Philippine Edition

The President's Report (cont...)

The year 2004 brought us not only financial rewards but prestigious awards as well. For the second year in a row, Yusen Air & Sea Service Phils., Inc. was acknowledged by the Global Cargo Carrier Inc., as the Cargo Forwarder of the Year, the highest award by that organization, apart from the other recognitions received for its excellent capabilities in various aspects of its operations.

For the past 12 years, we have the pleasure of providing our stockholders with returns averaging 23%. We have been on guard on our liquidity position with the empowerment of all sales areas on their own accounts receivable. By maintaining that conservative position on that area of cash management, we have supported our own operations through the years from our own resources and without loans for working capital.

Conservative and innovative, we have posed ourselves in the industry. We have adhered to the basics of freight forwarding and strictly managed our cost both direct and operating. We have localized our management team, which has perfectly attuned to the country’s settings. We have created operational efficiencies - a swift response to the much needed commitment to ever changing service excellence standards, including the most radical innovation of “one for all, all for one”.

Yusen as a network is on its milestone as it celebrates its golden anniversary in 2005. In the message of Mr. Tanaka for 2005, I do quote at this point,

“No company can be at the top in every field of business activity; each has its strengths and its weaknesses, and these must be faced squarely. I believe that the best strategic course for a company is to concentrate on building on its areas of strength in the short term, while at the same time laying the groundwork over the medium-to-long term for a fundamental solution to the problems that the lie behind its weaknesses”

As we braced ourselves in 2005, we build the foundation of our organizational structure, of laying the challenges for the next generations of leaders. It is the foundation that hopefully shall build the talents and character that will fulfill the aspirations of the next 50 years.

With this report, we take the liberty of presenting a 13 year perspective in Yusen Phils. history, in our efforts to highlight the performance growth and development of the “then” and “now”. We try to look at the past so we can live by the present and dream for the future.

Let us not forget the dinosaurs of the earth and the giants of the corporate world that used to roam the earth and rule the world, the strong and mighty ones in the past, but are now gone and extinct because of their inability to cope with the changing environment and challenges that the future presents.

Once again, I thank the men and women of Yusen Air & Sea Service Phils., Inc. , who have unselfishly and without single hesitation labored with me, side by side to face squarely the challenges of 2004.

To the stockholders, clients, partners, thank you very much.

Very Truly Yours,

Arthur P. Tugade

A 13 Year Journey

Last May 24, 2005, Yusen Air & Sea Service Phils., Inc. held its annual stockholders’ meeting. Mr. Genta Oyama, Senior Managing Director of Yusen Air & Sea Service co., Ltd. ( Japan) attended this meeting.

The stockholders’ meeting went on smoothly in the same fashion of the previous years by presenting the performance highlights of the year under review, growth, variances, approval of the previous minutes, election of the board members and officers, passing and approving of various corporate resolutions, and dividends.

This time, however, the management added more depth and meaning to the word performance as they unfolded a report embracing the whole being of the company, Yusen Air & Sea Service Phils., Inc. in its 13 years of existence to all its stakeholders.

Yusen Air & Sea Service Phils., Inc. in its 13^th year in 2005, as it crosses its life’s next threshold, the management took time to reminisce the past for which the company has put indelible mark in the country’s forwarding industry.

Indeed, it is an achievement for a company which started with the simple realities in 1992 of 14 personnel, 3 trucks, 2 telex machines and a ranking in IATA of no 61. The basket of achievements simply keeps on being filled up not only of the consistent double digit annual growth rate and one time triple digit, but by numerous honors and citations as well. To name a few, 2 time GCCI Best Forwarder of the year (2003, 2004), Diamond Award from Philippine Airline, the highest award given by PAL to a forwarder which only Yusen has held since its inception 64 years ago, GGCI Lifetime Achievement Award to our President Arthur P. Tugade for his contribution to the growth of the forwarding industry in the country and other numerous awards from various airlines.

Those achievements have provided us with material rewards and pride, to which we have demonstrated our appreciation though committing ourselves to socially attached initiatives like distribution of goodies to the typhoon devastated areas of Infanta Quezon, monthly tutorials to the street children of Pandacan, sharing precious blood through the blood letting activity in coordination with the Phil National Red Cross, sharing the vision of the habitat for humanity group with our donation and our labor though totally unskilled in carpentry and caring for our ecosystem through tree planting at the La Mesa Watershed.

We have given operational efficiencies paramount importance. Check and balance measures have been instituted to ensure cargo handling efficiency like cargo marshaling report, photo and video taking of all the cargoes, installing the state of the art navigational system - GPS on our trucks and providing a warehouse, being worked out for TAPA certification, as it is equipped with CCTV cameras and placed stringent security policies.

There’s still quite a number in the list, but what is important to note is that all of them did not come easy to the management and staff of Yusen Air & Sea Service Phils., Inc., who had endured the difficult days and sleepless nights to ensure that cargoes were all taken cared of to the least specific instructions and clients are all contented and worry-free.

The management has taken the step to look back at the past, so that its lessons will be learned and ingrained in our minds; not a way to live in the past but to make the past serve as an impetus that will take us off to the altitude we wish for tomorrow.

By: Cita B. Tan / Division Manager-Corp. Affairs, Finance and Accounting

Resolution of Gratitude

Yusen Phils. has successfully met the challenges through the years not only through the hard work, dedication and teamwork of its Management and staff, but also through the help and inspiration of a great number of people in the network. Three of them, as they opted for a less active involvement in Yusen network, we do recognize and express our utmost gratitude through the following resolutions as initiated by our President, Arthur P. Tugade.

Resolution of gratitude for Mr. Yoshiaki Yako, who with his support and guidance has given Yusen Air & Sea Service direction and guidance which helped much for the attainment of our vision and mission.

Resolution of gratitude for Mr. Yasuo Fukushima for the inspiration and guidance he has given to Yusen Air & Sea Service Phils., Inc. during his term as Managing Director for SAOR.

Resolution of gratitude for Mr. Genta Oyama, who with his visitation has given Yusen Air & Sea Service Phils., Inc. direction and guidance which helped much for the attainment of our vision and mission.

Our heartfelt thanks once again for all your generous assistance and guidance for all these years.

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By: Cita B. Tan / Division Manager - Corp. Affairs, Finance and Accounting