Non-Consolidated Financial Results
for the Three Months Ended July 31, 2018
[Japanese GAAP]
September 5, 2018
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 14, 2018
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, 2018
(May 1, 2018 to July 31, 2018)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Three months ended
July 31, 2018
July 31, 2017

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen%

1,441
1,388

3.8
12.9

139141(1.1)
4.7

142142

(0.6)
5.4

9698

(1.8)
7.1

Basic earnings
per share

Three months ended
July 31, 2018
July 31, 2017

Operating income

Diluted earnings pershare
YenYen

5.74
5.87

5.73
5.84

(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

5,580
As of July 31, 2018
5,715
As of April 30, 2018
(Reference) Equity: As of July 31, 2018: ¥4,934 million
As of April 30, 2018: ¥4,997 million

Equity ratio

Million yen%

4,934
5,000

88.4
87.4

2. Dividends
1stquarter-end
Yen

Annual dividends
2nd3rdYear-end
quarter-end
quarter-end
YenFiscal year ended April 30, 2018
0.00
Fiscal year ending April 30, 2019
Fiscal year ending April 30, 2019
0.00
(Forecast)(Note) Revision to the forecast for dividends announced most recently: NoTotal

YenYenYen-

10.00

10.00

-

10.00

10.00

3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2019
(May 1, 2018 to April 30, 2019)(% indicates changes from the previous corresponding period.)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%%

Basic earnings
per share

ProfitMillion yen%

YenFull year
6,111
3.58062.2811
1.95671.8
33.74(Note) Revision to the financial results forecast announced most recently: NoAs 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, 2018: 17,464,000 shares
April 30, 2018: 17,464,000 shares2) Total number of treasury shares at the end of the period:
July 31, 2018: 622,941 shares
April 30, 2018: 662,541 shares
3) Average number of shares during the period:
Three months ended July 31, 2018: 16,822,602 shares
Three months ended July 31, 2017: 16,752,963 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 ofthe deceased to a funeral business that is largely unaffected by economic trends, (2) the personal publishing
service 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 utilizingunique, 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 internal inter-segment sales.
(1) Memorial design service businessWe achieved strong revenue in our primary business area - processing of photos of the deceased, as
well as strong sales of equipment and frames. Sales from “Asuka Altar”, which is a collaboration
product with the aerial imaging business, also contributed to results. In addition, we also worked toimprove the functions and expand the use of the “tsunagoo” service that was released as into the funeralmarket “funeral tech” that allows users to easily order condolence messages and other items from theirsmartphones.
In terms of income, there was an increase in personnel costs for image processing operators, andshipping expenses were also higher as a result of the price hikes that took place starting from autumn oflast year. As a result, segment income decreased.
As a result, sales were 595,285 thousand yen (105.5% year-on-year), and segment income was142,296 thousand yen (93.3% year-on-year).
(2) Personal publishing service businessThis business operates AsukaBook for the professional photography market in Japan, and MyBook forthe general Japanese consumer market. We are also engaged in OEM supply of photo albums andphoto prints based on photos that were taken with smartphones.
In the professional photographer market, in addition to acquiring contracts through our own
marketing activities, we also achieved strong sales through means such as exhibiting at exhibitions,conducting AsukaBook seminars, and releasing new products. We also conducted a promotion aimed atexpanding 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, andother means. However the competitive environment is fierce, and we struggled in sales of products forgeneral consumers. On the other hand, sales of OEM products grew as the presence of our services
expanded in the market, although there was some rebound from the end of the campaign that weconducted in the previous year.
Segment income was down due to the lower gross profit margin resulting from the lower operating
rate as we took steps to increase our production capacity, and also due to the higher shipping expenses
resulting from price hikes beginning from autumn of last year.
As a result, sales were 817,835 thousand yen (103.0% year-on-year), and segment income was178,553 thousand yen (95.1% 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” that utilize our original technologies to project images in mid-air.
For glass ASKA3D plates, although sufficient cost reductions have not yet been achieved, we areproviding 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. In addition, we are also supplying plates
for the “Asuka Altar” service that is a collaboration project with the memorial design service business.
For plastic ASKA3D plates, we began the supply of our first round of samples in June 2018, and areengaged in sales primarily to customers which already purchased glass plates or which expressed interestat exhibitions and other events. In parallel with sample supply, we also worked to improve quality
through die improvements and other means, aiming for quality which is closer to that provided by glass
plates, and conducted trials in order to improve yield and stabilize quality in preparation for massproduction.
In terms of expenses, although there was an increase in personnel expenses due to the hiring of more
employees and an increase in travel expenses (primarily overseas), advertising expenses were lower due
to the smaller number of overseas exhibitions compared to the previous fiscal year.
As a result, sales were 34,721 thousand yen (104.5% year-on-year), and segment loss was 52,499
thousand yen (compared to a loss of 72,351 thousand yen in the same quarter of the previous year).
As a result of the above, sales were 1,441,602 thousand yen (103.8% year-on-year). In terms of income,although the segment loss contracted due to lower advance expenses for overseas exhibitions and other eventsin the aerial imaging business, the higher personnel expenses and expansion of production equipment resulted
in a lower gross profit margin, and in combination with higher shipping expenses resulting from price hikes,
ordinary income was 142,139 thousand yen (99.4% year-on-year), and net income was 96,492 thousand yen(98.2% year-on-year).
(2) Overview of the Financial Status during this Fiscal Year
(Assets)
Current assets at the end of this 1Q decreased by 135,470 thousand yen from the end of the previousfiscal year to reach 5,580,427 thousand yen. Despite an increase of 371,996 thousand yen in tangible
fixed assets resulting from the purchase of land and other causes, this decrease was primarily the resultof a decrease of 485,759 thousand yen in cash and savings resulting from the purchase of land, income
taxes, and dividend payment.
(Liabilities)
Liabilities at the end of this 1Q declined by 70,003 thousand yen from the end of the previous fiscal
year to reach 645,880 thousand yen. This was primarily due to a decrease of 84,300 yen in accruedincome taxes and a decrease of 63,500 thousand yen in the provision for bonuses.
(Net assets)
Net assets at the end of this 1Q declined by 65,466 thousand yen from the end of the previous fiscal
year to reach 4,934,547 thousand yen. Despite recording net income of 96,492 thousand yen, this wasprimarily due to a decrease of 168,014 thousand yen resulting from the payment of dividends fromsurplus.

5. Financial Statements for the First Quarter(1) Balance sheet(Units: 1,000s yen)Previous fiscal year
(ended April 30, 2018)

Current 1st quarter(ended July 31, 2018)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade

2,311,781
726,531

1,826,021
718,368

Merchandise and products
Work in progress

191,123
14,325

184,092
18,389Raw materials and supplies
Others62,20633,55959,33525,135

Allowance for doubtful accounts
Total current assets(2,617)(2,362)

3,336,909

2,828,982

512,558

529,810396,538
611,507413,509
838,060

Fixed assets
Tangible fixed assets
Buildings, net
Machinery and equipment, netLand
Others, net

172,702

283,921

Total tangible fixed assets

1,693,306

2,065,303

Total intangible fixed assets

206,851

210,156

Total investments and other assets

478,829475,985

2,378,988

2,751,445

5,715,897

5,580,427

Accounts payable-trade
Income taxes payable

126,270
137,900

119,474
53,600

Provision for bonuses
Others136,500
303,51273,000388,579

Total current liabilities

704,183

634,654

6,482
5,217

6,482
4,743

Total fixed assets
Total assets
Liabilities
Current liabilities

Fixed liabilities
Provision for retirement benefits
OthersTotal fixed liabilities

11,700

11,225715,883

645,880

Shareholders’ equity
Capital stock

490,300

490,300

Capital reserves
Retained earnings

606,585
4,183,583

606,585
4,105,643

Total liabilities
Net assets

Treasury stock(285,940)(268,850)

Total shareholders' equity

4,994,527

4,933,678

Valuation difference on available-for-sale securities

3,129

869

Total valuation and translation adjustments

3,129

869

2,356

―

5,000,014

4,934,547

5,715,897

5,580,427

Valuation and translation adjustments

Subscription rights to shares
Total net assets
Total liabilities and net assets

(2) Profit and loss statement
First quarter of the fiscal year

Net Sales
Cost of sales
Gross profit(unit:1000s yen)First quarter of the previous fiscal First quarter of the current fiscalyearyear(May 1, 2017 – July 31, 2017)(May 1, 2018 – July 31, 2018)
1,388,970
1,441,602
664,785
722,976
724,184

718,626

Selling, general, and administrative expenses

582,611578,631

Operating income

141,572

139,995

167

88

Dividends received
Commissions received

610
135510190

Foreign exchange income
Income from insurance

446―3778328144

1,369

2,144

Others10―

Total non-operating expenses

10―

142,931

142,139

550

72

550

72

Net income before taxes

142,381

142,066

Income taxes

44,11745,574

Net income

98,26396,492Non-operating income
Interest received

OthersTotal non-operating income
Non-operating expenses

Ordinary income
Extraordinary losses
Loss on retirement of fixed assets
Total extraordinary losses

[Segment information]
Cumulative first quarter of the previous fiscal year (May 1, 2017 – July 31, 2017)
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)

564,052

793,852

31,064

1,388,970―

1,388,970

―

―

2,160

2,160

(2,160)―564,052

793,852

33,224

1,391,130(2,160)1,388,970

152,477

187,774(72,351)

267,899(126,327)

141,572

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

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