Financial Report for Fiscal 2014 (Japanese GAAP ... · June 2014, the Group acquired 51.4% of shares in EXPOLANKA HOLDINGS PLC, which operates in ASEAN countries, Africa, the United

Financial Report for Fiscal 2014 (Japanese GAAP) (Consolidated) (May 7, 2015) Company Name SG HOLDINGS CO., LTD. URL http://www.sg-hldgs.co.jp/english/ Representative Tadashi Machida, President and COO Contact Shunichi Nakajima, Director in charge of Finance and Accounting TEL (075) 671-8600 General Meeting of the Shareholders Scheduled for June 12, 2015 Payment of Dividends Scheduled for June 15, 2015

(Note: Amounts less than 1 million yen are rounded down to nearest million yen)

1． Consolidated Financial Results for Fiscal Year Ended March 20, 2015 (March 21, 2014 - March 20, 2015)

(1) Consolidated Operating Results (Note: Percentage figures in table below represent changes from previous fiscal year)

Operating Revenue Operating Income Ordinary Income Net Income

Million yen % Million yen % Million yen % Million yen %

Fiscal 2014 857,449 2.7 45,594 5.1 43,901 7.7 24,815 49.0 Fiscal 2013 835,086 (4.2) 43,383 39.8 40,764 42.1 16,651 (28.9)

(Note) Comprehensive income:

Fiscal 2014

Fiscal 2013

28,426 million yen (57.9%)

18,000 million yen (-26.9%)

Net Income Per Share Net Income Per Share

Diluted Return on Equity (ROE)

Return on Assets (ROA)

Operating Margin

Yen Yen % % %

Fiscal 2014 232.42 - 13.1 7.7 5.3 Fiscal 2013 152.48 - 9.7 7.3 5.2

(Reference) Income on investment in equity-method affiliates:

Fiscal 2014 Fiscal 2013

(8) million yen (655) million yen

(2) Consolidated Financial Position

Total Assets Net Assets Equity Ratio Net Assets Per Share

Million yen Million yen % Yen

Fiscal 2014 585,230 207,547 34.4 1,924.69 Fiscal 2013 559,469 179,127 31.8 1,688.37

(Reference) Shareholders’ equity:

Fiscal 2014 Fiscal 2013

201,414 million yen 177,894 million yen

(3) Consolidated Cash Flows

Cash Flows from Operating

Activities Cash Flows from Investing

Activities Cash Flows from Financing

Activities Cash and Cash Equivalents

at the end of year

Million yen Million yen Million yen Million yen

Fiscal 2014 45,882 (48,081) (23,378) 62,509 Fiscal 2013 45,072 (27,280) (16,736) 86,473

2. Dividend Status

Dividend Per Share Total

Dividends (annual)

Payout Ratio (Consolidated)

Dividends on Net Assets

(Consolidated) 1Q-end 2Q-end 3Q-end 4Q-end Total

Yen Yen Yen Yen Yen Million yen % % Fiscal 2013 - 0.00 - 23.00 23.00 2,393 15.1 1.4 Fiscal 2014 - 0.00 - 26.00 26.00 2,690 11.2 1.4

Fiscal 2015 (forecast) - - - - - -

(Note) “Dividend Status” above represents the dividend paid for the Company’s common shares. As to dividend payment for class shares that differ from the Company’s common shares in respect to shareholders’ rights, see “Dividend Status of Class Shares” as described below. Distribution of dividends from surplus is scheduled to be resolved at the ordinary general shareholders’ meeting on June 12, 2015. The Company’s articles of incorporation designate September 20 and March 20 as the dividend record date. However, dividend forecast based on the said record date is currently undecided.

3. Projection of Consolidated Performance for Fiscal 2015 (March 21, 2015 - March 20, 2016)

(Note: Percentage figures in table below represent changes from previous fiscal year)

Operating Revenue Operating Income Ordinary Income Net Income Net Income per Share

Full year

Million yen % Million yen % Million yen % Million yen % Yen

940,000 9.6 50,000 9.7 48,000 9.3 29,000 16.9 272.83

* Notes

(1) Changes in significant subsidiaries during the period : Yes

(Changes in specified subsidiaries resulting in changes in scope of consolidation)

Newly added: 1 (Company Name) EXPOLANKA HOLDINGS PLC

Excluded: None

(Note) Please refer to the section “4. CONSOLIDATED FINANCIAL STATEMENTS (5) NOTES ON CONSOLIDATED FINANCIAL STATEMENTS (Significant Items Relating to the Preparation of Consolidated Financial Statements)” on page 16 of the Appendix for further information.

(2) Changes in accounting policies and accounting estimates, and restatements

(i) Changes associated with revision to accounting : Yes standards

(ii) Changes in accounting policies other than (i) : None above

(iii) Changes in accounting estimates : None

(iv) Restatements : None

(Note) Please refer to the section “4. CONSOLIDATED FINANCIAL STATEMENTS (5) NOTES ON CONSOLIDATED FINANCIAL STATEMENTS (Changes in Accounting Policies)” on page 19 of the Appendix for further information.

(3) Number of shares issued and outstanding (common shares)

(i) Number of shares outstanding at end of period (including treasury stock)

(ii) Number of shares of treasury stock at end of period

(iii) Average number of shares during the term

Fiscal 2014 106,732,400 shares

Fiscal 2013 106,732,400

shares

Fiscal 2014 3,262,483 shares Fiscal 2013 2,662,483

shares

Fiscal 2014 103,686,903 shares Fiscal 2013 105,032,788

shares

(Reference) Summary of Non-Consolidated Operating Results 1. Non-Consolidated Operating Results for the Year Ended March 20, 2015 (March 21, 2014 – March 20, 2015)

(Note: Percentage figures in table below represent changes (1) Non-Consolidated Operating Results

from previous fiscal year)

Operating Revenue Operating Income Ordinary Income Net Income

Million yen % Million yen % Million yen % Million yen %

Fiscal 2014 17,518 31.8 9,349 78.3 9,496 76.6 9,468 83.6 Fiscal 2013 13,290 34.9 5,244 57.3 5,377 55.4 5,155 54.6

Net income per share Net income per share diluted

Yen Yen Fiscal 2014 84.41 - Fiscal 2013 43.03 -

(2) Non-Consolidated Financial Position

Total Assets Net Assets Equity Ratio Net Assets per Share

Million yen Million yen % Yen

Fiscal 2014 432,354 168,842 39.1 1,609,90 Fiscal 2013 429,648 162,731 37.9 1,542.67

(Reference) Shareholders’ equity: Fiscal 2014 168,842 million yen

Fiscal 2013 162,731 million yen

* Description concerning the appropriate use of business forecast and other remarks The descriptions concerning the business forecasts included in this document are based on certain information obtained by the Company and the assumptions that the Company has deemed reasonable as of the date of publication. Actual results may differ substantially from these forecasts due to a variety of important factors.

Dividend Status of Class Shares Details of dividend per share on class shares that differ from the Company's common shares in respect to shareholder's rights are as follows:

Dividend per share

1Q-End 2Q-End 3Q-End 4Q-End Total

Yen Yen Yen Yen Yen

Class A preferred shares Fiscal 2013 - 0.00 23.50 23.50 Fiscal 2014 - 0.00 26.50 26.50

Fiscal 2015 (Forecast) - - - - -

Class B preferred shares Fiscal 2013 - 0.00 - 25.00 25.00 Fiscal 2014 - 0.00 - 28.00 28.00

Fiscal 2015 (Forecast) - - - - -

(Note) Distribution of dividends from surplus is scheduled to be resolved at the ordinary general shareholders’ meeting on June 12, 2015. The Company’s articles of incorporation designate September 20 and March 20 as the dividend record dates. However, dividend forecast based on the said record dates is currently undecided.

SG HOLDINS CO., LTD. Financial Report for Fiscal 2014 (Consolidated)

1

Table of Contents of Appendix

1. Analysis of Operating Results and Financial Position ........................................................................................... 2

(1) Analysis of Operating Results ............................................................................................................................ 2

(2) Analysis of Financial Position ............................................................................................................................ 4

(3) Dividend Policy and Dividends for the Current and Next Fiscal Years .............................................................. 5

2. Overwiew of SG HOLDINGS Group .................................................................................................................... 6

3. Management Policy ............................................................................................................................................... 8

(1) Basic Policy of Corporate Management ............................................................................................................. 8

(2) Target Management Indicators and Medium- to Long-Term Management Strategies........................................ 8

(3) Challenges to Be Addressed ............................................................................................................................... 8

4. Consolidated Financial Statements ........................................................................................................................ 9

(1) Consolidated Balance Sheets .............................................................................................................................. 9

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ....................... 11

(3) Consolidated Statements of Changes in Net Assets .......................................................................................... 13

(4) Consolidated Statement of Cash Flows ............................................................................................................ 15

(5) Notes on Consolidated Financial Statements .................................................................................................... 16

(Significant Items Relating to the Preparation of Consolidated Financial Statements) ........................................... 16

(Changes in Accounting Policies)............................................................................................................................ 19

(Changes in Presentation) ........................................................................................................................................ 19

(Segment Information, etc.) ..................................................................................................................................... 19

5. Non-Consolidated Financial Statements .............................................................................................................. 23

(1) Balance Sheets .................................................................................................................................................. 23

(2) Statements of Income ....................................................................................................................................... 25

(3) Statements of Changes in Net Assets ................................................................................................................ 26


2

1. Analysis of Operating Results and Financial Position

(1) Analysis of Operating Results

(i) Operating results for the fiscal year under review

In the consolidated fiscal year that ended March 20, 2015, the Japanese economy remained on a

moderate recovery track as the government's economic measures and the Bank of Japan's monetary

easing fueled corporate performance. However the consumption tax hike put a damper on real

consumption expenditure, which declined over the year.

Despite the trend toward aggressive global expansion via M&As, market conditions for the logistics

industry remained rocky as labor and car chartering costs continued to climb even though negotiations

with shippers for better freight rates went well amid a slow recovery of shipment volumes in Japan.

This fiscal year, marking the second year of the "Third Stage Plan" (our three-year medium-term

management plan which started in FY2013), we focused on creating new profit opportunities by

accurately capturing customer needs and expanding operations by leveraging the synergy within our

Group to boost growth.

Working against this backdrop, we shifted our new marketing strategies for the delivery business, our

core business line, into high gear with an eye to enhancing drivers' ability to propose solutions and solve

problems. Our logistics business focused on sales activities that capitalized on synergy within the Group

and worked on expanding the 3PL business by strengthening collaboration with the delivery business. In

June 2014, the Group acquired 51.4% of shares in EXPOLANKA HOLDINGS PLC, which operates in

ASEAN countries, Africa, the United States, as well as East and South Asia. The company's profit and

loss statement is consolidated for the period from July 1 to December 31, 2014. In other businesses, the

Group leveraged its management resources such as logistics networks, assets, and technologies to

broaden our business scope.

As a result, operating revenue for the consolidated fiscal year under review increased by 2.7% year

on year to total 857,449 million yen and operating income rose 5.1% year on year to reach 45,594

million yen. Ordinary income was up 7.7% to total 43,901 million yen while net income amounted to

24,815 million yen for a year-on-year increase of 49.0%.

Below is an overview of business segments and their respective performances.

Starting from the consolidated fiscal year under review, the Company has changed the categorization of

reporting segments. The year-on-year comparison listed below is based on previous year’s results that are

reclassified into new segments.

Delivery Business

The number of packages handled and delivered by the Group through its main services was as follows:

Service name

Fiscal 2013

(March 21, 2013 to

March 20, 2014)

Fiscal 2014

(March 21, 2014 to

March 20, 2015)

Year-on-year change

Year-on-year change (%)

Hikyaku Express (in millions) 1,218 1,196 (22) (1.9)

Hikyaku Air Express (in millions) 9 8 (0) (6.2)

Hikyaku Cool Express (in millions) 29 29 0 3.0

Mail Express (in millions) 344 280 (64) (18.7)

Hikyaku Mail Express 70 52 (17) (25.2)

Hikyaku You-Mail Express 273 227 (46) (17.1)

(Reference) e-Collect Service (in millions)

116 108 (8) (7.3)

Note: Although e-Collect Service belongs to the “Other Businesses” segment, the information is provided for

reference purposes.


3

The delivery business saw the number of packages handled and delivered decrease over the year due to a

sudden fall in demand during the first fiscal half following the last-minute surge in demand just before the

consumption tax hike. However, the launch of strategic products such as smart delivery, etc., ongoing

efforts to receive fair freight rates, and other measures all led to growth in revenue. Our cost control to turn

labor force expenses into variable costs was successful and drove profits up.

In addition to the above, the expanded lines of delivery solutions customized to meet customer needs as

well as increased facility logistics services for large-scale commercial facilities were among the factors

behind the profit increase.

In the end, operating revenue from this business segment increased by 0.4% from a year earlier to total

712,566 million yen while operating income rose 7.6% year on year to reach 39,119 million yen.

Logistics Business

The logistics business enjoyed increased revenue as its advanced logistics project team dubbed "GOAL"

made steady progress in proposing new cross-sectoral logistics solutions. In overseas markets, the Group

acquired a stake in EXPOLANKA HOLDINGS PLC, with a big freight forwarding advantage primarily in

connection to major apparel manufacturers in Europe and the United States, to expand its comprehensive

international logistics services.

In addition to expanded business operations, enhanced warehouse utilization, efficient field operations and

the proactive implementation of other cost controls all helped drive profits up. However, operating income

remained flat due to restructuring costs incurred for strengthening our overseas business structure.

All these factors brought operating revenue from this business segment up 47.5% year on year to total

80,935 million yen while operating income declined 2.2% year on year to reach 336 million yen.

Real Estate Business

Both revenue and profit declined for the real estate business due to the partial sale of real estate for sale

(SG Realty YOKOHAMA) in the previous consolidated fiscal year (April 2013).

Excluding the impact of the above-mentioned sale of real estate for sale (SG Realty YOKOHAMA),

revenue and profit increased thanks to the completion of SG Realty MAISHIMA as well as steady

operation of the renewable energy supply business.

As a result, operating revenue from this business segment fell 62.9% year on year to total 4,589 million

yen and operating income dropped 11.2% year on year to reach 285 million yen.

Other Businesses

Both revenue and profit rose in other businesses due to increased new car sales, steady expansion of

personnel services, and the launch of new products for settlement and IT services.

As a result, operating revenue from this business segment edged up 1.6% over last fiscal year to total

59,358 million yen while operating income rose 16.1% year on year to reach 5,006 million yen.

(ii) Projections for the Next Fiscal Year

While the Japanese economy is on a recovery track thanks to various government initiatives, etc., the

logistics industry will continue to face challenging market conditions in the next fiscal year due to

intensifying competition with other logistics companies as well as rising labor and car chartering costs.

Working against this backdrop, we will build stronger ties among Group companies in FY2015 with an

eye to expanding the 3PL business and comprehensive logistics services around the world by maximizing

the Group's integrated strengths.

In the delivery business, we will focus on marketing solutions through group-wide collaboration. We will

also launch home delivery and order-taking services as well as a service that will enable customers to

have Sagawa Express packages pick them up at any one of the Lawson outlets across Japan. These

services will be provided by SG LAWSON, a joint venture with Lawson, Inc., based on a business

alliance agreement.

In the logistics business, GOAL, a cross-sectoral advanced logistics project team that made steady

progress this fiscal year, will step up its marketing efforts to offer new logistics solutions combining the

Group's resources including not only logistics but IT and payment settlement services.


4

In the real estate business, we will launch an unlisted open-end private-placement real estate investment

trust (private REIT) to work on real estate operations while maintaining a portfolio, mainly consisting of the

Group's infrastructure, that will generates stable earnings.

Projection for consolidated business performance

Operating revenue 940.0 billion yen

Operating income 50.0 billion yen

Ordinary income 48.0 billion yen

Net income 29.0 billion yen

(2) Analysis of Financial Position

(i) Status of Assets, Liabilities and Net Assets

Total assets amounted to 585,230 million yen, up 25,761 million yen over what they were at the end of

the previous fiscal year. The principal factors contributing to this increase include an increase of 14,411

million yen in real estate for sale, an increase of 13,946 million yen in notes receivable-trade and

operating accounts receivable, and an increase of 10,773 million yen in land despite a decrease of 23,728

million yen in cash and deposits.

Liabilities totaled 377,683 million yen, falling 2,658 million yen from what they were at the end of the

previous fiscal year. This is due primarily to a decrease of 15,965 million yen in loans payable despite an

increase of 6,864 million yen in notes and operating accounts payable-trade.

Net assets amounted to 207,547 million yen, up 28,419 million yen from what they were at the end of the

previous fiscal year. This increase mainly came from an increase of 24,815 million yen in net income and

an increase of 4,900 million yen in minority interests despite 3,029 million yen in dividend payments

from surplus.

All these factors combined brought equity ratio up 2.6 percentage points above what it was at the end of

the previous fiscal year, to hit 34.4%.

(ii) Status of Cash Flows

The balance of cash and cash equivalents (hereinafter referred to as “funds”) as of the end of the

consolidated fiscal year under review decreased by 23,964 million yen to total 62,509 million yen.

The status of cash flows for the consolidated fiscal year under review and factors behind them are

provided below.

(Cash flows from operating activities)

Funds provided by operating activities totaled 45,882 million yen, up 1.8% from a year earlier.

This was due primarily to the posting of 40,696 million yen in income before income taxes and

minority interest and 21,428 million yen in depreciation costs, as well as payments totaling 15,530

million yen in income taxes.

(Cash flows from investment activities)

Funds used for investing activities amounted to 48,081 million yen, a year-on-year increase of 76.2%.

This mainly included an outflow of 37,406 million yen for the acquisition of property, plant and

equipment as well as an outflow of 6,991 million yen for the purchase of shares in subsidiaries that

went along with the change in the scope of consolidation.

(Cash flows from financing activities)

Funds used for financing activities increased by 39.7% year on year to total 23,378 million yen.

This was mainly due to an outflow of 55,729 million yen for the repayment of long-term loans payable,

the payment of cash dividends totaling 3,029 million yen, an inflow of 19,785 million yen from

long-term loans, as well as a net increase in short-term loans payable which amounted to 18,030 million

yen.


5

(3) Dividend Policy and Dividends for the Current and Next Fiscal Years

The Company has set a basic profit distribution policy to maintain a stable dividend payment while

securing sufficient retained earnings necessary to continue business operations in the future and to enhance

business management.

The Company makes it a basic policy to distribute dividends from surplus annually based on the resolution

of the ordinary general shareholders’ meeting. Meanwhile, the Company’s articles of incorporation

stipulate that the Company is able to pay an interim dividend based on the resolution of the Board of

Directors.

Based on those policies, the Company is planning to propose a resolution at the ordinary general

shareholders’ meeting scheduled for June 12, 2015 to pay a dividend of 26.0 yen per common share, 26.5

yen per Class A preferred share, and 28.0 yen per Class B preferred share for the fiscal year under review.

While dividends for the next fiscal year are undecided at this moment, the Company is committed to

enhancing cost competitiveness to accommodate expected changes in the business environment,

strengthening business infrastructure to meet market needs, and effectively investing retained earnings

aimed at facilitating global strategies.


6

2. Overview of SG HOLDINGS Group

SG HOLDINGS Group (the Company and related companies) consists of the Company (SG HOLDINGS

CO., LTD.) which is a pure holding company, 109 subsidiaries (including 108 consolidated subsidiaries and

1 nonconsolidated subsidiary not subject to the equity method), and 11 affiliated companies (including 10

affiliates subject to the equity method and 1 affiliate not subject to the equity method) and is engaging in the

delivery business, logistics business, real estate business, and other associated businesses.

Operations performed by the Group, together with the individual positions taken by related companies for

performance of these operations, are as follows:

Segment Name Major products and services Major companies

Delivery Business Hikyaku Express, Hikyaku Cool Express

Hikyaku Mail Express, Mail Air Express,

etc.

Moving transportation, Route delivery

service, Charter transportation

Installation transportation, Art transportation

Collective delivery service, Food delivery

service

SAGAWA EXPRESS CO., LTD.

SG MOVING CO., LTD.

WORLD SUPPLY CO., LTD.

(Total: 3 companies)

Logistics Business Lump-sum acceptance of orders for logistics

services

Development of logistics systems

Control and management of inventory and

orders placed and received

Management of distribution centers

Warehousing

Transportation using public transport

Sgx (international delivery service)

International air and marine transportation

services

SAGAWA GLOBAL LOGISTICS CO., LTD.

SAGAWA LOGISTICS PARTNERS CO., LTD.

SGH GLOBAL JAPAN CO., LTD.

TIANJIN POLY-SAGAWA INTERNATIONAL

TRADING CO., LTD.

SHANGHAI POLY-SAGAWA LOGISTICS CO.,

LTD.

POLY-SAGAWA LOGISTICS CO., LTD.

SHANGHAI DAZHONG SAGAWA LOGISTICS

CO., LTD.

SAGAWA SILOX SHANGHAI CO., LTD.

SAGAWA SILOX QINGDAO CO., LTD.

SAGAWA EXPRESS (H.K.) CO., LTD.

SAGAWA EXPRESS PHILIPPINES INC.

SAGAWA EXPRESS VIETNAM CO., LTD.

SAGAWA EXPRESS SINGAPORE PTE. LTD.

AMEROID LOGISTICS (S) PTE. LTD.

PT. SAGAWA INDONESIA

EXPOLANKA HOLDINGS PLC *1

Plus 89 other companies


Real Estate Business Real estate leasing and management Real

estate development

Real estate fund

Renewable energy supply

SG REALTY CO., LTD.

Plus 1 other company


Other Product sales, insurance agent, fuel sales

Automobile services, sales of automobiles,

manufacture of auto bodies

System sales and maintenance

e-Collect Service

Temporary staffing services and outsourcing

SAGAWA ADVANCE CO., LTD.

SG MOTORS CO., LTD.

SG SYSTEMS CO., LTD.

SAGAWA FINANCIAL CO., LTD.

SG FIELDER CO., LTD.

Plus 3 other companies


(Note) *1 The Group acquired EXPOLANKA HOLDINGS PLC on June 24, 2014. *2 The Group’s consolidated subsidiary, SG EXPERT CO., LTD. (shared service business) and SG HOLDINGS GLOBAL PTE.

LTD. (overseas operation headquarters) have been omitted as they are common in all segments.


7

The following diagram approximately illustrates the roles, and the relations with segments, of SG HOLDINGS

Group.

(Note) SG EXPERT CO., LTD. (shared service business) and SG HOLDINGS GLOBAL PTE. LTD. (overseas operation headquarters) have been omitted as they are common in all segments.

Customer

Delivery Business Logistics Business


SG MOVING CO., LTD.


Real Estate Business

SG REALTY CO., LTD.

Plus 1 other consolidated subsidiary

Other


SG MOTORS CO., LTD.




Plus 3 other consolidated subsidiaries

[Domestic]




[Overseas]

TIANJIN POLY-SAGAWA INTERNATIONAL TRADING CO., LTD.

SHANGHAI POLY-SAGAWA LOGISTICS CO., LTD.

POLY-SAGAWA LOGISTICS CO., LTD.

SHANGHAI DAZHONG SAGAWA LOGISTICS CO., LTD.

SAGAWA SILOX SHANGHAI CO., LTD.

SAGAWA SILOX QINGDAO CO., LTD.


SAGAWA EXPRESS PHILIPPINES INC.


SAGAWA EXPRESS SINGAPORE PTE. LTD.


PT. SAGAWA INDONESIA

EXPOLANKA HOLDINGS PLC

Plus 77 other consolidated subsidiaries

1 nonconsolidated subsidiary not subject

to the equity method

10 affiliates subject to the equity method

1 affiliate not subject to the equity method

SG HOLDINGS CO., LTD (holding company)


8

3. Management Policy

(1) Basic Policy of Corporate Management

Remaining committed to the founding spirit of "Hikyaku no Kokoro" (the spirit of express messenger), the

SG HOLDINGS Group has endeavored to improve its services and quality by which the customers can

enjoy "Security," "Satisfaction" and "Trust." "Hikyaku no Kokoro" means, with a motto of "swiftly, surely,

and carefully," a strong commitment to the customer creed, serving the development of local society, and

emphasizing responsibility and good faith.

Looking toward the future, the Group will make its utmost efforts to become a business entity of more

value to society by quickly responding to the changing society and customer needs and providing total

solutions.

(2) Target Business Indicators and Medium- to Long-Term Business Strategies

In order to cope with the rapidly changing business environment such as growing competition and

realignment in the logistics industry and to thrive in the future, we are focusing on demonstrating our

strengths as a group and reinforcing alliances with other companies to drive new growth under the Third

Stage Plan, our three-year medium-term management plan that runs from FY2013 to FY2015. In

accordance with the plan, we have set our corporate vision “creating new value by effectively using

management resources and strengthening collaboration both inside and outside the Group in the aim of

enhancing business platforms and securing sustainable growth.” We are pursuing business activities with

focus on “synergy, reform, and speed” and based on the following basic policies: maximizing the Group’s

earnings capability, enhancing the comprehensive strength of the Group by expanding business areas,

reinforcing and enhancing operating platforms, and fully adopting stakeholder management.

(3) Challenges to Be Addressed

Our operating environment has been changing as evidenced by (i) diversifying needs and higher

expectations of customers, (ii) the growing Asian economy, (iii) labor shortages due to declining

populations and changing awareness of work-life balance, (iv) growing compliance awareness across the

globe, and (v) climate change. Viewing these changes as opportunities for growth, we are stepping up

efforts on the following four key areas.

(i) Developing new profitable lines of business

The delivery business will place greater emphasis on initiatives designed to respond to customer needs,

like marketing solutions through group-wide collaboration while focusing on increasing profitability. We

will also work to strengthen the logistics and real estate businesses in order to lessen our dependence on

the delivery business. In overseas markets, we will invest management resources in key business areas in

ASEAN countries, etc. and work with EXPOLANKA HOLDINGS PLC to build a stronger network with

an eye to establishing logistics networks primarily in South Asia and Southeast Asia.

(ii) Securing human resources

Quality human resources are our vital assets. We will focus on hiring excellent personnel on an ongoing

basis, optimally assigning personnel, and keeping employee turnover low. We will also continue to

address workplace diversity with a focus on empowering women, offering various work style options,

and more.

(iii) Compliance

Recognizing compliance management as a key task, we will make further efforts to develop and manage

a compliance system in line with our Code of Ethics and Conduct all with a view to building a corporate

culture that fosters ethical conduct while responding to changes in society and the market.

(iv) Environmental conservation

As long as we continue our business operations, we will inevitably have some degree of impact on the

environment. We will work with all stakeholders on conserving the global environment to minimize our

ecological footprint.


9

4. Consolidated Financial Statements

(1) Consolidated Balance Sheets

(Unit: million yen)

Fiscal 2013

(March 20, 2014)

Fiscal 2014

(March 20, 2015)

Assets

Current assets

Cash and deposits 86,991 63,263

Notes receivable-trade and operating accounts

receivable

111,327 125,273

Real estate for sale 55,378 69,789

Merchandise and finished goods 155 338

Work in process 8,817 111

Raw materials and supplies 1,356 1,326

Deferred tax assets 4,861 4,897

Other 9,046 10,871

Allowance for doubtful accounts (490) (745)

Total current assets 277,444 275,126

Fixed assets

Property, plant and equipment

Buildings and structures (net) 58,455 53,493

Vehicles (net) 3,364 8,908

Land 129,625 140,398

Lease assets (net) 6,290 8,381

Construction in progress 186 4,480

Other (net) 15,597 21,314

Total property, plant and equipment 213,519 236,977

Intangible fixed assets

Goodwill 2,403 7,192

Software 13,651 12,187

Lease assets 134 83

Other 3,535 4,553

Total intangible fixed assets 19,725 24,017

Investments and other assets

Investment securities 4,746 6,512

Deferred tax assets 15,473 14,190

Other 30,981 30,447

Allowance for doubtful accounts (2,626) (2,203)

Total investments and other assets 48,574 48,946

Total fixed assets 281,820 309,941

Deferred assets

Bond issuance cost 204 162

Total deferred assets 204 162

Total assets 559,469 585,230


10

(Unit: million yen)

Fiscal 2013

(March 20, 2014)

Fiscal 2014

(March 20, 2015)

Liabilities

Current liabilities

Notes and operating accounts payable-trade 39,859 46,723

Short-term loans payable - 19,185

Current portion of long-term loans payable 55,134 29,138

Lease obligations 1,497 2,224

Income taxes payable 10,190 9,379

Deposits received 33,290 26,071

Provision for bonuses 4,888 5,253

Provision for directors' bonuses 41 48

Other 33,836 43,791

Total current liabilities 178,738 181,816

Noncurrent liabilities

Bonds payable 9,000 9,000

Long-term loans payable 140,637 131,482

Lease obligations 4,451 6,873

Provision for retirement benefits 37,281 -

Provision for directors' retirement benefits 29 29

Net defined benefit liability - 37,447

Asset retirement obligations 4,294 4,369

Other 5,909 6,664

Total non-current liabilities 201,603 195,867

Total liabilities 380,341 377,683

Net assets

Owners' equity

Capital stock 11,882 11,882

Capital surplus 882 882

Retained earnings 167,179 188,964

Treasury stock (3,461) (4,421)

Total owners’ equity 176,483 197,309

Accumulated other comprehensive income

Valuation difference on available-for-sale

securities

681 1,446

Deferred gains or losses on hedges (325) (286)

Foreign currency translation adjustment 1,055 3,205

Remeasurements of defined benefit plans - (260)

Total accumulated other comprehensive income 1,410 4,104

Minority interests 1,232 6,133

Total net assets 179,127 207,547

Total liabilities and net assets 559,469 585,230


11

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income

(Consolidated Statements of Income)

(Unit: million yen)

Fiscal 2013

(March 21, 2013 to March 20,

2014)

Fiscal 2014

(March 21, 2014

to March 20, 2015)

Operating revenue 835,086 857,449

Operating cost 764,248 780,480

Operating gross profit 70,838 76,969

Selling, general and administrative expenses 27,454 31,375

Operating income 43,383 45,594

Non-operating income

Interest income 128 111

Dividends income 126 133

Other 2,016 2,176

Total non-operating income 2,272 2,421

Non-operating expenses

Interest expenses 3,825 3,731

Equity in losses of affiliates 655 8

Other 409 373

Total non-operating expenses 4,891 4,113

Ordinary income 40,764 43,901

Extraordinary income

Gain on sales of noncurrent assets 41 50

Other 764 -

Total extraordinary income 805 50

Extraordinary loss

Loss on sales of noncurrent assets 34 1,048

Loss on retirement of noncurrent assets 743 338

Impairment loss 2,573 1,273

Lump-sum payment attributable to clearance of

corporate pension fund

4,660 -

Other 2,837 596

Total extraordinary loss 10,849 3,256

Income before income taxes and minority interest 30,721 40,696

Income taxes-current 13,242 14,558

Income taxes-deferred 850 1,322

Total income taxes 14,092 15,880

Income before minority interests 16,628 24,815

Minority interests in income (23) (0)

Net income 16,651 24,815


12

(Consolidated

Statements of Income)

(Unit: million

yen)

(March

Fiscal 2013

21, 2013 to March

2014)

20,

Fiscal 2014

(March 21, 2014

to March 20, 2015)

Income before minority interests

Other comprehensive income

Valuation difference on available-for-sale

securities

Deferred gains or losses on hedges

Foreign currency translation adjustment

Share of other comprehensive income of

associates accounted for using equity method

16,628

99

(325)

1,543

54

24,815

765

39

2,783

22

Total other comprehensive income 1,372 3,610

Comprehensive income 18,000 28,426

(Comprehensive income attributable to)

Comprehensive income attributable to owners of

the parent

Comprehensive income attributable to minority

interests

17,841

158

27,769

656


13

(3) Consolidated Statements of Changes in Net Assets

Fiscal 2013 (March 21, 2013 to March 20, 2014)

(Unit: million yen)

Owner’s equity

Capital stock Capital surplus Retained

earnings Treasury stock

Total owner’s

equity

Outstanding balance at the

beginning of fiscal period 11,383 383 153,241 - 165,007

Changes of items during the

period

Issuance of new shares 499 499 999

Dividends from surplus (2,714) (2,714)

Net income 16,651 16,651

Purchase of treasury stock (3,461) (3,461)

Net changes of items other

than owner’s equity -

Total changes of items during

the period 499 499 13,937 (3,461) 11,475

Balance as of March 20, 2014 11,882 882 167,179 (3,461) 176,483


Minority

interests

Total net

assets Valuation

difference on

available-for-

sale securities

Deferred gains or

losses on

hedges

Foreign currency

translation

adjustment

Remeasurements of

defined

benefit plans

Total

accumulated

other comprehensi

ve income


beginning of fiscal period 581 - (360) - 220 891 166,119


period

Issuance of new shares - 999

Dividends from surplus - (2,714)

Net income - 16,651

Purchase of treasury stock - (3,461)


than owner’s equity 99 (325) 1,416 - 1,190 341 1,532


the period 99 (325) 1,416 - 1,190 341 13,007

Balance as of March 20, 2014 681 (325) 1,055 - 1,410 1,232 179,127


14


(Unit: million yen)

Owner’s equity

Capital stock Capital surplus Retained

earnings Treasury stock

Total owner’s

equity


beginning of fiscal period 11,882 882 167,179 (3,461) 176,483


period

Dividends from surplus (3,029) (3,029)

Net income 24,815 24,815

Purchase of treasury stock (960) (960)


than owner’s equity -


the period - - 21,785 (960) 20,825

Balance as of March 20, 2015 11,882 882 188,964 (4,421) 197,309


Minority

interests

Total net

assets

Valuation

difference on

available-for-sale

securities

Deferred gains or

losses on

hedges

Foreign currency

translation

adjustment

Remeasurements of

defined

benefit plans

Total

accumulated

other comprehensi

ve income


beginning of fiscal period 681 (325) 1,055 - 1,410 1,232 179,127


period


Net income - 24,815

Purchase of treasury stock - (960)


than owner’s equity 765 39 2,149 (260) 2,693 4,900 7,593


the period 765 39 2,149 (260) 2,693 4,900 28,419

Balance as of March 20, 2015 1,446 (286) 3,205 (260) 4,104 6,133 207,547


15

(4) Consolidated Statements of Cash Flows

(Unit: million yen)

Fiscal 2013


2014)

Fiscal 2014


2015)

Net cash provided by (used in) operating activities


Depreciation and amortization 18,924 21,428

Impairment loss 2,573 1,273

Increase (decrease) in provision for retirement benefits (501) -

Increase (decrease) in provision for bonuses 2,113 364

Increase (decrease) in net defined benefit liability - (543)

Interest and dividends income (255) (245)

Interest expenses 3,825 3,731

Loss (gain) on sales and retirement of noncurrent

assets

736 1,335

Decrease (increase) in notes and accounts

receivable-trade

6,379 (3,603)

Increase (decrease) in notes and accounts

payable-trade

762 1,135

Increase (decrease) in deposits received (6,179) (7,233)

Other 255 6,584

Subtotal 59,355 64,923

Interest and dividends income received 213 204

Interest expenses paid (4,159) (3,715)

Income taxes paid (10,336) (15,530)

Net cash provided by (used in) operating activities 45,072 45,882

Net cash provided by (used in) investing activities

Purchase of property, plant and equipment (20,759) (37,406)

Proceeds from sales of property, plant and equipment 88 562

Purchase of intangible fixed assets (3,970) (3,787)

Proceeds from collection of guarantee deposits 1,343 983

Purchase of investment securities (20) (40)

Purchase of investments in subsidiaries resulting in change

in scope of consolidation

(3,024) (6,991)

Proceeds from sales of investments in subsidiaries resulting

in change in scope of consolidation

- 534

Purchase of investments in subsidiaries - (463)

Other (937) (1,471)

Net cash provided by (used in) investing activities (27,280) (48,081)

Net cash provided by (used in) financing activities

Net increase (decrease) in short-term loans payable (9) 18,030

Proceeds from long-term loans payable 31,000 19,785

Repayment of long-term loans payable (49,542) (55,729)

Proceeds from issuance of bonds 8,786 -

Repayments of lease obligations (1,866) (1,475)

Proceeds from issuance of common stock 999 -

Purchase of treasury stock (3,461) (960)

Cash dividends paid (2,714) (3,029)

Cash dividends paid to minority shareholders (8) -

Proceeds from stock issuance to minority shareholders 80 -

Net cash provided by (used in) financing activities (16,736) (23,378)

Effect of exchange rate change on cash and cash

equivalents

738 1,613

Net increase (decrease) in cash and cash equivalents 1,793 (23,964)

Outstanding balance of cash and cash equivalents,

beginning of fiscal period/year

84,680 86,473

Outstanding balance of cash and cash equivalents, end of

fiscal period/year

86,473 62,509


16

(5) Notes on Consolidated Financial Statements

(Significant Items Relating to the Preparation of Consolidated Financial Statements)

1. Scope of Consolidation

(i) Number of consolidated subsidiaries: 108

Names of principal consolidated subsidiaries:


SG MOVING CO., LTD.





SG REALTY CO., LTD.


SG MOTORS CO., LTD.




SG EXPERT CO., LTD.

SG HOLDINGS GLOBAL PTE. LTD.




EXPOLANKA HOLDINGS PLC

EXPOLANKA HOLDINGS PLC and its 75 subsidiaries are included in the scope of consolidation in

the consolidated fiscal year under review as a result of purchase of shares in EXPOLANKA

HOLDINGS. Eight of these companies including EXPOLANKA TEAS (PVT) LTD. are excluded

from the scope of consolidation due to sale of shares, and a newly established company is included in

the scope of consolidation.

As a result, the number of consolidated subsidiaries increased by 69.

(ii) Name etc. of non-consolidated subsidiary

Name of non-consolidated subsidiary

SAGAWA EXPRESS HAWAII, INC.

(Reason for exclusion from the scope of consolidation)

This is because the size of this non-consolidated subsidiary is small, and the aggregate amount of

total assets, operating revenue, net income (calculated by the equity method) and retained earnings

(calculated by the equity method), etc. do not significantly affect the consolidated financial

statements.

2. Notes on Application of the Equity Method

(i) Number of affiliates subject to the equity method: 10

Names of principal companies

SINDHU CARGO SERVICES PTE. LTD.

Seven affiliates of EXPOLANKA HOLDINGS PLC are included in the scope of equity method in the

consolidated fiscal year under review as a result of purchase of shares in EXPOLANKA HOLDINGS

PLC.

(ii) Name etc. of non-consolidated subsidiaries and affiliates not subject to the equity method

Name of principal companies

(Non-consolidated subsidiary) SAGAWA EXPRESS HAWAII, INC.


17

(Reasons for not applying the equity method)

This is because net income and retained earnings of this non-consolidated subsidiary/affiliate, not

subject to the equity method (calculated by the equity method), do not significantly affect the

Company's consolidated financial statements and do not have importance as a whole, even if this

company was excluded from the subject of equity method.

(iii) Information specific to application of the equity method

Since affiliates under the equity method close their books on a date other than the consolidated

closing, we used their financial statements calculated based on provisional settlement of accounts as

of December 31.

3. Accounting Periods of Consolidated Subsidiaries

Among our consolidated overseas subsidiaries, 23 companies including SAGAWA EXPRESS (H.K.)

CO., LTD. close their books on December 31. When preparing our consolidated financial statements, we

used their financial statements that were prepared based on their fiscal years ended on such date.

Among our consolidated overseas subsidiaries, 69 companies including EXPOLANKA HOLDINGS

PLC close their books on March 31. When preparing our consolidated financial statements, we used their

financial statements that were prepared based on provisional settlement of accounts as of December 31.

We made adjustments necessary for consolidation if there were material transactions during the period

between such closing date and the closing date of consolidated accounts.

4. Accounting Policies and Standards

(i) Appraisal standards and methods for important assets

(a) Securities

Other securities

Marketable

Reported at the market value of the securities on the closing date

(Valuation differences are recorded as net unrealized gain on other securities in net assets, and

the cost of sales is calculated using the moving average method.)

Non-marketable

Reported at cost using the moving average method

(b) Derivatives

Reported at the market value

(c) Inventories

Real estate for sale, merchandise, finished goods, raw materials, work in process:

Mainly reported at cost on an individual specified cost basis

(Balance sheet value is stated by writing down the carrying value based upon lowered

profitability.)

Raw materials

Mainly reported at cost using the gross average method


profitability.)

Supplies

Mainly reported at cost based on the first-in first-out method


profitability.)

(ii) Depreciation and amortization methods for important depreciable and amortizable assets

(a) Property, plant and equipment (except lease assets)

The Company and its major consolidated domestic subsidiaries adopt the declining balance

method, except for the buildings (excluding fixtures) acquired on and after April 1, 1998, which

are depreciated using the straight-line method. Major consolidated overseas subsidiaries adopt the

straight-line method.

(b) Intangible fixed assets (except lease assets)

Amortized using the straight-line method. However, software for the Company's own use is

amortized over the period it can be used by the Company (five years).


18

(c) Lease assets

Lease assets related to finance lease transactions with title transfer:

Depreciated by the same method as the depreciation method applied to the fixed assets held by the

Company. Lease assets related to finance lease transactions without title transfer:

Depreciated by the straight-line method, with the lease period counted as their useful lives and no

residual value. Finance lease transactions without title transfer (of which the starting dates of

lease transaction are prior to the beginning of the first consolidated fiscal year to which the

Accounting Standard No. 13 "Accounting Standard Concerning Lease Transactions" were

applied) are accounted for as operating leases.

(iii) Treatment of deferred assets

(a) Bond issuance cost

Depreciated by the straight-line method for a period of time up to the redemption of bonds.

(iv) Reporting standards for important allowances

(a) Allowance for doubtful accounts

The Company makes this allowance for losses arising from doubtful account. For normal debts,

the amount of the allowance is determined using past default rates. In the case of specific debts

that are considered to be at risk of souring, the amount of the allowance is the amount that is

deemed unlikely to be recovered following an assessment of the individual debt concerned.

(b) Provision for bonuses

The Company makes this allowance for employees' bonus payments based on estimated bonus to

be paid in this consolidated fiscal year.

(c) Provision for directors' bonuses

The Company makes this allowance for directors' bonus payments based on estimated bonus to be

paid in this consolidated fiscal year.

(d) Provision for directors' retirement benefits

The Company makes allowance for directors’ retirement benefits at the end of the fiscal year in

accordance with the Company’s internal rules. The Company abolished the directors’ retirement

benefits in June 2006, and no allowance for this benefit is recorded thereafter.

(v) Accounting for retirement benefits

(a) Attributing expected retirement benefits to periods

Retirement benefit obligations are calculated by attributing expected retirement benefits to a

period up to the end of the consolidated fiscal year under review on a point basis.

(b) Treatment of actuarial gains or losses and past service costs

Actuarial gains or losses are recognized commencing with the consolidated fiscal year following

their accrual and are amortized ratably on a straight-line basis over a specified number of years (8

years), which does not exceed the average remaining years of service of employees at the time of

their accrual in each consolidated fiscal year. Past service costs are recognized as they are

incurred.

(vi) Accounting for important hedging activities

(a) Accounting for hedging activities

Deferred hedge accounting is adopted.

Interest rate swaps that meet certain conditions are accounted for according to exceptional

treatments, while forward exchange contracts that meet condition of appropriation are accounted

for according to such appropriation treatment.

(b) Hedging instruments and items hedged

Hedging instruments: Interest rate swap, forward exchange contracts

Items hedged: Interest on loans, Interest on bonds, accounts payable in foreign currencies

(c) Hedging policy

The Company enters into derivative contracts in order to hedge against the risk of fluctuations in

interest rates and currency exchange rates in the amount not exceeding the accounts payable

relating thereto.


19

(d) Evaluation of the efficacy of hedging activities

The performance of the hedging instruments and the items hedged is compared using their total

amount of fluctuations in the market, based on which the efficacy is evaluated.

However, evaluation of the efficacy of the interest rate swaps subject to the specific treatment is

omitted.

(vii) Amortization method and amortization period of goodwill

Goodwill is amortized using the straight-line method over its estimated useful life determined for

each business combination, not exceeding twenty years. However, goodwill which is fairly

immaterial is included as an expense in the consolidated fiscal year of its occurrence.

(viii) Definitions of cash used in the consolidated cash flow statements

Cash and cash equivalents include cash at hand, highly liquid deposits at banks and short-term

investments with negligible risk of fluctuation in value and maturities of less than three months.

(ix) Other accounting policies for the preparation of consolidated financial statements

(a) Treatment of consumption tax

Consumption tax is treated outside of the financial statements.

(b) Application of consolidated taxation system

The consolidated taxation system is being used.

(Changes in Accounting Policies)

(Adoption of Accounting Standard for Retirement Benefits, etc.)

The Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May 17, 2012) and the

Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012) have

been adopted in the preparation of consolidated financial statements beginning with the consolidated fiscal

year under review (with the exception of provisions set forth in Article 35 of the Accounting Standard for

Retirement Benefits and Article 67 of the Guidance on Accounting Standard for Retirement Benefits).

Accordingly, we adopted an accounting method where the amount of retirement benefit obligations is

recognized as a net defined benefit liability, and therefore actuarial gains or losses that are yet to be

recognized are reported as a net defined benefit liability.

In accordance with transitional accounting as stipulated in article 37 of the Accounting Standard for

Retirement Benefits, the amounts affected by this change in the consolidated fiscal year under review were

either added to or deducted from the remeasurements of defined benefit plans, which are included in

accumulated other comprehensive income.

As a result, as of the end of the consolidated fiscal year under review, a net defined benefit liability

totaling 37,447 million yen was recognized and accumulated other comprehensive income declined 260

million yen.

In the meantime, net asset value per share dropped 2.52 yen.

(Changes in Presentation)

(Consolidated Balance Sheets)

Goodwill, which was included in other intangible fixed assets in the previous consolidated fiscal year, is

presented as a separate line item beginning with the consolidated fiscal year under review because of its

increased qualitative materiality. In order to reflect these changes, we made a revision to the previous

fiscal year's consolidated financial statements.

Due to this revision, 5,939 million yen, which was posted as “other” in intangible fixed assets in the

previous fiscal year's consolidated balance sheets, was reposted as “goodwill” totaling 2,403 million yen

and “other” totaling 3,535 million yen.

(Segment Information, etc.)

1. Overview of Reporting Segments

The Company’s reporting segments are regularly reviewed by the Board of Directors using the

segregated financial information available within each segment to determine the allocation of

management resources and evaluate business results.


20

The Group is operating business by categorizing products and services of consolidated subsidiaries

under the wings of the Company, which is a pure holding company, into three business segments.

Therefore, the Company uses the three reporting segments of “Delivery Business”, “Logistics

Business”, and “Real Estate Business” based on the said segments.

Starting with the consolidated fiscal year under review, SG HOLDINGS GLOBAL PTE. LTD., which

was previously included in the logistics businesses segment, is reported as adjustments in the “all

company (common)” segment since it has been shifted to a holding company overseeing overseas

business operations. Accordingly, the Company has prepared and disclosed the segment information for

the previous consolidated fiscal year based on the categorization of reporting segments for the

consolidated fiscal year under review.

Main products and services of each reporting segment

Reporting segment Major products and services

Delivery Business Hikyaku Express, Hikyaku Cool Express, Hikyaku Mail Express, Hikyaku Air Express, etc.,

Moving transportation, Route delivery service, Charter transportation, Installation

transportation, Art transportation, Collective delivery services, Food delivery service

Logistics Business Lump-sum acceptance of orders for logistics services, Development of logistics systems,

Control and management of inventory and orders placed and received, Management of

distribution centers, Warehousing, Transportation using public transport, Sgx (international

delivery service), International air and marine transportation services

Real Estate Business Real estate leasing and management, Real estate development, Real estate fund, Renewable

energy supply

2. Methods Used to Calculate Operating Revenue, Income or Loss, Assets, and Other Items by

Reporting Segment

The accounting method used for the reported business segment is the same as the one used for

“Significant Items Relating to the Preparation of Consolidated Financial Statements.”

Profit by reporting segment is stated on an operating income basis. Amounts for intersegment

transactions or transfers are calculated based on market prices.


21

3. Information on Operating Revenue, Income or Loss, Assets, and Other Items by Reporting

Segment


(Unit: million yen)

Delivery

Business

Logistics

Business

Real Estate

Business

Other

(Note 1) Total

Adjustments

(Note 2)

Amounts on

consolidated

financial

statements

(Note 3)

Operating revenue

Outside customers

Operating revenue

from internal

transactions between

different segments /

transfer of balances

between different

segments

709,441

37,606

54,872

7,949

12,377

2,555

58,395

60,971

835,086

109,083

-

(109,083)

835,086

-

Total 747,048 62,821 14,932 119,366 944,170 (109,083) 835,086

Segment income 36,373 344 3,158 4,313 44,190 (806) 43,383

Segment Asset 389,874 35,245 90,827 70,300 586,248 (26,778) 559,469

Other items

Depreciation and

amortization

Increase in property,

plant and equipment

and intangible fixed

assets

13,890

7,942

884

1,431

2,095

14,084

1,402

2,351

18,273

25,809

631

1,486

18,905

27,295

(Note) 1. The “Other” includes product sales, insurance agent, fuel sales, automobile services, automobile sales,

manufacture of auto bodies, system sales and maintenance, e-collect service, and temporary staffing service and

providing staffing services under contract.

2. The details of adjustments are as follows:

(1) The (806) million yen segment income adjustment includes 5,586 million yen in eliminations for

intersegment transactions and (6,393) million yen of companywide expenses not allocated to the respective

reporting segments. Companywide expenses are primarily the Company’s operating expenses.

(2) The (26,778) million yen segment asset adjustment includes (81,207) million yen in eliminations for

intersegment transactions and 54,428 million yen of companywide assets not allocated to the respective

reporting segments. Companywide assets are primarily the Company’s surplus funds and funds for

long-term investments (cash and deposits, investment securities).

(3) The 631 million yen depreciation adjustment is primarily depreciation of companywide assets not allocated

to the respective reporting segments.

(4) The 1,486 million yen adjustment for an increase in property, plant and equipment and intangible fixed

assets is the amount of companywide capital investments not allocated to the respective reporting segments.

3. Segment income is adjusted to operating income of consolidated financial statements.


22


(Unit: million yen)

Delivery

Business

Logistics

Business

Real Estate

Business

Other

(Note 1) Total

Adjustments

(Note 2)

Amounts on

consolidated

financial

statements

(Note 3)

Operating revenue

Outside customers

Operating revenue

from internal

transactions between

different segments /

transfer of balances

between different

segments

712,566

36,022

80,935

7,719

4,589

4,666

59,358

70,941

857,449

119,349

-

(119,349)

857,449

-

Total 748,589 88,654 9,255 130,299 976,799 (119,349) 857,449

Segment income 39,119 336 2,805 5,006 47,268 (1,674) 45,594

Segment Asset 396,491 58,138 119,981 68,404 643,015 (57,784) 585,230

Other items

Depreciation and

amortization

Increase in property,

plant and equipment

and intangible fixed

assets

14,831

22,816

1,293

1,820

3,339

21,975

1,289

1,871

20,753

48,483

632

421

21,385

48,905

(Note) 1． The “Other” includes product sales, insurance agent, fuel sales, automobile services, automobile sales,

manufacture of auto bodies, system sales and maintenance, e-collect service, and temporary staffing service and

providing staffing services under contract.

2. The details of adjustments are as follows:

(1) The (1,674) million yen segment income adjustment includes 6,189 million yen in eliminations for

intersegment transactions and (7,864) million yen of companywide expenses not allocated to the respective

reporting segments. Companywide expenses are primarily the Company’s operating expenses.

(2) The (57,784) million yen segment asset adjustment includes (93,222) million yen in eliminations for

intersegment transactions and 35,437 million yen of companywide assets not allocated to the respective

reporting segments. Companywide assets are primarily the Company’s surplus funds and funds for

long-term investments (cash and deposits, investment securities).

(3) The 632 million yen depreciation adjustment is primarily depreciation of companywide assets not allocated

to the respective reporting segments.

(4) The 421 million yen adjustment for an increase in property, plant and equipment and intangible fixed assets

comes from (302) million yen in eliminations for intersegment transactions and the companywide capital

investments totaling 724 million yen not allocated to the respective reporting segments.

3. Segment income is adjusted to operating income of consolidated financial statements.


23

5. Non-Consolidated Financial Statements

(1) Balance Sheets

(Unit: million yen)

FY2013

(March 20, 2014)

FY2014

(March 20, 2015)

Assets

Current assets

Cash and deposits 45,720 23,954

Operating accounts receivable 327 323

Prepaid expenses 20 23

Deferred tax assets 28 24

Short-term loans receivable 3,273 10,640

Current portion of long-term loans 12,948 28,229

Accounts receivable-other 6,242 6,356

Other 504 384

Total current assets 69,065 69,937

Fixed assets

Property, plant and equipment

Buildings (net) - 0

Machinery and equipment (net) 13 11

Tools, furniture and fixtures (net) 2 16

Lease assets (net) 7 12

Total property, plant and equipment 23 40

Intangible fixed assets

Right of trademark 12 9

Software 4 13

Total intangible fixed assets 16 22

Investments and other assets

Investment securities 3,549 4,468

Stocks of subsidiaries and affiliates 190,359 196,417

Long-term loans receivable 166,247 161,104

Long-term prepaid expenses 18 22

Other 163 178

Total investments and other assets 360,338 362,192

Total fixed assets 360,378 362,255

Deferred assets

Bond issuance cost 204 162

Total deferred assets 204 162

Total assets 429,648 432,354


24

(Unit: million yen)

FY2013

(March 20, 2014)

FY2014

(March 20, 2015)

Liabilities

Current liabilities

Short-term loans payable 60,520 92,560

Current portion of long-term loans payable 55,134 23,138

Lease obligations 1 3

Accounts payable-other 747 1,014

Accrued expenses 632 724

Income taxes payable 5,655 4,587

Provision for bonuses 26 33

Other 34 117

Total current liabilities 122,753 122,181

Noncurrent liabilities

Bonds payable 9,000 9,000

Long-term loans payable 134,637 131,479

Lease obligations 5 9

Provision for retirement benefits 17 69

Deferred tax liabilities 75 391

Other 427 380

Total non-current liabilities 144,163 141,331

Total liabilities 266,917 263,512

Net assets

Owner’s equity

Capital stock 11,882 11,882

Capital surplus

Legal capital surplus 109,089 109,089

Total capital surplus 109,089 109,089

Retained earnings

Other retained earnings

General reserve 30,000 30,000

Retained earnings brought forward 15,189 21,628

Total retained earnings 45,189 51,628

Treasury stock (3,461) (4,421)

Total owner’s equity 162,700 168,179

Valuation and translation adjustments

Valuation difference on available-for-sale securities 356 949

Deferred gains or losses on hedges (325) (286)

Total valuation and translation adjustments 30 662

Total net assets 162,731 168,842

Total liabilities and net assets 429,648 432,354


25

(2) Statements of Income

(Unit: million yen)

FY2013


2014)

FY2014


2015)

Operating revenue 13,290 17,518

Operating cost 3,732 3,636

Operating gross profit 9,557 13,881

General and administrative expenses 4,313 4,532

Operating income 5,244 9,349

Non-operating income

Interest income 9 7

Dividends income 97 106

Other 26 33

Total non-operating income 133 147

Non-operating expenses

Interest expenses 0 0

Other 0 -

Total non-operating expenses 0 0

Ordinary income 5,377 9,496

Extraordinary loss

Loss on retirement of noncurrent assets - 0

Compensation for cancellation of contracts 50 -

Other 5 -

Total extraordinary loss 55 0


Income taxes-current (3) 42

Income taxes-deferred 169 (14)

Total income taxes 166 27

Net income 5,155 9,468


26

(3) Statements of Changes in Net Assets


(Unit: million yen)

Owner’s equity

Capital

stock

Capital surplus Retained earnings

Treasury

stock

Total

owner’s

equity

Legal

capital

surplus

Total

capital

surplus

Other retained

earnings Total

retained

earnings General

reserve

Retained

earnings

brought

forward


beginning of fiscal period 11,383 108,589 108,589 30,000 12,748 42,748 - 162,720


period

Issuance of new shares 499 499 499 - 999

Dividends from surplus - (2,714) (2,714) (2,714)

Net income - 5,155 5,155 5,155

Purchase of treasury stock - - (3,461) (3,461)


than owner’s equity - - -


the period 499 499 499 - 2,441 2,441 (3,461) (19)

Balance as of March 20, 2014 11,882 109,089 109,089 30,000 15,189 45,189 (3,461) 162,700


Total net assets Valuation

difference on

available-for-sale

securities

Deferred gains or

losses on hedges

Total valuation

and translation

adjustments


beginning of fiscal period 189 - 189 162,910


period

Issuance of new shares - 999


Net income - 5,155

Purchase of treasury stock - (3,461)


than owner’s equity 166 (325) (159) (159)


the period 166 (325) (159) (179)

Balance as of March 20,

2014 356 (325) 30 162,731


27


(Unit: million yen)

Owner’s equity

Capital

stock

Capital surplus Retained earnings

Treasury

stock

Total

owner’s

equity Legal

capital

surplus

Total

capital

surplus

Other retained

earnings

Total

retained

earnings General

reserve

Retained

earnings

brought

forward


beginning of fiscal period 11,882 109,089 109,089 30,000 15,189 45,189 (3,461) 162,700


period

Dividends from surplus - (3,029) (3,029) (3,029)

Net income - 9,468 9,468 9,468

Purchase of treasury stock - - (960) (960)


than owner’s equity - - -


the period - - - - 6,439 6,439 (960) 5,479

Balance as of March 20, 2015 11,882 109,089 109,089 30,000 21,628 51,628 (4,421) 168,179


Total net assets Valuation

difference on

available-for-sale

securities

Deferred gains or

losses on hedges

Total valuation

and translation

adjustments


beginning of fiscal period 356 (325) 30 162,731


period


Net income - 9,468

Purchase of treasury stock - (960)


than owner’s equity 592 39 632 632


the period 592 39 632 6,111

Balance as of March 20,

2015 949 (286) 662 168,842

Documents

Financial Report for Fiscal 2014 (Japanese GAAP ... · June 2014, the Group acquired 51.4% of shares in EXPOLANKA HOLDINGS PLC, which operates in ASEAN countries, Africa, the United