Member of Financial Accounting Standards Foundation

Summary of Consolidated Financial Statements for the Second Quarter, FY2017
May 1, 2017
Exchange: First Section of Tokyo Stock Exchange
Name of listed company:

GMO Payment Gateway, Inc.

Stock code:

3769

URL: http://corp.gmo-pg.com/

Representative:

Issei Ainoura

President &Representative Director

Contact:

Ryu Muramatsu

Executive Vice President

Tel: +81-3-3464-0182

Scheduled date of submission ofquarterly report

May 12, 2017

Scheduled date ofcommencement ofdividend payment-

Supplemental materials preparedfor financial results

Yes

Information meeting arranged
related to financial resultsYes (for institutional investors andanalysts)(Amounts rounded down to the nearest one million yen)

1.

Consolidated Financial Statements for the Second Quarter, FY2017 (Cumulative)(From October 1, 2016 to March 31, 2017)(1) Consolidated Financial Statements (Percentages denote the increase or decrease from the previous period)
Net sales
2Q FY2017
2Q FY2016

Million yen
9,992
5,730

%
74.4
37.7

Operating income

Ordinary income

Million yen
2,536
1,879

Million yen
2,370
1,918

%
35.0
26.3

(Note) Comprehensive income: 2Q FY2017: 1,632 million yen (46.3%)

2Q FY2017
2Q FY2016

Net income per share
Yen
29.19
31.01

%
23.5
25.4

Profit attributable toowners of parent
Million yen
%
1,084
△5.9
1,151
22.9

2Q FY2016: 1,115 million yen (15.6%)

Diluted net income per share
Yen
31.00

(Note) In order to appropriately display the net income and diluted income per share, stock attributed to the directors’
remuneration board incentive plan trust has the right to a claim of dividend, and is therefore, not included in treasury stock.

(2) Consolidated Financial Position

2Q FY2017
FY2016

Total assets
Million yen
74,29054,771

Net assets
Million yen
19,702
19,108Reference: Equity: 2Q FY2017: 18,724 million yen

2.

Equity ratio
%
25.2
33.2

Net assets per shareYen
504.05488.88FY2016: 18,160 million yen

Dividends
1Q

FY 2016
FY 2017
FY 2017 (forecast)

2Q
Yen
0.00
0.00

Yen
0.00
0.00

Yearly dividends
3Q
Fiscal Year end
Yen
Yen
0.00
27.00
0.00

37.00

Total
Yen
27.00
37.00

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

3.

Consolidated Financial Forecast for the Fiscal Year Ending September 2017
(From October 1, 2016 to September 30, 2017)

Net sales
Operating income
Ordinary income
Million yen% Million yen% Million yen%
20,370
68.2
5,013
31.2
4,673
23.6
Full year(Note) Revision to the most recently released financial forecast: Yes

Profit attributable toowners of parent
Million yen
%
2,762
△5.1

Net income
per share
Yen
74.35

Notices:
(1)

(2)
(3)

(4)

Changes of important subsidiaries during the period (change in specified subsidiaries in accordance withchanges in the scope of consolidation):No
New subsidiaries: - (Name:), Excluded subsidiaries: - (Name:)
Application of special accounting procedures for the execution of the financial statements:
No
Changes in accounting policy / changes or restatements in the accounting estimates[1] Changes in accounting policies associated with reforms to accounting standards, etc.:
No[2] Changes in accounting policies other than [1]:No
[3] Changes in accounting estimates:
No[4] Restatements:
No
Number of shares issued (common stock)[1] Number of shares outstanding at theend of term (including treasury stock)[2] Number of treasury stocks at the end of
term[3] Average number of shares outstanding

2Q FY2017: 37,150,500

FY 2016: 37,150,500

2Q FY2017: 2,500

FY 2016: 2,500

2Q FY2017: 37,148,000

2Q FY2016: 37,145,234(Note) In order to appropriately display the number of treasury stocks at the end of the term and average number ofshares outstanding, stock attributed to the directors’ remuneration board incentive plan trust has the right to a claimof dividend, and is therefore, not included in treasury stock.

*

Implementation status of quarterly review procedures
These quarterly financial statements are not subject to the quarterly review procedures of the Financial
Instruments and Exchange Act. At the time of disclosure of these quarterly financial statements, the quarterly
financial statement review procedures of the Financial Instruments and Exchange Act had not been completed.

*

Explanation of the proper use of earnings forecasts and other important notes
The above forecasts are outlooks based on information currently available, and include various uncertain
factors. Actual performance may differ substantially from the forecasts due to changes in business conditions
and other factors. For the assumption on which financial forecasts are based and matters to be considered inusing financial forecasts, please refer to “(3) Review of consolidated earnings forecasts and other forecasts”
under “1. Qualitative Information on Consolidated Financial Statements for the Quarter” on page 5 of theattachment.
Results Presentation for Investors and Analysts was given on May 1, 2017. Supporting materials and a video ofthe presentation will be made available on the company's website after the event.

Table of contents of attachment
1. Qualitative Information on Consolidated Financial Statements for the Quarter(1) Qualitative information on consolidated operating results(2) Qualitative information on the consolidated financial condition(3) Description of forecast information including consolidated earnings forecasts(4) Challenges to be addressed by our company
2. Items concerning summary information (Notes)(1) Changes of important subsidiaries(2) Application of special accounting procedures for drafting of
the financial statements(3) Changes in accounting policy/ changes or restatements in the accounting
estimates(4) Additional information
3. Consolidated quarterly financial statements(1) Consolidated quarterly balance sheet(2) Consolidated quarterly statement of income and consolidated quarterly
statement of comprehensive income(3) Consolidated statements of cash flows(4) Notes for consolidated quarterly financial statements(Notes regarding the Going Concern Assumption)(Notes for the consolidated quarterly profit and loss statement)(Notes in cases of extreme variation in the amount of shareholders’ equity)

－

1 －

2
2
5
6
7
8
8
8
8
8
9
9
11
13
14
14
14
14

1.

Qualitative Information on Consolidated Financial Statements for the
Quarter(1)

Qualitative information on consolidated operating results①Consolidated operating results
Regarding the economic environment in Japan during the period under review, corporate earnings, employment, and income
environments are trending toward improvement, supported by the economic and fiscal policy of the government and themonetary easing measures by the Bank of Japan. However, the pace of economic recovery still remains moderate due touncertain situations in the future, with a sharp fluctuation in financial and capital markets influenced by the transition to the
new administration in the United States and the issue of the United Kingdom leaving the EU.
In regard to our core business, the B to C e-commerce market continues to grow, thanks to a favorable external environment
such as broader use of smartphones as well as reforms in logistics. The scope of e-commerce itself is also growing in themarkets for non-tangible items such as services, as seen in the new areas such as B to B and C to C e-commerce. In addition,
the transition to online payments outside of the e-commerce field is steadily proceeding, including services other than productsales, public dues such as utility bills and taxes, and fields which are closely linked to living such as medical care.
Meanwhile, performance has been strong in credit card shopping within the card-present market, that the principal market of
GMO Financial Gate Co., Ltd., which became a consolidated subsidiary in the previous consolidated fiscal year. As the Tokyo
Olympics and Paralympics in 2020 draw closer, we expect a transition to more cashless payments including means other thancredit cards. We expect this to create new business opportunities, expanding the business domain of our group even further.
With regard to overseas business, we established five overseas entities to provide Z.com Payment solutions to Japanese
online businesses with local presence in markets in South East Asia. We have continued to promote funding activities throughthe “GMO Global Payment Fund” to form capital alliances with prospective payment-related businesses; in addition, thefinancial results of local payment processing companies in which we invest our funds have performed steadily. In the previous
consolidated fiscal year, we acquired a substantial stake in Macro Kiosk Berhad, the leading complete end to end mobile
payment, authentication, notification and enterprise mobility solutions enabler based in Malaysia. With a view to incorporating
the huge growth potential of South East Asia, which is the center of global growth, into our Group’s mid-to-long-term businessgrowth, we will continue to introduce new measures while creating a synergistic effect between “Z.com Payment” and “GMO
Global Payment Fund”.
Under such circumstances, the group’s operating results for the consolidated cumulative second quarter of the current
consolidated fiscal year were as follows. Performance of our group for the cumulative second quarter of this consolidated
fiscal year saw net sales of 9,992,048 thousand yen (increase of 74.4% on a year-on-year basis); from winning of large-scale
merchants by our consolidated subsidiary GMO Payment Services Inc. as well as business expansion of Macro Kiosk Berhadthat started being included in the consolidated profit and loss statement from the second quarter of this fiscal year, in addition
to increase in the number and amount of processed payments and expansion of payment services due to winning large-scalebusinesses.
Looking at operating expenses in terms of cost of sales, despite the advantages of economies of scale we gained from ourrevenue growth, sales cost ratio rose due to strong performance in high sales cost ratio products in "GMO-PG remittanceservice", "GMO payment after delivery" service, and payment terminals sales in GMO Financial Gate, Inc. cost of sales
amounted to 2,922,522 thousand yen (increase of 125.2% on a year-on-year basis). Selling, general and administrative
expenses came to 4,532,806 thousand yen (increase of 77.5% on a year-on-year basis) due to the increases of MSB related
sales and an increase in personnel expenses. Operating income grew 35.0% on a year-on-year basis to 2,536,719 thousandyen.
With regard to non-operating income and loss, investment loss from the equity method of 193,145 thousand yen resulted inordinary income of 2,370,005 thousand yen (increase of 23.5% on a year-on-year basis) .
With regards to extraordinary profit or loss, expenditures concerning information leakage and unauthorized access that had
been announced on 10th March 2017 were recognized as an extraordinary expense of 270,046 thousand yen of information
security countermeasure cost, while received insurance reimbursement of 160,000 thousand yen from insurance regarding
this information leakage was recognized as an extraordinary income.

－2 －With regards to income taxes, while temporary differences have increased with GMO Payment Service Inc. business volume
expansion, since it is difficult to reasonably estimate future taxable income as at the end of this cumulative second quarter, it
has been decided not to recognize deferred tax asset on these temporary differences, which resulted in higher tax burden
ratio from income taxes. Consequently, the net profit for this quarter attributable to owners of parent company has become
1,084,316 thousand yen (decrease of 5.9% on a year-on-year basis)② Results by segment
Performance by reportable segment is explained below.
In order to facilitate appropriate understanding of business performance by our group, our business segment categorization
methodology has been reviewed, and several business segments that had previously been included in “Other” have been
aggregated as “Payment Enhancement Business” and were added on as a reporting segment. And Macro Kiosk Berhad,
which started being included in the consolidated profit and loss statement from the second quarter of this fiscal year, is
included in Payment Enhancement Business category.
First six months of theFirst six months of theprevious consolidated
current consolidated
Rate of change
Segment
fiscal year
fiscal year
(From October 1, 2015
(From October 1, 2016(%)
to March 31, 2016)
to March 31, 2017)
Payment Processing Business
Sales (thousand yen)
4,189,434
5,886,720
40.5
Operating income(thousand yen)
2,488,036
3,336,554
34.1
Money Service Business
2,515,380
Sales (thousand yen)
947,523
165.5
Operating income(thousand yen)
95,879△61,565
Payment Enhancement Business
Sales (thousand yen)
593,850
1,589,947
167.7
Operating income(thousand yen)
76,479289,337
278.3
Adjustments△221
Sales (thousand yen)
△1,027,607
Operating income(thousand yen)△781,239
Total
Sales (thousand yen)
5,730,587
9,992,048
74.4
Operating income(thousand yen)
1,879,155
2,536,719
35.0
a. Payment Processing BusinessIn the Payments Processing Business, online payments grew steadily, including the B to C, B to B, and C to C e-commercemarkets. With the aim of supporting further expansion of e-commerce in B to B transactions, provision of “Payment package
for B to B e-commerce” has started in the cumulative second quarter of this consolidated fiscal year, which aggregates
payment methods required for B to B e-commerce businesses. This package was launched in April 2017, with “Paid” service
added on, which is a one-stop service provided by RACCOON CO., LTD. that collectively handles matters from credit
exposure management, which arises in clearing of credit sale in B to B e-commerce, to payment collections.
In the field of recurring payments, we have continued working to attempt to develop this field to enable the use of credit cards
for paying utility charges, public dues and other monthly services closely connected with everyday life. We provide payment
methods to public institutions, such as the Japan Pension Service, and local governments.
Our number of merchants during the current consolidated cumulative first quarter increased by 7,867 to 85,123 compared tothe end of the previous consolidated fiscal year. The number and amount of processed payments steadily increased.
Changes in number of operating stores

Number of operating

End of September

End of September

End of September

End of September

End of March

2013

2014

2015

2016

2017

44,32849,72559,55977,256

85,123storesNote: Number of operating stores means the number of IDs assigned to each store to use the service. It shows thenumber of stores (merchants) which have an agreement with the Group, are connected to the system,
and in principle are able to process payments at any time, though the number of operating stores does not include stores
which are using the GMO Payment after delivery service or Online advertising service.

Regarding the card-present market business, payment processing services provided by GMO Financial Gate Co., Ltd., which－

3 －became a consolidated subsidiary in the previous consolidated fiscal year, showed strong performance and contributed toearnings growth in the second quarter of the current consolidated cumulative period.
Sales were 5,886,720 thousand yen (increase of 40.5% on a year-on-year basis) and income for the segment (operating
income) was 3,336,554 thousand yen (increase of 34.1% on year-on-year basis).

b. Money Service Business
For Money Service Business, our subsidiary GMO Payment Service Inc. provides a “GMO Payment after delivery” service thatallows the user to pay after receiving the goods. The “GMO Payment after delivery” service has been adopted by anincreasing number of merchants as a payment service that meets a high level of consumer needs and has continued toperform favorably since its introduction in May 2013. We also provide “Money service business (MSB)” such as “early
payment services”, transaction Lending service and “GMO-PG Remittance Service”.
Sales were 2,515,380 thousand yen (increase of 165.5% on a year-on-year basis) and loss for the segment (operatingloss) was 61,566 thousand yen (segment (operating income) was 95,879 thousand yen on the previous year) due to theincrease of selling, general and administrative expenses related to growth of the MSB.

c.Payment Enhancement Business
For Payment Enhancement Business, we provide services which Macro Kiosk Berhad provides such as mobile payment,
authentication, notification and enterprise mobility solution, Online Advertising Service, SSL server certifications, and shipping
services.
For the consolidated cumulative second quarter, services of Macro Kiosk Berhad and “GMO-PG Online Advertising Service”
showed solid growth.
Sales were 1,589,947 thousand yen (increase of 167.7% on a year-on-year basis) and income for the segment (operating
income) was 289,337 thousand yen (increase of 278.3% on year-on-year basis).

③ Results by Business model
Performance by business model is explained below.
Starting from the first quarter of this consolidated accounting period, we changed the layout for sales per business model andseparated "running revenue" into "stock (monthly revenue)" and "fee (transaction processing revenue)"
In order to disclose suitable management indicators that are founded on reality, our aggregation category for each item has
been reviewed from the second quarter of this consolidated fiscal year. In line with this change, commissions from “GMO
payment after delivery” relating to revenues that are charged at a rate against handling amounts have been recognized as
spread (merchant acquiring service revenue), which had been previously recognized as fee (transaction processing revenue).
For comparison against the second quarter of the previous fiscal year, figures from the previous fiscal year quarter have beenadjusted to the revised aggregation category.
First six months of theFirst six months of theprevious consolidated
current consolidated
Rate of change
fiscal year
fiscal year
(From October 1, 2015
(From October 1, 2016
Business model(%)
to March 31, 2016)
to March 31, 2017)
Initial(thousand yen)
(Initial revenue)
303,359805,682
165.6
Stock(thousand yen)(Monthly revenue)
1,392,295
1,779,016
27.8
Fee(thousand yen)
(Transaction processing
1391,951
2,834,614
103.6
revenue)
Spread (thousand yen)
(Merchant acquiring service revenue)
2,642,981
4,572,735
73.0
Total（thousand yen）

5,730,587－

4 －9,992,048

74.4

(2) Qualitative information regarding the consolidated financial condition[1]

AssetsThe balance of total assets at the end of the second quarter of the current consolidated fiscal year was
74,290,005 thousand yen, up 19,518,461 thousand yen as compared with the end of the previous consolidated
fiscal year. This increase was mainly due to an increase of cash and deposits (+3,772,946 thousand yen), an
increase of advance payments-trade (+2,852,025 thousand yen) and an increase of accounts
receivable-other(+10,751,392 thousand yen). The main factors for the increase in accounts receivable-other isthe increase of transactions for GMO payment after delivery service.

[2]

Liabilities
The balance of liabilities at the end of the second quarter of the current consolidated fiscal year was 54,587,832
thousand yen, up 18,924,458 thousand yen as compared with the end of the previous consolidated fiscal year.
This increase was mainly caused by an increase in short-term borrowings of 3,979,485 thousand yen, an
increase in accounts payable-other of 8,449,833 thousand yen and deposits received of 5,414,674 thousand yen,which was an effect of the increase in deposits received from merchants in accordance with the merchantacquiring service agreement.

[3]

Net assets
The balance of net assets at the end of the second quarter of the current consolidated fiscal year was 19,702,173
thousand yen up 594,003 thousand yen as compared with the end of the previous consolidated fiscal year. The
increase was mainly caused by increase in profit attributable to owners of parent of 1,084,316 thousand
yen ,increase of valuation difference on available-for-sale securities of 169,232 thousand yen, and the increase offoreign currency translation adjustment of 335,615 thousand yen.

[4]

Cash FlowsAt the end of the second quarter of the current consolidated fiscal year, cash and cash equivalents (“Funds”) were
28,952,405 thousand yen, up 3,764,869 thousand yen as compared with the balance at the beginning of theperiod. Cash flows at the end of the cumulative second quarter of the current consolidated fiscal year were as
follows.
Net cash provided by (used in) operating activities
Cash provided by operating activities during the cumulative second quarter of the current consolidated fiscal year
amounted to 1,919,044 thousand yen (gain of 3,451,868 thousand yen from the same period the previous fiscal
year).
This was mainly due to increases in accounts receivable-trade of 1,442,504 thousand yen, in advancepayments-trade of 2,852,025 thousand yen, accounts receivable-other of 10,591,377 thousand yen, record ofincome before income taxes of 2,260,850 thousand yen , in accounts of allowance of 772,034 thousand yen,inaccounts payable-other of 8,441,911 thousand yen, and an increase in deposits of 5,414,674 thousand yen.
Net cash provided by (used in) investing activities
Cash used in investment activities totaled 1,063,179 thousand yen (1,788,483 thousand yen was used in thesame period of the previous fiscal year.) This was mainly due to the investments in other securities of subsidiaries
and affiliates of 369,329 thousand yen, and purchase of intangible fixed assets of 585,062 thousand yen.
Net cash provided by (used in) financing activities
Cash used in financing activities totaled 2,890,245 thousand yen (625,703 thousand yen was used in the same
period of the previous fiscal year). This was primarily attributable to the payment of 1,000,529 thousand yen in
dividends and an increase of 4,002,404 thousand yen in proceeds from short-term borrowings.

－

5 －

(3)

Description of forecast information including consolidated earnings forecasts

For the term ending September 2017, we believe this will be achieved by accelerating the pace of new merchantacquisitions, strengthening our development of large-scale merchants through the provision of higher quality services,
and increasing revenue per merchant through providing services such as “Online Advertising Service” and “Money
service business (MSB)” that increase added value associated with the merchants' use of the Group. Regarding Macro
Kiosk Berhad, since its fiscal year end is on December 31, we plan to consolidate the financial statements based on theprovisional settlement of accounts which is three months before the accounting closing date of our company. For thisreason the income statement of Macro Kiosk Berhad has been consolidated from this second quarter of the consolidated
accounting period ending in September 2017, and we plan to incorporate the income and expenses for the nine months
from October 1, 2016, to June 30, 2017.
With regards to consolidated earnings forecast, the earnings forecast announced on 4th November 2016 has beenadjusted. Under such circumstances, consolidated financial forecast for the Fiscal Year Ending September 2017 will bedown below. The net sales 20,370 million yen (increase of 68.2% on year-on-year basis), operating income 5,013 million
yen (increase of 31.2% on year-on-year basis), ordinary income 4,673 million yen (increase of 23.6% on year-on-yearbasis), profit attributable to owners of parent 2,762 million yen (decrease of 5.1% on year-on-year basis).
For further details, please refer to “Notice of differences between forecast of consolidated financial results and actual
results for the cumulative second quarter of FY2017 ending September 2017, and revision to the full-year consolidated
financial results forecasts” that was announced on 1st May, 2017.

－

6 －

(4)

Challenges to be addressed by our company

Within items from “Challenges to be addressed by our company,” published in Summary of Consolidated Financial
Statements for the Term Ending September 30, 2016 and announced on 4th November 2016, below had materialchanges during the cumulative second quarter of this consolidated fiscal year.
① Strengthening the information security
We provides credit card payment processing services, and process and manage important information, such as credit
card numbers and other information.
As part of the process to strengthen the risk management system and prevention of information leaks, we obtained
certifications of ISO/IEC 27001:2013 (Japanese Standards, JIS Q27001: 2014), the global standards for information
security management for all of the business offices of the Company for the first time as a listed payment processing
services company. Consequently, the information security management system of the Company has been objectively
determined to be appropriate and safe in compliance with strict international standards.
With regards to PCI DSS which was jointly established by five international credit card companies: JCB; American
Express; Discover; MasterCard; and VISA, after obtaining the first certification in December 2008, we have passed
annual recertification review eight times and have obtained the latest certification in December 2016.
Meanwhile, with respect to the handling of personal information, we obtained the privacy mark that certifies thecompanies which have improved the system for taking appropriate protection measures for personal information incompliance with the Japanese Industrial Standards “JIS Q 15001 :2006 Personal Information Protection Management
System – Requirements.” We have independently established and operate the personal information protection
management system at a high level of protection in a manner that goes beyond mere compliance with the laws.
Despite the fact that we have handled our information security as above, between 8th and 9th March 2017, unauthorized
external accesses exploiting vulnerability of Apache Struts 2 that is the application framework have been confirmed in
two websites of our consignment merchants, and occurrence of incidents resulting in leakage of credit card information
as well as personal information of users of the websites have been confirmed.
We have concluded that objective, professional, fair and transparent investigation, examination and determination would
be required for ascertaining factual situations, investigation into causes of incidents, and setting out countermeasures forrecurrence prevention of this matter; Recurrence Prevention Committee, which includes external experts, wasestablished on 14th March 2017, and a report was published on 1st May, 2017, regarding findings from investigations
carried out up to 30th April 2017. For further details, please refer to “Notice of the Investigation Report of the Recurrence
Prevention Committee” that was announced on 1st May, 2017..
We will continue to take note of findings by Recurrence Prevention Committee and will endeavor to recover trusts fromour customers, by promoting security enhancement through steady, all-out implementation of technical andorganizational enhancements across the entire company.
Moreover, we have been collecting information on fraudulent uses relating to this matter, but have not confirmed any
incident as of this point in time.

－

7 －2. Items concerning summary information (Notes)(1)

Changes of important subsidiaries(2)

Application of special accounting procedures for the drafting of financial
statements

N/A

N/A

(3)

Changes in accounting policy / changes or restatements in the accounting
estimates
N/A(4)

Additional information(Application of Guidelines for applying recoverability of deferred tax)
"Guidelines for Applying Recoverability of Deferred Tax Assets" (Business Accounting Principles Guideline No. 26
issued on March 28, 2016)(Recognition basis for important provisions)
Provision for information security countermeasure
Upon leakage of information from unauthorized accesses, we have recognized estimated amounts in order to provide for
expenditures required on sending letters of apology to our customers, handling of inquiries, and investigations into
unauthorized accesses as well as information leakage.

－

8 －3. Consolidated quarterly financial statements(1)

Consolidated quarterly balance sheet(Unit: Thousand yen)

Summary of balance sheet atthe end of the previous
consolidated fiscal year
(September 30, 2016)
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Lease receivables
Merchandise
Supplies
Advance payments-trade
Prepaid expenses
Deferred tax assets
Short-term loans receivable
Accounts receivable-other
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Tangible assets
Buildings, net
Tools, furniture and fixtures
Other
Total tangible assets
Intangible assets
Goodwill
Right of trademark
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and affiliates
Investments in other securities ofsubsidiaries and affiliates
Long-term loans receivable from directors
and employees
Claims provable in bankruptcy, claims
provable in rehabilitation and other
Long-term prepaid expenses
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets－

9 －End of the second quarterof the current consolidated
fiscal year
(March 31, 2017)25,231,522
3,924,904
7,291,439
38,377972
6,388,955
118,723
300,169
515,689
1,742,612
323,887(327,887)
45,549,162

29,004,469
5,602,333
7,311,754
123,765757
9,240,981
149,865
221,078
1,050,678
12,494,004
192,643(1,324,585)
64,067,745

83,143
122,782
146,354352,280

99,871
133,636
129,429
362,937

2,271,697
212
1,079,334
346,9713,698,215

2,286,827
176
1,310,491
370,608
3,968,104

2,251,124
2,203,234
309,174

2,415,345
2,611,154
300,328962

716

31,46833,397

8,285
231,035
87,62980,437(31,468)
5,171,884
9,222,381
54,771,544

8,701
333,362
142,361
79,250(33,397)
5,891,219
10,222,260
74,290,005

(Unit: Thousand yen)
Summary of balance sheet atthe end of the previous
consolidated fiscal year
(September 30, 2016)
Liabilities
Current liabilities
Accounts payable-trade
Short-term borrowings
Accounts payable-other
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Provision for bonuses
Provision for information security
countermeasure
Provision for others
Other
Total current liabilities
Noncurrent liabilities
Provision for directors’ remuneration Board
Incentive Plan Trust
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total Accumulated other comprehensive
incomeSubscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

－

10 －

End of the second quarterof the current consolidated
fiscal year
(March 31, 2017)

2,726,492
50,6172,784,175
901,767
78,482447,442
27,634,302
478,808－

3,416,801
4,030,102
11,234,008
1,074,870
340,237
451,91033,048,977
252,215
251,637

125,000
103,660
35,330,748

100,000
82,91354,283,674

170,000

185,495

162,626
332,626
35,663,374

118,662304,157
54,587,832

4,712,900
4,964,712
8,893,549(265,236)
18,305,926

4,712,900
4,933,388
8,974,870(265,269)
18,364,889(48,004)

121,227(97,162)(145,167)

238,452
359,680

1,066
946,344
19,108,169
54,771,544

923
976,679
19,702,173
74,290,005

(2) Consolidated quarterly statements of income and consolidated quarterly
statement of comprehensive income(Consolidated quarterly statements of income)(Consolidated cumulative second quarter)(Unit: Thousand yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Equity income of affiliates
Gain on investments in partnership
Earnings on reversal of dividends payable
Rent costs
Commissions received
Exchange earnings
Other
Total non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Loss on investment in partnership
Rent Costs
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Insurance reimbursement
Total extraordinary income
Extraordinary expense
Loss on retirement of noncurrent assets
Information security countermeasure cost
Total extraordinary expense
Income before income taxes
Corporate, inhabitant and enterprise taxes
Income taxes-deferred
Total income taxes
Net income
Profit attributable to non-controlling interests
Profit attributable to owners of parent－

First six months of theprevious consolidated
fiscal year
(From October 1, 2015
to March 31, 2016)
5,730,587
1,297,883
4,432,703
2,553,548
1,879,155

First six months of thecurrent consolidated
fiscal year
(From October 1, 2016
to March 31, 2017)
9,992,048
2,922,522
7,069,526
4,532,806
2,536,719

3,119
6,327
22,861
7,672
933
8,852
11,755－
4,705
66,230

1,929
9,425
－
－
1,159
618
10,11720,007
5,929
49,186

1,677
－
－
8,689
16,02270
26,4591,918,926

13,563
193,145
8,259
515
－
416
215,900
2,370,005

－
－
－

936
160,000
160,936

2,574
－
2,574
1,916,352
717,420
47,176
764,596
1,151,756－
1,151,756

45
270,046
270,091
2,260,850
1,134,143(979)
1,133,163
1,127,687
43,3701,084,316

11 －(Consolidated quarterly statements of comprehensive income)(Consolidated cumulative second quarter)(Unit: Thousand yen)

Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Amount corresponding to the equity holdings ofthe equity-method affiliates
Total other comprehensive income
Comprehensive income
Details
Parent company shareholders’ comprehensive
incomeNon-controlling interests’ comprehensive income－

First six months of theprevious consolidated
fiscal year
(From October 1, 2015
to March 31, 2016)
1,151,756

First six months of thecurrent consolidated
fiscal year
(From October 1, 2016
to March 31, 2017)
1,127,687(21,991)

169,232(14,006)－

98,616
236,968(35,998)
1,115,757

504,847
1,632,535

1,115,757

1,670,789－(38,254)

12 －

(3)

Consolidated statements of cash flows(Unit: Thousand yen)First six months of theprevious consolidated
fiscal year
(From October 1, 2015
to March 31, 2016)
Net cash provided by (used in) operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Increase and decrease in provisionInterest and dividends income
Interest expenses
Foreign exchange gains and losses
Equity in gains and losses of affiliates
Gains and losses on investment in partnership
Gains and losses on investment securities
Loss on retirement of noncurrent assets
Insurance reimbursement
Information security countermeasure cost
Increase and decrease in accounts receivable
Increase and decrease in lease receivables
Increase and decrease in inventories
Increase and decrease in advance payments-trade
Increase and decrease in accounts receivable-other
Increase and decrease in purchase debts
Increase and decrease in accounts payable-other
Increase and decrease in deposits received
Other
SubtotalInterest and dividends income received
Interest expenses paid
Payment on deposit money
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of property, plants and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales or redemption of investment securities
Purchase of stocks of subsidiaries and affiliates
Distributions from an investment partnership
Payment on leasehold deposits
OthersNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Proceeds from short-term borrowings
Repayment of long-term borrowings
Proceeds from issuance of common stock
Cash dividends paid
Proceeds from stock issuance to minority shareholders
Other
Net cash provided by (used in) financing activities
Translation differences of cash and cash equivalents
Increase and decrease in cash and cash equivalents
Balance of cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of period－

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

1,916,352
167,763
1,300
115,925(9,447)
1,677
15,760(22,861)(7,672)
－
2,574
－
－

2,260,850
274,748
92,517772,034(11,354)
13,563(5,491)
193,145
8,259
(936)
45
(160,000)
270,046(575,661)(1,442,504)(2,419,322)(2,008)(888,126)(198,127)
283,304
592,110
5,739,215(61,490)
4,651,265
3,479(1,677)(350,000)(851,198)
3,451,868(20,314)(85,063)(2,852,025)(10,591,377)
545,3818,441,911
5,414,674(198,054)
2,920,057
2,406(13,292)－(990,126)
1,919,044(8,409)(281,369)(1,373,026)－(124,950)
30,328(1,004)(30,051)(1,788,483)(25,466)(585,062)(11,244)
30,947(369,329)
10,072(88,455)(24,640)(1,063,179)

－
－
2,749
(597,859)(6,076)(24,517)(625,703)
23,366
1,014,314
30,113,605
31,127,920

4,002,404(51,417)250(1,000,529)(26,960)(33,501)
2,890,245
18,7583,764,869
25,187,536
28,952,405

(4) Notes for the consolidated quarterly financial statement(Notes regarding the Going Concern Assumption)
N/A(Notes for the consolidated quarterly profit and loss statement)
Information security countermeasure cost
We found there were un authorized external access to the payment site of consignment merchants, Tokyo
Metropolitan Government credit card payment site for metropolitan tax and credit card payment site for group life
insurance rider of Japan Housing Finance Agency which leaded to information leackage.
From this, we have recognized information security countermeasure cost of 270,046 thousand yen (18,409 thousand
yen on expenditures for information security countermeasure and 251,637 thousand yen on provision for information
security countermeasure) as an extraordinary expense, as payments required for sending letters of apology to ourcustomers, handling of inquiries and investigations into unauthorized accesses as well as information leakage.
Also for this incident, we received insurance reimbursement of 160,000 thousand yen.
With regards to those costs, while there are possibilities that the amount may vary going forward due to discovery of
new facts or occurrence of additional measures, a reasonable estimation as of now has been carried out.
In addition, we will be recognizing occurrence of expenditures relating to reissuance of credit cards and fraudulent
uses of credit cards when we receive bills from operating bodies of the above two websites, which they will be doing
when various credit card issuers bill the said expenditures to those operating bodies. Therefore while the likelihood of
occurrences of those expenditures is considerably high, we cannot directly ascertain the status of such occurrences.
We are working closely together with various credit card companies, but occurrence of the said expenditures have notbeen recognized as at the end of the cumulative second quarter of this consolidated fiscal year, and as we are also
unable to reasonably estimate the probability of future occurrence, we have not recognized expenditures relating tocredit card reissuance and fraudulent use of credit cards in the cumulative second quarter of this consolidated fiscal
year. Since those costs are expected to be eligible for insurance reimbursement to a certain extent, their impact on the
profit and loss of the company is believed to be negligible even if those are to take place.
(Notes in cases of extreme variation in the amount of shareholders’ equity)
N/A

－

14 －