Non-Consolidated Financial Results
for the Fiscal Year Ended April 30, 2018
[Japanese GAAP]
June 11, 2018
Company name: Asukanet Co., Ltd.
Stock exchange listing: Tokyo Stock Exchange
Code number: 2438
URL: https://www.asukanet.co.jp
Representative: Yukio Fukuda, Representative Director, President & CEO
Contact: Kenya Kono, Managing Director & CFO
Phone: +81-82-850-1200
Scheduled date of Annual General Meeting of Shareholders: July 27, 2018
Scheduled date of commencing dividend payments: July 30, 2018
Scheduled date of filing annual securities report: July 30, 2018
Availability of supplementary briefing material on annual financial results: Available
Schedule of annual 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 Fiscal Year Ended April 30, 2018
(May 1, 2017 to April 30, 2018)(1) Non-Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net sales
Fiscal year endedApril 30, 2018
April 30, 2017

Operating income

Ordinary income

ProfitMillion yen%

Million yen%

Million yen%

Million yen

%

5,904
5,438

8.6
5.1

788
800

(1.5)
3.6

795
804

(1.1)
3.6

556
572

(2.7)
4.6

Basic earnings
per share

Diluted earnings
per share

Rate of return on
equityOrdinary income
to total assets

Operating income
to net sales

Fiscal year ended
Yen
Yen
April 30, 2018
33.20
33.08
April 30, 2017
34.19
34.01
(Reference) Equity in earnings of affiliated companies:

%

%

%

(2) Non-Consolidated Financial Position
Total assets

11.6
14.4
13.0
15.9
Fiscal year ended April 30, 2018: ¥- million
Fiscal year ended April 30, 2017: ¥- million
Net assets

Million yen

Equity ratio

13.4
14.7

Net assets per share

Million yen

%

Yen

5,000
4,603

87.4
86.3

297.45274.56

Cash flow fromoperating activities

Cash flow frominvesting activities

Cash flow fromfinancing activities

Cash and cash
equivalents at endof period

Million yen

Million yen

Million yen

Million yen

788
818

(596)
(293)

(157)
(164)

1,706
1,673

5,715
As of April 30, 2018
5,325
As of April 30, 2017
(Reference) Equity: As of April 30, 2018: ¥4,997 million
As of April 30, 2017: ¥4,597 million(3) Non-Consolidated cash flows

Fiscal year endedApril 30, 2018
April 30, 20171

2. Dividends
Annual dividends
1st
2nd
3rd
Year-endquarter-end quarter-end quarter-end
Fiscal year endedApril 30, 2017
Fiscal year endedApril 30, 2018
Fiscal year ending
April 30, 2019
(Forecast)

Total

Total
dividends(Annual)Dividend
payoutratio

Dividends
tonet assets

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

-

0.00

-

10.00

10.00

167

29.3

3.8

-

0.00

-

10.00

10.00

168

30.1

3.5

-

0.00

-

10.00

10.00

29.7

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
3.5
806
2.2
811
1.9
567
1.8
33.74
As the Company manages its financial results at an annual base, the financial results forecast for the first half is notdisclosed.
* Notes:(1) 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(2) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):
April 30, 2018: 17,464,000 shares
April 30, 2017: 17,464,000 shares2) Total number of treasury shares at the end of the period:
April 30, 2018: 662,541 shares
April 30, 2017: 717,741 shares
3) Average number of shares during the period:
Fiscal year ended April 30, 2018: 16,773,986 sharesFiscal year ended April 30, 2017: 16,739,285 shares* These financial results are outside the scope of audit 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.

2

・Contents of Attached Materials

1. 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 publishing
service business, which provides ideas for new photo output methods that allow users to create complete
photo collections 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.
In March 2018, we launched a business partnership with VRC Co., Ltd., a venture company that develops,
manufacturers, and sells full-body 3D scanners and 3D data processing systems based on core technologies
for super high-speed 3D data processing.
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, revenue was somewhat below expectations in our primary business areas – processing ofphotos of the decease, and video and other funeral production services – however equipment sales werestrong and the “Asuka Altar” collaboration product with the aerial imaging business also contributed to sales.
In addition, we are utilizing our extensive customer base in the funerals market, and have added a condolence
message function to our “tsunagoo” service that connects funeral companies, the bereaved, and mourners, andhave been promoting it to funeral companies.
In terms of income, in addition to an increase in personnel costs for image processing operators, shipping
expenses were also higher than expected beginning from the 3rd quarter due to price hikes, and segment
income fell below expectations.
As a result, sales were 2,524,634 thousand yen (104.0% compared to the previous year) and segment
income was 750,399 thousand yen (94.2% compared to the previous 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.
For the professional photographer market in Japan, in addition to acquiring new customers through ourown marketing activities, exhibiting at exhibitions, and holding digital photo seminars and workshops acrossJapan, we also introduced new products and worked to further increase our market penetration. As a result,
we achieved strong sales to professional photographers. We also opened a website for our highly popular“Life-Size Baby Photos” service, and worked to expand sales and market presence.
For the general consumer market in Japan, in addition to conducting efficient internet advertising and avariety of campaigns, we also worked to expand the presence of our services by utilizing SNS, exhibiting at
the CP+ exhibition, and introducing new products. However we struggled to acquire new customers, and sales
in the general consumer market were below the result from the previous year. On the other hand, there wassteady growth in sales related to OEM supply as a result of the growing presence of our services in the market.
As a result, we invested in additional printing equipment and bookbinding equipment in the OEM Division asplanned.
In terms of income, despite price hikes that resulted in higher than expected shipping expenses startingfrom the 3rd quarter, the improved operating rate due in particular to growing OEM sales contributed to the3results, and segment income grew by more than expected.
As a result, sales were 3,271,521 thousand yen (110.8% compared to the previous year) and segment
income was 778,088 thousand yen (118.3% compared to the previous 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. Previously we referred to the plates that use original
Asukanet technologies to project images in mid-air as “AI plates”. However for consistency with overseas
brands, in January 2018 the service brand was changed to “ASKA3D” and the plate names to “ASKA3D
plates”.
In this business, we are placing top priority on the ASKA3D plates which are capable of projecting 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 as a result of exhibitions in Japan and overseas. In
addition, we are also supplying plates for the “Asuka Altar” service that is a collaboration project with thememorial design service business.
Working for completion of the resin ASKA3D plates where we are aiming for high productivity and low
cost, we have produced production dies and reviewed the manufacturing process multiple times, and haveconducted repeated prototype improvements and other trial-and-error. At last the samples have been
completed, and we will be able to start supplying them from June 2018. We will work for the rapid
establishment of a mass production system and for further quality improvements.
In terms of marketing, we conducted sales activities by our own marketing staff both in Japan andoverseas, and also exhibited at CEATAC and one other exhibition in Japan, and at 3 overseas exhibitions
including in the United States and Dubai. In addition, we jointly developed an ATM that uses our ASKA3D
plates, and have exhibited it as a potential application at exhibitions in Japan and overseas. There are growing
numbers of cases when buyers of ASKA3D plates exhibit their own products and other applications which
use the plates. In June of this year, we are planning to participate in an exhibition in Germany.
In terms of expenses, there was a large increase in advertising and publicity expenses as a result of active
participation in exhibitions in Japan and overseas. In addition, there was an increase in R&D expenses as aresult of intensive R&D aimed at achieving mass production of resin AI plates. There were also increases inpersonnel expenses due to the addition of personnel, as well as in overseas travel expenses and patent-related
expenses.
As a result, sales were 118,204 thousand yen (195.3% compared to the previous year) and segment loss
was 250,467 thousand yen (compared to a loss of 183,742 thousand yen in the previous year).
As a result of the above, sales were 5,904,010 thousand yen (108.6% compared to the previous year). For
income, despite steady growth in income in the personal publishing business, as a result of a larger loss due topayment of advance expenses in the aerial imaging business, ordinary income was 795,949 thousand yen(98.9% compared to the previous year) and net income was 556,890 thousand yen (97.3% compared to theprevious year).
(2) Overview of the Financial Status during this Fiscal Year
(Assets)
Current assets during this fiscal year increased by 99,103 thousand yen from the end of the previous fiscal
year to reach 3,408,490 thousand yen. The primary reasons for the increase were an increase in cash andsavings of 33,529 thousand yen as a result of strong income results, and an increase in accounts receivable4

of 40,740 thousand yen as a result of strong sales.
Fixed assets at the end of this fiscal year increased by 291,547 thousand yen from the end of the previous
year to reach 2,307,407 thousand yen. The primary reasons for the increase were an increase in land of
178,805 thousand yen, and an increase in investment securities of 93,500 thousand yen.
(Liabilities)
Current liabilities at the end of this fiscal year decreased by 4,021 thousand yen from the end of theprevious fiscal year to reach 704,183 thousand yen. Fixed liabilities at the end of this fiscal year decreased
by 1,897 thousand yen from the end of the previous fiscal year to reach 11,700 thousand yen.
(Net assets)
Net assets at the end of this fiscal year increased by 396,569 thousand yen to reach 5,000,014 thousand
yen. The primary reason for the increase was an increase in retained earnings of 380,482 thousand yen.
(3) Overview of Cash Flows during this Fiscal YearThe balance of cash and cash equivalents (hereafter referred to as “Funds”) at the end of this fiscal year
increased by 33,529 thousand yen from the end of the previous fiscal year to reach 1,706,781 thousand yen.
Despite capital investment, software investment, and acquisition of investment securities, this increase was
the result of steady acquisition of funds from operating activities due to the strong income results.
(Cash flow from operating activities)
Net funds acquired through operating activities during this fiscal year were 788,191 thousand yen(compared to 818,011 thousand yen in the previous fiscal year). Despite recording payment of 236,814
thousand yen in income taxes, this was the result primarily of net income before taxes of 774,383 thousand
yen and depreciation of 309,094 thousand yen.
(Cash flow from investment activities)
Net funds expended through investment activities during this fiscal year were 596,942 million yen(compared to 293,619 million yen during the previous fiscal year. The primary reasons were acquisition of433,241 thousand yen in tangible fixed assets, acquisition of 58,482 thousand yen in intangible fixed assets,
and acquisition of 99,900 thousand yen of investment securities.
(Cash flow from financing activities)
Net funds expended through financing activities during this fiscal year were 157,530 thousand yen(compared to 164,281 thousand yen in the previous fiscal year). The primary reason was the paying of
167,225 thousand yen in dividends.
(4) Future Outlook
Despite signs of recovery including a recovery in corporate earnings and improvement in the employment
environment, the outlook for the economy during the coming fiscal year is expected to remain highly
unpredictable as a result of unstable overseas economic conditions, primarily in emerging nations.
Under these conditions, our company is operating a business that is consistent with the current times inwhich services are customized from minimum lot sizes to meet individual needs, and aims to capture stabledemand. Both the memorial design service business and personal publishing business have established a solid
business foundation and achieved stable income, however we recognize that there are issues from theperspective of further growth and will carry out measures aimed at expanding these business areas. In theaerial imaging business that we are conducting as a new business area, more time has been required than was
initially expected. However we expect to make great leaps forward now that we have begun the supply ofresin ASKA3D plate samples. We will also continue to challenge ourselves in the development of new
business and services.
In the memorial design service business, we will make use of our strengths in image processing
5technologies, in-house support systems, and a diverse range of funeral presentation tools to develop new
customers and increase the unit price for existing customers. We will be launching a variety of new services
under the label of “So-Tech” – IT services for the funeral market.
In the personal publishing business, we will add new product items and improve our photo collection
ordering software, and will also hold various seminars and participate in exhibitions, conduct events, and takeother steps to capture customers. There has also been strong growth in sales from OEM supply to smartphoneusers, and we are increasing our production capacity and aiming for further expansion.
In the aerial imaging business, we will address the establishment of a mass production system capable ofproducing AI plates for aerial imaging at suitable prices. In addition to expanding sales of glass plates
primarily for signage applications, we will carry out sample sales of resin plates that we expect to be
combined with sensors and incorporated in products. We will actively exhibit at exhibitions in Japan andoverseas, and will continue with development investments for further quality improvements aimed at mass
production. Based on the above, in the forecast for the fiscal year ending April 30, 2019, we will continue
advance investment in areas such as advertising and R&D expenses in the aerial imaging business, andexpect to see an overall increase in shipping and other expenses. In terms of sales, we expect strong growth ineach business, and will focus our sales efforts primarily on the resin plates in the aerial imaging business. We
are forecasting sales of 6,111 million yen (103.5% compared to the current year), operating income of 806
million yen (102.2%), ordinary income of 811 million yen (101.9%), and net income of 567 million yen(101.8%).
In addition, various matters in the personal publishing business, such as overseas markets and general
consumer markets, contain elements of uncertainty. Because sales in overseas markets are conducted in thelocal currencies, they are susceptible to the effects of changing exchange rates. The aerial imaging businessand other new business areas also involve technological research and marketing that we have not engaged in
before, and many uncertain elements are involved in its commercialization.
Note: The above forecast was created based on information available at the time this material was released, andactual results may differ from the forecast values due to a variety of factors.

6

2. Financial Statements for the fiscal year ended April 30, 2018
(1) Balance sheet(Units: 1,000s yen)Previous fiscal year
(ended April 30, 2017)

Current fiscal year
(ended April 30, 2018)

AssetsCurrent assets
Cash and deposits

2,278,251

2,311,781

Notes receivable-trade
Accounts receivable-trade

1,320
685,197594
725,937

Merchandise and products
Work in progress

166,123
12,038191,123
14,325

Raw materials and supplies
Prepaid expenses

56,972
46,49962,206
31,289Deferred tax assets
Others62,466
3,682

71,581
2,269

Allowance for doubtful accounts(3,163)(2,617)3,309,387

3,408,490

Buildings
Total depreciation

851,713(351,963)

895,176(382,618)

Buildings, net

499,750

512,558

Constructs
Total depreciation

17,643(10,766)

17,643(11,485)

Total current assets
Fixed assets
Tangible fixed assets

Constructs, net
Machinery and equipment
Total depreciation
Machinery and equipment, net
VehiclesTotal depreciation
Vehicles, net

6,877

6,157

1,359,354(936,738)

1,407,637(1,011,099)

422,616

396,538

9,661

9,661

(957)

(2,786)

8,704

6,875

Tools, furniture and fixtures

330,564

352,591

Total depreciation(195,653)(217,329)

134,911

135,261

432,702611,507

Tools, furniture and fixtures, net
LandConstruction materials in progress
Total tangible fixed assets―

24,407

1,505,562

1,693,306

24,082
186,476

20,603
180,165

1,314

6,082

211,874

206,851

Intangible fixed assets
Patent application
Software
OthersTotal intangible fixed assets

7

(Units: 1,000s yen)Previous fiscal year
(ended April 30, 2017)

Current fiscal year
(ended April 30, 2018)

Investments and other assets
Investment securities
Paid capitalLong term loan to employees
Long term pre-paid expenses
Deferred tax assets
Others147,10010

240,600
10

400
5,620

―
3,390

10,503
134,790

22,499140,748

Allowance for doubtful accounts(1)―

Total investments and other assets

298,423

407,248

2,015,859

2,307,407

5,325,247

5,715,897

Current liabilities
Accounts payable-trade

118,905

126,270

Accounts payable
Accrued expenses

143,049
67,998

162,361
72,320

Income taxes payable
Advances received

143,270
26,171

137,900
16,526

Deposits received
Provision for bonuses

11,759129,000

11,991
136,500

Others

68,05040,313

Total current liabilities

708,204

704,183

Provision for retirement benefits
Others

6,482
7,115

6,482
5,217

Total fixed liabilities

13,597

11,700721,802715,883

490,300

490,300

606,585

606,585

606,585

606,585

1,693

1,693

3,801,408

4,181,890

Total fixed assets
Total assets
Liabilities

Fixed liabilities

Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Capital reserves
Total capital surplus
Retained earnings
Retained reserves
Other Retained earnings
Deferred retained earnings

3,803,101

4,183,583

Treasury stock

Total Retained earnings(309,764)(285,940)

Total shareholders' equity

4,590,222

4,994,527

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

7,579

3,129

7,579

3,129

Subscription rights to shares

5,642

2,356

4,603,444
5,325,247

5,000,014

Total net assets
Total liabilities and net assets

8

5,715,897

(2) Profit and loss statement(unit:1000s yen)
22nd fiscal year
(May 1, 2016-April 30, 2017)

23rd fiscal year
(May 1, 2017-April 30, 2018)

1,643,427
3,032,106

1,674,315
3,420,030

762,665

809,664

Total sales

5,438,199

5,904,010

Cost of sales
Cost of service

712,517773,678

52,341

107,183

Cost of products sales during year

1,501,278

1,591,772

Total

1,553,620

1,698,955

Net Sales
Sales from service
Sales of products
Sales of goods

Cost of products sales
Stock of products at beginning of the year

Transfer to other accounts

35,88520,995

Stock of products at year end

107,183

129,141

1,410,551

1,548,818

Stock of goods at beginning of the year
Cost of goods sales during year

71,594505,92958,940562,819

Total

577,524

621,759

Transfer to other accounts

15,73018,976

Stock of goods at year end

58,94061,981

Cost of products sales
Cost of goods sales

Cost of goods sales

502,853

540,800

2,625,921

2,863,298

Gross profit

2,812,277

3,040,712

Selling, general, and administrative expenses

2,011,472

2,252,012

800,804

788,700

1,060

520

Dividends received
Commissions received

1,161
545

1,060
412

Revenue from insurance
Foreign exchange gains

―
―

3,999
14

Gain on forfeiture of unclaimed dividends
Others

354
869

825
415

3,990

7,249

178

―

Total cost of sales

Operating income
Non-operating income
Interest received

Total non-operating income
Non-operating expenses
Foreign exchange losses
Total non-operating expenses

178―

804,617795,949

Loss on retirement of fixed assets

2,904

21,566

Total extraordinary losses

2,904

21,566

Net income before taxes

801,712774,383

Current income taxes etc.
Income tax adjustment

227,786
1,613

236,653(19,161)

Income taxes

229,399

217,492

Net income

572,312556,890

Ordinary income
Extraordinary losses9(3) Statement of cash flows(unit:1000s yen)
22nd fiscal year
(May 1, 2016-April 30, 2017)

23rd fiscal year
(May 1, 2017-April 30, 2018)

801,712774,383

309,336567

309,094
489

(700)

7,500

(151)

―

(2,221)
2(1,581)
189

Cash flows from operating activities
Net income before taxes
Depreciation expenses
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)
Loss on retirement of fixed assets
Decrease (increase) in notes and accounts receivabletrade
Decrease (increase) in inventory assets

2,904

21,566(77,187)(41,133)(47,054)(32,520)

Increase (decrease) in accounts payable-trade
Increase (decrease) in accrued consumption taxes(4,808)18,7697,365(27,773)

Others32,198

6,065

Subtotal

1,033,368

1,023,643

Interest and dividends received
Income taxes paid

2,231
(217,589)

1,362(236,814)

818,011788,191(102,685)(433,241)

Purchase of intangible fixed assets
Purchase of investment securities(88,988)(99,000)(58,482)(99,900)

Collection of loans receivable
Payments into time deposits

1,440(605,000)

1,440(605,000)

Proceeds from withdrawal of time deposits
Others605,000(4,386)605,000(6,758)Cash flows from investing activities(293,619)(596,942)(166,410)(167,225)

2,604
(474)

11,592(1,897)(164,281)(157,530)

Cash flows due to operating activities
Cash flows from investing activities
Purchase of tangible fixed assets

Cash flows from financing activities
Cash dividends paid
Purchase of treasury stock
OthersCash flows from financing activities
Effect of exchange rate on cash and cash equivalents

(2)

(189)

Net increase (decrease) in cash and cash equivalents

360,107

33,529Balance of cash and cash equivalents at beginning of year

1,313,143

1,673,251

Balance of cash and cash equivalents at end of year

1,673,251

1,706,781

10

(4) Notes Regarding the Financial Statements(Segment information etc.)
Information related to the amounts of sales, income or loss, assets, liabilities, and other items for each reporting segment.
Year 22 (May 1, 2016 – April 30, 2017)
Units: Thousands yen
Reporting segment
Memorial design
service business

Personal
Aerial imaging
publishingbusiness
service business

Adjustment
Total

Amountrecorded infinancialstatements

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

2,427,256

2,951,308

59,634

5,438,199―

5,438,199

―

―

900

900

(900)

―

2,427,256

2,951,308

60,534

5,439,099(900)

5,438,199

796,315

657,557(183,742)

1,270,130(469,325)

800,804

21,057251,170

11,610283,838

25,498309,336

Other items
Depreciation expenses

Year 23 (May 1, 2017 – April 30, 2018)
Units: Thousands yen
Reporting segment
Memorial design
service business

Personal
Aerial imaging
publishingbusiness
service business

Adjustment
Total

Amountrecorded infinancialstatements

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

2,524,634

3,271,521

107,8545,904,010―

5,904,010――

10,35010,350(10,350)―

2,524,634

3,271,521

118,204

5,914,360(10,350)

5,904,010

750,399

778,088(250,467)

1,278,019(489,318)

788,700

25,940234,820

17,701

278,463

30,630309,094

Other items
Depreciation expenses

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

11