20060412

Financial Results Briefing for the December 2005 Term: 

Financial Results Briefing for the December 2005 Term March 3, 2006 SBS Co., Ltd. Securities code: 2384

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Table of Contents І. Financial Results for the December 2005 Term & Earnings Forecast for the December 2006 Term ІІ. Post-M&A Activities and Business Strategies III. Briefing on Balance Sheet IV. Future Efforts

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Financial Results for the December 2005 Term & Earnings Forecast for the December 2006 Term

　Consolidated Statement of Income for December 2005 Term: 

　Consolidated Statement of Income for December 2005 Term  Foods Lec contributed to the consolidated results for the full year.  　TL Logicom (former Tokyu Logistics) and two other companies contributed for the half-year.  　Same-day delivery business and human resources business continued steady growth (Unit: Million Yen)

　Consolidated Segment Information for December 2005 Term: 

　Consolidated Segment Information for December 2005 Term (Unit: Million Yen) (Unit: Million Yen)

　Consolidated Segment Information for December 2005 Term: 

　Consolidated Segment Information for December 2005 Term Logistics business  General distribution and food distribution: 　 Foods Lec’s performance has been strong 　 TL Logicom started to contribute to earnings from the second half. Post M&A activities of Foods Lec (former Yukijirushi Butsuryu) & TL Logicom (former Tokyu Logistics)  (Refer to case study in later slides)  Same-day delivery service: 　 Income & profit increased thanks to competitor withdrawal　 Expanded base for network logistics  Moving service business:　 Explored marketing methods/incurred costs in organizational realignment Retreated from unprofitable free paper business  (Refer to case study in later slides)

　Consolidated Segment Information for December 2005 Term: 

　Consolidated Segment Information for December 2005 Term Marketing business Income increased, yet competition remains stiff in preparation for postal privatization. Earnings are sluggish. Move of industry reorganization. This fiscal year would be the bottom in terms of financial performance. PAM Co.,Ltd. joined SBS Group. Financial contribution from FY2006.　 Human resources business New operational bases aggressively launched during the first half made positive contribution to sales Significant rise in recruitment cost suppressed earnings Other businesses　 　  　Environmental services business Cost for Yokohama Facility launch　was a burden, resulting in red for the full year, 　  　Financial services business Re-acquisition of Omiya Center Building. Built qualifications in real estate liquidation techniques.

　Consolidated Balance Sheet for December 2005 Term: 

　Consolidated Balance Sheet for December 2005 Term (Unit: Million Yen)

　Consolidated Cashflow Statement for December 2005 Term: 

　Consolidated Cashflow Statement for December 2005 Term  　CF from operating activities: Increase in profits due to group expansion. Increase in depreciation expense 　　　  　CF from Investing/financing activities： Acquisition of TL Logicom. Funds procured by arranging a loan for the acquisition. (Unit: Million Yen)

　Consolidated Performance Forecast for December 2006 Term: 

　Consolidated Performance Forecast for December 2006 Term  　Full-year contributions will be made by TL Logicom, Zentsu, etc.  　Focus on 3PL/Joint-distribution business (rollout of LAOX project)  　Integration of headquarters function (April). Pursuit of existing M&A synergy  　Seek further business expansion (Unit: Million Yen)

　Consolidated Earnings Forecast by Segment for December 2006 Term: 

　Consolidated Earnings Forecast by Segment for December 2006 Term (Unit: Million Yen) (Unit: Million Yen)  　Logistics business: Focus on growth of 3PL business 　　  　Marketing business: Industry trend will be set this year ahead of postal service privatization 　Expectation of business opportunities for SBS is high.　　　　　　　　　　　　　　　　　　  　Human resources business: Strong demands for general assistance work/work in warehouses, but impact of staff shortage is a concern. Earnings improved at new operational bases from FY2005.

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Post-M&A Activities and Business Strategies

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　Recognizing business environment Expansion in size and business offerings Integrated business expansion strategy of M&A + internal growth Enhancing business portfolio Enhance corporate strength（Examples in Case Studies） 1) Strengthen sales capability 2) Pursue synergy of SBS group 3) Strengthen capability to respond to clients’ needs Measures (strategies) Changes in business environment Challenges Privatization of postal services Sophisticated demands from Clients Industry trend toward oligopoly Escalating fuel cost Rise in labor cost Establish competitive advantage by strengthening comprehensive capability of SBS group Much closer relationship-building with customers Secure earnings by building more effective business model

　Integrated Business Expansion Strategy of M&A + Internal Growth: 

　Integrated Business Expansion Strategy of M&A + Internal Growth M&A + Internal Growth 　 Selecting M&A targets in alignment of our aim of being a business infrastructure provider Build track records in turn-around businesses Enhance Corporate Strength Strengthen sales capability Revise incentives Reform corporate culture Share success experiences via post-M&A support to group companies Pursuit of synergy effects Build advanced logistics facilities by providing know-how in logistics system design/development Review/Assess effective use of real estate Liquidation Logistics REIT Know-how for efficient use of assets (One of our core competency)　 1) Execution of strategic and sound M&A 2) Swift integration of newly acquired companies (Business co-ordination /Group-wide network) 3) Efficient and effective use of assets　(Group-wide)　

　Strengthening Business Portfolio: 

　Strengthening Business Portfolio Provide comprehensive service catering to outsourcing needs of businesses – as a business infrastructure provider Realize cost competitiveness and capability to respond to sophisticated needs Warehouse management system　（WMS) Medical analysis system solution Logistics system Same-day delivery/nationwide delivery Food distribution/Vehicle transportation Overseas distribution/moving service business Market research Sales promotion Online mail order business, etc. Marketing business Logistics business Information service business Business areas to drive growth in the future Expand current business segments from 3 pillars to 6 Establish leasing business Securitization/liquidation of real estate Others Financial services business Collaboration with logistics business Collection of large refuse from households Strengthening industrial waste disposal business Temporary staffing service Staff subcontracting service Human resources business Environmental services business Current three pillars Logistics business： Acquired Zentsu (Sales: 10 billion yen), which is highly regarded for its fresh foods storing/processing skills and home-delivery service (deal closing on January 5) Financial services business： In 2005, acquired Carlyle-held interest in real estate which had been acquired jointly by our A-MAX financial subsidiary and Carlyle in 2004. Marketing business： Took 20% stake in PAM, which engages in advertisement planning and production (mainly brochures for financial products) and later made it a wholly-owned subsidiary through a stock swap. Recent efforts

　Case Study 1: Efforts in Foods Lec ①: 

　Case Study 1: Efforts in Foods Lec ① At the time of acquisition by SBS Foods Lec sales were mainly generated through transportation service, work in warehouses, and auto-leasing business contracted from Snow Brand Group and its affiliates. (including former Snow Brand Group companies and its affiliates) (Approx. 70% of the total sales) Sales environment has been tough. Vehicle finance lease to partner transportation companies is a unique business area. Challenges Maintain quality level, expand into broader range of refrigerated/general food area and secure earning base Drive deployment of consolidated distribution business (3PL) leveraging the synergy of SBS group Expand auto-leasing business to the entire group

　Case Study 1: Efforts in Foods Lec ②: 

　Case Study 1: Efforts in Foods Lec ② Efforts and specific results New customer cultivation Contracted the entire logistics business from Sweet Garden and created a business division. Strengthen Consolidated distribution business Strengthen consolidated inland distribution business leveraged on the Sweet Garden case Cooperate/coordinate with Zentsu in business deployments within the Kanto region Leasing business division rollout Expand service provision by the entire group from the current scope of service provision to partner companies. Study growth strategy towards specializing in finance lease business for trucks Staff and system enhancement Planned investment amount for 2006: 2.4 billion yen Improvement of vehicle dispatching/hiring control and efficiency in wide-area transportation Concentrated vehicle dispatch control centers for wide-area transportation in the Chubu Branch Office, and improved loading and capacity operating rates.

　Case Study 1: Efforts in Foods Lec ③: 

　Case Study 1: Efforts in Foods Lec ③ Performance Trend Refrigerated logistics business grew steadily, focused on consolidated distribution business Improving logistics profit rate is a challenge. Impact of accounting standard change in leasing business

　Case Study 2: Efforts in TL Logicom ①: 

Performance of logistics business was stable. Larger profit contribution provided from real estate leasing business. Existing customer base has been stable. New customer base remained small. Close to 20 percent of sales from Tokyu Group companies Sotetsu Transportation, Tokyu Unyu, and Tokyo Tsuun have merged over the course of the past two years. (Integration process, both in terms of HR and business operations, of the three former companies is ongoing) 　Case Study 2: Efforts in TL Logicom ① At the time of acquisition by SBS Cultivation of new customers Increase profitability of logistics business Effective use of real estate Faster information sharing among sales offices and further strengthening of operational coordination. Organizational Reformation　 Challenges

　Case Study 2: Efforts in TL Logicom ②: 

　Case Study 2: Efforts in TL Logicom ② Efforts and specific results Strengthening sales capability in logistics business Promotion of new customer cultivation by efforts such as establishment of Sales Development Division. 　　Example：　SBS group won a contract to handle the entire logistics operation for LAOX. (Refer to the next slide for details) Group-wide sales efforts based on coordination among SBS group companies, led by TL Logicom. (A-Max：real estate asset management, AT&C：warehouse management system) Drive further business deployments of 3PL service, taking the LAOX deal as a model case Established a real estate division in order to promote effective use of real estate Concentrated real estate-related businesses. Promotion of more effective use of assets and efficient business operations. Refinement of operation management Execute efficient vehicle dispatch control by enhancing information sharing and operational coordination among branch offices. Staff enhancement Reformation of management/human resources Concentrate into a 3-business-division system from 8 divisions. Quicker management decisions Reform in business management and promotion of junior staff

　Case Study 2: Efforts in TL Logicom ③: 

　Case Study 2: Efforts in TL Logicom ③ Business tie-up with LAOX Laox’s business management strategy Switch over to “Lifestyle providing business” capable of responding to changes in the needs of consumers and society. Capture unyielding support from customers by building “a business model for small trade area” in close relationship with local communities. Realize improved operational efficiency and cost reductions Service enhancement including same-day delivery Improvement in logistics by bringing down logistics costs Needs for supply chain management Remove unprofitable products by thorough item-by-item control Enhance fresh atmosphere of sales floors by placing more popular products. Higher added value Renewal of E-commerce system and strengthening home-delivery function Strengthen home appliance handling service at the time of moving Handling of home appliance disposal Needs of logistics/supply chain management SBS’s sales approach Formed a project team as SBS group (Studied solutions to respond to various customer needs in addition to efforts to cut costs and improve efficiency) 　 Proposed a one-stop solution responding to customer needs Details of solution (Contract signed on December 20) Won a contract to handle entire logistics center operation and distribution to stores TL Logicom: Center operation. Distribution to stores AT&C: Logistics system design Set up a joint venture: home appliance installation service in conjunction with moving service Converge LAOX home-appliance sales channel and SBS group moving service channels such as Duck Packaged sales of moving service and home appliance installation service Recycling business of home appliance disposal LAOX and SBS’s environmental service division (Sogo Butsuryu System) are jointly working on the recycling business for home appliances disposed of by LAOX customers SBS group coordination led by TL Logicom. Provision of a total solution. Better correspondence　to more detailed client needs through enhanced sales capability. Group effort to pursue synergy, utilizing group resources.

　Case Study 2: Efforts in TL Logicom ④: 

　Case Study 2: Efforts in TL Logicom ④ Performance Trend Aim for increased income and profit for FY 2006. Operating profit ratio expected to improve 1 point from FY2004, the most recent financial results for a full 12 months.

　Case Study 3: Summary of Efforts in Moving Service Business: 

　Case Study 3: Summary of Efforts in Moving Service Business At the time of acquisition by SBS Both Duck and Sakura Transportation have been struggling in its core moving business. Sakura Transport’s free paper/flyer distribution business has been incurring losses. Challenges Concentrate on the core business. Increase profitability. Strengthening marketing capability 　　(Making the company name well known to customers is the important issue. ) Efforts and specific results Establish “new Duck” (Duck Moving Group and Sakura Transportation integrated their businesses in July 2005) Promote efficiency in business management by integration of　B2C moving services Withdraw from unprofitable free paper business Focus on the core business of moving service Change in marketing policy Switch to marketing via TV commercials instead of via flyers Promote Duck brand recognition through TV commercials which converged with the Internet. Duck Moving Group joined SBS Group in January 2005 and Sakura Transport Joined it in March 2005 Entered moving service (for individual customers) , first B2C business for SBS group.

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III.　Briefing on Balance Sheet

　Financial Standings: Balance Sheet Summary: 

　Financial Standings: Balance Sheet Summary Actual net debt/equity ratio is lower than 1.00 　Current consolidated balance sheet 　Appraisal gains in real estate/investment securities （*） 　Goodwill on consolidation (negative goodwill) 　　Net debt/equity ratio　2.01 　　Equity ratio 17% Cash and cash equivalents　 7.7 billion yen Current assets　 15.5 billion yen Fixed assets　 56.2 billion yen (Real estate)* (Investment securities)* Current liabilities　 12.5 billion yen Interest-bearing debt　 30.3 billion yen　　　 CB　5 billion yen Fixed liabilities 10.4 billion yen Goodwill on consolidation　7.5 billion yen Minority interests　1.8 billion yen Shareholders’ equity 11.9 billion yen Total assets　79.4 billion yen Net asset　 13.7 billion yen Cash and cash equivalents 　7.7 billion yen Current assets 　 15.5 billion yen Fixed assets　56.2 billion yen (Real estate)* (Investment securities)* Current liabilities 　12.5 billion yen Interest-bearing debt 　 30.3 billion yen 　　　 CB　5 billion yen Fixed liabilities 　10.4 billion yen Goodwill on consolidation 　7.5 billion yen Minority interests 　1.8 billion yen Total assets 　 79.4 billion yen Actual net asset　 26.2 billion yen 　Actual consolidated balance sheet (image) 　Consideration (1)　Depreciation of goodwill on consolidation (negative goodwill) 　Consideration (2)　Conversion of Alpine bond (CB) 　 Net debt/equity ratio (actual) 　　0.86 　 Equity ratio (actual) 　　　 33% Fixed liabilities 　10.4 billion yen Shareholders’ equity 　11.9 billion yen

　Balance Sheet: Assets owned by SBS Group (Major commercial properties for lease): 

　Balance Sheet: Assets owned by SBS Group (Major commercial properties for lease)

　Balance Sheet: Assets owned by SBS Group　(Major logistic facilities): 

　Balance Sheet: Assets owned by SBS Group　(Major logistic facilities)

　Balance Sheet: Assets Held by SBS Group　 (Investment Securities): 

　Balance Sheet: Assets Held by SBS Group　 (Investment Securities) Investment securities (This summary only relates to listed stocks)  Listed stocks:　46 issues Breakdown : Financial institutions　 9 issues Client companies　 27 issues Partner companies, etc. 10 issues  Book value (as of December 31, 2005) 　: Approx. 3.2 billion yen  Market value (as of December 31, 2005) : Approx. 6.1 billion yen 　

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IV. Future Efforts

　Efforts in FY 2006: 

　Efforts in FY 2006 ■　Strategic Priorities Targets to be achieved in this term ☆　Consolidated sales: 125 billion yen　　　　　　　　 ☆　Consolidated ordinary profit:　 4.4 billion yen Promote 3PL business 　　　*　Efforts by TL: Execute LAOX project Receive continuous orders for ongoing projects 　　　*　Efforts by FL: Promote joint distribution business Promote cooperation with Zentsu Drive facility development leveraged on real estate liquidation technique 　　　*　Effective use of assets owned by TL Develop logistics facility in Yokohama area Expand warehouse in the scope of our mid-term plan (Approx. 50,000 tsubo now　　Approx. 100,000 tsubo)*1 　　　*　SBS’s efforts Real estate development in view of mid-term strategy for the entire SBS group (Approximately 30,000 – 50,000 tsubo planned) *1 More efficient business management through 　 　integration of headquarters function Improvement in unprofitable businesses Acting on issues regarding environmental concern Note *1 ： 1 Tsubo = Approx. 3.3㎡

　Future Efforts: Image of Strategy　　～　Efficient Service Model Leveraged on SBS’s Comprehensive Capabilities　～: 

　Future Efforts: Image of Strategy　 　～　Efficient Service Model Leveraged on SBS’s Comprehensive Capabilities　～ Optimized logistics facilities/warehouses (Use facilities within/outside SBS group effectively) Comprehensive 3PL solution based on coordination among SBS group member companies Realize high added-value for our customers via 3PL solution driven by SBS group’s collective strength SBS Group General distribution/ consolidated distribution TL Logicom Foods Lec WMS development (Warehouse management system) AT&C SBS Logitem Zentsu Acquisition/development of logistics sites (Use of real estate liquidation scheme) A-MAX Distribution support service in warehouse/ general assistance work (Temporary staff dispatching service) SBS Staff Provide high value-added 3PL service for customers Improve efficiency in logistics operation Lower costs Build closer Client　 Relationships 　based on trust

　Summary of SBS Group: 

　Summary of SBS Group Mailing service business Environmental services business Human resources outsourcing business Financial services business Logistics/same-day delivery/3PL/moving service Marketing planning business System development business Logistics consulting business SBS Postway Co., Ltd. Forward, Inc. Clients Marketing Partner Co., Ltd. PAM Co., Ltd. Sogo Butsuryu System Co., Ltd. SBS Staff Co., Ltd. CS-Net Co., Ltd. AT&C Co., Ltd. Big Bang Co., Ltd. A-MAX Co., Ltd. Fuji Sogo Logistics Research Center Co., Ltd. SBS Logitem Co., Ltd./ Duck Co., Ltd. Foods Lec Co., Ltd. / Transworld Co., Ltd. TL Logicom Co., Ltd. (Former business name: Tokyu Logistics) Nihon Kamotsu Kyuso Co., Ltd. / Izu Express Trucking, Inc. Zentsu Corporation　(Joined SBS group in January 2006) Same-day delivery/general logistics service Logistics consulting System integration service Marketing planning/proposal offering Mailing service Recycling Transportation Staff dispatching General assistance work Refrigerated logistics service Real estate liquidation service  As of March 2006

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Cautionary Statement on this Forecast 　The purpose of this document is to provide information to investors. It is not meant to solicit sales. Descriptions related to future prospects in this document are based on our targets and forecasts and do not provide any assurance or guarantee. Please use this document with the full understanding that future earnings of SBS may differ from our present forecasts. While our descriptions on performance are prepared based on various data that are deemed reliable, SBS does not guarantee the accuracy or safeness of such. This document is provided on the basis that investors may use this document for their own purposes, upon their own judgment and responsibility, thus SBS, under any circumstances, does not accept any responsibility for the results of such use. Please visit our web site for IR information and inquires regarding IR issues. Contact Information Division: Corporate Planning Phone: 03-5655-6110 FAX： 03-5655-6180 E-mail： irinfo@sbs-group.co.jp Inquires Regarding Investor Relations　 TOP page IR information page