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.
SEPTENI HOLDINGS CO., LTD. (“the Company”) assumes no responsibility for this translation or for direct, indirect or
any other forms of damages arising from the translation.

November 30, 2016
Dear Shareholder
Koki Sato,
President and Representative Director

SEPTENI HOLDINGS CO., LTD.
17-1 Nishishinjuku 8-chome, Shinjuku-ku,
Tokyo, JapanCONVOCATION NOTICE FOR THE 26TH ORDINARY
GENERAL MEETING OF SHAREHOLDERS
1. Date and Time:

Tuesday, December 20, 2016, at 10:00 a.m.

2. Place:

The Company’s Conference Room
Floor 27, Sumitomo Fudosan Shinjuku Grand Tower
17-1 Nishishinjuku 8-chome, Shinjuku-ku, Tokyo, Japan

3. Meeting Agenda
Matters to be reported:
1. The Business Report and Consolidated Financial Statements for theCompany’s 26th term (from October 1, 2015 to September 30, 2016) and theresults of audits of the Consolidated Financial Statements by the Financial
Auditor and the Board of Company Auditors
2. Non-consolidated Financial Statements for the Company’s 26th term
(October 1, 2015 to September 30, 2016)
Matters to be resolved:
Agenda Item No. 1: Partial Amendment of the Articles of Incorporation
Agenda Item No. 2: Election of Eight (8) Directors
Agenda Item No. 3: Decision of Amount and Contents of Share-based Remuneration for
Directors, etc.

To Institutional Investors

You may use the Electronic Proxy Voting Platform operated by ICJ Inc., as a methodof exercising your voting rights for the General Meetings of Shareholders.

 When you attend the meeting, you are kindly requested to submit the enclosed Voting Rights Exercise Form to thereceptionist at the meeting.
For the purpose of saving resources, please be sure to bring this convocation notice with you.
 The documents to be provided with this convocation notice1) Notes to Consolidated Financial Statements
2) Notes to Non-consolidated Financial Statements
Based on relevant laws and regulations and the Article 18 of the Company’s Articles of Incorporation, the above items areposted on the Company’s website and are therefore not included in the documents accompanying this convocation notice.
If any amendment is made to the Business Report, the Consolidated Financial Statements, the Non-consolidated Financial
Statements and the Reference Documents for the General Meeting of Shareholders, the amended information will be
disclosed on the Company’s website.

The Company’s website: https://www.septeni-holdings.co.jp/en-1-

Reference Documents for the General Meeting of Shareholders
Agenda Items and Reference Matters
Agenda Item No. 1:

Partial Amendment of the Articles of Incorporation

1. Reasons for the proposal(1) In order to increase the efficiency of managing holders of shares less than one unit, to introduce aprovision to limit the rights of shares less than one unit (Article 8 of the proposed amendments).
(2) From the perspective of improving services to all shareholders, to introduce a system to buy
additional shares less than one unit as provided in Article 194 of the Companies Act (Article 9 of the
proposed amendments).
(3) From the perspective of thoroughly informing all shareholders, to determine to give public notice ofan administrator or administrators of the shareholder register and its or their handling office or offices(Article 10, paragraph (2) of the proposed amendments).
(4) In order to provide more flexible management of the shareholders meeting and the board of directors,
to change the person who has the right to call a shareholders meeting and a meeting of the board of
directors and the chairperson of such meetings to the director who was previously fixed by the boardof directors (Article 15 and Article 28 of the proposed amendments).
(5) In order to clarify procedures concerning the exercise by proxy of voting rights at the shareholders
meeting, to make necessary amendments (Article 17 of the proposed amendments).
(6) In order to ensure a clear separation between the management decision-making function and thebusiness execution function from the perspective of strengthening corporate governance, to introduce
a corporate officer system in which business activities are executed in accordance with management
policies or the like determined by the board of directors (Article 27 of the proposed amendments).
Together with the introduction of the corporate officer system, to abolish directors with titles andremove all those directors’ positions (Article 26 of the current articles of incorporation).
(7) To make other necessary amendments, including correcting wording and renumbering articles
together with the amendments mentioned above.
2. Details of the amendments
The details of the amendments are as set forth below.
(Underlined parts denote amendments.)
Current articles of incorporation
Chapter I General Provisions
Article 1 to Article 5(Article text omitted)
Chapter II Shares
Article 6 to Article 7(Article text omitted)
Article 8 (Acquisition of Own Shares)
The Company may acquire its own shares based on the
resolution of the board of directors.
(New article)

Proposed amendments
Chapter I General Provisions
Article 1 to Article 5(Remains the same)
Article 6 to Article 7

Chapter II Shares(Remains the same)(Deleted)

Article 8 (Rights Concerning Shares Less Than One Unit)
The Company’s shareholders shall not exercise their rights
other than the following rights, with respect to their sharesthat are less than one unit:(1) rights provided in each item of Article 189, paragraph(2) of the Companies Act;(2) rights to demand for acquisition of shares with put
option;(3) rights to receive an allotment of shares for subscription
and an allotment of share options in accordance with thenumber of shares held by shareholders; and(4) rights to make the request set forth in the following
article.

-2-Current articles of incorporation(New article)

Proposed amendments
Article 9(Purchase of Additional Shares Less Than One
Unit)
The Company’s shareholders may request the Company tosell shares that may constitute one share unit together withshares less than one unit that the shareholder is holding inaccordance with the share-handling regulations.
Article 9 (Administrator(s) of a Shareholder Register)
Article 10 (Administrator(s) of a Shareholder Register)
1. (Article text omitted)
1. (Remains the same)
2. The administrator(s) of the shareholder register, and its or 2. The Company shall determine the administrator(s) of thetheir handling office or offices shall be determined byshareholder register, and its or their handling office orresolution of the board of directors.
offices shall be determined by resolution of the board of
directors and a public notice of such resolution shall begiven.
3. Preparation, retention, and other administrative matters
3. (Amendments to the Japanese text and no materialof, or relating to, the shareholder register and the sharechanges to the provision.)
option register of the Company shall be entrusted to theadministrator(s) of the shareholder register; and theCompany shall not handle such matters.
Article 10 (Share-handling Regulations)
Article 11 (Share-handling Regulations)
The handling services and fees related to the Company’s
The handling services and fees related to the Company’s
shares shall be in accordance with the share-handlingshares shall be decided in accordance with the shareregulations determined by the board of directors.
handling regulations determined by the board of directors, inaddition to laws and regulations or these articles ofincorporation.
Article 11 (Article text omitted)
Article 12 (Remains the same)
Chapter III Shareholders Meeting
Chapter III Shareholders Meeting
Article 12 (Calling)
Article 13 (Calling)
An annual shareholders meeting shall be called within three An annual shareholders meeting shall be called in December
months from the next day of the end of each business year,
each year, and an extraordinary shareholders meeting may be
and an extraordinary shareholders meeting may be called
called whenever necessary.
whenever necessary.
Article 13 (Record Date for the Annual Shareholders
Article 14 (Record Date for the Annual Shareholders
Meeting)
Meeting)
The Company determines shareholders stated or recorded in The record date for the voting rights at the annual
the final shareholder register at the end of each businessshareholders meeting of the Company is September 30 eachyear, as the shareholders who should exercise their right atyear.
the annual shareholders meeting for the business year.
Article 14 (Person to Call a Shareholders Meeting and
Article 15 (Person Who Have the Right to Call a
Chairperson)
Shareholders Meeting and Chairperson)
1. Unless otherwise prescribed in laws and regulations, the 1. Unless otherwise prescribed in laws and regulations, therepresentative director shall call and be appointed as adirector, as previously fixed by the board of directors,
chairperson of a shareholders meeting. If there are ashall call and be a chairperson of a shareholders meeting.
multiple number of representative directors, the order ofpriority shall be determined by the board of directors inadvance.
2. When the representative director is unable to do so or is
2. When the director stated in the preceding paragraph isabsent, another director, in an order of priority establishedunable to act, another director, in an order of priority
by the board of directors in advance, shall undertake theestablished by the board of directors in advance, shall callrole.
and act as chairperson of the shareholders meeting.
Article 15 (Method of Determining a Resolution)
Article 16 (Method of Determining a Resolution)
1. Unless otherwise provided by laws and regulations or
1. (Amendments to the Japanese text and no material
these articles of incorporation, a resolution of thechanges to the provision.)shareholders meeting shall be determined by majority
vote held by the shareholders present who are entitled toexercise voting rights.
2. A resolution of the shareholders meeting pursuant to
2. (Amendments to the Japanese text and no material
Article 309, paragraph (2) of the Companies Act shall bechanges to the provision.)
adopted by two thirds or more of the voting rights held by
the shareholders present who are entitled to exercise
voting rights, where shareholders holding one third or
more of the voting rights of all the voting shareholders
attend.

-3-Current articles of incorporation

Proposed amendments

Article 16 (Exercise by Proxy of Voting Rights)
If shareholders are to exercise their respective voting rights
by proxy, the proxy shall be limited to a shareholder of theCompany with a voting right.

Article 17 (Exercise by Proxy of Voting Rights)
Shareholders are entitled to exercise their respective voting
rights by one proxy who is a shareholder of the Company
with a voting right. In this case, such shareholder or proxyshall present to the Company a document evidencing the
grant of the power of representation for each shareholders
meeting.
Article 18 (Minutes)(Amendments to the Japanese text and no material changes
to the provision.)

Article 17 (Minutes)
The outline of proceedings and results of the shareholders
meeting and other matters provided by relevant laws andregulations shall be stated or recorded in the minutes.
Article 18 (Internet Disclosure and Deemed Provision ofReference Documents, Etc. for Shareholders
Meetings)
When calling the shareholders meeting, the Company may
disclose information to be indicated or represented inreference documents of a shareholders meeting, business
reports, financial statements, and consolidated financial
statements through the Internet in accordance with theOrdinance of the Ministry of Justice; and this shall bedeemed provision to shareholders.
Article 19 (Resolution for Policy on Handling Large scale
Purchases of the Company’s Share Certificates,
Etc. (Anti takeover Measures))
1. The matters otherwise provided by laws and regulationsor these articles of incorporation shall be resolved at ashareholders meeting; furthermore, the introduction,change, continuance, or abolition of the policy onhandling large scale purchases of the Company’s sharecertificates, etc. (anti takeover measures) may also be
determined by its resolution.
2. The policy on handling large scale purchases of theCompany’s share certificates, etc. (anti takeovermeasures) set forth in the preceding article means theprocedures where the Company will require those who
attempt to conduct large scale purchases to comply with,
as well as rules including the requirements for,procedures and details of the countermeasures that theCompany will take against the large scale purchases orsimilar acts, in order to avoid a situation in which
inappropriate persons control decisions on the Company’s
financial and business policies in light of the basic policy
concerning what and how a person controlling decisions
on the Company’s financial and business policies shouldbe.
Article 20 (Decision on Allotment of Share Options
Without Contribution)
1. The Company may determine the matters concerning theallotment of share options without contribution by
resolution of the board of directors, as well as byresolution of the shareholders meeting or by a resolutionof the board of directors based on the authority delegatedby resolution of the shareholders meeting.
2. As one of the countermeasures against the large scalepurchases of the Company’s share certificates, etc. set
forth in paragraph 2 of the preceding article, when
determining the matters concerning the allotment of shareoptions without contribution based on the preceding
paragraph, the Company may determine different
contents of share options such as exercise conditions andcall options to certain share option holders from those forother share option holders.

Article 19 (Internet Disclosure and Deemed Provision ofReference Documents, Etc. for Shareholders
Meetings)(Amendments to the Japanese text and no material changes
to the provision.)

Article 20 (Resolution for Policy on Handling Large scale
Purchases of the Company’s Share Certificates,
Etc. (Anti takeover Measures))
1. (Amendments to the Japanese text and no materialchanges to the provision.)

2. (Amendments to the Japanese text and no materialchanges to the provision.)

Article 21 (Decision on Allotment of Share Options
Without Contribution)
1. (Amendments to the Japanese text and no materialchanges to the provision.)

2. (Amendments to the Japanese text and no materialchanges to the provision.)-4-Current articles of incorporation

Proposed amendments

Chapter IV Directors and the Board of Directors

Chapter IV Directors, the Board of Directors, and Executive
Officers
Article 22 to Article 26(Remains the same)(Deleted)

Article 21 to Article 25(Article text omitted)
Article 26 (Directors with Titles)
By resolution of the board of directors, a director andpresident shall be appointed; and as necessary, a director andchairman, a director and vice chairman, one or more vicepresidents, one or more senior managing directors, and one
or more managing directors may be appointed.
(New article)
Article 27 (Executive Officer)
1. The Company shall appoint executive officers by
resolution of the board of directors; and unless otherwise
provided by laws and regulations or these articles ofincorporation, the Company may have them executebusiness pertaining to the Company’s business, thebusiness of an operating company that belongs to theCompany’s corporate group, or the business of multiple
operating companies that belong to the Company’s
corporate group.
2. The board of directors may, by its resolution, determine apresident and executive officer and a senior executive
officer or senior executive officers from among theexecutive officers.
3. Matters concerning the executive officers shall be decidedin accordance with the regulations of the executive
officers established by the board of directors, in addition
to these articles of incorporation.
Article 27 (Board of Directors)
Article 28 (Board of Directors)
1. Unless otherwise prescribed in laws and regulations, the 1. Unless otherwise prescribed in laws and regulations, thedirector and president shall call and be appointed as the
director, as previously fixed by the board of directors,
chairperson of a meeting of the board of directors.
shall call and be the chairperson of a meeting of the board
However, when the director and president is unable to doof directors.
so or is absent, another director, in an order of priority
established by the board of directors in advance, shallundertake the role.
(New provision)
2. When the director stated in the preceding paragraph isunable to act, another director, in an order of priority
established by the board of directors in advance, shall calland act as chairperson of the meeting of the board of
directors.
2. (Article text omitted)
3. (Remains the same)
3. (Article text omitted)
4. (Remains the same)
Article 28 (Method of Determining a Resolution of the
Article 29 (Method of Determining a Resolution of theBoard of Directors)
Board of Directors)
1. (Article text omitted)
1. (Remains the same)
2. In the Company, with respect to a matter that is the
2. In the Company, in cases where directors submit a
purpose of the resolution of the board of directors
proposal with respect to a matter that is the purpose of themeeting, if the requirement prescribed by Article 370 ofresolution of board of directors meeting, if all directors
the Companies Act is met, it shall be deemed that the
who are entitled to participate in votes with respect toresolution to approve the proposal at the board ofsuch proposal manifest their intention to agree to suchdirectors meeting has been made.
proposal in writing or by means of electromagnetic
records (except for the case where a company auditor
states his/her objections to such proposal), it shall bedeemed that the resolution to approve such proposal at theboard of directors meeting has been made.
Article 29 (Minutes of a Meeting of the Board of Directors) Article 30 (Minutes of a Meeting of the Board of Directors)
The outline of proceedings and results of the board of(Amendments to the Japanese text and no material changes
directors meeting and other matters provided by relevantto the provision.)laws and regulations shall be stated or recorded in theminutes, to which the directors and company auditorspresent at that meeting shall affix their respective names andseal impressions, or electronic signatures.

-5-Current articles of incorporation

Proposed amendments

Article 30 (Regulations of the Board of Directors)
Matters concerning the board of directors shall be decided inaccordance with the regulations of the board of directors
established by the board of directors, in addition to laws andregulations or these articles of incorporation.
Article 31 (Article text omitted)
Article 32 (Exemption from Liability of Directors)
1. (Article text omitted)
2. The Company and the outside directors may conclude anagreement that limits the liability of the outside directors
provided in Article 423, paragraph (1) of the Companies
Act to the higher of either a prefixed amount exceeding 5
million yen or the amount provided by laws andregulations in cases where the relevant outside directors
are without knowledge and are not grossly negligent.

Article 31 (Regulations of the Board of Directors)(Amendments to the Japanese text and no material changes
to the provision.)

Article 32 (Remains the same)
Article 33 (Exemption from Liability of Directors)
1. (Remains the same)
2. (Amendments to the Japanese text and no materialchanges to the provision.)

Chapter V Company Auditors and the Board of Company
Chapter V Company Auditors and the Board of Company
Auditors
Auditors
Article 33 to Article 38(Article text omitted)
Article 34 to Article 39(Remains the same)
Article 39 (Minutes of a Meeting of the Board of Company Article 40 (Minutes of a Meeting of the Board of Company
Auditors)
Auditors)
The outline of proceedings and results of the board of(Amendments to the Japanese text and no material changes
company auditors meeting and other matters provided byto the provision.)
relevant laws and regulations shall be stated or recorded in
the minutes, to which the company auditors present at thatmeeting shall affix their respective names and seal
impressions, or electronic signatures.
Article 40 (Regulations of the Board of Company Auditors) Article 41 (Regulations of the Board of Company Auditors)
Matters concerning the board of company auditors shall be(Amendments to the Japanese text and no material changes
decided in accordance with the regulations of the board of
to the provision.)company auditors established by the board of company
auditors, in addition to laws and regulations or these articles
of incorporation.
Article 41 (Article text omitted)
Article 42 (Remains the same)
Article 42 (Exemption from Liability of Company
Article 43 (Exemption from Liability of Company
Auditors)
Auditors)
1. (Article text omitted)
1. (Remains the same)
2. The Company and the outside company auditors may
2. (Amendments to the Japanese text and no material
conclude an agreement that limits the liability of thechanges to the provision.)outside company auditors provided in Article 423,
paragraph (1) of the Companies Act to the higher of eithera prefixed amount exceeding 5 million yen or the amountprovided by laws and regulations in cases where therelevant outside company auditors are without knowledge
and are not grossly negligent.
Chapter VI Financial Auditors
Article 43 (Article text omitted)
Article 44 (Term of Office)
1. (Article text omitted)
2. Unless otherwise resolved at the annual shareholders
meeting stated in the preceding paragraph, a financial
auditor shall be deemed reelected at the annual
shareholders meeting.
Article 45 (Exemption from Liability of Financial Auditors)
1. (Article text omitted)
2. The Company and the financial auditors may conclude anagreement that limits the liability of the financial auditors
provided in Article 423, paragraph (1) of the Companies
Act to the higher of either a prefixed amount exceeding
30 million yen or the amount provided by laws andregulations in cases where the relevant financial auditors
are without knowledge and are not grossly negligent.

Chapter VI Financial Auditors
Article 44 (Remains the same)
Article 45 (Term of Office)
1. (Remains the same)
2. (Amendments to the Japanese text and no materialchanges to the provision.)

Article 46 (Exemption from Liability of Financial Auditors)
1. (Remains the same)
2. (Amendments to the Japanese text and no materialchanges to the provision.)-6-

Current articles of incorporation

Proposed amendments

Chapter VII Accounting
Article 46 (Article text omitted)
Article 47 (Organ to Determine Dividends of Surplus, Etc.)
Unless otherwise provided by laws or regulations, theCompany shall determine matters prescribed in each item of
Article 459, paragraph (1) of the Companies Act including
dividends of surplus by resolution of the board of directors,
not by resolution of the shareholders meeting.

Chapter VII Accounting
Article 47 (Remains the same)
Article 48 (Organ to Determine Dividends of Surplus, Etc.)
Unless otherwise provided by laws or regulations, theCompany shall determine matters prescribed in each item of
Article 459, paragraph (1) of the Companies Act including
dividends of surplus and the acquisition of its own shares byresolution of the board of directors, not by resolution of theshareholders meeting.
Article 49 (Record Date of Dividends from Surplus)
1. The record date of year-end dividends of the Company is
September 30 each year.

Article 48 (Record Date of Dividends from Surplus)
1. The year-end dividends may be paid to shareholders or
registered pledgees of shares stated or recorded in the
final shareholders register at the end of each businessyear.
2. (Article text omitted)
Article 49 (Article text omitted)

2. (Remains the same)
Article 50 (Remains the same)-7-

Agenda Item No. 2:

Election of Eight (8) Directors

At the close of this General Meeting of Shareholders, all eight directors will retire due to the expiration of
their respective terms of office. The Company hereby proposes that eight directors be elected. The
candidates are as follows:1

Koki Sato(Date of birth: March 11, 1975)

Reelection
Number of years in office
15 years
Attendance to the board of directors meetings
15/15
Number of the Company’s ordinary shares held 71,700

Profile and position at the Company
Apr. 1997
Joined the Company
Jul. 2001
Director and General Manager of Internet Operations
Oct. 2003
Managing Director and CMO
Dec. 2004
Senior Managing Director and COO
Oct. 2007
Senior Managing Director
Dec. 2009
President and Representative Director (current position)
 Important positions held at other companies
President and Representative Director, SEPTENI CO., LTD.

2

Isamu Ueno
(Date of birth: June 1, 1968)

Reelection
Number of years in office
12 years
Attendance to the board of directors meetings
15/15
Number of the Company’s ordinary shares held 86,000

Profile and position at the Company
Sep. 1998
Joined the Company
Nov. 2003
Officer and Manager of Personnel and Administration
Dec. 2004
Director and Manager of Personnel and Administration
Dec. 2005
Managing Director
Dec. 2009
Senior Managing Director (current position)
 Important positions held at other companies
None.

3

Kazumi Shimizu(Date of birth: August 8, 1963)

Reelection
Number of years in office
11 years
Attendance to the board of directors meetings
15/15
Number of the Company’s ordinary shares held 24,000

Profile and position at the Company
Oct. 2004
Joined the Company
Dec. 2005
Director and Manager of Business Management
Dec. 2009Managing Director (current position)
 Important positions held at other companies
None.

-8-

4

Tadahiro Matsuda(Date of birth: May 7, 1973)

Reelection
Number of years in office
11 years
Attendance to the board of directors meetings
14/15
Number of the Company’s ordinary shares held 24,000

Profile and position at the Company
Apr. 1998
Joined the Company
Oct. 2004
Head of the Osaka BranchJul. 2005
General Manager of Media
Dec. 2005
Director (current position)
Aug. 2009
President and Representative Director, SEPTENI CROSSGATE CO., LTD.
 Important positions held at other companies
None.

5

Shintaro Karaki(Date of birth: June 1, 1978)

Reelection
Number of years in office
4 years
Attendance to the board of directors meetings
15/15
Number of the Company’s ordinary shares held 10,000

Profile and position at the Company
Apr. 2001
Joined the Company
Oct. 2006
President and Representative Director, SEPTENI CROSSGATE CO., LTD.
Jan. 2010
Manager of Management Planning Dept.
Dec. 2012
Director and Manager of Management Planning Dept. (current position)
 Important positions held at other companies
None.

6

Kana Setoguchi(Date of birth: August 23, 1975)

Reelection
Number of years in office
2 years
Attendance to the board of directors meetings
15/15
Number of the Company’s ordinary shares held 91,700

Profile and position at the Company
Apr. 1998
Joined the Company
Dec. 2009
Director, SEPTENI CO., LTD.
Dec. 2011
Managing Director, SEPTENI CO., LTD. (current position)
Oct. 2013
Manager of Global Business Promotion Dept.
Dec. 2013
Director and Manager of Global Business Promotion Dept.
Apr. 2014
Director (current position)
 Important positions held at other companies
Managing Director, SEPTENI CO., LTD.

-9-

7

Tatsuya Kimura(Date of birth: November 24, 1958)

Reelection
Outside director
Independent officer
Number of years in office
2 years
Attendance to the board of directors meetings
14/15
Number of the Company’s ordinary shares held 500

Profile and position at the Company
Apr. 2001
Associate Professor, Nihon University Graduate School of Business
Apr. 2003
Associate Professor, Waseda University Graduate School of Asia-Pacific Studies
Apr. 2006
Professor, Waseda University Graduate School of Asia-Pacific Studies
Dec. 2006
Company Auditor
Apr. 2007
Professor, Waseda University Graduate School of Commerce
Dec. 2014
Outside Director (current position)
Apr. 2016
Professor, Waseda University Graduate School of Business and Finance (current position)
 Important positions held at other companies
Professor, Waseda University Graduate School of Business and Finance8

Etsuko Okajima(Date of birth: May 16, 1966)

Reelection
Outside director
Independent officer
Number of years in office
1 yearAttendance to the board of directors meetings
9/10
Number of the Company’s ordinary shares held –Profile and position at the Company
Apr. 1989
Joined Mitsubishi Corporation
Jan. 2001
Joined McKinsey & Company Incorporated Japan
Mar. 2002
Joined Globis Management Bank, Inc.
Jul. 2005
President, Globis Management Bank, Inc.
Jun. 2007
CEO, ProNova Inc. (current position)
Jun. 2014
Outside Director, Astellas Pharma Inc. (current position)
Jun. 2014
External Director, MARUI GROUP Co., Ltd. (current position)
Nov. 2015
Outside Director, Lancers, Inc. (current position)
Dec. 2015
Outside Director (current position)
Mar. 2016
Outside Director, Link and Motivation Inc. (current position)
 Important positions held at other companies
CEO, ProNova Inc.; Outside Director, Astellas Pharma Inc.; External Director, MARUI GROUP Co., Ltd.; Outside
Director, Link and Motivation Inc.
(Notes)1. The name of Ms. Etsuko Okajima in the family register is Etsuko Mino.
2. Mr. Tatsuya Kimura and Ms. Etsuko Okajima are candidates for outside directors.
3. Ms. Etsuko Okajima is the CEO of ProNova Inc., which has concluded a service contract agreement with SEPTENI CO.,LTD., a subsidiary of the Company, for support in the development of female business executives.
4. Apart from what is mentioned in 3. above, there are no other special relationships between the Company and each of thecandidates.
5. Mr. Tatsuya Kimura was elected as an outside director of the Company in December 2014. He will have served as such for
two years at the close of the General Meeting of Shareholders. He was named as a candidate because he is very familiar
with the field of corporate management and because he, as an outside director, has provided useful advice on all aspects ofthe business administration of the SEPTENI Group on the basis of his extensive knowledge and considerable insight. He
has never been involved in corporate management other than by serving as an outside officer. For the reasons mentioned
above, he is deemed capable of properly carrying out the duties of an outside director of the Company.
6. Ms. Etsuko Okajima was elected as an outside director of the Company in December 2015. She will have served as suchfor one year at the close of the General Meeting of Shareholders. She was named as a candidate because she has anabundance of experience and knowledge of corporate management as well as extensive insight, such that she is deemedcapable of properly fulfilling the duties of an outside director from an independent and objective position.

- 10 -

7. If the proposed election of Mr. Tatsuya Kimura and Ms. Etsuko Okajima is approved at the General Meeting of
Shareholders, they and the Company will enter into liability limitation agreements according to which their liability under
Article 423, paragraph 1 of the Companies Act will not exceed either ¥5 million yen or the Minimum Liability Amountstipulated in paragraph (1) of Article 425 of the same Act, whichever is higher.
8. The Company has designated Mr. Tatsuya Kimura and Ms. Etsuko Okajima as independent officers in accordance with therules of the Tokyo Stock Exchange, Inc. and has submitted a notice of designation to the Tokyo Stock Exchange. If the
proposed election of them is approved, the Company will continue to designate them as independent officers.

- 11 -

Agenda Item No. 3:
1.

Decision of Amount and Contents of Share-based Remuneration for
Directors, etc.

Reasons for the proposal and reasons for justifying such remuneration
Remuneration for directors of the Company consists of a “monthly remuneration” and “performancelinked share option remuneration.” The Company now requests approval to introduce a performancelinked and share-based remuneration plan (hereinafter referred to as the “Plan”), by which we will
perform the delivery of shares of the Company to directors (excluding outside directors and those whoare non-residents of Japan) and executive officers (excluding those who are non-residents of Japan;
hereinafter the directors and executive officers collectively referred to as “Directors, etc.”) of theCompany, in accordance with factors including the degree of attainment of performance targets.
Under the Plan, officers’ remunerations for the Directors, etc. of the Company and the executive
officers (excluding those who are non-residents of Japan; hereinafter the Directors, etc. of theCompany and these executive officers are collectively referred to as the “Eligible Directors, etc.”) of
its subsidiaries (hereinafter, the “Participating Subsidiaries,” and the Company and the Participating
Subsidiaries are collectively referred to as the “Participating Companies”) will be managed in an
integrated manner.
Subject to the approval of Agenda Item No. 1: Partial Amendment of the Articles of Incorporation as
proposed, the SEPTENI Group plans to introduce the executive officer system based on the delegationof the authority with a clear separation between the management decision-making function and thebusiness execution function, starting from January 1, 2017. The introduction of the Plan aims to makethe linkage between the remuneration for the Eligible Directors, etc. and the SEPTENI Group’s
medium- to long-term performance and shareholders value clearer, and to serve as a sound incentive
toward making contributions to improving performance of the SEPTENI Group over the medium- andlong-term and to increasing corporate value. In addition, it is in line with the purport and spirit of the“Corporate Governance Code” of Tokyo Stock Exchange, Inc. concerning remuneration plan linked tomedium- to long-term results and based on shares. Accordingly, the Company considers introductionof the Plan justifiable.
This agenda item requests approval to newly pay share-based remuneration to Directors, etc. separate
from the current limit on remuneration for directors (up to ¥600 million per year, excluding amounts
paid as salaries for employees to directors who serve concurrently as employees) that was approved atthe 23rd Ordinary General Meeting of Shareholders held on December 20, 2013.
The number of directors eligible for the Plan will be six provided that Agenda Item No. 2: Election ofEight Directors is approved and adopted as proposed. Furthermore, as the SEPTENI Group adopts a
holding company structure, the Plan is established to operate in an integrated manner for the directorsof the Company and executive officers of the Participating Companies on the basis of the possibility
that executive officers of the Participating Companies may serve concurrently as directors of theCompany during the Applicable Period (as provided for in 2. (3) below; the same applies hereinafter)of the Plan (the number of executive officers of the Participating Companies who are eligible for thePlan and do not serve concurrently as directors of the Company are two at the time of introduction of
the aforementioned executive officer system based on the delegation of the authority). Therefore, theagenda item suggests the overall amount and contents of remuneration based on the Plan as
remuneration, etc. for directors.
Subject to the approval of the introduction of the Plan at this General Meeting of Shareholders, theCompany shall abolish the current officers’ remunerations plan as share options for the officers of theCompany and therefore will not issue new share options in the future.

2.

Amount and other contents of remuneration, etc., under the Plan

(1) Overview of the Plan
The Plan is a share-based remuneration plan by which the Company’s shares are acquired through atrust using the amount of remuneration for the Eligible Directors, etc. contributed by the Participating
Companies, and by which the Company’s shares and an amount of money equivalent to the portion of
the Company’s shares converted into cash (hereinafter referred to as the “Company’s Shares, etc.”)- 12 -

are delivered and provided (hereinafter referred to as “Grant, etc.”) to the Eligible Directors, etc.
through the trust. (Details are as provided for in (2) below and thereafter.)(2) Persons eligible for the Grant, etc. of the Company’s Shares, etc. under the Plan
Directors (excluding outside directors and those who are non-residents of Japan; the same applies
hereinafter in this agenda item) of the Company and executive officers (excluding those who are nonresidents of Japan; the same applies hereinafter in this agenda item) of the Company and its
subsidiaries that adopt an executive officer system are the persons eligible for the Grant, etc. of theCompany’s Shares, etc. under the Plan.
(3) Maximum amount of money contributed by each Participating Company
The Plan will be applicable to three consecutive business years (initially, the three business years fromthe business year ending September 30, 2017 to the business year ending September 30, 2019, and, inthe event of extension of the trust period as provided for below, every three business years thereafter;
hereinafter referred to as “Applicable Period”) from the business year to which the date ofestablishment of the trust belongs. The Company, along with money contributed by each Participating
Subsidiary as remuneration for executive officers of each Participating Subsidiary, contributes money
as remuneration for Directors, etc. of the Company (the maximum amount of the sum of money
contributed by the Company and Participating Subsidiaries per each Applicable Period shall be ¥700
million), and sets a trust with a trust period of three years and with Eligible Directors, etc. who fulfill
the requirements for beneficiaries as beneficiaries of the trust (hereinafter referred to as the “Trust”)(the trust period may be extended as follows; the same applies hereinafter). The Trust purchases theshares of the Company on the stock market or from the Company (disposition of treasury shares)
using the trusted money in accordance with the instructions of the trust administrator (no dilution of
the Company’s shares occurs under the Plan as the initial purchase shall be made on the stock market).
Each Participating Company will, during the trust period, grant points (as provided for in (4) below)
to the Eligible Directors, etc., and the Grant, etc. of the Company’s Shares, etc. will be performed by
the Trust.
At the expiry of the trust period of the Trust, the Trust may be continued by performing amendment to
the trust contract or placing an additional trust as an alternative to newly setting the Trust. In thisevent, the trust period of the Trust will be extended by a period equal to the initial trust period, and thethree business years following the extension of the trust period will be the new Applicable Period. For
every trust period extended, the Participating Subsidiaries will provide an additional contribution to
the Company as remuneration for executive officers of each Participating Subsidiary within the limitof amount approved by the resolution of their respective General Meeting of Shareholders, and theCompany will provide an additional contribution as remuneration for Directors, etc. of the Company
to entrust the money along with the money contributed by each Participating Subsidiary (themaximum amount of the sum of money additionally contributed by the Company and theParticipating Subsidiaries per each Applicable Period shall be ¥700 million). Each Participating
Subsidiary will continue to grant points to the Eligible Directors, etc. and the Grant, etc. of theCompany’s Shares, etc. will be continuously performed by the Trust during the trust period extended;
provided, however, that, if, in the case of providing the aforementioned additional contribution, there
are residual the Company’s shares and money (hereinafter, collectively referred to as “Residual Shares,etc.”) in the trust assets on the last day of the Applicable Period prior to the extension, the total of theamount of Residual Shares, etc. and the trust money for additional contribution shall not be more than¥700 million.
(4) Calculation method and maximum number of the Company’s Shares, etc., subject to Grant, etc. to the
Eligible Directors, etc.
On September 30 of every year during the trust period, certain points hereinafter, referred to as Grant
Points, will be granted to each Participating Company according to such factors as titles and thedegree of attainment of the performance target for the fiscal year ending September 30 of the same
year (initially, the fiscal year ending September 30, 2017; hereinafter, the “Evaluation Fiscal Year”).
Furthermore, after the end of the final fiscal year of the Applicable Period, a fixed number of theGrant Points will be granted to Eligible Directors, etc. serving at the respective Participating
Company as of September 30 of the final fiscal year of the Applicable Period, respectively for eachParticipating Company, according to such factors as the level of attainment of the performance targets- 13 -

in the Midterm Business Policies, in addition to the Grant Points granted according to such factors as
the degree of attainment of the performance target for each Evaluation Fiscal Year. The number of theCompany’s Shares, etc., to be granted to the Eligible Directors, etc. under the Plan is determined on
the basis that one point corresponds to one share of the Company, according to the accumulated valueof Grant Points (hereinafter, “Accumulated Points”). If the total number of the shares of the Company
increases or decreases as a result of a share split, gratuitous allotment of shares, consolidation ofshares, etc., the Company will adjust the number of shares of the Company at which Grant, etc., ismade for every one point in accordance with the ratio of increase or decrease.
The total number of the Grant Points subject to Grant, etc. to the Eligible Directors, etc. through theTrust shall be no more than 2,800,000 points per three years (equivalent of 2.8 million shares). Thismaximum number of Grant Points is set by taking into account the maximum amount that the Eligible
Company described in (3) above contributes and by referencing the share price trends.
(5) Timing of Grant, etc. of the Company’s Shares, etc. to the Eligible Directors, etc.
The Eligible Directors, etc. who fulfill the requirements for beneficiaries will in principle receive
Grant, etc. of the Company’s Shares, etc. according to Accumulated Points after the end of the
Applicable Period. In this case, the Eligible Directors, etc. shall receive grant of shares of theCompany corresponding to 50% of the Accumulated Points (shares less than one unit are roundeddown). The number of the Company’s shares corresponding to the residual number of the points shallbe converted into cash within the Trust, and the Eligible Directors, etc. receive provision of money
equivalent to the amount of cash converted.
In the event that an Eligible Director, etc. who fulfills the requirements for beneficiaries is to retire
from office during the trust period (excluding voluntary resignation and dismissal), the Eligible
Director, etc. shall receive grant of shares of the Company corresponding to 50% of the Accumulated
Points by the time of retirement (shares less than one unit are rounded down) after required
procedures without delay. The number of the Company’s shares corresponding to the residual numberof the points shall be converted into cash within the Trust, and the Eligible Director, etc. receives
provision of money equivalent to the amount of cash converted. In the event that an Eligible Director,
etc. at office who fulfills the requirements for beneficiaries passes away during the trust period, theheir of the Eligible Director, etc. will receive provision of money from the Trust equivalent to thenumber of the Company’s shares corresponding to the Accumulated Points by the time of death of the
Eligible Director, etc., converted into cash. In the event that an Eligible Director, etc. at office who
fulfills the requirements for beneficiaries is posted overseas and become non-resident of Japan during
the trust period, the Eligible Director, etc. will receive provision of money from the Trust equivalent
to the number of the Company’s shares corresponding to the Accumulated Points by the time thereof.
(6) Voting rights concerning the Company’s shares in the Trust
In order to ensure neutrality toward management, voting rights of the Company’s shares in the Trustshall not be exercised during the trust period.
(7) Handling of dividends from surplus of the Company’s shares in the Trust
Dividends from surplus of the Company’s shares in the Trust are received by the Trust andappropriated for purposes of trust fees and trust expenses. If, there are residue dividends after paying
the trust fees and trust expenses at the termination of the Trust, such dividends shall be distributed to
the Eligible Directors, etc.
(8) Other matters of the Plan
Other matters regarding the Plan shall be defined by the board of directors each time the Trust is set,
an amendment is performed to the trust contract, and additional contribution is made to the Trust.
(Reference)
For details of the Plan, please refer to the press release “Notice on Introduction of PerformanceLinked and Share-Based Remuneration Plan for Officers” dated on November 22, 2016.

- 14 -

Business Report (From October 1, 2015 to September 30, 2016)
1. Current status of the SEPTENI Group(1) Business progress and results
Adoption of the International Financial Reporting Standards (hereinafter referred to as “IFRS”)
The SEPTENI Group has applied IFRS since the fiscal year ended September 30, 2016 in place ofpreviously used Japanese GAAP, aiming for better convenience for all of the Group’s stakeholders,
including shareholders and investors in and outside Japan, while promoting actively its global businessdevelopment.
In line with the above, while voluntary providing previously used “net sales” as a reference, the Group
discloses “revenue” as an indicator based on IFRS. The recording method of the revenue in the sale byadvertising agents, comprising a large part of the Internet Marketing Business, has been changed to record
the net amount, indicating only the margin. As a result, the amount of “revenue” has been reduced
substantially from the amount of “net sales” previously used when the amounts are compared in the sametransaction.
In addition, the SEPTENI Group discloses “non-GAAP operating profit,” an indicator that is not defined in
IFRS on a voluntary basis. Non-GAAP operating profit (or loss) is a profit indicator of constant businessperformance determined by adjusting temporary factors such as impairment losses and gains or losses on
the sales of non-current assets from the IFRS-based operating profit (or loss). The management of theGroup deems that the information is valuable for users of financial statements.
Earnings for the current term
Looking at the Internet business environment, in which the SEPTENI Group operates, the rapid
proliferation of smartphones has continued, with the household ownership rate as of December 31, 2015
accounting for 72.0% (source: “2015 White Paper on Information and Communications in Japan,” Ministryof Internal Affairs and Communications). As such, the smartphone has become a mainstream device foraccessing the Internet and the market for smartphone advertising and diverse services and content is
expanding. In addition, the power of social media, led by SNS (social networking services), is increasing
still further, and this is consequently prompting greater demand for marketing support that makes use of thecharacteristics of social media. These changes in the operating environment are promoting the global
expansion of the Internet business, with overseas business opportunities on the rise.
Under these circumstances, the SEPTENI Group was able to continue both expanding its operations andincreasing its profitability in its mainstay Internet Marketing Business by promoting business operations
focused on the growth areas of “Mobile,” “Social,” and “Global.” In addition, it proactively made upfront
investments in human resources and new businesses, etc. to strengthen its future competitiveness. As aresult, revenue increased to ¥17,060 million (up 19.6% year on year), non-GAAP operating profit increasedto ¥3,841 million (up 26.8% year on year), operating profit rose to ¥3,730 million (up 44.6% year on year)
and profit attributable to owners of parent totaled ¥2,519 million (up 7.1% year on year), with profit
practically hitting a record high for the fifth straight fiscal year.
Concerning year-end dividend for the current term, after taking into consideration the above-mentioned
business performance and the Company’s basic policy on profit distribution, the Company passed a
resolution at the board of directors meeting held on November 22, 2016 to pay a year-end dividend of ¥16
per share.
Based on this decision, total dividends paid will be ¥415,095,504.
* The Company conducted a share split of common share at a ratio of 5 for 1 on October 1, 2016. However,
the year-end dividend for the current term (ended September 30, 2016) will be distributed with respect tothe number of shares on a pre-share-split basis.

- 15 -

Revenue:

Non-GAAP operating
profit (Note):¥17,060 million¥3,841 million

Up 19.6%

Up 26.8%

Previous term: ¥14,267 million
Profit attributable to¥2,519 million
owners of parent:

Previous term: ¥3,030 million
Dividends:

Up 7.1%¥16

Previous term: ¥2,351 million

Previous term: ¥14(Note) A profit indicator of constant business performance determined by adjusting temporary factors such as an impairment
loss and a gain or loss on sale of non-current assets from the IFRS-based operating profit.

The overview of operating results by major business segment is as follows.
We have made a revision to our business segment definitions and added the new reportable segment of“Non-core Business” in addition to the pre-existing segments of “Internet Marketing Business” and “Media
Content Business.”
Accordingly, in order to provide year on year comparison data, the operating results of the previous term
have been restated to reflect the revision of the business segment definitions.

Internet Marketing Business Major business
Development of comprehensive marketing support services for companies leveraging the Internet
Sales of Internet advertising, provision of web solutions (website creation and operations, SEO, etc.) andprovision of marketing platforms including an ad network and cloud-based CRM services
During the current term, amid an expanding Internet advertising market centering on performance-based
advertising for smartphones, the SEPTENI Group’s business focus was on the growth areas of “Mobile,”“Social,” and “Global.” As a result, we were able to expand the operations steadily and also improve
profitability. In smartphone advertising, high growth continued on the back of expanding demand and thegreater diversification of advertising products. Billings amounted to about 1.4 times the size it was in theprevious term. In the social business, which centers on support services for marketing that makes use of
SNS and in which the SEPTENI Group has strength, the broadening of the media lineup to include
Instagram and LINE as well as our mainstay Facebook advertising contributed to increasing the billings toabout 1.4 times the size it was in the previous term. Meanwhile, as for global expansion, the Group grew its
business foundation in preparation for new market expansion in the future by, for example, establishing two
local bases (New York and Beijing). However, owing to a reduction in deliveries for existing large projects,
billings decreased slightly from the previous term.
Revenue: ¥13,409 million(Up 20.8% year on year)

Non-GAAP operating profit: ¥5,331 million(Up 39.7% year on year)- 16 -

Media Content Business Major business
Manga Content Business, recruitment platform business, social contribution platform business, andmedical platform business
The Manga Content Business engages in the cultivation and production of manga artists and the operationof manga distribution service for the purpose of planning and developing our own intellectual property (IP).
In the Manga Content Business in the current term, we proactively made upfront investments to expand thescale of the manga application “GANMA!” As a result, the number of GANMA! users grew significantly
resulting in cumulative downloads of 3.77 million as of September 30, 2016, which is about 2.1 times
number it was in the previous term. As part of efforts to improve profitability, we started sales ofadvertising that appears on GANMA! and forged ahead with commercialization of serialized manga forwhich we own IP. From such manga, we have created 27 books in the current term, and published 43
volumes in total.
Meanwhile, in the new businesses, we included the medical platform business in the consolidated results.
Non-GAAP operating loss: ¥718 million(Operating loss of ¥530 million
in the previous term)

Revenue: ¥601 million(Up 190.7% year on year)

Non-core Business Major business
Mobile game business
Planning, development and operation of varied digital content, primarily of mobile games for smartphones.
During the current term, although performance of new game titles has been robust, advertising expenses
increased significantly by the implementation of large-scale promotional programs.
Non-GAAP operating loss: ¥326 million(Operating profit of ¥122 million
in the previous term)

Revenue: ¥3,200 million(Up 4.2% year on year)- 17 -

(2) Trends in financial position and profit and loss
 J-GAAP
Category

23rd term(ended September 30,
2013)

24th term(ended September 30,
2014)

25th term(ended September 30,
2015)

Net sales (Thousand yen)

45,982,078

54,345,580

64,547,685

Operating profit (Thousand yen)

1,593,301

2,259,953

2,753,969

Ordinary income (Thousand yen)

1,752,653

2,362,887

3,118,052

Profit attributable to owners of parent(Thousand yen)

1,207,196

1,549,187

2,398,059

Basic earnings per share (Yen) (Note 2)

47.90

61.22

92.87

Total assets (Thousand yen)

16,023,329

21,625,786

25,387,848

Net assets (Thousand yen)

8,380,310

10,203,263

12,286,188

Dividends per share (Yen)

7.00

9.00

14.00

Return on equity (ROE) (%) (Note 4)

17.2

18.5

23.4

 IFRS
Category

25th term(ended September 30,
2015)

26th term(ended September 30,
2016)

Revenue (Thousand yen)

14,266,710

17,060,182

Non-GAAP operating profit (Thousand yen)

3,029,677

3,840,670

Profit attributable to owners of parent(Thousand yen)

2,351,121

2,519,007

Total assets (Thousand yen)

25,635,045

29,980,944

Basic earnings per share (Yen) (Note 3)

18.21

19.43

Dividends per share (Yen)

14.00

16.00

Return on equity (ROE) (%) (Note 4)

23.0

19.8

(Notes)1. The Company has applied the IFRS since the 26th term (fiscal year ended September 30, 2016.) Figures for the 25th term
(fiscal year ended September 30, 2015) based on IFRS are provided for reference.
2. The Company conducted a share split of common share at a ratio of 200 for 1 on October 1, 2013. Basic earnings per
share based on J-GAAP above have been calculated on the assumption that the share split was conducted at the beginningof the 23rd term.
3. The Company conducted a share split of common share at a ratio of 5 for 1 on October 1, 2016. Basic earnings per sharebased on IFRS above have been calculated on the assumption that the share split was conducted at the beginning of the
fiscal year ended September 30, 2015.
4. ROE is calculated as follows:
J-GAAP: (Profit attributable to owners of parent) / (Net assets - Subscription rights to shares - Non-controlling interests)(yearly average)
IFRS: Profit attributable to owners of parent / equity attributable to owners of parent (yearly average)- 18 -

 Adoption of the IFRS: Aiming to achieve rapid growth as a global company
Since the first quarter of the fiscal year ended September 30, 2016, the SEPTENI Group has applied theInternational Financial Reporting Standards (IFRS).
What has changed by IFRS?
1. Revenue has changed
How to record revenue (top line)
The conventional recording of the total amount (gross) has been changed to recording of net amounts inthe sale by advertising agents, which comprises a large part of the Internet Marketing Business.
2. The treatment of goodwill has changed
While straight-line amortization was applied to goodwill based on the Japanese GAAP, goodwill is notamortized on IFRS but requires an impairment test every year. This creates an impairment risk.
(3) Issues to be addressed
The SEPTENI Group has been working on the Midterm Business Policies that were launched in
November 2013 based on the concept of “double profits.” In the fiscal year ended September 30, 2016,
non-GAAP operating profit was ¥3.84 billion, which is about 2.4 times the Japanese-GAAP operating
profit of ¥1.59 billion in the fiscal year ended September 30, 2013, and profitability has improved
over that time as well. In addition, the Group has succeeded in achieving dramatic growth in each of
the focus areas of “Mobile,” “Social,” and “Global.”Aiming to achieve further profit growth and corporate value, the Group has formulated new Midterm
Business Policies for the years from the fiscal year ending September 30, 2017. We present the details
below.


Performance Target
Non-GAAP operating profit: ¥10.0 billion

Basic policies◆ Expand advertising business globally◆ Enhance our own media◆ Invest in what comes after the smartphone
In the mainstay Internet Marketing Business, the SEPTENI Group has up until now focused on thesmartphone advertising market and worked to expand its share. Looking forward, while the domestic
market matures gradually, we expect strong growth to continue in the global market as enhancements
are made to the ecosystem. Therefore, the SEPTENI Group will aim to expand its share and increase
its profitability in the domestic market by further strengthening the position established in the area ofsmartphones and social media. At the same time, it will further accelerate the global businessdevelopment and work to utilize both organic business growth and M&A as the dual engine forsubsequent growth.
In the Media Content Business, we will develop the manga application GANMA!, the Company’s
own media content, as a mainstay revenue source of the Group. Through this expansion of theCompany’s own media content, we aim to leverage strengths from inter-segmental synergy with theInternet Marketing Business and improve profitability of the Group.
We appreciate the continued support and encouragement of our shareholders.
(4) Capital investments
Nothing noteworthy to report.
(5) Financing
Nothing noteworthy to report.

- 19 -

(6) Business transfers, absorption-type company split or incorporation-type company split
Nothing noteworthy to report.
(7) Business transfers from other companies
Nothing noteworthy to report.
(8) Succession of rights and obligations relating to other entities’ business as a result of absorption-typemerger or company split
Nothing noteworthy to report.
(9) Acquisition or disposal of shares, other equities or share options of other companies
Nothing noteworthy to report.
(10) Parent and significant subsidiaries (as of September 30, 2016)
1) Relationship with the parent
Not applicable.
2) Significant subsidiaries
Company name

Capital or investment incapital(Thousand yen)

SEPTENI CO., LTD.

300,000

100.0% Internet ad agency

COMICSMART INC.

200,000

100.0% Manga Content Business

Ratio of voting right of theCompany

Major business(Notes)1. The Company owns a total of 27 consolidated subsidiaries, including the significant subsidiaries described above.
2. The Company does not own any subsidiaries that are specified wholly owned subsidiaries as provided in Article 118, item
4 of the Ordinance for Enforcement of the Companies Act.
3. AXEL MARK INC., which was a significant subsidiary of the Company until the previous term is no longer a subsidiaryas provided in Article 2, item 3 of the Companies Act, effective the current term. However, the aforesaid company iswithin the scope of consolidated reporting under IFRS.

(11) Major offices (as of September 30, 2016)
Company name

Office name

The Company

SEPTENI CO., LTD.

COMICSMART INC.

Location

Headquarters

Shinjuku-ku, Tokyo

Headquarters

Shinjuku-ku, Tokyo

Kansai Branch OfficeKita-ku, Osaka-shi

Nagoya Branch OfficeNakamura-ku, Nagoya-shi

Fukuoka Branch OfficeChuo-ku, Fukuoka-shi

Headquarters

Shinjuku-ku, Tokyo(12) Employees (as of September 30, 2016)
Number of employees

Increase/decrease from the previous term-end

930

84 increase(13) Major creditors (as of September 30, 2016)
Nothing noteworthy to report.
(14) Other important matters regarding the current status of the Group
Nothing noteworthy to report.

- 20 -

2. Status of the Company(1) Matters regarding shares (as of September 30, 2016)
1) Number of shares authorized

74,016,000 shares

2) Number of shares issued

27,728,300 shares

3) Number of shareholders

4,673

4) Major shareholders (top 10 shareholders, excluding treasury shares)
Number of shares (shares)

Shareholding ratio (%)

Japan Trustee Services Bank, Ltd. (Trust Account)

Name of shareholder

4,461,200

17.20

Village seven Co., Ltd.

3,243,800

12.50

Mamoru Nanamura

2,790,100

10.75

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

1,841,100

7.10

Yahoo Japan Corporation

1,400,000

5.40

Trust & Custody Services Bank, Ltd. (Securities Investment
Trust Account)

1,170,000

4.51

BBH FOR MATTHEWS JAPAN FUND

907,100

3.50

GOLDMAN SACHS INTERNATIONAL

847,169

3.27

STATE STREET LONDON CARE OF STATE STREETBANK AND TRUST, BOSTON SSBTC A/C UK LONDONBRANCH CLIENTS-UNITED KINGDOM

550,000

2.12

Hiroshi Shimizu

404,000

1.56(Note) The above shareholding ratios exclude treasury shares (1,784,831 shares).

5) Other important matters regarding shares
The Company implemented a share split on October 1, 2016, at a ratio of five shares per commonshare. The number of shares provided above and in (2) Matters regarding share options, etc. in thefollowing pages represents the number on a pre-share split basis.

- 21 -

(2) Matters regarding share options, etc. (as of September 30, 2016)
1) Status of share options, etc. held by officers of the Company
Date of resolution of issue

June 10, 2004

March 10, 2005

Director

Director

Director

Company
AuditorNumber of holders

1

1

2

1

Number of share options

Category

January 25, 2006

60

45

120

10

Number of shares to be issued
upon exercise of shareoptions

24,000 shares

18,000 shares

24,000 shares

2,000 sharesClass of shares to be issued
upon exercise of shareoptions

Common shares

Common shares

Common shares

Without contribution

Without contribution

Without contribution

¥7

¥7

¥7

From June 29, 2004
to December 18, 2033

From March 16, 2005
to December 16, 2034

From February 1, 2006
to December 20, 2035

Share options in share-based
payment arrangement

Share options in share-based
payment arrangement

Share options in share-based
payment arrangement

January 19, 2007

January 17, 2008

January 15, 2009

Issue priceAmount to be paid per shareupon exercise of shareoptions
Exercise period of shareoptions
Remarks

Date of resolution of issue
Category

Director

Director

Director

Number of holders

1

1

1

Number of share options

20

15

15

Number of shares to be issued
upon exercise of shareoptions

4,000 shares

3,000 shares

3,000 sharesClass of shares to be issued
upon exercise of shareoptions

Common shares

Common shares

Common shares

Issue price

¥731

¥802

¥304

Amount to be paid per shareupon exercise of shareoptions

¥7

¥7

¥7

Exercise period of shareoptions

From February 1, 2008
to December 31, 2037

From February 1, 2009
to December 31, 2037

From February 1, 2010
to December 31, 2037

Remarks

Share remuneration-type
share options for officers

Share remuneration-type
share options for officers

Share remuneration-type
share options for officers- 22 -

Date of resolution of issue

January 20, 2015

January 26, 2016

Director

Company
AuditorDirector

Company
AuditorNumber of holders

2

1

7

3

Number of share options

99

4

294

33

9,900 shares

400 shares

29,400 shares

3,300 shares

Category

Number of shares to be issued
upon exercise of shareoptions
Class of shares to be issued
upon exercise of shareoptions

Common shares

Common shares¥1,035¥1,798¥7¥7

Exercise period of shareoptions

From February 1, 2016
to January 31, 2017

From February 1, 2017
to January 31, 2018

Remarks

Share remuneration-type
share options for officers

Share remuneration-type
share options for officers

Issue priceAmount to be paid per shareupon exercise of shareoptions(Note) As the Company implemented a share split on October 1, 2013 at a ratio of 200 shares per common share, the numberof shares and issue price provided above were adjusted accordingly except those for the issue resolved on and afterJanuary 20, 2015.

2) Status of share options, etc. delivered to employees, etc. during the business year under review
Nothing noteworthy to report.
3) Other important matters regarding share options, etc.
Nothing noteworthy to report.

- 23 -

(3) Matters regarding company officers (as of September 30, 2016)
1) Directors and company auditors
Position

Name

Duties and important positions held at othercompanies
President and Representative Director, SEPTENI
CO., LTD.

President and Representative Director

Koki Sato

Senior Managing Director

Isamu Ueno

Managing Director

Kazumi Shimizu

Director

Tadahiro Matsuda

Director

Shintaro Karaki

Manager of Management Planning Dept.

Director

Kana Setoguchi

Managing Director, SEPTENI CO., LTD.

Director

Tatsuya Kimura

Professor, Waseda University Graduate School ofBusiness and FinanceDirector

Etsuko Okajima

CEO, ProNova Inc.
Outside Director, Astellas Pharma Inc.
External Director, MARUI GROUP Co., Ltd.
Outside Director, Link and Motivation Inc.

Internal Company Auditor

Muneyoshi Nomura

Company Auditor

Katsuhisa Yanagi

Company Auditor

Yoshihide Hirowatari

President, AGS Consulting Co., Ltd.
Managing Partner, AGS Certified Tax Co.

Mamoru Furushima

Representative, Furushima Law & Accounting
OfficeOutside Director (audit and supervisory
member), Nippon Chemical Industrial Co., Ltd.

Company Auditor(Notes)
1. Directors Tatsuya Kimura and Etsuko Okajima are outside directors as prescribed in Article 2, item 15 of the Companies
Act.
2. Company auditors Katsuhisa Yanagi, Yoshihide Hirowatari and Mamoru Furushima are outside company auditors asprescribed in Article 2, item 16 of the Companies Act.
3. Company auditors Yoshihide Hirowatari and Mamoru Furushima are certified public accountants and have a respectable
degree of knowledge in finance and accounting.
4. The Company has designated directors Tatsuya Kimura and Etsuko Okajima as independent officers in accordance withthe rules of the Tokyo Stock Exchange and has submitted a notice of designation to the Tokyo Stock Exchange.
5. Changes in officers during the business year under review are as follows: Ms. Etsuko Okajima was newly elected as a director and Mr. Mamoru Furushima was newly elected as a company
auditor at the 25th Ordinary General Meeting of Shareholders held on December 18, 2015.
 Mr. Reiji Otaki retired as a company auditor due to the expiration of his term of office at the close of the 25th Ordinary
General Meeting of Shareholders held on December 18, 2015.

2) Amount of remunerations to directors and company auditors
Number ofpayees

Officers’ remunerations

Remarks

Director

8¥295,600 thousand

Including ¥12,660 thousand for two outside
directors

Company Auditor

5¥43,977 thousand

Including ¥17,300 thousand for four outsidecompany auditors

Category(Notes)
1. Amount of remunerations, etc. to company auditors includes those paid to a company auditor who has retired at the closeof the 25th Ordinary General Meeting of Shareholders held on December 18, 2015 during their term in office.
2. Amount of remunerations, etc. above includes the amount that posted as expenses during the current term regarding shareoptions granted as share options to directors and company auditors.
3. Of all directors, part of remunerations, etc. for serving concurrently as directors of subsidiaries of the Company are borneby the subsidiaries as expenses. Amount of remunerations, etc. to directors, combining the amount borne by the Company
above and the amount borne by the subsidiaries, is ¥361,165 thousand.

- 24 -

3) Outside officers(a) Relationships between the Company and other companies where outside officers hold important
positionsCategory
Director

Director

Name
Tatsuya Kimura

Etsuko Okajima

Company Auditor Yoshihide HirowatariCompany Auditor Mamoru Furushima

Important positions held at othercompanies

Relationship with the Company

Professor, Waseda University
Graduate School of Business andFinance

There is no business relationship.

CEO, ProNova Inc.

There is no important business
relationship.

Outside Director, Astellas Pharma
Inc.

There is no business relationship.

External Director, MARUI GROUP
Co., Ltd.

There is no business relationship.

Outside Director, Link andMotivation Inc.

There is no business relationship.

President, AGS Consulting Co., Ltd.

There is no important business
relationship.

Managing Partner, AGS Certified
Tax Co.

There is no important business
relationship.

Representative, Furushima Law &Accounting Office

There is no business relationship.

Outside Director (audit andsupervisory member), Nippon
Chemical Industrial Co., Ltd.

There is no business relationship.

(b) Major activities in the business year under review
Category

Name

Major activities

Director

Tatsuya Kimura

Mr. Kimura attended 14 of 15 board of directors meetings held during thecurrent term, where he made comments primarily from his professional
viewpoints as an academic.

Director

Etsuko Okajima

Ms. Okajima attended 9 of 10 board of directors meetings held since she
assumed her position on December 18, 2015, where she made comments
primarily informed by her experience and insight as a corporate manager.

Company Auditor Katsuhisa Yanagi

Mr. Yanagi attended all board of directors meetings and all board ofcompany auditors meetings held during the current term, where he madecomments as required. In addition, he attended other important management
meetings and he performed monitoring of the directors’ performance of theirduties.

Company Auditor Yoshihide Hirowatari

Mr. Hirowatari attended 11 of 15 board of directors meetings and 12 of 14
board of company auditors meetings, where he made comments, primarily
from the professional viewpoint as a certified public accountant.

Company Auditor Mamoru Furushima

Mr. Furushima attended all board of directors meetings and all board ofcompany auditors meetings that were held since he assumed his position on
December 18, 2015, where he made comments primarily from thisprofessional viewpoints as a certified public accountant and as a lawyer.

4) Details of limited liability agreement
The Company has entered into agreements with all outside directors and outside company auditorsthat limit their liability for damages as set forth in Article 423, paragraph 1 of the Companies Act.
The limit on liability for damages under said agreement is ¥5 million or the minimum liability
amount provided for by Article 425, paragraph 1 of the Companies Act, whichever is higher.

- 25 -

(4) Financial auditor (as of September 30, 2016)
1) NameErnst & Young ShinNihon LLC
2) Amount of remuneration, etc.
(a) Remuneration for audit services set forth in Article 2, paragraph 1 of the Certificated Public
Accountants Act to be paid by the Company¥37,100 thousand(b) Total amount of cash and other economic benefits to be paid to the financial auditor by theCompany and its subsidiaries¥66,317 thousand(Notes)1. The audit contract between the Company and the financial auditor does not distinguish between remuneration paid for theaudit conducted in accordance with the Companies Act and remuneration paid for the audit conducted in accordance withFinancial Instruments and Exchange Act. Accordingly, the amount above is the aggregate amount.
2. The Company entrusts the financial auditor with advisory services concerning IFRS, which are non-audit services otherthan the services set forth in Article 2, paragraph 1 of the Certificated Public Accountants Act, and duly pays consideration
for such services.
3. The board of company auditors, based upon the “Practical Guidelines for Cooperation with Financial Auditors” releasedby the Japan Audit & Supervisory Board Members Association, conducts confirmation of the auditing plans of thefinancial auditor, the status of execution of audit, the grounds for calculation of remuneration estimates and other matters,
and having investigated these, gives consent to remuneration, etc. for the financial auditor in accordance with Article 399,
paragraph 1 of the Companies Act.

3) Details of limited liability agreement
The Company has entered into an agreement with the financial auditor that limits the liability thereof
for damages as set forth in Article 423, paragraph 1 of the Companies Act. The limit on liability fordamages under said agreement is ¥30 million or the minimum liability amount provided for by
Article 425, paragraph 1 of the Companies Act, whichever is higher.
4) Policy for determining of the dismissal or non-reappointment of financial auditor
In the event that there is an obstacle to the execution of duties by the financial auditor, or whenotherwise deeming the action necessary, the board of company auditors will determine the content ofan agenda to be proposed to the General Meeting of Shareholders regarding the dismissal or nonreappointment of the financial auditor. In addition, when any of the matters prescribed in the items in
Article 340, paragraph 1 of the Companies Act are applicable to the financial auditor, the board ofcompany auditors will dismiss the financial auditor with the unanimous consent of the company
auditors.
5) Business suspension order to which the financial auditor was subjected during the past two years
The Company’s financial auditor has been subject to a disposition from the Financial Services
Agency, suspending it from accepting new engagements for three months (from January 1, 2016 to
March 31, 2016) on December 22, 2015.

- 26 -

3. Structure and Policy of the Company(1) Policy regarding the determination of dividends of surplus, etc.
With regard to the distribution of surplus, we will consider our consolidated earnings performance, theneed to fortify our financial position, and the Group’s forward-looking business strategy while at thesame time endeavoring to maintain a dividend payout ratio of around 15% of profit attributable toowners of parent and provide a return of profit within the limit of the distributable amount of theCompany. Furthermore, taking into consideration the importance of continuity and stability of
dividend payments, we have established a general principle to provide a minimum annual dividend of¥5(*) per share to follow a basic practice of providing an appropriate level of profit distribution inaccordance with the business growth. In addition, we will endeavor to utilize our internal reserves forinvestments in training personnel, optimizing and reinvigorating our existing businesses, andcapturing new business areas that have the potential for high growth and profitability.
As for the acquisition of treasury shares, the Company recognizes it as one of the effective methods toreturn profit to shareholders, and therefore, the Company shall address the matter appropriately while
taking into account the trend of the share price, financial status and other factors.
* As the Company implemented a share split on October 1, 2016, at a ratio of five shares per ordinary
share, the Company changed the amount of the minimum annual dividend to ¥2 per share, startingfrom the fiscal year ending September 30, 2017. Consequently, the amount of the minimum annual
dividend has practically doubled compared with the amount prior to the share split.
(2) Systems to ensure the properness of operations
1) Systems to ensure compliance with laws and regulations and the Articles of Incorporation bydirectors when executing their duties(a) Based on the recognition that compliance with laws and regulations and social ethics naturally
precede all standards for conduct and decision-making, directors shall confirm that they practiceand encourage the compliance with laws and regulations, the Articles of Incorporation and social
ethics proactively to execute their duties properly.
(b) Status concerning compliance and risk management in the SEPTENI Group comprised of theCompany and its subsidiaries (hereinafter referred to as the “SEPTENI Group”) as a whole, and the
SEPTENI Group’s correspondence on such matters are examined by the Group Risk Management
Committee and the results thereof shall be periodically reported to the board of directors.
2) Systems for the storage and management of information regarding the execution of duties bydirectors(a) Directors shall appropriately manage and store the documents related to the execution of duties(including electromagnetic records) pursuant to the provisions stipulated by laws and regulations,
Articles of Incorporation and Company’s internal regulations. Such documents include the minutesof General Meeting of Shareholders, minutes of meetings of the board of directors, and approval
documents, as well as the records of the proceedings of important meetings which directors should
attend.
(b) When storing and managing information through electromagnetic records, directors shall strive togather the up-to-date information on threats for electronic information, such as hackers, inconsultation with the personnel in charge of IT system to build the latest system for storage andmanagement possible.
3) Regulations and other systems for managing the risk of loss(a) The Company shall detect and identify all risks of loss (hereinafter referred to as “risk”) that may
affect the business management of the SEPTENI Group, and control them at the management level,
while striving to eliminate and reduce factors that may harm interests of each stakeholder, such as
customers, clients, shareholders, investors, and local communities as well as officers andemployees with priority given to ensuring the quality and safety of its products and services.
(b) With regard to the risk management, risk analysis and countermeasures shall be usually deliberated
by each business area and the personnel responsible for the relevant area shall report them to theGroup Risk Management Committee. Significant items shall be centrally controlled by the Group- 27 -

Risk Management Committee. In case of an emergency, the Crisis Management Headquarters with
the President as its head shall be responsible for the overall risk management process.
(c) Assessment of and response to the risks affecting the entire SEPTENI Group or the risks related to
strategic decision-making such as merger and acquisition shall be treated as the exclusive
prerogatives of the board of directors.
4) Systems to ensure the efficient execution of duties by directors
The board of directors shall grant necessary authorities to each director based on a division of duties
to establish systems to ensure the efficient execution of duties by directors. In cases wheresubsidiaries make significant decisions, the board of directors shall proactively coordinate for theefficient resource allocation avoiding overlaps of business activities and capital investments withinGroup companies in line with the prior consultation with the subsidiaries.
5) Systems to ensure compliance with laws and regulations and the Articles of Incorporation by
employees when executing their duties(a) In order to make compliance by employees effective, the Company shall conduct regularcompliance trainings continuously and establish an internal reporting system for the Group (alias“Hotline”) that responds appropriately to reporting or consultation from employees onorganizational or individual legal violations.
(b) In cases where wrongful acts are found as a result of investigations following the reporting or
consultation from employees, directors shall immediately take corrective actions and measures toprevent a recurrence and make the SEPTENI Group aware thereof.
6) Systems to ensure the properness of operations of the corporate group comprised of the Company
and its subsidiaries(a) With regard to the business operation of the SEPTENI Group, the Company shall establish
common principles and regulations to ensure compliance with laws and regulations and social
ethics, risk management, efficient execution of duties by directors as well as compliance with laws
and regulations and the Articles of Incorporation by directors or employees when executing theirduties. With regard to the business management of subsidiaries, on the basis of their autonomous
management, subsidiaries shall report their financial results at the Group-wide monthly meetingsand consult with the Company prior to any significant decision-making as part of a reporting
system for items concerning the execution of duties by directors of subsidiaries to the Company.
(b) The Internal Auditing Office of the Company shall regularly conduct internal audits at theCompany and its subsidiaries. In cases where improvements are required, the Internal Auditing
Office shall present a letter of recommendation with an approval of the President and check thestatus of improvements afterwards to oversight the status of ensuring the properness of operationsof the entire SEPTENI Group.
7) Systems relating to employees that assist the company auditors upon the request of such company
auditors, matters relating to independence of the relevant employees from directors and mattersrelating to effectiveness of directions given to such employees of the company auditors to be ensured(a) Employees that assist the company auditors shall be assigned at the request of company auditors in
consultation with directors. The relevant employees shall be subject to orders and instructions ofinternal company auditor and shall not concurrently serve other duties and posts.
(b) Decisions on personal transfers involving employees that assist the company auditors shall requireprior consent of internal company auditor. Personnel evaluations such as payroll decision for the
relevant employees shall be conducted by internal company auditor separately from the other
employees.
8) Systems for enabling directors and employees of the Company and its subsidiaries to make reports tocompany auditors of the Company, systems for ensuring that the persons who made such reports
shall not be treated disadvantageously on the grounds that they have submitted the said reports,
matters concerning policy on processing of expenses or obligations arising in relation to the
execution of duties by company auditors and other relevant systems for ensuring the effectivefunctioning of audits- 28 -

(a) Company auditors may attend the board of directors of the Company and its subsidiaries as well as
the important meetings of the Company and its subsidiaries including the Management Committee,
and request explanations from directors or employees of the Company and its subsidiaries asnecessary. In cases where company auditors request explanations on operations or inspections of
documents such as approval documents and accounting books, directors or employees of theCompany and its subsidiaries shall respond to the request in a prompt and appropriate manner.
(b) In the event that directors or employees of the Company and its subsidiaries, or persons who
received reports from them detect any items that may significantly affect the business management
and financial condition of the SEPTENI Group, such directors, employees or persons shallimmediately report the items to the board of company auditors of the Company.
(c) All of the internal audit reports conducted by the Internal Auditing Office shall be reported to theboard of company auditors.
(d) The Company shall ensure that the persons of the Company and its subsidiaries who made thereports as stated above from a) to c) to company auditors or the board of company auditors shallnot be treated disadvantageously on the grounds that they have submitted the said reports.
(e) All expenses necessary for the execution of duties by company auditors shall be borne by theCompany.
(3) Overview of status of management of systems to ensure the properness of operations
1) Information on compliance and risk management
With regard to the status of compliance and risk management among the entire Group, the Company
shall regularly hold the meeting of the Group Risk Management Committee and share the information
relating to the correspondence status, etc.
Regular compliance trainings for employees have been provided to raise the employee’s awareness oncompliance. In addition, the Company established the internal reporting system for the Group (alias“Hotline”) and informed all employees about it.
2) Information on the execution of duties by directors
The board of directors comprises of eight (8) directors, including two (2) outside directors. In addition,
four (4) company auditors including three (3) outside company auditors also attend the meetings ofthe board of directors. During the business year under review, the board of directors held meetings 15
times to ensure the execution of duties in compliance with laws and regulations and the Articles ofIncorporation by means of the managerial decision-making through full and thorough discussions andother measures.
3) Information on the execution of duties by company auditors
The board of company auditors comprises of four (4) company auditors, including three (3) outsidecompany auditors. During the business year under review, the board of company auditors held
meetings 14 times to mainly receive reports from internal company auditor on the status of operationsof the Company and exchange opinions mutually among company auditors.
In addition to that, company auditors shall provide supervision of execution of duties by directors byattending the important meetings including the meeting of the board of directors and regularly
exchange information with Representative Director, financial auditor and Internal Auditing Office.
(Note) Figures in this Business Report are rounded down to the units indicated only for the J-GAAP monetary values in “(2)Trends in financial position and profit and loss” on page 18. All other figures are rounded to the units indicated.

- 29 -

Consolidated Financial Statements
Consolidated Statement of Financial Position(Thousand yen)
26th term
Account(At September
30, 2016)(Reference)

26th term

25th term

Account(At September
30, 2015)

AssetsCurrent assets
Cash and cash equivalents
Operating receivables
Inventories

15,480,970
9,982,708
118,517

11,694,507
9,818,035
8,601

Other financial assets

443,788532,901

Liabilities and Equity
Liabilities
Current liabilities
Operating payables
Other financial liabilities
Current income taxes
payableOther current liabilities

Other current assets

242,480

221,006

Total current assets
Non-current assets

26,268,463

22,275,050

Property, plant andequipment

363,519

328,527

Goodwill

147,491

147,491

Intangible assets

232,261

247,403

Investments accounted forusing equity method

611,991

530,722

Other financial assets

1,673,251

1,493,895

Total non-current
liabilities

Other non-current assets
Deferred tax assets

3,743
680,225

52,742559,215

Total liabilities
EquityTotal non-current assets

3,712,481

3,359,995

Equity attributable toowners of parent

Total current liabilities
Non-current liabilities
Other financial liabilities
Provisions
Other non-current
liabilities
Deferred tax liabilities

Share capital
Share premium
Treasury shares
Retained earnings
Other components ofequityTotal equity attributableto owners of parent
Non-controlling interests
Total equity
Total assets

29,980,944

25,635,045

Total liabilities and equity(Note) Figures are rounded to the nearest unit.

- 30 -(At September
30, 2016)(Reference)

25th term(At September
30, 2015)

9,652,601
1,728,525

9,203,035
1,793,417

1,236,846

682,575

1,573,264

1,417,687

14,191,236

13,096,714

654,867
88,454

157,949
85,520

518

2,426

–

664

743,839

246,559

14,935,075

13,343,273

2,085,004
3,617,269(485,685)
8,815,259

2,070,160
3,160,951(485,012)
6,495,103

123,875

65,96614,155,722

11,307,168

890,147

984,604

15,045,869

12,291,772

29,980,944

25,635,045

Consolidated Statement of Profit or Loss
26th term(From October 1, 2015
to September 30, 2016)

Account(Thousand yen)
(Reference)
25th term(From October 1, 2014
to September 30, 2015)

Continuing operations
Revenue
Cost of sales

17,060,182
3,436,710

14,266,710
2,805,567

Gross profit
Distribution and administrative expense
Other income
Other expense

13,623,472
9,803,390
106,712
196,576

11,461,143
8,457,030
49,756474,445

Operating profit
Finance income
Finance costs
Share of profit from investments accounted for using equity
method3,730,218
111,955
104,973

2,579,424
316,048
20,878109,755

88,878

Profit before tax
Income tax expense

3,846,955
1,594,946

2,963,472
1,341,075

Profit from continuing operations
Discontinued operations
Profit from discontinued operations

2,252,009

1,622,397–

677,894

Profit2,252,009

2,300,291

Profit attributable to:
Owners of parent
Non-controlling interests

2,519,007(266,998)

2,351,121(50,830)

2,252,009

2,300,291

Net sales (Reference)

76,401,356

64,547,685

Reconciliation from operating profit to non-GAAP operating
profit (Reference)
Operating profit
Other income
Other expense

3,730,218
78,515
188,967

2,579,424
17,555467,808

Non-GAAP operating profit

3,840,670

3,029,677

Total(Note) Figures are rounded to the nearest unit.

- 31 -

(Reference) Consolidated Statement of Comprehensive Income
26th term(From October 1, 2015
to September 30, 2016)
2,252,009

Account
ProfitOther comprehensive income
Items that will not be reclassified to profit or loss
Net changes in financial assets measured at fair value
through other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations
Cash flow hedges
Total other comprehensive income, net of tax(Thousand yen)
25th term(From October 1, 2014
to September 30, 2015)
2,300,291

298,883

32,031(114,119)(5,511)(23,435)–

179,253

8,596

Total comprehensive income

2,431,262

2,308,887

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

2,734,220(302,958)

2,364,713(55,826)

Comprehensive income

2,431,262

2,308,887(Note) Figures are rounded to the nearest unit.

- 32 -

Consolidated Statement of Changes in Equity
26th term (From October 1, 2015 to September 30, 2016)(Thousand yen)
Equity attributable to owners of parent
Total

Noncontrollinginterests

Total equity

65,966

11,307,168

984,604

12,291,772

2,519,007–

2,519,007(266,998)

2,252,009––

215,213215,213(35,960)

179,253––

2,519,007

215,2132,734,220(302,958)

2,431,262

14,844–

14,844––––(362,825)(29,495)–

193(362,825)––

193(362,825)

–

–

(673)

–

–

(673)

–

(673)

–

441,060–––

441,060

204,114645,174

Share capital

Share
premium

TreasurysharesRetainedearnings

Other
componentsof equity

2,070,160

3,160,951(485,012)

6,495,103

–

–

–

–

–

Total comprehensive
income–Issue of new shares
Dividends of surplus
Purchase anddisposal of treasury
sharesChanges inownership interests in
subsidiaries that do
not result in loss ofcontrol
Other

Balance at October 1,
2015
ProfitOther comprehensive
income–414–

163,974(127,809)

36,5794,387

40,966

Total amount oftransactions withowners

14,844456,318(673)(198,851)(157,304)

114,334

208,501

322,835

Balance at September
30, 2016

2,085,004

3,617,269(485,685)

8,815,259

123,875

14,155,722

890,147

15,045,869(Reference) 25th term (From October 1, 2014 to September 30, 2015)(Thousand yen)
Equity attributable to owners of parent
Total

Noncontrollinginterests

Total equity

112,631

9,134,967

994,087

10,129,054

2,351,121–

2,351,121(50,830)

2,300,291––

13,592

13,592(4,996)

8,596

–

–

2,351,121

13,592

2,364,713(55,826)

2,308,887

17,149–12,856––––(228,262)(26,129)–

3,876(228,262)

–
–

3,876
(228,262)

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

Share capital

Share
premium

TreasurysharesRetainedearnings

Other
componentsof equity

2,053,011

3,148,095(485,012)

4,306,242

–

–

–

–

–

Total comprehensive
income–Issue of new shares
Dividends of surplus
Purchase anddisposal of treasury
sharesChanges inownership interests in
subsidiaries that do
not result in loss ofcontrol
Other

Balance at October 1,
2014
ProfitOther comprehensive
income–––66,002(34,128)

31,874

46,343

78,217

Total amount oftransactions withowners17,14912,856–(162,260)(60,257)(192,512)

46,343(146,169)

Balance at September
30, 2015

2,070,160

3,160,951(485,012)

6,495,103

65,966

11,307,168

984,604

12,291,772(Note) Figures are rounded to the nearest unit.

- 33 -

Non-consolidated Financial Statements
Non-consolidated Balance Sheet(Thousand yen)
26th term
Account
AssetsCurrent assets
Cash and deposits(At September
30, 2016)(Reference)

5,639,521
4,137,985

Accounts receivable trade

276,032

365,382

Supplies
Prepaid expenses

2,862
61,8833,404
64,610Accounts receivable other810,523

1,038,020

Short-term loans
receivable fromsubsidiaries andassociates

30,00010,000

Deferred tax assets
Other

22,6102,201

20,116–

4,032,664

4,338,392

Property, plant andequipment

136,304

151,214

Buildings

28,06044,027

Facilities attached tobuildings

46,02061,660Tools, furniture andfixtures62,22345,526

Intangible assets
Software
Software in progress
Other

160,773
157,805
2,340
627

222,768
219,8402,300
627

Investments and otherassets3,735,586

3,964,409

300,607424,847

2,512,791

2,740,759

Lease and guarantee
deposits

466,047

467,916

Deferred tax assets

442,939

316,485

Other

13,20014,40011,068,275

9,977,913

Investment securities
Shares of subsidiaries
and associates

Total assets

Account(At September
30, 2015)

7,035,611
5,829,496

Non-current assets

26th term

25th term

Liabilities
Current liabilities
Short-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Other
Non-current liabilities(At September
30, 2016)(Reference)

25th term(At September
30, 2015)

1,039,829
50,002291,882
40,316605,751
15,40336,472–
266

730,358
50,002205,207
39,126351,168
16,433
40,102
28,318266

Long-term accounts
payable - other

266

266

Total liabilities

1,040,096

730,624

Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve

9,972,017
2,085,004
2,683,658
2,496,687
186,9715,689,039
70,867
5,618,172
400,000

9,212,030
2,070,160
2,668,814
2,481,842
186,9714,958,068
70,867
4,887,201
400,000

5,218,172

4,487,201(485,684)(485,011)

Valuation and translation
adjustments

60

34

Valuation difference on
available-for-salesecurities

60

34

Subscription rights toshares56,10235,222

Total net assets

10,028,179

9,247,288

Total liabilities andnet assets

11,068,275

9,977,913

Retained earnings
brought forward
Treasury shares(Note) Figures are rounded down to the nearest unit.

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Non-consolidated Statement of Income
26th term(From October 1, 2015
to September 30, 2016)

Account(Thousand yen)
(Reference)
25th term(From October 1, 2014
to September 30, 2015)

Operating revenue
Operating expenses

2,629,657
1,606,808

2,842,459
1,565,691

Operating profit
Non-operating profit
Interest income
Dividend income
Gain on valuation of investment securities
Other

1,022,848
64,230584
28,48834,172985

1,276,768
290,882776
71,954
213,163
4,987

Non-operating expenses
Interest expenses
Loss on valuation of investment securities
Share listing related expenses
Commission fee
Other123,439284
98,5096,931
16,192
1,522

64,613636
4,404
10,51145,6003,459

Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Other

963,639590,545–590,131414

1,503,038
1,383,855
49,256
1,322,474
12,125Extraordinary losses
Loss on valuation of shares of subsidiaries and associates
Other

451,727444,036
7,691

344,724
344,7240Profit before income taxes
Income taxes - current
Income taxes - deferred

1,102,457
137,619(128,958)

2,542,169
151,680
356,595

Profit

1,093,796

2,033,894(Note) Figures are rounded down to the nearest unit.

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Non-consolidated Statement of Changes in Equity
26th term (From October 1, 2015 to September 30, 2016)(Thousand yen)
Shareholders’ equity
Capital surplus

Balance at
beginning ofcurrent period
Changes of items
during period
Issuance of newsharesDividends ofsurplusProfitOther
Net changes of
items other thanshareholders’equityTotal changes of
items during
periodBalance at end ofcurrent period

Capital
stock

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurpluses

Legalretainedearnings

2,070,160

2,481,842

186,9712,668,814

70,867

14,844

14,844Retained earnings
Other retained earnings
Total
Retainedretained
Generalearnings
earnings
reservebrought
forward400,000

4,487,201

4,958,068(362,825)(362,825)

1,093,796

1,093,796

Treasuryshares(485,011)

14,844(672)

Valuation and translation
adjustments
Valuation
SubscripTotal
difference
Total sharevaluation tion rightsonto shares
holders’
andavailableequity
translation
for-saleadjustments
securities

Total net
assets9,212,030

9,247,288

34

34

35,222

29,68829,688(362,825)(362,825)

1,093,796(672)

1,093,796
(672)

–

25

25

20,87920,904780,891

14,844

14,844–

14,844––730,970

730,970(672)

759,986

25

25

20,8792,085,004

2,496,687

186,9712,683,658

70,867400,000

5,218,172

5,689,039(485,684)

9,972,017

60

60

56,102 10,028,179(Reference) 25th term (From October 1, 2014 to September 30, 2015)(Thousand yen)
Shareholders’ equity
Capital surplus

Balance at
beginning ofcurrent period
Changes of items
during period
Issuance of newsharesDividends ofsurplusProfitOther
Net changes of
items other thanshareholders’equityTotal changes of
items during
periodBalance at end ofcurrent period

Capital
stock

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurpluses

Legalretainedearnings

2,053,010

2,468,987

186,971

2,655,958

70,867

17,14912,855Retained earnings
Other retained earnings
Total
Retainedretained
Generalearnings
earnings
reservebrought
forward400,000

2,681,568

3,152,435

Treasuryshares(485,011)

12,855

Valuation and translation
adjustments
Valuation
SubscripTotal
difference
Total sharevaluation tion rightsonto shares
holders’
andavailableequity
translation
for-saleadjustments
securities

Total net
assets7,376,393

7,406,065

68

68

29,60430,00530,005(228,261)(228,261)(228,261)(228,261)

2,033,894

2,033,894

2,033,894–

2,033,894
–

–

(33)

(33)

5,618

5,585

17,14912,855–

12,855––

1,805,632

1,805,632–

1,835,637

(33)

(33)

5,618

1,841,222

2,070,160

2,481,842

186,9712,668,814

70,867400,000

4,487,201

4,958,068(485,011)

9,212,030

34

34

35,222

9,247,288(Note) Figures are rounded down to the nearest unit.

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Board of Company Auditors’ Report

Audit Report
With respect to the directors’ performance of their duties during the 26th business year from October 1,
2015 to September 30, 2016, the board of company auditors has prepared this audit report after
deliberations based on the audit reports prepared by each of the company auditors, and hereby reports asfollows:
1. Method and Contents of Audit by the Company Auditors and the Board of Company Auditors(1) The board of company auditors has established the audit policies, allocation of duties, etc. andreceived a report from each of the company auditors regarding the status of implementation of theiraudits and results thereof. In addition, the board of company auditors has received reports from thedirectors, etc., and the financial auditor regarding the status of performance of their duties, andrequested explanations as necessary.
(2) In conformity with the audit regulations for company auditors established by the board of company
auditors, and in accordance with the audit policies and allocation of duties, etc., each of the company
auditors endeavored to facilitate a mutual understanding with the directors, the Internal Audit Divisionand other employees, etc., endeavored to collect information, maintain and improve the audit
environment, and conducted the audits based on the methods described below.
1) Each of the company auditors has attended the meetings of the board of directors and otherimportant meetings, received reports on the status of performance of duties from the directors andemployees, etc., and requested explanations as necessary, examined important approval/decision
documents, and inspected the status of the corporate affairs and assets. Also, with respect to thesubsidiaries, each of the company auditors endeavored to facilitate a mutual understanding andexchanged information with the directors and company auditors, etc. of each subsidiary and received
from subsidiaries reports on their respective business as necessary.
2) Each of the company auditors monitored and inspected the status of the establishment and operationof the board of directors’ resolutions regarding the development and maintenance of the system toensure that the directors’ performance of their duties complied with all laws, regulations and the
Articles of Incorporation of the Company and other systems that are set forth in Article 100,
paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act as being necessary forensuring the appropriateness of the corporate affairs of the corporate group comprised of a joint
stock company and its subsidiaries, and the systems (internal control systems) based on such
resolutions. With respect to the internal control related to the financial report, the Board of company
auditors received reports regarding the assessment and status of their audits from the directors, etc.
and Ernst & Young ShinNihon LLC, and also requested explanations when necessary.
3) Each of the company auditors monitored and verified whether the financial auditor maintained its
independence and properly conducted its audit, received a report from the financial auditor on thestatus of its performance of duties, and requested explanations as necessary. Each of the company
auditors was notified by the financial auditor that it had established a “system to ensure that theduties are performed appropriately” (the matters listed in the items of Article 131 of the Ordinanceon Accounting of Companies) in accordance with the “Quality Management Standards Regarding
Audits” (Business Accounting Council, October 28, 2005), and requested explanations as necessary.
Based on the above-described methods, each of the company auditors examined the business report and the
supplementary schedules, the Non-consolidated Financial Statements (Non-consolidated Balance Sheet,
Non-consolidated Income Statement, Changes in Non-consolidated Shareholders’ Equity Statement andNotes to Non-consolidated Financial Statements) and the supplementary schedules thereof, as well as theConsolidated Financial Statements (Consolidated Statement of Financial Position, Consolidated Statementof Profit or Loss, Consolidated Statement of Changes in Equity and Notes to Consolidated Financial
Statements, all prepared by omitting some disclosure items required under IFRS as provided for by Article
120, the latter part of paragraph 1 of the Ordinance on Accounting of Companies), for the business year
under review.

- 37 -

2. Results of Audit(1) Results of Audit of Business Report, etc.
1) We acknowledge that the business report and the supplementary schedules thereof fairly present thestatus of the Company in conformity with the applicable laws and regulations and the Articles ofIncorporation of the Company.
2) We acknowledge that no misconduct or material fact constituting a violation of any law or regulationor the Articles of Incorporation of the Company was found with respect to the directors’ performanceof their duties.
3) We acknowledge that the board of directors’ resolutions with respect to the internal control systems
are appropriate. We did not find any matter to be mentioned with respect to the directors’
performance of their duties concerning the internal control systems including the internal control
related to the financial report.
(2) Results of Audit of Financial Statements and their Supplementary Schedules
We acknowledge that the methods and results of audit performed by the financial auditor, Ernst &Young ShinNihon LLC, are appropriate.
(3) Results of Audit of Consolidated Financial Statements
We acknowledge that the methods and results of audit performed by the financial auditor, Ernst &Young ShinNihon LLC, are appropriate.
November 22, 2016
Board of Company Auditors
SEPTENI HOLDINGS CO., LTD.
Internal Company Auditor

Muneyoshi Nomura(Seal)

Company Auditor

Katsuhisa Yanagi(Seal)

Company Auditor

Yoshihide Hirowatari(Seal)

Company Auditor

Mamoru Furushima(Seal)(Note)
Company auditor Katsuhisa Yanagi, company auditor Yoshihide Hirowatari and company auditor Mamoru
Furushima are outside company auditors, as set forth in Article 2, item 16, and Article 335, paragraph 3 of
the Companies Act.

- 38 -