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 Fiscal Year Ended March 31, 2016
[Japan GAAP]May 13, 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 Annual Shareholders Meeting:June 28, 2016
Scheduled Date of Dividend Paid: June 29, 2016
Scheduled Date of Issue of Financial Report:
June 28, 2016
Yes
Supplemental Information Materials:
Yes (for institutional investors)
Information Meeting for Financial Results:
1. Consolidated Operating Results for the Fiscal Year Ended March 2016 (From April 1, 2015 to March 31, 2016)(1) Consolidated Operating Results
Operating revenue
Million yen
434,000
398,447

Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015

%
8.9
19.3

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%
17,49728.2
17,178
29.8
8,542
20.8
13,64912.6
13,234
17.1
7,073
8.8

(Note) Comprehensive income
Fiscal year ended March 31, 2016: ¥8,630 million (–12.0%)

Profitper share
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
(Reference) Equity in earnings (losses) of affiliates:

Fiscal year ended March 31, 2015: ¥9,804 million (39.2 %)Diluted profit
per share

Yen
60.43
55.06

Yen
56.32
50.41

Fiscal year ended March 31, 2016: ¥109 million

Return on
shareholders’equity%10.1
9.5

Ratio of ordinary
income to total
assets
%6.2
5.0

Ratio of operating
income to operating
revenue%
4.0
3.4

Fiscal year ended March 31, 2015: —(2) Consolidated Financial Position
Total assets
Million yen
269,461
285,309

Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
(Reference) Shareholders’ equity:

Net assets
Million yen
100,00992,743Fiscal year ended March 31, 2016: ¥87,715 million

Equity ratio
%
32.6
28.4

Net assets per shareYen
613.71581.46

Fiscal year ended March 31, 2015: ¥81,026 million(3) Consolidated Cash Flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Million yen
16,14919,228

Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015

Cash flows fromfinancing activities

Million yen(2,288)(17,978)

Million yen(21,492)
6,209

Cash and cash
equivalents at end of
periodMillion yen
17,76525,476

2. Dividends
June
30
Yen
Fiscal year ended March 31, 2015
Fiscal year ended March 31, 2016
Fiscal year ending March 31, 2017
(Forecast)−−−

Annual dividend
September December
30
31
Yen
Yen
8.00
−
9.00
−
11.00

−

March
31
Yen
9.00
11.00

Yen
17.00
20.00

11.00

22.00

Total

Aggregate
Dividend on
Payout ratio
amountequity ratio(Consolidated)(Consolidated)(Annual)Million yen
%
%
2,308
30.9
2.9
2,887
33.1
3.3
33.4

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 business3. Forecast of Consolidated Operating Results for the Fiscal Year Ending March 31, 2017 (From April 1, 2016 to March 31, 2017)

Operating revenue

Operating income

Million yen
225,000
460,000

Million yen
8,400
18,100First half ending September 2016
Fiscal year ending March 2017

%
4.5
6.0

%
1.6
3.4

(Percentage figures represent year-on-year changes)
Profit attributable toProfitOrdinary income
owners of parent
per share
Million yen% Million yen
%
Yen
8,100
2.4
4,100
(5.2)
28.69
17,700
3.0
9,400
10.0
65.77

(Note) Change in the forecast made in this period: None
Notes
(1) Changes in significant subsidiaries during the fiscal year (Changes in specified subsidiaries associated with change in scope of
consolidation): None
(2) 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: None(d) Retrospective restatement: None
(3) Shares outstanding (Common shares)(a) Shares outstanding (including treasury shares)
As of March 31, 2016:

144,834,771 shares

As of March 31, 2015:

141,927,426 shares

1,907,546 shares

As of March 31, 2015:

2,577,118 shares(b) Treasury shares
As of March 31, 2016:(c) Average number of sharesFiscal year ended March 31, 2016:

141,352,936 sharesFiscal year ended March 31, 2015

128,467,414 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 March 31, 2016: 1,449,000
shares; as of March 31, 2015: 1,954,000 shares.)[Reference] Overview of Non-Consolidated Operating Results
1. Non-Consolidated Operating Results for the Fiscal Year Ended March 2016 (From April 1, 2015 to March 31, 2016)(1) Non-Consolidated Operating Results

Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015

Operating revenue
Million yen%
204,374
2.4
199,624
2.2

Operating income
Million yen
%
6,331
1.4
6,246
(5.7)

Profitper share
Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015

(Percentage figures represent year-on-year changes)
Ordinary income
ProfitMillion yen%
Million yen
%
6,889
(4.9)
3,774
(12.7)
7,242
(1.0)
4,324
(5.0)

Diluted profit
per share
Yen
26.71
33.66

Yen
24.87
30.82

(2) Non-Consolidated Financial Position

Fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015
(Reference) Shareholders’ equity:

Total assets
Million yen
203,379
215,941

Fiscal year ended March 31, 2016: ¥73,145 million

Net assets
Million yen
73,50570,328Equity ratio
%
36.0
32.4

Net assets per shareYen
511.77502.62

Fiscal year ended March 31, 2015: ¥70,040 million

Status of implementation of auditing procedure
The auditing procedure for the consolidated financial statements that is prescribed by the Financial Instruments and Exchange Act had
not been completed when this 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 3.

Index to accompanying materials

1．Results of Operations and Financial Condition ........................................................................................................................................ 2(1) Results of operations ......................................................................................................................................................................... 2(2) Financial condition ............................................................................................................................................................................. 4(3) Fundamental policy for distribution of earnings and dividend for the current and the next fiscal years ......................................... 5(4) Business risk ....................................................................................................................................................................................... 5
2．Corporate Group ....................................................................................................................................................................................... 6
3．Management Policies ............................................................................................................................................................................... 7(1) Fundamental management policy ..................................................................................................................................................... 7(2) Medium and long-term strategies ....................................................................................................................................................... 7
4．Basic Concept Regarding the Selection of Accounting Standards ........................................................................................................... 8
5．Consolidated Financial Statements ......................................................................................................................................................... 9(1) Consolidated balance sheets .............................................................................................................................................................. 9(2) Consolidated statements of (comprehensive) income ..................................................................................................................... 11
Consolidated statements of income................................................................................................................................................. 11
Consolidated statements of comprehensive income....................................................................................................................... 12(3) Consolidated statements of changes in equity ................................................................................................................................. 13(4) Consolidated statements of cash flows ............................................................................................................................................ 15

1

1.

Results of Operations and Financial Condition(1) Results of operations(a) Results of operations in the fiscal year ended March 31, 2016
In the fiscal year ended March 31, 2016 (April 1, 2015 to March 31, 2016), the Japanese economy continued to recover gradually,
including improvements in corporate performance and the employment environment. However, the outlook for the future remained
uncertain as overseas economies, including China, slowed from the fall and a slump was seen in consumption, in addition to such factors
as the increased risk of a downturn in corporate earnings due to the appreciation in the yen since early 2016.
In the logistics industry, despite declining fuel prices, the business environment remained challenging with factors such as slowing freight
volume due to the slump in consumption and postponement of capital expenditure, shortages of drivers, and intensifying competition.
In this environment, the Senko Group sought to enhance its competitiveness, boost its profitability, and upgrade its operating system as
the priority policies for the fiscal year ended March 31, 2016 and worked on a number of measures.
The following provides an outline of our main activities in the fiscal year ended March 31, 2016.
In retail product logistics, we promoted the opening of large-scale distribution centers to strengthen our business competitiveness. April
saw our opening of the Sayama PD Center (Sayama City, Saitama Prefecture) that connects the Tokyo metropolitan area with the Tohoku,
Chubu, and Kansai regions. In May, we opened the Narita Fashion Logistics Center I (Tomisato City, Chiba Prefecture) near Narita Airport,
to handle imported brands, and in October we began operating the Port of Sendai PD Center (Sendai City, Miyagi Prefecture) as a central
hub for the Tohoku region.
In the housing logistics domain, we worked to expand our business areas, identifying new needs including precutting housing
components, metal fittings and assembly, in addition to storage and delivery. We also pursued acquisition of logistics operations forcomponents related to solar power generation and household storage batteries that have increased in recent years.
In the area of chemical logistics, we opened the Dangerous Goods No. 2 Warehouse, Daimon Distribution Center (Moriyama City, Shiga
Prefecture) to respond to the need for dangerous goods storage in September and the Mihara Asphalt Center (Mihara City, Hiroshima
Prefecture), which conducts cargo handling, shipping and inventory management for asphalt in November. In January 2016, we
commenced operation of the Sodegaura Bulk Container Center (Sodegaura City, Chiba Prefecture), to expand bulk container logistics,
which is our strength.
As for overseas operations, we promoted expansion of our business base in the ASEAN region. We began full-scale operations at theLaem Chabang Distribution Center (Choburi Province) near Thailand’s largest trade port in September. In June, we opened a
representative office in Hanoi, Vietnam. In December, we concluded a three-way basic agreement with Sinotrans Air Transportation
Development Co., Ltd. (Sinotrans Air), a major Chinese air cargo operator, and Runtec Corporation, a member of the Senko Group, to set
up a joint venture. The new company is scheduled for establishment in June 2016 and will establish cold and freezer distribution centersin leading Chinese cities, as part of efforts to develop a cold and freezer logistics network in China.
In the trading & commerce business segment, trade company subsidiaries sought to develop their own private brands and expand
businesses that provide integrated trading and logistics services leveraging the Senko Group’s logistics functions. In addition, the Group
worked to bring logistics operations for goods handled in-house to streamline business.
To boost profitability, we raised productivity through such means as increasing truck operation efficiency and storage efficiency in
distribution centers. We also persuaded our customers to accept revised freight charges to receive appropriate rates.
To upgrade our operation system, we actively recruited drivers with the aim of expanding our fleet. We also opened our in-house training
facility for obtaining driver’s licenses for large vehicles to promote training of our own drivers.
Furthermore, to ensure financial soundness, in September we transferred four distribution centers to a real estate investment company (aprivate REIT) managed by Senko Asset Management Co., Ltd. Funds raised have been applied to the construction of new distribution
centers and other projects. In addition, we improved the equity ratio by controlling the increase in interest-bearing debt.

2

The full-year performance was as follows.
(Unit: Millions of yen)
FY ended March 2015

FY ended March 2016

Change%Operating revenue

398,447

434,000

35,552

8.9

Operating income
Ordinary income
Profit attributable to owners ofparent13,64913,234

17,497
17,178

3,847
3,943

28.2
29.8

7,073

8,542

1,468

20.8

Consolidated operating revenue for the fiscal year ended March 31, 2016 increased 8.9% year on year to ¥434,000 million due toaggressive expansion of sales in addition to rising sales volume in the trading & commerce business, and the effect of Runtec Corporation
becoming a consolidated subsidiary of the Company in October 2014 on increasing revenue.
On the profit front, consolidated operating income grew to ¥17,497 million, up 28.2% year on year, while consolidated ordinary income
rose to ¥17,178 million, up 29.8% year on year. Profits increased due to a jump in revenue in addition to the effect from a drop in fuelprices and the revision of freight charges despite a rise in costs, including rising outsourcing costs in the distribution business andpurchase prices in the trading & commerce business. Profit attributable to owners of parent increased to ¥8,542 million, up 20.8% year on
year.
The business segment performance was as follows.
Distribution
Operating revenue for the fiscal year under review grew 9.8% year on year to ¥300,420 million in this segment. This was the result ofhigher revenues in the retail product logistics business, due to the effect from making Runtec Corporation a subsidiary, and the receipt of
new orders for distribution operations, including those from a major drug store. In the housing logistics business and the chemicals
logistics business, revenues were flat due to a decline in existing volumes despite aggressive sales expansion.
Trading & commerce
Operating revenue increased 7.3% year on year to ¥129,469 million. This was mainly the result of a recovery in sales following the slump
caused by the consumption tax hike in the previous fiscal year, the acquisition of new customers, and the development and sale of new
products.
OthersIn this segment, operating revenue increased 0.3% year on year to ¥4,110 million.
(b) Forecast for the fiscal year ending March 31, 2017
The Japanese economy is expected to see an improvement in the employment environment and a recovery in personal consumption.
However, the economic outlook should remain unpredictable due to the postponement of capital expenditure because of deterioration inearnings at exporters from the appreciation in the yen and concerns about a slowdown in overseas economies.
In the distribution industry, the challenging environment is expected to continue, including intensifying competition within the industry amid
a forecast decline in freight volume and labor shortages in human resources, including drivers.
In this environment, the Senko Group will tackle the following tasks during the final year of its four-year medium-term business plan:
enhancing its competitiveness, expanding its business areas, and upgrading its operation system.
To boost our competitiveness, we will open new distribution centers, strengthen distribution center functions, and leverage IT to raise
productivity.
To expand our business areas, we will work to strengthen three-temperature zone logistics (cold, freezer, and normal temperaturestorage) to enhance food logistics. Moreover, to expand fashion logistics, we acquired all the shares in ACROSS TRANSPORT CO., LTD.
(Minato-ku, Tokyo), a leading department store delivery agent, welcoming it into the Senko Group in April 2016.
In overseas operations, we will promote new business expansion in countries such as Vietnam, Myanmar, and Mexico. We will alsoestablish a new Life Support Service Development Division to create new businesses.
To upgrade our operation system, we will continue to increase our own fleet in addition to promoting further modal shift as an initiative to
reduce the environmental impact and resolve the shortage of drivers.

3

As a result of pursuing such corporate activity, the Group’s consolidated forecasts for the next fiscal year are for operating revenue of¥460.0 billion, operating income of ¥18.1 billion, ordinary income of ¥17.7 billion, and profit attributable to owners of parent of ¥9.4 billion.
(2) Financial condition
1) Assets, liabilities and net assets
Total assets
Total assets as of March 31, 2016 were ¥269,461 million, ¥15,848 million lower than at the end of the previous fiscal year.
Current assets amounted to ¥93,380 million, down ¥4,867 million from the end of the previous fiscal year. This mainly reflected adecrease of ¥7,207 million in cash and deposits despite increases of ¥1,505 million in notes and operating accounts receivable and ¥487
million in merchandise and finished goods.
Non-current assets totaled ¥175,971 million, down ¥11,089 million from the end of the previous fiscal year. This was due to a decrease inproperty, plant and equipment of ¥13,087 million as a result of transfers of four distribution centers to the private REIT, despite an increase
in investments and other assets of ¥1,759 million.
Liabilities
Liabilities as of March 31, 2016 decreased ¥23,114 million from the end of the previous fiscal year to ¥169,451 million.
Current liabilities totaled ¥85,647 million, down ¥6,906 million from the end of the previous fiscal year. This was mainly due to a decreaseof ¥10,847 million in short-term loans payable, even though current portion of bonds increased by ¥4,980 million.
Non-current liabilities totaled ¥83,804 million, down ¥16,207 million from the end of the previous fiscal year. This was due to decreases inbonds payable of ¥5,000 million, convertible bond-type bonds with subscription rights to shares of ¥1,831 million, long-term loans payableof ¥6,027 million, and net defined benefit liability of ¥1,760 million.
Net assets
Net assets as of March 31, 2016 rose ¥7,265 million from the end of the previous year to ¥100,009 million. This mainly reflected increasesof ¥913 million in capital stock as a result of the conversion to shares of convertible bond-type bonds with subscription rights to shares,¥923 million in capital surplus, ¥6,168 million in retained earnings, and ¥504 million in non-controlling interests, despite a decrease of¥980 million in remeasurements of defined benefit plans. The equity ratio increased by 4.2 percentage points to 32.6% from the end of theprevious fiscal year.
2) Cash flows
Cash and cash equivalents at end of period decreased by ¥7,710 million year on year to ¥17,765 million.
Net cash provided by operating activities amounted to ¥16,149 million. This was mainly due to profit before income taxes of ¥16,416
million and depreciation and amortization of ¥9,925 million, despite decreases of ¥1,760 million in the net defined benefit liability and¥1,779 million in accrued consumption taxes, and interest expenses paid of ¥1,095 million and income taxes paid of ¥5,762 million.
Net cash used in investing activities totaled ¥2,288 million. This was mainly due to the purchase of property, plant and equipment of¥17,994 million and purchase of shares of subsidiaries and associates of ¥4,578 million, despite proceeds from the sales of property,
plant and equipment of ¥21,728 million.
Net cash used in financing activities totaled ¥21,492 million. This was mainly due to a decrease in short-term loans payable of ¥12,800
million, repayment of long-term loans payable of ¥9,644 million, repayments of finance lease obligations of ¥2,116 million, and cash
dividends paid of ¥2,571 million, despite proceeds from long-term loans payable of ¥5,780 million.

43) Performance indicators associated with cash flows
Fiscal years ended March 31

2012

2013

2014

2015

2016

Equity ratio (%)

30.3

31.3

27.8

28.4

32.6

Market capitalization equity ratio (%)

20.6

29.7

23.6

38.1

36.4

Interest-bearing debt to cash flow ratio

7.6

6.6

9.2

5.7

5.7

Interest coverage ratio

7.9

9.6

8.6

15.5

14.7

Notes:
Equity ratio: Shareholders’ equity / Total assets
Market capitalization equity ratio: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest expenses• All figures are based on the consolidated financial statements.
• Market capitalization is calculated by multiplying the fiscal year-end stock price and the number of shares issued at the end of the
fiscal year (after deducting treasury shares).
• Operating cash flows are the figure shown in the consolidated statement of cash flows. Interest-bearing debt is the sum of all
liabilities on the consolidated balance sheet on which interest is paid. Interest expenses are the figure shown in the consolidated
statement of cash flows.
(3) Fundamental policy for distribution of earnings and dividend for the current and the next fiscal years
While securing internal reserves necessary for future business development and management structure reinforcement, the basic policy is toreturn profits to shareholders by implementing stable dividends and dividends that are linked to business results.
In accordance with this policy, the year-end dividend for the fiscal year ended March 31, 2016 is set at ¥11.00 per share as previously
forecasted (includes an ordinary dividend of ¥9.00 and a ¥2.00 per share commemorative dividend for the 70th anniversary of the foundationand 100th anniversary in business). Combined with the already declared interim dividend of ¥9.00, the total annual dividend is expected to be¥20.00.
For the next fiscal year’s dividend, we expect an annual dividend of ¥22.00 per share (interim dividend of ¥11.00, year-end dividend of ¥11.00),
based on business results forecasts.
(4) Business risk
No discussion of business and other risks is presented here because there have been no significant changes involving these risks since themost recent Securities Report (dated June 26, 2015), which includes a section about business and other risks.

5

2.

Corporate GroupThe Senko Group includes Senko, 94 subsidiaries and five affiliated companies. To meet the increasingly diverse and exacting needsof customers, Group companies conduct a full line of logistics operations extending from the development of strategic logistics systems
to the operation of these systems. There are three business segments: Distribution, which includes cargo transport by truck, cargotransport by rail, warehouse operations, the operation of distribution centers, and other activities; Trading & Commerce, which includes
sales of petroleum products, trading sales and international trade; and Others, which includes outsourced data processing services,
motor vehicle maintenance, insurance agency services and other activities. A diagram of these business operations is presented below.

Customers

SENKO CO., LTD.
Distribution

Trading & Commerce

Others

Subsidiaries

Subsidiaries

Subsidiaries

○
○
○
○
○
○
○
○
○
○
○
○
○

Logi Solution Co., Ltd.
Senko Moving Plaza Co., Ltd.
Senko A Line Amano Co., Ltd.
Tokyo Nohin Daiko Co., Ltd.
Sapporo Senko Transport Co., Ltd.
Tohoku Senko Transport Co., Ltd.
Kanto Senko Transport Co., Ltd.
Kan-etsu Senko Logistics Co., Ltd.
Saitama Senko Transport Co., Ltd.
Senko Housing Logistics Co., Ltd.
Chiba Senko Transport Co., Ltd.
Senko Fashion Logistics Co., Ltd.
Kashiw a Senko Transport Co., Ltd.
Noda Senko Logi Service Co., Ltd.

○
○
○
○
○
○
○
○
○
○

○
○
○
○
○
○
○
○
○

○

Kanagaw a Senko Transport Co., Ltd.

Subsidiaries

○
○
○
○
○
○
○
○
○

Atsugi Senko Transport Co., Ltd.
Hokuriku Senko Transport Co., Ltd.
Fuji Senko Transport Co., Ltd.
Daito Senko Apollo Co., Ltd.
Tokai Senko Transport Co., Ltd.
Toyohashi Senko Transport Co., Ltd.
Mie Senko Logistics Co., Ltd.
Shiga Senko Transport Co., Ltd.
Osaka Senko Transport Co., Ltd.

○
○
○
○
○
○
○

○

Tokyo Nohin Daiko West Japan Co., Ltd.

○

Minami Osaka Senko Transport Co., Ltd.

○
○
○
○
○

Hanshin Senko Transport Co., Ltd.
Esaka Logistics Service Co., Ltd.
Hanshin Transport Co., Ltd.
Nara Senko Logistics Co., Ltd.
Okayama Senko Transport Co., Ltd.

○

Chugoku Piano transport Co., Ltd.

○
○
○
○
○
○
○
○

Sankyo Freight Co., Ltd.
Sanyo Senko Transport Co., Ltd.
Chushikoku Logistics Co., Ltd.
Fukuoka Senko Transport Co., Ltd.
Runtec Corporation
Kyushu Senko Logistics Co., Ltd.
Minami Kyushu Senko Co., Ltd.
Miyazaki Senko Transport Co., Ltd.

○

Senko Trading Co., Ltd.
AST CORPORATION
Smile Corp.
Marufuji Co., Ltd.
Fuji Label Co., Ltd.
Takano Machinery Works Co., Ltd.
Obata Co., Ltd.
Shanghai Smile Corp.
SHANGHAI SMILE PRINTING CORP.
HONG KONG SMILE CORP LIMITEDJapan Select LLPKOREA SMILE CORP.

○
○
○
○

Logi Solution Co., Ltd.
Senko Information System Co., Ltd.
Saitama Senko Transport Co., Ltd.
Chiba Senko Transport Co., Ltd.
Fuji Senko Transport Co., Ltd.
Tokai Senko Transport Co., Ltd.
Shiga Senko Transport Co., Ltd.
Minami Osaka Senko Transport Co., Ltd.
Shikoku Reefer Transport andWarehousing Co., Ltd.
Miyazaki Senko Transport Co., Ltd.
Senko Plantec Co., Ltd.
Senko Insurance Services Co., Ltd.
Senko Foods Co., Ltd.
Crefeel Koto Co., Ltd.

○○

Miyazaki Senko Apollo Co., Ltd.
Senko Plantec Co., Ltd.
S-TAFF Co., Ltd.
Kitahiroshima Ippan Shadan Hojin
IS Kitahiroshima Yugen Kaisha
SK Kaihatsu Ippan Shadan Hojin
SK Senboku Yugen Kaisha
Senko Medical Logistics Co., Ltd.
Delivery Ace Co., Ltd.

○Sankyo Butsuryu Niyaku Co., Ltd.

Affiliated Com panies○

Sankyo Logistics Co., Ltd.

△○

Senko (U.S.A.) Inc.
SENKO LOGISTICS MEXICO S.A. DE C.V
SK MARINE S.A.
Shenyang Senko Logistics Co., Ltd.
Dalian Tri-Enterprise Logistics Co., Ltd.

Subsidiaries
Senko Logistics Australia Pty Ltd.
Senko-Lancaster Silkroad Logistics LLP○ NH-SENKO Logistics Co., Ltd.

Qingdao Senko Logistics Co., Ltd.

Affiliated Com panies○○○

Senko Logistics (Shanghai) Co., Ltd.
Shanhai Senko International Freight Co., Ltd.
Guangzhou Senko Logistics Co., Ltd.
Senko International Logistics (Hong Kong) Ltd.
Senko (Thailand) Co.,Ltd.
SENKO GLOBAL LOGISTICS (Thailand) CO., LTD
Senko International Logistics Pte. Ltd.

○S-TAFF Co., Ltd.
Senko Business Support Co., Ltd.
Logi Factoring Co., Ltd.
Senko School Farm Tottori Co., Ltd.
PrettyPorters Co., Ltd.
Senko Asset Management Co., Ltd.
Kouki Corporation
Senko Facilities Co., Ltd.
Senko Logistics (U.S.A.) Inc.

Senko Private REIT investment Company

Moriyama Hoso Co., Ltd.
Hososhimako Niyaku Shinko Co., Ltd.
KO-SENKO Logistics Co.,Ltd.
Senko Logistics (Thailand) Co.,Ltd.

○: Consolidated subsidiaries△: Equity-method affiliate

63.

Management Policies(1) Fundamental management policy
The Senko Group is dedicated to becoming a company that earn the trust of shareholders, customers, employees and society andprovide benefits to these stakeholders by using highly advanced logistics and information technologies to create and provide servicesof the highest quality.
To accomplish this goal, group companies seek to maximize corporate value by supplying customers with high-quality, low-costvalue-added logistics services. From the standpoint of coexisting with society, the Senko Group also places priority on safety andenvironmental protection along with helping maintain social order. The aim is to create an energetic organization that is dedicated to
growth and trust and able to fulfill its obligations as a leading member of the logistics industry.
(2) Medium and long-term strategies
The Company celebrates its 100th anniversary in September 2016. To celebrate the 100th anniversary of its foundation, the Company
has established a vision of what is needed for “Becoming a logistics information company that can be trusted upon both in Japan andoverseas” and has accordingly created a medium-term business plan that covers the fiscal year started in 2013 through the fiscal year
ending in 2017.

Summary of the Senko Group Medium-term Business Plan (April 2013 to March 2017)1.

The shape that the Senko Group aims to achieve“Becoming a logistics information company that can be trusted upon both in Japan and overseas”*A logistics information company means: A company that has a good command of information, including logistics andtrade distribution, and provides the appropriate distribution and logistical services on a global scale.

2.

Corporate slogan: “Moving Global”
Go beyond logistics:
Provide customers with high-quality services beyond the framework of an existing logistics company.
Make the world go round:
Conduct a “global” business with social consciousness.
Revolutionize business:
Offer customers new value by cultivating an awareness of self-development in employees.

3.

Medium-term management policies(1) Aiming at the provision of comprehensive and integrated services, challenging the creation of products together
with expanding the range of our businesses in distribution and in trade logistics operations.
(2) Fostering a greater degree of trust among our customers, forming a high-quality and high-service structure.
(3) Reinforcing our staff training and employment activities to foster and retain group human resources (including
global human resources, and in-house entrepreneurs within the Group).
(4) Placing emphasis on compliance, and aiming to become a company that is in the vanguard of environmental,
safety, and health issues.
(5) Promoting financial policies that are based upon prioritizing the maintenance of financial soundness.

4.

Medium-term business policies(1) Expanding the operational scope of our “physical distribution business.”(2) Expanding the operational scope of our “commerce and trading business.”(3) Developing an “international distribution business” that prioritizes earnings(4) Taking on the challenge of “making things.”(5) Promoting “business partnerships and M&A.”

7

4. Basic Concept Regarding the Selection of Accounting Standards
To facilitate comparisons of its consolidated financial statements across time periods and with other companies, the Senko Groupintends to prepare its consolidated financial statements based on Japanese generally accepted accounting principles (JGAAP) for thetime being.
With regard to the adoption of international financial reporting standards (IFRS), Senko intends to monitor developments in Japan andoverseas, and to respond appropriately to these developments.

8

5.

Consolidated Financial Statements(1) Consolidated balance sheets(Unit: Millions of Yen)
As of March 31, 2015

As of March 31, 2016

AssetsCurrent assets
Cash and deposits

25,685

18,477

Notes and operating accounts receivable

56,602

58,107

Merchandise and finished goods

6,480

6,967

3

3

Work in process

191

200

Raw materials and supplies

437

335

Deferred tax assets

2,515

2,583

Other

6,374

6,734

(42)

(29)

98,24893,380Real estate for sale

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

141,085

134,201

Accumulated depreciation(72,650)(71,788)

Buildings and structures, net

68,43562,412

Machinery, equipment and vehicles

34,04835,670

Accumulated depreciation(26,073)(27,470)

Machinery, equipment and vehicles, net

7,975

8,200

Tools, furniture and fixtures

6,055

6,493

Accumulated depreciation(4,960)(5,108)Tools, furniture and fixtures, net

1,094

1,385

Land

66,22960,486

Leased Assets

7,405

6,848

Accumulated depreciation(4,356)(4,113)

Leased Assets, net

3,049

2,734

Construction in progress

3,027

1,504

149,811

136,723

Goodwill

4,311

4,038

Other

3,395

3,906

Total intangible assets

7,706

7,945

Investment securities

8,366

11,696Long-term loans receivable

4,967

3,755

Net defined benefit asset

2,009

-

Guarantee deposits

10,390

10,572

Deferred tax assets

2,734

2,553

Other

1,815

3,751

Allowance for doubtful accounts(741)(1,026)

Total investments and other assets

29,54331,302

187,061

175,971

Business commencement expenses-

108

Total deferred assets-

108

285,309269,461

Total property, plant and equipment
Intangible assets

Investments and other assets

Total non-current assets
Deferred assets

Total assets

9

(Unit: Millions of Yen)
As of March 31, 2015

As of March 31, 2016

Liabilities
Current liabilities
Notes and operating accounts payable−trade

37,98938,727

Current portion of bonds

20

5,000

Short-term loans payable

29,235

18,388

Lease obligations

1,837

1,935

Income taxes payable

3,415

3,219

Provision for bonuses

3,905

3,959

189

220

Other

15,96014,196

Total current liabilities

92,55485,647

Bonds payable

12,0007,000

Convertible bond-type bonds with subscription rights
to shares

6,868

5,037

Long-term loans payable

61,971

55,943

Lease obligations

3,419

3,591

369

363

Net defined benefit liability

9,381

7,621

Provision for special repairs

33

39

Asset retirement obligations

575

518

5,391

3,688

100,01183,804

192,565

169,451

Capital stock

23,09824,011

Capital surplus

21,914

22,838Retained earnings

36,67642,845

Treasury shares(1,183)(942)

Total shareholders’ equity

80,50688,752

1,819

1,448

(4)

(91)

Provision for directors’ bonuses

Non-current liabilities

Provision for directors’ retirement benefits

Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares

543

427

(1,839)(2,820)519(1,036)

288

359

Non-controlling interests

11,428

11,933

Total net assets

92,743100,009285,309269,461

Liabilities and net assets

10(2) Consolidated statements of (comprehensive) income(Consolidated statements of income)(Unit: Millions of Yen)
Fiscal year ended
March 31, 2015

Fiscal year ended
March 31, 2016

(April 1, 2014–March 31, 2015)(April 1, 2015–March 31, 2016)

Operating revenue

398,447

434,000

Operating cost

357,431386,321

Operating gross profit

41,01647,679Selling, general and administrative expenses

27,36630,181

Operating income

13,64917,497

Interest income

187

172

Dividend income

115

120

Other

890

1,052

1,193

1,345

1,213

1,101

395

562

1,608

1,663

13,234

17,17859

301

Compensation income for expropriation-

99

Gain on sales of investment securities

306-

Total extraordinary income

366

400

Provision of allowance for doubtful accounts for
subsidiaries and associates

82

400

Loss on retirement of non-current assets

192

181

Loss on cancellation of leases-

142

Loss on valuation of shares of subsidiaries andassociates

-

104

99

97

-

76

33

53

Special retirement expenses-

38

Cancel penalty-

35

Loss on sales of shares of subsidiaries andassociates-

32

Litigation settlement

98-

Loss on business withdrawal

41-

Total extraordinary losses

547

1,162

Profit before income taxes

13,053

16,416

Income taxes−current

4,465

5,527

Income taxes−deferred

958

638

Total income taxes

5,424

6,166

Profit7,629

10,250

555

1,707

7,073

8,542

Non-operating income

Total non-operating income
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets

Extraordinary losses

Compensation for damage
Expenses related to commemorative works forcentennial anniversary
Loss on sales of non-current assets

Profit attributable to non-controlling interests
Profit attributable to owners of parent

11

(Consolidated statements of comprehensive income)(Unit: Millions of Yen)
Fiscal year ended
March 31, 2015

Fiscal year ended
March 31, 2016

(April 1, 2014–March 31, 2015)(April 1, 2015–March 31, 2016)

Profit7,629

10,250

1,257

(353)

7

(94)

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment

257

(152)

Remeasurements of defined benefit plans, net of tax

652(1,019)Total other comprehensive income

2,175(1,620)Comprehensive income

9,804

8,630

9,059

7,087

745

1,542

Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable tonon-controlling interests12(3) Consolidated statements of changes in equity
Fiscal year ended March 31, 2015 (April 1, 2014–March 31, 2015)(Unit: Millions of Yen)
Shareholders’ equity
Capital stock
Balance at the beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

Capital surplus

20,521Retainedearnings

19,337

Treasury shares

31,064

Total
shareholders’equity(1,532)

69,390530
20,521

19,337

2,577

2,577

31,595530(1,532)

69,920Changes of items during period
Issuance of new shares

5,155

Dividends of surplus(2,064)(2,064)

Profit attributable to owners ofparent

7,073

7,073

Purchases of treasury shares

(10)

(10)

Disposal of treasury shares

360

360

Change of scope of consolidation

72

72

Net changes of items other thanshareholders’ equity−

Total changes of items during period

2,577

2,577

5,081

349

10,586

Balance at end of current period

23,09821,91436,676(1,183)80,506

Accumulated other comprehensive income

Balance at the beginning of current
periodCumulative effects of changes inaccounting policies
Restated balance

Valuationdifferencesonavailable-forsecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares

Noncontrollinginterests

738

(9)

230

(2,530)(1,570)

235

4,247

Total net
assets72,302
530

738

(9)

230

(2,530)(1,570)

235

4,247

72,832

Changes of items during period
Issuance of new shares

5,155

Dividends of surplus(2,064)

Profit attributable to owners ofparent

7,073

Purchases of treasury shares(10)

Disposal of treasury shares

360

Change of scope of consolidation72

Net changes of items other thanshareholders’ equity

1,081

5

313

690

2,090

52

7,181

9,324

Total changes of items during period

1,081

5

313

690

2,090

52

7,181

19,910

Balance at end of current period

1,819

(4)

543

(1,839)519

288

11,42892,74313

Fiscal year ended March 31, 2016 (April 1, 2015 – March 31, 2016)(Unit: Millions of Yen)
Shareholders’ equity
Capital stock
Balance at the beginning of current
periodCapital surplus

23,09821,914913

913

Retainedearnings

Treasury shares

36,676

Total
shareholders’equity(1,183)80,506

Changes of items during period
Issuance of new shares

1,826

Dividends of surplus(2,571)(2,571)

Profit attributable to owners ofparent

8,542

8,542

Purchases of treasury shares

(9)

(9)

Disposal of treasury shares

250

250

Change of scope of consolidation

197

Change in treasury shares ofparent arising from transactions
with non-controlling shareholders
Net changes of items other thanshareholders’ equity

197

10

10
-

Total changes of items during period
Balance at end of current period

913

923

6,168

240

8,245

24,011

22,83842,845(942)

88,752

Accumulated other comprehensive income

Balance at the beginning of current
periodValuationdifferencesonavailable-forsecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares

Noncontrollinginterests

1,819

(4)

543

(1,839)519

288

11,428

Total net
assets

92,743

Changes of items during period
Issuance of new shares

1,826

Dividends of surplus(2,571)

Profit attributable to owners ofparent8,542

Purchases of treasury shares(9)

Disposal of treasury shares

250

Change of scope of consolidation

197

Change in treasury shares ofparent arising from transactions
with non-controlling shareholders
Net changes of items other thanshareholders’ equity

10
(371)

(87)

(116)

(980)

(1,555)

71

504

(979)

Total changes of items during period

(371)

(87)

(116)

(980)

(1,555)

71

504

7,265

Balance at end of current period

1,448

(91)

427

(2,820)(1,036)359

11,933100,00914

(4) Consolidated statements of cash flows(Unit: Millions of Yen)
Fiscal year ended
March 31, 2015

Fiscal year ended
March 31, 2016

(April 1, 2014 – March 31, 2015)(April 1, 2015 – March 31, 2016)

Cash flows from operating activities
Profit before income taxes

13,053

16,416

Depreciation and amortization

8,856

9,925

Loss (gain) on sales of investment securities

(301)

-

Loss on valuation of shares of subsidiaries and associates-

104

Loss (gain) on sales of shares of subsidiaries and associates-

32

Loss (gain) on sales of non-current assets

(26)

(247)

Loss on retirement of non-current assets

192

181

Increase (decrease) in net defined benefit liability(638)(1,760)

Increase (decrease) in provision for bonuses

(14)

58

Interest and dividends income

(303)

(292)

Interest expenses

1,213

1,101

Decrease (increase) in notes and accounts receivable-trade772(1,748)Decrease (increase) in inventories

(533)

(405)

Increase (decrease) in notes and accounts payable-trade(1,365)

1,694

Increase (decrease) in accrued consumption taxes

2,998(1,779)

579

(497)

24,48322,782

214

225

Interest expenses paid

(1,238)(1,095)

Income taxes paid

(4,230)(5,762)

Net cash provided by (used in) operating activities

19,22816,149Other
Sub-totalInterest and dividends income received

Cash flows from investing activities
Purchase of property, plant and equipment(13,030)(17,994)

Proceeds from sales of property, plant and equipment

431

21,728Purchase of investment securities

(77)

(119)

Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Payments for sales of shares of subsidiaries resulting in change inscope of consolidation

126

524

(3,609)

-

-

(96)

(510)

(4,578)

9

-

Other

(1,318)(1,751)

Net cash provided by (used in) investing activities(17,978)(2,288)Net increase (decrease) in short-term loans payable

13,032(12,800)

Proceeds from long-term loans payable

6,800

5,780

Repayment of long-term loans payable(9,402)(9,644)

Repayments of finance lease obligations(2,135)(2,116)

Redemption of bonds(7,040)(20)

Proceeds from issuance of bonds

Purchase of shares of subsidiaries and associates
Proceeds from sales of shares of subsidiaries and associates

Cash flows from financing activities

7,000

-

Purchase of treasury shares

(10)

(9)

Proceeds from sales of treasury shares

360

250

(2,075)(2,571)

Other

(319)

(360)

Net cash provided by (used in) financing activities

6,209(21,492)

123

(79)

Net increase (decrease) in cash and cash equivalents

7,583(7,710)Cash and cash equivalents at beginning of period

17,66725,476225-

25,476

17,765

Cash dividends paid

Effect of exchange rate change on cash and cash equivalents

Increase in cash and cash equivalents from newly consolidated
subsidiary
Cash and cash equivalents at end of period15