ValueCommerce : Q2 TSE Filings(343KB)pdf

This filing was originally prepared and published by the company in Japanese as it contained timely disclosure information to be submitted to the Tokyo Stock Exchange (1st section). The English translation is for your reference only. To the extent there is any discrepancy between this English tra nslation and the original Japanese filing, the Japanese filing will prevail. The following financial information was prepared in a ccordance with generally accepted accounting principles in Japan (JGAAP).

Financial Results (Consolidated) for Q1-Q2 (Cumulative) of FY2017

July 26, 2017

Corporate Name:	ValueCommerce Co., Ltd.	Listed: TSE 1st section
Ticker Symbol:	2491	URL: http://www.valuecommerce.com/en/
Representative:	Representative Director, President and CEO	(Name) Jin Kagawa
Contact person:	Director of the Board, CFO	(Name) Masatomo Endo

Scheduled date of commencement of dividend payment: August 31, 2017 Scheduled date of filing the securities report: August 9, 2017

Results supplementary materials to be created: Yes Scheduled date of an explanatory presentation to investors: Yes

TEL: [phone]

(Amounts of less than one million yen are rounded down.)

1. Consolidated Operating Results for the Second Quarter of FY2017 (Jan. 1 to Jun. 30, 2017)

2. Consolidated Operating Results (Percentage figures refer to comparisons with the previous fiscal year)

   Revenue		Operating income		Ordinary income		Net income attributable to owners of the parent
   Q1-Q2 (cumulative) FY2017	Million Yen	%	Million Yen	%	Million Yen	%	Million Yen	%
   	7,984	(12.9)	899	104.4	909	84.0	452	196.7
   Q1-Q2 (cumulative) FY2016	9,164	13.3	440	(42.8)	494	(43.5)	152	(73.2)

   (Note) Comprehensive income: Second quarter ended June 30, 2017: 588 million yen, 163.2%

   Second quarter ended June 30, 2016: 223 million yen, (62.3)%

   Basic EPS (Earnings per share)	Diluted EPS (Diluted earnings per share)
   Q1-Q2 (cumulative) FY2017 Q1-Q2 (cumulative) FY2016	Yen 14.05 4.59	Yen 14.04 －

   (Note) Diluted earnings per share is not presented for the second quarter of FY2016 because there were no potentially dilutive shares.

3. Consolidated Financial Positions

4. Total assets	Net assets	Equity ratio	Book-value per share
   As of June 30, 2017	Million Yen	Million Yen	%	Yen
   	10,629	6,540	61.2	202.52
   As of December 31, 2016	9,984	6,163	61.3	188.02

   (Reference) Owners' equity: As of June 30, 2017: 6,506 million yen

   As of December 31, 2016: 6,118 million yen

5. Dividends

   Dividend per share
   Q1	Q2	Q3	Q4	Total
   FY2016 FY2017	Yen － －	Yen 2.00	Yen －	Yen 2.00	Yen 4.00
   		3.00
   FY2017 (Forecast)	－	4.00	7.00

   (Note) Revisions to dividend forecast published most recently: No

6. Consolidated Operating Forecast for the Fiscal Year Ended Dec. 31, 2017 (Jan. 1 to Dec. 31, 2017)

7. (Percentage figures refer to comparisons with the previous fiscal year)

   Revenue		Operating income		Ordinary income		Net income attributable to owners of the parent		Basic EPS (Earnings per share)
   FY2017	Million Yen 15,600	% (10.9)	Million Yen 1,100	% 19. 2	Million Yen 1,100	% 9.8	Million Yen 710	% 10 6.0	Yen 22.08

   (Note) Revisions to operating forecast published most recently: No

   * Notes

8. Significant changes in scope of consolidation during this year: No

9. Application of specific accounting treatment to the preparation of quarterly consolidated financial statements: No

10. Changes in accounting policies and accounting estimates, retrospective restatement

    1.	Changes in accounting policies due to amendment of accounting standards, etc. :	No
    2.	Changes in accounting policies other than 1. :	No
    3.	Changes in accounting estimates :	No
    4.	Retrospective restatement :	No

11. Number of shares issued (common stock)

12. Common stock (including treasury stock) 34,471,000 shares (as of Jun. 30, 2017) 34,471,000 shares (as of Dec. 31, 2016)

13. Treasury stock

    2,344,400 shares (as of Jun. 30, 2017)

    1,930,700 shares (as of Dec. 31, 2016)

14. Average number of shares issued (cumulative period)

15. 32,183,100 shares (average from Jan. 1 to Jun. 30, 2017)

    33,228,770 shares (average from Jan. 1 to Jun. 30, 2016)

    • Quarterly review

      This outline of quarterly consolidated financial statements is not subject to the quarterly review.

    • Note on proper use of the financial forecasts and other special notes (Note on future descriptions)

    This filing contains future descriptions such as a financial outlook. They are based on information currently available to the company and on certain assumptions that we deem reasonable. They are not intended to constitute the company's guarantee that the outlook and description will be achieved. The actual results may differ materially from those described in this filing due to various factors.

    (Method of accessing supplementary materials)

    The supplementary materials on the financial results will be posted on the company's website.

16. Qualitative Information Concerning Consolidated Business Results

17. Information about Operating Results

    During the first half of the consolidated fiscal year under review, the Japanese economy overall remained on a recovery path. Corporate earnings continued to improve, and consumer spending recovered moderately.

    In this environment, the Group continued to focus on the business of providing comprehensive services ranging from services for attracting customers to customer services and retention (maintaining relationships with customers).

    For the first half of the consolidated fiscal year under review, revenues stood at JPY 7,984,654 thousand (down 12.9% Y/Y). This reflected a reduction in ad placements for large ad campaigns with low profit margins in the financial sector on the affiliate marketing service side of the Advertising business.

    Operating income was JPY 899,983 thousand (up 104.4% Y/Y). This was attributable to strong performance in services for stores run within Yahoo! Shopping in the CRM business.

    Ordinary income was JPY 909,177 thousand (up 84.0% Y/Y) due to recognizing equity in earnings of an affiliate of JPY 21,334 thousand under non-operating income and loss on investment in partnership of JPY 17,100 thousand under non-operating expenses.

    Income before income taxes came to JPY 678,605 thousand (up 119.3% Y/Y), reflecting extraordinary losses of JPY 238,208 thousand, including an impairment loss on noncurrent assets associated with the ad network service in the Advertising business as results in the service fell short of the business plan.

    Net income attributable to owners of the parent was JPY 452,128 thousand (up 196.7% Y/Y) due to the recording of income taxes of JPY 226,476 thousand.

    Results by segment are as follows.

    Starting from the first quarter of the consolidated fiscal year under review, the Group changed the method of calculating profit and loss in each reporting segment. Under the new method, the Group limits the allocation of general and administrative expenses to each business and clarifies controllable expenses within each business, thus enabling more accurate performance management and appropriate business operations.

    Segment performance for the first half of the previous fiscal year has been prepared based on the new calculation method.

18. Advertising business

    In the Advertising business, the Group delivers advertisements of e-commerce providers and other advertisers that sell products and services on the Web to media posting advertsing, including websites and applications. The business includes the affiliate marketing service, the storematch service, and the ad network service.

    During the first half of the consolidated fiscal year under review, a reduction in ad placements for large ad campaigns with low profit margins in the financial sector outweighed growth in other sectors and pushed down revenue, particularly on the affiliate marketing service side. The storematch service for stores run within Yahoo! Shopping was strong.

    As a result, this segment achieved revenue of JPY 7,384,427 thousand (down 17.2% Y/Y) and segment operating income of JPY 1,389,553 thousand (up 20.8% Y/Y).

19. CRM business

    In the CRM business, the Group provides services that encourage consumers to visit and revisit markets where they are likely to make purchases by managing and analyzing consumers' purchase data and behavioral data at both online stores and bricks- and-mortar retailers and sending information in accordance with the needs of each customer at the right time. The business includes marketing automation services.

    In FY2015, the Group made DIGIMIHO Co., Ltd., which mainly provides marketing automation services, into a consolidated subsidiary, and fully entered the CRM business from FY2016.

    During the first half of the consolidated fiscal year under review, the STORE's R∞ (R Eight), a CRM tool for stores run within Yahoo! Shopping, performed strongly.

    As a result, this segment achieved revenue of JPY 649,602 thousand (including internal revenue of JPY 49,375 thousand) (up 166.0% Y/Y) and segment operating income of JPY 127,142 thousand (compared to a loss of JPY 166,570 thousand in the same quarter of the previous fiscal year).

20. Information about Financial Position

    1. Status of assets, liabilities and net assets (Assets)

    At the end of the second quarter of the consolidated fiscal year under review, total assets stood at JPY 10,629,910 thousand, increasing by JPY 645,288 thousand from the end of the preceding consolidated fiscal year.

    Current assets stood at JPY 7,403,426 thousand, increasing by JPY 695,969 thousand from the end of the preceding consolidated fiscal year, mainly due to an increase in cash and deposits of JPY 563,136 thousand and an increase in accounts receivable-other of JPY 125,501 thousand, which outweighed a decrease of JPY 81,650 thousand in other current assets.

    Noncurrent assets stood at JPY 3,226,484 thousand, declining by JPY 50,680 thousand from the end of the preceding consolidated fiscal year, mainly due to a decrease of 254,374 thousand yen in goodwill, which offset increases of JPY 57,186 thousand in software and JPY 187,566 thousand in investment securities.

    (Liabilities)

    At the end of the second quarter of the consolidated fiscal year under review, total liabilities stood at JPY 4,089,790 thousand, increasing by JPY 268,552 thousand from the end of the preceding consolidated fiscal year.

    Current liabilities stood at JPY 3,916,126 thousand, increasing by JPY 279,855 thousand from the end of the preceding consolidated fiscal year, mainly reflecting an increase in income taxes payable of JPY 258,143 thousand and an increase in other current liabilities of JPY 59,256 thousand.

    Noncurrent liabilities stood at JPY 173,663 thousand, decreasing by JPY 11,302 thousand from the end of the preceding consolidated fiscal year, mainly due to a decrease in deferred tax liabilities of JPY 6,929 thousand.

    (Net assets)

    At the end of the second quarter of the consolidated fiscal year under review, net assets stood at JPY 6,540,120 thousand, increasing by JPY 376,735 thousand from the end of the preceding consolidated fiscal year, mainly due to a decrease in retained earnings of JPY 65,080 thousand resulting from cash dividends paid, an increase in treasury stock of JPY 144,109 thousand, an increase in retained earnings of JPY 452,128 thousand resulting from net income attributable to owners of the parent, and an increase in the valuation difference on available-for-sale securities of JPY 135,965 thousand.

    2．Cash Flows

    At the end of the second quarter of the consolidated fiscal year under review, the balance of cash and cash equivalents stood at JPY 4,163,399 thousand, increasing by JPY 563,136 thousand from the end of the preceding consolidated fiscal year.

    The cash flows during the first half of the consolidated fiscal year under review and their causes are as follows.

    (Operating Cash Flows)

    Net cash generated by operating activities amounted to JPY 1,007,148 thousand (compared to net cash of JPY 480,309 thousand generated in the preceding first half), mainly due to income before income taxes of JPY 678,605 thousand. Positive factors include an increase in depreciation of JPY 154,225 thousand, amortization of goodwill of JPY 86,666 thousand, and an impairment loss of JPY 216,640 thousand. Negative factors include an increase in notes and accounts receivable-trade of JPY 80,066 thousand, an increase in accounts receivable-other of JPY 125,501 thousand, and income taxes paid of JPY 56,869 thousand.

    (Investing Cash Flows)

    Net cash used for investing activities amounted to JPY 240,572 thousand (compared of net cash of JPY 498,310 thousand used in the preceding first half), mainly due to payments for the purchase of intangible assets of JPY 214,596 thousand and the purchase of investment securities of JPY 34,173 thousand.

    (Financing Cash Flows)

    Net cash used for financing activities amounted to JPY 203,499 thousand (compared to net cash of JPY 213,906 thousand used in the preceding first half), mainly due to a payment for the purchase of treasury shares of JPY 149,967 thousand and cash dividends paid of JPY 64,643 thousand.

21. Information about Consolidated Financial Forecasts

22. The Group is examining its operating forecast for FY2017 as of July 26, 2017. If the operating forecast needs to be revised, the Group will announce the revision as soon as possible.

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