Consolidated Financial Results
for the Fiscal Year Ended September 30, 2017(FY9/17)[Japanese GAAP]
November 14, 2017

Company name:

Evolable Asia Corp.
Stock Exchange Listing: TSE
Stock Code:6191 (URL: http://www.evolableasia.com)
Representative:
Hideaki Yoshimura, CEOContact:
Yusuke Shibata, Director and CFO
TEL: +81-(0)3-3431-6191
Scheduled date of holding of ordinary shareholders’ meeting:
December 22, 2017
Scheduled date of payment of dividend:
December 25, 2017
Scheduled date of submission of financial reports:
December 25, 2017
Preparation of supplementary documents for financial results: Yes
Holding of financial results briefing
Yes (for institutional investors and securities analysts)(All amounts are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Fiscal Year Ended September 30, 2017 (October 1, 2016 to September 30, 2017)(Percentages represent year-on-year changes.)(1) Consolidated results of operations
Net sales

Operating income

Millions of yen%

Year ended September 2017
5,534
Year ended September 2016
4,000
Note: Comprehensive income (millions of yen)

Reference:

Millions of yen%

Millions of yen

%

730
18.1
695
618
97.7
571
Year ended September 2017 :596 (63.7%)
Year ended September 2016 :364 (66.4%)

21.7
87.0

420
340

23.5
97.3

Fully diluted profit
per share

Profit per share
Year ended September 2017
Year ended September 2016

Millions of yen

38.3
45.5

Profit attributable toowners of parent

Ordinary income%

Return on equity

Operating income
marginReturn on assete

Yen

Yen

%

%

%

25.06
22.17

23.77
21.12

16.6
26.0

11.3
16.5

13.2
15.5

Equity in earnings of affiliates (millions of yen)

Year ended September 2017:–

Year ended September 2016: –(2) Consolidated financial position
Total assets

Net assets

Net assets per share

Millions of yen

%

Yen

7,478
4,841

3,226
2,371

37.2
47.0

163.91
136.44As of September 2017
As of September 2016
Reference:

Equity ratio

Millions of yen

Shareholders’ equity (millions of yen)

As of Sept 2017:

2,773

As of Sept 2016:

2,276(3) Consolidated cash flow position
Cash flows fromoperating activities
Year ended September 2017
Year ended September 2016
2. Dividends

Cash flows frominvesting activities

Cash flows fromfinancing activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

216
604

(1,312)
(456)

942
1,476

2,078
2,225

Dividend per share
1Q-endYen

Cash and cash equivalents
at end of period

2Q-endYen

3Q-endYen

Year-end
Yen

Total
Yen

Total
Dividends(Annual)Millions of yen

Dividend
payout ratio

Dividends/
Net assets(Consolidated)(Consolidated)%%

Fiscal year ended Sep. 30,
–
0.00
–
0.00
0.00
–
–
–
2016
Fiscal year ended Sep. 30,
–
0.00
–
7.00
7.00
118
27.9
4.7
2017
Fiscal year ending Sep. 30,
–
0.00
–
10.00
10.00
19.4
2018(Estimated)
3. Forecasts for consolidated financial results for the fiscal year ending September 2018(October 1, 2017– September 30, 2018
(Percentages represent year-on-year changes.)
Net sales
Millions of yen

Profit attributable toowners of parent

Operating income% Millions of yen% Millions of yen

Profit per share%

Yen

Full year
7,050
–
1,500
–
881
–
52.09
Note: The Company has decided to voluntarily apply the International Financial Reporting Standards (IFRS) to the accounting ofresults from the announcement of full-year results for the fiscal year ending September 30, 2018. The consolidated results
forecasts for the fiscal year ending September 30, 2018 are thus prepared based on the IFRS, and no year-on-year percentagechanges are stated.

―1―

* Notes(1)Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of
consolidation)
Newly included:― companies
Excluded:― companies(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revision in accounting standards, others: None
2) Changes in accounting policies other than (i) above: None
3) Changes in accounting-based estimates: None
4) Restatement: None
(3) Numbers of outstanding shares (common stock)1) Number of shares outstanding as of the end of the period (including treasury shares)
As of September 2017: 16,919,100 shares
As of September 2016: 16,682,400 shares
2) Number of treasury shares as of the end of the period
As of September 2017: – shares
As of September 2016: – shares
3) Average number of shares issued during the period
Year ended September 2017: 16,763,493 sharesYear ended September 2016: 15,349,286 shares
Reference: Summary of non-consolidated business results
1. Non-consolidated financial results for the fiscal year ended September 30, 2017 (October 1, 2016 - September 30, 2017)(1) Non-consolidated results of operations(Figures in percentages denote the year-on-year change.)
Net salesYear ended September 2017
Year ended September 2016

Operating income%

Millions of yen%

Millions of yen

3,976
3,002

32.4
52.7

561
507

10.8
89.0

518
453

Year ended September 2017
Year ended September 2016

Profit% Millions of yen

14.3
71.6

%

373
281

32.7
84.2

Fully diluted profit per
share

Profit per share
Yen

Yen

22.28
18.36

21.13
17.49

(2) Non-consolidated financial position
Total assets
As of September 2017
As of September 2016

Ordinary income

Millions of yen

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen

%

Yen

6,313
4,522

2,674
2,187

41.8
48.4

155.21131.10

Reference: Shareholders’ equity: (millions of yen)

As of September 2017

2,626

As of September 2016

2,187

* The financial results are not subject to auditing.
* Explanation of appropriate use of earnings forecasts, and other special items
The forward-looking statements discussed in this material, including financial forecasts, are based on information available to theCompany at the time of the announcement of this material. Please note that the actual results may differ depending on future
uncertain factors.

―2―

Contents of Attachments
1. Overview of Results of Operations Etc. ……………………………………………………………………………………4(1) Overview of Results of Operations ……

……………………………………………………………………………4(2) Overview of Financial Position …………………………………………………………………………………………5(3) Overview of Cash Flows ………………… ………………………………………………………… …………………6(4) Outlook …………………………………………………………………………………………………………………7(5) Important Events Concerning the Assumption of Going Concern……………………………………………………7

2. Basic Policy for the Selection of Accounting Standards ……………………………………………………………………8
3. Consolidated Financial Statements and Key Notes ……………………

…………………………………………………8…………………………………………

(1) Consolidated Balance Sheet(2) Consolidated Statements of Income and Comprehensive Income………………………………………………11……… ……………………………………………13(3) Consolidated Statements of Changes in Equity ………………………… ……………………………………………10(4) Consolidated Statement of Cash Flows………………………………… ……………………………………………14(5) Explanatory Notes to Consolidated Financial Statements(Notes on going concern assumptions)…………………… ………………………………………16……………………………………

…………………………………………16(Changes in accounting policies)…………………………………………… …………………………………………16(Changes in accounting estimates)…………………………………………… ………………………………………16……………………………………………………………………………………………16(Segment information, etc.)(Per share information)………………………………………………………………………………………………18(Important subsequent events)…………………………………………………………………………………………19―3―

1. Overview of Results of Operations Etc.
(1) Overview of Results of Operations
During the fiscal year under review, the global economy posted only moderate growth, reflecting a slowdown in the Chinese economy
and the United Kingdom’s Brexit decision. Nonetheless, led by advanced economies, the world economy did continue its recovery.
The Japanese economy continued to expand at a steady pace, supported by increased domestic demand and inbound tourist demandagainst the background of the upcoming Tokyo Olympics in 2020, in addition to improvements in employment and corporate profits.
In the travel industry, the number of Japanese citizens who left Japan in the period from January 2017 to September 2017 totaled
13,410,000, increasing 0.7 million from the same period of the previous fiscal year according to statistics released by the Japan
National Tourism Organization (JNTO). In addition, the number of foreigners who visited Japan from January 2017 to September 2017
surpassed 21 million. Their number rose steadily toward 40 million, the target for 2020 set in the Tourism Vision to Support the Futureof Japan, which the Japanese government adopted in March this year.
Under these conditions, Evolable Asia Corp. (hereinafter the “Company”) continued expanding its operations, diversifying its service
lines, with a focus on sales of domestic airline tickets as an online travel agency. The Company also continued to enhance its services
for foreign visitors, making the most of its online travel business expertise.
In the IT Offshore Development Business, which was launched in 2012, the Company steadily won customers in numerous businesscategories and increased the number of engineers employed, focusing on the development of lab-type facilities in Vietnam. The
number of hired engineers grew to about 750 as of September 2017.
In the Investment Business, which has been developing in earnest since the stock was listed, the Company has been investing in
growing companies. As of September 2017, the Company has invested in 22 companies.
As a result, the Group achieved consolidated net sales of 5,534,194 thousand yen, consolidated operating income of 730,853 thousand
yen, consolidated ordinary income of 695,876 thousand yen, consolidated profit before income taxes of 695,876 thousand yen, andconsolidated profit attributable to owners of parent of 420,193 thousand yen.
The Company plans to adopt the IFRS in the fiscal year ending September 30, 2018. Under the IFRS, in the fiscal year under review,
the Group recorded consolidated net sales of 5,633,154 thousand yen, consolidated operating income of 1,008,390 thousand yen, andconsolidated profit attributable to owners of parent of 765,350 thousand yen (unaudited reference values).
Operating results by segment are as follows.
(1) Online Travel Agency Business
The Group offers the following four services in the Online Travel Agency Business segment.
・BtoC services (operation of PC and smartphone websites for selling travel commodities directly to general consumers)
The Company improved mass marketing and search engine marketing and renewed mission-critical systems significantly to acquire
new customers. The Company also improved user interfaces to increase the number of repeat customers. These contributed to a steadyincrease in the number of service users.
・BtoBtoC services (travel content provision under brands owned by business partners)
The enhanced development of alliances with major partners, the provision of services to match the needs of major partners, andenhanced communication with partners contributed to an increase in service use.
・BtoB services (wholesale to other travel agencies)
Trends in the airline industry and policies enforced by business partners affect these services to a certain extent. The online travel
agency business for operators handling domestic airline tickets grew dynamically as a whole, with an increase in the number ofdomestic air routes in service. As a result, net sales for these services increased strongly.
・BTM services (centralized management of internal approval procedures and arrangements associated with corporate businesstrips)
These services basically adopt a business model under which net sales expand in a manner that is linked with an increase in thenumber of corporate customers and a rise in their usage rate. The services achieved growth attributable to initiatives taken by theGroup, including the addition of salespeople and the identification of existing customers who used the services at a relatively low rate.
As a result of the factors stated above, net sales for the Online Travel Agency Business segment amounted to 3,894,626 thousand
yen and segment income came to 968,012 thousand yen in the fiscal year under review.

―4―(2) IT Offshore Development BusinessIn the IT Offshore Development Business segment, the Group offers lab-type facility development services to customers consisting
mainly of e-commerce operators, web solution providers, and game and system developers in Ho Chi Minh, Hanoi and Da Nang in
Vietnam.
The Company’s lab-type facility development model is distinctive in that a team is formed with new dedicated staff members hired
for each customer. The model also enables customers to confirm the state of lab-type facility development on demand. The Company
assumes the assignment of dedicated staff members to each team on a medium- to long-term basis. For that reason, the success or
failure of development depends on employing workers suited to customer demands and motivating the respective engineers more.
In addition, these services basically adopt a business model under which customers are billed on the basis of man-months and thenumber of workers. The number of engineers supplied to clients and the man-months affect net sales for them significantly. An
increase in the number of engineers and a rise in the unit cost due to development streamlining contributed to sales growth in the fiscal
year under review.
As a result of the factors stated above, net sales for the IT Offshore Development Business segment reached 1,661,001 thousand yen,and segment income totaled 163,472 thousand yen.
(3) Investment BusinessIn the Investment Business segment, the Group emphasizes synergies with the existing businesses and expands service lines throughaggressive M&A and capital alliances. The Group is pursuing investment in growing companies to improve profitability. In the fiscal
year under review, the Group expanded the number of companies that it invests in to 22 and sold part of the shares it held in Kanxashi
Corporation, the Group’s first exit.
As a result, net sales for the Investment Business segment stood at 103,372 thousand yen, and segment income was 68,351 thousand
yen.
Looking at the operating conditions for the Group, for the Online Travel Agency Business, the frequency of Internet use by travelers
increased against the background of developments such as the spread of smartphones and tablet terminals. The markets for the Groupalso expanded in size in step with the frequency increase.
Internet sales accounted for only 0.64% of total transactions in the travel industry in 2000. Their ratio reached 9.46% in 2013,
according to the Survey of Travel Market Trends 2015 published by the Japan Association of Travel Agents. The ratio is increasing
exponentially.
The offshore IT development market in Vietnam is continuing to grow in size against the background of a plan to increase thenumber of IT engineers and the policy of strengthening the software industry adopted by the Vietnamese government. At present,
offshore development by Japanese companies amounts to only about 100 billion yen, according to Trends in Software Industry andOffshore Development in Japan released by the Center of the International Cooperation for Computerization. Significant room formarket expansion appears to remain in Vietnam, considering that the Japanese market for developing outsourced software is estimatedat about 10 trillion yen, according to the Present State of Information Service Industry, a survey conducted by the Ministry of Economy,
Trade and Industry.
Under these conditions, the Group will continue improving the usability of its direct sales websites and optimizing SEM in the key
online travel agency business. At the same time, the Group aims to firmly establish “AirTrip” that has been launched as a new brand.
In the IT Offshore Development Business, the Group will seek to improve its profitability as a stock business in a sustained manner,continuing to develop clients and promote efforts to secure system engineers.
In the Investment Business, the Group will continue to promote investment in growing companies and work to develop companies
that it invests in to expand operations.

(2) Overview of Financial Position(1) State of assets, liabilities and net assets―5―Assets
Total assets increased 2,636,996 thousand yen from the end of the previous fiscal year, to 7,478,640 thousand yen at the end of the
fiscal year under review. This result was mainly due to an increase of 281,545 thousand yen in accounts receivable – trade, a rise of
1,100,489 thousand yen in operational investment securities, a climb of 621,844 thousand yen in goodwill, and an increase of 407,020
thousand yen in software.
Liabilities
Liabilities increased 1,751,383 thousand yen from the end of the previous fiscal year, to 4,221,666 thousand yen at the end of the fiscal
year under review. This result primarily reflected an increase of 430,020 thousand yen in short-term loans payable and a rise of535,492 thousand yen in long-term loans payable.
Net Assets
Net assets rose 855,062 thousand yen from the end of the previous fiscal year, to 3,226,422 thousand yen at the end of the fiscal year
under review. This result was mainly attributable to increases of 420,194 thousand yen in retained earnings, 48,522 thousand yen in
subscription rights to shares, and 309,549 thousand yen in non-controlling interests.

(3) Overview of Cash Flows
Cash and cash equivalents (hereinafter “cash”) decreased 146,601 thousand yen from the end of the previous fiscal year, to 2,078,651
thousand yen at the end of fiscal year under review. The status of the respective cash flows and the major factors are as follows.
Cash Flows from Operating Activities
Net cash provided by operating activities declined 387,959 thousand yen from the end of the previous fiscal year, to 216,877 thousand
yen at the end of the fiscal year under review. Major factors in this result were posted profit before income taxes of 695,876 thousand
yen, a decrease of 230,089 thousand yen in inventories, an increase of 208,206 thousand yen in notes and accounts payable – trade andan increase of 1,003,053 thousand yen in operational investment securities.
Cash Flows from Investing Activities
Net cash used in investing activities grew 856,186 thousand yen from the end of the previous fiscal year, to 1,312,298 thousand yen at
the end of the fiscal year under review. Major factors in this result were purchases of property, plant and equipment of 294,567
thousand yen, purchases of intangible assets of 467,803 thousand yen, purchases of shares of subsidiaries resulting in a change inscope of consolidation of 567,753 thousand yen.
Cash Flows from Financing Activities
Net cash provided by financing activities decreased 533,928 thousand yen from the end of the previous fiscal year, to 942,928
thousand yen at the end of the fiscal year under review. Major factors in this result were proceeds from short-term loans payable of416,900 thousand yen, proceeds from long-term loans payable of 514,500 thousand yen, and repayments of long-term loans payable of
26,322 thousand yen.
Reference: Changes in Indexes Related to Cash Flows
Fiscal year ended September 30, 2016

Fiscal year ended September 30, 2017

Equity ratio (%)

47.0

37.2

Equity ratio on a market value basis (%)

534.1

535.6

Ratio of interest-bearing liabilities tocash flows (annual ratio)

0.55

1.53

Interest coverage ratio (times)

58.2

21.9

(Note) 1. The respective indexes are calculated as follows.
Equity ratio = shareholders’ equity / total assets
Equity ratio on a market value basis = total market capitalization / total assets* Total market capitalization = closing share price at the end of the period x number of outstanding shares at the end of
the period (excluding treasury stock)
Ratio of interest-bearing liabilities to cash flows = interest-bearing liabilities / operating cash flows―6―

Interest coverage ratio = operating cash flows / interest payments
2. The equity ratio on a market value basis for the fiscal year ended September 30, 2015 is not stated because the Company’s
shares are not listed.
3. Interest-bearing liabilities include all liabilities stated in the consolidated balance sheet for which interest has been paid.
Cash flows from operating activities and the amount of interest paid in the consolidated statement of cash flows are used as
operating cash flows and interest payments, respectively.

(4) Outlook
In the Online Travel Business, the Company currently engages in online sales mainly based on direct sales (BtoC) throughcomparison websites of travel-related products and services, centered on domestic air tickets, using smartphones and PCs. It
assumes that there is no established brand recognized by consumers in the domestic air ticket market. Against this background, theCompany launched “AirTrip,” a new brand, in the fiscal year ended September 2017 under the concept of the most cost-effective
and convenient service. Consequently, in addition to an increase in the number of repeat customers, the Company aims to achieve
more frequent organic inflows of traffic on the back of stronger brand awareness. Going forward, it will work to expand operations
by promoting sales of new travel-related products and services, as well as domestic air tickets.
In the area of inbound travel, the Company is working to establish platforms for vacation rentals in light of the introduction of newlaws, the Camping Car Rental Business for foreign tourists visiting Japan and the Money Exchange Business, in addition to its
current initiatives, namely the OEM-based provisioning of the cross search and booking/sales systems for Japanese domestic air
tickets to overseas travel agencies and online media in multiple languages. Through these efforts, the Company aims to further
expand its operations.
In the IT Offshore Development Business, the Company will take further measures to optimize the roles of its three operation
bases in Ho Chi Minh City, Hanoi and Da Nang so that they are in more line with projects, while at the same time seeking toincrease the number of operation bases and expand operations to other countries. It also aims to expand the scope of projects forwhich it expects to receive orders by facilitating offshore system development of the upstream process (requirement definition,etc.), something that conventionally has often been done in Japan.
In the Investment Business, the Company will promote strategic M&A and capital alliances, emphasizing synergies with theexisting businesses, and investment in growing companies to develop them. In this way, the Company will expand investment andenhance the value of companies in which the Company invests.
The Company forecasts that in the fiscal year ending September 30, 2018, it will post consolidated net sales of 7,050 million yen,consolidated operating income of 1,500 million yen, and consolidated profit attributable to owners of parent of 881 million yen.
The Company will voluntarily apply the International Financial Reporting Standards (IFRS) and will disclose results under the
IFRS from the announcement of full-year results for the fiscal year ending September 30, 2018. The results forecasts for the fiscal
year ending September 30, 2018 are based on the IFRS, and no year-on-year percentage changes are stated.

(5) Important Events Concerning the Assumption of Going Concern
Not applicable.

2. Basic Policy for the Selection of Accounting Standards
As disclosed on November 14, 2017, at a meeting of the Board of Directors held on the same day, the Company resolved to apply theInternational Financial Reporting Standards (IFRS) voluntarily and disclose results under the IFRS from the announcement of full-year
results for the fiscal year ending September 30, 2018.
This report on consolidated financial results is prepared under the Japanese GAAP. The effect of the application of the IFRS on the
results in the fiscal year ended September 30, 2017 is described in the presentation material that is disclosed on the same date as thedate of disclosure of the consolidated financial results.

―7―

3. Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheet(Thousands of yen)
FY9/16(as of Sep. 30, 2016)

FY9/17(as of Sep. 30, 2017)

AssetsCurrent assets
Cash and deposits

2,356,432

2,139,151

1,104,591–

1,386,136
1,100,489

Merchandise and finished goods
Deferred tax assets

274,325
19,04645,032
78,166

Accounts receivable - other
Others129,823
140,830

181,394
227,716

(450)

(16)

4,024,599

5,158,070

18,662

153,550

Vehicles, net
Tools, furniture and fixtures, net

223
19,115

105,372
100,864

Construction in progress

2,500

7,123

Total property, plant and equipment

40,501

366,910Goodwill
Software102,976
202,742724,820
609,762

Total intangible assets

305,719

1,334,582

Investment securities
Deferred tax assets

43,0006,273

31,801
12,597

Guarantee deposits
Claims provable in bankruptcy, claims
provable in rehabilitation and other
OthersAllowance for doubtful accounts

409,193548,92137,31325,43012,358(37,313)25,756(25,430)

Notes and accounts receivable - trade
Operational investment securities

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net

Intangible assets

Investments and other assets

Total investments and other assets
Total non-current assets
Total assets―8―

470,824

619,075

817,044

2,320,569

4,841,644

7,478,640

(Thousands of yen)
FY9/16(as of Sep. 30, 2016)

FY9/17(as of Sep. 30, 2017)

Liabilities
Current liabilities
Notes and accounts payable - trade

1,293,317

1,558,350

Short-term loans payable
Accounts payable - other

225,139
311,670

655,159
487,496

Accrued expenses
Income taxes payable

87,287
134,102

155,181
188,727

Provision for bonuses
Provision for point card certificates

46,447
3,868

46,852
4,367

Provision for shareholder benefit program
Current portion of long-term loans payable

15,00019,572

26,394
122,258

Lease obligations
Forward exchange contracts

－
4,123

5,574

Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Long-term guarantee deposited
Net defined benefit liability

140,089－
268,647

2,280,618

3,519,009

87,288622,780

102,376

81,528
5,094－－

Deferred tax liabilities
Lease obligations－

Total non-current liabilities
Total liabilities

―9―

9,534
14,270189,664

733,2082,470,283

4,252,217

(Thousands of yen)
FY9/16(as of Sep. 30, 2016)

FY9/17(as of Sep. 30, 2017)

Net assets
Shareholders’ equity
Capital stock

1,019,927

1,031,127

Capital surplus
Retained earnings

824,927444,870

837,092
865,064

2,289,724

2,733,284(2,850)446

Total shareholders' equity
Accumulated other comprehensive income
Deferred gains or losses on hedges
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeSubscription rights to shares－

39,718(10,629)(216)(13,480)

39,948206

48,729Non-controlling interests

94,910404,459

2,371,360

3,226,422

4,841,644

7,478,640

Total net assets
Total liabilities and net assets―10―(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income

Net sales

FY9/16(from Oct. 1, 2015
to Sep. 30, 2016)
4,000,643(Thousands of yen)
FY9/17(from Oct. 1, 2016
to Sep. 30, 2017)
5,534,194

Cost of sales

679,014936,946

Gross profit

3,321,628

4,597,247

Selling, general and administrative expenses

2,703,226

3,866,393

618,402730,853

Interest income
Dividend income

2,082
40

4,372
40

Foreign exchange gains
Reversal of allowance for doubtful accounts

－
3,369

11,167

Other

1,612

－
2,362

Total non-operating income

7,104

17,942

Provision of allowance for doubtful accounts
Interest expenses

－
9,875

2,081
10,265

Foreign exchange losses
Listing expenses

15,00018,965－
21,900

Subscription rights to shares issuance cost
Other－
10,268

8,012
10,661

Operating income
Non-operating income

Non-operating expenses

Total non-operating expenses

54,11052,919571,396695,876

Gain on sales of non-current assets

1,403

－

Total extraordinary income

1,403

－

763

Ordinary income
Extraordinary income

Extraordinary losses
Loss on sales of non-current assets

763

－
－

Profit before income taxes

572,036

695,876

Income taxes - current

182,277

200,739

Income taxes - deferred(2,989)(38,339)

Total income taxes

179,287

162,399

Profit392,748

533,476

Profit attributable to non-controlling interests

52,426(113,282)

Profit attributable to owners of parent

340,321420,193

Total extraordinary losses―11―Consolidated Statement of Comprehensive Income

ProfitFY9/16(from Oct. 1, 2015
to Sep. 30, 2016)
392,748(Thousands of yen)
FY9/17(from Oct. 1, 2016
to Sep. 30, 2017)
533,476

Other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment－

39,718(1,775)(26,907)

3,297
20,417

Total other comprehensive income(28,682)

63,433Comprehensive income

364,065596,909

Comprehensive income attributable toComprehensive income attributable to ownersof parent
Comprehensive income attributable to noncontrolling interests

324,823473,622

39,241

123,287―12―

(3) Consolidated Statements of Changes in Equity
FY9/16 (from Oct. 1, 2015 to Sep. 30, 2016)(Thousands of yen)
Shareholders' equity

Capitalstock

Balance at
215,000
beginning of period
Changes of items
during period
Issuance of new
804,927
sharesProfit attributableto owners ofparentChange inownership
interest of parent
due totransactions with
non-controllinginterests
Net changes of
items other thanshareholders’equityTotal changes of
804,927
items during period
Balance at end of
1,019,927
periodAccumulated other comprehensive income

CapitalsurplusDeferredTotal
gains orRetainedshareholders’earnings
losses onequityhedges

20,000104,548804,927
340,321339,548(1,075)

Foreigncurrencytranslation
adjustment
3,093

Valuation AccumuNondifference
lated Subscription
rights to controllingon
othersharesinterests
available- comprefor-salehensivesecurities income
–

2,018

–

55,668

Total net
assets397,234

1,609,854

1,609,854

340,321340,321(1,775)(13,722)– (15,498)

206

39,241

23,950804,927

340,3211,950,175(1,775)(13,722)– (15,498)

206

39,241

1,974,126

824,927444,8702,289,724(2,850)(10,629)– (13,480)

206

94,9102,371,360

FY9/17 (from Oct. 1, 2016 to Sep. 30, 2017)(Thousands of yen)
Shareholders' equity

Capitalstock

Balance at
1,019,927
beginning of period
Changes of items
during period
Issuance of new
11,200sharesProfit attributableto owners ofparentChange inownership
interest of parent
due totransactions with
non-controllinginterests
Net changes of
items other thanshareholders’equityTotal changes of
11,200items during period
Balance at end of
1,031,127
periodAccumulated other comprehensive income

CapitalsurplusDeferredTotal
gains orRetainedshareholders’earnings
lossesonequityhedges824,927444,870

11,200420,193964

2,289,724(2,850)Foreigncurrencytranslation
adjustment(10,629)

Valuation AccumuNondifference
lated Subscription
rights to controllingon
othersharesinterests
available- comprefor-salehensivesecurities income– (13,480)

206

94,910Total net
assets2,371,360

22,401

22,401

420,193

420,193

964

964

3,297

10,412

39,71853,42848,522309,549

411,500

12,164420,193443,561

3,297

10,412

39,71853,42848,522309,549

855,061

837,092

865,064

2,733,284

446

(216)

39,71839,94948,729404,459

3,226,422―13―

(4) Consolidated Statement of Cash Flows(Thousands of yen)
FY9/17(from Oct. 1, 2016
to Sep. 30, 2017)

FY9/16(from Oct. 1, 2015
to Sep. 30, 2016)
Cash flows from operating activities
Profit before income taxes
Depreciation

572,036
89,061

695,876
149,110

Increase (decrease) in provisionInterest and dividend income

21,736(2,122)(4,091)(4,372)

Interest expenses
Listing-related expenses

9,875
18,965

10,265
21,900

－
(639)

8,012

(488,726)

25,556(198,865)

230,089

621,190

208,206(9,437)(37,484)

21,989(29,109)－(91,135)
176,886(1,003,053)

Decrease (increase) in other assets
Increase (decrease) in other liabilities
Subtotal

740,814

383,417

Subscription rights to shares issuance cost
Loss (gain) on sales of property, plant and equipment
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable trade
Decrease (increase) in guarantee deposits
Increase (decrease) in long-term guarantee deposits
received
Decrease (increase) in investment securities for saleInterest and dividend income received－(59,370)
171,881

2,122

4,372

Interest expenses paid
Income taxes paid

(10,387)(127,920)(9,913)(160,998)

Net cash provided by (used in) operating activities

604,629

216,877(111,022)－
109,749(18,644)

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of investment securities－(39,100)

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment(29,080)
1,593

Purchase of intangible assets
Payments of loans receivable(120,466)(50,000)－(467,803)(3,000)

Collection of loans receivable
Payments for lease deposits－(95,913)

2,400(78,520)

Collection of lease deposits
Purchase of golf club memberships
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Payments for transfer of business－(7,048)15,295

3,263

20,546(8,338)(567,753)－(30,000)(456,112)(1,312,298)

Net cash provided by (used in) investing activities―14―(294,567)－

(Thousands of yen)
FY9/17(from Oct. 1, 2016
to Sep. 30, 2017)

FY9/16(from Oct. 1, 2015
to Sep. 30, 2016)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable(95,828)－(18,204)
1,604,566

Repayments of long-term loans payable
Proceeds from issuance of common shares
Payments of listing-related expenses
Proceeds from issuance of subscription rights to shares
Proceeds from share issuance to non-controllingshareholders
Repayments of finance lease obligations
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period―15―416,900
514,500(26,322)
22,401(18,965)
206(21,900)
40,510

－

2,000

－

(5,161)

1,477,063

942,928(9,312)

5,890

1,616,267(146,600)

608,984

2,225,252

2,225,252

2,078,651

(5) Explanatory Notes to Consolidated Financial Statements(Notes on going concern assumptions)Not applicable.
(Changes in accounting policies)
Not applicable.
(Changes in accounting estimates)
Not applicable.
(Segment information, etc.)(Segment information)
1. Summary of reportable segments(1) Decision on reportable segments
The Company’s reportable segments are its business units that have separate financial information available and that are subject
to periodical examinations by the Board of Directors for the purpose of determining the allocation of management resourcesand evaluating performance.
The Company has divisions and subsidiaries based on services, and they conduct business activities to enhance services andincrease sales and profits both in Japan and abroad.
The Company therefore consists of the segments of service operations attributable to divisions and subsidiaries, and the Online
Travel Agency Business, the IT Offshore Development Business and Investment Businesses are presented as reportablesegments.
(2) Types of products and services belonging to the respective reportable segments
Reportable segment

Description of relevant services

Online Travel Agency Business

Online general travel agency service

IT Offshore Development BusinessLaboratory-type offshore development service

Investment Businesses

Investment business(3) Change in reportable segments
The Company has launched the Investment Business in the consolidated fiscal year under review, and the reportable segments
have changed from the Online Travel Agency Business, IT Offshore Development Business, and Other businesses to the Online
Travel Agency Business, IT Offshore Development Business, and Investment Business.
2. Calculation method of sales and profits (or losses), assets, liabilities, and other amounts by reportable segment
The accounting process for the reported business segments is the same as that used for the preparation of consolidated financial
statements.

―16―

3. Information related to net sales and profits (losses), assets, liabilities, and other amounts for the respective reportable segments
FY9/16 (October. 1, 2015 - September 30, 2016)(Thousands of yen)
Reportable segments
Adjustments(Note)

Amounts posted
in consolidated
financialstatements

Online Travel
Agency Business

IT Offshore
Development
Business

Other businesses

2,897,302

1,099,441

3,899

4,000,643－

4,000,643－

121,052－

121,052(121,052)－

2,897,302

1,220,494

3,899

4,121,695(121,052)

4,000,643

943,782

82,891(33)

1,026,640(408,238)

618,402

Total

Net sales
Sales to externalcustomers
Intersegment sales andtransfers
Total
Segment profits (losses)(Note) 1. The adjustment of -408,238 thousand yen to the segment profits (losses) includes corporate expenses, which mainly
consist of general administrative expenses that are not attributable to the reportable segments.
2. The segment assets are not presented because they are not subject to evaluations by the Chief Executive Officer in termsof financial results.
3. The segment profits (losses) are adjusted to be consistent with operating income in the consolidated financial statements.
4. Transaction prices in intersegment transactions are determined by factoring in transaction prices among independent third
parties.
FY9/17 (October. 1, 2016 - September 30, 2017)(Thousands of yen)
Reportable segments
Online Travel IT Offshore
AgencyDevelopment
Business
Business

Investment
Business

Other

Total

Total

Amountsposted in
Adjustments
consolidated(Note)
financialstatements

Net sales
Sales to externalcustomers
Intersegment sales andtransfers
Total
Segment profits (losses)

3,894,626

1,534,221

103,372

5,532,219

1,974

5,534,194－5,534,194－

126,779－

126,779－

126,779(126,779)－

3,894,626

1,661,001

103,372

5,658,999

1,974

5,660,973(126,779)

5,534,194

968,012

163,472

68,351

1,196,645(16)

1,196,629(465,775)

730,853(Note) 1. The adjustment of -465,775 thousand yen to the segment profits (losses) includes corporate expenses, which mainly
consist of general administrative expenses that are not attributable to the reportable segments.
2. The segment assets are not presented because they are not subject to evaluations by the Chief Executive Officer in termsof financial results.
3. The segment profits (losses) are adjusted to be consistent with operating income in the consolidated financial statements.
4. Transaction prices in intersegment transactions are determined by factoring in transaction prices among independent third
parties.

―17―

(Relevant information)
1. Information by product and service
Not applicable because similar information is disclosed in the Segment Information.
2. Information by region(1) Net sales(Thousands of yen)
Japan

Asia
4,098,011

Total
1,436,182

5,534,194(Note) The above net sales by country or region were compiled based on the locations of the operation facilities covering therespective areas.
(2) Property, plant and equipment(Thousands of yen)
Japan

Asia
246,928

Total
119,982

366,910(Note) The above property, plant and equipment by country or region were compiled based on the locations of the operation
facilities covering the respective areas.
3. Information by key customer
Not applicable because none of the sales to external customers accounted for 10% or more of the net sales presented in the
consolidated income statement.
(Per share information)
FY9/17 under review(From Oct. 1, 2016 to Sep. 30, 2017)
Net assets per share

163.91 yen

Profit per share

25.06 yen

Fully diluted profit per share

23.77 yen

(Note) 1. Profit per share and fully diluted profit per share were calculated based on the following factors.
FY9/17 under review(From Oct. 1, 2016 to Sep. 30, 2017)
Profit per share (yen)25.06

Profit attributable to owners of parent (thousand yen)

420,193

Amount not attributable to common shareholders (thousand yen)－

Profit attributable to owners of parent pertaining to common stock(thousand yen)

420,193

Average number of outstanding common shares during the period (shares)
Fully diluted profit per share (yen)16,763,493
23.77－

Adjusted profit attributable to owners of parent (thousand yen)
Number of common shares increased (shares)

908,643

An overview of diluted shares not included in the calculation of fully
diluted profit per share due to the absence of the dilutive effect.

―18―

Acquisition rights resolved at the Board of Directors’
meeting on July 7, 2017
Acquisition rights in the 9th term:
572,200 shares (5,722 acquisition rights)
Acquisition rights in the 10th term:
673,200 shares (6,732 acquisition rights)

Acquisition rights in the 11th term:
841,500 shares (8,415 acquisition rights)(Important subsequent events)
1. NHC15 Co., Ltd. made a subsidiary through a simple share exchange
At a meeting of the Board of Directors held on September 11, 2017, the Company resolved to conduct a simple share exchange tomake NHC15 Co., Ltd. a wholly owned subsidiary and implemented the share exchange on October 6, 2017.
NHC15 holds 28,682 shares in Mag2 Co., Ltd., and the Company will conduct the share exchange to acquire shares in Mag2 Co.,Ltd.
After the share exchange, the Company holds 85.7% of the stock of Mag2.
(1) Overview of business combinationi. Name and business of the company acquired
Business name

NHC15 Co., Ltd.

Business

Investment businessii. Date of business combination
October 6, 2017iii. Legal form of business combination
Share exchange through which the Company becomes a parent company and NHC15 becomes a wholly-owned subsidiaryiv. Reason of business combination
In November 2016, the Company released AirTrip, a comprehensive travel service platform, and is expanding products andservices from those related to domestic air tickets to those related to domestic hotels, overseas air tickets, vacation rentals, andoverseas hotels.
To accelerate the execution of strategies in the travel business, the Company has decided to make Mag2, which plans, creates,and operates advertising media using e-mail newsletters and websites, a subsidiary. Mag2’s vision is communicating whatcustomers want to communicate to people who want to obtain information, and Mag2 provides an e-mail newslettersdistribution service, Mag2, and operates Web-based media, MAG2NEWS and MONEYVOICE.
As part of the synergies between the Group and Mag2, the Company will offer AirTrip to the broad user base of Mag2. The
Company is considering launching a Web-based medium specializing travel by combining the strengths of Mag2 and theCompany.
v. Percentage of voting rights acquired: 100%(2) Cost of the acquisition of the company
Market value of common stock (treasury stock) of the Company delivered on the date of business combination: 350 million yen(3) Class of shares, exchange ratio, and the number of shares to be delivered

Allocation ratio

The Company(Parent company)

NHC15(Parent company)

1

4.21

Number of shares delivered

148,500

In association with the delivery of shares in the share exchange, the Company issues new common shares.
Calculation method of the share exchange ratio
NHC15, a wholly owned subsidiary following the share exchange, is an SPC solely for the purpose of holding shares in Mag2 anddoes not have any other assets or liabilities. NHC15 does not conduct any business operations, either. The Company therefore
considers the value of the stock of NHC15 equivalent to the value of the shares of Mag2 that NHC15 owns. For the assessment of
the value of the share of Mag2, Yokoyama Accounting Firm employs the DCF (discount cash flow), which reflects the profitability
and future prospects of the assessed company, and the book equity method, which is the least arbitrary assessment method.
2. N’s Enterprise Inc. made a subsidiary through a simple share exchange
At a meeting of the Board of Directors held on October 10, 2017, the Company resolved to acquire shares in N’s Enterprise Inc. and―19―acquired the shares for cash on October 10, 2017. The Company made N’s a consolidated subsidiary through a share exchange on
November 6, 2017.
(1) Overview of business combinationi. Name and business of the company acquired
Name

N’s Enterprise Inc.

Business

Tour businessii. Date of business combination
Acquisition of shares for cash: October 10, 2017; share exchange: November 6, 2017iii. Legal form of business combination
The acquisition of shares for cash and a share exchange through which the Company becomes a parent company and N’s
becomes a wholly owned subsidiaryiv. Reason of business combination
In November 2016, the Company released AirTrip, a comprehensive travel service platform, and is expanding products andservices from those related to domestic air tickets to those related to overseas air tickets, domestic hotels and Japanese inns,
overseas hotels, and vacation rentals. The Company sold those products and services separately.
To promote sales of domestic tour packages including air tickets and accommodations through AirTrip, the Company has madeN’s, an agency licensed by Japan Airlines that excels in the purchase of Japan Airlines domestic air tickets. N’s has also
concluded an agency agreement with Jetstar Japan.
Customers can buy exchange tickets for tours offered by N’s through Loppi terminals at Lawson stores nationwide.
Making N’s a subsidiary, the Company will make a full-scale entry into the domestic tour package market.
v. Percentage of voting rights acquired: 100%(2) Cost of the acquisition of the company
The acquisition price is not disclosed under a non-disclosure agreement with the counterparty.
(3) Class of shares, exchange ratio, and the number of shares to be delivered

Allocation ratio
Numberdeliveredof

The Company(Parent company)

N’s(Parent company)

1557.79shares

189,600

In association with the delivery of shares in the share exchange, the Company issues new common shares.
Calculation method of the share exchange ratio
For the assessment of the value of the share of N’s, Yokoyama Accounting Firm employs the DCF (discount cash flow), whichreflects the profitability and future prospects of the assessed company, and the book equity method, which is the least arbitrary
assessment method. In DCF, the Company assesses the enterprise value of N’s by calculating the present value by discounting thefuture cash flow that is calculated based on the five-year business plan prepared by N’s using a certain discount rate.

―20―