A N N U A L REPO RT

2021
For the year ended March 31, 2021

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.

CONTENTS

Editorial Policy

02 Financial and Nonfinancial Highlights
04 History of the Senko Group
06 A Message from the President
09 Medium-Term Business Plan [SIP21]
10 Review of Operations by Business Segment
12 Topics
14 Business Bases

Scope of Report

CSR
15 Senko Group Stakeholders

and Their Relationship with Us

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

Reporting Period
This report covers business activities
for the period between April 1, 2020
and March 31, 2021. However, some
activities that took place after April
2021 are also covered.

16 Relationship between Business
Activities and SDGs

Slogan18 Environmental Initiatives
20 Safety Programs
22 Health Initiatives
24 Social Activities
26 Directors and Auditors
27 Corporate Governance
29 Risk Management

Our thoughts into a Mission & Vision

Go beyondlogistics

Make the world
go roundRevolutionize
business

Financial Information
Corporate Values

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

PassionCommitment

Respect

Diversity

31 Financial Review
34 Consolidated Balance Sheets
36 Consolidated Statements of Income
36 Consolidated Statements of Comprehensive Income
37 Consolidated Statements of Changes in Net Assets
38 Consolidated Statements of Cash Flows
39 Notes to the Consolidated Financial Statements
64 Report of Independent Auditors
72 Stock Information
73 Corporate Data

Other Publicationsof the Company• Notice of convocation of the annual
meeting of shareholders• ‌Securities reports (Japanese only)and quarterly reports• CSR reports (Japanese only)• Senko Group report (Japanese only)
A variety of information other thanthat mentioned above is available on
the Company’s website.

https://www.senkogrouphd.co.jp/en

Disclaimer
The Senko Group provides noguarantee concerning the outcomeof the forward-looking statements inthis annual report as they will beaffected by various factors, including
unforeseen changes in economic
conditions.

SENKO ANNUAL REPORT 2021 01

Financial and Nonfinancial Highlights

Financial Highlights
FY2017FY2018FY2019FY2020

FY2021Thousands of
U.S.$ except per
share amounts

Operating revenues(Millions of yen)
600,000

529,609

Operating profit

Net income attributable toowners of parent(Millions of yen)

570,030 572,405(Millions of yen)

24,00020,657 21,520

455,435

492,127

529,609570,030

572,405

5,170,310

Operating profit

millionsof yen17,082

17,087

19,631

20,657

21,520

194,382

450,000

Net income attributable toowners of parent

millionsof yen

8,951

9,504

11,681

12,081

14,241

128,633

300,000

12,0008,000

Operating profit margin

(%)

3.8

3.5

3.7

3.6

3.8

–

150,000

6,000

4,000

Net assets per share

yen/US$

661.61

741.44785.08823.61

909.498.22

Net income per share

yen/US$

61.67

62.64

76.90

79.51

93.81

0.85

Cash dividends per share

yen/US$

22.00

22.00

26.00

26.00

28.00

0.25

455,435

(%)

35.7

35.1

33.8

32.7

29.8

–

(Millions of yen)

6.0

480,000

285,959

334,973

340,491

356,309435,261

3,931,542

1.5

Equity ratio

(%)

35.1

33.7

35.0

35.1

31.0

–

0

145,754

1,316,539

Return on equity (ROE)

(%)

9.5

8.9

10.1

9.9

11.0

–

Price earnings ratio (PER)

times

11.63

13.22

11.95

10.54

11.17

–

Capital expenditures

millionsof yen17,662

37,625

21,227

18,20633,321300,976

Cash flows from operating activities

millionsof yen20,84824,56827,02231,09931,858287,761

Cash flows from investing activities

millionsof yen(3,679)(37,020)(15,770)(18,030)(46,309)(418,291)

Cash flows from financing activities

millionsof yen(8,627)9,940(13,224)(9,156)36,758332,021

Cash and cash equivalents
at end of year

millionsof yen26,197

23,79622,801

27,14350,371454,991

3.8

4.5

3.5

3.7

3.8

3.6

(Yen)

(Yen)

1,000

909.49 120
823.61 93.81
785.0876.90 79.51

90

3.22

3.42

3.66

3.87

3.92

Fleet of own trucks

units

5,180

5,914

6,412

6,840

7,538

32.7

26.00 26.00

30

(%)

(Millions of yen)40

40,00030

30,00028.00

10,00002017 2018 2019 2020 2021 FY 002017 2018 2019 2020 2021FY 0

0

Net income per share

19,75517,081 17,644

12,88914,496■■ Cash dividends per share

33,321

21,227

17,6622017 2018 2019 2020 2021 FY

Logistics center storage space

Fleet of own trucks(Millions m2)(Units)

4

3.22

3.42

3.66

3.87

3.92

8,000

6,000

10,000

2

4,000

5,000

1

2,000

0

18,206

Dividend payout ratio

32017 2018 2019 2020 2021 FY

37,625

29.8

10

0

02 SENKO ANNUAL REPORT 2021

33.8

10

15,000

millions m2

35.1

30

FY2021

Logistics center storage space

35.7

250

FY202019,755

Capital expenditures

(Yen)
40

2017 2018 2019 2020 2021 FY

20,000FY201917,644

0

8.9

11.0

Equity ratio

20

FY201817,0812017 2018 2019 2020 2021FY 0

20

FY2017

14,496060

20,00012,8893

9.9145,754500(Number)number15

22.00 22.00

Number of Group employees

Number of Group employees

120,000

61.67 62.64■■ Net assets per shareNonfinancial Highlights

6

10.1

31.0

Cash dividends per share/
Dividend payout ratio

Net assets per share /Net income per share2017 2018 2019 2020 2021 FY

9.5

35.1

■■ Total assets ■■ Net assets

661.611230

2017 2018 2019 2020 2021 FY

750

(%)

356,309333,973 340,491
285,959 33.7 35.0 35.1

134,181
114,091 118,057 126,895

741.44(%)

435,261 60

9240,000

9,504

Return on equity (ROE)

45360,000

3.0

02017 2018 2019 2020 2021 FY(%)

millionsof yen134,18102017 2018 2019 2020 2021 FY

Total assets/Net assets/
Equity ratio

Total assets

126,895

12,000Operating profit margin

114,091

118,057

17,082 17,087

11,681 12,081
8,951

millionsof yenNet assets

19,631

18,0000

Dividend payout ratio

492,127

14,241

16,000Operating revenues

millionsof yen2017 2018 2019 2020 2021 FY

0

5,180

5,914

6,412

6,840

7,538

2017 2018 2019 2020 2021 FY

SENKO ANNUAL REPORT 2021 03

History of the Senko Group2010 〜
2010
2011

Since being founded in 1916, the Group has always taken up the challengeof transforming in anticipation of the needs of the times.
We have constantly worked to expand our business and to grow earnings.
Non-consolidated revenue (millions of yen)

Consolidated revenue (millions of yen)

2013
2014
2015
2016

Ordinary profit (millions of yen)

2000 〜1980 〜1980

1950 〜
1950

1954

1916 〜
1916
1946

1959
1961

Established as Tomita Shokai
Established Senko Unyu Shoji Co., Ltd.
Changed the corporate name to Senko
Transport Co., Ltd.

1965
1970
1973
1975
1977

Corporate emblem
at establishment

1949

1916

1978

1984

Acquired transportation (by rail) license and began
developing rail transportation business. Acquired ageneral motor truck transportation business license,and started a truck transportation businessStarted a special loading truck transportation
business (route business)
Acquired license for operating a warehousebusiness
Listed on the Second Section of the Osaka
Securities Exchange
Pioneered the introduction of computers in
the distribution industry
Started distribution (logistics) consulting service
Changed the corporate name to Senko Co., Ltd.
Listed on the First Section of the Osaka
Securities Exchange
Launched Siberia Land Bridge service
between Japan, the Far East, the Near andMiddle East, and Europe
Made full-scale entry into the house moving
business

1985
1987
1990
1996
1997

2004

Started implementation of comprehensive
multi-functional warehouses (PD centers) withthe opening of the Nanko PD Center in Osaka
Started value-added network (VAN) business,with Senko Information System Co., Ltd. as theprimary business entity
Launched delivery system for massmerchandisers/retailers, and started
distribution business for chain storesOpened housing materials logistics center,and launched a logistics system for housingmaterials
Listed on the First Section of the Tokyo
Securities Exchange
Opened Crefeel Koto, a comprehensive
training center for transportation and distribution(Higashi Omi City, Shiga Prefecture)
Started logistics center business in Dalian(China)2008
2009

Developed new logistics system "the Best
Partner System (BPS)", and started services
Launched a service transportation systemutilizing the China Land Bridge between
Japan and Central Asia, and entered thetemping agency sector with the establishmentof S-TAFF Co., Ltd.
Established LogiSolution Co., Ltd. to conduct
3PL business and logistics consulting business
Made Tokyo Nohin Daiko Co., Ltd. a subsidiary
Made Marufuji Co., Ltd. a subsidiary

2018

2019
2020
2021

570,030

Established Senko School Farm Tottori Co., Ltd. to enter the agricultural business
Opened the Kentucky Distribution Center (United States)
Made Smile Corp. a subsidiary
Made AST Inc. a subsidiary
Opened the KO-SENKO Logistics Center (South Korea)
Made Runtec Corporation a subsidiary for full-fledged entry into the lowtemperature logistics business
Opened the Laem Chabang Logistics Center (Thailand)
Made Across Transport Co., Ltd. a subsidiary
Made Keihanna Helper Station Co., Ltd. a subsidiary for full entry into the nursing
care business
Opened Yangon Logistics Center (Myanmar)
Changed the corporate name to Senko Group Holdings Co., Ltd., and transitioned
to a holding company structure
Made Nippon Marine Co., Ltd. and Eikichi Kaiun Co., Ltd. subsidiaries to grow themarine transport business
Made Skylift Consolidator (Pte) Ltd. a subsidiary to enter the international
airfreight business
Made Blue Earth Japan Co., Ltd. a subsidiary to enter the fitness sector
Made Anzen Yuso Co., Ltd. a subsidiary
Made Venus Co., Ltd. a subsidiary to provide nursing and preventative care services
Opened Pho Noi Logistics Center (Vietnam)
Opened the Qingpu Logistics Center (China)
Made Best Global Logistics Co., Ltd. a subsidiary
Opened the Beijing Logistics Center (China)
Completed frozen/refrigerated logistics center in Thailand
Grand opening of Tokyo Eastside Hotel Kaie on February 1
Made AZFIT Co., Ltd. a subsidiary expanding our household paper
wholesaling operations

227,692

22,23020,744

180,552
125,165

Crefeel Koto

Registered marine transport, marinetransportation operation, marine transport
brokerage and marine transport agent
businesses. (At the time, the marine transportand marine transport operation business wereregulated under a registration system)

1920

2000

2017

572,405

50,876

6,232
4,581

4,207

1990

2000

832

1930

1940

1950

1960

1970

1980

2010

2020

1916 〜1950 〜1980 〜2000 〜2015 〜

The birth of Tomita Shokai,
the origins of Senko

Set up/expanded ourtransportation system

Making the leap to a comprehensive
logistics company

From comprehensive logistics company to logistics
information company

Becoming a corporate group creating future trends

Tomita Shokai was established in 1916 as a specialized distributor
for Nippon Chisso Hiryo, a chemical industry conglomerate.
The company had headquarters in Osaka, an office in Minamata
City in Kumamoto Prefecture, and subsequently expanded onto
the Korean Peninsula. In 1941, the company name was changed to
Nicchitsu Unyu, and became a subsidiary of Nippon Chisso Hiryo.
The post-war policy of breaking up zaibatsu led to Nicchitsu
Unyu being dissolved in 1946. In the same year, Senko Unyu
was established by a group of interested parties. The Japanesecharacter for sen (fan) used in the name of the new company
was a reference to one element in the logo of the former
Nippon Chisso Hiryo, which showed a Japanese “rising sun”
on a folding fan.

Beginning with the acquisition of a truck transportation
business license in 1950, the company started the firstshipping service using company-owned ships in 1951, andbegan a rail shipping business from Osaka/Umeda Station in
1956. The company went on to acquire a warehouse businesslicense in 1959, expanding business foundations through suchinitiatives as beginning nationwide operations.
In 1965, the company installed the first computer ahead ofcompetitors, and in 1970 began to further bolster our
information and proposal-writing skills, such as becoming
distribution consultants. In 1973, to express our determination
to take on the challenges of businesses other than distribution,
the corporate name was changed.

In 1980, we began the nationwide expansion of PD centers,
incorporating multiple functions such as storage, shipping, anddistribution processing. In 1985, we started major home center
operations. Subsequent operations for customers grew, such aslarge supermarkets and drugstores, leading to the growth of what
is now the retail product logistics business.
In 1996, we opened Crefeel Koto, the Company’s comprehensive
training center for transportation safety and distribution in Shiga
Prefecture. We have improved education for drivers and forklift
operators, and are further boosting quality and productivity onsite. In 1981, we had already established a local subsidiary in the
United States, and in 1996 we opened our first distribution centerin China, as part of our full-fledged expansion overseas.

During the process of dealing with year 2000 concerns, the company inventoried all internal
information assets, and to better use these, we began the full-scale deployment of the Best Partner
System (BPS) which unifies information and logistics. We converted to a logistics informationcompany with the intent to improve the efficiency of information technologies and services,
centered on BPS, as well as supply chain management (SCM) in general.
Expanded in Japan and overseas using logistic centers equipped with a range of capabilities,
and significantly increased storage area. The company also became fully active in M&As,
welcoming companies with strengths in apparel/fashion and frozen/chilled shipping to the Senko
Group, in this way diversifying the logistics services we provide. Even in Trading & Commerce, thecompany added trading company distributors and other companies to the Senko Group, andbroadened the business domain by providing integrated trading and logistics services, etc.

04 SENKO ANNUAL REPORT 2021

September 2016 marked the 100th anniversary of the company. A new corporate philosophy wasformulated to recognize the corporate name change to Senko Group Holdings Co., Ltd. in April 2017(as part of the transition to a holding company structure). In Logistics, in addition to increasing
development of logistics centers overseas, we will move forward with plans to use automation andlabor-saving technologies in these centers, while providing customers with high value-added
distribution services. Also, we will strengthen new areas, such as Living Support, to build the third
pillar of our company, in addition to Logistics and Trading & Commerce.

SENKO ANNUAL REPORT 2021 05

A Message from the President

As a corporate Group that supports people's daily lives,
we enter the final year of the medium-term business plan
intending to move closer to our goal of achieving
sustainable growth.

Business Environment during
Fiscal Year 2021

City) in March 2021. In marine shipping, Senko Line Co., Ltd.

During the fiscal year ended March 31, 2021, economic

chemical tanker in August, and Senko Line Co., Ltd.

activity gradually resumed, following the lifting of the firstlaunched Senou Maru, a new freighter, in March 2021.

launched the new chemical tanker Nissen Maru in May,NIPPON MARINE CO., LTD. launched Kissho, another new

Outside Japan, the Company established a local

state of emergency declared for COVID-19, but aresurgence in the spread of infection led to an extremely

subsidiary, Senko Logistics (Europe) GmbH, in Düsseldorf,

challenging business environment.

Germany, in July to strengthen systems to develop a
European logistics network.
In Trading & Commerce, we welcomed household paper

Main Activities

wholesale distributor AZFIT CO., Ltd. to the Group in

Under these circumstances, the Group worked on initiatives

February 2021, and are aiming for synergistic benefits withto restore and improve earnings throughout the fourth year

the Group company AST CORPORATION, which covers theof the Senko Innovation Plan 2021 (SIP21), our five-yearsame type of household paper wholesale operations.
In Others, we welcomed children’s daycare center andmedium-term business plan.
In Logistics, we welcomed UACJ Logistics Corporation,

children’s club operator Procare Co., Ltd. to the Group inwhich operates heavyweight cargo transportation and otherAugust and membership-based wholesale and retail businessbusiness operations, and Nagase Logistics Co., Ltd. (whose

operator TERAUCHI CO., LTD. to the Group in November.

name has now been changed to SENKO Nagase Logistics

Further, VENUS CO., LTD., which operates daycare centers,Co., Ltd.), which provides storage, transportation, logistics

has opened six new locations; KEIHANNA helper station

processing, and other services for chemicals, to the Group

Co., Ltd., which operates residential nursing homes, hasin December 2020. In logistics centers, SENKO Co., Ltd. began

opened two new locations; and Life-eat Co., Ltd., which

operations at the Tachikawa Logistics Center (Tachikawa City,

operates conveyor belt sushi chain restaurants, opened

Tokyo) in July 2020 and the Kurihashi PD Center (Kazo City,

one new location.
Looking at initiatives to reduce our environmental impact,

Saitama Prefecture) in February 2021. Moreover, Runtec
Corporation began operating frozen and refrigerated storage

SENKO Co., Ltd. received the Logistics Environmental

warehouses at Runtec’s Moji Branch (Moji Ward, Kitakyushu

Conservation Activity Award and the Special LogisticsCity) in April and the Meiko Branch (Minato Ward, Nagoya

Environment Award in June and the 2020 Award for Excellent

Consolidated operating revenues (Net sales)

Consolidated operating profit /Consolidated ordinary profit(Billions of yen)
800

(Billions of yen)
28

600

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

529.6

570.0

572.4

21

400

14

200

7

0

06 SENKO ANNUAL REPORT 2021

492.1

625.0

2018

2019

2020

2021

2022 FY(forecast)0

17.1 17.3

2018■■ Consolidated operating profit

19.6 19.9

2019■■ Consolidated ordinary profit

22.2
20.7 20.7 21.5

2020

2021

24.6 25.02022 FY(forecast)

SENKO ANNUAL REPORT 2021 07

A Message from the President

Medium-Term Business Plan [SIP21]
Business Entities Working on Modal Shift in November fromover a resurgence of COVID-19.

the Japan Association for Logistics and Transport. In December,

Given this environment, as a corporate group that supports

TOKYO NOHIN DAIKO Co., LTD. received the 2020 MLIT

people in their daily lives, we enter the final year of our

Minister’s Award for Companies Contributing to Environmental

medium-term business plan looking to move closer to ourConservation in the Transport Industry from Japan’s Ministry

goal of achieving sustainable growth.

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.

of Land, Infrastructure, Transport and Tourism.
The Company signed the United Nations Global Compact
in October and was registered as a participating company.

Increasing the year-end dividend by ¥2

The Company supports the 10 principles related to protecting

While securing the internal reserves necessary for future

human rights, eliminating illegal labor practices, conserving

business development and to bolster our management

the environment, and preventing corruption, with the goal

structure, the basic policy of the Company is to returnof contributing to developing a sustainable society as aprofits to shareholders by issuing stable dividends that arecorporate group that supports people in their daily lives.

linked to business results, with the aim of enhancing
returns to shareholders.

Performance in Fiscal Year 2021

Based on this policy, the year-end dividend for the
fiscal year ended March 31, 2021 has been set at ¥15 per

The fiscal year ended March 31, 2021 was significantly

share. When this is combined with the interim dividend ofaffected by the COVID-19 pandemic. Groupwide initiatives¥13 (already declared), the total annual dividend is ¥28.

to increase sales, reduce expenses, improve cost efficiency

Regarding the dividend forecast for the fiscal year ending

and productivity, as well as to promote M&As, resulted in

March 31, 2022, based on the forecast of businessyear-on-year increases in consolidated operating revenue,

performance, the Company plans to pay an annual dividend

consolidated operating profit, consolidated ordinary profit,of ¥30 per share (an interim dividend of ¥15, and a year-end

and profit attributable to owners of parent.

dividend of ¥15).
We would like to ask for the continued support andFuture Initiatives

encouragement of our shareholders as we move into the future.

Going forward, the outlook for the Japanese economy is

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

(Yen)
60

11.7
12

■■ Cash dividend per share

30

4

15

2018

08 SENKO ANNUAL REPORT 2021

2019

2020

2021

2022 FY(forecast)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 corporate social
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(Billions of yen)

700.0

572.4

33.8

32.7

(%)
40

29.8

30.7
30

0

22

Profitability(Billions of yen)

Strive for operating
profit of¥28.0 billion

FY 2021

FY 2022

Strive for ratio of operating
income to sales of 4.0%

(forecast)

28.0

3.6 %

4.0 %

FY 2021

FY 2022(forecast)

26

26

28

Logistics center storage space (Million m2)

3.92

30

Investment amount (including M&As)

Operational system

20

4.00

up

0.08

millionm2

Fleet of own trucks (excluding trailers) (Units)

6,229

6,700

up

471units

10

2018

21.5

Consolidated payout ratio

45

8

0

35.1

12.1

9.5

Expand business areas¥700.0 billion

Net Income attributable to owners of parent
14.5

1
2
3
4
5

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.

Strive for operating
revenues of

expected to remain uncertain, due in part to concerns

14.2

The Senko Group has launched the Five-Year Medium-Term Business Plan SIP21 (Senko Innovation Plan 2021), which runs

2019

2020

2021

2022 FY0

FY 2021

FY 2022 (forecast)

FY 2021in five years¥150.0billion

FY 2022 (forecast)(plan)SENKO ANNUAL REPORT 2021 09

Review of Operations by Business Segment

67.7%

Logistics

Trading & Commerce

28.3%

Despite an increase in cargo volume for chain stores, the spread

Revenue and profits increased due to rising demand for dailyof COVID-19 caused a significant reduction in the amount ofnecessities following the increased need for home deliveries

housing, chemicals, frozen and refrigerated goods, with operating

and promoting revised selling prices for household paper goods.

revenue declining by ¥5,377 million year on year to ¥387,350 million.
costs and productivity, as well as UACJ Logistics Corporation¥387.4and Senko Nagase Logistics Co., Ltd. becoming consolidated
subsidiaries, segment profit rose by ¥1,554 million year on yearto ¥19,401 million.

387.4

billionbillionRetail
Products
Logistics

year on year to ¥3,035 million.

161.3

billion

2021

FY

23.2

billion2021

FY

up 0.3%

Housing
Logistics

down1.4%

2020
2021

Retail Products
Logistics

161.8

Other
Logistics
Chemicals
Logistics

2020

billion(Operating profit ¥3.0 billion)¥161,820 million, while segment profit increased by ¥915 million(Operating profit ¥19.4 billion)

392.7¥161.8As a result, operating revenue rose ¥505 million year on year to

Total
operating revenue

As a result of initiatives to grow sales, cut expenses, improve

Total
operating revenue

FY

40.1%

10.2 %

Housing
Logistics

Revenue for the current fiscal year rose ¥5.4 billion to

Revenue for the current fiscal year fell by ¥5.0 billion to¥229.5 billion.

¥58.3 billion.

229.5 billion

224.1

58.3 billion

63.3

up 2.4 %down 7.9%

Others4.0%

Total
operating revenue¥23.2

Due to the Company making both Procare Co., Ltd. and Terauchi
Co., Ltd. consolidated subsidiaries, and other initiatives, revenue
increased by ¥7,247 million year on year to ¥23,235 million. However,billion(Operating loss ¥61 million)

there was a significant negative impact on profits due to a sharp
2020

2021 FY

12.8 %

Chemicals
Logistics

2020

2021 FY

4.6 %

Other
Logistics

Revenue for the current fiscal year fell by ¥3.3 billion to

Revenue for the current fiscal year fell by ¥2.5 billion to¥73.5 billion.

¥26.1 billion.

73.5 billion

76.7

28.6

down 4.3%
2020

10 SENKO ANNUAL REPORT 2021

decline in the number of people using hotels, fitness clubs, daycare
centers, and restaurants following the spread of COVID-19. This
resulted in a loss for the segment of ¥61 million, a fall of ¥1,481
million over the previous fiscal year.

Business support

Living support

16.0

26.1billion

up 45.3%

down 8.9 %2021 FY

2020

2021 FY

2020

SENKO ANNUAL REPORT 2021 11

Topics

Increasing the number of locations in response to rising demand for frozen and refrigerated goods
as well as logistics for Internet shopping

2020

Runtec Corporation completed the construction of a two-story warehouse(Moji Branch) for frozen and refrigerated storage in Moji Ward, Kitakyushu
City, on April 7, 2020. Equipped with a sheltered dock and 33 truck bays (onboth sides of the building), goods can now be handled without being affectedby outside temperatures. Environmental friendliness was a focus of thedesign, and the warehouse is equipped with such features as energy-saving
cooling equipment and solar power generation for in-house consumption.

SENKO Co., Ltd. also began operations of the Tachikawa Logistics Center(Tachikawa City, Tokyo) in July 2020. By providing storage and sorting for
major Internet shopping companies, we are responding to the rising demandfor e-commerce logistics. Moreover, we will further strengthen our businessplatform in the Western Tokyo area by also storing, sorting, and making store
deliveries for large drugstores that continue to expand operations and theirbranch network.

Runtec Corporation’s Moji Branch

Tachikawa Logistics Center

4

5

6

7

8

9

General wholesaler and retailer Terauchi
Co., Ltd. becomes a subsidiary
In November 2020, general wholesaler
and retailer Terauchi Co., Ltd. became amember of the Senko Group.
Terauchi is a long-established company
in membership-based wholesaling andretailing of clothing and accessory
items, branded products, apparel,
miscellaneous daily goods, cosmetics,
foodstuffs, and a wide range of otheritems to its one million members. The
company also operates 25 stores under
the Croissant brand and other brandnames for miscellaneous lifestyle goods,
as well as online stores.
After becoming part of the Group, we
expect Terauchi to be able to generatesynergies, such as offering services tomembers, including nursing homes,
nursing care, and child daycare.

10

11

Using M&As to strengthen domestic
and overseas logistics systems
SENKO Co., Ltd. made Nagase Logistics Co., Ltd., the leading specialist
chemical trading company in Japan, a subsidiary in December 2020.
(Nagase Logistics’ name has now been changed to SENKO Nagase
Logistics Co., Ltd.) By working with the approximately 100 nationwide
deposit warehouses owned by Nagase Logistics, the Group will be able
to strengthen logistics operations for chemicals.
In April 2021, AirRoad Pty Ltd, an Australian company with a 30+ year
track record, became part of the Group. Working together with SENKO’sexisting locations, AirRoad will expand the Group’s logistics business inAustralia, where the population is growing every year.
We will continue to use M&As to drive the expansion of ourbusiness going forward.

SENKO Nagase Logistics

12 2021 1

AirRoad's transporter

2

3Completion of the chemical tanker Kissho
Responding to increased volumes for logistics from existing customers

Entering the child-raising support businessChild daycare center operator Procare Co., Ltd. joins the Senko Group

Further increase in distribution bases in theWestern Kanto area

Household paper wholesaler AZFIT Co., Ltd. becomesa subsidiary of SENKO Group Holdings Co., Ltd.

NIPPON MARINE CO., LTD. launched Kissho, a new chemical tanker, on
August 18, 2020.
Kissho was built to strengthen transportation services for existingcustomers provided by NIPPON MARINE CO., LTD. and to handle new
marine transportation operations from SENKO Co., Ltd. This vessel
services ports on the Seto Inland Sea, transporting cargoes such asconcentrated and fuming sulfuric acid.
Going forward, we will continue to improve our transportation services
and further develop the marine transportation business by acquiring
new customers.

On August 31, 2020,
SENKO Group Holdings
Co., Ltd. acquired all of
the shares of Procare
Co., Ltd., welcoming thecompany to the Group.
Procare Co., Ltd.
operates a domestic
network of 54 daycare
centers and clubs for children, mostly around the Tokyo area. Procare
has worked to reduce waiting lists for children for childcare facilities
and to support women who are raising children to move ahead in society.
Joining the Senko Group will enable Procare Co., Ltd. to open more
new child daycare centers, winning new outsourcing contracts forchildren's clubs, and differentiating the company by improving thequality of childcare and by offering new services. Procare will also
work to expand in-house childcare facilities within the Senko Group,
to improve the efficiency of operations using those resources, and tosecure personnel.

In February 2021, SENKO Co., Ltd. opened the Kurihashi PD Center inKazo City, Saitama Prefecture. Conveniently located approximately fivekm from the Kazo Interchange on the Tohoku Expressway, this center
will work with neighboring locations to respond to the heavy demand
for logistics bases around the Metropolitan Intercity Expressway.
In March 2021, Runtec Corporation began operating the Meiko Branch,situated within Maruha Nichiro Logistics, Inc.’s Nagoya Logistics Centerin Minato Ward, Nagoya City. Sited in an advantageous location
approximately one km from the Meiko Chuo Interchange of the Isewangan
Expressway, the cooling equipment there uses environmentally friendly
natural refrigerants, such as ammonia and CO2.
Going forward, this center will handle increasingly diverse logistics.

In February 2021, SENKO Group Holdings Co., Ltd. welcomed AZFIT Co.,
Ltd., a wholesaler of household paper, to the Group.
AZFIT sells household paper and daily items to drugstores andsupermarkets, mainly in the Greater Tokyo Metropolitan area. AZFIT
also develops products that use paper and nonwoven fabrics.
The Group company AST CORPORATION is one of the largest
specialized trading companies for household paper in Japan, and also has
wholesaling operations. The two companies will generate synergies
by strengthening product development and price competitiveness by
sharing management resources and know-how, as well as bolstering
the business platform by opening up sales channels, etc.

12 SENKO ANNUAL REPORT 2021

SENKO Co., Ltd. Kurihashi PD Center

Runtec Corporation’s Meiko branch

SENKO ANNUAL REPORT 2021 13

Business Bases

CSR

Domestic locations: 633 (As of March 31, 2021)

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

Senko Group Stakeholders and Their Relationship with Us

Shareholders

Hokkaido
Area

11

Runtec Corporation’s Moji Branch

SENKO Co., Ltd. Tachikawa Logistics Center

Customers
Shippers / Consignees

SENKO Co., Ltd. Kurihashi PD Center

Logistic centers that began operations in FY2021
Chubu
Area

191

Chugoku
Shikoku Area

Tohoku
Area

79

20

73

● Workplace health and safety● HR training ● Fair employment practices

Partner Companies
Subcontractors / Suppliers● Partnership ● Environmental friendliness

Important Initiatives

USA

Kazakhstan

ChicagoWinchester
Los Angeles

Almaty1Germany
Dusseldorf
■

China

■

■

Beijing

Querétaro
Veracruz
San Luis Potosí■

Dalian

■

■
■
■

■

■

Vietnam■

Pho Noi
Ho Chi Minh■

Qingdao
Zhangjiagang■

SuzhouGuangzhou■

Hong Kong

Singapore

Nantong■■■■■

South Korea

■
■

■

■
■

● Engaging with communities ● Engaging with society● Environmental friendliness

Employees

Overseas: 64 (As of March 31, 2021)■● Partnership ● Full disclosure of information● Strict legal compliance ● Road safety

Government

Headquarters,
Senko Group Holdings(Tokyo)■● Safe and environmentally friendly services● Full disclosure of information

188

■

71

MexicoRegional Community

Kanto
Area

KyushuArea● Full disclosure of information● Road safety ● Environmental friendliness

Senko Group

Kinki
Area

● Fair profit distribution ● Transparent management■

Changshu

Shanghai■

Myanmar
YangonIndonesia
Jakarta

Seoul
Busan

2

3

4

Environmental Measures

Safety Initiatives

Health Initiatives

Social Activities

We recognize that as a logistics
company we have a serious
role to play with regard to theenvironment, and we take on
initiatives to reduce CO2 emissions
and to save energy, withspecific numerical targets, andto implement green logistics.

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.

We aim to reduce health risks toa minimum through workplace
improvements aimed at preventing
health problems, self-care, andother personal health improvement
programs, and by maintaining
an extensive in-house healthsupport system with industrial
physicians and nurses.

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.

ESG indices for which
the Company has been
selectedThailand
BangkokLaem Chabang

Australia
Ingleburn*The inclusion of Senko Group Holdings Co., Ltd. in any MSCI Index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship,endorsement or promotion of Senko Group Holdings Co., Ltd. by MSCI or any of its affiliates. The MSCI Indexes are the exclusive property of MSCI. MSCI and the MSCI Index names
and logos are trademarks or service marks of MSCI or its affiliates.

14 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 15

CSR

Relationship between Business Activities and SDGs

The UN’s SDGs (Sustainable Development Goals) and the business activities of the
Senko Group nurture people’s development and supports their daily lives.

Living Support

As a rule, the Senko Group’s approach is that economic activities are built on a healthy global environment and harmonious social
relations, and the Group aims to resolve social issues and create new value through business.

Nursing care and housework services / fitness centers /moving services / restaurants / agriculture, etc.

Crefeel Koto Co., Ltd.
Traffic safety education / nurturing human resources /traffic safety parks for children, etc.

Business Support
Trading & Commerce
Priority
themes for
the Senko
Group SDGs

Logistics consulting / IT solutions / call centers /temporary personnel / hotels / real estate, etc.

Trading / oil sales / sales of miscellaneous
daily goods, food, and liquor, etc.

Priority
themes for
the Senko
Group SDGs

Logistics

Transportation / storage /distribution processing /operational work /international logistics, etc.

Economic level
Providing new value to society through businessSociety level
We are helping to create a barrier-free society inaddition to using our business activities to resolve
social issues through initiatives linked to CSR policies.

Business activities that nurture people and support their daily lives

We promote dialogues and collaboration with the various stakeholders associated with the Senko
Group, starting with local communities, and build harmonious social relationships.

CSR

The human resources and organizations
that form the foundation

Collaborating with society

Safety Initiatives
Health Initiatives
Social Activities
Food logistics that supports
people's lives through food

Promoting green logistics incooperation with customers

Providing logistics services
that are resilient to natural
disasters

Developing the Living Support
segment, beginning with nursing
care / healthcare services

Promoting healthmanagement at all Group
companies

CSR initiatives in the tradingbusiness

Sustainability of the global environment
Tires at end of primary life
New rubber

CSR

Base tire

Environmental
Measures

Refurbished (retreaded) tire

Installing solar power generation /energy-saving equipment at PD Centers

16 SENKO ANNUAL REPORT 2021

Reducing energy use / carbon emissions for transportation
infrastructure (Introducing CNG vehicles, electric trucks)

Using retreaded tires

Cooperation with the Osaka
Bay Regeneration Project

Supporting fulfillment andjob satisfaction for
employees

Traffic safety classes forkids at business locations

Traffic safety education /Professional driver training
at the Crefeel Koto facility

Environmental level
Minimizing the environmental impact of our business activities
As a logistics company, we are aware of our responsibility for consumingenergy and for greenhouse gas emissions, and we are doing our best toboth gain a full understanding of these issues and to reduce both factors.

SENKO ANNUAL REPORT 2021 17

CSR

Environmental Initiatives

Initiatives to Reduce Our Environmental Burden
Introduction of environmentally friendly trucks

Environmental Targets and Achievements

Promoting energy savings by replacing lights

CO2 Reduction Initiatives and Results

The Senko Group is promoting the introduction of environmentally

At logistics centers,

The Senko Group tracks the amount of energy used and the CO2 emissions generated by business activities, adjusting environmental

friendly trucks with lower CO2 and NOx emissions, such as

we are accelerating

protection measures as they are required. Today, we are continuing with initiatives to reduce our environmental burden. We aim toelectric and hybrid trucks. In FY 2021, we took delivery of the

our transition toachieve the CO2 reduction target of the five-year medium-term business plan that started in FY 2018: a reduction of more than 8,310 metricfirst heavy duty LNG truck for us in the Kansai area. We are

high-efficiency LED

tons over five years for Senko Co., Ltd.

responding to customers' requests for low carbon

lighting, reducing

transportation by taking advantage of environmental benefits,electricity consumption•Senko Group’s CO emissions by sourcesuch as CO2 emissions

Heavy duty LNG truck introduced to
Osaka Senko Transport Co., Ltd.

INPUT

by approximately 75%

Kita Kanto Logistics Center almost completely
upgraded to LED lighting

reduced by 10% or more,

2

Fuel consumed*1(kl)Electricity(t-CO2)

Fuel(t-CO2)Total(t-CO2)

SENKO Co., Ltd. (including Senko Line Co., Ltd.)

7,290

24,16034,21064,18098,390Group (excluding SENKO Co., Ltd.)

7,925

95,56737,794

256,853294,647

15,215

119,727

72,004

321,033

393,037

compared with mercury

NOx emissions reduced bylights. When these savings are translated to equivalent CO2,

70% or more. These vehicles

the result is an annualized saving of 360 t-CO2. In FY 2021, weemit no black smoke or

promoted the full-scale shift to LED lighting at many large sites,

sulfur oxides, compared

and we are working to make more efficient and effective usewith diesel vehicles.

of electric power.

OUTPUT

Electricity used
(10,000 kWh)Total
*1 Fuel consumption, crude oil (kl) conversion basis•Senko Group CO emissions■ ■ ■ CO2 emissions (t)*22

Using the roofs of logistics centers to develop the solar power business

Senko Co., Ltd.*4
1.21

To promote the spread of renewable energy, the Senko Group

1.15

began a solar power generation business in FY 2014 that is now
supplying electricity to electric power companies. In FY 2021,

94,276

95,336

2017

2018

1.10
98,0201.03

1.01

96,926

98,390618 kW of solar power generation equipment for use inhouse

Group Total*5

Compared with FY 2017,
per million yen of sales percentage
reduction in CO2 emissions
Target■ New companies within scope (11)■ Companies already within scope (70)393,037

269,876

270,385

0.72

0.72

2020

2021

Result-8.2 -16.5％

CO2 emissions per million yen (t)*3％

122,652

was installed at Runtec Corporation’s Moji Branch, together(FY)with a large storage battery with a capacity of 60 kWh,

*2 Emissions are total of Scope 1 and 2 *3 Net sales are calculated using mainstay businesses corresponding to Scope 1 and Scope 2 *4 Including Senko Line Co., Ltd. (spun off as a separate company in April 2018)*5 53 logistics companies including SENKO Co., Ltd., Senko Line Co., Ltd., Senko Group Holdings Co., Ltd. + 6 trading and commerce companies + 22 other companies = 81 in total

enabling clean energy to be used both when it is raining andat night. In FY 2022, SENKO Co., Ltd. plans to implement the firstlarge installation of solar power generation equipment forinhouse use (power output: 1,051 kW), at the Gifu Hashima PD
Center, and we are accelerating the use of renewable energy
at our logistics centers.

2019

2020

2021

(FY)

Runtec Corporation’s Moji Branch, which began operations in April 2020

Power output (from FY 2020)

UP 618 kW

From 22 sites across Japan•FY 2021 CO reduction targets and results (SENKO Co., Ltd. and 80 group companies)
2

We are now generating

17,100FY 2021 CO2 reduction target

Results (achieved)

1,782

1,711 (96%)

1,475

1,584 (107%)

3,257

3,295 (101%)

SENKO Co., Ltd. (including Senko Line Co., Ltd.)kW

Group (excluding SENKO Co., Ltd.)*Based on figures confirmed by the Ministryof Economy, Trade and Industry

Total

Initiatives to Preserve Biodiversity

CO2 reduction amountPriority implementation items

Since fiscal year 2020, the Senko Group has been helping to preserve biodiversity.
In FY 2021, environmental tree planting began: saplings have been planted in the
grounds of logistics centers at seven Senko branches and ten Group companies.
These initiatives preserve green spaces for future generations and improve
workplace communications as well as contribute to local communities.

Own Efforts

The Group has also endorsed the Osaka Bay Regeneration Project, a joint
initiative with local environmental conservation groups. As part of this project,
Expanding environmental tree planting at
Senko Group logistics centers

Eelgrass

18 SENKO ANNUAL REPORT 2021

Electricity
Savings

1. Switch to electric power companies with low CO2 emission coefficients
2. Upgrade to energy-efficient plants and equipment (LED lighting / air conditioning)
3. Use renewable energy from solar power, etc.

Fuel Savings
Recycling-BasedSociety

we are cooperating in the cultivation of eelgrass, which is then returned tothe sea to provide habitats for marine life. In FY 2021, 70 eelgrass cultivation
kits were distributed to the homes of employees.

*Includes Senko Group Holdings Co., Ltd. (units: t)

Recycled CO2
Products
for Customers

Green
Logistics

Company category
SENKO Co., Ltd.
(including Senko
Line Co., Ltd.)Group (excluding
SENKO Co., Ltd.)

Total

1,000

417

1,417

1. Update services with advanced, environmentally friendly trucks (electric, natural gas, hybrid)
2. Deploy environmental equipment, such as support equipment with start/stop systems

603

1,014

1,617

1. Promote recycling of wooden pallets and waste plastic
2. Promote use of retreaded tires

108

153

261

Total

1,711

1,584

3,295

884

125

1,009

1. Promote modal shifts
2. Propose improved efficiency that is environmentally friendly (larger vehicles, sharedtransportation, consolidation of locations)

Modal shift rate 75%

SENKO ANNUAL REPORT 2021 19

CSR

Safety Programs

Senko Group Safety Policy

Intragroup Health and Safety Initiatives
To strengthen compliance at Senko Group logistics

SafetyPhilosophy

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

companies, we are conducting training for managers andWe 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.

regulations, and internal rules that must be followed forothers involved in operations. We will focus on the laws,

1

operating a motor truck transportation business.

● The‌ Senko Group deeply recognizes the social mission of the logistics business and promotes efforts that all employees understandcorrectly and that contributes to the improvement of safety by ensuring safety in business activities is the basis of our business.

Basic
Approach● 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.
● The‌basis of safety is to be strongly conscious of each person working in the Senko Group to be healthy mentally and

Local managers experiencing face-to-face training

physically, to practice proper health management.

Nationwide Management System for Hazardous Materials

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.
1

Priority
Measures

People in charge of hazardous materials have been assigned to locations all over Japan. During the COVID-19 pandemic, these employees
used remote meetings to share information on hazardous materials and to increase understanding of these materials. They also educate
and train, while working to raise awareness of safety and quality in relation to hazardous materials, so that in the event of an emergency,
our response is effective and damage is minimized.
In response to revised laws and regulations, specialized education is provided quickly, with a focus on ensuring a safer workplace.

Achievement of Safety Goals (FY 2021)
As not all goals were achieved, we will formulate and implement new measures.
FY 2021 goals

FY 2021 achievements

Vehicle accident
frequency rate

0.30 or lower

0.57

Occupational accident
frequency rate

0.92 or lower

Priority initiatives● Implement effective preventive measures based on analyses of a range of accidents● ‌Further improve safety standards through cooperation within the Logistics Group● ‌Create an environment where safety can be substantially improved and introduce

leading-edge technology based on the verification of results

1.77● ‌Strengthen the structure for performance of safety initiatives by reinforcing various

safety management systems and checks

Medium-Term Safety Goals (FY 2018 – FY 2022)

Communication meeting conducted remotelySpecial training for preventing equipment from falling over

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 byhalf vehicle andoccupational accidents
from the FY 2017 level.

Vehicle accident
frequency rate
(on-road accidents)

Occupational accident
frequency rate
(occupational accidents withat least four lost workdays)

FY 2021
achievements

0.59/0.51

FY 2022
goals

0.25

FY 2021
achievements

1.85/1.60

FY 2022
goals

0.95

Logistics Group

Logistics Group

Senko Co., Ltd.

Senko Co., Ltd.

安全・品質ハンドブック

or lower

Senko Co., Ltd. And Logistics Groupor lower

Senko Co., Ltd. And Logistics Group*Figures for the Logistics Group do not include recently acquired companies.

20 SENKO ANNUAL REPORT 2021

Oil leak response training

Practicing the correct way to fit devices to prevent from falling over

SENKO ANNUAL REPORT 2021 21

CSR

Health Initiatives

Certified Health & Productivity Management Outstanding Organizations
Recognition Program (White 500) for Four Consecutive Years
In 2017, the Senko Group announced the Senko Group Health Management Declaration, which positions
the promotion of employee health as one of the most important issues facing management; we have beenencouraging activities that promote healthy living for many years.
This program has been well received. We were recognized by the Certified Health & Productivity
Management Outstanding Organizations Recognition Program (also called White 500) on March 4, 2021 forthe fourth consecutive year. Under this program, the Ministry of Economy, Trade and Industry and healthorganization Nippon Kenko Kaigi jointly recognize companies that practice outstanding health management.

Group company health management given high marks
In the 2021 Certified Health & Productivity Management Outstanding Organizations Recognition Program, Senko Information System
Co., Ltd. was recognized in the large corporation category. In the SME category, Toyohashi Senko Transport Co., Ltd. and Harcob Co., Ltd.
were recognized for the third consecutive year, in addition to six other companies: Fuji Senko Transport Co., Ltd., Hanshin Senko Transport
Co., Ltd., Esaka Logistics Service Co., Ltd., Hanshin Transportation Co., Ltd., Tokai Senko Transport Co., Ltd., Tokyo Nohin Daiko Co., Ltd.
Going forward, we will continue to support and expand initiatives that promote the health of employees, and to win further recognition
for Group companies.

Companies Recognized in the SME Category of the Certified Health & Productivity Management
Outstanding Organizations Recognition Program 2021
Despite the difficulty in staging events, like those held in previous years, due to the COVID-19 pandemic, these companies took a more

Accepting change and new challenges to become even more focused on health management

multi-layered approach to health management, devising programs that could be implemented under strict conditions to prevent infections.

Major Health Management Initiatives

Tokyo Nohin Daiko Co., Ltd.

Tokai Senko Transport Co., Ltd.

Making visible the fat and sugar content of foods

Promoting activities that build health for life

•Holding health courses and seminars•Promoting a healthy mind and body through sports

In FY 2021, we used online tools to deliver mental health training

In addition to judo, golf, swimming, kendo, and go, newcourses to new deputy/assistant managers, health literacy courses toclubs for women's tennis and athletics have been launched.

female employees and managers, and lifestyle-related illness

We are working hard with the men's tennis club to practiceseminars to employees concerned about their health.

on the four tennis courts recently built in the Tokyo head

•Using our proprietary health app

office building.

In May 2021, we began promoting new health

Making visible the fat and sugar
contained in food and drinks

Three-month weight measurement challenge

To raise the health awareness of employees, adisplay was created to make visible the amount of
fat contained in food, and the amount of sugar
contained in beverages. This display is next to theapplication desk for periodic health checks. Drivers
were also issued with smart watches for healthmanagement.

Presentation of achievement
awardsToyohashi Senko Transport Co., Ltd.

Harcob Co., Ltd.

Strict infection-prevention countermeasures

Strengthening existing initiatives

We carefully executed a range of initiatives, such as holding morning meetingsand health exercises with social distancing; setting up anti-spray sheets toprevent infection; taking the temperature of drivers at the reception counter;and promoting challenges to encourage disinfection and to discourage smoking.

initiatives that can be carried out even during
the COVID-19 pandemic, using the Senko Group’s

A new three-month program was held for measuring
body weight. By making employees aware of theirweight through daily measurements, we encouraged
them to pay more attention to eating food and snacks,
as well as exercise. For those employees who measured
their weight for the whole three-month period, an award
ceremony was held to recognize their achievement.

proprietary ChaReco (challenge and recording)

Using a thermal camera

app. This app not only tracks steps, but also

We have worked to reinforce existing programs, suchas introducing fixed days off and two days per month
where overtime is prohibited. In addition, with theobjective of managing health during the COVID-19
pandemic, we deployed thermal cameras that are able
to recognize faces and measure body temperatures.

records information to raise the awareness of
the user (such as body weight, diet, sleep,

Health Check Statistics

alcohol consumption, smoking, and exercise)
ChaReco health app

and assist them in improving their lifestyle habits.

Tennis club practice

Item

The Senko Group’s health promotion system(a) Stress check test ratio(b) Smoking ratio

Twenty-two healthcare professionals (public health nurses, registered nurses) have been assigned to the main areas of the country,
working with 102 health promotion coordinators to support the health of
employees in many ways.

(e) Ratio of those getting enough sleep(f) Ratio of those maintaining a healthy weightIn FY 2021, we appointed two supervising industrial physicians (Doctors(g) Blood pressure(h) Blood sugar level

Last fiscal year in particular, when the introduction of COVID-19 countermeasures
was required, we established in-house standards to help us achieve a better

22 SENKO ANNUAL REPORT 2021(d) Ratio of regular exercisers

Kobayashi and Odagami) to oversee the 78 industrial physicians and nurses,
enabling us to develop more effective Company-wide health policies and programs.

Nursing staff stationed around the country(c) Ratio of checkups where health issues were foundbalance between the health of employees and our business activities.

(i ) Liver function(j ) Lipids(k) Renal function
Number of people eligible (as of March 31, 2021)

Results
FY 2020

FY 2021

96.2
34.5
54.4
47.3
54.7
64.0
72.5
78.0
72.3
81.8
91.9
4,431

95.2
34.2
62.9
46.3
62.9
62.3
69.1
79.0
68.8
83.0
93.2
5,132

FY 2021
Evaluation
SatisfactoryGood
Not satisfactory
Satisfactory
Excellent
Not satisfactory
Not satisfactoryGood
Not satisfactory
Good
Good
—

(c) Ratio of health issues found: cases where results for items on regular
statutory health checkups ranges from B1 (requires further observation) to
C2 (under treatment)(d) People who responded positively to the statement on health “exercise
twice a week for at least 30 minutes each time, and have done this for atleast one year” or people who responded positively to the statement“walk or perform equivalent exercise for at least one hour every day.”(e) People who responded positively to the specific health question “I amgetting enough sleep”( f ) Healthy weight: BMI less than 25 and a waist size of less than 85 cm (men)or 90 cm (women)(g) Blood pressure: systolic pressure less than 130 mmHg and diastolicpressure of less than 85 mmHg(h) Blood sugar level: blood sugar value less than 100 mg/dl after fasting or
HbA1c less than 5.6%
( i ) Liver function: AST less than 31, and ALT less than 31, andγ-GTP less than 51( j ) Lipids: neutral fat less than 150 mg/dl and HDL cholesterol at least 40 mg/dl(k) Renal function: Creatinine less than 1.05 mg/dl (men) or 0.80 mg/dl (women)*The above covers employees of Senko Group Holdings Co., Ltd. and Senko Co., Ltd.

SENKO ANNUAL REPORT 2021 23

CSR

Social Initiatives

Encouraging Regional/Social Contribution Activities
We Evaluate Social Contribution Activities within the Group and Give Awards for Outstanding Achievements

Regional Revitalization
Senko School Farm Tottori Co., Ltd.

Selected as an outstanding case study that works on regional revitalization

In FY 2017, the Senko Group established the Social Contribution Activities Commendation program, which gives awards for outstanding

Senko School Farm Tottori Co., Ltd. is setting up a Nijisseiki nashi (Japanese apple pears) ownershipachievements, after being nominated by Group companies. In FY 2020, examinations by the Social Contribution Promotions Committee

system to recruit nashi orchardists over a wide area, while simultaneously promoting the tourist

resulted in two teams being selected for performance awards.

industry. The company is creating an outstanding case study that shows the potential of farming
and fishing villages in a region which there has been a decline in farms producing nashi, its specialty
product. (Nijisseiki is the name of a nashi variety for which the area is famous.) This widely

PerformanceAward

Traffic Safety Workshop for Protecting the Lives of Local Children(conducted at schools)

supported system has been given high marks and selected by the Chugoku-Shikoku Regional

As well as holding traffic safety workshops for children conducted by Senko Group logistics companies

the potential of farming and fishing villages. This program is part of initiatives that help to create

at elementary schools around the country, Runtec Corporation has taken the additional step of“a strong agricultural and fisheries industry,” and “beautiful farming and fishing villages full of vitality.”

visiting and assessing dangerous locations beforehand, then giving specific explanations about them
Runtec Corporation

during workshops. These initiatives has been positively received by schools and local communities
as an important way to protect children, and they have even received coverage on television.

•Assessing dangerous locations beforehand•Giving easily understood explanations about traffic safety

Agricultural Administration Office of the Ministry of Agriculture, Forestry and Fisheries, as an

Awarding ceremony

outstanding case study that works on regional revitalization and income improvements by achieving

This program was selected for several reasons: the number of participants is increasing every
year, and there are plans to continue activities that will contribute to the region.

Interviewed by the media after the ceremony(1) Slowed the decline in the cultivated area of Nijisseiki nashi and contributed to the restoration of nashi farmland(2) Contributed to the region by combining accommodations at local hot springs with a hands-on nashi harvesting, which has been accepted under a system for purchasing tax-deductible regional products(3) Leads to the development of new farmers

Collaborations with Local Communities
Continuation of Campaign to Deliver Picture Books to Children
The Campaign to Deliver Picture Books to Children is a continuation of an initiative thatbegan after the Tohoku Earthquake, and originally targeted children from that region.
In FY 2021, it was held between October 22 and December 4. The Group as a whole donated1,499 books, a significant increase over the 508 books in the previous fiscal year.

Giving explanations regarding the workplace and offering work
experience to younger people for self-reliant employment
PerformanceAward

Saitama Senko Logiservice Co., Ltd. is partnering with the NPO Fukaya Youth Support Station to help

Picture books filled with memories of the past are distributed with care to facilities such
Children at Kitanakamoto
Nursery School

Saitama Senko
Logiservice Co., Ltd.

•Workplace explanations

As a result of this initiative, eight people were hired across multiple areas, helping alleviate thesocial problem of participation in society by those who struggle to find work.

•Work experienceof picture books, and comments included, "It was very helpful because the school is newand there was a shortage." We are looking forward to children reading these books.

young people aged 15 to 39 who are neither employed nor in education by giving them explanations
about our workplaces and offering them work experience, in order to support self-reliant employment.

as nursery schools and elderly care homes. Children picked out favorite books from a lot

Residents of the Seikazoku
no Ie daycare center

Going forward, we will continue to deliver picture books as part of the Senko Group’s
CSR activities.

Operation of trucks vinyl wrapped with decorative PR materials for Minamata tourism
As part of a PR campaign to boost tourism in Minamata, Minami Kyushu Senko Co., Ltd.
is operating trucks wrapped with illustrations from manga artist Hisashi Eguchi, whocomes from Minamata, and photographs of local tourist spots, such as Yunoko Beachand the rose garden in Eco Park Minamata.
The launch ceremony was held at Minamata on September 12, 2020, and wasattended by about 60 people, including those involved in this initiative. The wrappedtrucks will travel across the country. While attending to their duties with even greater
professionalism, the drivers hope that this initiative will help promote their home region.

24 SENKO ANNUAL REPORT 2021

Nationwide PR for Minamata using vinyl wraps on trucks

SENKO ANNUAL REPORT 2021 25

CSR

Directors and Auditors (As of June 25, 2021)

President andRepresentative Director

Yasuhisa Fukuda

Responsible for Logistics
Senior Manager of Business Development Department
President and Representative Director, SENKO Co., Ltd.

CSR

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

Directors
Managing Executive
Officer

Noburo Sasaki

General Manager of Business Support Promotion HQ

Kenichi Shiraki

General Manager of Living Support Business Promotion HQ
Chairman and Director, Terauchi Co., Ltd.

Kazuhiro Yamanaka

Hiroshi Yoneji

Responsible for Refrigerated & Frozen Logistics
President and Representative Director, Runtec Corporation

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

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

Board ofCorporate Auditors

ReportDirectors

Toshio Takanashi

Accounting Auditors

Akira Taniguchi

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

Responsible for International BusinessAppointment / Dismissal

ReportAudit

Board of Directors

Accounting
Audit

ReportExecutive Officers

Selection/
Supervision

Dialogue
Assist /ReportReportPresident andRepresentative Director

Audit

Auditing Dept.

Hiroko Ameno

Appointment / Dismissal

Internal Controls Committee
CSR Promotion Committee

ReportDirector (part-time), Senko Co., Ltd.
Instruct
Audit

ReportReportSupervise

Legal Counsel

Yasuyuki Sugiura
Outside Directors

Yoko Araki

ReportOperating companies
AdviceSubsidiaries directlysupervised by
SENKO Group holding Co., LTD.
Companies affiliated with
Living Support/
Business Support

Core companies
ReportRuntec Corporation
SENKO SHOJI Co., LTD.
AST CORPORATIONSMILE CORP.

Committees
SENKO Co., Ltd.

Fumiko Okuno

Masanobu Uenaka
Full-time
Corporate Auditors

Masami Washida

OutsideCorporate Auditors
Part-time
Corporate Auditor(Outside Corporate Auditor)

26 SENKO ANNUAL REPORT 2021

Yasushi Matsutomo

Yoshiro Okano

1

The Company’s Board of Directors meets at least once a month and deliberates on issues as required by laws and regulations as well as importantmanagement 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 and responsibility. We also verify the status of the implementation of operations andstrive 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.
We also established an Internal Control Committee that will continue the internal control activities of the Group and seek to improve them.

3

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

Corporate Auditor, SENKO Co., Ltd.

Corporate Auditor, SENKO Co., Ltd.

Corporate Auditor, SENKO Co., Ltd.

SENKO ANNUAL REPORT 2021 27

CSR

CSR

Corporate Governance

4

The Company has concluded an audit contract with Grant Thornton Taiyo LLC as the accounting auditor, under the terms of the Companies Act and the
Financial Instruments and Exchange Act, and will receive guidance in relation to accounting. Three certified public accountants executed the audit, withseven other certified public accountants and six individuals who have passed certified public accountant exams assisting, for a total of 16 people.

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.

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

Further, to promote Group-wide CSR-based management,

Compliance Committee

we established the Compliance Committee, the Corporate
Ethics Committee, the Risk Management Committee, theCSR
Promotion
Committee

Environmental Promotion Committee, and the Social
Contribution Committee in addition to the CSR Promotion
Committee, which supervises these committees, and theCommittee Chairman:
PresidentInternal Controls Committee to create a Group-wide
CSR-based management system.

Operatingcompanies

Risk Management Committee
Environmental Promotion Committee
Social Contribution Promotion Committee

Compensation for officers includes basic compensation, stock options, and performance-based pay (bonuses), as well as
performance-based stock. Guided by internal rules, we determine the specific amounts of the compensation, taking into accountfactors such as the position of the officer, the performance in the individual fiscal year, and the level of contribution to
performance made by each person.

Directors (excludes Outside Directors)

Category of Officer

1

Laws and
Regulations

The Group is engaged in transportation, distribution processing, and other businesses, and provides a wide range of logistics 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 ofLand, Infrastructure and Transport to engage in these businesses, and there is a mandatory post-notification system for setting and revisingfees. 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 thePrice 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 performance of 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 publicconfidence, 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 performance of
the Group could be affected if these systems are shut down due to a natural disaster, computer virus, or computer hacking.
In 2018, the Group was affected by torrential rains in western Japan, as well as Typhoon Jebi and the Hokkaido Eastern Iburi Earthquake.

6

Management of
Customer
Information

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

7

M&A and capitalalliances

When expanding the scale of existing businesses, or entering new business fields, the Senko Group concludes M&As and enters into capitalalliances, etc. as part of our business strategy.
When progress after the completion of an acquisition or alliance is significantly slower than initially expected, there may be an impact
on performance and on the financial position of the Group.

8

Overseas businessgrowthTo continue growing into the future, the Senko Group is working to expand business overseas. The Group’s business expansion, performance, and growth
outlook could be significantly affected by social disturbances in the regions where we operate. These disturbances could be due to changes in the economic
situation, recessions, fluctuations in foreign exchange rates, changes in politics or laws and regulations, or outbreaks of terrorism, war or disease.

Corporate Ethics Committee

Policy on Determining Compensation for Officers

Total Amount ofCompensation, etc.
(Millions of yen)

and consolidated subsidiaries) as of the last day of the fiscal year under review (March 31, 2020).

Total Amount of Each Type of Compensation, etc. (Millions of yen)
Number of
Eligible Officers

Basic
remuneration

Performancebased pay(bonuses)

Performancebased stockcompensation

Restricted
Stock
Compensation

200

100

58

25

15

8

Corporate Auditors (excludes Outside Corporate Auditors)

43

32

11

–

–

2

Risk Management System

Outside Officers

51

37

14

–

–

5

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.

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.
https://www.senkogrouphd.co.jp/ir/governance/ (Japanese only)● Corporate Governance Report● Initiatives Based on Corporate Governance Principles

1

To systematically and effectively mitigate the risks that the Group faces, and to take corrective action, we have established the Risk Management Regulations. Every
department that controls risk is also tasked with formulating and distributing regulations, etc. aimed at reducing risks and for taking effective action when risks materialize.

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.

Compliance-Based Management

Establishing Business Continuity Plans (BCPs)

Compliance-based management, which complies with laws and regulations and engages in ethical business activities, is the base forEvery Group location has established a business continuity plan (BCP) in order to swiftly recover logistics in the event of a disaster.

a company to fulfill its social responsibility and earn the trust of stakeholders.

In an emergency, support and recovery activities will be carried out promptly under the direction of the head office and the manager of

The Senko Group has established, based on a thorough understanding of the Group’s social obligations, the Senko Standards ofBusiness Conduct which prescribes all items that executives and employees must observe for every aspect of their jobs.

the department 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.

28 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 29

Financial Review

The fiscal year ended March 31, 2021 was significantly affected by the COVID-19 pandemic, but as a result of Groupwide initiatives
to grow sales, reduce expenses, improve cost efficiency and productivity, as well as promoting M&As, consolidated operating revenue,
consolidated operating profit, consolidated ordinary profit, and profit attributable to owners of parent all increased year on year.

2020

2021

Financial Information

Growth rate
(%)

68.9

¥ (5.4)

(1.4)

222.6

39.1

5.4

2.4

10.2

63.2

11.1

(5.0)

(7.9)

12.8

76.6

13.4

(3.3)

(4.3)

Component
ratio (%)

Operating revenues(Billions of yen)

Component
ratio (%)

¥ 387.4

67.7¥ 392.7

Retail product

229.5

40.1

Housing

58.3

Chemicals

73.5

Logistics

2021

Difference(Billions of yen)

Operating revenues(Billions of yen)

26.1

4.6

30.2

5.3

(2.5)

(8.9)

Trading & Commerce

161.8

28.3

161.3

28.3

0.5

0.3

Others

23.2

4.0

16.0

2.8

7.2

45.3

Total

572.4

100.0

570.0

100.0

2.4

0.4

Other

Despite an increase in cargo volume for chain stores, such as discount retailers and drugstores, the COVID-19

Contents

pandemic caused a sharp fall in the volumes for housing, chemicals, and frozen and refrigerated goods forschool lunches and restaurants, with operating revenue declining by ¥5,377 million year on year to ¥387,350 million.

Logistics

For profits, as a result of sales growth initiatives, reduced expenses, cost and productivity improvements, and

31 Financial Review

UACJ Logistics Corporation and Senko Nagase Logistics Co., Ltd. becoming consolidated subsidiaries, segment

34 Consolidated Balance Sheets

profit rose by ¥1,554 million year on year to ¥19,401 million.

36 Consolidated Statements of Income
36 Consolidated Statements ofComprehensive Income

Sales increased due to rising demand for daily necessities following increased requirements for home deliveries andTrading &Commerce

promoting adjustments to the selling prices of household paper items. As a result, operating revenue rose ¥505 million
year on year to ¥161,820 million, while segment profit increased by ¥915 million year on year to ¥3,035 million.

37 Consolidated Statements of
Changes in Net Assets
38 Consolidated Statements of Cash Flows
39 Notes to the Consolidated
Financial Statements
64 Report of Independent Auditors

Operating revenues

Operating profit

Net income attributable toowners of parent(Millions of yen)

(Millions of yen)

(Millions of yen)

600,000

25,00015,000480,000

20,00012,000360,000

15,0009,000

240,000

10,0006,000

120,000

5,000

3,000

0

30 SENKO ANNUAL REPORT 2021

0

0

17

18

19

20

21 FY

17

18

19

20

21 FY

17

18

19

20

21 FY

SENKO ANNUAL REPORT 2021 31

Financial Review

Due primarily to the Company making Procare Co., Ltd. and Terauchi Co., Ltd. consolidated subsidiaries, andtaking other measures, operating revenue increased by ¥7,247 million year on year to ¥23,235 million. However,

Othersthe spread of COVID-19 had a negative impact on profits due to a considerable decline in the number of customers
using hotels, fitness clubs, daycare centers, and restaurants. This resulted in a loss for the segment of ¥61 million,

Net assets as of March 31, 2021 rose ¥11,573 million from the end of the previous fiscal year to ¥145,754 million.
This was primarily due to increases of ¥10,301 million in retained earnings, ¥2,429 million in reassessing definedNet
assetsbenefit plans, and ¥1,977 million in non-controlling interests, despite a decrease of ¥3,986 million in the purchaseof treasury shares. As of March 31, 2021 the equity ratio was 31.0%, a decrease of 4.1 percentage points froma deterioration of ¥1,481 million over the previous fiscal year.

the end of the previous fiscal year.

Assets, Liabilities and Net Assets

Total
assetsCapital Expenditures and Depreciation

Total assets as of March 31, 2021 were ¥435,260 million, rising by ¥78,952 million over the end of the previous fiscal year.

Capital expenditures in the fiscal year under review increased ¥15,115 million, or 83.0%, to ¥33,321 million compared with theCurrent assets came to ¥163,891 million, up ¥39,680 million from the end of the previous fiscal year. This wasprevious fiscal year. The Company opened logistics centers in Fukuoka, Tokyo, Saitama, and Aichi in the fiscal year under review.

mainly a reflection of increases of ¥24,051 million in cash and cash equivalents, ¥8,327 million in trade accounts

As a result, the total warehouse space as of March 31, 2021 grew by 50,000 m2 from the end of the previous fiscal year to 3,920,000 m2.

and notes receivable, and ¥4,621 million in merchandise and finished goods.

Depreciation in the fiscal year under review increased ¥1,854 million, or 11.9%, to ¥17,415 million compared with the previous fiscal year.

Non-current assets were ¥271,369 million, up ¥39,984 million. This was the result of a decline of ¥2,611 million
in investments and other assets, an increase in property, plant and equipment of ¥38,576 million, and an increase
in intangible assets of ¥4,020 million.

Cash Flows
Cash and cash equivalents at the end of the fiscal year increased by ¥23,228 million year on year to ¥50,371 million.

Liabilities as of March 31, 2021 increased ¥67,379 million from the end of the previous fiscal year to ¥289,506 million.

Net cash provided by operating activities came to ¥31,858 million. This was mainly due to outlays of ¥4,483 million associatedCurrent liabilities totaled ¥133,715 million, up ¥22,076 million from the end of the previous fiscal year. This was mainlywith an increase in negative goodwill, and ¥6,822 million in income taxes paid, despite profit before income taxes of ¥22,602 million,

due to increases of ¥3,397 million in trade notes and accounts payable, ¥2,027 million in electronically recorded
obligations–operating, ¥7,070 million in current portion of bonds payable, and ¥10,009 million in current portion of

Liabilities

convertible bonds with share acquisition rights, despite a decrease of ¥7,215 million in short-term borrowings.

depreciation and amortization of ¥17,419 million, and impairment losses of ¥3,053 million.
Net cash used in investing activities came to ¥46,309 million. This was mainly due to purchases of property, plant and equipmentof ¥33,618 million and purchases of the shares of subsidiaries arising from a change in the scope of consolidation of ¥11,386 million.

Non-current liabilities totaled ¥155,791 million, up ¥45,302 million from the end of the previous fiscal year. This

Net cash provided by investing activities came to ¥36,757 million. This was mainly due to proceeds from long-term borrowings of

was mainly attributable to increases of ¥12,952 million in bonds payable, ¥12,089 million in convertible bonds with

¥21,566 million and proceeds from issuing bonds of ¥42,110 million, despite repayments of long-term borrowings of ¥14,510 million,

share acquisition rights, and ¥19,048 million in long-term borrowings.

repayments of finance lease obligations of ¥4,465 million, the purchase of treasury shares of ¥4,312 million and a dividends payoutof ¥3,967 million.

Operating profit margin

Net income per share

Cash dividends per share

Total assets

Net assets ( )Equity ratio ( )

(%)

(Yen)

(Yen)

(Millions of yen)

(Millions of yen)

5.0

100

30

450,000

200,000

(%)
40

4.0

80

24

360,000

160,000

32

3.0

60

18

270,000

120,000

24

ROE
(%)
12

9

6
2.0

40

12

180,000

80,000

16

1.0

20

6

90,00040,000

8

3

0

0

0

17

18

32 SENKO ANNUAL REPORT 2021

19

20

21 FY

17

18

19

20

21 FY

0

17

18

19

20

21 FY

0

0

17

18

19

20

21 FY

17

18

19

20

21 FY

0

17

18

19

20

21 FY

SENKO ANNUAL REPORT 2021 33

Consolidated Balance Sheets
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

ASSETSLIABILITIES AND NET ASSETS

Current assets:

Current liabilities:

Cash and cash equivalents¥ 50,372¥ 27,143$ 454,991

85,20977,013

769,659

(29)

(22)

(262)

Inventories

13,9599,616

Prepaid expenses and other current assets

14,38010,461

Trade accounts and notes receivable
Less : allowance for doubtful accounts

Total current assets

163,891

124,211

Thousands of
U.S. dollars

Millions of yen

2020

2021

¥ 18,408¥ 15,091$ 166,272

Current portion of long-term debt (Note 12)20,756

14,210187,481

Lease obligations

4,254

3,674

38,425126,086

Trade accounts and notes payable

52,97147,545478,466

129,889

Accrued expenses

14,227

12,039128,507

Accrued income taxes

5,378

3,745

48,577

Other current liabilities

17,721

15,335160,067

1,480,363

Short-term loans (Note 12)

2021

133,715

111,639

1,207,795

Long-term debt, less current portion (Note 12)

127,02182,931

1,147,331

Lease obligations

14,882

13,913

134,423

Net defined benefit liabilities (Note 13)

7,104

7,060

64,168Other long-term liabilities

6,785

6,585

61,286

Total current liabilities

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

9,719

16,28387,788Investment securities (Notes 9 and 14)

8,211

5,764

74,167

Contingent liabilities (Note 15)
365,539

309,561

3,301,770

Less : accumulated depreciation(155,985)(138,583)(1,408,951)

Net property and equipment

209,554

170,978

1,892,819

Property and equipment, at cost (Notes 11 and 14)

Net assets (Note 16):
Shareholders' equity
Common stock:
Authorized–294,999,000 shares
Issued–152,952,221 shares in 2021 and 152,861,921 shares in 2020

Deferred tax assets (Note 18)

4,937

5,997

44,594

Net defined benefit assets

5,471

2,094

49,417

Other assets

33,47830,269302,394

26,565

26,529239,951

Capital surplus

29,806

29,770269,226

Retained earnings

81,20470,902

733,484

Less : Treasury stock, at cost–4,764,111 shares in 2021 and 898,113 shares in 2020

(4,638)(652)(41,893)

132,937

126,549

1,200,768

1,760

779

15,897

Total Shareholders' equity
Accumulated other comprehensive income :Net unrealized holdings gain on securities

Deferred assets:
Business commencement expenses
Total deferred assets

0

713

0

0

713

0

Gain (loss) on deferred hedges

32

14

289

Translation adjustments

57

256

515

Remeasurements of defined benefit plans(10)(2,439)

(90)

1,839

(1,390)16,611

Total accumulated other comprehensive income :Stock acquisition rights (Note 17)

410

432

3,703

10,5688,590

95,457

Total net assets

145,754

134,181

1,316,539

Total liabilities and net assets¥ 435,261¥ 356,309$ 3,931,542

Non-controlling interests

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

34 SENKO ANNUAL REPORT 2021

¥ 435,261¥ 356,309$ 3,931,542

See the accompanying notes to the consolidated financial statements.

SENKO ANNUAL REPORT 2021 35

Consolidated Statements of Income

Consolidated Statements of Changes in Net Assets

SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands of
U.S. dollars

Millions of yen

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

Income before income taxes

2021

2020

2021

¥ 572,405¥ 570,030$ 5,170,310

500,654
50,231

503,687
45,686

4,522,211
453,717550,885

549,373

4,975,928

21,520254(1,100)
(163)

1,987
(10,577)
18,363

1,082(1,009)9,773

22,602

19,648204,155

8,195
(314)

7,010
102

74,022(2,836)

7,881

7,112

71,186

14,721

12,536

132,969

(480)

(455)

(4,336)¥ 14,241¥ 12,081$ 128,633

Net income attributable to non-controlling interests
Net income attributable to owners of parent
Per share of common stock
Net income
Diluted net income
Cash dividends applicable to the year

194,382220(1,171)
2,033

Income taxes (Note 18):
Current
Deferred

Net income

20,657

Yen¥ 93.81
78.40
28.00

U.S. dollars¥ 79.51
73.75
26.00

$ 0.850.71
0.25

Millions of yen

Balance at March 31, 2019

Number ofshares ofcommonstock issued

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)

152,861¥ 26,529¥ 29,842¥ 62,983¥ (698)Net
Remeasurements
Stock
Gain (loss)
unrealized
Translationof definedacquisition
on deferredholdings gain
adjustments
benefit plansrightshedgeson securities¥ 1,351

¥ (4)

¥ 122

¥ (920)¥ 425

Noncontrollinginterests

Total net
assets¥ 7,266 ¥ 126,896

Net income attributable to owners of parent

–

–

–

12,081

–

–

–

–

–

–

–

12,081

Cash dividends

–

–

–

(3,968)

–

–

–

–

–

–

–

(3,968)Purchases of treasury stock

–

–

–

–

(0)

–

–

–

–

–

–

(0)

Retirement of treasury stock

–

–

5

–

46

–

–

–

–

–

–

51

Adjustment of retained earnings for
newly consolidated subsidiaries

–

–

42

(194)

–

–

–

–

–

–

–

(152)

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

–

–

(119)

–

–

–

–

–

–

–

–

(119)

Other changes

–

–

–

–

–

(572)

18

134

(1,519)

7

1,324

(608)

152,861¥ 26,529¥ 29,770¥ 70,902¥ (652)

¥ 779

¥ 14

¥ 256

¥ (2,439)¥ 432

Balance at March 31, 2020

¥ 8,590 ¥ 134,181

Net income attributable to owners of parent

–

–

–

14,241

–

–

–

–

–

–

–

Issuance of new stock

–

36

36

–

–

–

–

–

–

–

–

14,241
72

Cash dividends

–

–

–

(3,971)

–

–

–

–

–

–

–

(3,971)

Purchases of treasury stock

–

–

–

–

(4,312)

–

–

–

–

–

–

(4,312)Retirement of treasury stock

–

–

(1)

–

326

–

–

–

–

–

–

325

Adjustment of retained earnings for
newly consolidated subsidiaries

–

–

–

32

–

–

–

–

–

–

–

32

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

–

–

1

–

–

–

–

–

–

–

–

1

Other changes

–

–

–

–

–

981

18

(199)

2,429

(22)

1,978

5,185

152,861¥26,565¥29,806¥81,204¥(4,638)¥1,760

¥32

¥57

¥(10)

¥410

See the accompanying notes to the consolidated financial statements.

Balance at March 31, 2021

¥10,568 ¥ 145,754

Consolidated Statements of Comprehensive Income
Thousand of U.S. dollars

SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

Thousands of
U.S. dollars

Millions of yen

2021
Net income
Other comprehensive income (Note 7):
Net unrealized holdings gain (loss) on securities
Gain (loss) on deferred hedges
Translation adjustments
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of parent
Non-controlling interests

2020¥ 14,721
1,025
18
(355)
2,429

¥ 12,536
(560)
21
199
(1,519)2021$ 132,969
9,258
163(3,206)
21,9403,117(1,859)28,155¥ 17,838¥ 10,677$ 161,124¥ 17,476¥ 362¥ 10,078¥ 599$ 157,854$ 3,270

Balance at March 31, 2020

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)$ 239,626$ 268,901$ 640,430$ (5,889)

Net
Gain (loss)
Remeasurements
Stockunrealized
Translation
on deferredof definedacquisition
holdings gain
adjustments
hedgesbenefit plansrightson securities$ 7,036$ 126$ 2,312$ (22,030)$ 3,902

Noncontrollinginterests

Total net
assets$ 77,590 $ 1,212,004

Net income attributable to owners of parent––

128,633

–

–

–

–

–

–

–

128,633

Issuance of new stock

325

325

–

–

–

–

–

–

–

–

650

Cash dividends––(35,868)

–

–

–

–

–

–

–

(35,868)

Purchases of treasury stock

–

–

–

(38,949)

–

–

–

–

–

–

(38,949)

Retirement of treasury stock

–

(9)

–

2,945

–

–

–

–

–

–

2,936

Adjustment of retained earnings for newly
consolidated subsidiaries

–

–

289

–

–

–

–

–

–

–

289

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

–

9

–

–

–

–

–

–

–

–

9

Other changes

–

–

–

–

8,861

163

(1,797)

21,940(199)

17,867

46,835$ 239,951$ 269,226$ 733,484$ (41,893)$ 15,897

$ 289

$ 515

(90)

$ 3,703$ 95,457 $ 1,316,539

Balance at March 31, 2021$

See the accompanying notes to the consolidated financial statements.

36 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 37

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2021 and 2020

SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen

2021
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
Insurance income
Settlement money
Litigation settlement money
Loss (gain) on extinguishment of tie-in shares
Gain on termination of retirement benefit plan
Gain on sales of property and equipment
Loss on disposals of property and equipment
Loss on reduction of property and equipment
Subsidy income
Amortization of goodwill
Gain on bargain purchase
Reversal of provision for asset retirement obligations
Amortization of business commencement expenses
Increase (decrease) in allowance for doubtful accounts
Loss (gain) on liquidation of subsidiaries
Loss on return of subsidies
Gain on reversal of tax purpose reduction entry of non-current assets
Decrease (increase) in accured retirement benefits
Increase (decrease) 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
Foreign currency exchange loss (gain)
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
Settlement payment
Loss on return of subsidies
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 purchase of shares of newly 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
Purchases of treasury stock
Sales of treasury stock
Dividends paid
Dividends paid to non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

2020

2021

¥ 22,602¥ 19,648$ 204,155

17,420
3,053
–
–
–
–
–
–
–
(432)
311
337
(313)
798
(4,483)
(349)
561
(79)
–
–
–
(3,377)
2,472
571
(121)
68
(220)
(109)
1,171
(1,539)
(682)
1,947
552
(1,774)510

15,565
211
(11)
190
(144)
118
55
(51)
(46)
(52)
159
565
(579)
–
–
–
–
–
356
238
(238)
(139)
(671)
176
271
(103)
(254)
67
1,100
(2,866)
131
1,572
2,318
545
882

157,348
27,576
–
–
–
–
–
–
–
(3,902)2,809
3,044(2,827)
7,208(40,493)(3,152)
5,067
(714)
–
–
–
(30,503)
22,3295,158(1,093)614(1,987)(985)
10,577(13,901)(6,160)17,585
4,986(16,024)
4,607

38,895313––
623(1,151)(6,822)39,013
579
(106)
(238)
594
(1,097)(7,646)351,322
2,827
–
–
5,627
(10,396)(61,619)

31,85831,099287,761(2,069)1,803(33,618)
1,455(11,387)(987)(1,506)(2,738)
3,934(17,449)
1,182–(2,043)(916)(18,688)
16,286(303,658)
13,141(102,854)(8,915)(13,603)(46,309)(18,030)(418,291)

335
21,566(14,510)(4,465)
42,110––(4,312)106(3,968)
(169)
65

212
5,210
(6,978)(3,925)
–
803
(152)
–
–
(3,964)
–
(362)

3,026
194,797(131,063)(40,330)
380,363––(38,949)957(35,841)(1,526)587

36,758(9,156)

332,021(157)

46(1,418)Net increase (decrease) in cash and cash equivalents

22,1503,959

200,073

Cash and cash equivalents at beginning of year

27,14322,802

245,172

Net increase in cash and cash equivalents of newly consolidated subsidiaries
Net increase in cash due to merger non-consolidated subsidiaries

1,079
–

315
67

9,746
–

¥ 50,372¥ 27,143$ 454,991

Cash and cash equivalents at end of year
See the accompanying notes to the consolidated financial statements.

38 SENKO ANNUAL REPORT 2021

01 Basis of Presenting Consolidated Financial Statements
SENKO Group Holdings Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their accounts and records in accordance with the provisions
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 and practices
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 and Exchange Law of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated
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 prevailingat March 31, 2021, which was ¥110.71 to US$1.00. These convenience translations should not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be, converted into U.S.dollars at this or any other rate of exchange.

02 Summary of Significant Accounting Policies(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 with maturitiesof 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 by 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

Tools, furniture and fixtures

2 to 20 years(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.
SENKO ANNUAL REPORT 2021 39

(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 5 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 9 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 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 is amortized over a period of 5 years by the straight-line method. If the useful economic 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 foreign exchange
contracts are used as hedges and meet certain hedging criteria, the foreign currency receivables or payables are translated at the contracted
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 theinterest 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 eachyear after giving effect to the dilutive potential of the shares of common stock to be issued upon the conversion of convertible bonds and exerciseof stock acquisition 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.

03 Significant accounting estimates
Items that were recorded in the consolidated financial statements as accounting estimates for the fiscal year ended March 31, 2021 and that may havea material impact on the consolidated financial statements for the following fiscal year and beyond are as follows.

1. Recoverability of deferred tax assets(1) Amount recorded in the financial statements for the consolidated fiscal year ended March 31, 2021
Amount (Unit: million yen)

Deferred tax assets

4,936(2) Information on the details of significant accounting estimates related to the items identified
With regard to future deductible temporary differences, the Group determines the recoverability of deferred tax assets according to taxable income
based on future earnings capacity, tax planning, and other methods.
Estimates of future taxable income are based on the Group’s business plan, and take into account the impact of COVID-19 and other external factors.
These estimates may be affected by uncertainties in the economic situation and the business conditions of the Company, and in the event that
actual timings and amounts differ from the estimates, they could have a material impact on amounts recognized in the financial statements for thefollowing fiscal year and beyond. In addition, if the effective tax rate changes because of revisions to the tax system, this could have a material
impact on amounts recognized in the financial statements for the following fiscal year and beyond.

2. Impairment losses(1) Amount recorded in the financial statements for the consolidated fiscal year ended March 31, 2021
Amount (Unit: million yen)

Impairment loss
Property, plant and equipment
Intangible assets

3,053
209,554
17,174(2) Information on the details of significant accounting estimates related to the items identified
For non-current assets for which there are indications of impairment and where the total undiscounted future cash flows of the asset or asset groupin question are lower than book value, the Group writes down book value to the recoverable value and records the amount written down as an
impairment loss.
In addition, when considering whether an impairment loss should be recognized, or when estimating future cash flows for the calculation ofvalue in use, the Group makes certain assumptions, including some related to the timing of the resolution of the COVID-19 crisis.
For this reason, if the COVID-19 crisis shows no sign of resolution and market conditions deteriorate markedly, the Group may make a downward
revision to the business plans on which its estimates are based, and an additional impairment loss may be recorded in the consolidated financial
statements for the fiscal year ending March 31, 2022.

04 Accounting Standard, etc., Issued but Not Yet Adopted
・Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)
・Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 26, 2021)
・Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, March 31, 2020)(1) Outline
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have jointly developed a comprehensive
accounting standard for revenue recognition. This standard, issued in May 2014, is called Revenue from Contracts with Customers (IFRS 15 for the
IASB and Topic 606 for the FASB). In recognition of the application of IFRS 15 for fiscal years beginning after January 1, 2018, and the application of
Topic 606 for fiscal years beginning after December 15, 2017, the Accounting Standards Board of Japan has developed and issued a comprehensive
accounting standard and guidance for revenue recognition.
The basic approach of the Accounting Standards Board of Japan when developing the revenue recognition accounting standard was to set out an
accounting standard that adopted as its starting point the basic principles of IFRS 15 from the perspective of comparability of financial statements, oneof the benefits of working to achieve consistency with IFRS 15. In addition, in cases where there are items that must be taken into consideration, suchas the way business has been conducted in the past in Japan, etc., this standard proposes additional substitute treatments, provided that they do notaffect comparability.

(2) Planned application date
Application of these accounting standards is to start from the beginning of the fiscal year ending March 31, 2022.

(3) Impact of the application of the above accounting standard, etc.
The financial impact on the consolidated financial statements of applying the Accounting Standard for Revenue Recognition and other standards iscurrently under evaluation.

40 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 41

・Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019)
・Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Statement No. 31, July 4, 2019)
・Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9, July 4, 2019)
・Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019)
・Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Statement No. 19, March 31, 2020)(1) Outline
The IASB and FASB issued very similar detailed guidance on the measurement of fair value, issued as International Financial Reporting Standards(IFRS) 13 Fair Value Measurement, and by FASB as Topic 820 (Fair Value Measurement) of the Accounting Standards Codification. Accordingly, the
Accounting Standards Board of Japan took steps to ensure that the Japanese standard was consistent with international standards, and issued
Accounting Standard for Fair Value Measurement, a standard primarily concerned with guidance and disclosure in relation to the fair value offinancial instruments.
The basic approach of the Accounting Standards Board of Japan when developing the fair value measurement accounting standard was, in
effect, to adopt all of the prescriptions of IFRS 13 and to use a unified method of measurement from the perspective of improving comparability offinancial statements between companies in Japan and overseas. In addition, in cases where there are items that must be taken into consideration,such as the way business has been conducted in the past in Japan, etc., the standard sets out other treatments for individual items, provided thatthey do not affect comparability.

(2) Planned application date(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 348,000 shares valued at ¥302 million ($2,728 thousand)for the current consolidated fiscal year.

(Accounting estimates following the spread of COVID-19)
The spread of COVID-19 has had certain effects on the business of the Group, and it is assumed that these effects will continue for a period of time
beyond April 2021. Accordingly, we have created accounting estimates for impairment accounting of non-current assets, and for recoverability ofdeferred tax assets, and other items.
Moreover, because these assumptions are significantly affected by a variety of factors, such as the timing with which the COVID-19 crisis is
resolved, results based on actual figures in the future may differ from these assumptions and estimates.

07 Comprehensive Income
The amount of recycling and amount of income tax effect associated with other comprehensive income at March 31, 2021 and 2020
consisted of the following:
Millions of yen

Application of these accounting standards is to start from the beginning of the fiscal year ending March 31, 2022.

(3) Impact of the application of the above accounting standard, etc.
The financial impact on the consolidated financial statements of applying Accounting Standard for Fair Value Measurement and other standards
has yet to be finalized.

05

Changes in presentation(Application of “Accounting Standard for Disclosure of Accounting Estimates”)
The Company began to apply ASBJ Statement No. 31, “Accounting Standard for Disclosure of Accounting Estimates” (March 31, 2020) to theconsolidated financial statements in the fiscal year ended March 31, 2021, and the consolidated financial statements provide notes on significant
accounting estimates.
However, in accordance with the transitional arrangements set out in the proviso to paragraph 11 of said standard, no notes are provided for
details relating to previous fiscal years.

06

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.

2021
Net unrealized holdings gain (loss) on securities:
Amount recognized in the period under review
Amount of recycling

2020

Thousands of
U.S. dollars

2021¥ 1,215240¥ (800)(11)$ 10,975
2,167

1,455
(430)

(811)
251

13,142(3,884)

1,025

(560)

9,258

26

31

235

Before income tax effect adjustments
Amount of income tax effect

26
(8)

31
(10)

235
(72)

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

18

21

163

(355)

199

(3,206)

Remeasurements of defined benefit plans:
Amount recognized in the period under review
Amount of recycling

2,899
571

(2,534)350

26,185
5,158

Before income tax effect adjustments
Amount of income tax effect

3,470(1,041)(2,184)665

31,343(9,403)Remeasurements of defined benefit plans

2,429(1,519)21,940¥ 3,117¥ (1,859)$ 28,155

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(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 341,000 shares valued at ¥289 million ($2,610 thousand)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.

42 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 43

08 Financial Instruments

Millions of yen

2020(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, a consolidated
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 to capital 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.
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 no important transaction risks. Credit
risk is the risk that, in the case of default of the other party, the relevant party would become incapable of benefiting from the effect that would haveobtained in the future if the transaction had continued. The Companies' derivative transaction partners are limited to financial institutions with highcredit 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 of transactions
requires the permission of the director responsible for the management of derivatives and the details of transactions are reported to the generalmanager 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.

The values on the consolidated balance sheets, market values and the differences between them are as follows. Financial instruments for which
apprehension of the market value is recognized to be extremely difficult are not included.
Millions of yen

Book 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¥ 52,530
85,210
7,710
308
(38)

¥ 52,530
85,210
7,710

270

264

Total assets¥ 145,720¥ 145,714¥(6)(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)¥ 52,971
18,40837,142
32,11978,516
19,136¥ 52,971
18,40836,371
31,52678,676
18,794

¥

–
–
(771)
(593)
160
(342)

Total liabilities¥ 238,292¥ 236,746¥ (1,546)

Derivatives *

¥

¥

¥

2

44 SENKO ANNUAL REPORT 2021

(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¥ 28,479
77,013
5,285
3,329
(128)

¥ 28,479
77,013
5,285

3,201

3,224

23

Total assets¥ 113,978¥ 114,001

23(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)¥ 47,545
15,091
17,12010,02070,001
17,587¥ 47,545
15,091
17,036
9,910
69,94917,200¥Total liabilities¥ 177,364¥ 176,731¥ (633)

Derivatives *

¥

¥

¥

2

33

¥

33

–
–
–

–
–
(84)
(110)
(52)
(387)

–

Thousands of U.S. dollars

2021

Book valueMarket 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$ 474,483
769,668
69,641
2,782(343)$ 474,483
769,668
69,641

2,439

2,385

Total assets$ 1,316,231(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)

Difference
$

–
–
–

$ 1,316,177

$

(54)

$ 478,466
166,272
335,490
290,118
709,204
172,848$ 478,466
166,272
328,525
284,762
710,649
169,760$––(6,965)(5,356)
1,445(3,088)

Total liabilities$ 2,152,398$ 2,138,434$ (13,964)

Derivatives *

$

$

$

2

524

524

(54)

–

*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.

(b) Market value of financial instruments

2021

Book value

58

58

¥

–
–
–

(6)

–

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 8”(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.
SENKO ANNUAL REPORT 2021 45

(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

09 Investment Securities
The carrying amounts of investment securities at March 31, 2021 and 2020, consisted of the following:

2021
Marketable securities
Non-marketable securities

See “Note 10”
Financial instruments for which it is extremely difficulty to determine market value

Thousands of
U.S. dollars

Millions of yen

2021
Unlisted shares2020¥ 9,688

2020

2021

¥ 7,710501¥ 5,285479$ 69,642
4,525¥ 8,211¥ 5,764$ 74,167

The following is a summary of marketable securities included in investment securities, at March 31, 2021 and 2020.
Millions of yen

2021¥ 12,378

Thousands of
U.S. dollars

Millions of yen$ 87,508

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.

2021
Equity security
Bond and Others(c) ‌Planned redemption amounts after the balance sheets date for monetary assets and investment securities withmaturity dates

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)¥ 3,531147¥ 4,084
5¥ 55
2¥ 7,560150¥ 3,678¥ 4,089¥ 57¥ 7,710
Millions of yen

Millions of yen

2021

Within 1 year

Over 1 year
Within 5 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¥ 52,530
84,239
–

¥

1
–
–
6

–
–
–
243

Total

¥ 136,776¥ 1,214

Within 1 year

Over 1 year
Within 5 years

Over 5 years
Within 10 years

–
971
–

¥

¥

Over 10 years

–
–
–

¥

–
–
–

–
–
–
8

–
–
–
51

8

¥ 51
Millions of yen

2020

¥

–
–
–

Over 5 years
Within 10 years¥

2020
Equity security
Bond and Others¥ 28,479
77,013
–

–
–
–

¥

–
–
–

–
–
–
89

–
–
–
1,803

–
–
–
1,217

–
–
–
220

Total

¥ 105,581¥ 1,803¥ 1,217¥ 220

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)¥ 3,337186¥ 2,191
–

¥ 401
28

¥ 5,127158¥ 3,523¥ 2,191¥ 429¥ 5,285

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)$ 31,894
1,328$ 36,890
45

$ 497
18

$ 68,287
1,355$ 33,222$ 36,935$ 515$ 69,642

Thousands of U.S. dollars

2021
Equity security
Bond and Others

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

Acquisition cost

10 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

Thousands of U.S. dollars

2021

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$ 474,483
760,897
–
9
–
–
54

–
–
–
2,195

Total

$ 1,235,443$ 10,966

46 SENKO ANNUAL REPORT 2021

–
8,771
–

$

–
–
–

2021
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Sell
U.S. dollar
Buy
U.S. dollar
Euro
Chinese yuan

–
–
–

–
–
–
72

–
–
–
461

72

$ 461

Total

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

Trade accounts receivable

¥

16

¥ –

¥ (0)

Trade accounts payable
Trade accounts payable
Trade accounts payable¥ 1,320
375
259

¥ –
–
–

¥ 41
6
12

¥ 1,970¥ –¥ 59

SENKO ANNUAL REPORT 2021 47

Millions of yen

2020
Hedge accounting method

Designated transactions forforward exchange contracts

Type of contracts
Forward exchange contracts
Sell
U.S. dollar
Buy
U.S. dollar
Euro
Chinese yuan
Danish krone
New Zealand dollar
British pound

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

¥

0

¥ –

¥

0

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable¥ 2,239
754
237
2
1
0

¥ –
–
–
–
–
–

¥ 37
(10)
(3)
0
0
0

¥ 3,233¥ –¥ 24

Thousands of U.S. dollars

2021
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Sell
U.S. dollar
Buy
U.S. dollar
Euro
Chinese yuan

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

Trade accounts receivable

$

145

$ –

$ (0)

Trade accounts payable
Trade accounts payable
Trade accounts payable$ 11,923
3,387
2,339

$ –
–
–

$ 370
54
108

$ 17,794

$ –

$ 532

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

Millions of yen

2021
Type of contracts

Exceptional accounting
Interest rate swap contracts
method for interest-rate swap Floating rate receivable/transactions
Fixed rate payable

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

2021¥ 81,629
169,355
77,661
10,384
6,484
20,026¥ 61,669
145,107
67,912
9,334
6,294
19,245$ 737,323
1,529,717
701,481
93,79558,567
180,887¥ 365,539¥ 309,561$ 3,301,770

Item hedged

Long-term debt

Contract
amounts¥ 6,700

Over 1 year out ofcontract amounts¥ 6,000

Market value¥–

2021
0.25% to 1.62% unsecured loans from banks

Thousands of
U.S. dollars

Item hedged

Long-term debt

Contract
amounts¥ 17,000

Over 1 year out ofcontract amounts¥ 6,700

Market value

¥–

2020

¥ 18,408

0.50% bond due 2021
0.10% bond due 2022
0.48% bond due 2027
0.34% bond due 2025
0.06% bond due 2030
0.26% bond due 2021
Convertible bond due 2022
Convertible bond due 2025
0.21% to 2.78% loans from banks and insurance companies:
Unsecured¥$ 166,272

Thousands of
U.S. dollars

Millions of yen

2021

2021

¥ 15,091

At March 31, 2021 and 2020, long-term debt consisted of the following:

Millions of yen

Interest rate swap contracts
Exceptional accounting
method for interest-rate swap Floating rate receivable/transactions
Fixed rate payable

2020

At March 31, 2021 and 2020, short-term loans consisted of the following:2020
Type of contracts

2021

12 Short-term Loans and Long-term Debt

Less current portion

Hedge accounting method

Thousands of
U.S. dollars

Millions of yen

Total

Hedge accounting method

At March 31, 2021 and 2020, property and equipment at cost consisted of the following:
Millions of yen

Trade accounts receivable

Total

11 Property and Equipment

2020

2021

7,000
72
10,00010,00010,00070
10,01022,109¥ 7,000
120
10,000–––10,020–$63,228650
90,32690,32690,326632
90,416
199,70378,51670,001

709,205

147,777(20,756)

97,141(14,210)

1,334,812(187,481)¥ 127,021¥ 82,931$ 1,147,331

On March 28, 2017, the Company issued ¥10,050 million ($90,778 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 ($8.40) per share.
On March 18, 2021, the Company issued ¥22,110 million ($199,710 thousand) of zero coupon convertible bond with stock acquisition rights due in
2025. The stock acquisition rights are exercisable during the period from March 4, 2025 at a conversion price of ¥1,218 ($11.00) per share.
The annual maturities of long-term debt at March 31, 2021 are as follows:

Thousands of U.S. dollars

2021
Hedge accounting method

Type of contracts

Interest rate swap contracts
Exceptional accounting
method for interest-rate swap Floating rate receivable/transactions
Fixed rate payable

Item hedged

Long-term debt

Contract
amounts$ 60,518

Over 1 year out ofcontract amounts$ 54,169

Market value$–

Year ending March 31

2022
2023
2024
2025
2026
There after

Millions of yen¥ 20,756
11,322
10,06933,467
20,16951,994

Thousands of
U.S. dollars$ 187,481
102,267
90,949302,294
182,179
469,641

At March 31, 2021, the Company has committed line and overdraft contracts with 32 banks aggregating ¥79,035 million ($713,892 thousand).
Of the total credit limit, ¥18,088 million ($163,382 thousand) was used as the above short-term and long-term borrowing, and the rest ¥60,947 million($550,510 thousand) was unused.

48 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 49

13

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:

Retirement Benefits

Millions of yen

2021(1) Defined benefit plana. Table for adjusting benefits obligation at the beginning and end of the year

2021

Recognized actuarial differences

Thousands of
U.S. dollars

Millions of yen

2020

Benefits obligation at the beginning of the year
Service cost
Interest costAccrued actuarial differences
Retirement benefits paid
Decrease on termination of retirement benefit plan
Increase due to change of consolidated subsidiary
Others¥ 24,589
1,037
53
1,342
(1,936)–824(90)¥ 25,439
1,076
55
137
(1,814)
(277)
–
(27)

$ 222,103
9,367
479
12,122(17,488)
–
7,443
(813)

Benefits obligation at the end of the year

¥ 25,819¥ 24,589$ 233,213

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

2021

2020

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

¥ 19,623
491
4,240
572
(739)

¥ 21,557
539(2,373)578(678)$ 177,247
4,435
38,298
5,167(6,675)

Fair value of plan assets at the end of the year

¥ 24,187¥ 19,623$ 218,472

Millions of yen

2021

2020

Thousands of
U.S. dollars$ 174,022(218,471)

Benefits obligation under the unfunded benefit plan

(4,921)
6,554

(653)
5,619

(44,449)
59,200Net amounts of assets and liabilities on the consolidated balance sheets

1,633

4,966

14,751

Net defined benefit assets
Net defined benefit liabilities

5,471
7,104

2,094
7,060

49,41764,168¥ 1,633¥ 4,966

14,7512020¥ 1,037
53
(491)
571

¥ 1,076
55
(539)
340

$

9,367
479
(4,436)
5,158

Retirement benefit costs for the defined benefit plan

¥ 1,170¥$

10,56850 SENKO ANNUAL REPORT 2021–

2021
Unrecognized actuarial differences

¥

Total

2020

Thousands of
U.S. dollars

2021

(147)

¥ (3,617)$ (1,328)(147)(3,617)(1,328)

2020

Bonds
StocksOthers

24%
56%
20%

28%
51%
21%

Total

100%

100%

Note 40% and 45% of total pension assets are in a “Retirements Benefit Trust” for the defined benefit pension plans as of March 31, 2021 and 2020, 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.

Discount rate
Defined benefit pension plans
Retirements lump-sum plans
Expected rate of return on plan assets

2020

0.44%
0.21%
2.50%

(2) Defined contribution plan

Thousands of
U.S. dollars

Millions of yen

2021
Contributions to defined contribution plan by the Company and its consolidated subsidiaries

0.31%
0.14%
2.50%

¥1,130

2020
¥ 980

2021
$10,207

2021

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial differences

Gain on termination of retirement benefit plan

Millions of yen

Thousands of
U.S. dollars

Millions of yen

2021

31,3432021¥ 18,970(19,623)d. Breakdown of retirement benefit costs(2,184)h. Items concerning the essential basis for actuarial calculation¥ 19,266(24,187)$

3,470

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:

2021

Benefits obligation under the funded benefit plan
Fair value of plan assets

Net amounts of assets and liabilities on the consolidated balance sheets$ 31,343

2021

2021

c. ‌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¥ (2,184)

g. Items concerning plan assets(i) Main items of plan assets

Thousands of
U.S. dollars

Millions of yen

2021¥ 3,470

Total

2021

2020

Thousands of
U.S. dollars

932
(46)

–

SENKO ANNUAL REPORT 2021 51

14 Pledged Assets

17 Stock Option Plans

The following assets were pledged as collateral as at March 31, 2021 and 2020.

2021
Land
Buildings
Structures
Ship
OthersFixed mortgages

Thousands of
U.S. dollars

Millions of yen

2020(1) Description of stock options

2021¥ 5,724
2,455
–
1,149
10

¥ 3,904
1,650
20
1,249
10

$ 51,703
22,175–
10,37890¥ 9,338¥ 6,833¥ 2,600¥–

Millions of yen

2021

2020

Long-term debt, including current portion¥ 4,188

Short-term debt, including current portion

¥

180

2021
Guarantees of some obligations
Buyback obligations associated with securitization of receivables
Recourse obligation associated with securitization of guarantee deposits
Trade notes endorsed¥

July 21, 2007-June 30, 2027

$ 84,346

2007 Stock options (2nd)

9 operating officers

18,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007-June 30, 2027

$ 23,485

2008 Stock options (4th)

10 directors
3 auditors

71,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008-June 30, 2028

2008 Stock options (5th)

10 operating officers

22,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008-June 30, 2028

Thousands of
U.S. dollars

2009 Stock options (6th)

11 directors
4 auditors

74,000 shares

July 1, 2009¥1

Common stock

July 2, 2009-June 30, 2029

2021

2009 Stock options (7th)

12 operating officers

27,000 shares

July 1, 2009¥1

Common stock

July 2, 2009-June 30, 2029

2010 Stock options (8th)

11 directors
4 auditors

90,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010-June 30, 2030

2010 Stock options (9th)

13 operating officers
13 assistant directors

42,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010-June 30, 2040

2011 Stock options (10th)

12 directors
4 auditors

102,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011-June 30, 2031

2011 Stock options (11th)

15 operating officers
20 assistant directors

96,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011-June 30, 2041

2012 Stock options (12th)

12 directors
4 auditors

107,000 shares

July 2, 2012¥1

Common stock

July 3, 2012-June 30, 2032

2012 Stock options (13th)

16 operating officers
22 assistant directors

92,000 shares

July 2, 2012¥1

Common stock

July 3, 2012-June 30, 2042

2013 Stock options (15th)

12 directors
4 auditors

71,000 shares

July 1, 2013

¥1

Common stock

July 2, 2013-June 30, 2033

2013 Stock options (16th)

18 operating officers
26 assistant directors

82,000 shares

July 1, 2013

¥1

Common stock

July 2, 2013-June 30, 2043

2014 Stock options (18th)

12 directors
4 auditors

56,000 shares

July 1, 2014

¥1

Common stock

July 2, 2014-June 30, 2034

2014 Stock options (19th)

18 operating officers
32 assistant directors

74,000 shares

July 1, 2014

¥1

Common stock

July 2, 2014-June 30, 2044

2015 Stock options (20th)

12 directors
4 auditors

52,000 shares

July 1, 2015

¥1

Common stock

July 2, 2015-June 30, 2035

2015 Stock options (21st)

20 operating officers
30 assistant directors¥

16

60,000 shares

July 1, 2015

¥1

Common stock

July 2, 2015-June 30, 2045

2016 Stock options (22nd)

10 directors
4 auditors

35,000 shares

July 1, 2016

¥1

Common stock

July 2, 2016-June 30, 2036

2016 Stock options (23rd)

23 operating officers
15 assistant directors

43,000 shares

July 1, 2016

¥1

Common stock

July 2, 2016-June 30, 2046

2017 Stock options (25th)

6 directors
4 auditors

21,000 shares

July 3, 2017¥1

Common stock

July 4, 2017-June 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, 2017-June 30, 2047

2018 Stock options (27th)

7 directors
4 auditors

19,000 shares

July 2, 2018

¥1

Common stock

July 3, 2018-June 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, 2018-June 30, 2048

2019 Stock options (29th)

10 directors
3 auditors

24,000 shares

July 1, 2019¥1

Common stock

July 2, 2019-June 30, 2039

2019 Stock options (30th)

5 operating officers
3 assistant directors
6 executives of the subsidiaries
18 operating officers of the subsidiaries
21 assistant directors of the subsidiaries

60,000 shares

July 1, 2019¥1

Common stock

July 2, 2019-June 30, 2049

Thousands of
U.S. dollars

¥

469

¥

2021
77
448
25
94

$

–
3,197
226
813

644

$ 4,236

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, 2021, included the Company’s legal reserve of¥1,506 million ($13,603 thousand).

52 SENKO ANNUAL REPORT 2021

Exercise period

Common stock$ 1,626

–
354
25
90

Option price
Shares with
per warrant warrants granted
¥1

¥

2020

Date of
grant
July 20, 2007

$ 37,829

Millions of yen

Number ofshares withwarrants granted
61,000 shares

15 Contingent Liabilities
At March 31, 2021 and 2020, contingent liabilities were as follows:

Grantees
10 directors
3 auditors¥ 4,954–

Stock option
2007 Stock options (1st)

The maximum value of fixed mortgages in relation to said assets for the fiscal year ended March 31, 2021, was ¥2,600 million ($23,485 thousand).
Obligations which were secured on the above assets were as follows:

The stock option plans of the Company approved by the shareholders in accordance with the Japan Companies Act at March 31, 2021 were as follows:

SENKO ANNUAL REPORT 2021 53

(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, 2021. 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,
2020

GrantedForfeited

VestedShare subscription rights which have already been vested (shares):

At March 31, At March 31,
2021
2020

VestedExercised

Forfeited

At March 31,
2021

2007 Stock options (1st)

–

–

–

–

–

19,000

–

3,000

–

16,0002007 Stock options (2nd)

–

–

–

–

–

4,000

–

–

–

4,000

2008 Stock options (4th)

–

–

–

–

–

22,000

–

5,000

–

17,0002008 Stock options (5th)

–

–

–

–

–

4,000

–

–

–

4,000

18 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, 2021 and 30.6 % for the years ended March 31, 2020.
(1) Significant components of deferred tax assets and liabilities at March 31, 2021 and 2020 were as follows:

Thousands of
U.S. dollars

Millions of yen

2021

2020

2021

Deferred tax assets:¥ 2,338¥ 3,214

Accrued bonuses to employees

2,377

2,035

21,471

Loss carry forward *1

1,457

469

13,161

Net defined benefit liabilities$ 21,1182009 Stock options (6th)

–

–

–

–

–

25,000

–

4,000

–

21,000

Impairment losses

1,624

691

14,6692009 Stock options (7th)

–

–

–

–

–

15,000–––15,000Accrued enterprise tax

407

301

3,676

2010 Stock options (8th)

–

–

–

–

–

29,000

–

4,000

–

25,000Social insurance premium

335

297

3,026

Asset retirement obligations

282

363

2,547

2010 Stock options (9th)

–

–

–

–

–

24,000

–

2,000

–

22,000Loss on revaluation of golf club membership

117

115

1,057

2011 Stock options (10th)

–

–

–

–

–

41,000

–

5,000

–

36,000

Other

1,726

1,749

15,5902011 Stock options (11th)

–

–

–

–

–

66,000

–

6,000

–

60,000Gross deferred tax assets

10,663

9,234

96,3152012 Stock options (12th)

–

–

–

–

–

43,000

–

6,000

–

37,000

Valuation allowance relating to carry-forward of unused tax losses *2

(942)

(187)

(8,509)2012 Stock options (13th)

–

–

–

–

–

71,000

–

6,000

–

65,000

Valuation allowance relating to total future deductible temporary differences, etc.

(1,955)(1,178)(17,659)

2013 Stock options (15th)

–

–

–

–

–

39,000–––39,000Less: valuation allowance *1(2,897)(1,365)(26,168)

2013 Stock options (16th)

–

–

–

–

–

67,000

–

5,000

–

62,000Total deferred tax assets

7,766

7,869

70,1472014 Stock options (18th)

–

–

–

–

–

32,000–––32,000

(732)

(733)

(6,612)

2014 Stock options (19th)

–

–

–

–

–

64,000

–

6,000

–

58,000Asset retirement obligations

(130)

(130)

(1,174)

Net unrealized holdings gain on other securities(1,231)(545)(11,119)2015 Stock options (20th)

–

–

–

–

–

37,000–––37,000Other(3,967)(767)(35,833)

2015 Stock options (21st)

–

–

–

–

–

56,000

–

3,000

–

53,000Gross deferred tax liabilities(6,060)(2,175)(54,738)2016 Stock options (22nd)

–

–

–

–

–

26,000–––26,000Net deferred tax assets¥ 1,706¥ 5,694$ 15,409

2016 Stock options (23rd)

–

–

–

–

–

38,000

–

2,000

–

36,0002017 Stock options (25th)

–

–

–

–

–

17,000–––17,0002017 Stock options (26th)

–

–

–

–

–

74,000

–

3,000

–

71,0002018 Stock options (27th)

–

–

–

–

–

16,000–––16,0002018 Stock options (28th)

–

–

–

–

–

82,000

–

3,000

–

79,0002019 Stock options (29th)

–

–

–

–

–

24,000–––24,0002019 Stock options (30th)

–

–

–

–

–

61,000

–

1,000

–

60,000

Deferred tax liabilities:
Reserve for reduction in costs of fixed assets*1 The main factor behind material changes in the amount deducted from deferred tax assets (valuation allowance) was the increase in the valuation allowance relating to carry-forward of unused tax losses.
*2 ‌Value of carry-forward of unused tax losses and related deferred tax assets by carry-forward expiration dateMillions of yen

Within 1 year

Over 1 year
Within 2 years

Over 2 years
Within 3 years

Over 3 years
Within 4 years

Over 4 years
Within 5 years

Over 5 years

Carry-forward of unused tax losses *3

¥ 21

¥ 34

¥ 29

¥ 18

¥ 84

¥ 1,271

Valuation allowance

21

34

29

–

75

783

942

Deferred tax assets

–

–

–

18

9

488

*4 5152021¥ 1,457

Millions of yen

2020
Carry-forward of unused tax losses *3

54 SENKO ANNUAL REPORT 2021

Total

Within 1 year

Over 1 year
Within 2 years

Over 2 years
Within 3 years

Over 3 years
Within 4 years

Over 4 years
Within 5 years

Over 5 years

¥8

¥1

¥7

¥8

¥ 27

¥ 418

Total
¥ 469

Valuation allowance

8

1

7

8

10

153

187

Deferred tax assets

–

–

–

–

17

265

*4 282

SENKO ANNUAL REPORT 2021 55

Thousands of U.S. dollars

2021

Over 1 year
Within 1 year
Within 2 years

Over 2 years
Within 3 years

Over 3 years
Within 4 years

Over 4 years
Within 5 years

Over 5 years

Total$ 13,161

Carry-forward of unused tax losses *3

$ 190

$ 307

$ 262

$ 163

$ 759

$ 11,480

Valuation allowance

190

307

262

–

678

7,072

8,509

Deferred tax assets

–

–

–

163

81

4,408

* 4,652
4*3 Carry-forward of unused tax losses is the amount shown after the application of the statutory effective tax rate.
*4 ‌Deferred tax assets are deemed recoverable because we believe there is a high probability that future taxable income will be generated.

19 Bussiness Combination Related
I. Terauchi Co., Ltd.
(1) Summary of business combinationa. Name and business details of acquired company
Name of the acquired company
Terauchi Co., Ltd. (“Terauchi”)
Business details
Membership-based wholesaler and retailer of ornaments, apparel, and miscellaneous goods, etc., as well as retail of miscellaneous daily goods(Changes in presentation)
Due to the increased importance in financial terms of carry-forward of unused tax losses in the fiscal year ended March 31, 2021, we have added
details in accordance with the notes (Note 8) to “Accounting Standard for Tax Effect Accounting” (excluding the total value of valuation allowances)and Note 9 of the same, set out in paragraphs 3 to 5 of ASBJ Statement No. 28 “Partial Amendments to Accounting Standard for Tax EffectAccounting” (February 16, 2018).
As a result, the -¥1,364 million ($12,320 thousand) shown for “Valuation allowance” in the previous fiscal year has been reclassified as “Valuation
allowance relating to carry-forward of unused tax losses” of -¥186 million ($1,680 thousand), and “Valuation allowance relating to total future
deductible temporary differences, etc.” of -¥1,177 million (-$10,631 thousand).

b. Reason for carrying out the business combination
We believe that making Terauchi part of the Group will generate a variety of synergies, such as offering services provided by the Living Support
business to Terauchi’s members, including nursing homes, nursing care, and day care, as well as providing the extensive range of products
handled by Terauchi to employees and customers of the Senko Group.

Due to its rising importance in financial terms, “Retained earnings at overseas subsidiaries,” which was included in the “Other” section of deferred tax
liabilities for the previous fiscal year, has been broken out as a separate item for the fiscal year ended March 31, 2021. In order to reflect thesechanges, the notes to the consolidated financial statements for the previous consolidated fiscal year have been reclassified.
As a result, the -¥336 million (-$3,035 thousand) shown for the “Other” section of deferred tax liabilities in the previous fiscal year has been
reclassified as “Retained earnings at overseas subsidiaries” of -¥130 million (-$1,174 thousand), and “Other” of -¥206 million (-$1,861 thousand).

e. Name of the controlling entity after the business combination
The name remains unchanged.

Due to its declining importance in financial terms, “Loss on valuation of shares of subsidiaries and associates,” which was broken out as a separate
item for the previous fiscal year, is included in the “Other” section of deferred tax assets for the fiscal year ended March 31, 2021. In order to reflect
these changes, the consolidated financial statements for the previous consolidated fiscal year have been reclassified.
As a result, the ¥298 million ($2,692 thousand) shown as a “Loss on valuation of shares of subsidiaries and associates” in deferred tax assets in theprevious fiscal year has been included in the “Other” total of ¥1,748 million ($15,789 thousand) under deferred tax assets.
(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, 2021 and 2020 were as follows:

2021
Statutory tax rate

2020

30.6%

30.6%

Non-deductible expenses

1.3

1.9

Inhabitants’ per capita taxes

1.3

1.5

Non-taxable dividends income

(0.6)

(1.7)

Changes in valuation allowance

6.8

0.1

Negative goodwill

(6.1)

–

Other

1.6

3.8

34.9%

36.2%

Adjustment:

Income tax rate as a percentage of income before income taxes and non-controlling interests(Changes in presentation)
Due to its reduced importance in financial terms, “Special income tax deductions,” which was broken out as a separate item for the previous fiscal year,
is included in “Other” for the fiscal year ended March 31, 2021. In order to reflect these changes, the consolidated financial statements for the previous
fiscal year have been reclassified.
As a result, the -0.0% shown for “Special income tax deductions” in the previous fiscal year has been reclassified as 3.8% in “Other.”c. Date of business combination
November 30, 2020 (Deemed acquisition date: December 31, 2020)
d. Legal form of the business combination
Stock acquisition

f. Ratio of voting rights acquired
100.0%
g. Main reason for the decision to acquire the company
As the payment of the consideration was designated in cash, it was decided that the Company would be the acquirer, paying the relevant
consideration in cash.

(2) Period of the acquired company’s financial results included in the consolidated statements of income
From January 1, 2021 to March 31, 2021

(3) Acquisition cost of the acquired company and breakdown
Consideration for the acquisition
Details and amount of main expenses related to the acquisition

Cash
Advisory remuneration/fees, etc.

Acquisition cost

Millions of yen

Thousands of U.S. dollars¥ 7,000
20$ 63,228181¥ 7,020$ 63,409(4) Amount of gain on bargain purchase and cause of occurrencea. Amount of gain on bargain purchase¥3,311 million ($29,907 thousand)b. Cause of occurrence
Because the acquisition cost was lower than the market value of net assets at the time of the combination, the difference was recognized as again on bargain purchase.

(5) Amounts of assets and liabilities acquired on the day of the business combination, and breakdown
Millions of yen

Thousands of U.S. dollars

Current assets
Non-current assets¥ 5,776
8,205$ 52,172
74,113

Total assets¥13,981$126,285

Current liabilities
Long-term liabilities¥ 1,6022,069$ 14,471
18,688

Total liabilities¥ 3,671$ 33,159(6) ‌Rough estimate of the impact on consolidated financial statements for the fiscal year ended March 31, 2021, and thecalculation method used for the estimate, assuming that the business combination had been completed on the firstday of the consolidated fiscal year
Because the calculation of a rough estimate for the fiscal year ended March 31, 2021, is difficult, it is not presented here.

56 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 57

II. UACJ Logistics Corporation(1) Summary of business combination(6) ‌Rough estimate of the impact on consolidated financial statements for the fiscal year ended March 31, 2021, and thecalculation method used for the estimate, assuming that the business combination had been completed on the firstday of the consolidated fiscal year

a. Name and business details of acquired company
Name of the acquired company
UACJ Logistics Corporation (“UACJ Logistics”)
Business details
Transportation, materials sales, maintenance, warehousing

Millions of yen

b. Reason for carrying out the business combination
The Company believes that by making UACJ Logistics a subsidiary, it will be able to collaborate further with Senko A Line Amano Co., Ltd., which
specializes in heavy cargo transportation, to expand the business and improve productivity, while securing and strengthening the transportation
capabilities of the Group and increasing transactions with UACJ Group.
c. Date of business combination
December 1, 2020 (Deemed acquisition date: December 31, 2020)¥ 9,489
423
433
442
200

$ 85,710
3,821
3,911
3,992
1,807

yen

Net income per share¥

U.S. dollars

1

$

0

(Calculation method used for rough estimate)d. Legal form of the business combination
Stock acquisition

The rough estimate of the impact is deemed to be represented by the operating revenue and profit and loss information calculated on theassumption that the business combination was completed on the first day of the fiscal year.
No audit certification has been received for this rough estimate.

e. Name of the controlling entity after the business combination
The name remains unchanged.
f. Ratio of voting rights acquired
66.7%

III. Nagase Logistics Co., Ltd.
(1) Summary of business combination

g. Main reason for the decision to acquire the company
The Company acquired 66.7% of the voting rights of said company by offering cash for the shares.

a. Name and business details of acquired company
Name of the acquired company
Nagase Logistics Co., Ltd.(“Nagase Logistics”)
Business details
Warehousing, consigned freight forwarding, etc.

(2) Period of the acquired company’s financial results included in the consolidated statements of income
From January 1, 2021 to March 31, 2021

(3) Acquisition cost of the acquired company and breakdown
Millions of yen

Consideration for the acquisition
Details and amount of main expenses related to the acquisition

Operating revenues
Operating income
Ordinary income
Income before income taxes
Net income

Thousands of U.S. dollars

Cash
Advisory remuneration/fees, etc.

Acquisition costThousands of U.S. dollars¥ 3,10223$ 28,019
208¥ 3,125$ 28,227b. Reason for carrying out the business combination
By making Nagase Logistics part of the Group, the Company seeks to strengthen its structure for storing and transporting chemical products,
leading to further growth for existing businesses. The Company believes that by building relationships with the NAGASE Group, which isdeveloping its business in Japan and overseas, it can enhance its presence in the chemical distributions industry and expand its trade area.
c. Date of business combination
December 1, 2020 (Deemed acquisition date: December 31, 2020)
d. Legal form of the business combination
Stock acquisition(4) Goodwill, reason for recognizing goodwill, amortization method and amortization perioda. Amount of goodwill¥2,237 million ($20,206 thousand)e. Name of the controlling entity after the business combination
Senko Nagase Logistics Co., Ltd.

b. Reason for recognizing goodwill
Goodwill is attributable mainly to the excess earnings power expected from UACJ Logistics’s business.

f. Ratio of voting rights acquired
85.0%

c. Method and period of amortization of goodwill
Straight-line method over 10 years.

g. Main reason for the decision to acquire the company
The Company acquired 85.0% of the voting rights of said company by offering cash for the shares.

(5) Amounts of assets and liabilities acquired on the day of the business combination, and breakdown
Millions of yen

Thousands of U.S. dollars

Current assets
Non-current assets¥ 2,851642$ 25,752
5,799

Total assets¥ 3,493$ 31,551

Current liabilities
Long-term liabilities¥ 2,086111$ 18,842
1,003

Total liabilities¥ 2,197$ 19,845(2) Period of the acquired company’s financial results included in the consolidated statements of income
From January 1, 2021 to March 31, 2021

(3) Acquisition cost of the acquired company and breakdown
Millions of yen

Consideration for the acquisition
Details and amount of main expenses related to the acquisition

Cash
Advisory remuneration/fees, etc.

Acquisition costThousands of U.S. dollars¥ 1,81015$ 16,350135¥ 1,825$ 16,485(4) Amount of gain on bargain purchase and cause of occurrencea. Amount of gain on bargain purchase¥151 million ($1,364thousand)b. Cause of occurrence
Because the acquisition cost was lower than the market value of net assets at the time of the combination, the difference was recognized as again on bargain purchase.

58 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 59

(5) Amounts of assets and liabilities acquired on the day of the business combination, and breakdown
Millions of yen(3) Acquisition cost of the acquired company and breakdown
Thousands of U.S. dollars

Millions of yen

Current assets
Non-current assets

¥

530
4,690

$ 4,787
42,363

Consideration for the acquisition
Details and amount of main expenses related to the acquisition

Total assets¥ 5,220$ 47,150

Acquisition cost

Current liabilities
Long-term liabilities¥ 2,073840$ 18,725
7,587(4) Amount of gain on bargain purchase and cause of occurrence

Total liabilities¥ 2,913$ 26,312(6) ‌Rough estimate of the impact on consolidated financial statements for the fiscal year ended March 31, 2021, and thecalculation method used for the estimate, assuming that the business combination had been completed on the firstday of the consolidated fiscal year
Because the calculation of a rough estimate for the fiscal year ended March 31, 2021, is difficult, it is not presented here.
Millions of yen

Operating revenues
Operating income
Ordinary income
Income before income taxes
Net income

Thousands of U.S. dollars¥ 2,052
46
59
55
33
yen

Net income per share¥$ 18,535
415
533
497
298
U.S. dollars

0

$

0

(Calculation method used for rough estimate)
The rough estimate of the impact is deemed to be represented by the operating revenue and profit and loss information calculated on theassumption that the business combination was completed on the first day of the fiscal year.
No audit certification has been received for this rough estimate.

IV. AZFIT Co., Ltd.
(1) Summary of business combinationa. Name and business details of acquired company
Name of the acquired company
AZFIT Co., Ltd. (“AZFIT”)
Business details
Wholesaling, planning and sales of household paper, miscellaneous daily goods, and office products
b. Reason for carrying out the business combination
By making AZFIT part of the Group, the Company aims to generate synergies by enabling AZFIT and Group company AST CORPORATION, whichis engaged in similar household paper wholesale operations, to enhance their product development capability and price competitiveness throughthe sharing of management resources and know-how, as well as strengthening the business platform by opening up sales routes, etc. Furthermore,
we will seek to enhance earnings capacity by using the Group’s logistics know-how to make the logistics operations more efficient.
c. Date of business combination
February 2, 2021 (Deemed acquisition date: March 31, 2021)
d. Legal form of the business combination
Stock acquisitione. Name of the controlling entity after the business combination
The name remains unchanged.
f. Ratio of voting rights acquired
80.0%
g. Main reason for the decision to acquire the company
The Company acquired 80.0% of the voting rights of said company by offering cash for the shares.

(2) Period of the acquired company’s financial results included in the consolidated statements of income
The company’s date of acquisition is deemed to be March 31, 2021, and because the financial statements are for the period ended March 31,
which is the account settlement date of the acquired company, the performance of the acquired company is not included.

Cash
Advisory remuneration/fees, etc.

Thousands of U.S. dollars¥ 2,32029$ 20,956
262¥ 2,349$ 21,218

a. Amount of gain on bargain purchase¥989 million ($8,933thousand)b. Cause of occurrence
Because the acquisition cost was lower than the market value of net assets at the time of the combination, the difference was recognized as a gain
on bargain purchase.

(5) Amounts of assets and liabilities acquired on the day of the business combination, and breakdown
Millions of yen

Thousands of U.S. dollars

Current assets
Non-current assets¥ 5,647
3,476$ 51,007
31,397

Total assets¥ 9,123$ 82,404

Current liabilities
Long-term liabilities¥ 2,515
2,473$ 22,717
22,338

Total liabilities¥ 4,988$ 45,055(6) ‌Rough estimate of the impact on consolidated financial statements for the fiscal year ended March 31, 2021, and thecalculation method used for the estimate, assuming that the business combination had been completed on the firstday of the consolidated fiscal year
Because the calculation of a rough estimate for the fiscal year ended March 31, 2021, is difficult, it is not presented here.

20 Asset Retirement Obligations
1. Asset retirement obligations recorded in the consolidated balance sheetsa. 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 1 to 30 years and a discount rate
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

2021

2020

2021

Balance at the beginning of the term
Increase due to acquisition of a consolidated subsidiary
Increase due to acquisition of fixed assets
Increase in amount as a result of changes in accounting estimates (related to asset retirement obligations)
Reconciliation associated with the passage of time
Decrease due to settlement
Decrease caused by lapse of performance obligations for asset retirement obligations¥ 1,145
3
86
–
13
(9)
(369)

¥ 1,011
–
159
1
14
(40)
–

$ 10,342
27
777
–
117
(81)
(3,333)

Balance at the end of the term¥

¥ 1,145$ 7,849869

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 theleased 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.

60 SENKO ANNUAL REPORT 2021

SENKO ANNUAL REPORT 2021 61

21(1) Products and Services Information
Information for specific products and services is not shown because the same information is in the segment information.

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 living support, food service and outsourcing 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(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

2021
Distribution

Trading &Commerce

Others

Total

Operating revenues:
Customers
Intersegment¥ 387,350
4,580¥ 161,820
11,684¥ 23,235
10,060¥ 572,405
26,324

Total operating revenues

391,930

173,504

33,295

Segment income (loss)

19,402

3,036

Segment assets

318,064

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

15,050262
26,438Adjustments andeliminations

Consolidated

Millions of yen

2021

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce

OthersAdjustments andeliminations

Consolidated

¥

¥

¥

¥

¥

431
6,854

150
1,609

217
2,227

–
–

798
10,690Millions of yen¥–(26,324)¥ 572,405–

598,729(26,324)

572,405(62)

22,376(856)

21,52065,64644,196427,906

7,355

435,261

232
–
743

1,131
2,791
10,836

16,413
3,053
38,017

1,007
–
1,351

17,4203,053
39,3682020

Amortization of goodwill
Balance at the end of period

2020
Distribution

Others

Total

Operating revenues:
Customers
Intersegment¥ 392,727
2,510¥ 161,315
12,033¥ 15,988
9,797¥ 570,030
24,340Total operating revenues

395,237

173,348

25,785

Segment income (loss)

17,8482,120

Segment assets

278,028

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

13,436
183
22,693Adjustments andeliminations¥

Consolidated–(24,340)¥ 570,030–

594,370(24,340)

570,030

1,419

21,387(730)

20,65750,40918,908347,3458,964

356,309

262
–
288

873
28
1,812

14,571
211
24,793

994
–
2,319

15,565
211
27,112OthersAdjustments andeliminations

Consolidated

¥

¥

¥

¥

¥

395
4,723

150
1,759

160
1,281

–
–

705
7,763

Thousands of U.S. dollars

2021

Millions of yen

Trading &Commerce

Distribution

Trading &Commerce

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce$3,893
61,909$1,355
14,533

Others$1,96020,116

Adjustments andeliminations$––

Consolidated$7,20896,558(Gain on bargain purchase by reporting segment)
In the Logistics segment, there was a gain on bargain purchase arising primarily from the acquisition of shares in Senko Nagase Logistics Co., Ltd.
The gain on bargain purchase recorded for the fiscal year ended March 31, 2021, as a result of this event was ¥151 million ($13,644 thousand).
In the Trading & Commerce segment, there was a gain on bargain purchase arising primarily from the acquisition of shares in AZFIT Co., Ltd. The
gain on bargain purchase recorded for the fiscal year ended March 31, 2021, as a result of this event was ¥989 million ($8,933 thousand).
In the Others segment, there was a gain on bargain purchase arising primarily from the acquisition of shares in Terauchi Co., Ltd. The gain on
bargain purchase recorded for the fiscal year ended March 31, 2021, as a result of this event was ¥3,311 million ($29,907 thousand).
Furthermore, because the gains on bargain purchase are part of extraordinary income, they are not included in the profits of the above segments.

Thousands of U.S. dollars

2021

Operating revenues:
Customers
Intersegment
Total operating revenues

Distribution

Trading &Commerce

OthersTotal$ 3,498,780
41,369$ 1,461,657
105,537$ 209,873
90,868$ 5,170,310
237,774

3,540,149

1,567,194

300,741

5,408,084

Adjustments andeliminations$

Consolidated–(237,774)$ 5,170,310–(237,774)

5,170,310

Segment income (loss)

175,251

27,423(560)

202,114(7,732)

194,382

Segment assets

2,872,947

592,955

399,205

3,865,107

66,435

3,931,542

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

135,940
2,366
238,804

2,096
–
6,711

10,21625,21097,877148,252
27,576343,392

9,096–
12,203

157,348
27,576355,595

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Stock Information

Corporate Data

Stock Information (As of March 31, 2021)

Corporate Data (As of March 31, 2021)

Stock ListingFirst Section of the Tokyo Stock Exchange

Trade NameSENKO Group Holdings Co., Ltd.

Stock Code9069

Capital26,564 million yen

Authorized Shares

294,999,000

Established

September 1916

Outstanding Shares

152,952,221

Incorporated

July 1946

Number of Shareholders

8,567

Head Office

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

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

Representative

Yasuhisa Fukuda, President and Representative Director

Group Employees

19,755Fleet of Own Trucks

7,538 (including trailers)

Vessels

69

Total Warehouse Space

3,920,000 m2

Type of Shareholder

Major Shareholders
Number of
Shares(thousands)

Percentage
Held

Treasury stock

Financial institutions

4,073,498

58,384,442

Individuals and others

Custody Bank of Japan

21,44014.40%

Asahi Kasei Corporation

11,676

7.84%

The Master Trust Bank of Japan, Ltd.

10,921

7.34%

Sekisui Chemical Co., Ltd.

6,785
6,521

Mitsubishi UFJ Trust and Banking
Corporation

4,252

2.86%

Isuzu Motors Ltd.

4,039

2.71%

4.38%

Total

19.16% 152,952,221
sharesOverseas financial
institutions
and individuals

29,330,278

3,638

24.41%

1.20%

Other domestic corporations

Securities firms

37,328,586

1,829,404

Main Group Companies● Domestic● Overseas

SENKO Co., Ltd.

DALIAN TRI-ENTERPRISE LOGISTICS CO., LTD.

Runtec Corporation

SHANGHAI SENKO INTERNATIONAL FREIGHT FORWARDING INC.

Tokyo Nohin Daiko Co., Ltd.

GUANGZHOU SENKO LOGISTICS CO., LTD.

Senko A Line Amano Co., Ltd.

Senko International Logistics Pte. Ltd.

NIPPON MARINE CO., LTD.

SHANGHAI SMILE CORP.

ACROSS TRANSPORT CO., LTD.

HONG KONG SMILE CORP LIMITEDSENKO SHOJI CO., LTD.

KOREA SMILE CORP LIMITED

SMILE CORP.

SMILE CORP VIETNAM CO., LTD

2.44%

Japan Post Insurance Co., Ltd.

3,620

2.43%

Tokio Marine & Nichido Fire
Insurance Co., Ltd.

3,439

2.31%

72 SENKO ANNUAL REPORT 2021

2.66%
14.39%
38.16%

4.56%

Senko Group Employee’s
Stockholding

JP Morgan Chase Bank

22,006,013

AST CORPORATIONSENKO ANNUAL REPORT 2021 73

Shiomi SIF Bldg., 2-8-10 Shiomi, Koto-ku, Tokyo Japan
https://www.senkogrouphd.co.jp/en/
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