Summary of Consolidated Financial Statements for the Second Quarter, FY2018 (IFRS)
May 10, 2018
Exchange: First Section of Tokyo Stock Exchange
Name of listed company:

GMO Payment Gateway, Inc.

Stock code:

3769

Representative:

Issei Ainoura

President & Chief Executive Officer

Contact:

Ryu Muramatsu

Director, Executive Vice President

Tel: +81-3-3464-0182

Scheduled submission date of quarterly report

May 11, 2018

Scheduled date of commencementfor dividend payment-

Supplemental materials prepared for financial
results

Yes

Information meeting arranged related tofinancial resultsYes (for institutional
investors andanalysts)

URL: https://corp.gmo-pg.com/en/(Amounts rounded down to the million yen)

1.

Consolidated Financial Statements for the Second Quarter, FY2018(From October 1, 2017 to March 31, 2018)(1) Consolidated Financial Statements (Cumulative)
Revenue

Q2 FY2017

Profit before
income taxes

Operating profit

Million yen
Q2 FY2018% Million yen

12,558 25.2
10,028 －(Percentages represent year-on-year % change)% Million yen

3,269 51.8
2,153 －% Million yen

3,180 60.8
1,977 －

Total
comprehensive
incomeProfit attributable toowners of parent

Profit% Million yen

1,946 41.4
1,375 －

1,962
1,357

% Million yen

44.5
－

2,267
1,884

%

20.3
－

Diluted earnings per
share

Basic earnings per share
Yen

Yen

53.27
36.55

Q2 FY2018
Q2 FY2017

53.27
36.54

(2) Consolidated Financial Position
Total assets
Million yen

Total equity
Million yen

Total equity attributable toowners of parent
Million yen

Total equity attributable toowners of parent to total assets%

93,32584,33821,68820,76920,573
19,67522.0
23.3

Q2 FY2018
FY2017

2.

Dividends

FY 2017
FY 2018
FY 2018 (forecast)End of Q1
Yen

End of Q2
Yen

0.00
0.00

0.00
0.00

Full-year dividend
End of Q3
Yen

Year-end
Yen

Total
Yen

0.00

40.00

40.00

0.00

49.00

49.00

(Note) Revision to the most recently released dividend forecast: No

3.

Consolidated Financial Forecast for the Fiscal Year Ending September 2018
(From October 1, 2017 to September 30, 2018)(Percentages represent year-on-year change)
Revenue
Million yen

Operating profit
Million yen%

Profit before
income taxes
Million yen%

Profit attributable toowners of parent
Million yen%

Basic earnings
per share
Yen%
Full year
26,107
6,475
6,196
3,933
105.87－－－－(Note 1) Revision of the most recently released financial forecast: No(Note 2) Year-on-year changes are omitted since the Group started voluntary application of IFRS in the present consolidated fiscal year.

-1-Notices:
(1)

(2)

(3)

Changes of important subsidiaries during the period (change of specific subsidiaries that leads to a change in thescope of consolidation): No
Number of new subsidiaries: - (Name:), number of excluded subsidiaries: - (Name:)
Changes in the accounting policy / changes in the accounting estimation[1] Changes in accounting policy required by IFRS: No
[2] Changes in accounting policy other than [1]: No[3] Changes in accounting estimations: No
Number of shares issued (common stock)
Q2 FY2018: 37,150,500
FY 2017 : 37,150,500[1] Number of shares issued at the end of the term(including treasury stock)
FY 2017 : 2,500[2] Number of treasury shares at the end of the term Q2 FY2018: 2,500Q2FY2018:36,835,219
Q2 FY2017 : 37,148,000[3] Average number of shares during the term
(Note) Number of treasury shares at the end of the term above does not include the shares attributed to the directors’
remuneration board incentive plan trust (302,000 shares for Q2 FY2018; 320,000 shares for FY2017.)* These quarterly financial statements are not subject to the quarterly review procedures.
* Notes regarding the appropriate use of financial forecast and other important notes
1. The Group has voluntarily been adopting IFRS on its consolidated financial statements since the consolidated fiscal year ending
September 30, 2018, and disclosing IFRS-based condensed consolidated financial statements from the first quarter.
2. 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 in using 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 9 of the attachment.
3 Results Presentation for Investors and Analysts: May 11, 2018. Supporting materials and a video of the presentation will be madeavailable on the company's website after the event.

-2-

○Table of contents of attachment
1. Qualitative Information on Consolidated Financial Statements for the Quarter........................................................ - 4 (1) Consolidated operating results ................................................................................................................................. - 4 (2) Status of consolidated financial position ................................................................................................................... - 8 (3) Review of consolidated earnings forecasts and other forecasts ............................................................................... - 9 2.

Condensed consolidated Financial Statements and Major Notes ......................................................................... - 10 -(1) Condensed consolidated balance sheet ................................................................................................................. - 10 (2) Condensed consolidated statement of income and consolidated statement of comprehensive income................. - 12 (3) Condensed consolidated statement of changes in equity....................................................................................... - 14 (4) Condensed consolidated statement of cash flows .................................................................................................. - 15 (5) Notes regarding the going concern assumptions ................................................................................................... - 17 (6) Notes regarding condensed consolidated financial statements .............................................................................. - 18 1．Operating and other receivables ......................................................................................................................... - 18 2．Operating and other payables ............................................................................................................................ - 18 3．First-time adoption of IFRS ................................................................................................................................. - 19 --3-

1. Qualitative Information on Consolidated Financial Statements for the Quarter(1) Consolidated operating results
Forward-looking statements in the document are based on the judgement of the Group at the end of the quarter
under review. The Group started adoption of International Financial Reporting Standards (hereinafter called as“IFRS”) in place of conventional JGAAP from cumulative first quarter of the current fiscal year. The Group presents
earnings figures for the first six months and the full of the previous consolidated fiscal year under IFRS forcomparative analysis.
①Consolidated operating results
The Group announces its earnings results for the cumulative second quarter of the cumulative consolidated fiscal
year (October 1, 2017 to March 31, 2018) as follows.
(Unit: Thousand yen)First six months of theprevious consolidated
fiscal year
(From October 1, 2016
to March 31, 2017)

First six months of thecurrent consolidated
fiscal year
(From October 1, 2017
to March 31, 2018)

Rate of change (%)

Revenue

10,028,773

12,558,478

25.2

Operating profit

2,153,582

3,269,904

51.8

Profit before income taxes

1,977,605

3,180,037

60.8

1,357,747

1,962,370

44.5

Profit attributable toowners of parent
a. Revenue

The Group’s revenue surged to 12,558,478 thousand yen, up by 25.2 % year-on-year. Steady growth ofEcommerce market, coupled with expansion of the Group’s service coverage in non-Ecommerce field, has led
to an increased revenue in payment processing business. Our money service business revenue also rose withthe steady expansion of transaction value in “GMO payment after delivery,” an after-the-fact type of payment
service. Further, payment enhancement business revenue grew, partly thanks to Macro Kiosk Berhad, theGroup’s consolidated subsidiary that provides a comprehensive service of mobile payment, authentication andnotification.
Our revenue breakdown by business model is as follows.
(Unit: Thousand yen)

Business model

Initial(Initial revenue)
Stock(Monthly revenue)
Fee(Transaction processing
revenue)
Spread(Merchant acquiring
service revenue)
Total

First six months of theprevious consolidated
fiscal year
(From October 1, 2016
to March 31, 2017)

First six months of thecurrent consolidated
fiscal year
(From October 1, 2017
to March 31, 2018)

Rate of change (%)

803,072

639,903△20.3

1,406,205

1,628,013

15.8

3,538,870

4,797,608

35.6

4,280,625

5,492,951

28.3

10,028,773

12,558,478

25.2

-4-

b. Operating profit
The Group’s operating profit reached 3,269,904 thousand yen, up by 51.8 year-on-year, on track for the Group’s
earnings forecast for the consolidated full fiscal year.
Segment-wise, payment processing business was 3,855,529 thousand yen, a year-on-year increase of 18.9%,
Money Service Business stood at 583,400 thousand yen, in contrast with the loss of 87,459 thousand yen in thesame time previous year, and payment enhancement business amounted to 22,065 thousand yen, a year-onyear drop of 88.2%.
c. Profit before income taxes
Factors in a. and b. were translated into profit before income taxes of 3,180,037 thousand yen, an increase of
60.8%.

-5-

②Results by segment
Performance by reportable segment is explained below.
(Unit: Thousand yen)Segment

Payment Processing
Business
Revenue
Operating profit
Money Service Business
Revenue
Operating profit
Payment Enhancement
Business
Revenue
Operating profit
Adjustments
Revenue
Operating profit

First six months of theprevious consolidated
fiscal year
(From October 1, 2016
to March 31, 2017)

First six months of thecurrent consolidated
fiscal year
(From October 1, 2017
to March 31, 2018)

Rate of change (%)

5,886,720
3,242,470

6,960,907
3,855,529

18.2
18.9

2,070,489△87,459

3,106,201
583,400

50.0－

2,071,563
186,282

2,491,368
22,065

20.3
△88.2

－
△1,187,710－△1,191,090－－

10,028,773
2,153,582

12,558,478
3,269,904

25.2
51.8

Total
Revenue
Operating profit

a. Payment processing businessFor our payment processing business, the Group’s focus is on online payment, recurring payment and cardpresent payment.
Online payment and recurring payment left solid results with steady growth in Ecommerce market, acquisition ofmajor Ecommerce merchants, and service expansion to a wider merchant base which is not limited to
Ecommerce operators.
As part of the services to support financial institutions and financial service providers that promote new
businesses to create a cashless society, the Group has been providing “Ginko Pay” platform system. Ginko Pay
is a mobile phone payment service that links to bank accounts, and was developed jointly by the Bank of
Yokohama and the Group. The Group has been adding its bank clients on top of the Bank of Yokohama that use
the platform. In fact, under the fiscal period under review, the Bank of Fukuoka, Ltd. started receiving theservice in March 2018. Additionally, Kumamoto Bank, Ltd. and Shinwa Bank, Ltd., and the three banks under
Resona Group (Resona Bank, Limited, Saitama Resona Bank, Limited, and The Kinki Osaka Bank, Ltd.) signed
the adoption of the service.
As a result, the segment’s revenue came in at 6,960,907 thousand yen, a year-on-year increase of 18.2%, andits operating profit totaled 3,855,529 thousand yen, a year-on-year increase of 18.9%.

b. Money Service Business
Money Service Business (MSB) includes “early payment service” to help merchants receive sales proceeds
earlier and improve their cash flow, “transaction lending service” to lend growth capital to merchants based on
payment and other data, remittance service, and “GMO payment after delivery” that the Group’s consolidated
subsidiary GMO Payment Service, Inc. offers.
Points to note under the cumulative second quarter of the consolidated fiscal year includes the steady
expansion of “GMO payment after delivery” by GMO Payment Service, Inc., and the rise of transaction value inearly payment service and remittance service. These contributed to the larger revenue and profit of the segment.
These factors have led to a segment revenue of 3,106,201 thousand yen, up by 50.0% year-on-year and asegment operating profit of 583,400 thousand yen that contrasts with the operating loss of 87,459 thousand yen
in the same time previous year.

-6-

c. Payment enhancement business
Payment enhancement business includes services of mobile payment, authentication and notification
comprehensively provided by our consolidated subsidiary Macro Kiosk Berhad and an online advertising service
that raises the sales of the Group’s merchants by analyzing their sales status and running their ads on theirbehalf based on sales data.
Under the cumulative second quarter, even with the temporary headwind in the external environment striking its
payment-related business, Macro Kiosk Berhad’s revenue in its mainstay authentication and notification
business grew, as was the case in the first quarter. The business was especially strong in emerging markets
which remain to be the focus of Macro Kiosk Berhad. Still, revenue growth of Macro Kiosk Berhad did nottranslate into earnings growth for the segment, due to the foreign exchange loss.
As for our online advertising service, an external environment factor for part of the service resulted in a year-onyear decline in its ad-placement revenue and the entire service’s revenue.
As a result, the segment recorded a revenue at 2,491,368 thousand yen, a year-on-year increase of 20.3%, anda segment operating profit of 22,065 thousand yen, a year-on-year decrease of 88.2%.
Additionally, the Group concluded a capital alliance agreement with Singapore’s Jewel Paymentech Pte. Ltd.
through its consolidated Singaporean subsidiary, GMO PAYMENT GATEWAY PTE. LTD. (renamed as “GMOZ.COM PAYMENT GATEWAY PTE. LTD.” in April 2018) under the second quarter. Jewel Paymentech Pte. Ltd.
provides comprehensive, efficiency service that includes KYC* for credit card merchant registration andexamination, product and deal monitoring on Ecommerce, and payment fraud detection, targeting banks andEcommerce operators in ASEAN countries by utilizing AI technology.
*KYC: Abbreviation for “Know Your Customer”, which is an array of personal identification procedures requiredby banks and card companies at the time of opening a bank account, issuing a credit card and registering
merchants
Please see below for the chart of major businesses and companies of such businesses by segment.
Segment

Major service

Major companies of the service

Payment processing service

GMO Payment Gateway, Inc.

Payment(Online billing and recurring billing)

Processing

Payment processing service

Business(card present payment)

subsidiary)

System development

GMO Payment Gateway, Inc.

GMO Payment after delivery

Money Service
Business

Remittance service
Transaction lending
Early payment service

Payment
Enhancement
Business

Mobile payment, authentication andnotification
Online advertising service-7-

GMO Epsilon, Inc. (consolidated subsidiary)
GMO Financial Gate, Inc. (consolidated

GMO Payment Service, Inc. (consolidated
subsidiary)
GMO Payment Gateway, Inc.
GMO Epsilon, Inc. (consolidated subsidiary)
GMO Payment Gateway, Inc.
GMO Epsilon, Inc. (consolidated subsidiary)
GMO Payment Gateway, Inc.
GMO Epsilon, Inc. (consolidated subsidiary)
Macro Kiosk Berhad (consolidated subsidiary)
GMO Payment Gateway, Inc.
GMO Epsilon, Inc. (consolidated subsidiary)(2) Status of consolidated financial position①Assets, liabilities and net assets
a. Assets
Total assets at the end of the second quarter of the consolidated fiscal year under review were up 8,987,209
thousand yen from the end of the previous consolidated fiscal year at 93,325,842 thousand yen. An increase of
cash and cash equivalents by 4,225,219 thousand yen and an increase of operating and other receivables by
4,233,235 thousand yen contributed to the larger assets.
b. Liabilities
Balance of liabilities at the end of the second quarter of the consolidated fiscal year under review stood at
71,637,268 thousand yen, higher than the end of the previous consolidated fiscal year by 8,067,953 thousand
yen. Such increase mainly came from operating and other payables’ expansion of 6,119,130 thousand yen.
c. Equity
Equity balance at the end of the second quarter of the consolidated fiscal year under review was 21,688,574
thousand yen, higher by 919,256 thousand yen than the end of the previous consolidated fiscal year. Retained
earnings increase of 522,098 thousand yen led to the larger equity.
②Status of consolidated cash flows
Cash and cash equivalents (hereinafter called as “fund”) increased by 4,225,219 thousand yen over the
cumulative second quarter to 31,758,735 thousand yen. The state of cash flows over the cumulative second
quarter is presented below.
a. Cash flow of operating activities
Fund provided by operating activities in the cumulative second quarter amounted to 3,816,514 thousand yen,which contrasts with the provision of 2,008,845 thousand yen in the same period a year before. Despite anincrease in operating and other receivables by 4,204,137 thousand yen that dragged down the fund balance, anincrease in operating and other payables by 6,073,932 thousand yen have led to the fund expansion on thewhole.
b. Cash flow of investing activities
The amount of fund used for investing activities in the second cumulative quarter totaled 788,201 thousand yen,which contrasts with the usage of 1,047,473 thousand yen in the same period previous year. This is due to theoutflow of 538,256 thousand yen from an acquisition of intangible assets and purchase of investment securities
for 264,918 thousand yen.
c. Cash flow of financing activities
The amount of fund provided in financing activities over the cumulative second quarter totaled 1,228,873
thousand yen, which contrasts with the provision of 2,890,562 thousand yen in the same period previous year.
This is due to the net increase in short-term borrowings of 3,200,000 thousand yen, despite the payout ofdividends for 1,482,368 thousand yen.

-8-(3) Review of consolidated earnings forecasts and other forecasts
The Group’s core business is positioned in Ecommerce market in Japan. Japan’s B2C Ecommerce for merchandizing
continues to grow rapidly, helped by favorable changes in the group’s external environment such as spreading
smartphone usage and logistic reforms. At the same time, field of Ecommerce is expanding, represented by the riseof B2B and C2C Ecommerce markets.
For the fiscal year ending September 2018, the Group forecasts revenue expansion in all its segments of payment
processing business, Money Service Business and payment enhancement business by acquisition of large andgrowth merchants, financial institutions and large businesses, the expansion of “GMO payment after delivery,” further
growth of Macro Kiosk Berhad, and others.
In terms of profits, the Group is expecting a rise in cost-to-revenue ratio in response to growing high cost-ratio
services including “GMO payment after delivery” and remittance service, and the plans for upfront investments for
growth. Still, the Group is on track for its consolidated full-year forecast in terms of operating profit, by the expansionof high gross-margin payment processing business and margin improvement in Money Service Business.
Our earnings forecast for the consolidated fiscal year ending September 30, 2018 is as follows: revenue 26,107
million yen (-% year-on-year increase); operating profit 6,475 million yen (-% year-on-year increase); profit before
income taxes 6,196 million yen (-% year-on-year increase); profit attributable to owners of parent 3,933 million yen (% year-on-year increase). Please note that year-on-year changes are not presented since this is the first fiscal year
in which the Group adopts IFRS.

-9-

2. Condensed consolidated Financial Statements and Major Notes(1) Condensed consolidated balance sheet

Notes

Date of transition to
IFRS(October 1, 2016)(Unit: Thousand yen)
End of previous
End of Q2 of current
consolidated fiscal
consolidated fiscal
year
year
(September 30,(March 31, 2018)2017)

AssetsCurrent assets
Cash and cash equivalents
Operating and other receivables

1

25,091,091

27,533,515

31,758,735

19,841,482

42,991,145

47,224,381

39,35094,47880,478Inventories
Other financial assets

46,14750,89562,376

Other current assets

430,194

408,993467,255

Total current assets

45,448,267

71,079,028

79,593,227

400,648461,558

417,218

4,193,386

4,766,089

4,979,051

2,500,061

2,970,709

3,017,157

3,186,744

3,260,718

3,611,135

425,935

1,792,840

1,692,097

Other noncurrent assets

9,066

7,688

15,955

Total noncurrent assets

10,715,842

13,259,604

13,732,615

56,164,109

84,338,633

93,325,842

Noncurrent assets
Tangible assets
Goodwill and other intangible assets
Investments accounted for using equity
methodOther financial assets
Deferred tax assets

Total assets- 10 -

NotesDate of transition to
IFRS(October 1, 2016)(Unit: Thousand yen)
End of previous
End of Q2 of current
consolidated fiscal
consolidated fiscal
year
year
(September 30,(March 31, 2018)2017)

Liabilities and equity
Liabilities
Current liabilities
Operating and other payables

2

33,251,526

53,448,543

59,567,674

43,860820,596

4,005,705

Borrowings
Other financial liabilities

64,28473,54962,851

Income taxes payable, etc.

846,086

1,574,603

1,093,362

Other current liabilities

1,329,808

1,992,034

1,797,303

Total current liabilities

35,535,567

57,909,327

66,526,897

Borrowings

45,2452,999,500

2,599,300

Other financial liabilities

124,533

158,154

146,431

Provision

44,842

63,35864,055

Deferred tax liabilities

264,606

230,045

205,592

Other noncurrent liabilities

1,097,758

2,208,928

2,094,991

Total noncurrent liabilities

1,576,987

5,659,987

5,110,370

37,112,554

63,569,315

71,637,268

Capital stock

4,712,900

4,712,900

4,712,900

Capital surplus

4,964,712

4,985,781

5,096,959

Retained earnings

8,188,306

9,619,266

10,141,365

Treasury stock△265,236△256,269△242,111

Noncurrent liabilities

Total liabilities
EquityOther items of equity

357,654613,768

864,077

Total equity attributable to owners ofparent17,958,338

19,675,447

20,573,192

Minority interests

1,093,216

1,093,870

1,115,382

Total equity

19,051,554

20,769,318

21,688,574

56,164,109

84,338,633

93,325,842

Total liabilities and equity- 11 -

(2) Condensed consolidated statement of income and consolidated statement of comprehensive income
Condensed consolidated statement of income

Notes
RevenueFirst six months of previous
consolidated fiscal year
(From October 1, 2016
to March 31, 2017)
10,028,773(Unit: Thousand yen)First six months of current
consolidated fiscal year
(From October 1, 2017
to March 31, 2018)12,558,478△3,106,569△4,178,763

6,922,203

8,379,715

230,335

120,498△4,724,116△5,090,210△274,839△140,098

2,153,582

3,269,904

Cost of revenue
Gross profit
Other income
Selling, general and administrative
expenses
Other expense
Operating profit
Financial income

13,00535,004

Financial expense△62,463△30,522Equity method investment gains or loss

△126,518△94,349

Profit before income taxes

1,977,605

3,180,037

Income tax expenses△601,730△1,233,894

Profit1,375,875

1,946,143

1,357,747

1,962,370

18,127△16,227

1,375,875

1,946,143

Basic earnings per share (yen)

36.55

53.27

Diluted earnings per share (yen)

36.54

53.27

Profit attributable to
Owners of parent
Non-controlling interests
ProfitEarnings per share- 12 -

Condensed consolidated statement of comprehensive income

Notes
ProfitFirst six months of previous
consolidated fiscal year
(From October 1, 2016
to March 31, 2017)
1,375,875(Unit: Thousand yen)First six months of current
consolidated fiscal year
(From October 1, 2017
to March 31, 2018)
1,946,143

182,061

108,040

54,492

51,925236,554

159,966

44,89391,670226,874

69,805

271,768

161,475

508,322

321,442

1,884,197

2,267,585

1,863,847

2,258,454

Other comprehensive income
Items that will not be reclassified to profit
or loss
Fair value of financial assets measured
through other comprehensive income
Shares of other comprehensive incomeof equity method affiliates
Total of Items that will not bereclassified to profit or loss
Items that will be reclassified to profit orloss
Exchange differences on translation offoreign operations
Shares of other comprehensive incomeof equity method affiliates
Total of items that will be reclassified to
profit or loss
Other comprehensive income after income
taxes
Comprehensive income

Comprehensive income attributable to
Owners of parent
Minority interests
Total- 13 -

20,3509,131

1,884,197

2,267,585

(3) Condensed consolidated statement of changes in equity
First six months of the previous consolidated fiscal year (From October 1, 2016 to March 31, 2017)(Unit: Thousand yen)

Notes

Capitalstock

CapitalsurplusRetainedearnings

Treasurystock

Total equity
Other items attributableof equity to owners ofparentMinority
interests

Total assets

4,712,900

4,964,712

8,188,306△265,236

1,093,216

19,051,554

Profit

－－1,357,747－－

1,357,747

18,127

1,375,875

Other comprehensive income

－

－

－

－

506,099

506,0992,223

508,322－－

1,357,747－

506,099

1,863,847

20,3501,884,197

Disposal of treasury stock－

50,997

－

8,966

－

59,964－59,964

Dividends－－ △1,002,996－－ △1,002,996－△1,002,996－－

12,828－△12,828

－

－

－

－

△30,070－－－△30,070

3,360△26,710

－

142

－

－

△142

－

10,317

10,317

Total transactions with owners－

21,069△990,167

8,966△12,971△973,102

13,677△959,425

Balance as of March 31, 2017

4,712,900

4,985,781

8,555,887△256,269

850,782 18,849,082

1,127,244

19,976,326

Balance as of October 1, 2016

Comprehensive income

Transfer from accumulated
other comprehensive income
to retained earnings
Changes in the interests incontrolled subsidiary
Share-based paymenttransaction

357,654 17,958,338

First six months of the current consolidated fiscal year (From October 1, 2017 to March 31, 2018)(Unit: Thousand yen)
Total equity
Other items attributableof equity to owners ofparentCapitalstock

CapitalsurplusRetainedearnings

Treasurystock

4,712,900

4,985,781

9,619,266△256,269

Profit

－－1,962,370－－

Other comprehensive income

－

－

－

－

296,083－－

1,962,370－

Disposal of treasury stock－

73,760－14,157

Dividends－－ △1,485,920

－

－

－

45,648－△45,648－△30,707－－－

68,125－－

Total transactions with owners－

111,178 △1,440,271

Balance as of March 31, 2018

4,712,900

5,096,959 10,141,365

Notes

Balance as of October 1, 2017

Comprehensive income

Transfer from accumulated
other comprehensive income
to retained earnings
Changes in the interests incontrolled subsidiary
Share-based paymenttransaction- 14 -

613,768 19,675,447

Minority
interests

Total assets

1,093,870

20,769,318

1,962,370△16,227

1,946,143

296,083

25,358321,442

296,083

2,258,454

9,131

2,267,585－

87,918－87,918－ △1,485,920－△1,485,920

－

－

－

－

△30,707－△30,707△125

68,00012,38080,38014,157△45,774 △1,360,709

12,380△1,348,329△242,111

864,077 20,573,192

1,115,382

21,688,574

(4) Condensed consolidated statement of cash flows
First six months of previous
consolidated fiscal year
(From October 1, 2016
to March 31, 2017)(Unit: Thousand yen)First six months of current
consolidated fiscal year
(From October 1, 2017
to March 31, 2018)

1,977,605

3,180,037

Depreciation

362,537

457,650

Financial income and expense
Equity method investment gain/loss(△=gains)
Increase/decrease in inventories(△=increase)
Increase/decrease in operating andother receivables (△=increase)
Increase/decrease in operating andother payables (△=decrease)
Other△6,102△4,309126,518

94,349△85,063

13,999△14,465,941△4,204,137

14,541,359

6,073,932

568,80323,756

3,019,717

5,635,279

3,276

6,010

△14,016△18,260－△67,041△1,000,131△1,739,473

2,008,845

3,816,514△29,994△35,392△585,062△538,256△11,244△264,918

30,94758,245△369,329－△68,221△1,863

3,152

796△17,720△6,812△1,047,473△788,201

Notes
Net cash provided by (used in) operating
activities
Profit before income taxes

SubtotalInterest and dividends received
Interest paid
Payment on information security
countermeasure expense
Income taxes paid
Net cash provided by (used in)operating activities
Net cash provided by (used in) investing
activities
Purchase of property, plants andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales and redemptionof investment securities
Purchase of stocks of subsidiaries andaffiliates
Acquisition of other financial assets
Proceeds from sales of other financial
assetsOthersNet cash provided by (used in)investing activities- 15 -

NotesFirst six months of previous
consolidated fiscal year
(From October 1, 2016
To March 31, 2017)(Unit: Thousand yen)First six months of current
consolidated fiscal year
(From October 1, 2017
to March 31, 2018)

4,002,404

3,200,000△58,468△415,662

250－△26,960△30,707△1,000,529△1,482,368△26,133△42,387

2,890,562

1,228,873

37,123△31,967

3,889,057

4,225,219

25,091,091

27,533,515

28,980,148

31,758,735

Net cash provided by (used in) financing
activities
Proceeds from short-term borrowings(△=decrease)
Repayment of long-term borrowings
Proceeds from issuance of common
stock
Purchase of shares of subsidiaries not
resulting in change in scope of
consolidation
Dividends paid
Other
Net cash provided by (used in)financing activities
Effect of exchange rate changes on cash
and cash equivalents
Increase and decrease in cash and cash
equivalents (△=decrease)
Balance of cash and cash equivalents atthe beginning of the period
Cash and cash equivalents at the end of
period- 16 -

(5) Notes regarding the going concern assumptions
N/A- 17 -

(6) Notes regarding condensed consolidated financial statements
1．Operating and other receivables
Breakdown of operating and other receivables are as follows.
Date of transition to IFRS(October 1, 2016)

End of previous consolidated
fiscal year
(September 30, 2017)(Unit: Thousand yen)
End of Q2 of current
consolidated fiscal year
(March 31, 2018)

Accounts receivable-trade

4,083,117

6,154,731

6,658,786

Advance payments-trade

6,388,955

16,806,222

19,902,203

Accounts receivable-other

1,742,612

14,676,213

16,932,665

Operating loans

7,909,406

7,746,188

6,751,485

Allowance for doubtful
accounts△327,887△2,393,788△3,051,996

45,278

1,578

31,236

19,841,482

42,991,145

47,224,381

Date of transition to IFRS(October 1, 2016)

End of previous consolidated
fiscal year
(September 30, 2017)(Unit: Thousand yen)
End of Q2 of current
consolidated fiscal year
(March 31, 2018)

Accounts payable-trade

2,785,256

3,482,504

4,162,461

Accounts payable-other

2,902,451

12,697,663

14,167,674

Deposits received

27,563,819

37,268,376

41,237,538

33,251,526

53,448,543

59,567,674

Other
Total

2．Operating and other payables
Breakdown of operating and other payables are as follows.

Total- 18 -

3．First-time adoption of IFRSThe group discloses condensed consolidated financial statements under IFRS from the first quarter of the current
consolidated fiscal year. The most recent consolidated financial statements under JGAAP is for the consolidated
fiscal year ended on September 30, 2017, and transition date to IFRS is October 1, 2016.
(1)

Exemptions on retrospective application

IFRS 1 requires an entity that adopts IFRS for the first time to apply IFRS retrospectively. However, IFRS 1
provides some exemptions. Exemptions adopted by the Group are as follows.
①Business combinations
Under IFRS 1, first-time adopters may choose to apply IFRS 3, “Business Combinations” (hereinafter called as“IFRS 3”) retrospectively or prospectively. The Group has chosen not to apply IFRS 3 retrospectively tobusiness combinations that occurred before transition date. Therefore, business combinations that occurred
before the transition date were treated under JGAAP and are not modified. The amount of goodwill that
occurred as a result of business combination are presented in book value under JGAAP in principle. However,
all goodwill denominated in foreign currencies are reconverted at the exchange rate of the closing date since
IAS 21 “the effects of changes in foreign exchange rates” is retrospectively applied. Impairment test was
performed on goodwill at the time of transition date, irrespective of sign of impairment.
②Exchange differences on translation of foreign operations
IFRS 1 allows first-time adopters to choose to deem the cumulative amount of exchange differences ontranslation of foreign operations to be zero as of the date of transition to IFRS. The Group has chosen to adopt
this exemption.
③Share-based payment
IFRS 1 allows first-time adopters to choose to adopt IFRS 2 “share-based payment” (hereinafter called “IFRS2”) retrospectively or prospectively on share-based payments vested before IFRS transition date. The Groupchose to not adopt IFRS 2 on share-based payments vested before the date of transition to IFRS.
④Designation of financial instruments recognized before the date of transition
IFRS 1 allows classification under IFRS 9 to be determined based on the facts or status as of the date oftransition, not of earlier date. It also allows equity assets to be designated as financial assets measured at afair value through other comprehensive income. The Group applies this exemption and designates equity
assets as financial assets measured at a fair value through other comprehensive income.
(2) Mandatory exceptions under IFRS 1IFRS 1 prohibits retrospective application of IFRS on “estimates,” “derecognition of financial assets or liabilities,”"minority interests,” “classification and measurement of financial assets,” and others. As to these items, the Group
adopts IFRS prospectively from the date of transition.
(3) Reconciliation chart
Please see below for the effects that transition from JGAAP to IFRS gives on the financial position, operating
results and cash flows of the Group. Please note that “reclassification” of the reconciliation chart presents items
that do not affect retained earnings or comprehensive income and that “difference in recognition andmeasurement” presents items that affect retained earnings and comprehensive income.

- 19 -

①Reconciliation of equity
Date of transition to IFRS (October 1, 2016)
Presentation under JGAAP

Difference in
Reclassificati
recognition andon (1)
measurement

JGAAP

IFRS

Notes

Presentation under IFRS

Thousand yen Thousand yen Thousand yen Thousand yen
AssetsAssetsCurrent assets

Current assets

Cash and deposits

25,231,522△43,986△96,444

25,091,091

Accounts receivable-trade

3,924,904

15,140,397

776,179

19,841,482 (3),(11)Lease receivable

7,291,439△7,291,439

－

－

－

559,836△513,689

46,14739,350－－39,3506,388,955△6,388,955－－

Inventories
Advance payments-trade
Prepaid expenses

118,723△118,723－－

Deferred tax assets

300,169△300,169－－

1,742,612△1,742,612－－

839,372△442,405

33,227430,194

Allowance for doubtful
accounts△327,887

327,887－－

Total current assets

45,549,162△300,169

199,273

45,448,267

Accounts receivable-other
Other

(11)

(11)

352,280－

48,367

Intangible assets

4,143,749－

49,637

Investment securities

2,251,124△2,251,124－－

2,203,234

309,174△12,3482,500,061

309,174△309,174

－

－

962

2,562,598

623,183

31,468△31,468

－

－

(11)

Total current assets

4,193,386 (4),(11)△8,285－－231,035△231,035－－

Deferred tax assets

57,294300,169

68,472425,935

Other

80,437△72,151

780

9,066

△31,468

31,468－－9,637,579

300,169

778,093

10,715,842

55,186,742－

977,366

56,164,109

Total assets- 20 -(4),(6)(11)

3,186,744 (5),(11)8,285

Total noncurrent assets

Other current assets

400,648 (2),(11) Tangible assets

Lease and guarantee
deposits

Allowance for doubtful
accounts

Other financial assets

Noncurrent assets

Tangible assets

Long-term prepaid expenses

Operating and otherreceivables

Inventories

Noncurrent assets

Shares of subsidiaries andaffiliates
Investments in othersecurities of subsidiaries andaffiliates
Long-term loans receivablefrom directors andemployees
Claims provable inbankruptcy, claims provablein rehabilitation and otherCash and cash equivalents(11)

Goodwill and other intangible
assetsInvestments accounted forusing equity method

Other financial assets

Deferred tax assets
Other noncurrent assets

Total noncurrent assets
Total assets

Presentation under JGAAP

Difference in
Reclassificati
recognition and
IFRS
Notes
on (1)
measurement
Thousand yen Thousand yen Thousand yen Thousand yen
JGAAP

Presentation under IFRS

Liabilities

Liabilities

Current liabilities

Current liabilities
2,726,492

30,403,674

121,359

33,251,526(11)

Operating and other payables－

68,513△24,652

43,860(11)

Borrowings

64,846△64,846－－

Accounts payable-other

2,784,175△2,784,175－－

Income taxes payable

901,767△55,680－

846,086

Accrued consumption taxes

78,482△78,482－－－

64,846△561

64,284447,442△447,442－－

27,634,302 △27,634,302

－

－

62

△62

－

－

Provision for bonuses
Provision for bonuses for
directors

478,808△478,808－－

125,000△125,000

－

－

Other

89,3691,121,409

119,030

1,329,808 (8),(11) Other current liabilities

35,330,748△10,356

215,175

35,535,567

Long-term borrowings

30,150－15,09545,245(11)

Borrowings

Lease payable
Long-term lease andguarantee deposited
Provision for directors’
remuneration Board Incentive
Plan Trust

115,984

7,397

1,150

124,533(11)

Other financial liabilities

7,397△7,397－－

170,000△170,000

－

－

－

－

44,842

44,842－

264,606－

263,343△84,250

918,665

586,876

10,356

979,754

1,576,987

35,917,624－

1,194,930

37,112,554

Capital stock

4,712,900－－

4,712,900

Capital stock

Capital surplus

4,964,712－－

4,964,712

Capital surplus(10),8,188,306(12)

Retained earnings
Treasury stock

Accounts payable-trade

Lease payable

Advances received
Deposits received
Unearned revenue

Total current liabilities

Income taxes payable, etc.

(11)

Total current liabilities
Noncurrent liabilities

Noncurrent liabilities

Other
Total noncurrent liabilities
Total liabilities

Other financial liabilities

Provision(11)(7),(8)1,097,758(11)
264,606

Deferred tax liabilities
Other noncurrent liabilities
Total noncurrent liabilities
Total liabilities
EquityNet assets

Retained earnings

8,893,549－△705,242

Treasury stock△265,236－－△265,236

1,066△1,066－－△145,167

1,066

501,754357,654

18,161,825－△203,487

17,958,338

Minority interests

1,107,292－△14,076

1,093,216

Total net assets

19,269,118－△217,563

19,051,554

Total equity

Total liabilities and net assets

55,186,742－

977,366

56,164,109

Total liabilities and equity

Subscription rights to shares
Total accumulated othercomprehensive income

(10),
(11)

Other items of equity
Total equity attributable toowners of parent(11)

Minority interests(Note) Review of acquisition cost allocation
JGAAP amounts on the reconciliation chart above are based on the consolidated balance sheets (JGAAP) as of
September 30, 2016 on which acquisition cost allocation associated with business combinations was not finalized.
Instead, tentative accounting treatment was conducted based on reasonable information available at the time ofcreation of the said financial statements.

- 21 -

Allocation of the said acquisition costs were finalized in the following consolidated fiscal year in accordance with
JGAAP, and is reflected to JGAAP amounts on the above reconciliation chart. JGAAP amounts on thereconciliation chart are on “5. Accounting status” of Securities Report of the previous consolidated fiscal year.

- 22 -

Second quarter of the previous consolidated fiscal year (March 31, 2017)
Presentation under JGAAP

Difference in
Reclassificati
recognition and
IFRS
Notes
on (1)
measurement
Thousand yen Thousand yen Thousand yen Thousand yen
JGAAP

AssetsAssetsCurrent assets

Current assets

Cash and deposits

29,004,469△52,063

27,742

Accounts receivable-trade5,602,333

27,736,124

1,170,535

Lease receivable

7,311,754△7,311,754

－

－

－

1,103,202△1,048,678

54,52428,980,148

124,522－－

124,522△9,240,981－－

Prepaid expenses

149,865△149,865－－

Deferred tax assets

221,078△221,078－－

Short-term borrowings

1,050,678△1,050,678－－

12,494,004△
12,494,004－－

192,643

135,434

38,300366,378

Allowance for doubtful
accounts△1,324,585

1,324,585－－

Total current assets

64,067,745△221,078

187,901

64,034,568

Advance payments-trade

Accounts receivable-other
Other

(11)

34,508,993 (3),(11)9,240,981

Inventories(11)362,937－

47,261Intangible assets

4,383,270－

35,049Investment securities

2,415,345△2,415,345－－

2,468,556

300,328

264,525

3,033,410

300,328△300,328

－

－

716

2,827,957

627,024

33,397△33,397

－

－

(11)

－

－

333,362△333,362－－

Deferred tax assets

142,361

221,078

138,716

Other

79,250△70,548

780

9,481

△33,397

33,397－－

10,494,829

221,078

1,113,358

11,829,266

74,562,574－

1,301,259

75,863,834- 23 -(4),(6)(11)

3,455,698 (5),(11)△8,701

Total assets

Other current assets

Total current assets

4,418,319 (4),(11)8,701

Total noncurrent assets

Other financial assets

410,198 (2),(11) Tangible assets

Lease and guarantee
deposits

Allowance for doubtful
accounts

Operating and otherreceivables

Noncurrent assets

Tangible assets

Long-term prepaid expenses

Cash and cash equivalents

Inventories

Noncurrent assets

Shares of subsidiaries andaffiliates
Investments in othersecurities of subsidiaries andaffiliates
Long-term loans receivablefrom directors andemployees
Claims provable inbankruptcy, claims provablein rehabilitation and other

Presentation under IFRS

502,155 (9),(11)Goodwill and other intangible
assetsInvestments accounted forusing equity method

Other financial assets

Deferred tax assets
Other noncurrent assets

Total noncurrent assets
Total assets

Presentation under JGAAP

Difference in
Reclassificatio
recognition and
IFRS
Notes
n (1)
measurement
Thousand yen Thousand yen Thousand yen Thousand yen
JGAAP

Presentation under IFRS

Liabilities

Liabilities

Current liabilities

Current liabilities

Accounts payable-trade

3,416,801

44,268,115

100,761

47,785,679(11)

Operating and other payables

Short-term borrowings

4,030,102－△2,0384,028,064(11)

Borrowings－

57,916

1,922

59,839(11)

Other financial liabilities

Accounts payable-other

11,234,008△11,234,008－－

Income taxes payable(9)

Income taxes payable, etc.

1,074,870△86,247△431,948

556,674

Accrued consumption taxes

340,237△340,237－－

Advances received

451,910△451,910－－

Deposits received

33,048,977△33,048,977－－

252,215△252,215－－

251,637－－

251,637

100,000△100,000－－

82,913

1,187,563

125,631

54,283,674－△205,671

Provision for bonuses
Provision for information
security countermeasure
Provision for bonuses for
directors
Other
Total current liabilities

Provision

1,396,108 (8),(11) Other current liabilities
54,078,003

Total current liabilities
Noncurrent liabilities

Noncurrent liabilities

Provision for directors’
remuneration Board Incentive
Plan Trust

Other
Total noncurrent liabilities
Total liabilities－

12,603△6,014

6,588

(11)

Borrowings－

92,076

5,332

97,408(11)

Other financial liabilities

185,495△185,495

－

－

－

－

45,08645,086－275,272△7,335393,934△194,456

1,193,005

579,430－

1,230,073

1,809,504

54,863,105－

1,024,402

55,887,507

Provision(11)(7),(8)1,392,483(11)
267,937

Deferred tax liabilities
Other noncurrent liabilities
Total noncurrent liabilities
Total liabilities
EquityNet assets
Capital stock

4,712,900－－

4,712,900

Capital stock

Capital surplus

4,934,784－

50,997

4,985,781

Capital surplus(10),8,555,887(12)

Retained earnings
Treasury stock

Retained earnings

8,958,584－△402,697

Treasury stock△256,269－－△256,269

923

△923

－

－

215,339923

634,519

850,782

18,566,263－

282,819

18,849,082

Minority interests

1,133,206－△5,962

1,127,244

Total net assets

19,699,469－

276,857

19,976,326

Total equity

Total liabilities and net assets

74,562,574－

1,301,259

75,863,834

Total liabilities and equity

Subscription rights to shares
Total accumulated othercomprehensive income

(10),
(11)

Other items of equity
Total equity attributable toowners of parent(11)

Minority interests(Note) Review of acquisition cost allocation
JGAAP amounts on the reconciliation chart above are based on the consolidated balance sheets (JGAAP) as of March
31, 2017 on which acquisition cost allocation associated with business combinations was not finalized. Instead,tentative accounting treatment was conducted based on reasonable information available at the time of creation of thesaid financial statements.
Allocation of the said acquisition costs were finalized in the consolidated fiscal year of the quarterly closing date inaccordance with JGAAP, and is reflected to JGAAP amounts on the above reconciliation chart.
As a result, intangible assets, other under noncurrent liabilities, and minority interests under JGAAP on the above- 24 -

reconciliation chart are larger by 415,166 thousand yen, 275,272 thousand yen, and 156,527 thousand yen respectively,
and shares of subsidiaries and affiliates and retained earnings above are smaller by 142,597 thousand yen and 16,285
thousand yen respectively compared to those on the consolidated balance sheet (JGAAP) as of March 31, 2017.

- 25 -

Most recent date of creating consolidated financial statements (September 30, 2017)
Presentation under JGAAP

Difference in
Reclassificatio
recognition and
IFRS
Notes
n (1)
measurement
Thousand yen Thousand yen Thousand yen Thousand yen
JGAAP

Presentation under IFRS

AssetsAssetsCurrent assets

Current assets

Cash and deposits

27,623,466△48,292△41,658

27,533,515

Accounts receivable-trade

6,254,193

35,519,416

1,217,536

42,991,145 (3),(11)Lease receivable

6,426,827△6,426,827

－

－

－

1,267,515△1,216,619

50,895

94,478－－94,47816,806,222 △16,806,222

Inventories－－

Prepaid expenses

173,200△173,200－－

Deferred tax assets

1,251,001△1,251,001－－

Accounts receivable-other

14,678,576 △14,678,576

－

－

Other

Advance payments-trade

1,433,354△1,047,601

23,240408,993

Allowance for doubtful
accounts△2,393,788

2,393,788－－

Total current assets

72,347,531△1,251,001△17,501

71,079,028

(11)

(11)

399,588－

61,969Intangible assets

4,505,631－

260,458

Investment securities

2,704,216△2,704,216－－

2,318,656

420,998

231,055

2,970,709

420,998△420,998

－

－

467

3,108,972

151,279

49,359△49,359

－

－

(11)

Total current assets

4,766,089 (4),(11)△6,907－－

325,555△325,555－－

Deferred tax assets

16,8481,251,001

524,989

1,792,840

Other79,200△72,292

780

7,688

△49,359

49,359－－10,778,069

1,251,001

1,230,533

13,259,604

83,125,601－

1,213,031

84,338,633

Total assets- 26 -(4),(6)(11)

3,260,718 (5),(11)6,907

Total noncurrent assets

Other current assets

461,558 (2),(11) Tangible assets

Lease and guarantee
deposits

Allowance for doubtful
accounts

Other financial assets

Noncurrent assets

Tangible assets

Long-term prepaid expenses

Operating and otherreceivables

Inventories

Noncurrent assets

Shares of subsidiaries andaffiliates
Investments in othersecurities of subsidiaries andaffiliates
Long-term loans receivablefrom directors andemployees
Claims provable inbankruptcy, claims provablein rehabilitation and otherCash and cash equivalents(11)

Goodwill and other intangible
assetsInvestments accounted forusing equity method

Other financial assets

Deferred tax assets
Other noncurrent assets

Total noncurrent assets
Total assets

Presentation under JGAAP

Difference in
Reclassificatio
recognition and
IFRS
Notes
n (1)
measurement
Thousand yen Thousand yen Thousand yen Thousand yen
JGAAP

Presentation under IFRS

Liabilities

Liabilities

Current liabilities

Current liabilities
3,521,081

49,945,600△18,138

53,448,543(11)

Operating and other payables－

827,286△6,690820,596(11)

Borrowings

74,918－△1,36973,549(11)

Other financial liabilities

Accounts payable-other

12,558,354 △12,558,354－－

Income taxes payable

Accounts payable-trade

Lease payable

1,693,502△118,898－

1,574,603

Accrued consumption taxes

711,427△711,427－－

Advances received

491,722△491,722－－

37,406,767 △37,406,767－－

Deposits received

Income taxes payable, etc.

Unearned revenue

11,886△11,886－－

Provision for bonuses
Provision for bonuses for
directors

410,197△410,197－－

57,900△57,900

－

－

Other

882,799994,267

114,967

1,992,034 (8),(11) Other current liabilities

57,820,557－

88,76957,909,327

Total current liabilities

Total current liabilities
Noncurrent liabilities

Noncurrent liabilities
Long-term borrowings
Lease payable
Provision for directors’
remuneration Board Incentive
Plan Trust

Other
Total noncurrent liabilities
Total liabilities

2,999,500－－

2,999,500(11)

Borrowings

158,075－

79

158,154(11)

Other financial liabilities

210,495△210,495

－

－

－

－

63,358－

232,777△2,732

250,780△22,282

1,980,430

3,618,851－

2,041,136

5,659,987

61,439,408－

2,129,906

63,569,315

63,358Provision(11)(7),(8)2,208,928(11)
230,045

Deferred tax liabilities
Other noncurrent liabilities
Total noncurrent liabilities
Total liabilities
EquityNet assets
Capital stock

4,712,900－－

4,712,900

Capital stock

Capital surplus

4,934,784－

50,997

4,985,781

Capital surplus

Retained earnings

10,837,387－△1,218,121

9,619,266

Treasury stock△256,269－－△256,269

923

△923

－

－

364,344

1,937

247,486

613,768

20,594,071

1,013△919,637

19,675,447

Minority interests

1,092,121△1,013

2,762

1,093,870

Total net assets

21,686,192－△916,874

20,769,318

Total liabilities and net assets

83,125,601－

1,213,031

84,338,633

Subscription rights to shares
Total accumulated othercomprehensive income- 27 -(10),(12)

Retained earnings
Treasury stock

(10),
(11)

Other items of equity
Total equity attributable toowners of parent(11)

Minority interests
Total equity
Total liabilities and equity

Notes regarding the reconciliation of equity(1) Adjustment of line items
The Group has reclassified line items to comply with IFRS rules. Major changes are noted below.
・For cash and deposits under JGAAP, time deposits with a deposit term of three months or longer are included
under other financial assets (current) under IFRS.
・ ”Accounts receivable-trade,” “lease receivable,” “advance payments-trade,” “accounts receivable-other” and“allowance for doubtful accounts” under JGAAP are combined together and included in “operating and otherreceivables” under IFRS.
・”Investments accounted for using equity method” under “shares of subsidiaries and affiliates” under JGAAP ispresented as an independent item under IFRS.
・”Investment securities” under JGAAP is included in “other financial assets” under IFRS.
・”Accounts payable-trade,” “accounts payable-other” and “deposits received” under JGAAP are combined together
and included in “operating and other payables” under IFRS.
・Deferred tax assets and deferred tax liabilities are reclassified into noncurrent assets or noncurrent liabilities.
・Subscription rights to shares was an independent item under JGAAP, and is included in other items of equity
under IFRS.
(2) Tangible assets
The Group principally applied declining balance method for depreciation of tangible assets (excluding leaseassets) under JGAAP, and applies straight line method under IFRS.
(3) Financial instruments (loan agreement)
Lease transactions to clients and a series of transactions under consignment agreements were accounted for as
separate transactions under JGAAP. However, under IFRS, the Group treats them together as financial
instruments (loan agreement) in accounting treatment in light of their overall economic effect.
(4) Goodwill
The Group amortized goodwill evenly over a period of 10-20 years under JGAAP. From the date of transition to
IFRS onward, the Group has stopped such amortization and instead performs impairment test every fiscal year.
(5) Equity instruments
In principle, the Group measures unlisted equity instruments at acquisition price under JGAAP, and measures atfair value under IFRS. Therefore, there are changes in other financial assets (noncurrent). Further, gain/loss on
sales of equity instruments and impairment loss were recognized as net gain/loss under JGAAP. For the financial
assets designated to be measured at a fair value through other comprehensive income under IFRS, changes in
the fair value of such financial assets are recognized as part of other comprehensive income and are reclassified
into retained earnings.
(6) Investments accounted for using equity method
Goodwill in equity method affiliate is amortized under JGAAP, and is not amortized under IFRS.
(7) Share-based payment transaction by directors’ remuneration Board Incentive Plan Trust
For share-based payment transaction by directors’ remuneration Board Incentive Plan Trust, under JGAAP, theGroup recognized expenses and provision at fair value based on the share price of the time the Trust purchased
the Group’s shares. Under IFRS, they are recognized as cash-settled share-based payment transactions. The
Group recognizes the fair value of payment amount as liabilities, and records changes in the fair value of suchliabilities as net gain/loss until the right to receive the remuneration is vested under no condition.

- 28 -

(8) Accrued paid leave
Accrued paid leave was not accounted for as liabilities under JGAAP, and is recorded as liabilities on transition to
IFRS.
(9) Income tax payables and others
Income tax payables and others at quarterly closings were calculated in the same way as annual closings under JGAAP, while the Group calculates them based on estimated average effective tax rate for each fiscal year under
IFRS.
(10) Reclassification of exchange differences on translation of foreign operations
The Group has adopted exemptions under IFRS 1 on first-time adoption, and has reclassified the entire
cumulative exchange differences on translation as of the transition date into retained earnings.
(11) Alignment of reporting periods
For a consolidated subsidiary whose closing date is different from that of its parent company with a gap of threemonths or less, under JGAAP, the Group adjusted and consolidated material transactions during the gap period
based on the financial statements of the subsidiary. Under IFRS, the subsidiary’s financial statements are createdbased on its provisional closing at its parent company’s closing date and consolidated.
(12) Reconciliation of retained earnings
Second quarter of theprevious consolidated
fiscal year

Date of transition to
IFRS(October 1, 2016)(March 31, 2017)

Thousand yen

Thousand yen

Previous consolidated
fiscal year
(September 30, 2017)
Thousand yen

Reconciliation of goodwill amount－

160,268

322,064

Reconciliation of operating loans

72,347

70,11570,340△615,945△861,700△1,407,801△91,079△98,406△98,406△97,162△97,162△97,162－

430,968－

26,598△6,781△7,155△705,242△402,697△1,218,121

Reconciliation of directors’
remuneration Board Incentive Plan
Trust
Reconciliation of accrued paid
leave
Reclassification on cumulative
exchange differences ontranslation of foreign operations
Reconciliation of income tax
payables and others
Other
Total

- 29 -

②Reconciliation of comprehensive income
First six months of the previous consolidated fiscal year (October 1, 2016 to March 31, 2017)
Line item under JGAAP

Difference in
Reclassificati
recognition andon (1)
measurement

JGAAP

IFRS

Notes

Line item under IFRS

Thousand yen Thousand yen Thousand yen Thousand yen
Revenue
Cost of revenue
Gross profit

Selling, general andadministrative expenses

Operating profit
Non-operating profit

9,992,048－

36,724

10,028,773(2),(8) Revenue△2,922,522－△184,047△3,106,569(2),(8) Cost of revenue

7,069,526－△147,322

6,922,203－

235,955△5,620230,335△4,564,616－△159,499△4,724,116－△281,423

6,583△274,839

2,504,909△45,467△305,858

2,153,582

103,317△103,317－－

Gross profit(8)

Other income(3),(4) Selling, general and(6),(8) administrative expenses(8)

Other expense
Operating profit△275,601

275,601－－

Extraordinary profit

160,936△160,936－－

Extraordinary loss

△270,091

270,091－－－

12,290714

13,005(8)

Financial income－△49,603△12,860△62,463(8)

Financial expense－△198,658

72,139△126,518(5),(8)

Profit before income taxes

2,223,470－△245,865

1,977,605

Corporate, inhabitant andenterprise taxes△1,134,449

10,607522,112△601,730

10,607△10,607－－

1,099,628－

276,247

1,375,875

Non-operating expenses

Income taxes-deferred
Net profit
Other comprehensive income

98,646－△53,753

44,893

Other valuation difference on
available-for-sale securities

169,232－

12,828

182,061

303,755－△22,388281,367

571,634－△63,312508,322

1,671,262－

212,934

1,884,197

Comprehensive income

Profit before income taxes(7),(8) Income tax expenses

ProfitOther comprehensive income

Foreign currency translation
adjustment

Amount corresponding to theequity holdings of the equity
method affiliates
Total other comprehensive
incomeEquity method investment
gains- 30 -

Exchange differences ontranslation of foreign operations
Changes in fair value offinancial assets measured
through other comprehensive
incomeShares of other comprehensive
income of equity method
affiliates
Other comprehensive income
after income taxes
Comprehensive income

Previous consolidated fiscal year (October 1, 2016 to September 30, 2017)
Line item under JGAAP

Difference in
Reclassificati
recognition andon (1)
measurement

JGAAP

IFRS

Notes

Line item under IFRS

Thousand yen Thousand yen Thousand yen Thousand yen
Revenue

21,794,783－△740,361

21,054,421(2),(8) Revenue

Cost of revenue△6,687,176－

156,937△6,530,238(2),(8) Cost of revenue

Gross profit

15,107,607－△583,424

14,524,183－

238,476△2,733

235,743△10,092,156－△443,854△
10,536,010－△283,835

8,315△275,520

5,015,450△45,358△1,021,696

3,948,395

110,555△110,555－－

Selling, general andadministrative expenses

Operating profit
Non-operating profit

Gross profit(8)

Other income(3),(4) Selling, general and(6),(8) administrative expenses(8)

Other expense
Operating profit△386,051

386,051－－

Extraordinary profit

188,161△188,161－－

Extraordinary loss

△457,561

457,561－－－

69,207

2,077

71,285(8)

Financial income－△28,799△14,892△43,692(8)

Financial expense－△539,944

151,014△388,930(5),(8)

Profit before income taxes

4,470,554－△883,496

3,587,058

Corporate, inhabitant andenterprise taxes△2,472,115

984,104

331,226△1,156,785

984,104△984,104－－

2,982,543－△552,269

2,430,273

Non-operating expenses

Income taxes-deferred
Profit before minority interests
Other comprehensive income

92,460－31,380123,840

Other valuation difference on
available-for-sale securities

225,503－△316,789△91,285

190,147－

55,831

245,979

508,111－△229,577

278,534

3,490,654－△781,847

2,708,807

Comprehensive income

Profit before income taxes(7),(8) Income tax expenses

ProfitOther comprehensive income

Foreign currency translation
adjustment

Amount corresponding to theequity holdings of the equitymethod affiliates
Total other comprehensive
incomeEquity method investment
gains/losses- 31 -

Exchange differences ontranslation of foreign operations
Changes in fair value offinancial assets measured
through other comprehensive
incomeShares of other comprehensive
income of equity method
affiliates
Other comprehensive income
after income taxes
Comprehensive income

Notes regarding Reconciliation of income and comprehensive income(1) Adjustment of line items
The Group has reclassified some line items to comply with IFRS rules. Major reclassifications are as follows.
・Out of line items presented under JGAAP as ”non-operating profit,” “non-operating expenses,” “extraordinary
profit” or “extraordinary loss,” the Group records finance-related gain/loss as “financial income” or “financial
expense,” and presents remaining line items as “other income,” “other expense,” “equity method investment
gains/losses” or other line items under IFRS.
・Under JGAAP, the Group recorded “corporate, inhabitant and enterprise taxes” and “income taxes-deferred”
separately. Under IFRS, the Group combines and presents them as “income tax expenses.”(2) Adjustment on revenue
Of the Group’s transactions recorded on gross under JGAAP, the transactions in which we are judged to havebeen engaged as agents were recorded on net under IFRS.
(3) Change in depreciation method
The Group basically adopted declining balance method for depreciation of tangible noncurrent assets (excluding
lease assets) under JGAAP, and adopts straight line method under IFRS. The Group has adjusted cost of revenue
and selling, general and administrative expenses that include depreciation expenses, and has recalculated
gain/loss from tangible asset sales that was previously recorded based on the conventional depreciation method.
(4) Adjustment on goodwill amount
Goodwill is amortized under JGAAP, and is not amortized under IFRS.
(5) Adjustment on the amount of Investments accounted for using equity method
The Group amortized goodwill in equity method affiliate under JGAAP, and does not amortize it under IFRS.
(6) Accrued paid leave
Accrued paid leave was not accounted for under JGAAP. Under IFRS, it is recorded as personnel expenses.
(7) Income tax expenses
Income tax expenses were recorded due to the temporary difference in connection with adjustment of other itemson the statements of financial position.
Tax expenses during each fiscal year were calculated at each quarterly closings in the same way as annual
closings, while income tax expenses are calculated based on estimated average annual effective tax rate under
IFRS.
(8) Alignment of reporting periods
For a consolidated subsidiary whose closing date is different from that of its parent company with a gap of threemonths or less, under JGAAP, the Group adjusted and consolidated material transactions during the gap period
based on the financial statements of the subsidiary. Under IFRS, the subsidiary’s financial statements are createdbased on its provisional closing at its parent company’s closing date for consolidation.

- 32 -

③ Adjustment of cash flows
First six months of the previous consolidated fiscal year (October 1, 2016 to March 31, 2017) and previous
consolidated fiscal year (October 1, 2016 to September 30, 2017)
In the consolidated statements of cash flows for the first six months of the previous consolidated fiscal year
disclosed in accordance with IFRS, cash flows from operating activities is larger by 89,800 thousand yen, cash
flows from investing activities is larger by 15,705 thousand yen, and cash flows from financing activities is larger by
317 thousand yen, compared with the consolidated statements of cash flows prepared in accordance with JGAAP.
In the consolidated statements of cash flows for the previous consolidated fiscal year disclosed in accordance with
IFRS, cash flows from operating activities is larger by 100,598 thousand yen, cash flows from investing activities issmaller by 27,631 thousand yen, and cash flows from financing activities decreased by 8,525 thousand yen,
compared with the consolidated statements of cash flows prepared in accordance with JGAAP.
These differences are principally due to the alignment of reporting periods. For a consolidated subsidiary whose
closing date is different from that of its parent company with a gap of three months or less, under JGAAP, the Groupadjusted and consolidated material transactions during the gap period based on the financial statements of thesubsidiary. Under IFRS, the subsidiary’s financial statements are created based on its provisional closing at its
parent company’s closing date and consolidated.

- 33 -