UNOFFICIAL TRANSLATION
The formal official document is in Japanese
Summary of Consolidated Financial Results for the First Quarter of
Fiscal Year ending September 30, 2016 (Japanese Accounting Standards)
January 29, 2016
Listed Company Name: MTI Ltd.
Listing Exchanges: Tokyo Stock Exchange
Securities Code:9438
URL: http://www.mti.co.jp
Representative:
Toshihiro Maeta, President and Chief Executive Officer
Contact:
Hiroshi Matsumoto, Director
Phone: +81-3-5333-6323
Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): February 10, 2016
Scheduled date of dividend payment: –Supplementary documents for quarterly results: Yes
Quarterly results briefing: Yes (for securities analysts and institutional investors)(Figures less than one millions of yen are omitted)

1. Consolidated business results for the three months ended December 31, 2015
(October 1, 2015 – December 31, 2015)(1) Consolidated operating results (cumulative total)
Net sales

Operating income

Millions of yen

First quarter of fiscal year ending
September 30, 2016
First quarter of fiscal year ended
September 30, 2015
(Note) Comprehensive income:(Percentages represent year-on-year changes)
Profit attributable toOrdinary income
owners of parent% Millions of yen% Millions of yen% Millions of yen

%

8,547

4.1

1,121

(15.9)

1,117(15.0)

697

(8.3)

8,209

9.5

1,333

46.7

1,315

51.1

761

78.8

Three months ended December 31, 2015: 711 millions of yen (19.1) %Three months ended December 31, 2014: 880 millions of yen 95.2%
Net income
Net income
per shareper share/diluted

First quarter of fiscal year ending
September 30, 2016
First quarter of fiscal year ended
September 30, 2015

Yen

Yen

12.25

12.10

15.12

14.91

We conducted a 2-for-1 share split which became effective as of April 1, 2015. Net income per share and net income per share diluted are calculated on theassumption that this share split was carried out at the beginning of the previous fiscal year.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

As of December 31, 2015
As of September 30, 2015
(Reference) Shareholders’ equity:

Equity ratio

Millions of yen%

23,884
16,876
24,738
16,591
As of December 31, 2015: 16,330 millions of yen
As of September 30, 2015: 16,034 millions of yen

68.4
64.8

2. Dividends
End of firstquarter
Fiscal year ended
September 30, 2015
Fiscal year ending
September 30, 2016
Fiscal year ending
September 30, 2016 (forecast)End of second
quarter

Dividend per share
End of third
quarterYear end

Annual

Yen

Yen

Yen

Yen

Yen

–

12.00

–

8.00

20.00

8.00

–

8.00

16.00

–

(Note) Revision of dividend forecast for during this period : No

The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. The dividend per share at the endof the second period of the fiscal year ended September 30, 2015 is calculated based on the number of shares before the stock split,
but the year-end dividend per share is calculated based on the number of shares after the stock split.
The dividend per share at the end of the interim period of the fiscal year ended September 30, 2015, 12 yen, is the sum of a common
dividend of 10 yen and a dividend of 2 yen in commemoration of the change in the market where the stock is listed.

3. Forecast for consolidated business results for the fiscal year ending September 30, 2016
(October 1, 2015 – September 30, 2016)
Net sales(Percentages represent year-on-year changes.)
Profit attributable to
Net income
Ordinary income
owners of parent
per share

Operating income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

For the first half

17,200

3.5

2,000

(5.1)

1,980

(2.7)

1,130

3.8

19.82

Full year

35,000

4.6

4,700

10.7

4,660

12.4

2,700

3.6

47.35

(Note) Revisions to forecasts for consolidated business results published most recently: No* Notes(1) Important changes of subsidiaries during the term (changes in specified subsidiaries resulting in change in scopeof consolidation): Not applicable
New: –
Exception: –(2) Application of specific accounting treatment to the preparation of quarterly consolidated financial statements: Not
applicable(3) Changes in accounting policies and changes or restatement of accounting estimates(i) Changes in accounting policies due to the modification in accounting methods:(ii) Changes in accounting policies other than (i):(iii) Changes in accounting estimates:(iv) Restatement:Yes
Not applicableNot applicableNot applicable(4) Number of outstanding shares (common shares)(i) Number of shares outstanding at the end of period (including treasury shares):12/2015: 60,285,200 shares
9/2015: 60,226,800 shares(ii) Number of treasury shares at the end of period
12/2015: 3,260,928 shares
9/2015: 3,260,928 shares(iii) Average number of shares during the period (quarterly consolidated cumulative period)
Three months ended 12/2015: 56,983,793 shares Three months ended 12/2014: 50,366,089 shares
The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. The average number of shares during the period is calculatedon the assumption that this share split was carried out at the beginning of the previous fiscal year after these stock splits.

* Status of a quarterly review
A quarterly review under the Financial Instruments and Exchange Act was being conducted at the publication of this summary of
consolidated financial results.

* Cautionary statement with respect to forward-looking statements
The forward-looking statements included in this material are based on the Company’s judgments, assumptions, and convictions
based on information available to the Company at the time of publication of this document and may differ materially from actual
results for a range of factors, including conditions of Japanese and overseas economies, changes in the situation of operations inJapan and overseas, and uncertainties and potential risks inherent in forward-looking statements. The risks and uncertainties include
unforeseeable effects of future events. The information on consolidated earnings forecasts and other future forecasts on page 3-4of the Accompanying Materials describes notes on the assumptions of the earnings forecasts and the use of the earnings forecasts.
The Company will hold a briefing on earnings in the first three quarters chiefly for securities analysts and institutional investors on
Monday, February 1, 2016. A video of the briefing and a document to be used at the briefing will be posted on the Company’s
website as soon as the briefing ends. (A video is Japanese only.)Accompanying materials – Contents
1. Qualitative information on financial results for the current settlement ................................................................... 2(1) Explanation on operating results ................................................................................................................... 2(2) Explanation on financial position ................................................................................................................. 3(3) Explanation of future forecast information including consolidated forecast ................................................ 3
2. Matters relating to summary information (Notes)..................................................................................................... 5(1) Changes in important subsidiaries during the period ...................................................................................... 5(2) Adoption of specific accounting methods for producing quarterly consolidated financial statements ......... 5(3) Changes in accounting policies, changes in accounting estimates, restatements .......................................... 5
3. Quarterly consolidated financial statements ........................................................................................................... 6(1) Quarterly consolidated balance sheet ............................................................................................................ 6(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income ................................................................................................................................................................ 8(3) Notes concerning quarterly consolidated financial statements ....................................................................10(Notes concerning going concern assumption) ............................................................................................10(Notes on significant changes in shareholders’ equity) ................................................................................10

1

1. Qualitative information on financial results for the current settlement(1) Explanation on operating results
Although sales of smartphones slowed in terms of units, the penetration of smartphones continued to climb
thanks to solid replacement demand, among other factors, during the release of new models.
In this environment, the Company aggressively conducted promotions and focused on the acquisition of
paying subscribers on smartphones with its own content that has high average revenue per user (ARPU). As aresult, the number of paying smartphone subscribers increased to 6.1 million at the end of December 2015 (up0.1 million from the end of September 2015).
The number of paying subscribers on feature phones continued to decline to 1.84 million at the end of
December 2015 (down 0.1 million from the end of September 2015). Despite this, the total number of paying
subscribers at the end of December 2015 stood at 7.94 million, remaining flat from the end of September 2015,
helped by the efforts of focusing on the expansion of the number of paying smartphone subscribers.
Net sales climbed to ¥8,547 million (up 4.1% year on year), mainly due to the improvement of the averagerevenue per user (ARPU) in major services as a result of success in acquiring paying smartphone subscribers
with a high ARPU. Gross profit also rose to ¥7,184 million (up 4.6% year on year).
Operating income, ordinary income and profit attributable to owners of parent came to ¥1,121 million (down
15.9%), ¥1,117 million (decreasing 15.0%) and ¥697 million (declining 8.3%), respectively, reflecting an
increase in selling, general and administrative expenses(SG&A) mainly due to a rise in advertising expenses foracquiring paying smartphone subscribers, despite the increase in gross profit.
Consolidated business results(From October 1, 2015 to December 31, 2015)
First quarter
First quarterof the fiscal year ending of the fiscal year ended
September 30, 2016
September 30, 2015

ChangePercentagechangeAmountmillions of yen

millions of yen

millions of yen%

Net sales

8,547

8,209

+337

+4.1

Cost of sales

1,362

1,343

+19

+1.4

Gross profit

7,184

6,865

+318

+4.6

SG&A

6,062

5,532

+530

+9.6

Operating income

1,121

1,333

(211)

(15.9)

Ordinary income
Profit attributable to ownersof parent

1,117

1,315

(197)

(15.0)

697

761

(63)

(8.3)

Breakdown of SG&A
(From October 1, 2015 to December 31, 2015)
First quarter
First quarterof the fiscal year ending of the fiscal year ended
September 30, 2016
September 30, 2015

ChangePercentagechangeAmountmillions of yen

millions of yen

millions of yen

%

Total

6,062

5,532

+530

+9.6

Advertising expenses

2,532

2,021

+511

+25.3

Personnel expenses

1,341

1,374

(32)

(2.4)

Commission fee

954

896

+57

+6.4

Subcontract expenses

374

350

+23

+6.7

Depreciation

298

353

(54)

(15.5)

Other

561

535

+25

+4.8

2

(2) Explanation on financial position
1) Assets, Liabilities and Net assets
At the end of the first quarter under review, total assets declined ¥853 million from the end of September 2015,
to ¥23,884 million.
Current assets decreased ¥1,095 million, mainly due to the fall in cash and deposits and accounts receivableother. Non-current assets increased ¥242 million, largely as a result of the increase in investment securities,
offsetting the decrease in software.
Current liabilities dropped ¥1,166 million, primarily reflecting the decline in income taxes payable andaccrued consumption taxes, despite the increase in accounts payable-trade. Non-current liabilities increased ¥28
million, chiefly due to the rise in net defined benefit liability.
Net assets increased ¥284 million, chiefly due to the posting of ¥697 million in profit attributable to ownersof parent, even though cash dividends were paid.
Total assets

Net assets

Equity ratio

millions of yen

millions of yen%

As of December 31, 2015

23,884

16,876

68.4

As of September 30, 2015

24,738

16,59164.8(3) Explanation of future forecast information including consolidated forecast
The Company will aim to achieve the consolidated forecast by continuing to focus on the expansion of thenumber of paying subscribers on smartphones, and will work to increase the average revenue per user (ARPU)
from the second quarter.
The Company’s strength lies in the fact that it has developed the largest sales channel by far for promoting
sales of its own and other companies’content to customers at cellphone shops throughout Japan. Leveraging thisstrength, it will strive to promote the sales of its own content that generates high ARPU and boost the numberof paying subscribers on smartphones.
By responding to their needs, the Company will also work to enhance the lineup of high value-added services
to enhance customer satisfaction, and by taking advantage of its strength, it will increase the ratio of customers
who subscribe to services that generate high ARPU among paying smartphone subscribers.
With respect to the healthcare-related service business which the Company is undertaking from a medium- tolong-term perspective, the Company will implement various strategies to achieve sales growth, given that its
future growth potential is large and that it could become a more stock-type business than before by supporting
the life stage of customers for a longer term.
Our forecasts for consolidated business results for the first half and the full year of the fiscal year ending
September 30, 2016 remain unchanged from the values announced on November 4, 2015.
Forecasts for consolidated business results for the first half of fiscal year ending September 30, 2016
(From October 1, 2015 to March 31, 2016)
Consolidated
Net sales

17,200 millions of yen(Up 3.5% year on year)

Operating income

2,000 millions of yen(Down 5.1% year on year)

Ordinary income

1,980 millions of yen(Down 2.7% year on year)

Profit attributable toowners of parent

1,130 millions of yen(Up 3.8% year on year)3Forecast for consolidated business results for the fiscal year ending September 30, 2016
(From October 1, 2015 to September 30, 2016)
Consolidated
Net sales

35,000 millions of yen(Up 4.6% year on year)

Operating income

4,700 millions of yen(Up 10.7% year on year)

Ordinary income

4,660 millions of yen(Up 12.4% year on year)

Profit attributable toowners of parent

2,700 millions of yen(Up 3.6% year on year)42. Matters relating to summary information (Notes)(1) Changes in important subsidiaries during the period
Not applicable.
(2) Adoption of specific accounting methods for producing quarterly consolidated financial
statements
Not applicable.
(3) Changes in accounting policies, changes in accounting estimates, restatements
Changes in accounting policy（Adoption for Accounting Stardard for Business combirations）
Effective from the first quarter of the fiscal year under review, the “Accounting Standard for Business
Combinations” (ASBJ statement No. 21, September 13, 2013; hereinafter the “Accounting Standard forBusiness Combinations”), the “Accounting Standard for Consolidated Financial Statements” (ASBJ
statement No. 22, September 13, 2013; hereinafter the “Accounting Standard for Consolidated Financial
Statements”) and the “Accounting Standard for Business Divestures” (ASBJ statement No. 7, September 13,
2013; hereinafter the “Accounting Standard for Business Divestures”) are applied. The purpose of applying
these standards was to change the method for recording the difference from changes in the Company’s equity
in its subsidiaries that remain controlled by the Company as capital surplus and the expenses related toacquisition as an expense in the consolidated fiscal year in which the expenses are incurred. For businesscombinations implemented after the beginning of the first quarter of the fiscal year under review, the method
will be changed to one that reflects the revision of the distributed amounts of acquisition costs bydetermining provisional accounting treatment in the quarterly consolidated financial statements for thequarterly consolidated accounting period to which the date of the business combination belongs. In addition,
the Company has changed the presentation of net income and other items and the presentation of minority
interests to non-controlling interests. To reflect this change, the quarterly consolidated financial statements
and the consolidated financial statements for the first quarter of the previous fiscal year and the previous
fiscal year have been replaced.
The application of the Accounting Standard for Business Combinations and the other standards follows
the transitional treatment specified in Article 58-2 (4) of the Accounting Standard for Business
Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated Financial Statements, andArticle 57-4 (4) of the Accounting Standard for Business Divestitures. The application of these standards
has been underway since the beginning of the first quarter of the fiscal year under review, and will continue
to be applied going forward.
This change has no impact on profits and losses.

53. Quarterly consolidated financial statements（1） Quarterly consolidated balance sheets
Fiscal year ended September 30, 2015 and the first quarter of fiscal year ending September 30, 2016
(Thousands of yen)Previous fiscal year
(As of September 30, 2015)

Current fiscal year
(As of December 31, 2015)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade

11,608,562
6,885,765

11,196,675
6,870,950

Deferred tax assets
Other

358,149
1,430,037

214,953
914,412

Allowance for doubtful accounts(71,095)(81,229)

20,211,420

19,115,761

146,488

146,532

Intangible assets
Software2,254,746

2,114,582

Goodwill
Other

336
22,168－24,060Total intangible assets

2,277,251

2,138,643

Investments and other assets
Investment securities

796,241

1,045,777

Lease and guarantee deposits
Deferred tax assets

501,636
792,649

501,279
926,678

Other
Allowance for doubtful accounts

30,145(17,589)

27,839(17,589)

Total investment and other assets

2,103,083

2,483,985

Total current assets
Noncurrent assets
Property, plant and equipment

Total noncurrent assets
Total assets

6

4,526,824

4,769,160

24,738,244

23,884,922

(Thousands of yen)Previous fiscal year
(As of September 30, 2015)

Current fiscal year
(As of December 31, 2015)

Liabilities
Current liabilities
Account payable-trade
Current portion of long-term loans payable

1,179,484
518,679

1,369,531
518,206

Accounts payable-other
Income taxes payable

2,571,997
1,354,619

2,403,056
464,764

Provision for bonuses
Allowance for coin usage－
234,836

148,008
228,924

Other

1,334,097

894,713

Total current liabilities

7,193,715

6,027,203

Long-term loans payable
Net defined benefit liability

79,925
832,740

75,736
867,490

Negative goodwill
Other

40,541
141

38,261
141

Total noncurrent liabilities

953,349

981,629

8,147,064

7,008,833

Shareholders' equity
Capital stock

4,947,984

4,957,342

Capital surplus
Retained earning

5,469,051
6,300,484

5,478,410
6,542,697

Treasury stock(695,491)(695,491)

Total shareholders' equity

16,022,029

16,282,959

83,691

114,719

Noncurrent liabilities

Total liabilities
Net assets

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment(7,837)(7,195)Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeSubscription rights to shares(62,969)(60,320)

12,88447,202

127,100

133,702

Non-controlling interests

429,165

412,224

Total net assets
Total liabilities and net assets

7

16,591,180

16,876,089

24,738,244

23,884,922

（2） Quarterly consolidated statements of income and quarterly consolidated statementsof comprehensive income
Quarterly consolidated statements of income
For the first quarter of the fiscal year ended September 30, 2015 and fiscal year ending September 30, 2016
(Thousands of yen)First quarter of the previous
fiscal year

First quarter of the current
fiscal year

(from October 1, 2014
to December 31, 2014)(from October 1, 2015
to December 31, 2015)

Net sales

8,209,168

8,547,153

Cost of sales

1,343,629

1,362,805

Gross profits

6,865,539

7,184,348

Selling, general and administrative expenses

5,532,205

6,062,458

Operating income

1,333,333

1,121,889

Interest income
Dividend income

18
2,196

8
2,237

Amortization of negative goodwill
Foreign exchange gains

2,279

2,279
3,170

Non-operating income

Gain on reversal of subscription rights to shares
Insurance income

－
3,866
5,000

Other

6,908

－
－
2,240

Total non-operating income

20,269

9,937

1,364

1,030

21,12910,052

15,606

3,168

Non-operating expenses
Interest expenses
Share of loss of entities accounted for using
equity method
Other
Total non-operating expenses
Ordinary income

38,10014,251

1,315,502

1,117,575

32,198

9,078

Extraordinary income
Extraordinary loss
Loss on retirement of non-current assets
Total extraordinary loss

32,1989,078

1,283,304

1,108,497

Income taxes-current
Income taxes-deferred

308,935
139,005439,311(6,935)

Total income taxes

447,941

432,375

Net income

835,362

676,121

Profit (loss) attributable to non-controlling interests

74,059(21,817)

Profit attributable to owners of parent

761,303697,939

Income before income taxes and minority interests

8Quarterly consolidated statements of comprehensive income
For the first quarter of the fiscal year ended September 30, 2015 and fiscal year ending September 30, 2016
(Thousands of yen)First quarter of the previous
fiscal year

First quarter of the current
fiscal year

(from October 1, 2014
to December 31, 2014)(from October 1, 2015
to December 31, 2015)

Net income
Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

835,362

676,12126,652

31,07013,083

1,874

3,055

2,649

2,407

221

45,19935,815Comprehensive income

880,562

711,937(Comprehensive income attributable to)Comprehensive income attributable toowners of the parent
Comprehensive income attributable tonon-controlling interests

814,013732,258

66,548(20,320)9

（3） Notes concerning quarterly consolidated financial statements(Notes concerning going concern assumption)
Not applicable.
(Notes on significant changes in shareholders’ equity)
Not applicable.

10