Translation
Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any
discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results
for the Nine Months Ended December 31, 2015
(Based on Japanese GAAP)
January 28, 2016
Company name:SMS CO., LTD.
Stock exchange listing: Tokyo
Stock code:
Representative:

2175
CEOURLhttp://www.bm-sms.co.jp/Natsuki Goto

Inquiries:
Director, Corporate Planning Department
Scheduled date to file Quarterly Securities Report:

Masato Sugizaki
February 12, 2016

Scheduled date to commence dividend payments:
Preparation of supplementary material on quarterly financial results:–Yes

Holding of quarterly financial results meeting:

Yes

TEL

03-6721-2400(for institutional investors and analysts)(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the nine months ended December 31, 2015 (from April 1, 2015 to December 31, 2015)(1) Consolidated operating results (cumulative)
Net sales
Nine months ended December 31, 2015
Nine months ended December 31, 2014

Millions of yen
12,842
10,666Percentages indicate year-on-year changes
Profit attributable toOperating income
Ordinary income
owners of parent% Millions of yen% Millions of yen% Millions of yen%
20.4
1,572
16.7
2,170
20.7
1,371
(0.5)
22.3
1,347
23.4
1,798
23.4
1,378
47.9

Earnings per share

Diluted earnings per share

Yen
33.83
33.74

Nine months ended December 31, 2015
Nine months ended December 31, 2014

Yen
33.73
33.64

(2) Consolidated financial position
Total assets
As of December 31, 2015
As of March 31, 2015

Net assets

Millions of yen
33,053
11,421Equity ratio

Millions of yen
7,813
6,923

%
23.2
59.7

2. Cash dividends
Annual dividends per share

Year ended March 31, 2015
Year ending March 31, 2016

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen
––Yen
0.00
0.00

Yen––

Yen
7.00

Yen
7.00

––

Year ending March 31, 2016 (Forecast)Total

3. Forecast of consolidated financial results for the year ending March 31, 2016 (from April 1, 2015 to March 31, 2016)
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating income
Ordinary income
Earnings per shareowners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Yen
Full year
19,102
26.9
2,740
31.8
3,429
27.3
2,265
24.1
55.85

1

4. Notes(1) Changes in significant subsidiaries during the nine months ended December 31, 2015(changes in specified subsidiaries resulting in the change in scope of consolidation):Yes(2) Application of special accounting methods for preparing quarterly consolidated financial statements:

No(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:
Changes in accounting policies due to other reasons:

NoNo

Changes in accounting estimates:
Restatement of prior period financial statements:

NoNo(4) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of December 31, 2015

41,887,200 shares As of March 31, 2015

41,887,200 shares

Number of treasury shares at the end of the period
As of December 31, 2015

1,330,272 shares As of March 31, 2015

1,330,272 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Nine months ended December 31, 2015

40,556,928 shares Nine months ended December 31, 2014

240,868,674 shares

Quarterly consolidated financial statements
Consolidated balance sheets(Thousands of yen)
As of March 31, 2015

As of December 31, 2015

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade

2,708,623
2,486,428

4,249,024
2,910,223109,185
7,784

97,67635,141

12,721
1,306,471

37,0411,800,694

Prepaid expenses
Deferred tax assets

572,957
214,454670,009179,864

Other
Allowance for doubtful accounts

38,232(93,840)

136,559(178,361)

7,363,018

9,937,873

208,087(71,655)

339,185(156,429)

136,432

182,756

275,425(164,006)

543,624(384,351)

Tools, furniture and fixtures, net

111,419

159,273

Machinery, equipment and vehicles
Accumulated depreciation

11,871(3,322)58,445(24,019)

Merchandise and finished goods
Work in processSupplies
Accounts receivable - otherTotal current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Tools, furniture and fixtures
Accumulated depreciation

Machinery, equipment and vehicles, net
Total property, plant and equipment

8,548

34,426

256,400

376,456

1,318,296
730,608

19,279,633
1,417,864

50

50

2,048,954

20,697,547

1,240,328
101,309

1,248,075
203,905

382,489
28,629503,361
86,5291,752,757

2,041,872

Intangible assets
GoodwillSoftware
OtherTotal intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Lease and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets

3

4,058,113

23,115,876

11,421,131

33,053,750

(Thousands of yen)
As of March 31, 2015

As of December 31, 2015

Liabilities
Current liabilities
Accounts payable - trade131,641

376,337

Short-term loans payable
Accounts payable - other188
2,604,033

19,004,226
3,318,079

Accrued expenses
Income taxes payable

207,408
554,460

290,274
508,141Accrued consumption taxes
Advances received

371,52152,158137,446
1,185,698

Deposits received
Provision for bonuses

56,556
241,572

22,216
84,284

ProvisionForRepayment
Other

135,835
38,713111,131
39,309Total current liabilities

4,394,091

25,077,145

Non-current liabilities
Net defined benefit liability

89,63496,954Other

14,16365,902

Total non-current liabilities

103,797

162,856

4,497,889

25,240,002

Capital stock
Retained earnings

304,166
7,249,161

304,166
8,339,106

Treasury shares(1,036,485)(1,036,485)

Total shareholders' equity

6,516,843

7,606,788

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

10,403
287,523

9,396
40,633

Total accumulated other comprehensive income

297,926

50,02947,33961,133

71,16585,764

6,923,242

7,813,748

11,421,131

33,053,750

Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

4Consolidated statements of income (cumulative) and consolidated statements of comprehensive income(cumulative)
Consolidated statements of income (cumulative)(Thousands of yen)

Net sales
Cost of sales

Nine months ended

Nine months ended

December 31, 2014

December 31, 2015

10,666,917
855,713

12,842,667
1,031,735

Gross profit

9,811,204

11,810,932

Selling, general and administrative expenses

8,463,457

10,238,544

Operating income

1,347,746

1,572,388

Share of profit of entities accounted for using equity method
Other434,827
29,219605,904
35,655

Total non-operating income

464,046

641,559

2,730

21,321

8,825
1,053

19,424–Non-operating income

Non-operating expenses
Interest expenses
Foreign exchange losses
Commission for purchase of treasury shares
Other431

2,668

13,041

43,414

1,798,751

2,170,534

185,084

–

1,434

–

186,519–

Loss on sales and retirement of non-current assets
Loss on valuation of investment securities

–
–

1,468
55,201

Total extraordinary losses–

56,6691,985,271

2,113,864

550,770
55,226735,192
1,498

Total non-operating expenses
Ordinary income
Extraordinary income
Gain on step acquisitionsGain on sales of investment securities
Total extraordinary income
Extraordinary losses

Income before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

5605,996

736,691

1,379,274

1,377,173

429

5,274

1,378,844

1,371,898

Consolidated statements of comprehensive income (cumulative)(Thousands of yen)

ProfitOther comprehensive income

Nine months ended

Nine months ended

December 31, 2014

December 31, 2015

1,379,2741,377,173

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

10,454
213,154(1,047)(264,975)

Share of other comprehensive income of entities accounted
for using equity method(10,489)

11,599Total other comprehensive income

213,118(254,422)

1,592,393

1,122,750

1,588,492

1,124,001

3,900(1,251)

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

6Consolidated statements of cash flows(Thousands of yen)

Cash flows from operating activities
Income before income taxes and minority interests

Nine months ended

Nine months ended

December 31, 2014

December 31, 2015

1,985,271

2,113,864

Depreciation
Amortization of goodwill

177,628
250,274

308,136
222,562

Loss (gain) on step acquisitions
Loss (gain) on sales and retirement of non-current assets(185,084)
––
1,468

–

55,201(121,492)(43,383)

3,074(13,344)

Increase (decrease) in provision for bonuses
Increase (decrease) in repayment for bonuses(61,443)(7,652)(157,288)(24,704)

Increase (decrease) in net defined benefit liability
Decrease (increase) in notes and accounts receivable - trade

9,772
210,949

7,320
790,618

Increase (decrease) in accrued consumption taxes
Decrease (increase) in prepaid expenses

157,657
117,954(240,120)
40,022

Increase (decrease) in advances received
Increase (decrease) in accounts payable - other

40,4081,292,075(9,229)122,014(64,890)
2,887(12,689)(616,582)

3,807,387

2,543,865

3,653(3,144)

7,260(21,924)

Income taxes paid

(907,098)(1,121,659)

Net cash provided by (used in) operating activities

2,900,798

1,407,541

Payments into time deposits
Purchase of property, plant and equipment–(90,573)(65,700)(55,094)

Proceeds from sales of property, plant and equipment
Purchase of intangible assets–(474,556)

881(533,823)

8,934
(50)

–
–

Purchase of shares of subsidiaries resulting in change in scopeof consolidation(225,415)(17,907,051)

Purchase of shares of subsidiaries and associates
Payments of loans receivable(120,670)––(37,680)

1,341

2,470

(900,991)(18,595,998)

Loss (gain) on valuation of investment securities
Share of (profit) loss of entities accounted for using equity
methodIncrease (decrease) in allowance for doubtful accounts

Decrease (increase) in lease and guarantee deposits
Other, net
SubtotalInterest and dividend income received
Interest expenses paid

Cash flows from investing activities

Proceeds from sales of investment securities
Purchase of investment securities

Other, net
Net cash provided by (used in) investing activities

7

(Thousands of yen)

Cash flows from financing activities
Increase in short-term loans payable

Nine months ended

Nine months ended

December 31, 2014

December 31, 2015–

19,004,038

Proceeds from issuance of common shares
Purchase of treasury shares

495(417,274)––

Cash dividends paid
Payments from changes in ownership interests in subsidiaries(204,272)(281,323)(534,229)(4,692)–(13,007)(1,155,281)

18,705,014

that do not result in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

10,428(55,094)

Net increase (decrease) in cash and cash equivalents

854,954

1,461,463

Cash and cash equivalents at beginning of period

1,897,846

2,694,008

3,828–

2,756,629

4,155,471

Increase in cash and cash equivalents from newly consolidated
subsidiary
Cash and cash equivalents at end of period8