Summary of Consolidated Financial Statement
for the Fiscal Year Ended September 30, 2016 [IFRS]
November 8, 2016
Listed Market: TSE

SEPTENI HOLDINGS CO., LTD.
Stock Code: 4293
URL: http://www.septeni-holdings.co.jp/en
Representative:
President and Representative Director Koki Sato
Contact Person:
IR division Manager Eiichi Sou, Telephone: +81-3-6857-7258
Anticipated General Annual Shareholder Meeting Date: December 20, 2016
Anticipated Dividend Payment Date:
December 1, 2016
Anticipated Financial Report Filing Date:
December 20, 2016
Supplemental Earnings Presentation Materials:
Available
Earnings Presentation Meeting:
Held for institutional investors, analysts, media(All figures of less than 1 million yen are rounded down to the nearest digit)

1. Consolidated Financial Results for the Fiscal Year Ended September 30, 2016 (From October 1, 2015 to September 30,
2016)（(% figures represent year-over-year change)(1) Consolidated Earnings
Revenue
Million Yen

FY9/16
FY9/15% Million Yen

17,06014,267

19.6－% Million Yen

3,730
2,579

44.6
－

% Million Yen

3,847
2,963

29.8
－

% Million Yen

2,252
2,300

Total
comprehensive
incomeProfit for the period
attributable to ownersof the parent

Profitfor the period

Profit before tax

Operating Income-2.1－% Million Yen

2,519
2,351

7.1
－

2,431
2,309

%

5.3
－

(Note) 1. Non-GAAP Operating income: ¥3,841 million in FY9/16 (26.8%), ¥3,030 million in FY9/15 ( t
2. The group applied the International Financial Reporting Standards (hereinafter referred to as "IFRS") from the fiscal year ended September
30, 2016. Therefore Rate of change of the same period of the previous year of 2015 is not mentioned.

Diluted earnings per
share

Basic earnings per share
FY9/16
FY9/15

ROE

Revenue
Operating Margin

ROA

Yen

Yen

%

%

%

19.43
18.21

19.30
18.04

19.8
23.0

13.8
12.5

21.9
18.1

(2) Consolidated Financial Position
Total Assets

Equity attributable toowners of the parent

Total Equity

Ratio of equity attributable
Equity attributable toto owners of the parent toownersof parent per sharetotal assets

Million Yen

Million Yen

Million Yen%

Yen

29,981
25,63515,046
12,292

14,156
11,30747.2
44.1

109.13
87.26

Cash flows from (used in)financing activities

Cash and cash equivalents
at end of year

FY9/16
FY9/15(3) Consolidated Cash Flow Information
Cash flows from (used in)operating activities

Cash flows from (used in)investing activities

Million Yen

Million Yen

Million Yen

Million Yen

3,209
1,874

-109
1,258

801
-124

15,481
11,695

FY9/16
FY9/15

2. Dividend Conditions
Dividends
End of 1Q
FY9/15
FY9/16
FY9/17
Estimate

End of 2Q

End of 3Q

Term-end

Total Value of
Dividends(Total)

Total

Dividend Payout Dividend on equity
attributable to owners
Ratioof the parent(Consolidated)(Consolidated)

Yen

Yen

Yen

Yen

Yen

Million Yen

%

%

―
―

―
―

―
―

14.00
16.00

14.00
16.00

363
415

15.4
16.5

3.5
3.3

―

―

―

―

―

―

―

(Note) 1. Estimates for dividends in the fiscal year ending September 30, 2017 have yet to be decided. For the dividend policy, please refer to“1.Earnings Performance, Financial Conditions Analysis, (3) Basic Policy Regarding the Distribution of Profits, and Dividends in the current
and Next Terms.F
2. The Company implemented a 5-for-1 stock split for its common stock on October 1, 2016. The figures for the fiscal year ended
September 30, 2015 and 2016 are stated based on the number of shares before the stock split.

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3. Consolidated Financial Results Forecast for the Three Months Ending December 31, 2016(From October 1, 2016 to
December 31, 2016)(% figures represent year-over-year change)
Profit for the period attributable to
Basic earnings per shareowners of the parent

Revenue
1st quarter

Million Yen%

Million Yen

3,700

11.6

1,700

Yen

168.7

13.11

・Non-GAAP Operating income: ¥ 980million (0.8% up year on year)(Note) Instead of full-year earnings estimates, the Company discloses its earnings estimates for the next quarter. In addition, year over year change iscalculated based on previous year which Non-Core Business is rearranged to discontinued operation. For details, please refer to “1. Earnings
Performance, Financial Conditions Analysis, (1) Earnings Performance Analysisfor the nedocument.

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* Annotation(1) Important changes in subsidiaries, including changes in the scope of consolidation: None
(2) Changes in accounting methods, procedures, presentation methods
Changes in accounting policies required by IFRSs:
Other changes in accounting methods:
Changes in accounting estimates:

None
None
None

(3) Shares issued (common stock)
Shares issued as of term-end (incl. Treasury stock): FY9/16
Treasury stock as of tem-end:
FY9/16
Average number of shares outstanding:
FY9/16

138,641,500 FY9/15
8,924,155 FY9/15
129,661,912 FY9/15

138,503,500
8,923,000
129,107,708(Note) The Company implemented a 5-for-1 stock split for its common stock on October 1, 2016. The shares issued (common stock) were calculatedon the assumption that the stock split was implemented at the beginning of the previous fiscal year.

(Reference) Non-Consolidated Earnings Overview
1. Non-Consolidated Earnings for the Fiscal Year Ended September 2016 (October 1, 2015 – September 30, 2016)(1) Non-Consolidated Earnings(% figures represent year-over-year change)
Net Sales
Operating Income
Ordinary Income
Net Income
FY9/16
FY9/15

Million Yen%

Million Yen%

Million Yen%

Million Yen

2,630
2,842

-7.5
12.7

1,023
1,277

-19.9
15.5

964
1,503

-35.9
29.2

1,094
2,034

EPS

%

-46.2
60.4

Fully Diluted EPS
Yen

Yen

FY9/168.44
8.38
FY9/1515.75
15.61(Note) The Company implemented a 5-for-1 stock split for its common stock on October 1, 2016. EPS and fully diluted EPS in
FY9/16 are calculated on the assumption that the stock split was implemented at the beginning of the previous fiscal year.
(2) Non-Consolidated Financial Position
Total Assets
FY9/16
FY9/15Net Assets

Net Asset Ratio

Book Value per Share

Million Yen

Million Yen%

Yen

11,0689,978

10,028
9,247

90.1
92.3

76.88
71.09

(Reference) Capital: Fina972 million in FY9/16; split was implemented a5(Note) The Company implemented a 5-for-1 stock split for its common stock on October 1, 2016. Book value per share in FY9/16 is
calculated on the assumption that the stock split was implemented at the beginning of the previous fiscal year.

* Cautionary note about the use of results forecasts and other special notes(1) Application of IFRSFrom the fiscal year ended September 30, 2016, the Company is applying IFRS. For the difference between IFRS and JapanGAAP in relation to financial data, please refer to 5. Consolidated financial statements, (6) Notes to consolidated financial
statements (Initial application of IFRS) on page 16 of the Summary of Consolidated Financial Statement (accompanying
materials).

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Index
1. Earnings Performance, Financial Conditions Analysis ………………………………………………………… 2(1) Earnings Performance Analysis ……………………………………………………………………………… 2(2) Financial Conditions Analysis ……………………………………………………………………………… 4(3) Basic Policy Regarding the Distribution of Profits, and Dividends in the Current and Next Terms ………… 5
2. Corporate Structure ……………………………………………………………………………………………… 6
3. Management Policy …………………………………………………………………………………………… 7(1) Basic Corporate Management Policy ……………………………………………………………………… 7(2) Medium- to Long-Term Corporate Strategy and Issues to Be Addressed ………………………………… 7
4. Basic Stance on the Choice of Accounting Standards …………………………………………………………
8
5. Consolidated Financial Statements ……………………………………………………………………………… 8(1) Consolidated Statement of Financial Position ……………………………………………………………… 8(2) Consolidated Statement of Profit or Loss…………………………………………………………………… 10(3) Consolidated Statement of Comprehensive Income………………………………………………………… 11(4) Consolidated Statement of Changes in Equity ……………………………………………………………… 12(5) Consolidated cash flow statement…………………………………………………………………………… 13(6) Notes to Consolidated Financial Statements ……………………………………………………………… 14(Notes on going concern assumption) ……………………………………………………………………… 14(Segment information) ……………………………………………………………………………………… 14(Per-share information) …………………………………………………………………………………… 16(Significant subsequent events) …………………………………………………………………………… 16(Initial application of IFRS) ………………………………………………………………………………… 16
6. Other …………………………………………………………………………………………………………… 24

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1.

Earnings Performance, Financial Conditions Analysis(Adoption of the International Financial Reporting Standards (hereinafter referred to as “IFRS”)

The SEPTENI Group has applied IFRS since the fiscal year ended September 30, 2016 in place of previously used
Japanese GAAP, aiming for better convenience for all of the Group’s stakeholders, including shareholders andinvestors in and outside Japan, while promoting actively its global business development.
In line with the above, while voluntary providing previously used “net sales” as a reference, the Group discloses“revenue” as an indicator based on IFRS. The recording method of the revenue in the sale by advertising agents,
comprising a large part of the Internet Marketing Business, has been changed to record the net amount, indicating only
the margin. As a result, the amount of “revenue” has been reduced substantially from the amount of “net sales”
previously used when the amounts are compared in the same transaction.
In addition, the SEPTENI Group discloses “non-GAAP operating profit,” an indicator that is not defined in IFRS on a
voluntary basis. Non-GAAP operating profit (or loss) is a profit indicator of constant business performance determinedby adjusting temporary factors such as impairment losses and gains or losses on the sales of non-current assets fromthe IFRS-based operating profit (or loss). The management of the Group deems that the information is valuable forusers of financial statements.

(1)Earnings Performance Analysis(Earnings for the current ter,m）Looking at the Internet business environment, in which the SEPTENI Group operates, the rapid proliferation ofsmartphones has continued, with the household ownership rate as of December 31, 2015 accounting for 72.0%(source: “2015 White Paper on Information and Communications in Japan,” Ministry of Internal Affairs andCommunications). As such, the smartphone has become a mainstream device for accessing the Internet and the market
for smartphone advertising and diverse services and content is expanding. In addition, the power of social media, led
by SNS (social networking services), is increasing still further, and this is consequently prompting greater demand formarketing support that makes use of the characteristics of social media. These changes in the operating environment
are promoting the global expansion of the Internet business, with overseas business opportunities on the rise.
Under these circumstances, the SEPTENI Group was able to continue both expanding its operations and increasing its
profitability in its mainstay Internet Marketing Business by promoting business operations focused on the growth areasof Papbile,” “Social,” and “Global.” In addition, it proactively made upfront investments in human resources and new
businesses, etc. to strengthen its future competitiveness. As a result, revenue increased to ¥17,060 million (up 19.6%
year on year), non-GAAP operating profit increased to ¥3,841 million (up 26.8% year on year), operating profit rose to¥3,730 million (up 44.6% year on year) and profit attributable to owners of parent totaled ¥2,519 million (up 7.1%
year on year), with profit practically hitting a record high for the fifth straight fiscal year.
Operating results by reporting segment are as follows:
In the consolidated fiscal year under review, a new reporting segment, the Non-core Business, is added to the reporting
segments, which also include the Internet Marketing Business and the Media Content Business. For further
information, please refer to 5. Consolidated financial statements, (6) Notes to consolidated financial statements(Segment information).
The year-on-year comparison in the description of operating results by segment below is calculated based on results inthe previous fiscal year according to the new reporting segments.
1) Internet Marketing Business
The Internet Marketing Business provides comprehensive marketing support services for companies, using theInternet. Specifically, the Group sells Internet advertising and provides Web solutions (including the building andoperation of websites and SEO). The Group also operates its own services, including an ad network and othermarketing platforms, and cloud-based CRM services.
In the fiscal year under review, against a backdrop of the expanding market of Internet advertising, primarily
performance-based advertising for smartphones, the Group focused on growth fields: “Mobile”, “Social”, and“Global” businesses. As a result, the Group expanded its operations steadily and improved profitability at the sametime. Advertising for smartphones continued to achieve high growth, reflecting expanding demand and diversifying
advertising products, and advertising volume were approximately 1.4 times the year-ago level. In the Social Business,
primarily marketing support services using SNS, where the Group is strong, transactions stood at 1.4 times the yearago level, reflecting the expansion of the lineup of media to include Instagram and LINE in addition to Facebook, theGroup’s main medium. In the global business, the Group developed its operating base to enter new markets,
establishing two new bases (New York and Beijing). However, transactions declined slightly from a year ago partly
due to a decrease in advertising for existing large-scale projects.
Overall, revenue in this segment stood at 13,409 million yen (up 20.8% year on year). Non-GAAP operating income
was 5,331 million yen (up 39.7% year on year).

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2) Media Content Business
The Manga Content Business engages in the cultivation and production of Manga artists and the Manga distribution
service for the purpose of planning and developing the Group’s own intellectual property (IP). In addition, the Media
Content Business develops new businesses born from intrapreneurship, including the recruiting platform business,social contribution platform business, and medical platform business.
In the Manga Content Business, the Group actively made upfront investments in the fiscal year under review toexpand the scale of GANMA!, a manga content app. As a result, the number of GANMA! users increased significantly,
and the cumulative downloads of the app as of September 30, 2016 stood at 3.97 million, about 2.1 times the number
at the end of the previous fiscal year. To improve profitability, the Company commenced sales of advertising in
GANMA! and promoted the commercialization of manga series, its intellectual property. During the fiscal year underreview, 27 works were published as books, and a total of 43 books were released.
The medical platform business, a new business, is included in the scope of consolidation from this fiscal year.
As a result, revenue in this segment came to 601 million yen (up 190.7% year on year). The non-GAAP operating
loss was 718 million yen (non-GAAP operating loss of 530 million yen in the previous fiscal year).
3) Non-core Business
The Non-core Business is the mobile game business. In the fiscal year under review, new game titles performed well,while advertising expenses increased significantly due to large-scale promotions. Revenue was 3,200 million yen (up4.2% year on year), and the non-GAAP operating loss was 326 million yen (non-GAAP operating income of 122
million yen in the previous fiscal year).

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(Outlook for Next Fiscal Year)
1) Policy
In the fiscal year ending September 30, 2017, the Group aims to increase consolidated operating income through thesustainable growth of the Internet Marketing Business, while at the same time making a large investment in the Manga
Content Business to accelerate growth in and after the next fiscal year.
In the Internet Marketing Business, the Group aims to increase market share and improve profitability, proactively
promoting global business expansion and focusing on sales of video advertising and in-house media.
In the Media Content Business, the foundation for the monetization of the manga content business has been
established, and the Group plans to make large-scale marketing investments in and after the second quarter to expand
the user base of GANMA!. The Group aims to expand the cumulative number of downloads of applications to more than
10 million by investing an additional 500 million yen to 600 million yen annually.
In the Non-core Business, the Company will sell some of the AXEL MARK shares that it holds in November 2016,
and AXEL MARK will be excluded from consolidated financial statements. For further information, please refer to the
Notice of Changes in Consolidated Companies (AXEL MARK INC.) published on November 8, 2016.
2) Earnings estimates for the first quarter
When the Company announces quarterly results, it also announces earnings estimates for the next quarter.

In the first quarter of the fiscal year ending September 30, 2017, the Internet Marketing Business, the main business,is expected to achieve an increase in revenue and profit year on year.
In the Media Content Business, revenue is expected to increase significantly year on year, mainly on the back of theManga Content Business, but the loss will remain unchanged due to the continuation of prior investments.
As described above, the Company will sell shares in AXEL MARK and will post a profit from discontinued
operations of 1 billion yen.
Based on the situation above, on November 8, 2016, the Company has announced the earnings estimates for the firstquarter of the fiscal year ending September 30, 2017 below.
Earnings estimates for the first quarter of the fiscal year ending September 30, 2017 (from October 1, 2016 to December
31, 2016)
Revenue
3,700 million yen
Non-GAAP operating income
980 million yen
Profit attributable to owners of parent
1,700 million yen
The estimates above are based on information available at the time of publication of this summary and involves
uncertain factors. Actual results may differ from them for a variety of reasons.
(2) Analysis of financial position
Total assets at the end of the fiscal year under review increased 4,346 million yen from the end of the previous fiscal
year to 29,981 million yen. This was primarily attributable to an increase of 3,786 million yen in cash and cash
equivalents and an increase of 179 million yen in other financial assets in non-current assets.
Total liabilities rose 1,592 million yen, to 14,935 million yen chiefly due to increases of 450 million yen in operating
payables and of 554 million yen in income tax payables.
Equity rose 2,754 million yen, to 15,046 million yen, chiefly reflecting changes in interests in subsidiaries without lossof control of 645 million yen and a profit of 2,252 million yen, despite cash dividends paid of 363 million yen.

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(Cash flows)
Cash and cash equivalents in the fiscal year under review rose 3,786 million yen from the end of the previous fiscal year
to 15,481 million yen.
The following is a description of the situation and factors of each category of cash flow in the fiscal year under review.
(Cash flows from (used in) operating activities)
Cash flows from operating activities stood at 3,209 million yen (cash-in of 1,874 million yen in the previous fiscal year).
This reflected inflows such as the recovery of working capital of 469 million yen and a profit before tax fromcontinuing operations of 3,847 million yen, offsetting outflows such as income taxes paid of 1,597 million yen.
(Cash flows from (used in) investing activities)
Cash flows used in investing activities came to 109 million yen (cash-in of 1,258 million yen in the previous fiscal year).
This result was mainly attributable to outflows of 262 million yen resulting from the acquisition of intangible assets,
while there was a net cash inflow of 80 million yen from the purchase of securities and proceeds from the sales of
securities (purchase of securities of 197 million yen and proceeds from sales of securities of 277 million yen).
(Cash flows from (used in) financing activities)
Cash flows from financing activities was 801 million yen (cash-out of 124 million yen in the previous fiscal year). This
was largely a reflection of a net cash inflows of 514 million yen (repayments of non-current borrowings of 186 million
yen and non-current loans received of 700 million yen) and a cash inflow from the sale of shares in subsidiaries without
loss of control of 884 million yen, while there were dividends paid of 363 million yen.
(Reference)Trends in Cash Flow-Related Indicators
FY9/15

FY9/16Equity attributable to owners of parent Ratio (%)

44.1

47.2

Equity attributable to owners of parent Ratio, Market Capitalization Based (%)

217.2

194.7

Cash Flow to Interest-Bearing Debt Ratio (%)
67.3
48.1
Interest Coverage Ratio
433.3
330.0
Equity attributable to owners of parent Ratio：Equity attributable to owners of parent／Total assets
Equity attributable to owners of parent Ratio Market Capitalization Based：Market Capitalization／Total assets
Cash Flow to Interest-Bearing Debt Ratio: Interest-Bearing Debt / Cash Flow from Operating Activities
Interest Coverage Ratio: Cash Flow from Operating Activities / Interest Payments(Notes)1. Each number above is calculated from consolidated financial data.
2. The market capitalization is the closing stock price at the end of the fiscal year multiplied by the number of shares outstanding(excluding treasury stock).
3. The cash flows are cash flows from (used in) operating activities.
4. Interest-bearing debt is all the debt on which interest is paid that is posted in the statement of financial position.
5. The date of transition to IFRS was October 1, 2014. The Company is applying IFRS from the fiscal year ending September 30,
2016. Data for fiscal years up to the fiscal year ended September 30, 2014 are thus not described.

(3) Basic Policy Regarding the Distribution of Profits, and Dividends in the Current and Next Terms
We recognize that returning profits to our shareholders is a key management issue, and will flexibly implement thepolicy outlined below regarding the appropriate distribution of profits.
With regard to the distribution of retained earnings, we will consider our consolidated earnings performance, the need tofortify our financial position, and the Groupribution of profits. 30, 2014 are thus not desce same time endeavoring tomaintain a dividend payout ratio of around 15%. Furthermore, we have established a minimum full-year dividend target
level of ¥5(*) per share, and seek to strike a balance between stable dividends and an appropriate level of profit
distribution to allow us to grow our earnings. In addition, we will endeavor to utilize our retained earnings forinvestments in training personnel, optimizing and reinvigorating our existing businesses, and capturing new businessareas that have the potential for high growth and profitability.
Based on these policies, we expect to pay a ¥16 dividend per share during the current fiscal year.
Furthermore, with regard to dividends in the next term, we expect to implement a dividend in accordance with theabovementioned policy, and will announce the specific value for our dividend estimate as soon as we announce earnings
estimates for the full year.
(*)The Company conducted a 5-for-1 stock split on October 1, 2016 and changes the minimum amount to 2 yen from the fiscal year
ending September 30, 2017. The minimum annual dividend will effectively be twice as much as before the stock split.

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2.

Corporate Structure
As of September 30, 2016, the SEPTENI Group comprises the holding company SEPTENI HOLDINGS, 27
consolidated subsidiaries, and two equity accounting method held affiliates and is engaged in Internet marketing,media content, and Non-core.

Below is description of businesses and a breakdown of the companies that belong to each of the Groupnet marketing,media
Business Segment

Business Description

Internet advertising sales, Web solutions (website
creation, operation, SEO services), marketing
Internet Marketing Business platform operations for ad networks, cloud-based
CRM services, Internet marketing support services
for corporations

Media Content Business

Non-core Business

Main Consolidated Subsidiaries

SEPTENI CO., LTD.
Tricorn Corporation

The digital media content distribution businesssegment and platform business segment, including themanga content business, recruitment platform
COMICSMART, Inc.
business, social contribution platform business, andmedical platform business
The business whose value the highest decision-makerbelieves to be maximized if it is managed
independently and flexibly, among the businesses the
AXEL MARK INC. (*)
Group invests in, in consideration of the appropriate
distribution of the Group’s management resources
and the maximization of the Group’s enterprise value.

(*) As described in Earnings Performance, Financial Conditions Analysis, (2) Earnings Performance Analysis (Outlook for Next
Fiscal Year), if the transfer of some of the Axel Mark shares held by the Company is completed in November 2016, the Groupwill lose its control over Axel Mark.

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SEPTENI’s Corporate Structure
Service,
Product
Provision

Capital Participation
Management Leadership,
SupervisionInternet Marketing Business
Internet Advertising Agency

SEPTENI CO., LTD.
Cloud-based CRM Services

Tricorn Corporation
16 other companies

Manga content

COMICSMART INC.
Recruitment platform
ViViVit, Inc.
Social contribution platform
gooddo Inc.
Medical platform
Pharmarket Co.,Ltd.
1 other company

Non-core Business
Mobile GameAXEL MARK INC.
3 other companies

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Clients (Companies, Individual Users)

SEPTENI HOLDINGS CO., LTD.

Media Content Business3. Management Policy(1) The Company’s basic business policy
The Group has been flexibly expanding its operations mainly in its Internet Marketing Business, the focus of which isInternet advertising, and its Media Content Business, in response to changes in the external environment. As of
September 30, 2016, the Group has more than 20 Group companies, 14 bases in seven countries, and more than 1,000
employees. To further enhance its corporate value, the Group is promoting innovation and launching new operations tocreate new core operations in the advertising business.
Against this backdrop, the holding company marked its 10th anniversary in October 2016 and devised the Group’s
corporate philosophy and code of conduct. The Group is developing business activities in accordance with the following
corporate philosophy and code of conduct:
Corporate philosophy
Mission: Inspiring the world with entrepreneurship
Vision: To create a strong and great company
Creed: Hinerankai (Think outside the box)
Code of conduct: Septeni Way
Speed, Stretch, Partnership, Fair & Open, Diversity, Passion, Free & Rule
(2) The Company’s medium- to long-term management strategy and Issues to be addressed
Since November 2013, the Group has been implementing its medium-term business policies, whose concept is “Double
profits.” In the fiscal year ended September 30, 2016, non-GAAP operating income stood at 3.84 billion yen,approximately 2.4 times more than operating income (Japan GAAP) of 1.59 billion yen in the fiscal year ended
September 30, 2013, and profitability improved. The Group achieved dramatic growth in the “Mobile”, “Social”, and“Global” businesses, which are positioned as key businesses.
To achieve further income growth and improve corporate value, the Company has formulated new medium-termbusiness policies for the fiscal years from the year ending September 30, 2017. The following is an outline of thesepolicies.
■Earnings target
Non-GAAP operating income: 10 billion yen■Basic policies◆Expand advertising business globally◆Enhance our own media◆Invest in what comes after the smartphone
The Company expects that the market for smartphone advertisements, where the Group has expanded its share, will
mature gradually in Japan, but that strong growth will continue globally with an improved ecosystem. In thisenvironment, in the mainstay Internet Marketing Business, the Group aims to expand its share and increase profitability
in Japan by strengthening the position established in the field of smartphones and social media. Meanwhile, the Groupwill accelerate the development of global operations to make them a growth driver through organic business growth andM&A.
In the Media Content Business, the Group will develop GANMA!, a manga content app, as its own medium and its
primary revenue source. The Group will expand the scale of its own media to generate powerful inter-segment synergy
with the Internet Marketing Business and improve profitability of the Group.
4. Basic Stance on the Choice of Accounting Standards
The Group promotes the development of global operations and is applying IFRS from the fiscal year ended September 30,
2016 to improve the quality of business administration through the unification of accounting procedures within theGroup and to improve the convenience of stakeholders, including shareholders and investors in Japan and overseas, byincreasing the international comparability of financial information in capital markets.

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5. Consolidated Financial Statements(1) Consolidated Statement of Financial Position
Date of Transition(Ended September
30,2014)Previous Term(Ended September
30,2015)（Thousand yen）
Current Term（Ended September 30,
2016）

Cash and cash equivalents

8,417,028

11,694,507

15,480,970

Operating receivables

7,904,294

9,818,035

9,982,708

Inventories
Other financial assets

51,580702,866

8,601
532,901

118,517443,788

Other current assets

227,951

221,006

242,480

22,275,050―

26,268,463

17,937,915

22,275,050

26,268,463

Property, plant and equipment

290,450

328,527

363,519

Goodwill

601,206

147,491

Intangible assets

296,393

247,403

147,491
232,261

463,795
1,341,000

AssetsCurrent assets

Subtotal
Asset classified as held for sale

17,303,719
634,196

Total current assets―

Non-current assets

Investments accounted for using equity method
Other financial assets

611,991
1,673,251

Other non-current assets

43,575

530,722
1,493,895
52,742

Deferred tax assets

799,602559,215680,225

3,836,021

3,359,995

3,712,481

21,773,936

25,635,045

29,980,944

Total non-current assets
Total assets

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3,743

Date of Transition(Ended September
30,2014)Previous Term(Ended September
30,2015)（Thousand yen）
Current Term（Ended September 30,
2016）

Liabilities and Equity
Liabilities
Current liabilities
Operating payables

7,453,602

9,203,035

9,652,601

Other financial liabilities

1,438,979

1,793,417

1,728,525

891,629

682,575

1,235,959

1,417,687

1,236,846
1,573,264

11,020,169

13,096,714

14,191,236

187,522――

11,207,691

13,096,714

14,191,236

Other financial liabilities

348,336

157,949

654,867

Provisions

82,90585,52088,454

Other non-current liabilities

3,846

2,426

518

Deferred tax liabilities

2,104

664

―

Current income taxes payable
Other current liabilities
Subtotal
Liabilities directly associated with assets
classified as held for sale
Total current liabilities
Non-current liabilities

Total non-current liabilities
Total liabilities
EquityEquity attributable to owners of parent
Share capital
Share premium
Treasury shares
Retained earnings
Other components of equity
Total equity attributable to owners ofparentNon-controlling interests
Total equity
Total liabilities and equity－

437,191

246,559

11,644,882

13,343,273

743,839
14,935,075

2,053,011
3,148,095

2,070,160
3,160,951

2,085,004
3,617,269-485,012
4,306,242
112,631-485,012
6,495,103
65,966-485,685
8,815,259

9,134,967

11,307,168

14,155,722

994,087

984,604

10,129,054

12,291,772

890,147
15,045,869

21,773,936

25,635,045

29,980,944

13－

123,875

(2) Consolidated Statement of Profit or Loss（Thousand yen）
Previous Term(Ended September 30,2015)

Current Term(Ended September 30, 2016)

Cost of sales

14,266,710
2,805,567

17,060,182
3,436,710

Gross profit
Selling, general and administrative expense

11,461,143
8,457,030

13,623,472
9,803,390

Other expense

49,756474,445

106,712
196,576

Operating profit
Finance income

2,579,424
316,048

3,730,218
111,955

Finance costs

20,878104,973

Share of profit from investments accounted
for using equity method

88,878109,755

2,963,472
1,341,075

3,846,955
1,594,946

1,622,397

2,252,009

677,8942,300,291

2,252,009

2,351,121-50,830

2,519,007-266,998

2,300,291

2,252,009

12.96
5.25

19.43
―

18.21

19.43

12.84

19.30

5.20
18.04

―
19.30

64,547,685

76,401,356

Continuing operations
Revenue

Other income

Profit before tax
Income tax expense
Profit from continuing operations
Discontinued operations
Profit from discontinued operations
ProfitProfit attributable to:
Owners of parent
Non-controlling interests
Total
Earnings per share
Basic earnings per share (Yen)Continuing operations
Discontinued operations
Total
Diluted earnings per share (Yen)Continuing operations
Discontinued operations
Total
Net sales
Reconciliation from operating profit to non-GAAP operating profit (Reference)―(Thousand yen)Previous Term(Ended September 30,2015)

Current Term(Ended September 30, 2016)

Operating profit

2,579,424

3,730,218

Other income

17,555467,808

78,515
188,967

3,029,677

3,840,670

Other expense
Non-GAAP operating profit

－

14

－

(3) Consolidated Statement of Comprehensive Income（Thousand yen）
Previous Term(Ended September 30,2015)

Current Term(Ended September 30, 2016)

2,300,291

2,252,009

32,031

298,883-23,435-114,119―8,596-5,511
179,253

2,308,887

2,431,262

Owners of parent
Non-controlling interests

2,364,713-55,826

2,734,220-302,958

Comprehensive income

2,308,887

2,431,262

ProfitOther comprehensive income
Items that will not be reclassified to profit or loss
Net changes in financial assets measured at fairvalue through other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translating foreign
operations
Cash flow hedges
Total other comprehensive income, net of tax
Total comprehensive income
Comprehensive income attributable to:

－

15

－

(4) Consolidated Statement of Changes in Equity（Thousand yen）
Equity attributable to owners of parent
Total equity

Total

Noncontrollinginterests

112,631―

9,134,967
2,351,121994,087-50,830

10,129,054
2,300,291

2,351,121

13,592
13,592

13,592
2,364,713-4,996-55,826

8,596
2,308,887―――-228,262-26,129―

3,876-228,262

―
―

3,876
-228,262

―

―

―

―

―

―

―

―

―

―

―

―

―

―

―

Share capital

Share
premium

TreasurysharesRetainedearnings

Other
componentsof equity

Balance at October 1, 2014
ProfitOther comprehensive income

2,053,011―

3,148,095―-485,012―

4,306,242
2,351,121

―

―

―

―

Total comprehensive income

―

―

―

Issue of new shares
Dividends of surplus
Purchase and disposal oftreasury shares
Changes in ownershipinterests in subsidiaries that
do not result in loss of control
Other

17,149―12,856
―

―

―

―

―

66,002-34,128

31,874

46,343

78,217

Total amount of transactions
with owners

17,14912,856―-162,260-60,257-192,512

46,343-146,169

Balance at September 30, 2015

2,070,160

3,160,951-485,012

6,495,103

65,966

11,307,168

984,604

12,291,772（Thousand yen）
Equity attributable to owners of parent
Noncontrollinginterests

Total equity

Share capital

Share
premium

TreasurysharesRetainedearnings

Other
componentsof equity

2,070,160

3,160,951-485,012

6,495,103

65,966

11,307,168

984,604

12,291,772

―

―

―

2,519,007―

2,519,007-266,998

2,252,009

Other comprehensive income

―

―

―

―

215,213215,213-35,960

179,253

Total comprehensive income

―

―

―

2,519,007

215,2132,734,220-302,958

2,431,262

14,844―

14,844――――-362,825-29,495―

193-362,825――

193-362,825

―

―

-673

―

―

-673

―

-673

―

441,060―――

441,060

204,114645,174

Balance at October 1, 2015
ProfitIssue of new shares
Dividends of surplus
Purchase and disposal oftreasury shares
Changes in ownership interestsin subsidiaries that do not resultin loss of control
Other

Total

―

414

―

163,974-127,809

36,5794,387

40,966

Total amount of transactions
with owners

14,844456,318-673-198,851-157,304

114,334

208,501

322,835

Balance at September 30, 2016

2,085,004

3,617,269-485,685

8,815,259

123,875

14,155,722

890,147

15,045,869

－

16

－

(5) Consolidated cash flow statement（Thousand yen）
Previous Term(Ended September 30,2015)

Current Term(Ended September 30, 2016)

Profit before tax from continuing operations

2,963,472

3,846,955

Profit before tax from discontinued operations
Adjustments:

1,053,285―

Depreciation and amortization expense
Impairment loss

163,045

221,164

442,904-57,591―-7,313

5,319

9,863

-66,926-81,269-1,195,750

310,755-1,913,741
42,9791,749,433
254,847
3,441,276
57,591-4,32582,601-1,703,120
1,874,023-164,672-109,916
449,566
293,739
4,768,872
7,313-9,72339,258-1,596,915
3,208,805

138,596-55,125-118,025-61,075

276,630-196,762-153,148-262,189

1,249,062―

104,113
1,257,546

226,332-109,137

226,468―-175,001-228,262-244,068
700,000-185,906-362,825―

884,064-2,720―55,620-123,895-2,456-673
12,778800,914-1,133-114,1193,006,541
8,687,966
11,694,507

3,786,463
11,694,507
15,480,970

Cash flows from (used in) operating activities

Interest income and dividend income
Interest expenses
Share of (profit) loss of entities accounted forusing equity method
Other
Increase or decrease in working capital
Decrease (increase) in operating receivables
Decrease (increase) in inventories
Increase (decrease) in operating payables
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes refund
Income taxes paid
Cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Proceeds from sales of securities
Purchase of securities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of discontinued
operations(less cash of discontinued operations)
Other
Cash flows from (used in) investing activities
Cash flows from (used in) financing activities
Net increase (decrease) in current borrowings
Proceeds from non-current borrowings
Repayments of non-current borrowings
Cash dividends paid
Proceeds from changes in interests in
subsidiaries without loss of control
Dividends paid to non-controlling interests
Purchase of treasury shares
Other
Cash flows from (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

－

17

－

(Segment information)
1. Overview of reportable segments
The Group has a holding company structure where the Company is a holding company and its subsidiaries (or theirgroups) are business units. Activities directly related to revenue generation are conducted solely by business units,
which consist of the Company’s subsidiaries (or their groups).
The Group’s reportable segments are based on business segments for which separate financial information isavailable and that the highest decision-maker examines on a regular basis to determine the distribution of management
resources and evaluate the results. In consideration of similarities among the economic characteristics of each businesssegment and their quantitative importance and for the purpose of enabling the users of the financial statements toappropriately evaluate the Group’s businesses and the economic circumstances for the businesses and their effects on
the businesses, the Group discloses information on three reportable segments: the Internet Marketing Business, theMedia Content Business, and the Non-core Business.
Internet Marketing Business
The Internet Marketing Business is a single business segment engaging in comprehensive Internet marketing support
services for corporations, including sales of Internet advertising and the provision of web solutions (website creationand operations, SEO, etc.), ad networks, and cloud-based CRM services.
Media Content Business
The Media Content Business consists of the digital media content distribution business segment and platformbusiness segment, including the manga content business, recruitment platform business, social contribution platformbusiness, and medical platform business. The Media Content Business includes business units that have commenced
operation in recent years and have not made a profit due to prior investment for revenue generation. The highest
decision-maker makes decisions on the distribution of management resources to those business units and evaluates
their results, assuming risks and economic value that allow the Group to recover the investment costs through future
revenue generation.
Non-core Business
The Non-core Business is the business whose business value the highest decision-maker believes to be maximized if
the business is managed independently and flexibly, among the businesses the Group invests in, in consideration of
the appropriate distribution of the Group’s management resources and the maximization of the Group’s enterprisevalue. The highest decision-maker fully respects the management decisions of the management of the Non-coreBusiness. From the standpoint of a responsible investor (with stewardship responsibility), the highest decision-maker
determines the distribution of management resources and evaluates performance through dialogue in engagement for
constructive purposes.
On October 1, 2014, the Group sold its DM business segment. The disposal group consisting of the assets of the DM
business segment and the liabilities directly related to them was classified as held for sale on the date of transition, andthe results of the segment were presented as discontinued operations in the previous consolidated fiscal year. The
disclosure requirements of IFRS 8 (operating segments) therefore do not apply.
From the consolidated fiscal year under review, the mobile game business that previously belonged to the Media
Content Business is classified under the Non-core Business. In association with this change, the segment information
for the previous consolidated fiscal year has been revised retroactively.
2. Measurement of reportable segments’ profits and losses
Segment profit is non-GAAP operating income, which is the sum of operating income in compliance with IFRS andtemporary factors, including impairment losses and gains (losses) on sales of property, plant and equipment.
The prices of inter-segment transactions are determined based on the prices of transactions with external customers.
The Group voluntarily discloses the total amount of all transactions as net sales. The disclosure of net sales is notdisclosure in accordance with IFRS. The management believes, however, that sales are useful information for users of
the financial statements, and voluntarily discloses sales in its consolidated net profit-and-loss statement and segment
information as reference information.

－

18

－

3. Information on reportable segments’ profits and losses
Previous consolidated fiscal year (from October 1, 2014 to September 30, 2015)（Thousand yen）
Internet
MarketingMedia Content

Non-core

Total

Adjustment

Consolidated

Segment revenue

11,096,488

206,686

3,072,304

14,375,478-108,768

14,266,710

Segment profit (loss)

3,815,621-530,122

122,363

3,407,862-378,185

3,029,677

Segment sales

61,563,838

206,686

3,072,304

64,842,828-295,143

64,547,685(Note) The segment profit is non-GAAP operating income.
Fiscal Year Ended September 30, 2016 (October 1, 2015 l September 30, 2016)（Thousand yen）
Internet
MarketingMedia Content

Non-core

Total

Adjustment

Consolidated

Segment revenue

13,408,863

600,835

3,200,472

17,210,170-149,988

17,060,182

Segment profit (loss)

5,331,011-717,535-325,994

4,287,482-446,812

3,840,670

Segment sales

73,158,755

600,835

3,200,472

76,960,062-558,706

76,401,356(Note) The segment profit is non-GAAP operating income.
Reconciliation of segment profit (loss) and profit before tax（Thousand yen）
Previous Term(Ended September 30,2015)

Current Term(Ended September 30, 2016)

Segment profit (non-GAAP operating income)

3,029,677

3,840,670

Other profit (loss) (net)
Financial profit (loss) (net)Share of profit of entities accounted for using equity method-450,253
295,170
88,878-110,453
6,983
109,755

Profit before tax

2,963,472

3,846,955

－

19

－

(Per-share information)
The basis of the calculation of earnings per share is shown in the table below.
Previous Term(Ended September 30,2015)

Current Term(Ended September 30, 2016)

1,673,227

2,519,007

677,894―

Total

2,351,121

2,519,007

Average number of ordinary shares outstanding during the fiscal
year (thousand shares)

129,108

129,662

1,206

841

130,314130,503

Continuing operations

12.96

19.43

Discontinued operations

5.25

―

18.21

19.43

12.84
5.20

19.30
―

18.04

19.30

Profit attributable to owners of parent (thousand yen)
Continuing operations
Discontinued operations

Number of potential shares with dilutive effects
Number of warrants (thousand shares)
Average number of shares outstanding in consideration of thenumber of potential shares with dilutive effects (thousand
shares)Basic earnings per share (yen)Total
Diluted earnings per share (yen)Continuing operations
Discontinued operations
Total(First-time adoption of IFRS)
1. Transition to IFRSThe Group’s consolidated financial statements are prepared in compliance with IFRS. The Group’s consolidated
financial statements for the fiscal year ended September 30, 2016 are its first consolidated financial statements incompliance with IFRS. The Group’s last consolidated financial statements prepared in compliance with the generally
accepted accounting principles in Japan are those for the consolidated fiscal year ended September 30, 2015. The
date of transition from Japan GAAP to IFRS is October 1, 2014.
2.

-

Adoption of exemptions set out in IFRS 1IFRS 1 requires the entity that adopts IFRS for the first time to apply IFRS retroactively, but grants certain
exemptions. The Group adopts the following exemptions:
Chooses to adopt IFRS 3 (business combinations) from the date of transition and does not retroactively apply IFRS
to business combinations before the date of transition.
Deems the cumulative exchange differences on the translation of foreign operations on the date of transition to be
zero.
Makes decisions on the classification of IFRS 9 (financial instruments) based on the facts and situation on the dateof transition.

－

20

－

6. Other
Not applicable－21－