Annual Securities Report
This document is a paper version of the Annual Securities Reportsubmitted to the Financial Services Agency via the EDINET (Electronic
Disclosure for Investors’ NETwork) system.

Sansan, Inc.
(E34960)
Note:

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

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Table of Contents
Page
Cover Page

3

Part One Company Information………………………………………………………………………………………………

4

I. Overview of Company………………………………………………………………………………………………………

4

1. Key financial data……………………………………………………………………………………………………

4

2. History………………………………………………………………………………………………………………

8

3. Description of business………………………………………………………………………………………………

9

4. Subsidiaries and associates…………………………………………………………………………………………

11

5. Employees……………………………………………………………………………………………………………

12

II. Status of Business …………………………………………………………………………………………………………

14

1. Management policy, management environment, and issues to be addressed, etc.……………………………………

14

2. Policy and initiatives related to sustainability…………………………………………………………………………

17

3. Business risks…………………………………………………………………………………………………………

24

4. Management analysis of financial position, operating results, and status of cash flows……………………………

27

5. Important contracts for operation……………………………………………………………………………………

32

6. Research and development activities…………………………………………………………………………………

32

III. Information About Facilities………………………………………………………………………………………………

33

1. Overview of capital expenditures……………………………………………………………………………………

33

2. Major facilities………………………………………………………………………………………………………

33

3. Planned addition, retirement, and other changes of significant facilities……………………………………………

33

IV. Information About Reporting Company……………………………………………………………………………………

34

1. Company’s shares, etc.………………………………………………………………………………………………

34

2. Acquisition and disposal of treasury shares…………………………………………………………………………

70

3. Dividend policy………………………………………………………………………………………………………

70

4. Corporate governance, etc.……………………………………………………………………………………………

71

V. Accounting…………………………………………………………………………………………………………………

88

1. Consolidated financial statements and other information……………………………………………………………

89(1) Consolidated financial statements ………………………………………………………………………………

89(2) Others……………………………………………………………………………………………………………

133

2. Non-consolidated financial statements and other information………………………………………………………

134(1) Non-consolidated financial statements …………………………………………………………………………

134(2) Description of main assets and liabilities…………………………………………………………………………

149(3) Others……………………………………………………………………………………………………………

149

VI. Outline of Share-related Administration of Reporting Company…………………………………………………………

150

VII. Reference Information About Reporting Company………………………………………………………………………

151

1. Information about parent of reporting company……………………………………………………………………

151

2. Other reference information…………………………………………………………………………………………

151

Part Two: Information About Reporting Company’s Guarantor, etc.……………………………………………………………

153[Auditor’s Report]………………………………………………………………………………………

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154

Cover Page
Filed Document
Applicable Law
Filed toFiling Date
Fiscal Year
Company Name

Annual Securities Report
Article 24, paragraph (1) of the Financial Instruments and Exchange Act
Director-General of the Kanto Local Finance Bureau
August 30, 2023
The 16th Term (from June 1, 2022 to May 31, 2023)

Company Name in English
Name and Title of Representative
Address of Head Office

Sansan, Inc.
Chikahiro Terada, Representative Director & CEO
Aoyama Oval Building 13F, 5-52-2 Jingumae, Shibuya-ku, Tokyo(Note) The head office will be relocated effective from July 2024 as below:
SHIBUYA TOWER 28F, Shibuya Sakura Stage, 1-1 Sakuragaoka-cho,Shibuya-ku, Tokyo
+81-3-6758-0033
Muneyuki Hashimoto, Director, Executive Officer, CFO
Aoyama Oval Building 13F, 5-52-2 Jingumae, Shibuya-ku, Tokyo
+81-3-6758-0033
Muneyuki Hashimoto, Director, Executive Officer, CFO
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

Phone Number
Contact Person
Contact Address
Phone Number
Contact Person
Place for Public Inspection

Sansan 株式会社 (Sansan Kabushiki Kaisha)-3-Part One: Company Information
I. Overview of Company
1 Key financial data
(1) Summary of consolidated financial data
Fiscal term
12th term
Fiscal year ended

13th term

14th term

15th term

16th term

May 31, 2019

May 31, 2020

May 31, 2021

May 31, 2022

May 31, 2023

Net sales(Millions ofyen)

10,206

13,362

16,184

20,42025,510Ordinary profit (loss)(Millions of
yen)

(891)

435

375

968

122

Profit (loss) attributable toowners of parent(Millions of
yen)

(945)

339

182

857

(141)

Comprehensive income(Millions of
yen)

(950)

331

1,820

(658)

(63)

Net assets(Millions of
yen)

3,372

10,552

12,584

12,093

13,190Total assets(Millions of
yen)

9,079

22,81924,31026,292

31,200Net assets per share

(Yen)

28.65

84.72

100.8996.78

105.18

Basic earnings (loss) per share(Yen)(10.10)

2.75

1.47

6.87

(1.13)

Diluted earnings per share

(Yen)

–

2.72

1.45

6.77

–

Equity-to-asset ratio

(%)

37.0

46.2

51.5

45.4

40.6

Return on equity

(%)

–

4.9

1.6

7.0

–

Price earnings ratio(Times)–496.3

1,408.6

148.4–

Cash flows from operating
activities(Millions of
yen)

1,072

2,822

3,011

3,123

3,848

Cash flows from investing
activities(Millions ofyen)(2,282)(7,189)(551)(1,014)

1,364

Cash flows from financing
activities(Millions of
yen)

3,132

11,563(2,902)

909

523

Cash and cash equivalents at
end of period(Millions of
yen)

5,468

12,663

12,223

15,24520,985

549

713

954

1,205

1,399

[328]

[346]

[363]

[449]

[557]

Number of employees[Separately, average numberof temporary employees]
Notes:(Persons)

1. As for diluted earnings per share for the 12th term, although there are dilutive shares, they have not been disclosed
because shares of the Company were unlisted and thus the average share price during the period was not obtained, andbasic loss per share was posted. Diluted earnings per share for the 16th term are not described here because, although
there are potentially dilutive shares, basic loss per share was recorded.
2. By resolution at the Board of Directors meeting held on May 29, 2018, the Company implemented a 10,000-for-1 stock
split on June 15, 2018. However, net assets per share, basic earnings (loss) per share and diluted earnings per share were
calculated on the assumption that said splitting of shares had been made at the beginning of the 12th term.
3. By resolution at the Board of Directors meeting held on October 8, 2021, the Company implemented a 4-for-1 stock split
on December 1, 2021. However, net assets per share, basic earnings (loss) per share and diluted earnings per share were
calculated on the assumption that said splitting of shares had been made at the beginning of the 12th term.
4. The returns on equity for the 12th term and the 16th term have not been disclosed since losses attributable to owners ofparent were recorded.
5. The price earnings ratio for the 12th term has not been disclosed since shares of the Company were unlisted. The priceearnings ratio for the 16th term has not been disclosed since loss attributable to owners of parent was recorded.
6. The number of employees represents the number of employed persons (including contract employees). For the number of
temporary employees (including part-timers), the annual average number of staff is shown in parentheses and is excluded
from the above number.
7. Ordinary loss and loss attributable to owners of parent for the 12th term are mainly due to active advertising activities,
development activities, etc. conducted for acquisition of new customers and sales expansion.
8. The Company recorded a loss on valuation of investment securities as an extraordinary loss in the recording of a loss
attributable to owners of parent in the 16th term.
9. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) and relevant ASBJ regulations effective from the beginning of the 15th term, and key financial data for the 15th
term or later are data resulting from the application of the standard and relevant ASBJ regulations.

-4-10. Starting from the 15th term, figures, which was previously rounded down to thousands, are rounded down to millions. To
facilitate the comparison, the unit of presentation was also changed from thousands of yen to millions of yen for the 14th
term and before.

-5-(2) Key financial data of reporting company
Fiscal term
12th term
Fiscal year ended

13th term

14th term

15th term

16th term

May 31, 2019

May 31, 2020

May 31, 2021

May 31, 2022

May 31, 2023

Net sales(Millions ofyen)

10,20013,35816,042

20,05724,926

Ordinary profit (loss)(Millions of
yen)

(893)

484

684

1,651

533

Profit (loss)(Millions of
yen)

(947)

388

490

1,429

(473)

Share capital(Millions of
yen)

2,812

6,236

6,312

6,426

6,582

29,432,353

31,138,853

31,183,645

124,963,596

125,410,584

Total number of issued
shares(Shares)

Net assets(Millions of
yen)

3,376

10,612

12,933

13,12813,352

Total assets(Millions of
yen)

9,082

22,881

24,61027,202

31,124

(Yen)

28.68

85.21

103.68105.60106.47

–

–

–

–

–

[–]

[–]

[–]

[–]

[–]

(10.12)

3.14

3.94

11.45

(3.78)Net assets per share
Dividends per share[Interim dividends per
share](Yen)

Basic earnings (loss) per
share

(Yen)

Diluted earnings per share

(Yen)

–

3.11

3.88

11.28

–

Equity-to-asset ratio

(%)

37.1

46.3

52.3

47.7

41.4

Return on equity

(%)

–

5.6

4.2

11.1

–

Price earnings ratio(Times)

–

434.0

524.4

89.1

–

Payout ratio
Number of employees

(%)

–

–

–

–

–

(Persons)

547

710

928

1,166

1,317

[328]

[344]

[359]

[443]

[549]

[Separately, average numberof temporary employees]
Total shareholder return[Comparison benchmark:
TOPIX]

(%)

–

–

151.6

74.9

125.4

(%)

[–]

[–]

[123.0][122.3][137.5]Highest share price

(Yen)

–

6,540

10,300

3,085[14,570]

1,970

Lowest share price

(Yen)

–

3,435

4,020

876
[7,940]804

Notes:

1. Dividends per share and payout ratio have not been disclosed because dividends were not paid.
2. As for diluted earnings per share for the 12th term, although there are dilutive shares, they have not been disclosed
because shares of the Company were unlisted and thus the average share price during the period was not obtained, andbasic loss per share was posted. Diluted earnings per share for the 16th term are not described here because, although
there are potentially dilutive shares, basic loss per share was recorded.
3. By resolution at the Board of Directors meeting held on May 29, 2018, the Company implemented a 10,000-for-1 stock
split on June 15, 2018. However, net assets per share, basic earnings (loss) per share and diluted earnings per share were
calculated on the assumption that said splitting of shares had been made at the beginning of the 12th term.
4. By resolution at the Board of Directors meeting held on October 8, 2021, the Company implemented a stock split at aratio 4-for-1 on December 1, 2021. However, net assets per share, basic earnings (loss) per share and diluted earnings per
share were calculated on the assumption that said splitting of shares had been made at the beginning of the 12th term.
5. The returns on equity for the 12th term and the 16th term have not been disclosed since losses were recorded.
6. The price earnings ratio for the 12th term has not been disclosed since shares of the Company were unlisted. The priceearnings ratio for the 16th term has not been disclosed since loss was recorded.
7. The number of employees represents the number of employed persons (including contract employees). For the number of
temporary employees (including part-timers), the annual average number of staff is shown in parentheses and is excluded
from the above number.
8. The highest share price and the lowest share price are those on the Mothers Section of the Tokyo Stock Exchange up to
January 20, 2021, those on the First Section of the Tokyo Stock Exchange from January 21, 2021 up to April 3, 2022, andthose on the Prime Market of the Tokyo Stock Exchange from April 4, 2022.
However, not applicable for the share prices for the 12th term, because shares of the Company were listed on the Mothers
Section of the Tokyo Stock Exchange as of June 19, 2019.

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9. Total shareholder returns and comparison benchmarks from the 12th term up to the 13th term have not been disclosed,
because shares of the Company were listed on the Mothers Section of the Tokyo Stock Exchange as of June 19, 2019.
Total shareholder returns and comparison benchmarks for the 14th term or later were calculated with those as at the endof the 13th term as the baseline.
10. Ordinary loss and loss for the 12th term are mainly due to active advertising activities, development activities, etc.
conducted for acquisition of new customers and sales expansion.
11. The Company recorded a loss on valuation of investment securities as an extraordinary loss in the recording of a loss in
the 16th term.
12. The Company implemented a stock split at a ratio of 4-for-1 on December 1, 2021. The share prices for the 15th term
represent the highest share price and the lowest share price after the stock split, and the highest share price and the lowest
share price before the stock split are shown in parentheses.
13. Starting from the 15th term, figures, which was previously rounded down to thousands, are rounded down to millions. To
facilitate the comparison, the unit of presentation was also changed from thousands of yen to millions of yen for the 14th
term and before.
14. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) and relevant ASBJ regulations effective from the beginning of the 15th term, and key financial data for the 15th
term or later are data resulting from the application of the standard and relevant ASBJ regulations.

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2 History
Month/year
June 2007
September 2007
October 2008
November 2010
February 2012
April 2013
August 2013
August 2013
October 2013
March 2014
May 2014
October 2015
January 2016
July 2017
December 2018
June 2019
July 2019
May 31, 2020
June 2020
August 2020
January 2021
May 31, 2021
January 2022
April 2022
March 2023
April 2023

Overview
SAN SAN, Inc (now Sansan, Inc.) founded at Ichigaya Tamachi, Shinjuku-ku, Tokyo for the purpose ofproviding business card management services.
Started provision of Link Knowledge (currently Sansan, a sales solution for digital transformation [DX])Relocated head office to Yonbancho, Chiyoda-ku, Tokyo
Relocated head office to Kudanminami, Chiyoda-ku, Tokyo
Started provision of Eight, a contact and career management app
Raised approximately 500 million yen through third-party allocation of new shares
Changed the service name from Link Knowledge to Sansan
Broadcast first Sansan TV commercial “Menshiki Ari (acquainted with them)”
Established a subsidiary Sansan Corporation (now a consolidated subsidiary) in the State of Delaware, USA
Relocated head office to Jingumae, Shibuya-ku, Tokyo and changed legal name to Sansan, Inc.
Raised approximately 1.4 billion yen through third-party allocation of new shares
Established a subsidiary Sansan Global Pte. Ltd. (now a consolidated subsidiary) in Singapore
Raised approximately 2.0 billion yen through third-party allocation of new shares
Raised approximately 4.2 billion yen through third-party allocation of new shares
Raised approximately 3.0 billion yen through third-party allocation of new shares
Listed on the Mothers Section of the Tokyo Stock Exchange and raised approximately 2.1 billion yen througha public offering of shares
Raised approximately 4.7 billion yen through third-party allocation of new sharesStarted provision of Bill One, a cloud-based invoice management solution
Started provision of Virtual Cards function in Sansan service
Made logmi, Inc. a subsidiary
Change in stock market listing to the First Section of the Tokyo Stock Exchange
Started provision of Sansan Meishi Maker service, a comprehensive business card making solution
Started provision of Contract One, a contract DX solution
Transitioned to the Prime Market of the Tokyo Stock Exchange
Acquired stock in CREATIVE SURVEY INC. (now a consolidated subsidiary) to make it a consolidated
subsidiary
Established Sansan Global Development Center, Inc. (now a consolidated subsidiary) in the Philippines-8-3 Description of business:
The Group has two reportable segments by business type, Sansan/Bill One Business and Eight Business, with six consolidated
subsidiaries as of the end of the fiscal year ended May 31, 2023. Minor other services outside the reportable segments areincluded in Others, and consolidated eliminations (net sales) and various costs not attributed to any reportable segment areincluded in Adjustments.
Under the mission of “Turning encounters into innovation” and the vision of “Become business infrastructure,” the Company
group (the “Group”) is providing cloud-based solutions that promote digital transformation (DX) and reshape how people work,
leading to encounters with people and companies that become business opportunities by using approaches that combine systems
that use technology and manpower to digitize analog information with cloud software. Specifically, the Company operates the
Sansan/Bill One Business, which includes Sansan service for sales DX and Bill One cloud-based invoice management solution,and the Eight Business, which includes Eight and the event transcription service logmi series. The Technology Division is
responsible for research and development related to technologies for digitizing analog information and various types of data, as
well as product development, etc., as a common foundation for both businesses, and continues to pursue the development of newtechnologies and improvement of data entry operations. The following two businesses are the same as the segment classifications
listed in “V. Accounting 1 Consolidated financial statements and other information (1) Notes to consolidated financial
statements.”(1) Sansan/Bill One Business
The Sansan/Bill One Business provides Sansan service for sales DX and Bill One cloud-based invoice management
solution to corporate clients.
1) Sansan
Based on the concept of “The database to power your sales,” Sansan builds a database by combining corporate informationand customer contact information to strengthen the sales capabilities of organizations and individuals. Users can view morethan 1 million items of corporate information, including not only companies with which they have contact on Sansan, butalso companies with which they have no current contacts. In addition to business cards, users can also store and visualize avariety of contact information with customers on Sansan, including e-mails and website inquiries, etc. By combining suchcorporate information and contact information, a database unique to each user company can be built and strategicallyutilized in sales activities.
As a business model, a basic plan for company-wide use is offered. The monthly usage fee is the license fee calculated
based on the user company’s corporate size and application use, plus scanner rental and other fees. In addition, when theservice is introduced, additional services such as data conversion of large numbers of business cards stored in paper form
and introduction support are provided for a fee.
2) Bill One
Bill One is based on the concept of “Receive, digitize & centralize your invoices. Fast monthly closing,” and is anaccounting DX service that helps speed up management decision-making by enabling online receipt of all invoices invarious formats (paper, PDF, etc.) delivered to multiple offices and departments, and by promoting efficiency in invoicerelated operations throughout an entire company. Paper invoices are received by the Bill One scanning service center onbehalf of the customer and converted into accurate data in a short period of time. Invoices in PDF format, etc. are also
converted to data after Bill One receives them via email. In addition to being able to view the data-coded invoices in thecloud, various workflow processes, such as invoice verification and approval, can be completed in the cloud, contributing
to the acceleration of monthly account settlement operations. Since invoice information is managed centrally in a highly
searchable database, the data can be used to control costs, create sales opportunities, and maximize future revenue
opportunities. In addition, the data can be used in conjunction with other third-party services such as accounting systems. In
addition to invoice issuance and mailing services, the Company supports corporate accounting operations by providing avariety of functions, such as the Bill One Business Card, a corporate card that was launched in June 2023.
The business model offers fee plans consisting of an initial fee, which includes installation support by a dedicatedconsultant, and a monthly fee calculated based on the number of invoices converted to data for the user company, with
optional features such as invoicing and corporate cards, etc. For companies with 100 or fewer employees, a small businessplan with no initial and monthly fees is available, subject to certain conditions.
(2) Eight Business
Like Sansan, Eight enables users to accurately digitize business card data about themselves and the people with whom theyexchange business cards by simply scanning them, and to easily manage and search their connections in the cloud. Byscanning their own business card, users can first create their own page on Eight that accurately reflects their affiliation, title,
etc. Next, by scanning business cards of those with whom they have exchanged business cards, the business card
information is accurately converted into data, which can then be managed and searched in the cloud. In addition, users canreceive notifications when changes are made to the business cards of those with whom they are connected on Eight,
allowing them to obtain information on their recent activities.
The business model is based on offering an application that allows free use of profile management and business cardmanagement functions, and includes Eight Premium, a B2C service with expanded functions, Eight Team, a service thatenables business card sharing in Eight within companies, and Climbers, a large-scale business event for young businesspeople, etc.

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- 10 -

4 Subsidiaries and associates
Company name

Address

Share capital

Ratio of
Description of voting rights
principal
holdingbusiness(held)(%)

Related details

Consolidated subsidiaries
Sansan Global Pte. Ltd.

Singapore

Sansan/Bill
S$5,620 thousand
One Business

Sansan Corporation

State of
Delaware, USA

Sansan/Bill
US$46 thousand
One Businesslogmi, Inc. (Note 3)

Shibuya-ku,
Tokyo

Sales operations and marketing
services agency for Singapore
100.0
region and other locations
Interlocking officers
Sales vendor and agency forsome settlement services for
100.0
U.S. region
Interlocking officers¥16 million Eight Business100.0 Interlocking officers

CREATIVE SURVEY INC. Minato-ku, Tokyo

Sansan/Bill¥100 million
One Business

Planning, development,
operation and sales of web63.1
based surveys and research
tools

Sansan Global
Development Center, Inc.

PHP10,000 Sansan/Bill
thousand One Business100.0 Interlocking officers

Philippines

1 other entity
Notes:

1. Names of segments are provided in the “Description of principal business” of the consolidated subsidiaries.
2. None of the companies file Securities Registration Statements or Annual Securities Reports.
3. This company is an insolvent company, and as of the fiscal year ended May 31, 2023, its liabilities exceeded its assets by¥45 million.

- 11 -

5 Employees(1) Consolidated companies
As of May 31, 2023
Name of segment

Number of employees (Persons)Sansan/Bill One Business
Eight Business
Reportable segments total
Corporate (shared)
Total
Notes:

1,038

(400)

154

(115)

1,192

(515)

207

(42)

1,399

(557)

1. The number of employees represents the number of employed persons (including contract employees). For the number of
temporary employees (including part-timers), the annual average number of staff is shown in parentheses and is excluded
from the above number.
2. The number of employees shown as Corporate (shared) represents the number of those who belong to departments thatcannot be classified into any specific business segment as well as to the administrative department.
3. The increase in the number of employees by 194 persons during the fiscal year under review is mainly due to regular andmid-term hiring associated with business expansion.

(2) Reporting company
As of May 31, 2023
Number of employees(Persons)
1,317

Average age(Years)(549)

Average years of employment(Years)
32.3

Average annual salary(Millions of yen)

2.6

Name of segment

7.0

Number of employees (Persons)Sansan/Bill One Business

994

(394)

Eight Business

116

(114)

1,110

(508)

207

(41)

1,317

(549)

Reportable segments total
Corporate (shared)
Total
Notes:

1. The number of employees represents the number of employed persons (including contract employees). For the number of
temporary employees (including part-timers), the annual average number of staff is shown in parentheses and is excluded
from the above number.
2. Average annual salary represents the figure for full-time employees of the Company and includes bonuses andsupplemental wages. From the fiscal year under review, the calculation method has been partially changed and is basedon full-time employees as of the end of the fiscal year. The average salary for the fiscal year under review based on thecalculation method used until the previous fiscal year was ¥6.7 million.
3. The number of employees shown as Corporate (shared) represents the number of those who belong to departments thatcannot be classified into any specific business segment as well as to the administrative department.
4. The increase in the number of employees by 151 persons during the fiscal year under review is mainly due to regular andmid-term hiring associated with business expansion.

(3) Labor union
Although a labor union has not been formed for the Group, the labor-management relations have been smooth.
(4) Percentage of female employees in management positions, rate of male employees taking childcare leave, and gender wage
gap for workers
1) Reporting company
Percentage of female
Gender wage gap for workers (%)
Rate of male
employees in(Note 1)
employees taking
management positions
childcare leave (%)
Of which, full-time
Of which, non-full(%)
All workers(Note 2)
employees
time employees(Note 1)
17.8

64.8

59.0

84.0

98.9

Note: 1. Calculated based on the provisions of “Act on the Promotion of Women’s Active Engagement in Professional Life”(Act No. 64 of 2015).
2. Calculated the rate of taking childcare leave in Article 71-4 item 1 of the “Ordinance for Enforcement of the Act onChildcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other
Family Members” (Ordinance of the Ministry of Labor No. 25 of 1991) based on “Act on Childcare Leave,
Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members”(Act No. 76 of 1991).

- 12 -

2) Consolidated subsidiaries
This information is omitted because the consolidated subsidiaries are not obligated to disclose the information pursuant to
the provisions of “Act on the Promotion of Women’s Active Engagement in Professional Life” (Act No. 64 of 2015) and“Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other
Family Members” (Act No. 76 of 1991).

- 13 -

II. Status of Business
1 Management policy, management environment, and issues to be addressed, etc.
The Group’s management policy, management environment, and issues to be addressed, etc. are as follows.
Matters related to future developments in this text are based on judgements made by the Group at the time this report was
submitted.
(1) Basic policy of corporate management
As its corporate philosophy, the Group has established its mission of “Turning encounters into innovation” and its vision to“Become business infrastructure.” To realize this mission and vision, the Group is developing services to change the way
companies and business people facing various business challenges work and to promote DX, and it believes that thepromotion of these business activities will contribute to solving social issues and eventually maximize shareholder value
and corporate value of the Group.
(2) Key management indicators and medium-term targets
As the medium-term targets from the fiscal year ended May 31, 2023 to the fiscal year ending May 31, 2025, the Company
is aiming for growth in both net sales and profit. First of all, for consolidated net sales, which is the most importantmanagement indicator, we are aiming to continue the solid growth of mid-20% or higher. Previously, the target for
consolidated net sales for the fiscal year ended May 31, 2023 to the fiscal year ending May 31, 2025 was set at 20% ormore growth, however, due to the strong performance of the fiscal year ended May 31, 2023, the target value has beenchanged.
Next, we have adopted adjusted operating profit (Note 1), which excludes share-based payment expenses and expenses
arising from business combinations as a profit indicator to be emphasized, and are aiming to improve adjusted operating
profit margin in each fiscal year while making the investments required for growth of net sales in each business. In order toachieve an improved profit margin, we are aiming to record adjusted operating profit of ¥10.0 billion or more in total for
the Sansan and Bill One services (Note 2) in the fiscal year ending May 31, 2025, as well as to record stable adjusted
operating profit over the full year in Eight Business.
Notes: 1.
2.

Adjusted operating profit: Operating profit + Share-based payment expenses + Expenses that arise inconjunction with business combinations (amortization of goodwill and amortization of intangible assets)
Total for Sansan and Bill One in Sansan/Bill One Business, excluding the Others category(3) Medium- to long-term corporate management strategy
The Group’s businesses and business domains have the following characteristics, and medium- to long-term management
strategies are formulated based on these characteristics.
1) Wide-ranging market opportunities
The market related to the Company’s services continues to expand due to changes in work styles caused by the COVID-19
pandemic, a change in awareness of DX, and a growing interest in SaaS business, etc. The DX market is expected to reach¥5,195.7 billion in 2030 (up ¥3,813.6 billion from 2020) (Note 3), and the domestic SaaS market is expected to reach¥1,668.1 billion in 2026 (up ¥579.0 billion from 2022) (Note 4).
The Company also believes that documents such as business cards, invoices, and contracts are still used on a daily basis inpaper form and have not yet been digitized, leaving significant room for operational efficiency and effective utilization.
Regarding the potential market for each service, Sansan has an 81.6% (Note 5) share of the B2B business card management
service market, but the number of Sansan users accounts for only about 3% (Note 6) of the total working population in
Japan, and the Company believes there is vast room for development. Next, Bill One has established an invoice network
consisting of contracted companies, including free users, and companies that send invoices to each contracted company, but
as of the end of May 2023, only about 90,000 companies, or 4% (Note 6) of all companies in Japan, were participating in
the network, and the Company believes there is vast room for development.
Notes: 3.
4.
5.
6.

Based on Market Edition and Vendor Strategy Edition of 2022 Outlook of the Digital Transformation Market
by Fuji Chimera Research Institute
Based on 2022 New Software Business Markets by Fuji Chimera Research Institute
Based on Latest Trends in Business Card Management Services in Sales Support DX 2023 (December 2022,
survey by Seed Planning, in Japanese)
The denominator, the total number of companies and employees in Japan, is calculated based on the 2021
Economic Census for Business Activity by the Ministry of Internal Affairs and Communications.

2) Mechanisms and technology to achieve 99.9% accuracy in converting analog information into data
The accuracy of data conversion of analog information in each of the services provided by the Group contributes to theessential quality and competitiveness of services provided, and the common strength of Group businesses is having themechanisms and technology to achieve 99.9% accuracy. The Group’s services involve the digitization of analog
information through a combination of technology, which is constantly evolving through machine learning and other means,- 14 -

and manpower. Since its founding, the Group has converted vast amounts of business cards and other analog information
into data mainly through human data entry, and it is now able to develop and operate proprietary systems that accurately
and efficiently convert large amounts of analog information into data. This technological capability and proprietarymechanisms are the source of the Group’s competitiveness, and it is pursuing the development of new technologies andoperational improvements in order to continuously improve the quality and competitiveness of its services. In addition,these mechanisms and technologies are characterized by their applicability to a wide variety of business fields.
3) Highly stable financial and revenue model
The billing model for Sansan and Bill One is centered on a subscription (monthly billing) model that can be expected togenerate ongoing revenue, and it is a model that can be expected to generate stable and continuous business growth. The
monthly churn rate for services has averaged less than 1.0% over the last 12 months, and the Company views this as an
attractive model because it is easy to promote the maximization of customer LTV (lifetime value) by working to increase
sales per contract.
Specific management strategies of the Group are as follows.
(ⅰ) Sales maximization of the Sansan/Bill One Business
Sansan and Bill One are services that target many companies regardless of industry or business category, and there is alarge potential for customer development in Japan alone. From the beginning of the fiscal year ending May 2024, weestablished dedicated sales departments for each of Sansan and Bill One toward further sales growth in the future, andstrengthened our sales structure mainly targeting medium and large enterprises. We will continue to actively hire
personnel to further strengthen our sales structure, and for Sansan, we will continue to acquire new customers andpromote the expansion of use by existing customers on the premise that all employees of user companies use the service(company-wide use), while for Bill One we will further expand net sales by acquiring new customers and enhancing
optional functions.
Also, in terms of services, both Sansan and Bill One will see further enhancement of functionality to improve the valueof services for customers. For Sansan, we will work to add functions that promote DX in sales activities, such as theability to automatically store and visualize customer e-mails on Sansan. For Bill One, we will work to improve theconvenience of the corporate card service added as an optional service, and enhance various functions that will lead tomore efficient accounting operations.
In addition, we will work to create new services using the technology developed for Sansan and to strengthen the newservices we have launched. In the Contract One contract DX solution, we will focus on developing services forcompany-wide use of contracts, such as the use of generative AI for summarizing contracts.
(ⅱ) Monetization of the Eight Business
By leveraging the Eight network, which has 3.3 million registered users, and strengthening monetization of B2B
services such as business events, as well as shifting to a more profitability-oriented business operation, we aim to return
the overall business to profitability on an adjusted operating profit basis for the full year.
(ⅲ) Utilization of M&A
We will promote measures to enhance the corporate value of CREATIVE SURVEY INC., which became a Group
company in March 2023, and Institute of Language Understanding Inc., which became a Group company in June 2023,
and work to create synergies with the Group’s existing services. In addition, we have positioned the use of M&A as oneof our important growth strategies and will continue to actively consider this option.
(4) Priority business and financial issues to be addressed
In pursuing the management strategies outlined above, the following are the main issues that must be addressed by theGroup.
1) Continuous strengthening of the management system against security risks
Given that the Group handles substantial volumes of important information assets such as personal information, it is crucial
that we continuously strengthen our system for managing information. We continue to take the utmost care with respect toimplementing measures for safeguarding personal information, including strict management of information assets based on
our Policy on Personal Information Protection and Information Security Policy, and we will persist in our efforts tostrengthen and maintain our in-house systems and management approaches in that regard going forward.
2) Recruiting and training outstanding talent and ensuring diversity
For the Group to achieve sustainable growth, it is crucial that we hire many talented professionals with diverse careerbackgrounds, and then improve our sales, development and managerial structures. We are actively engaging in efforts
geared to establishing work environments and arrangements that substantially fuel employee motivation for talented
professionals who share an understanding of the Group’s corporate philosophy and business activities, and will furthermore
persist with our efforts to ensure diversity of our people.

- 15 -

3) Enhancing technological strengths
As technology to accurately digitize analog information is the wellspring of the Group’s competitive strengths and acts as acommon platform underpinning growth of the various services the Group provides, we believe it is important tocontinuously improve and strengthen this technology. We accordingly engage in initiatives to improve our technologicalcapabilities and become a leading group of technical experts in Japan, through efforts that involve hiring outstanding
technical experts while also investing in and monitoring cutting-edge technologies.

- 16 -

2 Policy and initiatives related to sustainability
The Group’s approach to sustainability and its initiatives are as follows.
Matters related to future developments in this text is based on judgements made by the Group at the end of period of the fiscal
year under review.
(1) General sustainability initiatives
1) Governance
The Group believes that helping to resolve social issues through its business activities contributes to the building of asustainable society, and in turn opens the way to sustainable growth for the Group and to enhancements in the Company’s
corporate value. While taking into account such factors as the operating environment, the state of management, and thestage of the business, the Group promotes activities for achieving sustainability through collaboration and cooperation withall of its stakeholders. Based on these concepts, a Director of the Company has been assigned responsibility for each of thematerial issues (priority issues), under whose supervision response measures and the details of initiatives are considered.
Matters that contribute to achieving sustainability, including consideration of these details, are reported to and subsequently
supervised by the Board of Directors on an annual basis, and significant issues are deliberated and determined by the Boardof Directors.
2) Strategy
The Group uses the following process to identify material issues related to sustainability that should be addressed as amatter of priority.
(i) Selecting candidates for
significant issues

In addition to referring to international guidelines and rules, such as the goals andtargets contained within the SASB (Sustainability Accounting Standards Board)
standards and the SDGs (Sustainable Development Goals), material issue candidates
that are highly relevant to the Group are selected through discussions and othercommunication between Directors of the Company and institutional investors.

(ii) Assessing the importance ofissues

The issues selected in (i) are each assessed by all Directors individually along twoaxes. One is the importance of the issue to society (stakeholders) in terms ofachieving a sustainable society, and the other is the importance of the issue in termsof achieving the Group’s vision and driving the growth of the business.

(iii) Discussions and decisions by
the Board of Directors

The results of the assessments conducted in (ii) are discussed and deliberated by the
Board of Directors, which identifies material issues.

As a result of the above, the Group has selected 10 material issues organized into 5 areas, as follows.
Balance Security and Convenience
Besides convenience, we also implement measures to ensure that our employees maintain data privacy
and information security, thereby providing society with a highly safe and stable service.
Area (1)Material issues
1. Provide safe and stable infrastructure services
2. Ensure robust protection of data privacy and information security
Transform Work Through Innovative DX Services
To become business infrastructure, we will leverage our strengths in digitization to develop and provide
innovative DX services that substantively improve social and economic productivity.
Area (2)Material issues
3. Promote DX services that improve productivity
4. Create innovative business infrastructure

Area (3)Respect Employee Diversity and Producing Innovation
To produce innovation that helps solve business challenges through the power of encounters, we
promote creation and provision of opportunities and environments for our diverse workforce to succeed.
Material issues
5. Promote recruitment, development, and success of human resources
6. Promote diversity, equity and inclusion
Establish a Firm Management Structure to Support Rapid Business GrowthTo support our growth under a multiproduct structure, we will reinforce our management structure bystrengthening corporate governance and ensuring compliance.

Area (4)Material issues
7. Strengthen corporate governance
8. Ensure compliance- 17 -

Area (5)Conserve the Environment Through BusinessWe will promote environmental conservation by addressing climate change issues through our businessactivities, including advancing DX, supporting paperless work, and introducing environmentallyfriendly services.
Material issues
9. Address climate change issues
10. Use natural capital efficiently

3) Risk management
The Group perceives risks related to addressing sustainability to be synonymous with or closely related to risks that could
have a significant impact on management and the business, and it analyzes and identifies them as part of its company-widerisk management activities. Details of risks etc., are presented in “II. Status of Business 3. Business risks” Furthermore,risks and opportunities related to climate change are presented in “II. Status of Business 2. Policy and initiatives related tosustainability (2) Initiatives to address climate change issues.”
4) Metrics and targets
The Group has set metrics in relation to material issues for sustainability, as well as targets for the fiscal year ending May
31, 2030 as follows, and monitors progress towards them.
Material issues

Metrics and targets for fiscal year ending May
31, 2030

Fiscal year ended
May 31, 2023

1. Provide safe and stable infrastructure services

Number of major incidents: 0

2. Ensure robust protection of data privacy andinformation security

Proportion of those qualified as Protection ofIndividual Information Person: maintained at
80% or higher

0

3. Promote DX services that improve
productivity

Number of items converted from analog todigital information using our services: 500
million

190 million

4. Create innovative business infrastructure

Number of users of our services: 20 million
people5.73 million
people5. Promote recruitment, development, andsuccess of human resources

Proportion of recruitment through referrals:
35%
Unipos (peer bonus) posting rate: 80%

12.0%
59.6%

6. Promote diversity, equity and inclusion

Ratio of female employees in management
positions: 30% or higher
Ratio of female employees: 45% or higher

17.8%
34.9%

7. Strengthen corporate governanceRatio of female Directors: 30% or higher

22.2%

8. Ensure compliance

Number of significant compliance violations: 0
Proportion of employees receiving
compliance-related training: 100%

9. Address climate change issues

Scope 1+2: carbon neutral

851 t-CO2

10. Use natural capital efficiently

Number of uses of paperless functions in ourservices: 120 million

10 million

88.0%

0
100%

Notes: 1. Results and targets presented here are for the Company on a non-consolidated basis.
2. “Protection of Individual Information Person” is the name of a certification provided by the All Japan Information
Learning Promotion Association.
3. Results for the Company’s services are aggregated for Sansan, Bill One, Contract One and Eight.
4. Unipos is a service centered on the peer bonus system provided by Unipos, Inc.
5. Scope 1 is calculated by aggregating direct GHG emissions from the offices and facilities owned by the Company.
Scope 2 is calculated by aggregating by indirect GHG emissions from the use of purchased electricity and thermalenergy in each office.
(2) Initiatives to address climate change issues
Regarding climate change, the Group determines and oversees business risks and opportunities under an appropriate
system. In raising the ability to respond to issues, the Group aims, for example, at stable economic development andsecuring the foundations for people’s livelihoods, and the Group sees this as a vital initiative in advancing the transition to a
low-carbon economy and, by extension, a decarbonized society. Based on this idea, the Group has expressed support for therecommendations published by the Task Force on Climate-related Financial Disclosures (TCFD) and makes disclosures
based on this framework as follows.

- 18 -

1) Governance
The Group discusses and makes decisions on various policies and important matters that contribute to realizing
sustainability at Board of Directors’ meetings. The Group has identified addressing climate change as one of the material
issues that the Group should proactively address. Under the supervision of the representative director in charge, the Group
has set up a Climate Change Response Project—consisting of corporate departments, such as the IR Team, Office Strategy
Department, and the Finance & Accounting Department to study the issue. Under this project, matters that include various
metrics relating to climate change, as well as business risks and opportunities, are examined, tabulated, and specified. These
matters are received and supervised in annual reports by the Board of Directors. Business strategies and plans are thendecided upon after duly considering the important matters.
2) Strategy
To strengthen the ability to respond and adapt to the changes in the business environment caused by climate change, theGroup mainly uses scenarios including the Intergovernmental Panel on Climate Change (IPCC)’s Shared Socioeconomic
Pathways to analyze business environments in which temperature increases are limited to 1.5°C (SSP1-1.9) or below 2°C(SSP1-2.6), as well as those in which 4°C increases (SSP5-8.5). After analyzing the scenarios, the Group identify thebusiness risks, opportunities and countermeasures as shown in the table below.
The analysis covers all businesses of the Group, with short-term analysis covering from the present to 2025, medium-term
analysis covering until 2030, and long-term analysis covering until 2050. Profit impact is shown as small for cases with anannual impact of less than 1 billion yen, medium for cases with an impact between 1 billion yen and less than 3 billion yen,and large for cases with an impact of 3 billion yen or more.

- 19 -

(i) Business risk identification
Profit impact(annual)Type

Scenario analysis

Acute

Physical risk

Law and regulation

Transitional risk

MarketIncreasing
environmental
awareness acrosssociety, the use ofvarious paper-based
business tools is
gradually declining,
while the utilizationof digital information
is expanding.

Social demand andrequirement for theuse of clean energy
will increase, andvarious energy prices
are soaring.
Additionally, theincreased global
warming is resulting
in an increased
cooling load for
information andcommunicationequipment.

Many countries andregions will tighten
regulations on GHG
emissions, and new
carbon taxes andhigher tax rates will
be introduced ascarbon pricing.

Natural disasters suchas torrential rains andfloods that cause
extensive damage are
becoming more
severe and more
frequent.

Time
frame

Business risks

The frequency andimportance ofutilization of somefunctions of theservice that digitizes
paper business cards,
invoices, contracts,
and other documents
to improve
productivity may
decrease.

Increases in server
prices and various
energy prices such as
electricity, which areessential for thebusiness centered ona SaaS-type businessmodel, will lead tohigher operating
expenses.

The expenses
associated with tax
burdens, as well as
the cost of purchasing
non-fossil fuelcertificates andcredits for carbon
offsetting, may
increase.

Flooding the servers
and digitalization
centers responsible
for tasks such as
digitizing paper
invoices, leading toservice disruptions, aswell as the damage tothe stored documentsof service user
companies, resulting
in a decline in theservice value.

- 20 -

Short tomediumterm

Mediumto longterm

Mediumto longterm

Mediumto long
term

1.5°C/
below
2°C
scenario

Small

Small tomediumSmall

Small tomedium4°C
scenario

Countermeasures

Small

Provide added
value equal to or
greater than thevalue ofdigitizing analog
information by
expanding highly
convenientfunctionscentered on theuse of digital
information andenhancing its
value as aplatform.

Small

Reduce costs by
optimizing
procurement ofnecessary
resources andmaterials,
including servers
and electricity,and improve
efficiency byimplementing
energy-saving
measures toreduce energy
use.

Small

Reduce tax
burdens andcarbon offset
costs byincreasing the useof renewableenergy andimproving energy
efficiency
through theimplementationof energy saving.

Small tolarge

As part of thebusiness
continuity plan
(BCP), ensureservice continuity
during natural
disasters by using
multiple servers
for system
redundancy,
decentralizing
important service
operation sites,and preparing
manuals for
emergencies.

(ii) Business opportunity identification

Type

Scenario analysis

Products and services

Profit impact(annual)Growingenvironmental
awareness acrosssociety will increasedemand for services
that help reduce paperuse. Additionally, theincreased risk ofinfectious diseases
associated with risingtemperatures has led
to a rise in non-faceto-face and noncontact businessactivities, increasing
the importance ofusing digital
information.

Business
opportunities

Time
frame

The demand for thevarious DX services,which are equippedwith functions to curb
the use of paper while
improving theefficiency of various
workflows throughthe use of digital
information, may
expand.

Mediumto long
term

1.5°C/
below
2°C
scenario

Countermeasures

4°C
scenario

Small tomediumSmall

Enhance thevalue provided tousers byexpanding highly
convenientfunctionscentered on theuse of digital
information, andstimulate further
demand bystrengthening thesales andmarketingactivities.

3) Risk management
In consultation with the directors in charge of each field and the Climate Change Response Project, the Group conducts
scenario analyses to identify climate-related business risks and opportunities, assesses their importance, calculates theirfinancial impact, and reviews countermeasures. These matters are next reported annually to the Board of Directors, which
decides on business strategies and plans after considering important matters including the risks and countermeasures.
Important climate change-related risks are also integrated and managed with the results of company-wide risk analyses
conducted through internal audits etc.
4) Metrics and targets
The Group has selected GHG emissions as a climate change-related assessment metric. The table below shows actual GHG
emissions over the last three years.
In the fiscal year ending May 31, 2024, the Group has newly set a carbon neutrality target by 2030 as part of our reduction
goals for Scope 1 and Scope 2 emissions. In addition to embarking on various initiatives to achieve these targets, the Groupwill continue to comprehensively consider the establishment of Scope 3 reduction targets, taking into account a variety ofinternal and external factors.
Item

Unit

Fiscal year
ended May31, 2021

Fiscal year
ended May31, 2022

Fiscal year
ended May31, 2023

Scope 1

t-CO2

0

0

0

Scope 2
(location-based)

t-CO2

477

639

840

Scope 2
(market-based)

t-CO2

525

668

851

Scope 1 and 2(market-based)

t-CO2

525

668

851

Scope 3t-CO2–

15,67918,638

Scope 1, 2 and 3(market-based)

t-CO2

–

16,347

19,489t-CO2 /
hundredmillion yen

–

81.7

78.2

Scope 1, 2 and 3 emissions intensity(per net sale)Notes: 1. This figure is based on the non-consolidated results of Sansan, Inc. and covers 97.7% (percentage of nonconsolidated net sales to consolidated net sales) of our business scope as of fiscal year ended May 31, 2023.
2. Scope 1 is calculated by aggregating direct GHG emissions from the offices and facilities owned by the Company.
Scope 2 is calculated by aggregating by indirect GHG emissions from the use of purchased electricity and thermalenergy in each office. Scope 3 is calculated by aggregating the GHG emissions of the entire value chain (Categories
1 through 15), excluding Scope 1 and Scope 2.

- 21 -

3. Due to the refinement of the aggregation method, the results prior to fiscal year ended May 31, 2022 have beenrecalculated.
(3) Initiatives on Investments in Human Resources
1) GovernanceIn achieving sustainable business growth and new value creation, the Group positions human resources as one of the mostimportant management capitals, and it is crucial that the Group embraces diversity of human resources and establishes
work environments that substantially fuel employee motivation for each of employees with diverse career backgrounds.
Under such concepts, the Group has selected promotion of recruitment, training and active participation of human resources
and promotion of diversity, equity and inclusion as material issues to work on preferentially, and is considering specificdetails of initiatives under the lead of Directors/Executive Officers/CHRO who are responsible persons. Initiatives oninvestments in human resources, including consideration of these details, are reported to and subsequently supervised by
the Board of Directors on a regular basis, and significant issues are deliberated and determined by the Board of Directors.
2) Strategy
With regard to human capital, the Group mainly implements the following initiatives as follows.
(i) Recruitment of diverse talented professionals
As part of its important growth strategy, the Group continues to strengthen its recruitment of human resources. The
number of employees on a consolidated basis was 1,399 persons as of the end of the fiscal year under review, andvarious organizations such as development, sales and back offices consist of human resources with diverse backbones.
In the recruitment, the Group gives weight to human resources who not only have a high level of expertise and skills but
also share an understanding of the Group’s corporate philosophy and take a mission-driven attitude. The more the ideal
image that human resources have matches the corporate philosophy such as the mission, vision and values, the more
actively they are likely to participate after joining the company. Therefore, the Company is reinforcing recruitment
through referrals.
(ii) Promotion of training and active participation of human resources
The Group principally implements the following initiatives in order to not only ensure that talented professionals
actively participate, but also establish an environment in which organizations absorb their excellent insights, resulting infurther growth of people around them.
Name

Description

Katachi discussion

We provides opportunities for all employees to discuss the corporate philosophy, andfacing the Company’s values and culture is an important opportunity from theperspective of growth of individuals and an increase in productivity.

Unipos (peer bonus)

We strive to instill the company culture and improve employee engagement throughvisualization of internal appreciation cases by utilizing a platform involving all
employees centered on the peer bonus system.

Engagement survey

We conduct engagement survey of permanent employees and contract employees
once a month, and utilize an analysis of the responses in self-management andorganizational management, formulation of company-wide internal systems andmeasures, etc.

Know MeWe have established a system to fund food and drink expenses when employees whoare involved in different operations interact in a team of three, in order to stimulateinternal communications to improve quality of operations.

CoachaFor the purpose of identifying challenges for growth from potentials and possibilities
of individuals and encouraging their action, we have established a system in which
employees can take one-on-one coaching of the employees who have professional
qualifications for coaching.

Geek Seek

For the purpose of improving quality of services, we have established a system tofund costs of purchasing of books and tools necessary for acquisition of knowledge
and increase in business efficiency, costs of participating in events, etc. for positionsof engineers, researchers and designers.

(iii) Promotion of active participation of women
Under the policy to aggressively recruit and promote outstanding talents regardless of certain attributes such as careerbackground and gender, the Group provides all employees fair opportunities for assessment and promotion. As a result,
the ratio of female employees and the ratio of promotions for women have been on a trend of improvement, and theGroup will continue fair assessment and operation regardless of certain attributes through monitoring each term, andother means.

- 22 -

(iv) Employment of foreign nationals and people with disability
In being oriented to proactive overseas business development, the Group reinforces recruitment of employees with aforeign citizenship, and endeavors to foster corporate culture of achieving missions while embracing diversity bycreating opportunities for interaction between foreign employees at overseas offices and Japanese employees in Japan tostimulate communications. In addition, the Group also makes efforts to create opportunities for people with disability towork and expands opportunities for them to actively participate.
3) Risk management
The Group perceives risks related to human resources to be synonymous with or closely related to risks that could have asignificant impact on management and the business, and it analyzes and identifies them as part of its company-wide risk
management activities. Details of risks etc., are presented in “II. Status of Business 3. Business risks, etc.”
4) Metrics and targets
With regard to initiatives on investments in human resources, the Group has mainly set appraisal metrics as follows, andmonitors the progress. In addition, for certain metrics, the Group has established targets for the fiscal year ending May 31,
2030.
Significant issues

Metrics (targets for fiscal year ending May
31, 2030)

Fiscal year ended May
31, 2023

Promote recruitment, development, and success ofhuman resources

Proportion of recruitment through referrals
(35%)

12.0%

Unipos posting rate (80%)

59.6%

Number of appreciation posts in Unipos
Response rate for engagement survey
Total participation time for Katachi-related
training

Promote diversity, equity and inclusion

Approximately
45,000 subscriptions
82.6%
Approximately
5,600 hours

Investments in Geek Seek

¥43 million

Investments in measures for interaction
among employees¥12 million

Total number of participants in internalcoaching

Approximately
800 people

Ratio of female employees in management
positions (30% or higher)

17.8%

Ratio of female employees (45% or higher)

34.9%

Ratio of foreign employees

2.6%

Ratio of employment of people withdisability

2.6%

Notes: 1. Results and targets presented here are for the Company on a non-consolidated basis.
2. The ratio of foreign employees was calculated from the Company and Sansan Global Pte. Ltd., its subsidiary.
3. The ratio of employment of people with disability was calculated by replacing the period with the accounting periodthat ends on March 31 (from April to March of the following year).

- 23 -

3 Business risks
Managerial and business risks of the Group include those related to information security, such as handling of personal
information and improvement of systems, since it provides services in which it handles important information of companies
including business cards and invoices. In addition, there are highly uncertain risks such as Internet usage environment,
technological innovations and user behavior change. To these risks, we strive to establish a management system andcountermeasures and work to reinforce the management structure to support the rapid growth of the business.
(1) Risk management
For risks that may have a significant impact on management, the Group stays aware of the probability of their occurrence
and establishes a risk management structure and methods to respond to the risks. Furthermore, the Group either prevents
them from manifesting themselves or respond to them if they become a reality, in light of changes in the environment
surrounding its businesses.
1) Identification and analysis of risks
The Group makes an internal audit plan in accordance with the internal audit regulations, and regularly identifies andanalyzes risks in the internal audit process. The Group assesses risks extracted at each department from the perspective of
the frequency of occurrence and impact level, and strives to prevent and early detect risks.
2) Incident guidelines
In case of any occurrence of incidents related to provision of services such as disasters, accidents, unauthorized access andvulnerability matters, each department has established guidelines on structure, chain of command, judgment criteria andresponse procedures for incidents. Specifically, incidents are classified from three perspectives of confidentiality, integrity
and availability, and a degree of priority is given to responses to each risk. Then a decision-maker for judgment on andresponses to incidents at each department is appointed.
(2) Major risks
The following shows matters that may have a material impact on judgment of investors, among matters that may affect theGroup’s businesses, status of finance and accounting, etc. The Group’s policy is to strive to stay aware of these potential
risks and to either prevent them from manifesting themselves or respond to them if they become a reality. However, it
believes that investment decisions on the Group’s shares need to be made after careful consideration is given to this section
together with other descriptions in this document.
Of the following descriptions, matters related to the future were judged by the Group as at the filing date of this document
and contain uncertainty, and therefore they may differ from actual results.
Category

Item

Information security (1) Handling ofrisk
personal
information(2) Equipment
and network
stability

Description of risks

Responses

 Natural disasters,
accidents, unauthorizedaccess from the outsidewith a malicious
intention, and internalleak, loss, alteration orabuse of customer
information by intention
or negligence Establishment and operation of a personal information
protection management system
 Obtaining PrivacyMark certification
 ISMS and ISO27017 certification, and issuance of
SOC2
 Requiring all employees to obtain the qualification of
Personal Information Protection Specialist Collection of information on new legal regulations inJapan and overseas, and implementation of necessary
countermeasures
 Thorough legal compliance, and safe management ofoutsourcing contractors

 Obstacles posed to the Distribution of load to multiple servers and regularGroup’s equipment andbackupsuse of network due to Establishment of a real-time access log check function
natural disasters such as
and a system to immediately give notice of any
fire and earthquake,software failure
external breakage, system  Recovery training assuming the time of failure
failures due to humanoccurrence
errors, or any otherunanticipated events- 24 -

Category

Item

Description of risks

Responses

Service risk

(3) Service
failures, etc.

External
environment risk

(4) Internet
 Introduction of new Collection of information on Internet-related legal
accessregulations on Internet
regulations, etc. as well as extraction of issues andenvironments use, and occurrence of an implementation of solutions
adverse effect(5) Cloudbusiness

 Occurrence of various
 Building and maintenance of the highly reliablebugs in the Group’s
development structure, and formulation andapplications, software
implementation of incident guidelines for services
and systems
 Detection of any critical
bug that poses an
obstacle to the operationof the Group’s businesses Significant downturn indemand for cloudservices themselves(6) Responding  Delay in responding tototechnological
technological innovations, etc.
innovations
 Incurrence of unexpecteddevelopment expenses,
etc.
(7) Competition

Investment risk

 Intensified competition
with existing business
operators and new entrant
operators
 Intensified competition
due to appearance of any
other company’s service
with a revolutionary
concept(8) Upfront Large increase in Monitoring of cost-effectiveness of advertising andinvestments
expenditures due topromotionsin advertising changes in the policy andandplans for advertising andpromotions
promotions(9) Investments
such ascorporateacquisitions

 Delay in a business plan
after an acquisition or
investment(10) System Unexpected additional
infrastructure investment in hardware
investments
and software for stable
operation of services
Personal risk

 Creation of new value offered Proactive adoption of new technologies
 Protection of intellectual property rights through patentacquisition, etc.
 Promotion of M&A, and capital and business alliances Implementation of sufficient due diligence for target
companies Thorough monitoring and follow-ups for target
companies Thorough monitoring of access from the outside Design of appropriate system infrastructure investment
according to the business expansion(11) Establishment  Delay in establishment of  Thorough development of the internal managementofthe business structure and structure in line with increases in operations andmanagement
the internal management
employees
control
structure according to thesystembusiness size(12) Training andsecuring
human
resources

 Shortfall in excellent
 Aggressive recruitment of human resources
human resources Strengthening of the structure by internally fostering
personnel, etc.
 Delay in securing sales
staff in the Sansan/Bill Development of the working environment
One Business and loss ofthem(13) Dependence
on specificindividuals Occurrence of any event  Creation of a structure that does not excessively depend
that brings difficulties for on him
Chikahiro Terada, Mutual information sharing among executives andRepresentative Director,
strengthening of the management organization
to continue operations- 25 -

Category
Legal risk

Item(14) Laws andregulations

Description of risks

Responses

 Impact of enactment of Collection of information on legal regulations, etc. as
new privacy-related
well as extraction of issues and implementation ofregulations, laws
solutions
regulating internetrelated business
operators, and relevantlaws, etc. applicable inline with the expansion of
the business environment
in Japan and overseas(15) Intellectual
 A claim for damage or Implementation of survey on intellectual property rightproperty right injunction request from a infringement via patent firms
infringement, third party on the grounds  Patent applications and registrations
etc.
of infringement of patent  Implementation of legal actions
right or trademark right A third party’s
infringement ofintellectual property
rights held by the Group
Overseas risk(16) Launchingoverseas Occurrence of risks
specific to overseas thatare difficult to address Delay in monetarizationof the overseas business

Other(17) Granting
incentives

 Dilution of value of Design of stock options with adequate consideration ofshares held by existing
the market environment, impact on existing
shareholders throughshareholders, etc.
exercise of stock options
issued (Note 1)

 Collection of information on regions where the Grouphas developed its businesses as well as extraction ofissues and implementation of solutions
 Formulation of appropriate business plans

Note: 1. The number of shares granted as stock options as of July 31, 2023 was 3,459,544 shares, which account for 2.76% of
the total number of issued shares.

- 26 -

4 Management analysis of financial position, operating results, and status of cash flows(1) Explanation of operating results
An overview of the Group’s financial position, operating results, and status of cash flows (hereinafter “Operating Results,
etc.”) are as follows.
1) Analysis of operating results
Under the mission of “Turning encounters into innovation” and the vision of “Become business infrastructure,” the Groupis providing cloud-based solutions that promote digital transformation (DX) and reshape how people work, leading toencounters with people and companies that become business opportunities by using approaches that combine systems that
use technology and manpower to digitize analog information with cloud software.
Specifically, the Group is developing solutions to promote DX for corporate sales activities, invoicing work, contract work,
etc. Moreover, as a result of reforming awareness regarding DX, changes to working styles due to the COVID-19
pandemic, and greater attention being given to SaaS (Software as a Service) products, the DX market in Japan is forecast toreach ¥5,195.7 billion by 2030 (an increase of ¥3,813.6 billion since 2020) (Note 1), while the SaaS market in Japan isforecast to reach ¥1,668.1 billion by 2026 (an increase of ¥579.0 billion since 2022) (Note 2). A sales DX solution Sansan,
provided by the Company, holds 81.6% share (Note 3) of the B2B business card management service market, and thismarket has seen approximately 14-fold expansion from 2013 to 2021 in conjunction with the growth in the Company’s
services. In addition, Bill One, a cloud-based invoice management solution provided by the Company, captured the number
one market share of the online invoice receiving solution in terms of net sales (Note 4), with this market seeing a 226.0%
increase year on year in FY2021.
Consolidated financial results for the fiscal year ended May 31, 2023 are as follows.
(Millions of yen, unless otherwise noted)
Fiscal year ended May 31,
2022

Fiscal year ended May 31,
2023

Net sales

20,42025,510+24.9%

Gross profit

17,904

21,827+21.9%

Adjusted operating profit (Note 5)

730

942

+28.9%

Ordinary profit

968

122

(87.4)%

Profit attributable to owners ofparent

857

(141)

–

Year-on-year change

In the fiscal year under review, the Group engaged in strengthening the sales structure and enhancing functions for Sansan
and Bill One, and increasing future profitability for Eight, in order to improve medium-term net sales growth and adjusted
operating profit margin.
Consequently, results were solid in the fiscal year under review with net sales increasing 24.9% year on year, gross profit
increasing 21.9% year on year (a gross profit margin of 85.6%). Adjusted operating profit increased 28.9% year on year due
to an increase in net sales and other factors. On the other hand, ordinary profit decreased 87.4% year on year due toincrease of share-based payment expenses and the recording of a gain on sale of investment securities of ¥979 million in
non-operating income in the previous fiscal year. Furthermore, profit attributable to owners of parent was recorded in the
red due to factors such as the recording of a loss on valuation of investment securities of ¥980 million in extraordinary
losses.
Notes: 1. Based on Market Edition and Vendor Strategy Edition of 2022 Outlook of the Digital Transformation Market
by Fuji Chimera Research Institute
2. Based on 2022 New Software Business Markets by Fuji Chimera Research Institute
3. Based on Latest Trends in Business Card Management Services in Sales Support DX 2023 (December 2022,
survey by Seed Planning, in Japanese)
4. Deloitte Tohmatsu MIC Research Institute, “The Present and Future of the Market of Online Invoice Receiving
Solution Expected to Grow at a Staggering Rate” (MIC IT Report, July 2022)
5. Although operating profit was presented previously, from the fiscal year under review, adjusted operating
profit, which is the sum of operating profit plus share-based payment expenses and expenses arising frombusiness combinations (amortization of goodwill and amortization of intangible assets), is presented instead,because the performance indicator used for management purposes was changed to an indicator that shows theregular capacity to generate corporate earnings after deducting expenses related to share-based payment
expenses, which may vary significantly depending on the level of the Company’s stock price, and expenses
that arise from business combinations. Adjusted operating profit is also presented for the fiscal year ended May
31, 2022. In addition, expenses related to the monetary compensation and payment of alternative wages, etc. to- 27 -

employees, etc. of the Group pertaining to trust-type stock options are included in share-based payment
expenses.
Results by segment are as follows.
(ⅰ) Sansan/Bill One BusinessThis business segment includes services such as sales DX solution Sansan, and cloud-based invoice management
solution Bill One.
Results for Sansan/Bill One Business in the fiscal year under review are as follows.
(Millions of yen, unless otherwise noted)
Fiscal year ended May Fiscal year ended May
Year-on-year change
31, 2022
31, 2023
Net sales (Note 6)
SansanSansan recurring sales
Sansan other sales
Bill One
OthersAdjusted operating profit

18,105
17,214
16,349
865
826
64
5,752

22,516
19,793
18,688
1,104
2,414
308
7,005

+24.4%+15.0%+14.3%+27.7%+192.2%+379.7%+21.8%

8,488
subscriptions¥170 thousand

8,969
subscriptions¥184 thousand

+5.7%

0.62%

0.44%

(0.18) pt.

116
776
subscriptions

316
1,581
subscriptions+172.8%+103.7%¥149 thousand¥200 thousand+34.2%

0.49%

0.64%

+0.15 pt.

SansanNumber of subscriptions
Monthly recurring sales per subscription
Last 12 months average of monthly churn rate
(Note 7)
Bill OneMRR (Note 8)
Number of paid subscriptions (Note 9)Monthly recurring sales per paid subscription(Note 9)Last 12 months average of monthly churn rate
(Note 7)
Notes:+8.2%

6. The sum of sales to external customers and intersegment sales or transfers
7. Ratio of decrease in monthly fees associated with subscription cancellations to total monthly fees for existing
subscriptions for each service
8. Monthly Recurring Revenue, changed value for the fiscal year ended May 31, 2022 due to revision of
calculation method
9. Changed value for the fiscal year ended May 31, 2022 due to the revision of the timing of collecting the datafrom the conclusion of the contract to the start of the service usagea. Sansan
To further expand the number of Sansan subscriptions and the monthly recurring sales per subscription, theGroup remodeled the product Sansan, a B2B business card-based contact management service, and worked to
add new functions based on the concept of “The database to power your sales” to create Sansan, a sales DX
solution. Specifically, in June 2022, apart from allowing users to view over 1 million items of company
information on Sansan, the Group installed functions able to store and visualize contact information not only
from business cards but also email signatures, etc. By combining this contact information with corporate
information, users of Sansan can build custom databases that also include information for companies withwhich they have no current contacts. The Group also worked on adding a function whereby emails withcustomers are automatically stored in Sansan. Backed by these new functions, the Group focused on enhancing
its sales capabilities and its sales structure for medium and large enterprises, aiming to acquire new users andto upsell existing users.
As a result of these, the number of subscriptions and the monthly recurring sales per subscription for Sansan
were up 5.7% year on year to 8,969 and 8.2% year on year, respectively. Furthermore, the last 12 months
average of monthly churn rate was 0.44%, a decrease of 0.18 points year on year, maintaining a low churn rateof less than 1%.
As a result, net sales in Sansan increased 15.0% year on year, of which recurring sales (fixed revenue) was up
14.3% year on year and other sales was up 27.7% year on year.
b. Bill One
Because of efforts such as strengthening the sales structure through measures including personnel hiring andenhancing service functions for continued high growth of Bill One, in May 2023, MRR was up 172.8% year on
year and ARR (Note 10) was ¥3,798 million. In addition, steady progress in acquiring new subscriptions- 28 -

mainly from medium and large enterprises resulted in the increase of number of paid subscriptions, up 103.7%
year on year, and the increase of monthly recurring sales per paid subscription, up 34.2% year on year.
Furthermore, the last 12 months average of monthly churn rate was 0.64%, an increase of 0.15 points year on
year, maintaining a low churn rate of less than 1%.
As a result, net sales in Bill One increased 192.2% year on year. Also, in June 2023, the Group launched Bill
One Business Card, a business card option for the Bill One service.
Note:

10. Annual Recurring Revenuec. Others
The Group focused on the launch of Contract One, a contract DX solution, etc., utilizing the strengths, knowledge,know-how, etc. cultivated through existing services. Also, CREATIVE SURVEY INC. became a consolidated
subsidiary and its contributions to consolidated earnings started to be recorded from March 2023.
As a result, net sales of others was up 379.7% year on year.

As a result of these efforts, net sales increased 24.4% year on year and adjusted operating profit increased 21.8% year
on year in Sansan/Bill One Business.
(ⅱ) Eight BusinessThis business segment includes Eight as well as the event transcription service logmi series.
Results for Eight Business in the fiscal year under review are as follows.
(Millions of yen, unless otherwise noted)
Fiscal year ended May 31, Fiscal year ended May 31,
Year-on-year change
2022
2023
2,213
286
1,927
(355)

2,867
303
2,563
(170)

+29.5%+6.0%+33.0%–

3.10 million
people2,819
subscriptions

3.31 million
people3,703
subscriptions+0.20 million
peopleNet sales (Note 11)
B2C services
B2B services
Adjusted operating profit
Eight
Number of Eight users (Note 12)
Number of subscriptions for EightTeam
Notes:+31.4%

11. The sum of sales to external customers and intersegment sales or transfers
12. Number of confirmed users who registered their business card to their profile after downloading the app
a. B2C services
In light of the normalization of business due to the ending of the COVID-19 pandemic, the number of Eightusers totaled 3.31 million, a steady increase of 0.20 million year on year, and net sales from B2C services
increased 6.0% year on year.
b. B2B services
In addition to holding a major business event, etc., the Group worked on monetization of the various B2B
services. As a result, the number of Eight Team subscriptions increased 31.4% year on year, and net sales fromB2B services increased 33.0% year on year.

As a result of these efforts, net sales in Eight Business increased 29.5% year on year, and adjusted operating loss wascurtailed by ¥185 million year on year.

- 29 -

2) Analysis of financial position

As of May 31, 2022

26,292
14,19912,093
26,292

Total assets
Total liabilities
Total net assets
Total liabilities and net assets

As of May 31, 2023

31,20018,00913,19031,200(Millions of yen)
Change fromprevious fiscal yearend
4,907
3,810
1,097
4,907

AssetsTotal assets at the end of the fiscal year under review were ¥31,200 million, up ¥4,907 million from the end of the previous
fiscal year. This was primarily due to an increase of ¥5,682 million in cash and deposits, an increase of ¥423 million inaccounts receivable - trade, an increase of ¥476 million in goodwill, and a decrease of ¥2,557 million from sale ofinvestment securities.
Liabilities
Total liabilities at the end of the fiscal year under review were ¥18,009 million, up ¥3,810 million from the end of theprevious fiscal year.
This was primarily due to an increase of ¥847 million in accounts payable - other, an increase of ¥291 million in new longterm borrowings, an increase of ¥113 million in provision for bonuses, and an increase of ¥2,530 million in advances
received from receiving a lump-sum payment of contract term fees from customers.
Net assets
Net assets at the end of the fiscal year under review were ¥13,190 million, up ¥1,097 million from the end of the previous
fiscal year. This was primarily due to the recording of share acquisition rights of ¥314 million, increases of ¥155 million
each in share capital and capital surplus as a result of exercise of share acquisition rights, and an increase of ¥310 million inchange in scope of equity method and retained earnings due to the recording of profit attributable to owners of parent.
3) Analysis of cash flows(Millions of yen)
Fiscal year ended May
31, 2022
3,123(1,014)909
15,245

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Cash and cash equivalents at end of period

Fiscal year ended May
31, 2023
3,848
1,364
523
20,985

YoY change
724
2,379
(386)
5,739

Cash and cash equivalents (hereinafter “capital”) at the end of the fiscal year under review totaled ¥20,985 million, an
increase of ¥5,739 million compared to the previous fiscal year (up 37.7% year on year). This increase includes the effectof ¥4 million due to exchange fluctuations on capital.
The respective cash flow positions and the factors thereof in the fiscal year under review are as follows.
Cash flows from operating activities
The amount of capital provided by operating activities totaled ¥3,848 million (¥3,123 million provided in the previous
fiscal year).
The main reasons for the increase in capital were an increase in advances received of ¥2,423 million, and an increase inaccrued expenses of ¥780 million, recognition of depreciation, non-cash expense of ¥898 million, recognition of sharebased payment expenses of ¥296 million, recognition of share of loss of entities accounted for using equity method of ¥287
million, recognition of loss on valuation of investment securities of ¥980 million, and the main factors for the decrease incapital were recognition of gain on sale of shares of subsidiaries and associates of ¥619 million, recognition of gain on saleof investment securities of ¥291 million, an increase in trade receivables of ¥391 million and income taxes paid of ¥471
million.
Cash flows from investing activities
The amount of capital provided by investing activities totaled ¥1,364 million (¥1,014 million used in the previous fiscal
year).
This was primarily due to proceeds from sale of investment securities of ¥1,406 million, proceeds from sale of shares ofsubsidiaries and associates of ¥1,601 million, purchase of investment securities of ¥359 million, purchase of intangible- 30 -

assets of ¥480 million, purchase of property, plant and equipment of ¥200 million, and payments for investments in capitalof ¥500 million.
Cash flows from financing activities
The amount of capital provided by financing activities totaled ¥523 million (¥909 million provided in the previous fiscal
year).
This was primarily due to proceeds from long-term borrowings of ¥900 million, proceeds from issuance of shares of ¥307
million, a net decline in short-term borrowings of ¥140 million and repayments of long-term borrowings of ¥527 million.
4) Production, orders, and sales resultsa. Production results
The Group does not disclose figures related to production results as there are no activities pertinent to production related
to the services provided.
b. Order results
The Group omits figures related to order results due to the short period between order and provision of services.
c. Sales results
By segment, sales results for external customers during the fiscal year under review is as follows.
Fiscal year ended May Fiscal year ended May
31, 2022
31, 2023
Name of segment
YoY change(From June 1, 2021 to(From June 1, 2022 to
May 31, 2022)
May 31, 2023)(Millions of
Sansan/Bill One Business
18,10422,512+24.4%
yen)(Millions ofEight Business
2,204
2,864
+29.9%
yen)(Millions of
Others111
134+20.4%
yen)(Millions of
Total
20,42025,510+24.9%yen)
Note:
Sales results by major business partner and the percentage of total sales by major business partner are omitted
because no business partner makes up 10% or more of the total sales results.
(2) Analysis and considerations related to status of operating results, etc. from management perspective
Recognition and analysis/considerations related to the status of operating results, etc. of the Company from management
perspective are as follows. Matters related to future developments in this text is based on judgements made at the time thisreport was submitted.
1) Assumptions used for major accounting policies and estimates
The consolidated financial statements of the Group are prepared based on the accounting standards recognized as generally
fair and appropriate in Japan. Upon preparation of the consolidated financial statements, important accounting policies arelisted in “V. Accounting, 1 Consolidated financial statements and other information, (1) Consolidated financial statements,
Notes to the consolidated financial statements (Basis of preparation of consolidated financial statements).”
Of the accounting estimates used in the preparation of the consolidated financial statements and the assumptions used in theestimates, the important estimates and assumptions are listed in “V. Accounting, 1 Consolidated financial statements andother information, (1) Consolidated financial statements, Notes to the consolidated financial statements (Significant
accounting estimates).”2) Recognition, analysis, and considerations related to operating results, etc. for the fiscal year ended May 31, 2023
Recognition, analysis, and considerations related to operating results, etc. are listed in “(1) Explanation of operating
results”
3) Capital sources and liquidity
The Group executes active advertising activities to raise awareness and expand the number of users. In the future, it plans
to continue such advertising investments. A certain percentage of the Group capital demand is advertising investments. In
principle, the Group secures necessary capital from owned treasury, financing from financial institutions, and equity
financing, etc. Furthermore, there is no special policy on priority of capital procurement methods. The Group plans to makeflexible considerations based on the amount and use of the required capital.
4) Major factors impacting operating results
Please see “2. Business risks” for major factors impacting operating results.
5) Issue awareness by management and future policies
Please see “1. Management policy, management environment, and issues to be addressed” for issue awareness bymanagement and future policies.

- 31 -

5 Important contracts for operation
Not applicable.

6 Research and development activities
Not applicable.

- 32 -

III. Information About Facilities
1 Overview of capital expenditures
Total amount of capital expenditures for the fiscal year under review amounted to ¥853 million. The major investments were an
investment of ¥503 million implemented to develop software for services in the Sansan Business. In addition, capital
expenditures of ¥315 million were implemented for expansion and renovation of the head office, etc.
There were no significant retirement, sale, etc. of facilities in the fiscal year under review.

2 Major facilities
The Group’s major facilities are as follows.
(1) Reporting company
As of May 31, 2023
Carrying amount

Name of office(Location)

Name of segment

Type of facility

Omotesando head
office(Shibuya-ku, Tokyo)

Sansan/Bill One
Business
Corporate (shared)

Facility for
operation

Building(Millions of yen)

Software(Millions of yen)

Others(Millions of yen)

Total
(Millions of yen)

387

702

69

1,159

Number of
employees(Persons)

1,201
(435)

Notes: 1. Of the carrying amount, “Others” include tools, furniture and fixtures, leased assets, etc.
2. The number of employees represents the number of employed persons (including contract employees). For thenumber of temporary employees (including part-timers), the annual average number of staff is shown in parentheses
and is excluded from the above number.
3. The head office is a rental property, and the annual rent is ¥597 million.
(2) Subsidiaries in Japan
No applicable facilities.
(3) Subsidiaries outside Japan
No applicable facilities.

3 Planned addition, retirement, and other changes of significant facilities(1) Planned addition and other changes of significant facilities
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to relocate its head office. Although
the Company expects to add facilities due to the relocation of the head office, the specific investment amount has not been
determined.
(2) Planned retirement and other changes of significant facilities
For a portion of the building and other items of the reporting company presented in “2 Major facilities,” the Company plans
to amortize or retire those items’ total amounts by July 2024, which is the scheduled month of the head office relocation.

- 33 -

IV. Information About Reporting Company
1 Company’s shares, etc.
(1) Total number of shares
1) Authorized shares
Class
Common shares
Total

Total number of authorized shares (shares)
470,800,000
470,800,0002) Issued shares

Class

Number of issued shares asof fiscal year end
May 31, 2023

Number of issued shares asof filing dateAugust 30, 2023

Name of financial
instruments exchange on
which securities are listed
or authorized financial
instruments businessassociation to which
securities are registered

Description

Commonshares125,410,584

125,487,476

Tokyo Stock Exchange(Prime Market)

These are shares with fullvoting rights, which arestandard shares of theCompany with no limits onrights. Number of shares ina trading unit is 100 shares.

Total

125,410,584

125,487,476––

Note: “Number of issued shares as of filing date” does not include the number of shares issued through the exercise ofshare acquisition rights between August 1, 2023 and the filing date of this Annual Securities Report.

- 34 -

(2) Share acquisition rights
1) Description of stock-option system
Share acquisition rights issued in accordance with the Companies Act are as follows.
A. 3rd Share Acquisition Rights
Date of resolution

January 9, 2019

Category and number of recipients (Persons)

Employees of the Company:
399
Directors of the Company’s subsidiaries: 2
Employees of the Company’s subsidiaries: 2

Number of share acquisition rights (Units)*

168,917 [158,802] (Note 1)

Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

675,668 [635,208] (Note 1)¥850 (Notes 2, 3)

Exercise period of share acquisition rights*

From February 1, 2021 to January 8, 2029

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥850
Additional paid-in capital: ¥425

Exercise conditions of share acquisition rights*(Note 4)

Matters concerning transfer of share acquisition rights*(Note 5)Matters concerning the grant of the share acquisition rights in(Note 7)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. As for matters changed by the end of the month before
the filing date (July 31, 2023), descriptions as at the end of the month before the filing date are provided in parentheses, and othermatters have not changed from the descriptions as of the last day of the fiscal year.
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is four common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company.
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price=×
adjustment
before adjustment
Ratio of stock split (or stock consolidation)
3. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after allotment of the share acquisition rights (excluding cases of
conversion or exercise of securities to be converted or convertible to common shares of the Company, or shareacquisition rights (including those attaching to bonds with share acquisition rights) that allow the holders to
demand delivery of common shares of the Company), the above exercise price shall be adjusted according to
the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded up to thenearest yen.

Exercise price
Exercise price=×
after adjustment
before adjustment

Number of shares Amount to be paid in×
Number of
newly issued
per shareshares already +Fair value per share before issue of newissuedshares- 35 -

Number of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
4. Exercise conditions of share acquisition rights(1) The person to whom the share acquisition rights are allotted (hereinafter the “share acquisition rights
holder”) must, at the time of exercise of the share acquisition rights, be holding the position of Director,
Audit & Supervisory Board Member, or employee of the Company or a subsidiary of the Company.
However, this shall not apply in cases where the person resigns at the expiration of his/her term of office,retires at the mandatory retirement age, or when another justifiable reason is acknowledged by the Board of
Directors of the Company.
(2) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(3) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
5. Matters concerning transfer of share acquisition rights
Transfer of share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
6. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all or part of the share acquisition rights without any
charge upon the arrival of a date to be separately specified by its Board of Directors. When acquiring a partof the share acquisition rights, the part of the share acquisition rights to be acquired shall be determined bya resolution of the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 4) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
(3) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.
7. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder of the share acquisition rights remaining on the effective
date of the organizational restructuring (hereinafter the “remaining share acquisition rights”) based on thefollowing policy in each case. In this case, the remaining share acquisition rights shall be extinguished, and the
Restructured Company shall newly issue share acquisition rights. However, this shall apply only if it isstipulated in the absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement or share transfer
plan that the Restructured Company shall deliver share acquisition rights.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder of the remaining share acquisition rights is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 1) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The subject of the contribution to be made on the exercise of each share acquisition right shall be monies,
and their value shall be the amount calculated by multiplying the exercise price after the restructuring,which is derived by adjusting the exercise price stipulated in (Note 2) and (Note 3) above in view ofconditions, etc. of the organizational restructuring, by the number of Restructured Company’s shares to beacquired upon exercise of share acquisition rights determined in accordance with (Note 7) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of start date of the exercise period of the share acquisition rights or the effective
date of the organizational restructuring to the expiration date of the exercise period of the share acquisitionrights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated in- 36 -

accordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 4) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 6) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.
In addition, the Company has introduced the incentive plan utilizing Trust for Share Acquisition Rights Issued at Market
Price® as a system equivalent to a stock-option system.
B. 4th Share Acquisition Rights
Date of resolution

January 9, 2019

Category and number of recipients (Persons)(Note 9)Number of share acquisition rights (Units)*

403,081 [376,984] (Notes 1, 2)

Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

1,612,324 [1,507,936] (Notes 1, 2)¥850 (Notes 3, 4)

Exercise period of share acquisition rights*

From September 1, 2020 to January 30, 2029

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥850
Additional paid-in capital: ¥425

Exercise conditions of share acquisition rights*(Note 5)Matters concerning transfer of share acquisition rights*(Note 6)

Matters concerning the grant of the share acquisition rights in(Note 8)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. As for matters changed by the end of the month before
the filing date (July 31, 2023), descriptions as at the end of the month before the filing date are provided in brackets, and othermatters have not changed from the descriptions as of the last day of the fiscal year.
Notes: 1. The share acquisition rights were issued with compensation at ¥17 per one share acquisition right. Based on¥850 of issuance price and ¥425 of additional paid-in capital in the case where shares are issued throughexercise of share acquisition rights, the issuance price shall be ¥855 reflecting the carrying amount per share of
the share acquisition rights at the time of exercise, and additional paid-in capital shall be ¥428 as a result ofaddition of ¥3, which is half of the maximum amount of increase of share capital, etc. (any fraction less than ¥1arising as a result of the calculation shall be rounded up to the nearest yen), in accordance with Article 17,
paragraph (1), item (i) of the Regulation on Corporate Accounting.
2. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is four common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company.
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and other cases where the above
adjustment of the Number of Granted Shares is required, the Number of Granted Shares may be adjusted withina reasonable range. However, the adjustment up to the above is made only to the Number of Granted Shares forthe share acquisition rights that have not been exercised at that time, among the share acquisition rights, andany fraction less than one share arising from the adjustment shall be rounded down to the nearest share.

- 37 -

3. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)
4. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after allotment of the share acquisition rights (excluding cases of
conversion or exercise of securities to be converted or convertible to common shares of the Company, or shareacquisition rights (including those attaching to bonds with share acquisition rights) that allow the holders to
demand delivery of common shares of the Company), the above exercise price shall be adjusted according to
the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded up to thenearest yen.

Exercise price
Exercise price=×
after adjustment
before adjustment

Number of shares Amount to be paid in×
Number of
newly issued
per shareshares already +Fair value per share before issue of newissuedsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted appropriately within a reasonable range, taking
into account conditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
5. Exercise conditions of share acquisition rights(1) The person to whom the share acquisition rights are allotted (hereinafter the “trustee”) may not exercise theshare acquisition rights, and except as otherwise provided in the offering memorandum, only the person towhom the share acquisition rights are granted by the trustee (hereinafter the “share acquisition rights
holder”) may exercise the share acquisition rights.
(2) The share acquisition rights holder may exercise the share acquisition rights only if segment profit of the
Sansan Business of the Company exceeds ¥3,150 million based on the Company’s statement of income(when the consolidated statement of income is prepared, consolidated statement of income) in any fiscal
year between the fiscal year ended May 31, 2020 and the fiscal year ended May 31, 2022. In addition, inthe event of significant changes in the concept of items to be referred to, due to the application ofinternational financial reporting standards, changes in the fiscal year end, etc., the indicators to be referredto shall be determined by the Company’s Board of Directors.
(3) Notwithstanding (2) above, the share acquisition rights holder may not exercise all the remaining shareacquisition rights, if each event listed below occurs between the Allotment Date of the share acquisitionrights and the expiration date of the exercise period.
(a) Case where issuance of common shares of the Company, etc. at a price lower than the price calculated
by multiplying the exercise price stipulated in (Note 3) and (Note 4) above by 50% (any fraction lessthan ¥1 being rounded up to the nearest yen) is conducted (excluding cases where the amount to be
paid in is “particularly favorable” as stipulated in Article 199, paragraph (3) and Article 200, paragraph(2) of the Companies Act, cases where the issuance, etc. is due to allotment to shareholders, and othercases where the issuance, etc. is conducted at a price that is considered different from the share valueof common shares).
(b) In the case where common shares of the Company to be acquired upon exercise of the share acquisitionrights are not listed on any financial instruments exchange in Japan, when trading or any othertransaction at a price lower than the price calculated by multiplying the exercise price stipulated in(Note 3) and (Note 4) above by 50% (any fraction less than ¥1 being rounded up to the nearest yen) is
conducted (excluding cases where the transaction is conducted at a price that is consideredsignificantly lower than the share value at the time of the transaction for special reasons such as capital
policy purposes).
(c) In the case where common shares of the Company to be acquired upon exercise of the share acquisitionrights are listed on any financial instruments exchange in Japan, when the closing price in ordinarytransactions of common shares of the Company is lower than the price calculated by multiplying theexercise price stipulated in (Note 3) and (Note 4) above by 50% (any fraction less than ¥1 being
rounded up to the nearest yen).
(d) In the case where common shares of the Company to be acquired upon exercise of the share acquisitionrights are not listed on any financial instruments exchange in Japan, when the amount of shares valued
by a third-party evaluation organization, etc. using methods such as the DCF method and thecomparable company analysis method is lower than the price calculated by multiplying the exercise
price stipulated in (Note 3) and (Note 4) above by 50% (any fraction less than ¥1 being rounded up to- 38 -

the nearest yen) (however, if the amount of shares valued is presented in a certain range, theCompany’s Board of Directors shall judge whether this paragraph applies, through consultation withthe third-party evaluation organization, etc.).
(4) The share acquisition rights holder is required to remain a Director, employee or adviser of the Company or
its subsidiary/affiliate, or an external cooperator of an outsourcing contractor, etc. until the holder exercises
the share acquisition rights. However, this shall not apply in cases where the person resigns at the
expiration of his/her term of office, retires at the mandatory retirement age, or when another justifiablereason is acknowledged by the Board of Directors of the Company.
(5) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(6) Pledging of share acquisition rights, or the creation of security interests shall not be permitted.
(7) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(8) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
6. Matters concerning transfer of share acquisition rights
Transfer of share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
7. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all or part of the share acquisition rights without any
charge upon the arrival of a date to be separately specified by its Board of Directors. When acquiring a partof the share acquisition rights, the part of the share acquisition rights to be acquired shall be determined bya resolution of the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 5) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
(3) The Company may acquire the share acquisition rights that are not the subject of the inheritance withoutcompensation, and as for notification to the share acquisition rights holder based on Article 274, paragraph(3) of the Companies Act, it shall be only necessary to provide such notification to any person who isconsidered by the Company appropriate among legal heirs of the share acquisition rights holder. However,
if such notification is considered unnecessary according to interpretation of laws and regulations, theCompany may omit the notification and acquire the share acquisition rights without compensation.
(4) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.
8. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder of the share acquisition rights remaining on the effective
date of the organizational restructuring (hereinafter the “remaining share acquisition rights”) based on thefollowing policy in each case. In this case, the remaining share acquisition rights shall be extinguished, and the
Restructured Company shall newly issue share acquisition rights. However, this shall apply only if it isstipulated in the absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement or share transfer
plan that the Restructured Company shall deliver share acquisition rights.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder of the remaining share acquisition rights is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 2) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The subject of the contribution to be made on the exercise of each share acquisition right shall be monies,
and their value shall be the amount calculated by multiplying the exercise price after the restructuring,which is derived by adjusting the exercise price stipulated in (Note 3) and (Note 4) above in view ofconditions, etc. of the organizational restructuring, by the number of Restructured Company’s shares to beacquired upon exercise of share acquisition rights determined in accordance with (Note 8) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of start date of the exercise period of the share acquisition rights or the effective
date of the organizational restructuring to the expiration date of the exercise period of the share acquisitionrights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights- 39 -

The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 5) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 7) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.
9. Chikahiro Terada, Representative Director & CEO, established a “share acquisition rights trust” with Takanori
Kushida, a tax accountant, as the trustee (hereinafter the “Trust (4th Share Acquisition Rights)”) as of January
30, 2019 based on the resolution at the Extraordinary General Meeting of Shareholders held on January 9, 2019
for the purpose of granting an incentive for the medium- to long-term enhancement of corporate value tocurrent and future executives and employees, etc. of the Group and retaining outstanding talents. For the Trust(4th Share Acquisition Rights), the Company issued the 4th Share Acquisition Rights (resolution at theExtraordinary General Meeting of Shareholders on January 9, 2019) on January 31, 2019 pursuant to theCompanies Act.
The Trust (4th Share Acquisition Rights) is to distribute 534,611 units of the 4th Share Acquisition Rights
granted to Takanori Kushida, a tax accountant, (equivalent to four shares per unit) to the Group’s executives andemployees, etc. according to future achievements. Unlike the existing incentive plan using share acquisitionrights, this scheme enables us to determine the size of distribution of an incentive at some future point in time
based on assessment of future achievement for the Group’s executives and employees, etc. to even further
reward individuals’ efforts, and to also distribute share acquisition rights to the Group’s executives andemployees, etc. who will be hired in the future. Any person to which the 4th Share Acquisition Rights are
distributed may exercise the share acquisition rights in accordance with the provisions of the prospectus for the
4th Share Acquisition Rights and the agreement for treatment. The Trust (4th Share Acquisition Rights) consistsof the three agreements (from A to C), and the outline is as follows.

- 40 -

Name

Share acquisition rights trust (Trust for Share Acquisition Rights Issued at Market Price®)

Trustor

Chikahiro Terada

Date of trust agreement

January 30, 2019

Type of trust andnumber of shareacquisition rights*(A) 318,903 units(B) 107,854 units(C) 107,854 units

Delivery date(A) Business day following the day on which two years have passed from the date of execution of
the agreement (however, if six months have not passed from the listing of the Company’s shareson a financial instruments exchange on the said day, business day following the day on which
six months have passed from the listing of the shares on a financial instruments exchange)(B) Business day following the day on which three years have passed from the date of executionof the agreement (however, if one and a half years have not passed from the listing of theCompany’s shares on a financial instruments exchange on the said day, business day following
the day on which one and a half years have passed from the listing of the shares on a financial
instruments exchange)(C) Business day following the day on which four years have passed from the date of execution of
the agreement (however, if two and a half years have not passed from the listing of theCompany’s shares on a financial instruments exchange on the said day, business day following
the day on which two and a half years have passed from the listing of the shares on a financial
instruments exchange)

Object of trust

318,903 units of the 4th Share Acquisition Rights (equivalent to four shares per unit) on (A)107,854 units of the 4th Share Acquisition Rights (equivalent to four shares per unit) on (B)107,854 units of the 4th Share Acquisition Rights (equivalent to four shares per unit) on (C)Eligibility requirements
for beneficiaries

Of the Group’s executives and employees, etc., persons who satisfy certain conditions stipulated in
the Company’s guidelines and others shall be beneficiary candidates, and the persons who aredesignated by the Company and determined to be beneficiaries pursuant to the provisions of the trust
agreement for the Trust (4th Share Acquisition Rights) shall be beneficiaries.
Distribution of the 4th Share Acquisition Rights to beneficiary candidates is separated into two types:
1) base points and 2) scores of the external evaluation committee, and determined by the evaluationcommittee in accordance with rules prescribed in the Company’s guidelines, and others.
1) Granting based on base points
As for executives and employees, etc., performance evaluation is made for the role andcontributions expected on the date of execution of the agreement, or at the time of joining thecompany for future executives and employees, etc., to grant points, and distribution is madeaccording to the points.
2) Granting based on scores of the external evaluation committee
As for executives and employees, etc., the level of special contribution and internal and external
impact of organizations and individuals are evaluated to grant points, and distribution is madeaccording to the points.

* For the Trust (4th Share Acquisition Rights), distribution is made as follows to the Group’s executives and employees, etc. upon thearrival of the expiration date of the trust period for each trust type.
(A) Two Directors of the Company, 383 employees of the Company, and three employees of the Company’s subsidiaries(B) 106 employees of the Company, 12 Director and employees of the Company’s subsidiaries(C) Four Directors of the Company, 10 employees of the Company, three employees of the Company’s subsidiaries, and threesubcontractors of the Company- 41 -

In addition, the Company resolved, at the meeting of its Board of Directors held on July 14, 2020, to issue share acquisitionrights to its Directors and Executive Officers as stock options with compensation in accordance with the provisions ofArticles 236, 238 and 240 of the Companies Act.
C. 5th Share Acquisition Rights
Date of resolution

July 14, 2020

Category and number of recipients (Persons)

Directors of the Company:
6
Executive Officers of the Company:

Number of share acquisition rights (Units)*

221 (Note 2)Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

12

88,400 (Note 2)

1,338 (Notes 3, 4)

Exercise period of share acquisition rights*

From September 1, 2021 to August 25, 2030

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥1,338Additional paid-in capital:¥669

Exercise conditions of share acquisition rights*(Note 5)Matters concerning transfer of share acquisition rights*(Note 6)

Matters concerning the grant of the share acquisition rights in(Note 8)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. There was no change in these matters as at the end of
the month before the filing date (July 31, 2023).
Notes: 1. The share acquisition rights were issued with compensation at ¥71,500 per one share acquisition right. Based on¥1,338 of issuance price and ¥669 of additional paid-in capital in the case where shares are issued throughexercise of share acquisition rights, the issuance price shall be ¥1,517 reflecting the carrying amount per shareof the share acquisition rights at the time of exercise, and additional paid-in capital shall be ¥759 as a result ofaddition of ¥90, which is half of the maximum amount of increase of share capital, etc. (any fraction less than
¥1 arising as a result of the calculation shall be rounded up to the nearest yen), in accordance with Article 17,
paragraph (1), item (i) of the Regulation on Corporate Accounting.
2. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 400 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company.
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and other cases where the above
adjustment of the Number of Granted Shares is required, the Number of Granted Shares may be adjusted withina reasonable range. However, the adjustment up to the above is made only to the Number of Granted Shares forthe share acquisition rights that have not been exercised at that time, among the share acquisition rights, andany fraction less than one share arising from the adjustment shall be rounded down to the nearest share.
3. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)- 42 -

4. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after the Allotment Date of the share acquisition rights (excluding
cases of conversion or exercise of securities to be converted or convertible to common shares of the Company,or share acquisition rights (including those attaching to bonds with share acquisition rights) that allow theholders to demand delivery of common shares of the Company), the above exercise price shall be adjusted
according to the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded
up to the nearest yen.
Number ofshares already +issuedExercise price
Exercise price=×
after adjustment
before adjustment

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
5. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “share acquisitionrights holder”) may exercise their share acquisition rights only if the amount of net sales in the Company’s
consolidated statement of income for the fiscal year ended May 31, 2021 has exceeded ¥16,034 million.
In determining the net sales amount, there are events, such as changes in the applicable accounting
standards and the acquisitions of companies, which can have a major impact on the business results of theCompany. In the event that the Board of Directors determines that it is not appropriate to make a judgment
based on actual figures, the Company will eliminate the effect of the acquisition of a company, etc. within areasonable range, and it shall be deemed possible to adjust the actual figures used for judgment. In addition,in the event of significant changes in the concept of items to be referred to, due to the application ofinternational financial reporting standards, changes in the fiscal year end, etc., the indicators to be referredto shall be determined by the Company’s Board of Directors.
(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary andassociate of the Company as Director, Audit & Supervisory Board Member or employee at the time of
exercising the share acquisition rights. However, this shall not apply in the event of resignation due to the
expiration of the term of office, mandatory retirement, or when a justifiable reason is acknowledged at a
meeting of the Board of Directors.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
6. Matters concerning transfer of share acquisition rights
Transfer of the share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
7. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all of the share acquisition rights without any charge
upon the arrival of a date to be specified by its Board of Directors. When acquiring a part of the shareacquisition rights, the part of the share acquisition rights to be acquired shall be determined by a resolutionof the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 5) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
(3) The Company may acquire the share acquisition rights that are not the subject of the inheritance withoutcompensation, and as for notification to the share acquisition rights holder based on Article 274, paragraph(3) of the Companies Act, it shall be only necessary to provide such notification to any person who isconsidered by the Company appropriate among legal heirs of the share acquisition rights holder. However,
if such notification is considered unnecessary according to interpretation of laws and regulations, theCompany may omit the notification and acquire the share acquisition rights without compensation.
(4) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.

- 43 -

8. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder on the effective date of the organizational restructuring
based on the following conditions in each case. In this case, the remaining share acquisition rights shall be
extinguished, and the Restructured Company shall newly issue share acquisition rights. However, this shallapply only if it is stipulated in the absorption-type merger agreement, consolidation-type merger agreement,
absorption-type company split agreement, incorporation-type company split plan, share exchange agreement orshare transfer plan that the Restructured Company shall deliver share acquisition rights in accordance with thefollowing conditions.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 2) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The value of property to be contributed when each share acquisition right is exercised shall be the amountcalculated by multiplying the exercise price after the restructuring, which is derived by adjusting theexercise price stipulated in (Note 3) and (Note 4) above in view of conditions, etc. of the organizational
restructuring, by the number of Restructured Company’s shares to be acquired upon exercise of shareacquisition rights determined in accordance with (Note 8) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of the first date of the exercise period of the share acquisition rights or theeffective date of the organizational restructuring to the last day of the exercise period of the shareacquisition rights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 5) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 7) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

- 44 -

D. 6th Share Acquisition Rights
Date of resolution

July 14, 2021

Category and number of recipients (Persons)

Directors of the Company:
6
Executive Officers of the Company:

Number of share acquisition rights (Units)*

200 [193] (Note 2)Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

13

80,000 [77,200] (Note 2)¥2,093 (Notes 3, 4)

Exercise period of share acquisition rights*

From September 1, 2022 to August 23, 2031

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥2,093
Additional paid-in capital: ¥1,047

Exercise conditions of share acquisition rights*(Note 5)Matters concerning transfer of share acquisition rights*(Note 6)

Matters concerning the grant of the share acquisition rights in(Note 8)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. As for matters changed by the end of the month before
the filing date (July 31, 2023), descriptions as at the end of the month before the filing date are provided in brackets, and othermatters have not changed from the descriptions as of the last day of the fiscal year.
Notes: 1. The share acquisition rights were issued with compensation at ¥109,000 per one share acquisition right. Basedon ¥2,093 of issuance price and ¥1,047 of additional paid-in capital in the case where shares are issued throughexercise of share acquisition rights, the issuance price shall be ¥2,366 reflecting the carrying amount per shareof the share acquisition rights at the time of exercise, and additional paid-in capital shall be ¥1,184 as a result ofaddition of ¥137, which is half of the maximum amount of increase of share capital, etc. (any fraction less than
¥1 arising as a result of the calculation shall be rounded up to the nearest yen), in accordance with Article 17,
paragraph (1), item (i) of the Regulation on Corporate Accounting.
2. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 400 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company.
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and other cases where the above
adjustment of the Number of Granted Shares is required, the Number of Granted Shares may be adjusted withina reasonable range. However, the adjustment up to the above is made only to the Number of Granted Shares forthe share acquisition rights that have not been exercised at that time, among the share acquisition rights, andany fraction less than one share arising from the adjustment shall be rounded down to the nearest share.
3. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)- 45 -

4. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after the Allotment Date of the share acquisition rights (excluding
cases of conversion or exercise of securities to be converted or convertible to common shares of the Company,or share acquisition rights (including those attaching to bonds with share acquisition rights) that allow theholders to demand delivery of common shares of the Company), the above exercise price shall be adjusted
according to the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded
up to the nearest yen.
Number ofshares alreadyissuedExercise price
Exercise price=×
after adjustment
before adjustment+

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
5. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “share acquisitionrights holder”) may exercise their share acquisition rights only if the amount of net sales in the Company’s
consolidated statement of income for the fiscal year ended May 31, 2022 has exceeded ¥20,386 million.
In determining the net sales amount, there are events, such as changes in the applicable accounting
standards and the acquisitions of companies, which can have a major impact on the business results of theCompany. In the event that the Board of Directors determines that it is not appropriate to make a judgment
based on actual figures, the Company will eliminate the effect of the acquisition of a company, etc. within areasonable range, and it shall be deemed possible to adjust the actual figures used for judgment. In addition,in the event of significant changes in the concept of items to be referred to, due to the application ofinternational financial reporting standards, changes in the fiscal year end, etc., the indicators to be referredto shall be determined by the Company’s Board of Directors.
(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary andassociate of the Company as Director, Audit & Supervisory Board Member or employee at the time of
exercising the share acquisition rights. However, this shall not apply in the event of resignation due to the
expiration of the term of office, mandatory retirement, or when a justifiable reason is acknowledged at a
meeting of the Board of Directors.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
6. Matters concerning transfer of share acquisition rights
Transfer of the share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
7. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all of the share acquisition rights without any charge
upon the arrival of a date to be specified by its Board of Directors. When acquiring a part of the shareacquisition rights, the part of the share acquisition rights to be acquired shall be determined by a resolutionof the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 5) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
(3) The Company may acquire the share acquisition rights that are not the subject of the inheritance withoutcompensation, and as for notification to the share acquisition rights holder based on Article 274, paragraph(3) of the Companies Act, it shall be only necessary to provide such notification to any person who isconsidered by the Company appropriate among legal heirs of the share acquisition rights holder. However,
if such notification is considered unnecessary according to interpretation of laws and regulations, theCompany may omit the notification and acquire the share acquisition rights without compensation.
(4) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.

- 46 -

8. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder on the effective date of the organizational restructuring
based on the following conditions in each case. In this case, the remaining share acquisition rights shall be
extinguished, and the Restructured Company shall newly issue share acquisition rights. However, this shallapply only if it is stipulated in the absorption-type merger agreement, consolidation-type merger agreement,
absorption-type company split agreement, incorporation-type company split plan, share exchange agreement orshare transfer plan that the Restructured Company shall deliver share acquisition rights in accordance with thefollowing conditions.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 2) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The value of property to be contributed when each share acquisition right is exercised shall be the amountcalculated by multiplying the exercise price after the restructuring, which is derived by adjusting theexercise price stipulated in (Note 3) and (Note 4) above in view of conditions, etc. of the organizational
restructuring, by the number of Restructured Company’s shares to be acquired upon exercise of shareacquisition rights determined in accordance with (Note 8) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of the first date of the exercise period of the share acquisition rights or theeffective date of the organizational restructuring to the last day of the exercise period of the shareacquisition rights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 5) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 7) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

- 47 -

E. 7th Share Acquisition Rights
Date of resolution

July 14, 2022

Category and number of recipients (Persons)

Employees of the Company:
138
Employee of the Company’s subsidiary:

Number of share acquisition rights (Units)*

6,445 [6,369] (Note 1)

Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

1

644,500 [636,900] (Note 1)¥1,021 (Notes 2, 3)

Exercise period of share acquisition rights*

From July 15, 2024 to July 14, 2032

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥1,021
Additional paid-in capital:¥511

Exercise conditions of share acquisition rights*(Note 4)

Matters concerning transfer of share acquisition rights*(Note 5)Matters concerning the grant of the share acquisition rights in(Note 7)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. There was no change in these matters as at the end of
the month before the filing date (July 31, 2023).
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)
3. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after allotment of the share acquisition rights (excluding cases of
conversion or exercise of securities to be converted or convertible to common shares of the Company, or shareacquisition rights (including those attaching to bonds with share acquisition rights) that allow the holders to
demand delivery of common shares of the Company), the above exercise price shall be adjusted according to
the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded up to thenearest yen.
Number ofshares already +issuedExercise price
Exercise priceafter adjustment = before adjustment ×

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury shares- 48 -

disposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
4. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “share acquisitionrights holder”) may exercise their share acquisition rights if the closing price of the Company’s commonshare in regular trading on the Tokyo Stock Exchange on a specific day during the period from the
Allotment Date of the share acquisition rights to the end of the period of exercise of the rights (July 14,2032) exceeds ¥2,344.
However, in the event of a stock split or stock consolidation after the Allotment Date, the share price shallbe adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price after adjustment=

Share price before adjustment ×

Ratio of stock split(or stock consolidation)(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary andassociate of the Company as Director, Audit & Supervisory Board Member or employee at the time of
exercising the share acquisition rights. However, this shall not apply in cases where the person resigns at
the expiration of his/her term of office, retires at the mandatory retirement age, or when another justifiablereason is acknowledged by the Board of Directors of the Company.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
5. Matters concerning transfer of share acquisition rights
Transfer of share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
6. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all or part of the share acquisition rights without any
charge upon the arrival of a date to be separately specified by its Board of Directors. When acquiring a partof the share acquisition rights, the part of the share acquisition rights to be acquired shall be determined bya resolution of the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 4) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
7. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder of the share acquisition rights remaining on the effective
date of the organizational restructuring (hereinafter the “remaining share acquisition rights”) based on thefollowing policy in each case. In this case, the remaining share acquisition rights shall be extinguished, and the
Restructured Company shall newly issue share acquisition rights. However, this shall apply only if it isstipulated in the absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement or share transfer
plan that the Restructured Company shall deliver share acquisition rights.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder of the remaining share acquisition rights is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 1) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The subject of the contribution to be made on the exercise of each share acquisition right shall be monies,
and their value shall be the amount calculated by multiplying the exercise price after the restructuring,which is derived by adjusting the exercise price stipulated in (Note 2) and (Note 3) above in view ofconditions, etc. of the organizational restructuring, by the number of Restructured Company’s shares to beacquired upon exercise of share acquisition rights determined in accordance with (Note 7) (3) above.
(5) Exercise period of share acquisition rights- 49 -

It shall be from the later of start date of the exercise period of the share acquisition rights or the effective
date of the organizational restructuring to the expiration date of the exercise period of the share acquisitionrights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 4) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 6) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

- 50 -

F. 8th Share Acquisition Rights
Date of resolution

July 14, 2022

Category and number of recipients (Persons)

Directors of the Company:
5
Executive Officers of the Company:

Number of share acquisition rights (Units)*

1,813 (Note 2)Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

15

181,300 (Note 2)¥1,021 (Notes 3, 4)

Exercise period of share acquisition rights*

From September 1, 2023 to September 1, 2032

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥1,021
Additional paid-in capital:¥511

Exercise conditions of share acquisition rights*(Note 5)Matters concerning transfer of share acquisition rights*(Note 6)

Matters concerning the grant of the share acquisition rights in(Note 8)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. There was no change in these matters as at the end of
the month before the filing date (July 31, 2023).
Notes: 1. The share acquisition rights were issued with compensation at ¥12,500 per one share acquisition right. Based on¥1,021 of issuance price and ¥511 of additional paid-in capital in the case where shares are issued throughexercise of share acquisition rights, the issuance price shall be ¥1,146 reflecting the carrying amount per shareof the share acquisition rights at the time of exercise, and additional paid-in capital shall be ¥574 as a result ofaddition of ¥63, which is half of the maximum amount of increase of share capital, etc. (any fraction less than
¥1 arising as a result of the calculation shall be rounded up to the nearest yen), in accordance with Article 17,
paragraph (1), item (i) of the Regulation on Corporate Accounting.
2. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company.
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and other cases where the above
adjustment of the Number of Granted Shares is required, the Number of Granted Shares may be adjusted withina reasonable range. However, the adjustment up to the above is made only to the Number of Granted Shares forthe share acquisition rights that have not been exercised at that time, among the share acquisition rights, andany fraction less than one share arising from the adjustment shall be rounded down to the nearest share.
3. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)
4. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after the Allotment Date of the share acquisition rights (excluding
cases of conversion or exercise of securities to be converted or convertible to common shares of the Company,or share acquisition rights (including those attaching to bonds with share acquisition rights) that allow theholders to demand delivery of common shares of the Company), the above exercise price shall be adjusted
according to the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded
up to the nearest yen.

- 51 -

Number ofshares already +issuedExercise priceafter adjustment=

Exercise pricebefore adjustment ×

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
5. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “share acquisitionrights holder”) may exercise their share acquisition rights only if the amount of net sales in the Company’s
consolidated statement of income for the fiscal year ended May 31, 2023 exceeds ¥25,265 million.
In determining the net sales amount, there are events, such as changes in the applicable accounting
standards and the acquisitions of companies, which can have a major impact on the business results of theCompany. In the event that the Board of Directors determines that it is not appropriate to make a judgment
based on actual figures, the Company will eliminate the effect of the acquisition of a company, etc. within areasonable range, and it shall be deemed possible to adjust the actual figures used for judgment. In addition,in the event of significant changes in the concept of items to be referred to, due to the application ofinternational financial reporting standards, changes in the fiscal year end, etc., the indicators to be referredto shall be determined by the Company’s Board of Directors.
(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary andassociate of the Company as Director, Audit & Supervisory Board Member or employee at the time of
exercising the share acquisition rights. However, this shall not apply in the event of resignation due to the
expiration of the term of office, mandatory retirement, or when a justifiable reason is acknowledged at a
meeting of the Board of Directors.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
6. Matters concerning transfer of share acquisition rights
Transfer of the share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
7. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all of the share acquisition rights without any charge
upon the arrival of a date to be specified by its Board of Directors. When acquiring a part of the shareacquisition rights, the part of the share acquisition rights to be acquired shall be determined by a resolutionof the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 5) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
(3) The Company may acquire the share acquisition rights that are not the subject of the inheritance withoutcompensation, and as for notification to the share acquisition rights holder based on Article 274, paragraph(3) of the Companies Act, it shall be only necessary to provide such notification to any person who isconsidered by the Company appropriate among legal heirs of the share acquisition rights holder. However,
if such notification is considered unnecessary according to interpretation of laws and regulations, theCompany may omit the notification and acquire the share acquisition rights without compensation.
(4) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.
8. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder on the effective date of the organizational restructuring
based on the following conditions in each case. In this case, the remaining share acquisition rights shall be- 52 -

extinguished, and the Restructured Company shall newly issue share acquisition rights. However, this shallapply only if it is stipulated in the absorption-type merger agreement, consolidation-type merger agreement,
absorption-type company split agreement, incorporation-type company split plan, share exchange agreement orshare transfer plan that the Restructured Company shall deliver share acquisition rights in accordance with thefollowing conditions.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 2) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The value of property to be contributed when each share acquisition right is exercised shall be the amountcalculated by multiplying the exercise price after the restructuring, which is derived by adjusting theexercise price stipulated in (Note 3) and (Note 4) above in view of conditions, etc. of the organizational
restructuring, by the number of Restructured Company’s shares to be acquired upon exercise of shareacquisition rights determined in accordance with (Note 8) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of the first date of the exercise period of the share acquisition rights or theeffective date of the organizational restructuring to the last day of the exercise period of the shareacquisition rights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 5) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 7) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

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G. 9th Share Acquisition Rights
Date of resolution

August 30, 2022

Category and number of recipients (Persons)

Directors of the Company:

Number of share acquisition rights (Units)*

3,250 (Note 1)

Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

5

325,000 (Note 1)¥1,269 (Notes 2, 3)

Exercise period of share acquisition rights*

From August 31, 2024 to August 30, 2032

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥1,269Additional paid-in capital:¥635

Exercise conditions of share acquisition rights*(Note 4)

Matters concerning transfer of share acquisition rights*(Note 5)Matters concerning the grant of the share acquisition rights in(Note 7)
association with an organizational restructuring** Description as of the last day of the fiscal year (May 31, 2023) is provided. There was no change in these matters as at the end of
the month before the filing date (July 31, 2023).
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)
3. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after allotment of the share acquisition rights (excluding cases of
conversion or exercise of securities to be converted or convertible to common shares of the Company, or shareacquisition rights (including those attaching to bonds with share acquisition rights) that allow the holders to
demand delivery of common shares of the Company), the above exercise price shall be adjusted according to
the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded up to thenearest yen.
Number ofshares already +issuedExercise price
Exercise priceafter adjustment = before adjustment ×

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of the- 54 -

exercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
4. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “share acquisitionrights holder”) may exercise their share acquisition rights if the closing price of the Company’s commonshare in regular trading on the Tokyo Stock Exchange on a specific day during the period from the
Allotment Date of the share acquisition rights to the end of the period of exercise of the rights (August 30,2032) exceeds ¥2,344.
However, in the event of a stock split or stock consolidation after the Allotment Date, the share price shallbe adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price after adjustment=

Share price before adjustment ×

Ratio of stock split(or stock consolidation)(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary of theCompany as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in cases where the person resigns at the expiration of
his/her term of office, retires at the mandatory retirement age, or when another justifiable reason is
acknowledged by the Board of Directors of the Company.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
5. Matters concerning transfer of share acquisition rights
Transfer of share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
6. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all or part of the share acquisition rights without any
charge upon the arrival of a date to be separately specified by its Board of Directors. When acquiring a partof the share acquisition rights, the part of the share acquisition rights to be acquired shall be determined bya resolution of the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 4) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
7. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder of the share acquisition rights remaining on the effective
date of the organizational restructuring (hereinafter the “remaining share acquisition rights”) based on thefollowing policy in each case. In this case, the remaining share acquisition rights shall be extinguished, and the
Restructured Company shall newly issue share acquisition rights. However, this shall apply only if it isstipulated in the absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement or share transfer
plan that the Restructured Company shall deliver share acquisition rights.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder of the remaining share acquisition rights is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 1) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The subject of the contribution to be made on the exercise of each share acquisition right shall be monies,
and their value shall be the amount calculated by multiplying the exercise price after the restructuring,which is derived by adjusting the exercise price stipulated in (Note 2) and (Note 3) above in view ofconditions, etc. of the organizational restructuring, by the number of Restructured Company’s shares to beacquired upon exercise of share acquisition rights determined in accordance with (Note 7) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of start date of the exercise period of the share acquisition rights or the effective
date of the organizational restructuring to the expiration date of the exercise period of the share acquisitionrights.

- 55 -

(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 4) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 6) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

- 56 -

H. 10th Share Acquisition Rights
Date of resolution

July 13, 2023

Category and number of recipients (Persons)

Employees of the Company:

Number of share acquisition rights (Units)*

1,243 (Note 1)

Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

57

124,300 (Note 1)¥1,552.5 (Notes 2, 3)

Exercise period of share acquisition rights*

From July 15, 2025 to July 13, 2033

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥1,552.5
Additional paid-in capital:¥777

Exercise conditions of share acquisition rights*(Note 4)

Matters concerning transfer of share acquisition rights*(Note 5)Matters concerning the grant of the share acquisition rights in(Note 7)
association with an organizational restructuring** Description as of the date of resolution of issue (July 13, 2023) is provided. There was no change in these matters as at the end of
the month before the filing date (July 31, 2023).
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)
3. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after allotment of the share acquisition rights (excluding cases of
conversion or exercise of securities to be converted or convertible to common shares of the Company, or shareacquisition rights (including those attaching to bonds with share acquisition rights) that allow the holders to
demand delivery of common shares of the Company), the above exercise price shall be adjusted according to
the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded up to thenearest yen.
Number ofshares already +issuedExercise price
Exercise priceafter adjustment = before adjustment ×

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of the- 57 -

exercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
4. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “Share Acquisition
Rights Holder”) may exercise their share acquisition rights if the closing price of the Company’s commonshare in regular trading on the Tokyo Stock Exchange on a specific day during the period from the
Allotment Date of the share acquisition rights to the end of the period of exercise of the rights (July 13,2033) exceeds ¥3,987.
However, in the event of a stock split or stock consolidation after the Allotment Date, the share price shallbe adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price after adjustment=

Share price before adjustment ×

Ratio of stock split(or stock consolidation)(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary andassociate of the Company as Director, Audit & Supervisory Board Member or employee at the time of
exercising the share acquisition rights. However, this shall not apply in cases where the person resigns at
the expiration of his/her term of office, retires at the mandatory retirement age, or when another justifiablereason is acknowledged by the Board of Directors of the Company.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
5. Matters concerning transfer of share acquisition rights
Transfer of share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
6. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all or part of the share acquisition rights without any
charge upon the arrival of a date to be separately specified by its Board of Directors. When acquiring a partof the share acquisition rights, the part of the share acquisition rights to be acquired shall be determined bya resolution of the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 4) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
7. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder of the share acquisition rights remaining on the effective
date of the organizational restructuring (hereinafter the “remaining share acquisition rights”) based on thefollowing policy in each case. In this case, the remaining share acquisition rights shall be extinguished, and the
Restructured Company shall newly issue share acquisition rights. However, this shall apply only if it isstipulated in the absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement or share transfer
plan that the Restructured Company shall deliver share acquisition rights.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder of the remaining share acquisition rights is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 1) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The subject of the contribution to be made on the exercise of each share acquisition right shall be monies,
and their value shall be the amount calculated by multiplying the exercise price after the restructuring,which is derived by adjusting the exercise price stipulated in (Note 2) and (Note 3) above in view ofconditions, etc. of the organizational restructuring, by the number of Restructured Company’s shares to beacquired upon exercise of share acquisition rights determined in accordance with (Note 7) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of start date of the exercise period of the share acquisition rights or the effective
date of the organizational restructuring to the expiration date of the exercise period of the share acquisitionrights.

- 58 -

(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 4) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 6) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.
I. 11th Share Acquisition Rights
Date of resolution

July 13, 2023

Category and number of recipients (Persons)

Directors of the Company:
5
Executive Officer of the Company

Number of share acquisition rights (Units)*

1,420 (Note 2)Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

11

142,000 (Note 2)¥1,552.5 (Notes 3, 4)

Exercise period of share acquisition rights*

From September 13, 2024 to September 12, 2033

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*

Issuance price:¥1,552.5
Additional paid-in capital:¥777

Exercise conditions of share acquisition rights*(Note 5)Matters concerning transfer of share acquisition rights*(Note 6)

Matters concerning the grant of the share acquisition rights in(Note 8)
association with an organizational restructuring** Description as of the date of resolution of issue (July 13, 2023) is provided. There was no change in these matters as at the end of
the month before the filing date (July 31, 2023).
Notes: 1. The share acquisition rights were issued with compensation at ¥14,000 per one share acquisition right. Based on¥1,552.5 of issuance price and ¥777 of additional paid-in capital in the case where shares are issued throughexercise of share acquisition rights, the issuance price shall be ¥1,692.5 reflecting the carrying amount per shareof the share acquisition rights at the time of exercise, and additional paid-in capital shall be ¥847 as a result ofaddition of ¥70, which is half of the maximum amount of increase of share capital, etc. (any fraction less than
¥1 arising as a result of the calculation shall be rounded up to the nearest yen), in accordance with Article 17,
paragraph (1), item (i) of the Regulation on Corporate Accounting.
2. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company.
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and other cases where the above
adjustment of the Number of Granted Shares is required, the Number of Granted Shares may be adjusted withina reasonable range. However, the adjustment up to the above is made only to the Number of Granted Shares forthe share acquisition rights that have not been exercised at that time, among the share acquisition rights, andany fraction less than one share arising from the adjustment shall be rounded down to the nearest share.

- 59 -

3. If the Company conducts a stock split or a stock consolidation of common shares of the Company after the
Allotment Date of the share acquisition rights, the above exercise price shall be adjusted by the following
formula according to the ratio of the stock split or stock consolidation, and any fraction less than ¥1 arisingfrom the adjustment shall be rounded up to the nearest yen.
1
Exercise price after
Exercise price before=
×
Ratio of stock split
adjustment
adjustment(or stock consolidation)
4. If the Company conducts issuance of new shares or disposal of treasury shares as for common shares of theCompany at a lower price than the fair value after the Allotment Date of the share acquisition rights (excluding
cases of conversion or exercise of securities to be converted or convertible to common shares of the Company,or share acquisition rights (including those attaching to bonds with share acquisition rights) that allow theholders to demand delivery of common shares of the Company), the above exercise price shall be adjusted
according to the following formula, and any fraction less than ¥1 arising from the adjustment shall be rounded
up to the nearest yen.
Number ofshares already +issuedExercise price
Exercise price=×
after adjustment
before adjustment

Number of shares
Amount to be paid in×
newly issued
per share
Fair value per share before issue of newsharesNumber of shares already issued+ Number of shares newly issued

In the above formula, the “Number of shares already issued” shall be the amount calculated by deducting thenumber of treasury shares related to common shares held by the Company from the total number of issued
common shares of the Company. In addition, if treasury shares related to common shares of the Company aredisposed of, the “Number of shares newly issued” shall be replaced with the “Number of treasury sharesdisposed of.” Furthermore, after the Allotment Date, in the case where the Company conducts a merger, etc.,
and where the Company conducts a gratis allotment of shares, or other cases where the above adjustment of theexercise price is required, the exercise price may be adjusted within a reasonable range, taking into accountconditions for the merger, etc., conditions for the gratis allotment of shares, and other factors.
5. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “Share Acquisition
Rights Holder”) may exercise their share acquisition rights only if the amount of net sales in the
Company’s consolidated statement of income for the fiscal year ending May 31, 2024 exceeds ¥33,164
million.
In determining the net sales amount, there are events, such as changes in the applicable accounting
standards and the acquisitions of companies, which can have a major impact on the business results of theCompany. In the event that the Board of Directors determines that it is not appropriate to make a judgment
based on actual figures, the Company will eliminate the effect of the acquisition of a company, etc. within areasonable range, and it shall be deemed possible to adjust the actual figures used for judgment. In addition,in the event of significant changes in the concept of items to be referred to, due to the application ofinternational financial reporting standards, changes in the fiscal year end, etc., the indicators to be referredto shall be determined by the Company’s Board of Directors.
(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary andassociate of the Company as Director, Audit & Supervisory Board Member or employee at the time of
exercising the share acquisition rights. However, this shall not apply in the event of resignation due to the
expiration of the term of office, mandatory retirement, or when a justifiable reason is acknowledged at a
meeting of the Board of Directors.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.
6. Matters concerning transfer of share acquisition rights
Transfer of the share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
7. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all of the share acquisition rights without any charge
upon the arrival of a date to be specified by its Board of Directors. When acquiring a part of the shareacquisition rights, the part of the share acquisition rights to be acquired shall be determined by a resolutionof the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 5) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.

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(3) The Company may acquire the share acquisition rights that are not the subject of the inheritance withoutcompensation, and as for notification to the share acquisition rights holder based on Article 274, paragraph(3) of the Companies Act, it shall be only necessary to provide such notification to any person who isconsidered by the Company appropriate among legal heirs of the share acquisition rights holder. However,
if such notification is considered unnecessary according to interpretation of laws and regulations, theCompany may omit the notification and acquire the share acquisition rights without compensation.
(4) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.
8. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder on the effective date of the organizational restructuring
based on the following conditions in each case. In this case, the remaining share acquisition rights shall be
extinguished, and the Restructured Company shall newly issue share acquisition rights. However, this shallapply only if it is stipulated in the absorption-type merger agreement, consolidation-type merger agreement,
absorption-type company split agreement, incorporation-type company split plan, share exchange agreement orshare transfer plan that the Restructured Company shall deliver share acquisition rights in accordance with thefollowing conditions.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 2) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The value of property to be contributed when each share acquisition right is exercised shall be the amountcalculated by multiplying the exercise price after the restructuring, which is derived by adjusting theexercise price stipulated in (Note 3) and (Note 4) above in view of conditions, etc. of the organizational
restructuring, by the number of Restructured Company’s shares to be acquired upon exercise of shareacquisition rights determined in accordance with (Note 8) (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of the first date of the exercise period of the share acquisition rights or theeffective date of the organizational restructuring to the last day of the exercise period of the shareacquisition rights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 5) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 7) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.

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J. 12th Share Acquisition Rights
Date of resolution

August 29, 2023

Category and number of recipients (Persons)

Directors of the Company:

Number of share acquisition rights (Units)*

1,448 (Note 1)

Class, description and number of shares to be acquired upon
exercise of share acquisition rights (Shares)*
Amount to be paid upon exercise of share acquisition rights(Yen)*

Common shares

4

144,800 (Note 1)¥1

Exercise period of share acquisition rights*

From August 30, 2026 to August 29, 2033

Issuance price and additional paid-in capital in the event ofissuance of shares upon exercise of share acquisition rights(Yen)*(Note 2)

Exercise conditions of share acquisition rights*(Note 3)Matters concerning transfer of share acquisition rights*(Note 4)

Matters concerning the grant of the share acquisition rights in(Note 6)
association with an organizational restructuring** Description as of the date of resolution of issue (August 29, 2023) is provided.
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated in accordancewith Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction less than ¥1 arising
as a result of the calculation shall be rounded up to the nearest yen. In this case, the amount of an increase inlegal capital surplus shall be the amount of the above maximum amount of increase of share capital, etc. less theamount of the increase in share capital.
3. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “Share Acquisition
Rights Holder”) may exercise their share acquisition rights if the closing price of the Company’s commonshare in regular trading on the Tokyo Stock Exchange on a specific day during the period from the
Allotment Date of the share acquisition rights to the end of the period of exercise of the rights (August 29,2033) exceeds ¥2,344.
However, in the event of a stock split or stock consolidation after the Allotment Date, the share price shallbe adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price after adjustment=

Share price before adjustment ×

Ratio of stock split(or stock consolidation)(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary of theCompany as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in cases where the person resigns at the expiration of
his/her term of office, retires at the mandatory retirement age, or when another justifiable reason is
acknowledged by the Board of Directors of the Company.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

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4. Matters concerning transfer of share acquisition rights
Transfer of share acquisition rights requires approval by resolution from the Board of Directors of theCompany.
5. Provisions for acquisition of share acquisition rights(1) In the event of a merger agreement in which the Company becomes a dissolved company, a split agreement
or a split plan in which the Company becomes a split company, or a share exchange agreement or a sharetransfer plan in which the Company becomes a wholly owned subsidiary, which is approved by a general
meeting of shareholders (or by a resolution of the Board of Directors if no approval is required by a general
meeting of shareholders), the Company may acquire all or part of the share acquisition rights without any
charge upon the arrival of a date to be separately specified by its Board of Directors. When acquiring a partof the share acquisition rights, the part of the share acquisition rights to be acquired shall be determined bya resolution of the Company’s Board of Directors.
(2) In the event that the exercise of the share acquisition rights becomes impossible pursuant to the provisions
set forth in (Note 3) above prior to the exercise by the share acquisition rights holder, the Company may
acquire the share acquisition rights without any charge.
(3) If the share acquisition rights holder relinquishes all or part of the share acquisition rights, the Company
may acquire the share acquisition rights without compensation upon the arrival of the day separately
designated by the Company’s Board of Directors.
6. Treatment of share acquisition rights in organizational restructuring
If the Company conducts a merger (limited to the case where the Company is extinguished through the merger),absorption-type company split, incorporation-type company split, share exchange or share transfer (hereinafter,
collectively, “organizational restructuring”), share acquisition rights of a Stock Company listed in Article 236,
paragraph (1), item (viii), (a) through (e) of the Companies Act (hereinafter the “Restructured Company”) areeach delivered to the share acquisition rights holder of the share acquisition rights remaining on the effective
date of the organizational restructuring (hereinafter the “remaining share acquisition rights”) based on thefollowing policy in each case. In this case, the remaining share acquisition rights shall be extinguished, and the
Restructured Company shall newly issue share acquisition rights. However, this shall apply only if it isstipulated in the absorption-type merger agreement, consolidation-type merger agreement, absorption-typecompany split agreement, incorporation-type company split plan, share exchange agreement or share transfer
plan that the Restructured Company shall deliver share acquisition rights.
(1) The number of share acquisition rights to be granted by the Restructured Company
The same number of share acquisition rights as the number of the share acquisition rights held by the shareacquisition rights holder of the remaining share acquisition rights is delivered.
(2) Class of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The class of the shares shall be common shares of the Restructured Company.
(3) Number of Restructured Company’s shares to be acquired upon exercise of share acquisition rights
The number shall be decided pursuant to (Note 1) above, after consideration of the terms and conditions of
the organizational restructuring.
(4) Value of property to be contributed when share acquisition rights are exercised
The subject of the contribution to be made on the exercise of each granted share acquisition right shall bemonetary, and the value of this shall be the amount obtained by multiplying the price of ¥1 per share of the
Restructured Company that can be granted by exercising the share acquisition right, by the number of the
Restructured Company’s shares to be acquired upon exercise of the share acquisition right, which isdetermined in accordance with (3) above.
(5) Exercise period of share acquisition rights
It shall be from the later of start date of the exercise period of the share acquisition rights or the effective
date of the organizational restructuring to the expiration date of the exercise period of the share acquisitionrights.
(6) Matters related to increase in share capital and legal capital surplus upon issuance of shares throughexercising the share acquisition rights
The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated inaccordance with Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction lessthan ¥1 arising as a result of the calculation shall be rounded up to the nearest yen. In this case, the amountof an increase in legal capital surplus shall be the amount of the above maximum amount of increase ofshare capital, etc. less the amount of the increase in share capital.
(7) Restrictions on assignment of share acquisition rights
For restriction on the acquisition by transfer, approval by resolution of the Board of Directors of the
Restructured Company shall be required.
(8) Other conditions for exercising share acquisition rights
Shall be decided pursuant to (Note 3) above.
(9) Reasons and conditions for acquisition of share acquisition rights
Shall be decided pursuant to (Note 5) above.
(10) Other conditions shall be determined in accordance with the conditions of the Restructured Company.
2) Shareholder rights plans
Not applicable.
3) Share acquisition rights for other uses
Not applicable.

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(3) Exercise of bonds with share acquisition rights with exercise price revision clause, etc.
Not applicable.

- 64 -

(4) Changes in total number of issued shares, share capital, etc.
Month/date/year

Increase(decrease) in total
number of issued
shares (Shares)June 15, 2018
(Note 1)

Common shares
20,397,960
Class B shares
3,389,661
Class C shares
2,359,764
Class D shares
2,399,760

September 26, 2018
(Note 2)–

December 4, 2018
(Note 3)

Class E shares
882,353January 31, 2019
(Note 4)

Common shares
9,032,353
Class B shares(3,390,000)
Class C shares(2,360,000)
Class D shares(2,400,000)
Class E shares(882,353)
Common shares
500,000
Common shares
1,126,500

Balance of total
number of issued
shares (Shares)

Increase
Balance of share(decrease) in
capitalshare capital(Millions of yen)
(Millions of yen)

Common shares
20,400,000
Class B shares
3,390,000
Class C shares
2,360,000
Class D shares
2,400,000
Common shares
20,400,000
Class B shares
3,390,000
Class C shares
2,360,000
Class D shares
2,400,000
Common shares
20,400,000
Class B shares
3,390,000
Class C shares
2,360,000
Class D shares
2,400,000
Class E shares
882,353

Common shares
29,432,353

Increase(decrease) inlegal capitalsurplus(Millions of yen)

Balance oflegal capitalsurplus(Millions of
yen)

–

3,164

–

1,443

(1,851)

1,312(1,443)

–

1,500

2,812

1,500

1,500

–

2,812

–

1,500

June 18, 2019
Common shares
1,051
3,864
1,051
2,551
(Note 5)29,932,353
July 17, 2019
Common shares
2,369
6,234
2,369
4,921
(Note 6)
31,058,853
July 30, 2019
Common shares
–
–
6,234
(947)
3,974
(Note 7)31,058,853
December 20, 2019 Common shares
Common shares
2
6,236
2
3,977
(Note 8)80,00031,138,853
February 1 to May
Common shares
Common shares
31, 2021
76
6,312
76
4,053
44,792
31,183,645(Note 9)June 1 to November
Common shares
Common shares30, 2021
63
6,376
63
4,116
31,684
31,215,329(Note 10)December 1, 2021
Common shares
Common shares
–
6,376
–
4,116
(Note 11)
93,645,987
124,861,316
January 1 to May 31,
Common shares
Common shares
2022
50
6,426
50
4,166
102,280
124,963,596(Note 12)From June 1, 2022 to
Common shares
Common shares
May 31, 2023
155
6,582
155
4,322
446,988
125,410,584(Note 13)
Notes: 1. Due to the stock split (1-for-10,000).
2. Based on the resolution at the Annual General Meeting of Shareholders held on August 21, 2018, the amount ofshare capital and legal capital surplus was reduced and the reduction amount was transferred to other capital surplus
to realize future flexible and agile capital policy through early elimination of cumulative losses. The capital
reduction ratio for share capital is 58.5%, and the capital reduction ratio for legal capital surplus is 100%.

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3. Third-party allotment of shares with compensation
Issuance price of Class E shares:¥3,400Additional paid-in capital:¥1,700
Allottee:Japan Post Capital Co., Ltd.
SBI AI&Blockchain Limited Liability Investment Partnership
T. Rowe Price Japan Fund
A-Fund, L.P.
4. The amendment of the Articles of Incorporation was resolved at the Extraordinary General Meeting of Shareholders
held on January 30, 2019, the class shareholders’ meeting by common shareholders, the class shareholders’ meetingby Class B shareholders, the class shareholders’ meeting by Class C shareholders, the class shareholders’ meeting by
Class D shareholders, and the class shareholders’ meeting by Class E shareholders, and each class shares wereabolished. Following this abolishment, Class B shares of 3,390,000 shares, Class C shares of 2,360,000 shares, ClassD shares of 2,400,000 shares, and Class E shares of 882,353 shares were converted to common shares of 9,032,353
shares as of January 31, 2019. As a result, the total number of issued shares (common shares) increased by 9,032,353
shares to 29,432,353 shares.
5. Paid-in public offering (offering by means of the book-building method)
Issuance price:¥4,500
Subscription price:¥4,207.50
Additional paid-in capital:¥2,103.75
Total amount to be paid:¥2,103,750,000
6. Third-party allotment of shares with compensation (capital increase by third-party allotment of shares related tosecondary distribution through over-allotment)
Issuance price:¥4,500
Subscription price:¥4,207.50
Additional paid-in capital:¥2,103.75
Allottee:
Nomura Securities Co., Ltd.
7. Based on the resolution at the meeting of the Board of Directors held on July 30, 2019, the amount of legal capitalsurplus was reduced and the reduction amount was transferred to other capital surplus to realize future flexible andagile capital policy through early elimination of cumulative losses. The capital reduction ratio for legal capitalsurplus is 19.2%.
8. Due to the exercise of share acquisition rights as of December 20, 2019, the total number of issued shares increased
by 80,000 shares, and share capital and legal capital surplus each increased by ¥2 million.
9. Between February 1, 2021 and May 31, 2021, the total number of issued shares increased by 44,792 shares, andshare capital and legal capital surplus each increased by ¥76 million due to the exercise of share acquisition rights.
10. Between June 1, 2021 and November 30, 2021, the total number of issued shares increased by 31,684 shares, andshare capital and legal capital surplus each increased by ¥63 million due to the exercise of share acquisition rights.
11. Due to the stock split (1-for-4).
12. Between January 1, 2022 and May 31, 2022, the total number of issued shares increased by 102,280 shares, andshare capital and legal capital surplus each increased by ¥50 million due to the exercise of share acquisition rights.
13. Between June 1, 2022 and May 31, 2023, the total number of issued shares increased by 446,988 shares, and sharecapital and legal capital surplus each increased by ¥155 million due to the exercise of share acquisition rights.
14. During the period between June 1, 2023 and the end of the month before the filing date (July 31, 2023), the total
number of issued shares increased by 76,892 shares, and share capital and legal capital surplus each increased by ¥32
million due to the exercise of share acquisition rights.

- 66 -

(5) Shareholding by shareholder category
As of May 31, 2023
Shareholding status (Number of shares per share unit: 100 shares)
Financial
institutions

Financial
instruments
business
operators

Other
corporations

–

13

23

–

259,709–

20.71

Category
Public sector
Number ofshareholders(Persons)
Number ofshares held
(Units)Shareholding
ratio (%)

Foreign investors

Individuals,
etc.

Shares lessthan one unit
(Shares)

Total

Companies,
etc.

Individuals

47

182

28

6,499

6,792

–

16,016

21,415363,191213

593,301

1,253,845

26,084

1.28

1.71

28.97

0.02

47.32

100

–

Note: Of treasury shares of 871 shares, 8 units are included in “Individuals, etc.” and 71 shares are included in “Shares less than
one unit.”(6) Major shareholders
As of May 31, 2023
Number of shares
held(Shares)

Ratio of shares held
to total number ofshares issued(excluding treasury
shares) (%)

Suginami-ku, Tokyo

41,432,920

33.04

2-11-3 Hamamatsu-cho, Minato-ku, Tokyo

17,183,400

13.70

1-8-12 Harumi, Chuo-ku, Tokyo

6,486,100

5.17

Kei Tomioka

Meguro-ku, Tokyo

4,160,000

3.32

MSIP CLIENT SECURITIES(Standing proxy: Morgan Stanley
MUFG Securities Co., Ltd.)

25 CABOT SQUARE, CANARY WHARF,LONDON E14 4QA, U.K. (OTEMACHIFINANCIAL CITY SOUTH TOWER, 1-9-7
Otemachi, Chiyoda-ku, Tokyo)
CAMPBELLS CORPORATE SERVICES
LIMITED FLOOR 4 WILLOW HOUSE
CRICKET SQUARE GRAND CAYMAN
KY1-9010 CAYMAN ISLANDSMERRILL LYNCH FINANCIAL CENTRE
2 KING EDWARD STREET LONDONUNITED KINGDOM (Nihombashi 1-chome
Mitsui Building, 1-4-1 Nihombashi, Chuoku, Tokyo)

3,484,900

2.78

3,314,000

2.64

2,412,276

1.92

Name or designation

Chikahiro Terada
The Master Trust Bank of Japan, Ltd.
(Trust account)
Custody Bank of Japan, Ltd. (Trustaccount)

DCM Ventures China Fund(DCM VII),L.P.
MLI FOR CLIENT GENERAL OMNINON COLLATERAL NON TREATYPB (Standing proxy: BofA Securities
Japan Co., Ltd.)

Address

Kenji Shiomi

Shinjuku-ku, Tokyo

2,320,000

1.85

STATE STREET BANK AND TRUSTCOMPANY 505303 (Standing proxy:
Settlement & Clearing Services
Department, Mizuho Bank, Ltd.)

P.O. BOX 351 BOSTONMASSACHUSETTS 02101 U.S.A.
(SHINAGAWA INTERCITY Tower A, 215-1 Konan, Minato-ku, Tokyo)

2,200,200

1.75

CNK, Inc.

1-21-18-501 Ebisu, Shibuya-ku, Tokyo

2,047,080

1.63

85,040,876

67.81

Total

–

Notes: 1. Of the number of shares held in The Master Trust Bank of Japan, Ltd. (Trust account) above, the number of shares
related to trust activities is 10,386,300 shares.
These shares are broken down to 433,900 shares of the portion included in pension trusts and 9,952,400 shares of the
portion included in investment trusts.
2. Of the number of shares held in Custody Bank of Japan, Ltd. (Trust account) above, the number of shares related totrust activities is 4,047,000 shares.
These shares are broken down to 234,300 shares of the portion included in pension trusts and 3,812,700 shares of the
portion included in investment trusts.
3. A Statement of Large-Volume Holdings (Statement of Changes) which was made available for public inspection asof November 22, 2019 shows that Capital Research and Management Company held the following shares as ofNovember 15, 2019. However, since the Company cannot confirm the number of shares that said company actually
held as of May 31, 2023, the said company is not included in the above status of major shareholders.
The description of the Statement of Large-Volume Holdings (Statement of Changes) is as follows.

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Although the Company implemented a stock split of common shares at a ratio of 4-for-1 on December 1, 2021, thefollowing number of shares, etc. held shows the number of shares before the stock split.
Number of shares, Holding ratio of share
Name or designation
Addressetc. held
certificates, etc.
(Shares)(%)
Capital Research andManagement Company

333 South Hope Street, Los Angeles,
CA 90071, U.S.A.

Shares:731,200

2.35

4. A Statement of Large-Volume Holdings (Statement of Changes) which was made available for public inspection asof January 7, 2020 shows that SPARX Asset Management Co., Ltd. held the following shares as of December 31,
2019. However, since the Company cannot confirm the number of shares that said company actually held as of May
31, 2023, the said company is not included in the above status of major shareholders.
The description of the Statement of Large-Volume Holdings (Statement of Changes) is as follows.
Although the Company implemented a stock split of common shares at a ratio of 4-for-1 on December 1, 2021, thefollowing number of shares, etc. held shows the number of shares before the stock split.
Number of shares, Holding ratio of share
Name or designation
Addressetc. held
certificates, etc.
(Shares)(%)
SPARX Asset Management
6th Floor, Shinagawa Season Terrace,
Shares: 1,010,000
3.25
Co., Ltd.
1-2-70 Konan, Minato-ku, Tokyo
5. A Statement of Large-Volume Holdings (Statement of Changes) which was made available for public inspection asof January 8, 2020 shows that JPMorgan Asset Management (Japan) Limited and two joint holders held thefollowing shares as of December 31, 2019. However, since the Company cannot confirm the number of shares thatsaid company and joint holders actually held as of May 31, 2023, they are not included in the above status of major
shareholders.
The description of the Statement of Large-Volume Holdings (Statement of Changes) is as follows.
Although the Company implemented a stock split of common shares at a ratio of 4-for-1 on December 1, 2021, thefollowing number of shares, etc. held shows the number of shares before the stock split.
Number of shares, Holding ratio of share
Name or designation
Addressetc. held
certificates, etc.
(Shares)(%)
JPMorgan Asset
Tokyo Building, 2-7-3 Marunouchi,
Management (Japan)
Shares: 1,446,800
4.66
Chiyoda-ku, Tokyo
LimitedJPMorgan Securities JapanTokyo Building, 2-7-3 Marunouchi,
Shares: 25,800
0.08Co., Ltd.
Chiyoda-ku, Tokyo
25 Bank Street, Canary Wharf,
J.P. Morgan Securities plc
Shares: 35,267
0.11
London E14 5JP, U.K.
6. A Statement of Large-Volume Holdings (Statement of Changes) which was made available for public inspection as
of September 6, 2021 shows that Pleiad Investment Advisors Limited held the following shares as of August 31,
2021. However, since the Company cannot confirm the number of shares that said company actually held as of May
31, 2023, the said company is not included in the above status of major shareholders.
The description of the Statement of Large-Volume Holdings (Statement of Changes) is as follows.
Although the Company implemented a stock split of common shares at a ratio of 4-for-1 on December 1, 2021, thefollowing number of shares, etc. held shows the number of shares before the stock split.
Number of shares, Holding ratio of share
Addressetc. held
certificates, etc.
Name or designation(Shares)(%)
Pleiad Investment Advisors
Limited26th Floor, Asia Pacific Centre, 8
Shares:Wyndham Street, Central, Hong Kong

1,029,091

3.30

7. A Statement of Large-Volume Holdings (Statement of Changes) which was made available for public inspection as
of September 7, 2021 shows that T. Rowe Price Japan, Inc. held the following shares as of August 31, 2021.
However, since the Company cannot confirm the number of shares that said company actually held as of May 31,
2023, the said company is not included in the above status of major shareholders.
The description of the Statement of Large-Volume Holdings (Statement of Changes) is as follows.
Although the Company implemented a stock split of common shares at a ratio of 4-for-1 on December 1, 2021, thefollowing number of shares, etc. held shows the number of shares before the stock split.
Number of shares, Holding ratio of share
Name or designation
Addressetc. held
certificates, etc.
(Shares)(%)
T. Rowe Price Japan, Inc.

10th Floor, GranTokyo South Tower,
Shares:1-9-2 Marunouchi, Chiyoda-ku, Tokyo- 68 -

1,077,847

3.46

8. A Statement of Large-Volume Holdings (Statement of Changes) which was made available for public inspection asof December 22, 2022 shows that FIL Investments (Japan) Limited held the following shares as of December 15,
2022. However, since the Company cannot confirm the number of shares that said company actually held as of May
31, 2023, the said company is not included in the above status of major shareholders.
The description of the Statement of Large-Volume Holdings (Statement of Changes) is as follows.
Number of shares, Holding ratio of share
Name or designation
Addressetc. held
certificates, etc.
(Shares)(%)
FIL Investments (Japan)
7-7-7 Roppongi, Minato-ku, Tokyo
Shares: 7,890,800
6.31
Limited(7) Voting rights
1) Issued shares
As of May 31, 2023
Number of shares (Shares)

Number of voting rights(Units)Shares with no voting rights

–

–

–

Shares with restricted voting rights(Treasury shares, etc.)

–

–

–

Shares with restricted voting rights (Other)

–

–

–

800

–

–

Category

Shares with full voting rights (Treasury
shares, etc.)

CommonsharesDescription

These are shares with fullvoting rights, which arestandard shares of theCompany with no limits
on rights, and the numberof shares in a trading unit
is 100 shares.

Shares with full voting rights (Other)

Commonshares125,383,700

1,253,837

Shares less than one unit

Commonshares

26,084––125,410,584

–

–

–

1,253,837–

Total number of issued shares
Aggregate voting rights of all shareholders

Note: “Shares less than one unit” includes 71 shares of shares held in the name of the Company.
2) Treasury shares, etc.
Name ofshareholder
Sansan, Inc.
Total

Address of shareholder

Number ofshares held in
own name(Shares)

As of May 31, 2023
Number of
Total number of Ratio of shares held
shares held inshares held
to total number ofothers’ names(Shares)shares issued (%)(Shares)

Aoyama Oval Building 13F, 552-2 Jingumae, Shibuya-ku,
Tokyo

800

–

800

0.00

–

800

–

800

0.00

- 69 -

2 Acquisition and disposal of treasury shares[Class of shares, etc.] Acquisition of common shares that falls under Article 155, item (vii) of the Companies Act(1) Acquisitions by resolution of General Meeting of Shareholders
Not applicable.
(2) Acquisitions by resolution of Board of Directors
Not applicable.
(3) Acquisition not based on resolution of General Meeting of Shareholders or Board of Directors
Category

Number of shares (Shares)

Treasury shares acquired during the fiscal year under review
Treasury shares acquired during the current period

Total amount (Yen)

135

187,160––

Note: Treasury shares acquired during the current period do not include shares acquired by the buyback of shares of lessthan one unit between August 1, 2023 and the filing date of this Annual Securities Report.
(4) Disposal of acquired treasury shares and number of treasury shares held
Fiscal year under review
Category

Acquired treasury shares offered to third
partiesAcquired treasury shares disposed of throughcancellation
Acquired treasury shares transferred formergers, share exchanges, share issuance, orcompany splits
Other
Number of treasury shares held

Number of shares(Shares)

Current period

Total amountdisposed (Yen)

Number of shares(Shares)

Total amountdisposed (Yen)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

871

–

871

–

Note: The number of treasury shares held during the current period does not include shares acquired by the buyback ofshares less than one unit between August 1, 2023 and the filing date of this Annual Securities Report.

3 Dividend policy
Recognizing the importance of properly returning profits to its shareholders, the Company’s basic policy is to pay stabledividends while ensuring a balance with internal reserves. However, given that our business remains in the growth stage as of thefiling date of this document, we seek to enhance internal reserves to facilitate business expansion, in addition to strengthening
our financial position. As such, we accordingly deem that making allocations for business expansion will lead to the greatest
return on profits to our shareholders.
For the fiscal year under review, we have opted to forgo payment of a dividend. We intend to use the internal reserves as afinancial resource for strengthening our financial position and expanding our business.
Our Board of Directors acts as the body for making decisions regarding dividends of surplus based on our basic policy offurnishing dividends twice annually in the form of an interim dividend and a year-end dividend, in the event that we opt to
implement a dividend of surplus. In addition, as the Articles of Incorporation of the Company stipulates that, “the dividend of
surplus, etc., shall be determined in accordance with the provisions of Article 459, paragraph (1) of the Companies Act, andunless otherwise specified by laws and regulations, will be determined by a resolution by the Board of Directors.”- 70 -

4 Corporate governance, etc.
(1) Overview of corporate governance1) Basic views on corporate governance
Under the mission of “Turning encounters into innovation” and the vision of “Become business infrastructure,” the Company isdeveloping businesses. The Company provides an innovative service to the very nature of business and encounters, and thecloud-based solutions that promote digital transformation and reshape how we work to companies and businesspersons facing
various business issues. Through this service, the Company will maximize sustainable corporate value and contribute to society
while recognizing the importance of gaining the continued trust of all stakeholders.
Based on this recognition, the Company has adopted the system of a company with Audit & Supervisory Committee for the
purpose of further improving its corporate governance and enhancing the soundness and transparency of management byreinforcing the supervisory function of the Directors. The Company will secure the transparency of management decisionmaking and the supervision of business execution by having an Audit & Supervisory Committee. At the same time, the Company
will establish an internal control system based on the Basic Policy on Internal Control Systems determined by the Board of
Directors and ensure its thorough operation while striving to maintain and strengthen corporate governance.
2) System of corporate governance and reasons for adopting this system
A. Overview of the system of corporate governanceAt the Annual General Meeting of Shareholders held on August 18, 2015, the Company transitioned to the system of a company
with an Audit & Supervisory Committee for the purpose of further improving its corporate governance and enhancing thesoundness and transparency of management by reinforcing the supervisory function of the Directors.
Board of Directors
The Board of Directors consists of nine Directors, including four Directors who are Audit & Supervisory Committee Members.
All Directors who are Audit & Supervisory Committee Members are Outside Directors. The Company has invited as Outside
Directors persons such as those with experience as a director at other companies and legal experts with a detailed knowledge ofcorporate legal affairs and compliance, as well as persons with expertise in the field of accounting, in order to promote theestablishment of a system that enables the Company to conduct management decision-making from a broader perspective and tosupervise management from outside the Company, while utilizing their insights on corporate management based on their wealthof business experience.
In order to conduct effective and prompt decision-making, the Board of Directors holds a regular Board of Directors meeting
once a month in principle, as well as holding extraordinary meetings as needed.
The Board of Directors functions both as a body for supervising the operations of Directors and a body for making decisions onimportant management matters, in compliance with laws and regulations and the Articles of Incorporation.
Chairperson:
Chikahiro Terada, Representative Director & CEO
Composition of members: Director Kei Tomioka, Director Kenji Shiomi, Director Yuta Ohma, Director Muneyuki
Hashimoto, Director who is an Audit & Supervisory Committee Member Maki Suzuki (Outside
Director), Director who is an Audit & Supervisory Committee Member Toru Akaura (Outside
Director), Director who is an Audit & Supervisory Committee Member Toko Shiotsuki (Outside
Director), Director who is an Audit & Supervisory Committee Member Taro Saito (Outside
Director)
Audit & Supervisory Committee
The Company’s Audit & Supervisory Committee comprises four Directors who are Audit & Supervisory Committee Members.
All Committee Members are Outside Directors. Directors who are Audit & Supervisory Committee Members include attorneys
and persons who possess an independent perspective on accounting and corporate management. Thus, the Company has
established a structure in which management supervision is conducted from the standpoint of each Committee member’s
professional ethics.
Directors who are Audit & Supervisory Committee Members express opinions on Directors’ execution of business at meetings ofthe Board of Directors and other meetings.
The Audit & Supervisory Committee monitors the vision of governance and its operational status. In order to audit and supervise
the everyday activities of the Directors, including the Directors’ performance of duties, the Audit & Supervisory Committee
implements audits based on the audit plan and holds meetings of the Audit & Supervisory Committee once a month whileconvening meetings with the Internal Auditing Department and Financial Auditors, and sharing information necessary forauditing.
Chairperson:
Director who is an Audit & Supervisory Committee Member Maki Suzuki (Outside Director)
Composition of members: Director who is an Audit & Supervisory Committee Member Toru Akaura (Outside Director),
Director who is an Audit & Supervisory Committee Member Toko Shiotsuki (Outside Director),
Director who is an Audit & Supervisory Committee Member Taro Saito (Outside Director)
Nomination and Remuneration Advisory Committee
The Company established the Nomination and Remuneration Advisory Committee on May 1, 2023 to gain appropriate
involvement of Independent Outside Directors, including from the perspective of diversity, such as gender, and skills, in order tostrengthen the functions of the Board of Directors pertaining to nomination, remuneration, etc. of Directors as well as theindependence, objectivity and accountability of the Board of Directors.
The Nomination and Remuneration Advisory Committee consists of three or more members appointed by resolution of theBoard of Directors. In order to ensure the independence of the committee, Independent Outside Directors make up a majority,and the chairperson is selected from the committee members who are Independent Outside Directors, and elected by resolution of
the committee.
The Nomination and Remuneration Advisory Committee deliberates in advance matters related to the nomination of Directors,
appointment and dismissal of Directors, remuneration of Directors (excluding those who are Audit & Supervisory Committee- 71 -

Members) and other matters for which the Board of Directors seeks advice, and provides reports to the Board of Directors. The
Board of Directors is decided by the Board of Directors based on the details of a report from the Nomination and Remuneration
Advisory Committee.
Committee chair:Director who is an Audit & Supervisory Committee Member Maki Suzuki (Outside Director)
Composition of members: Director who is an Audit & Supervisory Committee Member Toru Akaura (Outside Director),
Director who is an Audit & Supervisory Committee Member Toko Shiotsuki (Outside Director),
Director who is an Audit & Supervisory Committee Member Taro Saito (Outside Director),
Representative Director & CEO Chikahiro Terada, Director Yuta Ohma
Internal audits
The Company’s Internal Auditing Department is an entity placed directly under the Representative Director & CEO to ensure
independence from other departments executing business, and reports audit results to the Representative Director & CEO and the
Audit & Supervisory Committee.
The Internal Auditing Department cooperates with the Audit & Supervisory Committee and the Financial Auditor and shares theinformation necessary for auditing, thereby enhancing the effectiveness of each audit.
B. Reasons for adopting this system
The Company has judged that the current corporate governance structure is a corporate governance system that can realize thestrengthening of the Board of Directors decision-making and supervisory functions and the acceleration of business execution,and has adopted the current structure for the establishment of a corporate governance structure that will realize transparent andfair management as well as swift decision-making.
C. Relationship between the Company’s organization and internal control
The Company’s corporate governance structure is as shown in the diagram below.

3) Status of the preparedness of the internal control system
The Company strives to maintain and enhance corporate governance by the establishment and strict operation of an internal
control system based on the Basic Policy on Internal Control System, which was determined by the Board of Directors.
A.

System to ensure that the execution of duties by Directors and employees complies with laws and regulations aswell as the Articles of Incorporation (System for strict compliance with laws and regulations and the Articles ofIncorporation)
 Directors and employees carry out appropriate corporate activities based on high ethical standards and comply with laws
and regulations and internal rules such as the Articles of Incorporation in accordance with the Company’s corporate
philosophy and code of conduct, “The Katachi of Sansan.” Implement internal audits by the Internal Auditing Department, an independent entity under the direct supervision of theCEO, to verify if execution of business operations is being conducted based on laws and regulations, the Articles ofIncorporation, and internal and other rules while at all times strive to make improvements when issues are discovered.

- 72 -

B.

System for storage and management of information related to execution of duties by Directors (Information
storage and management system) The Company shall appropriately prepare, store and manage documents, business forms, various information such asrecords made in an electronic format based on the Rules on Information Asset Management, after classifying according tolevel of confidentiality.
 Directors may access these documents and records at any time.
C. Rules and other systems for managing risk of loss (Risk management system)
 Appropriately manage a host of potential risks in the Company’s business activities through the establishment of internal
rules and a response system.
 Give utmost priority to the appropriate handling of personal information, appoint a person in charge of personal information
protection, and make efforts to minimize the risks associated with the management of personal information by establishinginternal rules centered on a set of basic regulations for the protection of personal information.
 Reduce information security risks by appointing a chief information officer with responsibility and authority for information
security risks and risk management and establishing rules on management of information systems.
 Directors shall immediately report to the Audit & Supervisory Committee in the event of any kind of risk arising that may
cause a major loss to the Company.
D. System to ensure that the duties of the Directors are being carried out efficiently (System for securing efficiency)
 Hold regular meetings comprising Directors once a month and convene extraordinary meetings as needed in accordancewith laws and regulations, the Articles of Incorporation, and the Rules on the Board of Directors in order to audit the statusof business execution by discussing and making decisions on important matters, and receiving reports from Executive
Directors.
 Establish a suitable and efficient decision-making system through developing internal rules such as the Rules on the Boardof Directors, and clarifying areas of responsibility and authority.
E.

System to ensure the properness of business operations of the corporate group composed of the Company and its
subsidiaries (Internal control of corporate group) The Company and its subsidiaries, etc., which comprise the Sansan Group, have held up a policy to carry out appropriate
corporate activities based on high ethical standards and to comply with their respective corporate philosophy and code of
conduct as well as applicable laws and regulations and internal rules, such as the Articles of Incorporation, and endeavor todevelop fair and responsible business to contribute to sustainable growth of the Sansan Group.
In addition, as the basic policy for involvement in management of its subsidiaries, the Company has established the Rules
on Management of Subsidiaries and maintains a system in which group governance can function, such as concluding
business management agreements with the subsidiaries pursuant to said rules.
 The Internal Auditing Department implements regular audits in order to verify if the business operations of the Company
and its subsidiaries are in compliance with laws and regulations, the Articles of Incorporation, internal rules, and otherregulations.
F.
Internal control system for financial reporting (System to ensure properness of financial reporting) In order to secure the properness of financial reporting of the Company and its subsidiaries, the Company shall develop andappropriately operate internal rules, including the Basic Policy on Internal Controls Related to Financial Reporting, basedon the Financial Instruments and Exchange Act and other laws and regulations in Japan and overseas that apply to theCompany and its subsidiaries.
 Develop and operate a monitoring system for financial reporting and establish a system for timely and appropriate reportingwhen internal control system problems or defects are identified through the monitoring system.
 In terms of information infrastructure, effective and efficient use of the internal control system is made for financial
reporting and the Company shall respond appropriately with respect to general control and application control of thatstructure.
G.

Matters related to the Office that assists the duties of the Audit & Supervisory Committee, matters related to the
independence of members of that Office, and matters on ensuring the practicability of instructions to thosemembers (Establishing an Office and Office member for the Audit & Supervisory Committee) (Independence of
the Office member for the Audit & Supervisory Committee) (Ensuring practicability of instructions to the Officemember of the Audit & Supervisory Committee)
 Establish an Office under the direct control of the Audit & Supervisory Committee and designate an Office member to assist
the duties of the Committee’s members on a full-time basis.
 The supervisory authority over that Office member is to belong exclusively to the Audit & Supervisory Committee and theappointment, transfer, performance evaluation, disciplinarian action, and other matters regarding the member require theapproval of, and prior notification to, the Audit & Supervisory Committee.
H.

System for submitting reports to the Audit & Supervisory Committee, which includes the system for Directors
and employees to report to the Audit & Supervisory Committee (System for reporting to the Audit & Supervisory
Committee)
 Directors and employees shall promptly inform the Audit & Supervisory Committee of any matter that may have asignificant impact on the Company and the implementation status of internal audits as well as legal matters, and provide
necessary reports and information in response to requests from the Audit & Supervisory Committee.
 Formulate rules for a Whistle-Blower System and ensure the operation of an appropriate reporting system based on the
stipulations of the Whistle-Blower System. The Company shall not treat any Director or employee unfavorably on the basisof said Director or employee using the System to give a report to the Audit & Supervisory Committee.

- 73 -

I.

Other systems for ensuring the effectiveness of audits by the Audit & Supervisory Committee (Systems for
ensuring the effectiveness of audits by the Audit & Supervisory Committee)
 The Representative Director & CEO shall meet regularly with the Audit & Supervisory Committee and Financial Auditor toexchange opinions and communicate effectively.
 The Audit & Supervisory Committee shall meet regularly with the Financial Auditor, cooperate with the Internal Auditing
Department, and exchange information at all times.
 Payments of costs incurred in the process of executing the duties of the Audit & Supervisory Committee member shall be
addressed upon a request for payment.
In addition to the above, the Company shall conduct fair and responsible corporate activities through the formulation of the basic
policy regarding prevention of bribery and corruption and the basic policy regarding anti-social forces, as well as securing andmaintaining a compliance structure through the dissemination and implementation of such policies inside and outside theCompany.
4) Summary of details of limited liability agreements
In accordance with Article 427, paragraph (1) of the Companies Act, the Company has entered into agreements with its Outside
Directors to limit their liability for damages under Article 423, paragraph (1) of said Act. The maximum amount of liability fordamages under these agreements is the minimum liability amount provided for under laws and regulations.
5) Outline of the content of indemnification agreements entered into with officers, etc.
The Company has entered into indemnification agreements with Directors (excluding those who are Audit & Supervisory
Committee Members) and Directors who are Audit & Supervisory Committee Members as provided for under Article 430-2,
paragraph (1) of the Companies Act, under which the Company shall indemnify them for the expenses provided for in item (i)and the loss provided for in item (ii) of said paragraph to the extent provided for in laws and regulations. However, in order toensure that the appropriateness of the execution of duties by the Company’s officers is not impaired by said indemnificationagreement, the following items are not covered by the indemnification.
 Portion of litigation expenses that exceeds the amount of expenses normally required If the Company is to compensate for damages, etc., in the event that the indemnified Director (below, the “indemnified
person”) is liable to the Company under Article 423, paragraph (1) of the Companies Act, the portion of the damages, etc. that
relates to such liability
 All of the damages, etc. for which the indemnified person is liable due to his/her malicious intent or gross negligence inperforming his/her duties
In addition, even after the Company has paid compensation to the indemnified person, the indemnified person shall return all orpart of the compensation to the Company in the following cases.
 All of the compensated expenses, etc., if it is found that the indemnified person has performed his/her duties for the purpose ofgaining unjust benefits for him/herself or a third party or causing damage to the Company
 If it is found that all or part of the expenses, etc. compensated under this agreement cannot be compensated, the portion of thecompensated expenses, etc. that cannot be compensated under this agreement
 In the event that the indemnified person receives compensation from an insurer in accordance with an insurance contract that
the Company concludes with an insurer, which promises that the insurer will cover the damages that may arise due to theindemnified person assuming responsibility for the execution of his/her duties or receiving a claim related to the pursuit ofsuch responsibility, and which names the indemnified person as the insured, the portion of expenses, etc. for which
compensation was received6) Outline of the contents of the directors and officers liability insurance policy the Company has entered into, that names
the Director or officer as the insured
The Company has entered into a directors and officers liability insurance policy as provided for in Article 430-3, paragraph (1) of
the Companies Act with an insurance company. The scope of the insured includes Directors (excluding those who are Audit &Supervisory Committee Members), Directors who are Audit & Supervisory Committee Members, Executive Officers, andDirectors of subsidiaries of the Company (the “Officers, etc.”). By resolution of the Board of Directors, the insureds do not bear
any of the insurance premiums. Under this insurance policy, the insured will be compensated for the damages and litigation
expenses incurred by the insured as a result of a claim for damages arising from the insured’s conduct as an officer of theCompany or its subsidiaries. However, in order to ensure that the appropriateness of the execution of duties by the insured is not
impaired, the following cases are not covered.
 Cases in which the Company or its Officers, etc. have illegally obtained profits or benefits
 Actions taken with the full knowledge that they are in violation of laws and regulations or the Company’s internal regulations,etc.
7) Number of Directors
The Company’s Articles of Incorporation stipulate that the number of Directors (excluding those who are Audit & Supervisory
Committee Members) shall be eight or less. The Articles of Incorporation stipulate that the number of Directors who are Audit &Supervisory Committee Members shall be five or less.
8) Requirements for resolutions for the election of Directors (excluding those who are Audit & Supervisory Committee
Members) and Directors who are Audit & Supervisory Committee Members
The Company stipulates in its Articles of Incorporation that resolutions for the election of Directors shall distinguish between
Directors who are Audit & Supervisory Committee Members and those Directors who are not, and that shareholders who holdone-third or more of the voting rights of shareholders who are entitled to exercise their voting rights shall be in attendance, andthat resolutions shall be passed with a majority of such voting rights.

- 74 -

In addition, the Articles of Incorporation stipulate that cumulative voting shall not be used for the election of Directors.
9) Requirements for special resolutions at the General Meeting of Shareholders
Regarding the requirements for special resolutions at the General Meeting of Shareholders stipulated in Article 309, paragraph(2) of the Companies Act, the Articles of Incorporation stipulate that shareholders who hold one-third or more of the voting
rights of shareholders who are entitled to exercise their voting rights shall be in attendance, and that such resolutions shall bepassed with two-thirds or more of such voting rights. The purpose of this is to allow the General Meeting of Shareholders toproceed smoothly, by relaxing the quorum required for special resolutions at the General Meeting of Shareholders.
10) Organization determining dividends of surplus etc.
The Company’s Articles of Incorporation stipulate that matters stipulated in each item of Article 459, paragraph (1) of theCompanies Act, such as dividends of surplus, shall be determined by a resolution of the Board of Directors and not by aresolution of the General Meeting of Shareholders, unless otherwise stipulated by laws and regulations. The purpose of this is toagilely return profits to shareholders, by having the Board of Directors exercise the authority to distribute dividends of surplus.
11) Specific efforts for the elimination of anti-social forces
The Company, in its the basic policy regarding anti-social forces, stipulates that it shall never associate with anti-social forces orgroups, and we have never associated with anti-social forces to date.
We conduct thorough checks on business partners when initiating transactions and when renewing contracts. In addition to
including statements and guarantees to the effect that a business partner is not an anti-social force, the content of contractual
documents such as service agreements and business alliance agreements also makes it possible to cancel the contract even if thebusiness partner is discovered to be an anti-social force after the fact. In addition, we have established internal rules regarding theelimination of anti-social forces, and we conduct regular reviews of our business partners.
12) Regarding the system for managing subsidiaries and affiliates
The Company has established the Rules on Management of Subsidiaries with the aim of ensuring the appropriateness of thebusiness operations of the entire Group that consists of the Company and its subsidiaries, and we are in the process ofestablishing a system for group governance to function, such as concluding business management agreements with subsidiaries
based on said Rules.
13) Basic policy regarding the control of the Company
The Company believes that those who control decisions regarding financial and operational policy should strive to concentratebusiness resources in a manner that maximizes corporate value and augments the Company’s mutual interests with its
shareholders with the aim of consistently achieving sustainable growth.
Whereas the Company has not adopted anti-takeover measures at this point in time, we will continue to review matters flexibly
while monitoring changes with respect to social affairs and other circumstances.
14) Activities of the Board of Directors
During the fiscal year under review, the Company held 17 meetings of the Board of Directors, and the attendance record for each
Director is as follows.
Number of
Attendance
Name
times
ratio
attended
Chikahiro Terada
17 times100%
Kei Tomioka
17 times
100%
Kenji Shiomi
17 times
100%
Yuta Ohma
17 times
100%
Muneyuki Hashimoto
17 times
100%
Maki Suzuki
13 times
100%
Toru Akaura
17 times
100%
Toko Shiotsuki
17 times
100%
Taro Saito
13 times
100%
Yasuko Yokosawa
4 times100%
Yoshiki Ishikawa
4 times
100%
Notes: 1. The attendance records for Yasuko Yokosawa and Yoshiki Ishikawa state their attendance until their retirement on
August 30, 2022, due to the expiration of their term of office.
2. The attendance records for Maki Suzuki and Taro Saito state their attendance after they assumed office on August 30,
2022.
Major matters deliberated at the Board of Directors during the fiscal year under review were as follows.
 Matters for deliberation as stipulated by law
 Matters concerning management plans and business strategies
 Matters concerning organizational restructuring, division of duties, and important personnel changes
 Matters concerning financial results, business performance, and investments and loans
 Matters concerning compliance and governance, etc.

- 75 -

15) Activities of the Nomination and Remuneration Advisory Committee
During the fiscal year under review, the Company held one meeting of the Nomination and Remuneration Advisory Committee,
and the attendance record for each Committee Member is as follows.
Number of
Attendance
Name
times
ratio
attended
Maki Suzuki
1 time100%
Toru Akaura
1 time100%
Toko Shiotsuki
1 time100%
Taro Saito
1 time100%
Chikahiro Terada
1 time100%
Yuta Ohma
1 time100%
Note: The Company established the Nomination and Remuneration Advisory Committee on May 1, 2023, and the number oftimes attended indicates activity from the day the Committee was established until May 31, 2023.
Specific matters deliberated by the Nomination and Remuneration Advisory Committee included matters concerning policies andprocedures for nominating Directors, and policies for determining the remuneration etc. of Directors (excluding those who are
Audit & Supervisory Committee Members) and procedures.

- 76 -

(2) Officers
1) List of Officers
Seven men and two women (22.2% of officers are women)
Title

Name

Date of birth

Career summary

Joined Mitsui & Co., Ltd.
Worked for Mitsui Comtek
Corp. in Silicon Valley
February 2006 Seconded as General
Manager of Corporate
Representative Director & CEO
Management Department of
Chikahiro Terada December 29, 1976
Executive Officer and CEO
Mitsui Bussan Secure
Directions, Inc.
June 2007
Assumed office as
Representative Director &CEO of the Company(current position)
April 1999
Joined Oracle Corporation
Japan
Director
June 2007
Assumed office as Director
Executive Officer and COOof the Company (current
Kei Tomioka
May 26, 1976
Executive in charge of the Sansan Division
position)and Bill One Division
June 2021
Outside Director of Fringe81
Co., Ltd. (currently UniposInc.) (current position)
April 1994
Joined Bussan System
Integration Co. Ltd.
(currently MITSUIKNOWLEDGE INDUSTRY
CO., LTD.)
Director
December 2000 Seconded to Mitsui & Co.,
Executive Officer, CISO and DPO
Ltd., Mitsui Comtek Corp.
Kenji Shiomi
August 12, 1970
Executive in charge of the Technology
April 2005
Joined Wisdom Networks
Division and Eight BusinessCo., Ltd.
June 2006
President of United Portal
Co., Ltd.
June 2007
Assumed office as Directorof the Company (current
position)
April 2006
Joined WORKPORT, inc.
Director
October 2008 Director of Blast Co., Ltd.
Executive Officer and CHRO
February 2010 Joined the Company
Yuta Ohma
September 27, 1983
Executive in charge of the Human
August 2019
Assumed office as Director
Resources Divisionof the Company (current
position)
April 2004
Joined Lehman Brothers
Japan Inc.
September 2008 Joined Barclays Capital
Securities Japan Limited
January 2013 Joined DBJ Investment
Director
Advisory Co., Ltd.
Executive Officer and CFO
Muneyuki
January 10, 1982 November 2017 Joined the Company
Executive in charge of the Corporate
HashimotoAugust 2020
Assumed office as Director
Divisionof the Company (current
position)
June 2021
Outside Director of Fringe81
Co., Ltd. (currently UniposInc.) (current position)
October 2003 Registered with the Tokyo
Bar Association
Joined TMI Associates
July 2009
Registered with the New
York State Bar Association
October 2017 Joined Shintaro Sato Law
Director
Maki Suzuki
July 4, 1977
Office (current position)(Audit & Supervisory Committee Member)
February 2021 Registered with the Daini
Tokyo Bar Association
August 2022
Assumed office as Director(Audit & Supervisory
Committee Member) of theCompany (current position)

Term ofofficeNumber ofshares held
(Shares)(Note 3)41,432,920(Note 3)

4,160,000(Note 3)2,320,000(Note 3)90,300(Note 3)

81,200(Note 4)–

April 1999
May 2001- 77 -

TitleName

Date of birth

Career summary

Term ofofficeApril 1991

Director(Audit & Supervisory Committee Member)

Toru Akaura

Director(Audit & Supervisory Committee Member)

Toko Shiotsuki

Director(Audit & Supervisory Committee Member)Taro Saito

Joined Japan AssociatedFinance Co., Ltd. (currently
JAFCO Group Co., Ltd.)
October 1999 General Partner of Incubate
Capital Partners
March 2000
Outside Director of S-Pool,
Inc. (current position)
June 2005
Outside Director of jig.jp
Co., Ltd. (current position)
August 2007
Director of the Company
September 2010 Representative Director of
Incubate Fund KK (current
August 7, 1968
position)(Note 5)October 2014 Outside Audit & Supervisory
Board Member of Double
Standard Inc.
August 2015
Assumed office as Director(Audit & Supervisory
Committee Member) of theCompany (current position)
December 2017 External Director of ispace,inc. (current position)
June 2021
Outside Director of Double
Standard Inc. (current
position)
April 1996
Joined Japan Airlines Co.,
Ltd.
October 1999 Passed the second exam forcertified public accountants
July 2000
Standing Auditor ofCyberAgent, Inc.
March 2007
Juris Doctor, The Universityof Tokyo School of Law
January 9, 1973
December 2017 Director (Full-time Audit and (Note 5)
Supervisory Committee
member) of CyberAgent, Inc.
(current position)
August 2021
Assumed office as Director(Audit & Supervisory
Committee Member) of theCompany (current position)
June 1995
Joined DENTSU INC.
May 2005
Founder and Director of dof
Inc.
June 2009
Representative Director of
dof Inc. (current position)
December 2014 External Director of
VOYAGE GROUP, INC.
(currently CARTAHOLDINGS, INC.) (current
position)January 2017 Founder and Director of CC
November 24, 1972
(Note 4)
Corporation (current
position)
June 2019
Outside Director of forStartups, Inc. (current
position)
June 2020
Outside Director of ZOZO,
Inc. (current position)
August 2022
Assumed office as Director(Audit & Supervisory
Committee Member) of theCompany (current position)

Number ofshares held
(Shares)

Total

1,720,000––

49,804,420

Notes: 1. Maki Suzuki, Toru Akaura, Toko Shiotsuki, and Taro Saito are Outside Directors.
2. The system of the Company’s Audit & Supervisory Committee is as follows.
Committee chair Maki Suzuki, Committee Member Toru Akaura, Committee Member Toko Shiotsuki, Committee
Member Taro Saito
3. From the conclusion of the Annual General Meeting of Shareholders held on August 29, 2023 to the conclusion of
the Annual General Meeting of Shareholders for the fiscal year ending May 31, 2024.
4. From the conclusion of the Annual General Meeting of Shareholders held on August 30, 2022 to the conclusion of
the Annual General Meeting of Shareholders for the fiscal year ending May 31, 2024.
5. From the conclusion of the Annual General Meeting of Shareholders held on August 29, 2023 to the conclusion of
the Annual General Meeting of Shareholders for the fiscal year ending May 31, 2025.

- 78 -

2) Outside Officers
As of the filing date, all four Directors who are Audit & Supervisory Committee Members are Outside Directors under theCompanies Act, as of the date of submission of this document.
As one means to continuously increase corporate value, the Company has a basic policy of appointing Independent Directors
from among Outside Directors who have voting rights at the Board of Directors, after having determined that they are persons
with no potential conflicts of interest with general shareholders. Based on this policy, we have selected all four Outside Directorsof the Company as Independent Directors. Although we have not established any particular standards or policies regarding theindependence of Outside Directors, we have appointed them by taking into account the standards for independent officers
established by the Tokyo Stock Exchange, Inc. The four Outside Directors attend the Nomination and Remuneration Advisory
Committee, and involve themselves from an objective standpoint in matters related to the nomination, appointment and dismissalof Directors and the remuneration of Directors (excluding those who are Audit & Supervisory Committee Members). In addition,
our policy is to create an environment in which Independent Directors are able to fulfill the roles expected of them by working
closely with other officers and sharing information about the Company.
Personal, capital, and business relationships as well as other interests between Outside Directors and the Company are as
follows.
A.

B.

C.

D.

Outside Director Maki Suzuki possesses specialist knowledge in corporate legal affairs and compliance, etc., as well as a
wealth of insight in judicial precedents in her career as an attorney. The Company has appointed her in the anticipationthat she can provide opinions, etc. regarding the Company’s management from an objective standpoint as an
Independent Director, including legal aspects and diversity. There are no personal, capital, or business relationships, orother interests between her and the Company.
Outside Director Toru Akaura, as the Representative Director of Incubate Fund KK, possesses many years ofprofessional experience in the venture capital business, together with a wealth of experience as a director of othercompanies, and has cultivated broad insights through these experiences. The Company has appointed him in the
anticipation that he will offer advice and suggestions with regard to all areas of management and investing in companies.
There are no personal, capital, or business relationships, or other interests between him and the Company.
Outside Director Toko Shiotsuki has degrees as a junior accountant and a doctor of jurisprudence (professional), and has
extensive experience in business companies, including serving as a full-time Audit & Supervisory Committee member ofa listed company by leveraging her broad insight in accounting, auditing and legal affairs. Based on this, Company has
appointed her in the anticipation that she will present meaningful opinions as an Independent Director from theperspective of auditing and supervision as well as diversity. There are no personal, capital, or business relationships, orother interests between her and the Company.
Outside Director Taro Saito, as the Representative Director of dof Inc., possesses many years of work experience inbranding and communication design together with extensive experience as an officer at other companies, and has
cultivated broad insights through these experiences. The Company has appointed him in the anticipation that he will
provide advice and suggestions concerning the general management and corporate governance of the Company from an
objective standpoint as an Independent Director. There are no personal, capital, or business relationships, or otherinterests between him and the Company.

3) Mutual cooperation between supervision or audits by Outside Directors and internal audits, audits by the Audit &Supervisory Committee, and financial audits, and the relationship with the internal control department
As described in “(3) Audits” below, we believe that there is sufficient cooperation between the supervision or audits by Outside
Directors and audits by the Audit & Supervisory Committee and financial audits, as well as with the internal control department.

- 79 -

(3) Audits
1) Audit & Supervisory Committee’s audits
The Company’s Audit & Supervisory Committee consists of four members, Maki Suzuki, Toru Akaura, Toko Shiotsuki, and Taro
Saito, all of whom are Outside Directors, and is chaired by Maki Suzuki, an Outside Director (Independent Director). Based on
the Audit & Supervisory Committee’s guidelines, the Audit & Supervisory Committee carries out audit operations in line withauditing standards, auditing policies, the Audit Plan, auditing methods, etc. decided by the Audit & Supervisory Committee.
Maki Suzuki, an Outside Director who is a member of the Audit & Supervisory Committee, is a qualified attorney, and theCompany has appointed her in the anticipation that she will offer recommendations and advice on the Company’s legal affairs
from her standpoint as an expert. Outside Director Toko Shiotsuki, who is also an Audit & Supervisory Committee member, hasdegrees as a junior accountant and a doctor of jurisprudence (professional), and has extensive knowledge of finance andaccounting.
In addition, the Company has assigned an Office member dedicated to support the smooth execution of duties by the Audit &Supervisory Committee. Since reports and information are provided in a timely manner in response to requests from the Audit &Supervisory Committee through said Office member’s participation in major meetings and inspection of important documents,
etc., and an environment in which audit duties can be sufficiently carried out using the internal control system is in place, wehave not appointed a full-time Audit & Supervisory Committee member.
During the fiscal year under review, the Company held 13 meetings of the Audit & Supervisory Committee, and the attendance
record for each Audit & Supervisory Committee Member is as follows.
Name

Number of times
attended
10 times
13 times
13 times
10 times
3 times

Attendance ratio

Maki Suzuki
100%
100%
Toru Akaura
100%
Toko Shiotsuki
Taro Saito
100%
Yasuko100%
Yokosawa
100%
Yoshiki Ishikawa
3 times
Notes: 1. The attendance records for Yasuko Yokosawa and Yoshiki Ishikawa state their attendance until their retirement on
August 30, 2022, due to the expiration of their term of office.
2. The attendance records for Maki Suzuki and Taro Saito state their attendance after they assumed office on August30, 2022.
Regarding specific matters deliberated by the Audit & Supervisory Committee, deliberations, reports and discussions were heldon the following matters.
 Audit policy, audit plan Formation of opinions on the nomination and remuneration of Directors (excluding those who are Audit & Supervisory
Committee Members)
 Consent regarding election proposals of Directors who are Audit & Supervisory Committee Members
 Audit of Directors’ execution of duties
 Audit of the internal control system
 Evaluation results of the Board of Directors’ effectiveness Preparation of audit reports
 Evaluation and reappointment or non-reappointment of the Financial Auditor, and consent regarding the remuneration for
the Financial Auditor
 Exchange of opinions with the Internal Auditing Department and reporting of internal audit plans and internal audit results
 Status of operation etc. of compliance/whistle-blower system etc.
The Audit & Supervisory Committee checks whether the Company’s internal control systems are being established and operated
appropriately, receives regular reports on the comprehensive implementation status of audits from the Internal Auditing
Department, and shares information at the meeting of the Audit & Supervisory Committee. Furthermore, in order to foster
sufficient communication and deepen mutual awareness between Audit & Supervisory Committee Members and theRepresentative Director & CEO, they exchange opinions under the theme of significant auditing issues, etc.
By attending meetings of the Board of Directors, etc., each Audit & Supervisory Committee Member receives information
regarding the status of business execution, and by giving their opinions regarding this, audits and monitors the legality andsuitability, and ensures appropriate business execution.
In addition, the Audit & Supervisory Committee monitors and verifies whether the Financial Auditors maintain their
independence and implement appropriate audits, and receives reports from the Financial Auditors regarding the performance of
their duties and requests explanations when necessary. Moreover, the Audit & Supervisory Committee receives notification fromthe Financial Auditors regarding steps to improve the “systems for ensuring that the performance of the duties is being carriedout properly” (as enumerated in each item of Article 131 of the Regulation on Corporate Accounting) in compliance with the“Quality Control Standard for Audit” (adopted by the Business Accounting Council on October 28, 2005), etc., and requests
explanations when necessary.
2) Internal audits
The Company’s internal audits are conducted by one head of the Internal Auditing Department and two staff members who
belong to the Internal Auditing Department, and internal auditors appointed by the head of the Internal Auditing Department. The
objective of internal auditing is to examine and evaluate the effectiveness of internal controls established and operated at theCompany, and to point out matters that require improvement and offer advice toward making improvement in order to contribute- 80 -

to achievement of the Company’s management targets and stable business operations. The Internal Auditing Department makes
an internal audit plan each fiscal year, implements internal auditing after receiving the approval of the Representative Director &CEO, and reports the results of the audits to the Representative Director & CEO, the Audit & Supervisory Committee and thedivision that was subject to auditing, while pointing out matters to be improved to said division and checking the status of
improvement.
The Internal Auditing Department cooperates with the Audit & Supervisory Committee and the Financial Auditor and sharesinformation necessary for auditing.
3) Financial auditsa. Name of audit firm
KPMG AZSA LLC
b. Period continuously audited
Nine years
c. Certified public accountants who performed the audit
Osamu Takagi
Genta Tsuru
The number of years continuously audited is omitted because it is less than seven years for all of them.

d. Composition of assistants involved in the audit:
Assistants involved in the audit of the Company consist of six certified public accountants and eight other persons.
e. Policy and reasons for selecting audit firm
The Company does not have a policy for selecting Financial Auditors, but makes its decision based on the number ofaudit days, personnel allocation, and verification and evaluation of the audit performance of the previous fiscal year.
f. Evaluation of the audit firm by the Audit & Supervisory Committee
The Company’s Audit & Supervisory Committee evaluates the audit firm. In conducting this evaluation, the Audit &Supervisory Committee monitors and verifies whether the Financial Auditors maintain their independence andimplement appropriate audits, and receives reports from the Financial Auditors regarding the performance of theirduties and requests explanations when necessary. In addition, regarding the systems to ensure the proper execution ofduties, the Audit & Supervisory Committee receives notifications that the “Quality Control Standard for Audit”(adopted by the Business Accounting Council on October 28, 2005), etc. is being followed, and requests explanations.
Based on the above, the Audit & Supervisory Committee has evaluated the performance of duties by the audit firm inaccordance with the evaluation items in the “Practical Guidelines for Corporate Auditors, etc. Regarding theEstablishment of Criteria for Evaluation and Selection of Financial Auditors” (adopted by the Japan Audit &Supervisory Board Members Association on November 10, 2015), and has not found any problems.

A.

4) Details etc. of remuneration for audits
Details of remuneration for auditing certified public accountants, etc.
(Millions of yen)Previous fiscal year
Category

Remuneration based on
audit and attestation
services

Reportingcompany
Consolidated
subsidiaries
Total
B.

Fiscal year under review

Remuneration based onservices other than
auditing

Remuneration based on
audit and attestation
servicesRemuneration based onservices other than
auditing

25

–

32

–

–

–

–

–

25

–

32

–

Remuneration for the same network (KPMG member firms) as auditing certified public accountants, etc. (excluding (A))
Previous fiscal year
Not applicable.
Fiscal year under review
Not applicable.

C.

Remuneration based on other important audit and attestation services
Not applicable.

D.

Policy for determining remuneration for audits- 81 -

The Company’s policy for determining remuneration for audits by auditing certified public accountants, etc. isdetermined by taking into consideration the audit plan, audit content, and number of audit days presented by the audit
firm, and after obtaining the consent of the Audit & Supervisory Committee pursuant to Article 399, paragraph (1) of theCompanies Act.
E.

Reasons the Audit & Supervisory Committee agreed to the remuneration, etc. for the Financial Auditor
The Company’s Audit & Supervisory Committee has, based on the “Practical Guidelines for Cooperation with Financial
Auditors” published by the Japan Audit & Supervisory Board Members Association, checked and examined the detailsof the audit plan of the Financial Auditor, the status of the performance of duties by the Financial Auditor, and the basis
for calculating remuneration estimates, and as a result, the Committee has agreed to them as provided for in Article 399,
paragraph (1) of the Companies Act, because it believes that the remuneration, etc. for the Financial Auditor isappropriate and reasonable from the viewpoint of ensuring audit quality and independence of the Financial Auditor.

- 82 -

(4) Remuneration etc. of officers
1) Matters concerning the policy regarding the determination of the amount of remuneration, etc. for officers or the
method for calculation thereof
The Company made the decision regarding the policy for deciding the details of remuneration, etc. of Directors (excluding those
who are Audit & Supervisory Committee Members) for the fiscal year under review at a meeting of the Board of Directors.
Remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee Members) for the fiscal year underreview consists of basic remuneration, which is fixed monetary remuneration, and stock options with share price conditions as
medium- to long-term incentive remuneration. In consideration of their roles and duties, remuneration, etc. of Directors who are
Audit & Supervisory Committee Members is limited to basic remuneration, which is fixed monetary remuneration.
The individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee Members) for the fiscal
year under review was decided at an extraordinary meeting of the Board of Directors held after the Annual General Meeting of
Shareholders after obtaining the prior approval of all Outside Directors in accordance with the policy for determination, and theCompany judges that the details thereof are in accordance with the said policy.
Effective May 1, 2023, the Company established a Nomination and Remuneration Advisory Committee with the majority of its
members and its chairperson as independent Outside Directors, thereby partially modifying said decision-making policy. In
addition, at the Board of Directors meeting held in July 2023, the Company resolved to partially revise the policy for determining
the remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee Members) for the 17th term
onward, to provide performance-linked bonuses as short-term incentive remuneration and to grant stock remuneration-type stock
options as non-monetary individual remuneration to Directors (excluding those who are Audit & Supervisory Committee
Members) subject to approval by the General Meeting of Shareholders. The policy for deciding the details of remuneration, etc.
of Directors (excluding those who are Audit & Supervisory Committee Members) from the 17th term onward was decided at a
meeting of the Board of Directors based on the details of a report from the Nomination and Remuneration Advisory Committee
following consultations with the said Committee.
The details of the decision policy regarding the details of individual remuneration, etc. of Directors for the fiscal year underreview are as follows.
a. Policy for determining the amount or calculation method of individual remuneration, etc. of Directors regarding basic
remuneration (fixed monetary remuneration)
The amount of individual basic remuneration for Directors (excluding those who are Audit & Supervisory Committee
Members) shall be updated and determined each fiscal year within the limits of the total amount of remuneration
resolved at the General Meeting of Shareholders, taking into consideration the responsibilities and business execution
status of each Director and the Company’s performance and economic conditions.
The amount of individual basic remuneration for Directors who are Audit & Supervisory Committee Members shallbe determined by consultation of all Audit & Supervisory Committee Members within the limits of the total amountof remuneration resolved at the General Meeting of Shareholders.
b. Introduction and decision policy for performance-linked remuneration and non-monetary remuneration
With regard to individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee
Members), stock options with share price conditions may be granted as medium- to long-term incentive remuneration.
The ratio of these stock options to basic remuneration shall be decided and appropriate limits and conditions shall be
set based on the business environment, remuneration level at other companies, etc. in order to make the stock options
incentives that encourage the maximization of Directors’ performance and willingness to contribute in addition toappropriate risk taking as a result of the further strengthening of the link with shareholder value.
The introduction of a performance-linked remuneration plan or a non-monetary remuneration plan as other individual
remuneration, etc. of Directors shall require a resolution of the Board of Directors. When introducing such a
remuneration plan, the Board of Directors shall also pass a resolution on the details of the plan, the policy for
determining the amount (calculation method), and the ratio of each form of remuneration that constitutes theindividual remuneration, etc.
From May 1, 2023 onward, when introducing such a remuneration plan, the Board of Directors shall decide the detailsof the plan, the policy for determining the amount (calculation method), and the ratio of each form of remunerationthat constitutes the individual remuneration, etc. based on the details of a report from the Nomination andRemuneration Advisory Committee following consultations with the said Committee.
c. Policy for determining the timing and conditions of payment and grant of remuneration, etc. to Directors
Of the remuneration, etc. of Directors, fixed remuneration shall be paid on a monthly basis, and stock options withshare price conditions shall take into consideration the timing of payment/granting, conditions, etc. based on stock
options granted in the past, number of years in office, etc.
This shall not apply in cases where expenses to be paid as remuneration are separately incurred.
d. Matters concerning the decisions on remuneration, etc.
Individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee Members) shallbe determined by resolution of the Board of Directors, and shall be subject to approval by a “majority of the
Directors” and “all Outside Directors.”
Individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee Members) fromMay 1, 2023 onward shall be decided at a meeting of the Board of Directors based on the details of a report from theNomination and Remuneration Advisory Committee following consultations with the said Committee.

- 83 -

Activities of the Board of Directors in the process of determining remuneration etc. for Directors for the fiscal year
under review
June 21, 2022
Considered introducing a tax-qualified stock option system for Directors (excluding those who
are Audit & Supervisory Committee Members)
July 14, 2022
Resolved to revise the policy for determining remuneration, etc. for Directors, and to introduce
a tax-qualified stock option system
August 30, 2022
Resolved the amount of individual remuneration, etc. for Directors (excluding those who are
Audit & Supervisory Committee Members) and the issuance of stock options with share priceconditions

a.

b.

c.

d.

The details of the decision policy regarding the details of individual remuneration, etc. of Directors from the 17th term
onward are as follows.
Policy for determining the amount or calculation method of individual remuneration, etc. of Directors regarding basic
remuneration (fixed monetary remuneration) and performance-linked remuneration
As individual monetary remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee
Members), the Company shall pay basic remuneration (fixed monetary remuneration) and performance-linked
bonuses as short-term incentive remuneration for improving business performance in each fiscal year.
The amount of individual basic remuneration for Directors (excluding those who are Audit & Supervisory Committee
Members) shall be updated and determined each fiscal year within the limits of the total amount of remuneration
resolved at the General Meeting of Shareholders, taking into consideration the responsibilities and business execution
status of each Director and the Company’s performance and economic conditions.
The amount of individual performance-linked bonuses for Directors (excluding those who are Audit & Supervisory
Committee Members) shall be calculated within the range of 0% to 200% based on the degree of achievement against
the performance targets for each fiscal year within the limit of the total amount of remuneration resolved at theGeneral Meeting of Shareholders, and shall be updated and determined each fiscal year, taking into consideration each
Director’s position and responsibilities. The performance target for each fiscal year shall be based on consolidated net
sales, which is the most important management indicator of the Company.
The amount of individual basic remuneration for Directors who are Audit & Supervisory Committee Members shallbe determined by consultation of all Audit & Supervisory Committee Members within the limits of the total amountof remuneration resolved at the General Meeting of Shareholders.
Introduction and decision policy for non-monetary remuneration
With regard to individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee
Members), stock options with share price conditions and stock remuneration-type stock options may be granted as
medium- to long-term incentive remuneration. The ratio of these stock options to basic remuneration shall be decided
and appropriate limits and conditions shall be set based on the business environment, remuneration level at othercompanies, etc. in order to make the stock options incentives that encourage the maximization of Directors’
performance and willingness to contribute in addition to appropriate risk taking as a result of the further strengtheningof the link with shareholder value.
The introduction of a non-monetary remuneration plan as other individual remuneration, etc. of Directors shall requirea resolution of the Board of Directors. When introducing such a remuneration plan, the Board of Directors shalldecide the details of the plan, the policy for determining the amount (calculation method), and the ratio of each formof remuneration that constitutes the individual remuneration, etc. based on the details of a report from the Nomination
and Remuneration Advisory Committee following consultations with the said Committee.
Policy for determining the timing and conditions of payment and grant of remuneration, etc. to Directors
Among the remuneration, etc. for Directors, fixed remuneration shall be paid monthly, and the performance-linked
bonus to be introduced as individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory
Committee members) shall be paid in a lump sum at a certain time each year. In addition, stock options with shareprice conditions and stock remuneration-type stock options shall take into consideration the timing of
payment/granting, conditions, etc. based on stock options granted in the past, number of years in office, etc.
This shall not apply in cases where expenses to be paid as remuneration are separately incurred.
Matters concerning the decisions on remuneration, etc.
Individual remuneration, etc. of Directors (excluding those who are Audit & Supervisory Committee Members) shallbe decided at a meeting of the Board of Directors based on the details of a report from the Nomination andRemuneration Advisory Committee following consultations with the said Committee.
In the event of issuing stock options with share price conditions and stock remuneration-type stock options for
Directors (excluding those who are Audit & Supervisory Committee Members), a resolution of the General Meetingof Shareholders shall be obtained, and details of the proposal for the General Meeting of Shareholders shall bedecided by the Board of Directors based on the report of the Nomination and Remuneration Advisory Committee after
consultation with the Committee.

- 84 -

2) Total amount of remuneration, etc. for each officer category, total amount of remuneration, etc. by type, and number ofofficers to whom it is applicable
Officer category

Total amount of
remuneration(Millions of yen)

Total amount of remuneration by type (Millions of yen)Fixed remuneration

Performance-linked
remuneration

Number of applicableofficers(Number of persons)

Stock option

Director(excluding persons who are
Audit & Supervisory
Committee Members andOutside Directors)

212

145

–

67

5

Outside Director(Audit & Supervisory
Committee Member)

21

21

–

–

6

Notes: 1. The above table includes two Directors who are Audit & Supervisory Committee Members retired at the conclusionof the 15th Annual General Meeting of Shareholders held on August 30, 2022.
2. The stock options column shows the amount recorded as expenses in the fiscal year under review related to shareacquisition rights as stock options with share price conditions for Directors (excluding those who are Audit &Supervisory Committee Members).
3. The total annual amount of remuneration paid to Directors (excluding those who are Audit & Supervisory
Committee Members) shall not exceed ¥300 million, as resolved at the Extraordinary General Meeting of
Shareholders held on January 30, 2019. Number of Directors (excluding those who are Audit & Supervisory
Committee Members) at the conclusion of said General Meeting of Shareholders was five.
4. The total annual amount of remuneration paid to Directors who are Audit & Supervisory Committee Members shallnot exceed ¥50 million, as resolved at the Extraordinary General Meeting of Shareholders held on January 30, 2019.
Number of Directors who are Audit & Supervisory Committee Members at the conclusion of said General Meetingof Shareholders was four.
5. The maximum amount of remuneration for share acquisition rights as stock options with share price conditions for
Directors (excluding those who are Audit & Supervisory Committee Members) was resolved at the 15th Annual
General Meeting of Shareholders held on August 30, 2022, separate from the maximum amount of remuneration
mentioned in 3. above, to be up to ¥250 million (the total number of these share acquisition rights issued within one
year from the date of said General Meeting of Shareholders is limited to 5,000). Number of Directors (excluding
those who are Audit & Supervisory Committee Members) at the conclusion of said General Meeting of Shareholders
was five. The content of the share acquisition rights issued in the fiscal year under review based on the resolution of
the General Meeting of Shareholders is as described in “IV. Information About Reporting Company, 1. Company’s
shares, etc., (2) Share acquisition rights, 1) Description of stock-option system, G. 9th Share Acquisition Rights.”

3) Total amount of remuneration, etc. for each officer of the reporting company
Since no Director is paid in excess of a total of ¥100 million in remuneration etc., this information is not listed.
4) Important items from among the employee salary portion of an officer who concurrently serves as an employee
Not applicable.
5) Matters concerning incentives for Directors
As a means to incentivize the Directors apart from the remuneration system for Directors described above, the Company has
introduced Performance Target-Linked Stock Acquisition Rights (Stock Options with Charge) which are offered on the condition
that performance targets, which use consolidated net sales as an indicator, are achieved, for Directors (excluding those who are
Audit & Supervisory Committee Members) and Executive Officers of the Company, aiming to provide an incentive to improve
the Company’s shareholder value and corporate value over the medium- to long-term; and Directors (excluding those who are
Audit & Supervisory Committee Members) and Executive Officers acquire the stock acquisition rights based on their own
investment decisions.

- 85 -

(5) Stock held
1) Criteria and approach to classification of investment stocks
Regarding the classification of investment stocks held for pure investment purposes and investment stocks held for purposes
other than pure investment purposes, the Company classifies those investment stocks held solely for the purpose of profitingfrom fluctuations of stock value or dividends from stocks as investment stocks held for pure investment purposes, and classifies
investment stocks other than the foregoing to be investment stocks held for purposes other than pure investment purposes.
2) Investment stocks held for purposes other than pure investmenta. Holding policy, method of verifying the rationale behind the holdings, and details of verification by the Board of
Directors, etc. regarding the suitability of holding each stock
When considering the acquisition of stock, the Company verifies the rationale for holding it and whether to hold it or
not based on the matters specified below.
 Whether it will lead to the enhancement of the Company’s corporate value in the medium to long term, such as there
being business synergy, etc.
 Whether it will have a negative impact on the Company’s financial soundness Whether the holding ratio and acquisition amount exceed the range deemed reasonably necessary
b. Number of issues and balance sheet amount
Number of
Total carrying amount on theissuesbalance sheet (Millions of yen)
(Issues)
Unlisted shares

11

2,939

Shares other than unlisted
shares1

65(Issues whose number of shares increased in the fiscal year under review)
Number of Total acquisition price related
issuesto the increase in the number of Reason for the increase in the number of shares(Issues)shares (Millions of yen)
Unlisted shares

5

153

Shares other than unlisted
shares

––To strengthen business partnership–(Issues whose number of shares decreased in the fiscal year under review)Not applicable.
c. Information on the number of shares for each specified investment stock and deemed holding stock, carrying amounton the balance sheet, etc.
Fiscal year Previous fiscal
under review
year
Number of
Number of
WhethersharessharesPurpose of holding, summary of business partnership, or not the(Shares)(Shares)Issue nameetc., quantitative effect of holding
Company
Carrying
Carrying
and reasons for the increase in the number of sharesowns
amount on the amount on thesharesbalance sheet balance sheet(Millions of (Millions of
yen)
yen)
(Purpose of holding) To strengthen business
366,200
366,200
partnership.
Unipos Inc.
(Summary of business partnership) Sales support suchNone
65
52 as provision of sales and marketing know-how(Quantitative effect of holding) ** Since it is difficult to quantitatively describe the effect of holding specific investment stocks, we will describe the methodof verifying the rationale behind the holdings. Each term, the Company verifies the effects of holding individual stock, andconfirms that all of the stock it holds are held for purposes that are in line with the holding policy.

- 86 -

3) Investment stocks held for pure investment purposes
Fiscal year under review
Category

Number of issues(Issues)

Previous fiscal year

Total carrying amount
Total carrying amount
Number of issues
on the balance sheeton the balance sheet(Issues)(Millions of yen)
(Millions of yen)

Unlisted shares

–

–

–

–

Shares other than unlisted
shares

–

–

1

1,109

Fiscal year under review
Category

Total amount of dividend
Total gain/loss on sale
income(Millions of yen)
(Millions of yen)

Total gain/loss on
valuation(Millions of yen)

Unlisted shares

–

–

–

Shares other than unlisted
shares–291–4) Investment stocks for which the purpose of holding was changed from pure investment to purposes other than pureinvestment during the fiscal year under review
Not applicable.
5) Investment stocks for which the purpose of holding was changed from purposes other than pure investment to pureinvestment during the fiscal year under review
Not applicable.

- 87 -

V. Accounting
1. Method of preparing consolidated financial statements and non-consolidated financial statements(1) The Company’s consolidated financial statements are prepared in accordance with the “Regulation on Terminology, Forms
and Preparation Methods of Consolidated Financial Statements” (Ministry of Finance Order No. 28 of 1976).
(2) The Company’s non-consolidated financial statements are prepared in accordance with the “Regulation on Terminology,
Forms, and Preparation Methods of Financial Statements” (Ministry of Finance Order No. 59 of 1963, hereinafter referred toas “Regulation on Financial Statements”).
In addition, the Company falls under the category of special company submitting financial statements, and prepares its nonconsolidated financial statements in accordance with Article 127 of the Regulation on Financial Statements.

2. About audit attestation
In accordance with the provisions of Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act, KPMG AZSALLC has audited the consolidated financial statements for the fiscal year (from June 1, 2022 to May 31, 2023) and the nonconsolidated financial statements for the fiscal year (from June 1, 2022 to May 31, 2023).

3. Special efforts to ensure the appropriateness of consolidated financial statements, etc.
The Company makes special efforts to ensure the appropriateness of its consolidated financial statements, etc. Specifically, inorder to properly understand the details of accounting standards, etc. and establish a system that can appropriately respond tochanges in accounting standards, etc., we participate in training sessions on changes in accounting standards, etc. held by audit
firms and other external organizations, and hold discussions with audit firms as necessary.

- 88 -

1 Consolidated financial statements and other information(1) Consolidated financial statements
1) Consolidated balance sheet(Millions of yen)
As of May 31, 2022
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Software
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Leasehold deposits
Deferred tax assets
Other
Total investments and other assets
Total non-current assets
Total assets*1*2- 89 -

15,432
756
478
194
(3)
16,856

As of May 31, 2023

*1

21,114
1,180
604
341
(32)
23,207

1,227
(582)
645
339
(178)
161
806

1,281
(717)
564
446
(240)
206
770

917
229
0
1,147

827
706
0
1,533

6,262
793
416
10
7,481
9,435
26,292

*2

3,705
885
595
502
5,689
7,993
31,200(Millions of yen)
As of May 31, 2022
Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Accounts payable - other
Income taxes payable
Accrued consumption taxes
Advances received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets*3- 90 -

253
477
1,081
380
398
8,199
487
229
11,507

As of May 31, 2023

*3

338
558
1,929
206
410
10,729601
207
14,982

2,547
144
2,691
14,199

2,838
188
3,027
18,009

6,426
4,023
1,384
(1)
11,832

6,582
4,178
1,695
(2)
12,454

85
26
112
142
5
12,093
26,292

156
49
206
457
72
13,19031,2002) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
Fiscal year ended
May 31, 2022
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Subsidy income
Gain on sale of investment securities
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission expenses
Foreign exchange losses
Loss on investments in investment partnerships
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights
Gain on sale of shares of subsidiaries and associates
Gain on change in equity
Gain on step acquisitions
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on valuation of investment securities
Impairment losses
Total extraordinary losses
Profit (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss)
Loss attributable to non-controlling interests
Profit (loss) attributable to owners of parent

*1

*2

*3
*4

- 91 -

Fiscal year ended
May 31, 2023

20,4202,515
17,904
17,272631*1*2

25,5103,683
21,827
21,627
199

0
33
1
979
26
1,042

4
–
14
291
18
328

10
7
9
20

13
7
18
38

609

287

47
705
968

39
405
122

0
–
105
–
105

0
619
–
196
817

16
140
9
165
908
353
(296)
56
852
(5)
857

*3
*4

54
980
–
1,035
(96)
264
(203)
60
(156)
(15)
(141)

Consolidated statement of comprehensive income(Millions of yen)
Fiscal year ended
May 31, 2022
Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests*- 92 -

Fiscal year ended
May 31, 2023
852

(156)

(1,536)25(1,510)
(658)

70
22
93
(63)

*

(652)

(48)

(5)

(15)

3) Consolidated statement of changes in equity
Fiscal year ended May 31, 2022
(Millions of yen)
Shareholders’ equity
Treasury shares

Total
shareholders’equity526(0)10,892

113

–

–

226

–

–

–

(1)

(1)

Purchase of shares of
consolidated subsidiaries

–

(143)

–

–

(143)

Profit attributable to ownersof parent

–

–

857

–

857

Net changes in items otherthan shareholders’ equity

–

–

–

–

–

Total changes during period

113

(30)

857

(1)

939

6,426

4,023

1,384

(1)

11,832

Share capital

Capital surplus

6,312

4,053

113

Purchase of treasury shares

Balance at beginning of period

Retained earnings

Changes during period
Issuance of new shares

Balance at end of period

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period

Foreigncurrencytranslation
adjustment

Total
accumulated
othercomprehensive
incomeShare
acquisitionrightsNon-controlling
Total net assetsinterests

1,622

1

1,623

65

2

12,584Issuance of new shares

–

–

–

–

–

226

Purchase of treasury shares

–

–

–

–

–

(1)

Purchase of shares of
consolidated subsidiaries

–

–

–

–

–

(143)

Profit attributable to ownersof parent

–

–

–

–

–

857

Net changes in items otherthan shareholders’ equity(1,536)25(1,510)76

3(1,430)Total changes during period(1,536)25(1,510)

76

3

(491)

85

26

112

142

5

12,093

Changes during period

Balance at end of period- 93 -

Fiscal year ended May 31, 2023
(Millions of yen)
Shareholders’ equity
Treasury shares

Total
shareholders’equity1,384(1)11,832

155

–

–

311

–

–

–

(0)

(0)

Change in scope of equity
method

–

–

452

–

452

Loss attributable to ownersof parent

–

–

(141)

–

(141)

Net changes in items otherthan shareholders’ equity

–

–

–

–

–

Total changes during period

155

155

310

(0)

622

6,582

4,178

1,695

(2)

12,454

Share capital

Capital surplus

6,426

4,023

155

Purchase of treasury shares

Balance at beginning of period

Retained earnings

Changes during period
Issuance of new shares

Balance at end of period

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period

Foreigncurrencytranslation
adjustment

Total
accumulated
othercomprehensive
incomeShare
acquisitionrightsNon-controlling
Total net assetsinterests

85

26

112

142

5

12,093Issuance of new shares

–

–

–

–

–

311

Purchase of treasury shares

–

–

–

–

–

(0)

Change in scope of equity
method

–

–

–

–

–

452

Loss attributable to ownersof parent

–

–

–

–

–

(141)

Net changes in items otherthan shareholders’ equity

70

22

93

314

66

474

Total changes during period

70

22

93

314

66

1,097

Balance at end of period

156

49

206

457

72

13,190Changes during period- 94 -

4) Consolidated statement of cash flows(Millions of yen)
Fiscal year ended
May 31, 2022
Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Amortization of goodwill
Impairment losses
Loss (gain) on sale and retirement of non-current assets
Share-based payment expenses
Gain on reversal of share acquisition rights
Loss (gain) on sale of shares of subsidiaries andassociates
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on investments in investment partnerships
Share of loss (profit) of entities accounted for using
equity method
Loss (gain) on change in equity
Loss (gain) on step acquisitions
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Interest and dividend income
Interest expenses
Commission expenses
Decrease (increase) in trade receivables
Decrease (increase) in prepaid expenses
Decrease (increase) in other assets
Increase (decrease) in trade payables
Increase (decrease) in accounts payable - other
Increase (decrease) in advances received
Increase (decrease) in accrued consumption taxes
Increase (decrease) in other liabilities
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities- 95 -

Fiscal year ended
May 31, 2023

908
768
25
9
16
72
(0)

(96)
898
39
–
54
296
(0)

–

(619)

(979)
140
20

(291)
980
38

609

287

(105)
–
(1)
127
(34)
10
0
(183)
12
(76)
57
(90)
1,479
131
237
92
3,250
34
(16)
(144)
3,123

–
(196)
29
113
(4)
13
–
(391)
(101)
(118)
71
780
2,423
15
(6)
111
4,328
4
(13)
(471)
3,848

(Millions of yen)
Fiscal year ended
May 31, 2022
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Purchase of shares of subsidiaries and associates
Proceeds from sale of shares of subsidiaries andassociates
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Payments for investments in capital
Payments of leasehold deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of shares
Proceeds from issuance of share acquisition rights
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Other, net
Net cash provided by (used in) financing 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
Cash and cash equivalents at end of period

Fiscal year ended
May 31, 2023

(468)
(453)
(2,555)
3,224
(500)

(200)
(480)
(359)
1,406
–

–

1,601

(61)

–

–

*1

- 96 -

*2

46

–
(202)
2
(1,014)

(500)
(214)
64
1,364

(200)
3,250
(2,190)
209
21

(140)
900
(527)
307
22

(143)

–

(37)
909

(39)
523

3

4

3,021
12,223
15,245

5,739
15,24520,985*1

Notes to the consolidated financial statements
Basis of preparation of consolidated financial statements
1. Disclosure of scope of consolidation
Number of consolidated subsidiaries:
6・ Names of consolidated subsidiaries:
Sansan Global Pte. Ltd.
Sansan Corporation
Sansan Global Development Center, Inc.
logmi, Inc.
CREATIVE SURVEY INC.
One other company
Change in scope of consolidation
Included in the scope of consolidation in the fiscal year under review are Sansan Global Development Center, Inc.,due to it being established, and CREATIVE SURVEY INC., which was an equity method affiliate in which
additional shares were acquired.
2. Disclosure about application of equity method
Number of affiliates accounted for using equity method:0
Change in scope of equity method
Excluded from the scope of the equity method in the fiscal year under review are CREATIVE SURVEY INC., due
to additional shares being acquired and included in the scope of consolidation, SATORI, Inc., due to a portion of theshares being sold, and EventHub Co., Ltd., due to all of the shares being sold.
3. Disclosure about fiscal years, etc. of consolidated subsidiaries
The end of the fiscal year of all consolidated subsidiaries coincides with the balance sheet date of the consolidated
financial statements of the Company.
4. Disclosure of accounting policies(1) Accounting policy for measuring significant assets
A. Securities
Other securities (available-for-sale securities)
Securities other than shares with no market price, etc.
Stated at the quoted market price. Net unrealized gains or losses on these securities are reported as a separate
component of net assets at a net-of-tax amount. Cost of sales is determined using the moving-average method.
Shares with no market price, etc.
Stated at cost using the moving-average method
B. Inventories
Work in process
Stated at cost using the identified cost method (consolidated balance sheet amounts are determined based on themethod of writing down the book value in accordance with the declining in profitability of assets)(2) Accounting policy for depreciation of significant assets
A. Property, plant and equipment (excluding leased assets)
Facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated using the straightline method, and other property, plant and equipment are depreciated using the declining-balance method.
B. Intangible assets (excluding leased assets)
Amortized using the straight-line method. Software for internal use is amortized using the straight-line method
over its useful life as internally determined (three years).
C. Leased assets
Leased assets related to finance lease transactions that transfer ownership
Leased assets related to finance lease transactions that transfer ownership are depreciated by the same approach as
the depreciation method applied to non-current assets owned by lessee.
Leased assets related to finance lease transactions that do not transfer ownership
Leased assets related to finance lease transactions that do not transfer ownership are depreciated using the straightline method assuming the lease periods as useful lives without residual value.
(3) Accounting policy for significant deferred assets
Share issuance costs
Share issuance costs are fully recognized as expenses when incurred.
(4) Accounting policy for significant provisions
A. Allowance for doubtful accounts
To prepare for losses from bad debts, an estimated uncollectible amount is provided by using the historical rate ofcredit loss in the case of general receivables, or based on individual consideration of recoverability in the case of
specific receivables such as highly doubtful receivables.
B. Provision for bonuses- 97 -

A reserve for the employee bonus payment is provided by recording the estimated amounts of the future payments
attributed to the fiscal year under review.
(5) Method and period for amortization of goodwill
Goodwill is amortized over a ten-year period using the straight-line method.
(6) Accounting policy for revenue and expense
Sansan/Bill One Business
The services to be transferred over a certain period include sales DX service Sansan and cloud-based invoice
management solution Bill One, and as these main services are provided throughout the course of the contract
period, revenue is recognized by apportioning the transaction price based on the contract with the client over theservice provision period set forth in the contract.
In addition, for the pay as you go portion of Sansan business cards and Bill One invoice data conversion, theamount calculated in accordance with the number of subject business cards or invoices, and the unit price based on
the contract is recognized as revenue.
Eight Business
The services to be transferred over a certain period include B2C business card management service for individuals
Eight Premium, B2B business card management service for companies Eight Team, as well as recruitment-related
services and advertisement distribution services. As these are services that are provided over the course of thecontract period, the total transaction price under the contract with the client for the service provision period
prescribed in the contract is apportioned and recognized as revenue.
Goods or services that are to be transferred at one time include B2B recruitment-related services, advertising
services, and various business event services.
In the event of an advertisement bring created in the advertising service and provided to the client, revenue isrecognized at the time the advertisement is transferred to the client. In addition, in the event business service, as
goods or services are transferred to the client through the holding of an event, revenue is recognized on eachoccasion that an event is held.
(7) Accounting policy for translation of significant foreign currency assets or liabilities into Japanese yen
Monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the spot
exchange rate prevailing as of the consolidated balance sheet date, and differences arising from the foreignexchange are recognized as gains or losses. Assets and liabilities of the foreign subsidiaries are translated into
Japanese yen at the spot exchange rate prevailing as of the consolidated balance sheet date, while revenues andexpenses of foreign subsidiaries are translated into Japanese yen at the average exchange rate during the fiscal year
under review. Differences arising from these translations are included in foreign currency translation adjustment
under net assets.
(8) Scope of cash and cash equivalents in consolidated statement of cash flows
Cash and cash equivalents in the consolidated statement of cash flows are comprised of cash in hand, demand
deposits and short-term investments with terms of redemption or maturities of three months or less from theacquisition date, readily convertible into cash and are exposed to only an insignificant risk of fluctuations in value.

- 98 -

Significant accounting estimates
Recoverability of deferred tax assets(1) Amounts recorded in the consolidated financial statements for the fiscal year under review(Millions of yen)
As of May 31, 2022

As of May 31, 2023

Deferred tax assets (before offset)
454658(2) Other information to assist understanding of the content of estimates
Deferred tax assets have been calculated using estimates of the future timing at which taxable income will be
generated and the amounts thereof based on business plans.
In estimating taxable income, the Company makes estimates based on certain assumptions regarding the externalmanagement environment and other external factors, as well the Group’s budget and other internal factors, inparticular major expense items such as net sales, personnel expenses, and advertising expenses.
(3) Effect on the consolidated financial statements for the next fiscal year
Those estimates may be affected by uncertain future changes in economic conditions, etc. If the timing at whentaxable income is generated and the amounts thereof differ from the estimates, the amount of deferred tax assets
recognized in the consolidated financial statements for the next fiscal year may be significantly affected.
Valuation of goodwill(1) Amounts recorded in the consolidated financial statements for the fiscal year under review(Millions of yen)
As of May 31, 2022

As of May 31, 2023

Goodwill
229706(2) Other information to assist understanding of the content of estimates
In the case where a test is made for indicators of impairment and indicators of impairment are identified, the Company
determines whether recognition of impairment loss on goodwill is necessary or not by calculating the undiscounted
future cash flows for the period corresponding to the remaining goodwill amortization period based on the businessplan and comparing that with the amount corresponding to the net assets multiplied by the Company’s equity ratio,
and the amount if goodwill is added. If it is determined that recognition of impairment loss is necessary, the carrying
amount of that goodwill is reduced to the recoverable amount and the amount of the reduction is recognized as theimpairment loss. In the fiscal year under review, indicators of impairment were not identified for goodwill.
(3) Effect on the consolidated financial statements for the next fiscal year
This estimate could be affected by such unpredictable changes as the business environment in the future, and if theestimated future cash flow were to deteriorate, it may become necessary to recognize impairment loss in the
consolidated financial statements in the next fiscal year.
Valuation of investment securities(1) Amounts recorded in the consolidated financial statements for the fiscal year under review(Millions of yen)
As of May 31, 2022

As of May 31, 2023

Investment securities (unlisted
4,643
2,939
stocks)
These amounts include ¥1,865 million as of May 31, 2022 and ¥250 million as of May 31, 2023 as investment into
SATORI, Inc., which is a major investee of the Company.
(2) Other information to assist understanding of the content of estimates
The Company determines whether or not there is any impairment of excess earning power when making a valuation of
investment securities by grasping the state of investment achievement by performing an actual-result comparison on
the business plan that was formulated at the time of investment and considering the external economic environment,
etc. to assess the attainability of future business plans.
With regard to investment into SATORI, Inc., which is a major investee company, the Company assessed theattainability of SATORI, Inc.’s business plans by taking into consideration its external economic environment, major
trends for KPI, net sales, etc. and its growth rate, and determined whether or not there was any impairment of excess
earning power. A loss on valuation of ¥980 million was recorded for stocks of SATORI, Inc., for which impairment ofexcess earning power was recognized.
In the event that the investee’s actual results, etc. falls below the plan formulated at the time of investment, excess
earning power will be deemed to have been impaired, and impairment accounting may be performed.
(3) Effect on the consolidated financial statements for the next fiscal year
Concerning this estimate, in the event that the investee’s actual results, etc. falls below the plan formulated at the timeof investment, excess earning power will be deemed to have been impaired, impairment accounting may be
performed, and recognition of loss on valuation of investment securities may be required in the consolidated financial
statements for the next fiscal year.

- 99 -

Changes in accounting policies
Application of Implementation Guidance on Accounting Standard for Fair Value Measurement
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021) effective from the beginning of the fiscal year under review, and it has applied the new
accounting policy provided for by the Implementation Guidance on Accounting Standard for Fair Value Measurement,
prospectively in accordance with the transitional measures provided for in paragraph 27-2 of the Implementation Guidanceon Accounting Standard for Fair Value Measurement. This application has no effect on the consolidated financial
statements for the fiscal year under review.
In addition, in accordance with paragraph 27-3 of the Implementation Guidance on Accounting Standard for Fair Value
Measurement, the Company has not presented notes to investment trusts on items for the previous fiscal year, such as thebreakdown of the fair value of financial instruments by level in the notes of “Financial Instruments.”
Additional information
Treatment regarding trust-type stock options
The National Tax Agency expressed their view that at the time employees, etc. exercise trust-type stock options and acquire
shares, this will be deemed to be material wages by companies in the “Taxation of Stock Options (Q&A)” on May 30,
2023. They also expressed their view that companies must pay withholding income tax for trust-type stock options thathave already been exercised in the past.
In the fiscal year under review, the Company recorded the amount equivalent to the required payment for withholding
income tax of ¥87 million as other under current liabilities, and recorded corresponding receivables as other under current
assets.
Furthermore, the portion of the increased additional charges to employees, etc. in the Group will be compensated withcash or paid as alternative wages, and together with expenses incidental to this, the Company recorded selling, general andadministrative expenses of ¥499 million.

- 100 -

Notes to consolidated balance sheet*1 Balance of contract assets and liabilities generated from contracts with customers
Contract assets generated from contracts with customers are included in “accounts receivable - trade.” The amount ofcontract assets is described in “Notes to the consolidated financial statements (Revenue recognition) (3) 1) Balance
etc. of contract assets and liabilities” of the consolidated financial statements.
*2

Matters concerning affiliate companies are as follows.
(Millions of yen)
As of May 31, 2022

Investment securities (shares)*3

As of May 31, 2023

2,107

–

Balance of contract liabilities generated from contracts with customers
Contract liabilities generated from contracts with customers are included in “advances received.” The amount ofcontract liabilities is described in “Notes to the consolidated financial statements (Revenue recognition) (3) 1) Balance
etc. of contract assets and liabilities” of the consolidated financial statements.

Notes to consolidated statement of income*1 Revenue from contracts with customers
Net sales are not described via categorization into revenue from contracts with customers and other revenue. The
amount of revenue from contracts with customers is described in “Notes to the consolidated financial statements(Revenue recognition) (1) Information on disaggregation of revenue from contracts with customers” of the consolidated
financial statements.
*2

The main expense items of selling, general and administrative expenses and their amounts are as follows.
(Millions of yen)
Fiscal year ended May 31, 2022 Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)
Advertising expenses
2,969
3,306
Salaries, allowances and bonuses
5,856
7,621
Provision for bonuses

*3

901

1,134

The details of loss on retirement of non-current assets are as follows.
(Millions of yen)
Fiscal year ended May 31, 2022 Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)

Buildings and structures

4

4

Software

11

49

Others

–

0

16

54

Total
*4

Loss on valuation of investment securities
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
Of the securities held by the Company that are classified as investment securities, impairment accounting was
performed for those whose real value has declined significantly.
Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
Of the securities held by the Company that are classified as investment securities, impairment accounting was
performed for SATORI, Inc. due to its real value having declined significantly.

- 101 -

Notes to consolidated statement of comprehensive income*
Reclassification adjustments relating to other comprehensive income(Millions of yen)
Fiscal year ended May 31, 2022 Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)
Valuation difference on availablefor-sale securities:
Amount for the fiscal year underreview
Gross adjustments(1,360)

385

(866)

(291)

Before tax effect adjustments(2,226)

94

690

23

(1,536)

70

25

22

25

22

(1,510)93

Amount of tax effect
Valuation difference on
available-for-sale securities
Foreign currency translation
adjustment:
Amount for the fiscal year underreview
Foreign currency translation
adjustment
Total other comprehensive income

Notes to consolidated statement of changes in equity
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
1. Class and total number of issued shares
Number of shares at Increased number
beginning of theof shares for the
fiscal year underfiscal year underreview (Shares)
review (Shares)

Decreased numberof shares for the
fiscal year underreview (Shares)

Number of shares at
end of the fiscal
year under review(Shares)Issued shares
Common shares (Note 1)
Total

31,183,645

93,779,951–

124,963,596

31,183,645

93,779,951–

124,963,596

40

696

–

736

40

696

–

736

Treasury shares
Common shares (Note 2)
Total

Notes: 1. The increase in common shares was due to the exercise of share acquisition rights (133,964 shares) and the 4-for-1 stock
split conducted on December 1, 2021 (93,645,987 shares).
2. The increase in treasury shares of common shares was due to the buyback of shares less than one unit (192 shares) and the
4-for-1 stock split conducted on December 1, 2021 (504 shares).
2.

Category

Reportingcompany

Matters concerning share acquisition rights
Class of shares Number of shares to be acquired upon exercise of theshare acquisition rights (Shares)
to be acquired
Balance at
Breakdown of share acquisition upon exercise Beginning of Increase for Decrease for End of period end of periodrightsof the share period of the the fiscal
the fiscal of the fiscal (Millions ofacquisitionyen)fiscal year year under year under year underrightsunder review
review
review
review
2nd share acquisition rights as
stock options

–

–

–

–

–

1

4th share acquisition rights as
stock options

–

–

–

–

–

7

5th share acquisition rights as
stock options

–

–

–

–

–

49

6th share acquisition rights as
stock options

–

–

–

–

–

83

–

142

–
–
–
–
Total
Note: The first day of the exercise period for the 6th share acquisition rights as stock options is yet to arrive.

- 102 -

3.

Dividends
Not applicable.

Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
1. Class and total number of issued shares
Number of shares at Increased number
beginning of theof shares for the
fiscal year underfiscal year underreview (Shares)
review (Shares)

Decreased numberof shares for the
fiscal year underreview (Shares)

Number of shares at
end of the fiscal
year under review(Shares)Issued shares
Common shares (Note 1)
Total

124,963,596

446,988–

125,410,584

124,963,596

446,988–

125,410,584

736

135

–

871

736

135

–

871

Treasury shares
Common shares (Note 2)
Total

Notes: 1. The increase in common shares was due to the exercise of share acquisition rights.
2. The increase in the number of treasury shares of common shares was due to the buyback of shares of less than one unit.
2.

Category

Matters concerning share acquisition rights
Class of shares Number of shares to be acquired upon exercise of theshare acquisition rights (Shares)
to be acquired
Balance at
Breakdown of share acquisition upon exercise Beginning of Increase for Decrease for End of period end of periodrightsof the share period of the the fiscal
the fiscal of the fiscal (Millions ofacquisitionyen)fiscal year year under year under year underrightsunder review
review
review
review

Reportingcompany

4th share acquisition rights as
stock options

–

–

–

–

–

6

5th share acquisition rights as
stock options

–

–

–

–

–

48

6th share acquisition rights as
stock options

–

–

–

–

–

103

7th share acquisition rights as
stock options

–

–

–

–

–

128

8th share acquisition rights as
stock options

–

–

–

–

–

102

9th share acquisition rights as
stock options

–

–

–

–

–

67

–

–

–

–

–

457

Total

Note: The first day of the exercise period for the 7th, 8th and 9th share acquisition rights as stock options are yet to arrive.
3.

Dividends
Not applicable.

- 103 -

Notes to consolidated statement of cash flows*1 Reconciliation of closing balance of cash and cash equivalents and the related account on the consolidated balance
sheet(Millions of yen)
Fiscal year ended May 31, 2022 Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)
Cash and deposits
Time deposits with maturity over threemonthsCash and cash equivalents*2

15,432

21,114

(187)

(129)

15,24520,985Major components of assets and liabilities of consolidated subsidiaries acquired by purchase of sharesFiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
Not applicable.
Fiscal year ended May 31, 2023
The breakdown of assets and liabilities of CREATIVE SURVEY INC., which was newly consolidated due to theacquisition of shares, at the start of its consolidation, and the relationship between the acquisition cost of the company’s
shares and the revenue due to the acquisition of the shares (net amount) is as follows.

Current assets(Millions of yen)499
0

Non-current assets
Goodwill

516

Current liabilities(278)

Non-controlling interests

(81)
656

Subtotal(59)

Equity method evaluation
amount until acquisition ofcontrolGain on step acquisitions(196)

Acquisition amount

400

Cash and cash equivalents

(446)
46

Net: Revenue from acquisition

Lease transactions
The information is omitted as it is immaterial.

- 104 -

Financial instruments
1. Matters relating to financial instruments(1) Policies for financial instruments
The policy of the Group is to limit its investment of funds to short-term deposits, mainly those with no risk on lossof principal, and the Group does not make speculative transactions, including derivative transactions. Financing
requirements shall be met by using the Company’s own capital or borrowing funds from financial institutions.
(2) Details of financial instruments and their risks
Accounts receivable - trade, which refers to the amount owed to us through trade, are exposed to the credit risk ofcustomers.
Investment securities are shares of companies with which we have business relationships that are held as othersecurities and are exposed to the credit risk of the issuer.
Leasehold deposits are mainly leasehold deposits for the head office and exposed to the credit risk of lessors.
Accounts payable - trade and accounts payable - other classified as operating payables are all due within one year.
Long-term borrowings are mainly taken out to fund working capital requirements and the longest maturity fromthe date of the balance sheet is four years and nine months.
(3) System for managing risks associated with financial instruments
1) Credit risk management (risks associated with non-performance of contract by counterparties)
For accounts receivable-trade, which refers to the amount owed to us through trade, the Group will ensure that the
Finance and Accounting Division will maintain regular contact with the business units regarding outstandingbalances and status of payments for each customer, and make every effort to quickly identify and reduce
collection concerns arising from the deterioration of our customers’ financial status.
For investment securities, financial conditions of issuers are assessed on a regular basis.
For leasehold deposits, the responsible department monitors statuses as necessary to seek for an early
identification of collectability concern in order to mitigate risk of non-performance caused by deteriorated
financial condition of counterparties and other factors.
2) Management of liquidity risks associated with fund procurement (risks associated with non-repayment on due
date)
The administrative division manages liquidity risk by preparing and renewing cash management plans in a timely
manner while maintaining liquidity in hand.
(4) Supplemental information on fair values of financial instruments
Because the calculation of the fair value of financial instruments incorporates variable factors, the values mayvary in case where different assumptions, etc. are used.
2. Matters relating to fair value of financial instruments
The table below shows the amounts of financial instruments recorded in the consolidated balance sheet, their fairvalues and the differences between them. It should be noted that shares with no market price, etc., are not included in
the table below. (Refer to (Note 1))
As of May 31, 2022
(Millions of yen)
Consolidated balance
sheet amount

Fair value

Difference

Investment securities

1,161

1,161

–

Leasehold deposits

793

789

(3)

Total assets

1,954

1,951

(3)

Long-term borrowings
(*2)

3,024

3,024

0

Total liabilities

3,024

3,024

0

(*1) “Cash and deposits,” “accounts receivable - trade,” “accounts payable - trade,” and “accounts payable - other” havebeen omitted because they are cash and have a market value that is close to the book value due to being settled in ashort period of time.
(*2) The current portion of long-term borrowings are included.

- 105 -

As of May 31, 2023
(Millions of yen)
Consolidated balance
sheet amount

Fair value

Difference

Investment securities

65

65

–

Leasehold deposits

885

880

(4)

Total assets

950

946

(4)

Long-term borrowings
(*2)

3,397

3,391

(5)

Total liabilities

3,397

3,391

(5)

(*1) “Cash and deposits,” “accounts receivable - trade,” “accounts payable - trade,” and “accounts payable - other” havebeen omitted because they are cash and have a market value that is close to the book value due to being settled in ashort period of time.
(*2) The current portion of long-term borrowings are included.
Notes: 1. Shares with no market price, etc.
(Millions of yen)
Category

As of May 31, 2022

As of May 31, 2023

2,535

2,939

457

690

2,107

–

–

10

Investment securities
Other securities (unlisted shares)
Investments in investment limited
partnerships
Shares of subsidiaries andassociates (unlisted shares)
J-KISS share acquisition rights

These are shares, etc. that do not have a market value, so are not subject to fair value disclosure.
2. Redemption schedule of receivables after the consolidated balance sheet date
As of May 31, 2022
(Millions of yen)
Within 1 year
Cash and deposits

After 1 year through After 5 years through5 years
10 years

Over 10 years

15,432–––

Accounts receivable trade

756

–

–

–

Leasehold deposits

271

515

5

–

Total

16,460515

5–

As of May 31, 2023
(Millions of yen)
Within 1 year

After 1 year through After 5 years through5 years
10 years

Over 10 years

Cash and deposits

21,114–––

Accounts receivable trade

1,180

–

–

–

Leasehold deposits

175

676

33

–

Total

22,469676

33–- 106 -

3. Repayment schedule of long-term borrowings after the consolidated balance sheet date
As of May 31, 2022
(Millions of yen)
Within 1 year

After 1 year
through 2
years

After 2 years After 3 years After 4 years
through 3
through 4
through 5
Over 5 years
years
years
years

Long-term
borrowings

477

458

424

409

1,254

–

Total

477

458

424

409

1,254

–

As of May 31, 2023
(Millions of yen)
Within 1 year

After 1 year
through 2
years

After 2 years After 3 years After 4 years
through 3
through 4
through 5
Over 5 years
years
years
years

Long-term
borrowings

558

525

510

1,354

448

–

Total

558

525

510

1,354

448

–

3. Matters relating to the breakdown, etc. of the market value of financial instruments for each level
The market value of financial instruments is categorized into the following three levels, in accordance with theobservability and importance of the inputs relating to the calculation of market value.
Level 1 market price: Of the inputs relating to the calculation of observable market price, the market price calculated
in accordance with the market price of the asset or liability established in an active market thatis subject to the calculation of market value
Level 2 market price: Of the inputs relating to the calculation of observable market value, the market value calculated
through the use of inputs relating to the calculation of market value other than the inputs oflevel 1
Level 3 market price: The market price calculated through the use of inputs relating to the calculation of nonobservable market value
In the event of a plurality of inputs that have an important impact on the calculation of market price being used, of therespective levels to which these inputs belong, the market price is categorized to the lowest priority level in thecalculation of market value.
(1) Financial instruments recorded at market value in the consolidated balance sheet
As of May 31, 2022
(Millions of yen)
Fair value
Category
Level 1

Level 2

Level 3

Total

Investment securities
Other securities(available-for-salesecurities)
Shares:

1,161

–

–

1,161

Total assets

1,161

–

–

1,161

As of May 31, 2023
(Millions of yen)
Fair value
Category
Level 1

Level 2

Level 3

Total

Investment securities
Other securities(available-for-salesecurities)
Shares:

65

–

–

65

Total assets

65

–

–

65

- 107 -

(2) Financial instruments other than those recorded at market value in the consolidated balance sheet
As of May 31, 2022
(Millions of yen)
Fair value
Category
Level 1

Level 2

Level 3

Total

Leasehold deposits

–

789

–

789

Total assets

–

789

–

789

Long-term borrowings

–

3,024

–

3,024

Total liabilities

–

3,024

–

3,024

As of May 31, 2023
(Millions of yen)
Fair value
Category
Level 1

Level 2

Level 3

Total

Leasehold deposits

–

880

–

880

Total assets

–

880

–

880

Long-term borrowings

–

3,391

–

3,391

Total liabilities

–

3,391

–

3,391

Note: Explanation of appraisal method used to calculate market value and the inputs relating to the calculation ofmarket value
Investment securities
Listed shares are valued through the use of market prices, and as they are traded in active markets, their market
value is classified as level 1 market value.
Leasehold deposits
The market value of leasehold deposits is calculated based on the present value of future cash flows discounted
by the period through to the due date and the yield of high security long term bonds, and is categorized as level 2
market value.
Long-term borrowings
These market values are calculated by the discounted current value method based on the total amount of principal
and interest, as well as the remaining period of the debt and an interest rate that considers credit risk, and are
categorized as level 2 market values.

- 108 -

Securities
1. Other securities (available-for-sale securities)
As of May 31, 2022
(Millions of yen)Class

Consolidatedbalance sheet
Recorded amount
52

Acquisition cost

Difference(1) Shares:48
3(2) Debentures
1) Government and–––Items whose
local government
carrying amountbonds, etc.
exceeds acquisition
2) Bonds payable
–
–
–
cost
3) Others–––(3) Others–––
Subtotal
52
48
3(1) Shares
1,109
1,114
(5)
(2) Debentures
1) Government and–––Items whose
local government
carrying amountbonds, etc.
does not exceed2) Bonds payable–––acquisition cost3) Others–––(3) Others–––
Subtotal
1,109
1,114
(5)
Total
1,161
1,163
(1)
Notes: 1. “Acquisition cost” in the above table represents the carrying amount after impairment.
2. Unlisted shares (consolidated balance sheet amount: ¥2,535 million), investments in investment limited
partnerships (consolidated balance sheet amount: ¥457 million), and shares of subsidiaries and associates(consolidated balance sheet amount: ¥2,107 million) are not described as they do not have market prices.
As of May 31, 2023
(Millions of yen)Class

Consolidatedbalance sheet
Recorded amount
65

Acquisition cost

Difference(1) Shares:48
16(2) Debentures
1) Government and–––Items whose
local government
carrying amountbonds, etc.
exceeds acquisition
2) Bonds payable
–
–
–
cost
3) Others–––(3) Others–––
Subtotal
654816(1) Shares–––(2) Debentures
1) Government and–––Items whose
local government
carrying amountbonds, etc.
does not exceed2) Bonds payable–––acquisition cost3) Others–––(3) Others–––
Subtotal
–
–
–
Total
65
48
16
Notes: 1. “Acquisition cost” in the above table represents the carrying amount after impairment.
2. Unlisted shares (consolidated balance sheet amount: ¥2,939 million), investments in investment limited
partnerships (consolidated balance sheet amount: ¥690 million), and J-KISS share acquisition rights(consolidated balance sheet amount: ¥10 million) are not described as they do not have market prices.

- 109 -

2. Available-for-sale securities sold during the fiscal year under review
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
Class
Shares
Total

Sale proceeds
3,224
3,224

Total gain on sale
979
979

(Millions of yen)
Total loss on sale––

Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
Class
Shares
Total

Sale proceeds
1,406
1,406

Total gain on sale291
291(Millions of yen)
Total loss on sale––

3. Securities for which impairment accounting was performed
In the previous fiscal year, impairment accounting of ¥140 million was performed for other securities (available-forsale securities) held in one listed company and one unlisted company.
In the fiscal year under review, impairment accounting of ¥980 million was performed for other securities (availablefor-sale securities) held in one unlisted company (SATORI, Inc.).
For listed stocks other than shares with no market price, etc., impairment accounting is performed for the entire
amount if the market value at the end of period has declined by 50% or more compared to the acquisition cost; in theevent of a decline of 30% to 50%, impairment accounting is performed for the amount deemed necessary inconsideration of recoverability and other factors. Moreover, for unlisted stocks of shares with no market price, etc., if
the real value at the end of period has declined by 50% or more compared to the acquisition cost, impairment
accounting is performed for the amount deemed necessary in consideration of recoverability and other factors.

- 110 -

Stock options, etc.
1. Recorded amount and account name of expenses related to stock options(Millions of yen)
Fiscal year ended May 31,
Fiscal year ended May 31,
2022
2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May
2022)
31, 2023)
Share-based payment expenses (selling,
general and administrative expenses)

72

296

2. Amount recorded as a gain due to expiration due to non-exercise of rights(Millions of yen)
Fiscal year ended May 31,
Fiscal year ended May 31,
2022
2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May
2022)
31, 2023)
Gain on reversal of share acquisition rights

00

3. Details, scale and other variables of stock options(1) Details of stock options
2018 stock option
2019 stock option
2019 stock option(2nd Share Acquisition(3rd Share Acquisition Rights) (4th Share Acquisition Rights)
Rights)Category and number of
Directors of the Company: Employees of the Company: Trustee Takanori Kushidarecipients1399(Note 5)
Number of options by class ofCommon shares of theCommon shares of theCommon shares of thestocks (Notes 1, 2, 3)Company: 180,000 shares Company: 1,322,100 sharesCompany: 2,138,444 shares
Date of grant

June 16, 2018

January 31, 2019

January 31, 2019

Vesting conditions(Note 4)(Note 4)(Note 4)

From June 16, 2018 to
May 31, 2020
From June 1, 2020 to June
1, 2028

From January 31, 2019 toJanuary 31, 2021
From February 1, 2021 toJanuary 8, 2029

Relevant employment period
Exercise period

Not defined
From September 1, 2020 toJanuary 30, 2029

Number of options by class ofstocks (Notes 1, 2, 3)2020 stock option
2021 stock option
2022 stock option(5th Share Acquisition(6th Share Acquisition Rights) (7th Share Acquisition Rights)
Rights)Directors of the Company: Directors of the Company:
Employees of the Company:
6
6
138
Executive Officers of the
Executive Officers of the
Employee of the Company’s
Company:
12
Company:
13
subsidiary:1
Common shares of theCommon shares of theCommon shares of theCompany: 122,400 sharesCompany: 80,000 sharesCompany: 655,900 shares

Date of grantAugust 26, 2020

August 24, 2021

July 29, 2022

Vesting conditions(Note 4)(Note 4)(Note 4)

Relevant employment period

Not definedNot definedNot defined

Exercise period

From September 1, 2021 to From September 1, 2022 toAugust 25, 2030
August 23, 2031

Category and number ofrecipients- 111 -

From July 15, 2024 to July
14, 2032

Number of options by class ofstocks (Notes 1, 2, 3)2022 stock option
2022 stock option(8th Share Acquisition(9th Share Acquisition Rights)
Rights)Directors of the Company: Directors of the Company:
55
Executive Officers of theCompany:
15
Common shares of theCommon shares of theCompany: 181,300 sharesCompany: 325,000 shares

Date of grant

September 2, 2022

September 14, 2022

Vesting conditions(Note 4)(Note 4)

Relevant employment period

Not definedNot defined

Exercise period

From September 1, 2023 to From August 31, 2024 to
September 1, 2032
August 30, 2032

Category and number ofrecipients

Notes: 1.
2.
3.
4.
5.

Converted to the number of shares.
Converted to the number of shares after the June 15, 2018 stock split (10,000-for-1 stock split).
Converted to the number of shares after the December 1, 2021 stock split (4-for-1 stock split).
As described in “IV. Information About Reporting Company, (2) Share acquisition rights.”
The share acquisition rights were allotted to a trust with Takanori Kushida as the trustee, and will be issued to theofficers and employees of the Group designated as beneficiaries.

- 112 -

(2) Scale and other variables of stock options
Stock options that existed in the fiscal year under review (fiscal year ended May 31, 2023) are included, and thenumber of stock options has been converted to the number of shares.
1) Number of stock options
2018 stock option 2019 stock option 2019 stock option 2020 stock option 2021 stock option(2nd Share(3rd Share(4th Share(5th Share(6th Share
Acquisition
Acquisition
Acquisition
Acquisition
Acquisition
Rights)Rights)Rights)Rights)Rights)
Before vesting(Shares)

As of May 31, 2022

–

–

–

–

80,000Granted

–

–

–

–

–

Expired

–

–

–

–

–

Vested––––80,000

Unvested balance

–

–

–

–

–

180,000

848,348

1,874,048

91,600

–

–

–

–

–

80,000180,000

117,472

146,316

3,200–

Expired–55,208

115,408––

Unexercisedbalance–

675,668

1,612,324

88,40080,000After vesting(Shares)

As of May 31, 2022
VestedExercised2022 stock option 2022 stock option 2022 stock option(7th Share(8th Share(9th Share
Acquisition
Acquisition
Acquisition
Rights)Rights)Rights)
Before vesting(Shares)

As of May 31, 2022

–

–

–

Granted655,900

181,300

325,000

Expired

11,400––

Vested–––644,500

181,300

325,000

As of May 31, 2022

–

–

–

Vested–––Exercised–––

Expired–––Unvested balance
After vesting(Shares)

Unexercised–––balance
Notes: 1. Converted to the number of shares after the June 15, 2018 stock split (10,000-for-1 stock split).
2. Converted to the number of shares after the December 1, 2021 stock split (4-for-1 stock split).

- 113 -

2)

Price information2018 stock option 2019 stock option 2019 stock option 2020 stock option 2021 stock option(2nd Share(3rd Share(4th Share(5th Share(6th Share
Acquisition
Acquisition
Acquisition
Acquisition
Acquisition
Rights)Rights)Rights)Rights)Rights)Exercised value (Note) (Yen)
Average price at timeof exercise
Fair evaluation priceon date of grant

440

850

850

1,338

2,093

(Yen)

1,650

1,574

1,574

1,542

–

(Yen)

–

–

–

179

273

2022 stock option 2022 stock option 2022 stock option(7th Share(8th Share(9th Share
Acquisition
Acquisition
Acquisition
Rights)Rights)Rights)Exercised value (Note) (Yen)

1,021

1,021

1,269

Average price at time
(Yen)
–
–
–
of exercise
Fair evaluation price
(Yen)
816
125
802
on date of grant
Notes: 1. Converted to the value after the June 15, 2018 stock split (10,000-for-1 stock split).
2. Converted to the value after the December 1, 2021 stock split (4-for-1 stock split).
4. Estimation method of fair evaluation price of stock options(1) 7th Share Acquisition Rights
1) Evaluation method used
Black-Scholes model2) Main base figures and their estimation methods
Share price volatility (Note 1)
63.51%
Forecast remaining period
5.96 years(Note 2)
Forecast dividends (Note 3)¥0 per share
Risk-free interest rate (Note0.02%
4)
Notes: 1. Calculated based on the actual share price for the period corresponding to the forecast remaining
period.
2. The period from the allotment date to the expiration date of the exercise period.
3. Based on the actual dividend forecast for the most recent fiscal year.
4. The yield on government bonds corresponding to the forecast remaining period.
(2) 8th Share Acquisition Rights
1) Evaluation method used
Black-Scholes model2) Main base figures and their estimation methods
Share price volatility (Note 1)
63.15%
Forecast remaining period
5.5 years(Note 2)
Forecast dividends (Note 3)¥0 per share
Risk-free interest rate (Note0.058%
4)
Notes: 1. Calculated based on the actual share price for the period corresponding to the forecast remaining
period.
2. The period from the allotment date to the expiration date of the exercise period.
3. Based on the actual dividend forecast for the most recent fiscal year.
4. The yield on government bonds corresponding to the forecast remaining period.

- 114 -

(3) 9th Share Acquisition Rights
1) Evaluation method used
Black-Scholes model2) Main base figures and their estimation methods
Share price volatility (Note 1)
62.85%
Forecast remaining period
5.98 years(Note 2)
Forecast dividends (Note 3)¥0 per share
Risk-free interest rate (Note0.091%
4)
Notes: 1. Calculated based on the actual share price for the period corresponding to the forecast remaining
period.
2. The period from the allotment date to the expiration date of the exercise period.
3. Based on the actual dividend forecast for the most recent fiscal year.
4. The yield on government bonds corresponding to the forecast remaining period.
5. Number of vested stock options and their estimation method
Because it is difficult to reasonably estimate the number of options that will expire in the future, a method that reflects
only the actual number expired has been adopted.
6. The total intrinsic value at the end of the fiscal year under review and the total intrinsic value on the exercise date forstock options exercised during the fiscal year under review when calculated based on the intrinsic value per unit of thestock option
Total intrinsic value at the end of the fiscal year under review
Total intrinsic value on the exercise date for stock options exercised
during the fiscal year under review- 115 -

¥2,338 million¥452 million

Tax effect accounting
1. Major components of deferred tax assets and liabilities(Millions of yen)
As of May 31, 2022
Deferred tax assets
Tax loss carryforward (Note)
Excess depreciation
Loss on valuation of investment securities
Provision for bonuses
Accrued enterprise tax
OthersSubtotal deferred tax assets
Valuation allowance for tax loss carryforward (Note)
Valuation allowance for total deductible temporary
differences
Subtotal valuation allowance

As of May 31, 2023

1,237
653
43
148
50
325
2,457
(1,173)

1,135
713
343
182
29
500
2,905
(1,058)(829)(1,188)(2,002)(2,247)

Total deferred tax assets

454

658

Deferred tax liabilities
Valuation difference on available-for-sale investment
securities
Total deferred tax liabilities

38

62

38

62

Net deferred tax assets

416

595

Net deferred tax liabilities–
Note: Amount of tax loss carryforwards and their deferred tax assets by carryforward date
As of May 31, 2022–

(Millions of yen)
After 1 year After 2 years After 3 years After 4 years
Within 1 year through 2
through 3
through 4
through 5 Over 5 years Total amount
years
years
years
years
Tax losscarryforward
–
–
75
148
798
214
1,237
(*1)
Valuation
–
–
(11)
(148)
(798)
(214)
(1,173)
allowance
Deferred tax
–
–
64
–
–
–
(*2)
64
assets(*) 1. Tax loss carryforwards are multiplied by the statutory effective tax rate.
2. The amount recorded based on the future taxable income after careful consideration of recoverability.
As of May 31, 2023
(Millions of yen)
After 1 year After 2 years After 3 years After 4 years
Within 1 year through 2
through 3
through 4
through 5 Over 5 years Total amount
years
years
years
years
Tax losscarryforward
–
4
0
0
737
391
1,135
(*1)
Valuation
–
4
0
0
(661)
(391)
(1,058)
allowance
Deferred tax
–
–
–
–
76
–
(*2)
76
assets(*) 1. Tax loss carryforwards are multiplied by the statutory effective tax rate.
2. The amount recorded based on the future taxable income after careful consideration of recoverability.
Changes in presentation“Loss on valuation of investment securities,” which was included in “Others” under “Deferred tax assets” in the previous
fiscal year, has been presented separately from the fiscal year under review due to its increased financial materiality. To
reflect this change in the method of presentation, the information noted for the previous fiscal year has been reclassified.
As a result, ¥368 million presented in “Others” under “Deferred tax assets” in the previous fiscal year has been reclassified
and noted as “Loss on valuation of investment securities” of ¥43 million and “Others” of ¥325 million.

- 116 -

2. Reconciliation of significant differences between the statutory effective tax rate and the actual effective rate of income
taxes after application of tax effect accounting
As of May 31, 2022
Statutory effective tax rate
(Adjustments)
Expenses not deductible permanently, such asentertainment expenses
Income not taxable permanently, such as dividend
incomeInhabitant per capita taxes
Tax credits, etc.

As of May 31, 2023

30.6%

–%

1.8

–

(0.1)

–

1.6
(7.4)

–
–

Change in valuation allowance(36.6)–
Previous year’s taxes(2.4)–
Equity in losses (earnings) of affiliates
20.6–
Gain on change in equity(3.6)–
Amortization of goodwill
0.9–
Others0.8–
Effective rate of income taxes after application of tax
6.2–
effect accounting(Note) Some information has been omitted because a loss before income taxes was recorded in the fiscal year underreview.

- 117 -

Business combinations, etc.
Addition of consolidated subsidiary at equity method affiliate through acquisition of shares
The Company resolved at the Board of Directors Meeting held on February 14, 2023 to undertake a third-party allotmentof shares of CREATIVE SURVEY INC., which is an equity method affiliate of the Company. The payment was completed
on March 1, 2023, and the said company became a consolidated subsidiary on the same date.
1.

Outline of business combination(1) Name of the acquired company and details of the acquired business
Name: CREATIVE SURVEY INC.
Description of business: Planning, development, operation and sale of online survey and communication
platform “CREATIVE SURVEY”(2) Main reason of the business combination
CREATIVE SURVEY INC. provides its online survey and research tool CREATIVE SURVEY mainly toenterprises. By making the said company a consolidated subsidiary, the Company aims to further promote thebusiness of the said company, which is growing steadily, and enhance the corporate value of the said company
and the Group.
(3) Date of the business combination
March 1, 2023 (date of acquisition of shares)(4) Legal form of the business combination
Acquisition of shares through a third-party allotment(5) Name of entity after the business combination
Unchanged.
(6) Percentage of voting rights acquired
Percentage of voting rights held just before the acquisition of shares
Percentage of additional voting rights acquired by the acquisition of shares
Percentage of voting rights after the acquisition

40.00%
23.08%
63.08%(7) Main basis for determining acquiring company
The Company acquired the shares in consideration for cash.
2.

Period for which the results of the acquired company are included in the consolidated financial statements
From March 1, 2023 to May 31, 2023

3.

Acquisition cost of acquiree and components thereof by consideration type(Millions of yen)
Fair value of equity interest held on the date immediately preceding businesscombination on the date of business combination
Consideration for additionally acquired common shares on the date of businesscombination
Acquisition cost

256
400
656

4.

Difference between the acquisition cost of the acquired company and the total cost of acquisitions for eachtransaction required until acquisition
Gain on step acquisitions¥196 million

5.

Details and amounts of main acquisition-related costs
Due diligence expenses, etc.
¥3 million

6.

Amount of goodwill, reason for recognition, amortization method and amortization period(1) Amount of goodwill ¥516 million(2) Reason for recognition The difference between the acquiring company’s equity interest in the acquiredcompany and the acquisition cost is recognized.
(3) Method and period for amortization
Straight-line method over ten years

7.

Amount and breakdown of assets acquired and liabilities assumed as of the date of the business combination
Please refer to the notes regarding the consolidated statement of cash flows.

- 118 -

8.

Estimated amount and calculation method of the impact on the consolidated statement of income for the fiscal year
under review assuming that the business combination was completed on the first day of the fiscal year underreview
Net sales¥266 million
Operating loss¥(272) million
Ordinary loss¥(228) million
Loss before income taxes¥(228) million
Loss attributable to owners of parent¥(140) million
Basic loss per share¥(1.12)

Calculation method of estimated amountThe estimated amount of the impact is the difference between the net sales and profit and loss information calculated
assuming that the business combination was completed at the beginning of the fiscal year, and the net sales and profit andloss information in the acquiring company’s consolidated statement of income. In addition, for amortization of goodwill,
the estimated amount of the impact is the amount calculated on the assumption that goodwill recognized at the time of thebusiness combination arose at the beginning of the fiscal year under review.
This note has not been received audit certification.
Asset retirement obligations
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
Regarding leasehold deposits related to real estate lease agreements, asset retirement obligations are not recorded asliabilities because the amount that is deemed as ultimately being unrecoverable (costs for restoring the leased building to
its original state) is reasonably estimated and the amount that is to be borne in the fiscal year under review is recorded as
an expense.
The amount that is to be borne for the fiscal year under review is calculated based on the expected occupancy period.
Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
Regarding leasehold deposits related to real estate lease agreements, asset retirement obligations are not recorded asliabilities because the amount that is deemed as ultimately being unrecoverable (costs for restoring the leased building to
its original state) is reasonably estimated and the amount that is to be borne in the fiscal year under review is recorded as
an expense.
The amount that is to be borne for the fiscal year under review is calculated based on the expected occupancy period.

- 119 -

Revenue recognition(1) Information on disaggregation of revenue from contracts with customers
The Group’s net sales are revenue from contracts with customers, and the disaggregated breakdown by transaction
type for the Group’s reportable segments is as follows.
(Millions of yen)
Fiscal year ended May 31,
Fiscal year ended May 31, 2023
2022
Segment classification(from June 1, 2022 to May 31,(from June 1, 2021 to May 31,
2023)
2022)
Sansan/Bill One Business
Sansan (Stock)

16,34918,687

Sansan (Other)

865

1,104

Bill One

826

2,412

Others63
306
Eight Business
B2C Services
286
303
B2B Services
1,918
2,561
Other Business
111
134
Revenue from contracts with customers
20,42025,510
Sales to external customers
20,42025,510Note: The “Other Business” is a business segment that is not included in the reportable segments, and includes subsidiaries’
businesses.
(2) Information serving as basis for the ascertaining of revenue from contracts with customers
The information serving as basis for the ascertaining of revenue is as stated in “Basis of preparation of consolidated
financial statements 4. Disclosure of accounting policies (6) Accounting policy for revenue and expense.”(3) Information on the relationship between the satisfaction of performance obligations under contracts with customers
and cash flows arising from such contracts, and the amount and timing of revenue expected to be recognized fromcontracts with customers existing at the end of the fiscal year under review in the next fiscal year onwards
1) Balance, etc., of contract assets and contract liabilities
Contract assets are receivables based on contracts with customers in each service.
Advances received, which are a type of contract liability, are advances received through the lump sum payment offees for the term of a contract by the customer, and are transferred to sales at the time of the provision of theservice or over the course of the period that the service is provided.
The balances of receivables from contracts with customers, and contract liabilities were as follows:(Millions of yen)
Fiscal year ended May 31,
Fiscal year ended May 31,
2022
2023
(from June 1, 2021 to May(from June 1, 2022 to May
31, 2022)
31, 2023)
Credits from contracts with customers
Accounts receivable - trade (opening
balance)571
756
Accounts receivable - trade (closingbalance)756
1,180
Contract liabilities
Advances received (opening balance)
6,719
8,191
Advances received (closed balance)
8,191
10,720Among the revenue recognized during
the fiscal year under review, the amountthat was included in the closing balance
6,692
8,089
of contract liabilities (advances
received)- 120 -

2) Transaction price allocated to the remaining performance obligations
Total transaction price allocated to the remaining performance obligations and time when revenues are expected tobe recognized as of May 31, 2023.
For notes on transaction prices allocated to the remaining performance obligations, the Group has applied apractical expedient, and contracts with the original expected contract period of one year or less are not included in
the scope of the notes.
(Millions of yen)
Fiscal year ended May 31, 2022
Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31,(from June 1, 2022 to May 31,
2022)
2023)
Within 1 year
62
116
Over 1 year
102
120
Total
164
236

- 121 -

Segment information, etc.
Segment information
1. Description of reportable segments
The reportable segments used by the Group are components for which discrete financial information is available, andwhose operating results are regularly reviewed by the Board of Directors, in particular, to make decisions about resources
to be allocated to the segments and assess their performance.
In the operation of its business activities, the Group has established business divisions and companies to engage in
specific services, and it formulates comprehensive strategies for the services that each business division and company
provides.
Accordingly, the Group’s operations are made up of segments engaged in specific services under the basic operating
structures of business divisions or companies, and it has two reportable segments of the “Sansan/Bill One Business” andthe “Eight Business.”
Descriptions of the services belonging to each segment are stated below.
Reportable segments

Description of services in segment
Provision of Sansan, a service for sales DX, Bill One, a cloud-based
invoice management solution, etc.
Provision of Eight, as well as the event transcription service logmi
seriesSansan/Bill One Business
Eight Business

2. Methods of calculating the amounts of net sales, profit or loss, assets, liabilities, and other items for each reportablesegment
The accounting method used for operating segments reported is the same as the description in “Matters forming the basisof preparing the consolidated financial statements.”
3. Information on the amounts of net sales, profit or loss, assets, liabilities, and other items for each reportable segment
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)(Millions of yen)
Reportable segments
Others(Note 1)

Total

Sansan/Bill
One Business

Eight
Business

18,1042,204

20,309111

20,420

1

9

10

15

25

18,105

2,213

20,319126

20,446

5,752

(355)

5,397

(22)

5,374

507

18

525

0

525

Total

Net sales
Sales to external customers
Intersegment sales ortransfers
Total
Segment profit (loss)(Note 2)Other items
Depreciation

Notes: 1. The “Others” category is a business segment that is not included in the reportable segments, and includes
subsidiaries’ businesses.
2. Segment profit (loss) is shown as adjusted operating profit (loss), which is the sum of operating profit (loss) plus
share-based payment expenses and expenses arising from business combinations (amortization of goodwill andamortization of intangible assets).
(Millions of yen)AmountSansan/Billrecorded in
Eight
Adjustments
One
Othersconsolidated
Business(Note)
Businessstatement ofincomeSegment profit (loss)
5,752
(355)
(22)
(4,643)730
Share-based payment
27
10
–
34
72
expenses
Amortization of goodwill andamortization of intangible
–
20
5
–
25
assetsOperating profit (loss)

5,725

(386)

(28)

(4,678)631

Note: The adjustments stated are the amounts of corporate expenses not attributable to any reportable segment andmostly consist of general and administrative expenses. Depreciation included in adjustments as corporate
expenses is ¥242 million.

- 122 -

3. Segment assets and liabilities have not been shown, as information relating to assets and liabilities are notregularly provided to the chief operating decision maker and are not subject to the assessment of performance.
4. Intersegment sales or transfers are based on actual market price.
Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)(Millions of yen)
Reportable segments
Others(Note 1)

Total

Sansan/Bill
One Business

Eight
Business

22,512

2,864

25,376

134

25,510

4

2

7

64

72

22,5162,867

25,384

198

25,582

7,005

(170)

6,835

(36)

6,798

523

15

538

0

538

Total

Net sales
Sales to external customers
Intersegment sales ortransfers
Total
Segment profit (loss)(Note 2)Other items
Depreciation

Notes: 1. The “Others” category is a business segment that is not included in the reportable segments, and includes
subsidiaries’ businesses.
2. Segment profit (loss) is shown as adjusted operating profit (loss), which is the sum of operating profit (loss) plus
share-based payment expenses and expenses arising from business combinations (amortization of goodwill andamortization of intangible assets).
(Millions of yen)AmountSansan/Billrecorded in
Eight
Adjustments
One
Othersconsolidated
Business(Note 1)Businessstatement ofincomeSegment profit (loss)
7,005
(170)
(36)
(5,856)942
Share-based payment
315
136
–
251
702
expenses (Note 2)
Amortization of goodwill andamortization of intangible
12
20
7
–
39
assetsOperating profit (loss)

6,677

(326)

(43)

(6,107)

199

Notes: 1. The adjustments stated are the amounts of corporate expenses not attributable to any reportable segment andmostly consist of general and administrative expenses. Depreciation included in adjustments as corporate
expenses is ¥359 million.
2. Expenses related to the monetary compensation and payment of alternative wages, etc. to employees, etc. of theGroup pertaining to trust-based stock options are included in share-based payment expenses.
3. Segment assets and liabilities have not been shown, as information relating to assets and liabilities are notregularly provided to the chief operating decision maker and are not subject to the assessment of performance.
4. Intersegment sales or transfers are based on actual market price.
4. Matters regarding changes in reportable segments(Change in the method of measurement of profit (loss) of reportable segments)
Previously, segment profit (loss) was shown as operating profit (loss). However, from the first quarter of the fiscal year
under review, this was changed so that segment profit (loss) is shown as adjusted operating profit (loss), which is thesum of operating profit (loss) plus share-based payment expenses and expenses arising from business combinations(amortization of goodwill and amortization of intangible assets), because the performance indicator used for management
purposes was changed to an indicator that shows the regular capacity to generate corporate earnings after deducting
share-based payment expenses, which may vary significantly depending on the level of the Company’s share price, andexpenses that arise from business combinations.
Segment profit (loss) for the previous fiscal year is also shown with the adjusted operating profit (loss) after the change.

- 123 -

Information associated with reportable segments
1. Information for each product or service
This information is omitted because the same information has been presented in Segment information.
2. Information for each region(1) Net sales
This has been omitted because net sales to external Japanese customers account for more than 90% of net sales on
the consolidated statement of income.
(2) Property, plant and equipment
This has been omitted because the value of property, plant and equipment in Japan accounts for more than 90% of
the value of property, plant and equipment on the consolidated balance sheet.
3. Information for each of main customers
This has been omitted because there is no external customer that accounts for 10% or more of net sales recorded on the
consolidated statement of income.
Disclosure of impairment losses on non-current assets for each reportable segment
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
Impairment losses of ¥9 million for corporate expenses not belonging to any reportable segment were recorded.
Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
Not applicable.
Amortization and unamortized balance of goodwill for each reportable segment
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)(Millions of yen)
Sansan/Bill One
Business

Eight BusinessCorporate andeliminations

Amortization of
goodwill

–

20

5

25

Goodwill

–

165

64

229

Total

Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)(Millions of yen)
Sansan/Bill One
Business

Eight BusinessCorporate andeliminations

Amortization of
goodwill

12

20

7

39

Goodwill

503

145

57

706

Information about gain on bargain purchase for each reportable segment
Not applicable.

- 124 -

Total

Related party information
1. Transactions with related parties
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)(Millions of yen)Class

Name of thecompany,
etc. orpersonLocation

Officer

MuneyukiHashimoto–

Officer

SatoruJoraku–Sharecapitalor
Nature ofinvest- business orments occupationincapitalPercentage
ownership heldin (or by) party
such as voting
rights, etc. (%)

Relationship withrelatedpartiesNature oftransactions

Monetary
amount oftransactions

Item

Balanceat endofperiod–Director oftheCompany(held by party)
Direct: 0.1–

Exercise ofshareacquisitionrights (Note 1)

11

–

–

–

Executive
Officer oftheCompany(held by party)
Direct: 0.7–

Exercise ofshareacquisitionrights (Note 2)

17

–

–

Notes: 1. Due to the exercise of the 3rd Share Acquisition Rights, granted by a resolution at the meeting of the Board of
Directors held on January 9, 2019, during the fiscal year under review. Monetary amount of transactions listed
above are amounts paid upon exercise of share acquisition rights in the fiscal year under review.
2. Due to the exercise of the 5th Share Acquisition Rights, granted by a resolution at the meeting of the Board of
Directors held on July 14, 2020, during the fiscal year under review. Monetary amount of transactions listed
above are amounts paid upon exercise of share acquisition rights in the fiscal year under review.
Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)(Millions of yen)Class

Name of thecompany,
etc. orpersonOfficer

MuneyukiHashimoto

Location–

Sharecapitalor
Nature ofinvest- business orments occupationincapitalPercentage
ownership heldin (or by) party
such as voting
rights, etc. (%)

Relationship withrelatedpartiesNature oftransactions

Monetary
amount oftransactions

Item

Balanceat endofperiodDirector oftheCompany(held by party)
Direct: 0.1–

Exercise ofshareacquisitionrights (Note 1)

11

–

–

–

Note: 1. Due to the exercise of the 3rd Share Acquisition Rights, granted by a resolution at the meeting of the Board of
Directors held on January 9, 2019, during the fiscal year under review. Monetary amount of transactions listed
above are amounts paid upon exercise of share acquisition rights in the fiscal year under review.
2. Notes regarding parent company and significant affiliates
Fiscal year ended May 31, 2022
(1) Information on parent company
Not applicable.
(2) Summary of financial information on significant affiliates
The summary of financial information for all three equity-method affiliates, including the significant affiliate
SATORI, Inc., is as follows.
(Millions of yen)
Total current assets
2,657
Total non-current assets
161
Total current liabilities
646
Total non-current liabilities
332
Total net assets
1,839
Net sales
Loss before income taxes
Loss

1,975
(1,230)(1,262)

Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
Not applicable.

- 125 -

Per share information
Fiscal year ended May 31, 2022
Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, 2022) (from June 1, 2022 to May 31, 2023)
Net assets per share¥96.78¥105.18

Basic earnings (loss) per share¥6.87¥(1.13)

Diluted earnings per share

¥6.77

¥-

Notes: 1. The Company implemented a stock split of common shares at a ratio of 4-for-1 on December 1, 2021. Therefore,
net assets per share, basic earnings (loss) per share and diluted earnings per share are calculated on the assumptionthat said splitting of shares had been made at the beginning of the previous fiscal year.
2. Diluted earnings per share for the fiscal year ended May 31, 2023 are not described here because, although there
are potentially dilutive shares, basic loss per share was recorded.
3. Basis for calculation of basic earnings (loss) per share and diluted earnings per share is as follows:
Fiscal year ended May 31, 2022
Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, 2022) (from June 1, 2022 to May 31, 2023)
Basic earnings (loss) per share
Profit (loss) attributable toowners of parent(Millions ofyen)Profit (loss) not attributable to(Millions ofcommon shareholders
yen)Profit (loss) attributable toowners of(Millions ofparent related to common
yen)sharesAverage number of outstanding(Shares)common shares during the period

857

(141)

–

–

857

(141)

124,841,631

125,162,268––

1,896,164–(1,896,164)–

Diluted earnings per share
Adjustments stated for profit(Millions of
attributable to owners of parentyen)
Increase in number of common(Shares)shares(Of which share acquisition(Shares)rights)Overview of dilutive shares that are
not included in the calculation ofdiluted earnings per share as they
have no dilutive effects

Stock options 2021 (the 6th Share
Acquisition Rights): 200 units(80,000 shares)- 126 -–

Significant events after reporting periodBusiness combination through acquisition
The Company resolved at the meeting of the Board of Directors held on May 23, 2023 to acquire shares of Institute of
Language Understanding Inc., making it a consolidated subsidiary, and completed the procedures to acquire the shareson June 20, 2023 in accordance with that resolution.
Outline of business combination(1) Name of the acquired company and details of the acquired businessCompany name :Institute of Language Understanding Inc.
Description of:
A business utilizing large-scale language knowledge to provide businessbusiness
efficiency and create high added value(2) Main reason of the business combination
The aim of this business combination is to strengthen the Company’s research development capabilities related tonatural language processing as the knowledge databases and language-understanding engines owned by Institute of
Language Understanding Inc. are fields that promise to provide synergy with OCR, which is one of the Company’s
core technologies, natural language processing, etc.
(3) Date of the business combination
June 1, 2023 (deemed acquisition date)(4) Legal form of the business combination
Acquisition of shares(5) Name of entity after the business combination
Unchanged.
(6) Percentage of voting rights acquired
65.75%(7) Main basis for determining acquiring company
The Company acquired the shares in consideration for cash.
(8) Acquisition cost of acquiree and components thereof by consideration type
Acquisition price(cash and deposits)¥500 million
Acquisition cost¥500 million(9) Details and amounts of main acquisition-related costs
Remuneration, fees, etc. for advisory services¥4 million(10) Amount of goodwill, reason for recognition, amortization method and amortization period
Not confirmed at this stage.
(11) Amount and breakdown of assets acquired and liabilities assumed as of the date of the business combination
Not confirmed at this stage.

- 127 -

Issuance of the 10th share acquisition rights
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to issue the 10th Share Acquisition
Rights to employees of the Company in accordance with the provisions of Articles 236, 238, and 240 of the Companies Act.
10th Share Acquisition Rights
Number of share acquisition rights
1,243 units
Class and number of shares to be acquired upon
exercise of the share acquisition rights

Common shares of the Company, 124,300 shares(100 shares per share acquisition right)

Exercise price of share acquisition rights
Issuance price and additional paid-in capital in
the event of issuance of shares upon exercise ofshare acquisition rights
Allotment date of share acquisition rights
Persons subject to allotment of share acquisitionrightsExercise period of share acquisition rights¥155,250 per share acquisition right

Exercise conditions of share acquisition rights*(*)

Issuance price: ¥1,552.5 per one share
Additional paid-in capital: ¥777 per one share
August 7, 2023
57 employees of the Company
From July 14, 2025 to July 13, 2033

1. Persons who have received an allotment of the share acquisition rights (the “Share Acquisition Rights Holder”) may
exercise their share acquisition rights if the closing price of the Company’s common share in regular trading on theTokyo Stock Exchange on a specific day during the period from the allotment date of the share acquisition rights tothe end of the period of exercise of the rights (July 13, 2033) exceeds the ¥3,987.
However, in the event of a stock split or stock consolidation after the date of allotment, the share price shall be
adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price
Share price
Ratio of stock split
after=
before×(or stock
adjustment
adjustment
consolidation)
2. The Share Acquisition Rights Holders are required to have a position in the Company or a subsidiary and associateof the Company as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in the event of resignation due to the expiration of the term ofoffice, mandatory retirement, or when a justifiable reason is acknowledged at a meeting of the Board of Directors.
3. In the event the Share Acquisition Rights Holder dies, inheritance shall not be permitted.
4. Pledging of share acquisition rights, or the creation of security interests shall not be permitted.
5. The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued shares atthat time would exceed the total number of authorized shares.
6. It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

Issuance of the 11th share acquisition rights (compensatory stock options)
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to issue the 11th Share Acquisition
Rights to Directors and Executive Officers of the Company in accordance with the provisions of Articles 236, 238, and 240of the Companies Act.
11th Share Acquisition Rights
Number of share acquisition rights
1,420 units
Class and number of shares to be acquired
upon exercise of the share acquisitionrightsCommon shares of the Company, 142,000 shares(100 shares per share acquisition right)

Issuance price of share acquisition rights¥14,000 per share acquisition right

Exercise price of share acquisition rights¥155,250 per share acquisition rightIssuance price and additional paid-in
capital in the event of issuance of shares
upon exercise of share acquisition rights

Issuance price: ¥1,552.5 per one share
Additional paid-in capital: ¥777 per one share

Allotment date of share acquisition rights

September 13, 2023

Persons subject to allotment of shareacquisition rights

5 Directors of the Company
11 Executive Officers of the Company

Exercise period of share acquisition rights

From September 13, 2024 to September 12, 2033

Exercise conditions of share acquisition*rights(*) 1. Persons who have received an allotment of the share acquisition rights (the “Share Acquisition Rights Holder”) may
exercise their share acquisition rights only if the amount of net sales in the Company’s consolidated statement of- 128 -

2.

3.
4.
5.
6.

income for the fiscal year ending May 31, 2024 exceeds ¥33,164 million. In determining the net sales amount, there
are events, such as changes in the applicable accounting standards and the acquisitions of companies, which canhave a major impact on the business results of the Company. In the event that the Board of Directors determinesthat it is not appropriate to make a judgment based on actual figures, the Company will eliminate the effect of theacquisition of a company, etc. within a reasonable range, and it shall be deemed possible to adjust the actual figures
used for judgment. In addition, in the event of significant changes in the concept of items to be referred to, due tothe application of international financial reporting standards, changes in the fiscal year end, etc., the indicators to bereferred to shall be determined by the Company’s Board of Directors.
The Share Acquisition Rights Holders are required to have a position in the Company or a subsidiary and associateof the Company as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in the event of resignation due to the expiration of the term ofoffice, mandatory retirement, or when a justifiable reason is acknowledged at a meeting of the Board of Directors.
In the event the Share Acquisition Rights Holder dies, inheritance shall not be permitted.
Pledging of share acquisition rights, or the creation of security interests shall not be permitted.
The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued shares atthat time would exceed the total number of authorized shares.
It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

Issuance of the 12th share acquisition rights
At the 16th Annual General Meeting of Shareholders held on August 29, 2023 (hereinafter the “General Meeting of
Shareholders”), a proposal was put forward concerning share acquisition rights as stock remuneration-type stock options
with share price conditions for Directors (excluding those who are Audit & Supervisory Committee Members), and as this
proposal was approved at the General Meeting of Shareholders, at the meeting of the Board of Directors held on the sameday, the Company resolved to issue the following to Directors of the Company in accordance with the provisions of Articles
236, 238, and 240 of the Companies Act.
12th Share Acquisition Rights
Number of share acquisition rights
1,448 units (Note 1)
Class and number of shares to be acquired
upon exercise of the share acquisitionrightsCommon shares of the Company, 144,800shares(100 shares per share acquisition right) (Note 1)

Exercise price of share acquisition rights¥100 per share acquisition rightIssuance price and additional paid-in
capital in the event of issuance of shares
upon exercise of share acquisition rights(Note 2)

Allotment date of share acquisition rights

September 13, 2023

Persons subject to allotment of shareacquisition rights

4 Directors of the Company

Exercise period of share acquisition rights

From August 30, 2026 to August 29, 2033

Exercise conditions of share acquisition(Note 3)rights* Description as of the date of resolution of issue (August 29, 2023) is provided.
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated in accordancewith Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction less than ¥1 arising
as a result of the calculation shall be rounded up to the nearest yen. In this case, the amount of an increase in- 129 -

legal capital surplus shall be the amount of the above maximum amount of increase of share capital, etc. less theamount of the increase in share capital.
3. Exercise conditions of share acquisition rights(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “Share Acquisition
Rights Holder”) may exercise their share acquisition rights if the closing price of the Company’s commonshare in regular trading on the Tokyo Stock Exchange on a specific day during the period from the
Allotment Date of the share acquisition rights to the end of the period of exercise of the rights (August 29,2033) exceeds ¥2,344.
However, in the event of a stock split or stock consolidation after the Allotment Date, the share price shallbe adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price after adjustment=

Share price before adjustment ×

Ratio of stock split(or stock consolidation)(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary of theCompany as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in cases where the person resigns at the expiration of
his/her term of office, retires at the mandatory retirement age, or when another justifiable reason is
acknowledged by the Board of Directors of the Company.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

Relocation of head office
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to relocate its head office. An
overview is as follows.
(1) New location of head office
Shibuya Sakura Stage SHIBUYA TOWER, 1-1, Sakuragaoka-cho, Shibuya-ku, Tokyo(2) Timing of relocation
July 2024 (planned)(3) Purpose of relocation
As part of its growth strategy, the Group is at the present time strengthening its recruitment of human resources andwith this relocation will secure an office floor area compatible with future increases in personnel. By consolidating
multiple bases, we are also working to improve productivity and operational efficiency, leading to enhancement of theoffice-centric work style (taking the office as the starting point while combining remote work) that we have adopted aspolicy.
(4) Impact on business performance for the fiscal year ending May 31, 2024
Factors such as the details and amounts of expenses to be incurred in connection with this relocation and the timing of
their incurrence are currently under scrutiny.
(5) Other
Since the current head office and the new head office are in the same district, there will be no amendment to the
Articles of Incorporation.

- 130 -

5) Annexed consolidated detailed schedules
Consolidated detailed schedule of corporate bonds
Not applicable.
Consolidated detailed schedule of borrowings
Category

Balance at
beginning of
period(Millions ofyen)

Balance at end
Average interestof periodrate(Millions of
(%)
yen)

Payment due

Current portion of long-term borrowings

477

558

0.40

–

Current portion of lease obligations

32

40

–

–

2,547

2,838

0.41

2024 to 2028

66

111

–

2024 to 2028

3,123

3,549

–

–

Long-term borrowings
Lease obligations
Total
Notes: 1.
2.
3.

The average interest rate represents the weighted average interest rate with respect to the balance of borrowings at the endof period.
The average interest rate for lease obligations is omitted because lease obligations are recorded on the consolidatedbalance sheet at the amount before the amount equivalent to interest included in the total lease payments is deducted.
The repayment schedule of long-term borrowings and lease obligations (excluding current portion) for the five-year
period after the consolidated balance sheet date is as follows:(Millions of yen)
After 1 year
through 2 years

After 2 years
through 3 years

After 3 years
through 4 years

After 4 years
through 5 years

Long-term borrowings

525

510

1,354

448

Lease obligations

39

35

25

9

Consolidated detailed schedule of asset retirement obligations
Not applicable.

- 131 -

(2) Others
Quarterly information for the fiscal year ended May 31, 2023
Cumulative period

First quarter(Millions ofyen)(Millions ofProfit (loss) before income taxes
yen)Profit (loss) attributable to owners (Millions ofof parentyen)
Net sales

Basic earnings (loss) per share(Yen)

Accounting period
Basic earnings (loss) per share

Third quarter

Fiscal year underreview

5,714

11,824

18,17725,510

(172)

291

1,094

(96)

(325)

151

738

(141)

(2.61)

1.21

5.91(1.13)First quarter(Yen)

Second quarter(2.61)- 132 -

Second quarter
3.81

Third quarter
4.69

Fourth quarter(7.02)

2 Non-consolidated financial statements and other information(1) Non-consolidated financial statements
1) Non-consolidated balance sheet(Millions of yen)
As of May 31, 2022
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Tools, furniture and fixtures
Leased assets
Other
Total property, plant and equipment
Intangible assets
Trademark right
SoftwareTotal intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Leasehold deposits
Deferred tax assets
Other
Total investments and other assets
Total non-current assets
Total assets*1*1- 133 -

15,094
683
470
276
(3)
16,521

As of May 31, 2023

*1

*120,508
1,093
577
425
(32)
22,572

638
50
89
21
799

560
51
138
16
767

0
917
917

0
825
825

4,154
3,595
787
416
10
8,963
10,68027,202

3,705
1,275
879
595
502
6,958
8,551
31,124

(Millions of yen)
As of May 31, 2022
Liabilities
Current liabilities
Accounts payable - trade
Current portion of long-term borrowings
Lease liabilities
Accounts payable - other
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Total capital surplus
Retained earnings
Other retained earnings
Voluntary retained earnings
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Share acquisition rights
Total net assets
Total liabilities and net assets*1*1- 134 -

245
477
32
1,067
380
388
8,119
58
483
129
11,382As of May 31, 2023

*1

*1

321
558
40
1,933
205
394
10,54676
596
70
14,744

2,547
66
77
2,691
14,073

2,838
111
77
3,027
17,771

6,426

6,582

4,166
4,166

4,322
4,322

150
2,158
2,308
(1)
12,900

150
1,685
1,835
(2)
12,73885
85
142
13,12827,202156
156
457
13,352
31,124

2) Non-consolidated statement of income(Millions of yen)
Fiscal year ended
May 31, 2022
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Subsidy income
Gain on sale of investment securities
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commission expenses
Foreign exchange losses
Loss on investments in investment partnerships
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights
Gain on sale of shares of subsidiaries and associates
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Impairment losses
Loss on sale of shares of subsidiaries and associates
Loss on valuation of investment securities
Total extraordinary losses
Profit (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss)

Fiscal year ended
May 31, 2023

20,057
2,418
17,638*1, *2 16,954
683

24,926
3,521
21,405*1, *2 21,083
321

0
33
1
979
24
1,039

0
–
14
291
20
327

*1
*1

*1

*3

*4

- 135 -

*1
*1

*1

10
4
9
20
26
72
1,651

13
7
16
38
39
115
533

0
–
0

0
351
351

16
9
–
140
165
1,485
352
(296)
56
1,429

*3

*4

50
–
267
980
1,298
(413)
263
(203)
59
(473)

3) Non-consolidated statement of changes in equity
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)(Millions of yen)
Shareholders’ equity
Capital surplus
Share capital

Balance at beginning of
periodRetained earnings
Other retained earnings

Legal capitalsurplus

Total capitalsurplus

Voluntary
retainedearnings

Retainedearnings
brought forward

Total retained
earnings

6,312

4,053

4,053

150

728

879

113

113

113

–

–

–

Purchase of treasury
shares

–

–

–

–

–

–

Profit

–

–

–

–

1,429

1,429

–

–

–

–

–

–

113

113

113

–

1,429

1,429

6,426

4,166

4,166

150

2,158

2,308

Share
acquisitionrightsTotal net assets

Changes during period
Issuance of newsharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period

Valuation and translation
adjustments

Shareholders’ equity

Treasury shares
Balance at beginning of
periodTotal
shareholders’equityValuationdifference on
available-forsale securities

Total valuationand translation
adjustments(0)

11,245

1,622

1,622

65

12,933Issuance of newshares

–

226

–

–

–

226

Purchase of treasury
shares

(1)

(1)

–

–

–

(1)

Profit

–

1,429

–

–

–

1,429

Net changes in items
other thanshareholders’ equity––(1,536)(1,536)76(1,459)Total changes during
period(1)

1,655(1,536)(1,536)76

195

Balance at end of period(1)12,900

85

85

142

13,128Changes during period- 136 -

Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)(Millions of yen)
Shareholders’ equity
Capital surplus
Share capital

Balance at beginning of
periodRetained earnings
Other retained earnings

Legal capitalsurplus

Total capitalsurplus

Voluntary
retainedearnings

Retainedearnings
brought forward

Total retained
earnings

6,426

4,166

4,166

150

2,158

2,308

155

155

155

–

–

–

Purchase of treasury
shares

–

–

–

–

–

–

Loss

–

–

–

–

(473)

(473)

Net changes in items
other thanshareholders’ equity

–

–

–

–

–

–

Total changes during
period

155

155

155

–

(473)

(473)

Balance at end of period

6,582

4,322

4,322

150

1,685

1,835

Share
acquisitionrightsTotal net assets

Changes during period
Issuance of newsharesValuation and translation
adjustments

Shareholders’ equity

Treasury shares
Balance at beginning of
periodTotal
shareholders’equityValuationdifference on
available-forsale securities

Total valuationand translation
adjustments(1)

12,900

85

85

142

13,128Issuance of newshares

–

311

–

–

–

311

Purchase of treasury
shares

(0)

(0)

–

–

–

(0)

Loss

–

(473)

–

–

–

(473)

Net changes in items
other thanshareholders’ equity

–

–

70

70

314

385

Total changes during
period

(0)

(161)

70

70

314

223

Balance at end of period(2)12,738

156

156

457

13,352

Changes during period- 137 -

Notes to the non-consolidated financial statements
Significant accounting policies
1. Accounting policy for measuring assets(1) Accounting policy for measuring securities
Shares of subsidiaries and affiliates
Stated at cost using the moving-average method
Other securities (available-for-sale securities)
Securities other than shares with no market price, etc.
Stated at the quoted market price. Net unrealized gains or losses on these securities are reported as a separate
component of net assets at a net-of-tax amount. Cost of sales is determined using the moving-average method.
Shares with no market price, etc.
Stated at cost using the moving-average method(2) Accounting policy for measuring inventories
Work in process
Stated at cost using the identified cost method (balance sheet amounts are determined based on the method of
writing down the book value in accordance with the declining in profitability of assets)
2. Accounting policy for depreciation of assets(1) Property, plant and equipment (excluding leased assets)
Facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated using the straightline method, and other property, plant and equipment are depreciated using the declining-balance method.
(2) Intangible assets (excluding leased assets)
Amortized using the straight-line method.
Software for internal use is amortized using the straight-line method over its useful life as internally determined(three years).
(3) Leased assets
Leased assets related to finance lease transactions that transfer ownership
Leased assets related to finance lease transactions that transfer ownership are depreciated by the same approach as
the depreciation method applied to non-current assets owned by lessee.
Leased assets related to finance lease transactions that do not transfer ownership
Leased assets related to finance lease transactions that do not transfer ownership are depreciated using the straightline method assuming the lease periods as useful lives without residual value.
3. Accounting policy for deferred assets
Share issuance costs
Share issuance costs are fully recognized as expenses when incurred.
4. Accounting policy for provisions(1) Allowance for doubtful accounts
To prepare for losses from bad debts, an estimated uncollectible amount is provided by using the historical rate ofcredit loss in the case of general receivables, or based on individual consideration of recoverability in the case of
specific receivables such as highly doubtful receivables.
(2) Provision for bonuses
A reserve for the employee bonus payment is provided by recording the estimated amounts of the future payments
attributed to the fiscal year under review.
5. Accounting policy for revenue and expense
Sansan/Bill One Business
The services to be transferred over a certain period include sales DX service Sansan and cloud-based invoice
management solution Bill One, and as these main services are provided throughout the course of the contract period,
revenue is recognized by apportioning the transaction price based on the contract with the client over the service
provision period set forth in the contract.
In addition, for the pay as you go portion of Sansan business cards and Bill One invoice data conversion, the amountcalculated in accordance with the number of subject business cards or invoices, and the unit price based on the contract
is recognized as revenue.
Eight Business
The services to be transferred over a certain period include B2C business card management service for individuals
Eight Premium, B2B business card management service for companies Eight Team, as well as recruitment-related
services and advertisement distribution services. As these are services that are provided over the course of the contract
period, the total transaction price under the contract with the client for the service provision period prescribed in thecontract is apportioned and recognized as revenue.
Goods or services that are to be transferred at one time include B2B recruitment-related services, advertising services,and various business event services.

- 138 -

In the event of an advertisement bring created in the advertising service and provided to the client, revenue isrecognized at the time the advertisement is transferred to the client. In addition, in the event business service, as goods
or services are transferred to the client through the holding of an event, revenue is recognized on each occasion that an
event is held.
Significant accounting estimates
Recoverability of deferred tax assets(1) Amounts recorded in the non-consolidated financial statements for the fiscal year under review(Millions of yen)
As of May 31, 2022

As of May 31, 2023

Deferred tax assets (before offset)
454686(2) Other information to assist understanding of the content of estimates
This information is omitted as it is the same as that provided in notes regarding significant accounting estimates forthe consolidated financial statements.
(3) Effect on non-consolidated financial statements for the next fiscal year
Those estimates may be affected by uncertain future changes in economic conditions, etc. If the timing at whentaxable income is generated and the amounts thereof differ from the estimates, the amount of deferred tax assets
recognized in the non-consolidated financial statements for the next fiscal year may be significantly affected.
Valuation of investment securities(1) Amounts recorded in the non-consolidated financial statements for the fiscal year under review(Millions of yen)
As of May 31, 2022
Investment securities (unlisted
stocks)Shares of subsidiaries and associates

2,535

As of May 31, 2023
2,939

3,595
1,275
The amount for investment securities (unlisted stocks) as of May 31, 2023 includes ¥250 million as investment into
SATORI, Inc., which is a major investee of the Company. In addition, the amount for shares of subsidiaries andassociates as of May 31, 2022, includes ¥2,554 million as investment into SATORI, Inc.
(2) Other information to assist understanding of the content of estimates
This information is omitted as it is the same as that provided in notes regarding significant accounting estimates forthe consolidated financial statements.
(3) Effect on non-consolidated financial statements for the next fiscal year
Concerning this estimate, in the event that the investee’s actual results, etc. falls below the plan formulated at the timeof investment, excess earning power will be deemed to have been impaired, impairment accounting may be
performed, and recognition of loss on valuation of investment securities may be required in the financial statements
for the next fiscal year.

- 139 -

Changes in accounting policies
Application of Implementation Guidance on Accounting Standard for Fair Value Measurement
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ
Guidance No. 31, June 17, 2021) from the beginning of the fiscal year under review, and it has applied the new accounting
policy provided for by the Implementation Guidance on Accounting Standard for Fair Value Measurement prospectively
in accordance with the transitional measures provided for in paragraph 27-2 of the Implementation Guidance on
Accounting Standard for Fair Value Measurement. This application has no effect on the non-consolidated financial
statements for the fiscal year under review.
Changes in presentation
Non-consolidated balance sheet“Long-term prepaid expenses,” was presented separately under “Investments and other assets” in the previous fiscal year,
has been included in “Other” for the fiscal year under review due to its diminished financial materiality. To reflect thischange in the method of presentation, the information for the previous fiscal year in the non-consolidated financial
statements has been reclassified.
As a result, ¥10 million presented in “Long-term prepaid expenses” under “Investments and other assets” in the nonconsolidated balance sheet for the previous fiscal year has been reclassified as “Other” of ¥10 million.
Additional information
Treatment regarding trust-type stock options
The National Tax Agency expressed their view that at the time employees, etc. exercise trust-type stock options and acquire
shares, this will be deemed to be material wages by companies in the “Taxation of Stock Options (Q&A)” on May 30,
2023. They also expressed their view that companies must pay withholding income tax for trust-type stock options thathave already been exercised in the past.
In the fiscal year under review, the Company recorded the amount equivalent to the required payment for withholding
income tax of ¥87 million as other under current liabilities, and recorded corresponding receivables as other under current
assets.
Furthermore, the portion of the increased additional charges to employees, etc. in the Group will be compensated withcash or paid as alternative wages, and together with expenses incidental to this, the Company recorded selling, general andadministrative expenses of ¥499 million.

- 140 -

Notes to non-consolidated balance sheet*1 Monetary receivables from, and monetary payables to, subsidiaries and associates (excluding those displayed undercategories)(Millions of yen)Previous fiscal year
(May 31, 2022)

Fiscal year under review(May 31, 2023)

Short-term monetary receivables:

94

93

Short-term monetary payables:

17

76

Notes to non-consolidated statement of income*1 Transactions with subsidiaries and associates(Millions of yen)
Fiscal year ended May 31, 2022 Fiscal year ended May 31, 2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)
Transactions relating to theCompany’s operation
Net sales
Cost of sales
Selling, general andadministrative expenses
Amount of non-operatingtransactions

59

8

19

84

161

190

10

6

*2 The approximate percentage of expenses attributable to selling expenses was 19.0% for the previous fiscal year and17.1% for the fiscal year under review, and the approximate percentage of expenses attributable to general andadministrative expenses was 81.0% for the previous fiscal year and 82.9% for the fiscal year under review.
The main expense items of selling, general and administrative expenses and their amounts are as follows.
(Millions of yen)
Fiscal year ended May 31,
Fiscal year ended May 31,
2022
2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)
Advertising expenses
2,963
3,296
Salaries, allowances and bonuses
5,646
7,293
Provision for bonuses
894
1,124
Depreciation
231
346
*3

The details of loss on retirement of non-current assets are as follows.

Buildings and structures
Software
OthersTotal*4(Millions of yen)
Fiscal year ended May 31,
Fiscal year ended May 31,
2022
2023
(from June 1, 2021 to May 31, (from June 1, 2022 to May 31,
2022)
2023)
4
0
11
49
–
0
16
50

Loss on valuation of investment securities
Fiscal year ended May 31, 2022 (from June 1, 2021 to May 31, 2022)
Of the securities that are classified as investment securities, impairment accounting was performed for those whose
real value has declined significantly.
Fiscal year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)
Of the securities that are classified as investment securities, impairment accounting was performed for SATORI,
Inc. due to its real value having declined significantly.

- 141 -

Securities
As of May 31, 2022
Shares of subsidiaries and affiliates are shares with no market price, etc., so the fair value of shares of subsidiaries andaffiliates are omitted.
The carrying amount on the balance sheet for shares of subsidiaries and affiliates with no market price, etc. are as follows.
(Millions of yen)
Category

Previous fiscal year

Shares of subsidiaries

646

Shares of affiliates

2,948

As of May 31, 2023
Shares of subsidiaries are shares with no market price, etc., so the fair value of shares of subsidiaries are omitted.
The carrying amount on the balance sheet for shares of subsidiaries with no market price, etc. are as follows.
(Millions of yen)
Category

Fiscal year under review

Shares of subsidiaries

1,275- 142 -Tax effect accounting
1. Breakdown of deferred tax assets by major cause of accrual(Millions of yen)
Fiscal year under review(May 31, 2023)

Previous fiscal year
(May 31, 2022)
Deferred tax assets
Tax loss carryforward
Excess depreciation
Provision for bonuses
Loss on valuation of shares of subsidiaries and associates
Accrued enterprise tax

1,160
653
148
80
50

871
710
182
80
29

Loss on valuation of investment securities
OthersSubtotal deferred tax assets

43
244
2,380

343
401
2,619

Valuation allowance for tax loss carryforward
Valuation allowance for total deductible temporary
differences
Subtotal valuation allowance(1,095)

(794)

(829)

(1,167)(1,925)(1,961)

454

658

38

62

Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
Total deferred tax assets

38

62

Net deferred tax assets

416

595

–

–

Net deferred tax liabilities

2. Reconciliation of significant differences between the statutory effective tax rate and the actual effective rate of income
taxes after application of tax effect accounting
Previous fiscal year
Fiscal year under review(May 31, 2022)(May 31, 2023)
Statutory effective tax rate
30.6%–%
(Adjustments)
Expenses not deductible permanently, such as
1.1–
entertainment expenses
Income not taxable permanently, such as dividend(0.0)–
incomeInhabitant per capita taxes
0.9–
Tax credits, etc.
(4.5)–
Change in valuation allowance(23.6)–
Previous year’s taxes(1.4)–
Others0.7–
Effective rate of income taxes after application of tax
3.8–
effect accounting(Note) Some information been omitted because a loss before income taxes was recorded in the fiscal year underreview.
Business combinations, etc.
This has been omitted because the same details are shown in “Notes to the consolidated financial statements (Businesscombinations, etc.)” of the consolidated financial statements.
Revenue recognition
Information serving as the basis for the ascertaining of revenue from contracts with customers has been omitted because
the same details are shown in “Notes to the consolidated financial statements (Revenue recognition)” of the consolidated
financial statements.

- 143 -

Significant events after reporting periodBusiness combination through acquisition
The Company resolved at the meeting of the Board of Directors held on May 23, 2023 to acquire shares of Institute of
Language Understanding Inc., making it a consolidated subsidiary, and completed the procedures to acquire the shares onJune 20, 2023 in accordance with that resolution.
Outline of business combination(1) Name of the acquired company and details of the acquired businessCompany name:Institute of Language Understanding Inc.
Description of:
A business utilizing large-scale language knowledge to provide businessbusiness
efficiency and create high added value(2) Main reason of the business combination
The aim of this business combination is to strengthen the Company’s research development capabilities related tonatural language processing as the knowledge databases and language-understanding engines owned by Institute of
Language Understanding Inc. are fields that promise to provide synergy with OCR, which is one of the Company’s
core technologies, natural language processing, etc.
(3) Date of the business combination
June 1, 2023 (deemed acquisition date)(4) Legal form of the business combination
Acquisition of shares(5) Name of entity after the business combination
Unchanged.
(6) Percentage of voting rights acquired
65.75%(7) Main basis for determining acquiring company
The Company acquired the shares in consideration for cash.
(8) Acquisition cost of acquiree and components thereof by consideration type
Acquisition price(cash and deposits)¥500 million
Acquisition cost¥500 million(9) Details and amounts of main acquisition-related costs
Remuneration, fees, etc. for advisory services¥4 million(10) Amount of goodwill, reason for recognition, amortization method and amortization period
Not confirmed at this stage.
(11) Amount and breakdown of assets acquired and liabilities assumed as of the date of the business combination
Not confirmed at this stage.

- 144 -

Issuance of the 10th share acquisition rights
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to issue the 10th Share Acquisition
Rights to employees of the Company and employee of the Company’s subsidiary in accordance with the provisions ofArticles 236, 238, and 240 of the Companies Act.
10th Share Acquisition Rights
Number of share acquisition rights
1,243 units
Class and number of shares to be acquired upon
exercise of the share acquisition rights

Common shares of the Company, 124,300 shares(100 shares per share acquisition right)

Exercise price of share acquisition rights
Issuance price and additional paid-in capital in
the event of issuance of shares upon exercise ofshare acquisition rights
Allotment date of share acquisition rights¥155,250 per share acquisition rightIssuance price: ¥1,552.5 per one share
Additional paid-in capital: ¥777 per one share
August 7, 2023

Persons subject to allotment of share acquisitionrights57 employees of the Company

Exercise period of share acquisition rights

From July 14, 2025 to July 13, 2033

Exercise conditions of share acquisition rights*(*)

1. Persons who have received an allotment of the share acquisition rights (the “Share Acquisition Rights Holder”) may
exercise their share acquisition rights if the closing price of the Company’s common share in regular trading on theTokyo Stock Exchange on a specific day during the period from the allotment date of the share acquisition rights tothe end of the period of exercise of the rights (July 13, 2033) exceeds the ¥3,987.
However, in the event of a stock split or stock consolidation after the date of allotment, the share price shall be
adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price
Share price
Ratio of stock split
after=
before×(or stock
adjustment
adjustment
consolidation)
2. The Share Acquisition Rights Holders are required to have a position in the Company or a subsidiary and associateof the Company as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in the event of resignation due to the expiration of the term ofoffice, mandatory retirement, or when a justifiable reason is acknowledged at a meeting of the Board of Directors.
3. In the event the Share Acquisition Rights Holder dies, inheritance shall not be permitted.
4. Pledging of share acquisition rights, or the creation of security interests shall not be permitted.
5. The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued shares atthat time would exceed the total number of authorized shares.
6. It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

Issuance of the 11th share acquisition rights (compensatory stock options)
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to issue the 11th Share Acquisition
Rights to Directors and Executive Officers of the Company in accordance with the provisions of Articles 236, 238, and 240of the Companies Act.
11th Share Acquisition Rights
Number of share acquisition rights
1,420 units
Class and number of shares to be acquired upon
exercise of the share acquisition rights

Common shares of the Company, 142,000 shares(100 shares per share acquisition right)

Issuance price of share acquisition rights¥14,000 per share acquisition right

Exercise price of share acquisition rights
Issuance price and additional paid-in capital in
the event of issuance of shares upon exercise ofshare acquisition rights
Allotment date of share acquisition rights¥155,250 per share acquisition right

Persons subject to allotment of share acquisitionrights

5 Directors of the Company
11 Executive Officers of the Company

Exercise period of share acquisition rights

From September 13, 2024 to September 12, 2033

Exercise conditions of share acquisition rights*(*)

Issuance price: ¥1,552.5 per one share
Additional paid-in capital: ¥777 per one share
September 13, 2023

1. Persons who have received an allotment of the share acquisition rights (the “Share Acquisition Rights Holder”) may
exercise their share acquisition rights only if the amount of net sales in the Company’s consolidated statement ofincome for the fiscal year ending May 31, 2024 exceeds ¥33,164 million. In determining the net sales amount, there- 145 -

2.

3.
4.
5.
6.

are events, such as changes in the applicable accounting standards and the acquisitions of companies, which canhave a major impact on the business results of the Company. In the event that the Board of Directors determinesthat it is not appropriate to make a judgment based on actual figures, the Company will eliminate the effect of theacquisition of a company, etc. within a reasonable range, and it shall be deemed possible to adjust the actual figures
used for judgment. In addition, in the event of significant changes in the concept of items to be referred to, due tothe application of international financial reporting standards, changes in the fiscal year end, etc., the indicators to bereferred to shall be determined by the Company’s Board of Directors.
The Share Acquisition Rights Holders are required to have a position in the Company or a subsidiary and associateof the Company as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in the event of resignation due to the expiration of the term ofoffice, mandatory retirement, or when a justifiable reason is acknowledged at a meeting of the Board of Directors.
In the event the Share Acquisition Rights Holder dies, inheritance shall not be permitted.
Pledging of share acquisition rights, or the creation of security interests shall not be permitted.
The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued shares atthat time would exceed the total number of authorized shares.
It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

Issuance of the 12th share acquisition rights
At the 16th Annual General Meeting of Shareholders held on August 29, 2023 (hereinafter the “General Meeting of
Shareholders”), a proposal was put forward concerning share acquisition rights as stock remuneration-type stock options
with share price conditions for Directors (excluding those who are Audit & Supervisory Committee Members), and as this
proposal was approved at the General Meeting of Shareholders, at the meeting of the Board of Directors held on the sameday, the Company resolved to issue the following to Directors of the Company in accordance with the provisions of Articles
236, 238, and 240 of the Companies Act.
12th Share Acquisition Rights
Number of share acquisition rights
1,448 units (Note 1)
Class and number of shares to be acquired
upon exercise of the share acquisitionrightsCommon shares of the Company, 144,800 shares(100 shares per share acquisition right) (Note 1)

Exercise price of share acquisition rights¥100 per share acquisition rightIssuance price and additional paid-in
capital in the event of issuance of shares
upon exercise of share acquisition rights(Note 2)

Allotment date of share acquisition rights

September 13, 2023

Persons subject to allotment of shareacquisition rights

4 Directors of the Company

Exercise period of share acquisition rights

From August 30, 2026 to August 29, 2033

Exercise conditions of share acquisition(Note 3)rights* Description as of the date of resolution of issue (August 29, 2023) is provided.
Notes: 1. The number of shares to be acquired upon exercise of one share acquisition right (hereinafter the “Number ofGranted Shares”) is 100 common shares of the Company. The Number of Granted Shares shall be adjusted
according to the following formula in the event that, after the allotment date of the share acquisition rights(hereinafter the “Allotment Date”), the Company conducts a stock split (including the gratis allotment ofcommon shares of the Company; the same shall apply hereinafter) or a stock consolidation of common sharesof the Company
Number of Granted Shares
after adjustment=

Number of Granted Shares
before adjustment

×

Ratio of stock split(or stock consolidation)

In addition, after the Allotment Date of the share acquisition rights, in the case where the Company conducts ashare exchange or share transfer (hereinafter, collectively, “merger, etc.”), and where the Company conducts a
gratis allotment of shares, or other cases where the above adjustment of the Number of Granted Shares isrequired, the Number of Granted Shares may be adjusted within a reasonable range. However, the adjustment
up to the above is made only to the Number of Granted Shares for the share acquisition rights that have notbeen exercised at that time, among the share acquisition rights, and any fraction less than one share arising fromthe adjustment shall be rounded down to the nearest share.
2. The amount of an increase in share capital upon issuance of shares through exercising the share acquisitionrights shall be half of the maximum amount of increase of share capital, etc., which is calculated in accordancewith Article 17, paragraph (1) of the Regulation on Corporate Accounting, and any fraction less than ¥1 arising
as a result of the calculation shall be rounded up to the nearest yen. In this case, the amount of an increase inlegal capital surplus shall be the amount of the above maximum amount of increase of share capital, etc. less theamount of the increase in share capital.
3. Exercise conditions of share acquisition rights- 146 -

(1) Persons who have received an allotment of the share acquisition rights (hereinafter the “Share Acquisition
Rights Holder”) may exercise their share acquisition rights if the closing price of the Company’s commonshare in regular trading on the Tokyo Stock Exchange on a specific day during the period from the
Allotment Date of the share acquisition rights to the end of the period of exercise of the rights (August 29,2033) exceeds ¥2,344.
However, in the event of a stock split or stock consolidation after the Allotment Date, the share price shallbe adjusted according to the following formula (fractions of a yen shall be rounded up to the nearest yen).
1
Share price after adjustment=

Share price before adjustment ×

Ratio of stock split(or stock consolidation)(2) The share acquisition rights holders are required to have a position in the Company or a subsidiary of theCompany as Director, Audit & Supervisory Board Member or employee at the time of exercising the shareacquisition rights. However, this shall not apply in cases where the person resigns at the expiration of
his/her term of office, retires at the mandatory retirement age, or when another justifiable reason is
acknowledged by the Board of Directors of the Company.
(3) In the event that the share acquisition rights holder dies, the inheritance of the share acquisition rights shallnot be permitted.
(4) Pledging of the share acquisition rights, or the creation of security interests shall not be permitted.
(5) The share acquisition rights may not be exercised if, in so doing, the total number of the Company’s issued
shares at that time would exceed the total number of authorized shares.
(6) It shall not be possible to exercise fractions less than one unit of the share acquisition rights.

Relocation of head office
At the meeting of the Board of Directors held on July 13, 2023, the Company resolved to relocate its head office. An
overview is as follows.
(1) New location of head office
Shibuya Sakura Stage SHIBUYA TOWER, 1-1, Sakuragaoka-cho, Shibuya-ku, Tokyo(2) Timing of relocation
July 2024 (planned)(3) Purpose of relocation
As part of its growth strategy, the Group is at the present time strengthening its recruitment of human resources andwith this relocation will secure an office floor area compatible with future increases in personnel. By consolidating
multiple bases, we are also working to improve productivity and operational efficiency, leading to enhancement of theoffice-centric work style (taking the office as the starting point while combining remote work) that we have adopted aspolicy.
(4) Impact on business performance for the fiscal year ending May 31, 2024
Factors such as the details and amounts of expenses to be incurred in connection with this relocation and the timing of
their incurrence are currently under scrutiny.
(5) Other
Since the current head office and the new head office are in the same district, there will be no amendment to the
Articles of Incorporation.

- 147 -

4) Annexed non-consolidated detailed schedules
Non-consolidated detailed schedule of property, plant and equipment

Category

Increaseduring theperiodDecreaseduring theperiodBuilding

638

226

0

302

560

713

Tools, furniture andfixtures

50

26

0

24

51

109

Leased assets

89

88

–

39

138

119

Others

21

0

–

5

16

10

799

341

1

373

767

952

0

–

0

0

0

–

917

507

76

523

825

–

917

507

76

523

825

–

Class of assets

Property, plantand equipment

Total
Intangible assets(Millions of yen)Amortization
Depreciation
Balance atduring the
Cumulative
end of period
periodtotal

Balance at
beginning of
periodTrademark right
SoftwareTotal

Note: The main increases during the period are as follows.
Building
Omotesando head office¥95 million
Hulic Aoyama¥123 million
Software
Software related to the Sansan Business application
Software related to business cards data conversion¥292 million¥210 million

Consolidated detailed schedule of provisions(Millions of yen)
Item

Balance at
beginning of
periodDecrease during
Increase during thethe period
period(Purposed use)

Decrease during theperiod(Others)

Balance at end of
periodAllowance for3
32–
3
doubtful accounts
Provision for
483
596
483
–
bonuses
Note: The “Decrease during the period (Others)” of allowance for doubtful accounts is the reversal amount.
(2) Description of main assets and liabilities
This is omitted because consolidated financial statements have been prepared.
(3) Others
Not applicable.

- 148 -

32596

VI. Outline of Share-related Administration of Reporting Company
Fiscal year

From June 1 to May 31

Annual General Meeting of
Shareholders

Within three months after the end of each fiscal year

Record date

Every May 31

Record date for dividends ofsurplusEvery November 30 and May 31

Number of shares constituting one
unit

100 shares

Buyback of shares less than one
unit
Place for application

Head Office, Tokyo Securities Transfer Agent Co., Ltd.
3-11 Kanda-Nishikicho, Chiyoda-ku, Tokyo

Shareholder registryadministrator

Tokyo Securities Transfer Agent Co., Ltd.
3-11 Kanda-Nishikicho, Chiyoda-ku, Tokyo

Broker–Fees for buyback

Amount separately specified as fees equivalent to fees for consignment on sale ofshares

Method of public notices

Through electronic public notices. However, in the event of an accident or any otherunavoidable circumstances that make it impossible to give such notices
electronically, they will be published in The Nikkei.
URL for public notices
https://jp.corp-sansan.com/

Shareholder perks and benefits

Not applicable.

Note:

The Company’s Articles of Incorporation stipulate that shareholders of the Company holding shares of less than one unit
shall not be able to exercise rights other than the following for shares less than one unit:(1) Rights set forth in items of Article 189, paragraph (2) of the Companies Act;
(2) Right to make a demand pursuant to the provisions of Article 166, paragraph (1) of the Companies Act;
(3) Right to receive an allotment of offered shares and offered share acquisition rights in proportion to the number of shares
held by the shareholder.

- 149 -

VII. Reference Information About Reporting Company
1 Information about parent of reporting company
The Company does not have a parent company, etc. as defined in Article 24-7, paragraph (1) of the Financial Instruments andExchange Act.

2 Other reference information
The Company filed the following documents between the beginning of the fiscal year under review and the filing date of thisAnnual Securities Report.
(1)

Annual Securities Report, accompanying documents, and confirmation letter
Fiscal year (15th term) (from June 1, 2021 to May 31, 2022)
Filed to Director-General of the Kanto Local Finance Bureau on August 31, 2022

(2)

Internal control report and accompanying documents
Filed to Director-General of the Kanto Local Finance Bureau on August 31, 2022

(3)

Quarterly securities reports and confirmation letter(First quarter of the 16th term) (from June 1, 2022 to August 31, 2022)
Filed to Director-General of the Kanto Local Finance Bureau on October 13, 2022
(Second quarter of the 16th term) (from September 1, 2022 to November 30, 2022)
Filed to Director-General of the Kanto Local Finance Bureau on January 13, 2023
(Third quarter of the 16th term) (from December 1, 2022 to February 28, 2023)
Filed to Director-General of the Kanto Local Finance Bureau on April 13, 2023

(4)

Amendment report of quarterly securities reports and confirmation letter
Filed to Director-General of the Kanto Local Finance Bureau on April 13, 2023
The report and letter are the amendment report of quarterly securities reports for the second quarter of the 16th term(from September 1, 2022 to November 30, 2022), and the confirmation letter thereof.

(5)

Extraordinary Report
Filed to Director-General of the Kanto Local Finance Bureau on July 14, 2022
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ii-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on July 14, 2022
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ii-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on August 30, 2022
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ii-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on August 30, 2022
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ix-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on November 1, 2022
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (xix) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on July 13, 2023
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (xii) and item (xix) of the Cabinet Office Order on Disclosure of
Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on July 13, 2023
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ii-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on July 13, 2023
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ii-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.
Filed to Director-General of the Kanto Local Finance Bureau on August 29, 2023
An Extraordinary Report pursuant to provisions of Article 24-5, paragraph (4) of the Financial Instruments andExchange Act, and Article 19, paragraph (2), item (ii-ii) of the Cabinet Office Order on Disclosure of Corporate Affairs.

(6)

Amendment Report of Extraordinary Report
Filed to Director-General of the Kanto Local Finance Bureau on September 5, 2022

- 150 -

An amendment report pertaining to Extraordinary Report (Matters Resolved at the General Meeting of Shareholders)
filed on August 30, 2022.

- 151 -

Part Two: Information About Reporting Company’s Guarantor, etc.
Not applicable.

- 152 -

Independent Auditor’s Report on the Financial Statements
andInternal Control Over Financial Reporting
August 30, 2023
To the Board of Directors of Sansan, Inc.:
KPMG AZSA LLC
Tokyo Office, Japan
Osamu Takagi
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Genta Tsuru
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the accompanying consolidated financial statements of Sansan, Inc. (“the Company”) and its
consolidated subsidiaries (collectively referred to as “the Group”) provided in the “Financial Information”
section in the company’s Annual Report, which comprise the consolidated balance sheet as at May 31, 2023
and the consolidated statement of income and comprehensive income, statement of changes in net assets andstatement of cash flows for the year then ended, and a summary of significant accounting policies, otherexplanatory information and supplementary schedules, in accordance with Article 193-2(1) of the Financial
Instruments and Exchange Act of Japan.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at May 31, 2023, and its consolidated financial performanceand its consolidated cash flows for the year then ended in accordance with accounting principles generally
accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Consolidated Financial Statements section of our report. We are independent of the Group in accordancewith the ethical requirements that are relevant to our audit of the consolidated financial statements in Japan,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our auditof the consolidated financial statements of the current period. These matters were addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.

- 153 -

Appropriateness of judgment regarding valuation of investment securities (investment interest in
SATORI, Inc.)
The key audit matter
How the matter was addressed in our audit
A loss on valuation of investment securities of
We mainly conducted the following audit¥980 million was recorded in the consolidated
procedures to assess appropriateness of judgment
statement of income of Sansan, Inc., and isregarding valuation of investment securities
related to SATORI, Inc., which is an unlisted(investment interest in SATORI, Inc.).
company with no market price, as stated in the(1) Assessment of internal control
notes “Significant accounting estimates,
We assessed effectiveness of establishment
Valuation of investment securities.”and operation status of internal control
With regard to shares with no market price, etc.
related to valuation of investment securities.
such as investments in unlisted companies, as a
In the assessment, especially, we calculated
policy, if the real value of the shares has declined
estimates in relation to the business plan ofsignificantly due to deterioration in the financial
the investee used in judgement on whether orposition of the issuer of the shares, a loss on
not excess earning power, etc. has beenvaluation of investment is recognized unless theimpaired, by reference to changes inrecoverability is supported by sufficient
operating results of the investee, the growthevidence. In addition, the real value may berate shown by external data, etc. and other
determined, taking into account the company’s
data, and focused on control in assessing
excess earning power, management rights, etc.,
reliability of the business plan throughand a loss on valuation of investment also needs
comparison with the planned value andto be recognized when results of the business areresearch on significant differences with thelower than those in the business plan, which wasestimates.
based on the valuation at the time of theinvestment, and excess earning power, etc. is no(2) Assessment of appropriateness of judgment
longer expected.
regarding valuation of investment securities
The investment in SATORI, Inc. was made in
anticipation of excess earning power, etc. basedon the future business plan at the time of theinvestment, and the real value was determined,taking into account the excess earning power,
etc. However, in the fiscal year under review, theCompany judged that the excess earning power,
etc. had been impaired, and recognized a loss on
valuation of investment.
While judgement on whether or not excess
earning power, etc. reflected in the real value has
been impaired is made on the basis of thebusiness plan of the investee affiliate, a plan forincreasing revenue based on the assumption of
an increase in orders received throughadvertising measures and others involves
uncertainty, and therefore these judgements ofmanagement significantly affect judgment onwhether or not excess earning power, etc.
reflected in the real value has been impaired.
As a result, we have determined thatappropriateness of judgment regarding valuationof investment securities (investment interest in
SATORI, Inc.) is of most significance in the auditof the consolidated financial statements of the
fiscal year under review, and is a key audit matter.

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We mainly conducted the following
procedures to assess reasonableness ofjudgement on whether or not excess earning
power, etc. reflected in the real value ofinvestment interest in SATORI, Inc. has been
impaired.
・ We questioned the responsible person about
the business environment and outlook on
future operating results of the investee.
・ To assess adequacy of major assumptions usedin the preparation of the business plan of
SATORI, Inc., we compared our understanding
and assessment of businesses operated by thesaid company with respect to accuracy andreasonableness of the business plan at the timeof the investment and at the end of the fiscal
year under review, and at the same time,
confirmed that the business plan was based on
major assumptions such as the sales growthrate in light of sales results, and probability ofreceiving orders through advertising measuresin light of results of sales promotion.
・ We examined accuracy of estimates and thelevel of uncertainty involved in the plan,taking into account results of the assessment ofadequacy of major assumptions, results ofconsidering achievements of past businessplans and reasons for differences, and otherfactors.

Other Information
The other information comprises the information included in the Annual Report, but does not include theconsolidated financial statements, the financial statements, and our auditor’s reports thereon. Management is
responsible for the preparation and presentation of the other information. The audit and supervisorycommittee are responsible for overseeing the directors’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with theconsolidated financial statements or our knowledge obtained in the audit, or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements inaccordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan.
The audit and supervisory committee are responsible for overseeing the directors’ performance of their duties
including the design, implementation and maintenance of the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards generally accepted in Japan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events or conditions- 155 -

that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude thata material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.


Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation, structure andcontent of the consolidated financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We areresponsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.

We communicate with the audit and supervisory committee regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the audit and supervisory committee, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determine that amatter should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Audit of the Internal Control Report

OpinionWe also have audited the accompanying internal control report of Sansan, Inc. as at May 31, 2023, in
accordance with Article 193-2(2) of the Financial Instruments and Exchange Act of Japan.
In our opinion, the accompanying internal control report, which states that the internal control over financial
reporting was effective as at May 31, 2023, presents fairly, in all material respects, the results of theassessments of internal control over financial reporting in accordance with assessment standards for internal
control over financial reporting generally accepted in Japan.

Basis for Opinion
We conducted our audit of the internal control report in accordance with auditing standards for internal
control over financial reporting generally accepted in Japan. Our responsibilities under those standards arefurther described in the Auditor’s Responsibilities for the Audit of the Internal Control Report section of ourreport. We are independent of the Group in accordance with the ethical requirements that are relevant to our
audit of the internal control report in Japan, and we have fulfilled our other ethical responsibilities inaccordance with these requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Responsibilities of Management and the Audit and Supervisory Committee for the Internal Control
ReportManagement is responsible for the design and operation of internal control over financial reporting and the
preparation and fair presentation of the internal control report in accordance with assessment standards forinternal control over financial reporting generally accepted in Japan.
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The audit and supervisory committee are responsible for overseeing and examining the design and operationof internal control over financial reporting.
Internal control over financial reporting may not completely prevent or detect financial statement
misstatements.
Auditor’s Responsibilities for the Audit of the Internal Control Report
Our objectives are to obtain reasonable assurance about whether the internal control report is free frommaterial misstatement based on our audit of the internal control report and to issue an auditor’s report that
includes our opinion.
As part of our audit in accordance with auditing standards for internal control over financial reporting
generally accepted in Japan, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:

Perform procedures to obtain audit evidence about the results of the assessments of internal control overfinancial reporting in the internal control report. The procedures for the audit of the internal control
report are selected and performed, depending on the auditor’s judgment, based on significance of effecton the reliability of financial reporting.



Evaluate the overall presentation of the internal control report, including the appropriateness of thescope, procedures and results of the assessments that management presents.

Obtain sufficient appropriate audit evidence about the results of the assessments of internal control overfinancial reporting in the internal control report. We are responsible for the direction, supervision andperformance of the audit of the internal control report. We remain solely responsible for our audit
opinion.

We communicate with the audit and supervisory committee regarding, among other matters, the planned
scope and timing of our audit of the internal control report, the results thereof, material weaknesses in internal
control identified during our audit of internal control report, and those that were remediated.
We also provide the audit and supervisory committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of theCertified Public Accountants Act of Japan.

Notes to the Reader of Audit Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Financial Instruments and Exchange Act of Japan.
The English version of the “Independent Auditor’s Report on the Financial Statements and Internal Control
Over Financial Reporting” and the English translations of the consolidated financial statements and nonconsolidated financial statements are disclosed as a single document.
In addition, although the internal control report is not disclosed as a single document, because the“Independent Auditor’s Report on the Financial Statements and Internal Control Over Financial Reporting” istranslated, the internal control report portion is also included.
(Notes) 1. The original version of the independent auditor’s report presented above is kept separately by the Company (the filingcompany of the Annual Securities Report).
2. XBRL data is not included in the scope of the audit.

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Independent Auditor’s ReportAugust 30, 2023
To the Board of Directors of Sansan, Inc.:

KPMG AZSA LLC
Tokyo Office, Japan
Osamu Takagi
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant
Genta Tsuru
Designated Limited Liability Partner
Engagement Partner
Certified Public Accountant

OpinionWe have audited the accompanying financial statements of Sansan, Inc. (“the Company”), which comprise thebalance sheet as at May 31, 2023, the statements of income and changes in net assets for the year then ended,and notes, comprising a summary of significant accounting policies, other explanatory information andsupplementary schedules, in accordance with Article 193-2(1) of the Financial Instruments and Exchange Act
of Japan.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Company as at May 31, 2023, and its financial performance for the year then ended inaccordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in Japan, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our auditof the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Appropriateness of judgment regarding valuation of investment securities (investment interest in
SATORI, Inc.)
The content of “appropriateness of judgment regarding valuation of investment securities (investment
interest in SATORI, Inc.),” a key audit matter to be stated in the independent auditor’s report on thefinancial statements, is substantially the same as that of “appropriateness of judgment regarding
valuation of investment securities (investment interest in SATORI, Inc.),” a key audit matter describedin the independent auditor’s report on the consolidated financial statements. Therefore, information on
this matter is omitted in the independent auditor’s report on the financial statements.

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Other Information
The other information comprises the information included in the Annual Report, but does not include theconsolidated financial statements, the financial statements and our auditor’s reports thereon. Management is
responsible for the preparation and presentation of the other information. The audit and supervisorycommittee are responsible for overseeing the directors’ performance of their duties with regard to the design,
implementation and maintenance of the reporting process for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any formof assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact.
We have nothing to report in this regard.

Responsibilities of Management and The Audit and Supervisory Committee for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordancewith accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan.
The audit and supervisory committee are responsible for overseeing the directors’ performance of their duties
including the design, implementation and maintenance of the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with auditing standards generally accepted in Japan will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimatesand related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting andbased on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related- 159 -

disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.


Evaluate whether the presentation and disclosures in the financial statements are in accordance withaccounting standards generally accepted in Japan, the overall presentation, structure and content of thefinancial statements, including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

We communicate with the audit and supervisory committee regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the audit and supervisory committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the audit and supervisory committee, we determine those matters thatwere of most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Company which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Notes to the Reader of Audit Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as
required by the Financial Instruments and Exchange Act of Japan.
(Notes) 1. The original version of the independent auditor’s report presented above is kept separately by the Company (the filingcompany of the Annual Securities Report).
2. XBRL data is not included in the scope of the audit.

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