ANNUALREPORT2019

For the year ended March 31, 2019

Our Philosophy

Universal Mission
VisionCorporate Group
Creating Future Trends
As a corporate group fostering people and supporting people’s lives,
we contribute to achieve a genuinely productive global society bycontinuously challenging efforts to create new trends in terms of products
and services that shift the future;
centering on our physical and commercial distribution business.

SloganOur thoughts into a Mission & Vision

Go beyondlogistics

Make the world
go roundRevolutionize
business

Corporate Values

Values that should be shared with all our group
employees (IP CReD)
Integrity

PassionCommitment

Respect

Diversity

Contents

Editorial Policy

02 Financial and Nonfinancial Highlights
04 A Message from the President
07 Medium-Term Business Plan [SIP21]
08 Review of Operations by Business Segment
10 Topics

Scope of Report
The scope of coverage includes theactivities of Senko Group Holdings Co.,
Ltd. and Group companies.

Reporting Period
12 CSR / Corporate Governance13 Senko Group Stakeholders
and Their Relationship with Us
14 Environmental Initiatives
16 Safety Programs
18 Health Initiatives
20 Social Activities
22 CSR Topics
24 Directors and Auditors
25 Corporate Governance
27 Risk Management
28 Financial Information
29 Financial Review
32 Consolidated Balance Sheets
34 Consolidated Statements of Income
34 Consolidated Statements ofComprehensive Income
35 Consolidated Statements of Changes
in Net Assets
36 Consolidated Statements of Cash Flows
37 Notes to the Consolidated Financial
Statements
55 Report of Independent Auditors
56 Stock Information / Corporate Data
57 Global Network

This report covers business activities forthe period between April 1, 2018 andMarch 31, 2019. However, some activities
that took place after April 2019 are also
covered.

Other Publicationsof the Company• Notice of convocation of the annual
meeting of shareholders• ‌Securities reports (Japanese only) andquarterly reports• CSR reports (Japanese only)• Senko Group report (Japanese only)
A variety of information other than thatmentioned above is available on the
Company’s website.
http://www.senkogrouphd.co.jp/en

Disclaimer
The Senko Group provides no guarantee
concerning the outcome of the forwardlooking statements in this annual report asthey will be affected by various factors,
including unforeseen changes in
economic conditions.

SENKO ANNUAL REPORT 2019 01

Financial and Nonfinancial Highlights
Financial Highlights
FY2015FY2016FY2017FY2018FY2019Thousands of
U.S.$ except per
share amounts

Operating revenues

millionsof yen398,448

434,000

455,435

492,127

529,609

4,771,682

Operating profit

millionsof yen13,65017,497

17,082

17,087

19,632

176,881Net income attributable toowners of parent

millionsof yen

7,074

8,542

8,951

9,504

11,681

105,244

Operating profit margin

(%)

3.4

4.0

3.8

3.5

3.7

–

Net assets per share

yen/US$581.46613.71661.61

741.44785.087.07

Net income per share

yen/US$

55.06

60.43

61.67

62.64

76.90

0.69

Cash dividends per share

yen/US$

17.00

20.00

22.00

22.00

26.00

0.23

Dividend payout ratio

(%)

30.9

33.1

35.7

35.1

33.8

–

Net assets

millionsof yen92,745100,010114,091

118,057

126,896

1,143,310

Total assets

millionsof yen285,310

269,461

285,959

334,973

340,491

3,067,763

Equity ratio

(%)

28.4

32.6

35.1

33.7

35.0

–

Return on equity (ROE)

(%)

9.5

10.1

9.5

8.9

10.1

–

Price earnings ratio (PER)

times

14.17

11.35

11.63

13.22

11.95

–

Capital expenditures

millionsof yen14,182

17,50017,662

37,625

21,227

191,251

Cash flows from operating activities

millionsof yen19,22816,14920,84824,56827,022

243,463

Cash flows from investing activities

millionsof yen(17,979)(2,289)(3,679)(37,020)(15,770)(142,085)

Cash flows from financing activities

millionsof yen6,209(21,492)(8,627)9,940(13,224)(119,146)

Cash and cash equivalents
at end of year

millionsof yen25,476

17,76526,197

23,79622,802

205,442

FY2015FY2016FY2017FY2018FY2019Nonfinancial Highlights

Number of Group employees

number

11,562

11,992

12,88914,496

17,081

Logistics center storage space

millions m2

2.81

2.94

3.22

3.42

3.66

Fleet of own trucks

units

4,530

4,745

5,180

6,020

6,412

02 SENKO ANNUAL REPORT 2019

Operating revenues

Operating profit(Millions of yen)

(Millions of yen)
600,000

450,000 398,448

Net income attributable toowners of parent

434,000 455,435

492,127

20,000529,609(Millions of yen)

19,632

13,65015,0009,000

300,000

10,0006,000

150,000

5,000

3,000

0

0

2015 2016 2017 2018 2019

Total assets/ Net assets/
Equity ratio(%)(Millions of yen)

6.0

360,000

285,310
4.0

4.5

3.4

3.8

270,000

3.7

3.5

28.4

3.0

(%)

269,461

92,745 100,010

35.0

114,091 118,057 126,896

90,000002015 2016 2017 2018 20192015 2016 2017 2018 2019■■ Total assets ■■ Net assets

(Yen)
800

581.46600

55.06

613.7160.43

661.61

741.44785.08 (Yen)

40

75

30

30.9

76.90

61.67 62.64

400

50

20

200

25

10

0

2015 2016 2017 2018 2019■■ Net assets per share

9

30

6

15

3

0

0

0

Net income per share

0

33.1

35.7

35.1

33.8
26.0

17.00

20.00

10.1

9.5

8.9

2015 2016 2017 2018 2019

Capital expenditures(%)(Millions of yen)40

40,00030

30,00037,62522.00 22.00

2015 2016 2017 2018 2019■■ Cash dividends per share

10.1

Equity ratio

(Yen)

100

2015 2016 2017 2018 20191245

Cash dividends per share/
Dividend payout ratio

Net assets per share /Net income per share

9,504

7,074

9.5
33.7

8,951

(%)

285,959
35.1

32.6

8,542

Return on equity (ROE)

333,973 340,491 60

180,000

1.5

02015 2016 2017 2018 2019

Operating profit margin

11,681

12,00017,497 17,082 17,087

20

20,00010

10,0000

014,182

21,227

17,500 17,662

2015 2016 2017 2018 2019

Dividend payout ratio

Number of Group employees

Logistics center storage space

Fleet of own trucks(Number)(Millions m2)(Units)

20,00015,00017,081
11,562 11,992

12,88914,496

4

3

2.81

2.94

3.22

3.42

3.66

8,000

6,020
6,000

10,000

2

4,000

5,000

1

2,000

0

2015 2016 2017 2018 201902015 2016 2017 2018 2019

0

4,530

4,745

6,412

5,180

2015 2016 2017 2018 2019

SENKO ANNUAL REPORT 2019 03

A Message from the President

We will be active in a range ofbusinesses in the third year of
our five-year medium-termbusiness plan

Yasuhisa Fukuda
President and Representative Director Senko Group Holdings Co., Ltd.

Business Environment during Fiscal Year 2019
The Japanese economy in the fiscal year under review continued on a path to recovery backed by improvements in theemployment/income environment and corporate earnings. Overseas economies also continued a moderate recovery
overall, but uncertainties remain regarding the outlook due to increased trade friction between the United States andChina and a slowdown in the Chinese economy.
In the logistics industry–which is our core business – freight volume has been steady, mainly for consumer- andproduction-related cargo.

Main Activities
In the second year of the Senko Innovation Plan 2021 (SIP21), our five-year medium-term business plan, we worked toenlarge business areas, upgrade operational systems, and boost profitability.
To enlarge our business areas, SENKO Co., Ltd. started operation of the Higashi-Fuji PD Center (Shizuoka Prefecture)in April; the Nagareyama Logistics Center (Chiba Prefecture) in May; the Koga PD Center (Ibaraki Prefecture) and the
Kazo PD Center Warehouse No. 2 (Saitama Prefecture) in August; and the Koto Warehouse (Shiga Prefecture) in
November.
The Kazo PD Center Warehouse No. 2, jointly operated by SENKO Co., Ltd. and Runtec Corporation is the firstlogistics base with three temperature zones.
Also, Runtec Corporation started operating the Osaka Branch Nanko Center (Osaka Prefecture), increased the spaceat the Fukuoka Branch Center (Fukuoka Prefecture) in April, and opened the Keihin Branch Kawasaki FAZ Center(Kanagawa Prefecture) in December.

04 SENKO ANNUAL REPORT 2019

Consolidated operating revenues (Net sales)

Consolidated operating profit /Consolidated ordinary profit(Billions of yen)
600

(Billions of yen)
24

492.1

529.6

560.0

450

18

300

12

150

6

0

2018

2019

2020
(forecast)

FY

0■■ Consolidated operating profit

17.1 17.3

2018

19.6 19.9

2019■■ Consolidated ordinary profit

20.9 21.0

2020

FY

(forecast)

Looking overseas, Shanghai Senko International Freight Forwarding Inc. begin operating the Qingpu Logistics Centerin Shanghai in May. Sinotrans Senko International Cold Logistics (Shanghai) Co., Ltd. started operating the Beijing
Logistics Center in Beijing in November.
In Thailand, M-Senko Logistics Co., Ltd., a joint venture with major Thai restaurant chain MK Restaurant Group PublicCompany Limited, started operations from July. In September, we also welcomed Best Global Logistics Co., Ltd., an airand sea shipping company in Thailand, to our Group to strengthen operations in the ASEAN region.
To upgrade operational systems, we are promoting labor savings and the mechanization of logistics centers byadopting the latest technologies, such as arm articulated robots and driverless forklifts. In April, we launched an AI project
and a robotics project to promote research and development, and in July we established innovatech studio Co., Ltd. todevelop and sell next-generation technology systems, to further accelerate labor savings and mechanization programs.
In April, Senko Line Co., Ltd., which inherited the marine transportation business of SENKO Co., Ltd., began operating
and is working on expanding our marine transportation business.
To boost profitability, we worked on other initiatives, such as making indirect operations more efficient and improving
productivity at logistics centers.

Performance
Consolidated operating revenues increased 7.6% year on year to ¥529,609 million. This result was mainly a reflection ofhigher sales and revised rates, the effect of year-on-year differences due to the timing of the consolidation of Anzen
Yuso Co., Ltd. and Okumura Co., Ltd., which became consolidated subsidiaries in the previous fiscal year. Another factor
contributing to higher sales was making living support companies our consolidated subsidiaries, including KEIHANNA
helper station Co., Ltd., Venus Co., Ltd., and BLUE EARTH JAPAN Co., Ltd. in April and M-Senko Logistics Co., Ltd. in July.
On the profit front, consolidated operating profit increased 14.9% year on year to ¥19,632 million and consolidated
ordinary profit increased 14.8% year on year to ¥19,876 million. This was largely attributable to factors that include higher
sales and revised rates, the effect of consolidation, and a decrease in the amount amortized for actuarial differences inaccounting for retirement benefit obligations, despite the increased costs for outsourcing and higher fuel prices.
Profit attributable to owners of parent increased 22.9% year on year to ¥11,681 million due to the full consolidation of
Runtec Corporation and other companies.

SENKO ANNUAL REPORT 2019 05

A Message from the President

Net Income attributable to owners of parent

Cash dividend per share / Consolidated payout ratio■■ Cash dividend per share(Billions of yen)
16

11.7

(Yen)
100

13.0

35.1

Consolidated payout ratio

33.8

(%)
40

32.4

75

30

8

50

20

4

25

12

0

9.5

2018

2019

2020

FY

0

(forecast)

22.0

26.0

2018

2019

26.0
10

2020

FY

0

(forecast)

Future Initiatives and Outlook
Going forward, the outlook for the Japanese economy is expected to remain uncertain due to concerns over a slowdown
in the global economy, particularly in China.
In the logistics industry, the management environment is expected to become increasingly tough due to increased
costs from labor shortages, including drivers, as well as an expected decrease in the total amount of freight.
Given this environment, the Senko Group will work, based on our five-year medium-term business plan, to expand
business areas in the core logistics business as well as in trading and commerce as a corporate group that supports
industry and people’s livelihoods.
Our forecasts for consolidated performance for fiscal 2020, ending March 31, 2020, are consolidated operating
revenues of ¥560,000 million, consolidated operating profit of ¥209,000 million, consolidated ordinary profit of ¥210,000 million,
and profit attributable to owners of parent of ¥122,000 million.

Annual Dividend Increased to ¥26 per ShareFor dividends, our basic policy on distributing profits is to pay out consistent dividends based on our performance.
Given this fundamental policy, the year-end dividend for fiscal 2019, ended March 31, 2019, was ¥13 per share, as
expected. Together with the interim dividend of ¥13 per share (already paid), we paid an annual dividend of ¥26 pershare in fiscal 2019.
For fiscal 2020, ending March 31, 2020, we again plan to pay an annual dividend of ¥26 per share (interim: ¥13;
year-end: ¥13).
We would like to ask for the continued support and encouragement of our shareholders going forward. Goingforward, the Group will continue to work as one on promoting CSR management to be a corporate group that supports
the lives of people and businesses and that is trusted by all stakeholders. In addition, we will work over the long termon the United Nations sustainable development goals (SDGs).

06 SENKO ANNUAL REPORT 2019

Medium-Term Business Plan [SIP21]
The Senko Group has launched the Five-Year Medium-Term Business Plan SIP21 (Senko Innovation Plan 2021), which runs
through fiscal year 2018 and fiscal year 2022.
SIP21 is a growth strategy for the corporate Group to support logistics for industry and people’s lives as well as to take up
the challenge of creating new services and products that will drive the future, based on Logistics and Trading & Commerce,
for the next 100 years.

1
2
3
4
5

Expand business areas

Accelerate international business expansion, further enhance existing domestic
businesses, and enter new business areas, such as Living Support and Business Support.
Also, actively promote business partnerships and M&As to support the above.

Enhance brand value

Consolidate the Group’s overall strength, deliver “services that surprise and delight,”
and evolve from “customer satisfaction” (CS) to “customer delight” (CD).

Improve employee
satisfaction (ES)Through the creation and active utilization of diverse programs,
boost employee satisfaction to attract diverse personnel, help them to grow,and increase the value of their working environment.

Emphasize corporatesocial responsibility (CSR)

Grow alongside society, while preserving and fostering industry, culture,and nature in each area.

Gain trust from capital
markets

Work to maximize the corporate value of the entire Group,
while strengthening financial soundness.

Size

Profitability(Billions of yen)

Strive for operating
revenues of

700.0(Billions of yen)

529.6

Strive for operating
profit of¥700.0 billion¥28.0 billion
FY 2019

FY 2022(forecast)

Strive for ratio of operating
income to sales of 4.0%

Operational system

FY 2019

4.00

up

0.34
FY 2022(forecast)

28.0

3.7 %

4.0 %

FY 2019

FY 2022(forecast)Investment amount (including M&As)

Logistics center storage space (Million m2)
3.66

19.6

millionm2

Fleet of own trucks (Units)
5,525

FY 20196,700

up

1,175 units

in five years¥150.0billion

FY 2022(forecast)

SENKO ANNUAL REPORT 2019 07

Review of Operations by Business Segment
Logistics
Operating revenue increased 7.9% year on year to ¥375.385 billion.
This was mainly attributable to the effect of new large logistics
centers; higher sales of products, such as daily necessities, food,apparel, and chemical products; the effect of revised rates; yearon-year differences related to the timing of consolidation of Anzen
Yuso Co., Ltd.; and making M-Senko Logistics Co., Ltd. a
consolidated subsidiary.

375.4

347.8

billionup

Total
operatingrevenue

6%

Retail Product
Logistics

billion

14%

7.9%

2018

¥375.4201912%

Retail Products Logistics

Chemicals Logistics

Housing Logistics

Other Logistics

FY

Operating revenue increased 9.3% year
on year to ¥208.3 billion in this segment,
mainly due to increased sales related tofood, apparel, discount stores, and drug
stores, as well as the year-on-year
differences arising from mergers andacquisitions (M&As).

Housing
Logistics

208.3billion

190.5

Operating revenue increased 3.8% year
on year to ¥62.2 billion in this segment,
mainly due to the growth of sales to
new customers and the effect ofrevised rates.

up

up

Chemicals
Logistics

3.8%
2018

2019 FY

Operating revenue increased 8.9% year
on year to ¥73.8 billion in this segment,
mainly due to increased sales related toitems such as chemicals, resins, andraw materials.

73.8 billion

67.8

Other Logistics

FY

31.0 billion

29.5

up

up

08 SENKO ANNUAL REPORT 20192019

Operating revenue increased 5.0% year
on year to ¥31.0 billion in this segment.

5.0%

8.9%
2018

62.2 billion

60.0

9.3%
2018

39%

2019 FY20182019 FYTrading & Commerce
Operating revenue increased 2.1% year on year to ¥142.294 billion
in this segment, mainly because of increased operating revenue
from the trading business and petroleum sales, as well as theeffect of year-on-year differences related to the timing of theconsolidation of OKUMURA CO., LTD.

27%

Total
operatingrevenue¥142.3billion

142.3

139.3

billion

up

2.1%
2018

Others

2019

FY

2%

Operating revenue increased 135.9% year on year to ¥11.930 billion
in this segment, mainly due to higher operating revenue following
the consolidation of living support companies.

Total
operatingrevenue¥ 11.9billionBusiness support
companies

11.9

billion

Living support
companies

5.1

up

135.9%
2018

2019

FY

SENKO ANNUAL REPORT 2019 09

Topics

01

02

Beijing Logistics Center Starts Operations to Increase
Our Cold and Freezer Logistics Capacity in China
SENKO Co., Ltd. and Runtec Co., Ltd. established a joint venture called SINOTRANS SENKO INTERNATIONALCOLD LOGISTICS (SHANGHAI) CO., LTD. together with Sinotrans Air Transportation Development Co., Ltd.
("Sinotrans Air") and, in November 2018, began operating a logistics center in Beijing for handling cold andfreezer logistics.
The center is a two-story cold and freezer warehouse owned by Sinotrans Air, where we lease approximately
9,000 m2. It is located 5 km from Beijing Capital International Airport in a good location for covering the entire
city of Beijing thanks to its close proximity, 2 km,
to the on and off ramps on the expressway
connecting the airport and Beijing. The center
also features ways to prevent global warming
and reduce CO2 emissions, such as freezers andrefrigerators that use energy-saving naturalrefrigerants.
The Senko Group will promote initiatives tomeet domestic demand for cold and freezer
logistics in China by using the on-siteexperience of Senko and the technology andexpertise of Runtec for cold and freezer logistics.

Two distinctive sites opened in Kanto

In August 2018, our Kazo PD Center in Kazo, Saitama
Prefecture, was expanded. Warehouse No. 2 and threehazardous material warehouses now make it one of ourGroup's largest logistics sites. Warehouse No. 2 is our
first jointly operated logistics base, with the normal
temperature area operated by SENKO Co., Ltd. and thecold and freezer area operated by Runtec Co., Ltd.

10 SENKO ANNUAL REPORT 2019

In August 2018, the Koga PD Center was opened in
Koga, Ibaraki Prefecture. Some compartments havedock shelters that are airtight and insect-proof for
improved delivery, and they support holding
temperature-controlled goods. The center also has
warehouses for storing hazardous materials.

03
04
05

Brought an international forwarding company
into the GroupIn September 2018, SENKO Co., Ltd. madeBest Global Logistics Co., Ltd. in Thailand a
subsidiary. This company provides aforwarding service for imports from areas
such as Europe to Thailand and exports
from Thailand to other locations, such as
the Asia-Pacific region.

Joint Cold and Freezer Logistics Venture Starts Shipping
In March 2018, SENKO Co., Ltd. establisheda joint venture for cold and freezer logistics
called M-SENKO LOGISTICS CO., Ltd.
together with local Thai restaurant chain
MK Restaurant Group Public Company, andstarted business from July 2018.

Jointly Developed Products for Disaster Preparedness
Exhibited at Bosai Festa
The Senko Group exhibited at Bosai Festa
2018 in Osaka in September 2018.
Bosai Festa is an exhibition for families
with children to learn about the importance ofdisaster preparedness, and was visited byapproximately 12,000 people. At the exhibition
site, we displayed products useful for disaster
preparedness developed in cooperation with
our four trading and commerce Group
companies. We received comments such as,"I was surprised to learn how many types of
emergency food there are!"Some products exhibited that are useful for disaster preparedness
Canned bread, which has
a long shelf life

Adzuki bean jelly in aconvenient package forcarrying and storage

Compact solar power
charger for charging
anywhere

SENKO ANNUAL REPORT 2019 11

CSR

Corporate Social Responsibility

CSR / Corporate GovernanceContents
Senko Group Stakeholders and Their Relationship with Us……13
Environmental Initiatives……14
Safety Programs……16
Health Initiatives……18
Social Activities……20
CSR Topics……22
Directors and Auditors……24
Corporate Governance……25
Risk Management……27

12 SENKO ANNUAL REPORT 2019

Senko Group Stakeholders and Their Relationship with Us

We intend to earn the trust of all our stakeholders in all our business interactions

Shareholders

Senko Group

Customers Shippers /Consignees● Fair profit distribution ● Transparent management● Full disclosure of information● Safe and environmentally friendly services● Partnership ● Full disclosure of information● Road safety ● Environmental friendliness

Regional Community● Engaging with communities ● Engaging with society● Full disclosure of information

Government

Employees

Partner Companies
Subcontractors / Suppliers● Strict legal compliance ● Road safety● Environmental friendliness● Workplace health and safety● HR training ● Fair employment practices● Partnership ● Environmental friendliness

Important Initiatives

1

Environmental
Measures

We recognize that as alogistics company we have aserious role to play withregard to the environment,
and we take on initiatives toreduce CO2 emissions and tosave energy, with specificnumerical targets, and to
implement green logistics.

2

Safety Initiatives

We have set reduction
targets for vehicle and work
accidents and have
implemented safety initiatives
based on the PDCA cycle.
These will help us achieve
our eventual goal of being azero-accident workplace.

3

Health Initiatives

We aim to reduce health risks
to a minimum throughworkplace improvements
aimed at preventing healthproblems, self-care, and otherpersonal health improvement
programs, and by maintaining
an extensive in-house healthsupport system with industrial
physicians and nurses.

4

Social Activities

We hold traffic safety classes
and local clean-up drives tocontribute to the local
community, and we organize
volunteer activities, such as
education support, outside
Japan.

SENKO ANNUAL REPORT 2019 13

Environmental Initiatives
Reducing CO2 and Our Achievements
We track energy consumption and CO2 emissions from business activities and measure these in the results of environmental
initiatives. We have continued a range of programs aimed at reducing our environmental impact, and we aim to achieve the CO2
reduction targets in our Five-Year Medium-Term Management Plan SIP21, which started in fiscal year 2018: a reduction of at least
8,310 tonnes over the five years of the plan.

● FY 2019 CO2 Emissions by Energy Source● FY 2019 CO2 Emissions by Cause
Gasoline

INPUT
Diesel oil

12,652 kℓ

Heavy oil

9,447 kℓ

Gasoline

256 kℓKerosene

31 kℓ

285 t-CO / 0%2

2

Forklifts (diesel oil)

Others (city gas,
CNG, kerosene)

2,401 t-CO / 2%2

485 t-CO / 1%
2

LP gasElectricity

71.0 million kWh

CNG（compressed natural gas）

37.0 km³

City gas

145 km³

LP gas629 t

1,886 t-CO / 2%
2

Total CO2
emissions

Offices andwarehouses, etc.
(electricity)

98,020 t-CO

2

36,729 t-CO / 37%
2

Shipping (heavy oil)

Automobiles (diesel oil)

25,338 t-CO / 26%

30,304 t-CO / 31%22● Change in annual CO2 emissions

Measures to Reduce CO2Target achievement rate

Boilers

592 t-CO / 1%

(t-CO2)122

120,000%

CO2 emissions tend to increase as business expands, but wehave achieved a reduction of 2,548 t-CO 2 by applying thefollowing measures.

90,052

94,276

95,336

98,020

16

17

18

19

90,00060,00030,0000FY● FY 2019 CO2 Reduction Targets and Achievements (On a non-consolidated basis for SENKO Co.,Ltd.)

Energyconservation

Ongoing activities and FY 2019 measures

FY 2019 CO2
reduction target

FY 2019 CO2
reduction

Achievement
rate

Energy-saving logistics
centers● Switching high/low voltage departments to new power company● Increasing solar power sales and considering captive use● Switching to energy-saving equipment (LED lighting/air conditioning)

1,530 t2,073 t135%

Improved vehicle fuelconsumption● Switching to newer post long-term vehicles● Introducing non-fossil fuel (natural gas) vehicles● Switching to energy-saving vehicles and environmentallyfriendly forklifts● Reducing fuel consumption with stop/start technology andeco-driving systems, etc.

480 t

447 t

93%

80 t

28 t

35%

2,090 t2,548 t122%

1,259 t1,173 t93%

Social recycling Industrial waste recycling● Increasing the recycling volume and rate
● Cultivating recycling contractors for wooden pallets● Using retreaded tires

Energy conservation + recycling total
Other

14 SENKO ANNUAL REPORT 2019

Green logistics● Supporting the promotion of modal shifts● Switching to eco-friendly materials and products● Supporting joint delivery

Corporate Social Responsibility

CSR

Using Rooftops for Solar Power Generation
The Senko Group started solar power generation in FY 2014 in order to contribute to theproliferation and promotion of renewable energy. Operation started at two sites in Kazoand Higashi Fuji in FY 2019, and as of March 31, 2019, this has expanded to 20 sites
across Japan.
In FY 2020, we will open our first large-scale solar power generating and companyuse power site at the Runtec Co., Ltd. New Kansai Branch (Nishinomiya City, Hyogo
Prefecture). We plan to generate and use around 1 MW of power.

Power
output（from FY 2018）

1.9

up

Kazo PD Center ware house No.2 (started operation in August 2018)

We are now generating

15.5

from

MW

20 sites

across Japan

MW*Based on figures confirmed by the
Ministry of Economy, Trade and Industry
Higashi Fuji PD Center (started operation in April 2018,
began operating solar power plant in December 2018)

In FY 2020, we will havesites in Japangenerating solar power.

21

Sites in operation
FY 2020 plan

Runtec Co., Ltd.
New Kansai Branch

The Runtec Co., Ltd. New Kansai Branch planning to start operation in July 2019

● Installation Plans for FY 2020
Site name

Timing of operation

Location

Generating capacity

Runtec Co., Ltd.
New Kansai Branch

July 2019

Nishinomiya City,
Hyogo Prefecture

1 MW

Reducing Waste and Promoting Recycling
As a new initiative for reducing waste andrecycling, we have adopted retreaded tires asa way to reuse our truck tires. We areaccelerating the adoption of retreaded tires, as
they reportedly produce less than 50% of theCO2 emissions compared with making new tires.
In FY 2019, the total amount of non-recyclable
waste we generated increased by 12%* year
on year. On the other hand, our rate of recycling
was 74%*.

● Retreaded tire consignment system
New tires

Tire with primary
life ended
SHOP

Tire manufacturer
dealer
Vehicle sales office
New rubber
SHOP*On a non-consolidated basis for SENKO Co., Ltd.

Tire manufacturer
dealerRetreadedtire plant

Retreadedtire
Base tire

SENKO ANNUAL REPORT 2019 15

Safety Programs
Senko Group Safety Policy
The Senko Group will “achieve an eventual goal of zero workplace accidents” based on the spirit ofrespect and by prioritizing safety over everything else.

SafetyPhilosophy

1 We can and must prevent all accidents and disasters.
2 Managers are responsible for the safety of employees.
3 Every employee must believe in “eliminating all accidents.”
4 Safety ensures high quality and high productivity.
1 ‌The Senko Group deeply recognizes the social mission of the logistics business and promotes efforts that all

Basic
Approach

Priority
Measuresemployees understand correctly and that contributes to the improvement of safety by ensuring safety in businessactivities is the basis of our business.
2 ‌The top management will actively lead the field from the bottom to the top to unite and strive to secure safety andimprove safety in business activities.
3 ‌The basis of safety is to be strongly conscious of each person working in the Senko Group to be healthy mentallyand physically, to practice proper health management.
1 We comply with relevant laws and regulations and fulfill our social responsibilities.
2 We thoroughly carry out risk assessment and reduce all safety risks.
3 We prevent health problems by enhancing health management system and promoting independent health.
4 We actively disclose information on safety and health activities.

Achievement of Safety Goals (FY 2019)
As not all goals were achieved, we will formulate and implement new measures.
FY 2019 goals
Vehicle accident
frequency rate

FY 2019 achievements

Priority measures● Reduce vehicle accidents and occupational accidents involving young employees

0.33 or lower● ‌Develop and strengthen the management system to accommodate the aging of

0.57

employees● ‌Create an environment where safety can be substantially improved and introduce

Occupational accident
frequency rate

1.36 or lower

leading-edge technology based on the verification of results

1.56● ‌Strengthen the links between safety management systems and prevent accidents

and disasters

Medium-Term Safety Goals (FY 2018 – FY 2022)
Based on our Five-Year Medium-Term Business Plan SIP21, we will promote Group-wide safety programs, including using the latest
driver assistance technology and other measures.
We aim to reduce by half vehicle and occupational accidents from the FY 2017 level.

● Vehicle accident frequency rate

● Occupational accident frequency rate

(on-road accidents)

FY 2019
achievements

0.64/0.33(Logistics Group)(Senko Co., Ltd.)(occupational accidents with at least four lost workdays)

FY 2022 goal

0.25

or lower(Senko Co., Ltd. andLogistics Group)

FY 2019
achievements

1.41/0.82(Logistics Group)(Senko Co., Ltd.)FY 2022 goal

0.95

*Figures for the Logistics Group do not include recently acquired companies.

16 SENKO ANNUAL REPORT 2019or lower(Senko Co., Ltd. andLogistics Group)Corporate Social Responsibility

CSR

New "Coaching" Skills for Education Adopted in Model Areas,then Shared Nationwide
The Senko Group realizes that maintaining and improving safety is fundamental to our business activities. We also investigate andadopt more effective teaching methods for the safety education of our drivers. In fiscal 2019, we adopted a new "coaching" model infour areas around Japan to enable drivers to make realizations by themselves. We are now developing coaching trainers anddeploying them nationwide.

This has enabled us to establish an education method for expert drivers
that improves their ability to be safe via self-realizations.

Skill acquisition practical training

Encouraging drivers to make realizations

Seminars by external lecturers

Attentive listening training

Coaching theory training

Classes taken by management

Initiatives for Avoiding Hazardous Materials Risks
In addition to supplying varied opportunities for education and training for transportation safety when handling hazardous materials,
we also focus on maintaining a safer workplace.

Nationwide Management System
for Hazardous Materials
We assign people in charge ofhazardous materials to 12 areasin Japan. They share informationon hazardous materials andimprove their knowledge and skills.
Hazardous material (truck) training

A certification exam for truck drivers

SENKO ANNUAL REPORT 2019 17

Health Initiatives
Announcing the Senko Group Health Management Declaration
inside and outside the Company
The Health Management Declaration announced in September 2017 expresses our wish that employees will not only be healthy andhappy at work, but that they will also be healthy and happy throughout their lives, even after their working life ends.

Senko Group Health Management Declaration
The Senko Group hereby declares the following regarding the health of employees:◎ Continuing to be “A corporate Group which nurtures people and supports their daily lives.”◎ Ensuring that every Group employee can work in a healthy and lively manner.

◎ Placing the utmost importance on making sure employees can live healthy and happy lives.
In line with these goals, the Senko Group is implementing initiatives for promoting the health of employees, in order tobecome a truly affluent global company as a “Corporate Group Creating Future Trends.”
Yasuhisa Fukuda

President and Representative Director
Senko Group Holdings Co., Ltd.

Certified Health & Productivity Management Outstanding Organizations
Recognition Program (White 500) for Two Consecutive Years
The Senko Group has been promoting health management for employees for many years as an importantmanagement theme. We continue to enrich our employee health management and promote healthyliving via our Healthy Activities program.
This program was noticed; we were recognized by the Certified Health & Productivity Management
Outstanding Organizations Recognition Program (also called White 500) on February 21, 2019 for thesecond consecutive year. Under this program, the Ministry of Economy, Trade and Industry and the
Nippon Kenko Kaigi jointly recognize companies that practice outstanding health management.

A Company Where Employees Can Work Healthily and Energetically● Major Health Management Initiatives
Promoting Health via Healthy Activities

Nurses Supporting Health

Healthy Activities is a program that
we have been involved with since
fiscal 2008. Employees set their own
targets to make a habit of exercisingin their daily lives so that they
become healthier.
We also plan and hold voluntary sports eventsat our workplaces to promote employee health.

Twenty nurses (public health nurses
and general nurses) are stationed at
our main business sites in nine areas
across Japan (as of April 2019).
These nurses provide professional
health advice and support forphysical and mental wellbeing based on the resultsof periodic health checkups and consultations.

18 SENKO ANNUAL REPORT 2019

Tohoku Senko
Transport Co., Ltd.
Softball tournament

Nurses in the KansaiareaCorporate Social Responsibility

CSR

Health Management also Conducted at Group Companies
Toyohashi Senko Transport Co., Ltd. and Harcob Co., Ltd. were recently recognized in the SME category by the Certified Health &Productivity Management Outstanding Organizations Recognition Program 2019.
We plan to continue supporting and expanding our initiatives for promoting employee health at our Group companies.

● Health Management Initiatives

Companies recognized by the SME category of the Certified Health & Productivity Management
Outstanding Organizations Recognition Program 2019

Toyohashi Senko Transport Co., Ltd.

Harcob Co., Ltd.

We are now developing activities that improve forthe health of all our employees

Publishing Health News to support
employee health

We aim to promote awareness of the wellbeing via
recreation activities and information on healthy recipes,
in addition to following up on health checks.

We have also made a health management declaration andconduct activities with employees in charge of promotion.
We clarify issues, recommend health checkups, set up a
consultation service, hold voluntary events at each site,and periodically publish Health News to promote
wellbeing of both the body and the mind.

Senko Business Support Co., Ltd.
Soft volleyball tournament

Senko Fashion Logistics Co., Ltd.
Yoga and barbecue

SENKO INFORMATION SYSTEM CO., LTD.
Walking along sites of the former JR Fukuchiyama LineSENKO ANNUAL REPORT 2019 19

Social Activities
Improving Our Education System to Become a Workplace
Where Everyone Can Work and Reach Their Potential
With the motto Moving Global, the Senko Group promotes diversity that enables our employees to reach their maximum potential by
employing a diverse range of people, regardless of such factors as their race, gender, or faith.
Examples of this diversity include our education system developed by local staff in Thailand and the reception of technical interns
from Vietnam. Not only do we provide interns with technical training, we also focus on education for the country that receives themand work to merge the human resources of both countries in a way that transcends culture and values. In our Group companies
overseas, we also improve education and training systems so that we can provide the same “Senko quality” that is available in Japan.

Basic Approach1

We allow all employees to play more active roles through mutual
respect for diverse values, including nationality, culture or handicap,
rather than gender alone.

2

We make it possible to choose a work style that accommodates
where employees might find themselves from time to time, as well
as changing values.

Intern training at Noda Senko Logi Service Co., Ltd

We are reorganizing our education systems at sites in Japan and overseas in orderto handle the reception of people from other countries and technical interns.
By respecting each other’s cultures, recognizing our differences, and striving
to understand each other better, we create workplaces where everyone isable to work freely.
Female staff from a local education team (in charge of safety) teachingothers in Thailand

We Evaluate Social Contribution Activities within the Group andGive Awards for Outstanding Achievements
Outstanding
PerformanceAward

Traffic Safety Classes for Kids Secretariat at Crefeel Koto Co., Ltd.

In Recognition of Originality and Continuity over Many Years

We received the outstanding
performance award inrecognition of our efforts,
including holding Traffic Safety
Classes for Kids, contributing to
the region via children trafficpark, and developing workplace
experience programs.
Company representatives receiving the outstanding performance
award and performance award (ceremony held in May 2018)

20 SENKO ANNUAL REPORT 2019

Traffic Safety Classes for Kids

Corporate Social Responsibility

CSR

New "Volunteer Vacation" System Created
We have started a new "volunteer vacation" system based on the idea of widening horizons by making a social contribution leading topersonal growth. The Company augments this system to encourage employees to participate in social contribution activities, as wellas to support self-improvement and work-life balance.
This system is for all SENKO Co., Ltd. employees. Various forms of social contribution activities are being conducted, and we hopefor the further participation of employees in the future.

● Overview of Volunteer Vacation System

No limit on target activities

Application method

1 Vacation days can be consecutive or spread out
2 Prior permission from a supervisor is required

Promoting Employment of the Disabled● Disabled Employment Ratio (data as of June each year)(%)
4.0

The Senko Group aims to be a company that contributes to and is trusted by
all people in society, not only our customers and employees. We make every
effort to employ the disabled, including the opening of Senko School Farm
Tottori Co., Ltd. (a special subsidiary). We constantly maintain a higher levelof employment than is legally required, and disabled employees fully
participate in their workplaces.

Obtain certificate andsubmit to supervisor (whena certificate is issued)

Target activities

Conduct volunteer activity

All employees

Approval

Target employees

Submit an application to asupervisor

Five days over the year

Flow of applying for vacation days
Decide the activities to join

Number of vacation
days granted

3.01

3.03

3.14

13

14

15

3.0

2.74

2.64

2.65

16

17

18

2.0
1.8
1.0

Linking with the Local Community
Holding Traffic Safety Classes
in JapanContributing to the Region
by Running Daycare Centers

Participating in Local Cleanups
and Blood Donation Drives

In addition to the Traffic Safety Classes forKids that we have been holding at Crefeel
Koto and other sites, from fiscal 2015 we havecontinued to hold school visit workshops atelementary and junior high schools, which areenjoyed by a large number of students.
We make every effort to ensure that the
program enables children to enjoy learning
about the importance of traffic safety. In theschool visit workshop program, children think
about safe ways to cross the road and use acrosswalk as well as experience the blind
spots in a driver's line of sight by riding in atruck. These classes are enjoyed by bothchildren and their guardians.

The Senko Group currently runs six daycare
centers.
These centers accept children fromparents other than Group employees and are
well-loved by local residents.

We hold cleanup drives to contribute to the
local region and to show appreciation for theroads that we rely on. In FY 2019, we had
18,859 participants, a large increase over lastyear. For blood donations, we had 972
participants, despite many of our sites
canceling their plans due to natural disasters
during the fiscal year.

C la s s h e ld a t 2 0 s it es wi th 1, 701 parti ci pants

Senko Nakayoshi
Nursery (at Senko
Kazo PD Center)

Cleaning up near the
Head Office in Osaka

Looking after the
dreams, hope, andthe future of children

Blood donation drive jointly
held by Senko Fashion
Logistics Co., Ltd., Tokyo
Nohin Daiko Co., Ltd., ACROSS
TRANSPORT CO., LTD., andSenko A Line Amano Co., Ltd.

SENKO ANNUAL REPORT 2019 21

CSR Topics
Integrated Land and Sea Transportation
for a Better Tomorrow

Osaka freightterminal

Kyoto
Plant
Akashi
Plant

Round trip, shift to railway
transportation

Kobe freightterminal

Tosu City, Saga
Prefecture(logistics center)

Tosu freight terminal

Robust logistics friendly to people
and the environment

CO2 emissions reduced by 990 t-CO2 /year (64% reduction)
One example of a new modal shift was changing from transporting the products of a beverage
manufacturer by long-distance truck transportation to round-trip rail, enabling us to reduce CO2
emissions by 64% and to cut the working hours of drivers.

The Japan Association for Logistics and Transport has awarded the Logistics Environment
Award and Special Logistics Environment Award to the Senko Group as a whole, theImprovement Award, New Development Award and Effective Utilization Award to SENKO Co.,
Ltd., and the Effective Utilization Award to Runtec Co., Ltd.

22 SENKO ANNUAL REPORT 2019

In the late 1990s, modal shifts drew attention as
an environmental measure for the transportationindustry to reduce CO2 emissions. However, in
recent years expectations have risen for modal
shifting to solve the labor shortage crisis inJapan; there has been an increasing shortage ofdrivers due to the rapidly aging population andthe promotion of work style reforms lead by thegovernment. The requirement for shifting fromlong-distance transportation via trucks todriverless ship/railway transportation will likely
continue to increase.
We have traditionally owned our own ships
and have made proposals that used variedtransportation modes. Going forward, we willfurther use the advantages of trucks, rail, andships, efficiently using them for different
purposes. We are developing a service thatenables a wider range of transportation routes
to be selected, which can be called a “new”
modal shift.

Logistics That Are Friendly to People and the Environment
One way to reduce the environmental impact
with a modal shift is adding methods suitable forshipping large volumes of cargo over long
distances, such as ships and rail, to transportationroutes that previously used only trucks. This shiftenables the amount of energy required fortransportation to be dramatically reduced.
Furthermore, although the lead time required
for a modal shift seems longer because freightneeds to be unloaded and then reloaded, freightis carried for a time comparable to trucking byusing items such as containers that enableeasier linking with inland transportation.
Making a modal shift can also help alleviate
the problem of a lack of drivers, because it is nolonger necessary to drive trucks over long distances.

Truck x180

Ship x1

Transportation efficiency

Logistics Resilient to Disasters
In the event of a disaster, alternative modes of transportation may not be available. In one case, Asahi Kasei usually shipped products
produced at their Nobeoka Plant in Miyazaki Prefecture to Kanazawa via freight train. However, the JR Sanyo Line was cut due tosudden heavy rain in West Japan, and they asked us if we could help. Our Group includes marine shipping companies, and with our
overview of the entire project we were able to provide effective support by proposing that we preferentially use ships on analternative route for urgent freight.

Date ofembarkation

Next dayDay after next

1 Truck Nobeoka (plant) ---> Port of Oita truck (trailer)
2 Ferry

Port of Oita ---> Port of Kobe ferry

3 Truck Port of Kobe ---> JR Osaka site truck (trailer)
4 TrainKanazawa

JR Osaka site ---> JR Ishikawa site train

5

5 Truck JR Ishikawa site ---> Kanazawa (delivery destination) truck

Railways cut off
due to heavy rain

Port of Kobe

2

3

JR Ishikawa site

4
JR Osaka site
Traditional modal shift route by railway
Integrated ocean-land route after a disasterPort of Oita

1
Nobeoka

Logistics
infrastructure(ships, railways,
and trucks)
work together

SENKO ANNUAL REPORT 2019 23

Directors and Auditors (As of June 26, 2019)
President andRepresentative Director

Yasuhisa Fukuda

Responsible for Logistics
President and Representative Director, SENKO Co., Ltd.

Noburo Sasaki

General Manager of Business Support Promotion HQ

Kenichi Shiraki

General Manager of Living Support Business Promotion HQ

Masanobu Uenaka

Responsible for Finance
Responsible for Business Administration, Director and Managing Executive Officer,
Senko Co., Ltd.

Shinichi Murao

General Manager of Strategic Planning HQ

Kazuhiro Yamanaka

Responsible for Refrigerated & Frozen Logistics
President and Representative Director, Runtec Corporation
President and Representative Director, Kouki Co., Ltd.

Hiroshi Yoneji

Responsible for Trading & Commerce
President and Representative Director, SENKO SHOJI CO., LTD.

Akira Taniguchi

Responsible for Marine Logistics
Director, and Chairman, Senko Line Co., Ltd.
Director, and Chairman, NIPPON MARINE CO., LTD.

Hiroko Ameno

Director (part-time), Senko Co., Ltd.

Directors
Managing Executive
Officer

Directors

Outside Directors

Yasuyuki Sugiura

Yoko Araki

Full-time
Corporate Auditors

OutsideCorporate Auditors

Keiji Matsubara

Corporate Auditor, SENKO Co., Ltd.

Masami Washida

Corporate Auditor, SENKO Co., Ltd.

Kanji Yasumitsu

Corporate Auditor, SENKO Co., Ltd.

Yasushi Matsutomo

Outside Corporate Auditor, SENKO Co., Ltd.

1. Both the directors Hiroko Ameno and Yasuyuki Sugiura are outside directors.
2. Both the full-time corporate auditors Keiichiro Yoshimoto and Kanji Yasumitsu are outside corporate auditors.
3. The full-time corporate auditor Keiji Matsubara has served in the Company’s Accounting Department and has considerable knowledge of finance and accounting.
4. ‌The Company has submitted statements to the Tokyo Stock Exchange designating directors Hiroko Ameno and Yasuyuki Sugiura and Full-time Corporate Auditor Keiichiro Yoshimotoas Independent Officers.

24 SENKO ANNUAL REPORT 2019

Corporate Governance
Basic Policy
The Senko Group is a logistics company involved in highly public work that fosters people’s development and supports their lives. The
Senko Group makes every effort to ensure that all corporate activities thoroughly comply with laws, based on the awareness that
good corporate governance is the foundation of a business, as well as regarding governance as a high priority for management.

Corporate Governance System
We have adopted the following corporate governance system, one that we consider to be optimal, in order to ensure managementtransparency and legal compliance based on the company’s size, lines of business, organizational structure, and other features.
General Meeting of Shareholders
Appointment / Dismissal

Appointment / Dismissal

Accounting Auditors

ReportBoard ofCorporate Auditors

Appointment / Dismissal
ReportAudit

Appointment /Supervision

Dialogue
ReportAccounting
Audit

Executive Officers

Board of Directors

Assist /ReportReportPresident andRepresentative Director

Audit

Auditing Dept.

Internal Controls Committee
CSR Promotion Committee(Directors, Corporate Auditors, Committee Chairmen, etc.)

ReportSupervise
Instruct

Legal Counsel

Audit

ReportOperating companies
AdviceSubsidiaries directlysupervised by
SENKO Groupholding Co., LTD.
Companies in Living Supportand Business Support

ReportCore companies
Runtec Corporation
SENKO SHOJI Co., LTD.
AST CORPORATIONSMILE CORP.

ReportReportReportCompliance Committee
Corporate Ethics Committee
Risk Management Committee
Environmental Promotion Committee
Social Contribution Promotion Committee
Health and Safety Committee

SENKO Co., Ltd.
ReportCorporate Management Committee

1

The Company’s Board of Directors meets at least once a month and deliberates on issues as required by laws and regulations aswell as important management concerns in addition to being an organization that oversees the execution of business. Furthermore,so that the Directors, Executive Officers, and key employees execute their duties appropriately and efficiently, the Company has
established the Regulations of the Board of Directors and the Regulations for Administrative Authority to clarify authority andresponsibility. We also verify the status of the implementation of operations and strive to have even more transparent management.

2

To promote Group-wide CSR-based management, the Group has established the Compliance Committee, the Corporate Ethics
Committee, the Risk Management Committee, the Environmental Promotion Committee, and the Social Contribution Committee
in addition to the CSR Promotion Committee, which supervises these committees.
Moreover, we have established the Group Safety and Environment Committee to improve the level of safety and environmental
concern within the Group and the Internal Controls Committee to maintain and upgrade the Group’s internal control systems.

3

The Corporate Auditors attend meetings of the Board of Directors and monitor the execution of operations by the Directors
from an objective point of view. In addition, they conduct audits and collaborate with the Auditing Department and the
Accounting Auditors (Otemae Audit Corporation) to ensure thorough compliance, which includes subsidiaries.

SENKO ANNUAL REPORT 2019 25

4

The Company has concluded audit agreements based on the Companies Act and the Financial Instruments and Exchange Act
with Ohtemae Audit Corporation as the Accounting Auditors and receives advice on accounting. Three certified public
accountants provide these services, and nine certified public accountants assist with audit operations.

5

The Auditing Department performs internal audits at the Company and subsidiaries with the aim of verifying the status of risk
countermeasures, identifying the status of managing operations and of improvements, and ensuring the effectiveness of the operation
management system. As well, the Auditing Department reports its findings to the Representative Director and the Corporate Auditors.

Further, to promote Group-wide CSR-based
management, we established the Compliance
Committee, the Corporate Ethics Committee, theRisk Management Committee, the Environmental
Promotion Committee, and the Social Contribution
Committee in addition to the CSR Promotion
Committee, which supervises these committees,
and the Internal Controls Committee to create aGroup-wide CSR-based management system.

Compliance Committee
Corporate Ethics Committee
CSR Promotion
Committee
Committee Chairman: President

Operatingcompanies

Risk Management Committee
Environmental Promotion Committee
Social Contribution Promotion Committee

Policy on Determining Compensation for Officers
Compensation for the Company’s officers consists of basic remuneration, a performance-based stock compensation plan, stock
options, and performance-based pay (bonuses). Specific amounts are controlled by internal regulations with basic remuneration andstock options being determined by their peers, while the performance-based stock compensation plan and performance-based bonus
are based on varied circumstances, including the contribution of each person to the Company’s financial performance, in addition to
the Company’s overall financial performance in a single fiscal year.
Total Amount of Each Type of Compensation, etc. (Millions of yen)

Total Amount ofCompensation, etc.
(Millions of yen)Basicremuneration

Stock options

Bonus

Performance-linked
stock compensation

Directors (excludes Outside Directors)

158

65

10

58

23

8

Corporate Auditors (excludes Outside Corporate Auditors)

41

30

1

10

–

2

Outside Officers

45

30

2

12

–

4

Category of Officer

Number of
Eligible Officers

Senko has included some of the principle elements of Japan’s Corporate Governance Code, which started being applied in June 2015,
on the Company’s website to clarify the Company position on working to enhance corporate governance based on this code.
http://www.senkogrouphd.co.jp/ir/governance/ (Japanese only)● Corporate Governance Report● Initiatives Based on Corporate Governance Principles

Compliance-Based Management
Compliance-based management, which complies with laws and regulations and engages in ethical business activities, is the base for acompany to fulfill its social responsibility and earn the trust of stakeholders.
The Senko Group has established, based on a thorough understanding of the Group’s social obligations, the Senko Standards of BusinessConduct which prescribes all items that executives and employees must observe for every aspect of their jobs.

26 SENKO ANNUAL REPORT 2019

Risk Management
Business Risks
The risks related to the business, financial position, and operating results, etc. of the Senko Group that may have a material impact on
the judgment of investors are described below. Forward-looking statements are based on the judgment of the Senko Group (the Company
and consolidated subsidiaries) as of the last day of the fiscal year under review (March 31, 2019).

1

Laws and
Regulations

The Group is engaged in transportation, distribution processing, and other businesses, and provides a wide range oflogistics services. These businesses are subject to regulation under the Motor Truck Transportation Business Act,
the Consigned Freight Forwarding Business Act, the Warehousing Business Act and other legislation. It is necessary
to receive registration or approval from the Minister of Land, Infrastructure and Transport to engage in thesebusinesses, and there is a mandatory post-notification system for setting and revising fees. Moreover,environmental legislation, including regulations on truck exhaust, has also been strengthened. The performance of
the Group could be affected by legal revisions in the future and by trends for tightening or loosening regulations.

2

Sharp Increases in
the Price of Crude Oil

Higher prices for light oil due to a sharp increase in the price of crude oil will push up transportation costs. The performanceof the Group, where truck transportation is the mainstay business, could be affected in the future by price trends.

3

Occurrence of a
Serious Accident

In case a serious vehicle or freight accident occurs, the performance of the Group could be affected by a loss in customer
and public confidence, suspension of vehicle use, administrative penalties such as business suspension, etc.

4

Occurrence of aDisaster, etc.

The performance of the Group could be affected by a system shutdown due to transportation routes being blocked
or electricity being suspended during a disaster, such as a storm or an earthquake, or by a blackout.

5

IT System Failure

The Group leverages IT technology to manage customer freight information and for control systems for warehouses. The performanceof the Group could be affected if these systems are shut down due to a natural disaster, computer virus, or computer hacking.

6

Management of
Customer
Information

The Group handles customer information when providing logistics services and has worked hard on information
management through in-house education. However, the Group’s performance could be affected by claims forcompensation for damages if there is an external leak of information or loss of data.

Risk Management System
The Senko Group’s key management issues include ensuring stable earnings and establishing a sound management base by managing
all risks associated with the execution of operations. The risk management system is described below.

1

To systematically and effectively prevent the risks from occurring that the Group faces and to take corrective measures, we haveestablished the Risk Management Regulations. Every department that controls risk formulates and disseminates regulations, etc. aimed at
reducing risks and taking effective action when risks arise.

2

When a risk materializes and is expected to cause serious damage, the department controlling this risk and the department in which the risk
is expected to arise collaborate on reporting to the Board of Directors.

3

The Auditing Department verifies the status of risk countermeasures, etc. and reports to the Representative Director and the Board of
Corporate Auditors.

Establishing Business Continuity Plans (BCPs)
Every Group location has established a business continuity plan (BCP) in order to swiftly recover logistics in the event of a disaster. In
an emergency, support and recovery activities will be carried out promptly under the direction of the head office and the manager of thedepartment taking countermeasures on the ground using the BCP.
When data centers are affected by a disaster, a backup data center will restore systems within 30 minutes, even if the server
shuts down to ensure that logistics systems can be maintained.
SENKO ANNUAL REPORT 2019 27

2019Financial Information

Contents
Financial Review……29
Consolidated Balance Sheets……32
Consolidated Statements of Income……34
Consolidated Statements of Comprehensive Income……34
Consolidated Statements of Changes in Net Assets……35
Consolidated Statements of Cash Flows……36
Notes to the Consolidated Financial Statements……37
Report of Independent Auditors……55

28 SENKO ANNUAL REPORT 2019

Financial Review
Consolidated operating revenues increased 7.6% year on year to ¥529.609 billion for the fiscal year under review. This result was
mainly a reflection of increased sales and revised rates; the effect of year-on-year differences related to the timing of consolidationof Anzen Yuso Co., Ltd., and Okumura Co., Ltd., which became consolidated subsidiaries in the previous fiscal year; as well as making
living support companies consolidated subsidiaries including KEIHANNA helper station Co., Ltd., Venus Co., Ltd., and BLUE EARTH
JAPAN Co., Ltd.) in April and M-Senko Logistics Co., Ltd. in July.
On the profit front, consolidated operating profit increased 14.9% year on year to ¥19.631 billion and consolidated ordinary profit
increased 14.8% year on year to ¥19.876 billion. This was largely attributable to factors that include higher sales and revised rates;
the effect of consolidations; and the decrease in the amount amortized for actuarial differences in accounting for retirement benefit
obligations, despite increased costs for outsourcing as well as higher fuel prices.
Profit attributable to owners of parent increased 22.9% year on year to ¥11.681 billion due to the full consolidation of Runtec
Corporation and other companies.
Billions of yen

2019

2018

Operatingrevenues

Component
ratio (%)

Operatingrevenues

Component
ratio (%)

Difference

Growth rate(%)

Logistics¥ 375.4

70.9¥ 347.8

70.7

¥ 276

7.9

Retail product

208.3

55.5

190.5

54.8

178

9.3

Housing

62.2

16.6

60.0

17.3

23

3.8

Chemicals

73.8

19.7

67.8

19.5

61

8.9

Other

31

8.3

29.5

8.5

15

5.0

Trading & Commerce

142.3

26.9

139.3

28.3

30

2.1

Others

11.9

2.2

5.1

1.0

69

135.9

Total

529.6

100.0

492.1

100.0

375

7.6

For the fiscal years ended March 31

Operating revenues

Operating profit

Net income attributable toowners of parent(Millions of yen)

(Millions of yen)

(Millions of yen)

600,000

20,00012,000480,000

16,0009,600

360,000

12,0007,200

240,000

8,000

4,800

120,000

4,000

2,400

0

0

0

15

16

17

18

19

15

16

17

18

19

15

16

17

18

19

SENKO ANNUAL REPORT 2019 29

Logistics

Operating revenue increased 7.9% year on year to ¥375.384 billion. This was mainly attributable to the effect of
new large logistics centers, expanded sales of products such as daily necessities, food, apparel, and chemical
products; the effect of revised rates; year-on-year differences related to the timing of consolidation of Anzen
Yuso Co., Ltd.; and making M-Senko Logistics Co., Ltd. a consolidated subsidiary.

Trading &Commerce

Operating revenue increased 2.1% year on year to ¥142.294 billion in this segment, mainly due to increased
operating revenue from the trading business and petroleum sales as well as the effect of year-on-year
differences related to the timing of consolidation of Okumura Co., Ltd.

OthersOperating revenue increased 135.9% year on year to ¥11.930 billion in this segment, mainly attributable toincreased operating revenue due to the consolidation of living support companies.

Assets, Liabilities and Net Assets

AssetsTotal assets as of March 31, 2019 were ¥340,491 million, an increase of ¥6,518 million (2.0%) compared with theend of the previous fiscal year.
Current assets came to ¥117,263 million, up ¥3,114 million (2.7%) from the end of the previous fiscal year.
This was mainly a reflection of increases of ¥2,570 million in notes and operating accounts receivable–trade and¥1,219 million in merchandise and finished goods.
Non-current assets were ¥223,195 million, up ¥3,428 million (1.6%). This was mainly due to an increase inproperty, plant, and equipment of ¥2,143 million and an increase in intangible assets of ¥1,275 million.

Liabilities

Liabilities as of March 31, 2019 decreased ¥2,320 million (1.1%) from the end of the previous fiscal year to¥213,595 million.
Current liabilities totaled ¥98,669 million, down ¥7,379 million (7.0%) from the end of the previous fiscal year.
This was mainly due to a decrease in short-term loans payable of ¥7,770 million.
Non-current liabilities as of March 31, 2019 rose ¥5,059 million (4.6%) from the end of the previous fiscal year to¥114,926 million due to increases in long-term loans payable of ¥1,464 million and lease obligations of ¥3,157 million.

Operating profit margin (Net income per share

Cash dividends per share

(%)

(Yen)

(Yen)

5.0

80

30

4.0

64

24

3.0

48

18

2.0

32

12

1.0

16

6

0

)

0

0

15

16

30 SENKO ANNUAL REPORT 2019

17

18

19

15

16

17

18

19

15

16

17

18

19

Net assets as of March 31, 2019 rose ¥8,838 million (7.5%) from the end of the previous fiscal year to ¥126,895
million. This was attributable to such factors as increases in retained earnings of ¥8,015 million and non-controllinginterests of ¥2,225 million, despite decreases in net unrealized holdings gain on securities of ¥424 million andre-measuring the defined benefit plans of ¥877 million.
The equity ratio increased by 1.3 percentage points from the end of the previous fiscal year to 35.0%.

Net Assets

Capital Expenditures and Depreciation
Capital expenditures in the fiscal year under review decreased ¥16,398 million, or 77.3%, to ¥21,227 million, compared with the previous
fiscal year. The Company opened logistics centers in Osaka, Shizuoka and Fukuoka Prefectures as well as China in the fiscal year
under review. As a result, the total warehouse space as of March 31, 2019 expanded by 210,000 m2 from the end of the previous fiscal
year to 3,660,000 m2. In the fiscal year ending March 31, 2020, capital expenditures are expected to decrease ¥12,804 million, or 30.1%,
to ¥16,232 million.
Depreciation increased ¥1,895 million, or 15.2%, to ¥14,334 million, compared with the previous fiscal year, and is expected to rise¥875 million, or 6%, to ¥15,387 million in the fiscal year ending March 31, 2020.

Cash Flows
Cash and cash equivalents at the end of the fiscal year decreased by ¥993 million (4.2%) year on year to ¥22,801 million.
Net cash provided by operating activities came to ¥27,022 million, an increase of ¥2,455 million (10.0%) year on year. This was
mainly due to a fall in cash of ¥2,138 million and from an increase in trade receivable and ¥7,649 million in income taxes paid, despite
profit before income taxes of ¥18,901 million, depreciation and amortization of ¥14,335 million, an increase in trade payables of ¥871
million, and increased cash of ¥1,441 million due to a decrease in consumption taxes refund receivable, etc.
Net cash used in investing activities totaled ¥15,770 million, a decrease of ¥21,250 million (57.4%) year on year. This was mainly
due to payments for purchases of fixed assets of ¥24,376 million; payments for purchases of shares of newly consolidated subsidiariesof ¥1,380 million; and payments for purchases of non-consolidated subsidiaries of ¥1,296 million, despite ¥14,094 million in proceedsfrom sales of fixed assets.
Net cash used in financing activities totaled ¥13,224 million (¥9,940 million provided by financing activities in the previous fiscal
year). This was mainly due to a decrease in short-term loans, net of ¥5,332 million; repayment of long-term debt of ¥9,865 million;
repayment of finance lease obligations of ¥3,871 million; and cash dividends paid of ¥3,659 million, despite proceeds from long-term
debt of ¥7,711 million and proceeds from issuing shares to non-controlling shareholders of ¥2,305 million.

Total assets

Net assets ( ) /Equity ratio ( )ROE ((Millions of yen)

(Millions of yen)

(%)

(%)

350,000

150,000

40

12

280,000

120,000

32

210,000

90,00024)

96140,000

60,00016

70,00030,000

8

3

0

0

0

15

16

17

18

19

15

16

17

18

19

0

15

16

17

18

19

SENKO ANNUAL REPORT 2019 31

Consolidated Balance Sheets
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
March 31, 2019 and 2018
Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

¥ 22,802¥ 23,796$ 205,442

ASSETS
Current assets:
Cash and cash equivalents
Trade accounts and notes receivable–
Non-consolidated subsidiaries
OthersLess : allowance for doubtful accounts

2

3

18

73,09570,524

658,572

(14)

(16)

(125)

Inventories

9,767

8,181

87,999Prepaid expenses and other current assets

11,611

11,660104,613

117,263

114,148

1,056,519

Investments in and long-term loans receivable to non-consolidated subsidiaries

18,42020,008

165,961

Investment securities (Notes 7 and 12)

6,651

7,209

59,924

Total current assets

294,519

301,788

2,653,563

Less : accumulated depreciation(132,305)(141,717)(1,192,044)

Net property and equipment

162,214160,071

1,461,519

Long-term deferred tax assets (Note 16)

5,139

4,317

46,302

Net defined benefit assets

3,089

3,659

27,831Other assets

27,68324,503

249,419

32

58

288

32

58

288

¥ 340,491¥ 333,973$ 3,067,763

Property and equipment, at cost (Notes 9 and 12)

Deferred assets:
Business commencement expenses
Total deferred assets

Total assets
See the accompanying notes to the consolidated financial statements.

32 SENKO ANNUAL REPORT 2019

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

¥ 14,610¥ 19,891$ 131,634

Current portion of long-term debt (Note 10)

7,019

9,509

63,240

Lease obligations

3,182

3,074

28,669LIABILITIES AND NET ASSETS
Current liabilities:
Short-term loans (Note 10)

Trade accounts and notes payable–
Non-consolidated subsidiaries
Others10944,64944,608402,279
104,829

Accrued expenses

11,635

10,040Accrued income taxes

4,242

4,509

38,220

Other current liabilities

13,331

14,418120,110

98,669106,049

888,990

Long-term debt, less current portion (Note 10)

91,84790,440827,525

Lease obligations

10,5007,343

94,603Net defined benefit liabilities (Note 11)

6,971

6,902

62,808Other long-term liabilities

5,608

5,182

50,527

26,52926,529239,022

Capital surplus

29,842

29,730268,871Retained earnings

62,98354,969567,466

(698)

(590)

(6,289)118,656

110,638

1,069,070
12,172

Total current liabilities

Contingent liabilities (Note 13)
Net assets (Note 14):
Shareholders' equity
Common stock:
Authorized–294,999,000 shares
Issued–152,861,921 shares in 2019 and 152,861,921 shares in 2018

Less : Treasury stock, at cost–1,024,460 shares in 2019 and 937,015 shares in 2018
Total Shareholders' equity
Accumulated other comprehensive income :

1,351

1,775

Gain (loss) on deferred hedges

Net unrealized holdings gain on securities

(4)

(61)

(36)

Translation adjustments

122

335

1,099

Remeasurements of defined benefit plans

(920)

(43)

(8,289)
4,946

549

2,006

Stock acquisition rights (Note 15)

425

373

3,829

Non-controlling interests

7,266

5,040

65,465

Total net assets

126,896

118,057

1,143,310

Total liabilities and net assets¥ 340,491¥ 333,973$ 3,067,763

Total accumulated other comprehensive income :See the accompanying notes to the consolidated financial statements.

SENKO ANNUAL REPORT 2019 33

Consolidated Statements of Income
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018
Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

¥ 529,609¥ 492,127$ 4,771,682

471,129
38,848440,671
34,3694,244,788
350,013509,977

475,040

4,594,801

19,632

17,087

176,881269(1,036)
36

238
(977)
588

2,424
(9,334)
324

(731)

(151)

(6,586)

Income before income taxes

18,901

16,936170,295

Income taxes (Note 16):
Current
Deferred

7,102
(296)

5,778
(9)

63,988(2,667)

6,806

5,769

61,321

12,095

11,167

108,974(414)(1,663)(3,730)9,504$ 105,244

Operating revenues
Operating costs and expenses:
Operating costs of revenues
Selling, general and administrative expenses

Operating profit
Other income (expenses):
Interest and dividend income
Interest expenses
Others, net

Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent¥ 11,681

Per share of common stock
Net income
Diluted net income
Cash dividends applicable to the year¥
Yen

¥ 76.90
71.31
26.00

U.S. dollars¥ 62.64
58.08
22.00

$ 0.690.64
0.23

See the accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018
Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

¥ 12,095¥ 11,167$ 108,974

Other comprehensive income (Note 5):
Net unrealized holdings gain (loss) on securities
Gain (loss) on deferred hedges
Translation adjustments
Remeasurements of defined benefit plans

(434)
59
(294)
(878)

430
(66)
105
1,257

(3,910)532(2,649)(7,911)

Total other comprehensive income(1,547)

1,726(13,938)

Comprehensive income¥ 10,548¥ 12,893$ 95,036

Total comprehensive income attributable to:
Owners of parent
Non-controlling interests¥ 10,228¥ 320¥ 11,158¥ 1,735$ 92,153$ 2,883

Net income

See the accompanying notes to the consolidated financial statements.

34 SENKO ANNUAL REPORT 2019

Consolidated Statements of Changes in Net Assets
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018
Millions of yen
Number ofshares ofcommonstock issued

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)

152,861¥ 26,529¥ 25,411¥ 48,655¥ (658)¥ 1,392

Net income attributable to owners of parent

–

–

–

9,504

–

Cash dividends

–

–

–

(3,355)–Purchases of treasury stock

–

–

–

–

(455)

–

–

–

–

Retirement of treasury stock

–

–

(13)

–

523

–

–

–

–

Adjustment of retained earnings for
newly consolidated subsidiaries

–

–

–

165

–

–

–

–

–

Change in treasury shares ofparent arising from transactions
with non-controlling shareholders

–

–

4,332

–

–

–

–

–

Other changes

–

–

–

–

–

383

(63)

84

152,861¥ 26,529¥ 29,730¥ 54,969¥ (590)¥ 1,775¥ (61)¥ 335

Net income attributable to owners of parent

–

–

–

11,681–––

Cash dividends

–

–

–

(3,661)–

Purchases of treasury stock

–

–

–

–

(128)

Retirement of treasury stock

–

–

(2)

–

20

Adjustment of retained earnings for
newly consolidated subsidiaries

–

–

–

(6)

–

Change in treasury shares ofparent arising from transactions
with non-controlling shareholders

–

–

114

–

–

–

–

–

–

Other changes

–

–

–

–

–

(424)

57

(213)

(877)

152,861¥ 26,529¥ 29,842¥ 62,983¥ (698)¥ 1,351

¥ (4)

¥ 122

¥ (920)¥ 425

Balance at March 31, 2017

Balance at March 31, 2018

Balance at March 31, 2019

Net
Remeasurements
Stock
Gain (loss)
unrealized
Translationof definedacquisition
on deferredholdings gain
adjustments
benefit plansrightshedgeson securities¥

Noncontrollinginterests

Total net
assets2¥ 251¥ (1,293)

¥ 396

–

–

–

–

–

–

9,504

–

–

–

–

–

–

(3,355)

–

–

(455)

–

–

510

–

–

165

–

–

–

4,332

1,250

(23)

(8,366)(6,735)

(43)

¥ 373

–

–

–

–

11,681

–

–

–

–

–

(3,661)

–

–

–

–

–

–

(128)

–

–

–

–

–

–

18

–

–

–

–

–

–

(6)

–

–

114

52

2,226

821

¥

¥ 13,406 ¥ 114,091¥ 5,040 ¥ 118,057¥ 7,266 ¥ 126,896

Thousand of U.S. dollars
Net
Gain (loss)
Remeasurements
Stockunrealized
Translation
on deferredof definedacquisition
holdings gain
adjustments
hedgesbenefit plansrightson securities

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)$ 239,022$ 267,862$ 495,261$ (5,316)$ 15,992$ (550)$ 3,018$ (387)$ 3,361

Net income attributable to owners of parent––

105,244

–

–

–

–

–

–

–

105,244

Cash dividends––(32,985)

–

–

–

–

–

–

–

(32,985)

Purchases of treasury stock

–

–

–

(1,153)

–

–

–

–

–

–

(1,153)Retirement of treasury stock

–

(18)

–

180

–

–

–

–

–

–

162

Adjustment of retained earnings for newly
consolidated subsidiaries

–

–

(54)

–

–

–

–

–

–

–

(54)

Change in treasury shares of parent arising fromtransactions with non-controlling shareholders

–

1,027

–

–

–

–

–

–

–

–

1,027

Other changes

–

–

–

–

(3,820)514(1,919)(7,902)468

20,056

7,397$ 239,022$ 268,871$ 567,466$ (6,289)$ 12,172$ (36)$ 1,099$ (8,289)$ 3,829

Balance at March 31, 2018

Balance at March 31, 2019

Noncontrollinginterests

Total net
assets$ 45,409 $ 1,063,672$ 65,465 $ 1,143,310

SENKO ANNUAL REPORT 2019 35

Consolidated Statements of Cash FlowsSENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2019 and 2018
Thousands of
U.S. dollars

Millions of yen

2019
Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation and amortization
Impairment loss
Gain (loss) on sales of investment securities
Loss on valuation of shares of subsidiaries and associates
Loss on valuation of investments in affiliates
Gain on sales of property and equipment
Loss on disposals of property and equipment
Loss on reduction of property and equipment
Subsidy income
Loss on disaster
Loss (gain) on liquidation of subsidiaries and associates
Loss on liquidation of subsidiaries
Loss on office withdrawal
Decrease (increase) in accured retirement benefits
Decrease (increase) in net defined benefit liabilities
Increase (decrease) in accrued bonuses to employees
Increase (decrease) in provision for share-based remuneration
Increase (decrease) in provision for loss on disaster
Interest and dividends income
Interest expenses
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Decrease (increase) in consumption taxes refund receivable
Other
Subtotal
Proceeds from subsidy income
Interest and dividends income received
Interest expenses paid
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Payments for purchases of fixed assets
Proceeds from sales of fixed assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchase of shares of newly consolidated subsidiaries
Payments for purchases of non-consolidated subsidiaries
Payments for guarantee deposits
Other
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term loans, net
Proceeds from long-term debt
Repayment of long-term debt
Repayments of finance lease obligations
Proceeds from issuance of corporate bondProceeds from issuing shares to non-controlling shareholders
Payments for purchase of shares of usual consolidated subsidiaries
Dividends paid
Other
Net cash provided by (used in) financing activities

2018

2019

¥ 18,901¥ 16,936$ 170,295

14,335
32
(259)
675
–
(349)
335
1,565
(1,587)
111
(79)
200
134
(58)
(598)
584
124
103
(272)
1,036
(2,138)(1,547)
871
(648)
1,441
485

12,440
–
(66)
–
57
(414)
127
651
(639)
–
–
–
–
471
(257)
190
–
–
(238)
977
(3,863)
63
2,260
2,120
(2,056)(373)

129,156288(2,333)6,082–(3,144)
3,018
14,100(14,299)
1,000
(712)
1,802
1,207
(523)
(5,388)
5,262
1,117
928
(2,451)
9,334(19,263)(13,938)
7,848(5,838)12,983
4,370

33,397
1,587
718(1,031)(7,649)28,386
1,892
520
(968)
(5,262)300,901
14,2986,469(9,289)(68,916)

27,022

24,568

243,463(3,596)
2,413(24,376)
14,095(116)
378(1,380)(1,296)(1,576)
(316)

(319)
417
(37,042)
11,121(387)
155(2,140)(5,131)(1,332)(2,362)(32,399)
21,741(219,623)
126,993(1,045)
3,406(12,434)(11,677)(14,200)(2,847)(15,770)(37,020)(142,085)(5,332)
7,711(9,865)(3,871)
–
2,305
(170)
(3,659)
(343)

9,778
22,106(17,792)(3,855)
10,000–(6,884)(3,341)(72)(48,040)
69,475(88,882)(34,877)–
20,767(1,532)(32,967)(3,090)(13,224)

9,940(119,146)

Effect of exchange rate changes on cash and cash equivalents

(116)

55

(1,045)

Net increase (decrease) in cash and cash equivalents(2,088)(2,457)(18,813)

Cash and cash equivalents at beginning of year

23,79626,197214,398

Net increase in cash and cash equivalents of newly consolidated subsidiaries
Cash and cash equivalents at end of year
See the accompanying notes to the consolidated financial statements.

36 SENKO ANNUAL REPORT 2019

1,094

56

9,857

¥ 22,802¥ 23,796$ 205,442

Notes to the Consolidated Financial Statements
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries

01

Basis of Presenting Consolidated Financial Statements:

02

Summary of Significant Accounting Policies:

SENKO Group Holdings Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their accounts and records in accordance with theprovisions set forth in the Japan Companies Act and the Financial Instruments and Exchange Law of Japan and in conformity with accounting
principles generally accepted in Japan, which are different in several respects as to the accounting and disclosure requirements of International
Accounting Standards.
The Company’s foreign subsidiaries maintain their accounts and records in conformity with generally accepted accounting principles andpractices prevailing in their respective countries of domicile.
The accompanying consolidated financial statements are prepared based on the consolidated financial statements of the Company and its
subsidiaries(the“Companies”) which were filed with the Director of Kanto Local Finance Bureau as required by the Financial Instruments andExchange Law of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The translation of Japanese yen amounts into U.S. dollars is included solely for the convenience of the reader, using the exchange rate
prevailing at March 31, 2019, which was ¥110.99 to US$1.00. These convenience translations should not be construed as representations that theJapanese yen amounts have been, could have been, or could in the future be, converted into U.S.dollars at this or any other rate of exchange.

(a) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries. All significant intercompany balances
and transactions are eliminated.
Non-consolidated subsidiaries, whose combined assets, net sales, net income and retained earnings in the aggregate are not significant inrelation to those of the consolidation with the Companies.
The investments in other insignificant unconsolidated subsidiaries and affiliates are stated at cost.

(b) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks, net of overdrafts and all highly liquid investments withmaturities of three months or less.

(c) Investment Securities
Investment securities are classified and accounted for, depending on management’s intent.
Marketable other securities, which are not classified as either trading securities or held-to-maturity debt securities, are reported at fair value,with unrealized gains and losses, net of applicable taxes, reported in a separate component of net assets.
Non-marketable other securities are stated at cost.
The cost of other securities sold is determined by the moving-average method.
The Companies classified all securities as other securities.

(d) Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Companies’ past credit loss experience or an
evaluation of potential losses in the receivables outstanding.

(e) Inventories
Purchased goods are stated principally at cost determined by the moving-average method (with book values written down on the balance sheets based on
decreased profitability of assets). Finished goods, real estate for sale and work in process are stated principally at cost determined by the specific method(with book values written down on the balance sheets based on decreased profitability of assets). Raw materials are stated at cost determined by the lastpurchase cost method (with book values written down on the balance sheets based on decreased profitability of assets). Supplies are principally stated atcost determined by the moving-average method (with book values written down on the balance sheets based on decreased profitability of assets).

(f) Property and Equipment and Depreciation (Except for Leased Assets)
Property and equipment are stated at cost. Depreciation is computed on the straight-line method for the buildings (including fixtures attached tothe buildings), structures and vehicles, and on the declining-balance method for the others, on the estimated useful lives of assets.
The principal estimated useful lives are as follows:
Buildings and structures

2 to 60 years

Machinery and equipment

2 to 17 years

SENKO ANNUAL REPORT 2019 37

(g) Leased Assets
Financial leases other than those that are deemed to transfer the ownership of leased assets to the lessees are accounted for in a similar way topurchases and depreciation for lease assets is computed under the straight-line method with zero residual value over the lease term.
Financial leases other than those that are deemed to transfer the ownership of leased assets to the lessees, which commenced in fiscal years
beginning prior to April 1, 2008, are accounted for in a similar way to operating leases.

(h) Accounting for significant deferred assets
Method and period for amortization of business commencement expenses
Business commencement expenses are amortized by the straight-line method over five years.

(i) Retirement Benefits
The Company and certain consolidated subsidiaries have retirement benefit plans for their employees that consist of funded and unfunded defined
benefit pension plans and a defined contribution pension plan.
Under the defined benefit pension plans (all of which are funded benefit plans), lump-sum benefits or pensions are paid based on salary andthe length of service. The Company has set up a retirement benefit trust scheme for certain defined benefit pension plans.
Under the retirement lump-sum plans (though the plans are basically unfunded, some were turned into funded plans after the setting up of aretirement benefit trust scheme), lump-sum benefits are paid based on salary and length of service.
Net defined benefit liabilities have been provided for employees’ retirement benefits, based on the amount of projected benefit obligation
reduced by pension plan assets at fair value at the balance sheet date.
Actuarial gains and losses are amortized by the straight-line method over a period of 10 years, which is within the estimated average remaining
years of service of the Companies’ employees. The amortization of such gains and losses is recognized effective the year subsequent to the year inwhich they are incurred.
Certain consolidated subsidiaries also have a severance indemnity plan for directors and corporate auditors, whose accrued severance
indemnities are stated at 100% of the amount which is computed according to internal rules.

(j) Income Taxes
Deferred income taxes are recognized by the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are
determined based on difference of between financial reporting and the tax basis of the assets and liabilities, and are measured using the enacted
tax rate and laws that will be in effect when the differences are expected to reverse.

(k) Goodwill
Goodwill amortized over a period of 5 years by the straight-line method. If the economic useful life can be estimated, the useful life is used as theamortization period.

(l) Derivatives and hedge accounting
The Company and consolidated subsidiaries state derivative financial instruments at market value and recognize changes in the market value as
gain or loss unless the derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges andmeet certain hedging criteria, the Company and consolidated subsidiaries defer recognition of gain or loss resulting from changes in the market
value of the derivative financial instrument until the related loss or gain on the hedged item is recognized. However, when forward foreignexchange contracts are used as hedges and meet certain hedging criteria, the foreign currency receivables or payables are translated at thecontracted rate. Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received
under the interest rate swap contract is added to or deducted from the interest on the asset or liability for which the swap contract was executed.

(m) Per Share Information
Basic net income per share is computed on the basis of the weighted-average number of shares of common stock outstanding for the period.
Diluted net income per share is computed on the basis of the weighted-average number of shares of common stock outstanding during each year
after giving effect to the dilutive potential of the shares of common stock to be issued upon the conversion of convertible bonds and exercise of stockacquisition rights.
Cash dividends per share are dividends applicable to the respective years including dividends to be paid after the end of the year.

(n) Translation of Foreign Currencies
All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate at the balance sheet
date. Revenue and expenses are translated at the rate of exchange prevailing when transactions are made.
Foreign currency financial statements amounts of overseas consolidated subsidiaries are translated into Japanese yen at the exchange rate
for prevailing at the respective balance sheet dates of those subsidiaries for assets and liabilities, and at the historical exchange rate for net
assets. All income and expense amounts are translated at the average rate of exchange during the fiscal year of those subsidiaries.
The resulting translation adjustments are included in net assets as translation adjustments.

38 SENKO ANNUAL REPORT 2019

03

Accounting Standard, etc., Issued but Not Yet Adopted

・The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 issued on March 30, 2018 by ASBJ)
・The Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30 issued on March 30, 2018 by ASBJ)(1) Outline
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States jointly developed
comprehensive accounting standards for revenue recognition and published the Revenue from Contracts with Customers (IFRS 15 in the IASB and
Topic 606 in the FASB) in May 2014. Given that IFRS 15 will be applied from the fiscal year starting on or after January 1, 2018, and that Topic 606
will be applied from the fiscal year starting after December 15, 2017, the Accounting Standards Board of Japan (ASBJ) has developed
comprehensive accounting standards for revenue recognition and has published them together with the implementation guidance.
The policy of the ASBJ in developing accounting standards for revenue recognition is to set accounting standards that incorporate the basic
principles of IFRS 15 as a starting point. The goal is to have comparability between financial statements, one of the benefits of ensuringconsistency with IFRS 15, and to add alternative accounting treatments without losing comparability if there is an item that should be taken into
account in the practices, etc. that have been followed in Japan.

(2) Planned application date
To be applied from the beginning of the fiscal year ending March 31, 2022

(3) Impact of the application of the above accounting standard, etc.
The impact of the application of the Accounting Standard for Revenue Recognition, etc. on the consolidated financial statements is currently being
assessed.

04

Additional Information(Employee Stock Ownership Plan Trust (ESOP Trust))(1) Outline of the transaction
The Company introduced the ESOP Trust with the aim of improving the benefit program for employees. In addition, the ESOP Trust will foster asense of belonging to the Group, creating an awareness of participation in management, and will increase awareness about contributing to
improvements in the Group’s medium-to-long term business performance and increasing corporate value through a program that is common
across the Group. The ESOP Trust is an incentive plan that delivers the Company’s shares acquired by the Trust to eligible employees who meetcertain requirements based on predetermined share distribution rules . As the funds for purchasing the Company’s shares that the Trust acquires
are contributed by every eligible company, there is no contribution from eligible employees.

(2) The Company’s own stock remaining in the trusts
The Company’s own stock remaining in the ESOP Trusts is posted as treasury stock under net assets at a book value recorded in the ESOP Trusts(excluding ancillary expenses). The amount and book value of the applicable treasury stock is 351,000 shares valued at ¥286 million($2,577thousand) for the current consolidated fiscal year.
(Officer Remuneration Board Incentive Plan (BIP Trust))(1) Outline of Transactions
The Company has introduced the Board Incentive Plan Trust (BIP Trust) as an executive officer remuneration plan for directors of the Company
and the Group’s subsidiaries (excluding outside directors and non-residents of Japan). This incentive plan is strongly linked to the Group’s financial
performance as well as being highly transparent and objective to help increase awareness of contributing to improving the Group’s medium-tolong term business performance and increasing the corporate value. The BIP Trust is a plan that delivers the Company’s shares and/or pays anamount of cash equivalent to the converted value of the Company’s shares to directors based on their position in the company and their financial
performance in the same way as the Performance-based Stock Compensation Plan (Performance Share) and the Restricted Stock Compensation
Plan (Restricted Stock) in Europe and the United States.

(2) The Company’s own stock remaining in the trusts
The Company’s own stock remaining in the BIP Trusts is posted as treasury stock under net assets at a book value recorded in the BIP Trusts(excluding ancillary expenses). The amount and book value of the applicable treasury stock is 353,000 shares valued at ¥296 million($2,667thousand) for the current consolidated fiscal year.

SENKO ANNUAL REPORT 2019 39

05

Comprehensive Income

The amount of recycling and amount of income tax effect associated with other comprehensive income at March 31,2019 and 2018consisted of the following:
Millions of yen

2019
Net unrealized holdings gain (loss) on securities:
Amount recognized in the period under review
Amount of recycling

2018

Thousands of
U.S. dollars

2019¥ (360)
(259)

¥ 693
(67)

$ (3,243)(2,334)

(619)
185

626
(196)

(5,577)
1,667

(434)

430

(3,910)

87

(97)

784

Before income tax effect adjustments
Amount of income tax effect

87
(28)

(97)
31

784
(252)

Gain (loss) on deferred hedges
Translation adjustments
Amount recognized in the period under review

59

(66)

532

(294)

105

(2,649)Remeasurements of defined benefit plans:
Amount recognized in the period under review
Amount of recycling(1,814)
541

425
1,383

(16,344)4,874

Before income tax effect adjustments
Amount of income tax effec(1,273)
395

1,808
(551)

(11,470)
3,559

Remeasurements of defined benefit plans

(878)

1,257

(7,911)¥ (1,547)¥ 1,726$ (13,938)

Before income tax effect adjustments
Amount of income tax effectNet unrealized holdings gain (loss) on securities
Gain (loss) on deferred hedges:
Amount recognized in the period under review

Total other comprehensive income

06

Financial Instruments(a) Status of financial instruments(1) Policy on financial instruments
The Company and certain of its subsidiaries raise the funds required for capital investment plans for further growth from bank loans and theissuancee of bond. The Companies manage any temporary surplus funds using highly stable financial assets. The Companies use derivatives inorder to hedge against currency risks associated with merchandise imports as well as interest rate fluctuations risks in loans payable, and do
not engage in speculative transactions.
(2) Details of financial instruments, their risks and management systems
Trade accounts and notes receivable, which are operating receivables, are exposed to the credit risk of the customer and the Companies
operate systems to manage both payment deadlines and balances for each customer and grasp the credit status of each customer.
Investment securities are mainly the shares of companies with which the Companies have a business relationship and the shares related tocapital alliances, and these are exposed to the risk of fluctuations in market prices.
Trade accounts and notes payable, which are operating liabilities, have payment dates of within 1 year.
Trade accounts payable in foreign currencies are exposed to risks of foreign exchange fluctuations. To hedge such fluctuation risks, aconsolidated subsidiary has entered into foreign exchange forward contracts.
Short-term loans are fund procurement related mainly to operating transactions. Long-term debt are fund procurement related mainly tocapital investment.
Loans with variable interest rate are exposed to the risk of fluctuations in payable interest rates, but the Company conduct interest rate
swap transactions in order to hedge the risk of fluctuations in payable interest rates for some long-term debt among variable interest rate loans.
In addition, operating liabilities and loans payable are exposed to liquidity risk, but the Companies implement integrated fund management
through the concentration of funds in the Company, which carries out fund settlement, fund procurement, monitoring of balances and fundmanagement for the Companies.

40 SENKO ANNUAL REPORT 2019

Regarding derivatives, the Companies use foreign exchange forward contracts to hedge against foreign exchange rates fluctuation risks,
and interest rate swap transactions aimed at hedging against the risk of future interest rate fluctuations, and also reduce the cost of fundprocurement by converting variable interest rate liabilities into fixed interest rate liabilities.
Primary risks pertaining to derivative transactions include market risk and credit risk. Market risk is the risk that the value of an investment
position will decrease due to changes in market factors, and a derivative transaction is exposed to foreign exchange and interest rate
fluctuation risks. The Companies' derivatives effectively offset the risks of assets and liabilities on the balance sheets, and there were noimportant transaction risks. Credit risk is the risk that, in the case of default of the other party, the relevant party would become incapable ofbenefiting from the effect that would have obtained in the future if the transaction had continued. The Companies' derivative transaction
partners are limited to financial institutions with high credit ratings and the Companies do not foresee the occurrence of losses due to debt
default on the part of transaction partners.
The Company manages derivatives based on authority-related regulations in the Business Management Division . The execution oftransactions requires the permission of the director responsible for the management of derivatives and the details of transactions are reported
to the general manager of the Business Management Division and the director after their execution.
Consolidated subsidiaries also manage derivatives based on authority-related regulations, as does the Company.
(3) Supplementary explanation of the estimated market values of financial instruments
The market value of financial instruments includes prices based on market prices and reasonably estimated prices if there are no market prices.
Because estimations of the prices incorporate fluctuating factors, application of different assumptions can in some cases change the prices.

(b) Market value of financial instruments
The values on the consolidated balance sheets, market values and the differences between them are as follows. Financial instruments forwhich apprehension of the market value is recognized to be extremely difficult are not included.

Millions of yen

2019(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable (including current portion)Less allowance for doubtful accounts (*1)

Book valueMarket value

Difference¥ 25,233
73,097
6,238
3,791
(185)

¥ 25,233
73,097
6,238

3,606

3,562

(44)

Total assets¥ 108,174¥ 108,130¥ (44)(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)¥ 44,650
14,61017,16810,03071,668
13,682¥ 44,650
14,61017,106
9,866
72,44013,539¥Total liabilities¥ 171,808¥ 172,211¥ 403

Derivatives (*2)

¥

¥

¥

1

1

¥

–
–
–

–
–
(62)
(164)
772
(143)

–

Millions of yen

2018(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable (including current portion)Less allowance for doubtful accounts (*1)

Book valueMarket value

Difference¥ 24,996
70,527
6,814
3,980
(840)

¥ 24,996
70,527
6,814

3,140

3,903

763

Total assets¥ 105,477¥ 106,240¥ 763(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)¥ 44,608
19,891
17,216
10,04072,693
10,417¥ 44,608
19,891
16,923
9,769
73,277
10,360¥Total liabilities¥ 174,865¥ 174,828¥ (37)

Derivatives (*2)

¥

¥

¥

(61)

(61)

¥

–
–
–

–
–
(293)
(271)
584
(57)

–

SENKO ANNUAL REPORT 2019 41

Thousands of U.S. dollars

2019Book value(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable (including current portion)Less allowance for doubtful accounts (*1)

Market value

Difference$ 227,345
658,590
56,20334,156(1,667)$ 227,345
658,590
56,20332,48932,093(396)

Total assets$ 974,627$ 974,231$ (396)(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)$ 402,288
131,634
154,680
90,369645,716
123,272$ 402,288
131,634
154,12288,891
652,672
121,984$

Total liabilities$ 1,547,959$ 1,551,591$ 3,632

Derivatives (*2)

$

$

$

9

9

$

–
–
–

–
–
(558)
(1,478)
6,956(1,288)–*1. Allowance for doubtful accounts recognized in long-term loans receivable is offset.
*2. “Derivatives” shows net receivables and liabilities generated by derivative transactions, with net liabilities shown in parentheses.

Calculation of the market value of financial instruments and items relating to investment securities and derivatives● Assets(1) Cash and cash equivalents, (2) Trade accounts and notes receivable				Because these are settled in a short period of time and market values are roughly equivalent to book values, market value are calculated basedon book values.
(3) Investment securities
The market values of shares are based on stock exchange prices and the market values of bond are based on stock exchange prices and theprices offered by correspondent financial institutions. With regard to details of the investment securities by purpose, please see "Note 6"(4) Long-term loans receivable
The market values of long-term loans receivable are calculated based on the current value discounting future cash flow by a rate adding credit
risk to appropriate indices such as the yield on government bond.
● Liabilities(1) Trade accounts and notes payable, (2) Short-term loans
Because these are settled in a short period of time and market values are roughly equivalent to book values, market values are calculated
based on the book values.
(3) Bond, (4) Convertible bond
The market values of bond issued by the Company are calculated based on the current value discounting the total value of principal and interestby a rate adding the remaining period of the bond in question and credit risk.
(5) Long-term debt
The market values of long-term debt are calculated based on the current value discounting the total value of principal and interest by a rateenvisioned if a new loan of the same value was taken out. Long-term debt based on variable interest rates are subject to special processing
using interest rate swaps, and are calculated based on the current value discounting the total value of principal and interest processed as aunit with the relevant interest rate swaps by a rate estimated rationally and applied if a loan of the same value was taken out.
(6) Lease obligations
The market values of lease obligations are calculated based on the current value discounting the total value of principal and interest by a rateenvisioned if a new loan of the same value was taken out.
● Derivatives

See “Note 8”
Financial instruments for which it is extremely difficulty to determine market value
2019
Unlisted shares

Thousands of
U.S. dollars

Millions of yen¥ 14,023

2018¥ 15,829

2019$ 126,345

The financial instruments listed above are not included in “(3) Investment securities,” as there is no market price and determination of their market
value is extremely difficult.

42 SENKO ANNUAL REPORT 2019

(c) ‌Planned redemption amounts after the balance sheets date for monetary assets and investment securities withmaturity dates

Millions of yen

2019Within 1 year

Over 1 year
Within 5 years¥

Over 5 years
Within 10 years

–
–
–

¥

Over 10 years

Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable¥ 25,233
73,097
–

–
–
–

¥

–
–
–

–
–
–
96

–
16
–
2,535

–
–
–
925

–
–
–
235

Total

¥ 98,426¥ 2,551

¥ 925

¥ 235
Millions of yen

2018

Within 1 year

Over 1 year
Within 5 years¥

Over 5 years
Within 10 years

–
–
–

¥

Over 10 years

Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable¥ 24,996
70,527
–

–
–
–

¥

–
–
–

–
–
–
538

–
16
–
2,914

–
–
–
217

–
–
–
311

Total

¥ 96,061¥ 2,930

¥ 217

¥ 311
Thousands of U.S.dollars

2019

Within 1 year

Over 1 year
Within 5 years

Over 5 years
Within 10 years

Over 10 years

$

$

$

Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable$ 227,345
658,590
–
–
–
–
865

–
144
–
22,840

–
–
–
8,334

–
–
–
2,117

Total

$ 886,800$ 22,984$ 8,334$ 2,117

07

–
–
–

–
–
–

–
–
–

Investment Securities

The carrying amounts of investment securities at March 31, 2019 and 2018, consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019Marketable securities
Non-marketable securities

2018

2019

¥ 6,238413¥ 6,814395$ 56,203
3,721¥ 6,651¥ 7,209$ 59,924

SENKO ANNUAL REPORT 2019 43

The following is a summary of marketable securities included in investment securities, at March 31, 2019 and 2018.
Millions of yen

2019
Equity security
Bond and Others

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)¥ 3,530169¥ 2,644–¥ 102
3¥ 6,072166¥ 3,699¥ 2,644¥ 105¥ 6,238
Millions of yen

2018
Equity security
Bond and Others

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)¥ 3,465162¥ 3,2520¥ 62
3¥ 6,655
159¥ 3,627¥ 3,252¥ 65¥ 6,814
Thousands of U.S.dollars

2019
Equity security
Bond and Others

08

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)$ 31,804
1,523$ 23,822
–

$ 919
27

$ 54,707
1,496$ 33,327$ 23,822$ 946$ 56,203

Derivatives

1. Derivative transactions to which hedge accounting is not applied
Not applicable.

2. Derivative transactions to which hedge accounting is applied(1) Currency transactions

Millions of yen

2019
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Buy
U.S. dollars
Euros
Chinese yen
Danish kroner
Australian dollars

Item hedged

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable

Total

Contract
amounts

Over 1 year out ofcontract amounts

Market value¥ 2,459
379
277
6
4

¥ –
–
–
–
–

¥ 11
(13)
3
(0)
0

¥ 3,125¥ –¥ 1Millions of yen

2018
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Sell
U.S. dollars
Buy
U.S. dollars
Euros
Chinese yen
Danish kroner
Total

44 SENKO ANNUAL REPORT 2019

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

Trade accounts receivable

¥

10

¥ –

¥

0

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable¥ 2,151
698
212
7

¥ –
–
–
–

¥ 274
(5)
2
(0)

¥ 3,078

¥ –

¥ 271

Thousands of U.S.dollars

2019
Hedge accounting method

Designated transactions forforward exchange contracts

Type of contracts
Forward exchange contracts
Buy
U.S. dollars
Euros
Chinese yen
Danish kroner
Australian dollars

Item hedged

Contract
amounts

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable

Total

Over 1 year out ofcontract amounts

Market value$ 22,155
3,415
2,496
54
36

$ –
–
–
–
–

$ 99
(117)
27
(0)
0

$ 28,156

$ –

$

9

Market value is measured based on prices and other criteria presented by our correspondent financial institutions.
(2) Interest rate swaps

Millions of yen

2019
Hedge accounting method
Exceptional accounting
method for interest-rate
swap transactions

Type of contracts

Item hedged

Interest rate swap contracts
Floating rate receivable/
Fixed rate payable

Long-term debt

Contract
amounts

Over 1 year out ofcontract amounts¥ 17,450

Market value¥ 17,000¥–Millions of yen

2018
Hedge accounting method

Type of contracts

Exceptional accounting
method for interest-rate
swap transactions

Interest rate swap contracts
Floating rate receivable/
Fixed rate payable
Interest rate swap contracts
Principle accounting method
Floating rate receivable/
Fixed rate payable

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

Long-term debt

¥ 18,950¥ 17,450

Long-term debt

¥ 1,038

¥

973

(27)

¥ 19,988¥ 18,423¥ (27)

Total

¥

–

Thousands of U.S.dollars

2019
Hedge accounting metho
Exceptional accounting
method for interest-rate
swap transactions

09

Type of contracts

Item hedged

Interest rate swap contracts
Floating rate receivable/
Fixed rate payable

Long-term debt

Contract
amounts

Over 1 year out ofcontract amounts$ 157,221$ 153,167

Market value$–

Property and Equipment

At March 31, 2019 and 2018, property and equipment at cost consisted of the following:Thousands of
U.S. dollars

Millions of yen

Land
Buildings and structures
Machinery and equipment, vehicle and vessels
Tools, furniture and fixtures
Construction in Progress
Lease assets

2019

2018

2019

¥ 59,670
142,72262,5448,398
4,309
16,876¥ 59,614
146,448
59,003
7,271
16,45013,002$ 537,616
1,285,900
563,51075,66438,823152,050¥ 294,519¥ 301,788$ 2,653,563
SENKO ANNUAL REPORT 2019 45

10Short-term Loans and Long-term Debt

At March 31, 2019 and 2018, short-term loans consisted of the following:Thousands of
U.S. dollars

Millions of yen

2019
0.24% to 0.67% unsecured loans from banks

2018¥ 14,610¥ 19,891

At March 31, 2019 and 2018, long-term debt consisted of the following:

0.50% bond due 2021
0.10% bond due 2022
0.48% bond due 2027
Convertible bond due 2022
0.19% to 3.49% loans from banks and insurance companies:
UnsecuredLess current portion$ 131,634

Thousands of
U.S. dollars

Millions of yen

2019

2019

2018

2019

¥ 7,000
168
10,00010,030¥ 7,000
216
10,00010,040$ 63,069
1,513
90,09890,36971,66872,693645,716

98,866(7,019)99,949(9,509)890,765(63,240)¥ 91,847¥ 90,440$ 827,525

On March 28, 2017, the Company issued ¥10,050 million ($90,549 thousand) of zero coupon convertible bond with stock acquisition rights due in 2022.
The stock acquisition rights are exercisable during the period from March 14, 2022 at a conversion price of ¥930 ($8.38) per share.
The annual maturities of long-term debt at March 31, 2019 are as follows:Year ending March 31

2020
2021
2022
2023
2024
There after

Millions of yen

Thousands of
U.S. dollars¥ 7,019
14,18920,022
10,633
9,407
37,566$ 63,240
127,840
180,395
95,80284,755
338,463

At March 31,2019, the Company has committed line and overdraft contracts with 24 banks aggregating ¥49,165 million ($442,968 thousand).
Of the total credit limit, ¥14,610 million ($131,634 thousand) was used as the above short-term and long-term borrowing, and the rest ¥34,555 million($311,334 thousand) was unused.

11

Retirement Benefits(1) Defined benefit plana. Table for adjusting benefits obligation at the beginning and end of the year
2019
Benefits obligation at the beginning of the year
Service cost
Interest costAccrued actuarial differences
Retirement benefits paid
OthersBenefits obligation at the end of the year

46 SENKO ANNUAL REPORT 2019

Thousands of
U.S. dollars

Millions of yen

2018

2019

¥ 25,624¥ 25,637$ 230,868

1,046
88
536
(1,849)
(6)

1,083
109
300
(1,606)
101

9,424
793
4,829
(16,659)(54)¥ 25,439¥ 25,624$ 229,201

b. Table for adjusting fair value of plan assets at the beginning and end of the year

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Fair value of plan assets at the beginning of the year
Expected return on plan assets
Accrued actuarial differences
Contribution by employers
Retirement benefits paid

¥ 22,381
671(1,278)520(737)¥ 20,909
627
725
726
(606)

$ 201,649
6,046(11,515)
4,685(6,640)Fair value of plan assets at the end of the year

¥ 21,557¥ 22,381$ 194,225c. ‌Table for adjusting benefits obligation, fair value of plan assets at the end of the year, and net defined benefit liabilities and net
defined benefit assets on the consolidated balance sheets					Millions of yen

2019

2018

Thousands of
U.S. dollars

2019

Benefits obligation under the funded benefit plan
Fair value of plan assets¥ 19,656(21,557)¥ 19,844(22,381)$ 177,097(194,225)

Benefits obligation under the unfunded benefit plan

(1,901)
5,783(2,537)
5,780(17,128)
52,105

Net amounts of assets and liabilities on the consolidated balance sheets

3,882

3,243

34,977

Net defined benefit assets
Net defined benefit liabilities

3,089
6,971

3,659
6,902

27,83162,808¥ 3,882¥ 3,243$ 34,977

Net amounts of assets and liabilities on the consolidated balance sheets
d. Breakdown of retirement benefit costs

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial differences¥ 1,046
88
(671)
541

¥ 1,083
109
(627)
1,383

$ 9,424793(6,045)
4,874

Retirement benefit costs for the defined benefit plan

¥ 1,004¥ 1,948$ 9,046

e. Remeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of items posted as re-measurement of defined benefit plans (before tax effect deduction) is as follows:
Millions of yen

2019

2018

Thousands of
U.S. dollars

2019

Recognized actuarial differences¥ (1,273)¥ 1,808$ (11,470)

Total(1,273)

1,808(11,470)

f. Remeasurements of defined benefit plans (Accumluated Other Comprehensive Income)The breakdown of items posted as re-measurement of defined benefit plans (before tax effect deduction) is as follows:
Millions of yen

2019

2018

Thousands of
U.S. dollars

2019

Unrecognized actuarial differences¥(1,433)¥(159)$(12,911)

Total(1,433)(159)(12,911)g. Items concerning plan assets(i) Main items of plan assets
2019

2018

Bonds
StocksOthers

26%
55%
19%

25%
58%
17%

Total

100%

100%

(Note) 43% and 44% of total pension assets are in a "Retirements Benefit Trust" for the defined benefit pension plans as of March 31, 2019 and 2018,respectively.

(ii) Method of setting the expected rate of long-term return on plan assets
The Company has taken into account a forecasted allocation of plan assets and the present and expected long-term return on various assetsthat consist of the plan assets to determine the expected rate of long-term return on plan assets.
SENKO ANNUAL REPORT 2019 47

h. Items concerning the essential basis for actuarial calculation
2019
Discount rate
Defined benefit pension plans
Retirements lump-sum plans
Expected rate of return on plan assets

2018

0.33%
0.12%
3.00%

(2) Defined contribution plan

Contributions to defind contribution plan by the Company and its consolidated subsidiaries

2018
¥ 806

¥ 693

$ 7,262

Land
Buildings
Structures
Ship
Investment securities

2018

2019

¥ 6,670
2,253
23
1,351
10

¥ 6,606
2,496
27
1,426
22

$ 60,096
20,299207
12,17290¥ 10,307¥ 10,577$ 92,864

Obligations which were secured on the above assets were as follows:

Thousands of
U.S. dollars

Millions of yen

2019Long-term debt, including current portion

Thousands of
U.S. dollars

Millions of yen

2019

2018

¥ 5,575¥ 6,160

2019$ 50,230

Contingent Liabilities

At March 31, 2019 and 2018, contingent liabilities were as follows:

Guarantees of some obligations
Buyback obligations associated with securitization of receivables
Recourse obligation associated with securitization of guarantee deposits
Trade notes endorsed

Thousands of
U.S. dollars

Millions of yen

2019

14

2019

Pledged Assets

The following assets were pledged as collateral as at March 31, 2019 and 2018.

13

Thousands of
U.S. dollars

Millions of yen

2019

12

0.51%
0.21%
3.00%

2018

2019

¥ 782
369
83
112

¥ 573
445
83
103

$ 7,046
3,324
748
1,009

¥ 1,346¥ 1,204$ 12,127

Net Assets

The Japan Companies Act provides that an amount equal to at least 10% of the amounts to be disbursed as distributions of earnings be appropriated to
the legal reserve until such reserve and additional paid-in capital equals 25% of the common stock account. The Japan Companies Act also stipulates
that, on condition that the sum of the additional paid-in capital and the legal reserve exceeds 25% of the common stock account, the amount of any
such excess is available for appropriation by resolution of the shareholders.
The retained earnings account in the accompanying consolidated financial statements at March 31, 2019, included the Company’s legal reserve of¥1,506 million ($13,569 thousand).

48 SENKO ANNUAL REPORT 2019

15

Stock Option Plans

The stock option plans of the Company approved by the shareholders in accordance with the Japan Companies Act at March 31, 2019 were as follows:(1) Description of stock options
Stock option

Grantees

Number of shares withwarrants granted

Date of
grant

Option priceper warrant

Shares withwarrants granted

Exerciseperiod2007 Stock options (1st)

10 directors
3 auditors

61,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007June 30, 2027

2007 Stock options (2nd)

9 operating officers

18,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007June 30, 2027

2008 Stock options (4th)

10 directors
3 auditors

71,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008June 30, 2028

2008 Stock options (5th)

10 operating officers

22,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008June 30, 2028

2009 Stock options (6th)

11 directors
4 auditors

74,000 shares

July 1, 2009¥1

Common stock

July 2, 2009June 30, 2029

2009 Stock options (7th)

12 operating officers

27,000 shares

July 1, 2009¥1

Common stock

July 2, 2009June 30, 2029

2010 Stock options (8th)

11 directors
4 auditors

90,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010June 30, 2030

2010 Stock options (9th)

13 operating officers
13 assistant directors

42,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010June 30, 2040

2011 Stock options (10th)

12 directors
4 auditors

102,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011June 30, 2031

2011 Stock options (11th)

15 operating officers
20 assistant directors

96,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011June 30, 2041

2012 Stock options (12th)

12 directors
4 auditors

107,000 shares

July 2, 2012¥1

Common stock

July 3, 2012June 30, 2032

2012 Stock options (13th)

16 operating officers
22 assistant directors

92,000 shares

July 2, 2012¥1

Common stock

July 3, 2012June 30, 2042

2013 Stock options (15th)

12 directors
4 auditors

71,000 shares

July 1, 2013

¥1

Common stock

July 2, 2013June 30, 2033

2013 Stock options (16th)

18 operating officers
26 assistant directors

82,000 shares

July 1, 2013

¥1

Common stock

July 2, 2013June 30, 2043

2014 Stock options (18th)

12 directors
4 auditors

56,000 shares

July 1, 2014

¥1

Common stock

July 2, 2014June 30, 2034

2014 Stock options (19th)

18 operating officers
32 assistant directors

74,000 shares

July 1, 2014

¥1

Common stock

July 2, 2014June 30, 2044

2015 Stock options (20th)

12 directors
4 auditors

52,000 shares

July 1, 2015

¥1

Common stock

July 2, 2015June 30, 2035

2015 Stock options (21th)

20 operating officers
30 assistant directors

60,000 shares

July 1, 2015

¥1

Common stock

July 2, 2015June 30, 2045

2016 Stock options (22th)

10 directors
4 auditors

35,000 shares

July 1, 2016

¥1

Common stock

July 2, 2016June 30, 2036

2016 Stock options (23th)

23 operating officers
15 assistant directors

43,000 shares

July 1, 2016

¥1

Common stock

July 2, 2016June 30, 2046

2017 Stock options (25th)

6 directors
4 auditors

21,000 shares

July 3, 2017¥1

Common stock

July 4,2017June 30,2037

2017 Stock options (26th)

2 operating officers
4 assistant directors
9 executives of the subsidiaries
23 operating officers of the subsidiaries
20 assistant directors of the subsidiaries

77,000 shares

July 3, 2017¥1

Common stock

July 4,2017June 30,2047

2018 Stock options (27th)

7 directors
4 auditors

19,000 shares

July 2, 2018

¥1

Common stock

July 3,2018June 30,2038

2018 Stock options (28th)

1 operating officers
4 assistant directors
9 executives of the subsidiaries
24 operating officers of the subsidiaries
24 assistant directors of the subsidiaries

83,000 shares

July 2, 2018

¥1

Common stock

July 3,2018June 30,2048

SENKO ANNUAL REPORT 2019 49

(2) Changes in the number of stock options
The following describes changes in the number of stock options that existed during the year ended March 31, 2019. The number of stock options istranslated into the number of shares.
Share subscription rights which are not yet vested (shares):
Stock option

At March 31,
2018

GrantedForfeited2007 Stock options (1st)––2007 Stock options (2nd)–2008 Stock options (4th)Share subscription rights which have already been vested (shares):

VestedAt March 31,
2019

At March 31 ,2018

Vested–––24,000

–

–

–

–

–

4,000

–

–

–

–

–

2008 Stock options (5th)

–

–

–

–

2009 Stock options (6th)

–

–

–

2009 Stock options (7th)––2010 Stock options (8th)–2010 Stock options (9th)Forfeited

At March 31,
2019

–

–

24,000

–

–

–

4,000

27,000–––27,000

–

6,000

–

2,000

–

4,000

–

–

30,000–––30,000–––20,000

–

5,000

–

15,000––––35,000–––35,000

–

–

–

–

–

32,000

–

7,000

–

25,0002011 Stock options (10th)

–

–

–

–

–

62,000

–

6,000

–

56,0002011 Stock options (11th)

–

–

–

–

–

75,000

–

6,000

–

69,0002012 Stock options (12th)

–

–

–

–

–

66,000

–

7,000

–

59,0002012 Stock options (13th)

–

–

–

–

–

80,000

–

7,000

–

73,0002013 Stock options (15th)

–

–

–

–

–

59,000

–

5,000

–

54,0002013 Stock options (16th)

–

–

–

–

–

73,000

–

2,000

–

71,0002014 Stock options (18th)

–

–

–

–

–

46,000

–

3,000

–

43,0002014 Stock options (19th)

–

–

–

–

–

69,000

–

2,000

–

67,0002015 Stock options (20th)

–

–

–

–

–

49,000–––49,0002015 Stock options (21th)

–

–

–

–

–

60,000

–

1,000

–

59,0002016 Stock options (22th)

–

–

–

–

–

32,000–––32,0002016 Stock options (23th)

–

–

–

–

–

43,000

–

2,000

–

41,0002017 Stock options (25th)

–

–

–

–

–

21,000–––21,0002017 Stock options (26th)

–

–

–

–

–

77,000

–

2,000

–

75,0002018 Stock options (27th)–

19,000–19,000––19,000––19,0002018 Stock options (28th)–

83,000–83,000––83,000––83,00050 SENKO ANNUAL REPORT 2019

Exercised16

Income Taxes

The Company and its subsidiaries are subject to several taxes based on income, which in the aggregate resulted in a normal effective statutory tax rates ofapproximately 30.6 % for the years ended March 31, 2019 and 30.9 % for the years ended March 31, 2018.
(1) Significant components of deferred tax assets and liabilities at March 31, 2019 and 2018 were as follows:

Thousands of
U.S. dollars

Millions of yen

2019
Deferred tax assets:
Net defined benefit liabilities
Accrued bonuses to employees
Loss carry forward
Impairment losses
Accrued enterprise tax
Social insurance premium
Asset retirement obligations
Loss on revaluation of golf club membership
Other

2018

2019

¥ 2,800
1,700
416
642
310
239
317
159
1,910

¥ 2,572
1,611
418
508
406
212
258
121
1,739

$ 25,227
15,317
3,748
5,784
2,793
2,153
2,856
1,433
17,2098,493(1,272)

7,845(1,361)

76,520(11,460)

7,221

6,484

65,060

(739)
(110)
(795)
(697)

(729)
(71)
(981)
(804)

(6,658)(991)(7,163)(6,280)Gross deferred tax liabilities(2,341)(2,585)(21,092)

Net deferred tax assets¥ 4,880¥ 3,899$ 43,968

Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for reduction in costs of fixed assets
Asset retirement obligations
Net unrealized holdings gain on other securities
Other(2) Reconciliation‌of the statutory effective income tax rate and the income tax rate as a percentage of income before income taxes and non-controllinginterests at March 31, 2019 and 2018 were as follows:
2019

2018

Statutory tax rate
Adjustment:
Non-deductible expenses
Inhabitants’ per capita taxes
Non-taxable dividends income
Special deduction of income taxes
Changes in valuation allowance
Other

30.6%

30.9%

1.7
1.5
(0.4)
(0.1)
(0.1)
2.8

1.3
1.6
(0.3)
(0.6)
0.7
0.5

Income tax rate as a percentage of income before income taxes and non-controlling interests

36.0%

34.1%

SENKO ANNUAL REPORT 2019 51

17Asset Retirement Obligations

1. Asset retirement obligations recorded in the consolidated balance sheets(a) Outline of the relevant asset retirement obligations
Of property lease contracts for the Company’s distribution centers, asset retirement obligations are recognized where restoration is required in
the fixed-term leasehold contracts and in the property lease contracts of some consolidated subsidiaries as well as expenses for removing
asbestos in buildings the Company owns.
(b) Calculation method for the relevant asset retirement obligations
In calculating the amount of asset retirement obligations recorded under liabilities, an estimated period of use of 3 to 30 years and a discountrate generally set between 0.0% ans 2.5% were assumed.
(c) Increase in the total amount of asset retirement obligations

Thousands of
U.S. dollars

Millions of yen

2019

2018

2019

Balance at the beginning of the term
Increase due to acquisition of a consolidated subsidiary
Increase due to acquisition of fixed assets
Reconciliation associated with the passage of time
Decrease due to settlement

¥ 819
22
156
14
–

¥ 817
–
5
13
(16)

$ 7,379
198
1,406
126
–

Balance at the end of the term

¥ 1,011¥ 819$ 9,109

2. Asset retirement obligations not recorded in the consolidated balance sheets
The Group has restoration obligations to the original state at the withdrawal for some offices used on lease agreements. Since the use period of
the leased asset pertaining to the obligations is unclear and transfer is not scheduled at present, asset retirement obligations cannot be measured
reasonably. Therefore, asset retirement obligations corresponding to the obligations have not been recorded.

52 SENKO ANNUAL REPORT 2019

18

Segment Information

1. Summary of reportable segment
The reportable segments of the Companies are components for which separate financial information is available and whose operating results are
regularly reviewed by the board of directors to make decisions about resource allocation and to assess performance.
The Companies divide business operations into three segments: Distribution, Trading & Commerce, and Others
Distribution mainly includes truck transport, railway forwarding, marine transport, global logistics service, integrated retail logistics (distribution
centers) etc.
Trading & Commerce mainly includes the sale of petroleum products and the trading business.
Others mainly includes data processing outsousing services, automobile maintenance and insurance agency services

2. Calculation of sales, income (loss), and assets, etc. of each reportable segment
The accounting policies of the segments are substantially the same as those described in the “Summary of Significant Accounting Policies .”Income (loss) of reportable segments is based on operating income or loss.

3. Sales, income (loss), and assets, etc. of each reportable segment

Millions of yen

2019
Distribution

Trading &Commerce

Others

Total

Operating revenues:
Customers
Intersegment¥ 375,385
2,722¥ 142,294
11,853¥ 11,930
10,368¥ 529,609
24,943

Total operating revenues

378,107

154,147

22,298Segment income (loss)

16,2112,280

Segment assets

265,087

Other items
Depreciation
Impairment loss
Increase in tangible and intangible fixed assets

11,77732
42,145Adjustments andeliminations¥

Consolidated–(24,943)¥ 529,609–

554,552(24,943)

529,609

1,680

20,171(539)

19,632

46,86321,061333,0117,480

340,491

250
–
208

686
–
2,072

12,71332
44,425892–
775

13,60532
45,200Millions of yen

2018
Distribution

Trading &Commerce

Others

Total

Operating revenues:
Customers
Intersegment¥ 347,752
2,157¥ 139,317
12,294¥ 5,058
8,878¥ 492,127
23,329Total operating revenues

349,909

151,611

13,936515,456

Adjustments andeliminations¥

Consolidated–(23,329)¥ 492,127–(23,329)

492,127

Segment income (loss)

13,7092,855

896

17,460(373)

17,087

Segment assets

261,31945,584

18,333

325,2368,737

333,973

Other items
Depreciation
Increase in tangible and intangible fixed assets

10,90334,851

283
305

416
2,763

11,602
37,919838
6,459

12,44044,378

Thousands of U.S. dollars

2019

Operating revenues:
Customers
Intersegment
Total operating revenues

Distribution

Trading &Commerce

OthersTotal$ 3,382,152
24,525$ 1,282,043
106,793$ 107,487
93,414$ 4,771,682
224,732

3,406,677

1,388,836

200,901

4,996,414

Adjustments andeliminations$

Consolidated–(224,732)$ 4,771,682–(224,732)

4,771,682

Segment income (loss)

146,058

20,542

15,136

181,736(4,855)

176,881

Segment assets

2,388,386

422,227

189,756

3,000,369

67,394

3,067,763

Other items
Depreciation
Impairment loss
Increase in tangible and intangible fixed assets

106,109288
379,719

2,252
–
1,874

6,181
–
18,668

114,542288
400,261

8,036
–
6,983

122,578288
407,244

SENKO ANNUAL REPORT 2019 53

(1) Products and Services Information
Information for specific products and services is not shown because the same information is in the segment information.
(2) Geographic Segment Informationa. SalesSales information by geographic segment is not shown because sales in Japan accounted for over 90% of operating revenue on the
consolidated statements of income.
b. Property, plant and equipment
Property, plant and equipment information by geographic segment is not shown because property, plant and equipment in Japan accounted forover 90% of property, plant and equipment on the consolidated balance sheets.
(3) Information by Major Clients
Information by major clients is not shown because sales to major clients accounted for less than 10% of operating revenue on the consolidated
statements of income.
(Information on amortization of goodwill and amortization balance by business segment)

Millions of yen

2019

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce

¥ 276
4,106

¥ 150
1,909

Others¥58
1,431

Adjustments andeliminations

Consolidated

¥–
–

¥ 484
7,446
Millions of yen

2018

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce

¥ 260
4,382

¥ 145
1,922

Others¥8
218

Adjustments andeliminations

Consolidated

¥–
–

¥ 413
6,522

Thousands of U.S. dollars

2019

Amortization of goodwill
Balance at the end of period(Information on negative goodwill by business segment)
No significant items to be reported.

54 SENKO ANNUAL REPORT 2019

Distribution

Trading &Commerce

Others$ 2,487
36,994$ 1,351
17,200$ 523
12,893Adjustments andeliminations

Consolidated$ ––$ 4,361
67,087

Report of Independent Auditors

SENKO ANNUAL REPORT 2019 55

Stock Information / Corporate Data
Stock Information (As of March 31, 2019)
Stock ListingFirst Section of the Tokyo Stock Exchange

Stock Code9069

Authorized Shares

294,999,000

Outstanding Shares

152,861,921

Number of Shareholders

8,422

Administrator of
Shareholders’ Register

Mitsubishi UFJ Trust and Banking Corporation, Osaka Stock Transfer Agent Division
3-6-3, Fushimi Machi, Chuo-ku, Osaka 541-8502, Japan

Independent Auditors

Ohtemae Audit Corporation

Major Shareholders

Type of Shareholder
Number of
Shares(thousands)

Percentage
Held

Japan Trustee Services Bank, Ltd.

24,88916.32%

Asahi Kasei Corporation

11,676

7.65%

The Master Trust Bank of Japan, Ltd.

10,417

6.83%

Sekisui Chemical Co., Ltd.

6,785

4.45%

Senko Group Employee’s Stockholding

6,215

4.07%

Mitsubishi UFJ Trust and Banking
Corporation

4,252

2.79%

State Street Bank and Trust Company

4,091

2.68%

Isuzu Motors Ltd.

4,039

2.65%

J.P. Morgan Bank Luxembourg S.A.

3,685

2.42%

Tokio Marine & Nichido Fire Insurance Co., Ltd.

3,439

2.25%

Financial
institutions

Individuals
and others

62,766,529

22,246,445

14.55%
Total

18.87% 152,861,921
sharesForeign financial
institutions andindividuals

28,850,785

24.58% 0.72%
Securities firms
Other domestic
corporations

37,573,508

Corporate Data (As of March 31, 2019)
Trade NameSENKO Group Holdings Co., Ltd.

Capital26,528 million yen

Established

September 1916

Incorporated

July 1946

Head Office

Shiomi SIF Bldg., 2-8-10 Shiomi, Koto-ku, Tokyo 135-0052

Representative

Yasuhisa Fukuda, President and Representative Director

Group Employees

17,081

Fleet of Own Trucks

6,412 (including trailers)

Vessels

69

Total Warehouse Space

3,660,000 m2

56 SENKO ANNUAL REPORT 201941.06%

1,104,694

Global Network

East Asia

13
24

companies
sites

ASEAN

14
23

Rest of the World

7
12

Japan

98
572

companies
sites

companies
sites

companies
sites

Companies :Locations :

132
631

Main Group Companies
Domestic

Overseas

SENKO Co., Ltd.

Osaka Senko Transport Co., Ltd.

DALIAN TRI-ENTERPRISE LOGISTICS CO., LTD.

Runtec Corporation

Minami Osaka Senko Transport Co., Ltd.

SHANGHAI SENKO INTERNATIONALFREIGHT FORWARDING INC.

Tokyo Nohin Daiko Co., Ltd.

Kyushu Senko Logistics Co., Ltd.

GUANGZHOU SENKO LOGISTICS CO., LTD.

Senko A Line Amano Co., Ltd.

Minami Kyushu Senko Co., Ltd.

Senko International Logistics Pte. Ltd.

NIPPON MARINE CO., LTD.

SENKO SHOJI CO., LTD.

SHANGHAI SMILE CORP.

ACROSS TRANSPORT CO., LTD.

SMILE CORP.

HONG KONG SMILE CORP LIMITED

Hokkaido Senko Co., Ltd.

AST CORPORATIONKOREA SMILE CORP LIMITEDSENKO Line CO., LTD.

Marufuji Co., Ltd.

SMILE CORP VIENTNAM CO., LTD

ANZEN YUSO CO., LTD.

SENKO INFORMATION SYSTEM Co., Ltd.

Senko Fashion Logistics Co., Ltd.

Logi Solution Co., Ltd.

SENKO ANNUAL REPORT 2019 57

SENKO Group Holdings Co., Ltd.
Shiomi SIF Bldg., 2-8-10 Shiomi, Koto-ku, Tokyo Japan
http://www.senkogrouphd.co.jp/en/