A N N U A L R EPO RT

For the year ended March 31, 2020

Our Philosophy

Universal Mission
VisionCorporate Group
Creating Future Trends
As a corporate group fostering people and supporting people’s lives,
we contribute to achieve a genuinely productive global society bycontinuously challenging efforts to create new trends in terms of products
and services that shift the future;
centering on our physical and commercial distribution business.

SloganOur thoughts into a Mission & Vision

Go beyondlogistics

Make the world
go roundRevolutionize
business

Corporate Values

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

PassionCommitment

Respect

Diversity

CONTENTS

Editorial Policy

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

Scope of Report

CSR
15 Senko Group Stakeholders

and Their Relationship with Us

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

Reporting Period
This report covers business activities
for the period between April 1, 2019and March 31, 2020. However, some
activities that took place after April
2020 are also covered.

16 Relationship between Business
Activities and SDGs

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

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

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

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

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

SENKO ANNUAL REPORT 2020 01

Financial and Nonfinancial Highlights

Financial Highlights
FY2016FY2017FY2018FY2019FY2020Thousands of
U.S.$ except per
share amounts

Operating revenues

millionsof yen434,000

455,435

492,127

529,609570,030

5,237,802

Operating profit

millionsof yen17,497

17,082

17,087

19,631

20,657

189,810Net income attributable toowners of parent

millionsof yen

8,542

8,951

9,504

11,681

12,081

111,008

Operating profit margin

(%)

4.0

3.8

3.5

3.7

3.6

–

Net assets per share

yen/US$

613.71661.61

741.44785.08823.61

7.57

Net income per share

yen/US$

60.43

61.67

62.64

76.90

79.51

0.73

Cash dividends per share

yen/US$

20.00

22.00

22.00

26.00

26.00

0.24

Dividend payout ratio

(%)

33.1

35.7

35.1

33.8

32.7

–

Net assets

millionsof yen100,010114,091

118,057

126,895

134,181

1,232,942

Total assets

millionsof yen269,461

285,959

334,973

340,491

356,3093,273,996

Equity ratio

(%)

32.6

35.1

33.7

35.0

35.1

–

Return on equity (ROE)

(%)

10.1

9.5

8.9

10.1

9.9

–

Price earnings ratio (PER)

times

11.35

11.63

13.22

11.95

10.54

–

Capital expenditures

millionsof yen17,50017,662

37,625

21,227

18,206167,288

Cash flows from operating activities

millionsof yen16,14920,84824,56827,02231,099285,758

Cash flows from investing activities

millionsof yen(2,289)(3,679)(37,020)(15,770)(18,030)(165,671)

Cash flows from financing activities

millionsof yen(21,492)(8,627)9,940(13,224)(9,156)(84,131)

Cash and cash equivalents
at end of year

millionsof yen17,76526,197

23,79622,801

27,143

249,407

FY2016FY2017FY2018FY2019FY2020Nonfinancial Highlights

Number of Group employees

number11,992

12,88914,496

17,081

17,644

Logistics center storage space

millions m2

2.94

3.22

3.42

3.66

3.87

Fleet of own trucks

units

4,745

5,180

5,914

6,412

6,840

02 SENKO ANNUAL REPORT 2020

Operating revenues

Operating profit(Millions of yen)
600,000

450,000

434,000 455,435

492,127

529,609(Millions of yen)

570,030

20,00019,631

Net income attributable toowners of parent

20,657

12,00015,0009,000

300,000

10,0006,000

150,000

5,000

3,000

0

0

2016 2017 2018 2019 2020

Total assets/Net assets/
Equity ratio(%)(Millions of yen)

6.0

360,000

4.0

4.5

269,461
3.8

3.7

3.5

270,000

3.6

3.0

180,000

1.5

90,000002016 2017 2018 2019 2020

32.6

(Yen)

(Yen)

(Yen)

1,000

120

40

741.44785.08

(%)

60

12

100,010 114,091

35.0

35.1

118,057 126,895

134,18133.7

2016 2017 2018 2019 2020

45

9

30

6

15

3

823.6176.90 79.51 90
613.7162.64
60.43 61.67

33.1

35.7

35.1

0

0

33.8

32.7

(%)

(Millions of yen)40

40,00030

30,00020

20,000

250

30

10

10

10,00000

Net income per share

0

0

10.1
8.9

2016 2017 2018 2019 2020■■ Cash dividends per share

21,227

17,500 17,662

2016 2017 2018 2019 2020

Logistics center storage space

Fleet of own trucks(Number)(Millions m2)(Units)

15,00017,081 17,644
12,88914,496

4

2.94

3.22

3.42

3.66

3.87

8,000

3

6,000

10,000

2

4,000

5,000

1

2,000

0

11,992

2016 2017 2018 2019 2020

0

18,206

Dividend payout ratio

Number of Group employees
20,0009.9

37,62522.00 22.00

20

2016 2017 2018 2019 2020

9.5

2016 2017 2018 2019 202060

02016 2017 2018 2019 2020

10.1

500

■■ Net assets per share

9,504

Capital expenditures

26.00 26.00

30

20.00

8,951

Equity ratio

Cash dividends per share/
Dividend payout ratio

Net assets per share /Net income per share

661.61

356,309 (%)

285,959
35.1

8,542

Return on equity (ROE)

333,973 340,491■■ Total assets ■■ Net assets

750

02016 2017 2018 2019 2020

Operating profit margin

11,681 12,081(Millions of yen)

17,497 17,082 17,087

2016 2017 2018 2019 2020

0

4,745

5,180

5,914

6,412

6,840

2016 2017 2018 2019 2020

SENKO ANNUAL REPORT 2020 03

History of the Senko Group

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

Consolidated revenue (millions of yen)1980 〜

Ordinary profit (millions of yen)

1980

1916 〜
1916
1946

1950 〜

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

1950

1954
1959
Corporate emblem
at the establishment

1949

1961

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

1965
1970
1973
1975
1977
1978

1916

1920

1984
1985

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

1930

1940

1987
1990
1996
1997

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

1950

1960

1916 〜1950 〜1980 〜

The birth of Tomita Shokai,
the origins of Senko

Set up/expanded ourtransportation system

Making the leap to a comprehensive
logistics company

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

04 SENKO ANNUAL REPORT 2020

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

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

570,030

2010 〜
2010
2011
2013
2014
2015
2016

2000 〜
2000
2004

2008
2009

2017

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

2018

2019
2020

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

227,692

20,744

180,552
125,165

50,876

6,232
4,581

4,207

1990

2000

832

1970

1980

2010

2020

2000 〜2015 〜

From comprehensive logistics company to logistics
information company

Becoming a corporate group creating future trends

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

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

SENKO ANNUAL REPORT 2020 05

A Message from the President

The fourth year of the five-year
medium-term business plan.
In this difficult businessenvironment, the Group will
work as one to achievesustainable growth.

Business Environment during
Fiscal Year 2020
In the Japanese economy during the fiscal year ended
March 31, 2020, employment and income continued to
improve. However, the outlook remained unclear due tofactors such as a slowdown in overseas economies
caused by trade friction between the United States andChina and the slump in demand that followed the rush ofpurchases ahead of the consumption tax hike. In particular,
the business environment became especially challenging
due to the impact of the spread of the COVID-19 (novel
coronavirus) in the fourth quarter.

Main Activities
During the third year of the Senko Innovation Plan 2021
(SIP21), our five-year medium-term business plan, theGroup worked on initiatives to expand and strengthenbusiness operations.
In Logistics, SENKO Co., Ltd. began operations at the
new Inzai Logistics Center (Inzai City, Chiba Prefecture)in May, at the Oita PD Center (Oita City, Oita Prefecture)
in October, and at the Amagasaki PD Center (Amagasaki
City, Hyogo Prefecture) in February. Moreover, in July
Runtec Corporation began operating a new frozen andrefrigerated storage warehouse at the Kansai Branch(Nishinomiya City, Hyogo Prefecture).

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

06 SENKO ANNUAL REPORT 2020

Outside Japan, M-Senko Logistics Co., Ltd., a joint

Logistics Environment Award from the Japan Association

venture with MK Restaurant Group Public Company Limited,for Logistics and Transport in June, and four Groupa major Thai restaurant chain, started operations of thecompanies received the Award for Excellent Business

new three-temperature zone (i.e., frozen, refrigerated, andEntities Working on Modal Shift from the same association

standard) M-SENKO Logistics Center in October, and has

in November.

been working to develop a cold logistics chain in Thailand.
In Trading & Commerce, AST CORPORATION started

Performance

to handle household paper products for large-scale
mass-merchandiser groups throughout Japan.
In Living Support, we have been working hard to open

Consolidated operating revenue for the fiscal year ended
March 31, 2020 increased ¥40,421 million year on year to

new locations. VENUS CO., LTD., which operates day-care¥570,030 million. This result mainly reflected growing

centers, has opened eleven new locations. BLUE EARTH

sales and revised freight charges, opening new logistics

JAPAN Co., Ltd., which operates fitness clubs, has opened

centers, and making overseas Group companies andsix new locations including a first overseas location on

operating companies in living support services into

Cebu, an island in the Philippines, and KEIHANNA helper

consolidated subsidiaries.
On the profit front, despite factors that included higher

station Co., Ltd., which operates residential nursing homes,

costs (mostly stemming from increased outsourcing costs

has opened two new locations.
In Business Support, Tokyo Eastside Hotel Kaie, built

and the impact of the spread of COVID-19), consolidated

within the grounds of the Company’s Head Office in Shiomi,

operating profit rose ¥1,024 million year on year to ¥20,656

Koto-ku, Tokyo, celebrated a grand opening in February.

million and consolidated ordinary profit went up ¥868 million

For initiatives to reduce environmental impact, SENKO

year on year to ¥20,744 million. This upturn in profits wasCo., Ltd. and Runtec Corporation both received the Special

largely attributable to the effects of the higher revenue

Consolidated operating revenues (Net sales)

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

(Billions of yen)
24

600

455.4

492.1

529.6

570.0

585.0

18

400

12

200

6

0

2017

2018

2019

2020

2021 FY(forecast)0■■ Consolidated operating profit

17.1 17.3 17.1 17.3

2017

2018

■■ Consolidated ordinary profit

19.6 19.9 20.7 20.7 20.2 20.0

2019

2020

2021 FY(forecast)

SENKO ANNUAL REPORT 2020 07

A Message from the President

mentioned above, as well as our initiatives to improve

Maintaining the annual dividend of ¥26

productivity. Profit attributable to owners of parent
increased to ¥12,081 million, up ¥399 million year on year.

Our basic policy for distributing profits is to have aconsistent dividend linked to business performance.
Given this basic policy, the year-end dividend for the

Future Initiatives and Outlook

fiscal year ended March 31, 2020 was ¥13 per share, as
Going forward, the outlook for the Japanese economy,

expected. Combined with the interim dividend of ¥13 alreadyaffected by the slowdown in the global economy caused

paid, the total annual dividend was ¥26 per share.
Based on the performance forecasts for the next fiscal

by factors such as the impact of COVID-19, is expected

year, we also plan to pay an annual dividend of ¥26 per

to remain uncertain.
Given this environment, the Senko Group will continue towork on initiatives such as growing business areas aroundshare, consisting of an interim dividend of ¥13 and a
year-end dividend of ¥13.
We would like to ask for the continued support andthe core of the Logistics and Trading & Commerce segments,
based on the five-year medium-term business plan.
For the consolidated performance forecasts for theencouragement of our shareholders as we move into
the future.
Going forward—as a corporate Group that nurtures

next fiscal year—centered on the assumptions that
economic activity will gradually recover and that ourpeople and supports their daily lives, in addition to

management approach succeeds—we expect

working as one to promote CSR activities and maintainconsolidated operating revenue of ¥585,000 million,

the trust of stakeholders—over the long term the Group

operating profit of ¥20,200 million, ordinary profit ofwill follow, through our business practices, the Sustainable¥20,000 million and profit attributable to owners of parent

Development Goals (SDGs) being promoted by the Unitedof ¥11,400 million.

Nations.

Net Income attributable to owners of parent

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

12

(Yen)
60

11.7
9.0

12.1

9.5

11.4

30

4

15

2017

08 SENKO ANNUAL REPORT 2020

2018

2019

2020

2021 FY(forecast)

35.1

33.8

32.7

34.7

45

8

0

35.7

Consolidated payout ratio

0

(%)
40

30

22

22

26

26

26

20

10

2017

2018

2019

2020

2021 FY(plan)

0Medium-Term Business Plan [SIP21]
The Senko Group has launched the Five-Year Medium-Term Business Plan SIP21 (Senko Innovation Plan 2021), which runs
through fiscal year 2018 and fiscal year 2022.
SIP21 is a growth strategy for the corporate Group to support logistics for industry and people’s lives as well as to take up
the challenge of creating new services and products that will drive the future, based on Logistics and Trading & Commerce,
for the next 100 years.

1
2
3
4
5

Expand business areas

Accelerate international business expansion, further enhance existing domestic
businesses, and enter new business areas, such as Living Support and Business Support.
Also, actively promote business partnerships and M&As to support the above.

Enhance brand value

Consolidate the Group’s overall strength, deliver “services that surprise and delight,”
and evolve from “customer satisfaction” (CS) to “customer delight” (CD).

Improve employee
satisfaction (ES)Through the creation and active utilization of diverse programs,
boost employee satisfaction to attract diverse personnel, help them to grow,and increase the value of their working environment.

Emphasize corporate social
responsibility (CSR)

Grow alongside society, while preserving and fostering industry, culture,and nature in each area.

Gain trust from capital
markets

Work to maximize the corporate value of the entire Group,
while strengthening financial soundness.

Size(Billions of yen)

700.0

570.0

Strive for operating
revenues ofProfitability(Billions of yen)

Strive for operating
profit of¥28.0 billion¥700.0 billion
FY 2020

FY 2022(forecast)

Strive for ratio of operating
income to sales of 4.0%

207
20.7

280
28.0

3.6 %

4.0 %

FY 2020

FY 2022億円

億円(forecast)Investment
amountOperational
system(including M&As)

Logistics center storage space (Million m2)

3.87

FY 2020

4.00

up

0.13

FY 2022 (forecast)millionm2

Fleet of own trucks (excluding trailers) (Units)

5,790

FY 2020

6,700

up

910 units

in five years¥150.0billion

FY 2022 (forecast)

SENKO ANNUAL REPORT 2020 09

Review of Operations by Business Segment

Logistics
Operating revenue increased ¥17.343 billion year on year to¥392.728 billion. This was mainly attributable to the effects of
new logistic centers beginning operations in the current andthe previous fiscal year, as well as the effects of higher sales,

Total
operating revenue

revised freight charges, and making seven overseas Group¥ 392.7

companies into consolidated subsidiaries.

392.7billion

375.4

up 4.6%2019

2020

Retail Products
Logistics

10 SENKO ANNUAL REPORT 2020

5.3%
13.4 % 11.1%

FY

up 6.8%2020 FY

2019

Retail Products Logistics

Housing Logistics

Chemicals Logistics

Other Logistics

63.2 billion

62.2

Housing
Logistics

up 1.6%2020 FY

2019

Revenue for the current fiscal

Revenue for the current fiscal

year rose ¥14.1 billion to ¥222.6

year increased ¥1.0 billion tobillion.

¥63.2 billion.

76.6 billion

73.8

Chemicals
Logistics

billion222.6 billion

208.6

39.1%

up 3.8%20192020 FY

30.2 billion

30.8

Other
Logistics

down 1.8%
20192020 FY

Revenue for the current fiscal

Revenue for the current fiscal

year improved by ¥2.8 billion toyear fell by ¥0.5 billion to ¥30.2¥76.6 billion.

billion.

Trading & Commerce

28.3%
Total
operating revenue

Operating revenue increased ¥19.02 billion year on year to¥ 161.3¥161.314 billion, due in part to higher sales of household paper
products for large mass-merchandising chains.

billion

142.3

161.3

billion

2020

FY

up13.4%2019

2.8%

OthersTotal
operating revenue

Operating revenue increased ¥4.057 billion year on year to¥ 16.0¥15.987 billion, driven by growth in businesses, such as making
the food and beverage business into a consolidated subsidiary, as

billionwell as opening new nursing homes, fitness centers, and a hotel.

Business support

16.0

billion

11.9

up 34.0%

Living support
2019

2020

FY

SENKO ANNUAL REPORT 2020 11

Topics

2019

4

5

6

Opening the Inzai Logistics Center inInzai City, Chiba Prefecture
In May 2019, SENKO Co., Ltd.
opened the Inzai Logistics Centerin Inzai City, Chiba Prefecture.
This new center is one of thelargest within the Senko Group,and much work has been put into
automation and labor-saving
technologies, such as AGVs
(automatic guided vehicles) and installing a system for using smartphones
to inspect products. This distribution base, which covers the whole of
the Greater Tokyo Metropolitan area, has a convenient location withoutstanding access to expressways with nationwide connections.
The site includes a cafeteria and convenience store, creating a
comfortable work environment for employees.

7

8

9

Developing electric trucks especially designedwith hangers for shipping clothes forenvironmentally friendly transportation
In July 2019, Tokyo Nohin Daiko Co., Ltd. took delivery of two electrice-Canter model trucks.
In cooperation with European luxury brand Louis Vuitton Japan, we
switched deliveries to some stores within Tokyo, using electric trucks
especially designed with hangers for shipping clothes developed jointly with
Mitsubishi Fuso Truck and Bus Corporation, the first of their kind in Japan.
In Louis Vuitton’s home region,
Europe, building out moreenvironmentally friendly logistics
networks is increasing being
required, and going forward we
will continue to promote
environmentally friendly logistics.

Holding information meetings for individual investors
in Tokyo and Osaka
During August and September 2019, Senko Group Holdings Co., Ltd. held information meetings for individual
investors in Tokyo and Osaka.
We provided an overview of the Group and explanations on the results for the fiscal year ended March 31, 2019
for around 600 attendees. Regarding Living Support, we discussed initiatives for the development of nursing care,
as well as fitness and housekeeping services by Group companies.
We will continue to hold information meetings in the future. Details are continually available on our website,which we encourage you to visit.

Senko Group promotes extracurricular activities for employees
Senko Group promotes extracurricular activities
to encourage communication among employees
and to promote corporate public relations.
In the judo club, one of the members achieved
the remarkable feat of a victory in the 60 kg classat the European Judo Open tournament held in Odivelas, Portugal, in February 2019.
At the same time, the golf club has members who are competitive at the global level, winning 5th placeat the World Corporate Golf Challenge doubles tournament held in Portugal in July.
Other clubs, including kendo, swimming, and tennis, also take their activities seriously. Club members
practice every day while balancing their sports with their work, in this way supporting the activities of theGroup as a whole.
12 SENKO ANNUAL REPORT 2020

10

11

12

2020

1

2

3

Completion of frozen/refrigerated logistics center inThailand. Our aim is to be No.1 in the cold chain

Amagasaki PD Center begins operations,covers two urban areas: Osaka and Kobe

In October 2019, our joint venture in Thailand, M-SENKO, completed
the three-temperature zone (i.e., frozen, refrigerated, and standard)
M-SENKO Logistics Center in Samut Prakan Province. On a site
approximately 53,000 m², this building has a total floor area of around22,000 m² and is equipped with automated frozen/refrigerated
warehouses and movable racks to deal with a wide range of storage
temperature areas.
The new center is about 30 minutes by vehicle from central Bangkok,
and about 23 km from Suvarnabhumi Airport, a highly convenient
location for transportation. By using the frozen/refrigerated logistics
technology and the know-how that we have cultivated in Japan, we
provide a meticulous, high-quality service to the same level as in Japan.
In addition to supplying food to MK Restaurants operated by M-SENKOGroup companies, we intend to attract new customers and become
No.1 in developing cold chains in Thailand.

In February 2020, SENKO Co., Ltd. opened the Amagasaki PD Center in
Amagasaki City, Hyogo Prefecture. With a total floor area of 44,000 m²
and features such as double-sided trucking docks (for 88 vehicles) anddock levelers (10 vehicles), the center is highly efficient at storage,
loading/unloading, and transportation.
This center, within 8 km of the center of Osaka City and close toboth the Hanshin and Meishin Expressways, covers a wide area that
includes the urban areas of both Osaka and Kobe. We are taking
advantage of the nearness of the ports of Osaka and Kobe to provide
an integrated transportation service, both in Japan and overseas.
In the Kansai region, the Company previously opened a large-scale
logistics center focusing on Osaka and Shiga, but by following the
Nishi-Kobe PD Center with the opening of the Amagasaki PD Center,
we have strengthened operations in Hyogo Prefecture and further
reinforced our business foundation in the Kansai region.

We are further expanding the Living Support segment of ourbusiness, or supporting people's health and their daily lives.
In Yamanashi Prefecture, Blue Earth Japan Co., Ltd. is accelerating the rollout
of MY-BODY 24-hour fitness gyms with specialized small studios. In addition to
Yamanashi Prefecture, we are planning to increase the number of locations
both in Japan and overseas, including Tokyo and Cebu in the Philippines.
In Osaka, Venus Co., Ltd. opened a new seniors’ daycare center focusing on
exercise and rehabilitation. Because of our desire to also offer meals, in Sakai
City the company has begun an evening meal delivery service for senior citizens.
Going forward we will continue to work for the further growth of Living Support,
and plan to nurture this segment so that it becomes one of the three pillars ofour business, alongside Logistics and Trading & Commerce.

Launch of the Senko
Group official
Instagram account
Account Namesenko_group.official
MY-BODY in Central Yamanashi

This account, covering a wide range of content
such as details of ourbusinesses and club
activities, is updated
nearly every day. Pleasetake a look for yourself.

Venus Tabetenka healthy bento(lunch boxes)

SENKO ANNUAL REPORT 2020 13

Business Bases

Domestic Branches and Offices: 611 (As of March 31, 2020)
Logistic centers that began operations in FY2020
Hokkaido
Area

6Runtec Corporation Kansai Branch

SENKO Co., Ltd. Oita PD Center

Tohoku
Area

Kinki
Area

76

SENKO Co., Ltd. Amagasaki PD Center

23

193

Chugoku
Shikoku Area

Kanto
Area

164

■

Kyushu
Area

80

Chubu
Area

69

■ Headquarters,
Senko Group Holdings (Tokyo)

Overseas: 59 (As of March 31, 2020)
USA

Kazakhstan

ChicagoWinchester
Los Angeles

AlmatyGermany
Dusseldorf
■

■

■

China

South Korea■■

Mexico■■■Beijing

Mexico City
Queretaro
Guadalajara■

DalianQingdao
Zhangjiagang■

Vietnam■

Pho Noi
Ho Chi Minh■■■

SuzhouGuangzhou
Hong Kong■

Singapore

Nantong■■■■

14 SENKO ANNUAL REPORT 2020

■

■
■

■

■

Seoul
Busan

■
■

Changshu■

Shanghai■

MyanmarIndonesia

YangonJakartaThailand
BangkokLaem Chabang

Australia
Ingleburn

CSR

Senko Group Stakeholders and Their Relationship with Us

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

Shareholders
Customers
Shippers / Consignees● Fair profit distribution ● Transparent management● Full disclosure of information● Safe and environmentally friendly services● Partnership ● Full disclosure of information

Senko Group● Road safety ● Environmental friendliness

Regional Community● Engaging with communities ● Engaging with society● Full disclosure of information● Strict legal compliance ● Road safety

Government● Environmental friendliness● Workplace health and safety

Employees● HR training ● Fair employment practices

Partner Companies
Subcontractors / Suppliers● Partnership ● Environmental friendliness

Important Initiatives

1

2

3

4

Environmental Measures

Safety Initiatives

Health Initiatives

Social Activities

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

We have set reduction targets
for vehicle and work accidents
and have implemented safety
initiatives based on the PDCA
cycle. These will help us achieve
our eventual goal of being azero-accident workplace.

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

We hold traffic safety classes
and local clean-up drives tocontribute to the local community,
and we organize volunteer
activities, such as education
support, outside Japan.

ESG indices for which the Company has been selected*The inclusion of [issuer entity name] in any MSCI Index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement
or promotion of [issuer entity name] by MSCI or any of its affiliates.
The MSCI Indexes are the exclusive property of MSCI. MSCI and the MSCI Index names and logos are trademarks or service marks of MSCI or its affiliates.

SENKO ANNUAL REPORT 2020 15CSR

Relationship between Business Activities and SDGs

The UN’s SDGs (Sustainable Development Goals) and the business activities of the
Senko Group nurture people’s development and supports their daily lives.
As a rule, the Senko Group’s approach is that economic activities are built on a healthy global environment and harmonious social
relations, and the Group aims to resolve social issues and create new value through business.

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

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

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

Logistics

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

Business activities that nurture people and support their daily lives

Promoting green logistics in cooperation with customers

Providing logistics services
that are resilient to natural
disasters

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

Senko School Farm Tottori Co., Ltd.,
aims to develop communities
through agriculture

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

Base tire

Refurbished (retreaded) tire

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

16 SENKO ANNUAL REPORT 2020

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

Using retreaded tires

Cooperation with the Osaka
Bay Regeneration ProjectLiving Support
Nursing care and housework services / fitness centers /moving services / restaurants / agriculture, etc.

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

Priority
themes for
the Senko
Group SDGs

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

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

CSR

The human resources and organizations
that form the foundation

Collaborating with society

Safety Initiatives
Health Initiatives
Social Activities
Promoting healthmanagement at all Group
companies

CSR
Environmental
MeasuresNurturing people andbusinesses at Senko
University

Traffic safety classes forkids at business locations

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

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

SENKO ANNUAL REPORT 2020 17

CSR

Environmental Initiatives

Initiatives to Reduce Our Environmental Burden
Accelerated Introduction of Environmentally Friendly Trucks

A heavy-duty hybrid truck introduced at
Runtec Corporation in FY 2020

Introduction and Further Promotion of Energy-Saving Lighting

The Senko Group has

At logistics centers, we are proactively introducing high-efficiency

introduced environmentally

LED lighting, which uses 75% less electricity than conventional

friendly trucks that emit lessmercury lamps. In FY 2020, we used grants from the Ministry of

CO2 and NOx as part of our

Economy, Trade anddetermination to bring aboutIndustry to switch toa low-carbon society. In FY

LED lighting at four

2020, the Senko Group

locations. The Senko

introduced two electric trucks

Group is acceleratingand 14 hybrid trucks. The

the efficient andheavy-duty hybrid truck introduced at Runtec Corporation uses

effective use of energy.

regenerated electric energy to power both the refrigeration

The Urawa PD Center, where 100% LED illumination
was achieved with help from grants

unit and the vehicle.

Using roofs on logistics centers, we are developing solar power to provide renewable energy
To promote the spread of renewable energy, the Senko Group began a solar power
generation business in FY2014, supplying electricity to power companies. In FY2020,
the Kansai branch of Runtec Corporation became the first in the Group to operate

Power output

as a major in-house producer/user of renewable energy. We offer clean energy(from FY 2019)

for goods being stored on behalf of customers. In FY2021, we will install 0.6 MW of

1.0

up

MW

solar power for in-house use at the new Moji branch of Runtec Corporation (inKitakyushu City) and a large 60 kWh storage

We are now generating

battery. This clean energy will be used at nightand even when it is raining.
Runtec Corporation’s Kansai branch began operating in July
2019 (the Senko Group’s first major in-house producer/userof renewable energy)

from 21 sites
across Japan

16.5

MW

*Based on figures confirmed by the
Ministry of Economy, Trade and Industry

Launching initiatives to preserve biodiversity
In FY2020, the Senko Group launched initiatives aimed at preserving
biodiversity. Environmental tree planting, where saplings are planted atlogistics centers, has now been implemented at nine Senko branches
and at four Group companies. This contributes to better communications,both in the workplace and with the local community, as well as topreserving green spaces that will be inherited by the next generation.
The Group has also endorsed the Osaka Bay Regeneration Project incooperation with local environmental conservation groups. As part ofthis project, we are cooperating by cultivating eelgrass in pots, later to
Expanding environmental tree planting at
Senko Group logistics centers

18 SENKO ANNUAL REPORT 2020

Employees growing
eelgrass seedlings at home

be returned to the sea to provide habitat for marine life. In FY2020, 35 pots
were distributed, with employees nurturing them at home from seeds.

Environmental Targets and Achievements
CO2 Reduction Initiatives and Results
The Senko Group tracks the amount of energy used and the CO2 emissions generated by business activities, adjusting environmental
protection measures as they are required. Today, we are continuing with initiatives to reduce our environmental burden. We aim toachieve the CO2 reduction target of the five-year medium-term business plan that started in FY2018: a 9% reduction in CO2 emissions
per unit of sales over the five years for Senko Co., Ltd.

Senko Group’s CO2 emissions by source
Senko Co., Ltd., nonconsolidated *1CO2 emissions (t)*2

Sales (Millions of yen)

Entire Group *3

CO2 emissions per million yen (t/million yen)

Logistics Business *0.46

208,000

198,909
94,276CO2 emissions (t)*2

95,3360.44

0.42

224,267

233,069

98,02096,926

CO2 reduction
initiative

0.77

Change from
FY2017

337,823

Reduction

10.6 %

CO2 emissions per million yen (t/million yen)Group Total *5

4

Senko Co., Ltd.
0.47

Sales (Millions of yen)

0.56
0.72

0.70

366,519

380,500

0.53

0.51
529,360

500,568

470,840

260,767

263,509265,915

264,630

267,228

269,876(FY) 2018

2019

2020

(FY) 2018

2019

2020

9.3%

Change from
FY2018 Reduction

5.4%

8.9%

Target achievement(FY) 2017
Change from
FY2017 Reduction

2018
2.1%

2019
6.4%

2020

10.6%

118 %

Change from
FY2018 Reduction*6

6.7%*1 Includes Senko Line Co., Ltd. (spun off in April 2018) *2 Emissions are total of Scope1 and 2 *3 Excluding overseas subsidiaries *4 Total of 51 companies based mainly on logistics business*5 Logistics (51 companies) + Trading and Commerce (5 companies) + Others (8 companies) = Group Total (64 companies) *6 We started calculating emissions for the entire Group in 2017

FY 2019 achievements for CO2 reduction (SENKO Co., Ltd. and 59 group companies)(t)

FY2019 CO2 reduction amountPriority implementation items

Own Efforts

Senko Group

Total

Electricity
Savings

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

2,010

497

2,507

Fuel Savings

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

484

868

1,352

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

127

127

254

2,621

1,492

4,113

925

243

1,168

Recycling-BasedSociety

Total
Recycled CO2
Products
for Customers

Company category
Senko Co., Ltd.

Green Logistics

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

Modal shift rate 70%

SENKO ANNUAL REPORT 2020 19

CSR

Safety Programs

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

SafetyPhilosophy

We can and must prevent all accidents and disasters.
Managers are responsible for the safety of employees.
3 Every employee must believe in “eliminating all accidents.”
4 Safety ensures high quality and high productivity.
12● ‌The Senko Group deeply recognizes the social mission of the logistics business and promotes efforts that all employees understandcorrectly and that contributes to the improvement of safety by ensuring safety in business activities is the basis of our business.

Basic
Approach● The‌
top management will actively lead the field from the bottom to the top to unite and strive to secure safety andimprove safety in business activities.
● The‌basis of safety is to be strongly conscious of each person working in the Senko Group to be healthy mentally andphysically, to practice proper health management.
We comply with relevant laws and regulations and fulfill our social responsibilities.
We thoroughly carry out risk assessment and reduce all safety risks.
3 We prevent health problems by enhancing health management system and promoting independent health.
4 We actively disclose information on safety and health activities.
1

Priority
Measures2

Achievement of Safety Goals (FY 2020)
As not all goals were achieved, we will formulate and implement new measures.
FY 2020 goals

FY 2020 achievements

Vehicle accident
frequency rate

0.31 or lower

0.59

Occupational accident
frequency rate

1.14 or lower

2.31

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

leading-edge technology based on the verification of results● ‌Strengthen the structure for performance of safety initiatives by reinforcing various

safety management systems and checks

Medium-Term Safety Goals (FY 2018 – FY 2022)
Based on our Five-Year Medium-Term Business Plan SIP21, we will promote Group-wide safety programs, including
using the latest driver assistance technology and other measures.

We aim to reduce byhalf vehicle andoccupational accidents
from the FY 2017 level.

Vehicle accident
frequency rate
(on-road accidents)

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

FY 2020
achievements

0.61/0.53

FY 2022
goals

0.25

FY 2020
achievements

2.49/1.71

FY 2022
goals

0.95

Logistics Group

Logistics Group

Senko Co., Ltd.

Senko Co., Ltd.

or lower

Senko Co., Ltd. And Logistics Groupor lower

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

20 SENKO ANNUAL REPORT 2020

Intra-Group Health and Safety Initiatives
To strengthen compliance at Senko Group logistics companies, for managers and others involved in operations, we areconducting training in 11 blocks nationwide. We will focus on the laws, regulations, and internal rules that must be
followed for operating a motor truck transportation business.
Implementation
area

Local managers experiencing face-to-face training

Nationwide Management System for Hazardous Materials
We assign people in charge of hazardous materials to 12 areas in Japan. They share information on hazardous materials
and improve their knowledge and skills. Only drivers who have passed a demanding test under the internal accreditation
system can drive tanker trucks. Furthermore, accredited drivers are given update training every five years to raise theirsafety and quality awareness. In addition to supplying varied opportunities for education and training for transportation
safety when handling hazardous materials, we also focus on maintaining a safer workplace.

Training for exposure to liquids

FY 2020 internal
qualification
for drivers

Training on the operation of various types of valves

TM 14
Technical
MasterpeopleTC 15
Technical
Coach

peopleTP 217

Technical
Professional
DriverpeopleSENKO ANNUAL REPORT 2020 21

CSR

Health Initiatives

Announcing the Senko Group Health Management Declaration Inside and Outside the Company
The Health Management Declaration announced in September 2017 expresses our wish that employees will not only be healthy
and happy at work, but that they will also be healthy and happy throughout their lives, even after their working life ends.

Senko Group Health Management Declaration
The Senko Group hereby declares the following regarding the health of employees:◎ Continuing to be “A corporate Group which nurtures people and supports their daily lives.”◎ Ensuring that every Group employee can work in a healthy and lively manner.
◎ Placing the utmost importance on making sure employees can live healthy and happy lives.

In line with these goals, the Senko Group is implementing initiatives for promoting the health of employees, in order to becomea truly affluent global company as a “Corporate Group Creating Future Trends.”
Yasuhisa Fukuda

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

Certified Health & Productivity Management Outstanding Organizations
Recognition Program (White 500) for Three Consecutive Years
In 2017 , the Senko Group announced the Senko Group Health Management Declaration, which
positions the promotion of employee health as one of the most important issues facing management;
we have been encouraging activities that promote healthy living for many years.
This program has been well received. We were recognized by the Certified Health & Productivity Management Outstanding Organizations
Recognition Program (also called White 500) on March 2, 2020 for the third consecutive year. Under this program, the Ministry of Economy,
Trade and Industry and health organization Nippon Kenko Kaigi jointly recognize companies that practice outstanding health management.

A Company Where Employees Can Work Healthily and Energetically
Major Health Management Initiatives
Promoting activities that build health for life
Seminars have been held on a variety of themes to improve health literacy.* In FY2020, seminars on promoting ways
for working women to be healthy were held at three locations nationwide, targeting female employees.
Healthy activity events were also held at various workplaces, including a volleyball competition, and employees
were also involved in club activities. In 2019, a tennis club was launched at the Tokyo Headquarters building.
The tennis club in action*The ability to search for and understand health-related information that is relevant to yourself and to take actions to prevent illness
and care for your own health

Nurses Supporting HealthNursing staff stationed around the country

22 SENKO ANNUAL REPORT 2020

As of April 2020, 22 nursing professionals (public health and registered nurses) have been assigned to the main
offices in 13 areas around the country, providing specialized healthcare guidance and support for the mental andphysical health of employees.
In FY2020, a health management system was introduced, providing unified management of information, including
the results of periodic health checks and records on guidance for healthy living. This system enabled healthmanagement at the same level for all employees in the Group.

Health Management also Conducted at Group Companies
Toyohashi Senko Transport Co., Ltd. and Harcob Co., Ltd. were recently recognized in the SME category by the CertifiedHealth & Productivity Management Outstanding Organizations Recognition Program 2020. We plan to continue supportingand expanding our initiatives for promoting employee health at our Group companies.
Health Management Initiatives
Companies recognized by the SME category of the Certified Health & Productivity Management Outstanding
Organizations Recognition Program 2020
Toyohashi Senko Transport Co., Ltd.

Harcob Co., Ltd.

Using health events to energize communications

Taking up new challenges every year!

Following our recognition by the 2019 Certified Health & Productivity Management
Outstanding Organizations Recognition Program, we began receiving proposals
from companies involved in healthcare, and awareness of health issues among
our employees increased. In FY2020, our goals were to increase the number ofopportunities for exercise and to energize communications. To help meet thesegoals, we hired trainers from sports clubs to come and teach a variety of stretches
that can be used in the workplace or at home. Many people attended, including
whole families, providing opportunities for people to get in touch with their bodies.

In addition to our existing activities, such as regularly publishing Health News, we
also strengthened our system for recommending additional tests and diagnoses to
employees after health checks. In addition, we worked to raise health awarenessthrough such activities as prohibiting smoking and introducing yoga mat exercises
at 3 p.m. every working day, while in FY2021 we are implementing workstyle reforms,
such as establishing regular days off and setting aside some days for no overtime.
At workplaces with many females, we have made it possible for them to receive
medical examinations for women’s health issues, regardless of their age.

Healthy activity gatherings

Daily healthy exercises at 3 p.m.

Health Check Statistics

Item(a) Stress check test ratio(b) Smoking ratio(c) Ratio of checkups where health issues were found(d) Ratio of regular exercisers(e) Ratio of those getting enough sleep(f) Ratio of those maintaining a healthy weight(g) Blood pressure(h) Blood sugar level(i) Liver function(j) Lipids(k) Renal function
Number of people eligible (as of March 31, 2020)

Results
FY 2019

FY 2020

93.8
34.9
46.6
44.0
52.5
66.2
74.5
78.3
74.7
84.5
91.5
3,358

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

FY 2020
Evaluation
◎
○
×
○
○
×
△
△
×
×

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

SENKO ANNUAL REPORT 2020 23

CSR

Social Activities

Encouraging Regional/Social Contribution Activities
We Evaluate Social Contribution Activities within the Group and Give Awards for Outstanding Achievements
The Senko Group established the Social Contribution Activities Commendation program in FY2017, which gives awards
for outstanding achievements. In FY2019, the Social Contribution Promotions Committee examined social contribution
activities by Group companies, with the result that one team was selected for the outstanding performance award andtwo teams were selected for performance awards.

Outstanding
PerformanceAward

Joint Safety Council meeting for five companies including Senko Fashion Logistics
Co., Ltd. and Tokyo Nohin Daiko Co., Ltd.

“Evaluated the proactive stance and continuity”
Won the outstanding performance award for developing traffic safety classes for children
as well as for consistently employing people with disabilities.

Presentation on the activities over the past 12 years as a result of receiving awards from Chiba Prefecture and Funabashi City for being an "Outstanding
Business Office for the Employment of People with Disabilities"

PerformanceAward

Senko School Farm Tottori Co., Ltd. and the Tohoku Main Branch of SENKO Co., Ltd. won
performance awards.
Senko School Farm Tottori Co., Ltd. was rated highly for consistency when providing agriculturalexperiences, primarily to local elementary school children and children using mother and childliving support facilities. The Tohoku Main Branch of SENKO Co., Ltd. was rated highly forconsistently undertaking a range of activities, including collecting aluminum cans and usingthat money to donate wheelchairs and planting 10,000 trees for the Millennium Hope Hills
development in Miyagi Prefecture.
Senko School Farm Tottori Co., Ltd.

Holding an agricultural experience session

24 SENKO ANNUAL REPORT 2020

Tohoku Main Branch of SENKO Co., Ltd.

Planted 10,000 trees at Millennium Hope Hills

Joint Project between Industry and Academia
Held Hotel Kaie Art Competition in partnership with Tama Art University
65 textiles, dyed goods, and illustrations created by students of Tama Art University were exhibited at Hotel Kaie, which openedin Shiomi, Tokyo, in February 2020. Hotel Kaie approached the university to suggest opening an exhibition space for students to
spread their wings and launch themselves into the future, in the hope that this will help nurture a new generation of artists. The
Grand Prix was awarded to Echoes by Yael Harnik (Israel), which was exhibited in the elevator hall on the first floor.
In addition, illustrations personifying eachof the 47 prefectures of Japan were posted in
the rooms and corridors on the second floor,
as part of a joint project with the Tokyo
Communication Arts School. Going forward,
Hotel Kaie will consistently offer spaces toAward ceremony for the Art Competition industry-academia Large numbers of prize-winning works exhibited in the hotel
joint project with Tama Art University
works by young artists.

Promoting Employment of the People with Disabilities
The Senko Group aims to contribute to the lives of all members ofsociety and to be a trusted company. Beginning with the opening of
Senko School Farm Tottori Co., Ltd. (a special subsidiary company),
we have been focusing on providing employment for people withdisabilities and are moving forward with initiatives to allow a diverse
range of employees to participate fully in the company.
We have consistently employed greater numbers of people than
the statutory employment ratio, and many people with disabilities areplaying active roles in their workplaces.

Disabled Employment Ratio(data as of June each year)
(%)
4.0

3.03

3.14

3.0

2.74

2.64

Statutory employment ratio

2.0
1.8
1.0

14

15

16

17

2.65

2.46
2.2

2.0

18

19

Linking with the Local Community
Holding Traffic Safety Classes
in JapanContributing to the Region by
Running Daycare Centers

Participating in Local Cleanups
and Blood Donation Drives

Class held at 20 sites with 1,922 participants

The Senko Group currently runs six daycare centers.
These centers accept children from parents otherthan Group employees and are well-loved by local
residents. In addition, in October 2019 we beganeliminating fees for non-licensed daycare facilities
for children aged 3 to 5.

We hold cleanup drives to contribute to the local
region and to show appreciation for the roads that
we rely on. In FY2020, 14,619 people participated.
1,129 people took part in blood donation drives in
FY2020, exceeding the figure for FY2019 and coming
second only to the record high set in FY2018.

Christmas Party

Joint blood donation drive being held in the Kyoto-Shiga region

In addition to the Traffic Safety Classes for Kids that
we have been holding at Crefeel Koto and othersites, from FY2015 we have continued to hold school
visit workshops at elementary and junior highschools, which are enjoyed by a large number ofstudents.
We make every effort to ensure that the program
enables children to enjoy learning about theimportance of traffic safety. In the school visit
workshop program, children think about safe ways
to cross the road and use across walk as well as
experience the blind spots in a driver's line of sightby riding in a truck. These classes are enjoyed byboth children and their guardians.

SENKO ANNUAL REPORT 2020 25

CSR

Directors and Auditors(As of June 19, 2020)

President andRepresentative Director

Yasuhisa Fukuda

Responsible for Logistics
President and Representative Director, SENKO Co., Ltd.

Noburo Sasaki

General Manager of Business Support Promotion HQ

Kenichi Shiraki

General Manager of Living Support Business Promotion HQ

Masanobu Uenaka

Responsible for Finance
General Manager of Finance & Accounting HQ

Shinichi Murao

General Manager of Strategic Planning HQ
Senior Manager of Business Development Department

Kazuhiro Yamanaka

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

Hiroshi Yoneji

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

Akira Taniguchi

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

Hiroko Ameno

Director (part-time), Senko Co., Ltd.

Directors
Managing Executive
Officer

Directors

Outside Directors

Yasuyuki Sugiura

Yoko Araki

Keiji Matsubara

Corporate Auditor, SENKO Co., Ltd.

Masami Washida

Corporate Auditor, SENKO Co., Ltd.

Kanji Yasumitsu

Corporate Auditor, SENKO Co., Ltd.

Yasushi Matsutomo

Corporate Auditor, SENKO Co., Ltd.

Full-time
Corporate Auditors

OutsideCorporate Auditors

26 SENKO ANNUAL REPORT 2020

CSR

Corporate Governance

Basic Policy
The Senko Group is a logistics company involved in highly public work that fosters people’s development and supports their lives.
The Senko Group makes every effort to ensure that all corporate activities thoroughly comply with laws, based on the awareness that
good corporate governance is the foundation of a business, as well as regarding governance as a high priority for management.

Corporate Governance System
We have adopted the following corporate governance system, one that we consider to be optimal, in order to ensure managementtransparency and legal compliance based on the company’s size, lines of business, organizational structure, and other features.

General Meeting of Shareholders
Appointment / Dismissal

Board ofCorporate Auditors

ReportAccounting Auditors

Appointment / Dismissal

Appointment / Dismissal
ReportAudit

Board of Directors
Appointment /Supervision

DialogueAccounting
Audit

ReportExecutive Officers

Assist /ReportReportPresident andRepresentative Director

Audit

Auditing Dept.

CSR Promotion Committee

ReportInstruct
Audit

Internal Controls Committee

ReportReportLegal Counsel

Supervise

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

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

Committees
SENKO Co., Ltd.

1The Company’s Board of Directors meets at least once a month and deliberates on issues as required by laws and regulations as well as importantmanagement concerns in addition to being an organization that oversees the execution of business. Furthermore, so that the Directors, Executive
Officers, and key employees execute their duties appropriately and efficiently, the Company has established the Regulations of the Board of Directors
and the Regulations for Administrative Authority to clarify authority and responsibility. We also verify the status of the implementation of operations andstrive to have even more transparent management.

2

To promote Group-wide CSR-based management, the Group has established the Compliance Committee, the Corporate Ethics Committee, the Risk
Management Committee, the Environmental Promotion Committee, and the Social Contribution Committee in addition to the CSR Promotion Committee,
which supervises these committees.
We also established an Internal Control Committee that will continue the internal control activities of the Group and seek to improve them.

3

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

SENKO ANNUAL REPORT 2020 27

CSR

Corporate Governance4

In the fiscal year ended March 31, 2020 the Company concluded an audit contract with Ohtemae Audit Corporation as the accounting auditor, based on
the Companies Act and the Financial Instruments and Exchange Act, and we have received effective guidance on accounting practices.
Three certified public accountants performed auditing service, while nine other certified public accountants and one person who has passed
certified public accountant exams assisted with auditing.
In the fiscal year ending March 31, 2021 the Company will conclude an audit contract with Grant Thornton Taiyo LLC as the accounting auditor, basedon the Companies Act and the Financial Instruments and Exchange Act, and will receive guidance on accounting practices.

5

The Auditing Department performs internal audits at the Company and subsidiaries with the aim of verifying the status of risk countermeasures,
identifying the status of managing operations and of improvements, and ensuring the effectiveness of the operation management system. As well,
the Auditing Department reports its findings to the Representative Director and the Corporate Auditors.

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

Compliance Committee

we established the Compliance Committee, the Corporate
Ethics Committee, the Risk Management Committee, theEnvironmental Promotion Committee, and the Social
Contribution Committee in addition to the CSR Promotion
Committee, which supervises these committees, and theInternal Controls Committee to create a Group-wide

Corporate Ethics Committee

CSR
Promotion
Committee

Operatingcompanies

Risk Management Committee
Environmental Promotion Committee

Committee Chairman:
President

Social Contribution Promotion Committee

CSR-based management system.

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

Category of Officer

Total Amount of Each Type of Compensation, etc. (Millions of yen)Basicremuneration

Stock options

Performance-based Performance-basedpay (bonuses)
stock compensation

Number of
Eligible Officers

Directors (excludes Outside Directors)

161

69

13

58

20

11

Corporate Auditors (excludes Outside Corporate Auditors)

42

31

1

9

–

2

Outside Officers

47

33

2

12

–

6

Senko has included some of the principle elements of Japan’s Corporate Governance Code, which started being applied in June 2015,
on the Company’s website to clarify the Company position on working to enhance corporate governance based on this code.
https://www.senkogrouphd.co.jp/ir/governance/ (Japanese only)● Corporate Governance Report● Initiatives Based on Corporate Governance Principles

Compliance-Based Management
Compliance-based management, which complies with laws and regulations and engages in ethical business activities, is the base for
a company to fulfill its social responsibility and earn the trust of stakeholders.
The Senko Group has established, based on a thorough understanding of the Group’s social obligations, the Senko Standards ofBusiness Conduct which prescribes all items that executives and employees must observe for every aspect of their jobs.

28 SENKO ANNUAL REPORT 2020

CSR

Risk Management

Business Risks
The risks related to the business, financial position, and operating results, etc. of the Senko Group that may have a material impact on
the judgment of investors are described below. Forward-looking statements are based on the judgment of the Senko Group (the Company
and consolidated subsidiaries) as of the last day of the fiscal year under review (March 31, 2020).

1

Laws and
Regulations

The Group is engaged in transportation, distribution processing, and other businesses, and provides a wide range of logistics services.
These businesses are subject to regulation under the Motor Truck Transportation Business Act, the Consigned Freight Forwarding
Business Act, the Warehousing Business Act and other legislation. It is necessary to receive registration or approval from the Minister ofLand, Infrastructure and Transport to engage in these businesses, and there is a mandatory post-notification system for setting and revisingfees. Moreover, environmental legislation, including regulations on truck exhaust, has also been strengthened. The performance of the Group
could be affected by legal revisions in the future and by trends for tightening or loosening regulations.

2

Sharp Increases in thePrice of Crude Oil

Higher prices for light oil due to a sharp increase in the price of crude oil will push up transportation costs. The performance of the Group,
where truck transportation is the mainstay business, could be affected in the future by price trends.

3

Occurrence of a
Serious Accident

In case a serious vehicle or freight accident occurs, the performance of the Group could be affected by a loss in customer and publicconfidence, suspension of vehicle use, administrative penalties such as business suspension, etc.

4

Occurrence of aDisaster, etc.

The performance of the Group could be affected by a system shutdown due to transportation routes being blocked or electricity being
suspended during a disaster, such as a storm or an earthquake, or by a blackout.

5

IT System Failure

The Group leverages IT technology to manage customer freight information and for control systems for warehouses. The performance of
the Group could be affected if these systems are shut down due to a natural disaster, computer virus, or computer hacking.
In 2018, the Group was affected by torrential rains in western Japan, as well as Typhoon Jebi and the Hokkaido Eastern Iburi Earthquake.

6

Management of
Customer
Information

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

7

M&A and capitalalliances

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

8

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

Risk Management System
The Senko Group’s key management issues include ensuring stable earnings and establishing a sound management base by managing
all risks associated with the execution of operations. The risk management system is described below.

1

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

2

When a risk materializes and is expected to cause serious damage, the department controlling this risk and the department in which the risk is expected to arise
collaborate on reporting to the Board of Directors.

3

The Auditing Department verifies the status of risk countermeasures, etc. and reports to the Representative Director and the Board of Corporate Auditors.

Establishing Business Continuity Plans (BCPs)
Every Group location has established a business continuity plan (BCP) in order to swiftly recover logistics in the event of a disaster.
In an emergency, support and recovery activities will be carried out promptly under the direction of the head office and the manager ofthe department taking countermeasures on the ground using the BCP.
When data centers are affected by a disaster, a backup data center will restore systems within 30 minutes, even if the server shuts
down to ensure that logistics systems can be maintained.
SENKO ANNUAL REPORT 2020 29

2020
Financial Information

Contents
Financial Review………………………………31
Consolidated Balance Sheets…………………34
Consolidated Statements of Income…………36
Consolidated Statements of Comprehensive Income…36
Consolidated Statements of Changes in Net Assets…37
Consolidated Statements of Cash Flows……38
Notes to the Consolidated Financial Statements…39
Report of Independent Auditors………………58

30 SENKO ANNUAL REPORT 2020

Financial Review

Consolidated operating revenues for the fiscal year ended March 31, 2020 increased ¥40,421 million year on year to ¥570,030 million.
This result is mainly a reflection of the effects of growing sales, revised freight charges, opening logistics centers, and making
overseas Group companies and operating companies in living support services into consolidated subsidiaries. On the profit front,
despite factors that included higher costs (mostly stemming from higher outsourcing costs and the impact of the spread of COVID-19),
consolidated operating profit rose ¥1,024 million year on year to ¥20,656 million and consolidated ordinary profit increased ¥868 million
year on year to ¥20,744 million. This upturn in profits was largely attributable to the effects of higher revenue (mentioned above),
as well as our efforts to improve productivity. Profit attributable to owners of parent increased to ¥12,081 million, up ¥399 million
year on year.
Billions of yen

2020

2019

Growth rate(%)

Operatingrevenues

Component
ratio (%)

Operatingrevenues

Component
ratio (%)

Difference

Logistics¥ 392.7

68.9¥ 375.4

70.9¥ 17.3

4.6

Retail product

222.6

39.1

208.3

55.5

14.1

6.8

Housing

63.2

11.1

62.2

16.6

1.0

1.6

Chemicals

76.6

13.4

73.8

19.7

2.8

3.8

Other

30.2

5.3

31.0

8.3

(0.5)

(1.8)

Trading & Commerce

161.3

28.3

142.3

26.9

19.0

13.4

Others

16.0

2.8

11.9

2.2

4.1

34.0

Total

570.0

100.0

529.6

100.0

40.4

7.6

Operating revenue improved by ¥17,343 million year on year to ¥392,728 million. This was mainly attributable

Logistics

to the effects of new logistic centers beginning operations in the current and the previous fiscal year, as wellas the effect of higher sales, revised freight charges, and making seven overseas Group companies into
consolidated subsidiaries. Segment profit rose by ¥1,637 million year on year to ¥17,847 million.

Operating revenues

Operating profit

Net income attributable toowners of parent(Millions of yen)

(Millions of yen)

(Millions of yen)

600,000

21,00012,500480,000

16,80010,000360,000

12,6007,500

240,000

8,400

5,000

120,000

4,200

2,500

0

0

0

16

17

18

19

20

16

17

18

19

20

16

17

18

19

20

SENKO ANNUAL REPORT 2020 31

Financial Review

Trading &Commerce

Operating revenue in this segment grew ¥19,020 million year on year to ¥161,314 million, due in part to higher
sales of household paper products for large mass-merchandising chains, but costs also increased as a result ofhigher outsourcing costs and other factors. Segment profit declined by ¥160 million year on year to ¥2,119 million.
Operating revenue rose ¥4,057 million year on year to ¥15,987 million, driven by growth in businesses, such as

Othersmaking Life-eat Co., Ltd., which is developing a food and beverage business, into a consolidated subsidiary,
as well as opening new nursing care homes, fitness centers, and a hotel. However, due to the impact of the
spread of COVID-19, segment profit decreased by ¥260 million year on year to ¥1,419 million.

Assets, Liabilities and Net Assets
Total assets as of March 31, 2020 were ¥356,308 million, rising by ¥15,817 million over the end of the previous
fiscal year.
Current assets came to ¥124,210 million, up ¥6,947 million from the end of the previous fiscal year. This was

Total assets

mainly a reflection of increases of ¥3,246 million in cash and cash equivalents and ¥3,050 million in tradeaccounts and notes receivable.
Non-current assets were ¥231,384 million, up ¥8,189 million. This was the result of a decline of ¥1,706 million
in investments and other assets, an increase in property, plant and equipment of ¥8,763 million, and an increase
in intangible assets of ¥1,131 million.
Liabilities as of March 31, 2020 increased ¥8,531 million from the end of the previous fiscal year to ¥222,127 million.
Current liabilities totaled ¥111,638 million, up ¥12,969 million from the end of the previous fiscal year. This was

Liabilities

due to an increase in trade accounts and notes payable of ¥3,382 million and an increase in short-term loansof ¥7,671 million.
Non-current liabilities were ¥110,489 million, down ¥4,437 million. This was the result of lease obligations
increasing by ¥3,412 million, and a decline in long-term debt of ¥8,857 million, and other factors.

Operating profit margin ()

Net income per share

Cash dividends per share

(%)

(Yen)

(Yen)

5.0

80

30

4.0

64

24

3.0

48

18

2.0

32

12

1.0

16

6

0

0

0

16

17

32 SENKO ANNUAL REPORT 2020

18

19

20

16

17

18

19

20

16

17

18

19

20

Net assets as of March 31, 2020 rose ¥7,285 million from the end of the previous fiscal year to ¥134,181 million.
This was due to, among other factors, a decrease in remeasurements of defined benefit plans of ¥1,519 million,

Net assets

an increase in retained earnings of ¥7,918 million, and an increase in non-controlling interests of ¥1,324 million.
The equity ratio improved by 0.1 percentage points from the end of the previous fiscal year to 35.1%.

Capital Expenditures and Depreciation
Capital expenditures in the fiscal year under review decreased ¥3,021 million, or 14.2%, to ¥18,205 million compared with theprevious fiscal year. The Company opened logistics centers in Chiba, Oita, and Hyogo Prefectures as well as Thailand in the fiscal
year under review. As a result, the total warehouse space as of March 31, 2020 grew by 210,000 m2 from the end of the previous
fiscal year to 3,870,000 m2.
Depreciation in the fiscal year under review increased ¥1,230 million, or 8.6%, to ¥15,565 million compared with the previous fiscal year.

Cash Flows
Cash and cash equivalents at the end of the fiscal year increased by ¥4,340 million year on year to ¥27,142 million.
Net cash provided by operating activities came to ¥31,098 million. This was due to income before income taxes of ¥19,648 million,
Depreciation and amortization of ¥15,565 million, an increase in funds driven by higher trade payables of ¥1,572 million, and anincrease in accrued consumption taxes of ¥2,317 million. Against this backdrop, an increase in trade receivables resulted in adecrease in cash of ¥2,866 million, and income taxes paid were ¥7,645 million.
Net cash used in investing activities came to ¥18,030 million. This was mainly the result of purchases of property, plant andequipment of ¥17,449 million.
Net cash used in financing activities totaled ¥9,155 million. The main elements were proceeds from long-term debt of ¥5,210
million, repayments of long-term debt of ¥6,978 million, repayments of finance lease obligations of ¥3,924 million, and dividends
paid of ¥3,964 million.

Total assets

Net assets ( ) /Equity ratio ( )ROE ((Millions of yen)

(Millions of yen)

400,000

200,000(%)
40

320,000

160,00032

240,000

120,000

24

)

(%)
12

9

6
160,000

80,00016

80,00040,000

8

3

0

0

0

16

17

18

19

20

16

17

18

19

20

0

16

17

18

19

20

SENKO ANNUAL REPORT 2020 33

Consolidated Balance Sheets
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

ASSETS
Current assets:
Cash and cash equivalents¥ 27,143¥22,802$ 249,407

Trade accounts and notes receivable–
Non-consolidated subsidiaries
OthersLess : allowance for doubtful accounts

1

2

9

77,01273,095

707,636

(22)

(14)

(201)

Inventories

9,616

9,767

88,358Prepaid expenses and other current assets

10,461

11,611

96,122

124,211117,263

1,141,331

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

16,283

18,420149,618

Investment securities (Notes 8 and 13)

5,764

6,651

52,963

Total current assets

309,561

294,519

2,844,446

Less : accumulated depreciation(138,583)(132,305)(1,273,390)

Net property and equipment

170,978

162,214

1,571,056

Long-term deferred tax assets (Note 17)

5,997

5,139

55,104

Net defined benefit assets

2,094

3,089

19,241Other assets

30,26927,683

278,131

713

32

6,552

713

32

6,552

¥ 356,309¥ 340,491$ 3,273,996

Property and equipment, at cost (Notes 10 and 13)

Deferred assets:
Business commencement expenses
Total deferred assets

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

34 SENKO ANNUAL REPORT 2020

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

LIABILITIES AND NET ASSETS
Current liabilities:¥ 15,091¥ 14,610$ 138,666

Current portion of long-term debt (Note 11)

Short-term loans (Note 11)

14,2107,019

130,571

Lease obligations

3,674

3,182

33,75924

1

221

Trade accounts and notes payable–
Non-consolidated subsidiaries
Others
Accrued expenses

47,52144,649436,653

12,039

11,635

110,622

Accrued income taxes

3,745

4,242

34,411Other current liabilities

15,335

13,331140,907

111,639

98,669

1,025,810

Total current liabilities
Long-term debt, less current portion (Note 11)82,931

91,847762,023

Lease obligations

13,913

10,500127,842

Net defined benefit liabilities (Note 12)

7,060

6,971

64,872Other long-term liabilities

6,585

5,608

60,507

Contingent liabilities (Note 14)
Net assets (Note 15):
Shareholders' equity
Common stock:
Authorized–294,999,000 shares
26,52926,529243,766

Capital surplus

Issued–152,861,921 shares in 2020 and 152,861,921 shares in 201929,77029,842

273,546

Retained earnings

70,902

62,983

651,493

(652)

(698)

(5,991)

126,549

118,656

1,162,814

Net unrealized holdings gain on securities

779

1,351

7,158

Gain (loss) on deferred hedges

14

(4)

129

Translation adjustments

256

122

2,352

(2,439)(920)(22,411)(12,772)

Less : Treasury stock, at cost–898,113, shares in 2020 and 1,024,460 shares in 2019
Total Shareholders' equity
Accumulated other comprehensive income :Remeasurements of defined benefit plans(1,390)549

Stock acquisition rights (Note 16)

432

425

3,969

Non-controlling interests

8,590

7,266

78,931

Total net assets

134,181

126,896

1,232,942

Total liabilities and net assets¥ 356,309¥ 340,491$3,273,996

Total accumulated other comprehensive income :See the accompanying notes to the consolidated financial statements.

SENKO ANNUAL REPORT 2020 35

Consolidated Statements of Income
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

¥ 570,030¥ 529,609$ 5,237,802

503,687
45,686471,129
38,8484,628,200
419,792

549,373

509,977

5,047,992

20,657

19,632

189,810254(1,100)(163)

269(1,036)36

2,334(10,108)(1,498)(1,009)(731)(9,272)

Income before income taxes

19,64818,901

180,538

Income taxes (Note 17):
Current
Deferred

7,010
102

7,102
(296)

64,412
937

7,112

6,806

65,34912,536

12,095

115,189

(455)

(414)

(4,181)¥ 12,081¥ 11,681$ 111,008

Operating revenues
Operating costs and expenses:
Operating costs of revenues
Selling, general and administrative expenses

Operating profit
Other income (expenses):
Interest and dividend income
Interest expenses
Others, net

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

Yen

¥ 79.51
73.75
26.00

U.S. dollars¥ 76.90
71.31
26.00

$ 0.730.68
0.24

See the accompanying notes to the consolidated financial statements.

Consolidated Statements of Comprehensive Income
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

¥ 12,536¥ 12,095$ 115,189

Other comprehensive income (Note 6):
Net unrealized holdings gain (loss) on securities
Gain (loss) on deferred hedges
Translation adjustments
Remeasurements of defined benefit plans

(560)
21
199
(1,519)

(434)
59
(294)
(878)

(5,146)
193
1,829(13,958)

Total other comprehensive income(1,859)(1,547)(17,082)

Comprehensive income¥ 10,677¥ 10,548$ 98,107

Total comprehensive income attributable to:
Owners of parent
Non-controlling interests¥ 10,078¥ 599¥ 10,228¥ 320$ 92,603$ 5,504

Net income

See the accompanying notes to the consolidated financial statements.

36 SENKO ANNUAL REPORT 2020

Consolidated Statements of Changes in Net Assets
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019

Millions of yen
Number ofshares ofcommonstock issued

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)

152,861¥ 26,529¥ 29,730¥ 54,969¥ (590)¥ 1,775¥ (61)¥ 335¥ (43)¥ 373

Net income attributable to owners of parent

–

–

–

11,681

–

–

–

–

–

–

–

11,681

Cash dividends

–

–

–

(3,661)

–

–

–

–

–

–

–

(3,661)

Purchases of treasury stock

–

–

–

–

(128)

–

–

–

–

–

–

(128)

Retirement of treasury stock

–

–

(2)

–

20

–

–

–

–

–

–

18

Adjustment of retained earnings for
newly consolidated subsidiaries

–

–

–

(6)

–

–

–

–

–

–

–

(6)

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

–

–

114

–

–

–

–

–

–

–

–

114

Other changes

–

–

–

–

–

(424)

57

(213)

(877)

52

2,226

821

152,861¥ 26,529¥ 29,842¥ 62,983¥ (698)¥ 1,351

¥ (4)

¥ 122

¥ (920)¥ 425

Net income attributable to owners of parent

–

–

–

12,081

–

–

–

–

–

–

–

12,081

Cash dividends

–

–

–

(3,968)

–

–

–

–

–

–

–

(3,968)Purchases of treasury stock

–

–

–

–

(0)

–

–

–

–

–

–

(0)

Retirement of treasury stock

–

–

5

–

46

–

–

–

–

–

–

51

Adjustment of retained earnings for
newly consolidated subsidiaries

–

–

42

(194)

–

–

–

–

–

–

–

(152)

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

–

–

(119)

–

–

–

–

–

–

–

–

(119)

Other changes

–

–

–

–

–

(572)

18

134

(1,519)

7

1,324

(608)

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

¥ 779

¥ 14

¥ 256

¥ (2,439)¥ 432

Balance at March 31, 2018

Balance at March 31, 2019

Balance at March 31, 2020

Net
Remeasurements
Stock
Gain (loss)
unrealized
Translationof definedacquisition
on deferredholdings gain
adjustments
benefit plansrightshedgeson securities

Noncontrollinginterests

Total net
assets¥ 5,040 ¥ 118,057¥ 7,266 ¥ 126,896¥ 8,590 ¥ 134,181

Thousand of U.S. dollars
Net
Gain (loss)
Remeasurements
Stockunrealized
Translation
on deferredof definedacquisition
holdings gain
adjustments
hedgesbenefit plansrightson securities

Commonstock

CapitalsurplusRetainedearnings

Treasurystock(at cost)$ 243,766$ 274,207$ 578,728$ (6,414)$ 12,414$ (36)$ 1,121$ (8,454)$ 3,905

Net income attributable to owners of parent––

111,008

–

–

–

–

–

–

–

111,008

Cash dividends––(36,460)

–

–

–

–

–

–

–

(36,460)

Purchases of treasury stock

–

–

–

(0)

–

–

–

–

–

–

(0)

Retirement of treasury stock

–

46

–

423

–

–

–

–

–

–

469

Adjustment of retained earnings for newly
consolidated subsidiaries–

386(1,783)

–

–

–

–

–

–

–

(1,397)

Change in treasury shares of parent arising fromtransactions with non-controlling shareholders–(1,093)

–

–

–

–

–

–

–

–

(1,093)

Other changes

–

–

–

–

(5,256)

165

1,231

(13,957)

64

12,166(5,587)$ 243,766$ 273,546$ 651,493$ (5,991)$ 7,158$ 129$ 2,352$ (22,411)$ 3,969

Balance at March 31, 2019

Balance at March 31, 2020

Noncontrollinginterests

Total net
assets$ 66,765 $ 1,166,002$ 78,931 $ 1,232,942

SENKO ANNUAL REPORT 2020 37

Consolidated Statements of Cash FlowsSENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2020 and 2019

Thousands of
U.S. dollars

Millions of yen

2020
Cash flows from operating activities:
Income before income taxes
Adjustments for:
Depreciation and amortization
Impairment loss
Gain (loss) on sales of investment securities
Loss on valuation of shares of subsidiaries and associates
Insurance income
Settlement money
Litigation settlement money
Loss (gain) on extinguishment of tie-in shares
Gain on termination of retirement benefit plan
Gain on sales of property and equipment
Loss on disposals of property and equipment
Loss on reduction of property and equipment
Subsidy income
Loss (gain) on liquidation of subsidiaries
Loss on return of subsidies
Gain on reversal of tax purpose reduction entry of non-current assets
Loss on disaster
Loss on office withdrawal
Decrease (increase) in accured retirement benefits
Increase (decrease) in net defined benefit liabilities
Increase (decrease) in accrued bonuses to employees
Increase (decrease) in provision for share-based remuneration
Increase (decrease) in provision for loss on disaster
Interest and dividends income
Foreign currency exchange loss (gain)
Interest expenses
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Decrease (increase) in consumption taxes refund receivable
Other
Subtotal
Proceeds from subsidy income
Settlement payment
Loss on return of subsidies
Interest and dividends income received
Interest expenses paid
Income tax paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Payments for purchases of fixed assets
Proceeds from sales of fixed assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchase of shares of newly consolidated subsidiaries
Payments for purchases of non-consolidated subsidiaries
Payments for guarantee deposits
Other
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term loans, net
Proceeds from long-term debt
Repayment of long-term debt
Repayments of finance lease obligations
Proceeds from issuing shares to non-controlling shareholders
Payments for purchase of shares of usual consolidated subsidiaries
Dividends paid
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

2019

2020

¥ 19,648¥ 18,901$ 180,538

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

14,335
32
(259)
675
–
–
–
–
–
(349)
335
1,565
(1,587)
200
–
–
111
134
(58)
(598)
584
124
103
(272)
293
1,036
(2,138)(1,547)
871
(648)
1,441
113

143,021
1,939
(101)
1,746
(1,323)
1,084
505
(469)
(423)
(478)
1,461
5,192
(5,320)3,271
2,187(2,187)––(1,277)(6,166)
1,617
2,490
(946)
(2,334)616
10,108(26,334)
1,204
14,445
21,2995,008
8,104

39,013
579
(106)
(238)
594
(1,097)(7,646)33,397
1,587
–
–
718
(1,031)(7,649)358,477
5,320(974)(2,187)
5,458(10,080)(70,256)

31,09927,022285,758(2,738)
3,934(17,449)
1,182
–
–
–
–
(2,043)(916)(3,596)
2,413(24,376)
14,095(116)
378(1,380)(1,296)(1,576)(316)(25,159)
36,148(160,332)
10,861––––(18,772)(8,417)(18,030)(15,770)(165,671)

212
5,210
(6,978)(3,925)803(152)(3,964)(362)(5,332)
7,711(9,865)(3,871)
2,305(170)(3,659)
(343)

1,948
47,873(64,118)(36,065)
7,378(1,397)(36,424)(3,326)(9,156)(13,224)(84,131)

46

(116)

422

Net increase (decrease) in cash and cash equivalents

3,959(2,088)36,378Cash and cash equivalents at beginning of year

22,802

23,796

209,519

315

1,094

2,894

Net increase in cash and cash equivalents of newly consolidated subsidiaries
Net increase in cash due to merger non-consolidated subsidiaries
Cash and cash equivalents at end of year

67

–

616

¥ 27,143¥ 22,802$ 249,407

See the accompanying notes to the consolidated financial statements.

38 SENKO ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements
SENKO Group Holdings Co., Ltd. and Consolidated Subsidiaries

01 Basis of Presenting Consolidated Financial Statements
SENKO Group Holdings Co., Ltd. (the “Company”) and its domestic subsidiaries maintain their accounts and records in accordance with the provisions
set forth in the Japan Companies Act and the Financial Instruments and Exchange Law of Japan and in conformity with accounting principles generally
accepted in Japan, which are different in several respects as to the accounting and disclosure requirements of International Accounting Standards.
The Company’s foreign subsidiaries maintain their accounts and records in conformity with generally accepted accounting principles and practices
prevailing in their respective countries of domicile.
The accompanying consolidated financial statements are prepared based on the consolidated financial statements of the Company and its subsidiaries(the “Companies”) which were filed with the Director of Kanto Local Finance Bureau as required by the Financial Instruments and Exchange Law of Japan.
In preparing the accompanying consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated
financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The translation of Japanese yen amounts into U.S. dollars is included solely for the convenience of the reader, using the exchange rate prevailingat March 31, 2020, which was ¥108.83 to US$1.00. These convenience translations should not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be, converted into U.S.dollars at this or any other rate of exchange.

02 Summary of Significant Accounting Policies(a) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its significant subsidiaries. All significant intercompany balances
and transactions are eliminated.
Non-consolidated subsidiaries, whose combined assets, net sales, net income and retained earnings in the aggregate are not significant inrelation to those of the consolidation with the Companies.
The investments in other insignificant unconsolidated subsidiaries and affiliates are stated at cost.

(b) Cash and Cash Equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with banks, net of overdrafts and all highly liquid investments with maturitiesof three months or less.

(c) Investment Securities
Investment securities are classified and accounted for, depending on management’s intent.
Marketable other securities, which are not classified as either trading securities or held-to-maturity debt securities, are reported at fair value,with unrealized gains and losses, net of applicable taxes, reported in a separate component of net assets.
Non-marketable other securities are stated at cost.
The cost of other securities sold is determined by the moving-average method.
The Companies classified all securities as other securities.

(d) Allowance for Doubtful Accounts
The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Companies’ past credit loss experience or an
evaluation of potential losses in the receivables outstanding.

(e) Inventories
Purchased goods are stated principally at cost determined by the moving-average method (with book values written down on the balance sheets based on
decreased profitability of assets). Finished goods, real estate for sale and work in process are stated principally at cost determined by the specific method(with book values written down on the balance sheets based on decreased profitability of assets). Raw materials are stated at cost determined by the lastpurchase cost method (with book values written down on the balance sheets based on decreased profitability of assets). Supplies are principally stated atcost determined by the moving-average method (with book values written down on the balance sheets based on decreased profitability of assets).

(f) Property and Equipment and Depreciation (Except for Leased Assets)
Property and equipment are stated at cost. Depreciation is computed on the straight-line method for the buildings (including fixtures attached tothe buildings), structures and vehicles, and on the declining-balance method for the others, on the estimated useful lives of assets.
The principal estimated useful lives are as follows:
Buildings and structures

2 to 60 years

Machinery and equipment

2 to 17 years(g) Leased Assets
Financial leases other than those that are deemed to transfer the ownership of leased assets to the lessees are accounted for in a similar way topurchases and depreciation for lease assets is computed under the straight-line method with zero residual value over the lease term.

SENKO ANNUAL REPORT 2020 39

Financial leases other than those that are deemed to transfer the ownership of leased assets to the lessees, which commenced in fiscal years
beginning prior to April 1, 2008, are accounted for in a similar way to operating leases.

(h) Accounting for significant deferred assets
Method and period for amortization of business commencement expenses
Business commencement expenses are amortized by the straight-line method over 5 years.

(i) Retirement Benefits
The Company and certain consolidated subsidiaries have retirement benefit plans for their employees that consist of funded and unfunded defined
benefit pension plans and a defined contribution pension plan.
Under the defined benefit pension plans (all of which are funded benefit plans), lump-sum benefits or pensions are paid based on salary andthe length of service. The Company has set up a retirement benefit trust scheme for certain defined benefit pension plans.
Under the retirement lump-sum plans (though the plans are basically unfunded, some were turned into funded plans after the setting up of aretirement benefit trust scheme), lump-sum benefits are paid based on salary and length of service.
Net defined benefit liabilities have been provided for employees’ retirement benefits, based on the amount of projected benefit obligation reducedby pension plan assets at fair value at the balance sheet date.
Actuarial gains and losses are amortized by the straight-line method over a period of 9 years, which is within the estimated average remaining
years of service of the Companies’ employees. The amortization of such gains and losses is recognized effective the year subsequent to the year inwhich they are incurred.
Certain consolidated subsidiaries also have a severance indemnity plan for directors and corporate auditors, whose accrued severance indemnities
are stated at 100% of the amount which is computed according to internal rules.

(j) Income Taxes
Deferred income taxes are recognized by the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are
determined based on difference of between financial reporting and the tax basis of the assets and liabilities, and are measured using the enacted
tax rate and laws that will be in effect when the differences are expected to reverse.

(k) Goodwill
Goodwill amortized over a period of 5 years by the straight-line method. If the economic useful life can be estimated, the useful life is used as theamortization period.

(l) Derivatives and hedge accounting
The Company and consolidated subsidiaries state derivative financial instruments at market value and recognize changes in the market value as
gain or loss unless the derivative financial instruments are used for hedging purposes. If derivative financial instruments are used as hedges andmeet certain hedging criteria, the Company and consolidated subsidiaries defer recognition of gain or loss resulting from changes in the market
value of the derivative financial instrument until the related loss or gain on the hedged item is recognized. However, when forward foreign exchange
contracts are used as hedges and meet certain hedging criteria, the foreign currency receivables or payables are translated at the contracted
rate. Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid or received under theinterest rate swap contract is added to or deducted from the interest on the asset or liability for which the swap contract was executed.

(m) Per Share Information
Basic net income per share is computed on the basis of the weighted-average number of shares of common stock outstanding for the period.
Diluted net income per share is computed on the basis of the weighted-average number of shares of common stock outstanding during eachyear after giving effect to the dilutive potential of the shares of common stock to be issued upon the conversion of convertible bonds and exerciseof stock acquisition rights.
Cash dividends per share are dividends applicable to the respective years including dividends to be paid after the end of the year.

(n) Translation of Foreign Currencies
All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rate at the balance sheet
date. Revenue and expenses are translated at the rate of exchange prevailing when transactions are made.
Foreign currency financial statements amounts of overseas consolidated subsidiaries are translated into Japanese yen at the exchange rate
for prevailing at the respective balance sheet dates of those subsidiaries for assets and liabilities, and at the historical exchange rate for net assets.
All income and expense amounts are translated at the average rate of exchange during the fiscal year of those subsidiaries.
The resulting translation adjustments are included in net assets as translation adjustments.

03 Accounting Standard, etc., Issued but Not Yet Adopted
・Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)
・Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 31, 2020)
・Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, March 31, 2020)(1) Outline
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have jointly developed a comprehensive

40 SENKO ANNUAL REPORT 2020accounting standard for revenue recognition. This standard, issued in May 2014, is called Revenue from Contracts with Customers (IFRS 15 for the
IASB and Topic 606 for the FASB). In recognition of the application of IFRS 15 for fiscal years beginning after January 1, 2018, and the application of
Topic 606 for fiscal years beginning after December 15, 2017, the Accounting Standards Board of Japan has developed and issued a comprehensive
accounting standard and guidance for revenue recognition.
The basic axpproach of the Accounting Standards Board of Japan when developing the revenue recognition accounting standard was to set
out an accounting standard that adopted as its starting point the basic principles of IFRS 15 from the perspective of comparability of financial
statements, one of the benefits of working to achieve consistency with IFRS 15. In addition, in cases where there are items that must be taken into
consideration, such as the way business has been conducted in the past in Japan, etc., this standard proposes additional substitute treatments,
provided that they do not affect comparability.

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

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

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

(3) Impact of the application of the above accounting standard, etc.
The financial impact on the consolidated financial statements of applying Accounting Standard for Fair Value Measurement and other standards
has yet to be finalized.
・Accounting Standard for Disclosure of Accounting Estimates (ASBJ Statement No. 31, March 31, 2020)(1) Outline
There is a requirement for the disclosure of “sources of estimation uncertainty” under paragraph 125 of International Accounting Standards 1, (IAS 1)
published in 2003 by the IASB. Because this information has value to readers of the financial statements, there have been requests to consider
disclosing these sources under Japanese standards as information in explanatory notes. For this reason, the Accounting Standards Board of Japan
has developed and published the Accounting Standard for Disclosure of Accounting Estimates.
The basic approach taken by the Accounting Standards Board of Japan during the development of this standard was, rather than expanding
individual notes, to state the general principle (disclosure objectives), and then to allow the company to make a decision on the specific content tobe disclosed after comparing it with the disclosure objectives. During development, the Accounting Standards Board of Japan referred to theprovisions of paragraph 125 of IAS 1.

(2) Planned application date
Application of these accounting standards is to start from the end of the fiscal year ending March 31, 2021.
・Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections (ASBJ Statement No. 24, March 31, 2020)(1) Outline
Having been presented with the argument that consideration should be given to enriching the information in the explanatory notes in relation to “theprinciples and procedures for accounting treatments adopted in cases where the provisions of relevant accounting standards are not clear,”the Accounting Standards Board of Japan performed the necessary revisions, and published this as an accounting standard for accounting policy
disclosures, accounting changes, and error corrections.
In addition, to clarify the information in the explanatory notes related to “the principles and procedures for accounting treatments adopted in cases

SENKO ANNUAL REPORT 2020 41

where the provisions of relevant accounting standards are not clear,” and in order to avoid affecting business that had been conducted in cases
where the provisions of relevant accounting standards are clear, it is assumed to inherit the provisions of Notes to Corporate Accounting
Principles (Note 1 – 2).

(2) Planned application date
Application of these accounting standards is to start from the end of the fiscal year ending March 31, 2021.

04 Changes in accounting estimates(Change in the number of years used for amortization of actuarial differences relating to the accounting treatment of retirement benefits)
Previously, the number of years used for amortization of actuarial differences relating to the accounting treatment of retirement benefits had been
set at a certain number of years that was less than the average remaining years of service for employees (mostly 10 years). However, because theaverage remaining years of service fell below this level, in the fiscal year under review the Company began to use a figure of 9 years for amortization.
To reflect this change, operating profit, ordinary profit and income before income taxes each declined by ¥147 million ($1,352 thousand), comparedwith their respective levels before the change in the number of years used for amortization.

05 Additional Information(Employee Stock Ownership Plan Trust (ESOP Trust))(1) Outline of the transaction
The Company introduced the ESOP Trust with the aim of improving the benefit program for employees. In addition, the ESOP Trust will foster a senseof belonging to the Group, creating an awareness of participation in management, and will increase awareness about contributing to improvementsin the Group’s medium-to-long term business performance and increasing corporate value through a program that is common across the Group.
The ESOP Trust is an incentive plan that delivers the Company’s shares acquired by the Trust to eligible employees who meet certain requirements
based on predetermined share distribution rules . As the funds for purchasing the Company’s shares that the Trust acquires are contributed byevery eligible company, there is no contribution from eligible employees.

(2) The Company’s own stock remaining in the trusts
The Company’s own stock remaining in the ESOP Trusts is posted as treasury stock under net assets at a book value recorded in the ESOP Trusts(excluding ancillary expenses). The amount and book value of the applicable treasury stock is 348,000 shares valued at ¥284 million ($2,610 thousand)for the current consolidated fiscal year.
(Officer Remuneration Board Incentive Plan (BIP Trust))(1) Outline of Transactions
The Company has introduced the Board Incentive Plan Trust (BIP Trust) as an executive officer remuneration plan for directors of the Company
and the Group’s subsidiaries (excluding outside directors and non-residents of Japan). This incentive plan is strongly linked to the Group’s financial
performance as well as being highly transparent and objective to help increase awareness of contributing to improving the Group’s medium-to-longterm business performance and increasing the corporate value. The BIP Trust is a plan that delivers the Company’s shares and/or pays an amountof cash equivalent to the converted value of the Company’s shares to directors based on their position in the company and their financial performancein the same way as the Performance-based Stock Compensation Plan (Performance Share) and the Restricted Stock Compensation Plan
(Restricted Stock) in Europe and the United States.

(2) The Company’s own stock remaining in the trusts
The Company’s own stock remaining in the BIP Trusts is posted as treasury stock under net assets at a book value recorded in the BIP Trusts(excluding ancillary expenses). The amount and book value of the applicable treasury stock is 352,000 shares valued at ¥296 million ($2,720 thousand)for the current consolidated fiscal year.
(Accounting estimates related to the impact of the spread of novel coronavirus infections)
The Group has based impairment accounting of non-current assets, (and accounting estimates of these elements as the recoverability of deferred tax
assets), on the information available at the time the consolidated financial statements were created. The impact and the degree of impact from thenovel coronavirus infectious disease on the business of the Group has varied based on the business and the region. However, for those businesses
affected by declines in operating revenues, etc., accounting estimates have been made on the assumption that the impact will continue for part of the
fiscal year ending March 31, 2021.

42 SENKO ANNUAL REPORT 2020

06 Comprehensive Income
The amount of recycling and amount of income tax effect associated with other comprehensive income at March 31, 2020 and 2019consisted of the following:
Millions of yen

2020
Net unrealized holdings gain (loss) on securities:
Amount recognized in the period under review
Amount of recycling

2019

Thousands of
U.S. dollars

2020¥ (800)(11)¥ (360)(259)$ (7,351)
(101)

(811)
251

(619)
185

(7,452)
2,306

(560)

(434)

(5,146)

31

87

285

Before income tax effect adjustments
Amount of income tax effect

31
(10)

87
(28)

285
(92)

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

21

59

193

199

(294)

1,829

Remeasurements of defined benefit plans:
Amount recognized in the period under review
Amount of recycling(2,534)350(1,814)541(23,284)
3,216

Before income tax effect adjustments
Amount of income tax effect(2,184)665(1,273)395(20,068)
6,110

Remeasurements of defined benefit plans(1,519)(878)(13,958)¥ (1,859)¥ (1,547)$ (17,082)

Before income tax effect adjustments
Amount of income tax effectNet unrealized holdings gain (loss) on securities
Gain (loss) on deferred hedges:
Amount recognized in the period under review

Total other comprehensive income

07 Financial Instruments(a) Status of financial instruments(1) Policy on financial instruments
The Company and certain of its subsidiaries raise the funds required for capital investment plans for further growth from bank loans and theissuancee of bond. The Companies manage any temporary surplus funds using highly stable financial assets. The Companies use derivatives inorder to hedge against currency risks associated with merchandise imports as well as interest rate fluctuations risks in loans payable, and do
not engage in speculative transactions.
(2) Details of financial instruments, their risks and management systems
Trade accounts and notes receivable, which are operating receivables, are exposed to the credit risk of the customer and the Companies
operate systems to manage both payment deadlines and balances for each customer and grasp the credit status of each customer.
Investment securities are mainly the shares of companies with which the Companies have a business relationship and the shares related tocapital alliances, and these are exposed to the risk of fluctuations in market prices.
Trade accounts and notes payable, which are operating liabilities, have payment dates of within 1 year.
Trade accounts payable in foreign currencies are exposed to risks of foreign exchange fluctuations. To hedge such fluctuation risks, aconsolidated subsidiary has entered into foreign exchange forward contracts.
Short-term loans are fund procurement related mainly to operating transactions. Long-term debt are fund procurement related mainly tocapital investment.
Loans with variable interest rate are exposed to the risk of fluctuations in payable interest rates, but the Company conduct interest rate swap
transactions in order to hedge the risk of fluctuations in payable interest rates for some long-term debt among variable interest rate loans.
In addition, operating liabilities and loans payable are exposed to liquidity risk, but the Companies implement integrated fund management
through the concentration of funds in the Company, which carries out fund settlement, fund procurement, monitoring of balances and fundmanagement for the Companies.
Regarding derivatives, the Companies use foreign exchange forward contracts to hedge against foreign exchange rates fluctuation risks,
and interest rate swap transactions aimed at hedging against the risk of future interest rate fluctuations, and also reduce the cost of fundprocurement by converting variable interest rate liabilities into fixed interest rate liabilities.
SENKO ANNUAL REPORT 2020 43

Primary risks pertaining to derivative transactions include market risk and credit risk. Market risk is the risk that the value of an investment
position will decrease due to changes in market factors, and a derivative transaction is exposed to foreign exchange and interest rate fluctuation
risks. The Companies' derivatives effectively offset the risks of assets and liabilities on the balance sheets, and there were no important transaction
risks. Credit risk is the risk that, in the case of default of the other party, the relevant party would become incapable of benefiting from the effectthat would have obtained in the future if the transaction had continued. The Companies' derivative transaction partners are limited to financial
institutions with high credit ratings and the Companies do not foresee the occurrence of losses due to debt default on the part of transaction partners.
The Company manages derivatives based on authority-related regulations in the Business Management Division. The execution of transactions
requires the permission of the director responsible for the management of derivatives and the details of transactions are reported to the generalmanager of the Business Management Division and the director after their execution.
Consolidated subsidiaries also manage derivatives based on authority-related regulations, as does the Company.
(3) Supplementary explanation of the estimated market values of financial instruments
The market value of financial instruments includes prices based on market prices and reasonably estimated prices if there are no market prices.
Because estimations of the prices incorporate fluctuating factors, application of different assumptions can in some cases change the prices.

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

2020(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable (including current portion)Less allowance for doubtful accounts (*1)

Book valueMarket value

Difference¥ 28,479
77,013
5,285
3,329
(128)

¥28,479
77,013
5,285

3,201

3,224

Total assets¥ 113,978¥114,001¥

23(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)¥ 47,545
15,091
17,12010,02070,001
17,587¥ 47,545
15,091
17,036
9,910
69,94917,200

¥

–
–
(84)
(110)
(52)
(387)

Total liabilities¥ 177,364¥176,731¥ (633)

Derivatives (*2)

¥

33

¥33

¥

–
–
–

23

¥

–

Millions of yen

2019(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable (including current portion)Less allowance for doubtful accounts (*1)

Book valueMarket value

Difference¥ 25,233
73,097
6,238
3,791
(185)

¥ 25,233
73,097
6,238

3,606

3,562

(44)

Total assets¥ 108,174¥ 108,130¥(44)(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)¥ 44,650
14,61017,16810,03071,668
13,682¥ 44,650
14,61017,106
9,866
72,44013,539¥Total liabilities¥ 171,808¥ 172,211¥ 403

Derivatives (*2)

¥

¥

¥

44 SENKO ANNUAL REPORT 2020

1

1

¥

–
–
–

–
–
(62)
(164)
772
(143)

–

Thousands of U.S. dollars

2020

Book valueMarket value

Difference$ 261,683
707,645
48,56230,589(1,176)$ 261,683
707,645
48,562

29,41329,624211

Total assets$ 1,047,303$ 1,047,514$ 211(1) Trade accounts and notes payable(2) Short-term loans(3) Bond(4) Convertible bond(5) Long-term debt (including current portion)(6) Lease obligations (including current portion)$ 436,874
138,666
157,309
92,070643,214161,601$ 436,874
138,666
156,538
91,059642,736
158,045$

Total liabilities$ 1,629,734$ 1,623,918$ (5,816)

Derivatives (*2)

$

$

$

(1) Cash and cash equivalents(2) Trade accounts and notes receivable(3) Investment securities(4) Long-term loans receivable (including current portion)Less allowance for doubtful accounts (*1)

303

303

$

–
–
–

–
–
(771)
(1,011)(478)(3,556)–*1. Allowance for doubtful accounts recognized in long-term loans receivable is offset.							*2. “Derivatives” shows net receivables and liabilities generated by derivative transactions, with net liabilities shown in parentheses.

Calculation of the market value of financial instruments and items relating to investment securities and derivatives● Assets(1) Cash and cash equivalents, (2) Trade accounts and notes receivable
Because these are settled in a short period of time and market values are roughly equivalent to book values, market value are calculated basedon book values.
(3) Investment securities
The market values of shares are based on stock exchange prices and the market values of bond are based on stock exchange prices and theprices offered by correspondent financial institutions. With regard to details of the investment securities by purpose, please see "Note 7"(4) Long-term loans receivable
The market values of long-term loans receivable are calculated based on the current value discounting future cash flow by a rate adding credit
risk to appropriate indices such as the yield on government bond.
● Liabilities(1) Trade accounts and notes payable, (2) Short-term loans
Because these are settled in a short period of time and market values are roughly equivalent to book values, market values are calculated
based on the book values.
(3) Bond, (4) Convertible bond
The market values of bond issued by the Company are calculated based on the current value discounting the total value of principal and interestby a rate adding the remaining period of the bond in question and credit risk.
(5) Long-term debt
The market values of long-term debt are calculated based on the current value discounting the total value of principal and interest by a rateenvisioned if a new loan of the same value was taken out. Long-term debt based on variable interest rates are subject to special processing
using interest rate swaps, and are calculated based on the current value discounting the total value of principal and interest processed as aunit with the relevant interest rate swaps by a rate estimated rationally and applied if a loan of the same value was taken out.
(6) Lease obligations
The market values of lease obligations are calculated based on the current value discounting the total value of principal and interest by a rateenvisioned if a new loan of the same value was taken out.
● Derivatives

See “Note 9”
Financial instruments for which it is extremely difficulty to determine market value

2020
Unlisted shares

Thousands of
U.S. dollars

Millions of yen¥ 12,378

2019¥ 14,023

2020$ 113,737

The financial instruments listed above are not included in “(3) Investment securities,” as there is no market price and determination of their market
value is extremely difficult.

SENKO ANNUAL REPORT 2020 45

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

Millions of yen

2020

Within 1 year

Over 1 year
Within 5 years¥

Over 5 years
Within 10 years

–
–
–

¥

Over 10 years

Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable¥ 28,479
77,013
–

–
–
–

¥

–
–
–

–
–
–
89

–
–
–
1,803

–
–
–
1,217

–
–
–
220

Total

¥ 105,581¥ 1,803¥ 1,217¥ 220

Within 1 year

Over 1 year
Within 5 years

Over 5 years
Within 10 years

Millions of yen

2019

¥

–
–
–

¥

Over 10 years

Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable¥ 25,233
73,097
–

–
–
–

¥

–
–
–

–
–
–
96

–
16
–
2,535

–
–
–
925

–
–
–
235

Total

¥ 98,426¥ 2,551

¥ 925

¥ 235
Thousands of U.S.dollars

2020

Within 1 year

Over 1 year
Within 5 years

Over 5 years
Within 10 years

Over 10 years

$

$

$

Cash and cash equivalents
Trade accounts and notes receivable
Investment securities
Other securities with maturity period(1) Government bond, local government bond(2) Bond(3) Other
Long-term loans receivable$ 261,683
707,645
–

–
–
–

–
–
–

–
–
–

–
–
–
818

–
–
–
16,567–––
11,182

–
–
–
2,022

Total

$ 970,146$ 16,567$ 11,182$ 2,02208 Investment Securities
The carrying amounts of investment securities at March 31, 2020 and 2019, consisted of the following:Thousands of
U.S. dollars

Millions of yen

2020
Marketable securities
Non-marketable securities

46 SENKO ANNUAL REPORT 2020

2019

2020

¥ 5,285479¥ 6,238413$ 48,562
4,401¥ 5,764¥ 6,651$ 52,963

The following is a summary of marketable securities included in investment securities, at March 31, 2020 and 2019.
Millions of yen

2020
Equity security
Bond and Others

Acquisition cost

Gross unrealized
gains

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

¥ 401
28

¥ 5,127158¥ 3,523¥ 2,191¥ 429¥ 5,285

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)¥ 3,530169¥ 2,644–¥ 102
3¥ 6,072166¥ 3,699¥ 2,644¥ 105¥ 6,238

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesBook value(Market value)$ 30,663
1,709$ 20,132–$ 3,685257$ 47,110
1,452$ 32,372$ 20,132$ 3,942$ 48,562

Millions of yen

2019
Equity security
Bond and Others

Thousands of U.S.dollars

2020
Equity security
Bond and Others

09 Derivatives
1. Derivative transactions to which hedge accounting is not applied
Not applicable.

2. Derivative transactions to which hedge accounting is applied(1) Currency transactions

Millions of yen

2020
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

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

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

Trade accounts receivable

¥

0

¥ –

¥ 0

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

¥ –
–
–
–
–
–

¥ 37
(10)
(3)
0
0
0

¥ 3,233

¥ –

¥ 24

Total

Millions of yen

2019
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

Forward exchange contracts
Buy
U.S. dollar
Euro
Chinese yuan
Danish krone
Australian dollar
Total

Item hedged

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable

Contract
amounts

Over 1 year out ofcontract amounts

Market value¥ 2,459
379
277
6
4

¥ –
–
–
–
–

¥ 11
(13)
3
(0)
0

¥ 3,125¥ –¥1

SENKO ANNUAL REPORT 2020 47

Thousands of U.S.dollars

2020
Hedge accounting method

Type of contracts

Designated transactions forforward exchange contracts

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

Item hedged

Contract
amounts

Over 1 year out ofcontract amounts

Market value

Trade accounts receivable

$

0

$ –

$

Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable
Trade accounts payable$ 20,573
6,928
2,178
19
9
0

$ –
–
–
–
–
–

$ 340
(92)
(27)
0
0
0

$ 29,707

$ –

$ 221

Total

0

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

Millions of yen

2020
Hedge accounting method

Type of contracts

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

Item hedged

Contract
amounts

Long-term debt

Over 1 year out ofcontract amounts¥ 17,000

Market value¥ 6,700¥–

Millions of yen

2019
Hedge accounting method

Type of contracts

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

Item hedged

Contract
amounts

Long-term debt

Over 1 year out ofcontract amounts¥ 17,450

Market value¥ 17,000¥–Thousands of U.S.dollars

2020
Hedge accounting method

Type of contracts

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

Item hedged

Contract
amounts

Long-term debt

Over 1 year out ofcontract amounts$ 156,207

Market value$ 61,564$–

10 Property and Equipment
At March31, 2020 and 2019, property and equipment at cost consisted of the following:Thousands of
U.S. dollars

Millions of yen

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

48 SENKO ANNUAL REPORT 2020

2020

2019

2020

¥ 61,669
145,107
67,912
9,334
6,294
19,245¥ 59,670
142,72262,5448,398
4,309
16,876$ 566,655
1,333,336
624,019
85,767
57,833
176,836¥ 309,561¥ 294,519$ 2,844,446

11 Short-term Loans and Long-term Debt
At March 31, 2020 and 2019, short-term loans consisted of the following:Thousands of
U.S. dollars

Millions of yen

2020
0.24% to 3.22% unsecured loans from banks

2019¥ 15,091¥ 14,610

At March 31, 2020 and 2019, long-term debt consisted of the following:

0.50% bond due 2021
0.10% bond due 2022
0.48% bond due 2027
Convertible bond due 2022
0.20% to 2.78% loans from banks and insurance companies:
UnsecuredLess current portion$ 138,666

Thousands of
U.S. dollars

Millions of yen

2020

2020

2019

2020

¥ 7,000
120
10,00010,020¥ 7,000
168
10,00010,030$ 64,320
1,102
91,886
92,07070,001

71,668643,216

97,141(14,210)98,866(7,019)892,594(130,571)¥ 82,931¥ 91,847$ 762,023

On March 28, 2017, the Company issued ¥10,050 million ($92,346 thousand) of zero coupon convertible bond with stock acquisition rights due in 2022.
The stock acquisition rights are exercisable during the period from March 14, 2022 at a conversion price of ¥930 ($8.55) per share.
The annual maturities of long-term debt at March 31, 2020 are as follows:Year ending March 31

2021
2022
2023
2024
2025
There after

Millions of yen

Thousands of
U.S. dollars¥ 14,210
20,062
10,6559,534
10,85831,822$ 130,571
184,343
97,90587,604
99,770292,401

At March 31, 2020, the Company has committed line and overdraft contracts with 25 banks aggregating ¥49,765 million ($457,273 thousand).
Of the total credit limit, ¥14,750 million ($135,533 thousand) was used as the above short-term and long-term borrowing, and the rest ¥35,015 million($321,740 thousand) was unused.

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

2020
Benefits obligation at the beginning of the year
Service cost
Interest costAccrued actuarial differences
Retirement benefits paid
Decrease on termination of retirement benefit plan
OthersBenefits obligation at the end of the year

Thousands of
U.S. dollars

Millions of yen

2019

2020

¥ 25,439¥ 25,624$ 233,750

1,076
55
137
(1,814)
(277)
(27)

1,046
88
536
(1,849)
–
(6)

9,887
505
1,259
(16,668)(2,545)(248)¥ 24,589¥ 25,439$ 225,940

SENKO ANNUAL REPORT 2020 49

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

Thousands of
U.S. dollars

Millions of yen

2020

2019

2020

Fair value of plan assets at the beginning of the year
Expected return on plan assets
Accrued actuarial differences
Contribution by employers
Retirement benefits paid

¥ 21,557
539(2,373)578(678)¥ 22,381
671(1,278)520(737)$ 198,080
4,953(21,805)
5,311(6,230)Fair value of plan assets at the end of the year

¥ 19,623¥ 21,557$ 180,309c. ‌Table for adjusting benefits obligation, fair value of plan assets at the end of the year, and net defined benefit liabilities and net
defined benefit assets on the consolidated balance sheets
Millions of yen

2020

2019

Thousands of
U.S. dollars

2020

Benefits obligation under the funded benefit plan
Fair value of plan assets¥ 18,970(19,623)¥ 19,656(21,557)$ 174,309(180,309)

Benefits obligation under the unfunded benefit plan

(653)
5,619

(1,901)
5,783(6,000)51,631

Net amounts of assets and liabilities on the consolidated balance sheets

4,966

3,882

45,631

Net defined benefit assets
Net defined benefit liabilities

2,094
7,060

3,089
6,971

19,24164,872¥ 4,966¥ 3,882

Net amounts of assets and liabilities on the consolidated balance sheets
d. Breakdown of retirement benefit costs

45,631Thousands of
U.S. dollars

Millions of yen

2020

$

2019

2020

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial differences¥ 1,076
55
(539)
340

¥ 1,046
88
(671)
541

$

9,887
505
(4,953)
3,124

Retirement benefit costs for the defined benefit plan¥932

¥ 1,004

$

8,563

(46)

–

Gain on termination of retirement benefit plane. Remeasurements of defined benefit plans (Other Comprehensive Income)The breakdown of items posted as re-measurement of defined benefit plans (before tax effect deduction) is as follows:
Millions of yen

2020
Recognized actuarial differences
Total

2019

¥ (2,184)¥ (1,273)$ (20,068)(2,184)(1,273)(20,068)

Millions of yen

2020
Total

2019

Thousands of
U.S. dollars

2020¥ (3,617)¥ (1,433)$ (33,235)(3,617)(1,433)(33,235)

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

2020

2019

Bonds
StocksOthers

28%
51%
21%

26%
55%
19%

Total

100%

100%

(Note) 40% and 43% of total pension assets are in a "Retirements Benefit Trust" for the defined benefit pension plans as of March 31, 2020 and 2019, respectively.

50 SENKO ANNUAL REPORT 2020

Thousands of
U.S. dollars

2020

f. Remeasurements of defined benefit plans (Accumluated Other Comprehensive Income)The breakdown of items posted as re-measurement of defined benefit plans (before tax effect deduction) is as follows:

Unrecognized actuarial differences(423)

(ii) Method of setting the expected rate of long-term return on plan assets
The Company has taken into account a forecasted allocation of plan assets and the present and expected long-term return on various assetsthat consist of the plan assets to determine the expected rate of long-term return on plan assets.
h. Items concerning the essential basis for actuarial calculation

2020
Discount rate
Defined benefit pension plans
Retirements lump-sum plans
Expected rate of return on plan assets

2019

0.31%
0.14%
2.50%

(2) Defined contribution plan

0.33%
0.12%
3.00%
Thousands of
U.S. dollars

Millions of yen

2020
Contributions to defind contribution plan by the Company and its consolidated subsidiaries

2019

¥ 980

2020

¥ 806

$ 9,005

13 Pledged Assets
The following assets were pledged as collateral as at March 31, 2020 and 2019.

2020
Land
Buildings
Structures
Ship
Investment securities
Others20192020¥ 3,904
1,650
20
1,249
–
10

¥ 6,670
2,253
23
1,351
10
–

$ 35,872
15,161
184
11,477–92¥ 6,833¥ 10,307$ 62,786

Obligations which were secured on the above assets were as follows:

Thousands of
U.S. dollars

Millions of yen

2020
Long-term debt, including current portion

Thousands of
U.S. dollars

Millions of yen

2019¥ 4,9542020¥ 5,575$ 45,521

14 Contingent Liabilities
At March 31, 2020 and 2019, contingent liabilities were as follows:

2020
Guarantees of some obligations
Buyback obligations associated with securitization of receivables
Recourse obligation associated with securitization of guarantee deposits
Trade notes endorsed

Thousands of
U.S. dollars

Millions of yen

2019

2020

¥

77
448
25
94

¥

782
369
83
112

¥

644

¥ 1,346

$

707
4,116
230
864

$ 5,917

15 Net Assets
The Japan Companies Act provides that an amount equal to at least 10% of the amounts to be disbursed as distributions of earnings be appropriated to
the legal reserve until such reserve and additional paid-in capital equals 25% of the common stock account. The Japan Companies Act also stipulates that,on condition that the sum of the additional paid-in capital and the legal reserve exceeds 25% of the common stock account, the amount of any suchexcess is available for appropriation by resolution of the shareholders.
The retained earnings account in the accompanying consolidated financial statements at March 31, 2020, included the Company’s legal reserve of¥1,506 million ($13,838 thousand).
SENKO ANNUAL REPORT 2020 51

16 Stock Option Plans
The stock option plans of the Company approved by the shareholders in accordance with the Japan Companies Act at March 31, 2020 were as follows:(1) Description of stock options

Stock option

Grantees

Number ofshares withwarrants granted

Date of
grant

Option price
Shares with
per warrant warrants granted

Exercise period

2007 Stock options (1st)

10 directors
3 auditors

61,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007-June 30, 2027

2007 Stock options (2nd)

9 operating officers

18,000 shares

July 20, 2007

¥1

Common stock

July 21, 2007-June 30, 2027

2008 Stock options (4th)

10 directors
3 auditors

71,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008-June 30, 2028

2008 Stock options (5th)

10 operating officers

22,000 shares

July 1, 2008

¥1

Common stock

July 2, 2008-June 30, 2028

2009 Stock options (6th)

11 directors
4 auditors

74,000 shares

July 1, 2009¥1

Common stock

July 2, 2009-June 30, 2029

2009 Stock options (7th)

12 operating officers

27,000 shares

July 1, 2009¥1

Common stock

July 2, 2009-June 30, 2029

2010 Stock options (8th)

11 directors
4 auditors

90,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010-June 30, 2030

2010 Stock options (9th)

13 operating officers
13 assistant directors

42,000 shares

July 1, 2010

¥1

Common stock

July 2, 2010-June 30, 2040

2011 Stock options (10th)

12 directors
4 auditors

102,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011-June 30, 2031

2011 Stock options (11th)

15 operating officers
20 assistant directors

96,000 shares

July 1, 2011

¥1

Common stock

July 2, 2011-June 30, 2041

2012 Stock options (12th)

12 directors
4 auditors

107,000 shares

July 2, 2012¥1

Common stock

July 3, 2012-June 30, 2032

2012 Stock options (13th)

16 operating officers
22 assistant directors

92,000 shares

July 2, 2012¥1

Common stock

July 3, 2012-June 30, 2042

2013 Stock options (15th)

12 directors
4 auditors

71,000 shares

July 1, 2013

¥1

Common stock

July 2, 2013-June 30, 2033

2013 Stock options (16th)

18 operating officers
26 assistant directors

82,000 shares

July 1, 2013

¥1

Common stock

July 2, 2013-June 30, 2043

2014 Stock options (18th)

12 directors
4 auditors

56,000 shares

July 1, 2014

¥1

Common stock

July 2, 2014-June 30, 2034

2014 Stock options (19th)

18 operating officers
32 assistant directors

74,000 shares

July 1, 2014

¥1

Common stock

July 2, 2014-June 30, 2044

2015 Stock options (20th)

12 directors
4 auditors

52,000 shares

July 1, 2015

¥1

Common stock

July 2, 2015-June 30, 2035

2015 Stock options (21st)

20 operating officers
30 assistant directors

60,000 shares

July 1, 2015

¥1

Common stock

July 2, 2015-June 30, 2045

2016 Stock options (22nd)

10 directors
4 auditors

35,000 shares

July 1, 2016

¥1

Common stock

July 2, 2016-June 30, 2036

2016 Stock options (23rd)

23 operating officers
15 assistant directors

43,000 shares

July 1, 2016

¥1

Common stock

July 2, 2016-June 30, 2046

2017 Stock options (25th)

6 directors
4 auditors

21,000 shares

July 3, 2017¥1

Common stock

July 4, 2017-June 30, 2037

2017 Stock options (26th)

2 operating officers
4 assistant directors
9 executives of the subsidiaries
23 operating officers of the subsidiaries
20 assistant directors of the subsidiaries

77,000 shares

July 3, 2017¥1

Common stock

July 4, 2017-June 30, 2047

2018 Stock options (27th)

7 directors
4 auditors

19,000 shares

July 2, 2018

¥1

Common stock

July 3, 2018-June 30, 2038

2018 Stock options (28th)

1 operating officers
4 assistant directors
9 executives of the subsidiaries
24 operating officers of the subsidiaries
24 assistant directors of the subsidiaries

83,000 shares

July 2, 2018

¥1

Common stock

July 3, 2018-June 30, 2048

2019 Stock options (29th)

10 directors
3 auditors

24,000 shares

July 1, 2019¥1

Common stock

July 2, 2019-June 30, 2039

2019 Stock options (29th)

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

61,000 shares

July 1, 2019¥1

Common stock

July 2, 2019-June 30, 2049

52 SENKO ANNUAL REPORT 2020

(2) Changes in the number of stock options
The following describes changes in the number of stock options that existed during the year ended March 31, 2020. The number of stock options istranslated into the number of shares.
Share subscription rights which are not yet vested (shares):
Stock option

At March 31,
2019

GrantedForfeited

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

At March 31, At March 31,
2020
2019

VestedExercised

Forfeited

At March 31,
20202007 Stock options (1st)

–

–

–

–

–

24,000

–

5,000

–

19,0002007 Stock options (2nd)

–

–

–

–

–

4,000

–

–

–

4,000

2008 Stock options (4th)

–

–

–

–

–

27,000

–

5,000

–

22,0002008 Stock options (5th)

–

–

–

–

–

4,000

–

–

–

4,000

2009 Stock options (6th)

–

–

–

–

–

30,000

–

5,000

–

25,0002009 Stock options (7th)

–

–

–

–

–

15,000–––15,0002010 Stock options (8th)

–

–

–

–

–

35,000

–

6,000

–

29,0002010 Stock options (9th)

–

–

–

–

–

25,000

–

1,000

–

24,0002011 Stock options (10th)

–

–

–

–

–

56,000–15,000–41,0002011 Stock options (11th)

–

–

–

–

–

69,000

–

3,000

–

66,0002012 Stock options (12th)

–

–

–

–

–

59,000–16,000–43,0002012 Stock options (13th)

–

–

–

–

–

73,000

–

2,000

–

71,0002013 Stock options (15th)

–

–

–

–

–

54,000–15,000–39,0002013 Stock options (16th)

–

–

–

–

–

71,000

–

4,000

–

67,0002014 Stock options (18th)

–

–

–

–

–

43,000–11,000–32,0002014 Stock options (19th)

–

–

–

–

–

67,000

–

3,000

–

64,0002015 Stock options (20th)

–

–

–

–

–

49,000–12,000–37,0002015 Stock options (21st)

–

–

–

–

–

59,000

–

3,000

–

56,0002016 Stock options (22nd)

–

–

–

–

–

32,000

–

6,000

–

26,0002016 Stock options (23rd)

–

–

–

–

–

41,000

–

3,000

–

38,0002017 Stock options (25th)

–

–

–

–

–

21,000

–

4,000

–

17,0002017 Stock options (26th)

–

–

–

–

–

75,000

–

1,000

–

74,0002018 Stock options (27th)

–

–

–

–

–

19,000

–

3,000

–

16,0002018 Stock options (28th)

–

–

–

–

–

83,000

–

1,000

–

82,0002019 Stock options (29th)–

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

61,000–61,000––61,000––61,000

SENKO ANNUAL REPORT 2020 53

17 Income Taxes
The Company and its subsidiaries are subject to several taxes based on income, which in the aggregate resulted in a normal effective statutory tax rates ofapproximately 30.6 % for the years ended March 31, 2020 and 30.6 % for the years ended March 31, 2019.
(1) Significant components of deferred tax assets and liabilities at March 31, 2020 and 2019 were as follows:

Thousands of
U.S. dollars

Millions of yen

2020
Deferred tax assets:
Net defined benefit liabilities
Accrued bonuses to employees
Loss carry forward
Impairment losses
Accrued enterprise tax
Social insurance premium
Asset retirement obligations
Loss on revaluation of golf club membership
Other

2019

2020

¥ 3,214
2,035
469
691
301
297
363
115
1,749

¥ 2,800
1,700
416
642
310
239
317
159
1,910

$ 29,532
18,699
4,309
6,349
2,766
2,729
3,335
1,057
16,071

9,234(1,365)

8,493(1,272)

84,847(12,542)

7,869

7,221

72,305

(733)
(130)
(545)
(767)

(739)
(110)
(795)
(697)

(6,735)(1,195)(5,008)(7,047)Gross deferred tax liabilities(2,175)(2,341)(19,985)

Net deferred tax assets¥ 5,694¥ 4,880$ 52,320

Gross deferred tax assets
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve for reduction in costs of fixed assets
Asset retirement obligations
Net unrealized holdings gain on other securities
Other(2) Reconciliation‌of the statutory effective income tax rate and the income tax rate as a percentage of income before income taxes and non-controllinginterests at March 31, 2020 and 2019 were as follows:						

2020

2019

Statutory tax rate
Adjustment:
Non-deductible expenses
Inhabitants’ per capita taxes
Non-taxable dividends income
Special deduction of income taxes
Changes in valuation allowance
Other

30.6%

30.6%

1.9
1.5
(1.7)
(0.0)
0.1
3.8

1.7
1.5
(0.4)
(0.1)
(0.1)
2.8

Income tax rate as a percentage of income before income taxes and non-controlling interests

36.2%

36.0%

54 SENKO ANNUAL REPORT 2020

18 Asset Retirement Obligations
1. Asset retirement obligations recorded in the consolidated balance sheetsa. Outline of the relevant asset retirement obligations
Of property lease contracts for the Company’s distribution centers, asset retirement obligations are recognized where restoration is required in
the fixed-term leasehold contracts and in the property lease contracts of some consolidated subsidiaries as well as expenses for removing
asbestos in buildings the Company owns.
b. Calculation method for the relevant asset retirement obligations
In calculating the amount of asset retirement obligations recorded under liabilities, an estimated period of use of 3 to 30 years and a discountrate generally set between 0.0% ans 2.5% were assumed.
c. Increase in the total amount of asset retirement obligations

Thousands of
U.S. dollars

Millions of yen

2020

2019

Balance at the beginning of the term
Increase due to acquisition of a consolidated subsidiary
Increase due to acquisition of fixed assets
Increase in amount as a result of changes in accounting estimates(related to asset retirement obligations)
Reconciliation associated with the passage of time
Decrease due to settlement¥ 1,011–
159

Balance at the end of the term

¥

2020
819
22
156

$ 9,290
–
1,461

1

–

9

14
(40)

14
–

129
(368)

¥ 1,145¥ 1,011$ 10,521

2. Asset retirement obligations not recorded in the consolidated balance sheets
The Group has restoration obligations to the original state at the withdrawal for some offices used on lease agreements. Since the use period of
the leased asset pertaining to the obligations is unclear and transfer is not scheduled at present, asset retirement obligations cannot be measured
reasonably. Therefore, asset retirement obligations corresponding to the obligations have not been recorded.

SENKO ANNUAL REPORT 2020 55

19 Segment Information
1. Summary of reportable segment
The reportable segments of the Companies are components for which separate financial information is available and whose operating results are
regularly reviewed by the board of directors to make decisions about resource allocation and to assess performance.
The Companies divide business operations into three segments: Distribution, Trading & Commerce, and Others
Distribution mainly includes truck transport, railway forwarding, marine transport, global logistics service, integrated retail logistics (distribution centers) etc.
Trading & Commerce mainly includes the sale of petroleum products and the trading business.
Others mainly includes data processing outsousing services, automobile maintenance and insurance agency services

2. Calculation of sales, income (loss), and assets, etc. of each reportable segment
The accounting policies of the segments are substantially the same as those described in the “Summary of Significant Accounting Policies .”Income (loss) of reportable segments is based on operating income or loss.

3. Sales, income (loss), and assets, etc. of each reportable segment

Millions of yen

2020
Distribution

Trading &Commerce

Others

Total

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

395,237

173,348

25,785

Segment income (loss)

17,8482,120

Segment assets

278,028

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

13,436
183
22,693Adjustments andeliminations¥

Consolidated–(24,340)¥ 570,030–

594,370(24,340)

570,030

1,419

21,387(730)

20,65750,40918,908347,3458,964

356,309

262
–
288

873
28
1,812

14,571
211
24,793

994
–
2,319

15,565
211
27,112Millions of yen

2019
Distribution

Trading &Commerce

Others

Total

Operating revenues:
Customers
Intersegment¥ 375,385
2,722¥ 142,294
11,853¥ 11,930
10,368¥ 529,609
24,943Adjustments andeliminations¥

Consolidated–(24,943)¥ 529,609–

Total operating revenues

378,107

154,147

22,298554,552(24,943)

529,609

Segment income (loss)

16,211

2,280

1,680

20,171(539)

19,632

Segment assets

265,087

46,86321,061333,0117,480

340,491

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

11,77732
42,145

250
–
208

686
–
2,072

12,71332
44,425892–
775

13,60532
45,200Thousands of U.S. dollars

2020

Operating revenues:
Customers
Intersegment
Total operating revenues

Distribution

Trading &Commerce

OthersTotal$ 3,608,628
23,063$ 1,482,266
110,567$ 146,908
90,021$ 5,237,802
223,651

3,631,691

1,592,833

236,929

5,461,453

Adjustments andeliminations$

Consolidated–(223,651)$ 5,237,802–(223,651)

5,237,802

Segment income (loss)

163,999

19,48013,039196,518(6,708)

189,810Segment assets

2,554,700

463,190

173,739

3,191,629

82,367

3,273,996

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

123,459
1,682
208,518

2,407
–
2,646

8,022
257
16,650133,888
1,939
227,814

9,133–
21,308143,0211,939
249,12256 SENKO ANNUAL REPORT 2020

(1) Products and Services Information
Information for specific products and services is not shown because the same information is in the segment information.
(2) Geographic Segment Informationa. SalesSales information by geographic segment is not shown because sales in Japan accounted for over 90% of operating revenue on the
consolidated statements of income.
b. Property, plant and equipment
Property, plant and equipment information by geographic segment is not shown because property, plant and equipment in Japan accounted forover 90% of property, plant and equipment on the consolidated balance sheets.
(3) Information by Major Clients
Information by major clients is not shown because sales to major clients accounted for less than 10% of operating revenue on the consolidated
statements of income.
(Information on amortization of goodwill and amortization balance by business segment)

Millions of yen

2020

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce

OthersAdjustments andeliminations

Consolidated

¥

¥

¥

¥

¥

395
4,723

150
1,759

160
1,281

–
–

705
7,763

Millions of yen

2019

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce

OthersAdjustments andeliminations

Consolidated

¥

¥

¥

¥

¥

276
4,106

150
1,909

58
1,431

–
–

484
7,446

Thousands of U.S. dollars

2020

Amortization of goodwill
Balance at the end of period

Distribution

Trading &Commerce

Others$ 3,630
43,398$ 1,378
16,163$ 1,470
11,771

Adjustments andeliminations$––

Consolidated$ 6,478
71,332(Information on negative goodwill by business segment)
No significant items to be reported.

SENKO ANNUAL REPORT 2020 57

Report of Independent Auditors

58 SENKO ANNUAL REPORT 2020

SENKO ANNUAL REPORT 2020 59

Stock Information

Stock Information (As of March 31, 2020)
Stock ListingFirst Section of the Tokyo Stock Exchange

Stock Code9069

Authorized Shares

294,999,000

Outstanding Shares

152,861,921

Number of Shareholders

8,885

Administrator of
Shareholders’ Register

Mitsubishi UFJ Trust and Banking Corporation, Osaka Stock Transfer Agent Division
3-6-3, Fushimi Machi, Chuo-ku, Osaka 541-8502, Japan

Major Shareholders

Type of Shareholder
Number of
SharesPercentage
Held

Japan Trustee Services Bank, Ltd.

23,27715.25%

Asahi Kasei Corporation

11,676

7.65%

The Master Trust Bank of Japan, Ltd.

11,207

7.34%

Sekisui Chemical Co., Ltd.

6,785

4.44%

Senko Group Employee’s
Stockholding

6,294

4.12%

Japan Post Insurance Co., Ltd.

4,485

2.94%

(thousands)

Mitsubishi UFJ Trust and Banking
Corporation

4,252

2.79%

Isuzu Motors Ltd.

4,039

2.65%

JP Morgan Chase Bank

3,977

2.61%

State Street Bank and Trust Company

3,941

2.58%

60 SENKO ANNUAL REPORT 2020

Individuals and others

Financial institutions

22,152,210

63,357,297

14.49% 41.45%
Total

19.04% 152,861,921
shares24.49%
Overseas financial
institutions
and individuals

Other domestic
corporations

29,102,640

37,436,551

0.40%
Securities firms

616,978

Corporate Data

Corporate Data (As of March 31, 2020)
Trade NameSENKO Group Holdings Co., Ltd.

Capital26,528 million yen

Established

September 1916

Incorporated

July 1946

Head Office

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

Representative

Yasuhisa Fukuda, President and Representative Director

Group Employees

17,644Fleet of Own Trucks

6,840 (including trailers)

Vessels

69

Total Warehouse Space

3,870,000 m2

Main Group Companies● Domestic● Overseas

SENKO Co., Ltd.

DALIAN TRI-ENTERPRISE LOGISTICS CO., LTD.

Runtec Corporation

SHANGHAI SENKO INTERNATIONAL FREIGHT FORWARDING INC.

Tokyo Nohin Daiko Co., Ltd.

GUANGZHOU SENKO LOGISTICS CO., LTD.

Senko A Line Amano Co., Ltd.

Senko International Logistics Pte. Ltd.

NIPPON MARINE CO., LTD.

SHANGHAI SMILE CORP.

ACROSS TRANSPORT CO., LTD.

HONG KONG SMILE CORP LIMITEDSENKO SHOJI CO., LTD.

KOREA SMILE CORP LIMITED

SMILE CORP.

SMILE CORP VIETNAM CO., LTD

AST CORPORATIONSENKO ANNUAL REPORT 2020 61

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