Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending September 30, 2020
(FY9/20) (Nine Months Ended June 30, 2020) [IFRS]
August 14, 2020
Company name:

Stock Exchange
Listing:
URL https://www.airtrip.co.jp

AirTrip Corp.

Stock code:

TSE

6191
Yusuke Shibata, Representative Director,
Representative:
President and CFO
Yusuke Shibata, Representative Director,
TEL:+81-(0)3-3431Contact:
President and CFO
6191
Scheduled date of filing of Quarterly
Scheduled date of payment ofAugust 14, 2020―
Report:dividend:
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results briefing: Yes (for institutional investors and securities analysts)(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Third Quarter (October 1, 2019 to June 30, 2020) of FY9/20(1) Consolidated results of operations
Net sales
Millionsof yenNine months
ended Jun. 30,
2020
Nine months
ended Jun. 30,
201919,212(Percentages represent year-on-year changes)
Profit before
income taxes
Millions ofyen％Millions ofyenProfit attributable toTotal comprehensive
owners of parent
incomeMillions ofMillions of
％
％
％
yen
yen

― △1,269―△1,215―△1,167―208 △80.0

122

△83.7

57

△91.3

Operating income
Millionsof yen％％18.9 △1,147

16,148 155.3

270 △74.2△1,224―99 △86.6

Fully diluted profit per
share

Profit per share
Nine months ended Jun. 30,
2020
Nine months ended Jun. 30,
2019ProfitYen

Yen△58.36△58.36

3.11

3.01(2) Consolidated financial position
Total assets

Ratio of equity
attributable to owners ofparentEquity attributable toowners of parent

Total equity

Millions of yen

Millions of yen

Millions of yen％

30,951
31,253

9,173
10,099

8,836
9,716

28.55
31.09

As of Jun. 30, 2020
As of Sep. 30, 2019

2. Dividends
Dividend per share
1Q-end2Q-endYen

3Q-endYen

Fiscal year ended―
0.00
Sep. 30, 2019
Fiscal year ending―
0.00
Sep. 30, 2020
Fiscal year ending Sep. 30,
2020 (Estimated)
Note: Revision to the most recently announced dividend forecast: None

Year-end

Total

Yen

Yen

Yen

―

10.00

10.00

―

―

―

3. Full-year consolidated financial forecast for FY9/20 (October 1, 2019 – September 30, 2020)(Percentages represent year-on-year changes.)―1―

Net sales

Profit before
Profit attributable toincome taxes
owners of parent
Millions
Millionsof yenof yen
％
％
％
―
―
―
―
―

Operating income

Profit per share

Millions
Millionsof yenof yenYen％
Full-year――――
Note: Revision to the most recently announced forecast: None
Please refer to “1. Qualitative Information on Quarterly Consolidated Financial Performance (3) Explanation of Consolidated
Forecast and Other Forward-looking Statements” on page 5, which describes currently available information believed to be
useful for forecasting future performance.

―2―

* Notes(1) Changes in significant subsidiaries during the period (changes in specified： Nonesubsidiaries resulting in changes in scope of consolidation)
Newly included:– companies

Excluded:– companies(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Change of the accounting policy required under IFRS

： None2) Changes in accounting policies other than 1) above： None3) Changes in accounting-based estimates： None(3) Numbers of outstanding shares (common stock)1) Number of shares outstanding as of the end of theperiod (including treasury shares)
2) Number of treasury shares as of the end of theperiodAs of June 30, 2020

20,119,800

As of Sep. 30, 201919,801,300

As of June 30, 202035

As of Sep. 30, 201935

3) Average number of shares issued during the Nine months ended
periodJune 30, 2020

Nine months ended
20,009,407

18,482,840
June 30, 2019

* The current quarterly financial report is exempt from the quarterly review procedures performed by certified public accountants or
audit corporations.
* Explanation of appropriate use of earnings forecasts, and other special items
The forward-looking statements contained in this material are made based on information currently available to the Company andcertain assumptions considered reasonable as of the date of this material. The Company’s actual results may differ significantly fromthese forward-looking statements due to a variety of factors. The consolidated financial forecast for the fiscal year ending September 30,
2020 has yet to be determined due to the difficulties of making a reasonable calculation of the forecast amid the dramatic changes in the
Company’s business environment caused by the COVID-19 pandemic. Please refer to “1. Qualitative Information on Quarterly
Consolidated Financial Performance (3) Explanation of Consolidated Forecast and Other Forward-looking Statements” on page 5, which
describes currently available information believed to be useful for forecasting future performance.

―3―

○Contents of Attachments

1. Qualitative Information on Quarterly Consolidated Financial Performance………………………………………………4(1) Explanation of Results of Operations………………………………………………………………………………4(2) Explanation of Financial Position………………………………………………………………………………5(3) Explanation of Consolidated Forecast and Other Forward-looking Statements………………………………………5
2.

Condensed

Consolidated

Financial

Statements

and

Notes

to

the

Condensed

Consolidated

Financial

Statements……………………………………7(1) Condensed Consolidated Statement of Financial Position……………………………………………………………7(2) Condensed Consolidated Statement of Income and Condensed Consolidated Statement of Comprehensive Income……9(3) Condensed Consolidated Statement of Changes in Equity……………………………………………………………13(4) Condensed Consolidated Statement of Cash Flows………………………………………………………14(5) Notes to Condensed Consolidated Financial Statements……………………………………………………15
Notes on going concern assumptions…………………………………………………………………15
Changes in accounting policies………………………………………………………………………………………15
Segment information, etc.……………………………………………………………………………………16
Important subsequent events………………………………………………………………………………………21―4―

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
During the first nine months of the fiscal year under review, the Japanese economic outlook was uncertain due to the stagnation of
economic activity caused by the COVID-19 pandemic, as well as the trade tensions between the US and China and economic slowdown
in China and Europe seen since the previous fiscal year.
In the travel industry, the number of foreign visitors to Japan in the period from January to June 2020 dropped 76.3% from the same
period of the previous year and the number of Japanese citizens who left Japan in the same period fell 68.7% year on year, according to
the statistics released by the Japan National Tourism Organization (JNTO). These figures reflect the international travel restrictions,
lockdowns and other measures introduced by many countries due to the COVID-19 pandemic as well as the measures taken in Japan,such as stricter quarantine and the invalidation of visas, and travel demand is currently stagnating all over the world. The Company
believes it is necessary to monitor future market trends as well as developments in the COVID-19 pandemic.
Under these conditions, the Company continued expanding its operations by seeking to diversify its service lines with a focus on salesof domestic airline tickets and international airline tickets as an online travel agency and investing in advertising to raise recognition ofits main brand AirTrip. The Company also continued to enhance its services for foreign visitors to Japan, making the most of its online
travel business expertise.
Other operating expenses for nine months of the fiscal year under review include impairment losses of 1,044 million yen, reflecting
writedown of the carrying amount of noncurrent assets (goodwill, tangible and intangible assets, etc.) to their fair market value based
upon an assessment of recoverability carried out in response to indications of impairment due to decline in the profitability of the Online
Travel Agency Business. Determination of fair market value required future projections to be made about the affected business and thesewere based on certain assumptions considered reasonable as of the date of this material.
In the IT Offshore Development Business, which was launched in 2012, the Company steadily won customers in numerous businesscategories and increased the number of engineers employed, focusing on the development of lab-type facilities in Vietnam. The numberof engineers hired grew to 1,000 as of the end of June 2020. In the Investment Business, which has been developing in earnest since thestock was listed, the Company has been investing in growing companies. As of the end of June 2020, the Company has invested in 64
companies.
In this business environment, during first nine months of the fiscal year under review, the Group achieved consolidated net sales of
19,212 million yen, a consolidated operating loss of 1,147 million yen, a consolidated loss before income taxes of 1,269 million yen,
and a consolidated loss attributable to owners of parent of 1,215 million yen.
Operating results by segment are as follows.
(1) Online Travel Agency Business
The Group offers the following five services in the Online Travel Agency Business segment.
・BtoC services (operation of PC and smartphone websites for selling travel commodities directly to general consumers)
The Company implemented measures such as conducting mass marketing, strengthening SEM and overhauling its backbone systems
to acquire new customers and improving user interfaces to increase the number of repeat customers. These contributed to a steadyincrease in the number of service users.
The recognition of the Company’s brand AirTrip increased, and strategic pricing and the active input of branding costs were conductedto acquire customers.
・BtoBtoC services (travel content provision under brands owned by business partners)
The Company enhanced development of alliances with major partners, provided services to match the needs of major partners, andenhanced communication with partners. In addition, like the BtoC services, measures for marketing and alliances with an emphasis on
increasing customer numbers were promoted.
・BTM services (centralized management of internal approval procedures and arrangements associated with corporate business trips)
These services basically adopt a business model under which net sales expand in a manner that is linked with an increase in the numberof corporate customers and a rise in their usage rate. The services achieved steady growth attributable to initiatives taken by the Group,
including the addition of salespeople and the identification of existing customers who used the services at a relatively low rate.

―5―

・Services for foreign visitors (business of providing various BtoC services to visitors to Japan)
The Company offers various services for foreign visitors to Japan, including Wi-Fi rental, camping car rental, currency exchange andweb media serves. Results in every business line reflect an increase in visitors to Japan, multilingual customer service and stronger
marketing.
・Life innovation businesses and services
The Company is leveraging the knowledge of various travel-related services it has built up through its AirTrip brand to launch new
business lines aimed at improving convenience in many different aspects of customers’ lives. Current business lines include e-mailmagazines, the manufacture, sale and rental of travel carry cases, and the tea-processing business, and life innovation businesses andservices are expected to expand significantly in the future with the addition of new services.
As a result of the factors stated above, net sales for the Online Travel Agency Business segment amounted to 17,198 million yen, andsegment loss came to 289 million yen in the first nine months of the fiscal year under review.
(2) IT Offshore Development BusinessIn the IT Offshore Development Business segment, the Group offers lab-type facility development services to customers consisting
mainly of e-commerce operators, web solution providers, and game and system developers in Ho Chi Minh, Hanoi and Da Nang in
Vietnam.
The Company’s lab-type facility development model is distinctive in that a team is formed with new dedicated staff members hired
for each customer. The model also enables customers to confirm the state of lab-type facility development on demand. The Company
assumes the assignment of dedicated staff members to each team on a medium- to long-term basis. For that reason, the success or failureof development depends on employing workers suited to customer demands and motivating the respective engineers more.
In addition, these services basically adopt a business model under which customers are billed on the basis of man-months and thenumber of workers. The number of engineers supplied to clients and the man-months affect net sales for them significantly. An increasein the number of engineers and a rise in the unit cost due to development streamlining contributed to sales growth in the fiscal year underreview.
As a result of the factors stated above, net sales for the IT Offshore Development Business segment reached 1,461 million yen, andsegment income totaled 76 million yen.
(3) Investment BusinessIn the Investment Business segment, the Group emphasizes synergies with the existing businesses and expands service lines throughaggressive M&A and capital alliances. The Group is pursuing investment in growing companies to improve profitability. At the end of
the third quarter under review, the Group had increased the number of companies in which it invests to 64.
As a result, net sales for the Investment Business segment stood at 553 million yen, and segment loss was 79 million yen.

(2) Explanation of Financial Position(Assets)
Total assets decreased 301 million yen from the end of the previous fiscal year, to 30,951 million yen at the end of the third
quarter under review. This result was mainly due to an increase of 4,563 million yen in right-of-use assets and a rise of 1,222 million
yen in inventories, offsetting a decrease of 3,253 million yen in cash and cash equivalents.
(Liabilities)
Liabilities increased 624 million yen from the end of the previous fiscal year, to 21,777 million yen at the end of the third quarter
under review. This result primarily reflected increases of 4,678 million yen in lease liabilities, which offset a decrease of 1,828
million yen in other current liabilities and 1,840 million yen in operating payables and other operating payables.
(Equity)
Equity fell 925 million yen from the end of the previous fiscal year, to 9,173 million yen at the end of the third quarter underreview. This result was mainly attributable to a decrease in retained earnings of 1,205 million yen.

(3) Explanation of Consolidated Forecast and Other Forward-looking Statements―6―Consolidated net sales amounted to 7,980 million yen in the first quarter, 7,400 million yen in the second quarter and 3,820 million
yen in the third quarter and totaled 19, 210 million for the first nine months.
Operating income (loss) before recognition of impairment losses was income of 800 million yen in the first quarter, a loss of 420
million yen in the second quarter, and a loss of 480 million yen in the third quarter, resulting in a loss of 100 million for the first ninemonths.
In the second quarter, the Company recognized impairment losses of 1,040 million yen and operating income (loss) after recognitionof impairment losses was a loss of 1,140 million yen for the first nine months. The decline in travel demand and the instability of financial
markets caused by the COVID-19 pandemic since the second quarter in particular has affected the Group’s consolidated financial
performance.
Under such conditions, the Group is focusing on initiatives such as downsizing its operations through the radical reduction of costs,
rebuilding the business portfolio through new M&A and the sale of certain subsidiaries and tapping into domestic demand in light of the
GoTo Travel Campaign.
The full-year financial forecast is still difficult to determine at the present time due to the impact of COVID-19 and continued
uncertainty over the timing of materialization of the effects of the abovementioned measures.
However the Company expects that consolidated net sales for the fiscal year ending September 30, 2020 will be in the range 22,500
million yen to 24,000 million yen and that operating (income) loss before recognition of impairment losses will be in the range betweena loss of 600 million yen to income of 400 million yen. The Company does not expect to recognize any further impairment losses at thepresent time.

―7―2. Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements(1) Condensed Consolidated Statement of Financial Position(Millions of yen)
FY9/19(as of Sep. 30, 2019)

Third Quarter of FY9/20(as of June 30, 2020)

AssetsCurrent assets
Cash and cash equivalents
Notes and accounts receivable - tradeand other receivables
Other financial assets

8,997

5,744

5,239

2,693

4,606

4,224

Inventories

428

1,650

Other current assets

868

738

Total current assets

20,14015,052

1,324

1,771

-

4,563

Goodwill

5,770

5,480

Intangible assets

2,628

2,379

Other financial assets

1,103

1,309

Non-current assets
Property, plant and equipment
Right-of-use assets

Other non-current assets

59

39

Deferred tax assets

226

355

11,112

15,89931,25330,951

4,414

2,573

7,519

7,386

-

509

Other financial liabilities

368

264

Accrued income taxes

189

159

Total non-current assets
Total assets
Liabilities and equity
Liabilities
Current liabilities
Operating payables
operating payables
Interest-bearing debt

and

other

Lease liabilities

Other current liabilities

3,224

1,395

Total current liabilities

15,717

12,289Non-current liabilities
Interest-bearing debt

5,111

5,022

Lease liabilities

-

4,169

Other financial liabilities

41

18

Provisions

85

109

Deferred tax liabilities

175

96

Other non-current liabilities

22

71

Total non-current liabilities

5,436

9,488

21,153

21,777

Capital stock

2,922

2,936

Capital surplus

4,175

4,479

Retained earnings

2,598

1,392

Treasury shares△0△0

Other items of equity
Total equity attributable to owners ofparent

19

28

9,716

8,836

Total liabilities
Equity―8―Non-controlling interests
Total equity
Total liabilities and equity

―9―

382

336

10,0999,173

31,25330,951

(2) Condensed Consolidated Statement of Income and Condensed Consolidated Statement of Comprehensive Income
Condensed Consolidated Statement of Income
For the First Nine-month Period(Millions of yen)
Nine months ended June 30,
2019(Oct. 1, 2018 – Jun. 30, 2019)

Nine months ended June 30,
2020(Oct. 1, 2019 – Jun. 30, 2020)

Net sales

16,14819,212

Cost of sales△7,014△12,013Gross profit

9,134

7,199

△9,478430
225△7,671
△568
1,016

△41

△1,122270△1,147

Selling, general and administrative expense
Gain (loss) on investments
Other income
Other expenses
Operating income (loss)
Finance income

14

13

Finance costs

△77

△136

Profit (loss) before income taxes

208△1,269Corporate income tax expenses

△85

53

Profit (loss)

122△1,215

Profit (loss) attributable to
Owners of parent

57△1,167

Non-controlling interests

65

△48

122

△1,215

Profit (loss) per share (Yen)

3.11△58.36

Fully diluted profit (loss) per share (Yen)

3.01△58.36

Profit (loss)
Profit per share―10―For the Third Quarter Period(Millions of yen)
Note

Three months ended June 30,
2019(Apr. 1, 2019 – Jun. 30, 2019)

Three months ended June 30,
2020(Apr. 1, 2020 – Jun. 30, 2020)

5,505

3,829

△2,279△2,433

Net sales
Cost of sales
Gross profit
Selling, general and administrative expense
Gain (loss) on investments

3,225

1,395

△3,296
166△1,603△298
75

Other income

4

Other expenses

△7

△55

92

△486

Operating income (loss)
Finance income

5

2
△25

Profit (loss) before income taxes
Corporate income tax expenses

△31
67
△96

△509
73

Profit (loss)

△29

△436

Owners of parent

△20

△426

Non-controlling interests

△8

△9

△29

△436

Profit (loss) per share (Yen)△1.07△21.20Fully diluted profit (loss) per share (Yen)△1.07△21.20Finance costs

Profit (loss) attributable toProfit per share―11―Condensed Consolidated Statement of Comprehensive Income
For the First Nine-month Period(Millions of yen)
Nine months ended June 30,
2019(Oct. 1, 2018 – Jun. 30, 2019)

Nine months ended June 30,
2020(Oct. 1, 2019 – Jun. 30, 2020)

122△1,215

Items that may be reclassified as profit or loss
Translation adjustments of foreign
operations
Cash flow hedge

△22

△8

△1

△0

Total of items that may be reclassified as profit
or loss△23△8

Total of other comprehensive income, net of tax

△23

△8

99

△1,224

Owners of parent

44△1,172

Non-controlling interests

54

△52

Profit (loss)
Other comprehensive income, net of tax

Comprehensive income
Comprehensive income attributable to―12―For the Third Quarter Period(Millions of yen)Three months ended June 30,
2019(Apr. 1, 2019 – Jun. 30, 2019)

Three months ended June 30,
2020(Apr. 1, 2020 – Jun. 30, 2020)

△29

△436

Items that may be reclassified as profit or loss
Translation adjustments of foreign
operations
Cash flow hedge

△16

3

△0

-

Total of items that may be reclassified as profit
or loss△16

3

Total of other comprehensive income, net of tax△16

3

Comprehensive income

△46

△432

Comprehensive income attributable to
Owners of parent

△29

△424

△16

△8

Profit (loss)
Other comprehensive income, net of tax

Non-controlling interests―13―(3) Condensed Consolidated Statement of Changes in Equity
Nine months ended June 30, 2019 (Oct. 1, 2018 – Jun. 30, 2019)(Millions of yen)
Equity attributable to owners of parent
Capital stock Capital surplus
As of October 1, 2018
Profit (loss)
Other
incomecomprehensive

Retainedearnings

Other items ofequityTreasuryshares

Total

Noncontrollinginterests

Total equity

1,100

2,117

1,876

5

-

5,099

380

5,480

-

-

57

-

-

57

65

122

-

-

-

△12

-

△12

△11

△23

Total comprehensive income

-

-

57

△12

-

44

54

99

Dividends of surplus

-

△177

-

-

-

△177

-

△177

Issuance of new shares

1,819

1,819

-

-

-

3,638

-

3,638

Increase (decrease) throughtransfers and other changes

-

-

△8

18

-

9

△7

2

Total transactions with owners

1,819

1,642

△8

18

-

3,471

△7

3,463

As of June 30, 2019

2,919

3,759

1,925

11

-

8,615

427

9,043

Nine months ended June 30, 2020 (Oct. 1, 2019 – Jun. 30, 2020)(Millions of yen)
Equity attributable to owners of parent
Capital stock Capital surplus
As of October 1, 2019

Retainedearnings

Other items ofequityTreasuryshares

Total

Noncontrollinginterests

Total equity

2,922

4,175

2,598

19

△0

9,716

382

10,099

-

-

△34

-

-

△34

△18

△52

2,922

4,175

2,564

19

△0

9,682

363

10,046--△1,167--△1,167△48△1,215

-

-

-

△4

-

△4

△3

△8

Total comprehensive income--△1,167△4-△1,172△52△1,224

Dividends of surplus

-

△198

-

-

-

△198

-

△198

Issuance of new shares

13

13

-

-

-

26

-

26

-

510

-

-

-

510

-

510

-

△22

△3

13

-

△12

24

11

13

303

△3

13

-

326

24

351

2,936

4,479

1,392

28

△0

8,836

336

9,173

Adjustment for changes inaccounting policies
Balance after retrospective
restatement
Profit (loss)
Other
incomecomprehensive

Increase (decrease) by shareexchanges
Increase (decrease) throughtransfers and other changes
Total transactions with owners
As of June 30, 2020―14―

(4) Condensed Consolidated Statement of Cash Flows(Millions of yen)
Nine months ended June 30,
2019(Oct. 1, 2018 – Jun. 30, 2019)

Nine months ended June 30,
2020(Oct. 1, 2019 – Jun. 30, 2020)

208
666
△430
△209
-

△1,269
1,092
568
△755
1,044

(Increase) decrease in trade and other receivables

△335

1,313

Decrease (increase) in inventories

△66

108

Increase (decrease) in trade and other payables
Decrease (increase) in advance payments - trade
Decrease (increase) in guarantee deposits
Decrease (increase) in investment securities for sale
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

30
445
13
△311
305
317
12
△70
△28
230

△2,299
160
△187
△315
352
△187
6
△143
△239
△563

Cash flows from operating activities
Profit (loss) before tax
Depreciation and amortization expense
Loss (gain) on investments
Negative goodwill
Impairment losses

Cash flows from investing activities
Purchase of investment securities

△10

△111

Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Payments for lease deposits
Collection of lease deposits
Proceeds from withdrawal of time deposits
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Purchase of shares of subsidiaries resulting inchange in scope of consolidation

△241
121
△904
△101
167
3

△191
73
△554
66
52

50

553

-

△233

Proceeds from sale of shares of subsidiaries
resulting in change in scope of consolidation-

157

Payments for transfer of business
Other
Net cash provided by (used in) investing activities△136
0△1,050

△150
△25
△361

△37
1,867
△1,358
3,595
△176
△6
3,884

△333
△1,451
26
△367
△197
△5
△2,328Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of common shares
Repayments of lease obligations
Dividends paid to owners of the parent company
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents

△19

0

3,045

△3,253

Cash and cash equivalents at beginning of period

5,320

8,997

Cash and cash equivalents at end of period

8,365

5,744

―15―

(5) Notes to Condensed Consolidated Financial Statements(Notes on going concern assumptions)Not applicable.
(Changes in accounting policies)
Application of IFRS 16 Leases
The Group applied IFRS 16 Leases (issued in January 2016) (hereinafter referred to as “IFRS 16”) starting from the first
three months of this consolidated fiscal year. On applying IFRS 16, the Group chose the method of recognizing the
cumulative effect of application of the standard at the date of initial application (October 1, 2019), which is permitted undertransition provisions, and not retrospectively restating comparative information.
(i) Definition of lease
As a result of the application of IFRS 16, at the inception of a contract, the Group assesses whether the contract is, or
contains, a lease. A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for aperiod of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Group considers whether acontract includes use of an identified asset, whether the Group has the right to obtain substantially all of the economic
benefits from the use of the asset throughout the period of use, and whether the Group has the right to direct use of theasset.
(ii) Accounting for leases
Leases as lessee
At the commencement of the lease, with respect to the lease components of leases except for short-term leases andlow value asset leases, the Group recognizes a right-of-use asset and the related lease liability. At the commencement
date, the Group measures the right-of-use asset at cost and measures the lease liability at the present value of the lease
payments that are not paid at that date.
The cost of the right-of-use asset consists of the amount of the initial measurement of the lease liability, any initial
direct costs, any lease payments made before the commencement date and other adjustments. The discount rate used todetermine the present value of leases payment is the interest rate implicit in the lease, if that rate can be readily
determined, and if that rate cannot be readily determined, the Group uses the Group’s incremental borrowing rate.
The lease term is the noncancellable period of the lease including the period covered by the option to extend the lease(when the Group is reasonably certain to exercise an option to extend the lease) and the period covered by the option toterminate the lease (when the Group is reasonably certain not to exercise the option to terminate the lease).
After the commencement date, the right-of-use asset is measured at cost less accumulated depreciation andimpairment losses. When depreciating right of use assets, the Group applies the depreciation requirements in IAS 16
Property, Plant and Equipment. The Group also applies IAS 36 Impairment of Assets when assessing whether todepreciate right-of-use assets and when accounting for identified impairment losses.
If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the Group isreasonably certain to exercise the lessee’s purchase option, the Group depreciates the right-of-use asset from thecommencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-ofuse asset by the straight-line method from the commencement date to the earlier of the end of the useful life of the rightof-use asset or the end of the lease term.
After the commencement date, the Group measures the lease liability by increasing the carrying amount to reflect
interest on the lease liability and reduces the carrying amount to reflect the lease payments made. The Group alsoremeasures the carrying amount to reflect any fluctuation of lease payments or lease modifications or to reflect revised
in-substance fixed lease payments.
The Group expenses lease payments related to short-term leases and low value leases by the straight-line method.

―16―

Accounting on transition
On applying IFRS 16, the Group applies the practical expedient that does not require it to reassess whether existing
contracts contain a lease. Accordingly, assessment of leases in accordance with the definition of a lease under IFRS 16
applies only to contracts concluded or amended on or after October 1, 2019.
Leases as lessee(Leases classified as an operating lease under IAS 17)
A lease liability at transition is measured at present value of the remaining lease payments as of the transition datediscounted at the Group’s incremental borrowing rate as of October 1, 2019. A right-of-use asset at transition ismeasured by one of the methods shown below:
・carrying value as if IFRS 16 had always been in place calculated from lease commencement; provided, however, thatthe discount rate is the lessee’s incremental borrowing rate as of the date of initial application; or・set equal to the lease liability, adjusted for any prepaid or accrued lease payments.
When applying IFRS 16 to leases previously classified as operating leases under IAS 17, the Group applies thepractical expedients shown below:
・apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
・account for leases for which the lease term ends within 12 months of the date of initial application by the same
method used for short-term leases;
・exclude initial direct costs from the measurement of the right-of-use asset as of the date of initial application; and・use hindsight with respect to contracts with options to extend or cancel when determining the lease term, etc.
(Lease classified as a finance lease under IAS 17)
The carrying value of the right-of-use asset and the lease liability is determined based on the carrying value of thelease asset and lease liability under IAS 17 immediately before the date of initial application.
(iii) Impact on the condensed quarterly consolidated financial statements
On application of IFRS 16, in the condensed quarterly consolidated statements of financial position at the beginning of
the period, the Group additionally recognized right-of-use assets of 4,819 million yen and lease liabilities of 4,871 million
yen, and recognized decreased of 34 million yen in retained earnings and 18 million yen in non-controlling interests.
The weighted average of the lessee’s incremental borrowing rates applied to lease liabilities recognized in thecondensed quarterly consolidated statements of financial position as of the date of initial application is 0.7% to 4.8%.
(Segment information, etc.)(1) Summary of reportable segments
The Company’s reportable segments are its business units that have separate financial information available and that are subject
to periodical examinations by the Board of Directors for the purpose of determining the allocation of management resources andevaluating performance.
Under its “One Asia” vision, the Group aims to serve as a bridge connecting various opportunities and engineers in Asia. With
the Online Travel Agency Business, IT Offshore Development Business and Investment Business as its three mainstay businesses,
the Group classifies these businesses, with their highly unique business models, as its main reportable business segments anddraws up and determine Group strategies accordingly.
The businesses and main products belonging to each reportable segment are as follows:
Online Travel Agency Business: AirTrip travel agency services, services for foreign visitors in Japan, life innovation services
IT Offshore Development Business: Lab-type offshore development services and BPO services
Investment Business: Investment in growing companies and turnarounds―17―(2) Calculation method of segment income (loss) and segment performance
The accounting process for the reportable business segments is the same as that used for the preparation of the condensed
consolidated financial statements.
(3) Information about segment income (loss) and segment performance
Nine months ended June 30, 2019 (Oct. 1, 2018 – Jun. 30, 2019)(Millions of yen)
Reportable segments
OnlineIT Offshore
TravelInvestment
Developme
AgencyBusiness
nt BusinessBusiness

Total

Other
(Note 1)

Total

Adjustme
Consolidatents
d Total(Note 2)External sales revenue

14,088

1,817

242

16,1480

16,148-16,148Intersegment revenue

34

382

-

416

-

416

△416

-

14,1232,200

242

16,5650

16,565△416

16,148

147

134

473

756

△0

756

△485

270

Total sales revenue
Segment profits (losses)(Note 3)Financial income

14

Financial expenses△77

Income before income
208
taxes
(Note 1) The category “Other” includes the business segments not included in the reportable segments, such as advertising revenue.
(Note 2) The category “Adjustments” mainly consists of corporate expenses that do not belong to any reportable segment andintersegment transactions.
(Note 3) The segment profit or loss has been adjusted to the operating income stated in the condensed quarterly consolidated
statement of income.

―18―

Nine months ended June 30, 2020 (Oct. 1, 2019 – Jun. 30, 2020)(Millions of yen)
Reportable segments
OnlineIT Offshore
TravelInvestment
Developme
AgencyBusiness
nt BusinessBusiness

Total

Other
(Note 1)

Total

Adjustme
Consolidatents
d Total(Note 2)External sales revenue

17,1981,461

553

19,212

0

19,212-

19,212

Intersegment revenue

-

585

-

585

-

585

△585

-

17,1982,046

553

19,7980

19,798△585

19,212

△289

76

△79

△292

△0

△292

△854

△1,147

Total sales revenue
Segment(Note 3)

profits(losses)

Financial income

13

Financial expenses△136

Income (loss) before income△1,269taxes(Note 1) The category “Other” includes the business segments not included in the reportable segments, such as advertising revenue.
(Note 2) The category “Adjustments” mainly consists of corporate expenses that do not belong to any reportable segment andintersegment transactions.
(Note 3) The segment profit or loss has been adjusted to the operating loss stated in the condensed quarterly consolidated statementof income.
(Note 4) Segment profits (losses) for the Online Travel Agency Business include negative goodwill of 755 million yen due to theacquisition of Hikawa Co., Ltd. and impairment losses of 1,044 million yen.

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Third quarter ended June 30, 2019 (Apr. 1, 2019 – Jun. 30, 2019)(Millions of yen)
Reportable segments
OnlineIT Offshore
TravelInvestment
Developme
AgencyBusiness
nt BusinessBusiness

Other(Note 1)

Total

Adjustme
Consolidatents
d Total(Note 2)

Total

External sales revenue

4,588

675

241

5,505

0

5,505

-

5,505

Intersegment revenue

1

73

-

75

-

75

△75

-

Total sales revenue

4,590

749

241

5,580

0

5,580

△75

5,505

Segment profits (losses)(Note 3)

△86

22

236

172

-

172

△79

92

Financial income

5

Financial expenses△31

Income before income
67
taxes(Note 1) The category “Other” includes the business segments not included in the reportable segments, such as advertising revenue.
(Note 2) The category “Adjustments” mainly consists of corporate expenses that do not belong to any reportable segment andintersegment transactions.
(Note 3) The segment profit or loss has been adjusted to the operating income stated in the condensed quarterly consolidated
statement of income.

―20―

Third quarter ended June 30, 2020 (Apr. 1, 2020 – Jun. 30, 2020)(Millions of yen)
Reportable segments
OnlineIT Offshore
TravelInvestment
Developme
AgencyBusiness
nt BusinessBusiness

Total

Other
(Note 1)

Total

Adjustme
Consolidatents
d Total(Note 2)External sales revenue

2,902

444

481

3,829

0

3,829

-

3,829

Intersegment revenue

-

160

-

160

-

160

△160

-

2,902

605

481

3,989

0

3,989

△160

3,829

△488

22

164

△302

△0

△302

△184

△486

Total sales revenue
Segment(Note 3)

profits(losses)

Financial income

2

Financial expenses△25

Income (loss) before income
△509
taxes
(Note 1) The category “Other” includes the business segments not included in the reportable segments, such as advertising revenue.
(Note 2) The category “Adjustments” mainly consists of corporate expenses that do not belong to any reportable segment andintersegment transactions.
(Note 3) The segment profit or loss has been adjusted to the operating loss stated in the condensed quarterly consolidated statementof income.

―21―

(Important subsequent events)
Transfer of business
On June 30, 2020, the Company concluded an agreement to transfer the business of operating call centers and other facilities of
its AirTrip Travel Agency Business to Upsell-Technologies Inc. and completed the business transfer with effect July 1 based on
the business transfer agreement concluded on said date.
(1) Reason for the business transfer
By transferring the business of operating calls centers and other facilities, which was previously done predominantly
inhouse, the Company can adjust its human resources to the optimal level according to work volume which is subject to seasonal
fluctuation and to optimize operating costs, and can build a system for placing orders which takes busy and slack periods into
account.
(2) Name of transferee company
Upsell-Technologies Inc.
(3) Description of business to be transferredBusiness of operating call centers and other facilities of the Company’s travel agency business(4) Date of transfer
July 1, 2020
The impact of the business transfer on the consolidated financial statements is insignificant.

―22―