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 Six Months Ended September 30, 2019
(Based on Japanese GAAP)
October 30, 2019
Company name:SMS CO., LTD.
Stock exchange listing: Tokyo
Stock code:
Representative:

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

Inquiries:
CFO
Scheduled date to file Quarterly Securities Report:Masato Sugizaki
November 13, 2019

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 six months ended September 30, 2019 (from April 1, 2019 to September 30, 2019)(1) Consolidated operating results (cumulative)
Net sales
Six months ended September 30, 2019
Six months ended September 30, 2018

Millions of yen
17,62815,040Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
owners of parent% Millions of yen% Millions of yen% Millions of yen%
17.2
2,074
6.2
3,119
7.4
2,319
7.5
14.3
1,953
(9.0)
2,905
8.0
2,157
16.0

Earnings per share

Diluted earnings per share

Yen
26.66
24.84

Six months ended September 30, 2019
Six months ended September 30, 2018

Yen
26.53
24.75

(2) Consolidated financial position
Total assets
As of September 30, 2019
As of March 31, 2019Net assets

Millions of yen
49,28147,467

Equity ratio

Millions of yen
16,637
15,539

%
33.4
32.4

2. Cash dividends
Annual dividends per share

Year ended March 31, 2019Year ending March 31, 2020

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen
––

Yen
0.00
0.00

Yen–

Yen
7.50

Yen
7.50

–––

Year ending March 31, 2020 (Forecast)Total

3. Forecast of consolidated financial results for the year ending March 31, 2020 (from April 1, 2019 to March 31, 2020)
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating profit
Ordinary profit
Earnings per shareowners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Yen
Full year
37,557
21.8
5,623
18.6
6,854
14.6
5,065
20.1
58.21

1

4. Notes(1) Changes in significant subsidiaries during the six months ended September 30, 2019(changes in specified subsidiaries resulting in the change in scope of consolidation):No(2) Application of special accounting methods for preparing quarterly consolidated financial statements:

Yes(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:

Yes
No

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 September 30, 201987,037,600 shares As of March 31, 2019

86,998,800 shares

Number of treasury shares at the end of the period
As of September 30, 2019418 shares As of March 31, 2019372 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 201987,016,156 shares Six months ended September 30, 2018

286,884,336 shares

Quarterly consolidated financial statements
Consolidated balance sheets(Millions of yen)
As of March 31, 2019

As of September 30, 2019

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Merchandise and finished goods
Work in process
Supplies
Accounts receivable - otherPrepaid expenses
Other
Allowance for doubtful accounts

10,703
4,323

11,761
4,403

1
13

–
20

36
4,478

40
5,464

634
46

841
16(114)(119)

20,12322,428459

601

Accumulated depreciation

(276)

(275)

Buildings, net

183

325

Total current assets
Non-current assets
Property, plant and equipment
Buildings

Tools, furniture and fixtures

749

813

Accumulated depreciation

(498)

(555)

Tools, furniture and fixtures, net

251

257

Machinery, equipment and vehicles

4227

Accumulated depreciation

(30)

(21)

Machinery, equipment and vehicles, net

125–

430

–(31)

Right-of-use assets
Accumulated depreciation
Right-of-use assets,net

–398

447

987

10,574

9,895

SoftwareTrademark right

1,174
9,246

1,347
8,978

Customer-related assets
Other

2,088
0

1,911
0

Total intangible assets

23,083

22,133

Investments and other assets
Investment securities

2,048

1,830

855
880

887
991

Total property, plant and equipment
Intangible assets
Goodwill

Deferred tax assets
Leasehold and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets

330

21

3,814

3,731

27,34426,852

47,46749,281

(Millions of yen)
As of March 31, 2019

As of September 30, 2019

Liabilities
Current liabilities
Accounts payable - trade

353

300

2,487
6,064

2,481
7,697

Accrued expenses
Income taxes payable

529
623

530
211

Accrued consumption taxes
Advances received

435
583

335
1,021

Deposits received
Provision for bonuses

78
481

82
537

Provision for repayment
Other

227
24

295
138

Total current liabilities

11,891

13,630Non-current liabilities
Long-term borrowings

17,632

16,375

311
2,078

340
1,990

Current portion of long-term borrowings
Accounts payable - other

Retirement benefit liability
Deferred tax liabilities
Other

13306

20,037

19,012

31,92832,643

Share capital
Capital surplus

2,208
13

2,234
39

Retained earnings
Treasury shares

14,971(0)

16,638(0)Total shareholders' equity

17,193

18,912

Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

00

Foreign currency translation adjustment(1,834)(2,470)Total accumulated other comprehensive income(1,833)(2,470)179

195

15,53916,63747,46749,281

Share acquisition rights
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)(Millions of yen)Six months ended

Six months ended

September 30, 2018

September 30, 2019

Net sales
Cost of sales

15,0401,641

17,6281,804

Gross profit

13,39815,824

Selling, general and administrative expenses

11,445

13,750Operating profit

1,953

2,074992
35

1,096
31

1,028

1,127–

26

25
4651
–

Non-operating income
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Foreign exchange losses
Interest expenses
Arrangement fee
Other

53

Total non-operating expenses

76

81

2,905

3,119

1–

1–

40

9

Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

540

92,866

3,110793790

2,073

2,319(84)

–

2,157

2,319Consolidated statements of comprehensive income (cumulative)(Millions of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Comprehensive income

Six months ended

Six months ended

September 30, 2018

September 30, 2019

2,073

2,319(0)(466)

0(626)

(3)

(9)

(469)

(636)

1,604

1,683

1,785

1,683

(180)

–

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

6

Consolidated statements of cash flows(Millions of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of goodwill
Loss (gain) on sales and retirement of non-current assets
Share of loss (profit) of entities accounted for using equity
methodIncrease (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for repayment
Increase (decrease) in retirement benefit liability
Foreign exchange losses (gains)
Interest expenses
Decrease (increase) in trade receivables
Increase (decrease) in accrued consumption taxes
Decrease (increase) in accounts receivable - other
Decrease (increase) in prepaid expenses
Increase (decrease) in advances received
Increase (decrease) in accounts payable - other
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Loan advances
Purchase of shares of subsidiaries resulting in change in scopeof consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease obligations
Proceeds from issuance of share acquisition rights
Proceeds from issuance of shares resulting from exercise ofshare acquisition rights
Dividends paid
Payments from changes in ownership interests in subsidiaries
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
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

7

Six months ended

Six months ended

September 30, 2018

September 30, 20192,866
526
397
38

3,110
568
393
9

25

210

(36)
25
121
88(7)
25(177)
(33)
(935)
(189)
506
1,099
173
4,517
5(24)
(1,346)
3,150

6
59
67
30
26
51
(123)
(97)
(988)
(209)
474
1,635
(174)
5,051
12
(51)
(1,284)
3,727

(58)
–
(107)
(343)
–(704)
312
(226)
(506)
(3)

(23)

–

3(529)–(1,128)

10,953(714)–
4–(1,263)(31)
834

46(557)(644)(11,453)–(0)(1,732)
(41)
847
8,768
9,615

(0)
(1,885)
(44)
670
9,890
10,560