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

Summary of Consolidated Financial Results
for the Six Months Ended September 30, 2015
(Based on Japanese GAAP)
October 29, 2015
Company name:SMS CO., LTD.
Stock exchange listing: Tokyo
Stock code:
Representative:

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

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

Masato Sugizaki
November 13, 2015

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

Holding of quarterly financial results meeting:

Yes

TEL

03-6721-2400(for institutional investors and analysts)(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the six months ended September 30, 2015 (from April 1, 2015 to September 30, 2015)(1) Consolidated operating results (cumulative)
Net sales
Six months ended September 30, 2015
Six months ended September 30, 2014

Millions of yen
9,325
7,492

Percentages indicate year-on-year changes
Profit attributable toOperating income
Ordinary income
owners of parent% Millions of yen% Millions of yen% Millions of yen%
24.5
1,899
46.2
2,391
44.3
1,602
23.7
16.7
1,299
(2.9)
1,657
0.7
1,295
19.8

Earnings per share

Diluted earnings per share

Yen
39.50
31.65

Six months ended September 30, 2015
Six months ended September 30, 2014

Yen
39.40
31.55

(2) Consolidated financial position
Total assets
As of September 30, 2015As of March 31, 2015

Net assets

Millions of yen
12,498
11,421Equity ratio

Millions of yen
8,185
6,923%
64.5
59.7

2. Cash dividends
Annual dividends per share

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

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen
––

Yen
0.00
0.00

Yen–

Yen
7.00

Yen
7.00

–––

Year ending March 31, 2016 (Forecast)Total

3. Forecast of consolidated financial results for the year ending March 31, 2016 (from April 1, 2015 to March 31, 2016)
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating income
Ordinary income
Earnings per shareowners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Yen
Full year
18,881
25.4
2,702
30.0
3,403
26.3
2,306
26.4
56.87

1

4. Notes(1) Changes in significant subsidiaries during the six months ended September 30, 2015(changes in specified subsidiaries resulting in the change in scope of consolidation):Yes(2) Application of special accounting methods for preparing quarterly consolidated financial statements:

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

No
No

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

NoNo(4) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of September 30, 2015

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

41,887,200 shares

Number of treasury shares at the end of the period
As of September 30, 2015

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

1,330,272 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 2015

40,556,928 shares Six months ended September 30, 2014

2

40,939,000 shares

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

As of September 30, 2015

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade

2,708,623
2,486,428

3,744,071
2,200,899

109,185
7,784

98,775
5,123

12,721
1,306,471

7,200
1,602,980

Prepaid expenses
Deferred tax assets

572,957
214,454

539,432
238,206

Other
Allowance for doubtful accounts

38,232(93,840)

79,672(76,193)

7,363,018

8,440,169

208,087(71,655)

235,127(82,831)

136,432

152,295

275,425(164,006)

301,177(184,159)

Tools, furniture and fixtures, net

111,419

117,017

Machinery, equipment and vehicles
Accumulated depreciation

11,871(3,322)

13,430(3,540)

Merchandise and finished goods
Work in process
Supplies
Accounts receivable - otherTotal current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, netTools, furniture and fixtures
Accumulated depreciation

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

8,548

9,889

256,400

279,202

1,318,296
730,608

1,114,549
893,15950

50

2,048,954

2,007,759

1,240,328
101,309

1,190,800
101,947

382,489
28,629424,439
54,641

1,752,757

1,771,828

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

3

4,058,113

4,058,790

11,421,131

12,498,959

(Thousands of yen)
As of March 31, 2015

As of September 30, 2015

Liabilities
Current liabilities
Accounts payable - trade131,641

103,785

Accounts payable - otherAccrued expenses

2,604,033
207,408

2,478,416
105,036

Income taxes payable
Accrued consumption taxes

554,460
371,521785,836
186,669

Advances received
Deposits received52,158
56,556

84,56938,739Provision for bonuses
Provision for repayment

241,572
135,835

163,402
158,242

Other

38,901

56,3404,394,091

4,161,039

Net defined benefit liability
Other89,634
14,16393,561
58,838

Total non-current liabilities

103,797

152,399

4,497,889

4,313,438

Total current liabilities
Non-current liabilities

Total liabilities
Net assets
Shareholders' equity
Capital stock

304,166

304,166

Retained earnings
Treasury shares

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

8,572,646(1,036,485)

Total shareholders' equity

6,516,843

7,840,328

10,4039,425

Foreign currency translation adjustment

287,523

215,794

Total accumulated other comprehensive income

297,926

225,219

Subscription rights to shares

47,33962,221

Non-controlling interests

61,13357,750

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

Total net assets
Total liabilities and net assets

4

6,923,242

8,185,521

11,421,131

12,498,959

Consolidated statements of income (cumulative) and consolidated statements of comprehensive income(cumulative)
Consolidated statements of income (cumulative)(Thousands of yen)Six months ended

Six months ended

September 30, 2014

September 30, 2015

Net sales
Cost of sales

7,492,665
589,137

9,325,242
697,246

Gross profit

6,903,527

8,627,995

Selling, general and administrative expenses

5,604,114

6,728,567

Operating income

1,299,413

1,899,428

Share of profit of entities accounted for using equity method
Other345,234
18,379496,586
21,732

Total non-operating income

363,613518,319

4,070

19,292

295
1,206

–
6,575

Non-operating income

Non-operating expensesForeign exchange losses
Commission for purchase of treasury shares
Other
Total non-operating expenses

5,572

25,867

1,657,454

2,391,880

Gain on step acquisitions
Gain on sales of investment securities

185,084
1,434––

Total extraordinary income

186,519

–

–

1,479

Ordinary income
Extraordinary income

Extraordinary losses
Loss on sales and retirement of non-current assets
Total extraordinary losses
Income before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

5

–

1,479

1,843,973

2,390,401

581,250(34,126)

813,865(25,314)547,124

788,550

1,296,849

1,601,851

1,294(329)

1,295,555

1,602,180

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

ProfitOther comprehensive income

Six months ended

Six months ended

September 30, 2014

September 30, 2015

1,296,849

1,601,851

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

10,153
116,681(1,012)(97,406)

Share of other comprehensive income of entities accounted
for using equity method(29,743)

19,320Total other comprehensive income

97,091(79,098)

1,393,941

1,522,752

1,390,993

1,529,473

2,947(6,721)

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

6Consolidated statements of cash flows(Thousands of yen)

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Amortization of goodwill
Loss (gain) on step acquisitionsLoss (gain) on sales and retirement of non-current assets
Share of (profit) loss of entities accounted for using equity
methodIncrease (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for repayment
Increase (decrease) in net defined benefit liability
Decrease (increase) in notes and accounts receivable - trade
Increase (decrease) in accrued consumption taxes
Decrease (increase) in prepaid expenses
Increase (decrease) in advances received
Increase (decrease) in accounts payable - otherDecrease (increase) in lease and guarantee deposits
Other, net

Six months ended

Six months ended

September 30, 2014

September 30, 2015

1,843,973
106,552
161,264(185,084)–

2,390,401
195,819
178,870–
1,479(31,899)

65,934(2,561)
39,38343,075
7,025
187,304
125,178(79,228)
55,302840,084(55,974)
90,679(17,647)(78,169)
22,406
3,926
287,848(185,283)
33,72832,410(85,735)(36,542)(432,588)

Subtotal

3,145,076

2,376,859

Interest and dividend income received
Income taxes paid

2,077
(529,213)

4,089(580,272)

Net cash provided by (used in) operating activities

2,617,940

1,800,676–(82,985)–(261,962)
8,934
(16)

(78,882)(44,766)911(329,873)––(225,415)(14,789)(51,833)–
1,341–(28,416)
1,643(611,937)(494,174)

495(120,714)(204,104)––(281,068)(534,229)(4,692)–(13,007)

Net cash provided by (used in) financing activities(858,552)(298,768)

Effect of exchange rate change on cash and cash equivalents(19,681)(51,168)

Cash flows from investing activities
Payments into time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of investment securities
Purchase of investment securities
Purchase of shares of subsidiaries resulting in change in scopeof consolidation
Purchase of shares of subsidiaries and associates
Payments of loans receivable
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from issuance of common shares
Purchase of treasury sharesCash dividends paid
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other, net

Net increase (decrease) in cash and cash equivalents

1,127,768

956,565

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

1,897,846

2,694,008

3,828

–

Cash and cash equivalents at end of period

3,029,444

3,650,573

7