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

SENKO Group Holdings Co., Ltd.

Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2018
[Japan GAAP]
November 10, 2017
Name of Listed Company: SENKO Group Holdings Co., Ltd.
Stock Listed on: The First Section of the Tokyo Stock Exchange
Code Number:
9069
URL http://www.senkogrouphd.co.jp/en/
Representative:
Title: President
Name: Yasuhisa Fukuda
Inquiries:
Title: Executive Officer, Public Relations and IR
Name: Noburoh Sasaki
Tel. (06) 6440-5155
Scheduled Date of Issue of Financial Report:
November 14, 2017
Scheduled Date of Dividend Paid: December 5, 2017
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, 2017
(1) Consolidated Operating Results
Operating revenue
Six months ended September 30, 2017
Six months ended September 30, 2016

Million yen
242,300
224,521%7.9
4.3

Note: Amounts less than ¥1 million have been rounded down.
Profit attributable toOperating profit
Ordinary profit
owners of parent
Million yen%
Million yen%
Million yen%
7,991(10.0)
8,025
(8.2)
4,351
(2.7)
8,875
7.4
8,741
10.6
4,471
3.4

(Note) Comprehensive income
Six months ended September 30, 2017: ¥6,264 million (23.0%)
Profitper share

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

Yen
28.68
31.24

Yen
26.60
29.39

Total assets
Million yen
311,358
285,958

Net assets
Million yen
120,208
114,090

Six months ended September 30, 2017
Six months ended September 30, 2016
(2) Consolidated Financial Position

As of September 30, 2017
As of March 31, 2017
(Reference) Shareholders’ equity:

As of September 30, 2017: ¥104,170 million

Equity ratio
%
33.5
35.1

Net assets per share
Yen
685.80661.61

As of March 31, 2017: ¥100,287 million

2. Dividends
June 30
Yen

September 30
Yen
11.00
11.00

−
Fiscal year ended March 31, 2017−
Fiscal year ending March 31, 2018
Fiscal year ending March 31, 2018
(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
22.00

−

11.00

22.00

3. Forecast of Consolidated Operating Results for the Fiscal Year Ending March 31, 2018 (From April 1, 2017 to March 31, 2018)
Operating revenue
Million yen%
Fiscal year ending March 31, 2018
500,000
9.8(Note) Change in the forecast made in this period: None

Operating profit
Million yen
18,000%
5.4(Percentage figures represent year-on-year changes)
Profit attributable toProfitOrdinary profit
owners of parent
per share
Million yen% Million yen%
Yen
18,300
5.8
9,900
10.6
65.31

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: None(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Shares outstanding (Common shares)(a) Shares outstanding (including treasury shares)
As of September 30, 2017:

152,861,921 shares

As of March 31, 2017:

152,861,921 shares

965,915 shares

As of March 31, 2017:

1,279,937 shares(b) Treasury shares
As of September 30, 2017:(c) Average number of shares (quarterly consolidated cumulative period)
Six months ended September 30, 2017: 151,724,773 shares

Six months ended September 30, 2016:

143,098,676 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, 2017: 589,000
shares; as of March 31, 2017: 873,200 shares)
Quarterly financial results reports are not required to be subjected to quarterly reviews.
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 full-term of the fiscal year ending March 31, 2018” 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 full-term of the fiscal year ending March 31, 2018................................................................................................... 4
2．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, 2016 and 2017 ............................................................................................................. 7
Consolidated statements of comprehensive income
For the six months ended September 30, 2016 and 2017 ............................................................................................................. 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, 2018 (April 1, 2017 to September 30, 2017), the Japanese economy has been
recovering at a moderate pace amid firm consumer spending and capital expenditure against backdrop of factors that include more
upbeat corporate earnings and a better employment environment. Meanwhile, the global economy has been on a path of recovery
brought about by factors that include a robust U.S. economy and an upturn in the emerging economies of Asia, despite continuing
uncertainties ahead largely fueled by effects of geopolitical risk.
In the logistics industry where our core business lies, freight volume has been heading toward recovery but the business environment
overall has remained challenging due to shortages of drivers and workers combined with increasing costs particularly with respect toexpenses for hiring vehicles and other outsourcing costs.
In this environment, the Senko Group transitioned to a holding company structure in April, 2017, and embarked on the “Senko Innovation
Plan 2021 (SIP21)” five-year medium-term business plan.
The following provides an outline of our main activities in the second quarter of the current fiscal year.
In Japan, in order to forge ahead with efforts to further expand our marine shipping business, we added NIPPON MARINE CO., LTD.
which engages in marine transport for the JX Nippon Mining & Metals Group, as well as with EIKICHI KAIUN CO., LTD, to the Senko
Group in April.
In October, the Group also added Kanto region cargo truck carrier ANZEN YUSO CO., LTD., based in Kanagawa Prefecture, in order toboost the use of the Group’s own trucks and expand its operations.
Regarding distribution centers, in April we commenced operations of the Yokkaichi No. 2 PD Center (Yokkaichi City, Mie Prefecture) withthe aim of fortifying our logistics functions in the Chubu region, and in July we commenced operations of our New Komaki PD Center(Oguchi town, Aichi Prefecture).
Also, in the East Japan region, in June we commenced operations of Ranzan Logistics Center (Ranzan Town, Saitama Prefecture), andin September Aomori Logistics Center (Goshogawara City, Aomori Prefecture), our first logistics facility located in Aomori Prefecture.
Meanwhile outside Japan, Singapore-based Skylift Consolidator (Pte) Ltd., which engages in the business of international air and marinetransport and other such operations, became a Group company in April. Going forward, we will aim to involve upgrading our logistics
network and strengthening our business infrastructure.
Also, our overseas subsidiary established last year in Vietnam launched full-scale forwarding business operations in May serving
Japanese companies situated in the suburbs of Ho Chi Minh City.
At the end of October, we completed construction of the NH-SENKO Logistics Center, which is our second such facility in South Korea’s
Busan New Port.
In the trading & commerce business segment, SMILE CORP. established an overseas subsidiary in Vietnam in April, and OKUMURA
CO., LTD., a company that manufactures and sells slippers, was brought into the Group in September. We have made the manufacturing
enterprise part of Group with the aims of improving our product development strengths and bolstering our price competitiveness, working
in conjunction with that company.
Meanwhile we added companies to the Group with the aim of expanding our areas of business, including Aya Construction Co., Ltd., acompany located in Miyazaki Prefecture which operates in the construction business and the industrial waste collection and transportation
business in July, and fitness club operator BLUE EARTH Co., Ltd. in September, with the aim of bolstering our nursing care, medical andhealth-related businesses.
In October, the Group welcomed VENUS CO., LTD., a company which operates services for seniors to prevent the need for long-termcare.
In June, we received the Logistics Environment Special Award at the Japan Association for Logistics and Transport’s 18th Logistics
Environment Awards Ceremony, in recognition of our initiatives to switch to the use of railroads and marine vessels, from trucks previously,
for long-distance transport of apparel, housing, food and other items, with respect to shifting modes of transport with the aim of reducing
environmental impact and addressing the driver shortage. In September, Japan’s Ministry of Land, Infrastructure and Transport (MLIT)
recognized our two new initiatives geared to achieving shifts to new modes of transport by certifying them as comprehensive and efficientlogistics plans based on the Act of Logistics Integration and Efficiency.
As of September 30, 2017, the modal shift rate of SENKO Co., Ltd. amounts to 65% (the modal shift rate is the ratio of railway and marine
cargo by weight relative to cargo, by weight, transported more than 500 kilometers via trunk line transportation).

2

The six-month-period performance was as follows.
(Unit: Millions of yen)

Operating revenue
Operating profit
Ordinary profit
Profit attributable to owners ofparentSix months ended
September 30, 2016
224,521Six months ended
September 30, 2017242,300

8,875
8,741
4,471

Change%17,779

7.9

7,991
8,025

(884)
(716)

(10.0)
(8.2)

4,351

(119)

(2.7)

Consolidated operating revenue of the Senko Group increased 7.9% year on year to ¥242,300 million. This result mainly reflected theaggressive expansion of sales and the contribution of NIPPON MARINE CO., LTD., which was made a consolidated subsidiary of theCompany.
On the profit front, despite factors buoying profits brought about by sales expansion and moves to make NIPPON MARINE CO., LTD. andanother entity consolidated subsidiaries, consolidated operating profit decreased to ¥7,991 million, down 10.0% year on year,
consolidated ordinary profit decreased to ¥8,025 million, down 8.2% year on year, and profit attributable to owners of parent decreased to¥4,351 million, down 2.7% year on year. The downturn in profits was largely attributable to factors that include higher costs due to risingfuel prices and actuarial differences in accounting for retirement benefit obligations, in addition to factors such as a decline in freight
volumes from existing customers and diminished demand in relation to the 2016 Kumamoto Earthquake.
The six-month-period operating revenue by segment was as follows.
Logistics
Operating revenue grew 8.2% year on year to ¥170,424 million in this segment. This was mainly attributable to higher revenues
generated through the consolidation of NIPPON MARINE CO., LTD. and another entity, increased operations due to the opening of large
facilities in the previous fiscal year and expanded sales in relation to retailers and mass merchandisers, such as major drug stores.
Trading & commerce
Operating revenue grew 6.0% year on year to ¥68,584 million in this segment. This was mainly attributable to higher revenues due toincreasing fuel prices along with expansion of sales to new customers, despite diminished demand in relation to the 2016 Kumamoto
Earthquake.
OthersOperating revenue rose 40.8% year on year to ¥3,291 million in this segment. This was mainly attributable to the growth of sales in thecall center business.
(2) Financial condition
1) Assets, liabilities and net assets
Total assets
Total assets as of September 30, 2017 were ¥311,358 million, ¥25,400 million higher than at the end of the previous fiscal year. Current
assets amounted to ¥116,808 million, up ¥8,109 million from the end of the previous fiscal year. This mainly reflected an increase of¥8,018 million in notes and operating accounts receivable. Non-current assets totaled ¥194,479 million, up ¥17,303 million from the endof the previous fiscal year. This was primarily due to increases in property, plant and equipment of ¥10,257 million due to effects of M&As
and new capital expenditure, and despite a decreasing factor as a result of transfers of three logistics centers to the private REIT, ¥868
million in intangible assets and ¥6,177 million in investments and other assets.
Liabilities
Liabilities as of September 30, 2017 increased ¥19,282 million from the end of the previous fiscal year to ¥191,150 million. Current
liabilities totaled ¥99,706 million, up ¥5,791 million from the end of the previous fiscal year. This was mainly due to increases of ¥2,651
million in notes and operating accounts payable - trade, ¥657 million in electronically recorded obligations - operating, and ¥627 million inprovision for bonuses. Non-current liabilities totaled ¥91,443 million, up ¥13,490 million from the end of the previous fiscal year. This wasprimarily due to an increase in long-term loans payable of ¥12,490 million.
Net assets
Net assets as of September 30, 2017 rose ¥6,117 million from the end of the previous fiscal year to ¥120,208 million. This was mainly
attributable to increases of ¥2,839 million in retained earnings, and ¥2,257 million in non-controlling interests. The equity ratio as of
September 30, 2017 decreased by 1.6 percentage points to 33.5% from the end of the previous fiscal year.

32) Cash flows
Cash and cash equivalents as of September 30, 2017 decreased by ¥882 million from the end of the previous fiscal year to ¥25,314
million.
Net cash provided by operating activities amounted to ¥10,731 million. This was mainly due to profit before income taxes of ¥7,939 million,
depreciation of ¥5,817 million, an increase in cash due to an increase in notes and accounts payable-trade of ¥1,257 million andproceeds from subsidy income of ¥1,252 million, and despite a ¥4,101 million decrease in cash from an increase in notes and accounts
receivable-trade and income taxes paid of ¥3,071 million.
Net cash used in investing activities totaled ¥10,728 million. This was mainly due to the purchase of property, plant and equipment of¥13,724 million, purchase of shares of subsidiaries resulting in change in scope of consolidation of ¥1,375 million, and purchase of sharesof subsidiaries and associates of ¥4,153 million and payments for investments in capital of subsidiaries and associates of ¥1,082 million,
despite proceeds from sales of property, plant and equipment of ¥10,493 million.
Net cash used in financing activities totaled ¥922 million. This was mainly due to a repayment of long-term loans payable of ¥9,184 million,
repayments of finance lease obligations of ¥1,599 million, and cash dividends paid of ¥1,675 million, despite net increase in short-termloans payable of ¥3,862 million and proceeds from long-term loans payable of ¥8,092 million.
(3) Forecast for the full-term of the fiscal year ending March 31, 2018
No revisions have been made to the forecast of consolidated operating results for the fiscal year ending March 31, 2018, announced in“Summary of Financial Statements for the Fiscal Year Ended March 31, 2017” on May 11, 2017.

4

2.

Consolidated Financial Statements(1) Consolidated balance sheets(Unit: Millions of Yen)
As of March 31, 2017

As of September 30, 2017

AssetsCurrent assets
Cash and deposits

27,162

26,534

Notes and operating accounts receivable

61,97569,994Merchandise and finished goods

7,006

7,130

Work in process

305

415

Raw materials and supplies

292

445

11,97812,303(21)(15)

108,699

116,808

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

53,42049,049Land

56,70057,730

Other, net

19,99333,591

Total property, plant and equipment

130,114140,371

Goodwill

5,617

6,127

Other

4,086

4,445

Total intangible assets

9,704

10,572

Investment securities

16,452

21,167

Net defined benefit asset

2,359

2,844

Guarantee deposits

11,197

11,759Deferred tax assets

2,050

1,987

Other

6,322

6,793

Allowance for doubtful accounts(1,025)(1,017)

Total investments and other assets

37,35743,535

177,175

194,479

Business commencement expenses

83

70

Total deferred assets

8370

285,958

311,358

Intangible assets

Investments and other assets

Total non-current assets
Deferred assets

Total assets

5

(Unit: Millions of Yen)
As of March 31, 2017

As of September 30, 2017

Liabilities
Current liabilities
Notes and operating accounts payable−trade33,731

36,383

Electronically recorded obligations−operating

6,773

7,430

Short-term loans payable

25,631

25,242

Income taxes payable

3,916

2,965

Provision for bonuses

4,228

4,856

Provision for directors’ bonuses

210

152

Provision for loss on disaster

96

–

Other

19,32722,675

Total current liabilities

93,914

99,706

Bonds payable

7,000

7,240

Convertible bond-type bonds with subscription rights
to shares

10,04910,044Long-term loans payable

42,48354,974

Provision for directors’ retirement benefits

276

150

Provision for special repairs

37

74

Net defined benefit liability

7,087

7,047

Asset retirement obligations

817

828

Other

10,20011,083

Total non-current liabilities

77,95391,443

171,868

191,150

Capital stock

26,52826,528

Capital surplus

25,411

25,398Retained earnings

48,65451,494

Treasury shares

(657)

(426)

99,937

102,994

1,391

1,733

1

37

250

219

(1,293)

(814)

350

1,176

Non-current liabilities

Total liabilities
Net assets
Shareholders’ equity

Total 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

396

373

Non-controlling interests

13,406

15,664

Total net assets

114,090

120,208

285,958

311,358

Total liabilities and net assets

6

(2) Consolidated statements of (comprehensive) income(Consolidated statements of income)(For the six months ended September 30, 2016 and 2017)(Unit: Millions of Yen)
Six months ended
September 30, 2016

Six months ended
September 30, 2017

(April 1, 2016–September 30, 2016)(April 1, 2017–September 30, 2017)

Operating revenue

224,521242,300

Operating cost

199,642

217,093

Operating gross profit

24,87925,207

Selling, general and administrative expenses

16,003

17,216

Operating profit

8,875

7,991

61

43

Non-operating income
Interest income
Dividend income

81

89

Other

597

789

Total non-operating income

739

922

Interest expenses

499

476

Other

374

413

Total non-operating expenses

873

889

8,741

8,025

–

157

Gain on sales of non-current assets

186

110

Gain on sales of investment securities

–

66

186

334

Non-operating expenses

Ordinary profit
Extraordinary income
Delinquency charges

Total extraordinary income
Extraordinary losses
Loss on office withdrawal–

311

Loss on retirement of non-current assets

51

109

Expenses related to commemorative works forcentennial anniversary

133–

Loss on disaster88–

Total extraordinary losses

273

420

Profit before income taxes

8,654

7,939

Income taxes−current

2,658

2,410

Income taxes−deferred

469

131

Total income taxes

3,128

2,542

Profit

5,526

5,396

Profit attributable to non-controlling interests

1,055

1,044

Profit attributable to owners of parent

4,471

4,351

7

(Consolidated statements of comprehensive income)(For the six months ended September 30, 2016 and 2017)(Unit: Millions of Yen)
Six months ended
September 30, 2016

Six months ended
September 30, 2017

(April 1, 2016–September 30, 2016)(April 1, 2017–September 30, 2017)

Profit

5,526

5,396

Valuation difference on available-for-sale securities

(117)

390

Deferred gains or losses on hedges

(31)

36

Foreign currency translation adjustment

(448)

(42)

Remeasurements of defined benefit plans, net of tax

165

483

Total other comprehensive income

(431)

868

5,094

6,264

Comprehensive income attributable to owners ofparent

4,069

5,177

Comprehensive income attributable tonon-controlling interests

1,025

1,087

Other comprehensive income

Comprehensive income
Comprehensive income attributable to8

(3) Consolidated statements of cash flows(Unit: Millions of Yen)
Six months ended
September 30, 2016

Six months ended
September 30, 2017

(April 1, 2016–September 30, 2016)(April 1, 2017–September 30, 2017)

Cash flows from operating activities
Profit before income taxes

8,654

7,939

Depreciation

5,038

5,817

Loss (gain) on sales of non-current assets

(185)

(102)

Loss on retirement of non-current assets

51

109

Decrease (increase) in net defined benefit asset

(209)

136

Increase (decrease) in net defined benefit liability

2

(78)

Increase (decrease) in provision for bonuses

521

493

Interest and dividend income

(142)

(133)

Interest expenses

499

476

Decrease (increase) in notes and accounts
receivable-trade68(4,101)

Decrease (increase) in inventories

(197)

247

Increase (decrease) in notes and accounts
payable-trade

(688)

1,257

Increase (decrease) in accrued consumption taxes

861

711

Other

169

(7)

Subtotal

14,443

12,765–

1,252Interest and dividend income received

199

271

Interest expenses paid

(501)

(487)

Income taxes paid

(3,456)(3,071)

Net cash provided by (used in) operating activities

10,685

10,731

Purchase of property, plant and equipment(6,471)(13,724)

Proceeds from sales of property, plant andequipment

17,296

10,493

Proceeds from subsidy income

Cash flows from investing activities

Purchase of investment securities

(40)

(33)

Proceeds from sales of investment securities–

145

Purchase of shares of subsidiaries resulting inchange in scope of consolidation(325)(1,375)Purchase of shares of subsidiaries and associates(2,735)(4,153)

Payments for investments in capital of subsidiaries
and associates–(1,082)

Other

(400)

(998)

Net cash provided by (used in) investing activities

7,323(10,728)

135

3,862

Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable

3,050

8,092

Repayment of long-term loans payable(4,038)(9,184)

Repayments of finance lease obligations(1,336)(1,599)Proceeds from sales of treasury shares

203

209

(1,585)(1,675)

Dividends paid to non-controlling interests

(59)

(124)

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

(58)

–

Other

(109)

(503)

(3,800)

(922)

(239)

(17)

Net increase (decrease) in cash and cash equivalents

13,968(937)

Cash and cash equivalents at beginning of period

17,76526,197

Increase in cash and cash equivalents from newly
consolidated subsidiary5

55

31,73925,314

Cash dividends paid

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