Non-Consolidated Financial Results
for the Nine Months Ended January 31, 2017
[Japanese GAAP]
March 8, 2017
Company name: Asukanet Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 2438
URL: https://www.asukanet.co.jp
Representative: Yukio Fukuda, Representative Director, President & CEO
Contact: Kenya Kono, Managing Director & CFO
Phone: +81-82-850-1200
Scheduled date of filing quarterly securities report: March 14, 2017
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Not available
Schedule 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 Nine Months Ended January 31, 2017
(May 1, 2016 to January 31, 2017)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Nine months ended
January 31, 2017
January 31, 2016

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen%

4,029
3,851

4.6
2.9649602

7.9
11.2652
605

7.9
10.8

444
397

11.70.4

Basic earnings
per share

Nine months ended
January 31, 2017
January 31, 2016

Operating income

Diluted earnings pershare
YenYen

26.54
23.74

26.41
23.54

(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

4,478
4,190

89.3
86.8

5,008
As of January 31, 2017
4,820
As of April 30, 2016
(Reference) Equity: As of January 31, 2017: ¥4,472 million
As of April 30, 2016: ¥4,183 million
2. Dividends
1stquarter-end

2ndquarter-end

Yen

Yen

Annual dividends
3rdYear-end
quarter-endFiscal year ended April 30, 2016
0.00
Fiscal year ending April 30, 2017
0.00
Fiscal year ending April 30, 2017
(Forecast)(Note) Revision to the forecast for dividends announced most recently: No1TotalYen

YenYen-

10.00

10.00

10.00

10.00

3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2017
(May 1, 2016 to April 30, 2017)(% indicates changes from the previous corresponding period.)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%

Basic earnings
per share

Profit%Million yen%

YenFull year
5,461
5.6
800
3.58053.7(Note) Revision to the financial results forecast announced most recently: No551

0.7

32.93

* 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):
January 31, 2017: 17,464,000 shares
April 30, 2016: 17,464,000 shares2) Total number of treasury shares at the end of the period:
January 31, 2017: 719,741 shares
April 30, 2016: 730,141 shares
3) Average number of shares during the period:
Nine months ended January 31, 2017: 16,737,298 shares
Nine months ended January 31, 2016: 16,752,184 shares* Presentation regarding the implementation status of the quarterly review procedures
These quarterly financial results are outside the scope of quarterly review procedures under the Financial
Instruments and Exchange Act. At the time of disclosure of these quarterly financial results, quarterly review
procedures for the quarterly financial statements have not been completed.
* 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.

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4. Qualitative Information Concerning the Business Results(1) Explanation of business results
During the cumulative first 3 quarters of this fiscal year, the economy of Japan continued on a gradual trend
towards recovery as a result of continuing economic stimulus by the government and financial measures by theBank of Japan. However the future of the global economy is uncertain as a result of factors including the effects
slowdowns in the economies China and of emerging nations, the effects of Brexit, and the transition to a newadministration in the United States.
Asukanet operates three business areas, each with different positioning and characteristics. They are (1) thememorial design service business, which adds digital processing and remote output services for photos of thedeceased to the funeral business that is largely unaffected by economic trends, (2) the personal publishing business,a challenging 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.
Under these conditions, Asukanet is carrying out its business with attention on maintaining a balance between
steady growth in existing business and advance investment in new business.

The results for each business segment are as follows.
(Memorial design service business)
In this business, although there was a difficult struggle for income during the first quarter in our primarybusiness – processing of photos of the deceased, there was a recovery beginning from the second quarter. Inaddition to strong sales related to videos and other funeral presentations, there was also steady growth in salesof equipment and frames.
In terms of profits, although there were increases in PR expenses and hiring-related expenses, we also
recorded strong segment income due to steady income from processing of photos of the deceased – a businesswith a relatively high profit margin.
As a result, sales were 1,793,240 thousand yen (104.0% year-on-year) and segment income was 584,951
thousand yen (105.0% year-on-year).

(Personal publishing service business)
In this business, we worked to acquire new customers and propose new products to existing customers
through our own marketing operations in the professional photography market. At the same time, we also
engaged in holding workshops, releasing a photo selection app, and other activities. As a result, sales to theprofessional photography market grew steadily.
In the ordinary consumer market, we conducted efficient Internet advertising, as well as a variety ofcampaigns, exhibits at events, and other promotions. However in the current harsh competitive environment,
acquiring new customers is difficult, and sales to ordinary consumers were below expectations. On the otherhand, there was steady growth in sales related to OEM supply as a result of the strong presence of our services
in the market.
In terms of profits, the higher operating rate resulted in a higher gross profit margin and we were able to3

suitably control sales expenses. Consequently there was steady growth in segment income.
As a result of the above, sales were 2,191,910 thousand yen (105.1% year-on-year) and segment income
was 494,151 thousand yen (113.0% year-on-year).

(Aerial imaging business)
This business was launched in March 2011, aiming to create a market through new photo and video
expressions utilizing aerial imaging technologies.
In this business, we are placing top priority on the AI plate which is capable of projecting images in mid-air.
With glass plates, there has been stable improvement in image quality and production of large-size plates ispossible, however there has not yet been sufficient reduction in cost.
For resin plates, we are carrying out trials both using new production methods and using the same method as
for glass plate production. The resin plates which are produced using the same method as for glass plates are
smaller in size and provide image quality that is inferior to glass plates, however prototype products are being
sold. With the new production methods, we are continuing with trials involving multiple methods as we aim toresolve technological issues. Our plan is to decide on either a new production method or the glass plateproduction method at the latest by the end of this fiscal year.
In the area of marketing, in addition to conducting follow-up after exhibiting at Tokyo Design Week inOctober 2016, we also completely changed the exhibit contents at our Tokyo Branch showroom, expanded ourmarketing staff, and actively conducted demonstrations. As before, there is insufficient matching in the pricearea and sales have been restricted to limited applications and small lot sales. However, we have constructed asales system for sales of AI plates, as well as sales of package products that include the case, sensors, andcontent. We also prepared for exhibiting at overseas exhibitions.
Expenses grew as we focused on production of cases and content for overseas exhibitions, conducted R&D
aimed at future mass production, and actively filed patent applications.
As a result, sales were 43,960 thousand yen (109.3% year-on-year), and segment loss was 91,774 thousandyen (compared to a loss of 64,457 thousand yen year-on-year).

As a result of the above, sales in the first 3 quarters of this fiscal year were 4,029,111 thousand yen (104.6%year-on-year). In terms of profit, primarily due to strong OEM supply growth in the personal publishing business,ordinary income was 652,619 thousand yen (107.9% year-on-year), and net income was 444,256 thousand yen(111.7% year-on-year).

(2) Explanation concerning financial status
Assets at the end of the first 3 quarters of this fiscal year increased by 188,237 thousand yen from the end of theprevious fiscal year to reach 5,008,654 thousand yen. This was primarily due to an increase in cash and deposits of
89,250 thousand yen, and an increase in notes and accounts receivable of 96,613 thousand yen.
Liabilities at the end of the first 3 quarters of this fiscal year decreased by 99,696 thousand yen from the end of
the previous fiscal year to reach 530,348 thousand yen. This was primarily due to decreases of 29,888 thousand
yen in accounts payable, and 66,000 thousand yen in provision for bonuses.
4Net assets at the end of the first 3 quarters of this fiscal year increased by 287,933 thousand yen from the end of
the previous fiscal year to reach 4,478,306 thousand yen. Despite recording a net profit of 444,256 thousand yen,
this result was primarily due to a decrease of 167,338 thousand yen in dividends from surplus.

(3) Explanation of results forecasts and other future predictions
At the present time, there has been no change to the predicted results for the year ending April 30, 2017 thatwere announced on June 10, 2016.

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5. Summary Information (Notes)(1) Adoption of special accounting methods for preparation of quarterly financial statements(Calculation of tax expenses)
We adopted a calculation method which multiplies net income before taxes by an effective tax rate that wasreasonably estimated by applying tax effect accounting to net income before taxes for the fiscal year whichincludes these first 3 quarters.

(2) Changes in accounting policy, changes or restatement of accounting estimatesNone(3) Additional information(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
Beginning from the first quarter accounting period, we have applied the "Implementation Guidance on
Recoverability of Deferred Tax Assets" (Corporate Accounting Standard Application Guideline No. 26, March 28,2016).

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6. Financial Statements for the First 3 Quarters(1) Balance sheet
Previous fiscal year
(ended April 30, 2016)(Units: 1,000s yen)First 3 quarters of the current
fiscal year
(ended January 31, 2017)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade

1,918,143
610,639

2,007,393
707,253

Merchandise and products
Work in progress

123,936
13,423

172,891
15,736

Raw materials and supplies
Others50,72090,046

57,633103,018

Allowance for doubtful accounts(3,803)(5,179)2,803,106

3,058,746

Buildings, net
Machinery and equipment, net

514,797552,201

505,644
450,853

Land
Others, net

432,702
126,957

432,702
137,741

Total tangible fixed assets

1,626,659

1,526,942

Intangible fixed assets
Investments and other assets196,351
194,300

220,232
202,733

2,017,310

1,949,907

4,820,417

5,008,654

Current liabilities
Accounts payable-trade123,71493,825

Income taxes payable
Provision for bonuses

120,200
129,700

109,800
63,700

Others249,796

256,540

Total current liabilities

623,410

523,865

Provision for retirement benefits

6,634

6,482

Total fixed liabilities

6,634

6,482

630,045

530,348

Capital stock
Capital surplus

490,300
606,585

490,300
606,585

Retained earnings
Treasury stock

3,400,136(315,115)

3,675,369(310,627)

Total shareholders' equity

Total current assets
Fixed assets
Tangible fixed assets

Total fixed assets
Total assets
Liabilities

Fixed liabilities

Total liabilities
Net assets
Shareholders’ equity

4,181,905

4,461,626

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments

2,086

10,917

2,086

10,917

Subscription rights to shares

6,380

5,761

4,190,372

4,478,306

4,820,417

5,008,654

Total net assets
Total liabilities and net assets

7(2) Profit and loss statement
First 3 quarters of the fiscal year

Net Sales
Cost of sales

First 3 quarters of the previous
fiscal year
(May 1, 2015 – Jan. 31, 2016)
3,851,521
1,881,927(Units: 1,000s yen)First 3 quarters of the current
fiscal year
(May 1, 2016 – Jan. 31, 2017)
4,029,111
1,951,139

Gross profit

1,969,593

2,077,972

Selling,general, and administrative expenses

1,367,535

1,428,573

602,058

649,399

1,438
1,095

807
1,161

Commissions received
Foreign exchange gains

516―

418
51

Others

624

781

3,674

3,219

635―

635―

605,096652,6191,323

103

Operating income
Non-operating income
Interest received
Dividends received

Total non-operating income
Non-operating expenses
Foreign exchange losses
Total non-operating expenses
Ordinary income
Extraordinary losses
Loss on retirement of fixed assets

1,323

103

Net income before taxes

Total extraordinary losses

603,772

652,515

Income taxes

206,086

208,258

Net income

397,686444,2568

(3) Notes regarding the financial statements[Segment information]
Cumulative first 3 quarters of the previous fiscal year (May 1, 2015 – January 31, 2016)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment

AmountAdjustments recorded in*2
profit and loss
statement
*3

Other
*1

Memorial
designservicebusiness

Personal
publishing
servicebusiness

1,723,869

2,085,818

40,225

3,849,913

1,607

―

3,851,521

―

132

―

132

―

(132)

―

1,723,869

2,085,950

40,2253,850,046

1,607

(132)

3,851,521

557,054437,119(64,457)

929,716(16,176)(311,481)

602,058

Aerialimagingbusiness

Total

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

Notes: 1: The "Other" category is the business segment not included in the reporting segments, and consists of the "giftnet.com"
service.
2: The segment income adjustment figure of (311,481) thousand yen is a corporate expense that is not allocated to thereporting segments (a selling, general, and administrative expense that does not belong to the reporting segments).
3: Segment income matches the operating income figure in the profit and loss statement for the first 3 quarters.

Cumulative first 3 quarters of the current fiscal year (May 1, 2016 – January 31, 2017)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment
Memorial
Designservicebusiness

Personal
publishing
servicebusiness

Adjustments*1

Aerialimagingbusiness

Total

Amountrecorded in
profit and loss
statement*2

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

1,793,240

2,191,910

43,9604,029,111―

4,029,111

―

―

――

―

―

1,793,240

2,191,910

43,9604,029,111―

4,029,111

584,951

494,151(91,774)

987,328(337,928)

649,399

Notes: 1: The segment income adjustment figure of (337,928) thousand yen is a corporate expense that is not allocated to thereporting segments (a selling, general, and administrative expense that does not belong to the reporting segments).
2: Segment income matches the operating income figure in the profit and loss statement for the first 3 quarters.

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

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