SEPTENI HOLDINGS CO., LTD.

For the year ended September 30, 2017

Septeni Business Report 2017

TOP INT E RVI E W

SEPTENI HOLDINGS CO., LTD.
Group President and Chief Executive Officer

Koki Sato

Achieving sustainable growth through steadyprofitability gains in the Internet Marketing Business andeffective investments in the Media Content Business——What is your view on the recent
business environment?
Generating record revenue for six
consecutive fiscal years due to theadvancing shift to smartphones andgrowth in video advertisingof a stream of smart speaker products from the ITcompanies that drive the industry.
In this environment, in our mainstay Internet
Marketing Business we focused on smartphone
advertisements, and paid particular attention toenhancing our production and sales systems forthe fast-growing area of video advertisements. In

In the Internet-related market, the main businessconjunction with this approach, we made strides inarea of the Septeni Group, the ways in which smart

promoting an expansion of our overseas operations

devices are used have become more diverse and in-primarily through Lion Digital Global Ltd., an internet

depth. At the same time, globalization is proceeding

advertising agency in the Southeast Asia region thatat a rapid pace, typified by market expansion primarily

we made a consolidated subsidiary from the fiscal year

in developing countries. In 2017 marked two decades

in review.

since the Internet gained widespread adoption andIn the Media Content Business, we made proactive

a decade from the introduction of the first iPhone.

marketing investments in “GANMA!” Comic app in an

It was also a year that provided hints about the next

effort to expand the size of the user base and media.

decade for the Internet-related market with the release1

Septeni Business Report 2017

——What initiatives did you take andbusiness results did you record in thefiscal year ended September 30, 2017
under review?
In the Internet Marketing Business, we
expanded overseas revenue mainly in
Asia, while achieving steadily improving
profitability in Japanthe previous period. Although we ended the periodwith increased revenue and lower profit, we saw
improvements in transactions for our mainstay areas ofsmartphone advertising and social media advertising,as well as a better product mix thanks to a decreasein low-profitability projects. In terms of the ratio of
revenue to net sales for advertising transactions, werecorded a 0.8-point rise over the preceding period. In
these ways, we are continuing to make progress in ourIn the Internet Marketing Business, we have actively
rolled out sales activities and expanded operations

switch to a high-revenue business model.
On the organizational front, we made organizational

against a backdrop of a larger internet advertisingchangestobetterfit

theimmediatebusinessmarket, primarily composed of performance-based

environment and sought to strengthen our mobility.

advertising for smartphones. The percentage of earnings
from the transactions of smartphone advertising in thisSmartphone Ad

business rose 5.7 points over the previous year, and thistype now accounts for a high 80% of advertising. Even

Net Sales (¥bn)

within this type, earnings from transactions of video
advertisingexperienced

considerable

Component ratio to net sales

79.5%

73.8%

year-on-year

growth of around 2.4 times. Meanwhile, while we wereaffected by a decrease in advertising in some existinglarge-scale projects, overseas earnings particularly

57.7

54.0

from the Asia region were strong, and as a result we
achieved a 3.2% increase in revenue over the previous
period to 13.8 billion yen, while Non-GAAP operating
profit settled at 4.26 billion yen, a 20.2% drop from

FY2016

Video Ad

GlobalRevenue (¥bn)

FY2017

Component ratio to revenue

Component ratio to net sales

Net sales (¥bn)

10.7%

14.2%

6.3%
1.48

5.9%

10.3

0.84
4.3
FY2016FY2017FY2016FY2017

Septeni Business Report 20172

TOP INT E RVI E W
In the Media Content Business, we havesteadily expanded our media scale
through large-scale marketinginvestment in the manga content
business
In the Media Content Business, we made aggressive
marketing investments in GANMA! and ran the firsttelevision commercials in March 2017. The investment
yielded significant results, with the user base steadily
growing primarily among younger demographics.
As of October 2017, cumulative downloads of theapp stood at 8.95 million, 2.3 times greater than thepreceding period, and monthly page views continued

advertising market made consistent progress and theto grow to 3.9 billion views. Moreover, in connection

number of advertisers rose steadily. Consequently, thiswith the expanded media scale, app revenue enjoyedform of advertising is gaining increased recognition as

considerable growth of approximately 4.5 times overan alternative medium to television by which to reachthe previous term mainly thanks to expanded sales ofyounger demographic who are defecting from TV“GANMA! AD” in-app advertising.

viewership at an increasing rate.

The effects of television commercials not only

As a result, on a consolidated basis we generated

enhanced our media scale but also had the effect14.7 billion yen in revenue, a 6.1% jump over theof raising our recognition among advertisers. In theprevious year, while Non-GAAP operating profit fell

second half of the year, development of the brand

43.9% to 2.33 billion yen from the previous fiscal year.

Earning outside recognition for personnel-related initiatives“Great Place to Work(in Japan)” rankings“The 6th Japan HR
Challenge Awards”

The 2nd HR
Technology Awards(surveyed by the Great Place to Work®
Institute Japan)(Supported by the Ministry of Health,Labour and Welfare, Toyo Keizai, Inc., etc.)(Supported by the Ministry of Economy,
Trade and Industry, Toyo Keizai, Inc., etc.)

Received

Management System Division,
Received

Best Companies
to Work For<Selected 6 times>

an Prize for
Encouragement

an excellence award<for the 2nd consecutive year>

3

Septeni Business Report 2017

——What is the policy for the next
fiscal year?
Investing in people, the Group’s greatest
asset, raises our competitiveness as acompany in the medium-to-long term
To date, Septeni has achieved sustained growth byactively investing in entrepreneurial human resources
with a sense of ownership. As a part of our investmentby the national government since September 2016,
and also aim to contribute to medium-to-long termbusiness performance and boost competitiveness by
the hiring of more talented personnel and developing
them to full strength early on.

——What is your message for shareholders?
We distributed essentially the same
dividends as the preceding fiscal year

in these kinds of human resources, since 2012 we havebeen promoting an AI-type personnel system based

With respect to returning profits to shareholders, weon machine learning in the areas of personnel hiring

have set roughly 15% of profit attributable to owners

and development. In recent years, this initiative hasof parent as a benchmark, in the interest of maintaining

progressed to the stage where the prospect of hiringcontinuity and stability of dividends, as previously. We

even more talented personnel and bringing juniordecided to distribute a dividend per share of 3.2 yen,personnel to full strength at an earlier stage has been

which is essentially the same amount as the preceding

backed up by our internal data. We have also built

period. Moving forward we will continue to engage

up a track record of having these independent efforts

in appropriate profit distribution based on businessrecognized by multiple outside organizations.

performance.

Against this backdrop, we decided to make bold

From the next fiscal year, we will aim to achieverevisions to our personnel systems starting from thesustainable growth under the Midterm Business Policies

next fiscal year. Details of the revisions are explainedthat have set non-GAPP operating profit of 10.0 billion

on the following page. Through the revisions, we will

yen as a target. I humbly ask for your continued

confirm to the “workstyle reform” trend advocatedunderstanding and cooperation.

Midterm Business Policies (FY9/2017~)

Earnings target

Non-GAAP Operating Profit:¥10bn
Basic policies

Expand advertising business globally
Enhance our own media
Invest in what comes after the smartphone
Septeni Business Report 2017

4

FOCUS

Enhancing competitiveness through ongoing investments
in human resources
From the fiscal year ending September 2018, we will revise our personnel system with the aim ofhiring more talented human resources, bringing them up to full strength at an earlier stage andcontributing to business performance, while operating a machine learning-based AI-type personnel
system that we have been developing and operating independently.
Examples of efforts

Summary

Implementation
schedule

Systemization ofrecruitment anddevelopment of humanresources

Recruitment and development utilizing quantitative
information and statistical techniques

Research anddevelopment
commenced in
2012

Introduction of a flextime Effective work styles without any constraints on time will
be promoted.
systemOctober 2016 ~Replacement of current annual salary by the payment of
fixed pay and new performance-linked bonuses. (Eachemployee’s bonus is to be determined depending on the
merit rating.)

Enhancement ofsalary levels

October 2017 ~NEW

Previously
October
2017 ~

Fixed pay

Bonus

Performancelinked bonus

Fixed pay

Introduction ofa side businessapproval scheme

NEW

Engaging in side businesses will be permitted to an
approved extent for the improvement of individual skills.

October 2017 ~Improvementof remote work
environments

NEW

Diverse work styles without any constraints on location
will be realized.

January 2018 ~The new path forged by a unique AI-type personnel system
The Septeni Group established the Human Capital Lab as an internal organization tasks withresearching human resource development from a scientific perspective to maximize the businessperformance of each and every employee. In this section we will introduce the activities led by the
Human Capital Lab to date, including the AI-type personnel system behind the new personnel systemstaring from the fiscal year ending September 2018.

5

Septeni Business Report 2017

Our approach to human resource development
Providing the knowledge and skills necessary for business is a common means to human resource development atcompanies. However, it is extremely difficult to accurately measure the effects of this human resource development,
and this has proven to be a major issue at Septeni for many years.
Given this challenge, we chose to redefine human resource development from “providing the knowledge deemednecessary to cultivate human resources” to “building upon good quality experiences in the workplace to cultivate
human resources,” and began an effort to scientifically measure and assess the results of this approach.
We also devised a “Formula of Development” that indicates regularity which, by providing a workplace environment
conducive to demonstrating skills and having theminteract, promotes significant growth and brings

Formula of Development

personnel up to full strength early on. This approach

Growth Personality Environment Team

forms the basis of our human resource development

G = P × E ( T+ W)

program.

Work

AI-type personnel system
Based on the above approach, the Human Capital Lab independently
developed a Human Resource Development Engine equipped with analgorithm that predicts the success levels of human resources based on a vast
database on human resources assembled from the entire Group. In addition,
the 360-degree Multi-Survey, a unique assessment run by Septeni, we gained
the ability to gauge the growth of individual employees. By utilizing humanresource development outcomes as quantitative information in this way, we
assessed individuals and workplace environments in terms of assigned posts,
development and other factors, and established mechanisms to ensure that

Director of the Human Capital Lab
Tatsuya Shindo

human resources reach full strength at an early stage.
We verified the outcome of these initiatives in terms of the actual successlevels of junior employees, and as a result, confirmed that compared withpast trends, more employees reached full strength after joining the company in a shorter time.
As illustrated above, the greater contributions to business growth associated with junior employees reaching fullstrength earlier led to our decision to expand investment into the personnel area. We will continue to develop an
attractive work environment with the aim of hiring more talented personnel, taking them to full strength early on
and contributing to business performance, leading to improved medium-to-long-term competitiveness and sustained
growth.

Septeni Business Report 2017

6

CSR

CSR Policy and Priority Challenges
CSR Policy and promoting system

The Septeni Group’s priority
challenges in CSR

We have established a CSR policy of helping toReferencing international guidelines and long-term

resolve social issues through business, and we promotegoals such as ISO26000 and the SDGs, we take stock of

CSR activities with the aim of realizing a sustainable

the many issues facing society and make comprehensive

society and the Septeni Group’s mission of “Inspiring

judgments concerning what stakeholders expect of thethe world with entrepreneurship.” Led by a cross-

Septeni Group and the importance of issues to Septeni

sectoral CSR Committee chaired by President Sato, weGroup businesses. We then designate priority themes

are continually expanding our regular CSR activities as

and promote CSR activities accordingly. In light ofwell as efforts to ensure that our corporate philosophychanging social circumstances, our internal progress onand code of conduct take root.

initiatives and other factors, we reviewed the themes
we had pursued up to the 27th period and are working
on seven priority themes starting with the 28th period.

CSR targets

Major actionsin the 27th period

Encourage the active
participation ofwomen

Encouraging the active
participation of women

unning of female leader development•Rworkshop
throughout the entire group
ettlement of targets for active female•Sparticipation
for the entire group

unning of female leader development•Rworkshop
throughout the entire group

Take action against
discrimination andharassment

Ensuring the integrity of
the workplaceenvironment

aunch of LGBT & Allies Network,•L”SEPALLYRAINBOW”, activities
ntroduction of anti-discrimination and•Iharassment
training

pplication of welfare benefits for•Asame-sex
partners
mplementation of anti-discrimination•Iandharassment training

Development of highquality humanresources

Studying the developmentof high-quality humanresources

at outside workshops•LPectures
ublication of research reports to•peopleinside and outside the Group•Start of online recruitingat outside workshops•LPectures
ublication of research reports to people•insideand outside the Groupof the scope of use of the engine•Eforxpansion
the development of human resources

Implementing
measures for Healthand Productivity
Management

Implementing measuresfor Health andProductivity Management

romotion of measures for Health and•PProductivity
Management

romotion of measures for Health and•PProductivity
Management

Workstyle Reforms

Promoting workstylereforms

ull-scale introduction of flextime•Fsystem

evelopment of remote work
•Denvironment

Support the sounddevelopment of theInternet advertisingindustry

Supporting the sounddevelopment of theInternet advertisingindustry

ormulation and announcement of the Three•FPromises
by Septeni Group, a policy for the soundromotion of measures to reinforce the•Pspreadof the Three Promises by Septeni

Culture and sports
supportCulture and sports
supportaunch of the “RouteM” manga artist•Ldevelopment
programPriority challenges* We will regularly review the priority challenges.

7

Septeni Business Report 2017

development of the Internet advertising industry•Promoting measures to ensure policies take root

Actions plannedin the 28th period

Group, a policy for the sound developmentof the Internet advertising industry

aunch of the “RouteM” manga artist•Ldevelopment
program•Support for top athletes

Pick out CSR activities (1)Development of high quality human resources
The Septeni Group has set up “The Human Capital Lab", which exclusively studies human resources
data, in order to maximize the performance of each and every employee. Its findings are used in themaking of management decisions and the development of human resources.

Purpose of research andstructure

Online Recruiting“The Human Capital Lab” integrates and analyzes

As a part of efforts to expand the scope of thethe large amount of data on human resources that wehuman resource development engine built by thehave accumulated as our group has expanded over the

Human Capital Lab, from the fiscal year under review

years. It continues its research activities in an effort towe began online recruiting aimed at students fromclarify the structure of human resources development

regions other than Tokyo area.

in the growth industry from a scientific perspective andbroadly share its findings

Online recruiting allows us to complete the processfrom entry to informal job offer by utilizing predictionsof post-employment success derived from the AI-type

Reporting/Services

personnel system and an online interview system.
Students from regions other than Tokyo area

Reporting

The Human Capital Lab
Human resources
data

Integration, analysis, anddevelopment

Outsiderscan face a greater burden while job hunting due totransportation fees, accommodation expenses andthe time spent on the move. For the Septeni Group,
reducing this burden has allowed us to secure talented
resources from a broader pool of candidates.

Research Activities

Moving forward, the Septeni Group will continue topursue initiatives based on research conducted by the

The Human Capital Lab actively discloses research

Human Capital Lab and activities to strike a balance

reports and holds lectures to help hire and cultivate

between creating Group competitiveness and helping

human resources.

to solve social issues.

In the fiscal period under review, we actively
disseminated the results of our research through•Selection is concluded at home
•Lighten the burden of expense and timelectures, announcements and the placement of articles
in various media outlets.
We also sought to disseminate our research findings
globally by utilizing our subsidiaries located overseas.

•Acquisition of talented personnel fromall over Japan

Septeni Business Report 2017

8

CSR

Pick out CSR activities (2)Anti-discrimination and harassment training
We have Diversity, one of code of conduct, as a guide for day-to-day actions. Diversity means that
we respect all human rights and mutually recognize diversity. We work to realize working styles inwhich individuals can exhibit. We continually promote activities with this guideline to ensure thateach individual's strengths are fully demonstrated through creating an environment that will notcause discrimination and harassment by sex, age, nationality, race, ethnicity, religion, thoughts,
beliefs, social status, presence of disability, sexual orientation, gender identity, etc.

LGBT Support
We are building and acting on the group-wide LGBT & Allies Network SEPALLYRAINBOW to create a workplace where all employees are motivated to work,
regardless of whether they are LGBT or not, by deepening the understanding ofLGBT and increasing the number of Allies.

Extending welfare benefits to same-sex partners
From January 2018, we will revise the definition of “spouse” in our internal
regulations. By submitting the appropriate documentation, employees with samesex partners can now take advantages of the applicable systems.

Educational training
We periodically invite outside instructor to conduct training and engage ininternal awareness-raising activities on a continual basis.
Education using e-learning is also carried out for the purpose of acquiring basic
knowledge of all employees.

Outside recognition
We have received a bronze award as part of PRIDE INDEX 2017, an index
formulated by the voluntary organization work with Pride to evaluate corporate
initiatives aimed at sexual minorities such as LGBT employees.

Human rights awareness activities
We regularly offer training to prevent harassment and consider human rights inadvertisement expression.

9

Septeni Business Report 2017

Pick out CSR activities (3)Support the sound development of the Internet advertising industry
The drastic increase in Internet usage and the rapid progression of technologies are causing various
challenges for the Internet advertising industry. Aiming to help solve these issues and foster thesound, prosperous and attractive development of the Internet advertising market, the Septeni Grouphas devised and promoted activities under the Three Promises by Septeni Group, a policy for thesound development of the Internet advertising industry.

Three Promises by Septeni Group(1) Sincere response
We consider integrity to be the basis of everything we do and we will act with the resolve of rightand wrong rather than profit and loss. We will remain conscious about the communication of useful
information to society through appropriate means that will lead to continual trust in Internet
advertising and will act to make all of the people involved smile with the cooperation from thestakeholders.
(2) Improvement of quality
We will observe the relevant laws and regulations and the rules agreed upon with the parties
involved and aim to establish internal operations which preemptively avoids accidents or wrongdoings
while moving toward the enhancement of quality service through repeated education andimprovement.
(3) Challenging the possibilities
We will continue the challenge of using new technologies and techniques to enhance the value ofInternet advertisements and improve the satisfaction of the stakeholders.

Discovering and Solving Issues, Promoting
Education and Awareness of Various Rules
All employees involved in Internet advertising are interviewed aboutbusiness issues based on the Policy and actions for improvement are
taken mainly through cross-departmental projects. And education isregularly provided for understanding the laws and regulations relating
to business, the guidelines established by the industrial associations andthe rules for each advertising medium and for the application of such knowledge to our business operations.

Reflection of stakeholders’ voices
Each year, the Septeni Group conducts a survey on customer satisfaction directed at the relevant companies. The
answers are used to improve our services and internal systems. COMICSMART, which operates GANMA!, also strives
to improve its services with reference to user reviews.

Septeni Business Report 201710

Segmen t I n fo rm a ti o n

Internet Marketing Business

Summary of FY2017
•

Point

Growth in our areas offocus and improved
profitability

We made Lion Digital Global Ltd. (Lion & Lion), a
leading digital agency in Southeast Asia, into ac o n s o l i d a t e d s u b s i d i a r y. O v e r s e a s re v e n u e ,primarily from Lion & Lion and the Asia region,
expanded to 1.48 billion yen (up 76.2% over theMain content of business :General all-embracing marketing support services
using the Internet

preceding period).
•

Revenue(units: ¥mn)

approximately 7% year-on-year to 57.7 billion yen,

Non-GAAP Operating profit (units: ¥mn)

and accounted for roughly 80% of net sales.
•

13,40913,409

5,331
5,331

13,833
13,833

Transactions of smartphone advertising grewTransactions from video advertising, one of ourareas of focus, grew to 10.3 billion yen, a jump of

4,255
4,255

about 2.4 times from the preceding year.
•

Despite a decline in large projects, our product andclient mix improved, driving higher profitability.

2016/92016/92017/92017/92016/92016/92017/92017/91,163
1,163
Advertising
Sales

Internet Marketing Business

Advertising
Purchases

Internet Media

Advertising
Distribution,
Display

Advertising Agency Sales•Design of campaign structure•Consulting
△718
△718
•Operation of advertisements•Establishment of creative content

601
601

Clientsetc

Campaign Implementation, Operation,
Effectiveness Measurement△1,420In-house△1,420
services
2016/92016/911

2017/92017/9Service
Provision

2016/92016/9 CRM
2017/92017/9services•Cloud-based
Affiliatenetworks••Internet media
etc

Septeni Business Report 2017

Information DispatchUsers

13,40913,409

5,331
5,331

13,833
13,833

Media Content Business4,255
4,255

Manga Content Business•

Expanding revenue
through large-scale
marketing investments

Pointincluding television commercials to expand the
media scale of the GANMA! Manga app.

Main content of business :Production of Manga artists for the purpose ofplanning and supporting our own intellectual
2016/92017/92016/92017/92016/92017/92016/92017/9property(IP)and the operationof theManga
distribution service
Revenue(units: ¥mn)

We conducted large-scale marketing investments•

As a result of large-scale marketing investments,
the GANMA! user base increased significantly. As
of October 2017, cumulative downloads had risen
about 2.3 times compared with the preceding
period to 8.95 million, and monthly page views for

Non-GAAP Operating profit (units: ¥mn)

October 2017 grew to 3.9 billion views.

1,163
1,163
•

Sales of GANMA! AD in-app advertising have
expanded steadily, with app revenue growing
about 4.5 times year-over-year.

601
601

△718
△718

Other New Businesses•

Each business grew steadily.

△1,420△1,4202016/92016/92017/92017/9Manga Artists

2016/92016/92017/92017/9Cultivation

Media Content Business

Providing Works

Manga Content Business
Management of Manga Artists

Advertising
Sales

Distribution

Manga content app (GANMA!)
Users
Recruitment platform businessCorporation/
Group/
Medical institutions

Registration of
information

Provision of information
on job seekers
Social contribution platform business
Activity support

Support action
on the Internet

Medical platform business
Provision of solutions for
medical institutions

Septeni Business Report 201712

Manga Co nte nt Bu s ine ss
With the aim of positioning the Manga Content Business as a second pillar of the Septeni Group’sbusiness, we are working to develop and support manga artists and operate our own media, the
GANMA! Manga comic app. Moving forward, we will continue with prior investments designed to
expand our media scale and user base, and will strive to develop exceptional manga works originatingon the Internet and boost Group profitability.

What is“GANMA!”?
This manga comic app primarily
features original manga comics

Monthly page views
and accumulated
application downloadsof GANMA!

produced by the artists we have

YonY

cultivated in-house. We maintainmanga comics from more than 90

Total number of DL :2.3x
The number of monthly PV :2.9xvaried genres from quest battles

1.35

a large user base consisting
mainly of young readers in theirteens and 20s. All the episodes of

Total number of DL (mn)
The number of monthly PV (bn)

3.90

8.95

to love comedies and science
fiction are updated daily and can
all be read for free.

3.97

Manga content app
2016/102017/10

Implement of
TVCM
From late March to early April 2017, we ran the firsttelevision commercials for GANMA!. As a result, app
downloads and page views both increased significantly,
and after the commercial aired, the app would takethe top spot in the free download section of the App
Store, greatly contributing to expanded media scale. The
television commercials also boosted recognition among
young aspiring manga artists and advertisers.

13

Septeni Business Report 2017

Sales of the GAMNA! AD in-app advertising products have steadily increased proportional to our
expanded media scale, resulting in large growth in app revenue, up around 4.5 times comparedwith the preceding fiscal year. In addition to native advertisements displayed at the end of eachmanga episode, we have enhanced the quality of advertising types as products, such as large video
advertisements shown at the top page of the app, and casting advertisements using characters
being serialized on GANMA!. As a result, the number of advertisers has also risen steadily.

Videoadvertisement

Application
Revenue Trend(Total revenue of GANMA! in terms ofadvertising and in-app billing)*Volumes in 2016 = 100

YonY
Approx.
4.5x
Casting
advertisement

445

100
2016/92017/9In the second half of the year, we managed to advancethe development of the brand advertising market. By
enhancing GANMA!’s presence as a form of media, more
advertisements were placed by advertisers. In the next
fiscal year, we will continue to make prior investments at a
certain level, bolster our expanded media scale and thedevelopment of the brand advertising market, and drive
expanded sales of our in-house advertising products. This
will generate a powerful business synergy with the Internet
Marketing Business and enhance Group profitability.
Septeni Business Report 201714

Financi a l H i gh l i gh ts-For FY9/17, Non-core Business (Axel Mark) is excluded from the consolidated results.
Consolidated profits and losses for FY9/16, with which comparisons are made, arecorrected retroactively and presented after being reclassified as those of discontinued
businesses.

Consolidated Statement of Profit or Loss (units: ¥mn)
While there was a contraction in large projects from the Internet Marketing Business, expanded revenues
from the Media Content Business helped us secure increased revenue on a consolidated basis.

2016/9Account

2017/9Rate of change

Revenue

13,862

14,702+6.1%

Non-GAAP
Operating profit (*)

4,147

2,325

-43.9%

Operating profit

4,154

2,248

-45.9%

Profit from continuing
operations

2,717

1,338

-50.7%

Profit for the period
attributable toowners of the parent

2,519

2,211

-12.2%

73,20372,375-1.1%

Net sales(Reference)* ‌A profit indicator of constant business performance determined by adjusting temporary factors such as impairment loss and gains and loss on the sales of noncurrent assets from the IFRS-based operating profit (or loss)

Revenue(units: ¥mn)

13,862

Non-GAAP
operating profit(units: ¥mn)

Profit for the period attributable (units: ¥mn)
to owners of the parent

Non-GAAP operating profit

Profit for the period attributable to owners of the parent

Ratio of non-GAAP operating profit to revenue (%)

Ratio of profit attributable to owners of parent to revenue (%)

14,702

2,519

4,147

2,351

2,211

21.0

11,195
2,901
25.9

29.9

18.2

2,325

15.0
15.8

2015/9(reference value)

2016/92017/92015/9(reference value)

2016/92017/92015/9(reference value)*For reference purposes, figures based on IFRS for the fiscal year ended September 2015 are listed together.

15

Septeni Business Report 20172016/92017/9

Consolidated Statement of Financial Position (units: ¥mn)
Assets: Increased 2,948 million yen from the end of the previous fiscal year, chiefly reflecting increases in
Goodwill and investments accounted for using the equity method.
Liabilities: Increased 2,770 million yen from the end of the previous fiscal year mainly due to increases in
Other Financial liabilities.
Capital: Increased 178 million yen from the end of the previous fiscal year chiefly due to increases inretained earnings due to the posting of profit for the period.

AssetsLiabilities and Equity
Total

Total

32,929Total

29,981

Total

Current
liabilities

Current
liabilities

15,51915,481

14,191

Operatingreceivables

Current
Assets9,983

Current
Assets26,272

26,268Property, plantand equipment

Operatingreceivables

334

Other financial
assetsOther financial
assetsNon-current
AssetsNon-current
AssetsDeferred tax
assets

6,656

3,712

At September
30, 2016

Basic earnings per share

Equity attributableto owners ofparentDeferred tax
assetsEquityEquity14,156

1,657

15,224

15,046890

51
At September
30, 2016

Ratio of equity attributable to(%)
owners of the parent to total assets(%)
ROE
Ratio of equity attributable to owners of
the parent to total assets

15,172
Non-controllinginterests

Non-controllinginterests

728

Non-current
liabilities

4,319

Equity attributableto owners ofparentAt September
30, 2017(units: ¥)17,705

Liabilities

14,935744
Property, plantand equipment

1,673

13,387

Liabilities

Non-current
liabilities

9,988

364

680

29,981

Cash andcash equivalents

Cash andcash equivalents

32,929At September
30, 2017

Dividend per share
Dividend Payout Ratio(units: ¥)(Unit: %)Dividend per share
Payout Ratio

ROE

18.4
19.43
18.21

16.5

17.38
44.1

23.0

2015/9(reference value)

2016/92017/9* The Company conducted a five-for-one stock split on

October 1, 2016. The figures above are calculated as
though the stock split had been conducted at the
beginning of the fiscal year ended September 30, 2015.

2015/9(reference value)

47.2

46.1
14.7

15.1

2.8

3.2

3.2

2016/92017/919.8

2016/915.1

1.8

2017/92014/92015/9* The Company conducted a five-for-one stock split on
October 1, 2016.
The dividends per share for past years in the abovegraph have been converted into post-split-adjustment
amounts for comparison.

Septeni Business Report 201716

Topics

Regarding Management Structure for the Next Year
Strengthening Corporate GovernanceTwo outside directors were appointed by approval at the 27th ordinary meeting of shareholders.
This brings the number of outside directors to four, and as a result, outside directors now make up amajority of directors.
To enhance the effectiveness of the Board of Directors, we have proceeded with the development ofsystems to transition to a monitoring-oriented Board of Directors that places a priority on supervising
the execution of business.
In January 2017, we introduced an entrustment-type executive officers’ system to clarify the divisionof management decision-making functions, auditing functions and business execution functions. We
will further develop this system in the next fiscal year, and make every effort to build a robust anddynamic management foundation by minimizing the number of directors serving concurrently asGroup Executive Officers, and delegating considerable authority to execute business to the Group
Executive Officers. We will also strive to achieve sustained growth of the Septeni Group and enhance
corporate value in the medium-to-long-term.

Policy on Returning Profit to Shareholders
We recognize the return of profit to shareholders as one of our priority management issues.
With regard to the distribution of retained earnings, it has been implementing a flexible and proper
distribution of profits, factoring in its consolidated financial results for the respective business years,
financial bases, and future group business strategies, among other factors. Under the establishedpolicy of paying an annual dividend of 2 yen per share at minimum, it decides dividends to maintain apayout ratio of approximately 15% to profit attributable to owners of the parent, basically.
For the fiscal year under review, we

Dividend per share (units: ¥)Dividend Payout Ratio (units: %)distributed a year-end dividend of 3.2

18.4

yen per share. Although dividends
were 16 yen the previous year, on

16.5

October 1, 2016 we conducted astock split at a rate of five shares for

14.6

14.7

15.1

every 1 common share. As the graphon the right shows, when comparing

2.8

3.2

3.2

dividends converted into their postsplit equivalents, the dividend is

1.8
1.4

essentially the same amount as theprevious term.

17

Septeni Business Report 20172013/92014/92015/92016/92017/9

Corpo ra te P rofi l e / St o ck I nf o r m a t i o n
Corporate Profile As of September 30, 2017

Ownership Structure updated on September 30, 2017

Trade NameSEPTENI HOLDINGS CO., LTD.

Number of shares authorized

370,080,000 units

Headquarters

Sumitomo Fudosan Shinjuku Grand Tower,

Number of shares issued

138,819,000 units

8-17-1 Nishishinjuku, Shinjuku-ku, Tokyo

Number of shareholders

10,063+81-03-6863-5623

Major Stockholders

TelFax +81-03-6863-5624
Business Overview

Number of
Shareholding
sharesMajor shareholders

Corporate management and overall control ofgroup companies through ownership of sharesand other forms of equity.

Foundation

October 1990

Capital2,114 million yen

No.of Employees

1,083 permanent staff / 1,306 employees

1.

19,907,600

15.54

2. Village seven Co., Ltd.

16,219,000

12.66

3. Mamoru Nanamura

13,950,500

10.89

4. Yahoo Japan Corporation

7,000,000

5.46

Officers As of December 21, 2017
Representative Director Koki Sato(front row, center)

Director

Isamu Ueno

(front row, left)

Director

Kazumi Shimizu (front row, right)

Outside Director

Tatsuya Kimura (back row, second from right)

Outside Director

Etsuko Okajima (back row, second from left)

Outside Director

Seiji Yasubuchi (back row, left)

Outside Director

Yusuke Asakura (back row, right)

Internal Auditor

Muneyoshi Nomura

Outside Auditor

Katsuhisa Yanagi

Outside Auditor

Mamoru Furushima

Japan Trustee Services Bank, Ltd.
(Trust Account)5.

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

5,781,200

4.51

6.

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

5,184,100

4.05

7.

CHASE MANHATTAN BANK GTS
CLIENTS ACCOUNT ESCROW

4,914,605

3.84

8.

BNY GCM CLIENT ACCOUNT JPRD AC
2,321,945
ISG (FE-AC)

1.81

9. Hiroshi Shimizu

10.

NOMURA PB NOMINEES LIMITEDOMNIBUS-MARGIN (CASHPB)

2,020,000

1.58

1,835,499

1.43(Note) ‌Excluding our major stockholders above, our company reserve10,724,155 units ofstock in our treasury. The above shareholding ratios exclude treasury stock.

Breakdown by the Number of Holdings Shares

Treasury Stock
7.73%

Individuals·Other
33.24%

Foreign Investors
14.76%

Financial Institutions
26.29%

Domestic Corporations
16.97%
Securities Firms
1.01%

Septeni Business Report 201718

Corporate Philosophy
MissionInspiring the world
with entrepreneurship

VisionTo create a strong and great company

Creed"Hinerankai" in Kansai dialect means,"Think outside the box."

ひねらんかいCode of Conduct: Septeni Way
Speed

Speed is preferred—even if it comes with a little bitof roughness—over sophisticated but slow.
We place speed first and follow a process of
repeated trial and error in an effort to achieve ahigher level of completion.

StretchSetting challenging targets
We believe it is important to make innovations thatmeet challenging targets. The steady accumulationof day-to-day changes ultimately leads toremarkable growth.

Partnership

Achieving mutual growth
We a l l w o r k h a rd , i n c o m p e t i t i o n a n d i n
c o o p e r a t i o n , f ro m t h e p e r s p e c t i v e o f t h emanagement team to build a better company.

Fair&Open

Make things simple and easy for anybody tounderstandWe ensure fairness and openness in constructing
an environment and relations.

Diversity

Using diversity as a competitive edge
We respect all human rights and mutually
recognize diversity. We work to realize working
styles in which individuals can exhibit and apply
their respective strengths.

PassionRemaining passionate
We believe that passion will help us increase ourcapacity and consistently produce positive results.
We continue our own personal development tostimulate corporate growth and contribute to society.

Free&Rule

Freedom within discipline
The decisions we make are not dictated by whether
something is beneficial, but whether it is right. We
comply with the corresponding regulations andordinance and with the spirit of law, while
concentrating on doing our jobs seriously yet happily.

SEPTENI HOLDINGS CO., LTD.
https://www.septeni-holdings.co.jp/en
R esults forecasts and other forward-looking statements contained in this report wereprepared based on information available at the time the report was prepared, and actual
results may differ from projected figures due to various factors in the future.
T he company names and service names in this report are their trademark or registeredtrademark.