Three-month Consolidated Financial Report for the Fiscal Year ending
October 31, 2016 [Japan GAAP]
March 11, 2016
Kanamoto Co., Ltd.
9678
Tokyo Stock Exchange, Sapporo Stock Exchange
http://www.kanamoto.co.jp)
Kanchu Kanamoto
President
Nobuhito Utatsu
Director & Senior Executive Corporate Officer, Division
Manager, Accounting Division
TEL 81-11-209-1600
Please send inquiries in English to takayama@kanamoto.co.jp
Scheduled date for submission of Quarterly Report
March 15, 2016
Scheduled date for commencement of dividend payments–
Preparation of Quarterly Settlement Supplementary
No
Explanatory Materials
Quarterly Earnings Briefings
No

Listed Company Name
Company Code Number
Listing Exchanges(URL
Representative
Inquiries

1. Consolidated Operating Results for the Three-Month Period of the Fiscal Year Ending October 31, 2016
(November 1, 2015 – January 31, 2016)(Numbers less than one million yen have been rounded down)(1) Consolidated operating results (Cumulative)(Percentages show the change from the prior year)

Net Sales

Operating Income

Millions of yen

Fiscal Year ending October 31, 2016:
35,079First quarter
Fiscal Year ended October 31, 2015:
36,327First quarter(Note) Comprehensive income
Fiscal Year Ending October 31, 2016, First Quarter
Fiscal Year Ended October 31, 2015, First Quarter

Millions of yen%

Millions of yen%

Millions of yen

%

−3.4

4,069

−35.5

4,063

−36.2

2,533

−37.6

9.6

6,306

11.6

6,373

12.1

4,062

21.4

¥2,286 million (−49.6%)¥4,539 million (22.2%)
Net Income per
Share on a Fully
Diluted Basis

Yen

Yen

71.70

－

112.72－(2) Consolidated financial position
Total Assets
Fiscal Year ending October 31, 2016:
First quarter
Fiscal Year ended October 31, 2015

Profit Attributable to
Owners of Parent%

Net Income per
Share
Fiscal Year ending October 31, 2016:
First quarter
Fiscal Year ended October 31, 2015:
First quarter

Ordinary Income

Net Assets

Equity Ratio

Millions of yen

Millions of yen%

209,881

73,57733.9

202,919

71,99834.3(Reference) Equity (millions of yen)
Fiscal Year Ending October 31, 2016 First Quarter:¥71,046¥69,588

Fiscal Year Ended October 31, 2015:－1 －2. Dividends
Annual Dividends per Share
End of firstquarter
Fiscal year ended October 31, 2015
Fiscal year ending October 31, 2016

End of second
quarter

End of third
quarter

Yen

Yen

Yen

Yen

Yen

－
－

15.00

－

20.00

35.00

15.00

－

30.00

45.00

Fiscal Year ending October 31, 2016
(Projected)(Notes) 1. Has the Company revised its most recently released dividend projection?

Year-end

Full-yearNo

3. Projected Consolidated Operating Results for the Fiscal year ending October 2016
(November 1, 2015 – October 31, 2016)(Percentages show the change from the prior year)

Net Sales

Operating Income

Ordinary Income

Millions of yen

Millions of yen%

Millions of yen

%

%

Yen

68,000−0.5

9,280 −12.9

9,230 −13.4

5,750 −12.0

162.71

Full year

133,900

0.5

16,34016,270

10,230289.480.7

Millions of yen

Net Income per
ShareInterim period

0.4%

Profit Attributable to
Owners of Parent

7.0(Note) Has the Company revised its most recently released projected consolidated operating results during the quarter?
No

－

2 －

4. Notes(1) Changes in material subsidiaries during the period under review (Changes in specific subsidiaries in conjunction witha change in the scope of consolidation): No
Company newly included (Company name)─
Company newly excluded (Company name)─(2) Application of special accounting method in the preparation of quarterly consolidated financial statements:

No(3) Changes in accounting principles, changes in accounting estimates and retrospective restatements(a) Changes in accounting policy in conjunction with revision of accounting standards:
Yes(b) Changes other than the above:No(c) Changes in accounting estimates:(d) Retrospective restatements:

NoNo(4) Number of shares issued (common shares)(a) Number of shares outstanding at the end of the period (including treasury shares)
Fiscal year ending October 31, 2016 First Quarter:
36,092,241 sharesFiscal year ended October 31, 2015:
36,092,241 shares(b) Number of shares of treasury stock at the end of the period
Fiscal year ending October 31, 2016 First Quarter:
752,941 sharesFiscal year ended October 31, 2015:
752,941 shares(c) Average number of shares during the period (consolidated year-to-date)Fiscal year ending October 31, 2016 First Quarter:
35,339,300 sharesFiscal year ended October 31, 2015 First Quarter:
36,039,311 shares

Note: Disclosure concerning status of implementation of quarterly review procedure
This quarterly earnings report is exempt from the quarterly review procedure based on the Financial Instruments
and Exchange Act. At the time of disclosure of this quarterly earnings report, the Company has not completed thequarterly review procedure for quarterly financial statements.
Note: Explanation concerning appropriate use of the projected operating results and other items to note
Note Concerning Forward-Looking Statements
The above projections were prepared based upon information available to the Company at the time the projections
were announced as well as various assumptions concerning the future economic and business environment. Actual
operating results may differ from the projected figures depending upon various factors in the future. Please refer to“1. Qualitative Information Concerning Quarterly Consolidated Operating Results (3) Explanation Concerning Future
Forecasts Including Projected Consolidated Operating Results” on Page 6 of the Attachments for the conditions
used as assumptions for the projected operating results and matters to note before using the projected operating
results.

－

3 －○Attachments Table of Contents
1. Qualitative Information Concerning Quarterly Consolidated Operating Results ……………………………………

5(1) Qualitative Information Concerning Consolidated Operating Results ……………………………………………

5(2) Qualitative Information Concerning Consolidated Financial Position ……………………………………………

6(3) Qualitative Information Concerning Projected Consolidated Operating Results ……………………………….

6

2. Matters Concerning Summary Information (Notes) ……………………………………………………………………

6(1) Changes in Material Subsidiaries during the Consolidated Period under Review ………………………………
(2) Application of Special Accounting Method in the Preparation of Quarterly Consolidated Financial
Statements ………………………………………………………………………………………………………………
(3) Changes in Accounting Principles, Changes in Accounting Estimates and Retrospective Restatement …….

66

3. Quarterly Consolidated Financial Statements ………………………………………………………………………….

7(1) Quarterly Consolidated Balance Sheets …………………………………………………………………………….
(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive
Income …………………………………………………………………………………………………………………..
Quarterly Consolidated Statements of Income

7

Consolidated Three-month Period ended January 31, 2016 ……………………………………………….

9

6

9

Quarterly Consolidated Statements of Comprehensive Income
Consolidated Three-month Period ended January 31, 2016 ………………………………………………

10(3) Notes Concerning Quarterly Consolidated Financial Statements …………………………………………………

11(Notes Relating to the Going Concern Assumption) ………………………………………………………………

11(Note on Significant Changes to Shareholders’ Equity) ………………………………………………………….

11(Business Segment Information) ……………………………………………………………………………………

11

－

4 －

1. Qualitative Information Concerning Quarterly Consolidated Operating Results(1) Qualitative Information Concerning Consolidated Operating Results
Management environment (From November 1, 2015 to January 31, 2016)
During the consolidated three-month period ended January 31, 2016, Japan’s economy trended toward amodest recovery, as corporate earnings improved and the employment situation brightened, supported by thecontinuation of proactive economic and monetary policy measures. Moves toward a recovery in personal
consumption were evident as well. Nevertheless, the outlook for the future direction of the economy remained
cautious under the weight of various factors, including the global economic slowdown, exchange rate fluctuations,and the sharp drop in the price of oil.
< First Quarter Operating Results > (From November 1, 2015 to January 31, 2016) >In the construction industry related to the Kanamoto Group, the level of construction demand as a whole fell
below the previous year. Although private construction investment remained brisk against the backdrop of thepositive trend in corporate earnings, spending on public works projects reversed course and declined.
Given such circumstances, the Kanamoto Group continued to push forward with key initiatives based on thevarious measures in its Medium-term Management Plan (fiscal 2014 - fiscal 2016). In Japan, its main market, theCompany expanded its branches in the Tokyo metropolitan area and other locations, and optimized theplacement of rental equipment supplied to customers in response to the demand in various regions.
As a result, net sales for the consolidated three-month period slipped 3.4% compared with the same period
one year earlier to ¥35,079 million. From an earnings perspective, operating income declined 35.5% from thesame period of the prior consolidated fiscal year to ¥4,069 million, ordinary income decreased 36.2% year-onyear to ¥4,063 million, and profit attributable to owners of the parent fell 37.6% year-on-year to ¥2,533 million.
Results for each of the Company’s business segments were as follows:< Business related to the Construction Equipment Rental Division >In Kanamoto’s core construction-related business, the environment tracked the Company’s initial assumption,with budget execution in various regions becoming noticeably slower under the impact of factors such as theshortage of human resources. In regions such as Hokkaido where the effects of the decline in public works
investments fell most heavily, however, the result was a severe operating environment that produced a profoundsense of stagnation, including a drop in construction equipment rental demand that exceeded the Company’s
projection.
Sales of used construction equipment, which rose in the same period of the prior consolidated fiscal year when
the Company sold a substantial amount of equipment, including machines whose disposal two years ago was
postponed as a control on sales, remained at the level of average used equipment sales in a typical year.
Consequently, sales dropped 60.2% from the corresponding period one year ago.
As a result of the above factors, first quarter net sales for Kanamoto’s construction-related businesses eased
down 4.7% from the same period of the prior consolidated fiscal year to ¥32,540 million, and operating income
decreased 36.6% year-on-year to ¥3,900 million.
< Other businesses >In the Company’s other businesses, both steel products-related sales and sales in the information andtelecommunications-related division were robust. Net sales rose 17.0% from the same period of the priorconsolidated fiscal year to ¥2,539 million, and operating income edged upward 1.6% year-on-year to ¥67 million.
< Change in number of branches >During the first quarter consolidated accounting period, Kanamoto opened one new branch. The Company did
not close any branches.
New branch: Kumagaya Branch (Kumagaya, Saitama Prefecture)－

5 －(2) Qualitative Information Concerning Consolidated Financial Position
Assets, liabilities and net assets
Total assets at the end of the first quarter under review increased by ¥6,961 million compared with the end of theprior consolidated fiscal year to ¥209,881 million. This mainly reflected an increase in notes and accounts
receivable-trade of ¥1,022 million, and an increase in rental equipment of ¥5,965 million.
Total liabilities were ¥136,304 million, an increase of ¥5,382 million compared with the end of the priorconsolidated fiscal year. The principal items contributing to this change were an increase of ¥2,639 million in notes
and accounts payable-trade, an increase of ¥1,963 million in accounts payable-other and an increase of ¥4,147
million in long-term accounts payable-other, respectively, and decreases of ¥2,587 million in income taxes payableand ¥988 million in accrued consumption taxes.
Total net assets stood at ¥73,577 million, ¥1,578 million higher than at the end of the prior consolidated fiscal
year. This was mainly because of profit attributable to owners of the parent of ¥2,533 million.

(3) Qualitative Information Concerning Projected Consolidated Operating Results
There are no revisions to the full-year projected operating results that the Company announced in the Financial
Statements Bulletin for the Fiscal Year Ended October 31, 2015 (Japan GAAP) released on December 9, 2015.

2. Matters Concerning Summary Information (Notes)(1) Changes to Material Subsidiaries during the Consolidated Period under Review
The Company had no material items to report.

(2) Application of Special Accounting Method in the Preparation of Quarterly Consolidated Financial Statements
The Company had no material items to report.

(3) Changes in Accounting Principles, Changes in Accounting Estimates and Retrospective Restatement
Change in Accounting Policy(Application of the Accounting Standard for Business Combinations and related standards)
Beginning from the first quarter of the current consolidated fiscal year, the Company will apply the AccountingStandard for Business Combinations (Accounting Standards Board of Japan Statement No. 21 dated September
13, 2013; “the Business Combinations Accounting Standard”), the Accounting Standard for Consolidated
Financial Statements (Accounting Standards Board of Japan Statement No. 22 dated September 13, 2013; “theConsolidation Accounting Standard”), and the Accounting Standard for Business Divestitures (AccountingStandards Board of Japan Statement No. 7 dated September 13, 2013; “the Business Divestitures AccountingStandard”), and related standards, and together with reporting as capital surplus the difference that results fromthe change of Kanamoto’s equity interest in subsidiaries over which it will continue to exercise control, theCompany will change to the method of reporting costs related to business combinations as an expense in the
consolidated fiscal year in which they are incurred. Furthermore, for business combinations executed on or after
the beginning of the first quarter of the current consolidated fiscal year, the Company has changed its reporting
method to reflect adjustments to the allocated amounts of business combination costs resulting from the final
determination of the provisional accounting treatment in the quarterly consolidated financial statements of thequarter in which the date of the business combination falls. In addition, the Company has revised its presentationof net income etc., and revised its presentation from minority interests to non-controlling interests. To reflect thesechanges in presentation, the quarterly consolidated financial statements for the first quarter of the fiscal year
ended October 31, 2015 and the consolidated financial statements for the prior consolidated fiscal year havebeen restated to reflect a consistent presentation format.
Application of the accounting standards is subject to the transitional treatment set forth in Clause 58-2(4) of theBusiness Combinations Accounting Standard, Clause 44-5 of the Consolidation Accounting Standard, and Clause57-4(4) of the Business Divestitures Accounting Standard, and the Company will apply these accounting
standards in the future from the beginning of the first quarter under review.
The effect of this change on earnings is not material.
－

6 －3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheets(Unit: Millions of yen)
Prior Consolidated
Fiscal Year(As of October 31, 2015)

Current Consolidated
Fiscal Year First Quarter(As of January 31, 2016)

35,90037,251
350
672
272
8,214
610
623
−701
83,19535,962
38,274
200
771
248
8,534
266
703
−695
84,265

164,914−97,573
67,341
25,840−16,275
9,564
5,714−4,965749
32,354
2,539−1,112
1,426
111,436

171,119−97,81273,307
26,035−16,4579,578
5,750−4,979770
32,354
2,923−1,092
1,831
117,841

316
316

338
338

6,317
285
2,008
−528
−110
7,972
119,724
202,919

5,739
288
2,032
−514
−110
7,435
125,615
209,881

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Securities
Merchandise and finished goods
Raw materials and supplies
Construction machine parts
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Rental equipment
Accumulated depreciation
Rental equipment, net
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Land
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Other
Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Other
Allowance for doubtful accounts
Allowance for investment loss
Total investments and other assets
Total non-current assets
Total assets－

7 －(Unit: Millions of yen)
Prior Consolidated
Fiscal Year(As of October 31, 2015)

Current Consolidated
Fiscal Year First Quarter(As of January 31, 2016)

27,775727
12,550
1,585
3,711
856
19,233
3,093
69,53430,414719
12,581
1,491
1,124
424
21,196
2,183
70,136

19,614
1,831
39,254317
368
61,387130,921

20,1552,128
43,402318
163
66,167
136,304

13,652
14,916
41,156−2,12867,597

13,652
14,91642,983−2,12869,424

1,948
−0
43
1,991
2,409
71,998202,919

1,546
－
75
1,622
2,530
73,577
209,881

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Income taxes payable
Provision for bonuses
Accounts payable-other
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Long-term accounts payable-other
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets－

8 －(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(Consolidated Three-month Period ended January 31, 2016)(Unit: Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Insurance income
Rent income
A receipt bonus
Foreign exchange gains
Reversal of allowance for doubtful accounts
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on sales of notes payable
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Subsidy income
Compensation income for damage
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Total extraordinary losses
Income before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent－

Prior Consolidated Fiscal
Current Consolidated
Year First Quarter
Fiscal Year First Quarter(From November 1, 2014 (From November 1, 2015
to January 31, 2015)
to January 31, 2016)
36,32735,07924,062
24,782
12,265
10,297
5,959
6,228
6,306
4,069

9 －

0
26
4
18
0
141
7
32
232

1
52
12
16
9
－
18
53
164

126
5
34
165
6,373

93
3
72
170
4,063

7
2
118
128

3
2
－
5

10
10
6,490
2,014
271
2,285
4,204
142
4,062

15
15
4,053
1,072
325
1,397
2,655
121
2,533

(Quarterly Consolidated Statements of Comprehensive Income)(Consolidated Three-month Period ended January 31, 2016)(Unit: Millions of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests－

Prior Consolidated Fiscal
Current Consolidated
Year First Quarter
Fiscal Year First Quarter(From November 1, 2014 (From November 1, 2015
to January 31, 2015)
to January 31, 2016)
4,204
2,655

10 －

306
−1
29
334
4,539

−401
0
32
−368
2,286

4,392

2,165

147

121

(3) Notes Concerning Quarterly Consolidated Financial Statements(Notes Relating to the Going Concern Assumption)
The Company had no material items to report.
(Note on Significant Changes to Shareholders’ Equity)
The Company had no material items to report.
(Business Segment Information)[ Segment information ]I First quarter of the prior consolidated fiscal year (From November 1, 2014 to January 31, 2015)
1. Information concerning net sales and profit or loss of each reporting segment(Unit: Millions of yen)
Reporting segment
Business related to theConstruction Equipment
Rental Division

Other Businesses(See note)

34,1572,170

36,327－－－34,1572,170

36,327

6,148

66

6,214

Net sales
Net sales to outside customers
Net sales or transfers between
related segments
Total
Segment income

Total(Note) The “Other businesses” classification encompasses business segments not included in the reporting
segment, and includes business related to the Steel Sales Division and business related to the
Information Products Division and other businesses.
2. Difference between total reporting segment profit or loss and the amount reported on the Quarterly
Consolidated Statements of Income, and the main reasons for the difference (Matters Pertaining toReconciliation of Difference)(Unit: Millions of yen)
IncomeAmountReporting segment total
Income for “Other businesses” classification
Other adjustments

6,148
66
91

Operating income reported in the Consolidated
Quarterly Statements of Income

6,306

3. Information concerning fixed asset impairment loss and goodwill by reporting segment
The Company had no material items to report.

－

11 －

II

First quarter of the current consolidated fiscal year (From November 1, 2015 to January 31, 2016)
1. Information concerning net sales and profit or loss of each reporting segment(Unit: Millions of yen)
Reporting segment
Business related to theConstruction Equipment
Rental Division

Other Businesses(See note)

32,5402,539

35,079－－－32,5402,539

35,079

3,900

67

3,967

Net sales
Net sales to outside customers
Net sales or transfers between
related segments
Total
Segment income

Total(Note) The “Other businesses” classification encompasses business segments not included in the reporting
segment, and includes business related to the Steel Sales Division and business related to the
Information Products Division and other businesses.
2. Difference between total reporting segment profit or loss and the amount reported on the Quarterly
Consolidated Statements of Income, and the main reasons for the difference (Matters Pertaining toReconciliation of Difference)(Unit: Millions of yen)
IncomeAmountReporting segment total
Income for “Other businesses” classification
Other adjustments

3,900
67
101

Operating income reported in the Consolidated
Quarterly Statements of Income

4,069

3. Information concerning fixed asset impairment loss and goodwill by reporting segment
The Company had no material items to report.
4. Information concerning change etc. of reporting segment(Application of the Accounting Standard for Business Combinations and related standards)
As described in Change in Accounting Policy, beginning from the first quarter of the current
consolidated fiscal year the Company will apply the Accounting Standard for Business Combinations
and related standards, and together with reporting as capital surplus the difference that results from thechange of Kanamoto’s equity interest in subsidiaries over which it will continue to exercise control, theCompany will change to the method of reporting costs related to business combinations as an expensein the consolidated fiscal year in which they are incurred. In addition, for business combinations
executed on or after the beginning of the first quarter of the current consolidated fiscal year, theCompany has changed its reporting method to reflect adjustments to the allocated amounts of businesscombination costs resulting from the final determination of the provisional accounting treatment in thequarterly consolidated financial statements of the quarter in which the date of the business combination
falls.

－

12 －