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.
August 2, 2016

Summary of Financial Results of the First Quarter of the Fiscal Year Ending March 31, 2017
[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:
Tsuyoshi Taguchi, Director & Head of Corporate Planning Division
Tel: +81-6-7222-3101
Scheduled date of filing of quarterly report:
August 10, 2016
Scheduled date of payment of dividend:
N/A
Preparation of supplementary references regarding quarterly results:
No
Holding the briefing of quarterly results:
No(All amounts are rounded down to the nearest million yen)( means negative)

1. Financial results of the First Quarter of the Fiscal Year Ending March 31, 2017 (April 1, 2016 – June 30, 2016)(1) Consolidated operating results (cumulative total)(Percentages represent changes from previous year)
Net sales

Operating income

Income attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen

9,572
9,386

2.0
5.3

261
35

―
41.0

407
5

―
83.6

586
43

1Q FY03/2017
1Q FY03/2016%――

1Q FY03/2017:  635million yen (－%)
1Q FY03/2016:
23 million yen (3.6%)(Note) Comprehensive income

Net income per share

Diluted net income per share
Yen

Yen

―
―

17.67
1.47

1Q FY03/2017
1Q FY03/2016(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

26,74327,82013,73014,53151.0
51.8

410.57434.35

1Q FY03/2017
FY03/2016(Reference) Shareholders equity: 1Q FY03/2017:
FY03/2016:

13,634 million yen
14,424 million yen

2. Dividends
Annual dividend per share
1Q-end2Q-endFY03/2016
FY03/2017
FY03/2017 (forecasts)－－

Year-end

3Q-end

Yen

Yen

Yen

Total
Yen

Yen

－

－

5.00

5.00

－

－

5.00

5.00

(NOTE) Revisions to dividend forecasts published most recently: None

3. Consolidated performance forecasts for the Fiscal Year Ending March 31, 2017 (April 1, 2016 – March 31, 2017)(Percentages represent changes from previous year;  means negative)

Net sales

2Q (cumulative total)
Full term

Operating income

Income attributable toowners of parent

Ordinary income

Million yen%

Million yen%

Million yen%

Million yen

20,90043,400

6.1
8.3

310
850

38.5
56.8

330
940

22.9
160.1

20
400

(NOTE) Revisions to performance forecasts published most recently: None

Net income
per share
%

－
－

Yen

0.60
12.04

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) Application of special accounting methods to the preparation of quarterly consolidated financial statements: None
(3) 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

(4) Number of outstanding shares (common shares)
1) Number of shares outstanding at the end of the period (including treasury stock)
1Q FY03/2017:33,209,080 shares
FY03/2016:33,209,080 shares
2) Number of treasury stock at the end of the period
1Q FY03/2017:
212 shares
FY03/2016:
212 shares
3) Average number of shares outstanding during the period (quarterly cumulative)
1Q FY03/2017:33,208,868 shares
1Q FY03/2016:
29,458,917 shares* Presentation concerning implementation status of quarterly review procedures
These quarterly financial results are not the subject of a quarterly review procedure based on the Financial Instruments
and Exchange Act, and at the time of disclosing these quarterly financial results, review procedures regarding thequarterly financial statements based on the Financial Instruments and Exchange Act had 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 businessperformance and other elements may differ substantially due to various factors.

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY
○ Table of Contents: Appendix

1. Qualitative Information regarding the current quarter .............................................................................................. 2(1) Descriptions regarding operating results.............................................................................................................. 2(2) Descriptions regarding financial position ............................................................................................................ 3(3) Descriptions regarding future prospects such as consolidated performance forecasts ........................................ 3
2. Matters regarding summary information (Notes) ...................................................................................................... 4(1) Changes in important subsidiaries during the current consolidated cumulative period ....................................... 4(2) Application of special accounting methods to the preparation of quarterly consolidated financial statements ... 4(3) Changes in accounting principles, changes and restatements of accounting estimates ....................................... 4
3. Summary of important information for going concern assumption .......................................................................... 44. Quarterly Consolidated Financial Statements ........................................................................................................... 5(1) Quarterly Consolidated Balance Sheets ............................................................................................................... 5(2) Quarterly Consolidated Statements of Income and Statement of Comprehensive Income ................................. 7
Quarterly Consolidated Statements of Income
First quarter consolidated cumulative period ................................................................................................... 7
Quarterly Consolidated Statement of Comprehensive Income
First quarter consolidated cumulative period ................................................................................................... 8(3) Notes on Quarterly Consolidated Financial Statements....................................................................................... 9(Going concern assumption) ............................................................................................................................... 9(Notes in case of significant changes in the amount of shareholders’ equity) ..................................................... 9(Segment information, etc.) ................................................................................................................................. 9(Significant post-balance sheet events) ............................................................................................................... 91

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY
1. Qualitative Information regarding the Current Quarter(1)

Descriptions regarding operating results①

Consolidated performance(million yen;  means negative)

1Q FY03/2016+/- amounts
YoY

Actualresults
Net sales

+/-%
YoY

Actualresults

1Q FY03/2017+/- amounts
YoY

+/-%
YoY

9,386

468

5.3%

9,572

185

2.0%

Operating income

35

24

41.0%

261

296

－

Ordinary income5

26

83.6%

407

412

－

43

30

－

586

543

－

Income attributable toowners of parent

During the current first quarter consolidated cumulative period, net sales increased due to increase in number ofrestaurants in operation. However, income significantly decreased because of decline in net sales at existing
restaurants as compared to the previous year, and rise in ratio of SG&A expenses to sales mainly due to increase inlabor cost associated with arranging working environment, as well as allocation of foreign exchange losses due toprogressively stronger yen.
②

Measures for opening new restaurants

Category

As of end of theprevious consolidated
fiscal year

Newly opened
restaurants

Closedrestaurants(numbers of restaurants)
As of end of the
Planned to open
current second quarter
during the current
consolidated fiscal
consolidated fiscal
periodyear

Washoku Sato

201 (－)

－ (－)

－ (－)

201 (－)

4 (－)

Sushi-han

14 (－)

－ (－)

－ (－)

14 (－)－ (－)

Tendon & Tenpura
restaurant Santen

22 (－)

1 (－)

－ (－)

23 (－)

25 ( 5)

Nigiri Chojiro

53 (－)

1 (－)

－ (－)

54 (－)

6 (－)

Nigiri Chujiro

6 (－)

－ (－)

－ (－)

6 (－)

4 (－)

Katsuya28 (14)4 ( 2)－ (－)

32 (16)11 ( 6)

Miyakobito

18 (17)－ (－)

1 ( 1)

17 (16)－ (－)

Domestic total

342 (31)

6 ( 2)

1 ( 1)

347 (32)50 (11)6 ( 5)

1 (－)

－ (－)

7 ( 5)－ (－)

Overseas restaurants

Worldwide total
348 (36)
7 ( 2)
1 ( 1)
354 (37)
NOTE: Numbers in parentheses represent FC restaurants (domestic) and joint venture restaurants (overseas).

50 (11)

Newly opened restaurants during the current first quarter consolidated cumulative period were as follows: 1
directly managed "Tendon & Tenpura restaurant Santen" restaurants, 1 directly managed "Nigiri Chojiro" restaurant,
and 4 "Katsuya" restaurants including 2 directly managed and 2 FC restaurants, totaling 6 restaurants were newly
opened in all categories domestically.
As for overseas development, "Washoku Sato Jung-Li branch" was newly opened in Taiwan, which means theCompany operates currently 7 overseas restaurants; 2 in Taiwan, 2 in Indonesia and 3 in Thailand.
These developments have resulted in 354 restaurants of the entire Group in operation domestic and overseas at
the end of the current first quarter consolidated fiscal period.

2

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY③

Other measures

As operational measures at "Washoku Sato" restaurants, variation of the all-you-can-eat style Shabu-Shabu
became wider by adding "Buta-Shabu course (pork)" to "Sato-Shabu" menu at the end of March, 2016, followed bycontinuous sales enhancement efforts for our core menu of "Sato-Shabu", including half-price draft beer campaign in
May offered for those who ordered "Sato-Shabu". In addition, facilities renovations were carried out at 2 restaurants.
At "Santen" restaurants, Narumi branch (Aichi pref.) that is the first restaurant in Chubu area was newly
opened, and net sales of this category has maintained good performance at higher level than planned.
At "Nigiri Chojiro" restaurants, Chojiro's 15th anniversary special events started and various dishes using
seasonal fresh materials, including Madai (red seabream) as spring seasonal harvest festival, were offered and enjoyedmuch popularity.
It should be noted that the Group is a single segment of food service business and therefore description ofsegmental performance is omitted.
(2)

Descriptions regarding financial position(Status of assets, liabilities and net assets)
Total assets at the end of the current first quarter consolidated fiscal period was 26,743 million yen (decrease by
1,076 million yen from the end of the previous consolidated fiscal year).
(Assets)
Current liabilities was 9,587 million yen (decrease by 1,178 million yen from the end of the previous
consolidated fiscal year). It comprises mainly decrease in cash and deposits by 1,104 million yen.
Non-current assets was 17,145 million yen (increase by 91 million yen from the end of the previous
consolidated fiscal year). It comprises mainly increase in investment securities by 89 million yen.
(Liabilities)
Current liabilities at the end of the current first quarter consolidated fiscal period was 6,897 million yen(decrease by 455 million yen from the end of the previous consolidated fiscal year). It comprises mainly decrease incurrent portion of long-term loans payable by 185 million yen and decrease in accounts payable-trade by 123 millionyen.
Non-current liabilities was 6,116 million yen (increase by 179 million yen from the end of the previous
consolidated fiscal year). It comprises mainly decrease in long-term loans payable by 470 million yen and increase inbonds payable by 640 million yen.
(Net assets)
Net assets at the end of the current first quarter consolidated fiscal period was 13,730 million yen (decrease by
801 million yen from the end of the previous consolidated fiscal year).
(3)

Descriptions regarding future prospects such as consolidated performance forecasts

There is no change in consolidated performance forecasts for the second quarter consolidated cumulative
period and for the full term, as announced in the Summary of Financial Results on May 11, 2016.
It should be noted that on August 2, 2016, the Company executed a share transfer agreement with UG
Utsunomiya Corporation concerning acquisition of business (affiliation) of "Meshiya Miyamoto Munashi" (arestaurant chain), and a share transfer agreement with TWO SIX Corporation concerning acquisition of its entire
shares. Effects of these actions on the Company are under close investigation at present, and details are expected to bedisclosed at the occasion of releasing summary of financial results of the 2Q FY03/2017.

3

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY
2. Matters regarding summary information (Notes)(1)

Changes in important subsidiaries during the current quarterly consolidated cumulative period
Not applicable.

(2)

Application of special accounting methods to the preparation of quarterly consolidated financial
statements
Not applicable.

(3)

Changes in accounting principles, changes and restatements of accounting estimates
Additional information(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company has applied the "Implementation Guidance on Recoverability of Deferred Tax Assets"(Accounting Standards Board of Japan Guidance No. 26 of March 28, 2016) since the current first quarter
consolidated fiscal period.

3. Summary of important information for going concern assumption
Not applicable.

4

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY

4. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Thousand yen;  means negative)

Previous consolidated
fiscal year
(March 31, 2016)

Current first quarter
consolidated fiscal period(June 30, 2016)

AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Merchandise
Raw materials and supplies
Deferred tax assets
Other

8,616,381
603,001
41,279710,854
312,739
481,583

7,511,900
541,540
41,176748,493
222,471
521,967

Total current assets

10,765,840

9,587,550

2,456,152
4,742,506
2,174,772

2,514,935
4,742,506
2,232,896

9,373,431

9,490,338

1,116,373
977,751

1,093,896
933,406

2,094,124

2,027,303

Investment and other assets
Investment securities
Long-term loans receivable
Guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts

805,407
833,7443,039,010
445,963475,766△13,505

894,582
844,818
3,022,035
425,030
454,876△13,121

Total investments and other assets

5,586,386

5,628,222

17,053,942

17,145,864

649

10,051

27,820,432

26,743,467

Non-current assets
Property, plant and equipment
Buildings, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets

Total non-current assets
Deferred assets
Total assets

5

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY

(Thousand yen;  means negative)

Previous consolidated
fiscal year
(March 31, 2016)

Liabilities
Current liabilities
Accounts payable - trade
Current portion of bonds
Current portion of long-term loans payable
Accounts payable-other
Income taxes payable
Provision for bonuses
Other

Current first quarter
consolidated fiscal period(June 30, 2016)

1,179,980
50,0002,437,500
2,137,639
230,746
272,916
1,043,361

1,056,442
160,000
2,252,000
2,048,361
128,558
159,487
1,092,244

7,352,143

6,897,094－
3,759,945
274,908
83,74529,578510,772
1,277,478

640,000
3,289,593
274,908
81,966
29,578526,752
1,273,337

5,936,428

6,116,136

Total liabilities

13,288,571

13,013,231

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares

8,532,856
4,981,675
1,400,978△173

8,532,856
4,981,675
648,083△173

14,915,337

14,162,441

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

108,976△600,061

72,118△600,061

Total accumulated other comprehensive income△491,085△527,943

107,608

95,737

14,531,860

13,730,235

27,820,432

26,743,467

Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Deferred tax liabilities for land revaluation
Deferred tax liabilities
Provision for directors’ retirement benefits
Asset retirement obligations
Other
Total non-current liabilities

Total shareholders’ equity

Non-controlling interests
Total net assets
Total liabilities and net assets

6

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY

(2) Quarterly Consolidated Statements of Income and Statement of Comprehensive Income(Quarterly Consolidated Statements of Income)(First quarter consolidated cumulative period)(Thousand yen;  means negative)

Previous first quarter
consolidated cumulative period(April 1, 2015
- June 30, 2015)

Current first quarter
consolidated cumulative period(April 1, 2016
- June 30, 2016)

Net sales
Cost of sales

9,386,985
3,222,149

9,572,819
3,273,103

Gross profit

6,164,836

6,299,716

Selling, general and administrative expenses

6,129,596

6,561,407

Operating income or loss ()35,239△261,691

Non-operating income
Interest income
Dividend income
House rent income
Foreign exchange gains
Miscellaneous income

3,298
7,038
25,48021,384
13,733

3,505
6,924
17,666－
10,390Total non-operating income

70,93438,486

Non-operating expenses
Interest expenses
Rent expenses on real estates
Share issuance cost
Foreign exchange losses
Miscellaneous loss

35,244
20,68628,261－
16,83331,22914,394－
126,134
12,484

Total non-operating expenses

101,025

184,243

Ordinary income or loss ()5,147△407,448

Extraordinary losses
Loss on retirement of noncurrent assets
Loss on closing of stores

3,101
－

5,800
888

3,101

6,689

2,046

△414,137

106,854△50,508

76,132
108,460

56,345

184,592

Net loss ()△54,299△598,729

Net loss ()attributable to non-controlling interests△10,936△11,870

Net loss () attributable to owners of parent△43,362△586,859

Total extraordinary losses
Income or loss ()before income taxes and minority interests
Income taxes - current
Income taxes - deferred
Total income taxes

7

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY
(Quarterly Consolidated Statement of Comprehensive Income)(First quarter consolidated cumulative period)(Thousand yen; △ means negative)

Previous first quarter
consolidated
cumulative period(April 1, 2015
- June 30, 2016)

Net loss ()Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

8

Current first quarter
consolidated
cumulative period(April 1, 2016
- June 30, 2016)△54,299△598,729

77,682△36,858

77,682△36,858

23,383△635,588

34,320△10,936△623,718△11,870

SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY
(3) Notes on Quarterly Consolidated Financial Statements(Going concern assumption)
Not applicable.

(Notes in case of significant changes in the amount of shareholders’ equity)
Not applicable.
(Segment information, etc.)
The Group is a single segment of food service business and therefore description of segment information, etc. isomitted.
(Significant post-balance sheet events)(acquisition of companies by share acquisition)
The Company resolved at its board meeting held on August 2, 2016, that it would acquire the entire shares ofMiyamoto Munashi Corporation for the purpose of having the business of "Meshiya Miyamoto Munashi" transferredfrom its operator, UG Utsunomiya Corporation, and on the same day executed a share transfer agreement.
It should be noted that, after UG Utsunomiya Corporation effectively transfers its business operation of "Meshiya
Miyamoto Munashi" to Miyamoto Munashi Corporation being one of its subsidiaries by absorption and separation,then business transfer of "Meshiya Miyamoto Munashi" will be carried out by the Company acquiring 100% shares ofMiyamoto Munashi Corporation.
Meanwhile, at the same board meeting, the Company resolved that it would acquire 100% share of TWO SIX
Corporation, which holds the premise of "Miyamoto Munashi JR Nagoyaekimae branch", to become its subsidiary,and on the same day executed a share transfer agreement with Mr. Toshiyuki Fujimura, President and 100%
shareholder of TWO SIX Corporation.
(1) Purpose of share acquisition"Meshiya Miyamoto Munashi" is a restaurant chain serving set meals at reasonable prices for general population,and has at present 71 restaurants in operation mainly in Kansai area, mostly located at downtowns in front of train
stations.
This acquisition corresponds to the Company's mid-term management policy of enhancing low-price restaurant
category, which would supplement the Company's location strategy to open new restaurants mainly comprised ofsuburban ones, and at the same time synergy creation may be anticipated in purchase and logistic aspects, contributing
significantly to reinforcement of the Company's revenue base.
Moreover, it is also consistent with the societal trends such as declining birthrate and aging population,individuals eating alone, and downtown regression, all of which would further proceed, and "Meshiya Miyamoto
Munashi" would be able to offer more attractive items under the umbrella of the Company that considers it having
potentials to grow substantially. This is why the Company decided to acquire the shares.
In addition, the Company decided also to acquire the shares of TWO SIX Corporation because the Company
considered such action essential to ensure control over operational retention and other factors in "Miyamoto Munashi
JR Nagoyaekimae branch", being the flagship of "Meshiya Miyamoto Munashi" restaurant business.
(2) Name of the former shareholder
Miyamoto Munashi Corporation: UG Utsunomiya Corporation
TWO SIX Corporation: Toshiyuki Fujimura(3) Name, business activities and scale of the company to be acquired(Miyamoto Munashi Corporation)
Principal business activities: Management of restaurants
Scale (FY02/2016)
Capital stock: 1,000,000 yen
Net Sales: 3,365,375,000 yen
NOTE: Net sales has been calculated as that of "Meshiya Miyamoto Munashi" business operated by UG
Utsunomiya Corporation(TWO SIX Corporation)
Principal business activities: Leasing commercial buildings and any business associated therewith
Scale (FY02/2016)
Capital stock: 1,000,000 yen
Net Sales: 12,643,000 yen(4) Time of share acquisition
September 1, 2016 (planned)

9SATO RESTAURANT SYSTEMS COMPANY LIMITED (8163)
Summary of Financial Results of the 1Q FY03/2017

FOR TRANSLATION PURPOSE ONLY

(5) Number of shares to be acquired, acquisition cost and equity ratio after acquisition(Miyamoto Munashi Corporation)
Number of shares to be acquired: 101 shares
Acquisition cost: 1,850,000,000 yen for common shares, and 90,000,000 yen for advisory expenses (approx.)
Equity ratio after acquisition: 100%
(TWO SIX Corporation)
Number of shares to be acquired: 100 shares
Acquisition cost: 550,000,000 yen for common shares, and 23,000,000 yen for advisory expenses (approx.)
Equity ratio after acquisition: 100%(6) Funding for acquisition
Mainly borrowing from financial institutions and other funding will be appropriated.

10