Yusen Logistics AR2013

88
2013 Annual Report Year ended March 31, 2013

description

Logistics Industry

Transcript of Yusen Logistics AR2013

  • 2013Annual Report

    Year ended March 31, 2013

  • Yusen Logistics Co., Ltd.

    Presidents Message P.1 Presidents Message P.1 Presidents Interview

    Feature P.7 FY2011 Integration P.10 FY2012 Fusion P.12 FY2013 Driving Dramatic Progress Operations P.17 Operations

    Governance P.23 Corporate Social Responsibility (CSR) P.25 Corporate Governance P.31 Management

    Financial P.36 Financial Highlights P.38 Managements Discussion and Analysis P.42 Financial Statements P.50 Notes to Consolidated Financial Statements P.81 Independent Auditors Report

    About Us P.82 Company Profile P.83 History P.84 Investor Information

    Contents

    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.

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    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.

    en s Message

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    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.

    http://www.jp.yusen-logistics.com/ir/library/ar2013/

  • Annual Report 2013 1

    Presidents Message

    Reflections on Fiscal 2012

    Q: Please summarize the business environment and your performance in fiscal 2012.

    A: Our earnings declined even though sales increased year on year thanks to salesexpansion and the integration.

    The international logistics market in fiscal 2012 lacked strength as a whole, as highlighted by persistent sluggishness

    in the European economy and slowing growth in Asia. Most notable was a 14% year-on-year drop in air freight cargo

    originating from Japan, which reflected a combination of industry structural changes, including the off-shore transfer of

    production bases and a modal shift for cutting logistics costs.

    Under these conditions, consolidated net sales were 339,049 million, up 30,045 million year on year on the back of

    expanded sales and the business integration. However, consolidated operating income dropped 4,613 million year on

    year to 1,659 million on account of a decline in volumes handled in air freight forwarding and lower profitability in

    ocean freight forwarding.

    In April 2012, we completed the integration of overseas logistics businesses with Nippon YusenKabushiki Kaisha by consolidating as subsidiaries local companies in China and Malaysia. Infiscal 2012, we also established local subsidiaries in Bangladesh and Turkey, and took otheractions that expanded Yusen Logistics global logistics network to 440 locations in 38 countriesworldwide.

    Now we intend to take full advantage of integration synergies to bolster our sales and marketingcapabilities and continue expanding our bases. In tandem, we will focus on building ourcorporate platform, including the fusion of human resources and organizations, as we strive tobecome a world-class international forwarder.

  • Yusen Logistics Co., Ltd.2

    Q: Looking back at fiscal 2012, what went well and not so well?

    A: We saw the benefits of the business integration steadily show through and weincreased our international presence.

    Having completed the integration of overseas logistics businesses early in the year, we worked hard in fiscal 2012 to

    link our ocean freight forwarding, air freight forwarding and logistics businesses, to expand sales through base

    expansion, to fuse human resources more and to accomplish other goals.

    Medium-term Business Plan Progress

    Q: Please explain the revisions to your medium-term business plan targets.

    A: We initially made 1,000,000 TEU for ocean freight exports and 500,000 tons for airfreight exports medium-term business plan handling targets. However, because wesubsequently expected to have difficulty achieving these targets, we extended them intomedium- to long-term targets.

    We announced revisions to our medium-term business plan numerical targets on April 27, 2012. Furthermore, on April

    30, 2013, we made the following revisions for fiscal 2013, the final year of the plan, because market conditions are

    vastly different from the ones we initially expected. We recognize that achieving the revised targets is a major

    management challenge, and to this end, we are implementing the Project Re-engineering Yusen Logistics program.

    In terms of linking ocean freight forwarding, air freight forwarding and logistics businesses, we worked on many fronts

    to capitalize on the integration rather than respond as individual businesses. We focused on PLUS ONE sales

    activities where we offer comprehensive services to customers spanning our various businesses as the name might

    suggest. We also supported customers by harnessing our collective strengths across countries, thereby leveraging

    our global network to good effect; we worked on marketing in a bid to win more business from non-Japanese

    customers; and we made efforts to develop cross-trade business between Europe and the U.S. to Asia, and off-shore

    business. Going forward, we plan to continue to step up these activities.

    I feel that our international presence has been increasing recently. Through our businesses we have many

    opportunities to make proposals for total logistics solutions to customers around the world.

    Another noteworthy development for us in fiscal 2012 was our aggressive base development in emerging economies in

    Asia. We established a local subsidiary in Bangladesh, and expanded and enhanced warehouse facilities in India and

    Indonesia. And thats in addition to base expansion in East Asia, and South Asia & Oceania that we achieved through

    the business integration.

    We now have approximately 16,000 employees in the YLK Group. As an international forwarder, we are pushing

    ahead with programs to develop global human resources, including training for local staff, in order to ensure that all

    staff work from a shared perspective.

  • Annual Report 2013 3

    Feature: FY2011Integration

    FY2012Fusion

    FY2013Driving Dramatic Progress

    Q: What progress have you made with your business and sales strategies?

    A: We have stepped up approaches to strategic customers through industry-basedmarketing, and expanded the off-shore business.

    Under our business strategy, we have expanded the handling of off-shore business, which doesnt come through

    Japan, and European and U.S. business in both air freight and ocean freight. Furthermore, we have worked to

    enhance service quality, which is underscored by certification under the Authorized Economic Operator (AEO)

    program.

    In terms of our sales strategy, we have identified our strong fields and the industries we should focus on, and

    developed strategic marketing approaches for each field, and associated sales activities. The eight fields we are

    focusing on are health care/medical equipment, automobile-related, aircraft-related, project-related including plant

    export, environmental energy, retail, chemical, and technology.

  • Yusen Logistics Co., Ltd.4

    pr gram.

    In fiscal 2012, we concentrated on certain marketing activities. These included the international pharmaceuticals trade

    show INTERPHEX JAPAN in the health care/medical equipment field, and the Japan International Aerospace

    Exhibition in the aircraft-related field. In the automobile-related field, we entered into a business alliance with a major

    Mexican trucking company to expand land transport services in Mexico.

    Furthermore, we promoted our Corporate Account Program (CAP), which strategically targets approximately 30

    customers. Thanks to this initiative to provide strategic support across the group beyond the frameworks of individual

    businesses and regions, we were able to expand our business domains in fiscal 2012, including winning new

    business.

    Our logistics business is working on expanding sales through warehouse facility expansion, and has developed one of

    the largest warehouse networks of any Japanese logistics company in Australia and India.

    Q: Please explain your area strategy, including developments in emerging markets.

    A: We are actively expanding bases with the view to making inroads in emerging markets.

    We continue to strategically develop our operations in emerging markets. In fiscal 2012 we established local

    subsidiaries in Bangladesh and Turkey.

    In the same vein, we are looking at establishing local subsidiaries in Cambodia and Myanmar, where growth potential

    is huge, in the summer of 2013. To support these developments, we held well-attended logistics seminars targeting

    Cambodia, Myanmar and Bangladesh at three locations in Japan in fiscal 2012. In Russia, we opened a branch as a

    stepping stone into the Far East. We have also opened a new branch in China.

    In another strategic move, we opened a representative office in South Africa as part of our efforts to develop the African

    market, which is expected to witness strong growth going forward. In South America, we are making progress

    expanding bases in countries like Brazil.

    The YLK Groups base network has increased with the opening of bases in China and warehouse expansion in South

    Asia & Oceania.

  • Annual Report 2013 5

    Q: What are the main initiatives you have planned for fiscal 2013?

    A: We intend to make even more progress with our existing strategies.

    We plan to build on our existing strategies (business, sales, area and basic management) through greater

    Corporate Platform Strengthening

    Q: Please discuss the development of the people who will be key to strengthening thebusiness platform.

    A: We are continuing to run training programs and take other steps to fuse and developpeople with a global outlook.

    People are our greatest asset. Indeed, in order for us to grow as an international forwarder, it is crucial that we develop

    people with a broad outlook who can provide total logistics solutions.

    Global human resources (GHR) is a key aspect of our management plan. True to this positioning, we are promoting

    local employees to management positions at overseas subsidiaries and exchanging personnel within the group. To

    promote this, we held various training programs in fiscal 2012. These included the Senior Management Program

    (SMAP) for employees who are candidates for senior positions in the future, and the Global Sales Enrichment

    Program (GSEP) for mid-level sales employees. In the second program after being launched in fiscal 2011, GSEP

    aims to develop people who can make proposals for total logistics solutions and to build a network among employees.

    Fiscal 2011 program participants have quickly demonstrated the benefits through their activities around the world and

    cooperation with fellow participants.

    Q: What is your stance on CSR?

    A: I view this as an extremely important theme in our drive to raise our value as a globallogistics company.

    Only by earning the trust of the global community can a company continuously raise its value as a corporation. I see

    CSR activities as an extremely important theme for this. That is why we are working to increase quality, safety and

    satisfaction, as we run the company in a way that is mindful of corporate ethics, the protection of human rights and

    service to regional communities.

    cooperation between Japan and each region around the world.

    Under our business strategy, we plan to work actively in all businessesocean freight forwarding, air freight

    forwarding and logistics.

    Specifically, we aim to handle 650,000 TEU in ocean freight forwarding by strengthening relations with core carriers

    globally. A concurrent goal is to improve operational efficiency to secure earnings.

    In air freight forwarding, we will strengthen cooperation within the YLK Group network to expand off-shore cargo

    transportation, which doesnt come through Japan.

    In the logistics business, as we aim to increase earnings at all bases, we plan to continue expanding bases,

    especially in South Asia & Oceania, as well as further raise service quality by continuing the No. 1 Kaizen Company

    program.

  • Yusen Logistics Co., Ltd.6

    Message for Fiscal 2013

    Q: What is your outlook for fiscal 2013? And what expectations do you have for it?

    A: We will work to reform our structures and improve our operational efficiency to equipus with top-class international competitiveness.

    In fall 2013, we will mark the third year since our business integration. Up to now, we have prioritized the expansion of

    volumes handled. In fiscal 2013, in addition to these initiatives, we intend to strengthen our cost competitiveness. For

    this, in April 2013, we launched the Project Re-engineering Yusen Logistics program. This is not simply a cost-

    reduction project, as we also intend to fundamentally reform our operational and organizational approaches over the

    next two years. First of all, during the course of fiscal 2013, we aim to reduce administration division costs by 1.0

    l g t p .

    Compliance is an issue that each and every employee must make their own respons bility. We are instilling this

    awareness in employees and creating frameworks for that so employees practice rigorous compliance in their daily

    business. Governance is an equally important issue. We have established a system according to regional needs, built

    on close cooperation between Head Office in Japan and each region around the world.

    Another important theme is environmental protection. One of our main initiatives here is a forest adoption program in

    Japan that seeks to reduce CO2 emissions and protect biodiversity, among other aims. Additionally, in a recent move

    in fiscal 2012, Yusen Logistics (Americas) Inc. installed a solar power generation system at one of its warehouse

    facilities.

    billion. By the end of fiscal 2014, meanwhile, we aim to improve the efficiency of sales and business divisions, as well

    as revamp our organizational structure.

    Q: Finally, do you have a message for shareholders?

    A: We will strive to harness the strengths of all the YLK Groups employees to raise ourcorporate value and in this way meet the expectations of all stakeholders.

    Our operating environment remains challenging, as underscored by protracted malaise in the international logistics

    market. However, we are gradually seeing the benefits of the integration show through in increased volumes handled

    and other areas. We are also making steady progress with the fusion of human resources and other measures toward

    achieving our next stage of growth.

    So that we continue to meet the expectations of all stakeholders, we aim to raise our corporate value by achieving

    growth as a group. We also see the return of profits to shareholders as the highest priority of management. In line with

    this, we are committed to paying stable dividends, as long as we generate sufficient profit.

    Harnessing the passion and strengths of all the groups employees, we aim to become a world-class international

    forwarder.

  • Annual Report 2013 7

    Yusen Logistics was established in October 2010 as result of the integration in Japan of Yusen Air & Sea Service

    Co., Ltd., which had strengths in air freight forwarding, and NYK Logistics (Japan) Co., Ltd., which had strengths in

    contract logistics and ocean freight forwarding. Following the integration in Japan, overseas logistics businesses were

    progressively integrated. This process was completed in April 2012 with the consolidation as subsidiaries of

    companies in China and Malaysia.

    This integration has created a world-class company with a global network with more than 400 locations in 38

    countries. Possessing a broad range of services extending from air and ocean freight forwarding to contract logistics,

    we are now capable of supporting customers to optimize their logistics as a total logistics provider.

  • Yusen Logistics Co., Ltd.8

    A global network based on five regionsWe have a global network covering five regionsJapan, Americas, Europe, East Asia, and South Asia & Oceaniain

    38 countries and regions, as of March 31, 2013. Leveraging this global network, we can meet customers needs in

    any region and offer the operational knowhow we have amassed in Japan for delivering high-quality logistics services

    worldwide.

    A balanced business structureThe integration has created a well-balanced structure not only in terms of the mix of businesses (air freight forwarding,

    ocean freight forwarding and logistics), but also the share of sales in regions around the world. With a business

    structure that isnt excessively dependent on any particular region or business, we have a firm business base.

  • Annual Report 2013 9

    The ability to make proposals for various logistics needsYusen Logistics can make optimal and speedy logistics strategy proposals for customers increasingly diverse and

    sophisticated needs because we offer air and ocean freight forwarding and contract logistics services, and have a

    global network of bases. The proposals are also backed by the extensive expertise and experience of our people

    amassed over more than 50 years in the logistics business.

  • Yusen Logistics Co., Ltd.10

    In fiscal 2012, we made progress with our strategies for business, sales, areas and basic management under our GO

    FORWARD, Yusen Logistics medium-term business plan. In particular, we worked to expand our business bases for

    Driving Dramatic Progress in the future and to fuse the organization and change employee awareness. Following the

    completion of overseas logistics business integration in April 2012, we established local subsidiaries in Bangladesh,

    Turkey and elsewhere, and expanded our bases in South Asia & Oceania to expand sales. Moreover, we developed

    training for local staff and made gains fusing the entire group.

  • Annual Report 2013 11

    Human resources are our greatest asset. The business integration has created a total logistics provider that is able to

    offer various servicesair and ocean freight forwarding and contract logistics. As such, we are also developing

    logistics professionals who can sell all of these services. We continue to concentrate on equipping all our employees

    worldwide with the insight and expertise to provide detailed responses to customers logistics needs. This should

    strengthen our organization and enable us to achieve our medium- and long-term targets.

    * Click here for more details on "3D Management".

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  • Yusen Logistics Co., Ltd.12

    Under our medium-term business plan, we have made progress with organizational integration and achieved greater

    fusion. However, we have revised our numerical targets because business conditions are vastly different from what we

    initially expected. In order to achieve the revised targets for fiscal 2013, the final year of our medium-term business

    plan, we must make progress expanding sales in a way that meets customer needs, and initiate the Project Re-

    engineering Yusen Logistics program to reform operations and improve earnings.

  • Annual Report 2013 13

    Our business integration was basically completed in April 2012. However, in order to avoid any operational confusion

    caused by integration, we have essentially maintained the existing organizational structure. In fiscal 2013, we plan to

    implement the Project Re-engineering Yusen Logistics program to revamp our cost structures.

  • Yusen Logistics Co., Ltd.14

    We will continue to promote our unique 3D Management strategy, which seeks to secure balanced profits by

    expanding sales efficiently in three dimensions, by area, business, and customer or industry, and by managing them

    from various aspects. We will further improve our basic management, business, sales and area strategies with

    integrity, innovation, and intensity.

  • Annual Report 2013 15

  • Yusen Logistics Co., Ltd.16

  • Annual Report 2013 17

    Review of Operations

  • Yusen Logistics Co., Ltd.18

    The Japan segment, including domestic consolidated subsidiaries, saw sales drop 10.6% to74,853 million and segment profit fall 93.8% to 103 million from the previous fiscal year.

    Market Conditions and Company InitiativesAir Freight Forwarding

    The volume of air freight exports declined 15.2% year on year, reflecting a number of factors. These included

    protracted economic sluggishness in Europe, an economic slowdown in Asia, the absence of hit products to create

    special demand, and logistics cost revisions, which spurred a shift to ocean freight forwarding and led to lower air

    freight movement. Air freight imports mirrored air freight exports in terms of the modal shift to ocean freight forwarding.

    Air freight imports were soft as a whole due also to a lackluster domestic economy. As a result, freight volumes

    handled declined 2.0% year on year.

    Ocean Freight Forwarding

    In the ocean freight forwarding business, the volume of ocean freight exports handled on a TEU basis increased 9.7%

    year on year due to progress expanding sales. In terms of imports, however, freight volumes handled declined 0.4%

    year on year, despite movement of apparel and other imports.

  • Annual Report 2013 19

    The Americas segment recorded sales of 77,269 million, up 10.3% year on year. The segmentrecorded an operating loss of 6 million due primarily to increased expenses at newlyconsolidated companies. In the previous fiscal year, the segment recorded an operating loss of577 million.

    Market Conditions and Company InitiativesAir Freight Forwarding

    In air freight exports, freight volumes handled in the year under review increased 4.8% year on year mainly on the

    back of higher volumes of medical equipment-related products. In air freight imports, freight volume handled rose 6.6%

    year on year, reflecting mainly freight movement of automotive components.

    Ocean Freight Forwarding

    In the ocean freight forwarding business, freight volumes handled on a TEU basis increased 18.5% year on year. This

    increase was primarily attributable to volumes handled of automotive components exports. Ocean freight imports

    handled rose 10.8% year on year, reflecting mainly consumer goods-related freight.

    Logistics

    In logistics operations, earnings improved due to the benefits of cost reduction, as well as increased consumer goods-

    related volumes in line with recovering personal spending.

    *Exchange Rate: 82.33 (2013) ($1) 79.06 (2012)

  • Yusen Logistics Co., Ltd.20

    The Europe segment recorded sales of 76,157 million, down 0.9% year on year, amid persistenteconomic sluggishness. The segment recorded an operating loss of 247 million, compared witha profit of 924 million in the previous fiscal year.

    Market Conditions and Company InitiativesAir Freight Forwarding

    In air freight exports, volumes handled rose 5.6% year on year, thanks to volumes of electronic and electrical

    equipment-related products. Air freight imports, meanwhile, recorded a 15.4% year-on-year decline in volumes

    handled, with the main decreases coming in freight originating from Japan and Asia.

    Ocean Freight Forwarding

    In the ocean freight forwarding business, export volumes handled on a TEU basis increased 1.4%, the result mainly of

    volumes handled of automotive components. Imports handled rose 2.4% year on year, even though the market was

    soft. This increase was partly due to the modal shift from air freight forwarding.

    Logistics

    Logistics operations saw volumes handled comprising mainly automotive components and electronic and electrical

    equipment-related products. However, some companies, particularly in southern Europe, saw business results

    deteriorate.

    *Exchange Rate: 106.48 (2013) (1) 110.20 (2012)

  • Annual Report 2013 21

    The East Asia segment recorded sales of 54,988 million, up 37.9% year on year due to growth involumes handled and sales. However, the segment recorded an operating loss of 1,149 million,compared with a profit of 2,114 million in the previous fiscal year, due to higher ocean freightrates and other factors.

    Market Conditions and Company InitiativesAir Freight Forwarding

    In air freight exports, volumes handled rose 1.0% year on year. However, intensifying competition in the market

    pressured profitability. In air freight imports, freight volumes handled increased only 0.3%, with little evidence of an

    upturn in freight forwarding due to the protracted global economic malaise.

    Ocean Freight Forwarding

    In the ocean freight forwarding business, export volumes handled on a TEU basis jumped 111.6% and import volumes

    handled climbed 25.6% due to sales expansion and business integration in China.

    Logistics

    Sales expanded along with increased business from business integration. However, higher costs during the integration

    process meant that these higher sales did not translate into improved profits.

  • Yusen Logistics Co., Ltd.22

    The South Asia & Oceania segment recorded sales of 60,483 million, up 42.5%, the result mainlyof business integration. Segment operating income was 3,269 million, up 40.2% year on year.

    Market Conditions and Company InitiativesAir Freight Forwarding

    In air freight exports, volumes handled declined 4.4% year on year due to a give-back following emergency transport

    demand related to the floods in Thailand in the previous fiscal year and an economic slowdown in South Asian

    countries. In air freight imports, freight volumes handled rose 9.0% year on year, the result of the contribution from

    business integration.

    Ocean Freight Forwarding

    In the ocean freight forwarding business, business integration and sales expansion led to a 44.9% rise in export

    volumes handled on a TEU basis. Import volumes handled rose 99.1% for the same reasons.

    Logistics

    Sales in logistics operations increased year on year, reflecting efforts to expand bases, as well as the effects of

    business integration.

  • Annual Report 2013 23

    Corporate Social Responsibility (CSR)

    The YLK Group engages in various activities guided by its CSR activity policy.

    Environmental ActivitiesInstallation of LED Lighting at NARITA Logistics Center

    In 2011, lighting on the first floor of the warehouse, an

    area of approximately 6,864 m2, was replaced with LED

    lighting. This move was part of efforts to reduce energy

    use and save electricity under the Act on the Rational

    Use of Energy. Thereafter, in September 2012 all

    mercury lamp light fittings on the third floor of the

    warehouse were replaced with LED lights. These

    replacements are expected to cut electricity

    consumption by approximately 40% in the areas where

    LED lighting has been installed. The total reduction for

    the warehouse facility as a whole is estimated at

    approximately 25%.

    Given the meaning of CSR (Corporate Social Responsibility), 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.

  • Yusen Logistics Co., Ltd.24

    replace ents ar e ect

    Adopted Forest Absorbs 25.2 Tons of CO2

    The YLK Group is participating in Japans National

    Campaign for Building Beautiful Forests. As a specific

    activity, the YLK Group signed a three-year Forest

    Foster Parent (Forest of Creation) agreement with

    Tateshina Town in Kitasaku-gun, Nagano Prefecture, in

    October 2010 and began forest regeneration activities.

    Since then, employees and their family members have

    volunteered their time to care for the forest.

    In fiscal 2011, the year ended March 31, 2012, the

    adopted forest absorbed 25.2 tons of CO2. On July 18, 2012, we received a forest CO2 absorption certificate* from

    Nagano Prefecture.

    *Certifies via evaluation and screening the CO2 volume absorbed by efforts of environmentally advanced companies through the Adopt-a-ForestProgram being promoted by Nagano Prefecture.

    Environmental Load Data Collection Activities

    Up to the fiscal year ended March 2010, we

    conducted environmental load data collection

    activities as part of the NYK Groups environmental

    activities. As a new initiative, we developed a

    system for managing environmental load data,

    which came online in the year ended March 2011.

    Using this system to collect environmental load

    data for all group companies, we aim to reduce

    environmental emissions from each business site

    by analyzing the emissions data in more detail than

    before.

    ComplianceThe Company distributes a Code of Conduct for all YLK Group employees. The Code of Conduct ensures that our

    company is in line with social standards, and requires each YLK Group employee not only to observe laws and

    regulations, but also to carry out and accomplish corporate activities and routine work in accordance with corporate

    ethical guidelines and social morals. Our aim is to ensure that we win recognition from society and are respected as a

    trustworthy company. To this end, the Company has also distributed the Group Compliance Manual, which requires

    all officers to lead by example in terms of compliance. It also asks Group employees to improve their understanding of

    compliance and at the same time serves as guidelines for their daily activities.

  • Annual Report 2013 25

    Corporate Governance

    1. Independent Corporate Auditors Support SystemThe Company appoints independent corporate auditors in order to ensure the objectivity and neutrality of Board of

    Directors decision making by reflecting external, independent viewpoints in management. Matters for deliberation in

    and reporting to the Board of Executive Officers and the Board of Directors are notified in advance to independent

    corporate auditors and time is set aside for them to express their opinions at these meetings, so that corporate

    auditors can properly fulfill the function expected of them.

    Auditors

    The Company seeks to maintain its standing as a good corporate citizen, earning the trust of all stakeholders and

    their ongoing support. To this end, the Company upholds a high standard of ethics its business activitiesglobal

    logistics servicesand strives to engage in fair and dependable business practices in compliance with prevailing laws

    and within accepted social parameters.

    The Company introduced an executive officer system in June 2005 with two aims: (1) to clarify the functions of the

    Board of Directors for quick decision making on management strategies and policies and (2) to accelerate decision

    making and clarify responsibility in the execution of operations.

    Directors and executive officers are obliged to report to the Board of Directors and the Board of Executive Officers,

    respectively, which in turn deliberate on and supervise operations.

    The corporate auditors ensure healthy and good-quality corporate governance by inspecting the directors performance

    of their duties and by monitoring the directors implementation of their duty of care in cooperation with the Internal

    Audit Chamber and through reports from the Accounting Auditor.

  • Yusen Logistics Co., Ltd.26

    The 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 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.

    The Company has established the Internal Audit Chamber, which carries out planned audits of the Company. The

    Companys 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 Audit Chamber and receive regular reports on the audit results.

    The certified public accountants that performed the accounting audit of the Company were Yuji Itagaki, Tomoya Noda

    and Kenji Morita, who all belong to Deloitte Touche Tohmatsu LLC. In addition, four other certified public accountants

    and five other people assisted with accounting audit work of the Company.

    3. Reasons for Selecting Current Corporate Governance FrameworkThe Companys Board of Directors has five members. In order to inspect the decision making of the Board of Directors

    from an objective and neutral viewpoint, four corporate auditors, including two independent corporate auditors, conduct

    audits.

    The Company has not appointed any outside directors at present. However, the Company believes that it has

    established a framework for proper supervision of management functions properly by independent corporate auditors,

    who express opinions and offer advice from objective viewpoints at Board of Directors meetings based on their

    external insight and experience.

    2. Matters Relating to Business Execution, Audit and Supervision, Nomination,Compensation Setting and Other Functions (Overview of Current CorporateGovernance Framework)

    The Company 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. The Company has five directors. The directors pass resolutions about

    matters stipulated in laws and regulations and the Articles of Incorporation and 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, the Company has introduced an executive officer system. The Board of Executive Officers, which is

    made up of 19 executive officers, including executives who are also directors, meets twice a month. All executive

    officers perform their duties under the directions and supervision of the representative directors. This system

    accelerates decision making, clarifies responsibility in the execution of duties and raises management transparency

    and efficiency.

  • Annual Report 2013 27

    The Company 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. The Companys basic

    policies are set out below.

    1. System ensuring that the directors and other officers performance of their dutiescomply with laws and regulations

    1. Considering that fulfilling corporate social responsibility (CSR) is the core of management, the Company has

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

    directors, executive officers 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.

    2. The Company has established the Compliance Committee as an organ to ensure that the directors and executive

    officers comply with laws and regulations and perform their duties appropriately.

    3. 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 comply with laws andregulations

    1. The Company 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 the corporate ethical guidelines and social morals.

    2. To promote compliance, the Company has established the Compliance Committee, chaired by the President, the

    position of Chief Compliance Officer (CCO), and the CSR/Risk Management Chamber. The Company and each

    Group company appoint a CSR Leader at each workplace, who promotes compliance, to promote thorough

    compliance with corporate ethics and social norms in an organized way.

    3. To promote compliance, the Company works out a Group compliance program each year to operate education and

    training systems, 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 oftheir duties

    1. Documents and other information relating to the performance of duties of the directors of the Company are stored

    and managed properly under internal regulations including the document management rules.

    2. Critical documents of the Company are managed and stored and laid open for inspection in accordance with their

    levels of importance and confidentiality.

  • Yusen Logistics Co., Ltd.28

    4. Regulations and system relating to management of risks of loss1. The Company has established the CSR/Risk Management Chamber, which specializes in managing significant

    risks that might affect the management of the Company or might have Company-wide effects. The CSR/Risk

    Management Chamber is responsible for identifying, analyzing, and assessing risks and for taking appropriate

    action.

    2. Each division manages risks relating to its operations in accordance with relevant internal regulations and in

    cooperation with the CSR/Risk Management Chamber.

    3. The CSR/Risk Management Chamber reports risks and risk management to the Compliance Committee, which is

    chaired by the President, and to the Disaster Risk Management Meeting.

    4. The Company has authorized a Business Continuity Basic Policy and a BCP Manual, which stipulate measures for

    disaster prevention and mitigation, steps to confirm the safety of employees and their families, and post-disaster

    recovery actions, including the establishment of a disaster response office in the event of an emergency situation,

    such as a major disaster or disruption. Based on the policy and manual, the Company has established a crisis-

    management system.

    5. The Company has established the Personal Information Management Regulations to protect personal information.

    5. System ensuring that the directors and other officers perform their duties efficiently1. 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.

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

    and 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.

    3. 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.

    4. 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 ofthe parent company and subsidiaries

    1. To ensure the healthy and efficient management of the Group, the Company has established the Group

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

    2. The Company has established sections at head office that are 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.

  • Annual Report 2013 29

    p

    3. The Company has 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.

    4. 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 ofduties

    1. The directors maintain a system 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 directors1. If the corporate auditors have employees who will support the performance of their duties, the directors maintain a

    system to respect the opinion of the corporate auditors about the independence of the employees from the

    directors.

    9. System for the directors and employees to report to the corporate auditors andsystems relating to other reports to the corporate auditors

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

    Board of Corporate Auditors.

    2. Corporate auditors exercise the authority granted them under laws and regulations and communicate with the

    directors, executive officers and employees to carry out fair audits of the legality and efficiency of their performance

    of duties.

    3. 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 the corporate auditors1. The 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.

  • Yusen Logistics Co., Ltd.30

    t

    11. System for ensuring compliance with the Financial Instruments and Exchange Act1. The Company 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.

  • Annual Report 2013 31

    Motonobu Kobayashi

    Auditor (Full-time)

    Masaaki Hashimoto

    Auditor (Full-time)

    Hiromitsu Kuramoto

    President andRepresentative Director

    Hiroyuki Yasukawa

    Representative Director,Senior Managing ExecutiveOfficer

    Shoji Murakami

    Representative Director,Senior Managing Executive Officer

    Kenichi Kotoku

    Director,Managing Executive Officer

    Akio Futami

    Director,Managing Executive Officer

    As of June 27, 2013

    Management

    Makoto Satani

    Auditor (Part-time),Independent Auditor

    Setsuko Kusumoto

    Auditor (Part-time),Independent Auditor

  • Yusen Logistics Co., Ltd.32

    Tatsuo Aoyagi

    Managing Executive Officer

    Takashi Isobe

    Executive Officer

    Toshiyuki Kimura

    Executive Officer

    Tatsuhiko Saeki

    Executive Officer

    Eiichi Suzuki

    Executive Officer

    Taiji Kitagawa

    Executive Officer

    Kazuo Ishizuka

    Executive Officer

    Hidetoshi Nakanishi

    Executive Officer

    Minoru Futonaka

    Executive Officer

    Toru Kamiyama

    Executive Officer

    In

  • Annual Report 2013 33

    Yasuhiko Ueda

    Executive Officer

    Masayuki Yokoyama

    Executive Officer

    Takeshi Hagiwara

    Executive Officer

    Kunihiko Miyoshi

    Executive Officer

  • Yusen Logistics Co., Ltd.34

    Board of Directors

    Appointment Name Management Area

    President andRepresentative Director

    Hiromitsu Kuramoto

    Representative Director Hiroyuki Yasukawa Japan Region, Corporate Officer of NipponYusen Kabushiki Kaisha

    Shoji Murakami Business Development & Planning Dept.,Global Ocean Freight Business Dept., GlobalAir Freight Business Dept., Contract Logistics& Transport Dept.

    Directors Kenichi Kotoku Internal Audit Chamber, CSRRiskManagement Chamber, General Affairs Dept.,Human Resources Dept., OperationAdministration Dept., Information BusinessSystem Dept., Customs Clearance ControlChamber, Public Relations Dept.

    Akio Futami Corporate Planning Dept., Accounting Dept.,Investor Relations Dept.

    Auditors

    Appointment Name

    Auditors (Full-time) Motonobu Kobayashi

    Masaaki Hashimoto

    Auditors (Part-time),Independent Auditors

    Makoto Satani

    Setsuko Kusumoto

  • Annual Report 2013 35

    Executive Officers

    Appointment Name Management Area

    President Hiromitsu Kuramoto

    Senior Managing ExecutiveOfficers

    Hiroyuki Yasukawa East Japan Export Sales Div., East JapanImport Sales Div.,In charge of Central Japan Sales Div., WestJapan Sales Div., Contract Logistics SalesDept.

    Shoji Murakami Business Development & Planning Dept.,Global Ocean Freight Business Dept., GlobalAir Freight Business Dept., Contract Logistics& Transport Dept.

    Managing Executive Officers Kenichi Kotoku Internal Audit Chamber, CSRRiskManagement Chamber, Human ResourcesDept.In charge of General Affairs Dept., PublicRelations Dept.

    Akio Futami Corporate Planning Dept.In charge of Accounting Dept., InvestorRelations Dept.

    Tatsuo Aoyagi In charge of Information Business SystemDept., Operation Administration Dept.,Customs Clearance Control Chamber

    Executive Officers Takashi Isobe Director of Yamato Global Logistics Japan Co.,Ltd.

    Toshiyuki Kimura In charge of South Asia & Oceania Region,Chairman of Yusen Logistics (Singapore) Pte.Ltd.

    Tatsuhiko Saeki In charge of Contract Logistics & TransportDept.

    Eiichi Suzuki In charge of Internal Audit Chamber, CSRRiskManagement Chamber

    Taiji Kitagawa In charge of Business Development & PlanningDept.

    Kazuo Ishizuka In charge of Americas Region, President ofYusen Logistics (Americas) Inc.

    Hidetoshi Nakanishi General Manager of Global Air FreightBusiness Dept.

    Minoru Futonaka In charge of Global Ocean Freight BusinessDept.

    Toru Kamiyama In charge of East Asia Region, Chairman ofYusen Logistics (China) Co., Ltd.

    Yasuhiko Ueda General Manager of Human Resources Dept.

    Masayuki Yokoyama General Manager of Corporate Planning Dept.

    Takeshi Hagiwara General Manager of East Japan Export SalesDiv.In charge of East Japan Import Sales Div.

    Kunihiko Miyoshi In charge of Europe Region, Managing Directorof Yusen Logistics (Europe) B.V.

  • Yusen Logistics Co., Ltd.36

    Financial Highlights

    Yusen Logistics Co., Ltd. and Consolidated SubsidiariesYears Ended March 31

    Millions of YenThousands of

    U.S. Dollars

    Results of Operations 2013 2012 2011 2010 2009 2008 2013 Net sales 339,049 309,004 160,788 123,453 167,460 187,518 $3,604,987 Cost of sales 286,734 257,296 124,514 92,127 128,663 141,736 3,048,742 Gross profit 52,315 51,708 36,274 31,326 38,797 45,782 556,245 Selling, general and administrativeexpenses 50,656 45,436 31,327 29,016 34,223 35,566 538,608 Operating income 1,659 6,272 4,947 2,310 4,574 10,216 17,637 Income before income taxes andminority interests 4,074 6,673 5,887 3,004 2,859 12,178 43,318 Net income 1,119 2,526 3,621 1,545 1,083 7,271 11,896

    Millions of YenThousands of

    U.S. Dollars

    Sales by Geographical Segments 2013 2012 2011 2010 2009 2008 2013 Japan 74,853 83,761 77,635 61,227 72,337 87,355 $795,887 Americas 77,269 70,056 13,471 10,782 16,696 17,758 821,561 Europe 76,157 76,822 15,022 11,888 20,564 21,417 809,760 East Asia 54,988 39,884 31,705 22,315 33,079 35,185 584,667 South Asia and Oceania 60,483 42,440 25,742 19,332 26,958 28,520 643,098 Inter-segment sales/transfers (4,701) (3,959) (2,787) (2,091) (2,174) (2,717) (49,986)Net sales 339,049 309,004 160,788 123,453 167,460 187,518 3,604,987 Consol idated to non-consolidated ratio(times) 4.95 4.00 2.26 2.21 2.57 2.38

    Millions of YenThousands of U.S.

    Dollars

    Financial Position 2013 2012 2011 2010 2009 2008 2013 Current assets 104,700 93,907 60,883 52,690 47,245 66,558 $1,113,234 Current liabilities 62,113 52,580 22,538 21,462 17,193 32,716 660,421 Equity (Note 2) 63,859 57,708 53,164 51,668 49,501 57,725 678,994 Total equity (Note 3) 93,295 79,558 55,360 53,663 51,249 59,614 991,972 Total assets 173,823 151,115 88,363 81,443 75,733 98,366 1,848,196 Net cash provided by operatingactivities 8,910 2,719 5,675 840 8,213 8,127 94,740 Free cash ows (Note 4) (784) (11,182) 6,970 (796) 4,394 5,255 (8,331)

  • Annual Report 2013 37

    3

    Yen U.S. Dollars

    Per Share Data 2013 2012 2011 2010 2009 2008 2013 Basic net income(Note 5) 26.53 59.91 85.85 36.63 25.68 172.43 $0.282 Cash dividends (full year) (Note 5) 18.00 20.00 18.00 16.00 18.00 20.00 0.191 Net assets (Note 5) 1,514.34 1,368.47 1,260.69 1,225.21 1,173.84 1,368.84 16.101

    %

    Key Ratios 2013 2012 2011 2010 2009 2008 Gross profit to net sales 15.4 16.7 22.6 25.4 23.2 24.4 Operating income to net sales 0.5 2.0 3.1 1.9 2.7 5.4 Cost of sales to net sales 84.6 83.3 77.4 74.6 76.8 75.6 Selling, general and administrative expenses to net sales 14.9 14.7 19.5 23.5 20.4 19.0 Net income to net sales 0.3 0.8 2.3 1.3 0.6 3.9 Return on equity (ROE) 1.8 4.6 6.9 3.1 2.0 13.4 Net income to total assets 0.7 2.1 4.3 2.0 1.2 7.7 Asset turnover (times) 2.0 2.6 1.9 1.6 1.9 2.0 Equity ratio (Note 5) 36.7 38.2 60.2 63.4 65.4 58.7

    Other Year-End Data 2013 2012 2011 2010 2009 2008 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 andhave been made at the rate of 94.05 to $1, the approximate rate of exchange at March 31, 2013.

    2. Equity (63,859 mill ion in 2013) = total equity - minority interests.

    3. From the fiscal year ended March 31, 2007, total equity includes minority interests in accordance with the enforcement of Japan's CorporateLaw.

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

    5. The above figures included treasury stock of 50,236 shares in 2008, 50,212 shares in 2009, 50,296 shares in 2010, 50,734 shares in 2011,50,862 shares in 2012 and 50,958 shares in 2013.

  • Yusen Logistics Co., Ltd.38

    Managements Discussion and Analysis

    The economic environment in fiscal 2012, the year ended March 31, 2013, saw economic sluggishness persist in

    Europe, as highlighted by a negative real GDP growth rate. The U.S. economy, however, moved onto a moderate

    recovery footing on the back of firmer consumer spending and steady capital investment spurred by a job market

    recovery, and other factors.

    In Asia, Chinas GDP improved as a result of government economic policies. However, Asia as a whole lacked vigor,

    with varied economic conditions across the region. Japan, meanwhile, saw only a gentle economic recovery as the

    yen weakened due to quantitative easing and other policy measures implemented after the change of government.

    Amid global contraction, the international logistics market was generally lackluster, with softness most notable in the

    air freight forwarding sector for cargo originating from Asia, including Japan, and bound for Europe.

    Under these conditions, the YLK Group recorded much higher sales year on year in its logistics and ocean freight

    forwarding businesses due to the integration with Nippon Yusen Kabushiki Kaisha logistics businesses. However, the

    YLK Group underperformed compared with its initial plans. Furthermore, growth in freight volumes handled decreased

    compared with initial plans, reflecting the market conditions.

    In fiscal 2012, consolidated net sales increased 9.7% year on year to 339,049 million (US$3,604 million), reflecting

    mainly higher volumes handled in ocean freight forwarding and the business integration. However, operating income

    dropped 73.6% year on year to 1,659 million (US$17 million) due to a decline in volumes handled in air freight

    forwarding and lower profitability in ocean freight forwarding.

    As of March 31, 2013, the Yusen Logistics Group (YLK Group) comprised Yusen Logistics Co., Ltd. (the Company),

    Nippon Yusen Kabushiki Kaisha (parent company), 68 consolidated subsidiaries and 5 equity-method affiliates. The

    YLK Groups major business activities are the cargo business and the travel business, which the YLK Group is

    developing globally.

  • Annual Report 2013 39

    The YLK Group is currently implementing the GO FORWARD, Yusen Logistics medium-term business plan, which

    was launched in fiscal 2011.

    In terms of progress, in April 2012 the consolidation of local companies in China and Malaysia completed the

    integration of overseas logistics businesses with Nippon Yusen Kabush ki Kaisha. The establishment of subsidiaries in

    Bangladesh, Turkey and elsewhere was another highlight of the year under review. In addition, the Company

    expanded logistics businesses in South Asia & Oceania. Moreover, the Company strove to deepen integration of the

    whole group through human resource development of local staff.

    In terms of numerical targets, on April 27, 2012, the Company revised its targets. Furthermore, on April 30, 2013, the

    Company revised the final-year targets for the year ending March 31, 2014, in light of market conditions. The Company

    is now forecasting net sales of \400.0 billion, ordinary income of \4.8 billion and net income of \1.5 billion for the final

    year of the current medium-term business plan.

    FY2011 FY2012 FY2013

    Targets Actual Revised Targets Actual Revised Targets

    Net Sales 355,000 309,004 370,000 339,049 400,000

    Ordinary Income 11,500 7,485 9,500 2,744 4,800

    Net Income 5,200 2,526 5,000 1,119 1,500

    Performance Targets (Consolidated)

    FY2011 FY2012 FY2013

    Targets Actual Revised Targets Actual Revised Targets

    Ocean Freight (Exports) 510,000 TEU 450,000 TEU 640,000 TEU 550,000 TEU 650,000 TEU

    Air Freight (Exports) 400,000 ton 350,000 ton 420,000 ton 310,000 ton 330,000 ton

    Handling Targets (YLK Group Total)

  • Yusen Logistics Co., Ltd.40

    As of March 31, 2013, total assets amounted to 173,823 million (US$1,848 million), up 22,708 million, or 15.0%,

    year on year. This change mainly reflected increases in the total of cash and cash equivalents and time deposits of

    1,477 million, trade notes and accounts receivable of 8,702 million, and total property, plant and equipment of

    11,862 million, which outweighed a decrease of 1,818 million in total investments and other assets.

    Total liabilities were 80,528 million (US$856 million), up 8,971 million, or 12.5%, year on year. The main factors

    were a 2,481 million increase in trade notes and accounts payable, and a 5,275 million increase in other current

    liabilities.

    Total equity amounted to 93,295 million (US$991 million), mainly due to an increase in retained earnings and a

    decrease in the negative amount of foreign currency translation adjustments. The equity ratio was 36.7%.

    Net cash provided by operating activities increased by 6,191 million year on year to 8,910 million (US$94 million).

    The main factors were income before income taxes and minority interests of 4,074 million, down 2,599 million year

    on year; depreciation and amortization of 4,899 million, up 627 million; a decrease in trade notes and accounts

    receivable of 3,961 million, compared with a 4,132 million increase in the previous fiscal year; and an increase in

    othernet of 4,023 million, compared with a decrease of 1,855 million in the previous fiscal year. On the other

    hand, there was a 4,684 million decrease in trade notes and accounts payable, 3,932 million more than the

    decrease in the previous fiscal year; and income taxes paid of 1,928 million, which was 1,009 million less year on

    year.

  • Annual Report 2013 41

    The Company recognizes the return of profits to shareholders as one of its top priorities. The Companys policy is to

    offer a stable dividend within the limits set by business results. The Companys basic policy is also to steadily raise

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

    Based on the above policy, the Company decided to set the year-end dividend at 9 per share. This will bring the

    annual dividend to 18 per share, including the 9 per share interim dividend paid on December 5, 2012. For fiscal

    2013, the Company plans to pay a dividend of 18 per share, provided its results are in line with its consolidated

    earnings forecast.

    Net cash used in investing activities was 9,694 million (US$103 million), down 4,207 million year on year. The main

    uses of cash were 2,362 million for payments into time deposits, up 435 million year on year; 8,274 million for

    purchase of property, plant and equipment, up 5,035 million year on year; and 2,112 million for purchase of

    subsidiaries shares. Cash was mainly provided by proceeds from withdrawal of time deposits of 2,005 million, down

    762 million year on year, and 1,043 million from proceeds from sale of property, plant and equipment, up 430

    million year on year.

    Financing activities used net cash of 1,049 million (US$11 million), compared with 2,149 million provided in the

    previous fiscal year. This mainly reflected cash used of 1,444 million for the repayment of long-term debt, 45 million

    more year on year, and cash used of 802 million for cash dividends paid, down 1 million year on year. On the other

    hand, cash of 1,397 million was provided by a net increase in short-term loans payable, up 609 million year on

    year.

    Cash and cash equivalents at March 31, 2013 were 24,467 million (US$260 million), up 821 million from March 31,

    2012. This was the result of the aforementioned changes as well as the impact of foreign currency translation

    adjustments on cash and cash equivalents.

  • Yusen Logistics Co., Ltd.42

    Financial Statements

    Consolidated Balance Sheet

    sen Logistics Co., Lt . and

    Millions of Yen

    Thousands ofU.S. Dollars

    (Note 1) ASSETS 2013 2012 2013

    CURRENT ASSETS: Cash and cash equivalents (Note 10) 24,467 23,646 $ 260,147 Time deposits (Note 10) 1,719 1,063 18,281 Trade notes and accounts receivable (Note 10) 70,539 61,837 750,017 Deferred tax assetscurrent (Note 8) 1,392 1,471 14,804 Other current assets 7,507 6,868 79,814 Allowance for doubtful accounts (924) (978) (9,829)

    Total current assets 104,700 93,907 1,113,234

    PROPERTY, PLANT AND EQUIPMENT: Land 16,382 13,020 174,180 Buildings and structures 42,042 35,852 447,016 Furniture and fixtures 13,462 10,116 143,143 Machinery, equipment and vehicles 19,585 13,118 208,238 Construction in progress 1,953 173 20,762 Total 93,424 72,279 993,339 Accumulated depreciation (41,796) (32,513) (444,401)

    Total property, plant and equipment 51,628 39,766 548,938

    INVESTMENTS AND OTHER ASSETS: Investments in securities (Notes 4 and 10) 861 876 9,156 Investments in unconsolidated subsidiaries and affiliate companies 2,351 3,001 24,996 Goodwill 3,054 2,881 32,470 Deposits 2,730 2,447 29,026 Deferred tax assetsnon-current (Note 8) 2,328 2,546 24,752 Other assets 6,171 5,691 65,624

    Total investments and other assets 17,495 17,442 186,024

    TOTAL 173,823 151,115 $1,848,196

    Yusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2013 and 2012

  • Annual Report 2013 43

    Millions of Yen

    Thousands ofU.S. Dollars

    (Note 1) LIABILITIES AND EQUITY 2013 2012 2013

    CURRENT LIABILITIES: Trade notes and accounts payable (Note 10) 32,747 30,266 $ 348,191 Short-term loans payable (Notes 5 and 10) 2,393 512 25,446 Current portion of long-term debt (Notes 5 and 10) 1,090 893 11,594 Accrued income taxes (Note 10) 892 1,212 9,490 Accrued bonuses to employees 2,047 2,048 21,760 Provision for alleged antitrust law violation 1,451 1,268 15,428 Deferred tax liabilitiescurrent (Note 8) 139 350 1,477 Other current liabilities 21,354 16,031 227,035

    Total current liabilities 62,113 52,580 660,421

    LONG-TERM LIABILITIES: Long-term debt (Notes 5 and 10) 13,004 12,302 138,269 Accrued pension and severance costs for: Employees (Note 6) 4,011 4,046 42,650 Directors and audit & supervisory board members 467 383 4,969 Provision for alleged Anti-Monopoly Act violation 1,728 Deferred tax liabilitiesnon-current (Note 8) 345 304 3,671 Other long-term liabilities 588 214 6,244

    Total long-term liabilities 18,415 18,977 195,803

    EQUITY (Notes 7 and 16): Common stock, no par value authorized; 160,000,000 shares in 2013 and 2012, issued; 42,220,800 shares in 2013 and 2012 4,301 4,301 45,731 Capital surplus 4,733 4,733 50,326 Retained earnings 57,025 56,456 606,324 Treasury stockat cost; 50,958 shares in 2013 and 50,862 shares in 2012 (69) (69) (734) Accumulated other comprehensive income Unrealized gain on available-for-sale securities 87 154 923 Pension liability adjustment of foreign consolidated subsidiaries (50) Deferred gains or losses on hedges (7) (78) Foreign currency translation adjustments (2,211) (7,817) (23,498) Total 63,859 57,708 678,994 Minority interests in consolidated subsidiaries 29,436 21,850 312,978

    Total equity 93,295 79,558 991,972

    TOTAL 173,823 151,115 $ 1,848,196

    See notes to consolidated financial statements.

  • Yusen Logistics Co., Ltd.44

    Consolidated Statement of Income

    Yusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2013 and 2012

    sen Logistic Co., Ltd and Cons Cons lida ed S at en Income

    d h , 2

    Millions of Yen

    Thousands ofU.S. Dollars

    (Note 1) 2013 2012 2013

    NET SALES 339,049 309,004 $ 3,604,987

    COST OF SALES 286,734 257,296 3,048,742

    Gross profit 52,315 51,708 556,245

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 13) 50,656 45,436 538,608

    Operating income 1,659 6,272 17,637

    OTHER INCOME (EXPENSES): Interest and dividend income 270 255 2,877 Interest expense (265) (285) (2,823) Foreign currency exchange gainnet 520 508 5,531 Equity in earnings of unconsolidated subsidiaries and affiliate companies 229 657 2,431 Compensation for accidents (91) (968) Gain on negative goodwill 1,314 498 13,966 Loss on revaluation of investments in securities (35) (17) (368) Loss on cancellation of leasehold contracts (79) (842) Loss on abolishment of retirement benefit plan (Note 6) (111) (1,180) Loss related to competition law case (33) Provision for alleged antitrust law violation (1,268) Othersnet 663 86 7,057

    Other income (expense)net 2,415 401 25,681

    INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS 4,074 6,673 43,318

    INCOME TAXES (Note 8): Current 1,740 2,299 18,495 Deferred (135) 663 (1,431)

    Total income taxes 1,605 2,962 17,064

    NET INCOME BEFORE MINORITY INTERESTS 2,469 3,711 26,254

    MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 1,350 1,185 14,358

    NET INCOME 1,119 2,526 $ 11,896

    Yen U.S. Dollars

    PER SHARE: Basic net income per share (Note 16) 26.53 59.91 $ 0.282 Cash dividends 18.00 20.00 0.191

    See notes to consolidated financial statements.

  • Annual Report 2013 45

    Consolidated Statement of Comprehensive Income

    Yusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2013 and 2012

    sen Logistic Co., Ltd and Consolidated Subsid Conso ida ed S eme t o Comprehensive Inco

    h 3 , 2

    Millions of Yen

    Thousands ofU.S. Dollars

    (Note 1) 2013 2012 2013

    NET INCOME BEFORE MINORITY INTERESTS 2,469 3,711 $ 26,254

    OTHER COMPREHENSIVE INCOME: Unrealized gain (loss) on available-for-sale securities (67) 12 (714) Deferred gains or losses on hedges (16) (169) Foreign currency translation adjustments 9,171 (88) 97,522 Share of other comprehensive income in associates 253 (176) 2,693 Pension liability adjustment of foreign consolidated subsidiaries 99 (64) 1,048 Gain or loss on change in equity 65 3,309 687 Total other comprehensive income(loss) (Note 14) 9,505 2,993 101,067 COMPREHENSIVE INCOME 11,974 6,704 $ 127,321

    TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the parent 6,884 5,413 $ 73,203 Minority interests 5,090 1,291 54,118

    See notes to consolidated financial statements.

  • Yusen Logistics Co., Ltd.46

    Consolidated Statement of Changes in Equity

    Yusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2013 and 2012

    sen Logistics Co., Ltd. and Conso idated S Co so ida ed me o anges in qui y

    Thousands

    Outstanding Number of Shares of Common

    Stock

    Common Stock

    Capital Surplus

    RetainedEarnings

    TreasuryStock

    BALANCE, MARCH 31, 2011 42,170 4,301 4,812 51,375 (69) Change by transfer of business (79) Net income for the year ended March 31, 2012 2,526 Cash dividends (19.0 per share) (801) Purchase of treasury stock (0 ) (0) Adjustment of retained earnings for newly consolidated subsidiaries 53 Gain or loss on change in equity 3,309 Other (6) Net change in the year BALANCE, MARCH 31, 2012 42,170 4,301 4,733 56,4 (69) Net income for the year ended March 31, 2013 1,119 Cash dividends (19.0 per share) (801) Purchase of treasury stock (0 ) (0) Adjustment of retained earnings for newly consolidated subsidiaries 154 Gain or loss on change in equity 85 Other 12 Net change in the year BALANCE, MARCH 31, 2013 42,170 4,301 4,733 57,025 (69)

    Common Stock

    Capital Surplus

    RetainedEarnings

    TreasuryStock

    BALANCE, MARCH 31, 2012 $ 45,731 $ 50,326 $ 600,269 $ (733)

    Net income for the year ended March 31, 2013 11,896 Cash dividends ($0.202 per share) (8,519) Purchase of treasury stock (1 )

    Adjustment of retained earnings for newly consolidated subsidiaries 1,642

    Gain or loss on change in equity 899 Other 137 Net change in the year

    BALANCE, MARCH 31, 2013 $ 45,731 $ 50,326 $ 606,324 $ (734)

    See notes to consolidated financial statements.

  • Annual Report 2013 47

    Millions of Yen

    Accumulated Other Comprehensive Income

    Unrealized Gain (loss) on

    Available-for-sale Securities

    Pension Liability Adjustment of

    Foreign Consolidated Subsidiaries

    Deferred Gains or

    Losses on Hedges

    Foreign Currency

    Translation Adjustments Total

    Minority Interests in

    ConsolidatedSubsidiaries

    Total Equity

    142 (7,397) 53,164 2,196 55,360 (79) (79) 2,526 2,526 (801) (801) (0) (0) 53 53 3,309 3,309 (6) (6) 12 (50) (420) (458) 19,654 19,196

    154 (50) (7,817) 57,708 21,850 79,558 1,119 1,119 (801) (801) (0) (0) 154 154 85 85 12 12 (67) 50 (7) 5,606 5,582 7,586 13,168

    87 (7) (2,211) 63,859 29,436 93,295

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

    Unrealized Gain (loss) on

    Available-for-saleSecurities

    Pension Liability Adjustment of

    Foreign Consolidated Subsidiaries

    Deferred Gains or

    Losses on Hedges

    Foreign Currency

    Translation Adjustments Total

    Minority Interests in

    ConsolidatedSubsidiaries

    Total Equity

    $1,637 $ (534) $ $ (83,107) $ 613,589 $ 232,327 $ 845,916

    11,896 11,896 (8,519) (8,519) (1) (1)

    1,642 1,642

    899 899 137 137 (714) 534 (78) 59,609 59,351 80,651 140,002

    $ 923 $ $ (78) $ (23,498) $ 678,994 $ 312,978 $ 991,972

  • Yusen Logistics Co., Ltd.48

    Consolidated Statement of Cash Flows

    Yusen Logistics Co., Ltd. and Consolidated SubsidiariesMarch 31, 2013 and 2012

    sen Logistic Co., Ltd and Consolid Cons lidated Stat men o Cas Flows

    d h , 2

    Millions of Yen

    Thousands ofU.S. Dollars

    (Note 1) 2013 2012 2013

    OPERATING ACTIVITIES: Income before income taxes and minority interests 4,074 6,673 $ 43,318 Adjustment for: Depreciation and amortization 4,899 4,272 52,089

    Amortization of goodwill and gain on negative goodwill (552) 89 (5,865) Increase (decrease) in accrued pension and severance costs (169) 216 (1,794) Interest and dividend income (270) (255) (2,877) Interest expense 265 285 2,823 Loss (gain) on foreign currency exchange, net (43) 49 (457) Equity in earnings of unconsolidated subsidiaries and affiliate companies (229) (657) (2,431) Decrease (increase) in trade notes and accounts receivable 3,961 (4,132) 42,118 Increase (decrease) in trade notes and accounts payable (4,684) (752) (49,804) Loss on sale of property, plant and equipment, net (325) (13) (3,459) Loss (gain) on sale of investments in securities (65) (38) (696) Loss on revaluation of investments in securities 35 17 368 Increase (decrease) in allowance for doubtful accounts (211) 238 (2,247) Increase in provision for alleged antitrust law violation 1,268 Othernet 4,052 (1,674) 43,089 Total 10,738 5,586 114,175 Interest and dividend received 373 356 3,968 Interest paid (273) (286) 2,906) Income taxes paid (1,928) (2,937) (20,497)

    Net cash provided by operating activities 8,910 2,719 94,740

    INVESTING ACTIVITIES: Payments into time deposits (2,362) (1,927) (25,113) Proceeds from withdrawal of time deposits 2,005 2,767 21,316 Purchase of property, plant and equipment (8,274) (3,239) (87,971) Proceeds from sale of property, plant and equipment 1,043 613 11,087 Purchase of investments in securities (961) (181) (10,213) Proceeds from sale of investments in securities 67 54 713 Lending of loans receivable (99) (183) (1,053) Collection of loans receivable 56 1,212 Purchase of investments in subsidiaries (2,112) (22,458)

    Purchase of investments in subsidiaries resulting in change in scope of consolidation (Note 3) (39) (10,567) (418) Proceeds from purchase of investments in subsidiaries resulting in change in scope of consolidation 458 4,873 Proceeds from purchase of investments in capital of subsidiaries resulting in change in scope of consolidation 392 4,165

    Payments for transfer of business (2,282) Othernet 132 (168) 1,403

    Net cash (used in) provided by investing activities (9,694) (13,901) (103,071)

    FORWARD (784) (11,182) $ (8,331)

  • Annual Report 2013 49

    Millions of Yen

    Thousands ofU.S. Dollars

    (Note 1) 2013 2012 2013

    FORWARD (784) (11,182) $ (8,331)

    FINANCING ACTIVITIES: Short-term loans payable, net 1,397 788 14,857 Proceeds from long-term loans payable 862 4,000 9,164 Repayment of long-term debt (1,444) (1,399) (15,358) Repayment of obligations under finance lease (302) (233) (3,215) Cash dividends paid (802) (803) (8,529) Cash dividends paid to minority shareholders (756) (192) (8,038) Othernet (4) (12) (38)

    Net cash provided by financing activities (1,049) 2,149 (11,157)

    FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 2,347 (207) 24,958

    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 514 (9,240) 5,470

    CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 23,646 25,089 251,414

    CASH AND CASH EQUIVALENTS OF NEWLY CONSOLIDATED SUBSIDIARIES, BEGINNING OF YEAR 94 180 1,000

    INCREASE IN CASH AND CASH EQUIVALENTS RESULTING FROM MERGER 213 7,617 2,263

    CASH AND CASH EQUIVALENTS, END OF YEAR 24,467 23,646 $ 260,147

    See notes to consolidated financial statements.

  • Yusen Logistics Co., Ltd.50

    Notes to Consolidated Financial Statements

    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 2012 financial statements to conform to the classifications used in 2013.

    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 94.05 to $1, the approximate rate of exchange at March 31, 2013. 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. ConsolidationThe consolidated financial statements as of March 31, 2013 include the accounts of the Company and its 68 significant (56 in 2012) subsidiaries (together, the "Group") listed below:

    Consolidated Subsidiaries Equity Ownership

    Percentage*1 Capital Stock*1

    Yusen Logistics (Americas) Inc. 51.00% USD 70,976 thousandYusen Logistics (Hong Kong) Limited 100.00 HKD 55,000 thousandYusen Air & Sea Service (China) Ltd. 100.00*2 HKD 11,000 thousandYusen Logistics (Singapore) Pte. Ltd. 79.30 SGD 16,950 thousandYusen Logistics (Benelux) B.V. 100.00*3 EUR 50 thousandYusen Logistics (Deutschland) GmbH. 100.00*3 EUR 2,638 thousandYusen Air & Sea Service (U.K.) Ltd. 100.00*3 GBP 1,050 thousandYusen Logistics (Australia) Pty. Ltd. 50.97*4 AUD 15,478 thousandYusen Logistics (Canada) Inc. 100.00 CAD 5,000 thousandYusen Logistics (France) S.A.S. 100.00*3 EUR 14,185 thousandYusen Logistics (Taiwan) Ltd. 95.30*5 TWD 157,398 thousandYusen Air & Sea Service (Beijing) Co., Ltd. 100.00*2 CNY ,312 thousandYusen Logistics (Italy) S.P.A. 100.00*3 EUR 3,326 thousandP.T. Yusen Logistics Indonesia 67.62*6 USD 3,048 thousandYusen Logistics (Europe) B.V. 53.69 EUR 34,493 thousandYusen Logistics (Korea) Co., Ltd. 100.00 KRW 2,000 million Shanghai Yusen Freight Service Co.,Ltd. 100.00*2 CNY 16,457 thousandYusen Air & Sea Service Management (Thailand) Co., Ltd. 95.00*7 THB 10 million Yusen Air & Sea Service (Thailand) Co., Ltd. 100.00*8 THB 100 million Yusen Logistics International (Vietnam) Co., Ltd. 49.00*9 USD 600 thousandYusen Logistics Philippines, Inc. 51.00 PHP 500,000 thousandYusen Air & Sea Service (Guangdong) Ltd. 100.00*2 CNY 8,009 thousandYusen Logistics (India) Ltd. 51.00*10 INR 594 million Yusen Air & Sea Service Logistics (Shanghai) Co., Ltd. 100.00*2 CNY 5,380 thousandYusen Air & Sea Service Logistics (Suzhou) Co., Ltd. 100.00*2 CNY 6,844 thousandETA TOO, INC 100.00*11 USD 0 Yusen Logistics Transporte S.A.de C.V 100.00*12 MXN 50 thousandBRUNI INTERNATIONAL DE MEXICO, S.A.DE C.V. 100.00*13 MXN 350 thousand

  • Annual Report 2013 51

    Consolidated Subsidiaries

    EquityOwnership

    Percentage*1 Capital Stock*1

    Yusen Logistics (UK) Ltd. 100.00*3 GBP 44,130 thousandYusen Logistics (Iberica) S.A. 100.00*3 EUR 585 thousandYusen Logistics (Polska) Sp.z o.o. 100.00*3 PLN 2,400 thousandYusen Logistics (Hungary) KFT. 100.00*3 HUF 12,420 thousandYusen Logistics (Edam) B.V. 100.00*14 EUR 18 thousandYusen Logistics (Belgium) N.V. 100.00*14 EUR 16,345 thousandYusen Logistics (Czech) s.r.o. 100.00*3 CZK 431,729 thousandYusen Logistics Solutions (Vietnam) Co., Ltd. 49.00*9 VND 6,375 million NANHAI BUSINESS SOLUTIONS PTE LTD. 100.00*15 SGD 100 thousandNYK LOGISTICS (AUSTRALIA) PTY. LTD. 100.00*16 AUD 15,550 thousandYusen Logistics & Kusuhara Lanka (Pvt.) Ltd. 51.00 LKR 6,500 thousandYusen Logistics RUS LLC 100.00*3 RUB 289 thousandYusen Logistics Center,Ltd. 100.00*17 PHP 12,500 thousandYusen Logistics (Thailand) Co., Ltd. 87.80*18 THB 70,000 thousandPT. Puninar Yusen Logistics Indonesia 51.00 USD 10,000 thousandYusen Logistics Do Brasil Ltda. *23 61.88 BRL 14,492 thousandYusen Logistics (China) Co.,Ltd. *24 51.00 CNY 158,047 thousandPT. Yusen Logistics Solutions Indonesia*24 51.00 USD 5,100 thousandTASCO Berhad*25 51.00*19 MYR 100,000 thousandBaik Sepakat Sdn Bhd*24 100.00*20 MYR 100 thousandTunas Cergas Logistik Sdn Bhd*24 100.00*20 MYR 100 thousandEmulsi Teknik Sdn Bhd*24 100.00*20 MYR 100 thousandTASCO Express Sdn Bhd*24 100.00*20 MYR 100 thousandMaya Kekal Sdn Bhd*24 100.00*20 MYR 2 Precious Fortunes Sdn Bhd*24 100.00*20 MYR 8,000 thousandTrans-Asia Shipping Pte Ltd*24 100.00*20 SGD 100 thousandPiala Kristal (M) Sdn Bhd*24 51.22*21 MYR 205 thousandOmega Saujana Sdn Bhd*24 51.22*21 MYR 205 thousandYusen 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*22 JPY 50 million Yusen Loginet Co., Ltd. 100.00 JPY 20 million

    *1 as of March 31, 2013 *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 57.2% 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 51.00% by Yusen Air & Sea Service Management (Thailand) Co., Ltd., 49.00% by Yusen Logistics (Singapore) Pte. Ltd. *9 owned 49.00% by Yusen Logistics (Singapore) Pte. Ltd. *10 owned 31.53% by the Company, 19.47% by Yusen Logistics (Singapore) Pte. Ltd. *11 owned 100.00% by Yusen Logistics (Americas) Inc. *12 owned 50.00% by Yusen Logistics (America) Inc., 50.00% by ETA TOO, INC. *13 owned 99.71% by Yusen Logistics (Americas) Inc., 0.29% by Yusen Logistics Tranporte S.A.de C.V. *14 owned 100.00% by Yusen Logistics (Benelux) B.V. *15 owned 100.00% by Yusen Logistics (Singapore) Pte. Ltd. *16 owned 100.00% by Yusen Logistics (Australia) Pty. Ltd. *17 owned 100.00% by Yusen Logistics Philippines, Inc. *18 owned 33.46% by the Company, 10.80% by Yusen Air & Sea Service Management (Thailand) Co., Ltd. *19 owned 27.01% by the Company, 23.99% by Yusen Logistics (Singapore) Pte. Ltd.

  • Yusen Logistics Co., Ltd.52

    *20 owned 100.00% by TASCO Berhad *21 owned 51.22% by TASCO Berhad *22 owned 99.17% by Yusen Travel Co., Ltd. *23 became newly consolidated companies since materiality has increased *24 became newly consolidated companies as the result of the reorganization and integration of the logistics businesses that

    have been conducted by the Company and Nippon Yusen Kabushiki Kaisha (NYK LINE) (head office: Chiyoda-ku, Tokyo, Japan; president: Yasumi Kudo) (hereinafter "NYK").

    *25 became newly consolidated company as the result of the additional acquisition of the stock.

    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.

    Agate Electro Supplies Sdn Bhd became an affiliate company as a result of the acquisition of the stock and was included in the scope of the companies accounted for by equity method from this year. TASCO Berhad was excluded from the scope of the companies accounted for by equity method since it became a newly consolidated company as the result of the additional acquisition of the stock.

    Investments in three (three in 2012) unconsolidated subsidiaries and two (two in 2012) affiliate companies are accounted for by the equity method. Investments in the remaining unconsolidated subsidiaries and affiliate 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 for Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial

    StatementsIn 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 Combi