Non-Consolidated Financial Results
for the Three Months Ended July 31, 2019
[Japanese GAAP]
September 6, 2019
Company name: Asukanet Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 2438
URL: https://www.asukanet.co.jp
Representative: Yuji Matsuo, Representative Director, President & COO
Contact: Kenya Kono, Senior Managing Director & CFO
Phone: +81-82-850-1200
Scheduled date of filing quarterly securities report: September 13, 2019
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Not availableSchedule of quarterly financial results briefing session: Not scheduled(Amounts of less than one million yen are rounded down.)
1. Non-Consolidated Financial Results for the Three Months Ended July 31, 2019
(May 1, 2019 to July 31, 2019)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Three months ended
July 31, 2019
July 31, 2018

Operating income

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen%

1,541
1,441

6.9
3.8

155
139

11.3
(1.1)

155
142

9.2
(0.6)

1099613.1(1.8)

Basic earnings
per share

Diluted earnings pershare

Three months ended
Yen
Yen
July 31, 2019
6.48
July 31, 2018
5.74
5.73
(Note) Diluted earnings per share for the three months ended July 31, 2019 is not presented as there were no
potential shares.
(2) Non-Consolidated Financial Position
Total assets
Net assets
Equity ratio
Million yen

Million yen%

5,352
5,431

86.2
86.6

6,211
As of July 31, 2019
6,271
As of April 30, 2019
(Reference) Equity: As of July 31, 2019: ¥5,352 million
As of April 30, 2019: ¥5,431 million
2. Dividends

Annual dividends
2nd
3rdquarter-end
quarter-end

1stquarter-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended April 30, 2019

-

0.00

-

11.00

11.00

Fiscal year ending April 30, 2020

-

10.00

10.00

Fiscal year ending April 30, 2020
0.00
(Forecast)(Note) Revision to the forecast for dividends announced most recently: No3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2020
(May 1, 2019 to April 30, 2020)(% indicates changes from the previous corresponding period.)Basic earnings
Net sales
Operating income
Ordinary income
Profitper share
Million yen%

Million yen%

Million yen%

Million yen%

Yen

Full year
6,738
7.0
824 (5.1)
829 (5.1)545(9.0)
32.36(Note) Revision to the financial results forecast announced most recently: No
As the Company manages its financial results at an annual base, the financial results forecast for the first half is notdisclosed.
* Notes:(1) Accounting policies adopted specially for the preparation of quarterly financial statements: Yes(2) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: No
2) Changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: No4) Retrospective restatement: No(3) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):
July 31, 2019: 17,464,000 shares
April 30, 2019: 17,464,000 shares2) Total number of treasury shares at the end of the period:
July 31, 2019: 623,016 shares
April 30, 2019: 622,941 shares
3) Average number of shares during the period:
Three months ended July 31, 2019: 16,841,018 shares
Three months ended July 31, 2018: 16,822,602 shares* These quarterly financial results are outside the scope of quarterly review procedures by a certified public
accountant or an audit corporation.
* Explanation of the proper use of financial results forecast and other notes
The earnings forecasts and other forward-looking statements herein are based on information currently
available to the Company and certain assumptions that the Company believes are reasonable, and actual results
may differ significantly from these forecasts due to a wide range of factors.

4. Overview of Business Results(1) Overview of Business Results for this Fiscal Year
Asukanet operates three business areas, each with different positioning and characteristics. They are (1) the memorial design
service business, which adds digital processing and remote output services for photos of the deceased to a funeral business thatis largely unaffected by economic trends, (2) the personal publishing business, which provides ideas for new photo output
methods that allow users to create complete photo collections beginning from just a single book, and (3) the aerial imaging
business, which is utilizing unique, recently-developed technologies aiming to create a new market and achieve dreams.
Following is an overview of the business results for each segment. The results figures for each segment include internalinter-segment sales.
(1) Memorial design service businessIn this business, although sales in our primary business areas – processing photos of the deceased and sales of video andother funeral production services – were strong, sales of frames and supplies slackened. In addition, following the strong sales
in the previous quarter of the Asuka Altar product which was produced in collaboration with the aerial imaging business, there
was a rebound drop in this quarter and sales were down from the same period in the previous year. In addition, we also
worked to improve the functions and expand the use of the “tsunagoo” service that was released as into the funeral market“funeral tech” that allows users to easily order condolence messages and other items from their smartphones.
In terms of income, in addition to the decline in sales, there was also an increase in personnel expenses for image processing
operators and an increase in expenses for R&D aimed at AI applications. As a result, segment income was down.
As a result, sales were 582,379 thousand yen (97.8% year-on-year), and segment income was 134,837thousand yen (94.8%year-on-year).
(2) Personal publishing service businessThis business operates AsukaBook for the professional photography market in Japan, and MyBook for the general Japanese
consumer market.

We are also engaged in OEM supply of photo albums and photo prints based on photos that were takenwith smartphones.
In the professional photographer market, in addition to acquiring contracts through our own marketing activities, there wasalso strong growth in sales as a result of activities such as conducting AsukaBook seminars and the release of the GLAMPiC
data delivery service. We also conducted a promotion aimed at expanding our “Life-Size Baby Photos” service.
In the general consumer market, we worked to obtain orders primarily among photography enthusiasts and knowledgeable
customers through various campaigns, effective internet advertising, and other means. In a fiercely competitive environment,
we continued to achieve strong sales of the full-flat type photo album that opens up so it is completely flat – a product thatwas released in the last quarter. Overall sales in the general consumer market exceeded expectations. On the other hand, salesof OEM products grew as the presence of our services expanded in the market, although there was some rebound from the endof the campaign that we conducted in the previous year.
In June 6 2019, we completed construction of the new plant located adjacent to our headquarters. This plant was constructedwith the aim of expanding production capacity, We are now preparing for the start of production equipment operation.
In terms of income, despite higher expenses including a shipping price hike and higher personnel expenses, growing sales
centering on OEM divisions helped boost the operating rate and produced an increase in segment income.
As a result, sales were 935,833 thousand yen (114.4% year-on-year), and segment income was 212,278 thousand yen(118.9% year-on-year).
(3) Aerial imaging businessThis business was launched in March 2011, aiming to create a market through new image and video expressions utilizing
aerial imaging technologies. We are developing, manufacturing, and selling both glass and plastic “ASKA3D plates” thatutilize our original technologies to project images in mid-air.
For glass ASKA3D plates, although sufficient cost reductions have not yet been achieved, we are providing large-size plates
that are capable of high-quality aerial imaging. Although still in small lots, sales for signage and aerial system operations areincreasing. We are also working to develop new manufacturing technologies that can provide both quality and highproductivity.
For plastic ASKA3D plates, we established the first stage production system in May of this year, starting from monthly
production of 3,000 plates. We will continue working to improve quality, reduce production costs, and increase yield, andengage in production to meet to customer needs.
In terms of marketing, we engaged in sales of sample plastic ASKA3D plates and strove to obtain orders that fit our current
production scale and our price range. However there are still issues to overcome before we can achieve this goal. We willcontinue to exhibit at exhibitions of suitable sizes in Japan and overseas to directly communicate the possibilities of aerialimaging. Based on the diverse range of needs for the use of ASKA3D plates that we have confirmed through past exhibitions
and other programs, we will work to resolve these issues and acquire mass production orders. In terms of sales, because weare focusing on sales of inexpensive plastic plates, sales of high-priced glass plates declined. As a result, sales were downfrom the same period in the previous year.
In terms of profit and loss, because we succeeded in reducing advertising expenses and R&D expenses, the segment loss
was smaller than the same period in the previous year.
As a result, sales were 24,605 thousand yen (70.9% year-on-year), and segment loss was 48,262 thousand yen (compared toa loss of 52,499 thousand yen in the same quarter of the previous year).
As a result of the above, sales were 1,541,557 thousand yen (106.9% year-on-year). In terms of income, as a result of steady
growth in segment income in the personal publishing business, ordinary income was 155,279 thousand yen (109.2% year-onyear) and net income was 109,118 thousand yen (113.1% year-on-year).

(2) Overview of the Financial Status during this Quarter.
(Assets)
Current assets at the end of this first quarter decreased by 60,003 thousand yen from the end of the previous fiscal year toreach 6,211,510 thousand yen. Despite an increase in tangible fixed assets of 288,931 thousand yen resulting fromconstruction of the new plant (West Building) and other factors, and an increase in investment and other securities of 199,357
thousand yen resulting from the purchase of corporate bonds and other factors, this decrease was primarily due to a decreasein cash and savings of 518,933 thousand yen.
(Liabilities)
Current liabilities at the end of this first quarter increased by 18,926 thousand yen from the end of the previous fiscal year
to reach 859,406 thousand yen. Despite a decrease in income taxes payable of 133,400 thousand yen and a decrease in theprovision for bonuses of 70,200 thousand yen, this increase was primarily due to an increase in accounts payable of 232,056
thousand yen.
(Net assets)
Net assets at the end of this 1Q declined by 78,930 thousand yen from the end of the previous fiscal year to reach 5,352,103
thousand yen. Despite recording net income of 109,118 thousand yen, this was primarily due to a decrease of 185,251
thousand yen resulting from the payment of dividends from surplus.

5. Financial Statements for the First Quarter(1) Balance sheet(Units: 1,000s yen)Previous fiscal year
(ended April 30, 2019)
Asset
Current assets
Cash and deposits
Accounts receivable-trade and notes
Merchandise and products
Work in progressRaw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings, net
Machinery and equipment, net
LandConstruction in progress
Total tangible fixed assets
Total intangible fixed assets
Total investments and other assets
Investment securities
OthersTotal investment and others
Total fixed assets
Total assets
Liabilities
Current liabilities
Accounts payable-trade
Accounts payable-other
Income taxes payable
Provision for bonuses
OthersTotal current liabilities
Fixed liabilities
Provision for retirement benefits
OthersTotal fixed liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

Current 1st quarter(ended July 31, 2019)2,274,763
827,239
172,942
23,551
78,072
36,842(2,914)3,410,498

1,755,829
798,875
176,289
17,62079,13925,651(3,893)2,849,512

508,636
409,561
844,060
399,350
2,161,609
202,370

890,323
530,307844,060
185,8482,450,541
215,062

228,800
268,235
497,035
2,861,016
6,271,514

426,305
270,087
696,393
3,361,997
6,211,510

169,180
173,963
187,900
144,200
155,905
831,149

149,946
406,01954,50074,000166,084
850,550

6,009
3,320
9,330
840,479

6,009
2,846
8,855
859,406

490,300
606,585
4,608,076(268,850)
5,436,110

490,300
606,585
4,531,943(268,970)
5,359,857(5,076)(7,753)(5,076)
5,431,034
6,271,514(7,753)5,352,103
6,211,510

(2) Profit and loss statement for 1st quarter

Net Sales
Cost of sales
Gross profit
Selling, general, and administrative expenses
Operating income
Non-operating income
Interest received
Dividends received
Commissions received
Foreign exchange gains
Income from insurance
OthersTotal non-operating income
Non-operating expenses
Foreign exchange losses
OthersTotal non-operating expenses
Ordinary income
Extraordinary losses
Loss on retirement of fixed assets
Total extraordinary losses
Net income before taxes
Income taxes
Net income(unit:1000s yen)First quarter of the previous fiscal First quarter of the current fiscalyearyear(May 1, 2018 – July 31, 2018)(May 1, 2019 – July 31, 2019)
1,441,602
1,541,557
722,976
751,892
718,626
789,664
578,631
633,825
139,995
155,839
88
510
190
377
832
144
2,144

229
500
88
―
―
102
919

―
―

1,406
73

―
142,1391,480
155,27972
72
142,066
45,57496,492――
155,279
46,160109,118

[Segment information]
Cumulative first quarter of the current fiscal year (May 1, 2018 – July 31, 2018)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment
Memorial design
service business

Personal
Aerialpublishingimaging businessservice business

Adjustments

Amountrecorded in
profit and loss
statement

Total

Sales
Sales to outside
customers
Inter-segment internalsales and transfers
Total
Segment income (loss)

595,285

817,835

28,481

1,441,602―

1,441,602

―

―

6,240

6,240

(6,240)―595,285

817,835

34,721

1,447,842(6,240)1,441,602

142,296

178,553(52,499)

268,350(128,355)

139,995

Cumulative first quarter of the current fiscal year (May 1, 2019 – July 31, 2019)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment
Memorial design
service business

Personal
publishing
service businessAmountAerialimaging business

Adjustments
Total

recorded in
profit and loss
statement

Sales
Sales to outside
customers
Inter-segment internalsales and transfers
Total
Segment income (loss)

582,379

935,833

23,345

1,541,557―

1,541,557

―

―

1,260

1,260(1,260)―

582,379

935,833

24,605

1,542,817(1,260)1,541,557

134,837

212,278(48,262)

298,854(143,014)

155,839

This is the summarized translation of released report for your reference.
Please refer to the original Japanese financial document.