This document has been translated from the Japanese original document for reference purposes only. In the event ofany discrepancy between this translated document and the Japanese original, the original shall prevail.

Flash Report for the 3rd Quarter of the Fiscal Year Ending December 31, 2018
[Japan GAAP] (on a consolidated basis)
November 8, 2018
Listed on: TSE

Company name:Securities code:
Representative:

OPT Holding, Inc.
2389
URL https://www.optholding.co.jp/
Noboru Hachimine, Founder, President and CEO

Contact for inquiries:

Tomohiko Adachi, General Manager, Group Finance Division

Scheduled submission date ofquarterly report:

Phone: 03-5745-3611

Scheduled startdate of dividend
payment:

November 13, 2018－

Supplementary materials for quarterly results:
Prepared
Quarterly results briefing:
Held (for securities analysts and institutional investors)(Rounded down to the nearest million yen)
1. Consolidated Results for the 3rd Quarter of Fiscal 2018 (January 1, 2018 ̶ September 30, 2018)(1) Consolidated business results(% represents year-on-year change)
Net income attributable
Revenue
Operating income
Ordinary income
to owners of parent
Yen inYen inYen inYen in%%%%millions
millions
millions
millions(36.4)(29.7)
3QFY2018
64,069
6.3
1,223
1,260
1,236
61.5
3QFY2017
60,278
15.1
1,925
40.4
1,793
25.1
765
0.6
(Note):
Comprehensive
income:3QFY 2018:12,267

million(-%)

3QFY 2017:

Diluted net income
per share

Net income per share

905

EBIT ※1

54.13

Yen inmillions
2,541

32.98

1,829

Yen

Yen

3QFY2018

54.59

3QFY2017

33.09

million(254.4)%

EBITDA ※2

38.9

Yen inmillions
4,837

61.7

24.0

2,990

9.2

%

%

(Note) ※1 EBIT= Net income before taxes and other adjustment＋interest paid－interest received※2 EBITDA = EBIT + Other finance-related profits (losses) + Depreciation + Amortization of intangible assets +Amortization of long-term prepaid expenses + Non-cash gain and loss
(Reference) Consolidated business results of 3QFY2017 included result of Classified Inc. that was sold at the end of
consolidated fiscal year.
For reference, consolidated business results of 3QFY2017 exclude the impact of Classified Inc. are as
follows.
(% represents year-on-year change)
Operating

Revenue
Yen inmillions

Ordinary Income

Income%Yen inmillions%

3QFY2018

64,069

15.6

1,223

(31.7)

3QFY2017

55,407

－

1,791

－

Yen inmillions% Yen in millions%

EBIT
Yen inmillions

EBITDA%

Yen inmillions%

1,260 (25.2)

1,236

68.1

2,541

49.9

4,837

70.3

－

735

－

1,695

－

2,840

－

1,686

－

Net income attributableto owners of parent

1 －(2) Consolidated financial position
Total assets
Yen in millions
3QFY2018
61,189FY2017
46,127

Net assets
Yen in millions
30,523
18,813(Reference) Capital:

FY2017:(Notes)3QFY2018:

27,508million

AUM ※3

Capital-to-asset ratio
%
45.0
33.0

15,21826,273－

million※3 AUM: Sum of the book value of shares of subsidiary companies and affiliated companies and the FMV (※4) of operational investment securities and investment securities※4 FMV (fair market value): Amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.

Calculation method for AUM: In terms of shares of subsidiary companies and affiliated companies, their book value isused. As for operational investment securities and investment securities, their FMV is calculated on anissue-by-issue basis in the following manner.
・Issues with a small investment amount: Acquisition cost.
・Issues of listed companies: Market value as of the end of September 2018.
・Issues with recent financing (equity financing): Valuation amount based on the value of the relevant financing.
・Other issues are calculated based on the comparable multiple valuation method, discounted cash flow (DCF) method
or net asset method according to the condition of the business.
Please note that KPMG AZSA LLC has provided us with guidance and advice in calculating FMV for the investment
business.
The “－” symbol is indicated as the AUM for the fiscal year ended December 31, 2017 was not calculated.
2. Dividends
Annual dividend per share

FY 2017
FY 2018
FY ending Dec. 31, 2018
(forecast)End of 1Q
Yen－－

End of 2Q
Yen
0.00
0.00

End of 3Q
Yen－－

End of FY
Yen
12.00

Total
Yen
12.00

－

－

(Notes) Revisions to most recently announced dividend forecast: None
Regarding dividend, the company aims to pay a dividend payout ratio of 20% to net income attributable to parent
before amortization of goodwill from FY2017.
3. Consolidated business forecasts for fiscal 2018 (January 1, 2018 ̶ December 31, 2018)(Percentages are year-on-year changes)
Net income
Net income per
Revenue
Operating income
Ordinary income
attributable toshareowners of parent
Yen inYen inYen inYen in%%%%Yenmillions
millions
millions
millions
Full fiscal year
91,000
10.2
2,100
(5.6)
1,500 (21.9)
1,400
38.5
61.14
(Note) Revision to most recently announced consolidated earnings forecast: None
(Reference)
・EBIT
Forecast for FY 2018: 2,700 million yen
・EBITDA Forecast for FY 2018: 4,600 million yen※ Notes(1) Changes in major subsidiaries (changes in specified subsidiaries involving changes in the scope of consolidation)
during the fiscal year under review: None
# of subsidiaries newly included: 0# of subsidiaries excluded: 0(2) Application of accounting process specific to preparation of quarterly consolidated financial statements: None
(3) Changes in accounting policies, changes in accounting estimates, and retrospective restatements(i) Changes in accounting policies arising from amendments to accounting standards, etc.:(ii) Other changes in accounting policies:
None
－

2 －

None

(iii) Changes in accounting estimates:(iv) Retrospective restatements:(4) Outstanding (common) shares(i) Outstanding shares (including
treasury stock) at end of period(ii) Treasury stock at end of period(iii) Average of outstanding during
period (accumulated quarterly)

None
None

3QFY2018

23,817,700

shares

FY2017

23,817,700

shares3QFY2018

917,705

shares

FY20171,200,062

shares3QFY2018

22,646,522

shares3QFY2017

23,135,673

shares※Flash reports are not subject to audits.
※Explanation about proper use of business forecasts and other special instructions.
(Notice on describing future, etc.)
The business forecasts and other forward-looking statements contained in this material are based on the information
currently available to the Company and certain assumptions deemed to be reasonable, and actual business results andthe like may substantially differ due to various factors. For the assumptions serving as a basis of the business forecasts
and for the instructions for the use of the business results, see Subsection (4) “Future outlook” under Section 1“Summary of business results, etc.” on Page 7 of the attachment.
(Notice on reference of summary information)
1.

EBIT= Net income before taxes and other adjustment ＋ interest paid － interest received

2.

EBITDA= EBIT + Other finance-related profits (losses) + Depreciation + Amortization of intangible assets +Amortization of long-term prepaid expenses + Non-cash gain and loss－

3 － Attachment: Table of Contents
1. Qualitative information on the quarterly financial results …………………………………………………

2(1) Description of business results ……………………………………………………………………………………

2(2) Description of financial position ……………………………………………………………………………………

6(3) Description of cash flows ……………………………………………………………………………………………

7(4) Description of consolidated business results and other future forecast information …………………………

7

2. Quarterly consolidated financial statements and major notes thereto ……………………………………………

8(1) Consolidated balance sheets ………………………………………………………………………………………

8(2) Consolidated statements of income and consolidated statements of comprehensive income ………………

10

Quarterly consolidated statements of income ………………………………………………………………

10

Quarterly consolidated statements of comprehensive income ……………………………………………

11(3) Quarterly consolidated statements of cash flows ………………………………………………………………

12(4) Notes on Quarterly Consolidated Financial Statements ………………………………………………………

14

Notes on going concern assumptions …………………………………………………………………………

14

Notes if there is significant change in the amount of shareholders’ equity …………………………………

14

Segment Information, etc. ………………………………………………………………………………………

15

Material subsequent events ……………………………………………………………………………………

17

－

4 －

1. Qualitative information on the quarterly financial results(1) Description of business results
In February 2018, OPT Group announced a new medium-term management plan (for the three years from 2018 to2020) titled “New Stage 2020” with the aim of revenue growth of 16% to 18% (annual rate compared with 2017) and
EBITDA growth of 18% to 20% (annual rate compared with 2017). Its policy is to facilitate group cooperation and group
optimization, and to maximize cash flows for the purpose of maximizing the medium- and long-term corporate value.
The Group aims to achieve a return on equity (ROE) of more than 10% in the medium to long term throughcontinuous growth of revenue, profits and cash flows as well as creation of an optimal capital structure, in which capitalcosts are taken into account by proactively allocating the created cash to investments in digital sectors.
The main growth strategy is to address the rapidly progressing digital industrial revolution and lead any and all“digital shifts” in business entities by proactively utilizing abundant digital human resources, sales channels involving
thousands of domestic and overseas entities, and group assets including the know-how on investments and services indigital sectors. OPT Group will lead the digital shifts in each and every business field, such as “digital shift in advertising or
promotions” arising from people’s less interest in watching TVs and checking flyers, “digital shift in operations or humanresources” to handle big data, IoT, artificial intelligence, robots, etc., and “digital shift in business processes or businessmodels.”As a result of the business promotion based on the management policy stated above, the financial results of the OPTGroup during the third quarter consolidated accounting period under review are as follows.
(Unit: Yen in millions)
3Q consolidated
accounting period
FY2018Year-on-year growthrate (adjusted ※6)

Year-on-year growthrate

Revenue

20,3148.4%

0.2%

Gross profit

4,031

6.2%

(0.6)%

Operating income

134(70.9)%(72.4)%EBIT (※1)

520

317.3%

246.8%EBITDA (※2)

2,176

348.7%

322.7%

56

－(※7)

－(※7)

ROE (LTM) (※3, 4)

7.0%

－

－

Free cash flows (※5)

1,554

－

－

Diluted net income per share

2.05

－

－

Net income per share

2.51

－

－

Net income attributable to owners ofparent (※7)

※1 EBIT= Net income before taxes and other adjustment＋interest paid－interest received※2 EBITDA = EBIT + Other finance-related profits (losses) + Depreciation + Amortization of intangible assets +Amortization of long-term prepaid expenses + Non-cash gain and loss
※3 LTM = Last twelve months (past twelve months from the end of the last quarter)※4 (Net income attributable to owners of parent (LTM)) ÷ (average of capital as of September 30, 2017 and capitalas of September 30, 2018)※5 (Operating cash flows) + (Investment cash flows)  (Temporary cash flow items)※6 Comparison with the figures where the financial results of Classified Inc. (accounting for approximately 9.0% of
the revenue in the previous third quarter) sold at the end of the preceding fiscal year are excluded from theconsolidated business results.
※7 Since the year-earlier result is negative, indication is omitted.
Please note that the reporting segments are different from the fiscal year ending December 31, 2018. The
Group formerly had reporting business segments “Marketing Business,” “Investment & Incubation Business,” and“Overseas Business,” but now has two segments “Marketing Business” and “Synergy Investment Business” as the－

5 －disclosure of the segment information on each segment is expanded as indicated below. Please refer to “(4) Notes
on Quarterly Consolidated Financial Statements (Segment Information, Etc.) under “2. Quarterly Consolidated
Financial Statements and Major Notes Thereto.”
Changes in Segments / Disclosure Items
New segments

Old segments

Major business lines

Disclosure items

・Digital marketing・Internet advertising agency
Marketing Business Marketing Business business・Development / provision of solutions
・Support of human resources / IT

Synergy
Investment

Investment &Incubation
Business

EBIT, EBITDA

・Venture capital investment
・Fund management

Revenue, operating income,
EBIT, EBITDA, AUM (※1), IRR

・AI business(※2)

・Overseas Internet advertising

Business

Revenue, operating income,Overseas Business agency business・China / cross-border EC business

Revenue, operating income,
EBIT, EBITDA※1 AUM: Sum of the book value of shares of subsidiary companies and affiliated companies and the FMV (※3) ofoperational investment securities and investment securities.
※2 IRR: Internal rate of return.
※3 FMV (fair market value): Amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.

Performances by segment developed as follows.
Please note that the year-on-year comparison was carried out by replacing the figures for the previous third
quarter with those after the reporting segment change.
Marketing Business
The financial results (before the allocation of Head Office costs) of the Marketing Business during the third
quarter consolidated accounting period under review are as follows.
(Unit: Yen in millions)
3Q consolidated
accounting period
FY2018Year-on-year growthrate (adjusted)Year-on-year growthrate

Revenue

19,423

11.4%

2.4%

Gross profit

3,613

14.4%

5.4%

Operating income

755(5.0)%(9.0)%

EBIT

902

15.2%

10.3%

EBITDA

2,444

141.5%

132.4%In the third quarter consolidated accounting period under review, the Marketing Business had revenue of
JPY19,423 million (2.4% increase YoY), gross profit of JPY3,613 million (5.4% increase YoY), operating income of
JPY755 million (9.0% decrease YoY), EBIT of JPY902 million (10.3% increase YoY), and EBITDA JPY2,444 million(132.4% increase YoY).
In addition, in terms of the year-on-year percentage changes calculated based on the financial results excluding
Classified, Inc. for the previous third quarter consolidated accounting period, revenue had a 11.4% increase, grossprofit on sales a 14.4% increase, operating income a 5.0% decrease, EBIT a 15.2% increase and EBITDA a
141.5% increase.
－

6 －Major factors for the differences in the year-on-year percentages excluding Classified, Inc. are as follows.
1)

Revenue increased by JPY937 million in the business for large corporations due to favorable performance inreceiving orders from not only existing customers, but also brand sponsors and new retail clients, andincreased by JPY1,097 million in the business for local / SME clients due to favorable performance in receiving
new orders mainly from EC advertisers by successfully spotting a local demand in “digital shifts.” Consequently,

2)

revenue had an increase of 11.4% YoY.
EBITDA increased by JPY1,394 million in the business for large corporations mainly due to the JPY1,421
million gain on transfer of business of a consolidated subsidiary (relaido, Inc., formerly known as SkillUP Video
Technologies Co.,Ltd.) and increased by JPY43 million in the business for local / SME clients. Consequently,

3)

EBITDA had an increase of 141.5% YoY.
EBIT was JPY902 million (15.2% increase YoY) as its increase is limited compared with EBITDA primarily
because of the impairment of goodwill associated with the business transfer of relaido, Inc.,as well as theimpairment of capitalized software assets.
As a result, in terms of the consolidated financial results of the Marketing Business during the consolidated

cumulative third quarter under review (including the financial results of Classified, Inc.), revenue was JPY60,540
million (6.6% increase YoY), gross profit JPY10,955 million (5.9% increase YoY), operating income JPY2,824
million (2.9% increase YoY), EBIT JPY2,979 million (8.8% increase YoY) and EBITDA JPY5,026 million (48.9%
increase YoY). As for the consolidated financial results during the same period excluding the financial results ofClassified, Inc., revenue was 16.7% increase YoY, gross profit a 15.4% increase YoY, operating income a 9.4%
increase YoY, EBIT a 15.8% increase YoY and EBITDA a 57.3% increase YoY.
Major efforts in the Marketing Business during the third quarter of the fiscal year under review are as follows.
・OPT, Inc. played a central role in acquiring large-scale clients located mainly in the Tokyo metropolitan area.
・Carried out sales activities through the omni-channel innovation center focused on the support of “digital shifts” inretail business. Made progress in new acquisition as a new service utilizing location information has received
recognition.
・Accommodated the digital shift needs of an entire company and provided, in addition to digitalized advertising, acomplete set of consulting services for the overall digital marketing such as preparation of marketing or CRM
strategies, introduction of systems, research, analysis, and operation.
・Established “Studio Opt,” a professional organization for open innovation to create businesses and services by
involving domestic and overseas design firms and creators working as a sole proprietor.
・Established the “Amazon Strategy Department” as a dedicated unit helping business entities make an Amazon
channel shift.
・Won the “Top New Go-to-Market Partner Award” in the IBM Geography Excellence Awards 2018.
・SoldOut, Inc. (securities code: 6553), a consolidated subsidiary in charge of the local/SME client area, played acentral role in performing sales activities and acquiring new clients through 21 sales offices in Japan.
・SoldOut, Inc. started collaboration with Nihon M&A Center Inc. with a proven track record as the top firm in M&Aof SMEs.
・SoldOut, Inc. took a stake in Linkers Corporation operating “Linkers” a business matching service dedicated tothe manufacturing industry.

－

7 －Synergy Investment Business
The financial results (before the allocation of Head Office costs) of the Synergy Investment Business during thethird quarter consolidated accounting period under review are as follows.
(Unit: Yen in millions)
3Q consolidated

Year-on-year growthaccounting period
FY2018rate

Revenue920(32.0)%

Gross profit444(29.3)%

Operating loss

(154)

-※

EBIT

57

-※

EBITDA141-※※ No percentage is indicated because the figure of the third quarter consolidated accounting period under review
or the previous second quarter consolidated accounting period was negative.
In the third quarter consolidated accounting period under review, the Synergy Investment Business had
revenue of JPY920 million (32.0% decrease YoY), gross profit of JPY444 million (29.3% decrease YoY), operating
loss of JPY154 million (cf. operating loss of JPY30 million in the year-ago period), EBIT of JPY57 million (cf. JPY131 million in the year-ago period), and EBITDA JPY141 million (cf. -JPY40 million in the year-ago period).
Major factors for the differences in the year-on-year percentages are as follows.
1)

Revenue decreased by JPY433 million (32.0% decrease YoY) mainly due to the temporary poor performancein the overseas marketing subsidiaries (decrease of JPY294 million) and the impact of the exclusion of WriteupCo., Ltd. from the consolidation as a result of the sale of part of its shares held by the Company during thesecond quarter consolidated accounting period of this year despite an increase of JPY221 million in the cross-2)

border EC business, which was in good shape.
EBITDA increased by JPY182 million to JPY141 million due to the investment gains in overseas investment
subsidiaries despite some overhanging factors such as temporary poor performance in overseas marketing
subsidiaries and the impact of the exclusion of Writeup Co., Ltd. from the consolidation.
As a result, in terms of the consolidated financial results of the Synergy Investment Business during the third

quarter of the fiscal year under review, revenue was JPY3,619 million (1.1% decrease YoY), gross profit JPY1,918
million (2.6% decrease YoY), operating loss JPY236 million (cf. operating income of JPY107 million in the year-ago
period), EBIT JPY959 million (cf. -JPY400 million in the year-ago period) and EBITDA JPY1,127 million (cf. -JPY15
million in the year-ago period).
The definition of AUM has been changed as we started disclosing the valuation of the fair market value (FMV)
associated with our investments from the end of the second quarter consolidated accounting period under review toincrease transparency of our investment performance. AUM is defined as the “sum of the book value of shares ofsubsidiary companies and affiliated companies and the FMV of operational investment securities and investment
securities” from the second quarter consolidated accounting period under review. AUM was JPY26.2 billion as ofthe end of the third quarter consolidated accounting period under review. In addition, the consolidated acquisition
book value (※) is disclosed for the purpose of reference. The acquisition cost is JPY9.8 billion.
※ Sum of the book value of shares of subsidiary companies and affiliated companies and the acquisition cost ofoperational investment securities and investment securities, in which impairment is taken into account.
The FMV of operational investment securities and investment securities are calculated on an issue-by-issue
basis in the following manner.
(With regard to the shares of subsidiaries and affiliated companies, the FMV is the book value)・Issues with a small investment amount: Acquisition cost.
－

8 －・Issues of listed companies: Market value as of the end of September 2018.
・Issues with recent financing (equity financing): Valuation amount based on the value of the relevant financing.
・Other issues are calculated based on the comparable multiple valuation method, discounted cash flow (DCF)
method, or net asset method according to the condition of the business.
Please note that KPMG AZSA LLC has provided us with guidance and advice in calculating FMV for theinvestment business.
In addition to AUM, we decided to start disclosing IRR associated with our investments from the end of thesecond quarter consolidated accounting period under review to increase transparency of our investment
performance. The calculation method for IRR is shown below. IRR for any unsold issues after investment iscalculated on the assumption that they were sold based on this calculation method.
Prerequisites:
・Issues calculated: Those issues invested during the period from 2003 until the end of September 2018
(including business investments).
・Reference date for calculation: End of September 2018.
・Calculation method:1)

Handling of impaired issues:
Calculated on the assumption that they were sold at the net asset value at the time of impairment.

2)

Handling of issues with recent financing (equity financing):
Calculated on the assumption that they were sold at the valuation amount of the share value at the time of3)

financing.
IPO issues:

4)

Calculated on the assumption that they were sold at the market value on the reference date.
Fund issues:
Calculated with the amount collected before the end of September 2018 and the book value as of the endof September 2018.

5)

Other issues:
As for those issues with no change in their acquisition cost due to sale, impairment, financing (equity

financing), IPO, etc., calculation is made on the assumption that they were sold on the reference date at
the acquisition cost.
・Income taxes at the time of calculating IRR: Income taxes are taken into account.
The after-tax IRR calculated based on the above prerequisites as of the end of September 2018 is 16.4%.
Major efforts in the Synergy Investment Business during the third quarter of the fiscal year under review are as
follows Major efforts.
・Established a new company “SIGNATE Inc.” in April 2018. Started, in addition to algorithm development throughcompetition on a data analysis contest platform, an IT specialist personnel recruiting service focused on data
scientists, high-end engineers and high-class human resources to promote the use of AI and big data in business
entities.
・Made an investment, through the OPT Ventures #1 Investment Limited Partnership, in VAZ, Inc., which engages
in the influencer marketing business and non-college graduate job seeker support service business. Took a stakein Linkers Corporation operating “Linkers” a business matching service dedicated to the manufacturing industry.
・Raksul Inc., an existing investee, became listed on the TSE Mothers on May 31, 2018.
・Writeup Co., Ltd., an existing investee, which had been a consolidated subsidiary until the second quarter of the
fiscal year under review, became listed on the TSE Mothers on June 22, 2018.
<Consolidated Results>
OPT Group posted the revenue of JPY20,314 million (0.2% increase YoY), gross profit of JPY4,031 million (0.6%
decrease YoY), operating income of JPY134 million (72.4% decrease YoY), EBIT of JPY520 million (246.8%
increase YoY), EBITDA of JPY2,176 million (322.7% increase YoY), and net income attributable to owners of parent
JPY56 million (cf. net loss of JPY48 million in the year-earlier period) for the third quarter consolidated accounting－

9 －period under review. Please note that there is a large difference between EBIT and EBITDA as the non-cash gain of
JPY1,394 million was posted due to the impairment of goodwill associated with the business transfer in relaido, Inc.,
formerly known as SkillUP Video Technologies Corporation, and the impairment of capitalized software assets.
In addition, Classified, Inc. accounting for approximately 9.0% of the revenue in the previous third quarter
consolidated accounting period was sold in December 2017. In terms of the year-on-year percentages calculated
based on the financial results excluding Classified, Inc. in the previous third quarter consolidated accounting period,
revenue had an 8.4% increase YoY, gross profit a 6.2% increase YoY, operating income a 70.9% decrease YoY,
EBIT a 317.3% increase YoY, EBITDA a 348.7% increase YoY, and net income attributable to owners of parent a
JPY116 million increase YoY (cf. net loss of JPY59 million in the year-earlier period).
As a result, in terms of the consolidated financial results of OPT Group during the third quarter of the fiscal year
under review (including the financial results of Classified, Inc.), revenue was JPY64,069 million (6.3% increase
YoY), gross profit JPY12,833 million (4.2% increase YoY), operating income JPY1,223 million (36.4% decrease
YoY), EBIT JPY2,541 million (38.9% increase YoY), EBITDA JPY4,837 million (61.7% increase YoY), net income
attributable to owners of parent JPY1,236 million (61.5% increase YoY). As for the consolidated financial results
during the same period excluding the financial results of Classified, Inc., revenue had a 15.6% increase YoY, grossprofit a 11.7% increase YoY, operating income a 31.7% decrease YoY, EBIT a 49.9% increase YoY, EBITDA a
70.3% increase YoY and net income attributable to owners of parent a 68.1% increase YoY.
As for corporate functions, OPT Group sees recruiting and developing human resources as an importantmanagement agenda to realize the medium-term management plan, and therefore, reinforced human resources
development by enhancing mid-career recruiting. Moreover, in September 2018, the Group introduced therestricted stock compensation plan and an employees’ shareholding association as an incentive to improve its
corporate value, and started introducing a common system to support corporate functions.

(2) Description of financial position
Assets, liabilities and net assets
Assets:Total assets increased by JPY15,061 million from the end of the previous fiscal year to JPY61,189 million as ofthe end of the third quarter consolidated accounting period under review.
Current assets were JPY53,894 million, an increase of JPY17,610 million from the end of the previous fiscal year.
This is mainly because operational investment securities increased by JPY16,299 million partly due to the fairmarket valuation of shareholdings, and cash and deposits increased by JPY2,372 million partly due to the refund oflease and guarantee deposits and the partial business transfer through an absorption-type demerger of aconsolidated subsidiary.
Noncurrent assets were JPY7,295 million, a decrease of JPY2,548 million from the end of the previous fiscal year.
This is mainly because: (i) goodwill decreased by JPY1,013 million due to the impairment and amortization of
goodwill associated with the partial business transfer through an absorption-type demerger of a consolidated
subsidiary; (ii) lease and guarantee deposits decreased by JPY862 million partly due to the completion of thereserved stock price transaction of own shares; and (iii) shares of subsidiary companies decreased by JPY559
million partly in connection with the sale of shares of subsidiaries and the inclusion of non-consolidated subsidiaries
in the scope of consolidation.
Liabilities:
Total liabilities in the third quarter consolidated accounting period under review increased by JPY3,351 million
from the end of the previous consolidated fiscal year to JPY30,666 million.
Current liabilities were JPY21,342 million, a decrease of JPY622 million from the end of the previous fiscal year.
This is mainly because of the decrease of JPY5,033 million in current portion of long-term loans payable due torepayment and refinancing despite the increase of JPY4,540 million in deferred tax liabilities in connection with thefair market valuation of operational investment securities.
Noncurrent liabilities were JPY9,324 million, an increase of JPY3,974 million from a year earlier. This is mainly
because of the increase of JPY3,957 million in long-term loans payable due to repayment and refinancing.
－

10 －Net assets:
Total net assets in the third quarter consolidated accounting period under review increased by JPY11,710 million
from the end of the previous consolidated fiscal year to JPY30,523 million.
This is mainly because: (i) capital stock increased by JPY376 million in connection with the issuance of newshares as restricted stock compensation; (ii) capital surplus increased by JPY332 million partly due to the issuanceof new shares as restricted stock compensation and the acquisition of additional shares of subsidiaries; and (iii)
valuation difference on available-for-sale securities increased by JPY10,860 million in connection with the fairmarket valuation of operational investment securities.
(3) Description of cash flows
Cash and cash equivalents (hereinafter referred to as “Cash”) were JPY17,887 million as of the end of the third
quarter consolidated accounting period under review, an increase of JPY2,470 million from the end of the previous
consolidated fiscal year (JPY15,417 million) because the Cash earned in operating and investing activities
exceeded the Cash spent in financial activities, etc.
The status of each category of cash flows as of the end of the third quarter consolidated accounting period
under review and major factors are as follows.
Cash flows from operating activities
The increase in Cash from operating activities was JPY529 million (cf., increase of JPY993 million in theprevious consolidated fiscal year).
This is mainly because of the recognition of JPY1,203 million as the gain on sale of investment securities, therecognition of JPY2,520 million as net income before taxes and other adjustments despite the payment of
JPY1,019 million as income taxes, and the recognition of JPY594 million as depreciation.
Cash flows from investing activities
The increase in Cash from investing activities was JPY3,105 million (cf., decrease of JPY1,815 million in theprevious fiscal year).
This is mainly because of the inflow of JPY2,164 million due to partial business transfer through an absorptiontype demerger of a consolidated subsidiary, the inflow of JPY784 million due to the refund of lease and guarantee
deposits and the inflow of JPY524 million due to the settlement of derivatives associated with reserved stock pricetransaction of own shares despite the outflow of JPY678 million due to the acquisition of tangible and intangible
noncurrent assets partly in connection with the solution development centering on advertising technology and theoutflow of JPY321 million due to the acquisition of investment securities including investments in the U.S.
investment funds.
Cash flows from financial activities
The decrease in Cash from financial activities was JPY1,224 million (cf., decrease of JPY2,394 million in theprevious fiscal year).
This is mainly because of the outflow of JPY272 million due to dividend payments and the outflow of JPY6,535
million due to the repayment of long-term loans payable despite the inflow of JPY 5,500 million from long-termloans and the inflow of JPY 454 million due to proceeds from stock issuance to non-controlling shareholders.
(4) Description of consolidated business results and other future forecast information
In terms of the full-year consolidated business results for the fiscal year ending December 2018, the full-year
forecast figures released on February 8, 2018 have been modified. For the details, please refer to the “Notice ofModification to the Forecast of Consolidated Business Results” released on June 13, 2018.

－

11 －

2. Quarterly consolidated financial statements and major notes thereto(1)Consolidated balance sheets(Unit: Yen in thousands)
FY 2017(December 31, 2017)

AssetsAssetsCash and deposits
Notes and accounts receivable-trade
Operational investment securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Tangible noncurrent assets
Intangible noncurrent assets
Goodwill
OthersTotal intangible noncurrent assets
Investment and other assets
Shares of subsidiary companies
Shares of affiliated companies
Investment securities
Lease and guarantee deposits
OthersAllowance for doubtful accounts
Total investments and other assets
Total tangible assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Deferred tax liabilities
Provision for bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Liabilities on retirement benefits
Deferred tax liabilities
Asset retirement obligations
Other
Total noncurrent liabilities
Total liabilities

－

12 －

3QFY2018(September 30, 2018)15,753,327
12,888,753
5,597,559
121,051
509,6311,478,588(64,597)
36,284,315

18,126,296
12,212,634
21,896,859
351,944
157,434
1,202,388(53,099)
53,894,459

464,352

247,049

1,013,891
2,222,152
3,236,044－
1,430,248
1,430,248

579,479
953,506
2,516,572
1,593,798
567,633(67,861)
6,143,129
9,843,526
46,127,842

20,205
1,196,313
2,489,757
730,926
1,244,006(63,308)
5,617,901
7,295,199
61,189,658

10,951,798
49,2006,483,531
432,899
1,924
568,6173,477,067
21,965,038

10,683,080－
1,450,000
813,168
4,542,782
396,933
3,456,076
21,342,041

4,992,297
161,448
73,887
116,8885,122
5,349,644
27,314,683

8,950,000
202,193
65,352
104,705
2,179
9,324,430
30,666,472

(Unit: Yen in thousands)
FY 2017(December 31, 2017)
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeSubscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

－

13 －

3QFY2018(September 30, 2018)

7,835,926
3,567,434
4,214,070(912,886)
14,704,545

8,212,254
3,899,709
4,766,468(698,241)
16,180,190(1,389)10,859,006

515,583

469,193514,193

11,328,199

1,244
3,593,175
18,813,159
46,127,842

992
3,013,804
30,523,185
61,189,658

(2)Consolidated statements of income and consolidated statements of comprehensive income(Quarterly consolidated statements of income)(Third quarter consolidated cumulative period)(Unit: Yen in thousands)
3QFY 2017(from January 1, 2017
to September 30, 2017)

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Gain on investments in partnership
Gain on valuation of derivatives
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission fees
Loss on investments in partnership
Equity in losses of affiliates
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on transfer of businessProfit from reversal of new stock acquisition rights
Other
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Impairment loss
Loss on valuation of investment securities
Loss of sale of investment securities
Other
Total extraordinary losses
Quarterly net income before taxes and otheradjustments
Income taxes
Quarterly net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

－

14 －

3QFY 2018(from January 1, 2018
to September 30, 2018)60,278,879
47,963,937
12,314,942
10,389,401
1,925,540

64,069,761
51,236,337
12,833,424
11,609,710
1,223,714

4,549
40
－
387,000
26,323417,9133,965
160
37,51356,52550,930149,095

29,432
15,440113,310328,32163,621550,125
1,793,328

25,134
15,638－50,26821,061
112,1031,260,706

24,210－2,389
2326,622

1,219,212
506,749240
11,726,204

14,641－－－367
15,00962,015377,204
10,264
15,714
1,673
466,873

1,804,941

2,520,037

831,931
973,010207,365
765,645

1,066,478
1,453,558
217,326
1,236,232

(Quarterly consolidated statements of comprehensive income)(Third quarter consolidated cumulative period)(Unit: Yen in thousands)
3QFY 2017(from January 1, 2017
to September 30, 2017)
Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Share of other comprehensive income ofassociates accounted for using equity method
Total other comprehensive income
Quarterly comprehensive income
Breakdown:Comprehensive income attributable to owners of
the parent
Comprehensive income attributable to noncontrolling interests

－

15 －

3QFY 2018(from January 1, 2018
to September 30, 2018)

973,010

1,453,558(7,522)

10,860,921(62,365)(37,852)

2,571(8,996)(67,317)905,693

10,814,072
12,267,631

699,713

12,050,238

205,980

217,392

(3)Quarterly consolidated statements of cash flows(Unit: Yen in thousands)
3QFY 2017(from January 1, 2017
to September 30, 2017)

Cash flows from operating activities
Net income before taxes and other adjustments
Depreciation
Amortization of goodwill
Loss (gain) on investments in partnership
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Equity in (gain) losses of affiliates
Loss (gain) on valuation of derivatives
Impairment loss
Loss on retirement of noncurrent assets
Loss (gain) on transfer of business
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in liabilities on retirement
benefits
Interest and dividends income
Interest expenses
Decrease (increase) in trade receivable
Decrease (increase) in operational investment
securities
Decrease (increase) in inventories
Decrease (increase) in notes and accounts
receivable-trade
Increase (decrease) in accrued consumption taxes
Other
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Income taxes refund
Cash flows from operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from redemption of investment securities
Proceeds from transfer of business
Proceeds from acquisition of shares in subsidiaries
accompanying change in scope of consolidation
Payments for sales of investments in subsidiaries
resulting in change in scope of consolidation
Proceeds from settlement of derivatives
Payments of lease and guarantee deposits
Proceeds from refund of lease and guarantee
deposits
Payment of loans receivable
Proceeds from collection of loans receivable
Other
Cash flows from investing activities

－

16 －

3QFY 2018(from January 1, 2018
to September 30, 2018)

1,804,941
561,746
254,918
113,310(24,210)－328,321(387,000)－
14,641－2,520,037
594,382
237,232(37,513)(1,203,498)
10,26450,268(56,525)
377,204
62,015(506,749)(76,476)

7,441(84,213)(160,650)

20,77145,222(4,589)29,432(1,304,101)(4,126)25,134
382,781(679,252)(401,906)(68,653)(343,184)

1,379,209(189,436)

423,866
278,824
2,581,486
3,272(28,739)(1,576,692)
14,660993,987(20,980)
142,305
1,529,720
3,575(24,800)(1,019,372)
40,064
529,186(17)－(62,935)(858,303)(370,787)
50,546
139,470－(198,597)
285,908(31,765)(646,614)(321,715)
238,576
378,023
2,164,000

56,888－－(57,995)－(3,755,700)

524,678(33,339)

3,013,001

784,466(101,817)
79,130(5,244)(1,815,768)(15,287)
73,414(38,524)
3,105,226

(Unit: Yen in thousands)
3QFY 2017(from January 1, 2017
to September 30, 2017)
Cash flows from financial activities
Net increase (decrease) in short-term loans
payableProceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of common stock
Proceeds from stock issuance to non-controllingshareholders
Repayments of finance lease obligations
Repurchase of shares
Repurchase of shares by subsidiaries in
consolidation
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Purchase of investments in subsidiaries not
resulting in change in scope of consolidation
Other
Cash flows from financial 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
Increase (decrease) in cash and cash equivalents
resulting from change of scope of consolidation
Cash and cash equivalents at end of period

－

17 －

3QFY 2018(from January 1, 2018
to September 30, 2018)(155,900)(16,200)

1,650,000(2,207,359)
301,599

5,500,000(6,535,492)－

1,509,508

454,328(46,893)(2,868,273)(44,556)(318)(110,000)(146,551)(416,899)(272,369)(47,800)(24,309)－(135,450)(2,223)(2,394,244)(3,234)(1,224,153)(42,979)(14,183)(3,259,004)

2,396,077

18,234,074

15,417,161－

74,208

14,975,070

17,887,447

(4)Notes on Quarterly Consolidated Financial Statements
Notes on going concern assumptions:Not applicable.
Notes if there is significant change in the amount of shareholders’ equity:
Capital stock and capital surplus increased by JPY376,327 thousand each in the consolidated cumulative third
quarter under review as the Company issued new shares on September 3, 2018 as restricted stock compensation
to the directors and employees of the Company and its subsidiaries in accordance with the resolution by the boardof directors on August 17, 2018.
Retained earnings and treasury stock decreased by JPY214,963 thousand each as the Company retired
282,528 shares of treasury stock on September 3, 2018 in accordance with the resolution by the board of directors
on August 17, 2018.
Consequently, as of the end of the third quarter consolidated accounting period, capital stock was
JPY8,212,254 thousand, capital surplus JPY3,899,709 thousand, retained earnings JPY4,766,468 thousand andtreasury stock JPY698,241 thousand.

－

18 －

(Segment Information, etc.)【Segment Information】
I Third quarter of consolidated cumulative period of last fiscal year (From January 1, 2017 to September 30,
2017)
1 Information on amount of revenue, profit or loss of each Reporting segment(Unit: Yen in thousands)
Reporting Segment
Synergy
Investment
Business

MarketingBusinessAmount recognized inconsolidated financial
statements

Adjustment(Note) 1

Total

Revenue
Revenue to externalcustomers

56,714,816

3,564,062

60,278,879－

60,278,879

53,15895,091

148,249(148,249)－

Total
Profit (loss) of segment(Note) 2

56,767,975

3,659,153

60,427,129(148,249)

60,278,879

2,737,346(400,195)

2,337,150(507,366)

1,829,784

EBITDA

3,376,038(15,324)

3,360,714(369,809)

2,990,904

Internal revenue ortransfers between
segments(Note) 3

Interest paid – Interest received

24,842

Quarterly net income before taxes and other adjustments

1,804,941

Total income taxes

831,931

Income taxes – current

749,659

Income taxes - deferred, etc.

82,271

Quarterly net income attributable to non-controlling shareholders

207,365

Quarterly net income attributable to owners of parent
765,645(Notes) 1. The adjustment amount of JPY(507,366 thousand) for segment profit and loss includes elimination ofintersegment transaction, headquarter management cost of JPY(779,532 thousand) that is not allocated toeach reporting segment and profit from valuation of derivatives of JPY387,000 thousand that is related toforward stock transaction of the Company’s own shares.
2. Segment profit and loss is denoted in EBIT (Net income before taxes and other adjustment ＋ interest paid －interest received)
3. EBITDA = EBIT + Other finance-related profits (losses) + Depreciation + Amortization of intangible assets +Amortization of long-term prepaid expenses + Non-cash gain and loss
4. Business results of 3QFY2017 included business results of Classified Inc. that was sold at the end of last fiscal
year. Revenue, profit and loss of each reporting segment of 3QFY2017 excluding the impact of Classified Inc.
is as follows.
(Unit: Yen in thousands)

Reporting Segment
MarketingBusiness

Synergy
Investment
Business

Adjustment
Total

Amount recognized inconsolidated financial
statements

Revenue
Revenue to externalcustomers
Internal revenue or transfers
between segments
Total
Profit (loss) of segment(Note) 2
EBITDA (Note)351,819,547

3,587,939

55,407,486－

55,407,486

53,15890,225

143,383(143,383)－

51,872,706

3,678,164

550,550,870(143,383)

55,407,486

2,572,709(381,184)

2,191,525(496,241)

1,695,283

3,195,379

3,686

3,199,066(358,683)

2,840,382(3,018)Interest paid – Interest received
Quarterly net income before taxes and other adjustments－

1,698,302

19 －Total income taxes, etc.

785,682

Income taxes – current

706,260

Income taxes - deferred

79,422

Quarterly net income attributable to non-controlling shareholders

177,382

Quarterly net income attributable to owners of parent

735,237

2

Information concerning loss on impairment of noncurrent assets and goodwill by reporting segment(Significant loss on impairment of noncurrent assets)
Not applicable(Significant change in the amount of goodwill)
Not applicable(Significant gain on negative goodwill)
Not applicableII
1

Third quarter of consolidated cumulative period of last fiscal year (From January 1, 2018 to September
30, 2018)
Information on amount of revenue, profit or loss of each reporting segment(Unit: Yen in thousands)
Reporting Segment
MarketingBusiness

Synergy Investment
Business

Total

Adjustment(Note) 1

Amount recognizedin consolidated
financial statements

Revenue
Revenue to externalcustomers

60,512,467

3,557,294

64,069,761－

64,069,761

28,441

61,752

90,193(90,193)－

Total
Profit of segment(Note) 2

60,540,908

3,619,047

64,159,955(90,193)

64,069,761

2,979,180

959,300

3,938,481(1,397,435)

2,541,045

EBITDA

5,026,295

1,127,925

6,154,220(1,316,466)

4,837,753

Internal revenue ortransfers between
segments(Note) 3

Interest paid – Interest received

21,008

Quarterly net income before taxes and other adjustments

2,520,037

Total income taxes

1,066,478

Income taxes – current

1,280,459

Income taxes, deferred(213,980)

Quarterly net income attributable to non-controlling shareholders

217,326

Quarterly net income attributable to owners of parent
1,236,232(Notes) 1. The adjustment amount of JPY(1,397,435 thousand) for segment profit includes elimination of intersegment
transaction, headquarter management cost of JPY(1,273,611 thousand) that is not allocated to each reporting
segment and profit from valuation of derivatives of JPY56,525 thousand that is related to forward stocktransaction of the Company’s own shares.
2. Segment profit is denoted in EBIT (Net income before taxes and other adjustment ＋ interest paid －interest
received)
3. EBITDA = EBIT + Other finance-related profits (losses) + Depreciation + Amortization of intangible assets +Amortization of long-term prepaid expenses + Non-cash gain and loss
2

Information on assets of each reporting segment
The assets of each reporting segment for the third quarter consolidated accounting period under review
significantly changed from the end of the previous consolidated fiscal year. This is outlined as follows.
In the Synergy Investment Business, segment assets increased by JPY14,621,822 thousand due to theimpact of the fair market valuation of shares associated with new listing of Raksul Inc. an investee of the－

20 －Company during the second quarter consolidated accounting period.
3

Information concerning loss on impairment of noncurrent assets and goodwill by reporting segment(Significant loss on impairment of noncurrent assets)
In the Marketing Business segment, the Company posted impairment loss of software and others. The

amount posted as such impairment loss was JPY341,558 thousand in the consolidated cumulative third
quarter under review.
In the Synergy Investment Business, the Company posted impairment loss of software and others. The
amount posted as such impairment loss was JPY35,646 thousand in the consolidated cumulative third
quarter under review.

－

21 －

(Significant change in the amount of goodwill)In the Marketing Business, goodwill decreased by JPY714,945 thousand as the Company transferred
the video delivery solution business of relaido, Inc. (formerly known as SkillUP Video Technologies
Corporation) a consolidated subsidiary of the Company on September 1, 2018.
(Significant gain on negative goodwill)
Not applicable
4

Item concerning change of reporting segment, etc.
(Change of classification method of reporting segment)
The company have changed classification method of reporting segment from the first quarter
consolidated accounting period FY2018. The company had formerly three business segments “Marketing
Business”, “Investment & Incubation Business”, “Overseas Business”. The company formulated new
medium term business plan “THE LEADER in DIGITAL SHIFT: NEW STAGE 2020” with targeted period
from January 2018 to December 2020 and changed reporting segment to two business segments“Marketing Business”, “Synergy Investment Business” accompanying revision of allocation ofmanagement resources and performance evaluation from first quarter consolidated accounting period.
Regarding segment information of previous third quarter consolidated cumulative period, the company
listed based on classification of revised reporting segment.

(Material subsequent events)
Not applicable－22 －