Non-Consolidated Financial Results
for the Six Months Ended October 31, 2018
[Japanese GAAP]
December 11, 2018
Company name: Asukanet Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 2438
URL: https://www.asukanet.co.jp
Representative: Yuji Matsuo, Representative Director, President & COO
Contact: Kenya Kono, Senior Managing Director & CFO
Phone: +81-82-850-1200
Scheduled date of filing quarterly securities report: December 14, 2018
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: AvailableSchedule 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, 2018
(May 1, 2018 to October 31, 2018)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Six months ended
October 31, 2018
October 31, 2017

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen%

2,912
2,787

4.5
11.2

306
277

10.4(11.2)

310
284

9.2
(9.5)

211
195

7.7(8.0)

Basic earnings
per share

Six months ended
October 31, 2018
October 31, 2017

Operating income

Diluted earnings pershare
YenYen

12.54
11.69

12.53
11.64

(2) Non-Consolidated Financial Position
Total assets

Net assets

Million yen

5,701
As of October 31, 2018
5,715
As of April 30, 2018
(Reference) Equity: As of October 31, 2018: ¥5,046 million
As of April 30, 2018: ¥4,997 million

Equity ratio

Million yen%

5,046
5,000

88.5
87.4

2. Dividends
1stquarter-endYenAnnual dividends
2nd
3rdYear-end
quarter-end
quarter-end
Yen

Fiscal year ended April 30, 2018
0.00
Fiscal year ending April 30, 2019
0.00
Fiscal year ending April 30, 2019
(Forecast)(Note) Revision to the forecast for dividends announced most recently: NoTotal

Yen

Yen

Yen

-

10.00

10.00

-

10.00

10.00

3. Non-Consolidated Financial Results Forecast for the Fiscal Year Ending April 30, 2019
(May 1, 2018 to April 30, 2019)(% indicates changes from the previous corresponding period.)
Net sales
Million yen%

Operating income

Ordinary income

Million yen

Million yen%%

Basic earnings
per share

ProfitMillion yen%

Yen

Full year
6,111
3.58062.2811
1.95671.8
33.74(Note) Revision to the financial results forecast announced most recently: NoAs the Company manages its financial results at an annual base, the financial results forecast for the first half is notdisclosed.
* 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, 2018: 17,464,000 shares
April 30, 2018: 17,464,000 shares2) Total number of treasury shares at the end of the period:
October 31, 2018: 622,941 shares
April 30, 2018: 662,541 shares
3) Average number of shares during the period:
Six months ended October 31, 2018: 16,831,830 shares
Six months ended October 31, 2017: 16,764,011 shares* These quarterly financial results are outside the scope of quarterly review procedures by a certified public
accountant or an audit corporation.
* Explanation of the proper use of financial results forecast and other notes
The earnings forecasts and other forward-looking statements herein are based on information currently
available to the Company and certain assumptions that the Company believes are reasonable, and actual results
may differ significantly from these forecasts due to a wide range of factors.

4. Overview of Business Results(1) Overview of Business Results for this Fiscal Year
Asukanet operates three business areas, each with different positioning and characteristics. They are (1)the memorial design service business, which adds digital processing and remote output services for photos ofthe deceased 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.
Following is an overview of the business results for each segment. The results figures for each segment
include internal inter-segment sales.
(1) Memorial design service businessIn this business, although revenue from our primary business area – processing of photos of the deceased– was somewhat below expectations, it was higher than the same period in the previous year. There werestrong sales of video-related services and supplies, as well as of frames. Sales also grew for “Asuka Altar”,
which is a product produced in collaboration with the aerial imaging business. We also exhibited at events
such as the Funeral Business Fair and the Life Ending Industry Expo. In addition to the “tsunagoo” functionthat was released into the funeral market as one type of “funeral tech” utilizing IT technologies, we added
new function to order condolence messages and promoted to introduce this product to funeral homes.
In terms of income, there was an increase in personnel costs for image processing operators, and shipping
expenses were also higher as a result of the price hikes that took place starting from autumn of last year. Asa result, segment income decreased.
As a result, sales were 1,202,667 thousand yen (102.7％ year-on-year), and segment income was 302,937
thousand yen (93.2% year-on-year).
(2) Personal publishing service businessThis business operates AsukaBook for the professional photography market in Japan, and MyBook for thegeneral Japanese consumer market. We are also engaged in OEM supply of photo albums and photo prints
based on photos that were taken with smartphones.
In the professional photographer market, in addition to acquiring contracts and making product proposals
through our own marketing activities, we also conducted AsukaBook seminars in 11 locations across Japan,
released new products, and expanded the range of design templates. As a result of these and other measures,
we saw steady growth in sales to professional photographers. Aiming to expand the penetration of our “LifeSize Baby Photos” service, we held photo awards and exhibited at events, and also conducted a life-sizephoto commemoration day campaign.
In the general consumer market, we worked to obtain orders primarily among photography enthusiasts andknowledgeable customers through means such as efficient internet advertising, conducting various
campaigns, and utilizing SNS. In September of this year, we introduced a full-flat type new product withpages that open flat. There had been high demand for such a product, and it succeeded in achieving a strong
launch. However as competition is fierce, sales of MyBook were down from the same period in the previousyear. Sales of OEM products grew steadily as the presence of our services continued to expand in the market.
Despite the shipping price hike that has been in effect since autumn of last year, an increase in personnel
expenses, and other factors pushing costs upwards, segment income showed steady growth as a result of arecovery in the operating rate accompanying the growth in sales.
As a result, sales were 1,650,131 thousand yen (105.8% year-on-year), and segment income was 362,744
thousand yen (106.7% year-on-year).

(3) Aerial imaging businessThis business was launched in March 2011, aiming to create a market through new image and video
expressions utilizing aerial imaging technologies. We are developing, manufacturing, and selling both glass
and plastic “ASKA3D plates” that utilize our original technologies to project images in mid-air.
For glass ASKA3D plates, although sufficient cost reductions have not yet been achieved, we areproviding large-size plates that are capable of high-quality aerial imaging. Although still in small lots, sales
for signage and aerial system operations are increasing. In addition, we are also supplying plates for the“Asuka Altar” service that is a collaboration project with the memorial design service business.
For plastic ASKA3D plates, we began the supply of our first round of samples in June 2018, and areengaged in sales primarily to customers which already purchased glass plates or which expressed interest atexhibitions and other events. In parallel with sample supply, we also made improvements to dies, production
methods, and other areas, aiming for quality which is closer to that provided by glass plates. As a result, inOctober we succeeded in developing an upgraded plate that features large improvements to brightness andaerial imaging quality. We are now conducting production trials aimed at stabilizing quality and improving
yield in preparation for the mass production stage.
In terms of marketing, we exhibited the upgraded plastic ASKA3D plates at C-Touch & Display Shenzhenthat was held in Shenzhen, China in November. It was highly evaluated as a non-contact touch panel
intended for integration into various products. We will provide samples and conduct marketing follow-up
aimed at obtaining mass-production orders. We are now preparing to exhibit at FINETECH Japan andSEMICON Japan which will be held in Japan in December.
In terms of expenses, as a result of concentrated research and development aimed at improving the qualityof plastic ASKA3D plates, there was an increase in R&D expenses including prototyping and die costs.
Personnel expenses were higher as a result of reinforcing our staff, and there was also an increase in travel
expenses, primarily as a result of events held overseas. However because the number of exhibitions was lessthan the same period in the previous fiscal year, advertising expenses were lower.
As a result, sales were 67,794 thousand yen (115.0% year-on-year), and segment loss was 117,278
thousand yen (compared to a loss of 149,960 thousand yen in the same period of the previous year).
As a result of the above, sales during the consolidated first 2 quarters were higher in all business areas andreached 2,912,273 thousand yen (104.5% year-on-year). In terms of income, although there was a decline in
the memorial design service business, as a result of steady growth in segment income from the personal
publishing service business and a reduction of the loss in the aerial imaging business, ordinary income was310,520 thousand yen (109.2% year-on-year) and net income was 211,057 thousand yen (107.7% year-onyear).
(2) Overview of the Financial Status during this Fiscal Year
(1) Assets, liabilities, and net assets(Assets)
Current assets at the end of this 2Q decreased by 14,012 thousand yen from the end of the previous fiscal
year to reach 5,701,885 thousand yen. Despite an increase of 427,862 thousand yen in tangible fixed assets
resulting from the purchasing of land adjacent to the headquarters, this decrease was primarily the result of adecrease of 492,941 thousand yen in cash and savings resulting from the use of ready cash to cover thispurchase.
(Liabilities)
Current liabilities at the end of this 2Q decreased by 60,677 thousand yen from the end of the previous fiscal
year to reach 655,206 thousand yen. This was primarily due a decrease of 23,600 thousand yen in income
taxes payable and a decrease of 32,213 thousand yen in accounts payable.

(Net assets)
Net assets at the end of this 2Q increased by 46,665 thousand yen from the end of the previous fiscal year toreach 5,046,679 thousand yen. This was primarily due to net income of 211,057 thousand yen, and a decreaseof 168,014 thousand yen in dividend of surplus.
(2) Cash flows
The balance of cash and cash equivalents (hereafter referred to as “cash”) during the consolidated first 2
quarters declined by 492,941 thousand yen from the end of the previous fiscal year to reach 1,213,839
thousand yen. The status of each cash flow and primarily factors affecting it during the consolidated first 2
quarters are as follows.
(Cash flows from operating activities）
Net cash acquired as a result of operating activities during the consolidated first 2 quarters was 261,551
thousand yen (compared to 241,517 thousand yen in the same period of the previous fiscal year). Despite
recording pre-tax net income of 310,147 thousand yen and recording depreciation expenses of 141,966
thousand yen, this result was primarily due to payment of 122,746 thousand yen in income taxes.
(Cash flows from investment activities)
Net cash expended as a result of investment activities during the consolidated first 2 quarters was 595,410
thousand yen (compared to expenditure of 116,699 thousand yen in the same period of the previous fiscal year.
This was primarily due to the acquisition of 538,474 thousand yen in tangible fixed assets including thepurchase of land adjacent to the headquarters and deposits for construction of a new company building, as wellas the acquisition of 53,410 thousand yen in software and other intangible fixed assets.
(Cash flows from financing activities)
Net cash expended as a result of financing activities during the consolidated first 2 quarters was 159,995
thousand yen (compared to expenditure of 161,556 thousand yen during the same period of the previous fiscalyear. This was primarily due to the payment of 167,362 thousand yen in dividends.

5. Financial Statements for the First Quarter(1) Balance sheet
Previous fiscal year
(ended April 30, 2018)(Units: 1,000s yen)First two quarters of the current
fiscal year
(ended Oct. 31, 2018)

AssetCurrent assets
Cash and deposits

2,311,781

1,818,839

Accounts receivable-trade
Merchandise and products

726,531
191,123

769,011201,427

Work in progress
Raw materials and supplies

14,32562,206

21,30062,282OthersAllowance for doubtful accounts

33,559(2,617)

28,826(3,126)

3,336,909

2,898,560

Buildings, net
Machinery and equipment, net

512,558
396,538

523,899
461,889

Land
Others, net

611,507
172,702844,060
291,318

Total tangible fixed assets

1,693,306

2,121,168

Total intangible fixed assets
Total investments and other assets

206,851478,829

206,185475,970

2,378,988

2,803,324

5,715,897

5,701,885

Current liabilities
Accounts payable-trade126,270

134,493

Income taxes payable
Provision for bonuses

137,900
136,500

114,300
142,200

Others

303,512

253,761

Total current liabilities

704,183

644,754

6,482

6,182

Total current assets
Fixed assets
Tangible fixed assets

Total fixed assets
Total assets
Liabilities

Fixed liabilities
Provision for retirement benefits
Others

5,217

4,269

Total fixed liabilities

11,70010,451

715,883

655,206

Capital stock
Capital reserves

490,300
606,585

490,300
606,585

Retained earnings
Treasury stock

4,183,583(285,940)

4,220,209(268,850)

Total shareholders' equity

Total liabilities
Net assets
Shareholders’ equity

4,994,527

5,048,243

Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments

3,129(1,564)

3,129(1,564)

Subscription rights to shares

2,356

―

5,000,014

5,046,679

5,715,897

5,701,885

Total net assets
Total liabilities and net assets

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

Net Sales(unit:1000s yen)First two quarters of the previous First two quarters of the current
fiscal year
fiscal year
(May 1, 2017 – Oct 31, 2017)(May 1, 2018 – Oct. 31, 2018)
2,787,097
2,912,273

Cost of sales

1,366,401

1,449,118

Gross profit

1,420,695

1,463,155

Selling, general, and administrative expenses

1,142,996

1,156,587

277,699

306,567

294

219

Dividends received
Commissions received

610
232

510
287

Foreign exchange gains
Income from insurance

736
3,991

938
832

825
20950
214

Operating income
Non-operating income
Interest received

Gain on forfeiture of unclaimed dividends
OthersTotal non-operating income
Non-operating expenses

6,711

3,953

284,411

310,520550373Extraordinary loss
Loss on retirement of non-current assets
Total extraordinary losses
Net income before taxes

550

373

283,860

310,147

Income taxes

87,92899,089Net income

195,931211,057

(3) Statement of cash flows(unit:1000s yen)First two quarters of the previous First two quarters of the current
fiscal year
fiscal year
(May 1, 2017 – Oct. 31, 2017)(May 1, 2018 – Oct. 31, 2018)
Cash flows resulting from operating activities
Net income before taxes
Depreciation expenses

283,860
147,691

310,147
141,966

1,258
7,400

508
5,700

―(299)(904)
(135)

(729)
(913)

Loss on retirement of non-current assets
Decrease (increase) in accounts receivable-trade

550(38,508)373(42,479)

Decrease (increase) in inventory assets
Increase (decrease) in accounts payable-trade(16,014)758(17,355)
8,222

Increase (decrease) in accrued consumption taxes
Others(36,107)
13,893(14,608)(7,048)Subtotal

363,743

383,482

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement
benefits
Interest and dividends received
Foreign exchange losses (gains)

Interest and dividends received

775

815

Income taxes paid

(123,001)(122,746)

Cash flows due to operating activities

241,517

261,551

Payments into time deposits
Proceeds from withdrawal of time deposits(10,000)
5,000(355,000)
355,000

Purchase of property, plant, and equipment
Purchase of intangible fixed assets(83,792)(26,209)(538,474)(53,410)

Collection of loans receivable
Others

720(2,417)400(3,925)(116,699)(595,410)(166,655)(167,362)

6,048
(948)

8,316(948)(161,556)(159,995)

Cash flows due to investing activities

Cash flows due to investing activities
Cash flows due to financing activities
Cash dividends paid
Proceeds from disposal of treasury stock
OthersCash flows due to financing activities
Effect of exchange rate on cash and cash equivalents

135913

Net increase (decrease) in cash and cash equivalents(36,602)(492,941)

Balance of cash and cash equivalents at beginning of year

1,673,251

1,706,781

Balance of cash and cash equivalents at end of quarter

1,636,648

1,213,839

[Segment information]
Cumulative first 2 quarters of the previous fiscal year (May 1, 2017 – Oct 31, 2017)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment
Memorial design
service business

Personal
Aerialpublishingimaging businessservice business

Adjustments

Amountrecorded in
profit and loss
statement

Total

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

1,170,660

1,559,640

56,7972,787,097―

2,787,097

―

―

2,160

2,160(2,160)―

1,170,660

1,559,640

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

324,953

340,078(149,960)

515,071(237,371)

277,699

Cumulative first 2 quarters of the current fiscal year (May 1, 2018 – Oct. 31, 2018)
Information related to the amounts of sales, income, and loss for each reporting segment(Units: 1,000s yen)
Reporting segment
Memorial design
service business

Personal
Aerialpublishingimaging businessservice business

Adjustments

Amountrecorded in
profit and loss
statement

Total

Sales
Sales to outsidecustomers
Inter-segment internalsales and transfers
Total
Segment income (loss)1,202,667

1,650,131

59,4742,912,273―

2,912,273

―

―

8,320

8,320

(8,320)―1,202,667

1,650,131

67,7942,920,593(8,320)2,912,273

302,937

362,744(117,278)

548,403(241,835)

306,567

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