Profile

Seino
Ltd.
(“the
Company”)
began
SeinoHoldings
HoldingsCo.,
Co.,
Ltd.
(“the
Company”)
beganbusinessasasa atrucking
trucking
company
in 1930
businesscompany
in 1930
andandwaswasincorporatedinin1946.
1946.
Based
of Ogaki,incorporated
Based
in in
thethecitycityof Ogaki,
GifuGifu
Prefecture, we are a leading trucking company, expanding
Prefecture, we are a leading trucking company, expanding inin step with the growth of the Japanese economy and thestepwith the growthof the Japanese
economyand thedevelopmentof the nation’s
extensive
expressway
network.
development
nation’s
extensive expressway
On
On October of
1, the2005,
the Company
transferred network.
its
October
1,
2005,
the
Companytransferreditstransportationtransportation business and other operations to a newcompany—which
has taken thename Seino hasbusinessand other operations
to a original
new company—which
Transportation
Ltd.—andwas renamedCo.,
Seino
taken
the originalCo.,
name
Seino Transportation
Ltd.—andHoldings Co., Ltd. a pure holding company structure.
was renamed Seino Holdings Co., Ltd., adopting a pure holding
company
company structure.
Seino Holdings, 58 consolidated subsidiaries and 14
The SeinoGroup
consistsof the pureholdingaffiliates
engagedin currently
transportation
services,
vehiclesales,
company
Seino
Holdings,
70
consolidated
subsidiaries
21
merchandise sales, leasing for real estate services and andotherservices.
affiliates engaged in transportation services, vehicle sales,
In its mainstay
Servicesbusiness,themerchandise
sales, Transportationleasing for real estateservicesand other
Company has taken steps to build even more convenientservices.
logistics systems, all the while adhering to its “customer-first”
In its mainstay
Transportation
business,
the Company
principle.
As of March
31, 2011,Services
Seino offers
efficienthas taken steps services
to build throughout
even more convenientsystems, alltransportation
Japan via logistics
its 634 domestic
the
while
adhering
toits“customer-first”
principle.
As
of
March
terminals, a fleet of 24,321 trucks and a trucking networkthat
averagesdaily. Overseas,
Seino services
has transferredits
31, 2017,5,000
Seino routes
offers efficienttransportation
throughout
international
forwarding
Schenker-Seino
Co.,
Japan via its 667
domestic operations
terminals, ato
fleetof 24,214 trucks
and aLtd., a joint venture established with Schenker AG intrucking network that averages 4,000 routes daily. In addition,
making Kanto Transportation
Co., toLtd.
a consolidated
subsidiary,Company aims
bolsterits
a logistics networkcompetitivenessusing ordinary, chilled,
and freezingby optimizing
the synergies
temperatures is available.
of Seino’s domestic transportation network
andisSchenker’s
networkandservices
The Seino Group
committedglobal
to providing
rapid
cutting-edge
IT systems.
that deliver total customer
satisfaction
and will proceed down
the “Road to Success” to become aproviding rapid services that deliver total
highly profitablecompany
customer satisfaction
and will
proceedthroughdown
initiatives
the “Road to
Success”totodevelop
becomea aprogressive
highlybusiness model
thatwill become
profitable company
throughinitiatives
todevelop a progressive
businessmodel thatthe standard
for next-generation
will becometransportation
the standard business.
forContents
Contents
Financial Highlights
Financial
Highlights

11

To OurFriendsTo
Our Shareholders,Shareholders,Customers
Customersand
andFriends

22

Special FeatureSpecialFeature44

Review ofReviewof Operations
Operations

66

Financial Review
Financial
Review

88

Six-year Summary
Six-year
Summary

99

Consolidated Balance
Consolidated
BalanceSheets
Sheets1010Consolidated Statements
Consolidated
StatementsofofIncome
Income111112Consolidated Statementsof Comprehensive
Income(Loss) 12
Consolidated
Statementsof Comprehensive
Income12Consolidated Statements
Consolidated
Statements ofofChanges
ChangesininNet
NetAssets
Assets 12
Consolidated Statements
Consolidated
StatementsofofCash
CashFlows
Flows

13
13

Notes toNotes
to Consolidated
ConsolidatedFinancial
FinancialStatements
Statements

14
14

Report ofReportof Independent
IndependentAuditors
Auditors

24
24

Seino Group
Seino
Group

25
25

Board of Directors(As of June 28, 2017)
President

Yoshitaka Taguchi

Representative Director

Takao Taguchi

Directors

Shizutoshi Otsuka
Masahiro Kamiya
Hidemi Maruta
Harumi Furuhashi

Outside Directors

Yuji Tanahashi
Kenjiro Ueno

Standing Statutory Auditors

Takahiko Kumamoto
Shingo Terada
Meyumi Yamada

Outside Statutory Auditors

Fumio Kato
Eiji Kasamatsu

next-generation transportation business.

Forward-looking Statements:
In this annual report, statements other than historicalfacts are forward-looking statements that reflect theplans and expectations of the Company. These
forward-looking statements involve risks, uncertainties
and other factors that may cause the Company’s
actual results and achievements to differ materiallyfrom those anticipated in these statements.

Seino Holdings Co., Ltd.

Financial Highlights

For the Years Ended March 31, 2017, 2016 and 2015

Thousands of
U.S. Dollars (Note)

Millions of Yen
CONSOLIDATED BASIS:
Operating revenue
Operating income
Profit before income taxes
Net income
Net income per share (yen)

2017

2016

2015

2017

¥ 567,539 ¥ 555,457 ¥ 542,452
26,186
21,38627,117
27,95723,262
28,69018,864
14,45618,206
94.87
72.67
92.09

$ 5,067,313
242,117
256,161
162,554
0.82

Millions of Yen

Thousands of
U.S. Dollars (Note)2017

CONSOLIDATED BASIS:
Cash and cash equivalents, and short-term investments ¥ 98,011
Property and equipment, net of accumulated depreciation
290,151
Total assets
594,264
Long-term debt and other long-term liabilities
106,486
Net assets
381,299
Net assets per share (yen)1,912.12

2016¥ 91,444
290,151
579,565
104,351
371,007
1,835.78

2015¥ 91,998
275,034
548,525
83,382
363,314
1,778.29

2017$ 875,277
2,595,589
5,305,929
905,769
3,404,455
16.39

2015

2016

2017

2016

2017

2016

2017

Net income(Billions of Yen)

20
15
10
5
0

(Note) U.S. dollar amounts are translated at ¥112 = U.S. $1, only for the convenience of readers.

2015(Billions of Yen)

400
350
300
250
200

Corporate Data

150
100
50

(As of March 31, 2017)

0Company Name
Head Office
Date of Establishment
Paid-in Capital
Number of Shares Issued
Stock Listings
Transfer Agent
Independent Auditors

Seino Holdings Co., Ltd.
1, Taguchi-cho, Ogaki, Gifu 503-8501, Japan
Tel: 81-584-82-3881 Fax: 81-584-82-5040
November 1, 1946
¥42,482 million
207,679,783
The First Section of Tokyo Stock Exchange (code 9076)
The First Section of Nagoya Stock Exchange (code 9076)
Mitsubishi UFJ Trust and Banking Corporation
KPMG AZSA LLC

2015

1

Message from the Management

To Our Shareholders, Customers and Friends
We would like to take this opportunity to express our appreciation to our stakeholders, including shareholders
and other investors, for the consistent support you have shown us over the years. The results for the fiscal year
ending March, 2017 (April 1, 2016 to March 31, 2017) are presented herein.
As a result, operating revenue for the fiscal year ended

Medium-term Management
Plan “JUMP UP 70”2014/4-2017-3

March 31, 2017 was ¥567,539 million (up 2.2% year on year),

The following is a brief report on the performance ofordinary profit was ¥28,909 million (up 2.2% year on year),

Seino Holdings Co., Ltd. for the fiscal year ended March 31,
2017, our 96th term (from April 1, 2016 to March 31, 2017).

In the fiscal year under review, Japan’s economy continued

operating profit was ¥27,117 million (up 3.6% year on year),and profit attributable to owners of parent was ¥18,206
million (down 3.5% year on year).

to recover moderately with employment and income

conditions still benefiting from various government policy

measures. Despite this improvement, however, the economy
appears stuck at its current pace, and its prospects remain
unclear amid various concerns such as fears for global

economic slowdown, especially China, the issue of Brexit,
and the policy directions following the US Presidential
elections.

In the transportation industry, the Seino Group’s

mainstay business, although the trend of decline in freight
volume appears to have ended, we faced problems such as

rising outsourcing costs and increasing personnel expenses.
In this environment, we pushed forward together toenhance the Company’s corporate value. We steadily

implemented the various measures in our medium-term

management plan “JUMP UP 70: Change for the Future,”
which is now in its final year, and worked to establish astrong business foundation through initiatives to expand
business fields.

In addition, in March 1, 2017, Unicla Jiko Co., Ltd.

(headquarters: Nagoya City) was made a subsidiary of theCompany. By expanding our business operations in the fieldof automobile maintenance through establishing a hold inmarkets outside the Kanto region, we are developing amanagement structure for the Vehicle Sales Business that iscentered on a maintenance business and not reliant on new
car sales.
2

New Medium-term Management
Plan “Value-Up Challenge 2020”2017/4-2020-3
In our outlook for the Japanese economy, we expect thatthe moderate tone of recovery will continue amid theongoing improvement in the employment and income

environments, with positive effects also expected fromvarious policy measures. Nevertheless, there are lingering
uncertainties reflecting concerns such as the impact ofvarious problems in overseas countries and fluctuation in thefinancial and capital markets.

In the transportation industry, the primary industry of

the Seino Group, although there are positive signs ofconsumer-related freight, we expect the businessenvironment to continue as it has for the previous fiscal year

due to increases in personnel expenses and outsourcing costs,
as well as higher fuel prices. Facing such circumstances, theSeino Group has formulated a new three-year medium-term
management plan “Value-Up Challenge 2020: Take Off
Toward Growth,” which commenced in the fiscal year
ending March 31, 2018. While seeking to stretch our“strengths” accrued up until now, we will pursue

maximization of value, and accelerate our reforms and boldinitiatives to create new value.

In our mainstay Transportation Services Business, ourprimary policies are to stabilize, maintain and expand ourtransportation network; expand our logistics business

operations with storage and distribution processing that uses
digital tracking and with a global network of third-party
logistics providers; and address globalization such asproviding support for overseas logistics for Japanese
corporations.

At Seino Transportation Co., Ltd., our core company,

aiming to maximize the full potential of our personnel, we
will move ahead with working style reform geared up to

alleviate the effects of future labor force decline throughinitiatives including streamlining operations with systems

such as further promotion of EDI, introducing automatic-transmission trucks, and employing a combination of various
methods of transportation through the promotion of modal
shifts and introduction of full trailers.

In addition, in the Vehicle Sales Business, we are working

to enhance and expand the business base to enable more sales
offices to be number one dealer in their local region, while

striving to enhance the vehicle maintenance network in the
Kanto area.

Striving to achieve our new medium-term management

plan, we will take further steps to select and concentrate ourbusiness resources and move forward with a keen focus on
business expansion and growth.

As this year’s slogan “Handing down” suggests, we aim toachieve further growth by creating new value as we go about
our work with our “customer viewpoint” that we haveworked to hand down to next generations since ourfounding.

Yoshitaka Taguchi,
President and Chief Operating Officer

To all shareholders, we sincerely ask for your ongoing

encouragement and support into the future.
June 20173

Special Feature

Expanding Our Operations Scope and Creating New Value2017 marked the first year of our new three-year medium-term
management plan "Increased Value Challenge 2020: Takeoff
Toward Growth." As we pursue the maximization of our value,
using the strength we have cultivated until now, we will swiftly
set forth reform and the spirit of challenge to create new values.

Main Topics for 2017
2,800 Guests Attended the Memorial
Service and Farewell Ceremony for
President and Chief Operating Officer
Yoshikazu Taguchi in Remembranceof His Virtue and Achievements

Yoshikazu Taguchi, president and chief operating officer, passed
away from pneumonia at 1 a.m., September 22, 2016. The memorialservice and farewell ceremony were held for him on November 29 at
Gifu Memorial Center's Deai Dome and Fureai Dome. A total of
2,800 guests attended, remembering Mr. Taguchi's splendid
achievements and personality, offering flowers, and saying their
goodbyes.
The memorial service was attended by 1,500 guests from different
areas of society including the mayor of Gifu Prefecture, Hajime
Furuta, and mayor of Ogaki City, Bin Ogawa. With the presentationof a large bouquet of flowers, President Yoshitaka Taguchi expressed
his gratitude to the row boat enthusiast, Mr. Taguchi, as follows:"Mr. [Yoshikazu] Taguchi continued the corporate legacy of founderand Honorary Chairman Rihachi Taguchi. He managed the business
together with then-President and Chief Operating Officer Toshio
Taguchi, and when Toshio Taguchi passed away, Mr. [Yoshikazu]
Taguchi devoted all of his energy to every business endeavor withincredible effort. When he unfortunately took ill, he was surroundedby the warmth of his loving family as they watched over him. Mr.
Taguchi rowed over the waters of a fantastic 78-year life. We are sothankful for everyone's kindness."
At the farewell ceremony held by Seino Holdings, which followed
the memorial service, photograph panels showing different years in
Mr. Taguchi's life, a replica of his treasured Black Lion Flag fromvictory at The Intercity Baseball Tournament, boat oars, and otheritems were displayed, allowing guests to view as well as look back onand remember President and Chief Operating Officer Yoshikazu
Taguchi's active life.

4

Linked Business Capital with Hankyu
Hanshin Holdings

Seino Holdings (President Yoshitaka Taguchi, headquarters
in Taguchi-cho, Ogaki City) concluded its basic agreement with
Hankyu Hanshin Holdings (President Kazuo Sumi,
headquarters in Kita-ku, Osaka City), and discussions began
regarding cooperative business with one another as well as linked
capital.
The goal of this cooperation was to create and provide
distinguished services different from other companies throughthe synergy, networks, and management resources of bothgroups. Both organizations have joined their capitals throughmutual shareholding with a projected aggregate amount of up to
one billion yen.
Seino Holdings plans to expand and strengthen its businessthrough the logistics needs of the different areas of businessdeveloped by Hankyu Hanshin Holdings. In addition, with aconnection to Seino's strong logistics services throughout Japan,
Hankyu Hanshin will expand its value by strengthening its
current logistics business and activating sales channels anddistribution along rail lines.

Acceptance of the Minister of Land,
Infrastructure, Transport and Tourism
Award for Economization and Safety

Seino Transportation was given the Minister of Land,
Infrastructure, Transport and Tourism Award, the highest award
among business divisions, at the Economical Driving Activity
Contest held by the Economical Driving Promotion Conference
Association and Foundation for Promoting Personal Mobility
and Ecological Transportation.
High praise was received and the award was accepted for thesystem of incorporating instructors in-house and executing
concrete driving instruction by area, as well as improving fuelconsumption by 20% in large-sized trucks and the reduction in
accidents among vehicles by 70%.

Establishment of the New Company
Nanacoco

Coconet (President Shuji Kawai, headquarters in Chuo-ku,
Tokyo) established its 100% subsidiary company Nanacoco inaccordance with its vision of expanding business with client
7-Eleven Japan.
Due to a decline in births and an aging population, womenentering more and more into society, problems like limited accessamong some to shopping establishments, and other such issues
concerning the sense of inconvenience among customers
surrounding shopping, Nanacoco's home food delivery service,
which delivers food products, is growing throughout Japan.
In 7-Eleven Japan's second business venture of "omnichannel
strategy," things like door-to-door deliveries from the store to thecustomer's home or other destinations as well as reception oforders are carried out by Coconet in select areas (100 stores).
Coconet has received high praise from 7-Eleven Japan
regarding this operation, and Nanacoco was establishedexclusively to quickly expand this service to all 7-Eleven stores.

Open Innovation Promotion Office

The request from the government was from the 16th to the end of
April 2016, and during that time, approximately 280 tons ofblankets and food were delivered.
We received words of thanks from Gifu Prefecture'sCouncilor Ryoichi Hara of the Tokai Regional Agricultural
Administration Office saying, "Thanks to your swift aid
following the disaster, a day's worth of food was put into thebellies of the people affected."

Ogaki City Children's Company Tour

Ogaki City Cultural Foundation's "Science Lessons for the
PhDs of Tomorrow" event was held at Seino Transportation's
Ogaki branch (supervised by Manager Hidenori Masuda in
Higashimae, Ogaki City).
Approximately 50 elementary school students and theirparents came to the Ogaki branch for part of the event titled"Learn About the Transportation and Distribution of Things!"
Participants were captivated, learning about trailer beds risingand lowering through hydraulics as well as trucks whose trailers
can change their height.

Seino Holdings fuses together assets and knowledge held by
the group as well as innovative technology and more from othercompanies, and with the goal of delivering a higher level ofservice to clients as well as building new business models, theOpen Innovation Promotion Office was newly established.
This office is moving forward and taking form throughdifferent projects like cooperation with other companies, venturebusinesses, entrepreneurs, etc. as well as efficient use of newtechnologies like IoT and drones.

Letter of Gratitude from the Ministerof Agriculture, Forestry and Fisheries

Seino Transportation Co., Ltd. received a letter of gratitude
from the Minister of Agriculture, Forestry and Fisheries for its
cooperation in the transport of emergency supplies to affectedareas by the Kumamoto Earthquake in April 2016.
Seino Transportation delivered emergency supplies after being
named by the prime minister as a designated public institution toact in accordance with the Disaster Countermeasures Basic Act.
5

Expanding Our Operations Scope and Creating New Value
Transportation Services BusinessIn the Transportation Services Business, we worked on
expanding revenue and securing profit by steadily
implementing primary policies based on our medium-term
management plan such as stabilization of the transportation
network, and expansion of the logistics business.
With respect to office expansion efforts, Tokai Seino
Transportation Co., Ltd. newly established the Nakatsugawa
branch (Nakatsugawa City, Gifu Prefecture) to strengthen thetransportation network. In addition, Nohi Seino
Transportation Co., Ltd. established the Kakamigahara
Logistics Center (Kakamigahara City, Gifu Prefecture) withtemperature control storage to expand and enhance thelogistics business.
At Seino Transportation Co., Ltd., the core company of
the Transportation Services Business group, we continued
proactive negotiations to receive reasonable transport fees andcharges, and fuel surcharges, as a measure to improve profits,
and we worked on increasing customers through improving
services utilizing data sharing with customers through EDI(electronic data interchange). We also worked to properly
manage operation capabilities and costs, improve load
efficiency in consolidated deliveries, etc. to ensure revenue andprofit.
In addition, we earned our customers’ trust in ourtransportation services by further improving stable, fixed-time
fixed-route deliveries with the virtuous transportation cycle
and by striving to train truly professional drivers by adopting asafety promotion system to fulfill social responsibility.
As a result of the above, operating revenue for this segment
was ¥422,870 million, up 1.6% year on year, and operating
profit was ¥20,020 million, up 4.7% year on year.

Vehicle Sales BusinessIn passenger vehicle sales, the number of new car sales
significantly increased year on year through various efforts
including sales operations conducted at the local level, andcampaigns taking full advantage of the effects of new vehicle
model launches.
Meanwhile in used vehicle sales, although retail sales
dropped due to a shortage of quality trade-in vehicles, thenumber of wholesale vehicles sold for auctions rose, thereby
securing the same level of used vehicle revenue as the previous
fiscal year.
Also, we worked to secure service revenue by promoting
vehicle inspections focused on improving customer
satisfaction, and vehicle maintenance and garage services, aswell as the sale of tires and oil, etc.

In truck sales, the number of new vehicles sold increased
year on year, particularly those in the heavy truck classes, duepartly to a robust increase in demand for cargo-use trucks.
Although conditions were difficult in the used truck market
due to a shortage of quality vehicles, we concentrated on
capturing demand for vehicle maintenance, such as for vehicle
inspections, and sales of used-parts.
In office expansion efforts, Netz Toyota Gifu Co., Ltd.
carried out a full refurbishment of the Hozumi branch(Mizuho City, Gifu Prefecture).
As a result of the above, operating revenue for this segment
was ¥100,237 million, up 6.1% year on year, and operating
profit was ¥5,055 million, up 2.6% year on year.

Merchandise Sales Business
The Merchandise Sales Business engages in the sale of fuel,paper and paper products, and other products. Operating
revenue for this segment was ¥27,749 million, down 1.0% year

6

on year, partly due to the impact of a fall in sales unit prices
for fuel sales. Sales of domestic tissue papers were firm, andoperating profit was ¥766 million, down 0.8% year on year.

Leasing for Real Estate Services BusinessIn the Leasing for Real Estate Services Business, we strive
to effectively utilize business resources by leasing the former
truck terminal and store sites, which had been replaced mainly
due to the impact of urban development and increasingly
cramped conditions.

Operating revenue for this segment was ¥1,543 million, up
4.8% year on year, and operating profit was ¥1,279 million, up
4.2% year on year.

Other Business
Our Other Business segment includes the information
services business, the housing sales business, the construction
contract business, the passenger transportation business, andthe personnel services business.

Operating revenue for this segment was ¥15,140 million,
down 1.7% year on year, and operating profit was ¥728
million, down 34.3% year on year.

Operating Revenue by Business Segment(Millions of yen)
FY3/17
Results

FY3/16Composition

Results

Composition

Year-on-YearTransportation Services

422,870

74.5%

416,113

74.9%

1.6%

Vehicle Sales

100,237

17.6%

94,441

17.0%

6.1%

Merchandise Sales

27,7494.9%28,0295.0%(1.0%)

Leasing for Real Estate Services

1,543

0.3%

1,472

0.3%

4.8%

Other

15,1402.7%

15,4022.8%(1.7%)

Total

567,539100.0%

555,457

100.0%

2.2%

Composition

Year-on-Year

Operating Income by Business Segment(Millions of yen)
FY3/17
Results

FY3/16Composition

Results

Transportation Services

20,02073.8%

19,113

73.0%

4.7%

Vehicle Sales

5,055

18.7%

4,926

18.8%

2.6%

766

2.8%

772

3.0%

(0.8%)

1,279

4.7%

1,228

4.7%

4.2%

Other

728

2.7%

1,107

4.2%

(34.3%)

Total

27,848102.7%

27,146103.7%

2.6%

Elimination(731)(2.7%)(960)(3.7%)—

Consolidated

27,117100.0%

26,186100.0%

3.6%

Merchandise Sales
Leasing for Real Estate Services

7

Financial Review
Operating Results¥212,965 million (US$1,901,474 thousand), which was a¥4,406 million (US$39,339 thousand) increase from the endof the previous consolidated fiscal year. The primary reason
for this was severance pay, etc. Lastly, net assets grew ¥10,292
million (US$91,893 thousand) from the end of the previous
consolidated fiscal year, amounting to ¥381,299 million(US$3,404,455 thousand). Retained earnings, etc. were themain factor in the increase.

The consolidated operating revenue of Seino Holdings forthe fiscal year ending March, 2017 was ¥567,539 million (a2.2% increase from the previous fiscal year). This was due to arise in individual shipping charge prices as well as increases intransportation effectiveness and the number of new vehicle
sales.
The operating revenue’s operating costs amounted to¥502,639 million (US$4,487,848 thousand), which was a
0.2% increase from the previous fiscal year. The operating
cost rate to the operating revenue was 88.7%, the same as theprevious fiscal year.
Selling expenses and general administrative expenses
came to ¥37,783 million (a 3.6% increase from the same
period of the previous year), operating revenue came to¥27,117 million (US$242,117 thousand), and other expenses
amounted to ¥1,876 million (US$16,750 thousand).
As a result, this term’s net income before income taxes andminority interests was 2.6% more than the previous fiscal
year, coming to ¥28,689 million (US$256,151 thousand). The
net income for this term came to 3.5% less than the previous
fiscal year at ¥18,206 million (US$162,554 thousand).
Net income per share was ¥92.09 (US$0.82), and returnon equity was 4.9%. The annual cash dividend per share wasmaintained at ¥27.00 (US$0.24), which was 96.4% of thatfrom the previous fiscal year.

Cash Flows

Cash flow from operating activities amounted to ¥34,871
million (US$311,348 thousand), ¥4,226 million (US$37,732
thousand) up from the previous consolidated fiscal year, due
to an increase in this term’s net income before taxes andminority interests and a decrease in things like corporate
taxes.
Cash flow from investment activities came to −¥17,840
million (US$159,286 thousand), which was a ¥23,058 million(US$205,875 thousand) decrease from the previous
consolidated fiscal year, resulting from a decrease in
expenditures from negotiable certificates of deposit being
deposited, and a decrease in expenditures in the purchase ofinvestments in subsidiaries resulting in change in scope of
consolidation.
Cash flow from financial activities fell ¥15,842 million(US$141,446 thousand) from the previous consolidated fiscal
year, coming to −¥8,484 million (US$75,750 thousand)because of an increase in income from things like long-termloans.
As a result, cash and cash equivalents in the current
consolidated fiscal year decreased ¥2,939 million (US$26,241
thousand) from the previous consolidated fiscal year, totaling¥63,839 million (US$569,991 thousand).

Financial Position

Total assets at the end of the current consolidated fiscal
year totaled ¥594,264 million (US$5,305,928 thousand),
which was an increase of ¥14,699 million (US$131,241
thousand) from the end of the previous consolidated fiscal
year. The main factor in this was things like an increase ingoodwill and tangible fixed assets. Liabilities totaled

Operating income to operating revenue
Net income (loss) to operating revenue

Shareholders’ equity ratio

(%)

(%)

(%)

5

5

80

4

4

3

3

2

2

1

1

0

0

-1

-1

-2

-2

-3

-3

-4

-4

-5

8

Net income (loss) to total assets
Return on equity ratio

2012

2013

2014

2015

2016

2017

-5

60

40

20

2012

2013

2014

2015

Operating income to operating revenue

Net income (loss) to total assets

Net income (loss) to operating revenue

Return on equity ratio

2016

2017

0

2012

2013

2014

2015

2016

2017

SEINO HOLDINGS CO., LTD. and Consolidated Subsidiaries

Six-year Summary

For the Years Ended March 31, 2017, 2016, 2015, 2014, 2013 and 2012
Millions of Yen
2017
For the year:
Operating revenue:
Transportation services
Vehicle sales
Merchandise sales
Leasing for real estate services
Other
Operating costs
Selling, general andadministrative expenses
Operating income
Net income (loss)
At year-end:
Current assets
Total assets
Current liabilities
Short-term borrowings
Long-term debt, including current maturities
Net assets

¥

2016

567,539422,870
100,237
27,7491,543
15,140502,639¥2015

555,457
416,113
94,441
28,0291,472
15,402492,802¥542,452
398,972
95,351
32,6991,401
14,029487,664

2014
¥

2013

543,407393,320
100,569
33,306
1,421
14,791490,002¥2012

516,185
371,546
96,14832,457
1,438
14,596
467,596¥504,277
370,592
87,75530,144
1,416
14,370457,51237,783
27,117
18,206

36,46926,186
18,86433,402
21,386
14,45633,21620,18915,49034,243
14,346
12,15132,89813,867
12,542

232,792594,264
106,479
2,704
26,468381,299

221,278
579,565
104,207
2,768
25,293371,007

221,338
548,525
101,829
2,519
10,125363,314

221,873
542,411112,396
2,465
10,214346,339

196,803
510,467
107,1712,473
314
331,702

186,255
500,963108,2192,475
565
318,650Yen
Per share data:
Net (loss) income:-BasicCash dividends¥

Number of shares issued

92.09
27.00

¥

207,679

94.87
28.00

¥

207,679

72.67
21.00

¥

77.85
11.00

¥

61.05
11.00

¥

Thousands
207,679
207,679

207,679

63.02
11.00
207,679

Percent
Ratios:Operating income to operating revenue
Net income (loss) to operating revenue
Net income (loss) to total assets
Return on equity ratio
Shareholders’ equity ratio
Current ratio
Debt equity ratio
Payout ratio

4.8
3.2
3.0
4.9
63.1
218.6
56.8
29.3

Current ratio
(%)

240

4.7
3.3
3.2
5.3
63.0
212.3
57.2
29.5

3.9
2.7
2.6
4.2
64.5
217.4
52.4
28.9

3.7
2.9
2.9
4.7
62.2
197.4
58.3
14.1

Debt equity ratio

Payout ratio

(%)

(%)

120

70

2.8
2.4
2.4
3.8
63.4
183.6
55.3
18.0

2.7
2.5
2.5
4.0
62.0
172.1
58.7
17.5

60

200

50

90

40

160

30

120

20

60

10

80

0

30

-10

40

-20
0

2012

2013

2014

2015

2016

2017

0

2012

2013

2014

2015

2016

2017

-30

2012

2013

2014

2015

2016

2017

9

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Balance Sheets
March 31, 2017 and 2016

Millions of yen
2017
Assets:Current assets:
Cash and cash equivalents (Note 3)
Short-term investments (Notes 3 and 5)
Trade receivables (Note 3)Inventories (Note 4)
Deferred tax assets (Note 17)
Other current assets
Allowance for doubtful accounts
		
Total current assets¥

Property and equipment (Notes 6, 7 and 9):
At costAccumulated depreciation		Net property and equipment
Investments and other assets:
Investment securities (Notes 3 and 5)
Investments in and long-term loans to affiliates (Note 5)
Goodwill
Deferred tax assets (Note 17)
Employee retirement benefit asset (Note 12)
Other assets
		
Total investments and other assets
		
Total assets
Current liabilities:
Short-term borrowings (Notes 3, 9, 10 and 11)
Current portion of long-term debt (Notes 3, 9 and 11)
Trade payables (Note 3)
Accrued expenses
Income taxes payable
Other current liabilities
		
Total current liabilities

72,366
25,665
112,651
12,546
5,209
4,564
(209)
232,792

2016
63,83927,605109,269
10,758
5,697
4,325
(215)
221,278$

589,383(298,677)
290,706

581,804(291,653)
290,151

5,262,348(2,666,759)
2,595,589

33,115
4,119
14,6999,984
235

28,3494,071
15,804
9,370
1,899

295,670
36,777
131,241
89,143
2,098

70,766594,264¥

68,136
579,565

631,840$ 5,305,929

2,704

¥

2,768
1,226
43,14814,997
6,171
35,897104,207

$

¥

8,614

¥
¥

Long-term debt (Notes 3, 9 and 11)
Employee retirement benefit liability (Note 12)
Asset retirement obligations (Note 8)
Accrued severance indemnities for directors and corporate auditors
Deferred tax liabilities (Note 17)
Other long-term liabilities
		
Total liabilities

Thousands of
U.S. dollars
2017

1,481
44,96014,896
4,079
38,359106,479

8,643

646,125
229,152
1,005,812
112,018
46,50940,750(1,866)
2,078,500

76,911

24,143
13,223
401,428
133,000
36,420342,491
950,705

24,98773,739
2,550
1,643
2,797
770
212,965

24,067
72,279
2,581
1,635
2,985
804
208,558

223,098
658,384
22,768
14,67024,974
6,875
1,901,474

42,48280,631
260,275(12,554)
370,834

42,48280,585
247,617(9,667)361,017379,304
719,920
2,323,884(112,090)
3,311,018

11,574(114)(6,785)
(311)
4,364
6,101
381,299594,264

10,618(114)

103,339(1,018)Commitments and contingent liabilities (Notes 13 and 14)
Net assets:
Shareholders’ equity (Note 15):
Common stock: 794,524,668 shares authorized and 207,679,783 shares issued
Capital surplus
Retained earnings
Less treasury stock at cost: 11,459,026 shares in 2017 and 8,926,862 shares in 2016
Total shareholders’ equity
Accumulated other comprehensive income
Net unrealized gains on available-for-sale securities
Land revaluation decrement
Retirement benefit adjustment
Foreign currency translation adjustments
Total accumulated other comprehensive income
Non-controlling interests		
Total net assets
		
Total liabilities and net assets
See accompanying Notes to Consolidated Financial Statements.
10¥(6,423)

¥

(230)
3,851
6,139
371,007579,565(60,580)(2,777)38,96454,473
3,404,455$ 5,305,929

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Income
For the Years Ended March 31, 2017, 2016 and 2015

2015

Thousands of
U.S. dollars
2017542,452$ 5,067,313

Millions of yen
2017
Operating revenue (Note 21)¥

Operating costs and expenses (Note 12):
Operating costs
Selling, general and administrative expenses

567,5392016¥

555,457¥

502,639
37,783
540,422
27,117492,80236,469529,271
26,186487,664
33,402521,066
21,386

4,487,848
337,348
4,825,196
242,117

610
(235)
—
(54)
(82)
(13)
84
296
—
(221)
—
—
—
—
1,188
28,690

647
(199)
(121)
—
—
210
(106)
606
—
(446)
—
—
—
25
1,155
1,771
27,957

596
(26)
—
—
—
(41)
2
401
3
(127)
(3)
236
(255)
—
1,090
1,876
23,2625,446(2,098)
—
(482)
(732)
(116)
750
2,642
—
(1,973)————
10,607
14,044
256,161

Income taxes (Note 17):
Current
Deferred
Total income taxes

10,809(423)
10,386

11,336(2,049)
9,287

8,526
(241)
8,285

96,509(3,777)
92,732

		

18,304

18,67014,977

163,429

		

Operating income

Other income (expenses):
Interest and dividend income
Interest expense
Commission for syndicate loan
Loss on investments in partnerships
Loss on cancellation of leasehold contracts(Loss) gain on sale or disposal of property and equipment
Gain (loss) on sale of investment securities
Share of profit of entities accounted for using equity method
Amortization of negative goodwill (Note 21)
Impairment loss on fixed assets (Notes 2(i) and 21)
Loss on write-down of investment securities
Compensation received for the exercise of eminent domain
Expenses related to change of business nameGain on negative goodwill (Note 21)

Miscellaneous, net

1,573
		

Profit before income taxes

ProfitProfit (loss) attributable to non-controlling interests
		Profit attributable to owners of parent¥

98
18,206¥(194)
18,864¥521
14,456$Yen
Per share:
Profit attributable to owners of parent-Basic-Diluted
Cash dividends

¥

92.09
89.01
27.00

¥

94.87
91.77
28.00

875
162,554
U.S. dollars

¥

72.67
70.30
21.00

$

0.82
0.79
0.24

See accompanying Notes to Consolidated Financial Statements.
11

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Comprehensive Income
For the Years Ended March 31, 2017, 2016 and 2015

2015

Thousands of
U.S. dollars
2017¥

14,977$

163,429

¥

4,030
82
61
43
4,216
19,193

$

8,455
(563)
(3,518)(446)
3,928
167,357

Millions of yen
2017Profit¥Other comprehensive income (Note 18):
Net unrealized gains on available-for-sale securities
Remeasurements of defined benefit plans, net of tax
Foreign currency translation adjustments
Share of other comprehensive income of affiliates accounted for using equity method		
Total other comprehensive income¥
Comprehensive income
Comprehensive income attributable to:
Owners of the parent¥
Non-controlling interests

2016

18,304¥

18,670

947
(63)
(394)
(50)
440
18,744 ¥(1,324)(5,278)(139)(18)(6,759)11,911

18,71925

12,126
(215)

¥

¥

$

18,469724

167,134223

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Changes in Net Assets
For the Years Ended March 31, 2017, 2016 and 2015

Shareholders’ equity
Accumulated other comprehensive income
Total
Number of
Net unrealized
Foreignshares of
Total
gains onLand
Retirement currency accumulated
Nonothercommon Common Capital Retained Treasury shareholders’ available-for- revaluation benefit translation comprehensive controlling Total net
stock issued stock
surplus earnings
stock
equity sale securities decrement adjustment adjustments income
interests
assetsMillions of yen
Balance at March 31, 2014 207,679,783 ¥ 42,482 ¥ 74,261 ¥ 222,861 ¥ (8,687) ¥ 330,917 ¥ 7,922 ¥ (133) ¥ (1,068) ¥(163) ¥ 6,558 ¥ 8,864 ¥ 346,339
Profit attributable to owners of parent———
14,456—
14,456——————
14,456
Cash dividends———(2,188)—(2,188)——————(2,188)
Reversal of land revaluation decrement
—
—
—
4
—
4
—
—
—
—
—
—
4
Purchases of treasury stock andfractional shares, net
—
—
—
—
(17)
(17)
—
—
—
—
—
—
(17)
Net changes in items other thanshareholders’ equity
—
—
—
—
—
—
4,027
2
(75)
61
4,015
705
4,720
Balance at March 31, 2015 207,679,783
42,482
74,261
235,133(8,704) 343,172
11,949(131)(1,143)(102) 10,573
9,569
363,314
Profit attributable to owners of parent———
18,864—
18,864——————
18,864
Cash dividends———(6,364)—(6,364)——————(6,364)
Reversal of land revaluation decrement
—
—
—
(16)
—
(16)
—
—
—
—
—
—
(16)
Purchases of treasury stock andfractional shares, net
—
—
816
—
(963)
(147)
—
—
—
—
—
—
(147)
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
—
—
5,508
—
—
5,508
—
—
—
—
—
—
5,508
Net changes in items other thanshareholders’ equity
—
—
—
—
—
—
(1,331)
17(5,280)(128)(6,722)(3,430)(10,152)
Balance at March 31, 2016 207,679,783
42,48280,585
247,617(9,667) 361,017
10,618(114)(6,423)
(230)
3,851
6,139
371,007
Profit attributable to owners of parent———
18,206—18,206——————18,206
Cash dividends———(5,548)—(5,548)——————(5,548)
Reversal of land revaluation decrement
—
—
—
—
—
—
—
—
—
—
—
—
—
Purchases of treasury stock andfractional shares, net——
4—(2,887)(2,883)——————(2,883)
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
—
—
42
—
—
42
—
—
—
—
—
—
42
Net changes in items other thanshareholders’ equity
—
—
—
—
—
—
956
—
(362)
(81)
513
(38)
475
Balance at March 31, 2017 207,679,783 ¥ 42,482 ¥ 80,631 ¥ 260,275 ¥ (12,554) ¥ 370,834 ¥ 11,574 ¥ (114) ¥ (6,785) ¥(311) ¥ 4,364 ¥ 6,101 ¥ 381,299
Balance at March 31, 2016
Profit attributable to owners of parent
Cash dividends
Reversal of land revaluation decrement
Purchases of treasury stock andfractional shares, net
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Net changes in items other thanshareholders’ equity
Balance at March 31, 2017
12

Thousands of U.S. dollars$ 379,304 $ 719,509 $ 2,210,866 $ (86,313) $ 3,223,366 $ 94,804 $ (1,018) $ (57,348) $ (2,054) $ 34,384 $ 54,812 $ 3,312,562—— 162,554—
162,554——————
162,554——(49,536)—(49,536)
—
—
—
—
—
—
(49,536)
—
—
—
—
—
—
—
—
—
—
—
—
—

36

—

(25,777)(25,741)

—

—

—

—

—

—

(25,741)

—

375

—

—

375

—

—

—

—

—

—

375

—

—

—

—

—

8,535

—

(3,232)

(723)

4,580

(339)

4,241

$ 379,304 $ 719,920 $ 2,323,884 $ (112,090) $ 3,311,018 $ 103,339 $ (1,018) $ (60,580) $ (2,777) $ 38,964 $ 54,473 $ 3,404,455

See accompanying Notes to Consolidated Financial Statements.

SEINO HOLDINGS CO., LTD. and Subsidiaries

Consolidated Statements of Cash Flows
For the Years Ended March 31, 2017, 2016 and 2015

2015

Thousands of
U.S. dollars
201723,262$Millions of yen
2017
Cash flows from operating activities:
Profit before income taxes
		Adjustments for:			Depreciation
			 Impairment loss on fixed assets
			 Amortization of negative goodwill
			Amortization of goodwill
			 Gain on negative goodwill
			 Net increase in employee retirement benefit liability
			 Loss (gain) on sale or disposal of property and equipment
			 Share of profit of entities accounted for using equity method
			 Loss on write-down of investment securities
			 Loss on investments in partnership			 (Gain) loss on sale of investment securities
			 Net provision for accrued severance indemnities for directors andcorporate auditors(Increase) decrease in trade receivables
Increase in inventories
Increase (decrease) in trade payables
Other, net				 Subtotal
Interest and dividend received
Interest paid
Income taxes paid				Net cash provided by operating activities¥

28,690¥16,977
221
—
1,109
—
2,515
13
(296)
—
54
(84)

Cash flows from investing activities:
Increase in property and equipment
Increase in long-term investments and loans
Decrease in property and long-term investments
Decrease (increase) in short-term investments
Purchase of shares of subsidiaries resulting in change in scope of consolidation(Note 16)
				Net cash used in investing activities
Cash flows from financing activities:
Increase in long-term debt
Repayment of long-term debt
Net (decrease) increase in short-term borrowings
Proceeds from share issuance to non-controlling shareholders
Dividends paid to shareholders
Dividends paid to non-controlling interests
Purchases of treasury stock, net of disposals
Proceeds from maturity of trust account for acquisition of treasury stock
Payments made to trust account for acquisition of treasury stock
Other, net
				Net cash provided (used in) by financing activities				
Effect of exchange rate changes on cash and cash equivalents				
Net increase (decrease) in cash and cash equivalents				Cash and cash equivalents at beginning of year				Cash and cash equivalents at end of year

2016

¥

27,957¥

16,039
446
—
837
(25)
1,577
(210)
(606)
—
—
106

256,161
151,580
1,973
—
9,902
—
22,455116(2,642)
—
482
(750)

14,841
127
(3)
6
—
1,157
41
(401)
3
—
(2)

8

92

50

71

(3,589)(3,254)
1,873
2,731
46,968
1,081(242)(12,936)
34,871(1,752)(769)(3,046)(2,150)38,496938(199)(8,591)30,644

1,516(2,078)(13,507)
4,487
29,499933(26)(11,910)
18,496(32,045)(29,053)
16,72324,384
419,357
9,652(2,161)(115,500)
311,348(16,138)(4,636)
1,000
1,941

(23,878)(484)
755(2,387)(17,808)
(493)
1,048
17,252(144,089)(41,393)
8,929
17,330(7)(14,905)—(63)(17,840)(40,899)(1)(159,286)

1,360
(484)
(149)
43
(5,548)(46)(2,925)——(735)(8,484)(20)
8,527
63,83972,366

11,900(5,382)
156
4,917(6,364)
(66)
(2)
2,011
—
189
7,359
(43)
(2,939)66,77863,839—(76)54
5(2,188)(60)(17)—(5,000)(2)(7,284)
10
11,22155,557
66,77812,143(4,321)(1,330)384(49,536)(411)(26,116)——(6,563)(75,750)(178)
76,134569,991
646,125¥¥$

See accompanying Notes to Consolidated Financial Statements.
13

SEINO HOLDINGS CO., LTD. and Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements of SEINO HOLDINGS CO.,LTD. (the “Company”) and its subsidiaries (together with the Company, the “Seino
Group”) have been prepared in accordance with the provisions set forth in the Financial
Instrument and Exchange Law of Japan and its related accounting regulations and in
conformity with accounting principles generally accepted in Japan (“Japanese GAAP”),
which are different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards (“IFRS”).
The accompanying consolidated financial statements have been restructured andtranslated into English from the consolidated financial statements of the Company preparedin accordance with Japanese GAAP and filed with the appropriate Local Finance Bureauof the Ministry of Finance as required by the Financial Instrument and Exchange Law
of Japan. Certain supplementary information included in the statutory Japanese language
consolidated financial statements, but not required for fair presentation, is not presented in
the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely
for the convenience of readers outside Japan, using the approximate exchange rate prevailingat March 31, 2017, which was ¥112 to U.S. $1.00. The translation should not be construed
as a representation that the Japanese yen amounts have been, could have been or could in
the future be converted into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policies
(a)

(c)

14

(e)

(f)

(g)

Principles of consolidation

The accompanying consolidated financial statements include the accounts of theCompany and all of its subsidiaries. Investments in significant affiliates are accounted forby the equity method. Investments in affiliates not accounted for by the equity method
are stated at cost. Differences between the acquisition cost of investments in subsidiaries
and the underlying equity in their net assets, adjusted based on the fair value at the time of
the acquisition, are deferred as goodwill and amortized over the estimated useful life, 5-15
years, on a straight-line basis. From April 1, 2010, negative goodwill resulting from businesscombinations, measured by the excess of the underlying equity in the net assets over theacquisition cost, is credited to income. Negative goodwill resulting from acquisitions
incurred prior to April 1, 2010, however, is amortized over five years on a straight-line basis.
All intercompany transactions and accounts have been eliminated on consolidation.
Under accounting standards for consolidation, a subsidiary is defined as an enterprise
which is controlled by another enterprise and is a majority (more than 50%) owned
enterprise or a 40% to 50% owned enterprise that meets certain criteria. An affiliatedcompany is defined as an enterprise in which the investor has significant influence and is anenterprise other than a subsidiary that is a 20% or more owned enterprise or a 15% to lessthan 20% owned enterprise that meets certain criteria. For the years ended March 31, 2017,2016 and 2015, there was one company that was not a more than 50% owned enterprise
but was nevertheless classified as a subsidiary based on the judgment of the Company inaccordance with the accounting standards.
The number of subsidiaries and affiliates for the years ended March 31, 2017, 2016 and2015 was as follows:
Subsidiaries:
Domestic
Overseas
Affiliates accounted for by the equity method
Affiliates stated at cost

(b)

(d)

2017

2016

2015

64
6
6
15

65
6
5
13

59
2
4
10

The Company and most of its subsidiaries have a fiscal year that ends on March
31. The overseas subsidiary closes its books on December 31. The Company has
consolidated the overseas subsidiary’s financial statements as of its year-end because
the difference between its fiscal year-end and that of the Company was not morethan three months. Significant transactions for the period between the subsidiary’s
year-end and the Company’s year-end were adjusted for on consolidation.
The consolidated financial statements include the accounts of the overseas
subsidiary prepared under IFRS in accordance with Practical Issues Task Force(“PITF”) No. 18, “Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements,” issued by
the Accounting Standards Board of Japan (“ASBJ”).

Cash and cash equivalents

The Seino Group considers highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.

Investments and marketable securities

The Seino Group classifies certain investments in debt and equity securities as “heldto-maturity,” “trading” or “available-for-sale.” The classification determines the respective
accounting method as stipulated by the accounting standard for financial instruments.
Held-to-maturity securities are stated at amortized cost. Marketable securities with market
quotations for available-for-sale securities are stated at fair value, and net unrealized gains
and losses on these securities are reported as accumulated other comprehensive income in
net assets, net of applicable income taxes. Gains and losses on the disposition of available-

for-sale securities are computed based on the moving average method. Nonmarketablesecurities without available market quotations for available-for-sale securities are carriedat cost determined by the moving average method. Adjustments in carrying values ofindividual securities are charged to income through write-downs when a decline in value isdeemed other than temporary. Investments in partnerships are stated at the amount of net
assets attributed to the ownership percentage of the Company.

Accounting for derivatives

As of March 31, 2017 and 2016, the Seino Group did not hold nor had it
issued any derivative instruments.

Allowance for doubtful accounts

Allowance for doubtful accounts is provided for at the aggregate amount of
estimated credit loss based on an individual financial review of certain doubtfulor troubled receivables and a general reserve for other receivables based on thehistorical loss experience for a certain past period.

Inventories

Inventories for merchandise, products, raw materials and supplies are statedprincipally at the lower of moving average cost or net realizable value, andinventories for vehicles and work-in-process are stated principally at the lower of
specific identification cost or net realizable value.

Property and equipment and depreciation

Property and equipment, including significant renewals and additions, arestated at cost. Property and equipment of the Company and certain subsidiaries
are depreciated by the straight-line method for buildings and vehicles and by the
declining balance method for other property.
Property and equipment of other subsidiaries have been depreciated principallyby the declining balance method, except for buildings acquired on and after April
1, 1998, property held for lease and facilities attached to buildings and structuresacquired on and after April 1, 2016. Buildings acquired on and after April 1, 1998
and facilities attached to buildings and structures acquired on and after April 1, 2016
by the domestic subsidiaries are depreciated by the straight-line method. Some ofthe subsidiaries capitalize property for which the cost was not less than ¥100,000
but below ¥200,000 and depreciate it over three years on a straight-line basis.
The Seino Group, as lessee, capitalizes assets used under finance leases, except
for certain immaterial or short-term finance leases accounted for as operating leases.
Depreciation of leased assets capitalized in finance lease transactions as lessee iscomputed by the straight-line method over the lease term as the useful life with theassumption of no residual value. The leased property of a certain subsidiary engaged
in leasing operations as lessor is recorded at cost in property and equipment in theaccompanying consolidated balance sheets under operating lease accounting and isdepreciated over the term of the lease contract by the straight-line method to theamount equal to the estimated disposal value at the lease termination date.
Expenditures on maintenance and repairs are charged to operating income as
incurred. Upon the disposal of the property, the cost and accumulated depreciation
are removed from the accounts and any gain or loss is recorded as income or expense.

(Changes in accounting policies)

(h)

(i)

Due to amendments to the Japanese Corporation Tax Act, the Company andits domestic subsidiaries adopted “Practical Solution on a Change in Depreciation
Method Due to Tax Reform 2016” (Practice Issue Task Force No. 32, June 17, 2016
for application from the current fiscal year and changed the depreciation method forbuildings, facilities attached to buildings and structures acquired on and after April 1,2016 from the declining balance method to the straight line method. The effects ofthese changes in the current fiscal year were not material..

Intangible assets

Intangible assets are amortized on a straight-line basis. Software, which isincluded in intangible assets, is amortized using the straight-line method over theestimated useful life of five years.

Accounting standard for impairment of fixed assets

The Company and its domestic subsidiaries have adopted the "Accounting Standard
for Impairment of Fixed Assets" issued by the Business Accounting Council of Japan andthe related practical guidance issued by ASBJ. The standard requires that fixed assets bereviewed for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. An impairment loss shall be recognizedin the income statement by reducing the carrying amount of the impaired asset or group ofassets to the recoverable amount, to be measured as the higher of the asset’s net selling priceor value in use. Fixed assets include intangible assets as well as land, buildings and otherforms of property and are to be grouped at the lowest level for which there are identifiable
cash flows distinguishable from other groups of assets. For the purpose of recognition andmeasurement of impairment loss, fixed assets are grouped into cash-generating units suchas operating business branches other than idle or unused property. From the year ended
March 31, 2015, the Seino Group has changed the method used to group assets to measure
impairment of fixed assets in the transportation services segment from a method thatgrouped assets by each operating business branch to a method that groups assets by entire
segment. At March 31, 2017, 2016 and 2015, recoverable amounts of assets were measured
based on value in use using discounted future cash flows at interest rates principally of 6.6%,
6.8% and 7.8%, respectively, or net selling prices using primarily appraisal valuations. As a

result, the Seino Group recognized impairment loss as follows:
Millions of yen

Property subject toimpairment:
Impairment loss recorded for:land
buildings and structuresother property

(j)

2017

2016

2015

3 businessbranchesand 1 idle
property

6 businessbranchesand 5 idle
properties

2 businessbranchesand 8 idle
properties

¥
¥

163 ¥
57
1
221 ¥

380 ¥
65
1
446 ¥

Thousandsof U.S.
dollars
2017

69 $
58
—
127 $

1,455
509
9
1,973

Accumulated impairment losses have been directly deducted from theapplicable assets.
Employee retirement benefits

Employees who terminate their service with the Seino Group are entitled to retirement
benefits determined generally by reference to basic rates of pay at the time of termination,
length of service and conditions under which the termination occurs.
The Seino Group has recognized retirement benefits for employees, including
pension cost and related liability, based on the actuarial present value of retirement benefit
obligation using the actuarial appraisal approach and the fair value of pension plan assets
available for benefits at the fiscal year-end. In the calculation of the retirement benefit
obligation, the expected retirement benefits are attributed to the period up to the end of therespective fiscal year based on the straight-line method. Actuarial differences arising fromchanges in the retirement benefit obligation or the value of pension plan assets resulting
from actual outcomes different from that which were assumed and from changes in theassumptions themselves are amortized on a straight-line basis over principally ten years, aperiod within the average remaining service years of employees, from the year following theyear in which they arise. Past service cost is amortized using the straight-line method overprincipally ten years, a period within the average remaining service years of employees, fromthe year in which it occurs.

(o)

(p)

(q)

(r)
(s)

(Changes in accounting policies)

(k)

(l)

Effective from the year ended March 31, 2015, the Company and its consolidated
domestic subsidiaries adopted Article 35 of the “Accounting Standard for Retirement
Benefits” (ASBJ Statement No. 26, May 17, 2012 (hereinafter, “Statement No. 26”)) and
Article 67 of the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ
Guidance No. 25, March 26, 2015 (hereinafter, “Guidance No. 25”)) from the current fiscal
year and have changed the method used to determine retirement benefit obligation andcurrent service cost. In addition, the Company and its consolidated domestic subsidiaries
have changed the method used to determine the discount rate from a method based on the
expected average remaining years of service of the eligible employees to a method using
a single weighted average discount rate reflecting the estimated timing and amount ofbenefit payment. The effects of these changes in the retained earnings at the beginning of
the current fiscal year and profit or loss for the current fiscal year were not material.

Severance indemnities for directors and corporate auditors

The Seino Group pays severance indemnities to directors and corporate auditors
subject to the approval of the shareholders. The Company and certain subsidiaries provide
for accrued severance indemnities for directors and corporate auditors at the amount thatwould have been payable if the directors and corporate auditors had retired at the end of
the fiscal year based on internal rules, in accordance with the Japanese Institute of Certified
Public Accountants (“JICPA”) Audit and Assurance Committee Report No. 42, “Treatment
for Auditing of Reserve Under Special Taxation Measures Law, Reserve Under Special
Laws and Reserve for Retirement Benefits to Directors and Corporate Auditors.”

Revenue recognition for freight charges

The Seino Group recognizes freight charges as revenue when freight isreceived for shipment. In relation to its revenue recognition, the Seino Group
records freight charges from customers and charges paid to interline carriers as
operating revenue and operating costs and expenses, respectively.

(m) Income taxes

Income taxes are accounted for by the asset-liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences attributable
to differences between the carrying amounts of existing assets and liabilities andtheir respective tax bases and operating loss carryforwards. Deferred tax assets
and liabilities are measured using the enacted tax rates expected to apply totaxable income in the years in which those temporary differences are expected tobe recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the period that includes the enactment date and thepromulgation date for the fiscal year ended March 31, 2016 and 2015, respectively.

(Additional Information)(n)

The Company and its domestic subsidiaries adopted “Revised Implementation
Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26, March
28, 2016 (hereinafter, “Guidance No. 26) for application from the current fiscal year.

Enterprise taxes

The Seino Group records local corporate enterprise taxes based on the“added value” and “capital” amounts when levied as size-based corporate taxes
for local government enterprise taxes, which are included in selling, general andadministrative expenses.

(t)Appropriation of retained earnings

Cash dividends are recorded in the fiscal year during which a proposed
appropriation of retained earnings is approved by the Board of Directors and/or
shareholders.

Translation of foreign currency accounts

Receivables, payables and securities, other than stocks of subsidiaries, are translated
into Japanese yen at the exchange rates prevailing at the fiscal year-end. Transactions inforeign currencies are recorded based on the prevailing exchange rates on the transaction
dates. Resulting translation gains and losses are included in current earnings.
In respect to the financial statement items of overseas subsidiaries, all asset, liability,
income and expense accounts are translated into yen by applying the exchange rates
in effect at the fiscal year-end. Translation differences, after allocations of portions
attributable to minority interests, are reported as foreign currency translation adjustments
in a component of net assets on the accompanying consolidated balance sheets.

Per share data

Basic net income per share is computed by dividing income available to commonshareholders by the weighted average number of shares of common stock outstanding
during the respective year, retroactively adjusted for stock splits. Unless there is an antidilutive effect, diluted net income per share is calculated to reflect the potential dilution
assuming that all convertible bonds are converted at the time of issue.
Cash dividends per share shown for each fiscal year in the accompanying consolidated
statements of income represent dividends declared as applicable to the respective years.

Adoption of consolidated taxation system

The Company and some of its subsidiaries have adopted the consolidated
taxation system, with the Company as the taxable parent company.

Changes in accounting policies for business combinations

The Company and its domestic subsidiaries have adopted and apply “Revised
Accounting Standard for Business Combinations” (ASBJ Statement No. 21,
September 13, 2013 (hereinafter, “Statement No. 21”)), “Revised AccountingStandard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013 (hereinafter, “Statement No. 22”)) and “Revised AccountingStandard for Business Divestitures” (ASBJ Statement No. 7, September 13,
2013 (hereinafter, “Statement No. 7”)) (together, the “Business Combination
Accounting Standards”) from the prior fiscal year. As a result, the Company
changed its accounting policies to recognize in capital surplus the differences
arising from changes in the Company’s ownership interest of subsidiaries overwhich the Company continues to maintain control and to record acquisition
related costs as expenses in the fiscal year in which the costs were incurred. In
addition, the Company changed its accounting policy for the reallocation of
acquisition costs due to completion following provisional accounting to reflect
such reallocation in the consolidated financial statements for the fiscal year inwhich the business combination took place. The Company also changed thepresentation of net income, and the term “non-controlling interests” is usedinstead of “minority interests.” In addition, certain amounts in comparative
information for the year ended March 31, 2015 were reclassified to conform tochanges in the prior year presentation.
With regard to the application of the Business Combination AccountingStandards, the Company followed the provisional treatments in Article 58-2(4)of Statement No. 21, Article 44-5(4) of Statement No. 22 and Article 57-4(4) ofStatement No. 7, with application from the beginning of the year ended March
31, 2016 prospectively. As a result, operating income decreased by ¥133 million,
profit before income taxes for the year ended March 31, 2016 decreased by¥5,605 million, goodwill and capital surplus as of the end of the March 31, 2016
decreased and increased by ¥97 million and ¥5,508 million, respectively.
In the consolidated statement of cash flows, cash flows from acquisition or
disposal of shares of subsidiaries with no changes in the scope of consolidation
are included in “Cash flows from financing activities,” and cash flows fromacquisition related costs for shares of subsidiaries with changes in the scope of
consolidation or costs related to acquisition or disposal of shares of subsidiaries
with no changes in the scope of consolidation are included in “Cash flows fromoperating activities.”
Capital surplus as of the end of March 31, 2016 in the consolidated statementof changes in net assets increased by ¥5,508 million. Net assets per share,earnings per share and diluted earnings per share for the year ended March 31,
2016 decreased by ¥0.48, ¥28.19 and ¥27.28, respectively.

Additional information

Employee Shareholding Incentive Plan (E-Ship®)
The Company has introduced an Employee Shareholding Incentive Plan (E-Ship®)for the welfare of its employees. The plan is an incentive plan that covers all employees
participating in the Shareholding Association.
Under the plan, the Company, as the trustor, entered into a specified trust cash funding
agreement (the “E-Ship Agreement”) with a trust bank, as a trustee to set up the trust(the “E-Ship Trust”). The E-Ship Trust purchases the number of shares of the Company
that the Shareholding Association rationally expects to purchase over the next three years
and subsequently sells them periodically to the Shareholding Association in accordancewith certain conditions and methods stipulated in the E-Ship Agreement over the threeyear period. At the end of the trust period, the E-Ship Trust’s retained earnings, theaccumulation of net gain on sales of its shares of the Company, are distributed to theeligible employees in accordance with the E-Ship Agreement. For its part, the Company
will guarantee retained loss, accumulation of net loss on sales of its shares of the Company
and will pay off the amount of outstanding debt at the end of the trust period, as it shallguarantee the debt of E-Ship Trust.
The shares of the Company held by the E-Ship Trust were accounted for as treasury

15

stock under net assets. The assets, liabilities, income and expenses of the E-Ship Trust wereconsolidated in the accompanying consolidated financial statements. The book value andnumber of shares held by the E-Ship Trust at March 31, 2017 were ¥1,358 million ($12,125
thousand) and 1,019 thousand shares, respectively. The book value of bank loans of the
E-Ship Trust recorded in the consolidated balance sheet as of March 31, 2017 was ¥1,360
million ($12,143 thousand).

3. Financial Instruments(1) Qualitative information on financial instruments(a) Policies on Financial Instruments
The Seino Group implements its Cash Management System for effective
investments and funding. The Company invests in short-term, low-risk
instruments in accordance with its internal fund management rules. The
Company raises funds mainly through indirect financing such as bank loans forinvestments in facilities, taking immediate liquidity into consideration.
(b) Details of Financial Instruments and Risks
Trade receivables are exposed to the credit risk of customers. Some of thesubsidiaries have receivables in foreign currency and are exposed to foreign
currency fluctuation risk.
Marketable and investment securities, which consist of held-to-maturity
securities and equity securities of business entities with which the Seino Grouphas business relationships, are exposed to stock market fluctuation risk.
Trade payables have general terms and conditions and are mostly due within
one year. However, some of the subsidiaries have them denominated in foreign
currency, which exposes them to foreign currency fluctuation risk.
Some bank loans and convertible bonds are used principally for capital
investments and are partially exposed to interest rate fluctuation risk.
(c)
Risk Management for Financial Instruments(1) Monitoring of credit risk
In accordance with internal policies for credit risk management, eachsubsidiary monitors the creditworthiness of its customers and manages
the terms and conditions of payment, due dates and remaining balances
to reduce such risk. Regarding held-to-maturity securities, the Company
invests in high credit-rating bonds in accordance with its internal fundmanagement rules. As a result, the risk is insignificant.
(2) Monitoring market risk
The Board of the Directors regularly monitors market risk using
management methods which comply with internal market risk management
rules. For marketable securities, the Seino Group monitors market prices
every quarter and reviews the market conditions and the financial positionof and business relationship with the issuers.
(3) Monitoring liquidity risk
The Company has a Cash Management System with its subsidiaries
and becomes the paying agent for the subsidiaries under the system.
The subsidiaries report their cash flow projections to the Company. The
Company has sufficient bank credit lines, including credit lines withoverdrafts, enabling the Seino Group to manage liquidity risk.
(d) Supplemental information on fair values
The fair values of financial instruments are based on their market prices.
The fair values of financial instruments with no available market prices are
determined by using prices calculated in a reasonable manner. However, sincecertain assumptions are used in the computation of the reasonable estimates, theresult may be different if alternative assumptions are used.
(2) Fair values of financial instruments
The fair and carrying values of the financial instruments included in the consolidatedbalance sheets at March 31, 2017 and 2016, other than those for which the fair value wasextremely difficult to determine, are set forth in the table below.
Carrying value

At March 31, 2017:
Cash and cash equivalents ¥Short-term investments
Trade receivables
Investment securities¥
			Total assets
Short-term borrowings ¥Trade payables
Convertible bonds
Current portion of
long-term bank loans
Long-term bank loans
			Total liabilities¥

16

Fair value
Millions of yen

Difference

72,366 ¥25,665
112,651
30,735
241,417 ¥72,366 ¥—25,665—
112,651—
30,735—
241,417 ¥—2,704 ¥
44,96010,0152,704 ¥—44,960—10,475460

677
12,19270,548 ¥677
12,10470,920 ¥

—
(88)
372

Carrying value

At March 31, 2016:
Cash and cash equivalents ¥Short-term investments
Trade receivables
Investment securities¥
			Total assets
Short-term borrowings ¥Trade payables
Convertible bonds
Current portion of
long-term bank loans
Long-term bank loans¥
			Total liabilities

Fair value
Millions of yen

Difference

63,839 ¥27,605109,269
26,448227,161 ¥

63,839 ¥—27,605—109,269—
26,448—227,161 ¥—

2,768 ¥
43,14810,0252,768 ¥—43,148—
10,615590

483
11,321
67,745 ¥483
11,213
68,227 ¥

—
(108)
482

Carrying value
Fair value
Difference
Thousands of U.S. dollars

At March 31, 2017:
Cash and cash equivalents $ 646,125 $ 646,125 $—Short-term investments
229,152
229,152—
Trade receivables
1,005,812
1,005,812—
Investment securities
274,420
274,420—$ 2,155,509 $ 2,155,509 $—			Total assets
Short-term borrowings $Trade payables
Convertible bonds
Current portion of
long-term bank loans
Long-term bank loans$
			Total liabilities

24,143 $401,428
89,42024,143 $—
401,428—
93,527
4,107

6,045
108,857
629,893 $

6,045
108,071
633,214 $

—
(786)
3,321

Notes:i) Methods of measuring the fair value of financial instruments are as follows:
Assets:(1) Cash and cash equivalents
As these instruments are settled within a short term, their fair value andcarrying value are nearly identical, and their carrying values are assumed as
their fair values.
(2) Trade receivables
The fair value of installment sales receivables is measured by the carrying
amount, which is based on the present value of future cash flows throughmaturity discounted using an estimated credit risk adjusted interest rate. The
carrying amounts of trade receivables other than installment sales receivables
approximate fair value because of the short maturity of these instruments.
(3) Short-term investments and investment securities
The fair value of marketable securities equals the quoted market price, if
available. The fair value of debt securities equals the quoted market price or the
price provided by financial institutions. Marketable and investment securities
classified according to the purpose for which they are held are described in Note 5.
Liabilities:(1) Trade payables
As these instruments are settled within a short term, their fair values
and carrying values are nearly identical, and, their carrying values are
assumed as their fair values.
(2) Short-term borrowings and current portion of long-term bank loans
As these instruments are settled within a short term, their fair values andcarrying values are nearly identical, and their carrying values are assumed as
their fair values.
(3) Convertible bonds
The fair value of convertible bonds is based on the price quoted by thecorrespondent financial institution.
(4) Long-term bank loans
The fair value of long-term debt is based on the present value of future
cash flows discounted using the current borrowing rate for similar debt ofcomparable maturity.
ii) The following were not included in the table above because the fair value wasextremely difficult to determine:
Millions of yen

2017
Carrying value:
Unlisted equity securities, otherthan those of affiliates¥ 1,399
Investments in partnership981—
Preferred equity securities¥ 2,380

2016¥

Thousands of
U.S. dollars

2017

1,401 $ 12,491
—
8,759
500
—
1,901 $ 21,250

iii) The redemption schedule for financial assets with maturities at March 31,2017 was as follows:
Due within
1 yearDue after Due after
1 years
5 years
throughthrough
5 years
10 yearsMillions of yen

At March 31, 2017:
Cash and cash equivalents ¥ 72,366 ¥— ¥Short-term investments
25,665—Trade receivables
84,57027,247
Investment securities –—118		 bonds and other¥ 182,601 ¥ 27,365 ¥

Cost

Due
after
10 years

— ¥
—
834

—
—
—

834 ¥

—

—

Due after Due after
1 years
5 years
Due within
throughthrough
1 year
5 years
10 yearsThousands of U.S. dollars

—

Due
after
10 years

At March 31, 2017:
Cash and cash equivalents $ 646,125 $— $— $Short-term investments
229,152——
Trade receivables
755,088
243,278
7,446
Investment securities –
—
1,054
—
		 bonds and other$1,630,365 $ 244,332 $ 7,446 $

Gross
Gross
unrealized unrealized
gains
lossesMillions of yen

At March 31, 2017:
Equity securities
Bonds
Other
At March 31, 2016:
Equity securities
onds
Other
At March 31, 2017:
Equity securities
Bonds
Other

Fair andcarryingvalue¥ 12,959 ¥ 17,776 ¥
118—
12,12833¥ 25,205 ¥ 17,809 ¥(169) ¥ 30,566
(10)
108
—
12,161(179) ¥ 42,835¥(115) ¥ 26,232
(7)
111
(1)
14,405(123) ¥ 40,748

9,911 ¥ 16,436 ¥118—
14,35452¥ 24,383 ¥ 16,488 ¥Thousands of U.S. dollars$ 115,705 $158,715 $ (1,509) $272,911
1,054
—
(90)
964
108,286294— 108,580$225,045 $159,009 $ (1,599) $382,455———

At March 31, 2017 and 2016 investments in and long-term loans to affiliates
consisted of the following:—

Investments accounted for by theequity method for significant
affiliates and at cost for others ¥—iv)For the repayment schedule for convertible bonds and long-term bank loans at
March 31, 2017, see Note 9, “Short-term Borrowings and Long-term Debt.”

Millions of yen

Thousands of
U.S. dollars

4,119$ 36,777

2017

2016

¥

4,071

2017

6. Property and Equipment

4. Inventories
Inventories at March 31, 2017 and 2016 were as follows.
Millions of yen

2017
Merchandise and finished products ¥ 10,731
Work in process
1,116
699
Raw materials and supplies¥ 12,546

2016¥ 9,140971
647¥ 10,758

Thousands of
U.S. dollars

2017$ 95,813
9,964
6,241
$ 112,018

5. Investments
At March 31, 2017 and 2016, short-term investments consisted of thefollowing:
Millions of yen

2017Marketable securities:¥ 12,100
Bonds and other		 Total marketable securities
12,100Time deposits with an original
maturity of more than three months 13,565¥ 25,665

2016

Thousands of
U.S. dollars

2017¥ 14,300
14,300$ 108,036
108,036

13,305¥ 27,605

121,116$ 229,152

At March 31, 2017 and 2016, investment securities consisted of the following:
Millions of yen

2017Marketable securities:
Equity securities¥ 30,566
Bonds
108
61
Other
		 Total marketable securities
30,735
2,380
Other non-marketable securities¥ 33,1152016¥ 26,232
111
105
26,448
1,901¥ 28,349

Thousands of
U.S. dollars

2017$ 272,911
964
545
274,420
21,250$ 295,670

Marketable securities classified as available-for-sale are stated at fair value
with unrealized gains and losses excluded from current earnings and reported asa net amount within the net assets account until realized. At March 31, 2017and 2016, gross unrealized gains and losses for marketable securities classified asavailable-for-sale were as follows:

At March 31, 2017 and 2016, property and equipment consisted of thefollowing:
Millions of yen

Thousands of
U.S. dollars

2017
2016
2017
Property and equipment, at cost:Land¥ 173,281 ¥ 171,455 $ 1,547,151
Buildings and structures
263,608
261,283
2,353,643
Vehicles
106,237
104,524
948,545
Machinery and equipment
38,36937,443
342,580
Construction in progress
1,294
914
11,5546,594
6,185
58,875
Other589,383
581,804
5,262,348
Less accumulated depreciation (298,677) (291,653) (2,666,759)
Total property and equipment ¥ 290,706 ¥ 290,151 $ 2,595,589
One of the consolidated subsidiaries elected to carry out a one-time revaluation torestate the cost of land used for business operations at values reassessed on March 31, 2002,
reflecting adjustments for land shape and other factors based on appraisal values issued by
the Japanese National Tax Agency in accordance with the Law Concerning Revaluation ofLand. According to the law, the excess of the original book value over reassessed value, netof the tax effect and minority interests portions, is recorded in net assets as land revaluation
decrement account in the accompanying consolidated balance sheets. At March 31, 2017and 2016, the difference between the carrying values of land used for business operations
after revaluation over the current market values of the land at the fiscal year-end amounted
to ¥1,792 million ($16,000 thousand) and ¥1,779 million, respectively.

7. Real Estate for Rent
Some of the Company’s subsidiaries own land and facilities for rent at
locations where the business branches were closed or redeployed branches
used to be. The carrying values in the consolidated balance sheets, changes
during the years ended March 31, 2017 and 2016 and the fair values of therental properties were as follows:
Millions of yen

2017
Carrying value at the beginning of year ¥ 14,031
65
Net changes during the year
Carrying value at the end of year ¥ 14,096
Fair value at the end of year *¥ 19,2432016¥ 13,388
643¥ 14,031¥ 18,107

Thousands of
U.S. dollars

2017$125,277
580$125,857$ 171,813

Note: * Fair value was measured at the reasonable estimated value based principally ona real estate appraisal or property tax bases.

17

Profit and loss recorded for rental properties for the fiscal years ended March
31, 2017 and 2016 were as follows:
Millions of yen

Operating revenue¥
Operating costs
Income from rental operations
Loss on disposal of rental property¥
and other

2017
1,543
292
1,251

¥

2016
1,472
265
1,207

(243) ¥

Thousands of
U.S. dollars

2017$ 13,777
2,607
11,170(394) $ (2,170)

8. Asset Retirement Obligations
Asset retirement obligations are based upon estimated future restoration obligations
pursuant to office rental agreements. The asset retirement obligations are calculated based
upon the useful life designated by law or the estimated office rental period and are discounted
by the yield rate of government bonds.
Asset retirement obligations for the years ended March 31, 2017 and 2016 were as follows:
Millions of yen

At the beginning of year
New consolidations
New obligations
Changes in estimatedobligations and accretion
Settlement payments
Other
At the end of year2017
¥ 2,586
—
18
46

¥

¥

(23)
—
2,627 ¥

2016
2,548
25
—

46

Thousands of
U.S. dollars

2017$ 23,089
—
161
411

(37)
(206)
4
—
2,586 $ 23,455

9. Short-term Borrowings and Long-term Debt
At March 31, 2017 and 2016, short-term borrowings consisted of thefollowing::
Millions of yen

Thousands of
U.S. dollars

2017
2016
2017
Unsecured bank overdrafts withinterest rates of 1.475% per
¥
110 ¥
135 $
982
annum at March 31, 2017
Short-term bank loans, secured
with interest rates ranging from1.300% to 2.775% per annum at
March 31, 2017
117
200
1,045
Short-term bank loans, unsecured withinterest rates ranging from 0.130% to
2,477
2,433
22,1163.100% per annum at March 31, 2017
¥ 2,704 ¥ 2,768 $ 24,143
At March 31, 2017, the Company and certain subsidiaries had unsecured
overdraft agreements with 13 banks. Under the agreements, the Company and thesubsidiaries were entitled to withdraw up to ¥43,910 million ($392,054 thousand).
The Company and the subsidiaries were not obligated to pay commitment fees on
the unused portions of the overdraft facilities.
At March 31, 2017 and 2016, long-term debt consisted of the following:
Millions of yen

Thousands of
U.S. dollars

2017
2016
2017
Zero coupon convertible bonds
due October 2018, including
unamortized premium ( ¥15 million($134 thousand) at March 31, 2017) ¥ 10,015 ¥ 10,025 $ 89,419
Loans from government agencies andbanks, repayable due through 2022, withinterest rates ranging from 0.810% to3.100% per annum at March 31, 2017:
		Secured
11,344
11,756
101,286
		Unsecured
1,525
49
13,6163,584
3,463
32,000Capitalized lease obligations
26,46825,293
236,321(1,481)(1,226)(13,223)
Less current portion¥ 24,987 ¥ 24,067 $ 223,098
At March 31, 2017, the current conversion price of zero coupon
convertible bonds due in 2018 was ¥1,463 ($13) per share and was subject toadjustment in certain circumstances, including in the event of a stock split.
At March 31, 2017, the number of shares of common stock necessary forconversion of all convertible bonds outstanding was approximately 7 million.
At March 31, 2017 and 2016, respectively, the following assets were
pledged as collateral for certain long-term debt:
18

Millions of yen

Thousands of
U.S. dollars

5,169
1,778
1,611
1,133

$

2017
Land
¥
Buildings and structures
Cash and deposits
Shares of subsidiaries and associates
Long-term loans receivable fromsubsidiaries and associates

2016

¥

10

4,875
1,692
1,063
1,133

2017

10

46,152
15,875
14,384
10,11689

The aggregate annual maturities of long-term debt as of March 31, 2017 wereas follows:Year ending March 31,
2018
2019
2020
2021
2022
ThereafterThousands ofMillions of yen
U.S. dollars
¥
1,481
$
13,223
11,507102,741
2,979
26,5981,378
12,304
1,216
10,857
7,892
70,465¥26,453$ 236,188

10. Commitment line Agreement
Consolidated subsidiary Kanto Transportation Co., Ltd. had a commitmentline agreement of ¥ 1,000 million ($ 8,929 thousand) as of March 31, 2017 toensure its access to financing. At March 31, 2017, there were no borrowings
under this agreement.

11. Financial Covenants
Consolidated subsidiary Kanto Transportation Co., Ltd. is a party to a syndicatedloan agreement that includes the following financial covenants.
1.The operating loss on a consolidated basis of Kanto Transportation Co., Ltd.
before amortization of goodwill is allowed on the profit and loss statement for the twoconsecutive years as of the previous fiscal year at March 31, 2017 or later.
2.The amount of equity (except subscription rights to shares, non-controllinginterests and deferred gains or losses on hedges) on the balance sheets on a consolidated
basis of Kanto Transportation Co., Ltd. is required to be equal to or greater than 80% of
equity on the balance sheet as of the previous fiscal year at March 31, 2017 or later.
Remaining balances of debt were as follows:
Millions of yen

2017
Short-term borrowings¥—
Current portion of long-term debt
650
10,625Long-term debt
¥ 11,275

2016
200
475
11,275¥ 11,950¥

Thousands of
U.S. dollars

2017
—
5,804
94,866$ 100,670$

12. Employee Retirement Benefits
The Company and its subsidiaries have mainly unfunded defined benefit plans withrules and regulations determined by each subsidiary. In addition, some subsidiaries have
Smaller Enterprise Retirement Allowance Mutual Aid or Specific Retirement Allowance
Mutual Aid.
Other subsidiaries have funded defined benefit plans. One company belongs to acomprehensive employees’ pension fund for the defined benefit corporate pension plan.
One company has established a retirement benefit payment trust. Some of the consolidated
subsidiaries have joined a multi-employer welfare pension fund plan. Those for which it
is impossible to calculate in a rational manner the amount of the pension assets whichcorresponds to the amount of the contributions are accounted for in the same way as thedefined contribution pension plan. The retirement benefit obligation of certain subsidiaries
was calculated using the simplified method as permitted by the accounting standard for
employee retirement benefits.
As of and for the year ended March 31, 2017 and 2016, defined benefit plans, including
plans applying the simplified method were as follows:i) Movement in retirement benefit obligation:
Millions of yen

At the beginning of year
Service cost
Interest cost
Actuarial differences
Benefits paid
Past service cost
New consolidations
OthersAt the end of year

Thousands of
U.S. dollars

2017
2016
2017
¥ 78,425 ¥ 70,354 $ 700,223
4,293
3,822
38,330
180
627
1,607
73
6,105
652
(3,320)(3,265)(29,642)
270
84
2,411
—
698
—
(1)
—
(9)
¥ 79,920 ¥ 78,425 $ 713,572

ii) Movements in plan assets:
Millions of yen

2017
2016
2017
At the beginning of year
¥ 8,044 ¥ 10,287 $ 71,821
Actuarial differences(1,492)(2,247)(13,321)
Contributions paid by the employer
3
5
27
(139)
(1)
(1,241)
Benefits paid
¥ 6,416 ¥ 8,044 $ 57,286
At the end of year

Millions of yen

Employee retirement benefit liability
73,73972,279658,384
Employee retirement benefit asset(235)(1,899)(2,098)Net employee retirement benefit liability ¥ 73,504 ¥ 70,380 $ 656,286
iv)Net periodic retirement benefit expenses, including plans applying thesimplified method:
Millions of yen

2017
2016
Service cost
¥ 4,293 ¥ 3,822
Interest cost
180
627
Amortization of actuarial differences
1,242
344
(17)
31
Amortization of past service cost
Net periodic retirement benefit expenses ¥ 5,698 ¥ 4,824

Plan assets
Projected benefit obligation in
pension financing
Difference

Thousands of
U.S. dollars

2017
2016
2017
Funded retirement benefit obligation ¥ 6,412 ¥ 6,373 $ 57,250
Plan assets(6,416)(8,044)(57,286)(4)(1,671)(36)
Unfunded retirement benefit obligation
73,50872,051
656,322Net employee retirement benefit liability ¥ 73,504 ¥ 70,380 $ 656,286

Past service cost
Actual differences
Total balance

2017
287
323
¥
610

¥

2016
53
8,007
¥ 8,060¥

Millions of yen

Cash and cash equivalents
Bonds
Equity securities
Total*

Percent¥

21,799354

Millions of yen

Operating leases:
Due within one year
Due after one year

Thousands of
U.S. dollars

2017
¥

682
1,204
¥ 1,886

2016

¥
¥

528
864
1,392

Thousands of
U.S. dollars

2017

$

6,089
10,750$ 16,839

A certain subsidiary engaged in leasing operations as lessor enters into
various lease agreements with third parties principally for vehicles. The leases
are categorized as operating leases. At March 31, 2017 and 2016, the aggregate
future minimum lease commitments to be received for such non-cancelable leaseagreements, including the imputed interest, were as follows:

2017
2,563
2,884
$ 5,447$

Operating leases:
Due within one year
Due after one year

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

230
410
640

$

2017
¥
¥

2016

¥
¥

236
427
663

2017

$

2,053
3,661
5,714

15. Net Assets

2016
1%
1%
98%
100%

*99% of total plan assets consisted of assets of a retirement benefit payment
trust.
2. Long-term expected rate of return
Current and target asset allocations, historical and expected returns on
various categories of plan assets have been considered in determining thelong-term expected rate of return.
viii) Actuarial assumptions
	The principal actuarial assumptions (expressed as weighted averages):

20,571162

As lessee, the Seino Group has entered into various rental and leaseagreements for land and buildings to be used for truck terminals and warehouses
that are generally cancelable with a few months advance notice, except for certain
operating lease agreements. The aggregate minimum future lease payments forsuch non-cancelable operating lease agreements, including the imputed interest
portion, as lessee at March 31, 2017 and 2016 were as follows:

(a)

2017
1%
1%
98%
100%

¥

14. Lease Commitments

2017$ 38,330
1,607
11,089(151)$ 50,875vii) Plan assets
1. Plan assets comprise:2015
22,153At March 31, 2017 and 2016, the Seino Group was contingently liable fortrade notes endorsed to affiliates and third parties and for guarantees, including
substantial guarantees, principally of indebtedness of third parties in the aggregate
amount of ¥1,256 million ($11,223 thousand) and ¥1,233 million, respectively.

Thousands of
U.S. dollars

2016
2017
¥
(14) $ 2,429
9,246
85,437¥ 9,232 $ 87,866¥

13. Contingent Liabilitiesvi)Retirement benefit adjustment in accumulated other comprehensive income,before tax effects:
2017
Past service cost yet to be recognized¥272
Actuarial differences yet to be recognized
9,569
Total balance¥ 9,841¥2016
20,733

The ratio of contributions of the Company and its consolidated subsidiaries
to total contributions of multi-employer pension plans as of March 2017 and 2016
were 16.9% and 16.2%, respectively.

v)Retirement benefit adjustment included in other comprehensive income, before
tax effects:
Millions of yen

2016
mainly 1.0%
0.0%ix) Multi-employer pension plans
Required contributions of multi-employer pension plans, which are accounted
for by the same method as defined contribution pension plans, to welfare pension
funds that used for were ¥ 51 million ($ 455 thousand) and ¥ 47 million for theyear ended March 31, 2017 and 2016, respectively
The funded status of multi-employer pension plans as of March 31, 2016 and2015iii)Reconciliation from retirement benefit obligation and plan assets to employee
retirement benefit asset or liability:
Millions of yen

2017
mainly 1.0%
0.0%

Discount rateLong-term expected rate of return

Thousands of
U.S. dollars(b)Under the Japanese Corporate Law (the “Law”) and regulations, the entire amount paid for new
shares is required to be designated as common stock. However, a company may, by a resolutionof the Board of Directors, designate an amount not exceeding one half of the price of the newshares as additional paid-in capital, which is included in capital surplus.
Under the Law, in cases in which a dividend distribution of surplus is made, the smallerof an amount equal to 10% of the dividend or the excess, if any, of 25% of common stock over
the total of additional paid-in capital and legal earnings reserve must be set aside as additional
paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings
in the accompanying consolidated balance sheets.
Under the Law, legal earnings reserve and additional paid-in capital could be used toeliminate or reduce a deficit by a resolution of the shareholders' meeting. Additional paid-in
capital and legal earnings reserve may not be distributed as dividends. All additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained
earnings, respectively, which are potentially available for dividends.
At March 31, 2017 and 2016, capital surplus consisted principally of additional paid-in
capital. In addition, retained earnings included legal earnings reserve of the Company in theamount of ¥4,262 million ($38,054 thousand) at March 31, 2017 and 2016.
The maximum amount that the Company can distribute as dividends is calculated based on
the non-consolidated financial statements of the Company in accordance with Japanese laws
and regulations.
At the annual shareholders’ meeting held on June 28, 2017, the shareholders approved cash
dividends of ¥16 per share, amounting to ¥3,155 million ($28,170 thousand). The appropriation
had not been accrued in the consolidated financial statements as of March 31, 2017 as suchappropriations are recognized in the period in which they are approved by the shareholders.

19

16 Consolidated Statements of Cash Flows
Assets and liabilities of newly consolidated subsidiaries by acquisition
The following is the summary of assets acquired and liabilities assumed throughthe acquisition of shares Kanto Transportation Co., Ltd. and its five subsidiaries forthe year ended March 31, 2016, related costs and net payment:
Millions of yen

Current assets¥
Noncurrent assets
Goodwill
Current liabilities
Noncurrent liabilities
Acquisition cost¥
Cash and cash equivalents of newly consolidated subsidiaries
Purchase of shares of subsidiaries resulting in change in scope of consolidation ¥

5,648
8,524
16,636(4,652)(8,289)17,867(2,962)
14,905

17. Income Taxes
The tax effects of temporary differences that give rise to a significant portionof deferred tax assets and liabilities at March 31, 2017 and 2016 were as follows:

Thousands of
U.S. dollars

Millions of yen

2017
2016
2017
Deferred tax assets:
Employee retirement benefit liability ¥ 25,629 ¥ 25,076 $ 228,830
Enterprise tax accruals
473
632
4,223
Accrued bonuses
3,754
3,820
33,518Intercompany capital gains
1,173
1,171
10,473Operating loss carryforwards
352
501
3,143
Loss on assets transferred
1,376
1,585
12,286
Impairment loss on fixed assets
14,035
13,993125,313
Allowance for doubtful accounts
224
196
2,000
2,896
3,068
25,857
Other
49,91250,042445,643(15,510)(15,611)(138,482)
Less valuation allowance
34,402
34,431
307,161
Deferred tax liabilities:
Deferred capital gains
5,218
5,276
46,590
Unrealized gains on availablefor-sale securities
4,995
4,677
44,598Valuation adjustments for consolidation 11,179
11,184
99,813
Employee retirement benefit asset
81
657
723
533
555
4,759
Other
22,00622,349196,483¥ 12,396 ¥ 12,082 $ 110,678
Net deferred tax assets
At March 31, 2017 and 2016, deferred tax assets and liabilities wererecorded as follows:
Millions of yen

Deferred tax assets:
Current
Noncurrent
Deferred tax liabilities:
Noncurrent

2017¥ 5,209
9,984

2016

¥

2,797

Thousands of
U.S. dollars

2017

5,697
9,370

$ 46,509
89,143

2,985

24,974In assessing the realizability of deferred tax assets, management of the Seino Groupconsiders whether some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of the future taxable
income during the periods in which those temporary differences become deductible. At March
31, 2017 and 2016, a valuation allowance was provided to reduce deferred tax assets to the extent
that the management believed that the amount of the deferred tax assets was not realizable.
A reconciliation of the differences between the Japanese statutory tax rate and the effective
income tax rate on pretax income reflected in the accompanying consolidated statements ofincome for the years ended March 31, 2016 and 2015 was not disclosed because the difference
was not material. The reconciliation for the year ended March 31, 2017 was as follows:

20

Japanese statutory tax rate
Increase (decrease) due to:Permanently nondeductible expenses
Tax exempt income
Local minimum taxes - per capita levy
Amortization of goodwill
Equity in net income of affiliates
Changes in valuation allowance
Different tax rates applied to the consolidated subsidiaries
Tax credit for salary growth
Other
Effective income tax rate

Percentage of pretax
income

30.2%
0.4
(0.1)
2.3
1.5
(0.3)
(0.4)
4.3
(2.3)
0.6
36.2%

On March 29, 2016, amendments to the Japanese tax regulations were enacted intolaw. Based on the amendments, the effective statutory tax rate used to measure deferred
tax assets and liabilities (expected to be settled or realized on after April 1, 2016) in thefiscal year was changed from the previous rate of 31.5% to 30.2% for temporary differences
excepted to be resolved during the period from April 1, 2016 to March 31, 2018 and to30.2% for temporary differences excepted to be resolved on or after April 1, 2018. Dueto these changes in statutory income tax rates, net deferred tax assets (after deducting thedeferred tax liabilities) decreased by ¥137 million as of March 31, 2016, deferred income
tax expense recognized for the fiscal year ended March 31, 2016 increased by ¥276 million,
evaluation differences of other securities increased by ¥211 million and accumulated
adjustments for employee retirement benefits decreased by ¥72 million.
On March 31, 2015, amendments to the Japanese tax regulations were enacted into law.
Based on the amendments, the statutory income tax rates utilized for the measurement ofdeferred tax assets and liabilities expected to be settled or realized from April 1, 2015 toMarch 31, 2016 and on or after April 1, 2016 were changed for the fiscal year ended March
31, 2015 from 34.8% to 32.3% and 31.5%, respectively, as of March 31, 2015. Due to thesechanges in statutory income tax rates, net deferred tax assets (after deducting the deferred
tax liabilities) decreased by ¥97 million as of March 31, 2015, deferred income tax expense
recognized for the fiscal year ended March 31, 2015 increased by ¥476 million, evaluationdifferences of other securities increased by ¥461 million and accumulated adjustments for
employee retirement benefits decreased by ¥82 million.
Since amendment to the Japanese tax regulations were enacted into law on November
18, 2016, the statutory tax rate utilized for the measurement of deferred tax assets andliabilities in the current fiscal year changed from the previous year. The effects of thesechanges in the current fiscal year were not material.

18. Comprehensive Income
Amounts reclassified to net income (loss) in the current period that wererecognized in other comprehensive income in the current or previous periods andthe tax effects for each component of other comprehensive income for the years
ended March 31, 2017, 2016 and 2015 were as follows:

Thousands of
U.S. dollars

Millions of yen

2017
2016
2015
2017
Net unrealized gains onavailable-for-sale securities:
Increase during the year
¥ 1,305 ¥ (2,032) ¥ 5,162 $ 11,652
(34)
(1)
(1)
(304)
Reclassification adjustments
Subtotal, before tax
1,271 (2,033) 5,161
11,348(324)709 (1,131)(2,893)Tax effectSubtotal, net of tax
947 (1,324) 4,030
8,455
Foreign currency translation adjustments:
Increase during the year
Reclassification adjustments
Subtotal, before tax
Tax effectSubtotal, net of tax

(139)
—
(139)
—
(139)

61
—
61
—
61

(563)
—
(563)
—
(563)

Retirement benefit adjustment:(Decrease) during the year
(1,826) (8,425)
365
Reclassification adjustments 1,216
Subtotal, before tax(610) (8,060)
216
2,782
Tax effectSubtotal, net of tax(394) (5,278)

(131)
358
227
(145)
82

(16,304)
10,857(5,447)
1,929(3,518)

(44)
(13)
45
(6)
(5)
(2)
(50)
(18)
43
440 ¥ (6,759) ¥ 4,216

(393)
(53)
(446)
3,928

Shares of other comprehensive
income of affiliates accounted forusing equity method:(Decrease) increase during the year
Reclassification adjustments
Subtotal
Total other comprehensive income ¥

(63)
—
(63)
—
(63)

$

19. Business Combinations
For the year ended March 31, 2017
Stock-for-stock exchange agreements with the subsidiaries
On March 4, 2016, the Company entered into stock-for-stock exchange agreementswith a subsidiary, Toyota Home Gifu Co., Ltd., in order to increase the Company’s
equity share in the subsidiary to 100%. In accordance with this agreement, on April
1, 2016 (the stock-for-stock exchange date), the Company reissued 35,925 shares oftreasury stock at various exchange rates representing a certain number of shares of theCompany’s common stock (see below) for one share of common stock to the respective
minority shareholders of the subsidiary. The acquisition cost of the acquired companieswas ¥ 41 million ($363 thousand).
Details of the stock-for-stock exchange transactions with the subsidiaries were as
follows:

Exchange rate representing the number of sharesof common stock of the Company for one share ofcommon stock of the subsidiary

Toyota Home Gifu Co., Ltd.

359.25(shares)

The Company applied ASBJ Statement No. 21, “Accounting Standard for Business
Combinations,” revised on September 13, 2013, and ASBJ Guidance No. 10, “Guidanceon Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures,” revised on September 13, 2013, and treated them as business
transactions under common control.
For the year ended March 31, 2016
Stock-for-stock exchange agreements with the subsidiaries
On February 17, 2015, the Company entered into stock-for-stock exchange
agreements with six subsidiaries, Seino Super Express Co., Ltd., Seino Sangyo Co.,
Ltd., Seino Family Co., Ltd., Seino Tsu-un Transportation Co., Ltd., Suito TravelCo., Ltd. and Seino Engineering Co., Ltd., in order to increase the Company’s equity
shares in the subsidiaries to 100%. In accordance with these agreements, on April 1,2015 (the stock-for-stock exchange date), the Company reissued 2,457,806 shares oftreasury stock at various exchange rates representing a certain number of shares of theCompany’s common stock (see below) for one share of common stock to the respective
minority shareholders of each of the six subsidiaries. The acquisition cost of the acquiredcompanies was ¥ 3,190 million.
(1)	Details of the stock-for-stock exchange transactions with the subsidiaries
were as follows:
Exchange rate representing the number of sharesof common stock of the Company for one share ofcommon stock of the subsidiaries

Seino Super Express Co., Ltd.
Seino Sangyo Co., Ltd.
Seino Family Co., Ltd.
Seino Tsu-un Transportation Co., Ltd.
Suito Travel Co., Ltd.
Seino Engineering Co., Ltd.

0.054
2.020
2,662.580
56.97029.94017.350(shares)(2)	Changes in the portion held by the Company in connection with thetransactions with non-controlling interests① Main reason for changes in capital surplus
		Additional acquisition of subsidiary’s shares② 	Increase in capital surplus due to transactions with non-controllinginterests		 ¥5,508 million
The Company applied ASBJ Statement No. 21, “Accounting Standard for Business
Combinations,” revised on September 13, 2013, and ASBJ Guidance No. 10, “Guidanceon Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures,” revised on September 13, 2013, and treated them as business
transactions under common control.
Acquisition for the shares of Kanto Transportation Co., Ltd.
On May 13, 2015, the Board of Directors determined that the Company purchase allof the shares of Kanto Transportation Co., Ltd. from a fund managed by Polaris CapitalGroup Co., Ltd. through a fifty-fifty joint venture for investment by the Company and alimited partnership for investment managed by Karita and Company, Inc. etc., of which
Development Bank of Japan Inc. was the single limited partner and with regard to which
the Company signed a Share Purchase Agreement on the same date.
(1) General description of business combination① Name of the absorbed business and its description
		 Name of business: KSK Holdings Co., Ltd.
		Business description: Joint venture for purchasing shares of Kanto
Transportation Co., Ltd.
② Name of the absorbed business and its description		Name of business: Kanto Transportation Co., Ltd. and its fivesubsidiaries.
		 Business description: Transportation services(2) Main reason for business combination
To improve company performance and increase enterprise value by acquiring
a second general transportation business concern. The Company has added a
cold chain for which the expansion rate is high and obtained a transportation
network that utilizes ordinary, chilling and freezing temperatures, creating
new value and advancing our transportation services.
(3) Date of business combination
June 30, 2015(4) Legal form of business combination
Share acquisition(5) Acquired voting rights① KSK Holdings Co., Ltd.: 50%② Kanto Transportation Co., Ltd. and its five subsidiaries: 50%(6) Additional acquisition of shares in acquired company
Acquisition cost and consideration paid
① KSK Holdings Co., Ltd.
		 Consideration paid for acquisition: Cash ¥ 4,911 million② Kanto Transportation Co., Ltd. and its five subsidiaries
		 Consideration paid for acquisition: Cash ¥ 17,867 million(7) Main acquisition related costs

Fees paid : 47 million(8) Amount of goodwill and amortization method and period① Amount of goodwill: 16,636 million② 	Amortization method and period: Straight-line amortization over 15 years(9)	Asset acquired and liabilities assumed as of the date of the businesscombination
Millions of yen

Current assets
Noncurrent assets
Total assets¥

Current liabilities
Noncurrent liabilities
Total liabilities

¥

¥

¥

5,649
8,525
14,174

4,652
8,289
12,941

Common control transaction
On January 1, 2016, two consolidated subsidiaries KSK Holdings Co., Ltd. andKanto Transportation Co., Ltd. merged.
(1) General description of business combination① Combined Business		 Name of business: KSK Holdings Co., Ltd.
		Business description: Joint venture for purchasing shares of Kanto
Transportation Co., Ltd.
② The Combined Business		Name of business: Kanto Transportation Co., Ltd. and its fivesubsidiaries.
		 Business description: Transportation services(2) Date of business combination
January 1, 2016
(3) Legal form of business combination
Absorption-type merger
Surviving company: KSK Holdings Co., Ltd.
Merged company: Kanto Transportation Co., Ltd.
(4) Name after business combination
Kanto Transportation Co., Ltd. ( January 1, 2016, change of trade name from“KSK
Holdings Co., Ltd.”)
The Company applied ASBJ Statement No. 21, “Accounting Standard for Business
Combinations,” revised on September 13, 2013, and ASBJ Guidance No. 10, “Guidanceon Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures,” revised on September 13, 2013, and treated them as business
transactions under common control.

20. Subsequent Events
Disposal of Treasury Stocks as Restricted Shares-based Remuneration
On July 7, 2017, the Company determined to dispose of treasury stock as restricted
share-based remuneration and executed the disposal on August 4, 2017 as follows.
1. Overview of the Disposal of Treasury Stocks(1)Disposal date(2)Class and number of shares
to be disposed(3)Disposal value(4)Total disposal value(5)Method of offer or disposal(6)Method of contribution

August 4, 2017
Ordinary shares of the Company;
240,000 shares¥ 1,492 per share¥ 358,080,000 ($3,197 thousand)Allotment of specified restricted shares
In-kind contribution of monetary compensation
receivables(7)Acquirers of disposed shares Seino Holdings’ Members of the Board (including
and number of such acquirers, Members of the Board (Outside)): 9 person
and number of shares to be
222,000 sharesSeino Holdings’ subsidiarydisposed
Members of the Board:4 person 18,000 shares(8)Other
Disposal of Treasury Stocks was filed inaccordance with the Financial Instruments andExchange Act.
2. Purpose of and Reasons for the Disposal
The Company resolved, at a meeting of its Board of Directors held on May 12,
2017, to introduce a new restricted share-based remuneration plan (the “Remuneration
Plan”) in order to provide an incentive for the Members of the Board, including outsideboard members(“Eligible Board Members”), of the Company and its subsidiary tosustainably increase corporate value and in order to further promote shared values withshareholders as a new remuneration plan for Eligible Board Members of the Company
and its subsidiary.
At the 96th Ordinary General Meeting of Shareholders held on June 28, 2017,it was approved that monetary compensation not exceeding 600 million yen ($5,357
thousand) per year , including 100 million yen ($892 thousand) per year to outsideboard members and excluding the amount of employee’s salary paid to a Member ofthe Board who concurrently holds an employee post, shall be paid to Eligible Board
Members as monetary compensation to serve as the property to be contributed for theacquisition of shares with transfer and other restrictions (“restricted shares”) pursuant to
the Remuneration Plan and that the transfer restriction period for restricted shares shallbe the period specified by the Board of Directors of the Company and its subsidiary,
which shall be a period between three to six years from the day on which such sharesare allotted.

2121. Segment Information
1.

2.
3.

General information about reportable segments

The reportable segments are constituent business units of the Seino Group for which separate financial information is obtained and examined regularly
by the Board of Directors to evaluate business performance. The Seino Group has established the “Business Promotion Department” as a holding company.
Each subsidiary plans and operates each business under its control. In addition, some of the subsidiaries engage in real estate leasing services to make good useof their facilities. Therefore, the Seino Group consists of business segments that are based on the business conducted by each subsidiary. The Seino Group’sreportable segments are “transportation services,” “vehicle sales,” “merchandise sales” and “real estate leasing services.”

Basis of measurement about reportable segment profit or loss, segment assets and other material items

The principles of segment accounting are basically the same as those described in Note 2, “Summary of Significant Accounting Policies.” Intersegment sales
and transfer amounts are based on market prices.

Information about reportable segment profit or loss, segment assets and other material items

Information about reportable segment for the years ended March 31, 2017, 2016 and 2015 is summarized as follows:

For the year 2017:
Operating revenue:
		External customers
		 Intersegment sales or transfers
			Total operating revenue
Segment income (*2)

Transportation
services¥¥

Segment assets (*3)¥
Depreciation
Amortization of goodwill
Investments in affiliates accounted
for using the equity method
Increase in tangible and intangible
fixed assets
For the year 2016:
Operating revenue:
		External customers¥
		 Intersegment sales or transfers
			Total operating revenue¥
Segment income (*2)
Segment assets (*3)¥
Depreciation
Amortization of goodwill
Investments in affiliates accounted
for using the equity method
Increase in tangible and intangible
fixed assets
For the year 2015:
Operating revenue:
		External customers¥
		 Intersegment sales or transfers
			Total operating revenue¥
Segment income (*2)
Segment assets (*3)¥
Depreciation
Amortization of goodwill
Investments in affiliates accounted
for using the equity method
Increase in tangible and intangible
fixed assets
For the year 2017:
Operating revenue:
		External customers
		 Intersegment sales or transfers
			Total operating revenue
Segment income (*2)

Vehicle sales

Merchandise
sales

Real estateleasing services

Other (*4)

422,870 ¥
1,975
424,845
20,020 ¥100,237 ¥
8,665
108,902
5,055 ¥

27,749 ¥19,62147,370766 ¥Millions of yen
1,543 ¥
15,140 ¥—10,093
1,543
25,233
1,279 ¥
728 ¥

447,153 ¥
14,993
1,109

110,482 ¥
1,861—

14,490 ¥42—

13,153 ¥
54
—

3,962

—

—

14,3044,200

416,113 ¥
1,730
417,843
19,113441,635
14,121
837

Total

Adjustments(*1)

Consolidated

567,539 ¥
40,354
607,893
27,848— ¥(40,354)(40,354)(731) ¥

567,539—
567,539
27,11741,506 ¥363—

626,784 ¥
17,313
1,109(32,520) ¥(336)—

594,264
16,977
1,109

—

—

3,962

(2)

3,960

17

257

441

19,219(343)

18,876

94,441 ¥
8,436
102,877
4,926 ¥
107,391 ¥
1,830—

28,029 ¥20,60948,638772 ¥
13,401 ¥38—

1,472 ¥—
1,472
1,228 ¥
13,402 ¥38—

15,402 ¥24,31739,7191,107 ¥
42,561 ¥335—

555,457 ¥
55,092
610,549
27,146 ¥618,390 ¥
16,362837— ¥(55,092)(55,092)(960) ¥
(38,825) ¥(323)—

555,457—
555,457
26,186
579,565
16,039
837

3,675

—

—

297

—

3,972

(3)

3,969

46,224

2,605

67

360

384

49,640(387)

49,253398,972 ¥1,494
400,466
14,699 ¥405,415 ¥
13,062
6

95,351 ¥
7,868
103,219
4,890 ¥
104,153 ¥
1,710—

32,699 ¥24,77657,475755 ¥
13,840 ¥45—

1,401 ¥—
1,401
1,199 ¥
12,477 ¥32—

14,029 ¥13,691
27,720546 ¥
39,916 ¥296—

542,452 ¥
47,829590,281
22,089 ¥575,801 ¥15,1456— ¥(47,829)(47,829)(703) ¥
(27,276) ¥(304)—

542,452—
542,452
21,386
548,525
14,841
6

3,096

—

—

231

—

3,327

(4)

3,323

17,244

Transportation
services

2,536
Vehicle sales

9

Merchandise
sales

189

Real estateleasing services

595
Other (*4)

20,573
Total

(479)

Adjustments(*1)

20,094
Consolidated

Thousands of U.S. dollars
13,777 $ 135,179 $ 5,067,313 $— $ 5,067,313—
90,116360,303(360,303)—
13,777225,295
5,427,616(360,303)
5,067,313
11,420 $6,500 $ 248,643 $(6,526) $ 242,117$ 3,775,625 $
17,634
3,793,259$ 178,750 $

894,973 $
77,366
972,339
45,134 $247,759 $
175,187
422,946
6,839 $

Segment assets (*3)
$ 3,992,438 $Depreciation
133,866
Amortization of goodwill
9,902
Investments in affiliates accounted
for using the equity method
35,375
Increase in tangible and intangible
127,714
fixed assets

986,446 $
16,616—

129,375 $375—

117,438 $
482
—

—

—

—

—

35,375(18)

35,35737,500

152

2,294

3,938

171,598(3,062)

168,536

370,589 $ 5,596,286 $ (290,357) $ 5,305,929
3,241
154,580(3,000)151,580
—
9,902
—
9,902

Note: *1)	Adjustments column in the table above represents principally the elimination of intersegment transactions and balances, except for (*2) and (*3).
*2)	Segment income is reconciled to operating income in the accompanying consolidated statements of income. Segment income in the adjustments column represents
unallocated general corporate expenses which were not assigned to specific reportable segments, net of intersegment transactions.
*3)	Segment assets in the adjustments column represent unallocated general corporate items which were not assigned to specific reportable segments, including items
such as cash, short-term and long-term investments in securities, net of intersegment balances.
*4)	Other segment represents the business segment not included in the reportable segments and includes the information services business, the housing sales business,the passenger transportation business and other business.
22

(Related information)
1. Information about products and services
The Company has not disclosed information about products and services here because the Company has disclosed the same information above.
2. Information about geographic areas(1) Operating revenue
The Company has omitted the disclosure of operating revenue by geographic area because operating revenue to external customers in Japan accounts
for more than 90% of the amount of operating revenue reported in the consolidated statements of income.
(2) Property and equipment
The Company has omitted the disclosure of property and equipment by geographic area because property and equipment in Japan account for morethan 90% of the amount of property and equipment reported in the consolidated balance sheets.
3. Information about major customers
The Company has not disclosed information about major customers because no customer contributed 10% or more to operating revenue in the
consolidated statements of income.
4. Information on impairment loss by reportable segments:
Impairment loss:
For the year 2017
For the year 2016
For the year 2015
Impairment loss:
For the year 20175.

Transportation
services

Merchandise
sales

Real estateleasing services

¥

19 ¥
39
39

202 ¥
35
61

Millions of yen
— ¥
— ¥
—
372
—
27

$

170 $

1,803 $

Thousands of U.S. dollars
— $
— $

Other

Total

— ¥
—
—

221
446
127

— $

1,973

Information on goodwill and negative goodwill incurred due to business combinations before April, 2010 by reportable segments:
For the year 2017:
Amortization of goodwill

Transportation
services¥

As of March 31, 2017:
Balance of goodwill
For the year 2016:
Amortization of goodwill¥

As of March 31, 2016:
Balance of goodwill

Vehicle sales

Merchandise
sales

1,109 ¥

— ¥14,6954837 ¥
15,804

Real estateleasing services

Millions of yen
— ¥

Other

Total

— ¥

— ¥

1,109

—

—

—

14,699

— ¥

— ¥

— ¥

— ¥

837

—

—

—

—

15,804

For the year 2015:
Amortization of goodwill¥
Amortization of negative goodwill

6 ¥
3

— ¥
—

— ¥
—

— ¥
—

— ¥
—

6
3

As of March 31, 2015:
Balance of goodwill
Balance of negative goodwill

5
—

—
—

—
—

—
—

—
—

5
—

Transportation
services

Vehicle sales

Merchandise
sales

Real estateleasing services

For the year 2017:
Amortization of goodwill$

As of March 31, 2017:
Balance of goodwill
6.

Vehicle sales

Thousands of U.S. dollars
— $
— $
— $

9,902 $
131,205

36——

Vehicle sales

Merchandise
sales

Real estateleasing services

Information on gain on negative goodwill by reportable segments:
Gain on negative goodwill:
For the year 2017
For the year 2016
For the year 2015
Gain on negative goodwill:
For the year 2017

Transportation
services

¥

—
1 ¥
—

Transportation
services

$

— $

—
24 ¥
—
Vehicle sales

Millions of yen—— ¥—Merchandise
sales

Other

Real estateleasing services

— $

9,902

—

131,241

Other

—
— ¥
—

Thousands of U.S. dollars
— $
— $
— $

Total

Total

—
— ¥
—
Other

—
25
—
Total

— $

—

23

Report of Independent Auditors
Independent Auditor’s Report
To the Board of Directors of
SEINO HOLDINGS CO., LTD.:
We have audited the accompanying consolidated financial statements of SEINO HOLDINGS CO., LTD. (the “Company”) and its
subsidiaries, which comprise the consolidated balance sheets as at March 31, 2017 and 2016, and the consolidated statements of income,statements of comprehensive income, statements of changes in net assets and statements of cash flows for each of the years in the three-year
period ended March 31, 2017, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits inaccordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation andfair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, while
the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its
subsidiaries as at March 31, 2017 and 2016, and their financial performance and cash flows for each of the years in the three-year period ended
March 31, 2017, in conformity with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2017 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has
been made on the basis described in Note 1 of the Notes to Consolidated Financial Statements.

October 12, 2017
Nagoya, Japan

24

Seino GroupThe Seino Group consists of Seino Holdings Co., Ltd. and 70 consolidated subsidiaries and 21 affiliates. The Seino
Group operates in five business segments: transportation services, vehicle sales, merchandise sales, leasing for realestate services and other services. The business relationship in the Seino Group is as follows.

Clients
Collection and
Delivery

VehiclesSales and Repairs

Sales

Services

Real Estate
Leasing

Domestic Transportation

Vehicle Sales

Merchandise Sales

Leasing for Real Estate

Seino Transportation Co., Ltd.
*1
Hokkaido Seino Transportation Co., Ltd. *1
Tohoku Seino Transportation Co., Ltd. *1
Kanto Seino Transportation Co., Ltd.
*1
Seino Super Express Co., Ltd.
*1
Kanagawa Seino Transportation Co., Ltd. *1
Izu Seino Transportation Co., Ltd.
*1
Nohi Seino Transportation Co., Ltd.
*1
Tokai Seino Transportation Co., Ltd.
*1
Mie Seino Transportation Co., Ltd.
*1
Hinomaru Seino Transportation Co., Ltd. *1
Shikoku Seino Transportation Co., Ltd. *1
Kyushu Seino Transportation Co., Ltd. *1
Okinawa Seino Transportation Co., Ltd. *1
Seino Tsu-un Transportation Co., Ltd.
*1
Seino Express Co., Ltd.
*1
Seino Hikkoshi Co., Ltd.
*1
Seino Hokkaido Express Co., Ltd.
*1
Seino Tokyo Express Co., Ltd.
*1
Seino Hokuriku Express Co., Ltd.
*1
Seino Nagoya Express Co., Ltd.
*1
Seino Osaka Express Co., Ltd.
*1
Seino ST Service Co., Ltd.
*1
S&N Logistics Co., Ltd.
*1
Toyo Co., Ltd.
*1
Katsunuma Transportation Co., Ltd.
*1
Darumaya Transportation Co., Ltd.
*1
Central Logistics Co., Ltd.
*1
Eco Alliance Co., Ltd.
*1
COCONET CO., LTD.
GENie Co., Ltd.
*1ASAHI CONPOU CO., LTD.
*1
Kanto Transportation Co., Ltd.
*1
Osaka Kosoku Nyuhai Corporation*1
KCS Co., Ltd.
*1
Izumikawa Transportation Co., Ltd.
*1TMR Kita Kanto,Inc.
*1
Saitama Seino Transportation Co., Ltd. *2
Tokyo Seino Transportation Co., Ltd.
*2
Kobaun Co., Ltd.
*2
Mikawa Seino Transportation Co., Ltd.
Ensyu Seino Transportation Co., Ltd.
Kumamoto Seino Transportation Co., Ltd.
Tango Seino Transportation Co., Ltd.

Toyota Corolla Gifu Co., Ltd. *1
Gifu Hino Motor Co., Ltd. *1
Netz Toyota Gifu Co., Ltd. *1
Asahi Enterprise Co., Ltd. *1*1
Jms Gifu Co., Ltd.
Shiga Hino Motor Co., Ltd. *1
Seino Auto Service Kanto *1
Co., Ltd.
Seino Auto Lease Co., Ltd. *1*1
Tokyo Sharyou Co., Ltd.
Unicla Jiko Co., Ltd.
Subic GS Auto, Inc.
Toyota Gifu Parts Dsitributor
Co., Ltd.

Seino Trading Co., Ltd. *1
Seino Sangyo Co., Ltd. *1*1
Seino Commercial(Shanghai) Co., Ltd.
Seino Asia Trading Co., Ltd.

Seino Transportation Co., Ltd.
OthersMarchandise
sales

Information Services

VehicleSales

Seino Information
Service Co., Ltd.

*1

Japan Logistics
Development Co.,
Ltd.

*1

International Transportation
Seino Logix Co., Ltd.

Others*1

United-Seino Transportation(Malaysia) Sdn. Bhd.
*1
Seino Customs Clearance Service Co., Ltd. *1
Seino(Thailand) Co., Ltd.

*1

Seino Saha Logistics Co., Ltd. *1

PT Seino Indomobil Logistics Services *1
Schenker-Seino Co., Ltd.
Entsu Logistics Co., Ltd.

Leasing forReal Estate Services*2*2

PT Seino Indomobil Logistics SIRACHA
TRANSPORT CO., LTD.
*2

Asahi Agency Co., Ltd. (Advertising agency)*1
Suito Travel Co., Ltd. (Passenger transportation, Travel agency) *1*1Seino Engineering Co., Ltd. (Construction)*1
Seino Family Co., Ltd. (Insurance agency service)*1
Seino Staff Service Co., Ltd. (Personnel service)*1
Toyota Home Gifu Co., Ltd. (Housing sales)*1Asahi Create Co., Ltd. (Comprehensive printer)
Seino Business Support Co., Ltd. (Business support services) *1*1
Seino Ecotrading Inc. (Wholesale of recycled resources)
Nihon Oroshiuri Shiire Network Co., Ltd. (Collection agency) *1
Seino Financial Co., Ltd. (Settlement service representative) *1
Toyota Rent-A-Lease Gifu Co., Ltd. (Rental and lease)
Gifu Automotive Dealer Plaza Co., Ltd. (Rental office)Box Charter Co., Ltd.
Cosmo Hokuriku Haiso Center Co., Ltd.
Gifu Truck Kogyo Co., Ltd.
Aishin Sangyo Co., Ltd.
Ogaki School Lunch Support Co., Ltd.
INTENTS Inc.

OthersTransportation
Services

Seino Holdings Co., Ltd.
Note *1: Consolidated subsidiaries*2: Affiliates (under the equity method)
Companies except those mentioned above are affiliates
under the cost method.

70
6
15

25