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, 2014
[Japan GAAP]
October 31, 2013
Name of Listed Company: SENKO Co., Ltd.
Stock Listed on: the First Section of the Tokyo Stock Exchange
Code Number:
9069
URL http://www.senko.co.jp/en/
Representative:
Title: President
Name: Yasuhisa Fukuda
Inquiries:
Title: Executive Officer, Public Relations
Name: Noburoh Sasaki
Tel. (06) 6440-5155
Scheduled Date of Issue of Financial Report:
November 12, 2013
Scheduled Date of Dividend Paid: December 3, 2013
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, 2013
(1) Consolidated Operating Results

Six months ended September 30, 2013
Six months ended September 30, 2012
(Note) Comprehensive income

Operating revenues
Million yen%
151,189
4.7
144,412
13.9

Note: Amounts less than ¥1 million have been rounded down.
Operating income
Ordinary income
Net income
Million yen%
Million yen%
Million yen
%
5,465
17.3
5,063
7.5
3,374
26.2
4,658
22.6
4,711
28.9
2,674
62.5

Six months ended September 30, 2013 ¥3,686 million (62.5%)
Six months ended September 30, 2012 ¥2,268 million (40.9%)
Net income
per share
Yen
26.46
21.26

Diluted net income
per share
Yen
23.94
19.20

Total assets
Million yen
219,153
208,095

Net assets
Million yen
70,28067,327Six months ended September 30, 2013
Six months ended September 30, 2012
(2) Consolidated Financial Position

As of September 30, 2013
As of March 31, 2012
(Reference) Shareholders’ equity:

As of September 30, 2013 ¥68,027 million

Equity ratio
%
31.0
31.3

Net assets per shareYen
529.84521.48

As of March 31, 2012 ¥65,139 million

2. Dividends
June 30
Yen

September 30
Yen
7.00
8.00

Annual dividend
December 31
Yen−
Fiscal year ended March 31, 2013−
Fiscal year ending March 31, 2014
Fiscal year ending March 31, 2014
(Forecast)(Note) Change in the estimation of dividend for the fiscal year in this period: Yes

March 31

Total

−

Yen
7.00

Yen
14.00

−

8.00

16.00

The dividend forecast announced on April 25, 2013 has been revised. Please see “(Reference) Fundamental policy for distribution of
earnings and dividend for the fiscal year ending March 31, 2013” on page 4.
3. Forecast of Consolidated Operating Results for the Fiscal Year Ending March 31, 2014 (From April 1, 2013 to March 31, 2014)
Operating revenues Operating income
Million yen
325,000%
10.7

Fiscal year ending March 31, 2014
(Note) Change in the forecast made in this period: Yes

Million yen
12,200%23.1(Percentage figures represent year on year changes)
Net income
Ordinary income
Net income
per share
Million yen% Million yen%
Yen
11,400 12.9
6,400 23.0
50.20

Forecast stated in the results of operations for the fiscal year ending March 2014 announced on April 25, 2013 has been revised.
Please refer to “Forecast for the Fiscal Year Ending March 31, 2014” on page 4.

Notes(1) Changes in significant subsidiaries during the period (Changes in specified subsidiaries associated with change in scope of
consolidation): None
(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting principles and estimates, and retrospective restatement(a) Changes due to revision of accounting standards: Yes(b) Changes other than in (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Shares outstanding (Common shares)(a) Shares outstanding (including treasury stocks)
As of September 30, 2013

128,989,476 shares

As of March 31, 2013

128,989,476 shares

597,240 shares

As of March 31, 2013

4,077,506 shares(b) Treasury stock
As of September 30, 2013(c) Average number of shares (quarterly consolidated cumulative period)
Six months ended September 30, 2013

127,498,771 shares

Six months ended September 30, 2012

125,823,604 shares

Information concerning quarterly review procedure
This quarterly financial report is not subject to the quarterly review procedure prescribed by the Financial Instruments and Exchange 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.
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, 2014” on page 4.

Index to accompanying materials

1．Results of Operations and Financial Condition ........................................................................................................................................ 2(1) Results of operations ......................................................................................................................................................................... 2(2) Financial condition ............................................................................................................................................................................. 3(3) Forecast for the fiscal year ending March 31, 2014 ......................................................................................................................... 4
2．Other Information ...................................................................................................................................................................................... 5(1) Changes in significant subsidiaries ..................................................................................................................................................... 5(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements .............................. 5(3) Changes in accounting principles and estimates, and retrospective restatement ............................................................................ 5
3．Consolidated Financial Statements .......................................................................................................................................................... 6(1) Consolidated balance sheets ............................................................................................................................................................ 6(2) Consolidated statements of (comprehensive) income ..................................................................................................................... 8
Consolidated statements of income
For the six months ended September 30, 2012 and 2013 ............................................................................................................... 8
Consolidated statements of comprehensive income
For the six months ended September 30, 2012 and 2013 ............................................................................................................... 9(3) Consolidated statements of cash flows ........................................................................................................................................... 101

1.

Results of Operations and Financial Condition(1) Results of operations
In the six-month period of the fiscal year ending March 31, 2014 (April 1, 2013 to September 30, 2013), the Japanese economy
gradually recovered supported by robust domestic demand against a backdrop of the following factors: rising expectations for
economic recovery through the government’s economic stimulation measures, a recovery in consumer spending due to last-minutedemand before the consumption tax hike, and visible signs of an improvement in capital expenditures reflecting improved corporate
earnings.
In the logistics industry, there were signs of a growth in cargo of construction-related materials reflecting increasing public projects
and consumer spending-related goods due to the spike in demand ahead of the consumption tax hike. Meanwhile, with fuel prices
remaining at a high level due to the yen’s depreciation, subsequent high fuel costs weighed on the industry as a whole.
In this environment, the Senko Group established a new four-year medium-term business plan that started in the fiscal year underreview and is based on the slogan “Moving Global.” The plan has three goals: go beyond logistics, make the world go round, andrevolutionize business. The Group is working on achieving growth in the distribution business and commerce and trade businessas well as on fostering a greater degree of trust among our customers by building a structure for services with high quality andoutstanding performance in relation to the cost.
In the first half, we started operation of the Sapporo PD Center No. 2 Warehouse (Sapporo City) and new warehouses at the Daimon
Distribution Center (Moriyama City, Shiga Prefecture) in April 2013. We also placed in commission an asphalt tanker that wasconstructed under a joint investment by the Company and a shipper in May 2013. In addition, we opened the Chubu Housing
Distribution Center (Nagoya City) as a logistics hub for housing materials in the Chubu region in August 2013 and the Komaki No. 2
PD Center (Komaki City, Aichi Prefecture) in September 2013 to expand our business base in the Chubu region.
Overseas, we continued to take actions aimed at strengthening and enlarging our international distribution business. Our actions
include the following: component procurement and transportation services for Japanese automobile plants in Thailand that started in
April 2013; the construction of a distribution center at Busan New Port in South Korea that began in June 2013; and distribution
services for Japanese retailers in China that commenced in September 2013.
In the commerce and trade business segment, in September 2013 we concluded a capital and business alliance agreement with ASTCORPORATION, one of the largest wholesalers of household paper products, in which we acquired a majority of the shares in AST.
We will develop a business model featuring the integration of flow of trading activities and physical flow of goods by making full use ofboth AST’s abilities to plan and sell products and Senko’s know-how in logistics and nationwide distribution network.
In addition, as a part of environmental burden reduction activities, we started photovoltaic power generation by making efficient use ofour distribution centers’ roofs and launched the solar electricity sales business in September 2013.
The six-month-period performance was as follows.
(Unit: Millions of Yen)
Six months ended
September 30, 2012
144,412Six months ended
September 30, 2013
151,189

Operating income
Ordinary income

4,658
4,711

Net income

2,674

Operating revenues

Change

%
6,777

4.7

5,465
5,063

807
352

17.3
7.5

3,374

699

26.2

Consolidated operating revenues for the six-month period ended September 30, 2013 increased 4.7% from one year earlier to¥151,189 million as revenues increased in both the distribution and the commerce and trade business segments. Earnings benefited
from the growth in sales, cost-cutting measures and activities to raise productivity. The consolidation of special-purpose companies
associated with a revision to an accounting standard also affected earnings. As a result, operating income increased 17.3% to ¥5,465
million, ordinary income increased 7.5% to ¥5,063 million, and net income increased 26.2% to ¥3,374 million.

2

The six-month-period business segment performance was as follows.
Distribution
In retail product logistics, an increase in the volume of cargo for general merchandise stores, discount stores, and apparel volumeretailers contributed to growth in operating revenues and there was progress in developing relationships with new customers in theelectrical machinery and other machinery sector. In the housing logistics business, the cargo volume was higher along with theincreasing in housing starts in Japan. In the chemicals logistics business, the Group conducted aggressive activities to increase sales,
as production, exports and imports were sluggish in the chemical industry. The result was operating revenues of ¥116,931 million,
3.9% higher than one year earlier.
Commerce and trade
In the commerce business, progress with activities to increase sales in the petroleum marketing business and a contribution torevenues from Obata Co., Ltd., a wholesaler of household products that joined the Senko Group in October 2012. In the tradebusiness, there was an increase in exports of electronic components to China. The result was operating revenues of ¥32,814 million,
8.1% higher than one year earlier.
OthersIn this segment, operating revenues decreased 5.4% from one year earlier to ¥1,444 million, partly because of a decline in orders
received for outsourced data processing services.
(2) Financial condition
1) Assets, liabilities and net assets
Total assets
Total assets as of September 30, 2013 were ¥219,153 million, ¥11,058 million higher than at the end of the previous fiscal year.
There were increases of ¥2,222 million in current assets and ¥20,497 million in property, plant and equipment, while investments andother assets decreased ¥11,350 million. The consolidation of special-purpose companies caused increases of ¥1,633 million incurrent assets and ¥13,602 million in property, plant and equipment, and a decrease of ¥10,742 million in investments and otherassets.
Liabilities
Liabilities increased ¥8,105 million from the end of the previous fiscal year to ¥148,873 million. Long-term loans payable increased¥11,237 million and provision for retirement benefits decreased ¥3,266 million. The consolidation of special-purpose companies
caused increases of ¥1,556 million in current liabilities and ¥2,945 million in noncurrent liabilities.
Net assets
Net assets increased ¥2,953 million from the end of the previous fiscal year to ¥70,280 million. Retained earnings increased ¥2,493
million. The equity ratio decreased by 0.3 percentage point to 31.0%.
2) Cash flows
Cash and cash equivalents as of September 30, 2013 totaled ¥20,066 million, an increase of ¥4,375 million from the end of theprevious fiscal year.
Net cash provided by operating activities was ¥4,686 million. Major sources of cash were income before income taxes of ¥5,716
million, depreciation and amortization of ¥3,702 million, and a ¥2,768 million decrease in notes and accounts receivable-trade, whileuses of cash involved a ¥3,266 million decrease in provision for retirement benefits, a ¥1,405 million decrease in notes and accounts
payable-trade, and income taxes paid of ¥2,447 million.
Net cash used in investing activities was ¥6,943 million. The main use of cash involved purchases of property, plant and equipment
totaling ¥8,288 million, while the main source of cash was proceeds of ¥1,024 million from sales of investment securities.
Net cash provided by financing activities was ¥4,988 million. There were proceeds of ¥12,740 million from long-term loans payable,
while cash was used mainly by repayments of ¥6,091 million for long-term loans payable, repayments of ¥1,213 million for financelease obligations, and cash dividends of ¥873 million.

3(3) Forecast for the fiscal year ending March 31, 2014
The outlook for the Japanese economy is expected to remain solid supported by domestic demand, such as last-minute demand
before the consumption tax hike and capital expenditures by private companies.
In this environment, based on its medium-term management plan, the Senko Group will develop and provide high-value-added
services, expand the distribution center business, strengthen businesses in the Asian region, develop new businesses, and enhance
profitability.
Considering the consolidation of special purpose companies associated with a revision to an accounting standard and ASTCORPORATION, we have revised the forecast of consolidated operating results for the fiscal year ending March 31, 2014 as follows:
Operatingrevenues
Million yen

Operating income

Ordinary income

Million yen

Million yen

Million yen

Net income
per share
Yen

Net income

Previous forecast (A)310,000

11,00011,000

6,000

47.40

Revised forecast (B)Difference (B – A)

325,000
15,00012,2001,200

11,400
400

6,400
400

50.20
−

4.8

10.9

3.6

6.7

−

293,534

9,908

10,100

5,202

41.45

Difference (%)
Reference: Previous
operating results (the fiscal
year ended March 31, 2013)(Reference) Fundamental policy for distribution of earnings and dividend for the fiscal year ending March 31, 2013
The fundamental policy is to return earnings to shareholders by paying stable dividends and dividends that are linked toresults of operations while maintaining the internal reserves needed for future business development and management
structure reinforcement. In accordance with this policy, based on six-month consolidated results of operations andforecast of consolidated operating results for the fiscal year ending March 31, 2014, Senko plans to pay an annual
dividend of ¥16.00 per share, the sum of a ¥8.00 interim dividend and ¥8.00 year-end dividend.
Dividends per share (yen)Record datePrevious forecast(announced on April 25, 2013)
New forecast
Results for the six months
ended September 30, 2013
Results for the fiscal year
ended March 31, 2013

September 30

March 31Annual dividend

7.00

7.00

14.00

8.00

16.00

7.00

14.00

8.00
7.00

4

2. Other Information(1) Changes in significant subsidiaries
None(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements
None(3) Changes in accounting principles and estimates, and retrospective restatement
Change in accounting principle(Application of accounting standard for consolidated financial statements)
Starting with the six-month period of the fiscal year ending March 31, 2014, Senko is applying the Accounting Standard forConsolidated Financial Statements (ASBJ Statement No. 22, March 25, 2011), Guidance on Disclosure about Certain Special
Purpose Entities (ASBJ Guidance No. 15, March 25, 2011), Guidance on Determining a Subsidiary and an Affiliate (ASBJ Guidance
No. 22, March 25, 2011), and Practical Solution on Application of the Control Criteria and Influence Criteria to Investment
Associations (ASBJ Practical Issues Task Force No. 20, March 25, 2011). As a result, Y.K. SK Urawa and five other companies havebecome consolidated subsidiaries.
For the application of the above accounting standards and other items to the six newly consolidated subsidiaries, in accordancewith the transitional handling prescribed in Section 44-4 (3) of the Accounting Standard for Consolidated Financial Statements, atthe beginning of the first fiscal year of applying this standard the assets and liabilities of the six newly consolidated subsidiaries
were valued at a suitable book value for inclusion in the consolidated balance sheet.
The consolidation of these six companies did not have a material effect on retained earnings at the beginning of the six-month periodof the fiscal year ending March 31, 2014.

5

3. Consolidated Financial Statements(1) Consolidated balance sheets(Unit: Millions of Yen)
As of March 31, 2013

As of September 30, 2013

AssetsCurrent assets
Cash and deposits

15,69020,066

Notes and accounts receivable

42,38739,627

Merchandise

4,399

4,526

Real estate for sale

3

3Work in process

190

172

Supplies

186

180

Other

6,072

6,561

(66)

(54)

68,86371,085

Buildings and structures (net)44,117

57,691

Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipmentLand

40,09844,108Other (net)11,38914,302

Total property, plant and equipment

95,605

116,102

Intangible assets
Goodwill

3,452

3,316

Other

3,477

3,302

Total intangible assets

6,930

6,619

Investments and other assets
Guarantee deposits

9,252

9,323

Deferred tax assets

3,435

2,782

Other

24,407

13,661

Allowance for doubtful accounts

(399)

(420)

Total investments and other assets

36,69625,346139,232

148,068

208,095

219,153

Total noncurrent assets
Total assets

6

(Unit: Millions of Yen)
As of March 31, 2013

As of September 30, 2013

Liabilities
Current liabilities
Notes and operating accounts payable-trade

31,37730,245

Short-term loans payable

14,475

15,246

Income taxes payable

2,540

1,757

Provision for bonuses

3,118

3,439

181

74

Other

12,142

12,124

Total current liabilities

63,83562,887

Bonds payable

12,00012,000Convertible bond-type bonds with subscription rights

5,000

5,000

Long-term loans payable

41,74952,987

Provision for retirement benefits

9,269

6,002

65

62

Provision for directors’ bonuses

Noncurrent liabilities

Provision for directors’ retirement benefits
Provision for special repairs

61

54

Asset retirement obligations

324

327

Other

8,462

9,550

Total noncurrent assets

76,931

85,985

140,767

148,873

Capital stock

20,521

20,521

Capital surplus

18,782

18,834Retained earnings

26,46828,962

Treasury stock(1,353)(1,214)

Total shareholders’ equity

64,418

67,103

Valuation differences on available-for-sale securities

673

787

Deferred gains or losses on hedges

(4)

(14)

Foreign currency translation adjustment

52

150

Total accumulated other comprehensive income

720

923

195

235

Minority interests

1,992

2,017

Total net assets

67,32770,280208,095

219,153

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Subscription rights to shares

Liabilities and net assets

7

(2) Consolidated statements of (comprehensive) income(Consolidated statements of income)(For the six months ended September 30, 2012 and 2013)(Unit: Millions of Yen)
Six months ended

Six months ended

September 30, 2012

September 30, 2013

(April 1, 2012–September 30, 2012)(April 1, 2013–September 30, 2013)

Operating revenues

144,412151,189

Cost of sales

129,976

135,583

Gross profit

14,436

15,605

Selling, general and administrative expenses

9,777

10,139Operating income

4,658

5,465

Interest income

87

78

Dividend income

473

57

Other

282

272

Total non-operating income

843

409

Interest expenses

586

624

Other

204

187

Total non-operating expenses

790

811

4,711

5,063

Gain on sales of investment securities−

549

Gain on revision of retirement benefit plan−

239

Gain on sales of noncurrent assets−

145

Insurance income−

32

Total extraordinary income

−

966

−

134

−

104

−

51

−

22

Loss on valuation of investment securities

35−

Total extraordinary loss

35

313

Income before income taxes

4,675

5,716

Income taxes-current

1,708

1,764

Income taxes-deferred

275

536

Total income taxes

1,984

2,301

Income before minority interests

2,690

3,415

Minority interest in income or loss

16

41

2,674

3,374

Non-operating income

Non-operating expenses

Ordinary income
Extraordinary income

Extraordinary loss
Loss on retirement of noncurrent assets
Loss on valuation of investments in capital of subsidiaries andaffiliates
Loss on cancellation of lease contracts
Provision of allowance for doubtful accounts for subsidiaries andaffiliates

Net income8

(Consolidated statements of comprehensive income)(For the six months ended September 30, 2012 and 2013)(Unit: Millions of Yen)

Income before minority interests

Six months ended

Six months ended

September 30, 2012

September 30, 2013

(April 1, 2012–September 30, 2012)(April 1, 2013–September 30, 2013)

2,690

3,415

Valuation difference on available-for-sale securities

(218)

122

Deferred gains or losses on hedges

(216)

(9)

Foreign currency translation adjustment

12

158

Share of other comprehensive income of associates accounted forusing the equity method

0

−

(421)

271

2,268

3,686

2,257

3,577

11

109

Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests9(3) Consolidated statements of cash flows(Unit: Millions of Yen)
Six months ended

Six months ended
September 30, 2012

September 30, 2013

(April 1, 2012–September 30, 2012)(April 1, 2013–September 30, 2013)

Cash flows from operating activities
Income before income taxes

4,675

5,716

Depreciation and amortization

3,325

3,702

Loss on retirement of noncurrent assets

7

134

Loss (gain) on valuation of investment securities

35−

Loss (gain) on sales of investment securities

−

(549)

Loss (gain) on sales of noncurrent assets

0

(145)

Increase (decrease) in provision for retirement benefits

29(3,266)

Increase (decrease) in provision for bonuses

239

320

Increase (decrease) in provision for loss on disaster

(43)

−

Interest and dividends income

(561)

(136)

Interest expenses

586

624

Decrease (increase) in notes and accounts receivable-trade

482

2,768

Decrease (increase) in inventories

138

(103)

(2,158)(1,405)

Other

(209)

(1)

Sub-total

6,549

7,658

Increase (decrease) in notes and accounts payable-trade

Interest and dividends income received

119

100

(580)

(625)

Income taxes paid

(2,203)(2,447)

Net cash provided by (used in) operating activities

3,885

4,686

(3,256)(8,288)Proceeds from sales of property, plant and equipment

44

359

Purchase of investment securities

(23)

(26)

2

1,024

23

−

−

(143)

Interest expenses paid

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

Proceeds from sales of investment securities
Proceeds from purchase of investments in subsidiaries resulting inchange in scope of consolidation
Purchase of stocks of subsidiaries and affiliates
Income from sales of stocks of subsidiaries and affiliates
Other
Net cash provided by (used in) investing activities

22

12

(385)

118

(3,570)(6,943)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable(2,283)420

Proceeds from long-term loans payable

6,506

12,740

Repayment of long-term loans payable(2,310)(6,091)

Repayments of finance lease obligations(1,100)(1,213)

Proceeds from issuance of bonds with subscription rights

5,000

−

Expense from issuance of bonds with subscription rights(4,900)−Purchase of treasury stock

(1)

(2)

Proceeds from sales of treasury stock0172

Cash dividends paid

(713)

(873)

Other

(159)

(162)

37

4,988

8

52

361

2,783

13,354

15,690−1,591

13,71520,066

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Net increase (decrease) in cash and cash equivalents resulting fromchange of scope of consolidation
Cash and cash equivalents at end of period10