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, 2011
October 27, 2010
Name of Listed Company:
SENKO Co., Ltd.
Stock listed on: the First Section of the Tokyo Stock Exchange
Code Number:
9069
and Osaka Securities Exchange
URL http://www.senko.co.jp
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 11, 2010
Scheduled Date of Dividend Paid: December 7, 2010
Supplemental Information Materials:
Yes
Scheduled Date of Quarterly Information Meeting:Yes (for institutional investors)

1.

Consolidated Operating Results for the Second Quarter Ending March 2011 (From April 1, 2010 to September 30, 2010)(1) Consolidated Operating Results
Note: Amounts less than one million yen have been rounded down.
Operating Revenues
Operating income
Ordinary income
Net income
Million yen%
Million yen%
Million yen% Million yen%
Second quarter ending March 31, 2011
118,551
9.8
2,759
(0.1)
2,820
4.5
1,322
2.7
Second quarter ended March 31, 2010
107,994
(1.8)
2,763
2.6
2,698
2.2
1,287
(1.1)

Net income

Diluted net income

per shareper share
Yen
11.13
11.72

Yen
10.07
10.56

Total assets
Million yen
170,332
168,131

Net assets
Million yen
60,611
55,123

Second quarter ending March 31, 2011
Second quarter ended March 31, 2010
(2) Consolidated Financial Position

Second quarter ending March 31, 2011
Fiscal year ended March 31, 2010
(Reference) Shareholders’ equity:
Second quarter ending March 31, 2011 58,984 million yen
2.

Equity ratio
34.6
32.0

Net assets per share%Yen
465.11489.99Fiscal year ended March 31, 2010 53,809million yen

Dividends
First quarter
Yen-

Second quarter
Yen
4.00
5.00

Annual dividends
Third quarter
Yen-

Year end

Total
Yen
4.00

Yen
8.00

Fiscal year ended March 31, 2010
Fiscal year ending March 31, 2011
Fiscal year ending March 31, 2011
(Forecast)
5.00
10.00
(Note) Revision of dividends forecast in the second quarter: Yes
The Company revised the forecast of dividends announced on April 27, 2010 at Summary of Financial Statements for the Fiscal Year Ended March 31,
2010. Please see [Attached Information] “Basic Dividend Policy and Dividends for the Fiscal Year Ending March 2011” on page 3 for details.
3.

Forecast of Consolidated Operating Results for the Year Ending March 2011 (From April 1, 2010 to March 31, 2011)
OperatingOperating

Ordinary

Net income

Net income per

sharerevenues
incomeincomeMillion yen% Million yen%
Million yen %Million yen%
Yen
Fiscal year ending March 2011
243,000 6.7
6,400
4.1
6,500 4.3
3,100 5.2
25.25
(Note) Revision of consolidated results forecast in the second quarter: Yes(1) The Company revised its business forecast announced on April 27, 2010 at Summary of Financial Statements for the Fiscal Year Ended
March 31, 2010. Please see [Attached Information] “Forecast for Fiscal Year Ending March 2011” on page 3 for details.

4.

Others(Note) Please see [Attached Information] “Other Information” on page 3 for details.
(1) Changes in significant subsidiaries during the period (Changes in specified subsidiaries associated with change in scope of consolidation): None
(2) Application of simplified accounting procedures or of distinctive accounting procedures for the preparation of quarterly
consolidated financial statements: Yes(3) Changes in accounting principles, accounting procedures and presentation methods related to preparation of consolidated financial statements(Changes to be stated in the section “Changes in significant matters providing the basis for preparing consolidated financial statements”)
a. Changes involving amendments and revisions to accounting standards: Yes
b. Changes other than those included in the above a.: No(4) Shares outstanding (Common shares)
a. Shares outstanding at fiscal year end (including treasury stocks)
Second quarter ended March 31, 2011

128,989,476 sharesFiscal year ended March 31, 2010

111,989,476 shares

Second quarter ended March 31, 2011

2,172,419 sharesFiscal year ended March 31, 2010

2,172,362 sharesc. Average number of shares
Second quarter ended March 31, 2011

118,777,329 sharesFirst quarter ended March 31, 2010

109,814,571 sharesb. Treasury stocks at fiscal year end*Information concerning quarterly review procedure This quarterly financial report is not subject to the quarterly review procedure prescribed by the Financial Instruments and Exchange Law. 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.
*About the appropriate use of business forecasts and other special instruction
 Forward-looking statements in these materials are based on information available to management at the time this report was prepared andassumptions that management believes are reasonable. Actual results may differ significantly from these statements for a number of reasons. For
information about the assumptions used for forecasts and precautions concerning the use of forecasts, please see “Forecast for Fiscal Year Ending
March 2011” on page 3.

Index to accompanying materials

1.

2.

3.

Results of Operations and Financial Condition

2(1)

Results of Operations

2(2)

Financial Condition3(3)

Forecast for Fiscal Year Ending March 20113

Other information

3(1)

Changes in Material Subsidiaries

3(2)

Summary of Simplified or Special Accounting Methods

3(3)

Summary of Changes in Accounting Principles and Procedures, Presentation Methods and Other Items

3(4)

Significant Items about Going-Concern Assumption

3

Consolidated Financial Statements

4(1)

Consolidated Balance Sheets

4(2)

Consolidated Statements of Income

6(3)

Consolidated Statements of Cash Flows

7(4)

Note to Assumption of Going Concern

8(5)Consolidated Segment Information

8(6)

Material Changes in Shareholders’ Equity

91

1. Results of Operations and Financial Condition(1) Results of Operations
The Japanese economy has shown signs of a mild recovery in the first half of 2010, however the upturn has been losing momentum.
In the logistics industry, the operating environment remains challenging. Cargo volume within Japan is expected to decline for the 11th
consecutive year based on the outlook for a weak rebound in domestic demand in the current fiscal year, too.
The current fiscal year is the beginning of the Senko Group’s new three-year medium-term business plan based on the slogan“Moving Global.” In April, we started operations at the Fukui PD Center. In May, we established a joint venture company in Kazakhstan.
In June, we settled a joint venture company in Qingdao, China so as to expanding Japan-China integrated fashion distribution
operations.
As a result, second quarter operating revenues benefited from a number of factors. Most significant was aggressive measures toattract new customers, growth in sales by large scale capital investment, and the addition of Marufuji Co., Ltd. to the Senko Group.
Overall, consolidated second quarter operating revenues totaled 118,551 million yen, 9.8% higher than one year earlier.
Operating income, on the other hand, affected by negative factors such as price corrections and fuel price rises even though theoperating revenues grown, slightly decreased 0.1% to 2,759 million yen. However, ordinary income increased 4.5% to 2,820 million
yen and net income was up 2.7% to 1,322 million yen by improvement in balance of non-operating income and expenses.
Second quarter business segment performance was as follows.
Distribution
Operating revenues increased 6.5% to 103,915 million yen mainly because of aggressive actions to capture new business and growth
in revenues in current operations.
Trading and Commerce
Operating revenues increased 42.6% to 131,440 million yen due to the acquisition of Marufuji and higher sales of petroleum products.
OthersOperating revenues increased 27.2% to 1,491 million yen because of growth in the outsourced information processing business.
ReferenceStarting with the first quarter of the fiscal year ending March 31, 2011, Senko has changed its business segments due to adoption of“Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Statement No. 17, March 27,2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ
Guidance No. 20, March 31, 2008). The new business segments for financial reporting are as follows.
(Unit: ¥ million)
For the six-month period ended For the six-month period ended
ChangeSeptember 30, 2009
September 30, 2010
Distribution
97,605
103,915
6.5%
Trading and Commerce
9,216
13,144
42.6%
Others
1,172
1,491
27.2%
Total
107,994
118,551
9.8%(2) Financial Condition(a) Assets, liabilities and net assets
Total assets were 170,332 million yen at the end of the second quarter, 2,201 million yen more than at the end of the previous
fiscal year. The main reason was an increase of 3,409 million yen in fixed assets mainly because of the newly constructed
Kanazawa PD Center and Fukui PD Center.
Total liabilities decreased 3,287 million yen to 109,720 million yen. This was the result of decreases of 827 million yen in shortterm loans, 663 million yen in accrued income taxes, 729 million yen in long term loans and declines in other items.
(b) Net assets
Net assets increased 5,488 million yen to 60,611 million yen. This was mainly the result of increases of 2,175 million yen incommon stock and in the capital surplus because of the June public offering of stock. The equity ratio increased by 2.6
percentage point to 34.6%.
(c) Cash flows
There was a net decrease of 1,477 million yen in cash and cash equivalents to 13,027 million yen at the end of the second
quarter.
Net cash used in operating activities was 1,079 million yen. Cash was provided by income before income taxes and minority
interests of 2,445 million yen and depreciation and amortization of 2,722 million yen. Cash was used by a 408 million yen
decrease in accrued bonuses to employees, a 520 million yen decrease in interest and dividends receivable, a 509 million yen
decrease in account payable, interest paid of 589 million yen, and income tax paid of 1,699 million yen.
Net cash used in investing activities was 4,649 million yen. The largest use of cash was 3,179 million yen for purchases of fixed
assets, 1,407 million yen paid for long-term loans receivable.

2Net cash provided by financing activities was 1,616 million yen. There were proceeds of 2,950 million yen in revenue fromlong-term loans, 4,350 million yen from the issuance of stock and payments, 450 million yen for the repayment of short-termloans and payment of 626 million yen for the repayment of finance lease debt.
(3) Forecast for Fiscal Year Ending March 2011
Although Japan’s economy is recovering, given that the upturn has been losing momentum, the operating environment for the Senko
Group is expected to remain difficult.
The Senko Group has started a new three-year medium-term business plan based on the slogan “Moving Global.” The objective is toleverage all of the group’s strengths to become a “logistics and information company.” We are determined to be a global source ofhigh-quality services with outstanding performance in relation to cost. We are also dedicated to co-existing with society and enabling
our employees to develop and achieve their goals.
At this time, we revised consolidated forecasts for the fiscal year ending March 2011 announced on April 27, 2010, increased 1.3% to243 billion yen, following a growth in the logistics business.
Looking at profits, we revised operating income to ¥6.4 billion, decreased by 1.5 percentage point because of negative factors
affection including price corrections and fuel price rises. Meanwhile, there are no changes in consolidated ordinary income andconsolidated net income.
Reference
Basic Dividend Policy and Dividends for the fiscal ending March 2011
Our basic policy on profit distribution has been to continue to retain the internal reserves necessary to provide for future businessdevelopment and strengthen business structure. At the same time, to further increase the return of profits to shareholders, in addition
to maintaining stable dividends, we have linked dividends to performance.
In the fiscal year, considering performance of second quarter for the fiscal and future prospects, would like to live up to expectations ofshareholders, we decided to increase dividends as follows:
Dividends per share
Second quarter
Yen
4.00

Latest projection(announced on April 27, 2010)
Current projection(announced on October 27, 2010)
Detailed dividends resolved to be distributed

Year end

Total
Yen
4.00

Yen
8.00

5.00

10.00

4.00

8.00

5.00

Results for FY ended March 31, 2010

4.00

2. Other Information(1) Changes in Material Subsidiaries
None(2) Summary of Simplified or Special Accounting Methods(a) Method for estimating losses on ordinary receivables
To estimate losses on ordinary receivables, the actual loss ratio used at the end of the previous fiscal year was used because theCompany believes there was no significant change between this loss ratio and the loss ratio at the end of the second quarter.
(b) Method for calculating deferred tax assets and liabilities
To determine the likelihood of collecting deferred tax assets, business forecasts and tax planning that were used for thisdetermination at the end of the previous fiscal year were used because the Company believes there have been no significant
changes since the end of the previous fiscal year in the operating environment and in the occurrence of one-time items and otheritems.
(3) Summary of Changes in Accounting Principles and Procedures, Presentation Methods and Other Items
Starting with the first quarter of the fiscal year ending March 31, 2011, “Accounting Standard for Asset Retirement Obligations” (ASBJ
Statement No. 18, March 31, 2008) and “Guidance on Accounting Standard for Asset Retirement Obligations (ASBJ Guidance No. 21,
March 31, 2008) have been applied. This change reduced second quarter operating income and ordinary income by 9 million yen
each and reduced second quarter income before income taxes and minority interests by 139 million yen.
(4) Significant Items about Going-Concern Assumption
None3

3. Consolidated Financial Statements(1) Consolidated Balance Sheets(Unit: ¥ million)
As of September 30, 2010

As of March 31, 2010

AssetsCurrent assets
Cash and deposits

13,027

14,504

Notes and accounts receivable

30,48430,364Merchandise

775

1,237

Real estate for sale24

24

Supplies

125

112

Work in process

106

202

5,741

5,043

(47)

(44)

50,23751,445

Buildings and structures (net)38,18736,669Land

35,40835,401Other (net)10,016

10,164

Total Property, plant and equipment

83,61382,235Intangible assets

3,983

3,616

Guarantee deposits

8,508

8,728

Deferred tax assets

5,106

5,007

Other

19,15917,348

Allowance for doubtful accounts

(275)

(251)

Total investments and other assets

32,49830,832

Total noncurrent assets

120,095

116,685

Total assets

170,332

168,131

OthersAllowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment

Investments and other assets

4

(Unit: ¥ million)
As of September 30, 2010

As of March 31, 2010

Liabilities
Current liabilities
Notes and operating accounts payable- trade21,82422,473

Short-term loans payable

14,493

15,320

Income taxes payable

1,181

1,845

Provision for bonuses

2,975

3,384

48

84

Other

7,906

8,251

Total current liabilities

48,43051,359

Bonds

7,000

7,000

Convertible bond-type bonds with subscription rights

4,900

4,900

Long-term loans payable

30,66731,396

Provision for retirement benefits

9,840

9,907

Provision for directors’ retirement benefits

35

53

Provision for special repairs

30

25

Assets retirement obligations

289

-

Other

8,527

8,366

Total noncurrent assets

61,29061,648109,720

113,008

Capital stock

20,521

18,345

Capital surplus

18,782

16,607Retained earnings

20,501

19,604

(772)

(772)

59,03353,785

Valuation differences on available-for-sale securities

(21)

49

Deferred gains or losses on hedges

(17)

(22)

Foreign currency translation adjustment

(10)

(3)

Total valuation and translation adjustments

(48)

23

107

80

Minority interests

1,519

1,233

Total net assets

60,611

55,123Liabilities and net assets

170,332

168,131

Provision for directors’ bonuses

Noncurrent liabilities

Total liabilities
Net assets
Shareholders’ equity

Treasury stock
Total shareholders’ equity
Valuation and translation adjustments

Subscription rights to shares5(2) Consolidated Statements of Income(Unit: ¥ million)
Six-month period ended

Six-month period ended

September 30, 2009

September 30, 2010

Operating revenues

107,994

118,551

Cost of sales

98,902

108,690

Gross profit

9,092

9,860

Selling, general and administrative expenses

6,329

7,100

Operating income

2,763

2,759

Interest income

85

89

Dividends income

434

430

Other

310

353

Total non-operating income

830

874

Interest expenses

548

580

Other

346

232

Total non-operating expenses

895

813

2,698

2,820

232

147

-

130

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Loss on adjustment for changes of accounting standard for asset
retirement obligations-

74

Loss on cancellation of lease contracts

Special termination benefits

69

22

Loss on prior periods adjustment

180-

Total extraordinary loss

482

375

Income before income taxes

2,215

2,445

Income taxes- current

900

1,073

Income taxes- deferred

44

124

Total income taxes

944

1,198

Income before minority interests

-

1,247

Minority interest in income or loss

(16)

(74)

1,287

1,322

Net income6(3) Consolidated Statements of Cash Flows(Unit: ¥ million)
Six-month period ended

Six-month period ended

September 30, 2009

September 30, 2010

Cash flows from operating activities
Income before income taxes

2,215

2,245

Depreciation and amortization

2,410

2,722

232

147

-

130

Increase (decrease) in provision for retirement benefits

(185)

(67)

Increase (decrease) in provision for bonuses

(73)

(408)

Interest and dividends income

(519)

(520)

Loss on retirement of noncurrent assets
Loss on adjustment for changes of accounting standard for asset
retirement obligations

Interest expenses

548

580

Increase (decrease) in notes and accounts receivable- trade

(771)

(104)

Increase (decrease) in inventories

(26)

545

Increase (decrease) in notes and accounts payable- trade

312

(509)

Other

(1,119)(1,711)

Sub-total

3,024

3,249

Interest and dividends income received

125

119

Interest expenses paid

(567)

(589)

Income taxes paid

(888)

(1,699)Net cash provided by (used in) operating activities

1,693

1,079

(1,026)(3,179)Proceeds from sales of property, plant and equipment

178

64

Purchase of investment securities

(8)

(9)

Proceeds from sales of investment securities

23

4

-

(1,407)(384)-

Purchase of stocks of subsidiaries and affiliates

-

(198)

Payments for investments in capital of subsidiaries and affiliates

-

(104)

Other

223

180

Net cash provided by (used in) investing activities(995)(4,649)Net increase (decrease) in short-term loans payable

7,000

(450)

Proceeds from long-term debt

4,400

2,950

Repayment of long-term loans payable(797)(4,056)(7,000)-

Repayments of finance lease obligations

-

(626)

Proceeds from issuance of common stock

-

4,350

Purchase of treasury stock

(2)

(1)

Proceeds from sales of treasury stock

0

1

Cash dividends paid

(438)

(438)

Other

(632)

(113)

Net cash provided by (used in) financing activities

2,529

1,616

2

(19)

Net increase (decrease) in cash and cash equivalents

3,230(1,973)

Cash and cash equivalents at beginning of year

11,74814,50435

495

15,01313,027

Cash flows from investing activities
Purchase of property, plant and equipment

Long-term loans madePurchase of investments in subsidiaries resulting in change in scope of
consolidation

Cash flows from financing activities

Redemption of bonds

Effect of exchange rate change on cash and cash equivalents

Increase (decrease) in cash and cash equivalents resulting from changeof scope of consolidation
Cash and cash equivalents at end of period7(4) Notes to Assumption of Going Concern
Not applicable.

(5) Consolidated Segment information[Segment information by business segment]
Six months period ended September 30, 2009
Transport(Unit: ¥ million)
Integrated Retail

Others

Total

Logistics

Elimination or

Consolidated

corporate

Operating revenues(1) Revenues from customers

62,36835,237

10,388

107,994-

107,994(2) Inter-segment revenues or

1,407

2,207

5,669

9,285

(9,285)-

Total

63,77637,445

16,058117,279(9,285)

107,994

Operating income

1,572

821

418

2,813

(50)

2,763

transfers

Note:
1. Business segments above are based on the grouping used internally.
2. Each segment includes the following products:(1) Transport

Truck transport, special cargo transport, cargo transport using trucks, cargo transport using
railways, international and domestic marine cargo transport, harbor transport services,international cargo transport services, others.

(2) Integrated Retail Logistics

Warehouse operations, packaging, movement and other tasks for raw materials and finishedproducts at customers’ business sites, operation of distribution centers, others.

(3) Others

Sales of petroleum products, sales of information processing equipment, outsourced
information processing services, motor vehicle maintenance and repairs, others.

[Segment information by geographic area]
Six months period ended September 30, 2009
Operating revenues from overseas operations are not shown since they account for less than 10% of consolidated operating revenues.
[Operating revenues from overseas]Six months period ended September 30, 2009
Operating revenues from overseas operations are not shown since they account for less than 10% of consolidated operating revenues.

[Segment information]
1.

The reported segments of the Company are subject to periodic review so as to ensure that separate financial information on its
constituent divisions is available and that the board of directors can decide on the deployment of operational assets and assessbusiness performance.
Senko is engaged chiefly in the distribution business which contains truck transport, railway forwarding, and marine transport. The
Company also offers the warehousing, in-factory works. Consequently, the Company forte lies in supplying integrated efficient
distribution services, from distribution consulting to system design and operations that closely match customer needs. The other hand,
the Company provides petroleum sales business, data processing equipment for sale, trading, data processing and vehicle repair
business.
Accordingly, the Company is composed of business segments based on business operations and business organizations and the threereported segments of “Distribution Business”, “Commerce and Trading Business”, and “Other Business”.
“Distribution Business” offers track transport, railway forwarding, marine transport, international transport, warehousing, in-factory works,
and distribution center operations.
“Commerce and Trading Business” offers sales of petroleum, merchandise sales and trading.
“Other Business” composed of order-made data processing, vehicle repair business and insurance agency business.

8

2.

Difference between operating revenues and profit or loss amount for reported segments
Six months period ended September 30, 2010

(Unit: ¥ million)
Reported segment

Distribution

Commerce and

Other

Business

Trading BusinessBusiness

Total

Adjustments

Consolidated(Note) 1(Note) 2

Operating revenues
Sales to external customers

103,915

13,144

1,491

118,551-

118,551

359

4,338

2,002

6,700

(6,700)-104,275

17,482

3,494

125,251(6,700)118,551

2,278

227

314

2,821

(61)

2,759

Inter-segment sales and transfer
Total
Operating income(Note)
1.

The amounts in "Adjustments" of ¥ (61) million include the eliminations of intersegment transactions of ¥ (6,700) million and theunallocated corporate expenses of¥ (6,639) million. Corporate expenses are chiefly SG&A expenses not belong to segments.

2.

The aggregated amounts of operating income are adjusted and equal to those in the consolidated statements of income.

(Additional information)
From the three-month period ended June 30, 2010, the Company and its consolidated subsidiaries have adopted ASBJ Statement No.
17, “Revised Accounting Standard for Disclosure about Segments of an Enterprise and Related Information” and ASBJ Guidance No. 20,“Guidance on the Accounting Standard for Disclosures about Segments of on Enterprise and Related Information” issued by ASBJ on
March 27, 2009 and March 21, 2008 respectively.
(6) Material Changes in Shareholders’ Equity
The Company made a public offering on June 22, 2010.
Following that, the amount of capital stock and capital surplus increased ¥ 1,919 million, respectively.
Furthermore, the Company issued new shares by way of third party allotment on July 22, and capital stock and capital surplus increased¥255 million.
As a result, capital stock is ¥ 20,521 million, and capital surplus is ¥ 18,782 million at end of the second quarter.

9