Non-Consolidated Financial Results
for the Six Months Ended October 31, 2016
[Japanese GAAP]
December 9, 2016
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, 2016
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, 2016
(May 1, 2016 to October 31, 2016)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Six months ended
October 31, 2016
October 31, 2015

Operating income

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen%

2,505
2,393

4.7
2.9312266

17.5(5.5)31426817.0(5.8)

212
175

21.2(2.7)

Basic earnings
per share

Six months ended
October 31, 2016
October 31, 2015

Diluted earnings pershare
Yen

Yen

12.73
10.50

12.66
10.40

(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

As of October 31, 2016
4,864
As of April 30, 2016
4,820
(Reference) Equity: As of October 31, 2016: ¥4,233 million
As of April 30, 2016: ¥4,183 million
2. Dividends
1stquarter-end
Fiscal year ended April 30, 2016
Fiscal year ending April 30, 2017

Equity ratio

Million yen%

4,240
4,190

87.0
86.8

2ndquarter-end

Annual dividends
3rdYear-end
quarter-end

Total

Yen

Yen

Yen

Yen

Yen-

0.00
0.00

-

10.00

10.00

-

10.00

10.00

Fiscal year ending April 30, 2017
(Forecast)(Note) Revision to the forecast for dividends announced most recently: No1

3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2017
(May 1, 2016 to April 30, 2017)(% indicates changes from the previous corresponding period.)
Basic earnings
Net sales
Operating income
Ordinary income
Profitper share%Million yen%

Yen

Full year
5,461
5.68003.58053.7(Note) Revision to the financial results forecast announced most recently: No

Million yen%

Million yen%

Million yen

551

0.732.93* 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 2016: 17,464,000 shares
April 30, 2016: 17,464,000 shares2) Total number of treasury shares at the end of the period:
October 31, 2016: 726,541 shares
April 30, 2016: 730,141 shares
3) Average number of shares during the period:
Six months ended October 31, 2016: 16,734,113 shares
Six months ended October 31, 2015: 16,734,496 shares* Presentation regarding the implementation status of the quarterly review procedures
These quarterly financial results are outside the scope of quarterly review procedures under the Financial
Instruments and Exchange Act. At the time of disclosure of these quarterly financial results, quarterly review
procedures for the quarterly financial statements have not been completed.
* 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.

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4. Qualitative Information Concerning the Business Results(1) Explanation of business results
During the cumulative first 2 quarters of this fiscal year, the economy of Japan continued on a gradual trend
towards recovery as a result of continuing economic stimulus by the government and financial measures by theBank of Japan. However the future of the global economy is uncertain as a result of factors including the effectsof Brexit and slowdowns in the economies of emerging nations.
Asukanet operates three business areas, each with different positioning and characteristics. They are (1) thememorial design service business, which adds digital processing and remote output services for photos of thedeceased to a funeral business that is largely unaffected by economic trends, (2) the personal publishingbusiness, which provides ideas for new photo output methods that allow users to create complete photocollections beginning from just a single book, and (3) the aerial imaging business, which is utilizing unique,recently-developed technologies aiming to create a new market and achieve dreams.
The results for each business segment are as follows.
(Memorial design service business)
In this business, although there was a difficult struggle for income from processing of photos of the deceased
during the first quarter, there was a recovery in the second quarter. In addition to steady growth in sales
related to videos and other funeral presentations, there were also strong sales of hardware devices and frames.
We also worked to increase penetration of the newly launched EC service for funeral companies.
In terms of costs, although there was an increase in PR expenses due to exhibits at exhibitions and otherpublicity, other expenses such as travel and transportation expenses, and costs of supplies, were suitably
controlled.
As a result, sales were 1,127,753 thousand yen (102.3% year-on-year) and segment income was 340,540
thousand yen (102.5% year-on-year).
(Personal publishing service business)
In this business, we focused on developing new customers and increasing sales from existing customers bymeans such as conducting seminars for the professional photography market in 13 locations across Japan, andreleasing new products. As a result, there was steady growth in sales to professional photographers.
For ordinary consumers, in addition to exhibiting at events and conducting various campaigns, we also
carried out programs such as adding new products and expanding user support. However there is a harshcompetitive environment and acquiring new customers is difficult. Sales to ordinary consumers were below
expectations. On the other hand, there was steady growth in sales related to OEM supply, and the operating
rate also improved.
As a result, sales were 1,354,420 thousand yen (106.9% year-on-year), and segment income was 242,891
thousand yen (117.8% year-on-year).
(Aerial imaging business)
This business was launched in March 2011, aiming to create a market through new photo and video
expressions utilizing aerial imaging technologies.
In this business, we are placing top priority on the AI plate which is capable of projecting images in mid-air.
Although sufficient cost reductions in the glass plates have not been achieved, by pursuing multiple
production routes we have been able to improve quality and are also able to produce large-size plates.
For resin plates, we are continuing to carry out trials using both a new production method and the same
method as for glass plate production. Prototype resin plates made using the same method as for glass plateproduction is small-size plates, however they are generating sales. On the other hand, the largest issue for thenew production method is the mirror-finishing (vapor deposition) process, and a technical solution to this issue
has not yet been achieved. We are expanding our options and continuing with a variety of trials, however it is3requiring more time than we expected. Our plan is to decide on either the new production method or the glass
plate production method by the end of this fiscal year at the latest.
In the area of marketing, we exhibited at the Tokyo Design Week exhibition in October 2016. The exhibits
attracted considerable attention, and included interactive signage for designers and creators using a 1 m2
large plate, as well as an aerial imaging interface that allows precision operations. We have also been
preparing for planned exhibits at overseas exhibitions beginning from March 2017. In the area of research, weare continuing with improvement trials for the use of retroflection (a technology we have already beendeveloping) to create large-size plates with expanded fields of view.
As before, sales are restricted to sales for limited applications and small lot sales. This is primarily due toinsufficient matching in the price area. We are also conducting sales of package products that include the caseand sensors in addition to the plate. In terms of expenses, there were increases in R&D expenses and inpersonnel costs due to the addition of more employees, however because gross profit from panel sales
increased, the segment loss shrunk.
As a result, sales were 23,279 thousand yen (100.4% year-on-year) and segment loss was 48,481 thousandyen (compared to a 54,304 thousand yen loss in the same period of the previous year).
As a result of the above, sales in the first 2 quarters of this fiscal year increased in each business area to reach
2,505,452 thousand yen (104.7% year-on-year). In terms of profit, primarily due to strong OEM supply growth in
the personal publishing business, ordinary income was 314,196 thousand yen (117.0% year-on-year) and net
income was 212,991 thousand yen (121.2% year-on-year).

(2) Explanation concerning financial status[1] Assets, liabilities, and net assets
Assets at the end of the first 2 quarters of this fiscal year increased by 44,485 thousand yen from the end of
the previous fiscal year to reach 4,864,903 thousand yen. Despite a decrease in tangible fixed assets of 66,715
thousand yen, this result was primarily due to increases of 32,423 thousand yen in notes and accounts
receivable, 39,853 thousand yen in merchandise and products, and 18,022 thousand yen in intangible fixed
assets.
Liabilities at the end of the first 2 quarters of this fiscal year decreased by 5,260 thousand yen from the end of
the previous fiscal year to reach 624,784 thousand yen. This was primarily due to a decrease of 10,300 thousand
yen in income taxes payable.
Net assets at the end of the first 2 quarters of this fiscal year increased by 49,746 thousand yen from the endof the previous fiscal year to reach 4,240,118 thousand yen. Despite recording a net profit of 212,991 thousand
yen, this result was primarily due to a decrease of 167,338 thousand yen in dividends from surplus.
[2] Cash flows
Cash and cash equivalents (hereafter referred to as "funds") during the first 2 quarters of this fiscal year
increased by 8,683 thousand yen from the end of the previous fiscal year to reach 1,321,826 thousand yen. The
status of each cash flow during these first 2 quarters and the causes thereof are as follows.
(Cash flow due to operating activities)
Funds acquired as a result of operating activities during the first 2 quarters of this fiscal year were 249,127
thousand yen (compared to 197,547 thousand yen acquired during the same period of the previous fiscal year).
Despite recording net income before taxes of 314,183 thousand yen and depreciation expenses of 148,524
thousand yen, this result was primarily due to a recorded payment of 112,710 thousand yen in corporate taxes.
(Cash flow due to investing activities)
Funds acquired as a result of investing activities during the first 2 quarters of this fiscal year were 75,353
thousand yen (compared to 140,130 thousand yen acquired during the same period of the previous fiscal year).
This was primarily due to acquisition of book-binding equipment and other tangible fixed assets amounting to4

34,603 thousand yen, and to the development of systems for photo collections and acquisition of other intangible
fixed assets amounting to 39,724 thousand yen.
(Cash flow due to financing activities)
Funds acquired as a result of financing activities during the first 2 quarters of this fiscal year were 165,083
thousand yen (compared to 113,801 thousand yen acquired during the same period of the previous fiscal year).
This was primarily due to payment of 165,839 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, 2017 thatwere announced on June 10, 2016.

55. Financial Statements for the First 2 Quarters(1) Balance sheet
Previous fiscal year
(ended April 30, 2016)
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(Units: 1,000s yen)First 2 quarters of thecurrent fiscal year
(ended October 31, 2016)

1,918,143
610,639
123,936
13,42350,72090,046(3,803)

1,926,826
643,063
163,790
13,26457,04993,967(4,726)2,803,106

2,893,235

Fixed assets
Tangible fixed assets
Buildings, net
Machinery and equipment, net
Land
Others, net

514,797552,201
432,702
126,957

508,730
489,264
432,702129,246

Total tangible fixed assets

1,626,659

1,559,943

Intangible fixed assets
Investments and other assets

196,351
194,300214,373
197,350

2,017,310

1,971,667

Total fixed assets

4,820,417

4,864,903

Liabilities
Current liabilities
Accounts payable-trade
Income taxes payable
Provision for bonuses
OthersTotal assets

123,714120,200
129,700
249,796

119,820
109,900
127,700
260,880

Total current liabilities

623,410618,301

6,634

6,482

Fixed liabilities
Provision for retirement benefits
Total fixed liabilities
Total liabilities

6,634

6,482

630,045624,784

490,300
606,585
3,400,136(315,115)

490,300
606,585
3,445,205(313,562)

4,181,905

4,228,528

2,086

5,424

2,086

5,424

6,380

6,166

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-forsale securities
Total valuation and translation
adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets

64,190,372

4,240,118

4,820,417

4,864,903

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

Net Sales
Cost of sales(Units: 1,000s yen)First 2 quarters of theFirst 2 quarters of theprevious fiscal year
current fiscal year
(May 1, 2015 – Oct. 31, 2015) (May 1, 2016 – Oct. 31, 2016)
2,393,934
2,505,452
1,212,538
1,255,955

Gross profit

1,181,396

1,249,496

Selling,general, and administrative expenses

915,142936,763

Operating income

266,253

312,733

955
545
375
557

540
611
279
700

2,433

2,131

80

669

Non-operating income
Interest received
Dividends received
Commissions received
OthersTotal non-operating income
Non-operating expenses
Foreign exchange losses
Total non-operating expensesOrdinary income
Extraordinary losses
Loss on retirement of fixed assets
Total extraordinary losses

80

669

268,607314,196

1,323

121,32312

267,283

314,183

Income taxes

91,605

101,192

Net income

175,677

212,991

Net income before taxes7(3) Statement of cash flows(Units: 1,000s yen)First 2 quarters of theFirst 2 quarters of theprevious fiscal year
current fiscal year
(May 1, 2015 – Oct. 31, 2015) (May 1, 2016 – Oct. 31, 2016)
Cash flows resulting from operating
activities
Net income before taxes
Depreciation expenses
Stock compensation expensesIncrease (decrease) in allowance for
doubtful accounts
Increase (decrease) in provision forbonuses
Increase (decrease) in provision for
retirement benefits
Interest and dividends received
Foreign exchange losses (gains)
Loss on disposal of fixed assets
Decrease (increase) in notes and accounts
receivable-trade
Decrease (increase) in inventory assets
Increase (decrease) in accounts payabletrade
Increase (decrease) in accrued
consumption taxes
Others267,283
129,879
1,021

314,183
148,524
―

1,474

921

6,100

(2,000)―(151)(1,500)2
1,323(1,151)712(47,676)(32,423)(42,344)(46,023)

24,762(3,893)(32,665)(11,231)(22,523)(5,721)

Subtotal

285,136

361,050

Interest and dividends received
Income taxes paid

851
(88,440)

786(112,710)

Cash flows due to operating activities

197,547

249,127(5,000)(5,000)

5,000

5,000

(96,811)(34,603)(44,555)
6,800(5,563)(39,724)720(1,745)

Cash flows due to investing activities(140,130)(75,353)

Cash flows due to financing activities
Cash dividends paid
Purchase of treasury stock
Proceeds from disposal of treasury stock
Others(132,152)(48)
19,236(836)(165,839)―
756―(113,801)(165,083)

(2)

(7)

(56,387)

8,683

1,105,536

1,313,143

1,049,149

1,321,826

Cash flows due to investing activities
Payments into time deposits
Proceeds from withdrawal of time
deposits
Purchase of property, plant, andequipment
Purchase of intangible fixed assets
Collection of loans receivable
OthersCash flows due to financing activities
Effect of exchange rate on cash and cash
equivalents
Net increase (decrease) in cash and cashequivalents
Balance of cash and cash equivalents at
beginning of year
Balance of cash and cash equivalents at endof quarter

8(4) Notes regarding the financial statements[Segment information]
Cumulative first 2 quarters of the previous fiscal year (May 1, 2015 – October 31, 2015)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)Amountrecorded in
Adjustments profit andlossstatement

Reporting segment
Other

Memorial
designservicebusiness

Personal
publishing
servicebusiness

Aerialimagingbusiness

1,102,635

1,266,508

23,182

2,392,326

1,607

―

2,393,934―

132

―

132―

(132)

―

Total

1,102,635

1,266,641

23,182

2,392,459

1,607

(132)

2,393,934

Segment income (loss)

332,302

206,146(54,304)

484,144(15,776)(202,114)

266,253

Total

Sales
Sales to outside
customers
Inter-segmentinternal sales andtransfers

Cumulative first 2 quarters of the current 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

Amountrecorded inAdjustments
profit and lossstatement

Memorial
designservicebusiness

Personal
publishing
servicebusiness

1,127,753

1,354,420

23,2792,505,452―

2,505,452

―

―――

―

―

Total

1,127,753

1,354,420

23,2792,505,452―

2,505,452

Segment income (loss)

340,540

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

312,733

Aerialimagingbusiness

Total

Sales
Sales to outside
customers
Inter-segmentinternal sales andtransfers

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

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