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Messages from CEO and COO

Principles passed down through the generations

Our history started back in March 1957, when we carried out walk-in sales to find customers. We took packages to Osaka that we collected in Kyoto, and on the way back we brought packages that we collected in Osaka. We made several such round-trips in a day. By visiting each customer and communicating every day, we built mutual trust. Customers valued our passion and sincerity and started to give us business. By working closely with customers and addressing their requests in delivering packages, our company expanded nationwide.

Since our inception we have always put priority on knowing customers' needs and providing the services they desire. This is called Hikyaku no Kokoro (messenger's spirit) and is embodied in our vision "Trust, Create and Challenge." This concept is still alive today in various projects such as the cross-functional sales team "GOAL." In addition to delivering packages, we always consider what we can do for customers, create solutions and pursue challenges – this is what drives our actions.

Towards "Second Stage 2021"

The situation surrounding our group is changing rapidly. A workforce shortage and tight labor market have continued due to the decrease in the working population. The growth of the EC market has altered the domestic express package delivery market as well as the supply chain. In addition, cross-border economic activities have increased in line with the growth of Asian markets. All these factors accelerated customers' needs for more sophisticated and diverse services. Although issues remain to be solved, we see new opportunities where we can potentially add value.

The previous Mid-Term Management plan "First Stage 2018" was a major turning point for us. The so-called "Takuhai Crisis (delivery crisis)" captured public attention, and this changed the perception of the express package delivery industry.

In December 2017, we successfully completed our listing on the First Section of the Tokyo Stock Exchange. I greatly appreciate the expectations of society in us, and recognize the importance of maintaining sustainable growth of the group.

With the change of the name of the era from Heisei to Reiwa and the start of a new generation, we commenced the new Mid-term Management Plan "Second Stage 2021." Towards achieving our long-term vision to "Become Asia's leading comprehensive logistics group," we are implementing this new Mid-term Management Plan together as a group under a new leadership. Retaining our founding spirit as the core, we will keep providing eternal value while flexibly adapting to the rapidly changing environment. As a provider of social infrastructure, we fulfill our responsibilities. We aim to become a group that is chosen by society. We hope you will continue to support us in these efforts.

Eiichi Kuriwada
Chairperson and CEO
SG HOLDINGS CO., LTD.

Message from the President

To our valued shareholders:

It is an honor and privilege to take this important role as President of SG Holdings on April 1, 2019. We are committed to providing value and meeting the expectations of our stakeholders. Our priority is to grow the business and achieve our long-term vision to "Become Asia's Leading Comprehensive Logistics Group."

Three years of expanding resources

We focused on expanding our resources during "First Stage 2018." We added members to the GOAL team to increase sales activities, and the team provided higher value-added services including TMS.

During the past three years of the business alliance with Hitachi Transport System (HTS), we have seen steady results of the major project to integrate delivery and logistics into a comprehensive service. The scope of our services has grown wider through various efforts, helping to solve the issues faced by our customers.

Our continuous efforts on appropriate pricing made progress thanks to the understanding of our customers. We also expanded management resources which are critical for sustainable growth. Major actions taken include an increase in personnel, enhancement of the delivery network and workstyle reforms.

During the fiscal year ending March 31, 2019 we continued our focus on high value-added services as well as appropriate pricing. EC market expansion increased demand for the express package delivery service. While enhancing the delivery network, we have maintained service quality and increased the number of packages handled slightly from Q3 FY2018. Going forward, service quality remains our top priority and we will endeavor to respond to customers' needs while monitoring the progress of the network enhancement.

Regarding financial performance, we increased both operating revenue and operating income. Operating revenue was 1,118.0 billion yen and operating income was 70.3 billion yen, both exceeding the targets we announced in May 2017.

Three years of enhancing businesses and management platform

The new Mid-term Management Plan "Second Stage 2021" will guide us through a critical time as we enhance the management platform that is necessary for sustainable growth while continuing our focus on high value-added services through the group's comprehensive approach and appropriate pricing. By combining services and expertise within the group such as "GOAL®," we will address issues more widely and deeply in the overall supply chains of customers.

Overseas, we will enhance our presence in the global logistics market by building up the freight forwarding business centered on Expolanka in Sri Lanka and developing business in growth areas such as cross-border EC.

Regarding investments, we will invest in the large transfer center and IT and other technologies to strengthen the business platform and raise productivity.

To survive the severe competition in today's rapidly changing world, the power of our people is essential. Our objective is to become a company where our people grow together with the company in a friendly and rewarding environment. In addition, we will contribute to achieving the objectives of the SDGs as part of our responsibility as an infrastructure provider in logistics. Through our business, we wish to help build a sustainable society, and thus also increase our corporate value. This effort will help us obtain the support of our stakeholders.

We hope you will continue to support us in these efforts.

Hideo Araki
President and COO
SG HOLDINGS CO., LTD.

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