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 Year Ended March 31, 2017
(Based on Japanese GAAP)
April 28, 2017
Company name:SMS CO., LTD.

Stock exchange listing: Tokyo
Stock code:
2175
Representative:
Inquiries:

URL

http://www.bm-sms.co.jp/

CEO
CFO

Natsuki Goto
Masato Sugizaki

Scheduled date of ordinary general meeting of shareholders:
Scheduled date to file Securities Report:

June 22, 2017
June 22, 2017

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

June 23, 2017
Yes

Holding of 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 year ended March 31, 2017 (from April 1, 2016 to March 31, 2017)(1) Consolidated operating results
Percentages indicate year-on-year changes
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Year ended March 31, 201723,054
20.9
3,646
32.3
4,430
26.2
2,801
23.6
Year ended March 31, 2016
19,069
26.7
2,756
32.6
3,509
30.3
2,265
24.2

Earnings per share

Profit attributable toOrdinary profit/total Operating profit/net
owners ofassetssales
parent/equity
Yen
%
%
%
67.28
21.8
10.4
15.8
55.69
29.5
13.2
14.5

Diluted earnings per
share

Yen
67.49
55.86

Year ended March 31, 2017
Year ended March 31, 2016
(2) Consolidated financial position

Total assets
As of March 31, 2017
As of March 31, 2016

Net assets

Equity ratio

Millions of yen
43,231
41,689Millions of yen
21,583
13,157

Cash flows fromoperating activities
Millions of yen
3,919
2,244

Cash flows frominvesting activities
Millions of yen(1,033)(18,401)

Net assets per share
%
39.6
20.5

Yen
394.76211.03(3) Consolidated cash flows

Year ended March 31, 2017
Year ended March 31, 2016

Cash flows from
Cash and cash equivalents
at end of period
financing activities
Millions of yen
Millions of yen
(875)
7,140
18,6565,147

2. Cash dividends
Annual dividends per share
1st quarter-end 2nd quarter-end 3rd quarter-end Fiscal year-end

Year ended March 31, 2016
Year ended March 31, 2017
Year ending March 31, 2018
(Forecast)of dividends
Total cash
Dividend payout Ratio
to net assets
dividends (Total) ratio (Consolidated) (Consolidated)

Total

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

–
–

0.00
0.00

–
–

7.00
11.00

7.00
11.00

283
477

12.5
16.3

3.7
3.6

–

0.00

–

–

–

1

–

3. Forecast of consolidated financial results for the year ending March 31, 2018 (from April 1, 2017 to March 31, 2018)
Net sales
Millions of yen
Six months ending
September 30, 2017
Full year

Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
Earnings per shareowners of parent% Millions of yen% Millions of yen% Millions of yen%
Yen

13,484

12.5

2,311

0.0

2,793

(4.7)

2,009

9.0

48.42

27,804

20.6

4,378

20.1

5,137

15.9

3,396

21.3

81.85

4. Notes(1) Changes in significant subsidiaries during the year ended March 31, 2017(changes in specified subsidiaries resulting in the change in scope of consolidation):Yes(2) 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:
Yes
Changes in accounting policies due to other reasons:
Changes in accounting estimates:

No
No

Restatement of prior period financial statements:

No(3) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of March 31, 2017

43,382,600 shares As of March 31, 2016

41,887,200 shares

Number of treasury shares at the end of the period
As of March 31, 2017

113 shares As of March 31, 2016

1,330,272 shares

41,504,114 shares Year ended March 31, 2016

40,556,928 shares

Average number of shares during the period
Year ended March 31, 20172

Consolidated financial statements
Consolidated balance sheets(Thousands of yen)
As of March 31, 2016

As of March 31, 2017

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade

5,291,707
3,982,752

7,829,843
3,932,588

95,83031,185

81,624
18,8296,770
1,891,531

36,1632,491,065

Prepaid expenses
Deferred tax assets

685,224
268,219

722,169
239,450

Other
Allowance for doubtful accounts

140,001(217,510)

11,695(128,366)

12,175,712

15,235,064

383,400(151,756)

375,144(185,299)

231,643

189,844515,019(366,414)

573,211(418,963)

Tools, furniture and fixtures, net

148,605

154,247

Machinery, equipment and vehicles
Accumulated depreciation

110,080(61,999)

43,197(19,231)

Merchandise and finished goods
Work in process
Supplies
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

48,081

23,965428,330

368,057

Goodwill
Software

12,874,322
1,335,532

11,166,859
1,544,567

Trademark right
Customer-related assets

10,046,813
3,046,910

9,703,617
2,692,375

Total property, plant and equipment
Intangible assets

Other
Total intangible assets

50

50

27,303,627

25,107,468

1,025,966
211,138

1,665,781
209,836

516,448
28,578612,147
33,3901,782,132

2,521,154

29,514,090

27,996,681

41,689,802

43,231,745

Investments and other assets
Investment securities
Deferred tax assets
Lease and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets3

(Thousands of yen)
As of March 31, 2016

As of March 31, 2017

Liabilities
Current liabilities
Accounts payable - trade451,116

311,524

Short-term loans payable
Current portion of long-term loans payable

19,002,638––
1,201,200

Accounts payable - otherAccrued expenses

3,443,188
232,160

4,236,387
182,252

Income taxes payable
Accrued consumption taxes

947,942
100,331

1,139,932
242,002

1,102,636
45,7181,077,864
52,826

Provision for bonuses
ProvisionForRepayment

373,715
129,785

315,632
143,006

Other

85,266

8,016

25,914,499

8,910,645

44,742111,938

10,210,200
135,6132,442,393
18,563

2,374,428
17,463

Advances received
Deposits received

Total current liabilities
Non-current liabilities
Long-term loans payable
Net defined benefit liability
Deferred tax liabilities
Other
Total non-current liabilities

2,617,637

12,737,705

28,532,136

21,648,350

Shareholders' equity
Capital stock

304,166

2,153,046

Capital surplus
Retained earnings–
9,145,508

4,148,192
11,662,700

Treasury shares(1,036,485)(173)

Total shareholders' equity

8,413,190

17,963,766

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

9,888
135,593199(838,440)

Total accumulated other comprehensive income

145,482(838,240)

Subscription rights to shares
Non-controlling interests

80,1084,518,884

110,204
4,347,664

Total net assets

13,157,666

21,583,394

41,689,802

43,231,745

Total liabilities
Net assets

Accumulated other comprehensive income

Total liabilities and net assets

4Consolidated statements of income and consolidated statements of comprehensive income
Consolidated statements of income(Thousands of yen)
Fiscal year ended
March 31, 2016
Net sales

Fiscal year ended
March 31, 201719,069,101

23,054,956

Cost of sales

2,204,290

3,727,283

Gross profit

16,864,810

19,327,673

Selling, general and administrative expenses

14,108,270

15,681,247

Operating profit

2,756,539

3,646,425

10,885

9,778Interest on securities
Share of profit of entities accounted for using equity method

453
781,798

212
863,663

Other

39,05931,162

Total non-operating income

832,197

904,816

Foreign exchange losses
Interest expenses

35,95735,738

11,33347,999

Share issuance cost
Other

–
7,256

29,97331,087

Non-operating income
Interest income

Non-operating expenses

Total non-operating expenses

78,952

120,3943,509,785

4,430,847

Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates

240,038––
55,963

Total extraordinary income

240,038

55,963

Ordinary profit
Extraordinary income

Extraordinary losses
Loss on sales and retirement of non-current assets

4,853

–

Impairment loss
Loss on valuation of investment securities

16,00083,257

20,753–

Loss on sales of investment securities
Loss on sales of shares of subsidiaries and associates–
18,98520,000151,247

Provision of allowance for doubtful accounts

50,567–

Total extraordinary losses

173,662

192,000

Profit before income taxes

3,576,161

4,294,810

Income taxes - current

1,265,170

1,384,538

Income taxes - deferred(98,415)(93,825)

Total income taxes

1,166,754

1,290,712

Profit2,409,406

3,004,097

Profit attributable to non-controlling interests
Profit attributable to owners of parent

5

143,893

203,006

2,265,512

2,801,090

Consolidated statements of comprehensive income(Thousands of yen)

ProfitOther comprehensive income

Fiscal year ended

Fiscal year ended

March 31, 2016

March 31, 2017

2,409,406

3,004,097

Valuation difference on available-for-sale securities
Foreign currency translation adjustment(571)(95,369)(9,550)(1,263,573)

Share of other comprehensive income of entities accounted
for using equity method

12,001(5,643)

Total other comprehensive income(83,939)(1,278,767)

2,325,467

1,725,330

2,113,068

1,816,646

212,398(91,316)Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

6

Consolidated statements of changes in equity
Fiscal year ended March 31, 2016
(Thousands of yen)
Shareholders' equity
Capital stock
Balance at beginning of current
periodCapital surplus

304,166

Retained earnings–

Total shareholders'equityTreasury shares

7,249,161(1,036,485)

6,516,843

Changes of items during period
Issuance of new shares

–

–

–

–

–

Dividends of surplus––(283,898)–(283,898)

Profit attributable to ownersof parent––

2,265,512–

2,265,512

Net increase (decrease) in
surplus by change ofconsolidated scope––(23,025)–(23,025)

Change in ownership interestof parent due to transactions
with non-controlling interests––(62,241)–(62,241)

Purchase of treasury shares

–

–

–

–

–

Disposal of treasury shares

–

–

–

–

–

Net changes of items otherthan shareholders' equity

–

–

–

–

–

Total changes of items during
period

––1,896,347–

1,896,347

304,166–

9,145,508(1,036,485)

8,413,190

Balance at end of current period

Accumulated other comprehensive income

Balance at beginning of current
periodValuationdifference on
available-for-salesecurities

Foreign currencytranslation
adjustment

Total accumulated
othercomprehensive
income10,403

287,523

297,926

Subscription
rights to shares

Non-controllinginterests

Total net assets

47,33961,133

6,923,242

Changes of items during period
Issuance of new shares

–

–

–

–

–

–

Dividends of surplus

–

–

–

–

–

(283,898)

Profit attributable to ownersof parent

–

–

–

–

–

2,265,512

Net increase (decrease) in
surplus by change ofconsolidated scope

–

–

–

–

–

(23,025)

Change in ownership interestof parent due to transactions
with non-controlling interests

–

–

–

–

–

(62,241)

Purchase of treasury shares

–

–

–

–

–

–

Disposal of treasury shares

–

–

–

–

–

–

Net changes of items otherthan shareholders' equity(514)(151,929)(152,444)

32,7694,457,751

4,338,076

Total changes of items during
period(514)(151,929)(152,444)

32,7694,457,751

6,234,423

Balance at end of current period

9,888

135,593

145,482

80,1084,518,884

13,157,666

7Fiscal year ended March 31, 2017
(Thousands of yen)
Shareholders' equity
Capital stock
Balance at beginning of current
periodCapital surplus

Retained earnings

Total shareholders'equityTreasury shares

304,166–

9,145,508(1,036,485)

8,413,190

1,848,879

1,848,879––

3,697,758

Dividends of surplus––(283,898)–(283,898)

Profit attributable to ownersof parent––

2,801,090–

2,801,090

Net increase (decrease) in
surplus by change ofconsolidated scope

–

–

–

–

–

Change in ownership interestof parent due to transactions
with non-controlling interests–(3,272)––(3,272)

Changes of items during period
Issuance of new shares

Purchase of treasury shares

–

–

–

(117)

(117)

Disposal of treasury shares–

2,302,585–

1,036,428

3,339,014

Net changes of items otherthan shareholders' equity

–

–

–

–

–

Total changes of items during
period

1,848,879

4,148,192

2,517,192

1,036,311

9,550,576

Balance at end of current period

2,153,046

4,148,192

11,662,700(173)

17,963,766

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Foreign currencytranslation
adjustment

Total accumulated
othercomprehensive
income9,888

135,593

Issuance of new shares–

Dividends of surplus
Profit attributable to ownersof parent

Subscription
rights to shares

Non-controllinginterests

Total net assets

145,482

80,1084,518,884

13,157,666

–

–

–

–

3,697,758

–

–

–

–

–

(283,898)

–

–

–

–

–

2,801,090

Net increase (decrease) in
surplus by change ofconsolidated scope

–

–

–

–

–

–

Change in ownership interestof parent due to transactions
with non-controlling interests

–

–

–

–

–

(3,272)

Purchase of treasury shares

–

–

–

–

–

(117)

Disposal of treasury shares

–

–

–

–

–

3,339,014

Net changes of items otherthan shareholders' equity(9,688)(974,034)(983,723)

30,095(171,220)(1,124,847)

Total changes of items during
period(9,688)(974,034)(983,723)

30,095(171,220)8,425,728

Balance at end of current period

199(838,440)(838,240)

110,204

4,347,664

21,583,394

Balance at beginning of current
periodChanges of items during period8Consolidated statements of cash flows(Thousands of yen)
Fiscal year ended
March 31, 2016

Fiscal year ended
March 31, 2017

Cash flows from operating activities
Profit before income taxes
Depreciation

3,576,161
557,450

4,294,810
876,573

Amortization of goodwill
Loss (gain) on sales and retirement of non-current assets

425,672
4,853

640,164–

Impairment loss
Loss (gain) on sales of investment securities

16,000(240,038)

20,75320,00083,257–

18,985

95,283(219,277)(681,601)

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

25,804(37,576)

Increase (decrease) in provision for bonuses
IncreaseDecreaseInProvisionForRepaymentOpeCF

132,142(6,050)(46,422)
13,221

Increase (decrease) in net defined benefit liability
Foreign exchange losses (gains)

22,30335,957

23,675
11,333

Decrease (increase) in notes and accounts receivable trade(262,710)(10,293)

Increase (decrease) in accrued consumption taxes
Decrease (increase) in accounts receivable - other(277,234)(584,976)

141,372(599,537)

Decrease (increase) in prepaid expenses
Increase (decrease) in advances received

33,585(103,575)(20,093)
13,612

Increase (decrease) in accounts payable - other
Decrease (increase) in lease and guarantee deposits

243,886(29,032)

821,582(122,625)

Other, net

103,854(284,785)

Subtotal

3,557,017

5,169,447

Interest and dividend income received

10,66910,578Interest expenses paid
Income taxes paid

(35,947)(1,287,252)(48,289)(1,211,804)

Net cash provided by (used in) operating activities

2,244,486

3,919,932

Cash flows from investing activities
Payments into time deposits(116,512)(1,199,655)

Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment–(129,952)

655,145(67,157)

Purchase of intangible assets
Proceeds from sales of investment securities(772,738)
502,341(815,185)
13,647Purchase of investment securities
Payments of loans receivable(8,330)(37,680)(40,387)(38,500)

Proceeds from sales of shares of subsidiaries resulting inchange in scope of consolidation–

381,892

Purchase of shares of subsidiaries resulting in change inscope of consolidation(17,907,051)–

68,02076,620(18,401,902)(1,033,579)

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

9(Thousands of yen)
Fiscal year ended
March 31, 2016

Fiscal year ended
March 31, 2017

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

19,004,038(1,588)–(19,000,000)–(13,007)

12,012,000(600,600)––

3,679,747
3,324,989

Cash dividends paid
Payments from changes in ownership interests in(282,744)(289,268)

subsidiaries that do not result in change in scope of
consolidation(42,114)(3,311)Other, net(8,330)1,118

18,656,253(875,324)(54,803)(17,402)

Net increase (decrease) in cash and cash equivalents

2,444,033

1,993,626

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from newly

2,694,008

5,147,343

9,301

–

5,147,343

7,140,969

Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of common shares
Proceeds from sales of treasury shares

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

consolidated subsidiary
Cash and cash equivalents at end of period10