments to profit or loss 329 266 2,737 Amount before income tax effect 56 8 466 Income tax effect (51 ) (63 ) (426 ) Total 5 (55 ) 40

Gains or losses on change in shares in consolidated subsidiaries

Gains arising during the year 53 – 439 Reclassification adjustments to profit or loss – – – Amount before income tax effect 53 – 439 Income tax effect – – – Total 53 – 439

Total other comprehensive income ¥ 9,386 ¥ 6,350 $78,111


15. SEGMENT INFORMATION

For the years ended March 31, 2015 and 2014

Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information," an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.

1. Description of reportable segments

The Group’s reportable segments are those for which separate financial information is available and regular evaluation by the Company’s management is being performed in order to decide how resources are allocated among the Group. The Group mainly provides global logistics services. In order to provide its services over a large region, the regional headquarters which are located in Japan, USA, Netherlands, Hong Kong, and Singapore control the group companies in Japan, Americas, Europe, East Asia, and South Asia and Oceania, respectively. Thus, the Group’s reportable operating segments are based on geographical service providing structures, which consist of five regions: Japan, Americas, Europe, East Asia, and South Asia and Oceania.

2. Methods of measurement for the amounts of sales, profit (loss), assets, liabilities, and other items for each reportable segment

The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Signifi-cant Accounting Policies.”

Information about sales, profit (loss), assets, liabilities, and other items is as follows.

Japan Americas Europe East Asia

South Asiaand

Oceania Total Reconciliation Consolidated

Total Sales

Sales to external customers Intersegment sales/transfers

Total Segment profit (loss) Segment assets Other:

Depreciation Amortization of goodwill Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1

Increase in property, plant and equipment and intangible assets

¥ 90,378

92,1961,818

927

163

447

¥ 2,111

¥ 63,061

Millions of Yen

Reportable Segment 2015

–

–

¥ 103,983

108,1194,136

683

919

¥ 549

¥ 39,190

155

–

¥ 100,723

103,4982,775

1,581

954

¥ (1,155)

¥ 45,532

46

–

––

–

–

¥73,047

77,0944,047

984

412

¥ 1,442

¥ 30,891

25

¥92,837

94,5731,736

2,293

4,139

462

¥ 6,464

¥ 71,471

38

¥ 460,968 ¥¥

460,968

460,968475,48014,512 (14,512)

¥¥

(14,512)

(27,409)

(108)

6,468 6,468

6,8716,871

625

¥ 9,411 ¥ 9,303

¥250,145 ¥222,736

264 113 377

1,004379



Reportable Segment


South Asiaand

Oceania Total ReconciliationConsolidated

Total Sales

Sales to external customers $ 752,086 865,298 Intersegment sales/transfers 15,129 34,416

4,566899,714

326,121

–

– Total 767,215

Segment profit (loss) $ 17,564 Segment assets $ 524,761

DepreciationAmortization of goodwill Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1

Increase in property, plant and equipment and intangible assets

Millions of Yen 4102 Reportable Segment


South Asiaand

Oceania Total Reconciliation Consolidated

Sales

Sales to external customers ¥ 75,444 ¥ 88,945 ¥ 90,710 ¥ 73,190 ¥ 77,751 ¥ 406,040 – ¥ 406,040Intersegment sales/transfers 768 2,764 1,579 1,884 725 7,720 ¥ (7,720) –

Total 76,212 91,709 92,289 75,074 78,476 413,760 (7,720) 406,040

Segment profit (loss) ¥ 1,135 ¥ (119) ¥ (1,112) ¥ (120) ¥ 5,104 ¥ 4,888 ¥ (365) ¥ 4,523

Segment assets ¥ 55,706 ¥ 25,973 ¥ 44,502 ¥ 27,878 ¥ 57,100 ¥ 211,159 ¥ (21,236) ¥ 189,923

Other:

Other:

Depreciation 1,081 645 1,504 738 1,938 5,906 – 5,906Amortization of goodwill 10 141 215 144 – 510 365 875Investments in unconsolidated subsidiaries and affiliate

companies accounted for by the equity method *1 163 – – – 377 540 299 839

Increase in property, plant and equipment and intangible assets 791 678 878 439 4,031 6,817 – 6,817

Total

2015

7,714

1,356

3,721

–

–

5,683

7,645

1,287

–

13,152

7,936

383

–

–

–

8,194

3,432

213

23,097 33,676

$$

$ 838,167

861,264

$ 607,867

641,543

$

(9,609)$

378,899$ 257,060$12,002$

19,079

34,440

3,848 3,154

31453,822

57,174

8,358

3,137940

14,447772,550

786,997

$

594,752 2,081,593$53,791

53,822

57,174

5,204

2,197

120,7653,835,968

3,956,733

$ 3,835,968

3,835,968

$

1,853,511$

(120,765)(120,765)

$

(228,082)$(898)$78,314$

$$ 77,416$


*1: The reconciliation column for investments in unconsolidated subsidiaries and affiliated companies accounted for by the equity method contains investments which are not attributable to any reportable segments.

*2: The common assets mainly consisted of cash and deposits and investment securities.

Thousands of

Millions of Yen U.S. Dollars

2015 2014 2015

Sales: Elimination of intersegment transactions ¥ (14,512) ¥ (7,720) $ (120,765)

Total ¥ (14,512) ¥ (7,720) $ (120,765)

Thousands of


2015 2014 2015 Segment profit:

Elimination of intersegment transactions – – –Amortization of goodwill ¥ (113) ¥ (365) $ (940)Others 5 0 42

Total ¥ (108) ¥ (365) $ (898)

Thousands of


2015 2014 2015 Segment asset:

Elimination of intersegment receivables and payables ¥ (16,373) ¥ (10,834) $ (136,246)Elimination of intersegment investments and equity accounts (17,332) (16,208) (144,230)Common assets *2 6,383 5,893 53,114Others (87) (87) (720)

Total ¥ (27,409) ¥ (21,236) $ (228,082)

Notes: 1. The breakdown for the reconciliation of each item for the years ended March 31, 2015 and 2014, is as follows:

2. Segment profit (loss) is reconciled to operating income in the consolidated statement of income.


Related information

1. Information about services

2. Information about geographical areas

(1) Sales

Notes: (1) Sales are classified by country or region based on the location of customers. (2) Hong Kong is included in China.

The Group has omitted information about services as of March 31, 2015 and 2014, as sales to external customers in air and sea cargo is over 90% of consolidated sales.

Millions of Yen 2014

Japan Americas Europe East Asia South Asia

and Oceania Others Total U.S.A China

¥ 74,580 ¥ 73,418 ¥ 68,751 ¥ 78,063 ¥ 1 ¥ 406,040

Millions of Yen

2015

2015



¥ 89,308 ¥ 73,317




$ 743,183 $ 867,646 $ 3,835,968 $ 812,884 $839,676 $610,115 $564,707 $775,332 $16

¥ 104,265 ¥ 97,684 ¥100,904 ¥ 67,861 ¥ 93,172 ¥ 2 ¥ 460,968

¥ 89,137 ¥ 85,190 ¥ 90,841


(2) Property, plant and equipment

(3) Information about major customers

The Group has omitted information about major customers, as sales to any particular customer is not over 10% of consolidated sales at March 31, 2015 and 2014.

(4) Information about loss on impairment of fixed assets



and Oceania Total ¥ 369 – – – – ¥ 369



and Oceania Total – – – ¥ 55 – ¥ 55

Thousands of U.S. Dollars 2015


and Oceania Total $3,074 – – – – $ 3,074

Change in presentationPrior to April 1, 2014, "Malaysia" was included in "South Asia and Oceania". Since the amount of property, plant and equipment in Malaysia become more than 10% of that in the consolidated balance sheet during the fiscal year ended March 31, 2015, such amount is disclosed separately. In accordance with this change in presentation, property, plant and equipment for the year ended March 31, 2014, was reclassified. The amount of "Malaysia" included in "South Asia and Oceania" for the year ended March 31, 2014 was ¥5,223 million.


¥ 10,309 ¥ 7,817 ¥ 7,121 ¥ 14,017 ¥ 2,508 ¥ 20,391 ¥ 9,343 ¥ 5,223 ¥ 55,042


Thousands of U.S. Dollars 2015

¥ 9,425 ¥ 9,394 ¥ 8,671 ¥ 12,862 ¥ 2,590 ¥ 25,065 ¥ 10,768 ¥ 6,912 ¥ 59,336

AmericasU.S.A Thailand Malaysia

Japan Europe East Asia South Asia and Oceania Total

$ 78,432 $ 78,175 $ 72,153 $ 107,034 $ 21,552 $ 208,576 $ 89,607 $ 57,523 $ 493,769






(5) Information about amortization of goodwill

Millions of Yen

5102

Amortization of goodwill

Goodwill at March 31, 2015

Japan Americas Europe East AsiaSouth Asia

and Oceania Elimination / Corporate Total

– ¥ 155 ¥ 46 ¥ 25 ¥ 38 ¥113 ¥ 377

– 1,696 491 515 – 230 2,932



¥10 ¥ 141 ¥215 ¥ 144 – ¥365 ¥ 875

– 1,598 581 487 – 296 2,962

Millions of Yen

4102

Amortization of goodwill

Goodwill at March 31, 2014


5102



Amortization of goodwill – $ 1,287 $ 383 $ 213 $ 314 $ 939 $ 3,136

Goodwill at March 31, 2015 – 14,110 4,089 4,285 – 1,917 24,401


16. PER SHARE INFORMATION Per share information for the years ended March 31, 2015 and 2014, is summarized as follows:

Yen U.S. Dollars 2015 2014 2015

Net assets per share ¥ 1,825.21 ¥ 1,619.42 $ 15.189 Basic net income per share 65.81 31.17 0.548

Diluted net income per share is not presented since there were no securities with a dilutive effect for the years

ended March 31, 2015 and 2014.

Per share information is computed based on the following:


2015 2014 2015

Net income ¥ 2,775 ¥ 1,315 $ 23,094 Net income not subject to distribution to

common shareholders – – – Net income subject to current and future

distribution to common stock 2,775 1,315 23,094

Outstanding Number of Shares of

Common Stock 2015 2014

Weighted-average shares for the period 42,169,325 42,169,718


17. RELATED PARTY TRANSACTIONS

Notes: Business policy on terms and conditions Interest on loans and transfer of funds are decided in consideration of the market rate. The transaction amount in yen for transferring funds is calculated as the average of each month-end balance.

Information about the parent company

Nippon Yusen Kabushiki Kaisha (NYK LINE) (Listed on the Tokyo Stock Exchange and Nagoya Stock Exchange)

Major transactions and major balances for the years ended March 31, 2015 and 2014, with related parties are as follows: For the year ended March 31, 2015

Nature of Business

Ownership interest

(%) Relationship

Description of the

transactions

Transaction for the year Balance at end of year

Name Address Amount of

capital Millions of Yen


Account Name

Millions of Yen


Transaction with subsidiaries of a common parent:

NYK INTERNATIONAL

PLC U.K.

USD 32,285

thousandFinance Financing

Transfer of funds

Other current liabilities

(CMS deposits)

Loan (net amount)

Current portion of long-term debt

Payment of interest


(accrued interest payable)

NYK INTERNATIONAL

(USA) INC. U.S.A.

USD 2,161


Transfer of funds


(CMS deposits)

Payment of interest



For the year ended March 31, 2014

Nature of Business

Ownership interest

(%) Relationship

Description of the

transactions

Transaction for the year Balance at end of year

Name Address Amount of

capital Millions of Yen


Account Name

Millions of Yen


Transaction with subsidiaries of a common parent:

NYK INTERNATIONAL

PLC U.K.

USD 32,285


Transfer of funds


(CMS deposits)

Loan (net amount)

Current portion of long-term debt

Payment of interest



NYK INTERNATIONAL

(USA) INC. U.S.A.

USD 2,161


Transfer of funds


(CMS deposits)

Payment of interest



3,492

69

2,077 17,28129,060

(1,498) (12,468)

578

1,940 16,145 2,191 18,234

2 14

2 158 66

1,084 9,017

4,690

72

1,771 17,20845,573

(332) (3,224)

699

2,486 24,154 653 6,343

9 84

1,178 11,444

0 311 110

1,460 14,190

Long-term debt


18. SUBSEQUENT EVENT The Company made an appropriation of retained earnings, proposed by the board of directors and approved by shareholders at the general meeting on June 26, 2015, as follows:


Cash dividends (¥10 ($0.08) per share) ¥ 422 $ 3,509


Independent Auditor's ReportFinancial Data


Company ProfileCompany Data

Trade Name Yusen Logistics Co., Ltd.

Founded February 28, 1955

Capital JPY 4,301,000,000

Employees 20,038 as of March 31, 2015 (consolidated)

Representative Hiromitsu Kuramoto, President

Head Offi ce Sumitomo Fudosan Shiba-Koen Tower2-11-1, Shiba-Koen, Minato-ku, Tokyo 105-0011, Japan

Business Functions

Agency business for air and ocean carriers

Freight forwarding business

Customs clearance

Warehousing

Integrated international shipping and agency services

Motor vehicle transportation business

Marine shipping brokerage

Packing, display and storage business of medical devices

Leasing of containers loading equipment, distribution equipment and logistics information systems

Real estate leasing and management

Other business incidental to or connected with the above

Overseas Subsidiaries

Americas: Total 6 companiesYusen Logistics (Americas) Inc., Yusen Logistics Do Brasil Ltda. and etc.

Europe: Total 14 companiesYusen Logistics (UK) Ltd., Yusen Logistics (Europe) B.V. and etc.

East Asia: Total 11 companiesYusen Logistics (Hong Kong) Limited, Yusen Logistics (China) Co., Ltd. and etc.

South Asia & Oceania: Total 28 companiesYusen Logistics (Singapore) Pte. Ltd., Yusen Logistics (Thailand) Co., Ltd. and etc.

Domestic Subsidiaries Total 12 companiesYusen Travel Co., Ltd., Yusen Logistics (Shinshu) Co., Ltd. and etc.


HistoryCompany Data

YUSEN AIR & SEA SERVICE CO., LTD. NYK Logistics

1950's

1955

Establishes Kokusai Ryoko Kosha for handling of general

travel and air cargo industry.

Commences operations as an air transport agent certifi ed by

the International Air Transport Association (IATA).

1959

NYK acquires stock which Osaka Shosen Kaisha (O.S.K. Line)

owned, creating subsidiary company called Yusen Air Service

Co., Ltd.

1960's1961

Changes English name to Yusen Air & Sea Service Co., Ltd.

1970's1979

Acquisition of domestic air freight forwarder license in Japan

1980's

1984

Acquisition of international air freight forwarder license

1983

Setting up Logistics Department in the Harbor Division of the NYK

Headquarters Establishment of Japan Intermodal Transport (later, JIT

Co., Ltd.) in Japan, mainly handling ocean freight forwarding.

First half of 1980's

Establishment of subsidiaries in Asian countries, following

precedent in Thailand

Second half of 1980's

Expansion of network in Europe and Americas through

buyouts or establishment of subsidiaries

1990's

1994

Transfer of the sales section of the travel department to

Yusen Travel Co., Ltd.

1996

Registers its over-the-counter stock with the Japan Securities

Dealers Association

2000's

2005

Listing on the First Section of the Tokyo Stock Exchange

2000 and after

Building up a global network and organization by expanding

its business to Eastern Europe and the BRICs

2004

Integration of brand name to NYK Logistics internationally

2007

Merger of NYK Logistics (Japan) Co., Ltd. with JIT Co., Ltd. in

Japan

2010's

2010 February

Basic letter of agreement concerning integration of the businesses of Yusen Air & Sea Service and NYK Logistics Japan

2010 May

Transfer of business agreement between Yusen Air & Sea Service and NYK Logistics Japan

2010 October Inauguration of Yusen Logistics Co., Ltd.

2012 April

Integration of overseas affi liates was completed.


Investor InformationCompany Data

Stock Price and Trading Volume

Stock Price

Trading Volume

Stock Information

Common Stock

Number of authorized shares 160,000,000

Number of issued and outstanding shares 42,220,800



Name Number of shares heldRatio of the number ofshares held to the total

number of sharesoutstanding (%)

1 NIPPON YUSEN KABUSHIKI KAISHA (NYK) 25,135,084 59.53

2 BBH FOR FIDELITY LOW-PRICED STOCK FUND 3,669,500 8.69

3 CBNY-GOVERNMENT OF NORWAY 1,029,400 2.44

4 JAPAN TRUSTEE SERVICES BANK, LTD. (TRUST ACCOUNT) 666,200 1.58

5 YAMATO HOLDINGS CO., LTD. 605,800 1.43

6 THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. 537,600 1.27

7 BBH FOR BBHTSIA NOMURA FUNDS IRELAND PLC / JAPAN STRATEGIC VALUE FUND 511,700 1.21

8 TOKIO MARINE & NICHIDO FIRE INSURANCE CO., LTD. 406,400 0.96

9 THE BANK OF NEW YORK, NON-TREATY JASDEC ACCOUNT 367,600 0.87

10 THE MASTER TRUST BANK OF JAPAN, LTD. (TRUST ACCOUNT) 355,800 0.84

Total 33,285,084 78.84

Shareholders

Major Shareholders



Classification

Stock situation (Number of shares in a unit: 100 shares)

National andlocalgovernments,local publicentities

Financialinstitutions

Financialinstrumentsbusinessoperators

Othercorporations

Foreigncorporations,etc.

Number of shareholders 0 26 20 76 134

Number of shares held (units) 0 41,625 2,065 261,979 90,490

Percentage of the number of shares

held (%)0 9.87 0.49 62.13 21.46

Classification

Stock situation (Number of shares in a unit: 100 shares)

Stock situation(shares amountingto less than oneunit)

Individual investorsincluded in foreigncorporations, etc.

Individual investors,etc.

Total

Number of shareholders 3 5,944 6,200 -

Number of shares held (units) 13 25,575 421,734 47,400

Percentage of the number of shares

held (%)0 6.05 100.0 -

*Treasury stock (51,606 shares) is included in "individual investors etc." (516 units). The number of treasury stock (51,606 shares) is according to the shareholder list and the actual number of treasury stock was 51,566 shares as of March 31, 2015.


Sumitomo Fudosan Shiba-Koen Tower 2-11-1, Shiba-Koen Minato-ku, Tokyo 105-0011, Japan