GMO Payment Gateway, Inc.

21th Annual Report
Fiscal Year 20142013.10.1-2014.9.30

2014
Built and began providing B2B payment processing service

2013

Achieve Average Ordinary Income Growth ofOver 20%Began providing "GMO Payment Later" service
Began providing global payment processing service

Began providing online

1,431,391

1,764,325

advertising service

2008
the First Section of the Tokyo
Stock Exchange

1995

EC Market SizeThanks to the strong performanceof EC shopping malls andindividual EC merchants, thesize of the B2C EC market,
in the narrow sense, rose toa p p r ox i m a te l y ¥11. 2 t r illi o n i n
2013, with the EC ratio of 3.7%.

2013¥11.2 trillion

192,400

295,828

535,350

Established927,535

645,909

Tokyo Stock Exchange

756,506

market (at the time) of the

1,147,552

Listing market changed to
Stock listed on the Mothers

Ordinary Income (Thousand yen)
EC Market Size
Sources: Ministry of Economy, Tradeand Industry, FY2013
E-Commerce Market Survey
Nomura Research Institute,
Information Technology
Navigator 20142005
¥3.5 trillion

1995

FY2004

FY2005

FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012

Role of GMO Payment Gateway

Value Creation Process

GMO Payment Gateway’s primary role as a

Pivoting on payment processing services, we

p a y m e n t p ro c e s s i n g s e r v i c e p ro v i d e r i s
providing linkages for “contracts” “payment
information” and “settlement” between online

Consumers

Businesses

Payment business
Providers

work for sustained growth, while creating
innovative services that enable us to growwith our customers’ businesses.

FY2013

Source of Value
Creation
Human Resources(Development &Sales Capabilities)

AssetsThe Value We Provide
Customer

Provide innovative services
that support the businessfoundations of customers

Shareholder
Returns
Profits

Investment

IT Infrastructurebusinesses such as credit card companies.

Partnerships with
Payment Business Providers

21th Annual Report Fiscal Year 2014

FY2014Serviceshops and other merchants and payment

1

Ordinary
IncomeGrowthrate of atleast 10x
Ordinary income in fiscal 2014 (yearended September 30) was over 10times higher than fiscal 2004.

2,047,552

2011

GMO Payment Gateway, a payment processing services company listed on the First
Section of the Tokyo Stock Exchange, has successfully achieved the goal it set uponlisting of average ordinary income growth of 20% or more.
G o i n g f o r w a r d , G M O - P G i s co m m i t t e d to c r e a ti n g e l e c t r o n i c c o m m e r c e ( EC )environment s featuring even higher levels of se curit y and convenience, while
continuing to grow alongside its customers as an “EC Growth Company” dedicated toraising Japan’s EC ratio.

2005

2,527,793

ProfileCash Flow

21th Annual Report Fiscal Year 20142

Interview withManagement

Quick adaptation to rapidly changing times, while
continuing to manage with a constant focus on the future

Front row: Issei Ainoura, President & Representative Director Back row from left: Yuichi Hisada, Managing Director
Ryu Muramatsu, Executive Vice President Satoru Isozaki, Executive Vice President

Always, Together With Customers
Striving to be a "Growth Company Driving Development of EC in Japan"
GMO Payment Gateway has sustained average ordinary income growth of 20% since theCompany was publicly listed on the TSE Mothers market (at the time) in 2005.
So what are the sources of that growth?
And, to achieve the goal of "ordinary income of over ¥10.0 billion in 2020", what will be thefocus?
We asked President Ainoura, Executive Vice President Muramatsu, Executive Vice President
Isozaki and Managing Director Hisada to tell us about GMO-PG’s corporate value creation.

3

21th Annual Report Fiscal Year 2014

Ainoura: GMO Payment Gateway has reached amilestone, the 10th anniversary since our stock was listed
in 2005. And over these years what has enabled us to“maintain average ordinary income growth of over 20%”,
which we have consistently pursued as a company, isnone other than the support we have so generously
received from our shareholders and all other stakeholders,and for this we are deeply grateful. However, listing itself
was not our goal, and just as that occasion represented a
new beginning, this 10th anniversary of our listing is also
only a point along a longer road.
Muramatsu: Our business plan is based on a 30-year
span, and our goal for the more immediate future is“ordinary income in excess of ¥10.0 billion in 2020”. Overthe past ten years, we have been able to grow sales andordinary income nearly tenfold; so I think that we will beable to move past this milestone year in very good shape.
Isozaki: Likening growth to a rocket, I think the payment
service we began providing NHK in 2006 was like ourbooster. This led to opportunities to help the Tokyo
Metropolitan Government with water bill and auto tax
payments and the Ministry of Health, Labour and Welfare
with national pension premium payments, and otherprojects. The name GMO Payment Gateway has become
synonymous with payment processing services in area of
public dues and utility payments. (Figure 1)
Muramatsu: Technology innovation takes place at anextremely fast pace; consumption formats too are
constantly changing. Face-to-face to online; cash to credit,
and now you can just use a smartphone to makepurchases. Our mission, amidst such changes, is to create
an infrastructure that allows new forms of payment to becontinuously realized as demanded by the times.
Figure 1: Major Track Records
in Public Sectors

Source of growth is the personal qualities of ouremployees
All employees converge on the same vector
Ainoura: Our business is made possible by the growth of
our customers. In the truest sense, our success is directly
linked to the success of our customers. What I mean is weare not simply selling payment services; in order to “growand succeed alongside our customers” we must learn the
problems they face in their businesses and devise ways ofsolving them.
Hisada: Payment services are an essential part of today’ssociety, and each of our employees interacts withcustomers with the understanding that they represent a
company that provides necessary social infrastructure. Our
employees have great faith in the possibilities of payment
services and all engage in business activities along thesame vector, while looking forward to changes in the EC
market — this is the distinctive characteristic of our humanresources.
Muramatsu: At the same time, we also must not forgetthe perspective of “continuing growth while maintainingbalance”. In each section of planning, sales and systems,
good balanced growth itself is what makes growth
possible in the true sense. And to achieve this, humanresources development is indispensable. We conduct
employee seminars on various topics, but I think there arevery few companies like ours, in which the president andother members of top management serve as instructors.
Ainoura: A balanced mindset is also important. I always
tell our employees to maintain a high-level balance
between “amiability and IQ”. Through such day-to-day
communication, all employees are able to share in thesame mindset and spirit. “A company is its people”. I firmly
believe that the source of our growth lies in the personalqualities of our employees cultivated through humanresources development.

21th Annual Report Fiscal Year 20144

Interview withManagement

Aim to become a corporategroup capable of 20% profit
growth over the long term

Continue evolving by continuing
capital and developmental
investment at 10% or more of sales
Five strengths for realizing continued growth
Ainoura: Specifically our strengths as a company are:“business model”, “sales power”, “systems power”, “people
power”, and “planning capability/new businesses”. First,
our “business model” is made up of four sources of profit:
initial from new installation charges, stock from monthly
management charges, fee based on the number ofpayment processing transactions, and spread based on themonetary value of payments processed by customers.
Balanced growth from these four sources produces a profit
structure for both profit stability and growth acceleration.
Hisada: The company’s sales division is not named theSales Division, but the Innovation Partners Division,reflecting our desire to contribute to our customers’ growth
as a partner in innovation. Structuring our sales system inline with customer sectors, formats and scale allows us tomake proposals more closely in tune with their specificconditions and needs—this constitutes our “sales power”.
Isozaki: “Systems power” consists of three elements. The
first is technical capacity and the second is developmental
capacity. For customers, it goes without saying that“systems must function no matter the place or time”. In
addition, how stably they can be provided is also important.
We therefore work to develop technology to meet
infrastructure and security requirements and to further
strengthen our products and services. The third element isknowledge. Meeting the requirements of leading-edge

5

21th Annual Report Fiscal Year 2014

customers may not be possible if existing products andservices are used. What is needed at such an occasion isknowledge about payment processing. I think one of ourmajor strengths is being able to draw on the knowledge ofa systems engineer with expertise in applications to resolve
customer issues in a short period of time.
Ainoura: Next is “people power” and in addition to theabovementioned human resources development, we offer achallenging environment even for young employees and asystem for evaluating individual performance regardless ofgender or nationality. We cultivate people power based on
the motto, “One step by a hundred people beats a hundred
steps by one”.
Muramatsu: Finally, regarding “planning capability/new
businesses”, we currently are expanding our business into
areas connected to solutions for customers, pivoting on
payment services. We provide the GMO-PG online
advertising service for example, as well as GMO-PG Global
Payment for overseas payment processing and GMO
Global Payment Fund, a fund specializing in payment andsettlement, and it is on these axles that we are working torealize synergies and develop business overseas,
particularly in Southeast Asia. (Figure 2)

C o n t r i b u t i n g t o c u s t o m e r g ro w t h i n
expanding EC market
Muramatsu: The EC market has been expanding on the

spread of the Internet and rise of smartphones, but
Japan’s EC ratio is lower at 3.7%, compared to othercountries; so it is thought that there is still much room for
growth going forward. There is a range of latent potential,from new methods for boosting sales to effective ad
development and new payment services like deferredpayment. GMO Payment Gateway is moving into thesefrontiers in Japan of course but also overseas more quickly
than anyone else and with the latest technology in order tofurther raise corporate value.
Ainoura: In the EC market, we will also expand beyond
B2C (consumer transactions) into B2B (business-toFigure 2: Overseas Business Development
GMO Global Payment Fund
GMO-PG Global
Payment
GMO-PG’s
Merchants in Japan

Fund Investors

Support for Market Entry

Minority Investment /Business Synergies

Business Partner Payment Ventures

Affiliate Payment Ventures

Singapore
TaiwanHong Kong

Thailand Malaysia

Indonesia

VietnamPhilippines

business transactions) and C2C (consumer-to-consumertransactions) as well as effect fusions with face-to-facemarkets through O2O* and other approaches. GMO
Payment Gateway will continue promoting the realizationof this vision of the future, while sharing it withstakeholders as we strive to be a “Growth Company
Driving Development of EC in Japan”.
Isozaki: As a platformer providing payment services, wewould like to continue being a company that innovates
together with our customers. And as we innovate, we will
expand the company’s range of business, while providing
services to customers with even greater added value.
Hisada: When I hear comments like “Our success rate
has gone up” or “We were able to achieve greater growth”
from customers who do business with us, it is a greatsource of joy, and we intend to further refine this stance.
Ainoura: Moving forward, we will engage in business
management with the ambition and awareness of“continuing to evolve by continuing to make capital anddevelopmental investment of over 10% of sales each yearwith a view to becoming a corporate group that cansustain 20% profit growth over the long term”. In addition,
profits will be redistributed to shareholders in accordancewith our basic dividend policy of targeting 35% ofconsolidated net income to reciprocate the support
shareholders have provided. We thank you for yourongoing guidance and encouragement.
*O2O is a strategy for linking offline and online purchasing activities.

21th Annual Report Fiscal Year 2014

6

Our Services

Growth Strategy

We asked the authorized NPO called Japan Association for the World Food Programme about what led them to
implement GMO-PG’s payment and online advertising services and how specifically the services are utilized.

Customer Perspective

Japan Association for the World Food Programme
The Japan Association for the World Food Programme solicits
donations from people in Japan to support the activities of the World
Food Programme, the food aid agency of the United Nations, which
has a mission of eradicating hunger and poverty around the world.
Many donations are now made over the Internet, and so we
implemented the payment system of GMO-PG, a company offeringboth system security and operational expertise. We also use thecompany’s online advertising system. GMO-PG made the kind of
proposals that only payment processing providers can make, and thecompany’s representative in charge of the project provided support
based on a thorough understanding of the objectives of the WFP’s
activities, helping to broaden the scope of WFP fundraising in Japan.

Growth strategy for maintaining 20% ordinary
income growth over the next ten years
Trends in Base Markets•EC market expansion; increasing EC ratio•Acceleration of EC in tax sector•Rapid expansion of C2C market•Non-face-to-face transactions in
B2B EC market•Rise of Southeast Asia as
growth center
2. Medium-term
1. Short-term

Target market strategy

Client Overview
The Japan Association for the World Food Programme is the official
representative in Japan of the World Food Programme, the food aid
agency of the United Nations. In this role the association solicits donations
from individuals, groups and corporations and also conducts publicity
activities.

•Further strengthen B2C EC•EC initiatives in services,tax sector, etc.
•Capture B2B, C2C markets

3. Long-term

Business area strategy•Develop into Southeast
Asia•Respond to latest
technologies

Product strategy•Expand added-value
services like GMO
Payment Later andtransaction lending©JAWFP

Providing Payment Services to Diverse Customers
Leveraging know-how gained from consulting and payment processing implementation and support for 49,725 merchants

7

CLOSE UP

(GMO Payment Gateway Group as of September 30, 2014), GMO-PG provides optimal processing and high value-added

Creating Business Opportunities in Southeast Asia

services for customers. While solving issues latent in operations, we work to expand business together with our customers.

Southeast Asia is a market where EC market expansion is
expected in conjunction with the rapid spread of smartphones
and the Internet. We are currently helping our merchants based inJapan enter overseas markets through GMO-PG Global Payment,
which provides services for various countries and regions,
including Singapore, Indonesia and Thailand in Southeast Asia,
and Hong Kong and Taiwan. We are also promoting the creationof business opportunities in Southeast Asia by ramping up
investment through GMO Global Payment Fund, a fundspecialized in payment and settlement, to invest in paymentrelated companies in Southeast Asia and thereby strengthen
alliances with the payment ventures of local business partners.

EC salesService industry

Public•Department stores•Supermarkets•Apparel retailers•Bookstores•Travel agencies•Rental car companies•Hotels•Municipalities•Electric/water/gas
utilities•Tax payments

21th Annual Report Fiscal Year 2014

Game/content
providers•Games•Music streaming•Electronic books

GMO PAYMENT GATEWAYHONG KONG LIMITEDGMO PAYMENT GATEWAY (THAILAND) CO., LTD.

GMO PAYMENT GATEWAY MALAYSIA SDN. BHD.

GMO PAYMENT GATEWAY PTE. LTD.

21th Annual Report Fiscal Year 2014

8

Review ofOperations

Financial
Highlights

GMO-PG By The Numbers

Increases in Sales, Profits, and Dividends for the 13th Consecutive Term

Merchants

Books

Water utilities
Auto tax

Apparel(Thousand yen)(Thousand yen)

CDs

Transactions/Amounts

FY2010 FY2011 FY2012 FY2013 FY2014

FY2004+23.5% year-on-year

1,147,552

49,725

3,866,316

6,837 merchants

Taxes

4,708,097

FY2014

Fresh food

3,145,901

FY2004

5,764,085+25.0% year-on-year

2,527,793

Ordinary income

2,047,552

Net sales

1,764,325

Games/music

1,431,391

Tickets

Electronic books

7,205,542

Number of merchants

FY2010 FY2011 FY2012 FY2013 FY2014

FY2014650

37.0

million transactions

million transactions

Net income per share /ROE

Dividend(return on equity)¥1.4 trillion

FY2004FY2014

FY2004

43.92

(Yen)

(Yen)

35.38

Number of subsidiaries
FY2014

17.13

Number of employees(Net income per share)

28.01

billion+24.1% year-on-year

22.35¥120.0

23.0

30.00
24.4
24.50

20.9

19.50

19.4
15.50

17.0
Net Income
per share

11.75

ROE (%)

40(Ordinary income
per employee:¥4.8 million)

277(Ordinary income
per employee:¥9.1 million)

0

7(plus two equitymethod affiliates)

FY2010 FY2011 FY2012 FY2013 FY2014

FY2010 FY2011 FY2012 FY2013 FY2014

A 200-for-1 common stock split and a 2-for-1 common stock split were conducted on
July 1, 2012 and October 1, 2014 respectively. Net income per share information lists
figures that have been retroactively revised in light of the impact of these stocks splits tomake it easier to compare between periods.

Our basic dividend policy is to target “a payout ratio of around 35% of consolidated net
income” and on the basis of this policy, we paid a dividend of ¥30, which represents anincrease of ¥5.5 from the previous year. A 200-for-1 stock split was conducted forshares of common stock on July 1, 2012. Dividend information since FY2011 lists figuresthat have been retroactively revised in light of the impact of this split to make it easier tocompare between periods.

All shares in a consolidated subsidiary called Social Appli Payment Service, Inc.
were transferred to MTI Ltd. on September 30, 2014.
921th Annual Report Fiscal Year 2014

21th Annual Report Fiscal Year 201410

Financial Statements

Consolidated balance sheet(Thousand yen)(Thousand yen)

As of September
30, 2013

As of September
30, 2014

Current assets

19,670,940

22,476,019

Current liabilities

Cash and deposits

18,393,932

20,386,175

Accounts payable-trade652,397

792,588

Merchandise

385

2,165

Supplies

381

531

Advance payments-trade379,736585,395

Prepaid expenses

58,767

58,823

Deferred tax assets

123,786

Accounts receivable-other
Other

Assets

Accounts receivable-trade

Allowance for doubtful accounts

As of September
30, 2014

Net sales

5,764,085

7,205,542

15,537,011

17,624,339

Cost of sales

1,030,813

1,436,281

188,761

229,278

Gross profit

4,733,271

5,769,260

Selling, general and administrative expenses

2,684,406

3,292,851

Operating income

Lease obligations

34,09041,747

Accounts payable-other

227,045692,310

Income taxes payable

477,216

644,375

Accrued consumption taxes

66,046

171,628150,097

Advances received

8,842

69,197504,077

Deposits received

18,13052,343(25,772)(56,177)

1,627,298

2,137,039

Tangible assets

262,920

231,947

Buildings

68,80157,298Tools, furniture and fixtures

90,957

61,0752,048,865

2,476,408

Non-operating income

44,01387,503

Interest income

3,074

7,905

Dividends income

16

4,263

7,850

Gain on investments in partnerships–

21,367

14,337,566

15,589,857

Earnings on reversal of dividends payable

1,172

770

Unearned revenue

1,372

1,256

Rent income

14,497

13,941

Provision for bonuses

156,000

206,137

Provision for directors’ bonuses

35,42034,840

Other

4,648

5,056

Noncurrent liabilities

127,407173,339

90,756

97,084

Commissions received
Exchange earnings–

19,11823,25916,495

Other

1,993

3,641

Non-operating expenses

45,326

36,119Interest expenses

7,241

1,675

Lease assets

103,162

113,573

Lease obligations

Equity in losses of affiliates

11,407

15,836

Intangible assets

668,612764,469

Long-term lease and guarantee deposited

6,650

6,254

Loss on investment in silent partnership

5,176

4,521

Goodwill

41,42330,694

Provision for directors’ remuneration Board Incentive Plan Trust

30,00070,000Loss on investments in partnerships

4,990

–

Lease assets

14,191

16,785

Total liabilities

15,664,418

17,797,678

Rent expenses

14,201

13,659

426

272

Other

2,310

426

Software455,527

661,723

2,047,552

2,527,793

Other

157,044

54,992Extraordinary income

16,77032,357

Investments and other assets

695,764

1,140,621

Investment securities

421,165

Shares of subsidiaries and affiliates

Right of trademark

Net assets
5,609,646

6,727,143

Capital stock

696,111708,118

650,739

Capital surplus

956,032

968,040

2,010

2,507

Retained earnings

4,222,226

Bonds of subsidiaries and affiliates

11,00011,000Treasury stock

Investments in other securities of subsidiaries and affiliates

35,296

264,442

Accumulated other comprehensive incomeLong-term loans receivable from directors and employees

3,746

1,910

Claims provable in bankruptcy, claims provable in rehabilitation and other

11,904

12,434Long-term prepaid expenses

6,114

7,722

Lease and guarantee deposits

155,476

149,210Deferred tax assets

59,24851,384

Allowance for doubtful accounts
Total assets(10,198)(10,729)

21,298,239

24,613,058

Cash and deposits
The cash and deposits in assets increase/decrease as thedeposits received in liabilities increase/decrease.
Therefore the amount of money GMO-PG can use for its businessis the amount after deduction of the amount equal to the deposits
which are planned to be paid to our merchants every month.

Shareholders’ equity

Ordinary income
With the goal of becoming a corporate group capable ofsustaining ordinary income growth of 20% or more over the
medium-to-long term, we invested in new businesses, integrated
data centers and conducted other activities, and as a result,ordinary income grew by 23.5% year on year, meaning we
successfully reached our goal of at least 20% growth.
Extraordinary income
As a part of efforts to strengthen alliance-based businesses, we
promoted capital and operational alliances through partial stakes
in key merchants and important business partners. However, twoof these companies went public due to business expansion,
including transactions with GMO-PG, and we sold a portion of our
stakes in them, which resulted in recording extraordinary incomeof ¥32,357 thousand.

16,77032,35718,28919,7325,315,707

Loss on retirement of noncurrent assets

5,991

14,330(264,723)(264,723)

Loss on valuation of investment securities

12,298–13,71781,506

Other

–

5,402

Net cash provided by (used in) operating activities

6,954,257

3,088,604

Income before income taxes

2,046,032

2,540,417

Net cash provided by (used in) investing activities(755,003)(666,417)

872,859

1,075,020

Net cash provided by (used in) financing activities(632,002)(444,357)

7,968

64,821

Foreign currency translation adjustment

5,748

16,685

10,456

3,774

Minority interests

–

2,956

Total net assets

5,633,820

6,815,379

Total liabilities and net assets

21,298,239

24,613,058

Deposits received
This item is due to proceeds (amount of money which is paid fromcredit card companies, etc. to merchants through GMO-PG) paid
to merchants receiving services being recorded at the end of
every month.

GMO-PG’s website provides corporate and financial information and introduces business activities and trends toshareholders and investors.
For a more detailed understanding of GMO-PG, please visit the website.
URL http://corp.gmo-pg.com/ir/

21th Annual Report Fiscal Year 2014

Despite the negative rebound from last-minute demandassociated with the consumption tax increase in April 2014, sales
were steady and increased for the year by 25.0% over theprevious year.

Income from securities soldValuation difference on available-for-sale securities
Subscription rights to shares

Ordinary income

Net sales

Extraordinary loss

IR Site11

FY2013
FY2014(From October 1, 2012 (From October 1, 2013
to September 30, 2013) to September 30, 2014)

As of September
30, 2013

Liabilities

Noncurrent assets

Consolidated statements of income (Thousand yen)

Income taxes-current
Income taxes-deferred
Income before minority interests

FY2013
FY2014(From October 1, 2012 (From October 1, 2013
to September 30, 2013) to September 30, 2014)(43,853)(49,929)

Effect of exchange rate change on cash and cash equivalents

16,871

13,1351,217,025

1,515,326

Increase (decrease) in cash and cash equivalents

5,584,123

1,990,965

–

(462)

Balance of cash and cash equivalents at the beginning of the period

12,774,220

18,358,343

1,217,025

1,515,788

Balance of cash and cash equivalents at the end of the period

18,358,343

20,349,309

Minority interest in loss
Net income

Consolidated statements of cash flows (Thousand yen)

Consolidated statements of changes in net assets FY2014 (From October 1, 2013 to September 30, 2014)
Shareholder’s equity
Capitalstock

Capitalsurplus

Balance at the end of the previous period 696,111 956,032
Changes of items during the period
Issuance of new shares
12,007 12,007
Dividends from surplus
Net income
Changes of items other than shareholders’equity during the period, net
Total changes of items during the period 12,007 12,007
Balance at the end of the period 708,118 968,040

Retainedearnings

Treasurystock(Thousand yen)

Accumulated other comprehensive income
Total
shareholders’equity4,222,226(264,723) 5,609,646(422,307)
1,515,788

24,015(422,307)
1,515,788

1,093,480
5,315,707– 1,117,496(264,723) 6,727,143

Subscription
Valuation
Foreign
Total otherrights todifference on
currency
comprehensive
sharesavailable-for- translation
incomesale securities adjustment

7,968

5,748

13,717

10,456

Minority
interests

Total net
assets– 5,633,820
24,015(422,307)
1,515,788

56,852

10,93667,789(6,682)

2,956

56,85264,821

10,936
16,68567,78981,506(6,682)
3,774

2,956 1,181,559
2,956 6,815,379

64,06321th Annual Report Fiscal Year 201412

Management
SystemCorporate Profile

Corporate Governance

Information Security

Basic Approach to Corporate Governance

The GMO-PG Group has a mission of contributing to therealization of payment systems that are safe andconvenient for consumers and businesses with a view tothe establishment of infrastructure for payment processingin Japan. In conducting corporate activities in accordancewith this mission, we utilize our own information assets
and also handle the information assets of many
stakeholders, which include personal information. As acompany that creates added value for credit cards andother types of payment formats, we are striving for evenhigher levels of performance, and protection of theseinformation assets from outside threats is a top priority ofmanagement. Based on this recognition, we build andoperate information security systems and implement
necessary protective procedures and appropriate security
measures for our own information assets and those of
stakeholders.

In order to maintain both management efficiency and legal
compliance while continuing to develop in a soundmanner, we have established necessary governancesystems and conduct related policies. Corporate
governance is positioned as one of the most importanttasks of management, and in order to fulfill thiscommitment as well, we intend to practice an even moretransparent form of management through timely disclosureof management information to shareholders and investors.

Overview of Corporate Governance System
GMO Payment Gateway has adopted a system in which
two external directors are appointed to serve as
independent executives who provide recommendations
and opinions from an independent perspective, while
overseeing the activities of the full-time directors. There isalso a Board of Auditors consisting of five members
charged with auditing the company in coordination with
the Internal Audit Office and accounting auditors. Its fivemembers include three external auditors (two of whom are
independent executives). Decisions on the execution ofimportant business, decisions on important matters suchas decisions on director remuneration, and decisions forstrengthening governance are all made by the Board of
Directors, which is comprised of the aforementioned
directors.

Compliance
The GMO-PG Group recognizes the scope of complianceas consisting of a) laws and ordinances, etc., b) ethics andsocial norms, c) rules, regulations and procedures, etc.,
and d) company vision, etc., and recognizing that thisentails “adapting to social requirements” including legal
requirements (in other words, full-set compliance). With
these recognitions, we work to raise the complianceawareness of all employees.
In the term under review, in addition to actively raisingawareness of the aforementioned, the Corporate Support
Division led an effort to build and implement a compliancetraining program for all employees. The program isconducted in stages based on levels of comprehension
and rank, with employee understanding and achievementmonitored by the Internal Audit Office established in
October 2007. In addition, the Internal Audit Office, basedon an annual audit plan, confirms compliance with related
laws and ordinances, the articles of incorporation,company rules and other regulations, and if areas in needof improvement are identified, corrective measures aretaken and then further confirmation is conducted on theirstatus.
The company also has an internal reporting (whistleblower)system in addition to the normal reporting system basedon the chain of command for cases in which an incident
occurs internally that is thought to constitute a complianceviolation.

13

21th Annual Report Fiscal Year 2014

Company Profile (As of the end of September 2014)

Members of the Board (As of December 21, 2014)

Name

GMO Payment Gateway, Inc.
(3769; Tokyo Stock Exchange, First section)

Chairman & Director

Masatoshi Kumagai

President & Representative Director

Issei Ainoura

Date of establishment

March 1995

Executive Vice President

Ryu Muramatsu

Location

1-14-6, Dogenzaka, Shibuya-ku, Tokyo, Japan

Executive Vice President

Satoru Isozaki

Capital stock¥708 million

Managing Director

Yuichi Hisada

Additional paid-in capital¥968 million

Director

Yasuhiko Kimura

Number of employees

277 (consolidated)

Director

Tadashi Ohshima

Business outline

Credit card payment processing services and all
related operations

Director

Tomoyuki Murakami

Organization memberships

Japan Consumer Credit Association (JCA)
Japan Multi-Payment Network Promotion Association (JAMPA)EC Payment Forum
Japan Association of New Economy
Japan E-Commerce Consultant Association (JECCICA)

Director

Shinichi Sugiyama

Director

Yusuke Arai

External Director

Masaya Onagi

External Director

Akio Sato

Auditor (Full-time)

Yasuhiro Kanda

External Auditor

Akihiro Suzuki

External Auditor

Masashi Yasuda

AuditorTakashi Iinuma

External Auditor

Kazuo Ikeda

Subsidiaries

GMO Epsilon, Inc.
GMO Payment Service, Inc.
GMO PAYMENT GATEWAY PTE. LTD.

ISO 27001 Certification

Affiliated companies

We are the first publicly listed
payment processing service provider
to acquire ISO/IEC 27001:2005
certification (domestic standard JIS
Q 27001:2006), the global standard
for information security management,
for all our business sites.

GMO-PG board members (not including External Directors) / Presidents of group companies

Consumer Open Center, Ltd.

Full Conformance with PCIDSS
GMO-PG’s services fully conform to
PCIDSS Ver. 2.0, the global security
standard in the credit card industry
established jointly by the following
five international credit card brandcompanies: JCB, American
Express, Discover, MasterCard and VISA. We provide all
customers with secure credit card payments and thepeace of mind this entails.

Chairman & Director

Masatoshi Kumagai

President &Representative Director

Issei Ainoura

Executive Vice President,
Corporate Value Creation
Strategy Division
Director, GMO PAYMENTGATEWAY PTE. LTD.

Executive Vice President
General Manager ofSystem Division

Satoru Isozaki

Ryu MuramatsuManaging Director,
General Manager of
Innovation Partners
Division

Yuichi Hisada

Director, General Manager
of Corporate Support
Division

Yasuhiko Kimura

P-Mark Certification
GMO-PG has acquired PrivacyMark System
certification, a standard for companies that
establish systems with appropriate
measures for protecting personal informationin conformance with the Japan Industrial
Standard on the handling of personal
information, JIS Q 15001: 2006 Personal Information
Protection Management Systems—Requirements.

Director, General Manager
of Customer Delight
Division

Director, Deputy General
Manager of Innovation
Partners Division

Director, Deputy General
Manager of System
Division

Tadashi Ohshima

Tomoyuki Murakami

Shinichi Sugiyama

Director, President &Representative
Director, GMO Epsilon,
Inc.

President &Representative Director,
GMO Payment Service,
Inc.

President &Representative Director,
Consumer Open CenterLtd.

Yusuke Arai

Katsunari Mukai

Akira Takano

21th Annual Report Fiscal Year 201414

Stock Information (As of the end of September 2014)

Major shareholders

Total number of shares authorized

51,200,000

Shareholder name

Total number of shares issued

17,269,200

GMO Internet, Inc.

3,100

Number of shareholders

Number of shares for each shareholder
Financial institutions

Other corporations

2,772,700 shares (16.05%)

9,014,700 shares (52.20%)

Financial instruments
business operators

187,559 shares (1.09%)

Individuals, others

2,162,069 shares (12.52%)

Foreign corporations, etc.

Treasury stock

3,131,033 shares (18.13%)

1,139 shares (0.01%)

Number of shares

Percentage

8,924,800

51.68

Japan Trustee Services Bank, Ltd. (Trust account)893,500

5.17

JP Morgan Chase Oppenheimer JASDEC Lending
Account

555,600

3.21

Issei Ainoura

500,000

2.89

The Master Trust Bank of Japan, Ltd. (Trust account)

385,000

2.22

State Street Bank and Trust Company

272,589

1.57

The Chase Manhattan Bank, N.A. London S.L.
Omnibus Account219,400

1.27

State Street Bank and Trust Company

214,700

1.24

The Nomura Trust and Banking Co., Ltd. (Trust account)

207,700

1.20

Trust & Custody Services Bank, Ltd.
(Trust account for securities investment)

197,100

1.14

Note: Shareholding ratios are calculated on the total number of shares issued lesstreasury stock (1,139 shares).

Shareholder MemoBusiness year

October 1 to September 30

Day of decision of the end-of-term dividend

September 30

Day of decision of the mid-term dividend

March 31Annual meeting of shareholders

DecemberShareholder registry administrator

Mitsubishi UFJ Trust and Banking Corporation

Contact

Transfer Agent Department, Mitsubishi UFJ
Trust and Banking Corporation
7-10-11 Higashi-suna, Koto-ku, Tokyo 137-8081
Tel 0120-232-711 (Toll-free)

Stock listing

Tokyo Stock Exchange

Method of public notice

By electronic public notice
Public notice URL http://corp.gmo-pg.com/ir/(In the case of an accident or other inevitablereason the electronic public notice is notpossible, it will be published in the Nikkei)[Information]
1. Note(1) With regard to the shareholder’s address change, specification of thedividend transfer account, purchase request and other procedures, theseare principally done at the account administration organization (securities
company, etc.) at which the account has been opened. Please contact the
securities company at which you opened your account. Please note thatthe shareholder registry administrator (Mitsubishi UFJ Trust and Banking
Corporation) does not handle these matters.
(2) With regard to unreceived dividends, payment will be executed at the
Mitsubishi UFJ Trust and Banking Corporation.
2. About the Dividend Statements
The enclosed “Dividend Statements” combines the “Payment Notice” which ismade based on the Act on Special Measures concerning Taxation. It can beused as certification of the dividend amount after the receipt of the dividend, or
as a document for the income tax return.
Shareholders receiving the dividend in their securities account (Distribution
method proportional to the number of shares) should confirm this with thesecurities company which made the transaction.
3. With regard to the procedures for shares recorded on special accounts,
please contact Tokyo Securities Transfer Agent Co, Ltd., the administratingorganization for special accounts.
Contact address: Business Center, Tokyo Securities Transfer Agent Co, Ltd.
2-8-4 Izumi, Suginami-ku, Tokyo 168-8522
Tel 0120-49-7009 (Toll-free)

GMO Payment Gateway, Inc.
URL http://www.gmo-pg.com/
Tokyo Head Office Humax Shibuya Building 7F, 1-14-6 Dogenzaka, Shibuya-ku, Tokyo 150-0043 TEL 03-3464-2740
Osaka Branch Grand Front Osaka Tower B 23F, 3-1 Ofukacho, Kita-ku, Osaka 530-0011 TEL 06-7634-3070
Fukuoka Branch Tenjin Miyuki Building 8F, 4-2-20 Tenjin, Chuo-ku, Fukuoka 810-0001 TEL 092-688-9018