Member of Financial Accounting Standards Foundation

Summary of Consolidated Financial Statements for the Second Quarter, FY2015
April 30, 2015
Exchange: First Section of Tokyo Stock Exchange
Name of listed company:

GMO Payment Gateway, Inc.

Stock code:

3769

Representative:

Issei Ainoura

President &Representative Director

Contact:

Ryu Muramatsu

Executive Vice President

Tel: +81-3-3464-0182

Scheduled date of submission ofquarterly report

May 14, 2015

Scheduled date ofcommencement ofdividend payment-

Supplemental materials preparedfor financial results

Yes

Information meeting arranged
related to financial resultsYes (for institutional investors andanalysts)

URL: http://corp.gmo-pg.com/(Amounts rounded down to the nearest one million yen)

1.

Consolidated Financial Statements for the Second Quarter, FY2015(From October 1, 2014 to March 31, 2015)(1) Consolidated Financial Statements (Percentages denote the increase or decrease from the previous period)
Net sales
Operating income
Ordinary income
Net income
2Q FY2015
2Q FY2014

Million yen
4,162
3,487

%
19.4
27.7

Million yen
1,487
1,239

%
20.1
22.0

(Note) Comprehensive income: 2Q FY2015: 965 million yen (30.7%)

2Q FY2015
2Q FY2014

Net income per share
Yen
27.14
20.85

Million yen
1,530
1,242

%
23.2
21.7

Million yen
937
719

%
30.3
17.5

2Q FY2014: 738 million yen (19.5%)

Diluted net income per share
Yen
27.12
20.81

(Note)
1) In October 1, 2014, our company executed a 2-1 stock split. The values for the FY2014 are calculated on thesame base.
2) In order to appropriately display the net income per share, in regard to the stock attributed to the directors’
remuneration board incentive plan trust, it has the right to a claim of dividend, and is therefore, not included intreasury stock.
(2) Consolidated Financial Position

2Q FY2015
FY2014

Total assets
Million yen
31,912
24,613

Net assets
Million yen
7,264
6,815

Equity ratio
%
22.8
27.7

Net assets per shareYen
210.17197.15

Reference: Equity: 2Q FY2015: 7,260 million yen FY2014: 6,808 million yen(Note)In October 1, 2014, our company executed a 2-1 stock split. The values for the FY2014 are calculated on the same
base.
2.

Dividends
1Q

FY 2014
FY 2015
FY 2015 (forecast)

2Q
Yen
—
—

Yen
0.00
0.00

Yearly dividends
3Q
Fiscal Year end
Yen
Yen
—
30.00
—

18.00

Total
Yen
30.00
18.00

(Note) Revision of the most recently released dividend forecast: No
In October 1, 2014, our company executed a 2-1 stock split. The values for the FY2015(forecast) are calculated on
the same base.

3.

Consolidated Financial Forecast for the Fiscal Year Ending September 2015
(From October 1, 2014 to September 30, 2015)(Percentages denote an increase or decrease as compared with the previous period.)

Full year

Net sales
Million yen
%
8,656
20.1

Operating income
Million yen
%
2,974
20.1

Ordinary income
Million yen
%
2,985
18.1

Net income
Million yen
%
1,797
18.6

Net income per
share
Yen
52.02

(Note) Revision of the most recently released financial forecast: No

Notices:
(1)

(2)
(3)

(4)

Changes of important subsidiaries during the period (change of specific subsidiaries that lead to a change
in the scope of consolidation): No
Number of new subsidiaries: - (Name:), number of excluded subsidiaries: - (Name:)
Application of special accounting procedures for the execution of the financial statements: No
Changes in the accounting policy / changes in the accounting estimation / restatement of corrections[1] Changes associated with the revision of accounting policy, etc.: No[2] Changes other than [1]: No[3] Changes in accounting estimations: No[4] Restatement of corrections: No
Number of shares issued (common stock)[1] Number of shares issued at the end of
the term (including treasury stock)[2] Number of treasury stocks at the end of
the term[3] Average number of shares

2Q FY2015: 34,549,200

FY 2014: 34,538,400

2Q FY2015: 2,500

FY 2014: 2,278

2Q FY2015: 34,535,970

2Q FY2014: 34,494,678

1) In October 1, 2014, our company executed a 2-1 stock split. The number of shares issued at the end of the term,
the number of treasury stocks at the end of the term, and the average number of shares during the period are
calculated on the assumption that the said stock split was implemented at the beginning of the previous fiscal year.
2) In order to appropriately display the number of treasury stocks at the end of the term and average number ofshares, in regard to the stock attributed to the directors’ remuneration board incentive plan trust, it has the right to aclaim of dividend, and is therefore, not included in treasury stock.

*

Indication of the implementation status of quarterly review procedures
These quarterly financial statements are not subject to the quarterly review procedures of the Financial
Instruments and Exchange Act. At the time of disclosure of these quarterly financial statements, the quarterly
financial statement review procedures of the Financial Instruments and Exchange Act had not been completed.

*

Explanation of the proper use of financial forecasts and other important notes
The above forecasts are outlooks based on information currently available, and include various uncertain
factors. Actual performance may differ substantially from the forecasts due to changes in business conditions
and other factors. For the assumption on which financial forecasts are based and matters to be considered inusing financial forecasts, please refer to“(3) Review of consolidated earnings forecasts and other forecasts”
under“1. Qualitative Information on Consolidated Financial Statements for the Quarter” on page 4 of theattachment.

Table of contents of attachment
1. Qualitative Information on Consolidated Financial Statements for the Quarter(1) Qualitative information on consolidated operating results(2) Qualitative information on the consolidated financial condition(3) Review of consolidated earnings forecasts and other forecasts
2. Items concerning summary information (Notes)(1) Changes of important subsidiaries(2) Application of special accounting procedures for the execution of
the financial statements(3) Changes in the accounting policy/ changes in the accounting
estimation / restatement of corrections
3. Consolidated quarterly financial statements(1) Consolidated quarterly balance sheet

2
2
3
4
4
4
4
4
5
5

(2) Consolidated quarterly statements of income and consolidated quarterly
statement of comprehensive income

7(3) Consolidated statements of cash flows

9(4) Notes to consolidated quarterly financial statement

10(Notes regarding the premise for continuance)(Note when there is a significant fluctuation in the amount of shareholders’ equity)

－

1 －

10
10

1. Qualitative Information on Consolidated Financial Statements for the
Quarter(1)

Qualitative information on consolidated operating results
Regarding the economic environment in Japan during the period under review, the demand sank following the spike indemand ahead of the consumption tax hike has been moderating and the economy is gradually on the mend, with theeconomic and fiscal policy of the government and the monetary easing policy of the Bank of Japan as a background.
In regard to our core business, the BtoC EC market continues to grow thanks to a favorable external environment suchas broader use of smartphones as well as reforms in logistics, and e-commerce is also spreading in the market of salesof non-goods items such as services, as seen in new areas such as omni-channel, O2O, BtoB EC and CtoC EC.
In regard to the credit card field, credit card shopping is steadily growing, and people tend to make more purchases via
the Internet. Also, the non-face-to-face use of credit cards in the field of payment for everyday living expenses
continues to expand, such as payments for rent and medical costs, as well as utility charges and public funds. It is acertainty that opportunities to use credit cards will continue to increase.
Under such circumstances, the group has pressed on with its businesses in order to expand the scale of operations
described below.
The Group consists of GMO Payment Gateway, Inc. and its consolidated subsidiaries, GMO Epsilon, Inc. , GMO
PAYMENT SERVICE, Inc., GMO PAYMENT GATEWAY PTE. LTD. etc, and provides credit card payment processing
services and all related operations as a consolidated subsidiary of GMO Internet, Inc.
Our company and our subsidiary GMO Epsilon, Inc. provides companies that sell products on a non-face-to-face basiswith a payment processing service and, related to the payment-processing business, the means through which
payment processing by credit cards and other methods can be efficiently made.
The Group offers a broad range of services such as online payment and recurring payment services that respond to ourcustomers’ business category, size and payment type.
The number of merchants during the second quarter of the current consolidated fiscal year increased by 4,745 to
54,470 compared to the end of the previous consolidated fiscal year. The number and amount of processed payments
steadily increased.
Changes in number of operating stores
End of September

Number of operating
storesEnd of September End of September

End of September

2011

2012

2013

2014

32,062

38,94944,32849,725End of March 2015

54,470Note: Number of operating stores means the number of IDs assigned to each store to use the service. It shows thenumber of stores (merchants) which have an agreement with the Group, are connected to the system, and areable to process payments at any time in principle.
For online payment field, payment-processing service grew steadily and the business of GMO Epsilon, Inc. which
provides “Multi-Payment Service” to the merchants grew steadily, too.
For recurring payment field, we have continued to attempt to develop this field to enable using credit card for paying
utility charges, public funds and other monthly services closely connected with everyday life. We provide payment
methods to public institutions, such as the Japan Pension Service, and local governments, such as the Tokyo
Metropolitan government (TMG). During the period under review, it was decided that we would conduct the payment
operation in credit card payment for all taxation items for the Tokyo Metropolitan Government and the operation of the“Metropolitan Tax Credit Card Payment Site” (https://zei.tokyo) which the TMG has started since April 1, 2015.
Our subsidiary GMO Payment Service Inc. provides a “GMO Payment after delivery” service that allows the user to pay
after receiving the goods. The “GMO Payment after delivery” service has been adopted by an increasing number ofmerchants as a payment service with high level of consumers’ needs and has continued to perform favorably since its
introduction in May 2013.
As a value-added service making the best of the Group’s merchant base, we have made steady efforts to expand
services in areas related to the payment-processing business, such as the Online Advertising Service, providing SSL
server certifications, shipping services and early payment services.
During the period under review, we have started dealing with the “Chargeback Compensation Group Insurance” to－2 －reduce the damages of the member stores by unauthorized use of credit cards since March 16, 2015. And GMO
Epsilon, Inc., which is our consolidated subsidiary, has also started providing after us the service of funding for thegrowth of the merchants. Going forward, we will continue with our efforts to launch new products that will contribute tosolving our merchants’ problems.
With regard to overseas business, we established five oversea entity to provide GMO-PG Global Payment solutions toJapanese non-face-to-face businesses with a local presence and targeting local markets in South East Asia.
We have continued to promote funding activities through the “GMO Global Payment Fund” to form capital alliances withprospective payment-related businesses; in addition, the financial results of local payment processing companies inwhich we invest our fund have performed steadily. With a view to incorporating the huge growth potential of South East
Asia, which is the center of global growth, into our Group’s mid-to-long-term business growth, we will continue tointroduce new measures while creating a synergistic effect between “GMO-PG Global Payment” and “GMO Global
Payment Fund.”Consequently, the Group’s operating results for the cumulative second quarter of the current consolidated fiscal year
were as follows: Net sales amounted to 4,162,976,000 yen (an increase of 19.4% on a year-on-year basis); operating
income grew 20.1% on a year-on-year basis to 1,487,912,000 yen; ordinary income amounted to 1,530,567,000 yen(an increase of 23.2% on a year-on-year basis); and net income reached 937,361,000 yen (increase of 30.3% on a
year-on-year basis). Net sales consisted of an initial revenue of 248,466,000 yen (decrease of 20.1% on a year-on-yearbasis), running revenue of 2,288,822,000 yen (increase of 19.0% on a year-on-year basis) and merchant acquiring
service revenue of 1,625,686,000 yen (increase of 29.8% on a year-on-year basis)
Concerning operating expenses, while the solid performance of “GMO Payment after delivery” service saw a hike incost of sales, we were able to take advantage of the scale merit of the revenue growth and reduce our burden ofparallel operation by completing the transfer of our data center to strengthen our payment processing capacity since
September 2012. As a result, cost of sales amounted to 858,011,000 yen (a 22.2% increase on a year-on-year basis).
Selling, general and administrative expenses came to 1,817,052,000 (a 17.5% increase on a year-on-year basis).
Due to the equity income of affiliates and exchange earnings, non-operating income totaled 57,566,000 yen. Ratio of
ordinary income to net sales has increased to 36.8% from 35.6%.
In an effort to enhancement of collaboration-type business, we have promoted capital and business alliance byobtaining a part of shares of important affiliated stores and important business partners. However, we sold some of theshares due to the fact that some of the business partners were purchased by the listed company. By selling a part ofthe shares, we posted an extraordinary income of 30,766,000 yen.

(2) Qualitative information regarding the consolidated financial condition[1]

AssetsThe balance of total assets at the end of the second quarter of the current consolidated fiscal year was
31,912,988,000 yen, up 7,299,930,000 yen as compared with the end of the previous consolidated fiscal year.
This increase was mainly due to an increase of cash and deposits (+5,681,963,000 yen) and an increase ofinvestment securities (+400,642,000yen). The increase of cash and deposits was mainly caused by the increaseof deposits of merchants, in accordance with the merchant acquiring service agreement.
The deposits of merchants will mostly be paid out on the tenth of the next month, therefore the deposit balance
will decrease with receipt of deposits.

[2]

Liabilities
The balance of liabilities at the end of the second quarter of the current consolidated fiscal year was
24,648,143,000 yen, up 6,850,464,000 yen as compared with the end of the previous consolidated fiscal year.
This increase was mainly caused by an increase in deposits received of 6,577,046,000 yen, which was an effectof the increase in deposits received from merchants in accordance with the merchant acquiring service
agreement.

[3]

Net assets
The balance of net assets at the end of the second quarter of the current consolidated fiscal year was
7,264,845,000 yen, up 449,465,000 yen as compared with the end of the previous consolidated fiscal year. The
increase was mainly attributable to net income of 937,361,000 yen, with a decrease of 518,041,000 yen as aresult of a distribution of surplus.

[4]

Cash FlowsAt the end of the second quarter of the current consolidated fiscal year, cash and cash equivalents (the“Funds”) was 26,027,658,000 yen, up 5,678,349,000 yen as compared with the balance at the beginning of the－

3 －period. Cash flows at the end of the cumulative second quarter of the current consolidated fiscal year are as
follows.
Net cash provided by (used in) operating activities
Cash provided by operating activities during the cumulative second quarter of the current consolidated fiscal year
amounted to 6,861,352,000 yen (provided 1,913,530,000 yen for the corresponding period of the previous fiscal
year). This was mainly due to income before income taxes of 1,560,809,000 yen and an increase in deposits
received of 6,577,046,000 yen, after a payment of income taxes of 703,677,000 yen.
Net cash provided by (used in) investing activities
Cash used in investment activities totaled 670,794,000 yen (345,362,000 yen was used in the corresponding
period of the previous fiscal year.) This was mainly due to the acquisition of securities (434,046,000 yen) andintangible assets (161,167,000 yen).
Net cash provided by (used in) financing activities
Cash used in financing activities totaled 534,934,000 yen (426,399,000 yen was used in the corresponding periodof the previous fiscal year). This was primarily attributable to the dividend payment of 516,603,000 yen.

－

4 －

(3)

Review of consolidated earnings forecasts and other forecasts
In regard to our core business, the BtoC EC market continues to grow thanks to a favorable external environment
such as broader use of smartphones as well as reforms in logistics, and EC (e-commerce) is also spreading in themarket of sales of non-goods items such as services, as seen in new areas such as omni-channel, O2O, BtoB EC
and CtoC EC.
For the term ending September 2015, we expect initial revenue, running revenue and merchant acquiring service
revenue to increase steadily. We believe this will be achieved by accelerating the acquisition pace of new merchants,
strengthening the development of large-scale merchants through the provision of higher quality services, andincreasing revenue per merchant through providing services that increase added value associated with themerchants' use of the Group.
In regard to costs, we keep forecast for increase in sales cost ratio due to the sales growth of “Online AdvertisingService" and “GMO Payment after delivery”, which has a high sales-cost ratio. We also forecast investment cost on
the subsidiary companies, overseas businesses, and other investment on new businesses. We expect 18.1% growthin ordinary income and 34.5% ordinary income ratio.

2. Items concerning summary information (Notes)(1)

Changes of important subsidiaries
N/A

(2)

Application of special accounting procedures for the execution of the financial
statements
N/A

(3)

Changes in the accounting policy/ changes in the accounting estimation/
restatement of corrections
N/A

－

5 －

3. Consolidated quarterly financial statements(1)

Consolidated quarterly balance sheet(Unit: Thousand yen)

Summary of balance sheet at End of the second quarter ofthe current consolidated fiscal
the end of the previous
year
consolidated fiscal year
(September 30, 2014)(March 31, 2015)
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Merchandise
Supplies
Advance payments-trade
Prepaid expenses
Deferred tax assets
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Tangible assets
Buildings, net
Tools, furniture and fixtures, net
Other
Total tangible assets
Intangible assets
Goodwill
Right of trademark
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and affiliates
Bonds of subsidiaries and affiliates
Investments in other securities ofsubsidiaries and affiliates
Long-term loans receivable from directors
and employees
Claims provable in bankruptcy, claims
provable in rehabilitation and other
Long-term prepaid expenses
Lease and guarantee deposits
Deferred tax assets
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets－

6 －20,386,175
792,588
2,165
531
585,395
58,823150,097504,077
52,343△56,177
22,476,019

26,068,138
894,996
1,756
662
943,173
64,481
128,789
776,843
423,235△123,675
29,178,402

57,29861,075
113,573
231,947

59,73553,27896,026
209,040

30,694272
661,723
71,778764,469

26,007
196
673,837
119,754819,795

650,7392,507
11,0001,051,382
17,014
11,000264,442

377,829

1,910

1,678

12,43418,051

7,722
149,210
51,384△10,729

4,919
187,62954,296△18,051

1,140,621
2,137,039
24,613,058

1,705,750
2,734,585
31,912,988

(Unit: Thousand yen)
Summary of balance sheet at End of the second quarter ofthe end of the previous
the current consolidated fiscal
consolidated fiscal year
year
(September 30, 2014)(March 31, 2015)
Liabilities
Current liabilities
Accounts payable-trade
Accounts payable-other
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Provision for bonuses
Other provisions
Other
Total current liabilities
Noncurrent liabilities
Provision for directors’ remuneration Board
Incentive Plan Trust
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total Accumulated other comprehensive
incomeSubscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets－

7 －229,278
692,310644,375
171,628
7,850
15,589,857
206,137
34,84048,061
17,624,339

258,230
1,119,688
548,321111,384
21,522
22,166,903
166,61729,50048,66424,470,833

70,00095,000103,339
173,339
17,797,678

82,310177,310
24,648,143

708,118
968,040
5,315,707△264,723
6,727,143

710,205
970,126
5,735,026△265,236
7,150,122

64,821

96,921

16,685

13,74081,506110,661

3,774
2,956
6,815,379
24,613,058

2,603
1,458
7,264,845
31,912,988

(2) Consolidated quarterly statements of income and consolidated quarterly
statement of comprehensive income(Consolidated quarterly statements of income)(Cumulative second quarter of the consolidated fiscal year)(Unit: Thousand yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Equity income of affiliates
Earnings on reversal of dividends payable
Rent income
Commissions received
Exchange earnings
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Loss on investment in silent partnership
Loss on investment in partnership
Rent expenses
Other
Total non-operating expense
Ordinary income
Extraordinary income
Income from securities soldTotal extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Total extraordinary loss
Income before income taxes
Corporate, inhabitant and enterprise taxes
Income taxes-deferred
Total income taxes
Income before minority interests
Minority interest in loss(△)
Net income

First six months of the previous First six months of the current
consolidated
consolidated
fiscal year
fiscal year
(From October 1, 2013
(From October 1, 2014
to March 31, 2014)
to March 31, 2015)
3,487,937
4,162,976
701,969
858,0112,785,968
3,304,965
1,546,806
1,817,052
1,239,162
1,487,912

－

8 －

3,932
4,143
－
770
6,900
11,573
4,055
2,397
33,773

3,962
5,091
6,682
1,050
7,073
8,704
24,234767
57,566

1,040
9,994
11,327994
6,759
26
30,142
1,242,793

1,141
－
3,788
3,043
6,932
6
14,911
1,530,567

11,221
11,221

30,76630,766

3,199
3,199
1,250,815
532,648△983
531,665
719,149－
719,149523
523
1,560,809
607,954
17,211
625,165
935,644△1,716937,361(Consolidated quarterly statements of comprehensive income)(Cumulative second quarter of the consolidated fiscal year)(Unit: Thousand yen)

Income before minority interests
Other comprehensive income
Other valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Share of other comprehensive income ofassociates accounted for using equity method
Total other comprehensive income
Comprehensive income(Details)
Parent company shareholders’ comprehensive
incomeMinority’s comprehensive income

First six months of the previous First six months of the current
consolidated
consolidated
fiscal year
fiscal year
(From October 1, 2013
(From October 1, 2014
to March 31, 2014)
to March 31, 2015)
719,149
935,644－

9 －

14,321

32,1004,574△2,72696－

18,992
738,141

29,373965,017738,141

966,515－△1,498(3)Consolidated statements of cash flows(Unit: Thousand yen)

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Increase and decrease in provision (△decrease)
Interest and dividends income
Interest expenses
Foreign exchange gains and losses (△gains)
Equity in gains and losses of affiliates (△gains)
Gains and losses on investments in silent partnership(△gains)
Gains and losses on investment in partnership (△gains)
Loss on retirement of noncurrent assets
Gains and losses on valuation of investment securities(△gains)
Increase and decrease in accounts receivable (△Increase)
Increase and decrease in inventories (△increase)
Increase and decrease in advance payments-trade(△increase)
Increase and decrease in accounts receivable-other(△increase)
Increase and decrease in purchase debts (△decrease)
Increase and decrease in accounts
payable-other(△decrease)
Increase and decrease in deposits received (△decrease)
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plants and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of other securities of subsidiaries and affiliates
Distributions from an investment partnership
Payment on leasehold deposits
Other
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Proceeds from issuance of common stock
Purchase of treasury stock
Cash dividends paid
Other
Net cash provided by (used in) financing activities
Translation differences of cash and cash equivalents
Increase and decrease in cash and cash equivalents(△decrease)
Balance of cash and cash equivalents at the beginning of theperiodCash and cash equivalents at the end of period－

10 －First six months of theprevious consolidated
fiscal year
(From October 1, 2013
to March 31, 2014)

First six months of the current
consolidated
fiscal year
(From October 1, 2014
to March 31, 2015)

1,250,815
129,412
5,364
34,566△8,076
1,040△4,0589,994

1,560,809
141,255
4,686
54,959△9,053
1,141△24,311△6,682

11,327

3,788

994
3,199

3,043
523

△11,221△30,766△158,073△2,284△107,893
366△300,558△357,778△190,173△273,424

64,28528,757

203,455

267,652

1,393,974△1,5786,577,046△272,687

2,432,406
3,691△1,040△521,527
1,913,530

7,561,433
4,737△1,141△703,677
6,861,352△5,911△163,981△59,257
14,221△125,000－－△5,433△345,362△2,085△161,167△434,046
63,159△125,000
30,092△31,181△10,566△670,794

15,442－△420,296△21,545△426,399
5,809
1,147,577

3,002
△513
△516,603△20,820△534,934
22,725
5,678,349

18,358,343

20,349,309

19,505,920

26,027,658

(4)Notes to the consolidated quarterly financial statement(Notes regarding the premise for continuance)
N/A(Note when there is a significant fluctuation in the amount of shareholders’ equity)
N/A

－

11 －