Summary of Consolidated Financial Statements for the Second Quarter of FY2020 (IFRS)
May 12, 2020
Exchange: Tokyo Stock Exchange
Name of listed company:

GMO Payment Gateway, Inc.

Stock code:

3769

Representative:

Issei Ainoura

President & Chief Executive Officer

Contact:

URL: https://corp.gmo-pg.com/en/

Ryu Muramatsu

Director, Executive Vice President

Tel: +81-3-3464-0182

Scheduled submission date of quarterly
reportMay 13, 2019

Scheduled date of commencementfor dividend payment-

Supplemental materials prepared forfinancial results

Yes

Information meeting arranged related tofinancial resultsYes (for institutional investors and analysts)(Amounts rounded down to the nearest million yen)

1.

Consolidated Financial Statements for the Second Quarter, FY2020(From October 1, 2019 to March 31, 2020)(1) Consolidated Financial Statements (Cumulative)
OperatingprofitRevenue
Mil. Yen
Q2 FY2020
Q2 FY2019(Percentages represent year-on-year % change)% Mil. Yen

18,386 14.8
16,015 27.5

% Mil. Yen

4,704 10.5
4,258 30.2

Basic earnings per
share

Q2 FY2020
Q2 FY2019

Profit before
income taxes

Profit attributableTotal
to owners of comprehensive
parentincomeProfit% Mil. Yen

5,247 26.9
4,134 30.0%

Mil. Yen

3,455 35.6
2,549 31.0

3,408
2,578

% Mil. Yen
32.2
31.4

%

3,580 59.5
2,244 △1.0

Diluted earnings per
share

Yen

Yen

46.33
35.05

45.24
34.32

(2) Consolidated Financial Position
Total assets

Q2 FY2020
FY20192.

Total equity
Total equity attributable
attributable to owners to owners of parent toof parent
total assets

Total equity

Mil. Yen

Mil. Yen

Mil. Yen%

159,194
139,990

28,486
27,53927,42826,494

17.2
18.9

Dividends
Full-year dividend
End of Q1

FY2019FY2020
FY2020 (forecast)(Note 1)

3.

End of Q2

End of Q3

Year-end

Total

Yen

Yen

Yen

Yen

Yen

0.00
0.00

0.00
0.00

0.00

36.00

36.00

0.00

42.00

42.00

Revision to the most recently released dividend forecast:

No

Consolidated Financial Forecast for the Fiscal Year Ending September 2020
(From October 1, 2019 to September 30, 2020)(Full year % represents previous term comparison; Interim % represents year-on-year change)

Revenue
Mil. Yen
Full year

36,618Operating profit% Mil. Yen

14.0

Profit before
income taxes% Mil. Yen

10,376 25.0

(Note) Revision of the most recently released financial forecast:

No

―1―

Basic earnings
per share%

Mil. Yen%

Yen

6,216 23.0

6,110

16.0

83.06

% Mil. Yen

9,867 22.8

Profit attributable toowners of parent

ProfitNotices:(1) Changes of important subsidiaries during the period (change of specific subsidiaries that leads to a change in thescope of consolidation): No
Number of new subsidiaries: - (Name:);

Number of excluded subsidiaries: - (Name:)(2)

Changes in the accounting policy / changes in the accounting estimation[1] Changes in accounting policy required by IFRS.: Yes[2] Changes in accounting policy other than [1]: No[3] Changes in accounting estimations: No(3)

Number of shares issued (common stock)
Q2 FY2020: 74,301,000
FY 2019: 74,301,000[1] Number of shares issued at the end of the term(including treasury stock)
FY 2019: 739,281[2] Number of treasury shares at the end of the term Q2 FY2020: 714,781
Q2
FY2020:73,573,232
Q2 FY2019: 73,562,665[3] Average number of shares during the term
(Note 1) Number of treasury shares at the end of the term above include the shares attributed to the directors’
remuneration board incentive plan trust and J-ESOP (734,205 shares for FY2019; 709,705 shares for Q2
FY2020.)* These quarterly financial statements are not subject to the quarterly review procedures.
* Notes regarding the appropriate use of financial forecast and other important notes
1. The above forecasts are outlooks based on information currently available, and includes various uncertain factors.
Actual performance may differ substantially from the forecasts due to changes in business conditions and other factors.
For the assumption on which financial forecasts are based and matters to be considered in using financial forecasts,
please refer to “(3) Review of consolidated earnings forecasts and other forecasts” under “1. Qualitative Information on
Consolidated Financial Statements for the Quarter” on page 9 of the attachment.
2 Results Presentation for Investors and Analysts to be held on May 14, 2020. Supporting materials and a video of thepresentation will be made available on the company's website after the event.

―2―

○ Table of contents of attachment

1. Qualitative Information on Consolidated Financial Statements for the Quarter2(1) Consolidated operating result2(2) Status of consolidated financial position

8(3) Review of consolidated earnings forecasts and other forecasts

9

2. Condensed Consolidated Financial Statements and Major Notes

10(1) Condensed consolidated balance sheet

10(2) Condensed consolidated statement of income and comprehensive income

12(3) Condensed consolidated statement of changes in equity

14(4) Condensed consolidated statement of cash flows

15(5) Notes regarding the going concern assumptions

17(6) Notes regarding condensed consolidated financial statements

18② Cash and cash equivalents

18③ Operating and other receivables

18④ Deposits to subsidiaries and affiliates

18⑤ Material Subsequent Events

19

―3―

1. Qualitative Information on Consolidated Financial Statements for the Quarter(1) Consolidated operating results
Forward-looking statements in the document are based on the judgement of the Group at the end of the quarter underreview.
① Consolidated operating results
The Group announces its earnings results for the cumulative second quarter of the consolidated fiscal year
(October 1, 2019 to March 31, 2020) as follows.
(Unit: Thousand yen)
Cumulative Q2 of theprevious consolidated
fiscal year
(From October 1, 2018
to March 31, 2019)

Cumulative Q2 of thecurrent consolidated
fiscal year
(From October 1, 2019
to March 31, 2020)

Rate of change (%)

Revenue

16,015,927

18,386,666

14.8

Operating profit

4,258,091

4,704,341

10.5

Profit before income taxes

4,134,331

5,247,684

26.9

2,578,390

3,408,373

32.2

Profit attributable to ownersof parent

a. Revenue
The Group’s revenue reached to ¥18,386 mil., up by 14.8% YoY. The Payment Processing Business revenue
continued to grow thanks to the steady growth of E-Commerce (EC) market, coupled with the expansion of theGroup’s service coverage to non-EC operators. The Money Service Business (MSB) revenue grew fromfavorable trends in transactions of GMO Payment After Delivery, a type of deferred payment service. The
Payment Enhancement Business revenue grew thanks to the growth at Macro Kiosk, the Group’s consolidated
subsidiary that provides SMS-based authentication and notification service.
Note that, it has been resolved at the Board of Directors meeting held on April 30, 2020 to transfer all theshares of Macro Kiosk Berhad, a second-tier subsidiary held via a consolidated subsidiary, and has concluded
the transfer agreement on the same date. For details, please refer to ⑤ Material Subsequent Events of the (6)Notes regarding condensed consolidated financial statements, found under 2. Condensed Consolidated
Financial Statements and Major Notes.

―4―

Revenue breakdown by business model is as follows.
(Unit: Thousand Yen)

Business model

Cumulative Q2 of theprevious consolidated
fiscal year
(From October 1, 2018
to March 31, 2019)

Initial(Initial revenue)
Stock(Fixed revenue)
Fee(Transaction processing
revenue)
Spread(Merchant acquiring service
revenue)
Total

Cumulative Q2 of thecurrent consolidated
fiscal year
(From October 1, 2019
to March 31, 2020)

Rate of change(%)

713,426

1,394,682

95.5

2,411,444

2,777,546

15.2

6,044,719

6,666,058

10.3

6,846,335

7,548,379

10.3

16,015,927

18,386,666

14.8

b. Operating profit
Consolidated operating profit reached ¥4,704 mil., up by 10.5% YoY. Operating profit only grew by 10.5% YoY
despite the revenue growth of 14.8% YoY due to unfavorable comps against the previous second quarter which
benefited from a one-off decline in expenses from various corporate efforts to lower credit risks in the Money
Service Business segment, despite continued efforts to keep expense at low levels during the period underreview.
By segment, Payment Processing Business segment profit (operating profit) was ¥5,380 mil., up 13.9% YoY;
Money Service Business segment profit (operating profit) was ¥829 mil., a decline of 16.0% YoY; and, Payment
Enhancement Business recorded a segment profit (operating profit) was ¥54 mil. (previous second quarter wasa loss of ¥31 mil.). For details please refer to ② Results by segment of the (1) Consolidated operating results,
found under 1. Qualitative Information on Consolidated Financial Statements for the Quarter.
c. Profit before income taxes
Consolidated pre-tax profit reached ¥5,247 mil., up 26.9% YoY. The reason the pre-tax profit growth rate of
26.9% YoY was higher than the operating profit growth rate of 10.5% YoY, is due to gains on investment
partnerships of ¥223 mil. that increased the financial income to ¥244mil. (versus the previous second quarter
financial income of ¥25 mil.) and equity method investment gains of ¥421 mil. (versus the previous second
quarter equity method loss of ¥52 mil.).

―5―

② Results by segment
Performance by reportable segment is explained below.
(Unit: Thousand yen)Segment

Cumulative Q2 of theprevious consolidated
fiscal year
(From October 1, 2018
to March 31, 2019)

Cumulative Q2 of thecurrent consolidated
fiscal year
(From October 1, 2019
to March 31, 2020)

Rate of change(%)

Payment Processing Business
Revenue
Operating profit

9,272,379
4,724,611

10,858,319
5,380,311

17.1
13.9

Money Service Business
Revenue
Operating profit

3,833,603
987,978

4,364,228
829,669

13.8
△16.0

Payment Enhancement Business
Revenue
Operating profit

2,909,943△31,280

3,169,278
54,6198.9－

Adjustments
Revenue
Operating profit－△1,423,217△5,160△1,560,259

－
－

Total
Revenue
Operating profit

16,015,927
4,258,091

18,386,666
4,704,341

14.8
10.5

a. Payment Processing Business
The payment processing business mainly consists of payment processing for online billing, recurring billing,
and, offline market, as well as support services to financial institutions and financial service providers.
In the online billing and recurring billing domain, we focused our efforts to large merchants and non-EC
operators given the secular growth in EC market. The segment revenue growth was driven by the strongtransaction volume growth of 35.4% YoY from increased transaction related to daily goods and digital contents
impacted by COVID-19, rising penetration of cashless payments and, expanding EC market.
Transaction value, on the other hand, grew only by 21.5% YoY due to the impact from the spread of COVID-19
that significantly affected some merchants with high-value transactions such as travel and ticket sales.
In the offline market, strong sales trend of payment terminals continued thanks to the high demand for IC chipembedded credit card terminals on the back of amendments to the Installment Sales Act. In addition, orderwins progressed favorably in the Unattended Market such as automated payment machines and ticket
machines.
As a result, segment revenues reached ¥10,858 mil., up 17.1% YoY and segment profit (operating profit) was¥5,380 mil. up 13.9% YoY.
Note that segment revenues for Q2 standalone grew 21.2% YoY, much stronger than Q1standalone growth rate of 13.2% YoY.
b. Money Service Business
Money Service Business (MSB) consists of Early Payment Service that help merchants improve cash flow
according to the merchant’s cash cycle needs; Transaction Lending Service that loans growth capital tomerchants based on their payment and other related data; Remittance Service; and GMO Payment After
Delivery offered by consolidated subsidiary GMO Payment Service, Inc.
In the cumulative Q2 period under review, GMO Payment After Delivery grew steadily despite some merchantsthat were adversely affected by spread of COVID-19. In addition, services such as lending to overseas
operators and GMO B2B Early Payment and GMO AR Guarantee also grew. On the other hand, bothRemittance service and Early Payment service posted a YoY decline despite efforts to offset the negative
impact from a few merchants in the previous term.
The Electronic Invoice Early Payment service was launched on January 2020, which offers a one-click
payment of invoices to business users (i.e. sellers who issue invoices) on the B2B Platform Invoicing, a―6―

platform to digitalize invoices operated by Infomart Corporation.
As a result, segment revenue reached ¥4,364 mil., up 13.8% YoY and segment profit (operating profit) reached¥829 mil., a decline of 16.0% YoY due to the decline of few services and unfavorable comps against theprevious second quarter which benefited from a one-off decline in expenses resulting from corporate efforts tolower credit risks despite efforts to control expense levels even after this one-off reduction.

c. Payment Enhancement Business
Payment Enhancement Business comprises of mobile payment services and authentication and notification
services via SMS (the “the EMS business”), provided by our consolidated subsidiary Macro Kiosk Berhad, andthe online advertising service.
In the consolidated Q2 under review, Macro Kiosk Berhad’s revenue grew only 12.6% YoY, resulting in segment
revenue of ¥3,169 mil. (up 8.9% YoY) and segment profit (operating profit) of ¥54 mil. (compared to operation
loss of ¥31 mil. in the previous Q2.
Note that, it has been resolved at the Board of Directors meeting held on April 30, 2020 to transfer all theshares of Macro Kiosk Berhad, a second-tier subsidiary held via a consolidated subsidiary, and has concluded
the transfer agreement on the same date. For details, please refer to ⑤ Material Subsequent Events of the (6)Notes regarding condensed consolidated financial statements, found under 2. Condensed Consolidated
Financial Statements and Major Notes.
Please see below for the table of the major businesses and companies providing these businesses by segment.
Segment

Major service

Major companies of the services

Payment processing service
Payment
Processing
Business(Online billing and recurring billing)

GMO Epsilon, Inc. (consolidated subsidiary)

Payment processing service
GMO Financial Gate, Inc. (consolidated subsidiary)(Offline payment)
GMO Payment After Delivery
Money Service
Business

GMO Payment Gateway, Inc.

GMO Payment Service, Inc. (consolidated
subsidiary)
GMO Payment Gateway, Inc.

Remittance service

GMO Epsilon, Inc. (consolidated subsidiary)
GMO Payment Gateway, Inc.

Transaction lending

GMO Epsilon, Inc. (consolidated subsidiary)
GMO Payment Gateway, Inc.

Early Payment service
Payment

Mobile payment, authentication

Enhancement
Business

GMO Epsilon, Inc. (consolidated subsidiary)

Macro Kiosk Berhad (consolidated subsidiary)and notification―7―

(2) Status of consolidated financial position① Assets, liabilities and net assets
a. Assets
Total assets at the end of the consolidated second quarter under review increased by ¥19,203 mil. from the endof the previous fiscal year to reach ¥159,194 mil. This is mainly due to an increase in cash and cash
equivalents of ¥10,293 mil., an increase in advance payment of ¥1,033 mil., and an increase in accrued
revenues of ¥3,010 mil. and the increase of tangible fixed assets of ¥3,385 mil.
The Group has ¥1,800 mil. in deposits made to subsidiaries and affiliated companies included in the balance of
cash and cash equivalents at the end of the consolidated second quarter under review, as stated in ② Cashand cash equivalents of (6) Notes regarding condensed consolidated financial statements. Together with the¥5,000 mil. of deposits to subsidiaries and affiliated companies stated in the condensed consolidated balance
sheet, the total balance of the Group’s deposits to subsidiaries and affiliated companies stands at ¥6,800 mil.
These deposits comprise the available cash on hand that is managed by GMO Internet’s cash management
system (CMS) and available to the entire Group. As a result, this allows the GMO-PG Group to withdraw
necessary funds according to our business developments by registering a request taking into account thedesignated number of days prior to when cash is needed, without the need to wait until the CMS maturity date.
b. Liabilities
Balance of liabilities at the end of the consolidated second quarter under review stood at ¥130,707 mil., anincrease of ¥18,256 mil. from the end of the previous consolidated fiscal year, mainly due to an increase inaccrued expenses of ¥2,142 mil., deposits received of ¥13,101 mil. and the increase in other financial liabilitiesof ¥3,316 mil.
c. Equity
Equity balance at the end of the consolidated second quarter under review was ¥28,486 mil., an increase of¥947 mil. from the end of the previous consolidated fiscal year. This was mainly due to the increase in net profitof ¥3,455 mil. and other comprehensive profit of ¥125 mil., which was partially offset by the decline in retained
earnings of ¥2,648 mil. from dividend payouts.
② Status of consolidated cash flows
Cash and cash equivalents (“funds”) at the end of the consolidated second quarter under review increased by¥10,293 mil. versus the balance at the start of the term, to ¥62,306 mil. The state of cash flows over the
cumulative second quarter under review is discussed below.
a. Cash flow from operating activities
Net funds provided by operating activities over the consolidated second quarter under review amounted to¥16,379 mil., which compares to ¥3,839 mil. in the same period of the previous year. This resulted from cash
outflows of (i) increase in advances paid of ¥1,033 mil., (ii) increase in accrued revenues of ¥2,943 mil., (iii)
corporate and income tax payment of ¥1,793 mil. which partially offset the cash inflows of (i) profit before tax of¥5,247 mil., (ii) increase in accrued expenses of ¥2,175 mil., and (iii) increase in deposits received of ¥13,101
mil.
b. Cash flow from investing activities
Net funds used by investing activities over the consolidated second quarter under review totaled ¥1,831 mil.,which compares to ¥61,656 mil. in the same period of the previous year. This is due to cash outflow of ¥766 mil.
from acquisition of intangible assets and ¥909 mil. from purchase of investment securities.
c. Cash flow from financing activities
Net funds used by financing activities over the consolidated second quarter under review was a ¥4,246 mil.,which compares to ¥2,574 mil. in the same period of the previous year, due to net reduction of short-termborrowings of ¥1,000 mil. and dividend payout of ¥2,647 mil.

―8―

(3) Review of consolidated earnings forecasts and other forecasts
The Group’s core business is positioned within the EC market in Japan, and Japan’s B2C EC market formerchandizing continues to grow very rapidly, helped by favorable externalities such as increased penetration ofsmartphone and reforms in the logistic/distribution industry. At the same time, the scope of EC market itself is
expanding from the online migration of B2B and C2C transactions. We are committed to achieving over 25%
operating profit growth in the medium to long term by focusing on FinTech in the Money Service Business (MSB)
segment, on IoT in the offline market and on global expansion as well.
Note that, it has been resolved at the Board of Directors meeting held on April 30, 2020 to waive all claims and totransfer all the shares of Macro Kiosk Berhad held via a consolidated subsidiary, and has concluded the transfer
agreement on the same date. For details, please refer to ⑤ Material Subsequent Events of the (6) Notes regarding
condensed consolidated financial statements, found under 2. Condensed Consolidated Financial Statements andMajor Notes. As a result, revenues are forecast to fall short of the earnings guidance provided on November 12, 2019,
however, the earnings guidance does not include this impact as the amount of impact to consolidated financial
statements is undetermined at present.
Regarding the impact from the spread of COVID-19, business activities have been switched to remote work fromhome from January 27, 2020, and we have not experienced any noticeable decline in productivity or efficiency due tothis. Regarding the impact to our financial performance, the nature of online business makes it resilient althoughprivate consumption itself may stagnate. Along with the offline-to-online trend in the offline market, the overall impact
to GMO-PG group’s revenues is minimal at present.
Earnings guidance announced on November 12, 2019 for the Fiscal Year ending September 2020 is as follows.
(Unit: Yen Million)
Forecast for Fiscal Year ending
September 2020

Rate of change (%)

Revenues

36,61814.0

Operating Profit

10,37625.0

Profit Before Tax

9,867

22.8

Profit

6,216

23.0

Profit Attributable to Owners of Parent

6,110

16.0

―9―

2. Condensed Consolidated Financial Statements and Major Notes(1) Condensed consolidated balance sheet

Notes

End of previous consolidated
fiscal year
(September 30, 2019)(Unit: Thousand yen)
End of Q2 of current
consolidated fiscal year
(March 31, 2020)

AssetsCurrent assets
Cash and cash equivalents②

Operating and other receivables③

52,013,447

62,306,643

13,663,112

13,326,210

Advances paid

32,496,862

33,530,110

Accrued revenue

21,566,393

24,577,323

Inventories

207,280

216,803－5,000,000

Other financial assets

165,584

176,915

Other current assets

956,398

959,760

121,069,081

140,093,766

517,5093,903,471

4,359,129

4,682,854

3,001,692

3,751,694

5,000,000－

Other financial assets

4,803,089

5,595,751

Deferred Tax Assets

1,124,014

1,042,005

116,082

124,785

18,921,518

19,100,561

139,990,599

159,194,328

Deposits to subsidiaries and affiliates④

Total current assets
Non-current assets
Tangible assets
Goodwill and other intangible assets
Investments accounted for using equity
methodDeposits to subsidiaries and affiliates①④

Other non-current assets
Total non-current assets
Total assets―10―NotesEnd of previous consolidated
fiscal year
(September 30, 2019)(Unit: Thousand yen)
End of Q2 of current
consolidated fiscal year
(March 31, 2020)

Liabilities and Equity
Liabilities
Current liabilities
Operating and other payables

4,688,856

5,335,759

Accrued expenses

16,118,112

18,260,687

Deposits received

50,834,374

63,935,762

15,800,400

14,800,400

108,534

424,490

1,569,616

1,591,753

396,631528,946

Borrowings
Other financial liabilities①

Income taxes payable, etc.
Provisions
Other current liabilities

2,229,923

2,437,462

91,746,449

107,315,262

Corporate bonds

16,745,648

16,780,102

Borrowings

1,398,700

998,500

Total current liabilities
Non-current liabilities

Other financial liabilities①

223,363

3,223,468

Provision

35,848

129,677

Deferred tax liabilities

85,60473,253

Other non-current liabilities

2,215,686

2,187,712

Total non-current liabilities

20,704,851

23,392,714

112,451,301

130,707,976

Capital stock

4,712,900

4,712,900

Capital surplus

5,847,480

5,956,527

Total liabilities
EquityRetained earnings①

Treasury stock
Other items of equity
Total equity attributable to owners ofparentNon-controlling interests①

Total equity
Total liabilities and equity―11―

15,884,444

16,573,141△1,181,846△1,149,341

1,231,655

1,335,462

26,494,633

27,428,689

1,044,664

1,057,661

27,539,297

28,486,351

139,990,599

159,194,328

(2) Condensed consolidated statement of income and consolidated statement of comprehensive income
Condensed consolidated statement of income
Cumulative Q2 of previous
consolidated fiscal year
(From October 1, 2018
to March 31, 2019)
16,015,927(Unit: Thousand yen)
Cumulative Q2 of current
consolidated fiscal year
(From October 1, 2019
to March 31, 2020)
18,386,666

Cost of revenue△5,811,604△6,615,569

Gross profit

10,204,322

11,771,096

73,93995,002△5,890,733△7,012,262△129,436△149,495

4,258,091

4,704,341

Notes
Revenue

Other income
Selling, general and administrative
expenses
Other expense
Operating profit
Financial income

25,851

244,851

Financial expense△96,775△122,565

Equity method investment gains or loss

△52,835

421,058

Profit before income taxes

4,134,331

5,247,684△1,585,183△1,792,230

2,549,148

3,455,453

Owners of parent

2,578,390

3,408,373

Non-controlling interests△29,242

47,080

Profit2,549,148

3,455,453

Basic earnings per share (yen)

35.05

46.33

Diluted earnings per share (yen)

34.32

45.24

Income tax expenses
ProfitProfit attributable toEarnings per share―12―Condensed consolidated statement of comprehensive income
Cumulative Q2 of previous
consolidated fiscal year
(From October 1, 2018
to March 31, 2019)
2,549,148(Unit: Thousand yen)
Cumulative Q2 of current
consolidated fiscal year
(From October 1, 2019
to March 31, 2020)
3,455,453△287,897△160,035

Shares of other comprehensive incomeof equity method affiliates△42,986

238,696

Total of Items that will not bereclassified to profit or loss
Items that will be reclassified to profit orloss
Exchange differences on translation offoreign operations
Shares of other comprehensive incomeof equity method affiliates△330,883

78,661△11,396△57,720

37,894104,139

26,497

46,418△304,386

125,080

2,244,762

3,580,534

2,274,065

3,538,305

Notes
ProfitOther comprehensive income
Items that will not be reclassified to profit
or loss
Fair value of financial assets measured
through other comprehensive income

Total of items that will be reclassified to
profit or loss
Other comprehensive income after income
taxes
Comprehensive income

Comprehensive income attributable to
Owners of parent
Non-controlling interests△29,30342,228

Total

2,244,762

3,580,534―13―

(3) Condensed consolidated statement of changes in equity
Cumulative second quarter of the previous consolidated fiscal year (From October 1, 2018 to March 31, 2019)(Unit: Thousand yen)
Total equity
Other
NonCapital
Capital Retained Treasury
attributable
Total
Notes
items ofcontrollingstock
surplus earnings
stock
to owners
assetsequityinterestsof parent
Balance as of October 1,
4,712,900 5,758,448 12,875,446 △491,893 1,941,305 24,796,206 1,223,811 26,020,018
2018
Cumulative effects of－－ △195,085－－△195,085－ △195,085
accounting changes
4,712,900 5,758,448 12,680,361 △491,893 1,941,305 24,601,121 1,223,811 25,824,933
Restated Balance
ProfitOther comprehensive
incomeQuarterly comprehensive
incomePurchase of treasury
stock
Dividends
Share-based paymenttransaction
Total transactions withownersBalance as of March 31,
2019

－

－

2,578,390

－

－

－

－

－

2,578,390△29,2422,549,148－－ △304,324△304,324△61△304,386－

2,578,390－ △304,324

2,274,065△29,3032,244,762－－－△689,952△689,952－△689,952－－ △2,136,041－－ △2,136,041－－

34,818－－－34,818 △2,136,041△689,952

4,712,900

5,793,266 13,122,711 △1,181,846－

34,818－ △2,791,175
1,636,980

24,084,012－ △2,136,041
15,49150,31015,491 △2,775,683
1,209,999 25,294,011

Cumulative second quarter of the current consolidated fiscal year (From October 1, 2019 to March 31, 2020)(Unit: Thousand yen)
Total
Other
equityNonCapital
Capital Retained Treasury
Total
Notes
items of attributable controllingstock
surplus earnings
stock
assetsequityto owners interestsof parent
Balance as of October 1,
4,712,900 5,847,480 15,884,444 △1,181,846 1,231,655 26,494,633 1,044,664 27,539,297
2019
Cumulative effects of①－－△97,243－－△97,243△38,971 △136,214
accounting changes
4,712,900 5,847,480 15,787,200 △1,181,846 1,231,655 26,397,389 1,005,692 27,403,082
Restated Balance
ProfitOther comprehensive
incomeQuarterlycomprehensive
incomeDisposal of treasury
stock
Dividends
Transfer from othercomponents of equity toretained earnings
Changes in the interests
in controlled subsidiary
Share-based paymenttransaction
Other increase/decrease
Totaltransactions
withownersBalance as of March 31,
2020

－

－

3,408,373－－

3,408,373

47,0803,455,453

－

－

－

－

129,932

129,932△4,851125,080－－

3,408,373－

129,932

3,538,305

42,2283,580,534－

33,085－32,504－65,590－65,590－－ △2,648,221

－

－

－

25,788－△25,788

－

－

－

－

△9,528－－－△9,528－△9,528－85,490－－△22

85,4689,740

95,208

－

－

－

－

△313

△313

－

△313

109,047 △2,622,433

32,504－
4,712,900

5,956,527 16,573,141 △1,149,341―14―－ △2,648,221△26,125 △2,507,006
1,335,462

27,428,689－ △2,648,221

9,740 △2,497,265
1,057,661 28,486,351

(4) Condensed consolidated statement of cash flows
Cumulative Q2 of previous
consolidated fiscal year
(From October 1, 2018
to March 31, 2019)(Unit: Thousand yen)
Cumulative Q2 of current
consolidated fiscal year
(From October 1, 2019
to March 31, 2020)

4,134,331

5,247,684

525,842734,761－

89,272Financial income and expense

70,924△122,285

Equity method investment loss
Increase/decrease in inventories(△=increase)
Increase/decrease in operating andother receivables (△=increase)
In/Decrease in advances paid(△=increase)
Accrued revenues (△=increase)
In/Decrease in operating payables(△=decrease)
In/Decrease in accrued expenses(△=decrease)
In/Decrease in deposits received(△=decrease)
In/Decrease in provisions

52,835△421,058

9,711△9,523

1,447,643

305,239△4,143,402△1,033,247△2,856,782△2,943,858

112,446

682,440△1,085,264

2,175,539

6,969,499

13,101,268

356,219

132,314△207,871

292,335

5,386,134

18,230,884

25,851

20,990Interest paid

△22,441△78,697

Increase in Deposits△59,940－

Income taxes paid/refunded
Net cash provided by (used in)operating activities
Net cash provided by (used in) investing
activities
Payment from time deposits
Purchase of property, plants andequipment
Purchase of intangible assets△1,490,051△1,793,330

3,839,552

16,379,846

689,374－△72,668△349,008△568,789△766,698

Purchase of investment securities
Proceeds from sales and redemptionof investment partnerships
Acquisition of other financial assets
Proceeds from sales of other financial
assetsOthersNet cash provided by (used in)investing activities△101,562△909,028

110,805

297,233△89,401△101,937

7,262

49,387△36,677△50,986△61,656△1,831,038

Notes
Net cash provided by (used in) operating
activities
Profit before income taxes
Depreciation & Amortization
Impairment Loss

Other
SubtotalInterest and dividends received―15―

Cumulative Q2 of previous
consolidated fiscal year
(From October 1, 2018
to March 31, 2019)(Unit: Thousand yen)
Cumulative Q2 of current
consolidated fiscal year
(From October 1, 2019
to March 31, 2020)

Net cash provided by (used in) financing
activities
In/decrease in short-term borrowings

699,000△1,000,000

Repayment of long-term borrowings△400,200△400,200

Payment for stock buyback△689,952－△2,133,237△2,647,589△50,376△198,212△2,574,766△4,246,002△33,884△9,6091,169,245

10,293,195②

42,033,124

52,013,447②

43,202,369

62,306,643

Notes

Dividends paid
Other
Net cash provided by (used in)financing activities
Effect of exchange rate changes on cash
and cash equivalents
In/decrease
in
cash
and
cash
equivalents (△=decrease)
Balance of cash and cash equivalents atthe beginning of the period
Cash and cash equivalents at the end of
period―16―

(5) Notes regarding the going concern assumptions
None.

―17―

(6) Notes regarding condensed consolidated financial statements②

Cash and cash equivalents

Breakdown of cash and cash equivalents are as follows.
End of previous consolidated
fiscal year
(September 30, 2019)(Unit: Thousand yen)
End of Q2 of current
consolidated fiscal year
(March 31, 2020)

Cash and cash equivalents

49,213,447

60,506,643

Deposits to subsidiaries
and affiliates

2,800,000

1,800,000

52,013,447

62,306,643

Total③ Operating and other receivables
Breakdown of operating and other receivables are as follows.
End of previous consolidated
fiscal year
(September 30, 2019)(Unit: Thousand yen)
End of Q2 of current
consolidated fiscal year
(March 31, 2020)

Accounts receivable - trade

5,663,939

6,217,804

Operating loans

7,514,754

6,690,051

590,916

526,030△106,498△107,676

13,663,112

13,326,210

Other
Allowanceaccounts

fordoubtful

Total④

Deposits to subsidiaries and affiliates

Deposits to subsidiaries and affiliates are the deposits managed under the CMS (cash management system) of GMO
Internet Group.

―18―

⑤

Material Subsequent Events(Waiver of claims to subsidiary and transfer of subsidiary shares)
GMO Payment Gateway, Inc. (GMO-PG) has resolved at the Board of Directors meeting held on April 30, 2020 towaive claims (“the Waiver”) to Macro Kiosk Berhad (Macro Kiosk) and have also resolved to transfer all the shares
held through our subsidiary (“the Transfer”) and have concluded the transfer agreement on the same date. As aresult of the Transfer, Macro Kiosk will be deconsolidated from the consolidated financial statements.

a.

Reasons for the Transfer and Waiver

GMO-PG group acquired the shares and consolidated Macro Kiosk on August 2016 in order to expand ourcomprehensive payment services globally, and we have pursued business expansion mainly centered inSoutheast Asia.
Macro Kiosk steadily grew by expanding its competitive services offered in Malaysia to the neighboring emerging
markets. However, changes in the competitive landscape and market conditions have made it difficult to achieve
the medium-term plans formulated at the time of the acquisition. As a result, we recorded an impairment loss ofthe entire book value of goodwill, technical assets, software and customer-related assets in the Fiscal Years
ending September 2018 and 2019.
Despite reviewing the growth strategy of Macro Kiosk, we now foresee a prolonged time to generate synergy
benefits making it and it is difficult to formulate a medium term plan that could achieve management’s KPI targetof 25% operating profit growth, foresee a cashflow improvement and a resolution to the negative capital situation,
due the earnings deterioration and changes in market conditions that were unforeseeable at the time ofacquisition in August 2016. Thus, we could not negate the possibility of further cash injections. In addition, thespread of COVID-19 in Malaysia and throughout Asia from January 2020 and the resulting widespread recession
have materially increased uncertainty and risks that are difficult to control. Following a broad assessment of thesefactors, the decision was made to transfer all the shares of Macro Kiosk to the three founding members andcurrent management of Mr. Goh Chee Ken, Mr. Goh Chee Heng and Mr. Goh Chee Seng.
Pursuant to the Transfer, all claims to Macro Kiosk from GMO-PG are to be waived.

b.

Outline of the recipient of the Transfer(i) Goh Chee Ken(ii)① NameGoh Chee Ken② Address

State of Selangor, Malaysia③ Relationship with the listed company

Director of Macro Kiosk

Goh Chee Heng
① NameGoh Chee Heng

② Address

State of Selangor, Malaysia③ Relationship with the listed company

Director of Macro Kiosk(iii) Goh Chee Seng
① NameGoh Chee Seng

② Address

State of Selangor, Malaysia③ Relationship with the listed company

Director of Macro Kiosk

―19―

c.

Schedule(i) Date of Resolution andConclusion of Agreement of Transfer of Shares

April 30, 2020(ii) Transfer of Shares and Waiver of Claimsd.

After May 2020 (Planned)

Outline of consolidated subsidiary to be transferred: Macro Kiosk
Company Name

Macro Kiosk BerhadBusiness Description

SMS mobile solution business, Carrier billing businessBusiness Relationship Between GMO-

GMO-PG provides loans to Macro Kiosk

PG and Macro Kioske.

Number of shares to be transferred, transfer price and share ownership before and after the Transfer
Number of shares held before
the Transfer
Number of shares to betransferred
Number of shares held after theTransfer

3,500,000shares (Voting rights: 3,500,000 units;ownership ratio 70%）
3,500,000 shares

0 shares(Voting rights: 0 units, ownership ratio: 0%)(Note) The transfer price is undisclosed due to confidentiality agreements with the recipient. The transfer
price was determined through discussions with the recipient, following thorough assessment of thevalidity of the transfer price that took into consideration the current negative capital situation andestimated decline in future profitability of Macro Kiosk.

f.

g.

Contents of the WaiverType of claim

Loans and Accrued Interest

Value of claims to be waived

Approximately ¥1.0 billion

Reported segment which includes Macro Kiosk
Payment Enhancement Business segment.

h.

Future Outlook
The estimated impact to consolidated profit and loss statement for Fiscal Year ending September 2020 is
as follows: a ¥300 mil. reduction to Operating Profit from recording a loss on sale of subsidiary shares and,a ¥600 mil. reduction to Profit Attributable to Owners of the Parent due to waiver of claims of approximately¥1.0 bn which caused some of Macro Kiosk’s profit to be reclassified as their minority interest.
Note that due to COVID-19, the exact date of the Transfer cannot be determined and there is a likelihood―20―

that transfer proceedings could take more time than usual. The amounts related to the Transfer and theWaiver have been assumed to occur by the end of March 2020.
In addition, Macro Kiosk will be excluded from the scope of consolidation due to the Transfer, however
given the undetermined date of the Transfer, the amount from this impact has not been confirmed.

―21―