Non-Consolidated Financial Results
for the Nine Months Ended January 31, 2018
[Japanese GAAP]
March 6, 2018
Company name: Asukanet Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 2438
URL: https://www.asukanet.co.jp
Representative: Yukio Fukuda, Representative Director, President & CEO
Contact: Kenya Kono, Managing Director & CFO
Phone: +81-82-850-1200
Scheduled date of filing quarterly securities report: March 14, 2018
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Not available
Schedule of quarterly financial results briefing session: Not scheduled(Amounts of less than one million yen are rounded down.)
1. Non-Consolidated Financial Results for the Nine Months Ended January 31, 2018
(May 1, 2017 to January 31, 2018)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Nine months ended
January 31, 2018
January 31, 2017

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen

%

4,429
4,029

9.9
4.6

604
649

(7.0)
7.9

611
652

(6.4)
7.9

413
444

(7.0)
11.7

Basic earnings
per share

Nine months ended
January 31, 2018
January 31, 2017

Operating income

Diluted earnings per
share
Yen

Yen

24.64
26.54

24.55
26.41

(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

5,372
As of January 31, 2018
5,325
As of April 30, 2017
(Reference) Equity: As of January 31, 2018: ¥4,851 million
As of April 30, 2017: ¥4,597 million

Equity ratio

Million yen

%

4,855
4,603

90.3
86.3

2. Dividends
1stquarter-end

2ndquarter-end

Yen

Yen

Annual dividends
3rdYear-endquarter-end

Fiscal year ended April 30, 2017
0.00
Fiscal year ending April 30, 2018
0.00
Fiscal year ending April 30, 2018
(Forecast)(Note) Revision to the forecast for dividends announced most recently: No

Total

Yen

Yen

Yen

-

10.00

10.00

10.00

10.00

3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2018
(May 1, 2017 to April 30, 2018)(% indicates changes from the previous corresponding period.)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%%

Full year
5,696
4.7
771 (3.7)
776 (3.6)(Note) Revision to the financial results forecast announced most recently: No

Basic earnings
per share

ProfitMillion yen

%

Yen

541

(5.5)

32.31

* Notes:(1) Accounting policies adopted specially for the preparation of quarterly financial statements: Yes(2) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: No
2) Changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: No4) Retrospective restatement: No(3) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):
January 31, 2018: 17,464,000 shares
April 30, 2017: 17,464,000 shares2) Total number of treasury shares at the end of the period:
January 31, 2018: 680,941 shares
April 30, 2017: 717,741 shares
3) Average number of shares during the period:
Nine months ended January 31, 2018: 16,768,281 shares
Nine months ended January 31, 2017: 16,737,298 shares* These quarterly financial results are outside the scope of quarterly review procedures.
* 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. Qualitative Information Concerning the Business Results(1) Explanation of business results
During the cumulative first 3 quarters of this fiscal year, the economy of Japan saw a continuing gradual recovery,
with continued improvement in corporate profits and the employment environment, as a result of continuing
economic stimulus by the government and financial measures by the Bank of Japan. However there are continuing
concerns regarding the future of overseas economies, including policy trends in various countries and growing
geopolitical risk in Asia.
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 thedeceased to the funeral business that is largely unaffected by economic trends, (2) the personal publishing business,a challenging business which provides ideas for new photo output methods that allow users to create complete photocollections 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.
The results for each business segment are as follows. Results figures for each segment include internal intersegment sales.
(Memorial design service business)
In this business, although revenue was somewhat below expectations in our primary business area – processing ofphotos of the deceased, equipment sales were strong and the “Asuka Altar” collaboration product with the aerial
imaging business also contributed to sales. In addition, we are utilizing the extensive customer base in the funeralsmarket for development to upgrade our “tsunagoo” service that connects funeral companies, the bereaved, andmourners.
In terms of income, the gross profit margin was down due to an increase in personnel expenses in the Image
Processing Division. Beginning from the 3rd quarter, shipping expenses were higher than expected due to pricehikes, and there has also been an increase in personnel expenses and travel & transportation expenses resulting fromour growing number of support sites.
As a result, sales were 1,865,125 thousand yen (104.0% year-on-year) and segment income was 545,087 thousandyen (93.2% year-on-year).
(Personal publishing service business)
This business operates AsukaBook for the professional photographer market in Japan, and the MyBook brand forgeneral consumers. We are also engaged in OEM supply of photo albums and photo prints based on photos thatwere taken with smartphones.
For the professional photographer market, in addition to acquiring new customers through our own marketing
activities, we also held seminars and workshops in 11 locations across Japan, working to capture customers andpromote new products. As a result, there was steady sales growth in the professional photographer market. In the
future, we will work to expand sales and market penetration of our highly popular “Life-Size Baby Photos” service.
For the general consumer market, in addition to efficient internet advertising, we also conducted a variety of
campaigns, utilized SNS, and expanded our lineup of templates and illustrations. However we struggled to acquire
new customers in this fiercely competitive environment, and sales in the general consumer market were below theresult from the previous year. On the other hand, there was steady growth in sales related to OEM supply as a resultof the growing presence of our services in the market. In preparation for future increases in production, the OEM
Division carried out the planned investment in equipment and also prepared for exhibiting at the CP+ exhibition.
In terms of income, despite higher than expected shipping expenses due to price hikes, the improved operating
rate resulted in a higher gross profit margin and there was steady growth in segment income.
As a result, sales were 2,477,095 thousand yen (113.0% year-on-year) and segment income was 602,935 thousandyen (122.0% year-on-year).

(Aerial imaging business)
This business was launched in March 2011, aiming to create a market through new image and video expressions
utilizing aerial imaging technologies. Previously we referred to the plates that use original Asukanet technologies toproject images in mid-air as “AI plates”. However for consistency with overseas brands, in January 2018 the service
brand was changed to “ASKA3D” and the plate names to “ASKA3D plates”.
In this business, we are placing top priority on achieving mass production of the ASKA3D plates for projecting
images in mid-air.
For glass ASKA3D plates, although sufficient cost reductions have not yet been achieved, we are providing largesize plates that are capable of high-quality aerial imaging. Although still in small lots, sales for signage and aerial
system operations are increasing as a result of exhibitions in Japan and overseas. In addition, we are also supplying
plates for the “Asuka Altar” service that is a collaboration project with the memorial design service business.
For the resin ASKA3D plates where we are working to achieve high productivity and low cost, we are in theprocess of establishing the specific manufacturing methods, but we have encountered new problems such asproblems with the resin separation process, and at present the completion of samples is behind schedule. However
we are confident that we can resolve these problems by means such as mold improvements and changes to theseparation method, and we are aiming to produce new prototypes and provide samples to the market as quickly as
possible as soon as the improvements are completed.
In terms of marketing, in addition to CEATEC and one other exhibition in Japan and 2 overseas exhibitions in the
United States during the first 2 quarters, in the 3rd quarter we also exhibited in Dubai. We also jointly developed an
ATM that utilizes ASKA3D plates and have exhibited it at exhibitions in Japan and overseas. These products havealso been used at the reception desk of Henn na Hotel at the Huis Ten Bosch amusement park.
In terms of expenses, there was a large increase in advertising and publicity expenses as a result of active
participation in exhibitions in Japan and overseas. In addition, there was an increase in R&D expenses as a result ofintensive R&D aimed at achieving mass production of resin AI plates. There were also increases in personnel
expenses due to the addition of personnel, as well as in overseas travel expenses and patent-related expenses.
As a result, sales were 97,394 thousand yen (221.6% year-on-year) and segment loss was 187,792 thousand yen(compared to a loss of 91,774 thousand yen during the same period of the previous year).
As a result of the above segment results, overall sales in all business areas during the cumulative first 3 quartersof this fiscal year were 4,429,265 thousand yen (109.9% year-on-year). In terms of income, despite steady growth insegment income in the personal publishing business, as a result of the company-wide increase in shipping expenses,
and higher advertising/publicity and R&D expenses in the aerial imaging business, ordinary income was 611,086
thousand yen (93.6% year-on-year), and net income was 413,182 thousand yen (93.0% year-on-year).

(2) Overview of the Financial Status
Assets at the end of the third quarter increased by 47,549 thousand yen from the end of the previous fiscal year toreach 5,372,796 thousand yen. Although there was a decrease of 46,727 thousand yen in cash and savings, thisresult was primarily due to increases of 94,021 thousand yen in notes and accounts receivable (trade) and work inprogress and 29,411 thousand yen in tangible fixed assets.
Liabilities at the end of the third quarter decreased by 204,160 thousand yen from the end of the previous fiscal
year to reach 517,641 thousand yen. This was primarily due to decreases of 64,470 thousand yen in income taxes
payable and 59,400 thousand yen in provisions for bonuses.
Net assets at the end of the third quarter increased by 251,709 thousand yen from the end of the previous fiscal
year to reach 4,855,154 thousand yen. This was primarily due to net income of 413,182 thousand yen and a decreaseof 167,462 thousand yen in dividend payments.

(3) Explanation of results forecasts and other future predictions
At the present time, there has been no change to the predicted results for the year ending April 30, 2018 that wereannounced on June 9, 2017.

5. Financial Statements for the First 3 Quarters(1) Balance sheet
Previous fiscal year
(ended April 30, 2017)(Units: 1,000s yen)First 3 quarters of the current
fiscal year
(ended January 31, 2018)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade2,278,251
686,5172,231,523
780,539

Merchandise and products
Work in progress

166,123
12,038179,448
14,387

Raw materials and supplies
Others56,972
112,648

56,20984,653

Allowance for doubtful accounts(3,163)(4,177)3,309,387

3,342,584

Buildings, net
Machinery and equipment, net

499,750422,616

505,865
435,860

Land
Others, net

432,702150,493432,702160,545

Total tangible fixed assets

1,505,562

1,534,974

Intangible fixed assets
Investments and other assets

211,874
298,423

198,534
296,702

Total current assets
Fixed assets
Tangible fixed assets

Total fixed assets

2,015,859

2,030,211

5,325,247

5,372,796

Current liabilities
Accounts payable-trade

118,905

109,208

Income taxes payable
Provision for bonuses

143,270129,000

78,80069,600

Others317,028

247,858

Total current liabilities

708,204

505,467

Provision for retirement benefits
Others

6,482
7,115

6,482
5,692

Total fixed liabilities

13,597

12,174

721,802517,641

Shareholders’ equity
Capital stock

490,300

490,300

Capital surplus
Retained earnings

606,585
3,803,101

606,585
4,042,857

Total assets
Liabilities

Fixed liabilities

Total liabilities
Net assets

Treasury stock(309,764)(293,882)

Total shareholders' equity

4,590,222

4,845,860

7,579

5,841

7,579

5,841

5,642

3,452

4,603,444

4,855,154

5,325,247

5,372,796

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets

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

Net Sales
Cost of sales(Units: 1,000s yen)First three quarters of the previous First three quarters of the current
fiscal year
fiscal year
(May 1, 2016 – Jan. 31, 2017)(May 1, 2017 – Jan. 31, 2018)
4,029,111
4,429,265
1,951,139
2,137,661

Gross profit

2,077,972

2,291,604

Selling, general, and administrative expenses

1,428,573

1,687,396

649,399604,207

Operating income
Non-operating income
Interest received

807

410

Dividends received
Commissions received

1,161
418

1,060
327

Foreign exchange income
Income from insurance

51

141
3,999

OthersTotal non-operating income
Ordinary income
Extraordinary losses
Loss on retirement of fixed assets
Total extraordinary losses

―
781

938

3,219

6,878

652,619

611,086103

15,174103

15,174

Net income before taxes

652,515595,911

Income taxes

208,258

182,728

Net income

444,256

413,182

[Segment information]
Cumulative first 3 quarters of the previous fiscal year (May 1, 2016 – January 31, 2017)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment
Memorial design
service business

Personal
publishing
service businessAmountAerial imaging
business

Adjustments
Total

recorded in
profit and loss
statement

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

1,793,240

2,191,910

43,9604,029,111―

4,029,111

―

―

―

―

―

―

1,793,240

2,191,910

43,9604,029,111―

4,029,111

584,951

494,151(91,774)

987,328(337,928)

649,399

Cumulative first 3 quarters of the current fiscal year (May 1, 2017 – January 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
publishing
service business

Aerial imaging
businessAmountAdjustments
Total

recorded in
profit and loss
statement

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

1,865,125

2,477,095

87,044

4,429,265―

4,429,265――

10,35010,350(10,350)―

1,865,125

2,477,095

97,3944,439,615(10,350)

4,429,265

545,087

602,935(187,792)

960,230(356,022)

604,207

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