To our Shareholders and Investors:

The Yamato Group is expanding its Delivery Business, which centers on the Takkyubin service, while creating new value to make the lives of customers more convenient by combining management resources including information technology (IT), logistics technology (LT), and financial technology (FT) functions, and is working to achieve the sustainable growth of the entire Group.

During the fiscal year under review, the business environment remained difficult in the first half, affected by the economic slowdown, production adjustments by companies, and weak consumer spending, but recovered in the second half as reflected by the growth of the mail-order market.

In the Delivery Business, the Group further fine-tuned the Takkyubin network using part-time employees and enhancing the functions of distribution terminals, and provided a new service that helps customers to receive parcels in a stress-free way. As a result of such improvements to service quality and active sales activities, the delivery volumes of both Takkyubin and Kuroneko Mail services increased from the previous fiscal year. Profits also rose due to various productivity improvement measures, to which the Group has given high priority since the previous fiscal year, resulting in further reinforcing our earnings structure.

With respect to the non-delivery businesses, the Yamato Group’s unique business model which offer greater convenience, better business efficiency and cost reductions have delivered strong performances such as by unearthing latent corporate clients’ needs. The business overall, however, was impacted by the economic slump.

As a result, consolidated financial results for the fiscal year under review were as follows. Please note that associated with the accounting change for the freightage payable to airlines from the fiscal year under review, operating revenue and operating expenses decreased 31,756 million yen each while operating income, ordinary income and net income were not affected.

(Millions of yen)

Status of Management Measures

• 1. 
  Based on the medium-term management plan “Create Satisfaction Three-Year Plan” that started from April 2008, the Yamato Group undertakes management measures to contribute to the realization of an affluent society through the creation of new value in the Japanese market and the expansion of the business area to the Asia region.
• 2. 
  In the Japanese market, the Group grew steadily by expanding sales of various business models launched during the previous fiscal year. By continuing in the future to create business models that utilize functions unique to the Yamato Group, the Group aims to reduce distribution costs while providing greater convenience from the viewpoint of end-user customers, and expanding our foundations for growth in the Japanese market.
• 3. 
  As part of the expansion of the business area to the Asia region, the Group launched the Takkyubin service in Shanghai and Singapore in January, providing not only the Yamato Group’s Takkyubin service featuring meticulousness and high quality, but also new value that did not exist overseas, such as “Cool Takkyubin” and “Time Designated Delivery.”
  By providing these services, we are improving convenience for people in the Asian region. We will continue to proactively expand our business areas, thus contributing to the realization of an affluent society in the region.
• 4. 
  As part of measures to improve the investment environment for the shareholders, the Company passed a resolution at its Board of Directors meeting to lower the investment unit. As a result, the share unit has been changed from 1,000 shares to 100 shares. The Company will further improve its share liquidity to enhance shareholder value by expanding the investor base.
• 5. 
  To improve the transparency of remunerations to Directors and Auditors, the Group abolished the conventional bonus payment program and adopted a scheme of performance-linked bonuses, which clarify bonus payments.

We look forward to the continued support and encouragement of our shareholders and investors as we move to mobilize the collective powers of the Yamato Group and enhance our corporate value.

March 2010