FOR TRANSLATION PURPOSE ONLYDISCLAIMER
This English translation is only for reference purpose. When there are any discrepancies between original
Japanese version and English translation version, the original Japanese version always prevails.
May 12, 2015

Summary of Financial Results for the Fiscal Year Ending March 31, 2015
[Japanese standards] (Consolidated)
Stock Exchange listings: Tokyo
Company name:Sato Restaurant Systems Company Limited
Securities code:
8163
URL: http://www.sato-restaurant-systems.co.jp
Representative:
Yoshitaka Shigesato, President & Chief Executive Officer
Contact:
Masahiko Shigesato, Director & Executive Vice President
Tel: +81-6-7222-3101
Scheduled date of ordinary general meeting of shareholders: June 26, 2015
Scheduled date of payment of dividend:
June 29, 2015
Scheduled date of filing securities report:
June 29, 2015
Preparation of supplementary references regarding financial results:
No
Holding the briefing of financial results:
Yes (For institutional investors and analysts)(All amounts are rounded down to the nearest million yen)

1. Financial results of the Fiscal Year Ending March 31, 2015 (April 1, 2014 – March 31, 2015)(1) Consolidated operating results(Percentages represent changes from previous year)
Net Sales

Ordinary profit

Net profit%

Million yen%

Million yen%

Million yen%

37,96932,762

15.9
27.1

1,183
888

33.1
35.5

1,330
846

57.2
50.6

840
513

63.5
60.3

FY Ending March 31, 2015
FY Ending March 31, 2014
(Note) Comprehensive income

Operating profit

Million yen

FY Ending March 31, 2015:
FY Ending March 31, 2014:

Net profit
per share

FY Ending March 31, 2015
FY Ending March 31, 2014

974 million yen (93.8%)502 million yen (10.9%)

Diluted net profit
per share

Ratio of net profit
to equity

Ratio of ordinary
profit to total assets

Ratio of operating
profit to sales

Yen

Yen

%

%

%

29.79
18.22

－
－

8.5
5.6

5.5
3.9

3.1
2.7

(Reference) Equity in earnings of affiliated companies:

FY Ending March 31, 2015:
FY Ending March 31, 2014:－ million yen－ million yen(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

24,272
23,816

10,456
9,567

42.5
39.6

365.89334.56FY Ending March 31, 2015
FY Ending March 31, 2014

(Reference) Shareholders equity: FY Ending March 31, 2015:
FY Ending March 31, 2014:

10,321 million yen
9,437 million yen(3) Consolidated cash flow status ( means decrease)
Cash flow fromoperating activities

Cash flow frominvestments

Cash flow fromfinancial activities

Balance of cash andcash equivalents

Million yen

Million yen

Million yen

Million yen

2,721
1,157

1,2202,756

1,597
1,604

5,532
5,533

FY Ending March 31, 2015
FY Ending March 31, 2014

2. Dividends
Annual dividend(Record date)1Q-end2Q-end3Q-endYear-end

Annual

Total
Dividend
dividends
ratio(consolidated) (consolidated)

Ratio of dividends
to net assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Million yen%%

FY Ending March 31, 2014
FY Ending March 31, 2015

－
－

－
－

－
－

3.00
5.00

3.00
5.00

84
141

16.5
16.8

0.9
1.4

FY Ending March 31, 2016
(forecasts)

－

－

－

5.00

5.00

28.8

3. Consolidated performance forecasts for the Fiscal Year Ending March 31, 2016 (April 1, 2015 – March 31, 2016)(Percentages represent changes from previous year;  means decrease)

Net sales

Operating profit

Net profit attributable toshareholders of parent company

Ordinary profit

Million yen%

Million yen%

2Q(cumulative total)

19,700

5.6

400

28.2

Full term

40,900

7.7

1,260

6.5

Million yen

Net profit per share%

Million yen

%

Yen

370

36.7

100

67.3

3.54

1,220

8.3

490

41.7

17.37

FOR TRANSLATION PURPOSE ONLY

*Notes(1) Changes in important subsidiaries during the current period(changes in specific subsidiaries resulting in modifications of the consolidation scope): None
New company: None
Excluded company: None
(2) Changes in accounting principles, changes and restatements of accounting estimates
1) Changes in accounting principles caused by revision of accounting standards:
2) Changes other than 1):
3) Changes in accounting estimates:
4) Restatements:

None
None
None
None

(3) Number of outstanding shares (common shares)
1) Number of shares outstanding at the end of the period (including treasury stock)
FY Ending March 31, 2015:
28,209,080 shares
FY Ending March 31, 2014:
28,209,080 shares
2) Number of treasury stock at the end of the period
FY Ending March 31, 2015:
163 shares
FY Ending March 31, 2014:
122 shares
3) Average number of shares outstanding during the period
FY Ending March 31, 2015:
28,208,952 shares
FY Ending March 31, 2014:
28,208,981 shares(Reference) Unconsolidated business results
1. Unconsolidated business results of the Fiscal Year Ending March 31, 2015 (April 1, 2014 – March 31, 2015)(1) Unconsolidated operating results(Percentages represent changes from previous year;  means decrease)

Net Sales

Operating profit

Ordinary profit

Net profit

Million yen%

Million yen%

Million yen%

Million yen%

29,064
26,712

8.8
5.8

735
758

3.1
18.8

921
736

25.0
32.6

606
476

27.4
50.5

FY Ending March 31, 2015
FY Ending March 31, 2014

Net profit
per share

FY Ending March 31, 2015
FY Ending March 31, 2014

Diluted net profit
per share
Yen

Yen

21.51
16.88

－
－

(2) Unconsolidated financial position
Total assets

Equity ratio

Net assets per share

Million yen%

Yen

21,841
21,277

10,076
9,426

46.1
44.3

357.22334.18FY Ending March 31, 2015
FY Ending March 31, 2014
(Reference) Own capital:

Net assets

Million yen

FY Ending March 31, 2015:
FY Ending March 31, 2014:

10,076 million yen
9,426 million yen

2. Unconsolidated forecast for the Fiscal Year Ending March 31, 2016 (April 1, 2015 - March 31, 2016)(Percentages represent changes from previous year;  means decrease)

Net sales

Ordinary profit

Net profit

Net profit per share

Million yen%

Million yen%

Million yen

%

Yen

2Q
(cumulative total)

16,200

23.0

330

3.0

170

3.2

6.03

Full term

33,700

15.9

970

5.3

470

22.5

16.66

* Presentation concerning implementation status of audit proceduresThis summary of financial results are not the subject of an review procedure based on the Financial Instruments
and Exchange Act, and at the time of disclosing this summary of financial results, review procedures regarding thefinancial statements based on the Financial Instruments and Exchange Act has not been completed.
* Explanation regarding appropriate use of the earnings forecast and other special notes
Descriptions about the future such as performance forecasts contained in this document are based on information
currently available to the Company and certain presumptions considered to be reasonable, and therefore actual
business performance and other elements may differ substantially due to various factors.

FOR TRANSLATION PURPOSE ONLY

○ Table of Contents: Appendix
1. Operating results ..................................................................................................................................................... 2(1) Analysis on operating results ............................................................................................................................ 2(2) Analysis on financial position .......................................................................................................................... 3(3) Basic principle of profit allocation and dividends for the current/next term ................................................ 5(4) Risk of businesses ............................................................................................................................................. 5
2. Corporate group ...................................................................................................................................................... 7
3. Management policy ................................................................................................................................................ 8(1) Basic policy of managing the Company .......................................................................................................... 8(2) Management indicators to be the targets ......................................................................................................... 8(3) Middle-and-long term management strategies ................................................................................................ 8(4) Issues to be addressed ....................................................................................................................................... 8
4. Basic idea for the selection of accounting standards ................................................................................................ 8
5. Consolidated financial statements ......................................................................................................................... 9(1) Consolidated balance sheets ............................................................................................................................. 9(2) Consolidated profit and loss statement; and consolidated comprehensive profit statement ........................ 11
Consolidated profit and loss statement ............................................................................................................ 11
Consolidated comprehensive profit statement................................................................................................. 13(3) Consolidated statements of shareholders' equity ............................................................................................. 14(4) Consolidated cash flow statement .................................................................................................................... 16

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1. Analysis on operating results and financial position(1)
Analysis on operating results①

Operating results of the current term
Consolidated performance for the current consolidated fiscal year has seen successful increase in both income
and profit, with net sales of 37,969 million yen (up 15.9% YOY and increase by 5,206 million yen), operating profit of
1,183 million yen (up 33.1% YOY and increase by 294 million yen), ordinary profit of 1,330 million yen (up 57.2%
and increase by 483 million yen), and net profit of 840 million yen (up 63.5% YOY and increase by 326 million yen).
As for net sales, although customers decreased in the first half of the period due to such as bad weather, that influenceof raising consumption tax rate was more limited than concerned, and that business performance of Foodsnet
Corporation having been owned by the Company since July, 2013 has been incorporated, have substantiallycontributed to increase in income. As for income, in addition to increase in income, effects of proper control over
SG&A expenses and of foreign exchange gains have helped increase in profit.
The Group aims to be "the restaurant that brings the highest customer satisfaction", promoting various
measures proactively, and has also continued its effort towards accelerated opening of new fast-casual restaurants andincreasing profitability of pre-existing restaurant categories in order to achieve its basic policy for the new mid-term
management plan, namely "to be an essential social infrastructure and prosper over 100 years to come". Specificmeasures include adoption of table order system using tablet terminals, which completed at every restaurant of ourmain category "Washoku Sato" in July, 2014, viewing services with least waiting time as our maximum service. In
addition, as one of our efforts to generate synergy with Foodsnet Corporation, logistic integration has been conductedsince October, 2014, facilitating efficiency by unifying logistics for the entire group, that has led to logistic cost
reduction.
With respect to human resource measures, as part of our personnel system reform to build up environment inwhich every employee could fulfill his/her potential by being allowed to choose from wide variety of work styles
conforming to individual life styles, "short-time regular employee system" allowing shorter working hours has been
introduced since October 1, 2014, 300 part-time employees who qualify for social insurance and contract employees
were transitioned to regular employees. This system reform made it possible to prevent talented personnel fromflowing out and to promote generating willingness to work and utilization of women in regular employment, resulting
in further improved satisfaction of employees and customers.
The Group considers its measures for opening new restaurants as highest priority to achieve the new mid-term
management plan, and promotes various efforts to achieve its goals of opening new restaurants. In the current
consolidated fiscal year, that is, the first year of the new mid-term management plan, total 35 of directly managed and
FC restaurants were planned to be opened; in practice, however, 1 directly managed "Washoku Sato" restaurant, 1
directly managed "Sushihan" restaurant, 6 directly managed "Tendon & Tempura Honpo Santen" restaurants, 2
directly managed "Nigiri CHOJIRO" restaurants, 1 directly managed "Nigiri CHUJIRO" (experimentally operated
home delivery style Sushi store), 1 directly managed and 4 FC restaurants of "Katsuya" were newly opened, totaling
16 new restaurants among all categories during the current consolidated fiscal year. It should be noted that in addition
to the abovementioned restaurants already in operation, contracts have entered into for opening 13 new restaurants (asof March 31, 2015). In considering the fact that goals of opening new restaurants for the current term have notachieved, the following efforts have begun as measures for the next term and onwards.
• Reorganization of group restaurants development division to include development of restaurants operated by Sato
Arcland Food Service Co., Ltd.
• Expansion of areas for opening new "Santen" restaurants• More staff put into group restaurants development division
With these measures, the Company will strive to achieve goals of opening new restaurants for the next termwith accelerated opening by aggregating property information for "Santen" and "Katsuya" restaurants for wider
selection, as well as enhanced and more accurate property information.
As for overseas business, the Group has adopted an approach to establish joint ventures with local partnercompanies. In terms of its achievement in the current consolidated fiscal year, total 2 restaurants of Taiwanese version
of a new category of hot pot menu for one-person, were opened in September, 2014 and in February, 2015 in Taiwan;
and in Thailand which shows significant economic growth, "Washoku Sato" J-PARK branch was opened in October,2014 with its aim to contribute to rich cuisine culture by delivering genuine Japanese cuisine to more and more people
at reasonable price zone.
These developments have resulted in 292 directly managed restaurants (increase by 12 YOY) at the end of thecurrent consolidated fiscal year; comprising 198 "Washoku Sato" restaurants, 14 "Sushihan" restaurants, 12 "Santen"
restaurants, 52 "Nigiri CHOJIRO" restaurants, 1 "Miyakobito" restaurant, 3 "Nigiri CHUJIRO" restaurants and 12"Katsuya" restaurants. Meanwhile, the Group also operates total 31 FC stores comprising 20 "Miyakobito" restaurants
and 11 "Katsuya" restaurants, and total 6 overseas stores comprising 4 in Taiwan, 1 in Indonesia and 1 in Thailand,that means the Group now operates total 329 restaurants worldwide.
Operational measures for each category include starting sales of event-premium commodities with season
specific themes as brushing up "Sato-Shabu", and additionally, a very popular menu of all-you-can-eat style
Shabu-Shabu at "Washoku Sato" restaurants, and continued efforts in an attempt to attract more customers more
frequently such as proposal for recommending specially arranged menu on the menu book and starting sales

2FOR TRANSLATION PURPOSE ONLY

promotion utilizing LINE application for smartphones. In addition, official mascot character "Wassho-kun" of
Washoku Sato will continue to be used for sales promotion, and TV commercial featuring well-known talents havebeen broadcasted, as part of our efforts to acquire new customers. Meanwhile, 9 "Washoku Sato" restaurants wererenovated during the period. At "Sushihan" restaurants, in addition to renovation of Houzenji main restaurant, special
fair filled with seasonal feeling was taken place pursuing sense of genuineness and high quality unique to "Sushihan"making use of seasonal foodstuff and it received very much popularity. And at "Nigiri CHOJIRO" restaurants, ourgreatest joy is that customers would say "Delicious!" and they deliver seasonal menu making use of fresh stuff, and in
addition 6 of which were renovated.
It should be noted that the Group is a single segment of food service business and therefore description of segmental
performance is omitted.
②

Forecasts for the next term
For the next term Japanese economy is expected to recover gradually due to increase in income andimprovement in employment environment, whereas the environment surrounding company management would
remain hard due to raw materials cost staying still at high level because of weaker yen and to increased labor costcaused by rising hourly wage and recruitment cost. In such situations, the Group considers the next term as "period for
growth and development" just as the current term, and put efforts into opening new restaurants as highest priority sothat its goals of "being an essential social infrastructure and prosper over 100 years to come" as described in the new
mid-term management plan could be achieved, planning to open 3 directly managed "Washoku Sato" restaurants, 20"Tendon & Tempura Honpo Santen" restaurants" (16 directly managed and 4 FC restaurants), 4 directly managed
Nigiri CHOJIRO" restaurants, 3 directly managed Nigiri CHUJIRO" restaurants, and 16 "Katsuya" restaurants (6directly managed and 10 FC), totaling 46 restaurants overall. Moreover, as part of its ongoing efforts to achieve more
efficiency by integrating indirect operations and to minimize influence of steep price rise of raw materials, the Groupwill further promote improved purchasing power by using foodstuff common to multiple restaurants and increase
proportion of materials directly imported from overseas. In addition, for higher work efficiency, we have started
attendance management by means of vein authentication using terminals to clock in/out so that burdens of in-store
operations could be reduced by abolishing time card system, and we will seek higher efficiency in headquarters tasks
by outsourcing payroll-related operations.
In such context, consolidated performance for the next term is at present expected as net sales of 40,900 million
yen, operating profit of 1,260 million yen, ordinary profit of 1,220 million yen and net profit attributable toshareholders of parent company of 490 million yen.

(2)

Analysis on financial position①

Status of assets, liabilities and net assets
Total assets at the end of the current consolidated fiscal year were 24,272 million yen (increase by 455 million
yen YOY).
Current assets were 7,526 million yen (increase by 211 million yen YOY). This is mainly due to, for example,
increase in accounts receivable by 56 million yen and in current assets-others by 133 million yen.
Fixed assets were 16,742 million yen (increase by 247 million yen YOY). This is mainly due to, for example,
increase in leased assets by 305 million yen and in investment securities by 152 million yen.
Current liabilities were 7,284 million yen (increase by 432 million yen YOY). This is mainly due to, forexample, increase in accounts payable-other by 149 million yen and in current liabilities-others by 284 million yen.
Fixed liabilities were 6,530 million yen (decrease by 866 million yen YOY). This is mainly due to, for example,
decrease in long-term loans payable by 1,009 million yen.
Net assets were 10,456 million yen (increase by 889 million yen YOY).

3

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Cash flow status
Cash and cash equivalents (hereinafter, "business fund") in the current consolidated fiscal year were 5,532
million yen (decrease by less than a million yen YOY).
Each cash flow status and factors thereof in the current consolidated fiscal year are as follows.
(Cash flow from operating activities)
Business fund resulting from operating activities was 2,721 million yen (whereas it was 1,157 million yen in
the previous consolidated fiscal year). This includes mainly net profit before income taxes of 1,281 million yen,depreciation of 1,322 million yen and others.
(Cash flow from investment activities)
Business fund used for investment activities was 1,220 million yen (whereas it was 2,756 million yen in theprevious consolidated fiscal year). This includes mainly expense by acquiring tangible fixed assets of 829 million yen,expense by acquiring intangible fixed assets of 237 million yen and others.
(Cash flow from financial activities)
Business fund used for financial activities was 1,597 million yen (whereas it was 1,604 million yen in theprevious consolidated fiscal year). This includes mainly net decrease in long-term loans payable by 1,220 million yen
and expense by repayment of finance lease obligations of 192 million yen and others.
(Reference) Transition of cashflow-related indicators
FY 03/2011

FY 03/2012

FY 03/2013

FY 03/2014

FY 03/2015

Equity ratio (%)

44.1

37.1

46.3

39.6

42.5

Equity ratio based on market value (%)

60.4

78.1

84.2

91.4

123.4

Ratio of cash flow to interest-bearing
liabilities (year)

5.6

6.1

4.6

7.9

3.0

Interest coverage ratio (times)

7.2

7.4

9.3

7.5

17.7

Equity ratio: Equity / Total assets
Equity ratio based on market value: Aggregate market value / Total assets
Ratio of cash flow to interest-bearing liabilities: Interest-bearing liabilities / Cash flow
Interest coverage ratio: Cash flow / Interest payment
NOTES:
1.

Aggregate market value is calculated based on the number of shares issued, excluding treasury stock.

2.

Cash flow from operating activities is used.

3.

Interest-bearing liabilities include all the liabilities listed on the balance sheet for which interests have been paid.

4FOR TRANSLATION PURPOSE ONLY

(3)

Basic principle of profit allocation and dividends for the current/next term

Basic idea concerning profit allocation is that in principle it should be determined according to business performance,
and the Company does not prefer an idea towards keeping a certain level of dividend ratio but has its policy to retain asmuch stable dividends as possible. We would like to earmark our retained earnings for investment in opening newrestaurants and in renovation of existing restaurants so that the Company's business quality could be enhanced. Under theabovementioned policy, the Company has carried out business reform to enhance its profitability and endeavored to improve
its financial strength. These efforts resulted in business performance in the current term surpassing initially publishedfigures, and the Company, taking into account comprehensively its business development in the future and retained earnings,
has decided to provide year-end dividend of 5.00 yen per share. And also for the next term, it is expected that year-end
dividend of 5.00 yen per share would be paid out.
In accordance with the resolution adopted at the 43rd annual meeting of shareholders held on June 29, 2011, theCompany's articles of incorporation include a stipulation that "The Company may provide dividends of surplus upon
resolution by its board of directors, pursuant to Article 459, Section 1 of the Company Act of Japan".
Dividend of surplus for the current fiscal year is as follows.

(4)

Date of resolution

Total amount of dividend(thousand yen)

May 12, 2015
board of directors

141,044

Dividend per share
(yen)
5.00

Risk of businesses

Potential risk factors which may have some impact on, for example, the Group's operating results, share price andfinancial position include the following.
It should be noted that descriptions concerning the future in the text are based on judgement of the Company as of theend of the current consolidated fiscal year.
①

Sales fluctuations
The Group operates restaurants as its core business and therefore if sales is substantially reduced due to some events
causing significant decline in incentive for consumers to dine out, namely adverse effects such as large scale natural disaster,social disruption caused by war and terrorism, new infectious disease, and abnormal weather during busy season, operating
results may be affected.
②

Trend of competition
In the food service industry in which the Group does its business, it is predicted that competition with home-meal
replacement industry such as convenience stores and delicatessens would be tougher, as well as that with conventional
competitors. If the Group fails to provide highly value-added commodities meeting consumer needs, such situation may
lead to decline in market share and in brand power of commodities, and eventually operating results may be affected.
③

Dependence on main restaurant category
Majority of consolidated sales of the Group depends on "Washoku Sato" restaurants. In order to grow out of suchdependence on a single category, the Group puts its efforts into fostering other categories such as "Santen", "Nigiri
CHOJIRO" and "Katsuya" restaurants, but it still depends heavily on "Washoku Sato" restaurants and therefore operating
results may be affected by business performance of them.
④

Food safety
The Group operates various restaurants as "restaurant business" based on Food Sanitation Act of Japan. As thehighest priority, the Group has organized its internal regime such as appointing persons responsible for "safety andsanitation, SRS Group audit office", and regularly inspects compliance with nationally established criteria, quality control
status of foodstuff and sanitary control conditions of the restaurants. However, if ever any severe problem questioning foodsafety occurs inside or outside the Company, operating results may be affected.
⑤

Purchase price fluctuations and stable procurement
Operating results may be affected in the event of substantial fluctuations in prices of items to be purchased and insupplied amount due to, for example, abnormal weather and large scale natural disaster, international conflict, safety issues
such as residual pesticides and food additives, outbreak of infectious diseases of livestock, and exchange rate fluctuations.
⑥

Opening new restaurants
The Group mainly operates Japanese restaurants chains and therefore if appropriate sites for opening new restaurants
could not be acquired or if the Company is forced to withdraw due to unexpected change in roads around any planned site
for opening new restaurant and/or in development conditions, or due to significant change in location environment causedby any competitor restaurant opening in the neighborhood, operating results may be affected.
⑦

Dependence on leased properties for restaurants
The Group has most of its offices and premises on leased properties. Duration of lease contract can be renewed upon
agreement with the lessor, whereas lease contract might be terminated due to some reason on the part of the lessor.
Unplanned withdrawal might occur due to early termination of lease contract.

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In addition, guarantee deposits have been provided to lessors based on contracts with each of them. Although theGroup pays adequate attentions to situations of lessors to ensure recovery of deposits, if such recovery is difficult due to, forexample, bankruptcy of a lessor, operating results may be affected.
⑧

Interest-bearing liabilities
The Group raises funds for opening new restaurants and for other purposes from financial institutions and othersources. Although it aims to operate with conservative financial policies including reduction in outstanding interest-bearing
liabilities, operating results may be affected in the event of interest rate fluctuations.
⑨

Impairment loss and loss on withdrawal
The Group applies "accounting standard for impairment of fixed assets". In the event of significant decline inprofitability in any of the Group's restaurants due to, for example, striking change in external environment, impairment loss
may be declared thereby affecting operating results.
In addition, some underperforming restaurants have been closed based on our withdrawal criteria. If any loss onretirement of fixed assets, any penalty and/or subleasing cost for the relevant property occur upon withdrawal, or if someallowance should be allocated for expected loss on such withdrawal, operating results may be affected.
⑩

Control of personal information
The Group endeavors to collect questionnaires and other information from membership and customers for gainingsome understanding of customer satisfaction and for service improvement. Despite maximum efforts to control personal
information, operating results may be affected in the event of leak of personal information for some reason that could cause
compensation for damage and collapse of social trust.
⑪

Retaining human resources
In order to continue smooth operation of the Group's business, retaining and fostering human resources including
short-time workers are of importance. The Group puts its efforts into retaining human resources including personnel
relocation and mid-career employment. However, operating results may be affected if in the future human resources could
not be retained as planned.
⑫

Natural disaster and others
The Group's bases of production, logistics, sales, information control facilities and others may suffer enormous
damage from natural disaster such as earthquake and typhoon. Although the Group inspects its out facilities regularly,
impacts from these disasters may not be completely prevented or mitigated. In the event of natural disaster such as large
scale earthquake and typhoon, operating results may be affected due to interruption of production activities and to delay inproduct supply.
⑬

Impairment of goodwill
The Group allocates substantial amount of goodwill associated with acquisition of a corporation on the consolidatedbalance sheets. Such allocation of goodwill is considered as properly reflecting the future profitability, whereas should
outcome be less than expected, then impairment loss may be declared for the relevant goodwill thereby affecting financial
position and operating results of the Group.
⑭

Risk in overseas businessIn developing overseas business, there exist various potential risks including laws, systems, political/economic/social
circumstances, cultures, business practices, foreign exchanges in countries where the Group operates, and if it could notproceed with business development as planned because of, for example, being unable to deal with such risks, operating
results may affected by necessity for handling impairment of investment (e.g. handling impairment of investment securities).

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2. Corporate group
The Group consists of the Company and its three affiliates, main business of which is operating family restaurants.
Description of the Group's business, relationship with the Company, and systematic chart of business are as shown
below.
(1)
Description of the Group's business and relationship with the Company[Operating family restaurants] The Company operates family restaurants centering on Japanese cuisine. Sato Arcland
Food Service Co., Ltd. operates and manages 12 "Katsuya" restaurants in Kansai area.
Foodsnet Corporation operates and manages 52 "Nigiri CHOJIRO" restaurants, 1"Miyakobito" restaurant and 3 "Nigiri CHUJIRO" restaurants in Kansai and Kanto areas.
[Others](2)

Space Supply Co., Ltd. engages mainly in real estate leasing.

Systematic chart of business

Customers

provide commodities

real-estate leasing

providecommodities

Sato Arcland Food Service Co.

providecommodities

Foodsnet Corp.

sell raw materials

Sato Restaurant Systems Co.

real-estate leasing
Space Supply Co.

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3. Management policy(1)
Basic policy of managing the Company
The Group's philosophy is "Contributing to society through food" and aims to realize good life by establishing"food" that is the most important element for people to live as its pillar of business and by providing opportunities to enjoy
affluent meals, with its basic policy of being "the restaurant that brings the highest customer satisfaction" as a company
which is essential for the community.

(2)Management indicators to be the targets

The Group has set its goal of increasing ratio of ordinary profit on sales, as one of important management indicators
towards improved corporate value and enhanced shareholders profit. Also, it has set its goal to achieve ratio of ordinary
profit on sales of 5% as its middle-and-long term goal.

(3)

Middle-and-long term management strategies

As middle-and-long term management strategies and towards the basic policy of being "the restaurant that brings thehighest customer satisfaction", the Group will put its efforts into various business challenges with three important themes of"lowering break-even point by improved productivity", "continued opening new restaurants of conventional categories andaccelerated opening new restaurants in new business domain", and "fundamental reform of financial structure".

(4)

Issues to be addressed

For achieving its middle-and-long term management strategies, the Group will consider the years to come as"periods of growth and development", bring forward the fast-casual categories of "Santen" and "Katsuya" restaurants as its
growth drivers, and put its efforts into various measures so that they would get on track of growth and expansion as early as
possible.
Specifically, with respect to "Santen" restaurants, the Group will carry out measures for early formation of dominant
areas by accelerated opening new restaurants, for starting penetration into new areas, and for increase in sales and improved
profitability at each restaurant aiming to generate surplus in FC business, along with fostering personnel responsible for FC
operations. For "Katsuya" restaurants, the Group will accelerate further opening new directly managed and FC restaurants in
Kansai area aiming at, like "Santen" restaurants, early formation and expansion of dominant areas.
At "Washoku Sato" restaurants, main category of the Group, it continues to enhance sales of its core menu of"Sato-Shabu" (all-you-can-eat style Shabu-Shabu) and measures for attracting wider range of customers, while for purposeof cost reduction it aims at higher efficiency in restaurant operations by table order system using tablet terminals andfunctionally strengthened store assistance system. In addition, continued opening new restaurants in potential areas will takeplace mainly in Chubu region in Japan.
And at "Nigiri CHOJIRO" restaurants, the Group continues to generate synergies, and works on management
efficiency centered on cost reduction in purchasing by using common materials and by higher logistic efficiency, along with
fostering human resources for opening new restaurants. Proactively opening new restaurants will also be driven within theGroup's logistics network.
In terms of finance, the Group will carry out financial structure reform by further reduction in liabilities.

4. Basic idea for the selection of accounting standards
The Group has decided to adopt Japanese accounting standards for the time being, but taking into account the trend inproportion of foreign shareholders and in adoption of International Financial Reporting Standards (IFRS) at other domestic
companies, it looks at thinking about when IFRS should be adopted.

8

FOR TRANSLATION PURPOSE ONLY

5. Consolidated financial statements(1) Consolidated balance sheets(Thousand yen;  means decrease)

Previous consolidated
fiscal year
(March 31, 2014)

AssetsCurrent assets
Cash and deposits
Accounts receivable
Commodities
Raw materials and supplies
Deferred tax assets
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures
Cumulative depreciation
Buildings and structures (net)
Machinery, equipment and vehicles
Cumulative depreciation
Machinery, equipment and vehicles (net)Land
Leased assets
Cumulative depreciation
Leased assets (net)
Construction in progress
OthersCumulative depreciation
Others (net)Total tangible fixed assets
Intangible fixed assets
Goodwill
OthersTotal intangible fixed assets
Investment and other assets
Investment securities
Long-term loan
Guarantee deposits
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total fixed assets
Deferred assets
Total assets

9

Current consolidated
fiscal year
(March 31, 2015)

5,533,179
485,558
34,632644,900
236,864
380,735
620
7,315,250

5,532,308
541,833
36,395
651,647
250,648514,238
477
7,526,595

16,940,602
13,957,120
2,983,482
680,136
563,108
117,027
4,742,506
1,090,882
278,334
812,547325
2,892,621
2,393,719
498,902
9,154,792

17,075,451
14,242,874
2,832,576
714,244593,039
121,205
4,742,506
1,601,603
483,416
1,118,187
49,6503,005,858
2,500,593
505,264
9,369,391

1,296,192
792,918
2,089,110

1,206,282
822,9902,029,273

669,801
635,831
3,130,625
479,838
351,650
16,295
5,251,451
16,495,354
5,863
23,816,468

822,623
698,913
3,051,899
401,559
383,435
14,665
5,343,765
16,742,431
3,259
24,272,286

FOR TRANSLATION PURPOSE ONLY
(Thousand yen;  means decrease)

Previous consolidated
fiscal year
(March 31, 2014)

Liabilities
Current liabilities
Accounts payable
Bonds payable within one year
Current portion of long-term loans payable
Lease obligations
Accounts payable-other
Income taxes payable
Reserve for bonuses
OthersTotal current liabilities
Fixed liabilities
Bonds
Long-term loans payable
Lease obligations
Deferred tax liabilities for land revaluation
Deferred tax liabilities
Provision for directors’ retirement benefits
Asset retirement obligations
OthersTotal fixed liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive profit
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total accumulated other comprehensive profit
Minority shareholders' equity
Total net assets
Total liabilities and net assets

10

Current consolidated
fiscal year
(March 31, 2015)

1,101,403
100,000
2,613,496
137,071
1,536,704
234,846
413,336
714,899
6,851,757

1,111,667
100,000
2,403,186
214,976
1,686,382
297,104
471,966
999,149
7,284,433

150,000
5,408,383
750,400
319,828
100,769
31,403454,910
181,541
7,397,236
14,248,993

50,0004,398,835
989,588289,282
84,71931,403
478,446
208,637
6,530,912
13,815,345

6,361,756
2,810,575
779,318
85
9,951,564

6,361,756
2,810,575
1,535,148
129
10,707,350

131,106
644,981
513,874
129,785
9,567,474
23,816,468

228,418
614,436
386,018
135,607
10,456,940
24,272,286

FOR TRANSLATION PURPOSE ONLY

(2) Consolidated profit and loss statement; and consolidated comprehensive profit statement(Thousand yen;  means decrease)

Previous consolidated
fiscal year
(Apr.1, 2013
- Mar.31, 2014)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Directors’ compensations
Salaries and allowances
Employees' bonuses
Provision for bonuses
Welfare expenses
Retirement benefit expenses
Utilities expenses
Supplies expenses
Rent expenses
Repair expenses
Depreciation
Miscellaneous expenses
Amortization of goodwill
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividends income
Rent income
Foreign exchange gains
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses on real estates
Miscellaneous loss
Total non-operating expenses
Ordinary profit

11

Current consolidated
fiscal year
(Apr.1, 2014
- Mar.31, 2015)

32,762,885
10,865,534
21,897,351

37,969,881
12,979,959
24,989,921

141,616
9,368,096
236,015369,395
747,359
198,213
1,722,360
993,774
3,588,391
390,546
1,091,256
2,108,912
52,44721,008,387
888,963

143,430
10,721,630
251,647
461,972
892,368
206,598
1,817,141
1,034,995
3,935,700
408,026
1,314,188
2,528,726
89,90923,806,336
1,183,585

11,34914,21998,05841,53377,584
242,746

12,94417,082
101,982
220,910
77,904
430,822

154,057
76,90254,423285,384
846,325

153,954
83,883
46,477284,3151,330,092

FOR TRANSLATION PURPOSE ONLY
(Thousand yen;  means decrease)

Previous consolidated
fiscal year
(Apr.1, 2013
- Mar.31, 2014)

Extraordinary profit
Gain on sales of fixed assets
Total extraordinary profit
Extraordinary loss
Loss on retirement of fixed assets
Loss on sales of fixed assets
Loss on valuation of investment securities
Loss on valuation of other investments
Loss on cancellation of leasehold contracts
Impairment loss
Total extraordinary losses
Net profit before income taxes
Income taxes-current
Income taxes-deferred
Total income taxes
Net profit before minority interests
Minority interests or losses in net profit
Net profit

12

Current consolidated
fiscal year
(Apr.1, 2014
- Mar.31, 2015)

3,000
3,000

4,129
4,129

39,383
167
6,203
2,250
3,365
25,681
77,052772,273
269,825
913
268,911503,361
10,579
513,941

24,733－26,084－2,400－
53,217
1,281,004
417,944
16,780434,724
846,279
5,822
840,456

FOR TRANSLATION PURPOSE ONLY(Consolidated comprehensive profit statement)(Thousand yen;  means decrease)

Previous consolidated
fiscal year
(Apr.1, 2013
- Mar.31, 2014)

Net profit before minority interests
Other comprehensive profit
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total other comprehensive profit
Comprehensive profit(detail)Comprehensive profit for shareholders of parent company
Comprehensive profit for minority shareholders

13

Current consolidated
fiscal year
(Apr.1, 2014
- Mar.31, 2015)

503,361

846,279

691
－
691
502,669

97,31130,545
127,856
974,135

513,249
10,579

968,313
5,822

FOR TRANSLATION PURPOSE ONLY

(3) Consolidated statements of shareholders' equity
Previous consolidated fiscal year (Apr.1, 2013 - Mar.31, 2014)(Thousand yen;  means decrease)

Shareholders’ equity
Capital stock

Balance at the start ofcurrent period

Capital surplus

6,361,756

Retained earnings

2,810,575

321,794

Treasury stock63

Total shareholders’equity9,494,062

Changes of items
during the period
Dividends from surplus

56,417

56,417

Net profit

513,941

513,941

Purchase of treasury
stock

21

21

Changes of items otherthan shareholders'equity (net)Total changes of items
during the period－－

457,523

21457,501

Balance at the end ofcurrent period

6,361,756

2,810,575

779,318

85

9,951,564

Accumulated other comprehensive profit
Valuationdifference on
available-for-salesecurities
Balance at the start ofcurrent period

131,798

Revaluation
reserve for land

644,981

Total accumulated
othercomprehensive
profit513,182

Minorityshareholders'equity140,364

Total net assets

9,121,244

Changes of items
during the period
Dividends from surplus

56,417

Net profit

513,941

Purchase of treasury
stock

21

Changes of items otherthan shareholders'equity (net)

691

－

691

10,579

11,271

Total changes of items
during the period

691

－

691

10,579446,230

Balance at the end ofcurrent period

131,106

644,981

513,874

129,785

9,567,474

14

FOR TRANSLATION PURPOSE ONLY

Current consolidated fiscal year (Apr.1, 2014 - Mar.31, 2015)(Thousand yen;  means decrease)

Shareholders’ equity
Capital stock

Balance at the start ofcurrent period

6,361,756

Capital surplus

Retained earnings

2,810,575

779,318

Treasury stock

85

Total shareholders’equity9,951,564

Changes of items
during the period
Dividends from surplus

84,626

84,626

Net profit

840,456

840,456

Purchase of treasury
stock

43

43

755,829

43755,786

1,535,148

129

10,707,350

Changes of items otherthan shareholders'equity (net)Total changes of items
during the period
Balance at the end ofcurrent period

6,361,756

2,810,575

Accumulated other comprehensive profit
Valuationdifference on
available-for-salesecurities
Balance at the start ofcurrent period

131,106

Revaluation
reserve for land

644,981

Total accumulated
othercomprehensive
profit513,874

Minorityshareholders'equity129,785

Total net assets

9,567,474

Changes of items
during the period
Dividends from surplus

84,626

Net profit

840,456

Purchase of treasury
stock

43

Changes of items otherthan shareholders'equity (net)97,31130,545

127,856

5,822

133,679

Total changes of items
during the period

97,31130,545

127,856

5,822

889,465

Balance at the end ofcurrent period

228,418

614,436

386,018

135,607

10,456,940

15

FOR TRANSLATION PURPOSE ONLY

(4) Consolidated cash flow statement(Thousand yen;  means decrease)

Cash flow from operating activities
Net profit before income taxes
Depreciation
Amortization of goodwill
Impairment loss
Increase/decrease in reserve for bonuses ( means decrease)
Increase/decrease in allowance for doubtful accounts ( means decrease)
Increase/decrease in provision for loss on store closing ( means decrease)
Interest and dividends income
Interest expenses
Profit/loss on valuation of investment securities ( means profit)
Loss on valuation of other investments
Profit/loss on sales of tangible fixed assets ( means profit)
Loss on retirement of tangible fixed assets
Loss on cancellation of leasehold contracts
Increase/decrease in sales credit ( means increase)
Increase/decrease in inventories ( means increase)
Increase/decrease in accounts payable ( means decrease)
Increase/decrease in accrued consumption taxes ( means decrease)
OthersSubtotalInterest and dividends income received
Interest expenses paid
Proceeds from insurance income
Income taxes paid
Cash flow from operating activities
Cash flow from investment activities
Expense by acquiring tangible fixed assets
Proceeds from sales of tangible fixed assets
Expense by purchasing investment securities
Expense by acquiring intangible fixed assets
Expense by acquiring shares in a subsidiary resulting in change inscope of consolidation
Expense by payment of guarantee deposits
Proceeds from collection of guarantee deposits
Expense by payment of construction assistance fund receivables
Proceeds from collection of construction assistance fund receivables
OthersCash flow from investment activities
Cash flow from financial activities
Proceeds from long-term loans payable
Expense by repayment of long-term loans payable
Expense by repayment of finance lease obligations
Expense by redemption of bonds
Expense by acquiring treasury stock
Dividends paid
16

Previous consolidated
fiscal year
(Apr.1, 2013
- Mar.31, 2014)

Current consolidated
fiscal year
(Apr.1, 2014
- Mar.31, 2015)

772,273
1,099,918
52,447
25,681
82,366
1,013
50,000
25,568
154,057
6,203
2,250
2,83239,3833,365
8,159
67,955
436,213
31,137
74,996
1,602,345
14,436
148,863
5,544
316,007
1,157,454

1,281,004
1,322,538
89,909－58,6301,772－
30,026
153,954
26,084－
4,12924,7332,400
56,274
8,511
10,263
469,638
118,182
3,220,261
16,772
155,023－
360,657
2,721,353

1,019,514
3,142
41,420
177,583

829,070
4,239
49,932
237,559

1,488,676
44,022
163,647
146,000
80,087
85,887
2,756,227－
88,335
125,986
177,000
91,696
60,031
1,220,007

5,050,000
3,151,282
138,069
100,000
21
56,4171,550,000
2,770,449
192,501
100,000
43
84,626

FOR TRANSLATION PURPOSE ONLY

Cash flow from financial activities
Effect of exchange rate change on cash and cash equivalents
Increase/decrease in cash and cash equivalents ( means decrease)
Balance of cash and cash equivalents at the start of the period
Balance of cash and cash equivalents at the end of the period

17

1,604,208
53,33558,7705,474,408
5,533,179

1,597,621
95,403
871
5,533,179
5,532,308