Non-Consolidated Financial Results
for the Six Months Ended October 31, 2017
[Japanese GAAP]
December 8, 2017
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: December 14, 2017
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Available
Schedule of quarterly financial results briefing session: Scheduled (for institutional investors and analysts)(Amounts of less than one million yen are rounded down.)
1. Non-Consolidated Financial Results for the Six Months Ended October 31, 2017
(May 1, 2017 to October 31, 2017)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Six months ended
October 31, 2017
October 31, 2016

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen

%

2,787
2,505

11.2
4.7

277
312

(11.2)
17.5

284
314

(9.5)
17.0

195
212

(8.0)
21.2

Basic earnings
per share

Six months ended
October 31, 2017
October 31, 2016

Operating income

Diluted earnings per
share
Yen

Yen

11.69
12.73

11.64
12.66

(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

5,301
As of October 31, 2017
5,325
As of April 30, 2017
(Reference) Equity: As of October 31, 2017: ¥4,633 million
As of April 30, 2017: ¥4,597 million

Equity ratio

Million yen

%

4,637
4,603

87.4
86.3

2. Dividends
1stquarter-end
Yen

Annual dividends
2nd
3rd
Year-endquarter-end
quarter-end
Yen

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):
October 31, 2017: 17,464,000 shares
April 30, 2017: 17,464,000 shares2) Total number of treasury shares at the end of the period:
October 31, 2017: 688,941 shares
April 30, 2017: 717,741 shares
3) Average number of shares during the period:
Six months ended October 31, 2017: 16,764,011 shares
Six months ended October 31, 2016: 16,734,113 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
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
photo collections beginning from just a single book, and (3) the aerial imaging business, which is utilizing unique,recently-developed technologies aiming to create a new market and achieve dreams.
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 there were strong sales of equipment and frames, second quarter revenue was somewhat
below expectations in our primary business area – processing of photos of the deceased. During this quarter, we worked
to expand the presence of our EC services for funeral homes, and also focused on development of new services.
In terms of profits, the gross profit margin declined somewhat as a result of factors including an increase in personnel
expenses in the Image Processing Division. There was also an increase in advertising and publicity expenses due toincreased participation in exhibitions, and the increase in the number of support division personnel also resulted inhigher personnel expenses and travel and transportation costs.
As a result, sales were 1,170,660 thousand yen (103.8% year-on-year) and segment income was 324,953 thousandyen (95.4% year-on-year).

(Personal publishing service business)
This business operates AsukaBook for the professional photography market in Japan, and MyBook for the general
Japanese consumer market.
For the professional photography market in Japan, we worked to capture customers by holding seminars andworkshops in 11 locations across the country, and also focused on developing new customers and increasing sales toexisting customers by exhibiting at exhibitions and releasing new products. As a result, there was steady sales growth in
the professional photography market.
For the general Japanese consumer market, in addition to efficient internet advertising and various campaigns, we
also made use of SNS, provided information on our Photo Soken website, and released new products and new templates.
However in the current harsh competitive environment, MyBook sales were down from the previous quarter. On theother hand, there was steady growth in sales related to OEM supply as a result of the growing presence of our services in
the market.
In terms of income, although there was an increase in personnel, shipping, and other expenses, the higher operating
rate caused by growth in sales, particularly in the OEM division, resulted in a steady increase in segment income.
As a result, sales were 1,559,640 thousand yen (115.2% year-on-year) and segment income was 340,078 thousandyen (140.0% 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.
In this business, we are placing top priority on achieving mass production of the AI plates which are capable ofprojecting images in mid-air.
For glass AI plates, although sufficient cost reduction shave not yet been achieved, we are providing large-size plates
that are capable of high-quality aerial imaging. Although still in small lots, sales for signage and aerial operations are
increasing as a result of exhibitions in Japan and overseas.
For resin AI plates, we are continuing trials using a new production method that is well suited to mass production,
and we exhibited reference prototypes at the CEATEC exhibition in October 2017. The imaging performance of thecompact size prototype was well received, however we understood that improvements are needed in imaging with themedium size prototype, and the points which require correction became clear. We are conducting another trial using
improved mold manufacturing, and intend to achieve a sample supply by early next year.
It terms of marketing, in addition to 1 exhibition in Japan and 2 exhibitions overseas during the first quarter, during
the second quarter we also exhibited at the CEATEC exhibition on a scale larger than initially planned. In addition toreference exhibition of our resin AI plates, we also presented four exhibits combining our large size glass AI plates withunique technologies and contents, and received a particularly large reaction from the life-size aerial imaging
demonstration. We are also planning to exhibit at an exhibition in Dubai during the third quarter.
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 58,957 thousand yen (253.3% year-on-year) and segment loss was 149,960 thousand yen(compared to a loss of 48,481 thousand yen during the same quarter of the previous year).

As a result of the above segment results, overall sales in all business areas during the cumulative first 2 quartersof this fiscal year were 2,787,097 thousand yen (111.2% year-on-year). In terms of profit, despite steady growth insegment income in the personal publishing business, as a result of active advertising/publicity and R&D expenses
in the aerial imaging business, ordinary income was 284,411 thousand yen (90.5% year-on-year), and net income
was 195,931 thousand yen (92.0% year-on-year).
(2) Overview of the Financial Status[1] Assets, liabilities, and net assets(Assets)
Assets at the end of the second quarter decreased by 23,521 thousand yen from the end of the previous fiscal
year to reach 5,301,725 thousand yen. Although there was an increase of 38,508 thousand yen in notes andaccounts receivable (trade) and work in progress, this result was primarily due to a decrease of 31,602 thousandyen in cash and savings and a decrease of 17,527 thousand yen in intangible fixed assets.
(Liabilities)
Liabilities at the end of the second quarter decreased by 57,760 thousand yen from the end of the previous
fiscal year to reach 664,041 thousand yen. This was primarily due to a decrease of 40,970 thousand yen in income
taxes payable.
(Net assets)
Net assets at the end of the second quarter increased by 34,239 thousand yen from the end of the previous fiscal
year to reach 4,637,683 thousand yen. Although we recorded quarterly net income of 195,931 thousand yen, thisresult was primarily due to a decrease of 167,462 thousand yen in dividend payments.

[2] Overview of Cash Flows during this Fiscal Year
Cash and cash equivalents (hereafter referred to as "funds") during the cumulative first 2 quarters decreased by
36,602 thousand yen from the end of the previous fiscal year to reach 1,636,648 thousand yen. The status andcauses of each cash flow during the cumulative first 2 quarters are as shown below.
(Cash flow due to operating activities)
Funds acquired as a result of operating activities during the cumulative first 2 quarters were 241,517 thousandyen (compared to acquisition of 249,127 thousand yen during the same period of the previous fiscal year).
Although we recorded net income before taxes of 283,860 thousand yen and depreciation expenses of 147,691
thousand yen, this result was primarily due to the payment of 123,001 thousand yen in income taxes.
(Cash flow due to investment activities)
Funds expended as a result of investment activities during the first 2 quarters were 116,699 thousand yen(compared to expenditure of 75,353 thousand yen during the same period of the previous fiscal year). This result
was primarily due to acquisition of 83,792 thousand yen of printing-related equipment and other tangible fixed
assets, and acquisition of 26,209 thousand yen of software and other intangible fixed assets.
(Cash flow due to financing activities)
Funds expended as a result of financing activities during the first 2 quarters were 161,556 thousand yen(compared to expenditure of 165,083 thousand yen during the same period of the previous fiscal year). This result
was primarily due to payment of 166,655 thousand yen in dividends.
(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 thatwere announced on June 9, 2017.

5. Financial Statements for the First 2 Quarters(1) Balance sheet
Previous fiscal year
(ended April 30, 2017)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and products
Work in progress
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings, net
Machinery and equipment, net
Land
Others, net
Total tangible fixed assets
Intangible fixed assets
Investments and other assets
Total fixed assets
Total assets
Liabilities
Current liabilities
Accounts payable-trade
Income taxes payable
Provision for bonuses
OthersTotal current liabilities
Fixed liabilities
Provision for retirement benefits
OthersTotal fixed liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
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(Units: 1,000s yen)First 2 quarters of the current
fiscal year
(ended October 31, 2017)

2,278,251
686,517
166,123
12,03856,972
112,648(3,163)3,309,387

2,246,648
725,025
176,641
13,73560,771
92,161(4,423)3,310,560

499,750422,616
432,702150,493
1,505,562
211,874
298,423
2,015,859
5,325,247

503,550
394,193432,702
168,194
1,498,640
194,346
298,177
1,991,164
5,301,725

118,905
143,270129,000
317,028
708,204

119,664
102,300
136,400
293,027
651,392

6,482
7,115
13,597
721,802

6,482
6,166
12,648664,041

490,300
606,585
3,803,101(309,764)
4,590,222

490,300
606,585
3,826,903(297,334)
4,626,453

7,579
7,579
5,642
4,603,444
5,325,247

7,301
7,301
3,928
4,637,683
5,301,725

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

Net Sales(Units: 1,000s yen)First two quarters of the previous First two quarters of the current
fiscal year
fiscal year
(May 1, 2016 – Oct. 31, 2016)(May 1, 2017 – Oct. 31, 2017)
2,505,452
2,787,097

Cost of sales

1,255,955

1,366,401

Gross profit

1,249,496

1,420,695

Selling, general, and administrative expenses

936,763

1,142,996

Operating income

312,733

277,699

Interest received
Dividends received

540
611

294
610

Commissions received
Foreign exchange income

279
―

232
736

OthersTotal non-operating income

―
700

3,991
846

2,131

6,711

669

―

Non-operating income

Interest received
Non-operating expenses
Foreign exchange losses
Total non-operating expenses
Ordinary income

669―

314,196

284,41112550

Extraordinary losses
Loss on retirement of fixed assets

12

550

Net income before taxes

Total extraordinary losses

314,183

283,860

Income taxes

101,192

87,928Net income

212,991

195,931(3) Statement of cash flows(unit:1000s yen)First two quarters of the previous First two quarters of the current
fiscal year
fiscal year
(May 1, 2016 – Oct. 31, 2016)(May 1, 2017 – Oct. 31, 2017)
Cash flows resulting from operating activities
Net income before taxes
Depreciation expenses

314,183
148,524

283,860
147,691

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses

921(2,000)

1,258
7,400

Increase (decrease) in provision for retirement benefits
Interest and dividends received(151)(1,151)―(904)

Foreign exchange losses (gains)
Loss on disposal of fixed assets
Decrease (increase) in notes and accounts receivabletrade
Decrease (increase) in inventory assets

7
12

(135)
550

(32,423)(38,508)(46,023)(16,014)

Increase (decrease) in accounts payable-trade
Increase (decrease) in accrued consumption taxes(3,893)(11,231)758(36,107)

Others(5,721)

13,893

Subtotal

361,050

363,743786

775

Income taxes paid

(112,710)(123,001)

Cash flows due to operating activities

249,127

241,517

Interest and dividends received

Cash flows due to investing activities
Payments into time deposits(5,000)(10,000)

Proceeds from withdrawal of time deposits
Purchase of property, plant, and equipment

5,000(34,603)

5,000(83,792)

Purchase of intangible fixed assets
Collection of loans receivable(39,724)720(26,209)
720

Others(1,745)(2,417)

Cash flows due to investing activities(75,353)(116,699)(165,839)
756(166,655)
6,048

Cash flows due to financing activities
Cash dividends paid
Proceeds from disposal of treasury stock
OthersCash flows due to financing activities

―

(948)

(165,083)(161,556)

Effect of exchange rate on cash and cash equivalents

(7)

135

Net increase (decrease) in cash and cash equivalents

8,683(36,602)

Balance of cash and cash equivalents at beginning of year

1,313,143

1,673,251

Balance of cash and cash equivalents at end of quarter

1,321,826

1,636,648

[Segment information]
Cumulative first 2 quarters of the previous fiscal year (May 1, 2016 – October 31, 2016)
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
Aerial imaging
publishingbusiness
service business

Adjustments

Amountrecorded in
profit and loss
statement

Total

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

1,127,753

1,354,420

23,2792,505,452―

2,505,452

―

―

―

―

―

―

1,127,753

1,354,420

23,2792,505,452―

2,505,452

340,540

242,891(48,481)534,950(222,216)

312,733

Adjustments

Amountrecorded in
profit and loss
statement

Cumulative first 2 quarters of the current fiscal year (May 1, 2017 – October 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
Aerial imaging
publishingbusiness
service business

Total

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

1,170,660

1,559,640

56,7972,787,097―

2,787,097

―

―

2,160

2,160

(2,160)―1,170,660

1,559,640

58,9572,789,257(2,160)2,787,097

324,953

340,078(149,960)

515,071(237,371)

277,699

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