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, 2017
Dear Shareholder
Koki Sato,
Representative Director
Group President and Chief Executive
Officer

SEPTENI HOLDINGS CO., LTD.
17-1 Nishishinjuku 8-chome, Shinjuku-ku,
Tokyo, JapanCONVOCATION NOTICE FOR THE 27TH ORDINARY
GENERAL MEETING OF SHAREHOLDERS
1. Date and Time:Thursday, December 21, 2017, 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 27th term (from October 1, 2016 to September 30, 2017) 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 27th term
(October 1, 2016 to September 30, 2017)
Matters to be resolved:
Agenda Item No. 1: Election of Seven Directors
Agenda Item No. 2: Election of Financial Auditor

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 19 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.
The Consolidated Financial Statements and the Non-consolidated Financial Statements audited by the Board of Company
Auditors and the Financial Auditor include Notes to Consolidated Financial Statements and Notes to Non-consolidated
Financial Statements, which are posted on the Company’s website.
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:

Election of Seven 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.
Therefore, the Company hereby proposes the election of seven directors, including four outside directors.
To establish a higher level of corporate governance, maintain sustainable growth, and enhance corporate
value over the medium to long term, the Company will be delegating as much of the decision-making andexecution relating to business execution as possible to group executive officers, and so the board of
directors can perform thorough oversight of the business execution of the group executive officers, theCompany has decided to make broad changes to the composition of the board of directors.
These changes will reduce the number of directors serving concurrently as group executive officers by
three and increase the number of outside directors by two, meaning that outside directors will account for amajority of the Company’s board of directors, and in doing so, will work to further strengthen the oversightfunction of management.
The Company nominates candidates for director based on a strong sense of ethics and responsibility, andthe extensive knowledge and experience, as well as character, required for the Company’s management
decision-making, or the track record and insight required to enhance the oversight function of management.
In nominating candidates for director, based on the above policy, the Group President and Chief Executive
Officer creates a proposed list of candidates, and following deliberation by the Nomination Advisory
Committee, composed only of outside directors and the Group President and Chief Executive Officer, thecandidates are nominated at a meeting of the board of directors.
The candidates are as follows:-2-

Candidate
No.

Candidate
No.

Name

Koki Sato
Representative
Director

Name

Etsuko Okajima

Reelection
Attendance to theboard of directors
meetings:
13/13

Outside director

15Reelection
Outside director
Independent officer
Attendance to theboard of directors
meetings:
12/13[Important positions held at other companies]
President, SEPTENI CO., LTD.

[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.

Isamu Ueno

Seiji Yasubuchi

Director2

Reelection
Attendance to theboard of directors
meetings:
13/13

Outside director

New candidate
Outside director
Independent officer

6[Important positions held at other companies]
President and Representative Director, Visa
Worldwide Japan Co., Ltd.

Kazumi Shimizu
Director

3

Yusuke Asakura

Reelection
Attendance to theboard of directors
meetings:
13/13

Outside director

New candidate
Outside director
Independent officer

7[Important positions held at other companies]
Outside director, Raksul, Inc.
Visiting scholar, National Graduate Institute for
Policy Studies

Tatsuya Kimura
Outside director

4

Reelection
Outside director
Independent officer
Attendance to theboard of directors
meetings:
13/13[Important positions held at other companies]
Professor, Waseda University Graduate Schoolof Business and Finance

-3-

1

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

Reelection
Number of years in officeAttendance to the board of directors meetings
Number of the Company’s ordinary shares held

16 years
13/13
402,500

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
Representative Director (current position) and President
Jan. 2017
Group President and Chief Executive Officer (current position)
 Reasons for nomination as candidate for director
Since joining the Company, Mr. Koki Sato established a new field which has become a major pillar of the Group business,always leading from the front. Furthermore, he has led the management of the entire Group over the course of many years,
steadily addressing a range of management challenges to enhance corporate value, and because he is expected to continue toexercise strong leadership, he has been reelected as candidate for director.
 Important positions held at other companies
President, SEPTENI CO., LTD.

2

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

Reelection
Number of years in officeAttendance to the board of directors meetings
Number of the Company’s ordinary shares held

13 years
13/13
484,000

Profile and position at the Company
Sep. 1998
Joined the Company
Nov. 2003
Officer and Manager of Personnel and Administration
Dec. 2004
Director (current position) and Manager of Personnel and Administration
Dec. 2005
Managing Director
Dec. 2009
Senior Managing Director
Jan. 2017
Group Senior Executive Officer (current position)
 Reasons for nomination as candidate for director
Mr. Isamu Ueno has extensive experience and results, and considerable insight in the field of personnel and administration,and because he is expected to drive the management of the Group and further enhance and drive corporate governance, he isdeemed necessary to enhance corporate value, and has been reelected as candidate for director.
 Important positions held at other companies
None.

-4-

3

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

Reelection
Number of years in officeAttendance to the board of directors meetings
Number of the Company’s ordinary shares held

12 years
13/13
144,500

Profile and position at the Company
Oct. 2004
Joined the Company
Dec. 2005
Director (current position) and Manager of Business Management
Dec. 2009Managing Director
Jan. 2017
Group Senior Executive Officer (current position)
 Reasons for nomination as candidate for director
Mr. Kazumi Shimizu has extensive experience and results, and considerable insight in the fields of business management andfinance and accounting, and because he is expected to drive the management of the Group and further enhance and drive
corporate governance, he is deemed necessary to enhance corporate value, and has been reelected as candidate for director.
 Important positions held at other companies
None.

4

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

Reelection
Outside director
Independent officer
Number of years in officeAttendance to the board of directors meetings
Number of the Company’s ordinary shares held

3 years
13/13
2,500

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
Outside 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)
 Reasons for nomination as candidate for outside director
Mr. Tatsuya Kimura is very familiar with the field of corporate management, and because he has provided useful advice on
all aspects of the business administration of the Group based on his extensive knowledge and considerable insight, he isdeemed capable of providing oversight and advice on the Company’s business administration as an outside director, and has
been reelected as candidate for outside director. Although he has never been involved in corporate management other thanserving as an outside officer, he is deemed capable of properly carrying out the duties of an outside director of the Company
for the reasons mentioned above.
 Important positions held at other companies
Professor, Waseda University Graduate School of Business and Finance

-5-

5

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

Reelection
Outside director
Independent officer
Number of years in officeAttendance to the board of directors meetings
Number of the Company’s ordinary shares held

2 years
12/13–

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)

 Reasons for nomination as candidate for outside director
Ms. Etsuko Okajima has an abundance of experience, and knowledge and considerable insight of corporate management, andbecause she has provided useful advice on all aspects of the business administration of the Group from an independent andobjective position, she is deemed capable of providing oversight and advice on the Company’s business administration as an
outside director, and has been reelected as candidate for outside director.
 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.

-6-

6

Seiji Yasubuchi(Date of birth: October 2, 1955)

New candidate
Outside director
Independent officer
Number of years in office– years
Attendance to the board of directors meetings–/–
Number of the Company’s ordinary shares held –Profile and position at the Company
Apr. 1979
Joined Mitsubishi Corporation
Nov. 1999
Joined Ripplewood Japan, Inc.
Executive Director
Apr. 2001
Joined UBS Securities Japan Co., Ltd.
Executive Director in charge of transport and privatization of public organization
Mar. 2005
Managing Director in charge of transport and privatization of public organization,
UBS Securities Japan Co., Ltd.
Jun. 2006
Joined GE Commercial Finance Asia
Executive Vice President in charge of business development
Sep. 2007
President and CEO, GE Commercial Finance Japan
Jan. 2009
President and CEO, GE Capital
Jan. 2010
Director, GE Japan Corp.
President and CEO, GE Capital
Sep. 2016
Representative Director, President and CEO, SMFL Capital Co., Ltd.
Apr. 2017
Joined Visa Worldwide Japan Co., Ltd.
President and Representative Director (current position)
 Reasons for nomination as candidate for outside director
Mr. Seiji Yasubuchi has extensive experience and results, and considerable insight as an executive at global companies, andhe is deemed capable of providing oversight and advice on the Company’s business administration as an outside director,
and has been nominated as candidate for outside director.
 Important positions held at other companies
President and Representative Director, Visa Worldwide Japan Co., Ltd.

7

Yusuke Asakura(Date of birth: July 23, 1982)

New candidate
Outside director
Independent officer
Number of years in office– years
Attendance to the board of directors meetings–/–
Number of the Company’s ordinary shares held –Profile and position at the Company
Apr. 2007
Joined McKinsey & Company
Aug. 2010
Joined Naked Technology Inc.
Oct. 2010
Representative Director, President and CEO, Naked Technology Inc.
Oct. 2011
Joined mixi Inc.
Jun. 2013
Representative Director, President and CEO, mixi Inc.
Nov. 2014
Visiting scholar, Stanford University
May 2015
Outside director, Raksul, Inc. (current position)
Mar. 2016
Outside director, Loco Partners
Mar. 2017
Visiting scholar, National Graduate Institute for Policy Studies (current position)
 Reasons for nomination as candidate for outside director
Mr. Yusuke Asakura has extensive experience and results, and considerable insight as an executive and researcher at listed
internet companies, and as an investor, and he is deemed capable of providing oversight and advice on the Company’sbusiness administration as an outside director, and has been nominated as candidate for outside director.
 Important positions held at other companies
Outside director, Raksul, Inc.; Visiting scholar, National Graduate Institute for Policy Studies-7-

(Notes)
1. The name of Ms. Etsuko Okajima in the family register is Etsuko Mino.
2. Mr. Tatsuya Kimura, Ms. Etsuko Okajima, Mr. Seiji Yasubuchi and Mr. Yusuke Asakura 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. The Company has established “Independence Standards for Outside Directors” (https://www.septeniholdings.co.jp/ir/pdf/isod.pdf) (in Japanese only). There is no information showing any violations of these standards forcandidates Mr. Tatsuya Kimura, Ms. Etsuko Okajima, Mr. Seiji Yasubuchi, or Mr. Yusuke Asakura, and each candidate isdeemed independent.
6. The Company has designated Mr. Tatsuya Kimura and Ms. Etsuko Okajima as independent officers in accordance with therules of 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. Furthermore,
if the proposed election of Mr. Seiji Yasubuchi and Mr. Yusuke Asakura is approved, the Company will designate them as
independent officers in accordance with the rules of Tokyo Stock Exchange, Inc., and will submit a notice of designation
to the Tokyo Stock Exchange.
7. The Company has entered into a liability limitation agreement with each of Mr. Tatsuya Kimura and Ms. Etsuko Okajima.
According to the aforementioned liability limitation agreement, Mr. Tatsuya Kimura’s and Ms. Etsuko Okajima’s liability
under Article 423, paragraph 1 of the Companies Act will not exceed either ¥5 million or the minimum liability amountstipulated in Article 425, paragraph 1 of the same Act, whichever is higher. If their proposed elections are approved at this
General Meeting of Shareholders, the Company plans to again enter into the aforementioned liability limitation agreementwith them. In addition, if the proposed elections of Mr. Seiji Yasubuchi and Mr. Yusuke Asakura are approved, theCompany plans to enter into the aforementioned liability limitation agreement with each of them.

-8-Agenda Item No. 2:

Election of Financial Auditor

At the close of this General Meeting of Shareholders, the term of office of the financial auditor, Ernst &Young ShinNihon LLC, will expire. In that regard, it is proposed that the financial auditor in question not
be reelected, and that a new financial auditor be elected.
In addition, the consent of the board of company auditors has been obtained for this proposal.
1.

Reasons for not reelecting Ernst & Young ShinNihon LLC and for newly requesting the election of
Deloitte Touche Tohmatsu LLC
Believing it appropriate to once again evaluate and review the financial auditor on the basis that Ernst& Young ShinNihon LLC had been elected as financial auditor for a long period, the board ofcompany auditors conducted an investigation of multiple audit firms, including the aforementioned
firm, in accordance with the Company’s financial auditor evaluation and selection guidelines.
As a result, the Company has newly nominated Deloitte Touche Tohmatsu LLC as the candidate forfinancial auditor to replace Ernst & Young ShinNihon LLC. In reaching this decision, the Company
judged that not only did Deloitte Touche Tohmatsu LLC possess the specialty, independence andsuitability required to be the Company’s financial auditor and the auditing system capable ofperforming unified auditing of the Group’s global business activities, but also that, through changing
the financial auditor, the Company could expect to further improve the reliability of its financial
information by applying auditing that uses perspectives and methods that are different from before.

-9-

2.

Candidate for financial auditor
Name, address of principal office, history, etc. of the candidate for financial auditor are as follows:

Name
Address ofprincipal
officeDeloitte Touche Tohmatsu LLC
Shinagawa Intercity, 15-3 Konan 2-chome, Minato-ku, Tokyo
May 1968
May 1975

History

OutlineTohmatsu Awoki & Co. established
Joined Touche Ross International (TRI) (now Deloitte Touche Tohmatsu
Limited (DTTL)) allianceFeb. 1990 Changed the company name to Tohmatsu & Co.
Jul. 2009
Converted to a limited liability company and changed the company name to
Deloitte Touche Tohmatsu LLC
Capital¥966 million (as of August 31, 2017)
Number of employees
6,589 (as of August 31, 2017)
Partners (including 53 specified partners)
594
Professionals
5,585
Administrative staff
410
Total
6,589
Of the above,
Certified public accountants (CPAs)
3,340
Passers of certified public accountant exam, etc.
(including junior certified public accountants) 1,112
Number of audit clients 3,399 companies (as of May 31, 2017)(Notes)1. If shareholders approve the election of financial auditor candidate Deloitte Touche Tohmatsu LLC, the Company willenter into a liability limitation agreement with that firm according to which their liability under Article 423, paragraph 1 of
the Companies Act will not exceed either ¥30 million or the minimum liability amount stipulated in Article 425, paragraph
1 of same Act, whichever is higher.
2. For the past two years, financial auditor candidate Deloitte Touche Tohmatsu LLC has received compensation from theCompany for advisory and guidance services relating to International Financial Reporting Standards (IFRS).

- 10 -

Business Report (From October 1, 2016 to September 30, 2017)
1. Current status of the SEPTENI Group(1) Business progress and results
Earnings for the current term
Individual smartphone ownership in Japan rose to 56.8% in 2016, as the quantitative expansion continued
centered on the younger generation, with more than 80% of those in their teens through 30s now owning asmartphone. At the same time, per-capita smartphone usage time also increased greatly with the increasing
usage rate of SNS (social networking services), meaning we are also seeing a profound qualitative change
in usage (source: “2017 White Paper on Information and Communications in Japan,” Ministry of Internal
Affairs and Communications). As such, with the smartphone becoming a mainstream device to access theInternet, the market for corresponding advertising and diverse services and content is expanding. In
addition, the power of social media, led by SNS, is increasing still further. In this way, demand formarketing support that makes use of the characteristics of social media is increasing still further.
Amid this business environment, the Group has focused on smartphone advertising, and has worked toenhance its production and sales system for video advertising, which is experiencing particularly dramatic
growth. The Group also worked to expand business overseas and to boost earnings in Southeast Asia.
Moreover, to enhance competitiveness in the medium to long term, we proactively hired and developed
human resources using AI-type personnel systems based on the machine learning, and in our Media
Content Business, we made upfront investments to expand the media scale mainly of the manga application“GANMA!”As a result, revenue increased to ¥14,702 million (up 6.1% year on year), non-GAAP operating profit
decreased to ¥2,325 million (down 43.9% year on year) and profit attributable to owners of parent totaled¥2,211 million (down 12.2% year on year), with revenue again setting a new record high in substantive
terms for the sixth straight fiscal year.
Furthermore, following the sale of some of our shares in AXEL MARK INC. on November 10, 2016, wehave removed the company and its subsidiaries from the scope of our consolidation. We separated the
profits or losses of the company and its subsidiaries and the profits or losses from the sale of shares fromcontinuing operations, and reclassifying those profits or losses as discontinued operations, weretrospectively adjusted the previous fiscal year’s results with which comparisons are made.
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 21, 2017 to pay a year-end dividend of ¥3.2
per share. Based on this decision, total dividends paid will be ¥409,903,504.
Furthermore, in order to increase shareholder returns through improvement of the capital efficiency as wellas to pursue the agile capital policy that responds to changes in the management environment, the Company
acquired 1,800 thousand treasury shares (total acquisition price of ¥630 million) during the current term.

- 11 -

Adoption of the International Financial Reporting Standards (hereinafter referred to as “IFRS”)
The Group has applied IFRS since the fiscal year ended September 30, 2016 in place of previously 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 business development.
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 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 business performance
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 the Group deems
that the information is valuable for users of financial statements.
Revenue:

Non-GAAP operating
profit:Up 6.1%

Down 43.9%¥14,702 million¥2,325 million

Previous term: ¥13,862 million
Profit attributable to
Down 12.2%
owners of parent:

Previous term: ¥4,147 million
Dividends per share:¥2,211 million¥3.2

Previous term: ¥2,519 million

Previous term: ¥16 (Note)(Note) The Company conducted a share split of common share at a ratio of 5 for 1 on October 1, 2016. The operating resultsof the previous term are stated based on the number of shares before the share split.

- 12 -

The overview of operating results by major business segment is as follows.
Internet Marketing Business Major business
Development of comprehensive marketing support services for companies leveraging the Internet
The Internet Marketing Business engages in the sales of Internet advertising and the operation of cloudbased CRM services and marketing platforms including affiliate networks.
During the current term, amid an expanding Internet advertising market centering on performance-based
advertising for smartphones, the Group proactively engaged in operating activities and worked to expand
operations. In addition to that increased demand, growth was supported by the increasing diversification ofadvertising products and richness of advertising methods, and smartphone advertising’s share of net sales in
the Internet Marketing Business remained high. Net sales from video advertising, a focus area, saw broad
growth. Despite a reduction in deliveries for certain existing large projects, we expanded overseas
operations centered on Lion Digital Global Ltd., a Southeast Asian Internet advertising agency acquired asa consolidated subsidiary in October 2016, resulting in continued strong overseas business revenue andcontributing to expanded revenue for the Internet Marketing Business.
Revenue: ¥13,833 million(Up 3.2% year on year)

Non-GAAP operating profit: ¥4,255 million(Down 20.2% year on year)

Media Content Business Major business
Manga Content Business, recruitment platform business, social contribution platform business,
medical platform business, and other businesses
The Manga Content Business engages in cultivating and supporting manga artists and operates a manga
distribution service through the manga application “GANMA!,” the Company’s own media, for the purposeof planning and developing its own intellectual property (IP).
In the Manga Content Business in the current term, we proactively made marketing investments including
TV commercial to expand the media scale of the manga application “GANMA!” As a result, although
distribution and administrative expense increased mainly in advertising expenses, the number of“GANMA!” users grew significantly resulting in cumulative downloads of 8.59 million as of September 30,
2017, which is about 2.2 times the number it was in the previous term. Furthermore, sales of advertisingthat appears on “GANMA!” remained strong, and application revenue centered on advertising revenue saw
broad growth.
Non-GAAP operating loss: ¥1,420 million(Operating loss of ¥718 million
in the previous term)

Revenue: ¥1,163 million(Up 93.5% year on year)- 13 -

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

24th term(ended September 30,
2014)

25th term(ended September 30,
2015)

Net sales (Thousand yen)

54,345,580

64,547,685

Operating profit (Thousand yen)

2,259,953

2,753,969

Ordinary profit (Thousand yen)

2,362,887

3,118,052

Profit attributable to owners of parent(Thousand yen)

1,549,187

2,398,059

61.22

92.87

Basic earnings per share (Yen)
Total assets (Thousand yen)

21,625,786

25,387,848

Net assets (Thousand yen)

10,203,263

12,286,188

Dividends per share (Yen)

9.00

14.00

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

18.5

23.4

 IFRS
Category

25th term(ended September 30,2015) (Note 1, 2)

26th term(ended September 30,2016) (Note 2)

27th term(ended September 30,
2017)

Revenue (Thousand yen)

11,194,804

13,861,870

14,702,191

Non-GAAP operating profit (Thousand yen)

2,900,596

4,146,751

2,324,552

Profit attributable to owners of parent(Thousand yen)

2,351,121

2,519,007

2,210,604

Total assets (Thousand yen)

25,635,045

29,980,944

32,928,735
17.38

Basic earnings per share (Yen) (Note 3)

18.21

19.43

Dividends per share (Yen)

14.00

16.00

3.20

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

23.0

19.8

15.1

(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. Following the sale of part of shares of AXEL MARK INC. held by the Company, on November 10, 2016, this company
and its subsidiaries have been excluded from the scope of consolidation, and as for the trends in profit and loss for the
25th and 26th terms, the comparative periods, the said business was reclassified as discontinued operations andretrospective adjustments were made.
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 the25th term.
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)- 14 -

 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 Group has applied the International
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
Aiming to achieve further profit growth and corporate value, the Group has formulated new Midterm
Business Policies for the years from the fiscal year ended 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 Group has up until now focused on the smartphone
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 Group will aim to expand its share and increase its profitability
in the domestic market by further strengthening the position established in the area of smartphones
and social media. At the same time, it will further accelerate the global business development andwork to utilize both organic business growth and M&A as the dual engine for subsequent 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.
(4) Capital investments
Nothing noteworthy to report.
(5) Financing
During the fiscal year under review, other financial liabilities increased by ¥3,567 million. This wasdue mainly to an increase of ¥3,616 million in loans payable from financial institutions.
(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.

- 15 -

(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
On October 5, 2016, the Group acquired 96.01% of shares of Lion Digital Global Ltd., a Southeast
Asian Internet advertising agency and made the said company its consolidated subsidiary.
On November 10, 2016, the Group sold 440,000 shares out of 1,746,500 shares of AXEL MARK
INC., resulting in the said company becoming its associate accounted for using equity method.
(10) Parent and significant subsidiaries (as of September 30, 2017)
1) Relationship with the parent
Not applicable.
2) Significant subsidiaries
Capital or investment incapital(Thousand yen)Company name

Ratio of voting right of theCompany

Major business

SEPTENI CO., LTD.

300,000

100.0% Internet ad agency

COMICSMART INC.

450,000

100.0% Manga Content Business(Notes)1. The Company owns a total of 33 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.

(11) Major offices (as of September 30, 2017)
Company name

Office nameLocation

The Company

Headquarters

Shinjuku-ku, TokyoSEPTENI CO., LTD.

Headquarters

Shinjuku-ku, TokyoCOMICSMART INC.

Headquarters

Shinjuku-ku, Tokyo(12) Employees (as of September 30, 2017)
Number of employees

Increase/decrease from the previous term-end

1,083

153 increase(13) Major creditors (as of September 30, 2017)
Creditor

Amount of loans(Million yen)Mizuho Bank, Ltd.

4,933

(14) Other important matters regarding the current status of the Group
Nothing noteworthy to report.

- 16 -

2. Status of the Company(1) Matters regarding shares (as of September 30, 2017)
1) Number of shares authorized

370,080,000 shares

2) Number of shares issued

138,819,000 shares (including 10,724,155 treasury shares)

3) Number of shareholders

10,063 (5,390 increase from the previous fiscal year-end)

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

Number of shares (shares)

Shareholding ratio (%)

19,907,600

15.54Japan Trustee Services Bank, Ltd. (Trust Account)
Village seven Co., Ltd.

16,219,000

12.66

Mamoru Nanamura

13,950,500

10.89Yahoo Japan Corporation

7,000,000

5.46

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

5,781,200

4.51

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

5,184,100

4.05

CHASE MANHATTAN BANK GTS CLIENTS ACCOUNTESCROW

4,914,605

3.84

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

2,321,945

1.81

Hiroshi Shimizu

2,020,000

1.58

NOMURA PB NOMINEES LIMITED OMNIBUS MARGIN (CASHPB)

1,835,499

1.43(Notes)1. The above shareholding ratios exclude treasury shares (10,724,155 shares).
2. The treasury shares do not include the Company’s shares owned by the officer remuneration BIP (Board Incentive Plan)trust.

5) Other important matters regarding shares(a) The Company implemented a share split on October 1, 2016, at a ratio of five shares per commonshare. As a result, the number of shares authorized increased by 296,064,000 shares and the numberof shares issued increased by 110,913,200 shares.
(b) The number of shares issued increased by 177,500 shares due to the exercise of share options.
(c) At the board of directors meeting held on November 22, 2016, the Company resolved theacquisition of treasury shares of the Company, in accordance with the provisions of the Articles ofIncorporation, pursuant to Article 459, paragraph 1 of the Companies Act, and acquired its treasury
shares as follows:
Type of shares acquired

Common shares of the Company

Total number of shares acquired

1,800,000 shares

Acquisition price¥630,452,000

Acquisition date

From November 24, 2016 to December 2, 2016

Acquisition method

Open-market purchase on the Tokyo Stock Exchange

Reasons for acquisition

Increase in shareholder returns and implementation of theagile capital policy(d) The Company introduced a share-based remuneration plan for directors of the Company (excluding
outside directors and those who are non-residents of Japan) and executive officers of the Group(excluding those who are non-residents of Japan). This plan employs the mechanism of the officer
remuneration BIP (Board Incentive Plan) trust, and acquired 1,739,200 shares of common shares of
the Company (total acquisition cost of the shares: ¥575,680,987) through the BIP trust during thebusiness year under review.

- 17 -

(2) Matters regarding share options, etc.
1) Status of share options, etc. held by officers of the Company (as of September 30, 2017)
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

120,000 shares

90,000 shares

120,000
shares

10,000sharesClass 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

20,000 shares

15,000 shares

15,000 sharesClass of shares to be issued
upon exercise of shareoptions

Common shares

Common shares

Common shares

Issue price

¥146

¥160

¥61

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- 18 -

Date of resolution of issue
Category

January 26, 2016
Director

Number of holders

3

Number of share options

75

Number of shares to be issued
upon exercise of shareoptions

37,500 sharesClass of shares to be issued
upon exercise of shareoptions

Common shares

Issue price¥360

Amount to be paid per shareupon exercise of shareoptions¥7

Exercise period of shareoptions

From February 1, 2017
to January 31, 2018

Remarks

Share remuneration-type
share options for officers(Notes)
1. As the Company implemented a share split on October 1, 2013 at a ratio of 200 shares per common share, the number ofshares and issue price provided above were adjusted accordingly except those for the issue resolved on and after January
26, 2016.
2. As the Company implemented a share split on October 1, 2016 at a ratio of five shares per common share, the number ofshares and issue price provided above were adjusted accordingly.

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.

- 19 -

(3) Matters regarding company officers (as of September 30, 2017)
1) Directors and company auditors
Position

Name

Duties and important positions held at othercompanies

Representative Director

Koki Sato

Director

Isamu Ueno

Director

Kazumi Shimizu

Director

Tadahiro Matsuda

Director

Shintaro Karaki

Director

Kana Setoguchi

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

President, SEPTENI CO., LTD.

(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 Tokyo Stock Exchange, Inc. and has submitted a notice of designation to the Tokyo Stock Exchange.
5. The Company has entered into agreements with all outside directors and outside company auditors that 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.

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

Officers’ remunerations

Director

8¥328,175 thousand

Including ¥16,379 thousand for two outside
directors

Company Auditor

4¥39,177 thousand

Including ¥14,218 thousand for three outsidecompany auditors

Category

Remarks(Notes)
1. 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.
2. 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 ¥407,675 thousand.

- 20 -

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

Tatsuya Kimura

Mr. Kimura attended all board of directors meetings held during the current
term, where he made comments primarily from his professional viewpoints
as an academic. Furthermore, as the chairperson of the Nomination Advisory
Committee, which is a voluntary advisory organization of the Company, he
has led deliberations on nomination of directors and compiled proposed
recommendations as the committee.

Etsuko Okajima

Ms. Okajima attended 12 of 13 board of directors meetings held during thecurrent term, where she made comments primarily informed by her
experience and insight as a corporate manager. Moreover, she has expressed
opinions, etc. appropriately as a member of the Nomination Advisory
Committee, which is a voluntary advisory organization of the Company.

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 10 of 13 board of directors meetings and 12 of 15
board of company auditors meetings held during the current term, where hemade comments, primarily from his 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 held during the current term, where he madecomments primarily from his professional viewpoints as a certified public
accountant and as a lawyer.

Director

Director- 21 -

(4) Financial auditor (as of September 30, 2017)
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¥38,306 thousand(b) Total amount of cash and other economic benefits to be paid to the financial auditor by theCompany and its subsidiaries¥40,066 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 and guidance services concerning English translation of nonfinancial documents, which are non-audit services other than the services set forth in Article 2, paragraph 1 of theCertificated 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.

- 22 -

3. Structure and policy of the Company(1) Policy regarding the determination of dividends of surplus, etc.
With regard to the dividends of surplus, we will consider our consolidated earnings performance, theneed to fortify our financial position, the Group’s forward-looking business strategy, and other factors
while at the same time endeavoring to maintain a dividend payout ratio of around 15% of profit
attributable to owners of parent and provide a return of profit within the limit of the distributableamount of the Company. Furthermore, taking into consideration the importance of continuity andstability of dividend payments, we have established a general principle to provide a minimum annual
dividend of ¥2 per share to follow a basic practice of providing an appropriate level of profit
distribution in accordance with the business growth. In addition, we will endeavor to utilize ourinternal reserves for investments in training personnel, optimizing and reinvigorating our existing
businesses, and capturing new business areas that have the potential for high growth and profitability.
Furthermore, as for the acquisition of treasury shares, the Company shall implement it appropriately
while taking into account the financial status, trend of the share price and other factors, in order toincrease shareholder returns through improvement of the capital efficiency as well as to pursue theagile capital policy that responds to changes in the management environment.
Based on these policies, the Company will pay a year-end dividend of ¥3.2 per share for the current
term. In addition, the Company acquired 1,800 thousand treasury shares (total acquisition price of¥630 million) during the current term.
(2) Systems to ensure the properness of operations
1) Systems to ensure the properness of operations of the corporate group comprised of the Company
and its subsidiaries(a) The corporate group comprised of the Company and its subsidiaries (hereinafter referred to as the“Group”) is managed under a holding company structure in which the Company, which is theultimate parent company, is a holding company and its subsidiaries are operating companies. By
separating the managerial function from the function of executing its individual businesses, theGroup shall work to facilitate the delegation of authority to its operating subsidiaries and strengthen
the Company’s function of monitoring the Group’s businesses.
(b) The Company’s function of managing the business of its operating subsidiaries shall be
implemented effectively and efficiently based on the execution of its direct and indirect
shareholders’ rights and under the “Basic Agreement on Business Management Services for theGroup” entered into with the operating subsidiaries.
(c) The Company shall establish principles, regulations, guidelines and others common to the Group to
ensure efficient and proper execution of duties by the Group’s directors, group executive officers
and employees (hereinafter referred to as “officers and employees”).
(d) The Company shall clarify a system for reporting any situations concerning execution of duties by
the Group’s officers and employees such as the state of the business and financial results to theCompany’s board of directors or the Group Management Meeting. In cases where certain
significant decisions are made, prior approval of the Company’s board of directors or the GroupManagement Meeting shall be required.
(e) The Internal Auditing Office of the Company shall provide assurance operations (auditing andguarantee function) and consulting operations (advisory and guidance function) from an
independent and objective position to the Group, and examine and assess the status of ensuring theproperness of operations of the entire Group.
2) Systems to ensure compliance with laws and regulations and the Articles of Incorporation bydirectors and employees when executing their duties(a) Officers and employees of the Group shall recognize compliance with laws and regulations andsocial ethics as being one of basic points for the Group to fulfill its corporate social responsibilities(CSR) and achieve sustainable growth, and practice the compliance through the Group’s CSR
activities.

- 23 -

(b) The Group’s corporate philosophy and code of conduct shall call for compliance with laws andregulations and social ethics and adopt it as the Group’s basic policy for the business operation.
(c) Directors and group executive officers of the Group shall practice and encourage the compliancewith laws and regulations and social ethics proactively.
(d) Directors and group executive officers shall assign authorities for execution of duties appropriately
and clearly and execute the duties in accordance with regulations including the regulations of theboard of directors and the regulations of the executive officers.
(e) In the event that directors and group executive officers find a violation of laws and regulations orother important facts regarding compliance, they shall report to the Company’s board of directors
or the Group Management Meeting without delay and take corrective measures.
(f) The Company shall conduct regular compliance trainings for the Group’s officers and employees
continuously and have the Internal Auditing Office, which is directly under Group President andChief Executive Officer, perform internal audits of the Group.
(g) In order to respond appropriately to reporting or consultation from the Group’s officers andemployees on organizational or individual violations of laws and regulations, detect and amend
inappropriate actions and others early, and strengthen the compliance, the Company shall establish
a whistleblower hotline with external lawyers being as the person who directly receives a report.
3) Systems for the storage and management of information regarding the execution of duties bydirectors(a) With regard to information security of the Group, the Company shall set the “Basic Policy on
Information Security,” develop internal regulations regarding information security in line with laws
and regulations, and establish the “Security Management Office” to oversee and manage
information security in an integrated and effective manner under the common policy as the Group.
(b) With regard to documents, forms and other records related to duties of the Group’s officers andemployees (including electromagnetic records), the Company shall develop internal regulations
regarding document management in line with laws and regulations, and manage and store such
documents in an integrated and effective manner under the common policy as the Group.
(c) With regard to personal information management of the Group, the Company shall establish“Privacy Policy,” develop internal regulations regarding personal information security in line withlaws and regulations, and manage such information in an integrated and effective manner under thecommon policy as the Group.
(d) With regard to documents, forms and other records related to duties of the Group’s officers andemployees (including electromagnetic records), the Company shall establish a system to ensure that
directors and company auditors can have access to these records at any time.
(e) With regard to insider information on shares of listed companies, the Company shall establish the“Group Regulations on Prevention of Insider Trading,” manage such information in an integrated
and effective manner under the common policy as the Group, and communicate it to the division in
charge of information disclosure appropriately.
(f) When storing and managing information through electromagnetic records, the Company shall strive
to gather the up-to-date information on threats for electronic information to build the latest system
for storage and management possible.
4) Regulations and other systems for managing the risk of loss(a) In order to recognize significant events that may affect the business management of the Group,
identify, analyze and assess risks that may harm the development and growth of the business, andmake responses to the risks such as risk aversion, mitigation, transfer and others, the Company
shall establish the “Group Risk Management Regulations” and set up the “Group Risk
Management Committee” as a body to oversee and manage such risks in an integrated and effective
manner under the common policy as the Group.
(b) With regard to usual risk management of the Group, each operating subsidiary or division shallmake a risk assessment and response to the risk, and the Group Risk Management Committee shall- 24 -

receive a report from the operating subsidiary or division and oversee the risk management of theGroup.
(c) In case of an emergency, the “Crisis Management Headquarters” with the Group President andChief Executive Officer as its head shall oversee the risk management of the Group.
(d) Risk management policies of the entire Group as well as assessment of and responses to the risks
related to strategic decision-making such as management strategy and merger and acquisition shallbe treated as the exclusive prerogatives of the Company’s board of directors. In making thesemanagement decisions, the Company shall assess the risks appropriately.
(e) The Company shall establish a reporting system for any event or indication that may affect theGroup significantly in cases where risks have become apparent, so that its board of directors canfigure out such an event or indication in advance.
5) Systems to ensure the efficient execution of duties by directors(a) The Company’s board of directors shall make decisions on matters stipulated in laws andregulations and the Articles of Incorporation and the execution of important operations, and transfer
its authority to group executive officers with regard to the execution of other operations pursuant to
the “regulations of the board of directors” and the “Resolution and Entrustment Criteria” to ensureswiftness and efficiency of the execution of duties.
(b) Multiple subsidiary groups that are part of the same chain of command in the Group shall bedeemed as companies without board of directors in terms of institutional design under theCompanies Act in order to promote the swiftness and efficiency of the decision-making process.
Their information shall be consolidated by the Company’s board of directors or the management
meeting of the core subsidiary to uniform the decision-making process.
(c) Directors and group executive officers shall execute duties efficiently based on the Midterm
Business Policies and goals and annual budget set by the Company’s board of directors, as well asreport the progress of these policies and goals and budget to the Company’s board of directors or
the Group Management Meeting and implement necessary improvement measures.
(d) In cases where subsidiaries make significant decisions, approval of the Company’s board of
directors or the Group Management Meeting shall be required, and coordination shall be made forthe efficient resource allocation avoiding overlaps of business activities and capital investments
between the Company and subsidiaries or between subsidiaries.
6) Matters relating to employees that assist the company auditors upon the request of such company
auditors, independence of the relevant employees from directors and 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.
(b) Employees that assist the company auditors shall not concurrently serve other duties and posts.
(c) Matters related to personnel evaluations, personnel transfers, disciplinary actions, etc. for
employees that assist the company auditors shall be conducted separately from the other employees
and determined with the consent of the company auditors.
7) Systems for enabling directors and employees to make reports to company auditors and 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(a) Company auditors of the Company may attend the board of directors meetings of the Company aswell as the important meetings of the Group including the board of directors meetings andmanagement meetings, and request explanations from officers and employees as necessary.
(b) In cases where company auditors request reports on operations or inspections of documents such as
minutes, approval documents and accounting books, officers and employees of the Group shall
respond to the request in a prompt and appropriate manner.
(c) In the event that officers and employees of the Group detect any facts or situations that may causesignificant damage to the companies, such officers and employees shall immediately report thematters to company auditors.
- 25 -

(d) The Company shall establish regulations for prohibiting removal from duty, discharge and anyother disadvantageous treatment to officers and employees of the Group on the grounds that theofficers and employees made a report to company auditors, and make the regulations well known.
(e) All of the internal audit reports conducted by the Internal Auditing Office shall be reported to theboard of company auditors.
8) Matters relating to policies on procedures for prepayment or reimbursement of expenses arising fromthe execution of duties by company auditors and processing of other expenses or obligations arisingfrom the execution of duties by company auditors
Expenses that are considered necessary in the execution of duties of company auditors shall bebudgeted in advance. In cases where company auditors request payment for reasonable expenses
for the execution of their duties, the Company shall accept the request.
9) Systems for ensuring the effective functioning of audits by company auditors(a) The Company shall ensure that it provides its company auditors with opportunities to sufficiently
exchange opinions with the Group President and Chief Executive Officer, outside directors,
financial auditor and Internal Auditing Office.
(b) The Company shall establish a system that allows its company auditors to perform audits
equivalent to audits of the Company by the company auditors under individual agreements between
the Company and its subsidiaries, in addition to investigations of subsidiaries under laws andregulations, so that the company auditors can audit the entire Group effectively and efficiently as
needed.
(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 officers and employees have been provided to raise the employee’s
awareness on compliance. In addition, the Company established the internal reporting system for theGroup and informed all employees about it.
2) Information on the execution of duties by directors
The board of directors comprises of eight directors, including two outside directors. In addition, four
company auditors including three outside company auditors also attend the meetings of the board of
directors. During the business year under review, the board of directors held meetings 13 times toensure 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 company auditors, including three outside company
auditors. During the business year under review, the board of company auditors held meetings 15
times to mainly receive reports from internal company auditor on the status of operations of theCompany 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 GroupManagement Meeting, and regularly exchange information with the Group President and Chief
Executive Officer, 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 14. All other figures are rounded to the units indicated.

- 26 -

Consolidated Financial Statements
Consolidated Statement of Financial Position(Thousand yen)Account

27th term(At September
30, 2017)(Reference)

26th term

Account(At September
30, 2016)

AssetsCurrent assets
Cash and cash equivalents
Operating receivables
Inventories
Other financial assets
Other current assets

15,519,366
9,988,192
9,794
209,252
545,80915,480,970
9,982,708
118,517443,788242,480

Total current assets

26,272,413

Liabilities and Equity
Liabilities
Current liabilities
Operating payables
Other financial liabilities

26th term(At September
30, 2016)

9,652,601
1,728,525

Current income taxes
payable309,710

1,236,846

26,268,463

Other current liabilities

1,796,410

1,573,264

Total current liabilities
Non-current liabilities
Other financial liabilities
Provisions

13,386,666

14,191,236

4,018,845
82,821

654,867
88,454

1,140

518

Deferred tax liabilities

215,731–

Total non-current
liabilities

4,318,537

743,839

Total liabilities

17,705,203

14,935,075

2,113,611
3,647,815(1,691,818)
11,018,315

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

84,355

123,875

15,172,278

14,155,722

Property, plant andequipment

333,676

363,519

Goodwill
Intangible assets

1,817,632
169,005

147,491
232,261

Investments accounted forusing equity method

1,943,739

611,991

Other financial assets
Other non-current assets

1,657,054
7,024

1,673,251
3,743

Total non-current assets(At September
30, 2017)(Reference)

9,349,155
1,931,391

Non-current assets

Deferred tax assets

27th term

728,192

680,225

6,656,322

3,712,481

Other non-current
liabilities

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

Total assets

32,928,735

29,980,944

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

- 27 -

51,254890,147

15,223,532

15,045,869

32,928,735

29,980,944

Consolidated Statement of Profit or Loss
27th term(From October 1, 2016
to September 30, 2017)

Account(Thousand yen)
(Reference)
26th term(From October 1, 2015
to September 30, 2016)

Continuing operations
Revenue
Cost of sales

14,702,191
1,713,539

13,861,870
1,383,668

Gross profit
Distribution and administrative expense
Other income
Other expense

12,988,652
10,651,666
14,949104,127

12,478,202
8,350,253
46,044
19,547

Operating profit
Finance income
Finance costs
Share of profit from investments accounted for using equity
method2,247,808
277,030
113,963

4,154,446
111,387
94,69936,772

109,755

Profit before tax
Income tax expense

2,447,647
1,109,365

4,280,889
1,563,685

Profit from continuing operations
Discontinued operations
Profit (loss) from discontinued operations

1,338,282

2,717,204

868,070(465,195)

Profit2,206,352

2,252,009

Profit attributable to:
Owners of parent
Non-controlling interests

2,210,604(4,252)2,519,007(266,998)

2,206,352

2,252,009

Net sales (Reference)

72,375,144

73,203,044

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

2,247,808
960
77,704

4,154,446
20,00012,305

Non-GAAP operating profit

2,324,552

4,146,751

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

- 28 -

(Reference) Consolidated Statement of Comprehensive Income
27th term(From October 1, 2016
to September 30, 2017)
2,206,352

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
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income, net of tax(Thousand yen)
26th term(From October 1, 2015
to September 30, 2016)
2,252,009

183,719

298,883

258,466(13,770)(114,119)(5,511)

1,514–

429,929

179,253

Total comprehensive income

2,636,281

2,431,262

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

2,617,876
18,4052,734,220(302,958)

Comprehensive income

2,636,281

2,431,262(Note) Figures are rounded to the nearest unit.

- 29 -

Consolidated Statement of Changes in Equity
27th term (From October 1, 2016 to September 30, 2017)(Thousand yen)
Equity attributable to owners of parent

Balance at October 1,
2016
ProfitOther comprehensive
incomeTotal comprehensive
incomeIssue of new shares
Dividends of surplus
Purchase anddisposal of treasury
sharesChanges inownership interests in
subsidiaries that do
not result in loss ofcontrolChanges inownership interests in
subsidiaries that
result in loss ofcontrol
Other

Total

Noncontrollinginterests

Total equity

123,875

14,155,722

890,147

15,045,869

2,210,604–

2,210,604(4,252)

2,206,352––

407,272

407,272

22,657429,929––

2,210,604

407,272

2,617,876

18,4052,636,281

28,607–28,606––––(415,096)(55,970)–

1,243(415,096)

–
–

1,243
(415,096)––(1,206,133)––(1,206,133)–(1,206,133)

–

1,940

–

–

–

1,940

(218,024)(216,084)

–

–

–

–

(2,873)(2,873)(638,394)(641,267)

Share capital

Share
premium

TreasurysharesRetainedearnings

Other
componentsof equity

2,085,004

3,617,269(485,685)

8,815,259

–

–

–

–

–

–

–

–

–

407,548(387,949)

19,599(880)

18,719Total amount oftransactions withowners28,60730,546(1,206,133)(7,548)(446,792)(1,601,320)(857,298)(2,458,618)

Balance at September
30, 2017

2,113,611

3,647,815(1,691,818)

11,018,315

84,355

15,172,278

51,254

15,223,532(Note) Figures are rounded to the nearest unit.

- 30 -

(Reference) 26th term (From October 1, 2015 to September 30, 2016)(Thousand yen)
Equity attributable to owners of parent

Balance at October 1,
2015
ProfitOther comprehensive
incomeTotal comprehensive
incomeIssue of new shares
Dividends of surplus
Purchase anddisposal of treasury
sharesChanges inownership interests in
subsidiaries that do
not result in loss ofcontrolChanges inownership interests in
subsidiaries that
result in loss ofcontrol
Other

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

–

–

–

–

–

–

–

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(Note) Figures are rounded to the nearest unit.

- 31 -

Non-consolidated Financial Statements
Non-consolidated Balance Sheet(Thousand yen)Account
AssetsCurrent assets
Cash and deposits

27th term(At September
30, 2017)(Reference)

26th term

11,153,521
7,983,157

7,035,611
5,829,496

Accounts receivable trade283,787

276,032

Supplies
Prepaid expenses

2,130
66,2672,862
61,883

Accounts receivable other2,062,699

810,523

Income taxes receivable

337,933–

Short-term loans
receivable fromsubsidiaries andassociates

400,000

30,000

Deferred tax assets

16,96022,610584
4,408,539

2,201
4,032,664

Property, plant andequipment

125,670

136,304

Other
Non-current assets

Account(At September
30, 2016)

Liabilities
Current liabilities
Short-term loans payable

27th term(At September
30, 2017)(Reference)

26th term(At September
30, 2016)

1,611,114
58,335

1,039,829
50,002Current portion of longterm loans payable

999,996–

Accounts payable - otherAccrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Non-current liabilities
Long-term loans payable
Other

442,999
26,200
16,23918,696
48,6483,961,395
3,933,338
28,057

291,882
40,316605,751
15,40336,472266–
266

Total liabilities

5,572,509

1,040,096

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

9,989,102
2,113,610
2,712,264
2,525,293
186,971
6,855,044
70,867
6,784,177
400,000

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

6,384,177

5,218,172(1,691,817)(485,684)

Valuation and translation
adjustments(19,281)

60

–

60

Buildings

45,17474,081Tools, furniture andfixtures80,49562,223

Intangible assets
Software
Software in progress
Other

152,781
127,154
25,000627

160,773
157,805
2,340
627

Investments and otherassets4,130,087

3,735,586

Investment securities

520,330

300,607

Shares of subsidiaries
and associates

2,119,340

2,512,791

Lease and guarantee
deposits

753,265

466,047

Valuation difference on
available-for-salesecurities

Deferred tax assets
Other723,379
13,771

442,939
13,200

Deferred gains or losses
on hedges(19,281)–

Subscription rights toshares

19,73056,102

Total net assets

9,989,551

10,028,179

Total liabilities andnet assets

15,562,061

11,068,275

Total assets

15,562,061

Retained earnings
brought forward
Treasury shares

11,068,275(Note) Figures are rounded down to the nearest unit.

- 32 -

Non-consolidated Statement of Income
27th term(From October 1, 2016
to September 30, 2017)

Account(Thousand yen)
(Reference)
26th term(From October 1, 2015
to September 30, 2016)

Operating revenue
Operating expenses

3,800,044
1,785,355

2,629,657
1,606,808

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

2,014,688
331,237
215
32,639297,698683

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

Non-operating expenses
Interest expenses
Loss on valuation of investment securities
Share listing related expenses
Commission fee
Other97,9104,227
25,62012,59950,758
4,705

123,439284
98,5096,931
16,192
1,522

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

2,248,015
251,480
248,998
2,481–

963,639590,545590,131–414

Extraordinary losses
Loss on valuation of shares of subsidiaries and associates
Other

1,148,182
1,145,849
2,332

451,727444,036
7,691

Profit before income taxes
Income taxes - current
Income taxes - deferred

1,351,313
36,465(266,253)

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

Profit

1,581,100

1,093,796(Note) Figures are rounded down to the nearest unit.

- 33 -

Non-consolidated Statement of Changes in Equity
27th term (From October 1, 2016 to September 30, 2017)(Thousand yen)
Shareholders’ equity
Retained earnings
Other retained earnings
Legal
Total
Retained
Total capitalretainedretained
Generalearnings
surpluses
earnings
earnings
reservebrought
forwardValuation and translation adjustments
Valuation
Total
Subscripdifference Deferred
Total sharevaluation
tion rights
Treasuryongains orholders’andto shares
sharesavailable- losses on
equitytranslation
for-salehedgesadjustments
securities

2,683,658

Capital surplus
Capitalstock

Balance at
beginning of
2,085,004
current period
Changes of items
during period
Issuance of new
28,606
sharesDividends ofsurplusProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during
28,606
periodBalance at end of
2,113,610
current period

Legalcapitalsurplus

Othercapitalsurplus2,496,687

186,971

28,60670,867400,000

5,218,172

5,689,039(485,684) 9,972,017

57,212

57,212(415,095)(415,095)(415,095)(415,095)

1,581,100

1,581,100

28,60660–

60

Total net
assets56,102 10,028,179

1,581,100

1,581,100(1,206,132) (1,206,132)(1,206,132)

–

(60)

(19,281)(19,341)(36,371)(55,713)(38,628)

28,606–28,606––

1,166,005

1,166,005 (1,206,132)

17,084(60)(19,281)(19,341)(36,371)

2,525,293

186,9712,712,264

70,867400,000

6,384,177

6,855,044 (1,691,817) 9,989,102–(19,281)(19,281)

19,730 9,989,551(Reference) 26th term (From October 1, 2015 to September 30, 2016)(Thousand yen)

Capitalstock

Balance at
beginning of
2,070,160
current period
Changes of items
during period
Issuance of new
14,844
sharesDividends ofsurplusProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during
14,844
periodBalance at end of
2,085,004
current period

Legalcapitalsurplus2,481,842

Shareholders’ equity
Capital surplus
Retained earnings
Other retained earnings
Total
Other
Legal
Retained
Total capitalretained
capitalretained
Generalearnings
surpluses
earnings
surplusearnings
reservebrought
forwardValuation and translation adjustments
Valuation
Total
Subscripdifference Deferred
Total sharevaluation
tion rights
Treasuryongains orholders’andto shares
sharesavailable- losses on
equitytranslation
for-salehedgesadjustments
securities

186,971

14,844

2,668,814

70,867400,000

4,487,201

4,958,068(485,011) 9,212,030

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

1,093,796

1,093,796

1,093,796

1,093,796

(672)

(672)

14,844(672)

14,844–

14,844––730,970

730,970

2,496,687

186,9712,683,658

70,867400,000

5,218,172

5,689,039(Note) Figures are rounded down to the nearest unit.

- 34 -

34–

34

Total net
assets35,222 9,247,288

–

25

–

25

20,87920,904759,986

25–

25

20,879780,891(485,684) 9,972,017

60

–

60

56,102 10,028,179(672)

Board of Company Auditors’ Report

Audit Report
With respect to the directors’ performance of their duties during the 27th business year from October 1,
2016 to September 30, 2017, 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.

- 35 -

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 21, 2017
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.

- 36 -