The global economy has been undergoing an unparalleled paradigm shift ever since the Lehman Brothers Crisis in 2008. The rapid proliferation of new technologies and products has created an increasingly commoditized economy in which the “first-mover advantage” no longer applies. As technologies and products merge between sectors to create new markets, we are also seeing a major shift towards a more “borderless” economy.

Under these circumstances, we have resolved to achieve regrowth and sustainable development and have accelerated the three types of innovation highlighted in our Basic Management Policy - products, processes and personnel. For the 76th period (fiscal year ending March 2014), we consider that the most important issues are restoring consolidated net sales of ¥30 billion, which is one of the Medium-Term Management Targets, and pushing full steam ahead with the reform of the profit structure toward the achievement of "Minimum 8."

In addition, we will focus on comprehensive initiatives for corporate social responsibility (CSR) based on the understanding that we must fulfill CSR at a higher level as an enterprise that carries out global business. These initiatives include the protection of human rights and information protection, building on our past work in these areas, as well as existing efforts related to the environment and compliance.

<Medium-Term Management Targets>
We have set out the following Medium-Term Management Targets for the Yokowo Group.

• Restore consolidated net sales of ¥30 billion as soon as possible and reestablish growth
• “Minimum 8”
  Secure a sales growth rate, minimum recurring profit margin and return on equity of 8%

<Outline of Medium-Term Management Plan>
To achieve the above targets, we have drawn up a Five-Year Medium-Term Management Plan and intend to implement a range of measures accordingly from the fiscal year ended March 2013 to the fiscal year ending March 2017. The following is a brief outline.

• Medium-Term Management Plan: Companywide basic policy
  We intend to implement reforms with a dual emphasis on corporate growth and profit structure.
  

  1)		Corporate growth We intend to focus on product and process innovations that will drive corporate growth both by steady implementation at the initiative of divisions aiming at the global target markets and by bold revolution through a company-wide project on a cross-divisional basis responding to the diversification of functions and applied technologies of customer products, which is advancing in the global paradigm shift. We also intend to focus on full-scale regrowth based on a multilevel approach to markets and customers, applied technologies and supply chains and the establishment of a multilevel business structure that is able to respond to the rapidly changing business environment.
  2)		Profit structure Having been working to reform our profit structure since our 70th year (fiscal year ended March 2008) in an effort to weather the storm caused by the rapid appreciation of the yen, the global economic downturn and changes to the supply chain, we intend to take measures to the next level by focusing on reforms to our fixed cost structure including the transfer of head office capabilities overseas, cost planning/review/pursuit taking into consideration the sources of variable costs, and reforms to variable cost structures through which the object of the process innovation will be expanded qualitatively from the viewpoint of gaining an understanding of the state of the production systems. In addition, we also intend to implement personnel innovation to secure and train the necessary human resources to oversee global operations. This will make us better equipped to deal with broadening business cycles and increasingly diverse business risks.

• Key Management Policies
  

  1)		Accelerate full-scale product innovation as the basis of our growth strategy
  2)		Implement process innovation as the basis of improved business capabilities
  3)		Implement global personnel innovation
  4)		Expand frontline operations in overseas markets on a cross-divisional basis
  5)		Expand head office capabilities globally and continue to focus on reforms to our fixed and variable cost structure
  6)		Establish Yokowo as a quality brand (attractive quality)
  7)		Reinforce management index monitoring framework

The entire Group is determined to work as a team to implement a range of measures based on the above Medium-Term Management Plan and Key Management Policies.

We hope that we can count on the continued support and guidance of our shareholders.