Non-Consolidated Financial Results
for the Six Months Ended October 31, 2019
[Japanese GAAP]
December 10, 2019
Company name: Asukanet Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 2438
URL: https://www.asukanet.co.jp
Representative: Yuji Matsuo, Representative Director, President & COO
Contact: Kenya Kono, Senior Managing Director & CFO
Phone: +81-82-850-1200
Scheduled date of filing quarterly securities report: December 13, 2019
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Available
Schedule of quarterly financial results briefing session: Scheduled (for institutional investors and analysts)(Amounts of less than one million yen are rounded down.)
1. Non-Consolidated Financial Results for the Six Months Ended October 31, 2019
(May 1, 2019 to October 31, 2019)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Six months ended
October 31, 2019
October 31, 2018

Operating income

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen

%

3,142
2,912

7.9
4.5

323
306

5.6
10.4

324
310

4.6
9.2

228
211

8.3
7.7

Basic earnings
per share

Diluted earnings per
share

Six months ended
Yen
Yen
October 31, 2019
13.57
October 31, 2018
12.54
12.53
(Note) Diluted earnings per share for the six months ended October 31, 2019 is not presented as there were no
potential shares.
(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

6,224
As of October 31, 2019
6,271
As of April 30, 2019
(Reference) Equity: As of October 31, 2019: ¥5,472 million
As of April 30, 2019: ¥5,431 million

Equity ratio

Million yen

%

5,472
5,431

87.9
86.6

2. Dividends
1stquarter-end

2ndquarter-end

Yen

Yen

Annual dividends
3rdYear-endquarter-end

Fiscal year ended April 30, 2019
0.00
Fiscal year ending April 30, 2020
0.00
Fiscal year ending April 30, 2020
(Forecast)(Note) Revision to the forecast for dividends announced most recently: No

Total

Yen

Yen

Yen

-

11.00

11.00

-

10.00

10.00

3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2020
(May 1, 2019 to April 30, 2020)(% indicates changes from the previous corresponding period.)
Basic earnings
Net sales
Operating income
Ordinary income
Profitper share
Million yen%

Million yen%

Million yen%

Million yen%

Yen

Full year
6,738
7.0
824 (5.1)
829 (5.1)
545
(9.0)
32.36
(Note) Revision to the financial results forecast announced most recently: No
As the Company manages its financial results at an annual base, the financial results forecast for the first half is
not disclosed.
* 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):
October 31, 2019: 17,464,000 shares
April 30, 2019: 17,464,000 shares2) Total number of treasury shares at the end of the period:
October 31, 2019: 623,016 shares
April 30, 2019: 622,941 shares
3) Average number of shares during the period:
Six months ended October 31, 2019: 16,841,001 shares
Six months ended October 31, 2018: 16,831,830 shares* These quarterly financial results are outside the scope of quarterly review procedures by a certified public
accountant or an audit corporation.
* Explanation of the proper use of financial results forecast and other notes
The earnings forecasts and other forward-looking statements herein are based on information currently
available to the Company and certain assumptions that the Company believes are reasonable, and actual results
may differ significantly from these forecasts due to a wide range of factors.

4. Overview of Business Results(1) Overview of Business Results for this Fiscal Year
Asukanet operates three business areas, each with different positioning and characteristics. They are (1) the memorial design
service business, which adds digital processing and remote output services for photos of the deceased to a funeral business thatis largely unaffected by economic trends, (2) the personal publishing business, which provides ideas for new photo output
methods that allow users to create complete photo collections beginning from just a single book, and (3) the aerial imaging
business, which is utilizing unique, recently-developed technologies aiming to create a new market and achieve dreams.
Following is an overview of the business results for each segment. The results figures for each segment include internalinter-segment sales.
(1) Memorial design service businessIn this business, although sales in our primary business areas – processing photos of the deceased and sales of video andother funeral production services – were somewhat below expectations, the results were up from the same period in theprevious year. During the cumulative first 2 quarters of this fiscal year, sales were higher than the same period in the previous
year due to strong equipment sales as well as strong sales of frames and supplies. We also worked to expand the presence of
the “tsunagoo” service which we have released as one type of our “funeral tech” that has brought extensive use of IT
technologies to the funeral market, and to develop new services such as a cloud-based copyist service.
On the other hand in terms of income, although we succeeded in controlling sales, general & administrative expenses,
segment income was down slightly as a result of factors including an increase in personnel expenses resulting from hiring
additional image processing operators.
As a result, sales were 1,218,103 thousand yen (101.3% year-on-year), and segment income was 297,390 thousand yen(98.2% year-on-year).
(2) Personal publishing service businessThis business operates AsukaBook for the professional photography market in Japan, and MyBook for the general Japanese
consumer market. We are also engaged in OEM supply of photo albums and photo prints based on photos that were takenwith smartphones.
In the professional photographer market, in addition to acquiring contracts through our own marketing activities, there wasalso strong growth in sales as a result of activities such as conducting AsukaBook seminars and the release of the GLAMPiC
data delivery service. We also participated events and hold a photo contest aimed at expanding our “Life-Size Baby Photos”
service.
In the general consumer market, we worked to obtain orders primarily among photography enthusiasts and knowledgeable
customers through effective internet advertising, various campaigns and other means. We continued to achieve strong sales ofthe full-flat type photo album that opens up so it is completely flat – a product that was released in the previous fiscal year.
Overall MyBook sales of this quarter exceeded in the same quarter of the previous year. In addition, sales of OEM products
grew as the presence of our services expanded in the market, although there was some rebound from the end of the campaignthat we conducted in the previous year.
In terms of income, in addition to higher personnel expenses and a shipping price hike, costs were higher for a number ofother reasons including completion of the new plant (West Building) located adjacent to our headquarter, an increase indepreciation expenses resulting from production equipment operation, and associated relocation expenses. Despite the higher
costs, segment income saw steady growth partly as a result of rising sales centered on the OEM divisions, and of investment
in improving production efficiency.
As a result, sales were 1,875,024 thousand yen (113.6% year-on-year), and segment income was 396,453 thousand yen(109.3% year-on-year).

(3) Aerial imaging businessThis business was launched in March 2011, aiming to create a market through new image and video expressions utilizing
aerial imaging technologies. We are developing, manufacturing, and selling both glass and plastic “ASKA3D plates” thatutilize our original technologies to project images in mid-air.
For glass ASKA3D plates, although sufficient cost reductions have not yet been achieved, we are providing large-size plates
that are capable of high-quality aerial imaging. Although still in small lots, sales for signage and aerial system operations are
increasing. We are also working to develop new manufacturing technologies to solve current concern of productivity.
For plastic ASKA3D plates, in May 2019 we established the first-stage mass production system starting from a monthly
production capacity of 3,000 plates/month, and worked to acquire mass production orders that fit our current production scale
and price range. However, there are still issues to overcome before we can achieve this goal. One of those issues is image
quality, and we are experimenting with production methods to increase image brightness. At the same time, we are studying
materials and processes and working to further increase yield, aiming to reduce the cost of production.
Although more time than initially expected has been required for commercialization, we have confirmed that there are large
needs for the use of aerial imaging among corporations in all fields, both in Japan and overseas. We will work to resolve theissues in order to meet these needs.
In terms of marketing, sales were down from the same period in the previous year, partially due to our focus on sample salesof inexpensive plastic ASKA3D plates. So that more people can experience aerial imaging and generate potential leads forsales, in addition to participating in an exhibition in China, we also have prepared for an exhibition in Japan in December.
There are growing cases of other companies exhibiting products that utilize ASKA3D, and using ASKA3D in their shop andother displays.
In terms of expenses, although personnel expenses were higher, we were able to control advertising and R&D expenses byconcentrating on a smaller number of exhibitions and focusing our areas of R&D. As a result, segment loss was smaller than
the same period in the previous year.
As a result, sales were 51,903 thousand yen (76.6% year-on-year), and segment loss was 109,474 thousand yen (compared
to a loss of 117,278 thousand yen in the same quarter of the previous year).
As a result of the above, sales were 3,142,930 thousand yen (107.9% year-on-year). In terms of income, as a result of steady
growth in segment income in the personal publishing business, ordinary income was 324,855 thousand yen (104.6% year-onyear) and net income was 228,604 thousand yen (108.3% year-on-year).

(2) Overview of the Financial Status during this Quarter.
[1] Assets, liabilities, and net assets(Assets)
Current assets at the end of this second quarter decreased by 47,277 thousand yen from the end of the previous fiscal year toreach 6,224,236 thousand yen. Despite an increase in tangible fixed assets of 301,055 thousand yen resulting from constructionof the new plant (West Building) and other factors, and an increase in investment and other securities of 209,456 thousand yen
resulting from the purchase of corporate bonds and other factors, this decrease was primarily due to a decrease in cash andsavings of 610,392 thousand yen.
(Liabilities)
Current liabilities at the end of this second quarter decreased by 89,118 thousand yen from the end of the previous fiscal year
to reach 751,361 thousand yen. This decrease was primarily due to a decrease in income taxes payable of 76,600 thousand yen.
(Net assets)
Net assets at the end of this second quarter increased by 41,841 thousand yen from the end of the previous fiscal year to reach
5,472,875 thousand yen. Despite a decrease of 185,251 thousand yen resulting from the payment of dividends from surplus, thiswas primarily due to recording net income of 228,604 thousand yen[2] Cash flows
The balance of cash and cash equivalents (hereafter referred to as “cash”) during the consolidated first 2 quarters declined by
410,392 thousand yen from the end of the previous fiscal year to reach 1,259,371 thousand yen. The status of each cash flow andprimarily factors affecting it during the consolidated first 2 quarters are as follows.
(Cash flows from operating activities）
Net cash acquired as a result of operating activities during the consolidated first 2 quarters was 260,181 thousand yen(compared to 261,551 thousand yen in the same period of the previous fiscal year). Despite recording pre-tax net income of
324,710 thousand yen and recording depreciation expenses of 166,776 thousand yen, this result was primarily due to payment of
168,243 thousand yen in income taxes.
(Cash flows from investment activities)
Net cash expended as a result of investment activities during the consolidated first 2 quarters was 483,629 thousand yen(compared to expenditure of 595,410 thousand yen in the same period of the previous fiscal year. This was primarily due to theacquisition of 410,447 thousand yen in tangible fixed assets including the construction of new plant at land adjacent to ourheadquarter and production facilities.
(Cash flows from financing activities)
Net cash expended as a result of financing activities during the consolidated first 2 quarters was 186,052 thousand yen(compared to expenditure of 159,995 thousand yen during the same period of the previous fiscal year. This was primarily due tothe payment of 184,981 thousand yen in dividends.

5．Financial Statements for the Second Quarter(1) Balance sheet(Units: 1,000s yen)Previous fiscal year
(ended April 30, 2019)
Asset
Current assets
Cash and deposits
Accounts receivable-trade
Merchandise and products
Work in progress
Raw materials and supplies
OthersAllowance for doubtful accounts

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

1,664,371
829,386
182,509
21,37388,731
42,568(4,049)3,410,498

2,824,892

Fixed assets
Tangible fixed assets
Buildings, net
Machinery and equipment, net
LandConstruction in progress

508,636
409,561
844,060
399,350

927,883
496,111844,060
194,609

Total tangible fixed assets

2,161,609

2,462,665

Total intangible fixed assets
Total investments and other assets
Investment securities
Others202,370

230,187

228,800
268,235

428,056
278,435

Total investment and others

497,035

706,492

2,861,016

3,399,344

6,271,514

6,224,236

Liabilities
Current liabilities
Accounts payable-trade
Accounts payable-other
Income taxes payable
Provision for bonuses
Others169,180
173,963
187,900
144,200
155,905

169,029
182,997
111,300
151,800
127,852

Total current liabilities

831,149

742,979

6,009
3,320

6,009
2,371

Total current assets

Total fixed assets
Total assets

Fixed liabilities
Provision for retirement benefits
Others

9,330

8,381

Total liabilities

Total fixed liabilities

840,479

751,361

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock

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

490,300
606,585
4,651,429(268,970)

5,436,110

5,479,343(5,076)(6,467)

Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total liabilities and net assets
Total liabilities and net assets(5,076)(6,467)

5,431,034

5,472,875

6,271,514

6,224,236

(2) Profit and loss statement for first two quarters(unit:1000s yen)

Net Sales
Cost of sales

First two quarters of the previous First two quarters of the current
fiscal year
fiscal year
(May 1, 2019 – Oct. 31, 2019)(May 1, 2018 – Oct. 31, 2018)
2,912,273
3,142,930
1,449,118
1,571,304

Gross profit

1,463,155

1,571,625

Selling, general, and administrative expenses

1,156,587

1,247,931

306,567

323,694

219
510
287
938
832
950
214

517
500
194
―
―
1,051
102

3,953

2,365

―
―

1,131
73

Operating income
Non-operating income
Interest received
Dividends received
Commissions received
Foreign exchange gains
Income from insurance
OthersTotal non-operating income
Interest received
Non-operating expense
Foreign exchange losses
OthersTotal non-operating expenses
Ordinary income
Extraordinary loss
Loss on retirement of fixed assets
Total extraordinary losses
Net income before taxes

―

1,204

310,520324,855

373

145

373

145

310,147

324,710

Income taxes

99,08996,105

Net income

211,057

228,604

(3) Statement of cash flows(unit:1000s yen)First two quarters of the previous First two quarters of the current
fiscal year
fiscal year
(May 1, 2019 – Oct. 31, 2019)(May 1, 2018 – Oct. 31, 2018)
Cash flows resulting from operating activities
Net income before taxes
Depreciation expenses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement
benefits
Interest and dividends received
Expense to buy back its securities
Foreign exchange losses (gains)
Loss on disposal of fixed assets
Decrease (increase) in notes and accounts receivabletrade
Decrease (increase) in inventory assets
Increase (decrease) in accounts payable-trade
Increase (decrease) in accrued consumption taxes
Others

310,147
141,966
508
5,700

324,710
166,776
1,134
7,600

(299)

―

(729)
―
(913)
373

(1,017)1890
145(42,479)(2,147)(17,355)
8,222(14,608)(7,048)(18,047)(151)(52,996)
578

Subtotal

383,482

427,476

Interest and dividends received
Income taxes paid

815
(122,746)

949(168,243)

Cash flows due to operating activities

261,551

260,181

Cash flows due to investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant, and equipment
Purchase of intangible fixed assets
Purchase of investment securities
Collection of loans receivable
Others(355,000)
355,000(538,474)(53,410)―400(3,925)(405,000)
605,000(410,447)(58,741)(201,394)―(13,047)

Cash flows due to investing activities(595,410)(483,629)

Cash flows due to financing activities
Cash dividends paid
Expense to buy back its shares
Proceeds from disposal of treasury stock
Others(167,362)
―
8,316
(948)

(184,981)
(122)
―
(948)

Cash flows due to financing activities(159,995)(186,052)

913

(890)

Effect of exchange rate on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents(492,941)(410,392)

Balance of cash and cash equivalents at beginning of year

1,706,781

1,669,763

Balance of cash and cash equivalents at end of quarter

1,213,839

1,259,371

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

Personal
Aerialpublishingimaging businessservice business

Adjustments

Amountrecorded in
profit and loss
statement

Total

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

1,202,667

1,650,131

59,4742,912,273―

2,912,273

―

―

8,320

8,320

(8,320)―1,202,667

1,650,131

67,7942,920,593(8,320)2,912,273

302,937

362,744(117,278)

548,403(241,835)

306,567

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

Personal
Aerialpublishingimaging businessservice business

Adjustments

Amountrecorded in
profit and loss
statement

Total

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

1,218,103

1,875,024

49,803

3,142,930―

3,142,930

―

―

2,100

2,100

(2,100)―1,218,103

1,875,024

51,903

3,145,030(2,100)3,142,930

297,390

396,453(109,474)

584,369(260,675)

323,694

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