Member of Financial Accounting Standards Foundation

Summary of Consolidated Financial Statements for the Term Ending September 30, 2016
November 4, 2016
Exchange: First Section of Tokyo Stock Exchange
Name of listed company:

GMO Payment Gateway, Inc.

Stock code:

3769

Representative:

Issei Ainoura

President & Representative Director

Contact:

Ryu Muramatsu

Executive Vice President

Tel: +81-3-3464-0182

Scheduled date for the holding of the ordinary
general shareholders’ meeting

December 18, 2016

Scheduled date of commencementfor dividend payment

December 19, 2016

Scheduled submission date of securities report

December 19, 2016

Supplemental materials prepared for financial
results:Yes

Information meeting arranged related tofinancial results:Yes (for institutional investors and analysts)

URL: http://corp.gmo-pg.com/(Amounts rounded down to the nearest one million yen)

1.

Consolidated Financial Statements for the Term Ending September 2016
(From October 1, 2015 to September 30, 2016)(1) Consolidated Financial Statements(Percentages denote the increase or decrease from the previous period)
Net sales
FY2016FY2015

Operating income

Million yen
12,113
9,030

%
34.1
25.3

Million yen
3,819
2,977

Ordinary income

%
28.3
20.2

(Note) Comprehensive income: FY2016: 2,649 million yen (40.5%)

FY 2016
FY 2015

Net income per
share
Yen
78.36
52.60

Diluted net income
per share
Yen
78.36
52.57

Million yen
3,780
3,000

%
26.0
18.7

Profit attributable toowners of parent
Million yen
%
2,910
57.1
1,853
22.3

FY2015: 1,885 million yen (19.1%)

Net income ratio toequity%17.0
16.1

Ordinary income
ratio to total assets
%
7.8
9.0

Operating income
ratio on net sales
%
31.5
33.0

Reference: Equity in earnings of affiliates: FY 2016: -15 million yen; FY 2015: 20 million yen(Note)In order to appropriately display the net income per share, in regard to the stock attributed to the directors’ remuneration board incentive plan trust, it has the right to a claim ofdividend, and is therefore, not included in treasury stock.

(2) Consolidated Financial Position

FY2016FY2015

Total assets
Million yen
54,771
41,831

Reference: Equity: FY2016: 18,160 million yen

Net assets
Million yen
19,10816,186Equity ratio
%
33.2
38.7

Net assets per share
Yen
488.88435.78Cash flow from financing
activities
Million yen
-654
7,398

Closing balance of cash
and cash equivalents
Million yen
25,18730,113

FY2015: 16,184 million yen(3) Consolidated Cash FlowsFY 2016
FY 2015

2.

Cash flow from operating
activities
Million yen
-748
3,709

Cash flow from investing
activities
Million yen-3,415-1,374

Dividends
Dividends per share

FY 2015
FY 2016
FY 2017 (forecast)

3.

1Q
Yen
—
0.00
0.00

2Q
Yen
0.00
0.00
0.00

3Q
Yen
—
0.00
0.00

Year-end
Yen
18.00
27.00
37.00

Total
Yen
18.00
27.00
37.00

Amount ofdividends(total)Million yen
668
1,002

Dividends
Ratio of dividends topayout ratio
net assets(consolidated)(consolidated)
%
%
34.2
5.7
34.5
5.8
49.8

Consolidated Financial Forecast for the Fiscal Year Ending September 2017
(From October 1, 2016 to September 30, 2017)(For the full year, percentages denote an increase or decrease as compared with the previous period. For the first six months of the period under review, they denote an increase or
decrease as compared with the second quarter of the previous year.)2Q of FY 2017
(cumulative)
Full year

Net sales
Million yen
8,389
18,767%

Operating income
Million yen%

Ordinary income
Million yen
%

46.4
54.9

2,499
5,013

2,351
4,673

33.0
31.2

1

22.5
23.6

Profit attributable toowners of parent
Million yen
%
1,409
2,762

22.3
-5.1

Net income
per share
Yen
37.93
74.35

Notices:
(1)

(2)

(3)

Changes of important subsidiaries during the period (change of specific subsidiaries that lead to a change in thescope of consolidation): Yes
New: 1 company (Company name) GMO Financial Gate, Inc.
Changes in the accounting policy / changes in the accounting estimation / restatement of corrections[1] Changes associated with the revision of accounting policy, etc.: Yes[2] Changes other than [1]: No[3] Changes in accounting estimations: No[4] Restatement of corrections: No
Number of shares issued (common stock)
FY 2015: 37,140,900[1] Number of shares issued at the end of the term
FY2016: 37,150,500(including treasury stock)
FY 2015: 2,500[2] Number of treasury stocks at the end of the term
FY2016: 2,500
FY2015: 35,236,836[3] Average number of shares
FY2016: 37,146,617(Note) In order to appropriately display the number of treasury stocks at the end of the term and average number of shares, inregard to the stock attributed to the directors’ remuneration board incentive plan trust, it has the right to a claim of dividend,
and is therefore, not included in treasury stock.

(Reference) Summary of Non-consolidated Statements
Non-consolidated Financial Statements for the Term Ending September 2016
(From October 1, 2015 to September 30, 2016)(1) Non-consolidated Financial Statements(Percentages denote the increase or decrease from the previous period)
Net sales
Operating income
Ordinary income
Net income
FY 2016
FY 2015

Million yen
9,144
6,749

%
35.5
23.7

Million yen
2,397
1,847

Net income per share
Yen
56.54
42.53

FY 2016
FY 2015

%
29.7
25.0

Million yen
2,777
2,213

%
25.5
20.9

Million yen
2,100
1,498

%
40.1
21.5

Diluted net income per share
Yen
56.53
42.51

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

(2) Non-consolidated Financial Position

FY 2016
FY 2015
Reference:

Total assets
Million yen
39,251
32,206

Net assets
Million yen
15,748
14,461Equity ratio
%
40.1
44.9

Net assets per shareYen
423.93389.36

Shareholders’ equity: FY 2016: 15,748 million yen, FY 2015: 14,460 million yen* Display regarding the audit procedure’s enforcement situation
This summary of consolidated statements is not subject to the Financial Instruments and Exchange Act’s audit procedure, and therefore, atthe time of display, the audit procedure regarding the financial statements is not completed.
* Explanation regarding the proper use of financial forecasts and other important notes
1) The above forecasts are outlooks based on the information currently available, and includes various uncertain factors. Actual
performance may differ materially from the forecasts due to changes in business conditions and other factors.
2) Results Presentation for Investors and Analysts: November 7, 2016. Supporting materials and a video of the presentation will be madeavailable on the company's website after the event.

2

○Table of Contents of Attached Document
１．Qualitative Information Regarding financial Performance ………………………………………………

4（１）Analysis of consolidated operating results ………………………………………………………………

4（２）Analysis of financial position ………………………………………………………………………………

6（３）Basic policy on profit sharing and distribution for the current and next terms ………………

7

２．Business group …………………………………………………………………………………………………………

8

３．Management policy ……………………………………………………………………………………………………… 11（１）Basic management policy of the Company ……………………………………………………………………

11（２）Target management index and medium-to long-term management strategy ………………………………

11（３）Challenges to be addressed by our company …………………………………………………………………

11

４．Consolidated Financial Statements …………………………………………………………………………………

13（１）Consolidated Balance Sheets ……………………………………………………………………………………

13（２）Consolidated statements of income and comprehensive income …………………………………………

15

Consolidated statements of income ……………………………………………………………………………

15

Consolidated statements of comprehensive income …………………………………………………………

16（３）Consolidated Statements of Cash Flows ………………………………………………………

－

3 －

17

1. Qualitative Information regarding Financial Performance(1) Analysis of consolidated operating results（Operating results for the current period）
Regarding the economic environment in Japan during the period under review, although there were some concerns
about overseas economic conditions such as the impact of China’s economic decline, the decline in crude oil prices,and the fluctuations in exchange, the economy is gradually on the mend, with the economic and fiscal policy of thegovernment and the monetary easing policy of the Bank of Japan as a background.
In regard to our core business, the BtoC EC market continues to grow, thanks to a favorable external environment
such as broader use of smartphones as well as reforms in logistics, and e-commerce is also spreading in themarket of sales of non-goods items such as services, as seen in new areas such as BtoB EC and CtoC EC.
In regard to the credit card field, credit card shopping is steadily growing, and people tend to make more purchases
via the Internet. Also, use of credit cards in the field of payment via the internet for everyday living expenses
continues to expand, such as payments for rent and medical costs, as well as utility charges and public funds. It isa certainty that opportunities to use credit cards will continue to increase.
Under such circumstances, the group has pressed on with its businesses in order to expand the scale of operations
described below.
The Group consists of GMO Payment Gateway, Inc. and its consolidated subsidiaries, GMO Epsilon, Inc. , GMO
PAYMENT SERVICE, Inc., GMO Financial Gate, Inc. ,GMO PAYMENT GATEWAY PTE. LTD. and MACROKIOSK Berhad etc, and provides Payment Processing Business, Money Service Business, and Other business asa consolidated subsidiary of GMO Internet, Inc.
The Group offers a broad range of services such as online payment and recurring payment services that respondto our customers’ business category, size and payment type. The number of merchants during the current
consolidated fiscal year increased by 17,697 to 77,256 compared to the 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 September

2012

2013

2014

2015

2016

38,94944,32849,72559,55977,256

storesNote: Number of operating stores means the number of IDs assigned to each store to use the service. It shows the number ofstores (merchants) which have an agreement with the Group, are connected to the system, and are able to process
payments at any time in principle, though the number of operating stores does not include stores which are using the“GMO Payment after delivery service”, “Online advertising service” and the number of merchants of MACRO KIOSK. Also
it does not include number of terminals of GMO Financial Gate.

For online payment field, payment-processing service grew steadily. During the period under review, it was decided
providing the “Apple Pay” in the “PG Multi-Payment Service”. GMO Epsilon, Inc., our consolidated subsidiary, sells
and provides the “Multi-Payment Service” and is contributing to an increase in the number of operating stores andmerchants acquiring service revenue. This service provides a package of various payment methods such as credit
cards to small-scale companies via its website, on a online basis. GMO Epsilon’s business results grew steadily,and recorded net sales of 2,242,573,000 yen (an increase of 20.2% year-on-year).
For recurring payment field, we have continued to attempt to develop this field to enable using credit card forpaying utility charges, public funds 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, such as the“Metropolitan Tax Credit Card Payment Site” (https://zei.tokyo) which the Tokyo Metropolitan government (TMG)
has started since April 1, 2015.
For Money Service Business, Our subsidiary GMO Payment Service Inc. provides a “GMO Payment after delivery”
service that allows the user to pay after receiving the goods. The “GMO Payment after delivery” service has been
adopted by an increasing number of merchants as a payment service with high level of consumers’ needs and has
continued to perform 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”. During theperiod under review, we formed a partnership with Money Forward, Inc., a developer of money platforms, to offer
lending services from a credit model that combines billing and accounting data.
For Others, we provide Online Advertising Service, SSL server certifications, shipping services.
－

4 －With regard to overseas business, we established five oversea entity to provide Z.com Payment solutions toJapanese online businesses with a local presence and targeting local markets in South East Asia. We havecontinued to promote funding activities through the “GMO Global Payment Fund” to form capital alliances withprospective payment-related businesses; in addition, the financial results of local payment processing companies inwhich we invest our fund have performed steadily. 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 business growth, we will continue
to introduce new measures while creating a synergistic effect between “Z.com Payment” and “GMO Global
Payment Fund”. During the period under review, we acquired a substantial stake in MACRO KIOSK Berhad, theleading complete end to end mobile payment, authentication, notification(*2) and enterprise mobility solutions
enabler based in Malaysia.
Also, prior investment in new businesses, appointment of talented personnel, strengthening of the foundation of thepayment network, and further strengthening of security were carried out in order to aim for a corporate group thatcan continue to maintain the operating income growth of 25% or more over the medium-to-long term. During theperiod under review, we acquired 70% of the outstanding shares of MACRO KIOSK Berhad which has major
Southeast Asian banks as its customer base and converted it to our subsidiary in order to expand our corporategroup and incorporate into our business growth the spread of bank accounts and mobile payment which has been
forecast in Southeast Asia over the long term. It will be used as the foundation for spreading in Southeast Asia our
payment-related know-how accumulated in Japan. As for the field of offline payment, we increased our stake in
GMO Financial Gate Inc. up to 65% and converted it to our subsidiary in order to incorporate innovative fields withespecially marked growth into our business growth. For the above two companies, only their balance sheets wereconsolidated in the current consolidated fiscal year.
Consequently, the Group’s operating results for the current consolidated fiscal year were as follows: Net sales
amounted to 12,113,864,000 yen (an increase of 34.1% on a year-on-year basis). Net sales consisted of an initial
revenue of 640,111,000 yen (increase of 21.5% on a year-on-year basis), running revenue of 6,301,443,000 yen(increase of 30.2% on a year-on-year basis) and merchant acquiring service revenue of 5,172,308,000 yen(increase of 41.4% on a year-on-year basis).
Concerning operating expenses, while the solid performance of “GMO Payment after delivery” service and“GMO-PG Remittance Service” saw a hike in cost of sales, we were able to take advantage of the scale merit of
the revenue growth. As a result, cost of sales amounted to 2,769,578,000 yen (increase of 44.3% on a year-onyear). Selling, general and administrative expenses came to 5,524,779,000 yen (increase of 33.6% on a year-onyear basis) due to the increase of MSB related sales and increase in personnel expenses. The operating income
grew 28.3% a year-on-year basis to 3,819,506,000 yen.
With regard to non-operating income and loss, exchange losses of 72,010,000 yen has been posted and Ordinary
income resulted 3,780,880,000 yen (increase of 26.0% on a year-on-year basis) and marking a ratio of ordinary
income to net sales of 31.2%.
Under extraordinary income, we posted gain of 395,827,000 yen related to the phased acquisition of shares of
GMO Financial Gate Inc. and gain on sales of investment securities of 194,057,000 on August 31, 2016, Profit
attributable to owners of parent resulted 2,910,926,000 yen (increase of 57.1% on a year-on-year basis ).
The Results of each segment is as mentioned below.
Effective from the first quarter of the fiscal year ending September 30, 2016, the classification of the reporting segments
has been revised. The reporting segments consist of the “Payment Processing Business”, the “Money Service
Business”, and the Others. Segment information for the previous fiscal year is based on the segment classification after
the change.
For Payment Processing Business, the number and amount of processed payments steadily increased with the
expansion of e-commerce market. System development orders from large-sized enterprises remained at a high level.
The sales marked 8,632,192,000 yen (increase of 17.7% on a year-on-year basis) and the segment income (operating
income) marked 5,066,667,000 yen (increase of 22.9% on year-on-year basis).
For Money Service Business, Money service business (MSB)” such as “GMO Payment after delivery”, “GMO-PG
Remittance Service” steadily increased. As a result, the sales marked 2,242,795,000 yen (increase of 163.5% on a
year-on-year basis) and the segment income (operating income) marked 216,883,000 yen (FY2015 segment lost
marked 21,838,000 yen).
－

5 －For Others, “GMO-PG Online Advertising Service” grew very well. Sales of SSL server certifications and shipping
service grew steadily. As a result, the sales marked 1,239,088,000 yen (increase of 46.0% on a year-on-year) and thesegment income marked 159,485,000(increase of 89.5% on a year-on-year basis).
（Forecasts for the next period）
In regard to our core business, the BtoC EC market continues to grow thanks to a favorable external environment suchas broader use of smartphones as well as reforms in logistics, and e-commerce is also spreading in the market of salesof non-goods items such as services, as seen in new areas such as BtoB EC and CtoC EC.
For the term ending September 2017, we believe this will be achieved by accelerating the acquisition pace of new
merchants, strengthening the 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.
As for our new subsidiary MACRO KIOSK Berhad, we plan to make consolidated financial statements based on theprovisional financial statements created by performing provisional settlement at the point of time three months before
the closing date of our company because the closing date of MACRO KIOSK Berhad is December 31. For this reason,in the fiscal year ending on September 30, 2017, we plan to consolidate the income statement of MACRO KIOSKBerhad from the second quarter accounting period and incorporate their income and loss of nine months from October
1, 2016 to June 30, 2017. As for our other new subsidiary GMO Financial Gate Inc., the company has already secured
stable income and is expected to contribute to achieving our management target of the 25% operating income growth.
In regard to costs, we keep forecast for increase in sales cost ratio due to the sales growth of “Online AdvertisingService" and “GMO-PG Remittance Service”, which has a high sales-cost ratio. We also forecast investment cost on thesubsidiary companies, overseas businesses, and other investment on new businesses. We expect 31.2% growth inoperating income and 26.7% operating income ratio.
(2) Analysis of financial position①Assets, liabilities and net assets（Assets）
The balance of total assets at the end of the current consolidated fiscal year was 54,771,544,000 yen, up
12,939,807,000 yen as compared with the end of the previous consolidated fiscal year. This increase was mainly
due to an increase of lease receivables (+4,997,492,000 yen), an increase of advance payments-trade(+4,085,527,000 yen), an increase of Goodwill (+2,246,989,000 yen), an increase of shares of subsidiaries andaffiliates (+2,064,187,000 yen), and an increase of Accounts receivable-trade (+1,807,896,000 yen).
（Liabilities）
The balance of liabilities at the end of the current consolidated fiscal year was 35,663,374,000yen, up
10,017,988,000 yen as compared with the end of the previous consolidated fiscal year. This increase was mainly
caused by an increase in deposits received of 6,449,996,000 yen and an increase of accounts payable-trade(+1,740,642,000 yen). Increase in deposits received is accordance with the merchant acquiring service agreement.
（Net assets）
The balance of net assets at the end of the current consolidated fiscal year was 19,108,169,000 yen, up
2,921,818,000 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 2,910,926,000 yen and increase in profit attributable
to non-controlling owners of 946,344,000 yen, with a decrease of 668,491,000 yen as a result of a distribution of
surplus.
②Cash FlowsAt the end of the current consolidated fiscal year, cash and cash equivalents (the “Funds”) for the current
consolidated fiscal year totaled 25,187,536,000 yen, down 4,926,069,000 yen when compared with the balance atthe beginning of the period. Cash flows for the current consolidated fiscal year are as follows.
（Cash flow from operating activities）
The Funds used as a result of operating activities for the current consolidated fiscal year were 748,659,,000 yen(3,709,772,000 yen was obtained for the same period of the previous year).

－

6 －This was mainly due to the recording of 4,337,643,000 yen for Income before income taxes, increase of deposits(+5,463,265,000 yen), with payment of income taxes of 1,463,600,000 yen, 4,997,492,000 yen for increased leasereceivables and 4,077,361,000 yen for increased advance payments-trade.
（Cash flow from investing activities）
The Funds used as a result of investing activities for the current consolidated fiscal year were 3,415,138,000 yen(1,374,094,000 yen was used for the same period of the previous year). This was mainly due to the investments inother securities of subsidiaries and affiliates of 1,519,870,000 yen and shares of subsidiaries and affiliates of
1,727,629,000 yen.
（Cash flow from financing activities）
The Funds used as a result of financing activities totaled 654,646,000 yen (7,398,573,000 yen was obtained in thecorresponding period of the previous fiscal year). This was mainly due to the cash dividends paid of 599,399,000
yen.
The trend of the Group’s cash flow indices is as follows.
FY 2012FY 2013

FY 2014

FY 2015

FY 2016

Equity ratio (%)

33.4

26.4

27.7

38.7

33.2

Equity ratio on a market value basis (%)

163.9

216.2

348.0

408.4

356.8

Cash flows to interest bearing liabilities ratio (%)
Interest coverage ratio (times)

5.4

1.8

4.5

3.0

121.4

960.3

1,843.7

2,058.7-

Notes:
1.

2.
3.

4.

5.

Method of calculating the abovementioned indices
Equity ratio: Shareholders’ equity ÷ total assets
Equity ratio on a market value basis: Total market value of shares ÷ total assets
Cash flows to interest bearing liabilities ratio: interest bearing liabilities ÷ operating cash flows
Interest coverage ratio: Operating cash flows ÷ interest payments
Each indices was calculated based on consolidated financial values.
The total market value of shares was calculated by multiplying the closing share price at theend of the term by the number of shares issued at the end of the term (other than treasury
stock)As operating cash flows and interest payments, “net cash provided by (used in) operating
activities” and “interest expenses paid” recorded in the consolidated statements of cash flows
were used.
The cash flows to interest bearing liabilities ratio and interest coverage ratio are omitted for
the FY2016, because that fiscal year’s operating cash flow was negative.

(3) Basic policy on profit sharing and distribution for the current and next terms
We consider that returning a stable profit to our shareholders is a major mission of our management. Therefore, we
accumulate an internal reserve that is necessary for future business development and the enhancement of businessquality, and also for continuing to provide a stable return of profit to the shareholders. Thus, we established a basic
dividend policy, setting the target dividend payout ratio at “roughly 35% of the consolidated net income” and started to
pay term-end dividends in the term that ended September 30, 2006.
The dividend per share is 27.0 yen for the current consolidated fiscal year.
As for the dividend for the next term, based on our successful business plan, we expect 37.0 yen with a dividend payout
ratio of 50% to the profit attributable to owners of parent in order to further strengthen shareholder returns by continuing
the consecutive increase of dividend from the start of dividend payments and thereby contribute to increasing the
medium-to-long-term corporate value.

－

7 －2. Business group(1) Affiliates
The Group consists of the Company and its consolidated subsidiaries, GMO Epsilon, Inc. GMO PAYMENTSERVICE, Inc., GMO Financial Gate Inc., GMO PAYMENT GATEWAY PTE. LTD. and MACRO KIOSK Berhad
etc and provides Payment Processing Business, Money Service Business, and Other business as a consolidated
subsidiary of GMO Internet, Inc. GMO Internet, Inc., the parent Company, provides internet infrastructure, EC
business, internet media and internet brokering under the motto “Internet for everybody”

Name

Location

Details of business

Capital stock

The holding/held
ratio of voting
rights（％）

Segment by type of
related business(Parent company)
GMO Internet, Inc. *1

Shibuya, Tokyo

Comprehensive
Internet business

5,000
Million yen

Not owning
51.65(Subsidiary)
GMO Epsilon, Inc. *2

Shibuya, Tokyo

Various payment
processing
services

98
Million yen

100.00

Payment
Processing
Business

GMO PAYMENTSERVICE, Inc.,

Shibuya, Tokyo

Payment after
Delivery100
Million yen

100.00

Money Service
Business

GMO Financial
Gate ,Inc. *2,4

Shibuya, Tokyo

65.00

Payment
Processing
Business

100.00

Payment
Processing
Business

Others

GMO PAYMENTGATEWAY PTE. LTD.

Singapore

MACRO KIOSKBerhad *5

Malaysia

Various payment
1,173
processing
Million yen
services
Headquarter of theregion47,426
Thousand
Payment
Singapore Dollars
processing
services
Others related to
payment

5,000
Thousand
Malaysia Ringgit

70.00(70.00) *3(Affiliates)
GMO Global Payment Shibuya, Tokyo
Fund

Investment
Business

1,503
Million yen-

SMBC GMO Payment Shibuya, Tokyo

Various payment
processing
services

312
Million yen

20.00

2C2P Pte. Ltd.

Various payment
processing
services

9,618
ThousandUS Dollars

35.05(35.05) *3

Others19 companies

Singapore

Others1 company

Notes:*1 Filed Annual Securities Report.
*2 The company falls under specific subsidiaries.
*3 Figures in ( ) in ownership ratio of voting rights indicate indirect ownership ratio included in the total.
*4 only their balance sheets were consolidated in the current consolidated fiscal year.
*5 only their balance sheets were consolidated in the current consolidated fiscal year.
(2) Business details
The Group provides Payment Processing Business, Money Service Business and Other business.
① Type of servicea.

Payment Processing Business
GMO Payment Gateway, Inc. and GMO Epsilon, Inc. provide companies that sell products on a online basis,including by way of consumer electronic commerce (B-to-C EC), with a payment processing service through which－

8 －payment processing by credit cards, convenience store payment, prepaid cards, Pay-easy, electronic money,
PayPal, Carrier billing, Internet banks and Cash on delivery can be made efficiently.
GMO PAYMENT GATEWAY PTE. LTD., provides payment processing services globally.
Money Service Businessb.

We provide “Money service business (MSB)” such as “early payment services”, Transaction Lending service and“GMO-PG Remittance Service”. Our subsidiary GMO Payment Service Inc. provides a “GMO Payment after
delivery” service that allows the user to pay after receiving the goods.
②

Contract types entered into between the merchant and the credit card companya.

Payment Processing Business
The Group’s business models are classified broadly into two categories depending on the type of contract enteredinto between merchants and credit card companies, or others.

(a). Direct merchant contract
The group provided a payment system and mainly ties up payment information and settlement between merchantsand various payment businesses. Merchants make a contract with various payment businesses individually, then,the merchant’s proceeds are paid directly to the merchant by each credit card company.
GMO-PG will receive the service fees below from the merchant:• Initial introduction costs for the license of connective software to use the system, initial setting, connection test,
and support, all of which are received upon introduction of the services: These revenues are recorded as initial
revenue.

Settlement
information
Servicecharge

GMO Payment Gateway
Group

Settlementcompanies,
etc.

Contract

Merchants

Money flow

Services• Customer support fees, monthly fixed fees, and transaction fees to be charged according to the number of dataprocessing tasks: These revenues are recorded as running revenue.

Proceeds from sales(ｂ). The representative merchant contract (merchant acquiring service)
The group provides a payment system and mainly ties up payment information and settlement between the merchantand various payment businesses. The group makes a representative merchant contract (merchant service) that isconcluded as a package with several payment companies like credit card companies. Merchant proceeds are paid to
the group from each credit card company or other payment company, and are then paid to the merchants by thegroup in a lump sum.
The group receives the following fees from merchants as a service charge in addition to the fees mentioned in (a)direct merchant contract.

－

9 －Merchants

Money flow

Services

Settlement information・Contract

GMO Payment Gateway
Group
Fees
（B）

ServicechargeProceeds from
Sales（A-B）

Proceeds from
Sales（A）

Settlement companies, etc.

•
Fees for proceeds from the merchant acquiring service revenue which are received when paying the proceedsfrom sales in a lump sum. These revenues are recognized as merchant acquiring service revenue.

Proceeds from salesb.

Money Service Business
GMO payment after delivery
GMO PAYMENT SERVICE, Inc., provides “GMO Payment Later service,” which is an after-payment means, toour merchants. In this service, GMO PAYMENT SERVICE, Inc., performs credit examination of consumers andsends billing statements to them, as a payment service provider. GMO PAYMENT SERVICE, Inc., temporarily
pays the merchants proceeds from the sales on behalf of the consumers, and collects payment from consumers.
GMO PAYMENT SERVICE, Inc., receives the following as service fees from the merchants.
- A customer support fee, a fixed monthly fee as a management fee, and a fee for the service use (which isposted as running sales)

－

10 －

３．Management policy（１）Basic management policy of the Company
The management principle of the Group is to “pursue both spiritual and material gains for compeers by contributing
to the progress and development of communities.” We will contribute to the progress and development of communities through a commitment to creating andcultivating markets, and through business development based on sincerity and equity.
 “Compeers” means executives and employees with creative ideas and mutual respect, our customers, and ourpartner business operators.
 Executives and employees of the Company will pursue both spiritual and material gains by making the most of
their spirit, problem-solving abilities, and high level of professionalism, and by exchanging value withcustomers.
Based on this management principle, the Group considers that its mission is to become the infrastructure forpayment processing in Japan, and to contribute to the realization of payment processing system that is safe andconvenient for consumers and companies. As a result, it has promoted its business in accordance with thefollowing basic policies.
 Adaptation to trends
Advanced efforts
We try to ensure the technical advantage of our products.
Flexibility
We expeditiously make proposals in the growing market.
 Establishment of existing value
UniquenessWe try to ensure the meaning of our existence by providing services from the standpointof our customers.
Profitability
We beat our competitors by pursuing improvements in profitability and firmly establishingour position in the industry.
Independence and education With the aim of being highly self-contained businesspeople, we set a good
example to others in terms of results, attitude and mindset.
 Pursuit of profit conditions
Sociality
We are committed to developing a sound business, and continue to actively develop
unexplored markets for various payment methods.
ReasonablenessWe quickly and fairly make management judgments by always keeping economy andreasonability in mind.
 Responsibilities to shareholders
We try to improve shareholder value while being conscious of capital efficiency. We actively conduct IR
activities and provide shareholders and investors with information in a timely and appropriate manner.
（２）Target management index and medium-to long-term management strategy
Our group’s main management goal is a 25% growth in operating income.
The operating income for the current consolidated fiscal year increased 28.3%. Due to the making of investments
necessary to maintain a yearly growth of 25% in the medium-to long-term, next year’s operating income growth rate is
expected to be 31.2%.
Our group is shouldering the online commercial transaction market infrastructure, contributing to the creation of amore convenient and secure EC environment and the improvement of Japan’s EC ratio. We also endeavor to expandin new fields by developing new businesses, capital/ business tie-up with partners, founding new subsidiaries, andexpanding services globally.
（３）Challenges to be addressed by our company
We put emphasis on the following three challenges to be addressed as a condition for the realization of the measures
mentioned above.
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 theCompany has been objectively determined to be appropriate and safe in compliance with strict international
standards.

－

11 －

Further, we are in full compliance with the global security standard in the credit industry “PCIDSS Ver.3.1” which
was jointly established by five international credit card companies: JCB; American Express; Discover; MasterCard;and VISA, and the services of the Company satisfy the basic requirements: “construction and maintenance of safe
network”; “protection of card member information”; “maintenance program for management of vulnerabilities”;“introduction of firm access control method”; “regular monitoring and testing of network”; and “possession of an
information security policy.”
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 withthe laws.
We will endeavor to provide better services by continuing to provide a thorough internal education and monitoring
system to establish and improve management measures in accordance with the established security policy, and to
make an effort to maintain and improve reliability
Further, in order to prevent computer intrusions by fraudulent means, computer viruses, cyber attacks, etc., we takeappropriate countermeasures such as security measures against fraudulent intrusions from outside/inside, 24-hoursystem monitoring, and preparation and operation of office regulations.
②Strengthening of system development capabilities
We constantly see the appearance of new technologies and new services in communications, including theInternet. The Group is deeply related to the Internet in the business field, and recognizes that to provide customers
with competitive products, it is important to adopt technologies and services in a timely manner.
At present, internal personnel respond to changes in the system environment, accept requests from customers anddesign systems, and we outsource programming to provide efficient high-quality services. We will try to continue tosecure highly skilled development personnel and further strengthen system development capabilities and services.
③Strengthening of the collaboration business
We recognize that to ensure stable growth, it is essential to establish business collaborations from which acompany with many merchants, as well as ourselves, can benefit, and to promote the efficient acquisition of new
merchants.
This form of business is a feature of our strategy, and we will continue to actively promote this kind of businesscollaboration with companies which have many merchants, payment companies, EC site construction service
companies.
④Expansion of business portfolio
As a management strategy, we entered the fields of consumer e-commerce (B to C EC), public money, utility
charges, service commerce, online charging in the B to B market and the C to C EC market, and payment service
by founding GMO Payment Service Inc. Thus, our corporate group has always strived to expand our new businessdomains. In the current consolidated fiscal year, we strengthened our overseas expansion by making MACROKIOSK Berhad our subsidiary, and we expanded our business in the offline payment market by making GMO
Financial Gate Inc. our subsidiary. Thereby, we have further advanced our management strategy. We will continue
to advance expansion of our multifaceted business portfolio with the payment processing service as its core andstrive to continually increase profits.

－

12 －

４．Consolidated financial statements（１）Consolidated balance sheet（Unit: Thousand yen）
Summary of balance sheet at Summary of balance sheet atthe end of the previous
the end of the current
consolidated fiscal year
consolidated fiscal year
(September 30, 2015)(September 30, 2016)
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Lease receivables
Merchandise
Supplies
Advance payments-trade
Prepaid expenses
Deferred tax assets
Accounts receivable-other
OthersAllowance for doubtful accounts
Total current assets
Noncurrent assets
Tangible assets
Buildings
Accumulated depreciation
Buildings, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Lease assets
Accumulated depreciation
Lease assets, net
Total tangible assets
Intangible assets
Goodwill
Lease assets
Right of trademark
Software
OthersTotal 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
OthersAllowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

－

13 －

30,152,630
2,117,007
2,293,947
1,062
617
2,303,428
67,830220,805
1,156,824
341,591△186,253
38,469,492

25,231,522
3,924,904
7,291,439
38,377972
6,388,955
118,723
300,169
1,742,612
839,372△327,887
45,549,162

113,953△40,393
73,559216,042△166,668
49,373
191,110△98,545
92,564215,497

144,694△61,551
83,143504,090△381,308
122,782306,340△159,985
146,354352,280

24,707
12,217
119751,499
146,267
934,8112,271,7697
17,450212
1,079,334
329,521
3,698,215

1,437,144
139,0472,251,124
2,2013,234

343,047

309,174

1,443

962

25,54531,4682,570
223,818
64,863△25,545
2,211,935
3,362,243
41,831,736

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

（Unit: Thousand yen）
Summary of balance sheet at Summary of balance sheet atthe end of the previous
the end of the current
consolidated fiscal year
consolidated fiscal year
(September 30, 2015)(September 30, 2016)
Liabilities
Current liabilities
Accounts payable-trade
Lease obligations
Accounts payable-other
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Unearned revenue
Provision for bonuses
Provision for directors’ bonuses
OthersTotal current liabilities
Noncurrent liabilities
Lease obligations
Long-term lease and guarantee deposited
Provision for directors’ remuneration Board
Incentive Plan Trust
OthersTotal 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

985,850
45,2671,911,844
795,544
73,10848,69821,184,305
1,573
337,334
58,7005,959
25,448,186

2,726,492
64,8462,784,175
901,767
78,482447,442
27,634,302
62
478,808
125,000
89,36935,330,748

67,060
10,138

115,984
7,397

120,000

170,000

197,198
25,645,385

39,243332,626
35,663,374

4,711,021
4,970,942
6,651,114△265,236
16,067,842

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

134,960△48,004△18,578△97,162

116,382△145,167

2,126
－

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

16,186,351
41,831,736

－

14 －

（２）Consolidated statements of income and consolidated statement of comprehensive income（Consolidated statements of income）（Unit: Thousand yen）
FY2015FY2016(From October 1, 2014 to(From October 1, 2015 to

September 30, 2015)

September 30, 2016)

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
Earnings on investment in silent partnership
Earnings on investment in partnership
Earnings on reversal of dividends payable
Rent income
Commissions received
Exchange earnings
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Equity in losses of affiliates
Loss on investment in partnership
Rent expenses
Stock issue expense
Exchange Losses
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Income from securities sold
Change in equity
Gain on step acquisitions
Total extraordinary income
Extraordinary loss
Gain on change in equity
Loss on retirement of noncurrent assets
Loss on disaster
Total extraordinary loss
Income before income taxes
Corporate, inhabitant and enterprise taxes
Income taxes-deferred
Total income taxes
Income before minority interests
Minority interest in loss(△)

9,030,892
1,919,836
7,111,055
4,133,784
2,977,270

12,113,864
2,769,578
9,344,285
5,524,779
3,819,506

7,716
5,271
20,724
1,218
－
1,050
13,97815,58622,030
4,385
91,961

5,088
6,719
－
－
12,425933
18,363
21,842－
9,683
75,056

1,802
－
3,541
13,67445,317

4,986
15,375－18,035－72,0103,274
113,6823,780,880

4,441
68,7773,000,455
30,76626,196－56,962
－
2,148
－
2,148
3,055,268
1,295,625△91,075
1,204,550
1,850,718△2,7301,853,449

Net income

－

15 －

194,057－
395,827
589,884
21,096
9,407
1,807
33,121
4,337,643
1,492,877△66,160
1,426,717
2,910,926－
2,910,926

（Consolidated statements of comprehensive income）（Unit: Thousand yen）
FY2015FY2016(From October 1, 2014 to(From October 1, 2015 to

September 30, 2015)

September 30, 2016)

Income before minority interests
Other comprehensive income
Other valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income(Details)
Parent company shareholders’ comprehensive
incomeMinority’s comprehensive income

－

16 －

1,850,718

2,910,926

70,139△182,965△35,489
34,6501,885,369△78,584△261,549
2,649,376

1,888,325

2,676,425△2,956△27,049

（３）Consolidated statements of cash flows（Unit: Thousand yen）
FY2015FY2016(From October 1, 2014 to(From October 1, 2015 to

September 30, 2015)

September 30, 2016)

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Increase and decrease in provision (△decrease)
Interest and dividends income
Interest expenses
Foreign exchange gains and losses (△gains)
Equity in gains and losses of affiliates (△gains)
Gains and losses on investments in silent
partnership (△gains)
Gains and losses on investment in partnership(△gains)
Gain and loss on investment securities sold(△gains)
Gains and losses on changes in equity (△gains)
Stock issue expense
Loss on retirement of noncurrent assets
Loss on disaster
Gain on step acquisitions
Increase and decrease in accounts receivable(△Increase)
Increase and decrease in lease receivables (△gains)
Increase and decrease in inventories (△increase)
Increase and decrease in advance payments-trade(△increase)
Increase and decrease in accounts receivableother (△increase)
Increase and decrease in purchase debts(△decrease)
Increase and decrease in accounts payable-other(△decrease)
Increase and decrease in deposits received(△decrease)
OthersSubtotalInterest and dividends income received
Interest expenses paid
Payment on deposit money
Distributions from 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
Purchase of other securities of subsidiaries andaffiliates
Distributions from an investment partnership
Payment on leasehold deposits
Losses on the purchase of subsidiary shares－

17 －3,055,268
291,319
5,987
349,948△12,987
1,802△22,255△20,724

4,337,643
369,1972,600
365,975△11,807
4,986
68,922
15,375△1,218－3,541△12,425△30,766△194,057△26,196
45,3172,148－－

21,906
－
9,407
1,807
△395,827△1,337,793△801,433△2,293,947△4,997,492

1,135△2,126△1,718,032△4,077,361△653,421△566,500

756,183

420,883

1,197,466

696,391

5,594,448

5,463,265△274,149
4,913,076
8,734△1,802△50,010－△1,160,226
3,709,772△25,253
694,088
5,839△4,986△350,000
370,000△1,463,600
748,659△38,966△377,887△1,016,185△29,109△509,159△1,519,870

263,159

202,318△63,000△1,727,696△125,000－

30,092△31,623－

30,328△1,212△770,095accompanying changes in the scope of
consolidation
Gains on the purchase of subsidiary sharesaccompanying changes in the scope of
consolidation
OthersNet cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Proceeds from issuance of common stock
Purchase of treasury 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(△decrease)
Balance of cash and cash equivalents at the beginningof the period
Cash and cash equivalents at the end of period

－

18 －

－

1,056,596△14,683△1,374,094△97,238△3,415,138

7,958,839△513△517,241

2,749－△599,399－△8,160△42,511
7,398,573
30,044△49,835△654,646△107,624

9,764,296

4,926,069

20,349,309

30,113,605

30,113,605

25,187,536