This document is a translation of the Japanese financial statements and is not in conformity with accounting principles of the United States.

SENKO Co., Ltd.

Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2017
[Japan GAAP]
October 31, 2016
Name of Listed Company: SENKO Co., Ltd.
Stock Listed on: The First Section of the Tokyo Stock Exchange
Code Number:
9069
URL http://www.senko.co.jp/en/
Representative:
Title: President
Name: Yasuhisa Fukuda
Inquiries:
Title: Executive Officer, Public Relations
Name: Noburoh Sasaki
Tel. (06) 6440-5155
Scheduled Date of Issue of Financial Report:
November 14, 2016
Scheduled Date of Dividend Paid: December 6, 2016
Yes
Supplemental Information Materials:
Yes (for institutional investors)
Scheduled Date of Quarterly Information Meeting:
1. Consolidated Operating Results for the Six Months Ended September 30, 2016
(1) Consolidated Operating Results
Operating revenue
Six months ended September 30, 2016
Six months ended September 30, 2015
(Note) Comprehensive income

Million yen
224,521215,232

%
4.3
17.1

Six months ended September 30, 2016: ¥5,094 million (-0.6%)
Profitper share

Note: Amounts less than ¥1 million have been rounded down.
Profit attributable toOperating income
Ordinary income
owners of parent
Million yen%
Million yen%
Million yen
%
8,875
7.4
8,741
10.6
4,471
3.4
8,266
53.7
7,906
54.1
4,324
40.9
Six months ended September 30, 2015: ¥5,124 million (40.7%)
Diluted profit
per share

Yen
31.24
30.91

Yen
29.39
28.54

Total assets
Million yen
277,570
269,461

Net assets
Million yen
103,623
100,009

Six months ended September 30, 2016
Six months ended September 30, 2015
(2) Consolidated Financial Position

As of September 30, 2016
As of March 31, 2016
(Reference) Shareholders’ equity:

As of September 30, 2016: ¥90,397 million

Equity ratio
%
32.6
32.6

Net assets per shareYen
630.85613.71

As of March 31, 2016: ¥87,715 million

2. Dividends
June 30
Yen

September 30
Yen
9.00
11.00

−
Fiscal year ended March 31, 2016−
Fiscal year ending March 31, 2017
Fiscal year ending March 31, 2017
(Forecast)(Note) Change in the estimation of dividend for the fiscal year in this period: None

Annual dividend
December 31
YenMarch 31

Total

−

Yen
11.00

Yen
20.00

−

11.00

22.00

Breakdown of the year-end dividend per share for the year ended March 31, 2016: ¥9 per share ordinary dividend, ¥2 per sharecommemorative dividend for the 70th anniversary of the foundation and 100th anniversary in business3. Forecast of Consolidated Operating Results for the Fiscal Year Ending March 31, 2017 (From April 1, 2016 to March 31, 2017)
Operating revenue
Million yen%
Fiscal year ending March 2017
460,000
6.0(Note) Change in the forecast made in this period: Yes

Operating income
Million yen
18,400%
5.2(Percentage figures represent year-on-year changes)
Profit attributable toProfitOrdinary income
owners of parent
per share
Million yen% Million yen%
Yen
18,000
4.8
9,500
11.2
66.39

Forecast stated in the results of operations for the fiscal year ending March 2017 announced on August 3, 2016 has been revised.
Please refer to “Forecast for the fiscal year ending March 31, 2017” on page 4.

Notes(1) Changes in significant subsidiaries during the period (Changes in specified subsidiaries associated with change in scope of
consolidation): None
(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting principles and estimates, and retrospective restatement(a) Changes due to revision of accounting standards: Yes(b) Changes other than in (a): None(c) Changes in accounting estimates: Yes(d) Retrospective restatement: None
(4) Shares outstanding (Common shares)(a) Shares outstanding (including treasury shares)
As of September 30, 2016:

144,834,771 shares

As of March 31, 2016:

144,834,771 shares

1,539,458 shares

As of March 31, 2016:

1,907,546 shares(b) Treasury shares
As of September 30, 2016:(c) Average number of shares (quarterly consolidated cumulative period)
Six months ended September 30, 2016: 143,098,676 shares

Six months ended September 30, 2015:

139,903,708 shares(Note) Starting with the first quarter of the consolidated fiscal year ended March 31, 2015 (the three months ended June 30, 2014), thenumber of treasury shares at term-end includes Senko shares owned by the employee stock ownership plan (ESOP) trust,
following revisions to accounting principles due to the amendment of accounting standards. (As of September 30, 2016: 1,132,800
shares; as of March 31, 2016: 1,449,000 shares.)
Information concerning quarterly review procedure
This quarterly financial report is not subject to the quarterly review procedure prescribed by the Financial Instruments and Exchange Act.
The review procedure prescribed by the Financial Instruments and Exchange Law for the quarterly consolidated financial statements had
not been completed when this quarterly financial report was released.
Cautionary statement regarding forecasts of operating results and special notes
Forward-looking statements in these materials are based on information available to management at the time this report was prepared
and assumptions that management believes are reasonable. Actual results may differ significantly from these statements for a number ofreasons. For information about the assumptions used for forecasts and precautions concerning the use of forecasts, please see “Forecast
for the fiscal year ending March 31, 2017” on page 4.

Index to accompanying materials

1．Results of Operations and Financial Condition ....................................................................................................................................... 2(1) Results of operations ......................................................................................................................................................................... 2(2) Financial condition ............................................................................................................................................................................. 3(3) Forecast for the fiscal year ending March 31, 2017 ......................................................................................................................... 4
2．Other Information ...................................................................................................................................................................................... 4(1) Changes in significant subsidiaries ................................................................................................................................................... 4(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements .............................. 4(3) Changes in accounting principles and estimates, and retrospective restatement ............................................................................ 4(4) Additional Information .......................................................................................................................................................................... 4
3．Consolidated Financial Statements ......................................................................................................................................................... 5(1) Consolidated balance sheets .............................................................................................................................................................. 5(2) Consolidated statements of (comprehensive) income ....................................................................................................................... 7
Consolidated statements of income
For the six months ended September 30, 2015 and 2016 ............................................................................................................. 7
Consolidated statements of comprehensive income
For the six months ended September 30, 2015 and 2016 ............................................................................................................. 8(3) Consolidated statements of cash flows ............................................................................................................................................ 91

1.

Results of Operations and Financial Condition(1) Results of operations
In the six-month period of the fiscal year ending March 31, 2017 (April 1, 2016 to September 30, 2016), there were signs of improvements
including a solid trend in capital expenditure. However, the economic recovery in Japan remained subdued due in part to the appreciationof the yen, the economic slowdown overseas and stagnant consumer spending.
In the logistics industry, the business environment also remained challenging, as the shortage of drivers and workers continued amid
slowing freight volume mainly for export and consumer-related cargo.
In this environment, the Senko Group has strived to enhance its competitiveness, expand its business areas, and upgrade its operating
system, among other measures.
The following provides an outline of our main activities in the second quarter of the current fiscal year.
In Japan, we acquired all the shares in ACROSS TRANSPORT CO., LTD., a department store delivery agent involved in the fashion
logistics business in April, welcoming it into the Senko Group. We are promoting business expansion by boosting cooperation with each of
the Senko Group companies in charge of the fashion logistics businesses as well as promoting joint distribution and mutual use ofbusiness bases and human resources.
With regard to the commencement of operations at large-scale distribution centers, in May we opened the Narita Fashion Logistics
Center II (Tomisato City, Chiba Prefecture) to strengthen our logistics services for imported brands in the Narita area. In addition, we
opened Nishikanto LC (Logistics Center) (Aikawa Town, Kanagawa Prefecture) in August and started logistics operations for major
general merchandise store outlets located in the western Kanto region. Furthermore, logistics operations for a drugstore in the Kansai
region, launched from January to March 2016, are steadily expanding.
Outside Japan, initiatives aimed at expanding our business scale and functions have been taken. These included the establishment of afreezer warehouse at Kentucky Logistics Center (Kentucky, the United States) in August, which contributes to the strengthening of ourbusiness foundation in the south eastern region of the United States. In October, we started operation at our first Three-Temperature
Zone Logistics Center in Myanmar. By applying the Japanese-style cold and freezer logistics technologies and expertise to equipment
and delivery vehicles, we will work to expand our business in the country. In addition, we have commenced construction of the second
distribution center at Busan New Port in South Korea, an international hub port, aiming at commencement of operations in October 2017.
In the trading & commerce business segment, efforts such as making in-house logistics operations for goods handled at each of the
Senko Group companies which engage in trade business, development of new products and sales network expansion of existingproducts have been made.
Meanwhile, regarding initiatives in the new business domain, we established a subsidiary SENKO REAL ESTATE, Co., Ltd. in August,advancing into the real estate business. In October, we officially launched a nursing care business by making Keihanna helper station Co.,
Ltd., which operates a nursing care business in Nara Prefecture, into a Senko Group subsidiary.
To upgrade our operating system, we have promoted a modal shift to reduce the environmental impact and resolve the shortage of drivers
by changing the method of long-distance transportation for beverage and building materials from trucks to railways and ships, whileboosting the use of our own trucks.
To ensure financial soundness, in September we transferred seven distribution centers to a real estate investment company (a private
REIT) managed by Senko Asset Management Co., Ltd. Funds raised will be utilized for business expansion and growth through theconstruction of new distribution centers and other purposes.
Furthermore, in October we established SENKO UNIVERSITY, an in-house university for raising the sophistication and specialization oftraining content for human resources and developing strategic human resources. In addition, as part of efforts to promote active
participation by women, we are creating businesses that make use of the sensibilities of women through an in-house entrepreneurshipsupport program and proceeding with promoting women to managerial positions.
The six-month-period performance was as follows.
(Unit: Millions of yen)

Operating revenue
Operating income
Ordinary income
Profit attributable to owners ofparentSix months ended
September 30, 2015
215,232

Six months ended
September 30, 2016
224,521

8,266
7,906
4,324

2

Change

%
9,289

4.3

8,875
8,741

609
835

7.4
10.6

4,471

146

3.4

Consolidated operating revenue for the six-month period ended September 30, 2016 of the current fiscal year increased 4.3% year on
year to ¥224,521 million. This result reflected the aggressive expansion of sales and the contribution of ACROSS TRANSPORT CO.,LTD., which was made a consolidated subsidiary of the Company.
On the profit front, consolidated operating income grew to ¥8,875 million, up 7.4% year on year, while consolidated ordinary income roseto ¥8,741 million, up 10.6% year on year, due primarily to the sales expansion, revision of freight charges and lower fuel prices, despite adecline in freight volumes from existing customers. Profit attributable to owners of parent increased 3.4% to ¥4,471 million.
The six-month-period operating revenue by segment was as follows.
Distribution
Operating revenue grew 5.0% year on year to ¥157,479 million in this segment. This was mainly attributable to a rise in operating revenue
resulting from the consolidation of ACROSS TRANSPORT CO., LTD. and expansion of sales to new and existing customers, including amajor drugstore.
Trading & commerce
Operating revenue grew 2.3% year on year to ¥64,704 million in this segment. This primarily reflected the result of an increase in sales
volume of existing products and sales expansion to new customers, despite a decline in sales caused by a drop in fuel prices in the
petroleum marketing business.
OthersOperating revenue rose 14.5% year on year to ¥2,337 million in this segment. This was attributable to the growth of sales in the dataprocessing services and expansion of the sales of electricity produced by solar power generation.
(2) Financial condition
1) Assets, liabilities and net assets
Total assets
Total assets as of September 30, 2016 were ¥277,570 million, ¥8,109 million higher than at the end of the previous fiscal year. Current
assets amounted to ¥109,562 million, up ¥16,181 million from the end of the previous fiscal year. This mainly reflected increases of¥13,527 million in cash and deposits and ¥1,928 million in notes and operating accounts receivable. Non-current assets totaled ¥167,911
million, down ¥8,059 million from the end of the previous fiscal year. This was primarily due to a decrease in property, plant andequipment of ¥13,153 million as a result of transfers of seven distribution centers to the private REIT, despite increases in intangible
assets of ¥1,864 million and investments and other assets of ¥3,228 million, respectively.
Liabilities
Liabilities as of September 30, 2016 increased ¥4,495 million from the end of the previous fiscal year to ¥173,947 million. Current
liabilities totaled ¥94,629 million, up ¥8,982 million from the end of the previous fiscal year. This was mainly due to increases of ¥5,081
million in electronically recorded obligations−operating, ¥6,036 million in short-term loans payable and ¥550 million in provision forbonuses, despite a decrease of ¥4,389 million in notes and operating accounts payable−trade. Non-current liabilities totaled ¥79,317
million, down ¥4,486 million from the end of the previous fiscal year. This was primarily due to a decrease in long-term loans payable of¥5,639 million.
Net assets
Net assets as of September 30, 2016 rose ¥3,613 million from the end of the previous fiscal year to ¥103,623 million. This was mainly
attributable to increases of ¥2,899 million in retained earnings and ¥896 million in non-controlling interests. The equity ratio as of
September 30, 2016 was 32.6%.
2) Cash flows
Cash and cash equivalents as of September 30, 2016 totaled ¥31,739 million, up ¥13,974 million from the end of the previous fiscal year.
Net cash provided by operating activities was ¥10,685 million. Major factors affecting this cash flow were profit before income taxes of¥8,654 million, depreciation and amortization of ¥5,038 million and income taxes paid of ¥3,456 million.
Net cash provided by investing activities was ¥7,323 million. Major factors affecting this cash flow were proceeds from sales of property,
plant and equipment of ¥17,296 million, purchase of property, plant and equipment of ¥6,471 million and purchase of shares ofsubsidiaries and associates of ¥2,735 million.
Net cash used in financing activities was ¥3,800 million. Major factors affecting this cash flow were proceeds from long-term loans
payable of ¥3,050 million, repayments of long-term loans payable of ¥4,038 million, repayments of finance lease obligations of ¥1,336
million, and cash dividends paid of ¥1,585 million.

3(3) Forecast for the fiscal year ending March 31, 2017
Although the Japanese economy is expected to recover at a moderate pace amid an ongoing improvement in employment and income
conditions, the outlook remains uncertain due in part to concerns about economic downturns in China and other Asian emerging countries
as well as in resource-rich nations.
In the logistics industry as well, the challenging environment is expected to continue amid labor shortage of drivers and intensifying
competition in the industry, with no recovery expected in freight movement.
In this environment, the Senko Group will continue trying to enhance its competitiveness, expand its business areas, and upgrade its
operating system.
Considering the operating results for the six-month period ended September 30, 2016 as well as surrounding economic conditions, thetrend of cargo volumes and other factors, the Company has revised the forecast of consolidated operating results for the fiscal year
ending March 31, 2017 as follows:
Operatingrevenue
Million yen

Profitper share
Yen

Ordinary income

Million yen

Previous forecast (A)460,000

18,10017,700

9,400

65.77

Revised forecast (B)Difference (B – A)

460,000−

18,400300

18,000
300

9,500
100

66.39
−

−

1.7

1.7

1.1

−

434,000

17,497

17,178

8,542

60.43

Difference (%)
Reference: Previous
operating results (the fiscal
year ended March 31, 2016)

2.

Million yen

Profit attributable toowners of parent
Million yen

Operating income

Other Information(1) Changes in significant subsidiaries
None(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements
None(3) Changes in accounting principles and estimates, and retrospective restatement
Changes in accounting principles(Application of Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016)
Effective from the first quarter of the fiscal year ending March 31, 2017, certain consolidated subsidiaries of the Company began applying
the Practical Solution on a Change in Depreciation Method Due to Tax Reform 2016 (Accounting Standards Board of Japan’s [ASBJ]
Practical Issues Task Force [PITF] No. 32 of June 17, 2016) as a result of revisions to Japan’s Corporate Tax Act. The solution was
adopted to change from the declining-balance method to the straight-line method for depreciation of facilities attached to buildings or
structures acquired on and after April 1, 2016.
The above change had only a negligible effect on the profit and loss.
Changes in accounting estimates(Change in the amortization period for actuarial gains and losses from accounting treatments of defined benefit plans)With regard to actuarial gains and losses from accounting treatments of defined benefit plans that previously have been amortized over acertain period (mainly 13 years), which is within the estimated average remaining years of service of the Companies’ employees, theCompany has shortened the period to mainly 10 years effective from the first quarter of the fiscal year ending March 31, 2017, as thecurrent estimated average remaining years of service fell short of the previous amortization period of 13 years.
In line with this change, when compared with the figures calculated for the previous amortization period, operating income, ordinary
income and profit before income taxes for the second quarter of the current fiscal year decreased by ¥144 million for each.
(4) Additional information(Application of Revised Implementation Guidance on Recoverability of Deferred Tax Assets)
Effective from the first quarter of the fiscal year ending March 31, 2017, the Company has adopted the Revised Implementation Guidanceon Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26 of March 28, 2016).

4

3.

Consolidated Financial Statements(1) Consolidated balance sheets(Unit: Millions of Yen)
As of March 31, 2016

As of September 30, 2016

AssetsCurrent assets
Cash and deposits

18,47732,005

Notes and operating accounts receivable

58,10760,036Merchandise and finished goods

6,967

7,124

Real estate for sale

3-

Work in process

200

309

Raw materials and supplies

335

301

9,317

9,808

(29)

(23)

93,380109,562

Buildings and structures, net

62,41250,453

Land

60,48655,939Other, net

13,824

17,177

Total property, plant and equipment

136,723

123,570

Goodwill

4,038

5,805

Other

3,906

4,004

Total intangible assets

7,945

9,810

Guarantee deposits

10,572

11,187

Deferred tax assets

2,553

2,606

Other

19,20321,702

Allowance for doubtful accounts

ሺ1,026)(965)

Total investments and other assets

31,302

34,531

175,971

167,911

Business commencement expenses

108

95

Total deferred assets

108

95

269,461

277,570

Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Intangible assets

Investments and other assets

Total non-current assets
Deferred assets

Total assets

5

(Unit: Millions of Yen)
As of March 31, 2016

As of September 30, 2016

Liabilities
Current liabilities
Notes and operating accounts payable−trade37,12532,736

Electronically recorded obligations−operating

1,601

6,683

Current portion of bonds

5,000

5,000

Short-term loans payable

18,38824,424

Income taxes payable

3,219

2,826

Provision for bonuses

3,959

4,510

220

104

Other

16,131

18,344

Total current liabilities

85,647

94,629Bonds payable

7,000

7,000

Convertible bond-type bonds with subscription rights
to shares

5,037

5,035

Long-term loans payable

55,94350,303

Provision for directors’ retirement benefits

363

267

Provision for special repairs

39

46

Net defined benefit liability

7,621

7,624

Asset retirement obligations

518

757

Other

7,279

8,282

Total non-current liabilities

83,80479,317

169,451

173,947

Capital stock

24,011

24,011

Capital surplus

22,83822,864Retained earnings

42,84545,744

Treasury shares

(942)

(786)

88,752

91,835

1,448

1,252

Deferred gains or losses on hedges

(91)

(119)

Foreign currency translation adjustment

427

86

Remeasurements of defined benefit plans(2,820)(2,657)

Total accumulated other comprehensive income

ሺ1,036)(1,438)359

396

Non-controlling interests

11,933

12,829Total net assets

100,009

103,623

269,461

277,570

Provision for directors’ bonuses

Non-current liabilities

Total liabilities
Net assets
Shareholders’ equity

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Subscription rights to shares

Liabilities and net assets

6

(2) Consolidated statements of (comprehensive) income(Consolidated statements of income)(For the six months ended September 30, 2015 and 2016)(Unit: Millions of Yen)
Six months ended
September 30, 2015

Six months ended
September 30, 2016

(April 1, 2015–September 30, 2015)(April 1, 2016–September 30, 2016)

Operating revenue

215,232

224,521

Operating cost

191,875

199,642

Operating gross profit

23,35624,879Selling, general and administrative expenses

15,09016,003Operating income

8,266

8,875

Interest income

102

61

Dividend income

71

81

Other

352

597

Total non-operating income

526

739

Interest expenses

585

499

Other

300

374

Total non-operating expenses

885

873

7,906

8,741

Gain on sales of non-current assets

257

186

Total extraordinary income

257

186

31

133

-

88

Loss on retirement of non-current assets

52

51

Loss on cancellation of leases

115-

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary losses
Expenses related to commemorative works forcentennial anniversary
Loss on disaster

Loss on sales of non-current assets

54-

Cancel penalty

35-

Loss on sales of shares of subsidiaries andassociates

32-

Total extraordinary losses

322

273

Profit before income taxes

7,841

8,654

Income taxes−current

1,959

2,658

Income taxes−deferred

663

469

Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

7

2,623

3,128

5,217

5,526

893

1,055

4,324

4,471

(Consolidated statements of comprehensive income)(For the six months ended September 30, 2015 and 2016)(Unit: Millions of Yen)
Six months ended
September 30, 2015

Six months ended
September 30, 2016

(April 1, 2015–September 30, 2015)(April 1, 2016–September 30, 2016)

Profit

5,217

5,526

Valuation difference on available-for-sale securities

(230)

(117)

Deferred gains or losses on hedges

(30)

(31)

Foreign currency translation adjustment

50

(448)

Remeasurements of defined benefit plans, net of tax

116

165

(93)

(431)

5,124

5,094

4,278

4,069

845

1,025

Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests8(3) Consolidated statements of cash flows(Unit: Millions of Yen)
Six months ended
September 30, 2015

Six months ended
September 30, 2016

(April 1, 2015–September 30, 2015)(April 1, 2016–September 30, 2016)

Cash flows from operating activities
Profit before income taxes

7,841

8,654

Depreciation and amortization

4,930

5,038

Loss (gain) on sales of non-current assets

(202)

(185)

Loss on retirement of non-current assets

52

51

Increase (decrease) in net defined benefit liability

(256)

2

Increase (decrease) in provision for bonuses

367

521

Interest and dividends income

(173)

(142)

Interest expenses

585

499

Decrease (increase) in notes and accounts
receivable-trade

(29)

68

Decrease (increase) in inventories

(513)

(197)

26

(688)

Increase (decrease) in accrued consumption taxes(1,305)

861

Other

(1,499)(40)

Sub-total

9,825

14,443

Interest and dividends income received

150

199

Interest expenses paid

(578)

(501)

Income taxes paid

(3,250)(3,456)

Net cash provided by (used in) operating activities

6,145

10,685Purchase of property, plant and equipment(8,370)(6,471)

Proceeds from sales of property, plant and equipment

21,447

17,296

Purchase of investment securities

(91)

(40)

Proceeds from sales of investment securities

524-

Purchase of shares of subsidiaries resulting inchange in scope of consolidation

-

(325)

Payments for sales of shares of subsidiaries resulting
in change in scope of consolidation

(96)

-

Purchase of shares of subsidiaries and associates(4,060)(2,735)

Other(1,572)(400)

Net cash provided by (used in) investing activities

7,780

7,323

Increase (decrease) in notes and accounts
payable-trade

Cash flows from investing activities

Cash flows from financing activities
Net increase (decrease) in short-term loans payable(7,500)135

Proceeds from long-term loans payable

4,130

3,050

Repayment of long-term loans payable(6,990)(4,038)

Repayments of finance lease obligations(1,048)(1,336)

Purchase of treasury shares(5)0Proceeds from sales of treasury shares

124

203

(1,341)(1,585)

Dividends paid to non-controlling interests

-

(59)

Payments from changes in ownership interests in
subsidiaries that do not result in change in scope of
consolidation

-

(58)

(150)

(109)

(12,782)(3,800)21(239)

Net increase (decrease) in cash and cash equivalents

1,165

13,968Cash and cash equivalents at beginning of period

25,476

17,765

Increase in cash and cash equivalents from newly
consolidated subsidiary-5

26,641

31,739Cash dividends paid

Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents

Cash and cash equivalents at end of period9