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, 2017
(Based on Japanese GAAP)
October 27, 2017
Company name:SMS CO., LTD.
Stock exchange listing: Tokyo
Stock code:
Representative:

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

Inquiries:
CFO
Scheduled date to file Quarterly Securities Report:

Masato Sugizaki
November 13, 2017

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, 2017 (from April 1, 2017 to September 30, 2017)(1) Consolidated operating results (cumulative)
Net sales
Six months ended September 30, 2017
Six months ended September 30, 2016

Millions of yen
13,162
11,990Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
owners of parent% Millions of yen% Millions of yen% Millions of yen%
9.8
2,146(7.1)
2,690
(8.2)
1,859
0.9
28.6
2,311
21.7
2,930
22.5
1,843
15.0

Earnings per share

Diluted earnings per share

Yen
42.85
45.44

Six months ended September 30, 2017
Six months ended September 30, 2016

Yen
42.69
45.29

(2) Consolidated financial position
Total assets
As of September 30, 2017
As of March 31, 2017Net assets

Millions of yen
45,157
43,231Equity ratio

Millions of yen
21,631
21,583

%
39.0
39.6

2. Cash dividends
Annual dividends per share

Year ended March 31, 2017
Year ending March 31, 2018

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen
––

Yen
0.00
0.00

Yen–

Yen
11.00

Yen
11.00

–––

Year ending March 31, 2018 (Forecast)Total

3. Forecast of consolidated financial results for the year ending March 31, 2018 (from April 1, 2017 to March 31, 2018)
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating profit
Ordinary profit
Earnings per shareowners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Yen
Full year
27,804
20.6
4,378
20.1
5,137
15.9
3,396
21.3
78.27

1

4. Notes(1) Changes in significant subsidiaries during the six months ended September 30, 2017(changes in specified subsidiaries resulting in the change in scope of consolidation):No(2) Application of special accounting methods for preparing quarterly consolidated financial statements:

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

NoNo

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

NoNo(4) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of September 30, 2017

43,416,200 shares As of March 31, 2017

43,382,600 shares

Number of treasury shares at the end of the period
As of September 30, 2017

113 shares As of March 31, 2017

113 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Six months ended September 30, 2017

43,397,687 shares Six months ended September 30, 2016

240,561,195 shares

Quarterly consolidated financial statements
Consolidated balance sheets(Millions of yen)
As of March 31, 2017

As of September 30, 2017

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade

7,829
3,932

9,855
3,869

811867
1636
2,491

28
3,410

Prepaid expenses
Deferred tax assets

722
239

705
245

OtherAllowance for doubtful accounts

11(128)12(130)15,23518,080375(185)419(234)

189

185

573
(418)

676
(428)

Tools, furniture and fixtures, net

154

247

Machinery, equipment and vehicles
Accumulated depreciation

43(19)

44(26)

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

Machinery, equipment and vehicles, net

23

18368

450

Goodwill
Software

11,166
1,544

11,2341,316

Trademark right
Customer-related assets

9,703
2,692

9,329
2,468

Total property, plant and equipment
Intangible assets

Other
Total intangible assets

00

25,107

24,348

1,665
209

1,336
234

612
33

682
24

2,521

2,278

27,996

27,077

43,23145,157

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

(Millions of yen)As of March 31, 2017

As of September 30, 2017

Liabilities
Current liabilities
Accounts payable - trade

311

284

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

–
1,201

9
1,201

Accounts payable - otherAccrued expenses

4,236
182

5,194
284

Income taxes payable
Accrued consumption taxes

1,139
242

1,044
350

Advances received
Deposits received

1,077
52

1,590
67

315
143

381
185

8

19

8,910

10,612Long-term loans payable
Net defined benefit liability

10,210135

10,576
145

Deferred tax liabilities
Other

2,374172,175
17

Total non-current liabilities

12,737

12,91321,64823,526

Shareholders' equity
Capital stock

2,153

2,165

Capital surplus
Retained earnings

4,148
11,662

3,963
13,044

Provision for bonuses
Provision for repayment
Other
Total current liabilities
Non-current liabilities

Total liabilities
Net assets

Treasury shares

(0)

(0)

17,963

19,173

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

0(838)

0(1,554)

Total accumulated other comprehensive income(838)(1,554)

Subscription rights to shares
Non-controlling interests

110
4,347

118
3,893

Total net assets

21,583

21,631

43,23145,157

Total shareholders' equity
Accumulated other comprehensive income

Total liabilities and net assets

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

Six months ended

September 30, 2016

September 30, 2017

Net sales
Cost of sales

11,9901,762

13,162
1,932

Gross profit

10,228

11,230

Selling, general and administrative expenses

7,916

9,083

Operating profit

2,311

2,146

Share of profit of entities accounted for using equity method
Other609
54522
43

Total non-operating income

663

565

2420

Non-operating income

Non-operating expenses
Interest expenses
Other

190

Total non-operating expenses

44

21

2,930

2,690

58–

58–

20–

143–

28
0

Ordinary profit
Extraordinary income
Gain on sales of shares of subsidiaries and associates
Total extraordinary income
Extraordinary losses
Loss on sales of investment securities
Loss on sales of shares of subsidiaries and associates
Other
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

5163

28

2,825

2,662

988

862

1,836

1,800

(6)

(59)

1,843

1,859

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

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

Six months ended

Six months ended

September 30, 2016

September 30, 2017

1,836

1,800

(9)
(3,822)0(1,274)

(22)

(6)

(3,854)(1,280)(2,017)519(1,201)

1,143(815)(624)

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

6Consolidated statements of cash flows(Millions of yen)

Cash flows from operating activities
Profit before income taxes

Six months ended

Six months ended

September 30, 2016

September 30, 2017

2,825

2,662

DepreciationAmortization of goodwill501334523
321

Loss (gain) on sales of investment securities
Loss (gain) on sales of shares of subsidiaries and associates

2084–
28

Share of (profit) loss of entities accounted for using equity
method(427)

321

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses

(25)
(101)

371

Increase (decrease) in provision for repayment
Increase (decrease) in net defined benefit liability

28(0)

429

Decrease (increase) in notes and accounts receivable - trade
Increase (decrease) in accrued consumption taxes

437
159

16108

Decrease (increase) in accounts receivable - other
Decrease (increase) in prepaid expenses

(418)
(105)

(892)
21

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

235
556

544
938

Other, net

120

223

Subtotal

4,227

4,946

Interest and dividend income received

61

Interest expenses paid
Income taxes paid

(26)
(825)

(21)
(1,106)

Net cash provided by (used in) operating activities

3,382

3,820

Cash flows from investing activities
Payments into time deposits–(451)Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment

85
(67)

357
(148)

Purchase of intangible assets
Purchase of investment securities

(430)
(33)

(425)
–

Proceeds from sales of shares of subsidiaries and associates
Purchase of shares of subsidiaries resulting in change in scope

391

–

–

(784)

of consolidation
Payments of loans receivable
Other, net
Net cash provided by (used in) investing activities

7(20)

–

1(8)

(72)

(1,461)

(Millions of yen)

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

Six months ended

Six months ended

September 30, 2016

September 30, 2017(12,000)(31)

12,012
–933
(600)

12

415(286)

(477)

(3)

(230)

Net cash provided by (used in) financing activities

(272)

(388)

Effect of exchange rate change on cash and cash equivalents

(76)

(40)

Net increase (decrease) in cash and cash equivalents

2,960

1,930

Cash and cash equivalents at beginning of period

5,147

7,140

Cash and cash equivalents at end of period

8,107

9,071

Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of subscription rights to shares
Proceeds from issuance of shares resulting from exercise ofsubscription rights to shares
Cash dividends paid
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation

8