OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

For the sake of improved understanding of the Company’s financial performance for non-Japanese
investors, this earnings release is prepared in a different format from the Japanese original TSE filingdocument released on August 8, 2019. In the event of any discrepancy between this English document
and the Japanese original, the original shall always prevail.
August 8, 2019
OPT Holding, Inc. (TSE 2389)
Consolidated Financial Results for the Six Month Ended June 30, 2019 (J-GAAP, Unaudited)Tokyo, August 8, 2019, OPT Holding, Inc. (“the Company”) announced today its consolidated financial results for thethree month ended on June 30, 2019. (From April 1 to June 30, 2019, “2019 Q2”)
(Amount are rounded down to the nearest million yen)
Consolidated Operating Results for 2019 Q2(in million yen, unless otherwise stated)

Revenue
Operating Income or loss

Three month ended on June 30

Six month ended on June 30

2019

2018

2019

2018

20,141

20,982(4.0)%

41,69643,755(4.7)%

81

-*3

(121)

1,089

-*3

(14)

842

-*3

(528)

YoY(%)

YoY(%)

Ordinary Income

(456)

(31)

-*3

EBIT*1

(724)

1,127

-*3

(281)

2,020

-*3

EBITDA*2

(247)

1,395

-*3

438

2,660

(83.5)%

(596)

663

-*3

(353)

1,179

-*3

Earnings per share- diluted (yen)

-

29.07

-*3

-

51.86

-*3

Earnings per share- basic (yen)(26.06)

29.35

-*3

(15.46)

52.14

-*3

Net income(loss) attributable to owners of parent

Note:
1.
2.
3.

EBIT= Net income (loss)before taxes and other adjustment＋interest paid－interest received
EBITDA = EBIT + other financial related gains (losses)+ depreciation + amortization of intangible assets + amortization of
long-term prepaid expenses + Non-cash gain(loss)
Figures were omitted due to relevant amounts in reporting or the previous period are negative.

Consolidated Balance Sheet Data
(in million yen, unless otherwise stated)

As of June 30, 2019

As of December 31, 2018

Total assets*3

59,88856,551

Net assets

31,60627,133Equity attributable to owners of parent*3

27,46823,476

Ratio of equity attributable to owners of parent (%)

45.9%

41.5%

Assets under management (AUM) *4

27,004

21,218

Note:

4.
5.
6.

Partial amendments to Accounting Standards for Tax Effect Accounting (ASBJ statement No.28, February 16, 2018) wereapplied from the beginning of first quarter in 2019, and total assets and ratio of equity attributable to owners of parent as ofDecember 31, 2018 which were revised retrospectively.
AUM: Aggregate amount of (1) book value of subsidiaries’ and affiliates’ stocks and (2) fair market value (FMV*6) of operational
investment securities and invested securities.
FMV (Fair market value): an estimated market value of a property or a liability, based on third-party transaction between aknowledgeable and willing buyer and a knowledgeable and willing seller

The AUM calculation is prepared with guidance and advice by KPMG Azsa.

Appropriate use of earnings forecast and forward looking statement
Although forward-looking statements contained in this document are based upon what management of the Company believes are reasonable assumptions, there can be no assurance
that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company
undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities
laws. The reader is cautioned not to place undue reliance on forward-looking statements.
The information contained in this material is carefully scrutinized before presentation as it is intended to facilitate your understanding of the Company’s business, management policies
and plans, financial position, etc. However, we do not guarantee its accuracy, completeness, effectiveness, or security. None of the information herein is prepared to solicitate
investment. The final decision on investing should be made by you, under your own responsibility. We will not be responsible or liable for any consequences resulting from investments
made by you in reference to, or by use of, the information.
Any information herein other than past or present facts represents our future outlook developed based on the input currently available, and includes various risks and uncertainties.
Thus, please note that actual business results released at a later date may differ due to such factors
Please see page 9, of this document for appropriate use and note on assumptions for earnings forecast. .

－1 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

3. Dividends
2019

2018

End of Q1 (yen)End of Q2 (yen)-2019 Forecast
0.00-

End of Q3 (yen)--End of Q4 (yen)

19.00

-

19.00

Total

The Company sets a consolidated payout ratio target of 20% of profit attributable to owners of parent before amortization of goodwill fromthe year ended December 31, 2017. The Company does not make a forecast for annual dividend for the year ending December 2019.

4. Forecast for the year ending December 31, 2019(in million yen)
Marketing Business2019

YoY(%)

Revenue

86.500

7.3%

EBIT

2.900

(24.0)%EBITDA

3.450(27.8)%

Synergy Investment Business
AUM (Range)

15~20%

Internal Rate of Return; IRR (Range)

15~20%

Corporate Function cost
Selling, general & administration cost

2,300

Note: Revision from the previous earnings forecast: Revised
EBIT and EBITDA forecasts of Marketing Business are before Corporate Function cost allocation
For the details of IRR calculation: See page 9 of footnote for Management Discussions and Analysis.

For more information: URL: https://www.optholding.co.jp/en/ir/
Coming Schedule for IR events and documents
Quarterly financial report (in Japanese): August 8, 2019
Effective Date of dividend payment: Additional materials and events 2019 Q2 results
Supplementary document for the results meeting: Available
Earnings conference for analysts and institutional investors: Held on August 8, 2019
Video streaming of results meeting: Available immediately after earnings conference in Japan
Changes in important subsidiaries for the reporting period
There was no material change in specific subsidiaries accompanying a change in scope of consolidation
Changes in accounting policies and changes in accounting estimates(1) Changes in accounting policies required by amendments to accounting standards, etc.: None
(2) Other accounting policies except for item (1): None
(3) Accounting estimates: None
(4) Retrospective restatements: None
Number of shares issued –Common stock2019 Q2
Number of shares issued including treasury shares
Number of treasury shares

23,817,700
917,7052019 Q2

Average number of shares during the period

22,899,995

2018
23,817,700
917,7052018 Q2
22,617,573

Change in monetary unit on financial statements
From the beginning of this reporting period, the unit amount shown on quarterly financial statements and other items has
been changed to JPY million from JPY thousand.
－2 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

Table of Contents
1. Management Discussion and Analysis....................................................................................................................... 4
Results of Operations………………………………………………………………………………………………………... 4
Overview of the Financial Position………………………………………………………………………………………….. 9
Consolidated Cash Flows…………………………………………………………………………………………………… 9
Earnings Forecast for Year ending December 31, 2019………………………………………………………............. 10
2. Quarterly Consolidated Financial Statements and Primary Notes……………………………………………………. 12(1) Quarterly consolidated balance sheets……………………………………………………………………………........ 12(2) Quarterly consolidated statements of income and comprehensive income………………………………………… 14
Quarterly consolidated statements of income……………………………………………………………………… 14
Quarterly consolidated statements of comprehensive income……………………………………….................. 15(3) Quarterly consolidated statements of cash flows…………………………………………………………………........ 16(4) Notes on Quarterly Consolidated Financial Statements……………………………................................................ 18
Notes on the premise of going concern........................................................................................................... 18
Notes on significant change in equity amounts………………………………………………….......................... 18
Additional information……………………………………………………………………………………………........ 18
Information of reporting segment ………………………………………………………………………………....... 18
Important subsequent event………………………………………………………………………………………...... 20－

3 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

1. Management Discussion and Analysis(1) Results of Operations
OPT group (hereinafter “the Group”) set the management policy to maximize corporate value and cash flows by leading
any and all corporate "digital shift" in response to the rapidly advancing digital industrial revolution, based on the missionof "support, innovate, and create digital industrial revolution.”
In addition to internet ad agency business, which is our current pillar, we, as a Digital Shift (DS) company, are developing
our strategy in the following three dimensions (so called “3DS (Digital Shift) strategy”). The first is "Support DS for clients.”
The Group will serve for corporate clients to provide broader range of marketing solutions from 1P (“Promotion”, which wecurrently provide) to 7Ps (Promotion, Price, Product, Place, Personnel, Process and Physical Evidence). By providing
7Ps, the Group will extend the coverage of services and products. The second is “Innovate DS with clients”. The Groupaims to take a role to accelerate corporate digital shift and to innovate through the alliance with client companies or
establishing JVs with them. The third is "Create DS by Ourselves", which aims to create digital services from zero to one
which is free from conventional business formats and ways of operating. Through these three dimensions, the Group aims
to realize our business model diversification.
Also, in our core management policy, maintaining strong financial foundation is essential to increase our corporate value,at the same time, we will proactively utilize management resources, especially cash. We set at least 10% IRR (internalrate of return) as our targeted return from the investments, however, we are aiming to maximize shareholders’ return byaccelerating mid-to-long term EPS growth through following measures. We plan to implement around JPY 20 billion
investment on existing businesses related to digital shift and, different from this investment, M&A for digital shift creation
for the next three years or so.
The results of operation for the three month ended on June 30, 2019 (hereinafter 2019 Q2) were as follows.
(in million yen unless otherwise stated)2019 Q2

Year-on-year change (%)
Adjusted*6

ActualRevenue
Gross profit

Actual20,141
3,484(1.4)%(13.8)%(4.0)%(16.3)%

Operating income or loss

(528)

-*7

-*7

Ordinary income

(456)

-*7

-*7

Extraordinary profit

(271)

-*7

-*7

EBIT (Non-GAAP) *1

(724)

-*7

-*7

EBITDA (Non-GAAP) *2

(247)

-*7

-*7

Net income (loss)attributable to owners of parent

(596)

-*7

-*7

ROE*3 (Last twelve month; LTM, %)

1.54%

-

(5.80)pts

(472)

-*7

-*7

Free cash flow*4(Non-GAAP)
Earnings per share- diluted (yen)Earnings per share- basic (yen)

-*5

-

-

(26.06)

-*7

-*7

Note:
1.
EBIT= Net income (loss)before taxes and other adjustment＋interest paid－interest received
2.
EBITDA = EBIT + other financial related gains (losses)+ depreciation + amortization of intangible assets + amortization of longterm prepaid expenses + Non-cash gain(loss)
3.
Return on equity (ROE): Net income attributable to owners of parent in last twelve months/average amount of equity as of the endof reporting quarter and the same quarter in previous year
4.
Free cash flow (FCF)=Operating cash flow+ investing cash flow ±one-off cash flow items
5.
Earnings per share-diluted for 2Q of the fiscal year ended December 31, 2019 is not presented as the earnings per share for thequarter was a net loss although dilutive potential common shares exist
6.
Figures are compared to excluding the impact of the business transfer implemented during 2018 Q3. Approx. 2.7% of quarterly
consolidated sales for 2018 Q2 was by video streaming business, operated by relaid Inc., (formally Skill-up Video Technology,
Inc.,).
7.
Figures were omitted due to relevant amounts in reporting or the previous period are negative

Results by reporting segment is as follows.
The Group analyses and reports financial results for two reporting segments, Marketing Business and Synergy Investment
Business and Corporate Function costs. Earnings of Marketing Business and Synergy Investment Business are shown
before Corporate Function cost allocation.

－

4 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

Marketing Business
Marketing Business consists of two sub-segments: Large Corporation, which includes OPT, Inc. and seven otherconsolidated subsidiaries providing online advertising, digital marketing, and related services to enterprise clients. And
Local SMEs, which includes Soldout, Inc., and five other subsidiaries providing a variety of digital marketing solutions inregional areas.
The table below shows 2019 Q2 results of Marketing Business.
(in million yen unless otherwise stated)2019 Q2

Year-on-year change (%)
Adjusted*1

ActualRevenue
Gross profit

Actual19,2693,141(0.2)%(6.3)%(3.0)%(9.6)%

303(57.1)%(53.6)%

Ordinary profit

301

-*2

-*2

Extraordinary profit

(62)

-*2

-*2

EBIT(Non-GAAP)

238(66.6)%(63.9)%EBITDA(Non-GAAP)

396(53.9)%(55.9)%

Operating profit

Note:
1.
To provide a more accurate comparative analysis of earnings, changes are shown adjusted to exclude the impact of any
businesses not included in the current quarter's earnings due to such as business sell-off during the previous year. The reporting
period excludes earnings from video streaming business of relaido, Inc. in Large Corporation sub-segment (the business wastransferred after company-split in 2018 Q3. Recorded JPY 561 million of revenue in 2018 Q2).
2.
Figures were omitted due to relevant amounts in reporting or the previous period are negative.

Demand for Internet ad in Japan has continued to grow by replacing traditional media such as TV and flyers. In addition,
associated with diversification of Internet media, demands for digital marketing and digital shift by corporate clients havebeen further increased. On the other hand, same as in 1Q 2019, the trends which is reduction of advertising budget andshifting to in-house in part of existing clients have been continued.
In this market environment, the Group has made efforts for not only continuing existing marketing business but also
proposal sales heading to digital shift support for corporate clients, development solution and our own products, inaddition to acquiring new clients.
In the Q2 consolidated accounting period, the Marketing Business recognized revenue of JPY 19,269 million (down 3.0%
YoY), gross profit of JPY 3,141 million (down 9.6% YoY), operating profit of JPY 303 million (down 53.6% YoY), ordinary
profit of JPY 301 million (ordinary loss of JPY 74 million in 2018 Q2), extraordinary loss of 62 million (JPY 2 million in 2018
Q2) , EBIT of JPY 238 million (down 63.9% YoY), and EBITDA of JPY 396 million (down 55.9% YoY).
The key changes excluding the impact of businesses transfer in the previous Q2 consolidated accounting period were: sales
decreased by 0.2%, gross profit decreased by 6.3%, operating income decreased by 57.1%, EBIT decreased by 66.6%,
and EBITDA decreased by 53.9%. (Ordinary income and extraordinary profit were omitted due to the amounts in previous
period are negative.)
Although the Group has focused on new large project orders primarily from national clients, the Company has made adownward adjustment in the earnings forecast of the Marketing Business segment for the fiscal year ended December 31,
2019. The adjustments in the forecast are due to a decrease in advertising budget of certain existing clients in the Large
Corporations sub-segment for the Q2 consolidated accounting period along with and a decrease in gross profit margin of
certain clients as a result of an intense competitive environment for new projects which surpassed initial forecasts.
After excluding results of relaido Inc.’s video streaming business from 2018 Q2, the reasons for the changes in the key items
were as follows.
(1) In the Large Corporation sub-segment, the Group will continue to focus on acquiring new projects from national clients,
and will recognize large scale orders acquired through competition in the upcoming Q3. However, the trend of reduction
advertising budgets by a part of large clients started from Q1 has carried over into Q2, resulting in revenue of JPY 14,573
million (down 5.8% YoY). In the Local/SMEs sub-segment, the revenue was JPY 4,836 million, increased by 20.3%, due
to acquisition of new clients and an increase in advertising costs, driven by the business expansion of existing clients.
As a result, the revenue of the Marketing Business was JPY 19,269 million (down 0.2% YoY).
(2) With respect to operating income, although the Company is attempting to reduce the SG&A expenses in the first half of2019, continuous investments of personnel recruiting / training has led to an increase in SG&A expenses for both theLarge Corporations and the Local/SMEs sub-segments in anticipation of extended future business growth from theprevious quarter. In the Large Corporations sub-segment, operating income was JPY 180 million (down 68.2% YoY),
due to a decline in the gross profit accompanied by a decline in revenue, and poor performance of sales incentive frommedia in addition to the decrease in gross profit margin of certain new projects. In the Local SME sub-segment, operating
income was JPY 123 million (down 12.9% YoY), due to a decline in sale incentive from certain media, despite ofincreased revenue. As a result, operating income in the Marketing Business was JPY 303 million (down 57.1% YoY).
(3) EBIT for the entire Marketing Business decreased to JPY 238 million (down 66.0% YoY). In the Large Corporation sub－5 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

segment, EBIT was JPY 119 million (down 76.8% YoY) due to an increase in extraordinary loss from impairment ofsoftware resulted from the reorganization of Brainy Inc., a consolidated subsidiary. In the Local SMEs segment, EBIT
was JPY126 million (down 13.4% YoY) due to a decrease in operating profit.
(4) EBITDA for the entire Marketing Business decreased to JPY 396 million(down 53.9% YoY).In the Large Corporations
sub-segment, EBITDA was JPY 250 million(down 63.6% YoY) due to a decrease in EBIT despite the reversal of
extraordinary loss such as amortization of software and impairment loss. In the Local SME’s segment, EBITDA was
JPY145 million (down 14.5% YoY) due to a decrease in EBIT.
As a result, in the Q2 cumulative consolidated accounting period of the Marketing Business, revenue was JPY 39,567 million(down 3.8% YoY), gross profit was JPY 6,706 million (down 8.6% YoY), operating profit was JPY 1,159 million (down 44.0%
YoY), ordinary profit was JPY 1,170 million (down 12.6% YoY), extraordinary loss of 71 million (extraordinary loss of JPY 2
in 2018 Q2) EBIT was JPY 1,097 million (down 47.1% YoY), EBITDA was JPY 1,366 million (down 47.1% YoY).
After adjustment of the streaming business results of relaido Inc. in the previous year, revenue in 2019 Q2 was 1.1% lower
YoY, gross profit was 5.5% lower YoY, operating profit was 45.9% lower YoY, ordinary income was 17.2% lower YoY, EBIT
was 48.9% lower YoY, and EBITDA was 44.6% lower YoY. (Extraordinary profit were omitted due to the amounts in reportingand previous period are negative.)
The major activities in Marketing Business for this fiscal year were as follows.
•

Actions for acquiring large-scale new clients such as manufacturers and retail distributors were taken principally
through OPT, Inc.
OPT, Inc.'s activity highlights:•-

Began offering creative production packages optimized for TikTok's unique outlook, in order to promotesales of TikTok's advertising services. Strengthened marketing support services for wide range ofgeneration especially for young people.

-

Certified as a “five-star agent of Criteo Certified Partners”, the highest rank in Japan, for four consecutive
periods (certified in half a year).

-

Launched new marketing support program utilizing CDP for promoting digital shift for real store operators.
CDP (Customer Data Platform) is a platform to collect, accumulate, and integrate individual user’s profileand behavioral data without specific private information. Every user touching point data will be integrated
into single user ID and it leads better services by sales personnel and promotion activities. OPT is the firstagent among Japanese agencies to register “ US CDP association” and aims to be a leading company inthis field by actively holding events and seminars and introducing cases of CDP usage inside and outside ofJapan.

-Started to provide a newly developed analytic tool. It is an analytic tool for consumer insights; byconstructing unique database with 37 profiles, 63 items, and log data which were obtained from a survey
about purchase information and personal values toward more than 10,000 panels. With this tool, OPT will
support more efficient marketing activities by providing concrete image of target users.

-

Awarded Gold in Technology Partner and Sales Partner in LINE Account Connect division and also
awarded Silver in Sales Partner of LINE Ad Platform division in LINE Biz-Solutions Partner Program Award
2019 1st half, which certify their partners for their corporate service division. .

Implemented sales activities and new client acquisition at 21 sites in Japan, by SoldOut Inc., (hereinafter,“SoldOut”, securities code: 6553).and other subsidiaries in Local/SMEs segment.

SoldOut’s activity highlights:-

Switched to the TSE First Section on March 22 2019.

-Awarded the LINE Ads Platform Bronze Sales Partner Award in the LINE Biz-Solutions Partner Program
2019 1st half awards.

-

TechLoCo, Inc., a consolidated subsidiary of SoldOut released “lycle GMB (Google My Business, “GMB”),”
a tool to enter and control registration, updates, and improve efficiency on GMB from the LINE Talk Screen.
The strength of this service is seamless controllability realized by joint development with LINE Corporation
and Google. This service support store operators’ marketing activities such as promoting recognition andcustomer attraction through widely spreading their attractive information with accuracy and easy-to-use
operating system.

－

6 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

Synergy Investment Business
The Synergy Investment Business consists of the Business Development and Financial Investments sub-segments. The
Business Development consists of SIGNATE, Inc.,(“SIGNATE”) which is involved mainly in AI business, and of the China
cross-border business, while the Financial Investments consists of OPT Ventures # 1 and # 2 funds and investment
businesses managed by OPT America, etc.,. It also includes the Overseas Marketing Business.
The table below shows 2019 Q2 results and KPIs of Synergy Investment Business. There is no item to be adjusted in thesame period of previous year.
(in million yen unless otherwise stated)2019 Q2

Year-on-year change (%)

Revenue
Gross profit

877
368

(23.8)%(47.3)%

Operating income

(276)

-*2

Ordinary income

(48)

-*2

Extraordinary profit

(332)

-*2

EBIT(Non-GAAP)

(382)

-*2

EBITDA (Non-GA

(140)

-*2

AUM*1

27,004(10.1)%

IRR*1

13.0%

(2.7)pts

Note:1.
AUM and IRR compare the recent previous quarter (2019 Q1). The details for calculation are disclosed in footnote on page 9.
2.
Figures were omitted due to relevant amounts in reporting or the previous period are negative.

In 2019 Q2, the Synergy Investment Business recognized revenue of JPY 877 million (down 23.8% YoY), gross profit of
JPY 368 million (down 47.3% YoY), operating loss of JPY 276 million (JPY 118 million in 2018 Q2), ordinary loss of JPY
48 million (JPY 350 million in 2018 Q2), extraordinary loss of 332 million (extraordinary profit of JPY 1,270 million in 2018
Q2), EBIT of JPY (382) million (JPY 941 million in 2018 Q2), and EBITDA of JPY (140) million (JPY 944 million in 2018
Q2).
The reasons for the difference from the second quarter of FY2018 are as follows.
(1) Revenue of Synergy Investment Business decreased by 23.8% year on year to JPY 877 million due to the impact fromthe deconsolidation of Writeup Co., Ltd. (hereinafter referred to as “Writeup”) and the sale and liquidations of overseas
subsidiaries (JPY355 million decreased YoY).
(2) Gross profit, same as revenue, decreased by 47.3% year on year to JPY 368 million mainly due to the impact fromdeconsolidation of Writeup (JPY 218 million decreased YoY).
(3) Operating loss was JPY (276) million (JPY 158 million decrease from JPY (118) million YoY).
(4) Although ordinary loss was negatively impacted by an operating loss, ordinary loss was JPY (48) million (JPY 301 million
increase from JPY (350) million YoY), as the US investment fund income improved from a loss of JPY 191 million in theprevious year to income of JPY 121 million in in financial investment sub-segment.
(5) Extraordinary loss was JPY (332) million (JPY 1,603 million decrease YoY), due to a gain of JPY 1,270 million recognizedfrom the sale of Writeup Inc. shares in the previous year, an impairment loss of JPY 41 million in domestic affiliates, andan impairment loss of JPY 281 million in overseas investments.
(6) EBITDA increased JPY 241 million compared with EBIT due to reversal of the impairment loss of the investment ofChina business, but it was JPY (140) million decreased JPY1,085 million from JPY 944 million year on year due toextraordinary gain from transfer of Writeup’s share in 2018 Q2.
As a result, in the cumulative consolidated Q2 of the Synergy Investment, revenue was JPY 2,138 million (decreased by
20.8% YoY), gross profit was JPY 985 million (decreased by 33.1% YoY), operating loss was JPY 190 million (operating
loss of JPY 81 million YoY), ordinary profit of JPY 61 million (ordinary loss of JPY 398 million YoY), extraordinary loss of
326 million (extraordinary profit of JPY 1,270 million YoY) , EBIT was JPY (267) million (JPY 901 million YoY), and
EBITDA was JPY 16 million (decreased by 98.3% YoY).
The major activities in Synergy Investment Business for this fiscal year were as follows.
•

In financial investment sub-segment, OPT Ventures # 2 Investment Partnership LLC completed the first close andinvested on Sider Inc., a provider of an AI tool for code review, on Zainar, Inc., a US company involved in developing
and selling the system of identifying and synchronizing real-time location using wireless technology and on Crassone.
co., Ltd. operating a matching platform for housebreakers.

•

Transfer of all the shares of Writeup, an existing investee.

－

7 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results•

In business development sub-segment, SIGNATE, Inc. solves companies’ AI development using open innovation, witha membership base consisting of office workers and students possessing AI developmental skills. Participation ofthese members will expand the scope of the explanatory analysis, which has a significant influence on the accuracy of
AI models, and will make the procurement of advanced AI possible. The number of registrants has increased,
exceeding 20,000 users within a year from inception.

•

SIGNATE released “Aldebaran,” a platform for supporting to manage, operate, and re-learn of AIs and machinelearning models support manage. Corporate users become able to use AI and machine learning model from the API
without preparing compiling environment for them with initial setting supervised by SIGNATE’s data scientists.
SIGNATE will provide one-stop service from “development” of AIs and machine learning models, which SIGNATE
have been providing, to “management, operation, and re-learning” of the developed programs.

•

Digital Shift Academy (DSA) has been established to support customers in development of digital human resources.
DSA supports digital shift of clients by developing human resources which can formulate and propose digital shiftbusinesses and strategies through lectures, workshops, and technological tours to China.

•

In China business, the Company established OPT China, Inc. by incorporation-type of company split to take over the
China businesses operated by OPT Holding, in order to expand its earnings and to realize efficient group management(effective from 1 April 2019) . OPT China has changed its business model from conventional cross-border eCommerce where sales contact is limited to special EC site to general trading model. In addition, OPT China is aiming
to expand its business by changing its main vendors to Japanese SMEs with exclusive selling rights in China granted
to OPT China, and by creating a structure to develop best-selling products with the manufacturers.
The Company discloses AUM (Assets Under Management) and IRR (Internal Rate of Return) to enhance thetransparency of investment returns. At the end of the Q2 consolidated accounting period, AUM was JPY 27,004 million(down 10.1% compared to 2019 Q1), due to the decrease in market value of Raksul Inc., and impairment losses incurredfrom overseas investments. IRR after tax at the end of June 2019 was 13.0 %, and decreased by 2.7 point at the end of
the 1Q consolidated accounting period in relation to the decline in market value of SoldOut Inc.. (Please see footnotes on
page 10 for detailed calculation method applied to AUM and IRR)
Corporate Function cost.
The table below shows 2019 Q2 results of Corporate Function cost.
(in million yen unless otherwise stated)2019 Q2

Difference from 2018 Q2*

Selling and administrative expense
Operating income or loss

(538)
(538)

(77)
(77)

EBIT(Non-GAAP)

(572)

(92)

EBITDA(Non-GAAP)

(483)

(32)

Note: Negative amount means increase of expense on this table.

The Corporate Functions acknowledges recruiting and development of human resources as an important management
agenda to realize the medium-term management plan. Moreover, in September 2018, as a result of introducing a
restricted stock compensation plan as an incentive to improve its corporate value, SG&A costs in the Corporate Function
for 2019 Q2 was JPY (538) million, (JPY (460) million in 2018 Q2), and EBITDA was JPY (483) million (JPY (450) million
in 2018 Q2).
As a result, in the Q2 of cumulative consolidated period of the Corporate Function, SG&A expenses were JPY (1,077)
million (JPY (908) million in 2018 Q2), EBITDA was JPY (924) million (JPY (910) million in 2018 Q2).
Consolidated Results of Operations for 2019 Q2
Based on the segment results above, in 2019 Q2, revenue was JPY 20,141 million (down 4.0% YoY), gross profit was JPY
3,484 million (down 16.3% YoY), operating loss was JPY 528 million (operating profit of JPY 81 million in 2018 Q2),
ordinary loss was JPY 456 million (JPY 31 million in 2018 Q2), extraordinary loss was JPY 271 million (extraordinary profitof JPY 1,152 million in 2018 Q2), EBIT was JPY (724) million (JPY 1,127 million in 2018 Q2), and EBITDA was JPY (247)
million (JPY 1,395 million in 2018 Q2), and net loss attributable to owners of the parent was JPY 596 million (net profit of
JPY 663 million in 2018 Q2).
In case of removing the streaming business results of relaido Inc. of the previous second quarter, the revenue was 1.4%
lower and gross profit was 13.8% lower year on year. (Comparative of the same period of operating profit, ordinary profit,
extraordinary profit, EBIT and net profit attributable to owners of the parent were omitted because of the relevant amounts
in the current reporting period are negative.)
As a result, revenue in the second cumulative quarter was JPY 41,696 million (down 4.7% YoY), gross profit was JPY 7,662
million (down 12.9% YoY), operating loss was JPY 121 million (operating profit of JPY 1,089 million in 2018 Q2), ordinary
loss was JPY 14 million (ordinary profit of JPY 842 million in 2018 Q2), extraordinary loss was JPY 275 million (extraordinary
profit of JPY 1,164 million in 2018 Q2), EBIT was JPY (281) million (JPY 2,020 million in 2018 Q2), EBITDA was JPY 438
million (down 83.5% YoY), and net loss attributable to parent company shareholders was JPY 353 million (net profit of JPY
1,179 million in 2018 Q2).
－

8 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

In case of removing the streaming business results of relaido Inc. of the previous second quarter, the revenue was 2.2%
lower YoY, gross profit was 10.4% lower YoY and EBITDA was 82.8% lower year on year. (Comparative of the same period
of operating profit, ordinary profit, extraordinary profit, EBIT and net profit attributable to owners of the parent were omitted
because of the relevant amounts in the current reporting period are negative.)(2) Overview of the Financial Position
Partial amendments to Accounting Standards for Tax Effect Accounting (ASBJ statement No.28, February 16, 2018) wereapplied from the beginning of the 1Q consolidated accounting period and the financial position was comparative withretroactive restatement of the previous consolidated accounting year end.
(Assets)
Total assets at the end of the 2Q consolidated accounting period year were JPY 59,888 million, an increase of JPY 3,336
million from the end of the previous fiscal year.
Current assets were JPY 53,692 million, an increase of JPY 3,601 million from the end of the previous consolidated fiscal
year. This is mainly due to the increase of JPY 7,233 million in operating investment securities, but the decrease in notes
and accounts receivables trade of JPY 1,960 million, and decrease in cash and deposits of JPY 1,552 million.
Non-current assets were JPY 6,195 million, a decrease of JPY 265 million from the end of the previous consolidated fiscal
year. This is mainly due to the increase of JPY 98 million in intangible non-current assets but the decrease of JPY 171
million in other non-current assets including deferred tax, a decrease of JPY 147 million in shares of subsidiaries, and adecrease of JPY 132 million in investment securities.
(Liabilities)
Total liabilities at the end of the period were JPY 28,281 million, a decrease of JPY 1,136 million from the end of the previous
year.
Current liabilities were JPY 15,841 million, a decrease of JPY 2,737 million from the end of the previous year. This is due toa decrease of JPY 1,059 million in other current liabilities including consumption taxes payable, a decrease of JPY 1,063
million in notes and accounts payable-trade, a decrease of JPY 361 million in income taxes payable, and a decrease of JPY
252 million in provision for bonuses.
Non-current liabilities were JPY 12,440 million, an increase of JPY 1,600 million from the end of the previous year. This ismainly due to an increase of JPY 2,236 million in deferred tax liabilities resulting from the market valuation of operating
investment securities, offset by a decrease of JPY 650 million in long-term loans payable.
(Net Assets)
Total net assets at the end of period under review increased by JPY 4,472 million from the end of the previous year to JPY
31,606 million. This is mainly due to an increase of JPY 4,963 million from valuation difference on available-for-salesecurities, and an increase of JPY 481 million in non-controlling interests, offset by a decrease of JPY 788 million in retained
earnings due to dividends declared and a quarterly net loss attributable to owners of parent, as well as a decrease of JPY
127 million in foreign currency translation adjustment.
(3) Consolidated Cash Flow
Cash and cash equivalents (hereinafter referred to as “Cash”) were JPY 18,047 million at the end of the 2Q consolidated
accounting period, a decrease of JPY 1,551 million from the end of the previous fiscal year due to cash outflows fromoperating and investing activities. The following is the status of cash flows and major factors of each activity.
Cash flows from operating activities
Cash from operating activities decreased by JPY 537 million (JPY 1,341 million increase YoY). The increase in cash ismainly due to the decrease in notes and accounts receivable-trade by JPY 1,831 million, offset by a decrease in notes andaccounts payables-trade by JPY 1,028 million, a decrease from payment of income taxes by JPY 933 million, and a quarterly
net loss before taxes and other adjustments of JPY 289 million.
Cash flows from investing activities
Cash from investing activities decreased by JPY 440 million (JPY 739 million increase YoY). This decrease in cash flows
was mainly due to the purchase of intangible assets of JPY 376 million.
Cash flows from financial activities
Cash from financial activities decreased by JPY 497 million (JPY 827 million decrease YoY). This decrease in cash flows
was mainly due to the increase of JPY 643 million from non-controlling shareholders, offset by the decrease of JPY 650
million due to repayment of long-term loans and decrease of JPY 434 million from payments of cash dividend.

－

9 －OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(4) Earnings Forecast for Year ending December 31, 2019
With respect to the earnings forecasts of the Marketing Business for the full fiscal year ended December 31, 2019, revenue
and profit items during 2019 Q2 same as 2019 Q1, were lower on YoY basis. For 2019 Q3 and thereafter, althoughacquisition of brand advertisers and new large clients in the retail sector by entering the competition is expected, profitabilityof large projects is lower than existing projects due to intensifying competitive environment. Thus, the full fiscal year
earnings forecasts released on February 8, 2019 is revised as follows.
(in million yen unless otherwise stated)

Full year of earnings forecasts for FY2019
Revenue

EBIT

EBITDA

Original forecasts (A)Revised forecasts (B)93,50086,500

5,000
2,950

5,550
3,450

Difference from original forecast (B-A)(7,000)(2,050)(2,100)Change (%)(7.5)%(41.0)%(37.8)%

Reference: FY2018 (C) *80,579

3,814

4,780

Difference YoY (B-C)

5,921

(864)

(1,330)Change (%)

7.3%(22.7)%(27.8)%

Note: Figures exclude the performance from video streaming business of relaido, Inc.(formally Skill-up Video Technology, Inc.) because
the business was transferred in FY2018 Q3

2nd half of earnings forecast for FY2019(in million yen unless otherwise stated)
Revenue

EBIT

EBITDA

Original forecasts (A)Reference: FY2018 (B) *46,93340,581

1,853
1,664

2,084
2,311

Difference YoY (B-C)

6,352

189

(227)

Change (%)

15.7%

11.3%

(9.8)%

Note: Figures exclude the performance from video streaming business of relaido, Inc.(formally Skill-up Video Technology, Inc.) because
the business was transferred in FY2018 Q3

For key items, the factors for increases/ (decreases) compared to the earnings forecasts from February 8, 2019 are noted
below.
(1)

With regard to revenue, the Large Corporations sub-segment has acquired large projects through proactive sales
activities centering on participating the competitions to acquire new large clients focused on brand advertisers andretailers. On the other hand, the trend seen in 2019 Q1 that some large clients reduce their advertising budget,
contrary to initial beginning of the year forecasts, is expected to continue in 2019 Q2 and thereafter. As a result, in the
Large Corporations sub-segment, while the revenue growth rate after 2019 Q3 is expected to recover toapproximately 14%, it is difficult to cover the decline in revenue to 2019 Q2. Similarly for the Local SMEs subsegment, as result of scrutinizing the full fiscal year revenue forecast, although the revenue growth rate for 2019 Q3
and thereafter is expected to recover to approximately 24%, it is expected to be difficult to cover the transaction
volume decline in some large clients during 2019 Q1 through the full fiscal year, and the revenue forecast for theentire Marketing Business is revised to JPY 86,500 million for a decrease of 7.5 % from original forecast.

(2)

EBIT and EBITDA are expected to decrease by JPY 900 million in the Large Corporations sub-segment, and JPY 500
million in the Local SMEs sub-segment due to a decrease in gross profit from a decline in revenue, for a total
decrease of approximately JPY 1,400 million. Further, for new projects in the Large Corporations sub-segment, due toreduction of margins in the advertising agency business resulting from price competition with rival companies andreduction in revenue incentives from media in connection with a slowdown in the revenue growth, gross profit isexpected to decrease by approximately JPY 1,600 million yen compared with original forecasts. In addition, despite
efforts to reduce SG&A expenses, as the Company continues to hire new graduates and provides training to achieve
long-term growth, the upward revision from original forecasts in EBIT and EBITDA is expected to remain at JPY 900
million. Accordingly, forecasted EBIT and EBITDA for the Marketing Business are revised to JPY 2,950 million (down
41.0% from original forecasts) and to JPY 3,450 million (down 37.8% from original forecasts) respectively.

The Company will take countermeasures blow and make efforts for profit recovery from FY2020 onward.
••

The Company will promote further BPR & BPO to reduce the business operating costs (e.g. automation of operations,
utilization of nearshore/offshore etc.), and utilize AI technologies for work saving.
The Company will expand training programs of the HR Development Center to increase sales per person throughearly sales force enablement/ development of human resources.

There are no changes in the outlook for the Synergy Investment Business and the HD management costs.

－

10 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

Footnotes for the definitions for KPIs
Assets Under Management (AUM)
AUM is defined as aggregate amount of 1) book value of subsidiaries’ and affiliates’ stocks and 2) fair market value of
operational investment securities and invested securities. For assets categorized 2), impairment will be reflected to thevalue to be aggregated.
(1)

Shares of subsidiaries and affiliates; book value is applied(2)

Operational investment securities and investment notes and securities: each notes and security’s FMV is calculated
depending on the classification shown below;
i.
ii.
iii.
iv.

Notes or securities of which investment amount is small: acquisition price
Listed companies’ shares: closing price at the end of reporting period
Securities with financing in recent period: based on value of relevant financing
Other securities estimated by comparable multiple, DCF, or net asset valuation depending on eachcompany’s performance
The AUM calculation is prepared with guidance and advice by KPMG Azsa.
Internal Rate of Return (IRR)
Prerequisites for calculation (Un-sold securities are calculated as if they are sold)

Subject to : Those the Company has invested in from 2003 to the end of June 2019 (including securities ofoperational investment securities, investment securities, shares of subsidiaries and shares of affiliates)

The reference date for calculation: June 30, 2019

Method:1.
Impaired investment: Calculated as if they were sold at the net asset value after impairment.
2.
Investment with recent financing: Calculated as if they were sold at the finance valuation.
3.
IPOed investment: Calculated as if they were sold at the market value as of the reference date.
4.
Fund: Calculated with the amount collected until the end of the reporting period and the book value as ofthe end of reporting period.
5.
Others: Any other investment with no change in their acquisition cost due to sale, impairment, financing,
IPO or the like are calculated as if they were sold on the reference date at the acquisition cost.
Income tax are included

－

11 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

Quarterly Consolidated Financial Statements and Primary Notes(1)

Quarterly consolidated balance sheets(Unit: yen in millions)
As of December 31, 2018

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Operational investment securities
Inventories
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Tangible noncurrent assets
Intangible noncurrent assets
Other
Total intangible noncurrent assets
Investments and other assets
Shares of subsidiary companies
Shares of affiliate companies
Investment securities
Lease and guarantee deposits
Other
Allowance for doubtful accounts
Total investment and other assets
Total noncurrent assets
Total assets

－

12 －

As of June 30, 2019

19,631
13,652
15,337
252
1,266
(49)
50,091

18,078
11,692
22,570
29
1,351
(30)
53,692

299

312

1,498
1,498

1,597
1,597

0
1,027
2,208
731
775
(80)
4,662
6,460
56,551

0
880
2,076
773
603
(47)
4,286
6,195
59,888

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(Unit: yen in millions)
As of December 31, 2018
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Income taxes payable
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
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 income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets

－

13 －

As of June 30, 201912,163
1,300
557
727
3,829
18,578

11,100
1,300
196
475
2,769
15,841

8,700
200
1,831
104
1
10,83929,418

8,050
209
4,068
110
1
12,44028,281

8,212
3,915
5,442
(698)
16,872

8,212
3,859
4,654
(698)
16,027

6,214

11,177

390
6,604
0
3,656
27,13356,551

263
11,44004,138
31,60659,888

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(2) Quarterly consolidated statements of income and consolidated statements of comprehensive income
Quarterly consolidated statement of income for three month ended on June 30, 2019

Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income or loss
Non-operating income
Investment gain on equity method
Gain on investments in partnership
Gain on valuation of derivatives
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses

2018 Q2(From January 1 to June 30,
2018)
43,75534,954
8,801
7,711
1,089

(Unit: yen in millions)2019 Q2(From January 1 to June 30,
2019)41,69634,033
7,662
7,784
(121)

56
38
94

103
128
231

17
24

12
29

Loss on investments in partnership
Investment loss on equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on change in equity
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss of retirement of non-current asset
Impairment loss
Loss on sales of investment securities
Loss on valuation of investment securities
Other
Total extraordinary losses
Quarterly net income (loss)before taxes and otheradjustments
Total income (loss)taxes
Quarterly net income(loss)
Quarterly net income (loss)attributable to noncontrolling interests
Quarterly net income(loss) attributable to owners ofparent

－

14 －

233

-

30
35
341
842

78
4
123
(14)

1,185
0
1,186

232
0
(97)
134

3
1
15
1
21

22
43
336
8
410

2,006

(289)

666
1,340

164
(453)

161

(99)

1,179

(353)

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

Quarterly statement of comprehensive income for three month ended on June 30, 2019
(Unit: Yen in millions)

Net income(loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests－

2018 Q1(From January 1 to June 30,
2018)
1,340

2019 Q1(From January 1 to June 30,
2019)
(453)

7,334
(139)

4,959
(111)

(18)

(17)

7,176
8,517

4,831
4,377

8,361
156

4,481
(104)

15 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(3)

Quarterly consolidated statements of cash flows(Unit: Yen in millions)2018 Q2
2019 Q2(From January 1 to June (From January 1 to June30, 2018)
30, 2019)

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Amortization of goodwill
Loss (gain) on investments in partnership
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Share of loss (profit) of entities accounted for using equity
methodLoss (gain) on valuation of derivatives
Impairment loss
Loss on retirement of non-current assets
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Loss (gain) on change in equity
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in investment securities for sale
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividend 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 sales of investment securities
Refund of investment securities
Payments for sales of shares of subsidiaries resulting in change
in scope of consolidation
Payments for sale of businesses
Proceeds from derivative settlement
Payments for lease and guarantee deposits
Decrease in lease and guarantee deposits
Payments of loans receivableCollection of loans receivable
Other, net
Cash flows from investing activities

－

16 －

2,006
404
165
233
(1,170)
-

(289)
265
(103)
336

30

(37)

(56)
1
3
11
(80)
33
(3)
17
370
(177)
(298)
165
(164)
420
1,915
2
(17)
(600)
40
1,341

43
22
(35)
(260)
22
(3)
12
(116)
1,831
(58)
223
(1,028)
(947)
508
383
3
(12)
(933)
21
(537)

(199)
287
(22)
(434)
(171)
58
-

(45)
(376)
(85)
51
228

(57)

-

524
(27)
783
(15)
66
(52)
739

(177)
(50)
7
(0)
15
(6)
(440)

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(Unit: Yen in millions)2018 Q2
2019 Q2(From January 1 to June (From January 1 to June30, 2018)
30, 2019)
Cash flows from financial activities
Net increase (decrease) in short-term loans payable
Repayment of long-term loans payable
Proceeds from payments from non-controlling shareholders
Repayments of finance lease obligations
Repurchase of treasury shares
Purchase of subsidiary’s treasury shares
Cash dividends paid
Cash dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries
that do not result 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 fromchange of scope of consolidation
Cash and cash equivalents at end of period

－

17 －

(16)
(745)
441
(30)
(0)
(88)
(272)
(24)

(650)
643
(0)
(12)
(434)
(44)

(90)

-

(2)
(827)
(77)
1,175
15,417(497)(75)(1,551)
19,59874-

16,666

18,047

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(4) Notes on Quarterly Consolidated Financial StatementsInQ3(Note on the premise of a going concern)
Not applicable.
(Notes on significant changes in the amount of shareholders' equity)
Not applicable.
(Additional information)(Partial amendments to Accounting Standards for Tax Effect Accounting)Partial amendments to Accounting Standards for Tax Effect Accounting (ASBJ statement No.28, February 16,2018) were applied from the beginning of this reporting quarter; three month ended on March 31, 2019, anddeferred tax assets are categorized in other of investment and other assets, deferred tax liabilities are
categorized in noncurrent liabilities.
(Disposal of Shares of a Material Subsidiary)
Deferred tax liability of JPY 85 million was recognized during this reporting period because the Company
decided to transfer all interests held in its consolidated subsidiary, eMFORCE Inc. In 2019 Q3, extraordinary
income of JPY 250 million and income taxes of JPY 88 million will be recorded due to the transaction of theinterest transfer.

(Information on reporting segments)
I. For the three month ended on June 30, 2018 (2018 Q2)
1. Revenue and profit or loss by reporting segments for the three month ended on June 30, 2018
(Unit: Yen in millions)
Reporting Segment
Synergy
Investment
Business

MarketingBusiness

Adjustment *1

Total

Consolidated

Revenue
Revenue from third
partiesIntersegment revenue ortransfer

41,1102,644

43,755－43,755

6

54

60

(60)

－

Total

41,116

2,698

43,815(60)

43,755

*2

2,076

901

2,977

(956)

2,020

EBITDA*3

2,581

986

3,567

(906)

2,660

Profit (loss) of segment

Interest paid – Interest received

14

Net income before taxes and other adjustments

2,006

Total income taxes

666

Income taxes – current

737

Income taxes - deferred, etc.

(71)

Net income attributable to non-controlling interests

161

Net income attributable to owners of parent

1,179

Notes:
1.
2.
3.

The adjustment amount of JPY (956 million) for segment profit includes elimination of intersegment transaction and JPY(830 million) of Corporate Function cost which were not allocated to reporting segments and JPY 56 million of gain on
valuation of derivatives for the Company’s stock forward trading.
Segment profit and loss is denoted in EBIT (Net income before taxes and other adjustment ＋ interest paid －interest
received)
EBITDA = EBIT + other financial related gains (losses)+ depreciation + amortization of intangible assets + amortization of
long-term prepaid expenses + Non-cash gain(loss)

2. Information on assets of each reportable segment
The assets of each reportable segment for the second quarter consolidated accounting period under review significantly changed from theend of the previous consolidated fiscal year. This is outlined as follows.
The major factor is that the segment assets increased by ¥9,046,607 thousand due to the fair market valuation associated with new listingof Raksul Inc. an investee of the Company during the second quarter consolidated accounting period under review.

－

18 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results

3. Impairment loss of non-current asset or goodwill, etc., by reporting segments(Significant impairment loss of non-current asset)
Not applicable(Significant change in amount of goodwill)
Not applicable(Significant gain on negative goodwill)
Not applicable

II. For the three month ended on June 30, 2019 (2019 Q2)
1. Revenue and profit or loss by reporting segments for the three month ended on March 31, 2019
(Unit: Yen in millions)
Reporting Segment
Synergy
Investment
Business

MarketingBusiness
Revenue
Revenue from third
partiesIntersegment revenue
or transfer
Total

Adjustment*1

Total

Consolidated

39,5652,130

41,696-

41,696

2

7

9

(9)

-

39,5672,138

41,705(9)41,696

Profit (loss) of segment
*2

1,097

(267)

830

(1,111)(281)

EBITDA*3

1,366

16

1,383

(945)

438

Interest paid – Interest received

8

Net income before taxes and other adjustments(289)

Total income taxes, etc.

79

Income taxes – current

140

Income taxes – deferred(61)

Net income attributable to non-controlling interests(99)

Net income attributable to owners of parent(268)

Notes:
1.
2.
3.

The adjustment amount of JPY (1,111 million) for segment profit includes elimination of intersegment transaction and JPY(1,106 million) of Corporate Function cost which were not allocated to reporting segments.
Segment profit and loss is denoted in EBIT (Net income before taxes and other adjustment ＋ interest paid －interest
received)
EBITDA = EBIT + other financial related gains (losses)+ depreciation + amortization of intangible assets + amortization of
long-term prepaid expenses + Non-cash gain(loss)

2. Information on assets by reportable segment
There is no applicable information to be disclosed.

3. Impairment loss of non-current asset or goodwill, etc., by reporting segments(Significant impairment loss of non-current asset)
Not applicable(Significant change in amount of goodwill)
Not applicable(Significant gain on negative goodwill)
Not applicable

－

19 －

OPT Holding, Inc. (TSE2389)
2019 Q2 Financial Results(Important subsequent event)(Disposal of shares of a material subsidiary)
In the Board of Directors meeting held on June 20, 2019, the Company decided to transfer all shares held of its
consolidated subsidiary, eMFORCE Inc. to Digital Advertising Consortium Inc. On July 1,, 2019, a Share Purchase andSale Agreement (hereafter referred to “the Agreement”) was closed between the Company and Digital Advertising
Consortium Inc. and was expected to be executed on July 31, 2019.
Based on the Company's decision of the share transfer, deferred tax liability of JPY 85 million was recognized during thisreporting period. In 2019 Q3, extraordinary income of JPY 250 million and income taxes of JPY 88 million are expected tobe recorded due to the transaction.

1. Reason for the share transfer
eMFORCE Inc. is a Korean internet-based advertisement agency with strengths in programmatic advertising based on
search advertisement.
As internet advertising has swiftly expanded domestically in Japan, our Group’s tools and marketing know-how have been
deployed overseas. In 2005, with the objective of developing our Group, the group acquired shares of eMFORCE Inc. andit was accounted for as our consolidated subsidiary. As approximately 14 years have passed since the share acquisition,
eMFORCE Inc. has steadily developed its business in Korea. However, synergies with our Group’s Japan based
Marketing Business had continued to fall short of initial expectations.
As a result of deliberate examination of the direction of our Group’s Overseas Digital Marking Business and allocation ofmanagement resources, the group has determined that reassessing certain aspects of our Overseas Digital Marketing
Business and focusing on the Marketing Business in Japan where digital shift is demonstrating acceleration, judged that it
contributes to the enhancement of our Group’s corporate value.

2. Counterparty to the share transfer
Digital Advertising Consortium Inc.

3. Date of the share transfer
July 31, 2019

4. Name of subsidiary, business, relationship with our company(1) Name(2) Business(3) Relationship with our Company

eMFORCE Inc.
Internet Advertising BusinessNo specific items to report

5. Number of shares before and after transfer, price of the share transfer, and income/loss on transfer
(1)
(2)
(3)
(4)
(5)

Number of shares held prior to the transfer 483,880 shares (percentage of voting rights 96.78%)
Number of shares transferred
483,880 shares (percentage of voting rights 96.78%)
Number of shares held after the transfer
0 shares (percentage of voting rights 0%)
Price of the share transfer
JPY 774 million
income / Loss of transaction
An extraordinary income JPY 255 million is expected to be recognized in the consolidated accounting period of2019 Q3.

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