Annual Securities Report(Report based on the provision of Article 24, paragraph (1) of
the Financial Instruments and Exchange Act)
Fiscal year
(Reporting Period 59)

From February 1, 2020
To January 31, 2021

Artner Co., Ltd.
5-2, Nishidaimotsucho, Amagasaki, Hyogo(E05717)

Contents
Page

Cover
Part I Company Information ......................................................................................................... 1
I. Overview of the Company ..................................................................................................... 1
1 Key Financial Data ............................................................................................................1
2 History...............................................................................................................................2
3 Business Fields .................................................................................................................. 3
4 Information about the Affiliates ......................................................................................... 5
5 Employees ......................................................................................................................... 5
II. Business Conditions ............................................................................................................. 6
1 Management Policy, Business Environment, and Issues to be Addressed ...........................6
2 Business and Other Risks ................................................................................................... 7
3 Management Analysis of Financial Status, Business Performance and Cash Flows .......... 10
4 Important Business Contracts ........................................................................................... 13
5 R&D Activities ................................................................................................................ 13
III. Facilities and Equipment................................................................................................... 14
1 Overview of Capital Investments and Others.................................................................... 14
2 Major Facilities ................................................................................................................ 14
3 Plans for Installation, Retirement, etc. of Facilities........................................................... 14
IV. State of the Reporting Company ....................................................................................... 15
1 The Company’s Shares .................................................................................................... 15
2 Acquisition of Treasury Shares ........................................................................................ 17
3 Dividend Policy ............................................................................................................... 17
4 Corporate Governance ..................................................................................................... 18
V. Financial Information......................................................................................................... 29
1 Non-consolidated Financial Statements, etc. .................................................................. 300
VI. Overview of Shareholder Services at the Reporting Company ........................................ 488
VII. Reference Information about the Reporting Company ..................................................... 49
1 Information about the Parent Company, etc. of the Reporting Company .......................... 49
2 Other Reference Information............................................................................................ 49
Part II Information about the Reporting Company’s Guarantor, etc........................................... 500[Auditor’s Report][Internal Control Report]

[Cover][Reported Document]

Annual Securities Report[Clause Serving as Basis]

Article 24, paragraph (1) of the Financial Instruments and Exchange Act[Recipient]

Director General of the Kinki Local Finance Bureau[Submission Date]

April 22, 2021

[Fiscal Year]

Reporting Period 59 (FY2021) (February 1, 2020 to January 31, 2021)[Company Name]

Artner Co., Ltd.

[Name and Title of Representative]

SEKIGUCHI Sozo, President and CEO[Address of Head Office]5-2, Nishidaimotsucho, Amagasaki, Hyogo(This address is the location of the registered head office. The company’s businessis conducted in the nearest contact location shown below.)[Telephone No.]

06(6445)7551[Name of Administrative Contact]

HARIGAE Tomonori, Director and Head of the Management Division[Nearest Contact Location]

Sumitomo Nakanoshima Building 2F, Nakanoshima 3-2-18, Kita-ku, Osaka City
06(6445)7551[Telephone No.]
[Name of Administrative Contact][Location for Public Inspection]

HARIGAE Tomonori, Director and Head of the Management DivisionTokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

Part I Company Information
I. Overview of the Company
1 Key Financial Data
State of the Reporting Company
Fiscal Year
Year end

FY2017FY2018FY2019FY2020

FY2021January 2017

January 2018

January 2019

January 2020

January 2021

Net sales(thousandsof yen)5,153,319

5,765,117

6,331,692

7,002,175

7,174,725

Ordinary profit(thousandsof yen)564,242

690,426

794,098

893,656

910,457

Profit(thousandsof yen)363,555

480,977

540,973

613,377

628,561

Share of profit of entities
accounted for using equity
method(thousandsof yen)

－

－

－

－

－

Capital(thousandsof yen)238,284

238,284

238,284

238,284

238,284

Total number of shares issued(shares)

2,656,980

5,313,960

10,627,920

10,627,920

10,627,920

Net assets(thousandsof yen)1,616,193

1,963,726

2,333,306

2,728,380

3,123,182

Total assets(thousandsof yen)2,289,912

2,763,619

3,264,188

3,801,139

4,432,313

152.10184.81

219.59256.77293.93

45.00

30.00

18.00

20.50

23.00

20.00

13.00

7.50

10.00

11.50

Net assets per share(yen)

Dividend amount per share(Interim dividend per shareincluded therein)(yen)

Earnings per share

(yen)

34.21

45.26

50.91

57.73

59.16

Diluted earnings per share

(yen)

－

－

－

－

－

Equity ratio

(%)

70.6

71.1

71.5

71.8

70.5

Return on equity

(%)

24.4

26.9

25.2

24.2

21.5

Price Earnings Ratio(times)

12.4

23.8

18.1

14.3

14.6

Payout ratio

(%)

32.9

33.1

35.4

35.5

38.9

Net cash provided by (used in)operating activities
Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities
Cash and cash equivalents at
end of period(thousandsof yen)192,324

471,209612,537

591,153

899,285(thousandsof yen)(15,717)(25,833)(75,542)(42,723)(30,979)(thousandsof yen)(105,677)(134,729)(169,438)(215,920)(232,089)(thousandsof yen)1,372,728

1,683,375

2,050,932

2,383,441

3,019,657

Number of employees(people)

736

801

881

1,002

1,079

Total Shareholder Return(Comparison index: TOPIX
total return index)

(%)

146.8

257.7

225.5

207.7

221.8

(%)

108.6

123.3

107.5

118.5

130.3

Highest stock price

(yen)

1,075

1,116

Lowest stock price

(yen)

665

490

1,998
[879]
839
[833]

2,344
791

-1-

2,370
[1,367]
1,706
[560]

Notes: 1. Since we do not create consolidated financial statements, key financial data pertaining to the consolidated fiscal year are
not included.
2. Net sales do not include consumption tax.
3. Shares of profit of entities accounted for using equity method are not shown because we do not have an affiliate.
4. Diluted earnings per share are not shown because we have no dilutive shares.
5. We carried out a 2-for-1 stock split (common shares) on February 1, 2017 and a 2-for-1 stock split (common shares) on
April 1, 2018. The net assets per share and the earnings per share have been calculated on the assumption that these stock
splits were carried out at the beginning of FY2017. The dividend amounts per share shown here are the actual dividends
paid out prior to the stock splits.
The total shareholder return has been calculated on the assumption that these stock splits were carried out at the beginningof FY2017.
6. The highest and lowest stock prices refer to those that were quoted in the Second Section of the Tokyo Stock Exchange onor after October 26, 2017, and those in the First Section of the Tokyo Stock Exchange on or after July 3, 2018. Prices posted
any time earlier were in the Tokyo Stock Exchange JASDAQ (Standard). The stock prices shown for FY2017 and FY2019
were the highest and lowest prices before the stock splits. The highest and lowest stock prices after the stock splits are shownin the brackets.
7. The dividend per share for FY2018 includes the commemorative dividend of JPY 2 for the Company's 55th anniversary of
establishment and the 10th anniversary of listing on JASDAQ (now Prime Market).
8. The dividend per share for FY2019 includes the commemorative dividend of JPY 2.50 for the stock moving up to the First
Section of the Tokyo Stock Exchange.

2 History
In August 1953, Sekiguchi Kogyo Co., Ltd. was established as a manufacturer of gloves for industrial use, and as a blueprint
printing business. In the late 1950s, as Japan began to enjoy the economic boom, the company decided to switch to design creationand tracing services for design drawings. Sekiguchi Kogyo and the family of SEKIGUCHI Sozo, current President and CEO, madeinvestments as capital, and in September 1962, Osaka Technology Center Co., Ltd., which is currently Artner, was established.
The timeline below shows how the business of Osaka Technology Center Co., Ltd. has developed.
Month and Year

Event

September 1962

Sekiguchi Kogyo Co., Ltd. and the family of current President and CEO SEKIGUCHI Sozo invest 300,000 yen
as capital to establish Osaka Technology Center Co., Ltd. to start the main business of design creation anddesign drawing services.

June 1964

Headquarters (current Osaka headquarters) move to Fukushima Ward, Osaka City.

March 1980

Headquarters move to Kita Ward, Osaka City.

November 1986

The Company launches its specified worker dispatching business as the Worker Dispatching Business Act was
enforced.

April 1998

The Company changes its trade name from Osaka Technology Center Co., Ltd. to Artner Co., Ltd.

December 2003

The Company obtains its license for general worker dispatching business.

February 2004

The Company obtains its license for the paid employment agency business.
The Company establishes two headquarters in Osaka and Tokyo. The Tokyo headquarters opens in Minato
Ward, Tokyo.

October 2007

Company stock listed on JASDAQ.

February 2010

The Tokyo headquarters move to Kohoku Ward, Yokohama City.

April 2010

With the merger between the JASDAQ Securities Exchange and the Osaka Securities Exchange (OSE), theCompany lists its stock on the OSE JASDAQ.
The learning centers open in Suita, Osaka, for centralized management of education and training for newly
graduated engineers.

February 2011

The Company goes through reorganization to open business offices (in Utsunomiya, Yokohama, Nagoya, andOsaka) under the Engineer Business Division.
The Human Resources Business Department and the Hyper Artner Business Department are established underthe Human Resources Business Division.

February 2012

The Hyper Artner Business Department is renamed the Hyper Artner Business Division.

February 2013

The Engineer Agency Business Division is established.

July 2013

With the integration of the Tokyo Stock Exchange (TSE) and the OSE, the Company lists its stock on the TSE
JASDAQ (Standard).

February 2016

The Company integrates its business divisions to reorganize them into the Engineer Business Division and-2-Month and Year

Event
Human Resources Business Division.
The Engineer Business Division and the Hyper Artner Business Department are established under the Engineer
Business Division.

October 2017
February 2018

July 2018
January 2019
March 2020

The Technology Development Department and Engineer Agency Business Department are established under the
Human Resources Business Division.
Stock listing moved to the Second Section of the Tokyo Stock Exchange.
The Engineer Business Division and the Hyper Artner Business Department under the Engineer Business
Division are disbanded.
The High Value Group, the Wide Value Group, the Product Value Group, and the Contracting Group are
established under the Engineer Business Division.
Stock listing moved up to the First Section of the Tokyo Stock Exchange.
The recruitment, education, and sales departments are integrated into learning centers (current learning centersin West Japan) and relocated to a different part of Suita.
The learning centers in East Japan open in Kohoku Ward, Yokohama City.

3 Business Fields(1) Engineer dispatching and contracting businesses
Currently, Artner offers a design engineer dispatching services as its primary business. We have offices in Utsunomiya, Yokohama,
Nagoya, and Osaka.
In the engineer dispatching business, our design engineers provide technical services in the fields of machinery (design of how amachine works using 2D/3D CAD), electronics (e.g., design of a circuit board at the heart of a device or instrument; reliability
assessment), and among others, control software (e.g., development of software for operating electrical equipment with CPUs,
including vehicles with increasingly advanced technologies and IoT devices), data processing (e.g., development of systems andapplication software to offer services to users; development of web and open systems, and package software), thereby assisting
our clients’ design and development teams.
We also operate a contracting business that offers design and development services outsourced by our clients.
(2) Types of contracts with our clients
We execute staffing agreements and service agreements with our clients to conduct our business. While our business is based
mostly on staffing agreements executed with our clients, we also sign service agreements with some of our clients.
(i) Staffing agreement
A staffing agreement is signed between Artner (dispatching business operator) as the employer of a design engineer and a clientcompany (client) as the user of the engineer’s services. The design engineer engages in work at the client company under thesupervision of the client in accordance with the agreement.
The figure below is a graphic representation of the relationships between Artner (dispatching business operator), a clientcompany (client), and a design engineer (dispatched worker).
Artner (dispatchingbusiness operator)

Client company(client)
Staffing agreement

Employment relationshipSupervisory relationship
Designengineer-3-

(ii) Service agreement
Under a service agreement, a client company outsources work to Artner, who takes full responsibility for giving instructions on
the work and managing the design engineer’s labor, among other tasks, in order to deliver completed work to the client.
The figure below is a graphic representation of the relationships between Artner (contractor), a client company (client), and adesign engineer.
Artner (contractor)

Client company (client)
Service agreement

Employment relationshipSupervisory relationship

Design engineer-4-

[Systematic diagram of Artner’s business]
The figure below graphically shows how the business stated above is structured.

Client companies

Engineer dispatching

Contracting

ArtnerHire regular employees
Job applicants (new graduates/mid-career hires)

4 Information about the Affiliates
Not applicable.

5 Employees(1) State of the reporting company
Number of employees(people)Average age(years old)

1,079

Average years of service(years)30.2

6.2

As of January 31, 2021
Average annual wage(yen)
4,027,460

Notes: 1. The number of employees is that of staff members working at Artner. It does not include registered employees.
2. The average annual wage includes bonuses and nonstandard wages.
3. Since we have only one reportable segment, figures sorted by segment have been omitted.
(2) Labor union
Artner’s labor union is named Artner Workers’ Union, which has 992 members as of January 31, 2021. The superior body it
belongs to is UA ZENSEN.
We have stable labor-management relations.

-5-II. Business Conditions
1 Management Policy, Business Environment, and Issues to be Addressed
The statements about the future in the text are judgments we made at the end of the fiscal year ended January 31, 2021.
(1) Management policy
Based on our management philosophy of being an Engineer Support Company, we are committed to serving as a technical partnerthat contributes to the sustainable growth of our clients. This basic stance, developed over many years, has built up a lot of trust
and achievements, establishing our firm position as a pioneer in the industry.
We will continue to expand our corporate value by promoting management that will win the support and approval of our clients,
shareholders, employees, and all other members of society.
(2) Corporate planning and strategy(Guiding principle for the Medium-Term Business Plan)“Build a foundation for sustainable and next-generation growth”“Make Value for 2020 to 2022”(Priority measures for the Medium-Term Business Plan)(i) Promote strategies by segment• Develop strategies for each segment (recruitment - education - assignment - system).
• Establish approaches to markets by segment.
• Explore and seek new specialist fields of technology.
(ii) Promote diversity and inclusion in talent management• Utilize workers of retirement age, women, and foreign workers (overseas students) as personnel.
• Utilize and organize partner companies (set up a contracting system).
(3) Objective indicators for assessing the achievement status of management goals, etc.
In the engineer dispatching business, our main business, the following indicators are used. Net sales: the amount calculated by the
number of operative personnel (number of engineers × utilization rate) × unit price of engineers × total work person-hours; costof sales: labor costs for engineers assigned to our clients; and selling, general and administrative expenses: labor costs for engineers
undergoing in-house training (standby status) and labor costs for other staffers.
We consider the engineer count, utilization rate, and unit price of engineers as particularly important management indicators, andwill focus on efforts to improve them further.
(4) Business environment
While development was in demand at major manufacturers—our main clients—, there remained uncertainty over the size ofinvestment budgets.
We are working to place newly graduated engineers as our management priority.
(5) Business and financial issues that should be prioritized
Our main business, which is the engineer dispatching business, consists of a cycle of recruitment, training, sales, and support
activities. We must address the following issues for future business expansion.
(Recruitment activities)
We view securing and increasing the number of talented engineers as an essential requirement for the expansion of our business.
Therefore, we will strive to secure high-quality talents that meet the market needs by implementing measures such as improving
our recruitment criteria, securing recruitment opportunities, hiring diverse and inclusive talents, optimizing the composition ofengineers by field and business domain, and optimizing the composition of new graduate and career hires.
With regard to the recruitment of new graduates, we will conduct online company information sessions and online interviews, etc.,
for students in order to secure participants in the selection process. We will also regularly provide detailed follow-ups touniversities and prospective employees, and hold get-togethers for prospective employees in an effort to increase the percentage
of prospective employees who join the Company.
(Training activities)
We will improve the skills of our engineers by providing general, external, basic, customized, and/or career training based on our
long-accumulated experience. During the pandemic, newly graduated engineers come to the office in shifts. With weight given to
employee autonomy, they enhance their knowledge through home-based training and demonstrate it through assignments
performed at the office.
In addition, we will strive to improve the technical and human skills of our staff by holding skill development seminars for all
employees and human development training for managers.

-6-

(Sales activities)
We will secure and expand our business partners by strengthening our new business development and sales capabilities, utilizing
online conferencing tools, and making proposals for the selection of engineers, team dispatching, and organization of contracting
services in response to client needs.
In addition, we will negotiate with client companies to assign and place appropriate engineers for improved business terms andconditions, such as an increase in the unit price of engineers.
(Support activities)
Through regular interviews with engineers, including online meetings, we will strive to improve the retention rate by providing
guidance and advice according to the engineers’ wishes and actual conditions, and by providing dedicated counselors for improved
mental health and motivation.

2. Business and Other Risks
Of the matters regarding business conditions and financial information included in the Annual Securities Report, those that may
have a material impact on investors are stated below.
Please note that the statements about the future in the text are judgments we made at the end of the fiscal year ended January 31,
2021.
(COVID-19)
As the COVID-19 infection spreads, we have adopted working from home (telework) and staggered work hours, among othermeasures, in order to ensure the safety of our clients, our employees and their families, our partners, and other stakeholders, toprevent the spread of the infection, and to continue our business. If our employee catches the virus and the infection rapidly spreads
across the Company despite these efforts, our financial status and business performance may be affected.
Moreover, if COVID-19 spreads, our clients may cut back on capital investments, R&D, and the use of external engineers, which
will cause their utilization rates to drop. Or they may ask our engineers to work from home (telework), in shifts, or staggered hours,
which will lead to fewer days and overtime hours worked and to reduced total work person-hours. Either of these cases may also
affect our financial status and business performance.
(Performance trends in the manufacturing industry)
Our major clients belong to the manufacturing industry, and we dispatch engineers primarily to their design and development
departments. If these major clients were to reduce their capital investments, R&D costs, and the use of external engineers due toeconomic recession and other factors in the countries or regions in which they operate, our financial status and business performance
may be affected.
In addition, if significant changes in the business environment take place for automobile-related manufacturers, which account fora large share of our sales, our financial status and business performance may be affected.
(Competition with other companies in the industry)
If competition with other companies intensifies due to market contraction or new entrants in the engineer staffing industry, where
we operate our business, and this results in a fierce price competition, our financial status and business performance may be affected.
(Effectiveness of education and training)
We strive to improve the skills of our engineers by providing training programs that have been developed based on many years ofexperience. However, if the training does not turn out to be as effective as expected and the unit price of engineers does not increase
due to low customer satisfaction, and/or if we fail to satisfy the requests from clients and they start to make complaints, our financial
status and business performance may be affected.
(Securing suitable clients for our dispatching business)
Although we always strive to secure and expand our clients for our engineer dispatching business, if we are unable to find suitableclients that match our engineers and cannot maintain or improve the unit price of engineers and/or utilization rates, our financial
status and business performance may be affected.
(Regulations on total work person-hours)
The total work person-hours of our engineers is determined based on the business conditions of the client company. If the revisions
to relevant laws and regulations generate a larger pressure against long working hours, which may result in a significant decreasein the total work person-hours of engineers, our financial status and business performance may be affected.
(Securing science and engineering graduates)
We consider science and engineering graduates to be an important managerial resource, but if the population of science and-7-engineering graduates were to decrease due to the declining birth rate and other factors, making it significantly more difficult tohire talented graduates, our financial status and business performance may be affected.
(Securing career engineers)
We consider engineers with work experience to be an important managerial resource. However, if the competition to secure careerhires intensifies due to a shortage of engineers who wish to change jobs as a result of booming design and development activities
in the manufacturing industry, making it significantly more difficult to hire talented career engineers, our financial status andbusiness performance may be affected.
(Information management)
By introducing measures such as acquiring the “PrivacyMark,” we have been committed to properly managing personal information,
confidential information, and all other information obtained in the course of our business operations. However, if such informationis leaked to outside parties for some reason, our social credibility will be damaged, and our financial status and business performance
may be affected.
In addition, although we take appropriate security measures to ensure the stable supply of our services, system failures and otherproblems may be caused by computer viruses, unauthorized access, natural disasters, or other unforeseen events, and in such cases,
our financial status and business performance may be affected.
(Laws, regulations, licenses, and permits)
The following laws and regulations apply for each of our business categories:(i) Worker dispatching business
Dispatching of engineers, which is our main business, is carried out under the license from the Minister of Health, Labour andWelfare as described below, based on the Act on Securing the Proper Operation of Worker Dispatching Businesses andProtecting Dispatched Workers (hereinafter referred to as “Worker Dispatching Act”):
License nameSupervisory authority

License number

Licensed date

Expiration date

Worker dispatching
Ministry of Health,派 27-020513
December 1, 2003
November 30, 2021
business
Labour and Welfare
We consider compliance with the Worker Dispatching Act and relevant laws and regulations to be one of our highest priorities,
and strive to maintain a legal compliance system by monitoring compliance with laws and regulations via internal audits and by
regularly confirming compliance with laws and regulations at different meetings. However, in the unlikely event that we violate
such laws and regulations, which would hinder the continuity of our business, our financial status and business performance
may be affected.
In addition, Article 14 of the Worker Dispatching Act stipulates that if a dispatching business operator falls under any of thedisqualification grounds provided in Article 6 of the Worker Dispatching Act (main possible grounds: if the Company issentenced to imprisonment or more, or is sentenced to a fine for violating the Labor Standards Act, the Worker Dispatching Act,
the Employment Security Act or other labor-related laws, or the Health Insurance Act, the Employment Insurance Act or otherlaws, or for committing a crime under the Penal Code, the Immigration Control and Refugee Recognition Act or other laws, andfive years have not passed from the date on which the execution of the sentence is completed or the sentence is no longer
executed; or if the Company becomes an adult guardian or warrantee, or goes bankrupt and has not had its rights restored, etc.)
or violates the Worker Dispatching Act and the Employment Security Act, the business operator shall be ordered to have its
business license canceled or its operations suspended. However, there are no such disqualification grounds applicable to us at
this time. However, in the unlikely event that we violate such laws and regulations and are ordered to have our business license
canceled or our operations suspended, it may become difficult to continue our business, and our financial status and businessperformance may be affected.
The Worker Dispatching Act and other relevant laws and regulations are being revised from time to time by means of adding
modifications in response to changes in the labor environment, social conditions, and other factors.
We take appropriate measures whenever such laws and regulations are revised. However, if any such revisions made are
significantly unfavorable to our business, our financial status and business performance may be affected depending on the detailsof the revised laws and regulations.
(ii) Paid employment agency business
Our paid employment agency business is conducted under the license from the Minister of Health, Labour and Welfare as
described below, based on the Employment Security Act:
License nameSupervisory authority

License number

Licensed date

Expiration date

Paid employment agency
business

Ministry of Health,Labour and Welfare

27-ユ-020355

February 1, 2004

January 31, 2022

-8-

Article 32-9 of the Employment Security Act stipulates that if a provider of paid employment placement services (including its
executives in case of a company) falls under any of the disqualification grounds as a paid employment agency business (if theCompany is sentenced to imprisonment or more, or is sentenced to a fine for violating the Labor Standards Act, the Employment
Security Act, the Worker Dispatching Act, or other labor-related laws, or for committing a crime under the Penal Code, theImmigration Control and Refugee Recognition Act or other laws, and five years have not passed from the date on which theexecution of the sentence is completed or the sentence is no longer executed; or if the Company becomes an adult guardian or
warrantee, or goes bankrupt and has not had its rights restored, etc.), or violates the Employment Security Act and the Worker
Dispatching Act, the service provider shall be ordered to have its business license canceled or its operations suspended. However,there are no such disqualification grounds applicable to us at this time. However, in the unlikely event that we violate such laws
and regulations and are ordered to have our business license canceled or our operations suspended, it may become difficult tocontinue our business, and our financial status and business performance may be affected.
In addition, if such laws and regulations are revised in the future and if any such revisions made are significantly unfavorable toour business, our financial status and business performance may be affected.
(Disasters, accidents, etc.)
We have established a manual to deal with natural disasters, man-made disasters, and other disasters and accidents (hereinafterreferred to as “Disasters, etc.”) in an effort to minimize the damage. However, if any Disasters, etc. that significantly exceed our
prediction take place, our financial status and business performance may be affected.
In addition, in the event that our business activities are hindered as a result of the spread of COVID-19 infections and other factors,
our financial status and business performance may be affected.

-9-3 Management Analysis of Financial Status, Business Performance and Cash Flows(1) Overview of business performance and other conditions
Artner’s financial status, business performance, and cash flows (hereinafter referred to as “financial performance and otherconditions”) for the fiscal year ended January 31, 2021, are summarized as below.
(i) Financial status and business performance
For this fiscal year, the Japanese economy continued to face a tough situation due to the impact of COVID-19. Among automobile
manufacturers—our main clients—, there were needs to develop gasoline-free cars, such as electric vehicles and fuel cell vehicles,in order to align with the Japanese government’s decarbonization policy, as well as Connected, Autonomous, Shared, and Electric(CASE) vehicles. In the semiconductors industry, there were needs to develop semiconductors and semiconductors manufacturing
equipment necessary for electronic devices used for the electrification of automobiles, IoT, and teleworking. However, there
remained uncertainty over the size of investment budgets.
Amid this situation, the Company’s engineer dispatching business negotiated unit prices with clients based on current engineers’
work performance. As a result, the unit price of engineers was at the same level as that in the same period of the previous year.
The utilization rate fell below that in the same period of the previous fiscal year due to contract expirations at the end of June,
September, and December. However, the number of engineers surpassed that in the same period of the previous year, which led
to a year-on-year increase in the number of operative personnel. In addition, total work person-hours declined year on year as ourclients asked our engineers to work from home, in shifts, or staggered hours, which led to fewer days and overtime hours worked.
The contracting business actively engaged in sales activities. Consequently, the number of contracted projects increased.
As for profit, the assignments of the newly graduated and career engineers who joined the Company in 2020 were delayedcompared to previous years, and the progress ratio was around 50%. Consequently, the labor costs of unassigned employees
were recorded as SG&A expenses. However, we promoted staff’s teleworking in recruitment and sales activities of the entire
company to reduce travel and transportation expenses, meeting expenses, etc. We also reduced recruitment and advertisingexpenses. As a result, the profit margin was at the same level as that for the same period of the previous year.
As a result of all this, our financial status and business performance for this fiscal year are as stated below.
a. Financial status
The total assets at the end of this fiscal year increased JPY 631,174 thousand compared to the end of the previous fiscal year
to JPY 4,432,313 thousand.
The total liabilities at the end of this fiscal year increased JPY 236,371 thousand compared to the end of the previous fiscal
year to JPY 1,309,131 thousand.
The total net assets at the end of this fiscal year increased JPY 394,802 thousand compared to the end of the previous fiscal
year to JPY 3,123,182 thousand.
b. Business performance
Net sales for this fiscal year totaled JPY 7,174,725 thousand (up 2.5% year on year), operating profit JPY 887,075 thousand(up 0.1% year on year), ordinary profit JPY 910,457 thousand (up 1.9% year on year), and profit JPY 628,561 thousand (up2.5% year on year).
(ii) Cash flows
Cash and cash equivalents (hereinafter referred to as “cash”) at the end of this fiscal year increased JPY 636,216 thousandcompared to the end of the previous fiscal year to JPY 3,019,657 thousand.
Cash flows for the fiscal year and factors therein are as stated below.
(Net cash provided by (used in) operating activities)
The cash gained as a result of operating activities totaled JPY 770,935 thousand (up JPY 128,349 thousand year on year). Thisis mostly because we recorded JPY 1,057,786 thousand in profit before income taxes, whereas we also recorded JPY 320,821
thousand in income taxes paid.
(Net cash provided by (used in) operating activities)
The cash gained as a result of operating activities totaled JPY 899,285 thousand (up JPY 308,131 thousand year on year). Thisis mostly because we recorded JPY 913,113 thousand in profit before income taxes, an increase of JPY 92,828 thousand inprovision for retirement benefits, and an increase of JPY 73,075 thousand in accounts payable – other, whereas we also recorded
JPY 305,960 thousand in income taxes paid.
(Net cash provided by (used in) investing activities)
The cash used as a result of investing activities totaled JPY 30,979 thousand (down JPY 11,744 thousand year on year). This ismostly because we recorded JPY 36,767 thousand in purchase of property, plant and equipment.

- 10 -

(iii) Records of production, orders received, and sales
a. Record of production
A record of production has been omitted because the mainstay of our business is the engineer dispatching business formachinery design and development, electronics design and development, and software development, among others. The
business, based on the nature of services provided, is not fit to be presented for a production record.
b. Record of orders received
A record of orders received has been omitted because orders received are almost equal to sales in terms of monetary amounts
due to how our business works.
c. Record of sales
Sales results by business category for this fiscal year are as shown below.
FY2021(Fiscal year ended January 31, 2021)

Business Category

Amount (thousands of yen)
Engineer Dispatching BusinessYoY (%)

6,715,436

99.4

Contracting Business

447,367

196.1

Other businesses

11,92159.0

7,174,725

102.5

Total

Notes: 1. Since we have only one reportable segment, the figures are sorted by business category.
2. The table below shows sales results sorted by major client and percentages they make up of overall sales for the last two
fiscal years.
ClientHonda R&D Co., Ltd.

FY2020(Fiscal year ended January 31, 2020)

FY2021(Fiscal year ended January 31, 2021)

Amount(thousands of yen)

Percentage (%)

Amount(thousands of yen)

Percentage (%)

1,340,047

19.1

903,596

12.59

3. The amounts presented above do not include consumption tax.
(2) Analysis and discussion of the state of business performance and other conditions from the perspective of the management
The management of Artner understands, analyzes, and discusses the Company’s business performance and other conditions as
stated below.
Please note that the statements about the future in the text are judgments made at the end of the fiscal year ended January 31, 2021.
(i) Significant accounting estimates and assumptions used in the estimates
Artner prepares its financial statements based on accounting standards that are generally accepted as fair and appropriate inJapan. The significant accounting policies we have used to prepare the financial statements are as stated in “V. Financial
Information 1. Financial Statements and Other Documents (1) Financial statements.” The financial statements and otherdocuments include projections, which is based on our decision as of the end of the fiscal year ended January 31, 2021. We madethese projections based on logical judgments that consider results in the past. However, since estimates are by their nature
uncertain, results may turn out to differ from the projections.
(ii) Understanding, analysis, and discussion of the state of business performance and other conditions for the fiscal year ended
January 31, 2021
a. Business performance(Net sales)
The engineer dispatching business saw the number of engineers surpass that in the same period of the previous year, theutilization rate fall short of that in the same period of the previous year, and the unit price of engineers remain at the same level
as that in the same period of the previous year. As a result, net sales for this fiscal year increased 2.5% year on year to JPY
7,174,725 thousand.
(Operating profit, ordinary profit, and profit)
While cost of sales, including labor cost of engineers, decreased year on year, SG&A expenses, including labor cost ofunassigned engineers, increased year on year. As a result, operating profit for this fiscal year increased 0.1% year on year to JPY- 11 -

887,075 thousand, ordinary profit increased 1.9% year on year to JPY 910,457 thousand, and profit increased 2.5% year on year
to JPY 628,561 thousand.
b. Financial status(Assets)
The total assets at the end of this fiscal year increased JPY 631,174 thousand compared to the end of the previous fiscal year to
JPY 4,432,313 thousand. This is mostly because we recorded an increase of JPY 636,216 thousand in cash and deposits.
(Liabilities)
Liabilities at the end of this fiscal year increased JPY 236,371 thousand compared to the end of the previous fiscal year to JPY
1,309,131 thousand. This is mostly because we recorded an increase of JPY 92,828 thousand in provision for retirement benefits,
an increase of JPY 76,162 thousand in deposits received, and an increase of JPY 73,075 thousand in accounts payable - other.
(Net assets)
Net assets at the end of this fiscal year increased JPY 394,802 thousand yen compared to the end of the previous fiscal year to
JPY 3,123,182 thousand. This is mostly because we recorded an increase of JPY 394,799 thousand in retained earnings.

- 12 -

c. Sources of capital and liquidity of funds
The cash we have demand for is primarily to cover personnel expenses for engineers we dispatch to client companies. As arule, we allocate our own funds to working capital, funds for equipment, and other required funds. Yet we also turn toborrowings from a bank to raise capital if the situation demands.
The state of cash flows is as stated in “II. Business Conditions 3 Management Analysis of Financial Status, Business
Performance and Cash Flows (1) Summary of business performance and other conditions (ii) Cash flows.”
The table below shows indicators related to our cash flows.
FY2017FY2018FY2019FY2020

FY2021Equity ratio (%)

70.6

71.1

71.5

71.8

70.5

Market value-based equity ratio (%)

196.5

413.9

300.1

230.9

206.9

Ratio of cash flows to interest-bearing
liabilities (year)

－

－

－

－

－

5,777.8

6,131.6

16,772.7－－

Interest coverage ratio (times)

Equity ratio: Equity / Total assets
Market value-based equity ratio: Market capitalization / Total assets
Ratio of cash flows to interest-bearing liabilities: Interest-bearing liabilities / Operating cash flow Interest coverage ratio: Operating
cash flow / Interest payments
Notes: 1. The calculation of market capitalization is based on the number of shares issued, excluding treasury shares.
2. The ratios of cash flows to interest-bearing liabilities are not shown because there are no year-end interest-bearing liabilities.
3. The interest coverage ratios for the fiscal year ended January 2020 and the fiscal year ended January 2021 are not shown
because there were no interest payments.
d. Factors that may have a material impact on business performance
In regard to factors that may have a material impact on business performance, we are aware that our business environment,
business fields, how we operate our businesses, and a variety of risk factors may have a material impact on our businessperformance, as stated in “II. Business Conditions 2. Business and Other Risks.”
Therefore, while keeping an eye on market trends at all times, we plan to strengthen our internal management structure, hire
and retain talented employees, and offer services designed to match market needs, thereby diversifying and reducing risks that
may have a material impact on our business performance and taking appropriate actions.
e. Objective indicators for assessing management policies, corporate planning and strategies, and the achievement status ofmanagement goals
Our Medium-Term Business Plan has defined the engineer count of 1,300 as a particularly important indicator, and we focus
on further efforts accordingly. With new graduates and career engineers who joined us this fiscal year, the term-end engineer
count totaled 971 (up 70 year on year).

4 Important Business Contracts
Not applicable.

5 R&D Activities
Not applicable.

- 13 -

III. Facilities and Equipment
1 Overview of Capital Investments and Others
No important capital investments were made during the fiscal year.
No important facilities/equipment were/was retired or sold during the fiscal year, either.

2 Major Facilities
The table below shows our major facilities.
Since we have only one reportable segment, figures sorted by segment have been omitted.
As of January 31, 2021
Carrying amount
Description

Office (Location)

Building(thousands ofyen)

Tools, furnitureand fixtures(thousands ofyen)

Software(thousands ofyen)

Number of
employees
Other
Total (thousands(thousands of(people)of yen)yen)

Osaka headquarters (Kita Ward,
Osaka City)

Headquarters

2,268

5,981

32,45229,51970,221

28

Learning centers in East Japan,
Yokohama Office of Tokyo
headquarters (Kohoku Ward,
Yokohama City)

Headquarters, businessoffice, training facilities

25,626

7,646

9,868

24,16067,30134

Nagoya office (Nakamura Ward, Business office andNagoya City)
technical center

1,018

321

－

5,895

7,235

8

Utsunomiya office (Utsunomiya
City, Tochigi Prefecture)

Business office andtechnical center

4,572

818

－

5,315

10,705

11

Learning centers in West Japan(Suita City, Osaka Prefecture)

Training facilities andbusiness office

9,347

4,538

5,472

17,337

36,69541

Notes: 1. The amounts presented above do not include consumption tax.
2. The above offices are leased facilities. What these buildings contain are mostly furnishings.
3. The numbers of employees are those of staff members working at these offices. They do not include engineers assigned toclient companies.
4. Other than the above, we own land containing unutilized assets that is worth JPY 43,941 thousand (733 m2 in Kamigori,
Ako District, Hyogo Prefecture; 1,631 m2 in Sasayama City, Hyogo Prefecture; 550 m2 in Kita Ward, Kobe City; and168.23 m2 in Amagasaki City, Hyogo Prefecture).
5. “Others” in the carrying amount are leasehold and guarantee deposits.
6. Other than the above, major facilities leased from others are as shown in the table below.
As of January 31, 2021
Office (Location)
Osaka headquarters (Kita Ward, OsakaCity)

Description

Leased areas (m2)Annual rent (thousands of yen)

Leased building

536.61

27,270

Learning centers in East Japan, Yokohama
Office of Tokyo headquarters (Kohoku
Leased building
Ward, Yokohama City)

810.1024,996

Nagoya office (Nakamura Ward, Nagoya
City)

Leased building

125.98

5,895

Utsunomiya office (Utsunomiya City,
Tochigi Prefecture)

Leased building

196.91

5,119

Learning centers in West Japan (Suita City,
Leased building
Osaka Prefecture)

795.8824,9223 Plans for Installation, Retirement, etc. of Facilities(1) Installation of new important facilities
Not applicable.
(2) Retirement of important facilities
Not applicable.

- 14 -

IV. State of the Reporting Company
1 The Company’s Shares(1) Total number of shares(i) Total number of shares
Type

Total number of authorized shares (shares)

Common shares

36,000,000
Total

36,000,000(ii) Total number of shares issued
Type

Number of shares issued year-end(As of January 31, 2021)

Number of shares issued submission date
(As of April 22, 2021)

Financial instruments exchange
where the Company is listed orRegistered/Authorized financial
instruments firms association

Definition

Common shares

10,627,920

10,627,920

First Section of the Tokyo
Stock Exchange

Number of shares
per share unit

Total

10,627,920

10,627,920－－(2) Stock acquisition rights(i) Stock option plans
Not applicable.
(ii) Rights plans
Not applicable.
(iii) Other stock acquisition rights
Not applicable.
(3) Status of corporate bond certificates, etc. with share options subject to exercise value change
Not applicable.
(4) Total number of shares issued and capital
Change in the Balance of total
Balance of
Change in legal Balance of legal
total number of
Change in capitalsharesissuedcapitalcapital surplus capital surplus
Dateshares issued(thousands of yen)(shares)(thousands of yen) (thousands of yen) (thousands of yen)(shares)

As of February 1, 2017
2,656,980(Notes)
As of April 1, 2018
5,313,960(Notes)Note: A 2-for-1 stock split was carried out.

5,313,960－

238,284－

168,323

10,627,920－

238,284－

168,323(5) Details by shareholder
As of January 31, 2021
Shareholder and shares held (number of shares per unit: 100)
Classification

Number of shareholders(people)Number of shares owned(units)Ratio of shares owned (%)

Financial
institutions

Financial
instruments
business
operators

Other
corporations

－

15

23

－

8,094

－

7.62

National andlocal
governments

Foreign corporations, etc.

Individuals
and others

Total

Shares lessthan one shareunit (shares)

Nonindividuals

Individuals

19

30

3

3,190

3,280

－

2,097

48,1652,471

745,411

106,245

3,420

1.97

45.33

2.33

0.01

42.74

100.00－Note: Of treasury shares of 2,376, 23 units are included in the figures under “Individuals and others” and 76 shares in those under“Shares less than one share unit.”- 15 -

(6) Major shareholders
As of January 31, 2021
The number of shares
owned as a proportionof the total number ofissued shares (excluding
treasury stock)

Number of shares
owned (shares)

Name / Company name

Address

Sekiguchi Kogyo Co., Ltd.
Artner Employee Stock Ownership
Association
Osaka Small and Medium Business
Investment and Consultation Co., Ltd.
The Master Trust Bank of Japan, Ltd.
(Trust Account)

3-20, Nangocho, Nishinomiya City, Hyogo

4,310,000

40.56

3-2-18, Nakanoshima, Kita-ku, Osaka City

961,648

9.05

3-3-23, Nakanoshima, Kita-ku, Osaka City

480,000

4.51

2-11-3, Hamamatsucho, Minato-ku Tokyo

361,700

3.40

HARIGAE Tomonori

Tsukuba City, Ibaraki

270,240

2.54

OKUSAKA Kazuya

Kishiwada City, Osaka

254,880

2.39

Artner Officer Stocks Society

3-2-18, Nakanoshima, Kita-ku, Osaka City

107,000

1.00

EGAMI Yoji

Ichikawa City, Chiba

101,552

0.95

Custody Bank of Japan, Ltd. (Trust
Account)
The Nomura Trust and Banking Co.,
Ltd. (Trust account)

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

77,7000.73

2-2-2, Otemachi, Chiyoda-ku Tokyo

76,3000.71

7,001,020

65.88

Total

－

Note: The number of shares owned by The Master Trust Bank of Japan, Ltd. (Trust Account), Custody Bank of Japan, Ltd. (Trust
Account), and The Nomura Trust and Banking Co., Ltd. (Investment Trust Account) is all for trust services.
(7) Voting rights(i) Shares issued
As of January 31, 2021
Classification

Number of shares (shares)

Non-voting shares
Shares with restricted voting rights(e.g., treasury shares)
Shares with restricted voting rights (other)
Shares with full voting rights(e.g., treasury shares)
Shares with full voting rights (other)
Shares less than one share unit

Number of voting rights

Definition

－

－

－

－

－

－

－

－

－

2,300

－

－

Common shares: 10,622,200

106,222

－

3,420

－

－

10,627,920－－

Common shares:
Common shares :Total number of shares issued

Voting rights held by all shareholders－
106,222－
Note: The figure for “Shares less than one share unit” includes 76 treasury shares less than one share unit owned by Artner.
(ii) Treasury shares
As of January 31, 2021
Shareholder name /Company name
Artner Co., Ltd.
Total

Address of shareholder
5-2, Nishidaimotsucho,
Amagasaki, Hyogo－

Number of shares
Number of shares Total shares
held in theheld in others’ owned (shares)
shareholder’sname (shares)
name (shares)

Ratio of shares
owned as aproportion of thetotal number ofissued shares (%)

2,300

－

2,300

0.02

2,300

－

2,300

0.02

- 16 -

2 Acquisition of Treasury Shares
Type of shares: Acquisition of common shares under Article 155, item (vii) of the Companies Act(1) Acquisition of shares based on a resolution at the General Meeting of Shareholders: Not applicable.
(2) Acquisition of shares based on a resolution by the Board of Directors: Not applicable.
(3) Acquisition of shares not based on a resolution at the General Meeting of Shareholders or by the Board of Directors:
Classification

Number of shares (shares)

Total value of shares (yen)47

41,172

Treasury shares acquired during the fiscal year

Treasury shares acquired during the period－－
Note: The treasury shares acquired during the period do not include shares less than one share unit purchased during the period
between April 1, 2021, and the date of submission of this Annual Securities Report.
(4) Acquired treasury shares disposed of/held
Classification

Fiscal year ended January 31, 2021
Total value of
Number of sharesshares for(shares)
disposition (yen)Acquisition period
Total value of
Number of sharesshares for(shares)
disposition (yen)Acquired treasury shares placed for subscription

－

－

－

－

Acquired treasury shares retired

－

－

－

－

Acquired treasury shares transferred for merger,
share exchange, share delivery, or company split

－

－

－

－

Other

－

－

－

－

2,376

－

2,376

－

Number of treasury shares held

Note: The number of treasury shares held during the period does not include that of shares less than one share unit purchased or soldduring the period between April 1, 2021, and the date of submission of this Annual Securities Report.

3 Dividend Policy
In terms of profit distribution, Artner comprehensively considers future business developments, earnings, the management
environment, as well as the strengthening of its management foundations, and positions the supply of stable dividends to its
shareholders as top-priority management tasks.
While taking into account earnings trends and other factors, Artner’s basic policy calls for the biannual distribution of retained
earnings in the form of interim and year-end dividends. The distributions of retained earnings are decided by the generalshareholders meeting in the case of the year-end dividend and by the Board of Directors in the case of the interim dividend. Artner’s
Articles of Incorporation specifies that the Company may pay out dividends of surplus by resolutions of the Board of Directors
pursuant to Article 459, paragraph (1) of the Companies Act.
Shareholders will receive a year-end dividend payment of 11.50 yen per share for this fiscal year. Combined with the interim
dividend of 11.50 yen a share that was already paid, the dividend for the full year totals 23 yen per share. This makes the payout
ratio for this fiscal year 38.9%.
Internal reserves are set aside to address projected future changes in the management environment and invest efficiently in enriching
our pool of human resources, etc.
The table below shows the dividends of surplus for this fiscal year.
Total amount ofDate of resolution
dividends(thousands of yen)
Resolution by the Board of Directors on
122,193
September 8, 2020
Resolution at the Ordinary General Meeting
122,193of Shareholders on April 22, 2021

- 17 -

Dividend per share
(yen)
11.50
11.50

4 Corporate Governance(1) Overview of corporate governance(i) Basic views on corporate governance
1. Artner’s No.1 business challenge is steadily improving shareholder value over the long term. So in addition to expanding ourbusiness and ensuring profitability, we want to grow as a “technical partner” together with our client companies in various
industries, as a collective of engineers focused on developing more and more advanced levels of technical expertise. At the sametime, with a constant awareness of what society needs most, and a desire to create a demand for it, we strive for businessefficiency and soundness to help in the sustainable development of the Company.
2. At Artner, we are highly conscious of our social responsibility as a company, so in addition to strictly observing all applicablelaws and regulations, we strive to sustain and develop favorable relationships with shareholders, with our local community, withall of our client companies, and with all employees.
3. We are committed to further strengthening our internal control and risk management efforts through the application of business
management systems (including internal control systems) to enable flexible adaptation to changes in the business environment.
Artner also will promptly disclose relevant information both inside and outside the company and enhance business transparency.
(ii) Overview of Artner’s corporate governance framework and why this framework is used
Artner is a company with an audit and supervisory committee, an organizational design defined by the Companies Act. The
Company has in place the following bodies in the framework.
(Board of Directors)
The Board of Directors, chaired by President and CEO SEKIGUCHI Sozo, is composed of eight members including five directors(SEKIGUCHI Sozo, HARIGAE Tomonori, OKUSAKA Kazuya, SATO So, EGAMI Yoji) (directors who are members of the
Audit and Supervisory Committee are excluded) and three outside directors (TERAMURA Yasuhiko, MITANI Takaaki, MORII
Shinichiro) who are members of the Audit and Supervisory Committee. The Board meets twice a month. At a mid-month business
report board meeting, the members deliberate on the Company’s monthly business performance; and at a regular month-end board
meeting, they deliberate and decide on matters relating to the Company’s management plan, as well as significant matters relating
to day-do-day business operations.
(Audit and Supervisory Committee)
The Audit and Supervisory Committee, chaired by Standing Audit and Supervisory Committee member TERAMURA Yasuhiko,
is composed of three Audit and Supervisory Committee members who are outside directors. The committee meets twice a month.
Directors who are members of the committee also attend board meetings and other important internal meetings. The committee
provides impartial and independent oversight of the Company’s corporate management, based on the audit standards as well as
the audit policy and plans established by the committee.
(Nomination and Remuneration Committee)
The Nomination and Remuneration Committee, chaired by Standing Audit and Supervisory Committee member TERAMURA
Yasuhiko, is composed of four members including the President and CEO and three members of the Audit and Supervisory
Committee who are outside directors. The committee meets at least four times a year. The Nomination and Remuneration
Committee will report to the Board of Directors on the appointment/dismissal and remuneration of directors in order to enhance
the fairness and objectivity of the decision-making process of nominating and determining the remuneration of directors as wellas enhancing corporate governance.
(Compliance and Risk Management Meeting)
The Compliance and Risk Management Meeting, chaired by the President and CEO, is composed mainly of Heads of Divisions
and Departments in addition to eight directors. The meeting is held monthly. In these meetings, members discuss policies andactions to ensure that all officers and employees of the Company abide by laws and the Company’s Articles of Incorporation, anddraw up the Risk Management Guidelines.

- 18 -

The chart below shows the Company’s bodies and how internal control works.
General Meeting of Shareholders

Audit / Supervision

Board of Directors

The Audit andSupervisory Committee

Audit

Selection / Discharge

President and CEO
ReportAppointment/ Dismissal

Appointment / Dismissal

Appointment / Dismissal

Inquiry
ReportCollaboration

Directions /Commands

Collaboration

ReportAccounts
Audit

Compliance and Risk
Management Meeting

ReportInternal Audit
OfficeInstructions

ReportCollabora-tion

External
Accounting
AuditorInternal
Audit
Consultation

Corporate Planning and Strategy Division
Management Division
Engineer Business Division
Human Resources Business Division

Consultation /AdviceLegal Advisors(iii) Other matters regarding corporate governance(a) Design of the Internal Control System
Artner has designed its internal control system in accordance with the following basic policies on the internal control systemthat has been established by the Board of Directors.
a. System to ensure that directors and employees execute their duties in compliance with applicable laws and regulations andthe Company’s Articles of Incorporation
1) At Artner, we have implemented the Compliance and Risk Management Meeting, chaired by the President and CEO, aspart of a system aimed at thoroughly educating employees regarding all applicable laws and regulations and the Articles ofIncorporation, and also ensuring such compliance.
2) We have set up an internal whistleblowing system, under which directors, employees, and other people engaged in workfor the Company can report corruption or wrongdoing to the Whistleblowing Committee, which has a duty of confidentiality.
It is prohibited to subject persons who submit whistleblower reports using the system to any disadvantageous treatment asa result of such reporting. The system is designed to ensure the effectiveness of whistleblowing to prevent or quickly detectviolations of applicable laws and regulations.
3) The Internal Audit Office, operating independently of other divisions that execute business practices, conducts internal
audits. Through such audits, it verifies the appropriateness and effectiveness of the internal management system of eachdivision, and by promoting the improvement of the systems, it ensures that all employees lawfully execute their duties.
b. System to ensure the appropriateness of financial reporting
1) Directors and employees ensure the appropriateness of financial reporting by executing their duties in compliance with the“Basic Framework of Internal Control Related to Financial Reporting.”
2) Directors and employees smoothly operate the system to ensure the appropriateness of financial reporting.
3) The Internal Audit Office audits the operation of the system to ensure the appropriateness of financial reporting.
c. System to store and manage information relating to the execution of duties by directors
1) Information and documents relating to the execution of duties by directors are appropriately stored and managed inaccordance with the “Document Management Rules,” other applicable rules and regulations, and related information
management system manuals.
2) The Internal Audit Office conducts internal audits to confirm that this information and related documents are appropriately
stored and managed.
d. Rules and system to manage the risk of loss
1) We have formulated guidelines, “Structure to Conduct Risk Management,” to define a clear system for managing different
risks.
2) We have classified and defined management risks in accordance with these policies, and each responsible division identifies
and analyzes the risk situation for each type of risk. We have set up a system in which the various kinds of risks are managed
through the Compliance and Risk Management Meeting. Management and countermeasures for each type of risk are- 19 -

clarified and managed in the meeting.
3) The Internal Audit Office, which is directly overseen by the President and CEO, is responsible for audits in accordance withan internal audit plan. The office examines the method and details of audit implementation and revises the audit method as
and when needed.
e. System to ensure that directors execute their duties efficiently
1) Board of Directors meetings are held twice a month, as the basis of a system to ensure that directors execute their duties
efficiently. The first board meeting of the month is a performance board meeting and the second is a regular board meeting.
Special board meetings are also held as and when needed. The scope of authority of the Board of Directors is clearly definedin the “Board of Directors Rules.”2) To ensure efficient business management by the directors, we have formulated “Organizational Rules,” “Administrative
Authority Rules,” “Division of Duties Rules,” “Division of Duties (Administrative Authority) Statement,” and other internal
rules.
f. System to ensure appropriate business practices in a corporate group consisting of companies, parent companies, andsubsidiaries
The company does not currently have any parent companies or subsidiaries.
g. Matters relating to employees who assist with the duties of the Audit and Supervisory Committee, independence of such
employees from other directors who are not members of the committee, and ensuring the effectiveness of the committee’s
instructions to such employees
1) If requested by the Audit and Supervisory Committee, an employee can be appointed to assist with the duties of thecommittee.
2) The appointment or dismissal, reassignment, and performance evaluation of such employees require the approval of the
Audit and Supervisory Committee.
3) If the Audit and Supervisory Committee requests the appointment of an employee to assist with its work, the appointmentof a suitable employee to assist with the work needed by the committee is made in consultation with the committee. The
appointment is made with the prior approval of the committee, and with an assurance of independence. To ensure theeffectiveness of the instructions of the Audit and Supervisory Committee to the applicable employee, the employee works
exclusively for the committee, without being assigned any other work.
h. System to enable directors who are not members of the Audit and Supervisory Committee and employees to report to the
Audit and Supervisory Committee
1) Directors who are members of the Audit and Supervisory Committee attend meetings of the Board of Directors and otherimportant meetings and receive reports on the state of business practice execution from other directors who are not membersof the committee.
2) Directors who are members of the Audit and Supervisory Committee are able to view important internal decision request
circulars, written decisions, and reports that are not discussed at the important meetings mentioned above, and they also
receive explanation of the contents of such documents as and when needed.
3) Directors or employees should report to the Audit and Supervisory Committee any of the following: a risk that may
significantly harm the company; misconduct relating to execution of duties by directors who are not members of the Audit
and Supervisory Committee; significant violation of an applicable law, regulation, or the Articles of Incorporation; reports
relating to the state of internal audits; facts reported based on the internal whistleblowing system; and any other matter
requested for the purposes of the Audit and Supervisory Committee.
i. System to ensure that persons who make whistleblower reports to the Audit and Supervisory Committee are not subjected toany disadvantageous treatment as a result of such reporting
The operation status of the internal whistleblowing system is reported to the Audit and Supervisory Committee as appropriate,
and in accordance with internal rules, it is prohibited to subject persons who submit whistleblower reports using the system to
disadvantageous treatment in retaliation for whistleblowing.
j. Matters relating to policies concerning procedures for prepayment or reimbursement of expenses arising from the executionof duties by the Audit and Supervisory Committee members or other processing of expenses or monetary obligations arisingfrom the execution of such duties
The procedures for prepayment or reimbursement of expenses arising from the execution of duties by members of the Audit
and Supervisory Committee or other processing of expenses or monetary obligations arising from the execution of such duties
are carried out appropriately through applications made by members of the Audit and Supervisory Committee.
k. Other systems to ensure that audits of the Audit and Supervisory Committee are effectively conducted
1) The President and CEO and the Head of the Internal Audit Office strive to enable sufficient opportunities for consultation- 20 -

with the Audit and Supervisory Committee members to examine the establishment of a suitable working environment forthe committee, in order to ensure the effectiveness of audits.
2) To ensure the effectiveness of audits by the Audit and Supervisory Committee, the committee members demand that the
President and CEO and the Board of Directors strive to make continuous improvements to the auditing system.
3) The Internal Audit Office, which is the internal auditing department of the Company, and the division responsible foroversight of compliance and risk management meet regularly with the Audit and Supervisory Committee to exchange
opinions regarding issues to be addressed.
4) If the Audit and Supervisory Committee deems it necessary to appoint legal advisors or other external advisors when
conducting an audit, such advisors can be appointed.
l. Basic approach to the exclusion of antisocial forces
1) To fulfill its obligations of corporate social responsibility and to protect the Company, any relations with antisocial forces
are cut off.
2) In the event that the company is subjected to any unreasonable demands by antisocial forces, we respond resolutely by legalmeans.
3) We set up a “System for Cutting off Relations with Antisocial Forces” based on the manual for dealing with antisocial
forces.
4) In preparation for unreasonable demands by antisocial forces, we are building close partnerships with an external specialized
agency, and in the event that we are subjected to an unreasonable demand by antisocial forces, we will consult with theagency regarding how to respond, or request a response from the agency.
5) Under no circumstances do we, for the sake of convenience, respond by engaging in behind-the-scenes dealing with orproviding money to antisocial forces.
6) We regularly inform directors and employees of our “System for Cutting off Relations with Antisocial Forces” and promoteawareness of it.
m. Internal system for exclusion of antisocial forces
1) Under the Head of the Management Division, the General Affairs Group, as department responsible for exclusion ofantisocial forces, strives to prevent the Company from being subjected to any unreasonable demands from such forces.
2) We have concluded advisory agreements with a legal advisor and retired police officers, and collaborate with a specialized
agency.
3) In collaboration with the Head of the Management Division, the General Affairs Group receives guidance and advice fromthe legal advisor as circumstances demand, and maintains a database of information on antisocial forces. As and whenneeded, the group also reports the details of such information to the Board of Directors. Based on the information, eachdivision and the Compliance and Risk Management Meetings examine approaches to the exclusion of antisocial forces.
4) We distribute a manual for dealing with antisocial forces to all employees and promote awareness of it.
5) The General Affairs Group raises awareness of issues relating to the exclusion of antisocial forces regularly at internal
training sessions.
(b) Risk management framework
Artner is aware that risk management is critical to its business. We also acknowledge that risk management related to compliancewith laws and regulations as well as internal rules is particularly important. To ensure the risk is fully managed, we have set up
the Compliance and Risk Management Meeting. To properly manage personal information, we use a personal information
protection management system that conforms to the Personal Information Protection Management Systems -- Requirements (JISQ 15001). We have also set up an internal whistleblowing system in order to prevent violations of laws and regulations andavoid risks, thereby developing and enhancing our risk management framework.
(c) Agreements limiting liability
a. Directors
Artner has an agreement in place that limits the liability for damages specified in Article 423, paragraph (1) of the Companies
Act with each director (non-Executive Director) pursuant to Article 427, paragraph (1) of the said Act. The limit of liability
based on the agreement is an amount prescribed by laws and regulations.
b. Accounting Auditor
Artner has an agreement in place that limits the liability for damages specified in Article 423, paragraph (1) of the Companies
Act with KPMG AZSA LLC who is our Accounting Auditor pursuant to Article 427, paragraph (1) of the said Act. The limitof liability based on the agreement is an amount prescribed by laws and regulations.
(d) Number of directors
Artner specifies in its Articles of Incorporation that it shall have up to ten directors (excluding directors who are members of the- 21 -

Audit and Supervisory Committee) and up to five directors who are members of the Audit and Supervisory Committee.
(e) Election of directors
Artner specifies in its Articles of Incorporation that resolutions on the election of directors shall be made with the approval of amajority of the votes of the shareholders who are present and hold at least one-third of the total votes of the shareholders whoare entitled to exercise such rights.
The Articles of Incorporation also prescribes that no cumulative voting shall be allowed on the resolutions of the election of
directors.
(f) Resolutions that may be passed by the Board of Directors instead of the General Meeting of Shareholders and reasons thereofa. Acquisition of treasury shares
Artner’s Articles of Incorporation specifies that the Company may acquire its treasury shares following a resolution by the
Board of Directors, pursuant to Article 165, paragraph (2) of the Companies Act. The purpose of this provision is to acquire
treasury shares through market transactions or by other means so that we are able to carry out flexible capital policies to adapt
to change of the business environment.
b. Organ deciding dividends of surplus
Artner specifies in its Articles of Incorporation that, to ensure flexible capital policies and dividend policies, the Company’s
Board of Directors may resolve on the matters such as dividends of surplus prescribed in the items under Article 459, paragraph(1) of the Companies Act, unless otherwise provided for in laws and regulations.
c. Release from liability of directors
Artner specifies in its Articles of Incorporation that, pursuant to Article 426, paragraph (1) of the Companies Act, theCompany’s Board of Directors, instead of the General Meeting of Shareholders, may resolve to release directors (including
former directors) from their liability related to the acts defined in Article 423, paragraph (1) of the said Act to the extent legallypermissible. The purpose of this provision is to provide an environment that enables directors to fulfill their expected role as
they perform their duties by achieving their full potential.
d. Release from liability of Accounting Auditors
Artner specifies in its Articles of Incorporation that, pursuant to Article 426, paragraph (1) of the Companies Act, theCompany’s Board of Directors, instead of the General Meeting of Shareholders, may resolve to release an Accounting Auditor(or a former Accounting Auditor) from their liability related to the acts defined in Article 423, paragraph (1) of the said Act
to the extent legally permissible. This provision has been set in the wake of the enforcement of the Companies Act that has
made accounting auditors subject to shareholder derivative suits, so that a balance is kept between our directors and Accounting
Auditor.
(g) Requirements for special resolutions at the General Meeting of Shareholders
Artner specifies in its Articles of Incorporation that, regarding the requirement for a special resolution at the General Meetingof Shareholders as prescribed in Article 309, paragraph (2) of the Companies Act, the resolution is adopted if shareholders withat least one-third of the total votes of the shareholders who are entitled to exercise their right to vote are present, and at least
two-thirds of the votes approve the resolution. The purpose of this provision is to ensure the smooth running of the General
Meeting of Shareholders by relaxing the quorum of the General Meeting of Shareholders for a special resolution.

- 22 -

(2) Executive Officers(i) Executive Team
Males: 8: Females: - (ratio of women in the Executive Team: -%)Title

President and CEO

Name

SEKIGUCHI
Sozo

Director and Head of the HARIGAEManagement Division Tomonori

Director
Head of the Engineer
Business Division

OKUSAKA
KazuyaDate of birth

December 31,
1964

May 24, 1954

September 3,
1955

Director
Head of the Human
Resources Business
Division

SATO So

EGAMI Yoji

Terms Number ofsharesof
owned
office (shares)June 1983: Joined MEITEC CORPORATION
April 1988: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
March 1993: Appointed Director; Head of the Business Planning Office
Note 3February 1998: Appointed Director; Vice President
February 2002: Appointed President and CEO (current)
February 2012: Appointed Head of the Hyper Artner Business Division
April 1978: Joined Toyobo Interior Co., Ltd.
March 1982: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
March 1990: Appointed Head of the Kanto Business Dept.
March 1991: Appointed Director
Note 3
March 1993: Appointed Managing Director; Head of the General Affairs Dept.
February 2007: Appointed Managing Director; Head of the Management
Division
May 2008: Appointed Director; Head of the Management Division (current)
April 1978: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
October 1993: Appointed Head of the No.3 Business Dept.
February 2002: Appointed Standing Auditor
April 2004: Appointed Managing Director; Head of the Human Resources Dept.
February 2007: Appointed Managing Director; Head of the Human Resources
Division
April 2007: Appointed Managing Director; Head of the Business Management
Division
March 2009: Appointed Managing Director; Head of the Technology
Note 3Development Division
February 2010: Appointed Managing Director; Head of the Business Promotion
Division
February 2011: Appointed Managing Director; Head of the Engineer Business
Division
April 2011: Appointed Director; Head of the Engineer Business Division
February 2013: Appointed Director; Head of the Human Resources Business
Division
February 2016: Appointed Director; Head of the Engineer Business Division(current)

6,917

281,075

277,849

August 14,
1973

April 1998: Joined Nihon Bayer Agrochem (now Bayer Crop Science)
June 2004: Joined Aon Affinity
April 2007: Joined Artner Co., Ltd.
Appointed Head of the Corporate Planning and Strategy Division
February 2013: Appointed Head of the Corporate Planning and Strategy
Note 3
Division; Head of the Engineer Agency Business Division
April 2015: Appointed Director; Head of the Corporate Planning and Strategy
Division; Head of the Engineer Agency Business Division
February 2016: Appointed Director; Head of the Corporate Planning andStrategy Division (current)

6,080

September 26,
1958

April 1981: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
February 2007: Appointed Head of the Technology Development Dept. of the
Human Resources Division
April 2007: Appointed Director; Head of the Human Resources Division
February 2010: Appointed Director; Head of the Business Promotion Division Note 3
February 2011: Appointed Director; Head of the Human Resources Business
Division
February 2013: Appointed Director; Head of the Engineer Business Division
February 2016: Appointed Director; Head of the Human Resources Business
Division (current)

128,242

Director
Head of the Corporate
Planning and Strategy
Division

Career summary- 23 -

TitleDirector(Audit and Supervisory
Committee member)

Director(Audit and Supervisory
Committee member)

Director(Audit and Supervisory
Committee member)

Name

Date of birth

Career summary

Terms Number ofsharesof
owned
office (shares)

TERAMURA November 22,
Yasuhiko
1955

April 1978: Joined The Bank of Yokohama, Ltd.
December 1997: Appointed New York Branch Manager
April 2003: Appointed Executive Officer; Head of the Financial Markets Dept.
April 2006: Appointed Managing Executive Officer
June 2006: Joined Kyodo Shiryo Co., Ltd. (now Feed One Co., Ltd.) as Parttime Auditor
November 2007 Joined Mabuchi Corporation as Managing Director
Note 4
November 2008: Appointed Senior Managing Director
June 2011: Joined Sagami Transportation & Warehouse Co., Ltd. as Outside
Director
November 2018: Joined Multitrans, Ltd. as CEO
April 2021: Joined Artner Co., Ltd. as Director and member of the Audit andSupervisory Committee (current)―

MITANI
Takaaki

October 18,
1950

April 1973: Joined NEC Engineering, Ltd. (Now NEC Platforms, Ltd.)
July 1994: Appointed Deputy Head of the Accounts Dept.
April 2002: Appointed Head of the Accounts Dept. of Business Management
Division
April 2005 Appointed Head of the Accounts Dept.
June 2010: Appointed Senior Professional of the Accounts Dept.
April 2011: Joined Artner Co., Ltd. as Standing Auditor
April 2017: Appointed Outside Director and standing member of the Audit
and Supervisory Committee (current)

Note 4―

November 28,
1953

March 1976: Joined Takara Standard Co., Ltd.
May 2006: Appointed Kansai Direct Demand Branch President
April 2011: Appointed Executive Officer; Kansai Direct Demand BranchPresident
April 2013: Appointed Managing Executive Officer; Kansai Direct Demand
Branch President
Note 4
April 2019: Appointed Managing Executive Officer; Kansai Direct Demand
Branch Manager and Chubu Direct Demand Branch Manager
June 2020: Appointed Advisor
April 2021: Joined Artner Co., Ltd. as Director and member of the Audit andSupervisory Committee (current)

―

MORII
Shinichiro

Total

716,607

Notes: 1. The numbers of shares owned are real holdings that contain each owner’s equity in the Artner Officer Stocks Society,including shares less than one unit. The number of shares acquired by the Artner Officer Stocks Society was not confirmed
as of the date of submission of this report. Hence, the number shown is the real holdings as of the end of the fiscal year
ended January 31, 2021.
2. Messrs. Teramura, Mitani, and Morii are outside directors.
3. One year from the conclusion of the Ordinary General Meeting of Shareholders held on April 22, 2021
4. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on April 22, 2021(ii) Status of Outside Directors
Artner has three outside directors, all of whom hold shares of the Company. Apart from this shareholding position, none of thethree outside directors has any vested interests in the Company, including personal, capital, or business relationships. Outside
Directors TERAMURA Yasuhiko and MORII Shinichiro have no vested interests in the Company, including personal, capital,
or business relationships.
Each outside director plays a role in ensuring that highly effective audits are conducted, from an objective and neutral view point,
and we believe that the current system satisfactorily fulfills its management monitoring and advisory functions. The three outside
directors are designated as independent directors as defined by the Tokyo Stock Exchange and they are registered with theexchange.
Although the Company does not have any specific standards or policies regarding independence for the appointment of outside
directors, when making such appointments we not only meet the regulatory requirements established by the Companies Act, butalso take into account the Tokyo Stock Exchange’s criteria for ensuring the independence of independent directors.
(iii) Mutual cooperation between supervision or audits by outside directors and internal audits, audits by Audit and Supervisory
Committee members, and accounting audits; relations with the internal control department
Artner has three outside directors, and they are directors who are members of the Audit and Supervisory Committee.
The Head of the Internal Audit Office and the Audit and Supervisory Committee consult with each other and exchange
information and views when preparing their annual audit plans and creating audit reports. This enables them to share informationand conduct audits efficiently.

- 24 -

The Internal Audit Office and the Audit and Supervisory Committee exchange information and views with an external
accounting auditor of record in order to have a common understanding of issues subject to audits and other relevant matters.
They also seek professional advice and guidance from the Accounting Auditor as needed.
(3) Audits(i) Internal audits and audits by the Audit and Supervisory Committee
An internal audit is conducted by the Internal Audit Office, which consists of one Head and one member, in accordance with theinternal audit plan approved by the President and CEO. The audit examines whether the Company’s departments perform theiroperations in compliance with laws and regulations and other rules. It also reviews the consistency of these operations with the
management policy, along with the validity of operational efficiency. Then the audit team gives advice necessary for the
departments to improve their operations and the efficiency thereof, and reports the audit results to the President and CEO.
Artner is a company with an audit and supervisory committee. The Audit and Supervisory Committee consists of three outside
directors (one full-time director and two part-time directors). Outside Director MITANI Takaaki has years of experience inaccounting in the accounting department. His knowledge of finance and accounting is enormous. Outside Director MORII
Shinichiro has worked in key posts (e.g., branch manager) as an Executive Officer. His knowledge of finance and accounting isenormous.
Artner held a total of 25 meetings of the Audit and Supervisory Committee during this fiscal year. The table below shows therecord of Audit and Supervisory Committee members’ attendances.
Name

Number of meetings held

Attendance

MITANI Takaaki

25

25

KANAI Hiroki

25

25

FUKUMURO Kozaburo

25

25

Note: Messrs. KANAI Hiroki and FUKUMURO Kozaburo resigned at the conclusion of the Ordinary General Meeting of
Shareholders held on April 22, 2021.
As its primary tasks, the Audit and Supervisory Committee develops the audit policies and plans, and reviews the legitimacy of
execution of duties by directors, the legitimacy of financial statements and business reports, etc., and the competence of the
Accounting Auditor. Directors who are members of the Audit and Supervisory Committee attend board meetings and otherimportant meetings to offer their opinions as necessary. They also regularly meet with the President and CEO as a means toaudit the legitimacy and validity of execution of duties by directors (excluding directors who are members of the Audit andSupervisory Committee).
Activities of full-time Audit and Supervisory Committee members include communication with and information gathering fromdirectors and others in relevant posts, creation and enhancement of the audit environment, and perusal of documents about
important managerial decisions, in accordance with the audit policies and plans set forth by the Audit and Supervisory Committee.
(ii) Accounting Auditsa. Accounting firm name
KPMG AZSA LLC
b. Continuous audit period
16 yearsc. Certified public accountants who performed the service
YONO Kenji (Designated Limited Liability and Engagement Partner)
YASUDA Tomonori (Designated Limited Liability and Engagement Partner)
d. Assistants in the audit service
Six certified public accountants and 7 others serve as assistants in Artner’s accounting audit service. The number of years ofcontinuous audit is omitted since it is seven or less.
e. Policy and reason for selection of the audit firm
The Audit and Supervisory Committee consults the Practical Guidelines for Auditors regarding Accounting Auditor
Evaluation and Selection Criteria published by the Japan Audit & Supervisory Board Members Association, and conducts acomprehensive review to select an Accounting Auditor. In this process, the committee ensures that the accounting firm has
independence as an Accounting Auditor and a proper quality management framework, which covers misconduct risk; that thefirm has in place an audit framework designed for the size and business of Artner; and that the audit plan and cost are practicaland fair. We have selected KPMG AZSA LLC as our Accounting Auditor because we decided that the firm has all theseelements to conduct proper accounting audits of Artner. The Audit and Supervisory Committee will also dismiss the- 25 -

Accounting Auditor based on the consent of all Audit and Supervisory Committee members if any of the items of Article 340,
paragraph (1) of the Companies Act applies to the Accounting Auditor.
f. Evaluation of the Accounting Auditor by Audit and Supervisory Committee members and the Audit and Supervisory
Committee
The Audit and Supervisory Committee consults the Practical Guidelines for Auditors regarding Accounting Auditor
Evaluation and Selection Criteria published by the Japan Audit & Supervisory Board Members Association, and evaluates the
Accounting Auditor from all angles, such as the quality management framework the Auditor has developed and how it operates,of the independence and expertise the Auditor has, among others, to determine that the Auditor is qualified.
(iii) Details of audit fees
a. Audit fees for certified public accountants
Fiscal year ended January 31, 2020
Fees for audit services(thousands of yen)

Fiscal year ended January 31, 2021

Fees for non-audit service(thousands of yen)

20,000Fees for audit services(thousands of yen)－

Fees for non-audit service(thousands of yen)

20,000－The non-audit service at Artner is preparation of comfort letters related to prospectuses for stock offerings.
b. Fees for an organization in the same network to which the certified public accountants belong
Not applicable.
c. Details of other fees based on important audit services
Not applicable.
d. Policy for determining audit fees
Artner’s policy for determining fees for an audit by certified public accountants is that the Company reviews the audit plan,details of the audit, and the audit schedule, among others, presented by the Accounting Auditor and receives approval fromthe Audit and Supervisory Committee to decide on proper fees.
e. Reason for the approval of the Audit and Supervisory Committee given to fees for the Accounting Auditor and otherrelevant fees
The Audit and Supervisory Committee reviewed the policy, contents, and the basis for calculation of estimates shown in theaudit plan, which would constitute grounds for fees paid to the Accounting Auditor. Then the committee received andexamined required reports about the contents submitted by relevant internal departments, and determined that the policy,
contents, and the basis were all fair for an accounting audit of Artner. Hence, the committee approved the fees for the
Accounting Auditor.
(4) Remuneration for directors(i) Policies for determining remuneration for directors and calculation methods
The remuneration of directors consists of a basic remuneration and a performance-linked bonus. The upper limits of the
remuneration established by resolution at the ordinary general meeting of shareholders held on April 27, 2017, are ¥200 million
per year for five directors who are not members of the Audit and Supervisory Committee and ¥30 million per year for three
directors who are members of the Committee. We have not established an advisory board that includes outside directors to
examine remuneration of directors. However, we ensure objectivity and transparency by obtaining appropriate involvement ofand advice from independent outside directors.
The Board of Directors and the Audit and Supervisory Committee are responsible for deliberating and determining the
remuneration of the Executive Team, which is composed of a fixed remuneration and performance-linked remuneration. The
remuneration of directors who are not members of the Audit and Supervisory Committee is determined solely by the Board of
Directors, whereas the remuneration of the Audit and Supervisory Committee members is determined by deliberation among themembers of the Committee.
How to determine the policy for determining the remuneration for each individual is set forth in the rules concerning the
remuneration of directors, resolved by the Board of Directors.
The Board of Directors receives reports that are deliberated by the Nomination and Remuneration Committee based on the policy
for determining the remuneration and within the range of the total amount resolved by the General Meeting of Shareholders, so
the Board of Directors deems that the content of the report is in line with the said policy.
The policy for determining the percentage of the amount of remuneration for each individual shall be decided based on thereports that are deliberated by the Nomination and Remuneration Committee, comprehensively taking into account the role and- 26 -

contribution status of each director as well as business performance.
The basic remuneration is determined based on the amount established for each director position, with the Company’s businessperformance, relative weight against employee salaries, and remuneration levels at other companies taken into consideration.
However, if it is not appropriate to pay a remuneration calculated in such a manner due to a significant decline in the Company’sbusiness performance or other factors, the Company reserves the right to reduce the amount of basic remuneration.
The metrics for performance-linked bonuses is calculated using a formula based on the Company’s annual profit, as this is
judged to be the most reasonable way to measure the performance of directors. For the fiscal year ended January 31, 2021, thetarget metrics for performance-linked bonuses had been set at ¥677 million, and the result was ¥642 million.
The processes that the Board of Directors and the Audit and Supervisory Committee went through to determine the remunerationof directors for the fiscal year ended January 31, 2021, are summarized as follows:
With regard to the remuneration for directors who are not members of the Audit and Supervisory Committee, the amount ofbasic remuneration was determined by resolution of the Board of Directors on April 26, 2018, and has since remained unchanged.
The amount of a performance-linked bonus for each director was determined by resolution of the Board of Directors on February
26, 2021.
With regard to the remuneration for directors who are members of the Audit and Supervisory Committee, the amount of basic
remuneration was determined by deliberation among the members of the Committee on April 26, 2018, and has since remained
unchanged. The amount of a performance-linked bonus for each director was determined by deliberation among the membersof the Committee on February 26, 2021.
(ii) Total amount of remuneration by type of director, amount by type of remuneration, and the number of corresponding directors
Amount by type of remuneration
Total amount of
Number of(thousands of yen)remuneration
corresponding
Type of director
Basic
Performance(thousands of yen)directors
remuneration
linked bonus
Directors who are not members of
the Audit and Supervisory
Committee or outside directors

107,204

95,412

11,791

5

Director and member of the Audit
and Supervisory Committee but are
not outside directors

－

－

－

－

24,44823,4001,048

3Outside directors(iii) Total amount of remuneration for each director
We have omitted providing information here as no directors were paid remuneration of ¥100 million or more.
(5) Shares held(i) Criteria for and definitions of the classifications of shares for investment
Artner defines shares held to gain profits from fluctuations in the value of the stocks or by receiving dividends as shares solely
for investment purposes, and any other shares held as shares for non-investment purposes, and classifies the shares it holds
accordingly.
(ii) Shares held for non-investment purposesa. Policy on holding shares for non-investment purposes; approach for examining the rationality of holding those shares; detailsof the board review concerning the advisability of holding each of the stocks
Artner has the policy that it holds shares in enterprises after considering from all angles whether the shareholding will help
the Company continue to grow and raise its medium- to long-term enterprise value. We review these enterprises’ future outlook
and stock prices, and discuss the validity of the shareholding at board meetings. We also reduce the number of shares that nolonger serve the purpose of holding them.
b. Number of stocks and amount recorded on the balance sheet
Number of
Total amount recorded on the balancestocks (stocks)
sheet (thousands of yen)
Unlisted shares－－

Shares other than unlisted shares

14

7,261

- 27 -

(Stocks that increased in the number of shares during the fiscal year under review)
Number ofstocks (stocks)

Total acquisition value associatedwith increase in number of shares(thousands of yen)

－

－

－

88

New acquisition to collect information about industry trends andother relevant matters

Unlisted shares
Shares other than unlisted shares

1

Reason for increase in number(Stocks that decreased in the number of shares during the fiscal year under review)
Number ofstocks (stocks)
Unlisted shares
Shares other than unlisted shares

Total sale value associated withdecrease in number of shares(thousands of yen)

－
－

－
－

c. Information regarding the numbers of specific shares for investment and of deemed shares held sorted by stock, and theamounts recorded on the balance sheet
Specific shares for investment

Stock

Fiscal year ended
Fiscal year ended
January 31, 2021
January 31, 2020
Number of shares
Number of shares(shares)(shares)Amount recorded on
Amount recorded onbalance sheet (thousands balance sheet (thousandsof yen)of yen)BeNext-Yumeshin GroupCo.
Persol Holdings Co., Ltd.
TechnoPro Holdings, Inc.
Abist Co., Ltd.
Meitec Corporation
Altech Corporation
Yumeshin Holdings Co.
Ltd.
Copro-Holdings. Co., Ltd.
Hip Corporation
Sobal Corporation
SUS Co., Ltd.
Forum Engineering Inc.
Human Holdings Co., Ltd.
JTEC Corporation

2,000

2,000

2,468
438

2,272
438

858

869

100

100

799

738

200

200

586

513

100

100

549

630

220

220

456

399

600

600

427

509

100

100

356

280

300

300

196

240

200

200

185

245

400

400

146

221

100

－

88

－

100

100

76

127

400

400

67

85

Purpose of shareholding, quantitative effect ofshareholding, and reason for increase in number ofsharesArtner’s shares held

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters (Reason for the increase) New
acquisition for the purpose stated aboveNo

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

Yes

Notes: Although it is a challenge to describe a quantitative effect of a shareholding, we have examined economic rationality andvalidity of holding the shares to ensure that we hold these shares for the purposes that are in line with our policy onshareholdings.
Deemed shares held
Not applicable.
(iii) Shares held solely for investment purposes
Not applicable- 28 -

V. Financial Information
1. Approach for Preparing Financial Statements
Artner prepares its financial statements in accordance with the Regulation on Terminology, Forms, and Preparation Methods ofFinancial Statements (Ministry of Finance Order No. 59 of 1963).

2. Audit Certification
Artner had its financial statements for the fiscal year (from February 1, 2020 to January 31, 2021) audited by KPMG AZSA LLC
in accordance with Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act.

3. Consolidated Financial Statements
Since it has no subsidiary, Artner does not prepare consolidated financial statements.

4. Special Efforts to Ensure the Appropriateness of Financial Statements
Artner makes special efforts to ensure the appropriateness of its financial statements. More specifically, we have joined the Financial
Accounting Standards Foundation to keep ourselves updated in order to maintain a correct understanding of accounting standards
and other rules, thereby preparing to take the right actions when any changes are made to these standards and rules.

- 29 -

1【Non-consolidated Financial Statements, etc. 】(1)【Non-consolidated financial statements】(i)【Non-consolidated balance sheets】(Thousands of yen)
As of January 31, 2020
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Work in process
Raw materials and supplies
Prepaid expenses
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Total property, plant and equipment
Intangible assets
SoftwareTelephone subscription right
Total intangible assets
Investments and other assets
Investment securities
Investments in capital
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets- 30 -

As of January 31, 2021

2,383,441
932,1122,370
2,374
24,010989
17,237(5,500)3,357,036

3,019,657
895,926
992
4,383
29,482
1,259
16,252(5,300)3,962,653

90,606(68,467)
22,1391,677(1,672)
5
41,255(26,627)
14,62859,15995,932

108,238(64,611
43,626
1,172(1,172)044,802(25,496)
19,30643,941
106,873

57,487
1,654
59,14147,793
1,654
49,447

7,133
1,250
1,256
195,361
82,9201,106
289,028
444,1023,801,139

7,261
1,250
1,381
217,198
85,114
1,132
313,338
469,659
4,432,313

(Thousands of yen)
As of January 31, 2020
Liabilities
Current liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Deposits received
Unearned revenue
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Provision for retirement benefits
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Legal capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 31 -

As of January 31, 2021

91,78566,539180,764
171,819
13,95084
132,420
4,179
661,544

164,860
62,345
182,239
183,571
90,113
66
116,787
5,105
805,088411,214411,214
1,072,759

504,042504,042
1,309,131

238,284

238,284

168,323
168,323

168,323
168,323

10,46010,46040,0002,268,351
2,318,811(698)
2,724,720

40,0002,663,150
2,713,610(739)
3,119,478

3,659
3,659
2,728,380
3,801,139

3,704
3,704
3,123,182
4,432,313

(ii)【Non-consolidated statements of income】(Thousands of yen)
Fiscal year ended
January 31, 2020
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Commission income
Sales income of training materials
Rental income from land and buildings
Dividend income of insurance
Subsidy income
Other
Total non-operating income
Non-operating expenses
Cancellation penalty
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit- 32 -

Fiscal year ended
January 31, 2021

7,002,175
4,461,849
2,540,326
1,654,318
886,0077,174,725
4,442,856
2,731,868
1,844,793
887,075

6
230
556
857
949
4,445
1,762
602
9,410

3
248
604
556
925
2,931
17,256
2,582
25,109

1,761
0
1,761
893,656

1,554
172
1,727
910,457

－
－

3,926
3,926

－
－
893,656
308,856(28,576)
280,279
613,377

1,270
1,270
913,113306,409(21,856)
284,552
628,561

[Cost of Sales Statement]
FY2020
FY2021(Fiscal year ended January 31, 2020) (Fiscal year ended January 31, 2021)
Note
numberClassification

Amount(thousands of yen)

Ratio
(%)

Amount(thousands of yen)

Ratio
(%)

4,350,367

97.5

4,307,382

97.0

112,065
4,462,433

2.5
100.0

134,095
4,441,477

3.0

I. Labor cost
II. Expenses*2

Total manufacturing cost for the period
Beginning inventory of work in process
Total
Ending inventory of work in process
Cost of sales for the period

1,786
4,464,220

2,370
4,443,848

2,370
4,461,849

992
4,442,856

FY2020(Fiscal year ended January 31, 2020)

100.0

FY2021(Fiscal year ended January 31, 2021)

1. Cost accounting method

1. Cost accounting method

Job costing based on actual costs*2 Details are as shown below:

Job costing based on actual costs*2 Details are as shown below:

Travel and transportation

JPY 69,218 thousand

Travel and transportation

JPY 70,476 thousand

Rent

JPY 11,649 thousand

Rent

JPY 13,039 thousand- 33 -

(iii)【Non-consolidated statements of changes in equity】
Fiscal year ended January 31, 2020
(Thousands of yen)
Shareholders' equity
Capital surplus

Retained earnings

Share capital Legal capital Total capital Legal retained
surplussurplusearnings
Balance at beginning of
periodChanges during period

238,284

168,323

168,323

10,460

Other retained earnings
Retained
Generalearnings
reservebrought
forward40,0001,872,798

Total
retainedearnings
1,923,258

Dividends of surplus(217,824)(217,824)

ProfitNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

613,377

613,377

－

－

－

－

－

395,552

395,552

238,284

168,323

168,323

10,46040,0002,268,351

2,318,811

2,329,167

Valuation and translation
adjustments
Valuation
Total
Total net assets
difference on valuation andavailable-fortranslation
sale securities adjustments
4,139
4,139
2,333,306

Dividends of surplus(217,824)(217,824)

ProfitNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

613,377

613,377

Shareholders' equity
Total
Treasury shares shareholders'equityBalance at beginning of
periodChanges during period

(698)

(479)

(479)

(479)

－

395,552

(479)

(479)

395,073(698)

2,724,720

3,659

3,659

2,728,380- 34 -

Fiscal year ended January 31, 2021
(Thousands of yen)
Shareholders' equity
Capital surplus
Share capital

Balance at beginning of
periodChanges during period

Retained earnings

Legal capital Total capital Legal retained
surplussurplusearnings

238,284

168,323

168,323

10,460

Other retained earnings
Retained
Generalearnings
reservebrought
forward40,0002,268,351

Total
retainedearnings
2,318,811

Dividends of surplus(233,762)(233,762)

Profit628,561

628,561

Purchase of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

－

－

－

－

－

394,799394,799

238,284

168,323

168,323

10,46040,0002,663,150

2,713,610

2,724,720

Valuation and translation
adjustments
Valuation
Total
difference on valuation and Total net assets
available-fortranslation
sale securities adjustments
3,659
3,659
2,728,380

Dividends of surplus(233,762)(233,762)

Profit628,561

628,561

(41)

(41)

Shareholders' equity
Total
Treasury shares shareholders'equityBalance at beginning of
periodChanges during period

Purchase of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

(698)

(41)

44

44

44

(41)

394,7584444394,802(739)

3,119,478

3,704

3,704

3,123,182- 35 -

(iv)【Non-consolidated statements of cash flows】(Thousands of yen)
Fiscal year ended
January 31, 2020
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Interest and dividend income
Gain on sale of non-current assets
Loss on retirement of non-current assets
Decrease (increase) in accounts receivable – other
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accounts payable – other
Other, net
SubtotalInterest and dividends received
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Payments for the acquisition of investment securities
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Payments for the acquisition of treasury shares
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 36 -

Fiscal year ended
January 31, 2021

893,656
26,9231,000
19,49980,588
(236)
－
－
(427)
(167,476)
77
66,910(32,201)
6,959
895,272236(304,355)
591,153

913,11330,103(200)(15,633)
92,828(251)(3,926)
1,270(269)
36,185(629)
11,75173,07567,575
1,204,993
251(305,960)
899,285(15,507)－(13,958)(13,401)379(36,767)
19,234(11,162)(2,534)
340

(208)
(26)
(42,723)(64)(26)(30,979)－(215,920)
215,920332,5082,050,932
2,383,441(41)(232,048)(232,089)
636,216
2,383,441
3,019,657

[Notes](Significant Accounting Policies)
1. Basis and method for valuation of securities
Available-for-sale securities
Securities with fair value
Fair value method based on the market value etc. on the closing date (with the entire amount of valuation differences inserted
directly into net assets, and the cost of sales calculated using the moving average method)
2. Basis and method for valuation of inventories(1) Work in process
Job costing method (with the amount shown on balance sheet written down as profitability declines)(2) Supplies
Job costing method (with the amount shown on balance sheet written down as profitability declines)
3. Depreciation method for non-current assets(1) Property, plant and equipment
Declining balance method (note: straight-line method for buildings (excluding facilities attached to the buildings) acquired on orafter April 1, 1998, and for facilities attached to buildings and for structures acquired on or after April 1, 2016)
Service life of the assets is mostly as shown below:
Buildings:
8 - 26 years
Tools, furniture and fixtures:
4 - 15 years(2) Intangible assets
Straight-line method is applied to software for internal use. The calculation is based on usable life within the Company (5 years).
4. Recognition criteria for provisions(1) Allowance for doubtful accounts
To make allowances for the non-payment of receivables, the historical default rate is used for general receivables; and receivables
designated as potentially irrecoverable is determined by reviewing actual collectability on an individual claim basis to record theestimated amount that is deemed irrecoverable.
(2) Provision for bonuses
To make allowances for the payment of bonuses to employees, the amount that should be paid in the fiscal year under review isrecorded, out of the estimated payment in the following fiscal year.
(3) Provision for retirement benefits
To make allowances for the payment of retirement benefits to employees, this is recorded based on the estimate for retirement
benefit liabilities as of the end of the fiscal year under review.
(i) Method for attributing estimated retirement benefit payments to the period
When calculating retirement benefit liabilities, the method for attributing estimated benefit payments to the period that lasts until
the end of the fiscal year under review is as per the benefit formula basis.
(ii) Method for processing actuarial gains and losses as expenses
Actuarial gains and losses are treated as expenses in the fiscal year following the fiscal year in which they arise. The amount is
proportionally divided using the straight-line method over a certain number of years (five years) that is within the average
number of employees’ remaining service years at the time the differences emerge each fiscal year.
5. Cash included in the statement of cash flows
The cash included in the statement of cash flows consists of cash on hand, savings available for withdrawal at any time, and shortterm investments that can easily be converted into cash, have only a limited risk of price fluctuations, and are redeemed within threemonths from the date of acquisition.
6. Other significant matters that form the basis for preparing financial statements
Accounting treatment of consumption tax
Tax is not included.
(Accounting Standards to Be Implemented)- Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020)- Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, March 31, 2020)(1) Summary
This is a comprehensive accounting standard for revenue recognition. The following five steps are taken to recognize revenue.
Step 1: Identify the contract(s) with a client.
Step 2: Identify the performance obligation in the contract.
Step 3: Determine the transaction price.

- 37 -

Step 4: Allocate the transaction price to the separate performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Implementation schedule
The Company plans to implement the standard starting from the beginning of FY2023.
(3) Impact from the implementation of the Accounting Standard
We are in the process of assessing the monetary amounts that receives the impact as we prepare the financial statements.
・「Accounting standards for disclosure of accounting estimates」(Corporate Accounting Standard No. 31 March 31, 2020)(1）Overview
This accounting standard aims to disclose information that contributes to the understanding of users of the financial statements
regarding the details of accounting estimates used for the amounts of items recorded in the financial statements for the current
fiscal year that are based on accounting estimates and pose a risk of significantly impacting the financial statements for the
next fiscal year.
(2）Scheduled date of application
This is scheduled to be applied from the end of the fiscal year ending January 2023.
(Additional Information)(Accounting Estimates Related to the Spread of COVID-19)
It is difficult to predict how the COVID-19 pandemic will spread and when it will end. That said, we have made accounting
estimates, including the recoverability of deferred tax assets, on the assumption that the pandemic will only have a limited
impact on our business activities, while the impact of the spread of the infection will continue for a certain period of time
beyond the current fiscal year.
Furthermore, given the uncertainty of the impact of the COVID-19 pandemic, any changes in the situation may affect our
financial status and business performance, among others.
(Regarding Non-consolidated Balance Sheet)
1 Artner has entered into overdraft agreements with its six banks in order to ensure efficient financing for working capital. The tablebelow shows the balances of borrowings available for withdrawal according to the agreements.
FY2020(As of January 31, 2020)
Overdraft limit
Outstanding borrowing

JPY 1,450,000 thousand－

Balance1,450,000

FY2021(As of January 31, 2021)
JPY 1,450,000 thousand－
1,450,000(Regarding Non-consolidated Statement of Income)*1 Selling expenses accounted for approximately 7% in FY2021, and 7% in FY2022, and general and administrative expenses 93%
in FY2021, and 93% in FY2022.
The table below shows the main item of selling, general and administrative expenses, and the amounts thereof.

FY2020(Fiscal year ended January 31, 2020)
Salaries and allowances
Travel and transportation
Rent
Provision for bonuses
Retirement benefit expenses
Depreciation

FY2021(Fiscal year ended January 31, 2021)

JPY 589,113 thousand
150,655
141,286
22,70728,49926,803

JPY 784,158 thousand
80,868167,318
20,30733,01329,9781,000－

Provision of allowance for doubtful accounts- 38 -

(Regarding Non-consolidated Statement of Changes in Equity)
FY2020 (Fiscal year ended January 31, 2020)
1. Matters concerning the type and total number of shares issued, and the type and total number of treasury shares
Number of shares at
beginning of FY2020(shares)

Increase in shares during
Decrease in shares
Number of shares at end
FY2020 (shares)
during FY2020 (shares)of FY2020(shares)

Shares issued
Common shares
Total

10,627,920－－

10,627,920

10,627,920－－

10,627,920

2,329

－

－

2,329

2,329

－

－

2,329

Treasury shares
Common shares
Total
2. Matters concerning dividends(1) Dividends paid
Total amount of
Dividend per
dividends
share (yen)(thousands of yen)

Resolution

Type ofsharesOrdinary General Meeting of
Shareholders on April 25, 2019

Commonshares111,568

Board of Directors Meeting on
September 9, 2019

Commonshares106,255

Record date

Effective date

10.50

January 31, 2019

April 26, 2019

10.00

July 31, 2019

October 4, 2019(2) Dividends with a record date in the fiscal year under review and an effective date in the following fiscal year
amount of Source of funds Dividend perType of Total
dividends
Resolution
Record date
Effective dateshares (thousands of yen) for dividends
share (yen)Ordinary General Meeting of Common
Shareholders on April 23, 2020 shares

Retainedearnings

111,568

10.50

January 31, 2020

April 24, 2020

FY2021 (February 1, 2020 to January 31, 2021)
1. Matters concerning the type and total number of shares issued, and the type and total number of treasury shares
Number of shares at
Increase in shares during
Decrease in shares
Number of shares at end
beginning of FY2021
FY2021 (shares)
during FY2021 (shares)of FY2021 (shares)(shares)
Shares issued
Common shares
Total

10,627,920－－

10,627,920

10,627,920－－

10,627,920

2,329

47

－

2,376

Treasury shares
Common shares

Total
2,329
47
－
Note: The increase of 47 treasury shares (common shares) came from the purchase of shares less than one share unit.
2. Matters concerning dividends

2,376(1) Dividends paid
Total amount of
Dividend per
dividends
share (yen)(thousands of yen)

Resolution

Type ofsharesOrdinary General Meeting of
Shareholders on April 23, 2020

Commonshares111,568

Board of Directors Meeting on
September 8, 2020

Commonshares122,193- 39 -

Record date

Effective date

10.50

January 31, 2020

April 24, 2020

11.50

July 31, 2020

October 7, 2020

(2) Dividends with a record date in the fiscal year under review and an effective date in the following fiscal year
Type ofsharesResolution

Ordinary General Meeting of Common
Shareholders on April 21, 2021 shares

Total amount of Source of funds Dividend per
dividends
share (yen)(thousands of yen) for dividends

Record date

Effective date

Retainedearnings

January 31, 2021

April 23, 2021

122,193

11.50(Regarding Non-consolidated Statement of Cash Flows)*1 Relationship between cash and cash equivalents at the end of the period and the amount for the account title shown in thebalance sheet

Cash and deposit accountCash and cash equivalents

FY2020(Fiscal year ended January 31, 2020)

FY2021(Fiscal year ended January 31, 2021)

JPY 2,383,441 thousand

JPY 3,019,657 thousand

2,383,441

3,019,657(Regarding Lease Transactions)
Notes on this matter have been omitted because they are of little importance.
(Regarding Financial Instruments)
1. Matters concerning financial instruments(1) Policy on financial instruments
Artner limits its fund management to short-term deposits or any equivalents, and it has the policy that it raises funds mostly
by borrowing from banks.
(2) Description of financial instruments, risks involved therein, and risk management framework
Accounts receivable are exposed to clients’ credit risk. We mitigate this risk in line with our credit management policy.
(3) Supplementary explanations about matters concerning the fair values of financial instruments
The fair value of financial instruments has no market value, and thus it depends on the rationally calculated value. Variablefactors are taken into account when the fair value is calculated. Hence, the value may fluctuate when different prerequisites
are used.
2. Matters concerning the fair values of financial instruments
The amounts calculated for the balance sheet and fair value, along with differences between them, are as shown in the table below.
Note that the instruments for which fair value can hardly be identified are not included (refer to Note 2).
FY2020 (As of January 31, 2020)
Amount recorded onbalance sheet(thousands of yen)
(1) Cash and deposits(2) Accounts receivable - trade
Total assets(1) Accounts payable - otherTotal liabilities

Fair value(thousands of yen)

Difference(thousands of yen)

2,383,441
932,1122,383,441
932,112－－3,315,554

3,315,554－

91,78591,785－91,78591,785－

FY2021 (As of January 31, 2021)(1) Cash and deposits(2) Accounts receivable - trade

Amount recorded onbalance sheet(thousands of yen)
3,019,657
895,926

Total assets(1) Accounts payable - otherTotal liabilities- 40 -

fair value(thousands of yen)

Difference(thousands of yen)

3,019,657
895,926－－

3,915,584

3,915,584－

164,860

164,860－

164,860

164,860－

Notes: 1. How to calculate the fair value of a financial instrument
Assets(1) Cash and deposits, (2) Accounts receivable - trade
Since these are settled in a short term, their fair value approximates carrying amounts. Hence, the fair value
depends on the carrying amounts.
Liabilities(1) Accounts payable - other
Since these are settled in a short term, their fair value approximates carrying amounts. Hence, the fair value
depends on the carrying amounts.
2. Financial instruments for which fair value can hardly be identified(Unit: thousands of yen)
FY2020(Fiscal year ended January 31, 2020)

Classification

FY2021(Fiscal year ended January 31, 2021)

Leasehold and guarantee deposits
82,92085,114
Leasehold and guarantee deposits have no market value, which means their fair value can hardly be identified. Hence,
their fair value is not disclosed.
3. Planned redemption amounts after the closing date for monetary claims
FY2020 (As of January 31, 2020)
More than 1 year, More than 5 years,
within 10 years
within 5 years(thousands of yen)
Within 1 year

More than 10
years(thousands of yen) (thousands of yen) (thousands of yen)

Cash and deposits
Accounts receivable - tradeTotal

2,383,147
932,112

－
－

－
－

－
－

3,315,260－－－

FY2021 (As of January 31, 2021)
Within 1 year
(thousands of yen)

Cash and deposits
Accounts receivable - trade
Total

More than 1 year, More than 5 years,
within 10 years
within 5 years

More than 10
years(thousands of yen) (thousands of yen) (thousands of yen)

3,019,477
895,926

－
－

－
－

－
－

3,915,404－－－(Regarding Investment Securities)
1. Available-for-sale securities
FY2020 (As of January 31, 2020)
Type
Securities recorded onbalance sheet at amount thatexceeds acquisition cost
Securities recorded onbalance sheet at amount that
does not exceed acquisition
cost

Amount recorded on balance
sheet (thousands of yen)

Stock
Subtotal
Stock
Subtotal

Total

Acquisition cost(thousands of yen)

Difference(thousands of yen)

6,911

1,487

5,424

6,911

1,487

5,424

221

374

(152)

221

374

(152)

7,133

1,861

5,271

FY2021 (As of January 31, 2021)
Type
Securities recorded onbalance sheet at amount thatexceeds acquisition cost
Securities recorded onbalance sheet at amount that
does not exceed acquisition
cost

Amount recorded on balance
sheet (thousands of yen)

Stock
Subtotal
Stock
Subtotal

Total
2. Available-for-sale securities soldNot applicable.

- 41 -

Acquisition cost(thousands of yen)

Difference(thousands of yen)

7,115

1,551

5,564

7,115

1,551

5,564

146

374

(227)

146

374

(227)

7,261

1,925

5,336

(Regarding Derivatives)
Not applicable, as Artner does not trade derivatives.
(Regarding Retirement Benefits)
1. Summary of the retirement benefit plan used
Artner uses the defined benefit retirement lump sum payment plan and the define contribution pension plan to pay retirement
benefits to its employees.
2. Defined benefit plan
(1) Reconciliation of the beginning and ending balances of retirement benefit liabilities
FY2020
FY2021(Fiscal year ended January (Fiscal year ended January
31, 2020)
31, 2021)
Balance of retirement benefit liabilities at beginning of period
Service expenses
Interest expenses
Actuarial gains and losses incurred
Retirement benefit payments
Balance of retirement benefit liabilities at end of period

JPY 428,626 thousand
41,8903,587
72,076(11,810)534,370

JPY 534,370 thousand
55,8984,472(18,016)(7,091)
569,633(2) Reconciliation of the ending balance of retirement benefit liabilities and the provision for retirement benefits recorded on
the balance sheet

Retirement benefit liabilities in non-savings-type plan
Retirement benefit liabilities unfunded

FY2020(As of January 31, 2020)

FY2021(As of January 31, 2021)

JPY 534,370 thousand
534,370

JPY 569,633 thousand
569,633

Unrecognized actuarial gains and losses(123,155)(65,590)

Net liabilities and assets recorded on balance sheet

411,214504,042

Provision for retirement benefits

411,214504,042

Net liabilities and assets recorded on balance sheet

411,214504,042(3) Itemized retirement benefit expenses
FY2020 (February 1,
FY2021 (February 1, 2020
to January 31, 2021)
2019 to January 31, 2020)
Service expenses

JPY 41,890 thousand

JPY 55,898 thousand

Interest expenses

3,587

4,472

Actuarial gains and losses processed as expenses

46,92039,548Retirement benefit expenses for defined benefit plan

92,39899,919(4) Matters concerning the basis for actuarial calculations
Basis for key actuarial calculations
FY2020(As of January 31, 2020)
Discount rate

0.8%

FY2021(As of January 31, 2021)
0.8%

To project the rates of increase in salary, we use pay raise indexes by age calculated with September 1 of the fiscal year being
the base date.
3. Defined contribution plan
Artner’s required contributions to the defined contribution plan were JPY 48,505 thousand for the previous fiscal year and JPY
54,549 thousand for the fiscal year under review.
(Regarding Stock Options)Not applicable.

- 42 -

(Regarding Tax Effect Accounting)
1. Breakdown of deferred tax assets and deferred tax liabilities by main cause
FY2020(As of January 31, 2020)
Deferred tax assets
Enterprise tax payable
Accrued expenses
Provision for bonuses
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss

FY2021(As of January 31, 2021)

JPY 10,200 thousand
9,204
40,494
125,749
1,681
8,617

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

JPY 12,282 thousand
9,220
35,713
154,136
1,620
4,642

1,025

1,215

196,973

218,830(1,612)(1,631)

Total deferred tax liabilities(1,612)(1,631)

Net deferred tax assets

195,361

217,198

2. Statutory effective tax rate and main causes of the difference from the income tax burden rate after the application of tax effectaccounting
Notes have been omitted because, for FY2020 and FY2021, the difference between the statutory effective tax rate and theincome tax burden rate after the application of tax effect accounting is five-hundredths or less of the statutory effective tax
rate.
(Equity in Earnings)
Not applicable.
(Regarding Business Combination)
Not applicable.
(Regarding Asset Retirement Obligations)
Notes on this matter have been omitted because they are of little importance.
(Regarding Investment and Rental Property)
Notes on this matter have been omitted because the total amount of investment and rental property is of little importance.
(Segment Data)[Segment data]
Since we have only one reportable segment, notes on this matter have been omitted.
[Related information]
FY2020 (Fiscal year ended January 31, 2020)
1. Information by product and service
Since our business is in a single segment, notes on this matter have been omitted.
2. Information by region(1) Net sales
Not applicable because we have no sales to external clients outside Japan.
(2) Property, plant and equipment
Not applicable because none of our property, plant and equipment are located outside Japan.
3. Information by major customer
Client name / Company name

(Unit: thousands of yen)
Net sales

Honda R&D Co., Ltd.

1,340,047

Note: Since our business is in a single segment, names of related segments have been omitted.

- 43 -

FY2021 (February 1, 2020 to January 31, 2021)
1. Information by product and service
Since our business is in a single segment, notes on this matter have been omitted.
2. Information by region(1) Net sales
Not applicable because we have no sales to external clients outside Japan.
(2) Property, plant and equipment
Not applicable because none of our property, plant and equipment are located outside Japan.
3. Information by major customer
Client name / Company name

(Unit: thousands of yen)
Net sales

Honda R&D Co., Ltd.

903,596

Note: Since our business is in a single segment, names of related segments have been omitted.
[Information about impairment loss on non-current assets in each reportable segment]
Not applicable.
[Information about amortization and unamortized balance of goodwill in each reportable segment]
Not applicable.
[Information about gain on bargain purchase in each reportable segment]
Not applicable.
[Information about related parties]
Not applicable.
(Per Share Information)
FY2020(Fiscal year ended January 31, 2020)

FY2021(Fiscal year ended January 31, 2021)

Net assets per share

JPY 256.77

JPY 293.93

Earnings per share

JPY 57.73

JPY 59.16

Notes: 1. Diluted earnings per share are not shown because we have no dilutive shares.
2. The table below shows the bases for calculations of earnings per share.
FY2020(Fiscal year ended January 31, 2020)
Profit (thousands of yen)Amounts not attributable to common shareholders(thousands of yen)
Profit pertaining to common shares (thousands ofyen)
Average number of common shares outstanding
during the period(Material Post-Balance Sheet Events)
Not applicable.

- 44 -FY2021(Fiscal year ended January 31, 2021)

613,377

628,561－－

613,377

628,561

10,625,591

10,625,562

(v) Supplementary schedule[Statement of property, plant and equipment]

Asset TypeBalance at
beginning of
period(thousands ofyen)

Accumulated
Increase during Decrease during Balance at end of depreciation/amortization atperiodperiodperiod(thousands of(thousands of(thousands ofend of period
yen)
yen)
yen)
(thousands ofyen)

Amortization inperiod(thousands ofyen)

Balance at endof period(thousands ofyen)

Property, plant and equipment
Buildings

90,60626,0928,460

108,238

64,611

4,048

43,626Structures

1,677

－

504

1,172

1,172

2

0

Tools, furniture and fixtures

41,255

10,6757,127

44,80225,496

5,993

19,306

Land

59,159－15,21843,941－－

43,941

192,699

36,76731,312

198,154

91,281

10,044

106,873

108,368

11,162

5,637

113,893

66,09920,05947,793

Telephone subscription right

1,654

－

－

1,654

－

－

1,654

Total intangible assets

110,022

11,162

5,637

115,547

66,09920,05949,447

Total property, plant andequipment
Intangible assets
Software[Statement of bonds]
Not applicable.
[Statement of borrowings]
Not applicable.
[Statement of provisions]Classification
Allowance for doubtful accounts
Provision for bonuses

Balance at
Decrease during
Increase during
Decrease during Balance at end of
beginning of
period (spending
period (thousands
period (other)
period (thousands
for purpose)
period (thousandsof yen)of yen)(thousandsofyen)(thousands of yen)of yen)
5,500

5,300

－

5,500

5,300

132,420

116,787

132,420－

116,787

Note: “Decrease during period (other)” under allowance for doubtful accounts is the amount updated using the loan loss ratio forgeneral receivables.
[Statement of asset retirement obligations]Not applicable.

- 45 -

(2) Details of Main Assets and Liabilities(i) Assets(a) Cash and deposits
Classification

Amount (thousands of yen)

Cash

180

Deposits
Current deposits

2,931,266

Ordinary deposits

26,593Special deposits

1,616Time deposits

60,000Subtotal

3,019,477

Total

3,019,657(b) Accounts receivable
Breakdown by client
ClientAmount (thousands of yen)

Honda Motor Co., Ltd.

143,392

Honda R&D Co., Ltd.

127,939

Nikon Corporation

63,945

Tokyo Electron Technology Solutions Ltd

28,936

Sumitomo Electric Industries, Ltd

27,480Other504,232
Total

895,926

Accounts receivable accrued, collected, or outstanding
Accrued during
Balance at
beginning of period period (thousandsof yen)(thousands of yen)

Collected during
period (thousandsof yen)Balance at end of
period (thousandsof yen)Collection rate (%)

Overdue (days)(A) ＋ (D)
2

(C)
(A)
932,112(B)

7,889,820

(C)

(D)

7,926,006

895,926

× 100(A) ＋ (B)

(B)
366

89.8

42.4

Note: The accrued amount includes consumption tax.
(c) Work in process
Item

Amount (thousands of yen)Contracting business

992
Total

992

- 46 -

(d) Raw materials and supplies
Item

Amount (thousands of yen)

Printed matter

3,879

Quo cards

500

Revenue stamps

3
Total

4,383

(ii) Liabilities(a) Provision for retirement benefits
Classification

Amount (thousands of yen)

Retirement benefit liabilities

569,633

Unrecognized actuarial gains and losses(65,590)

Total

504,042(3) Other
Quarterly financial information for the fiscal year under review(Cumulative)

Q1

Q2

Q3

Full year

Net sales (thousands of yen)

1,874,892

3,654,381

5,395,093

7,174,725

Profit before income taxes(thousands of yen)

270,156

480,087

689,690913,113

Profit (thousands of yen)

187,266

332,472

477,741

628,561

Earnings per share (yen)

17.62

31.29

44.96

59.16

(Accounting period)
Earnings per share (yen)

Q1

Q2
17.62

Q3
13.67

- 47 -

Q4
13.67

14.19

VI. Overview of Shareholder Services at the Reporting Company
Fiscal year

February 1 to January 31

Ordinary General Meeting of
Shareholders

In April

Record date

January 31

Record dates for dividends of surplus

January 31 and July 31

Number of shares per share unit

100 shares

Purchase and sale of shares less than
one share unit
Place of trade
Shareholder registry administrator

6-3, Fushimi-machi 3-Chome, Chuo-ku, Osaka, Japan
Osaka Securities Agency Division, Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-Chome, Chiyoda-ku, Tokyo, Japan
Mitsubishi UFJ Trust and Banking Corporation

Agency office-

Trading fee

None

How public notice is issued

Benefits for shareholders

Artner issues an electronic public notice. However, if an accident or any otherunavoidable reason prohibits the Company from issuing an electronic public notice,such a notice will be posted in the Nikkei (the Nihon Keizai Shimbun) newspaper.
Public notices are posted on the Company’s website as shown below:
https://www.artner.co.jp
Not applicable.

Notes: 1. Pursuant to provisions in Artner’s Articles of Incorporation, shareholders of shares less than one share unit do not hold any
rights other than the rights listed in the items of paragraph (2) of Article 189 of the Companies Act, the right to demandaccording to Article 166, paragraph (1) of the Companies Act, the entitlement to the allotment of the shares for subscription
and to the allotment of the share options for subscription in accordance with the number of shares they hold, and the right todemand for cash-out of shares less than one share unit.
2. Shares less than one share unit recorded in special accounts are purchased and sold at branches of Mizuho Trust & Banking
across Japan.

- 48 -

VII. Reference Information about the Reporting Company
1 Information about the Parent Company, etc. of the Reporting Company
Artner does not have a parent company, etc. as specified in Article 24-7, paragraph (1) of the Financial Instruments and ExchangeAct.

2 Other Reference Information
Artner submitted the following documents during the period from the start date of the fiscal year under review to the date ofsubmission of the Annual Securities Report.
(1) Annual Securities Report, documents attached thereto, and confirmation letter
Fiscal year (FY2020) (from February 1, 2019 to January 31, 2020): Submitted to Director General of the Kinki Local Finance
Bureau on April 23, 2023
(2) Internal control report and documents attached thereto
Submitted to Director General of the Kinki Local Finance Bureau on April 23, 2020
(3) Quarterly reports and confirmation letter(FY2021, Q1) (from February 1, 2020 to April 30, 2020): Submitted to Director General of the Kinki Local Finance Bureau on
June 10, 2020
(FY2021, Q2) (from May 1, 2020 to July 31, 2020): Submitted to Director General of the Kinki Local Finance Bureau on
September 10, 2020
(FY2021, Q3) (from August 1, 2020to October 31, 2020): Submitted to Director General of the Kinki Local Finance Bureau on
December 10, 2020
(4) Extraordinary report
Submitted to Director General of the Kinki Local Finance Bureau on April 24, 2020This extraordinary report is based on Article
19, paragraph (2), item (ix)-2 (result of exercising voting rights at a General Meeting of Shareholders) of the Cabinet Office Orderon Disclosure of Corporate Affairs.

- 49 -

Part II Information about the Reporting Company’s Guarantor, etc.
Not applicable.

- 50 -

Independent Auditor’s Report and Internal Control Audit Report
April 22, 2021

To the Board of Directors of Artner Co., Ltd.
KPMG AZSA LLC
Osaka Office
YONO Kenji, Designated Limited Liability and Engagement Partner,
Certified Public Accountant

YASUDA Tomonori, Designated Limited Liability and Engagement
Partner, Certified Public Accountant

Financial Statement Audit
Opinions
To execute audit certification pursuant to Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act, we audited Artner
Co., Ltd.’s financial statements for FY2021 (reporting period 59; from February 1, 2020to January 31, 2021) shown in “Financial
Information,” namely the balance sheet, statement of income, statement of changes in equity, statement of cash flows, significant
accounting policies, other notes, and supplementary schedule.
We acknowledge that the above financial statements comply with the business accounting standards that are generally accepted as fair
and appropriate in Japan to correctly present, in all material respects, Artner’s financial status as of January 31, 2021 as well as its
business performance and cash flows for the fiscal year that ended on the same date.
Basis for Opinions
We conducted the audit in accordance with auditing standards that are generally accepted as fair and appropriate in Japan. Our
responsibilities under these standards are described in the Responsibilities of the Auditor in a Financial Statement Audit. We are
independent of Artner pursuant to relevant ethics required of professionals in Japan, and we fulfill other ethical responsibilities we haveas an auditor. We are certain that we have obtained sufficient and appropriate evidence that serves as the basis for our opinions.
Responsibilities of management and the Audit and Supervisory Committee for financial statements
Management is responsible for preparing and correctly presenting financial statements in accordance with business accounting standards
that are generally accepted as fair and appropriate in Japan. This includes designing and implementing internal control that management
has decided is essential to prepare and correctly present financial statements that contain no material misrepresentations due to a wrongful
act or errors.
When preparing financial statements, management is responsible for evaluating as to whether it is appropriate to prepare financial
statements according to the going concern assumption, and, if matters concerning the going concern must be disclosed in accordancewith business accounting standards that are generally accepted as fair and appropriate in Japan, management is also responsible fordisclosing those matters.
The Audit and Supervisory Committee is responsible for overseeing the execution of duties by directors in the designing andimplementation of the process of financial reporting.
Responsibilities of the auditor in a financial statement audit
The auditor is, based on the audit it has conducted, responsible for obtaining a rational guarantee as to whether the Company’s financial
statements as a whole contain any material misrepresentations due to a wrongful act or errors, and for expressing its opinions on thefinancial statements in the auditor’s report from an independent viewpoint. A misrepresentation may occur due to a wrongful act orerrors. It may influence decisions made by users of the financial statements on its own or when it is added up, and when such influenceis likely, a misrepresentation is judged to be material.
The auditor makes professional judgments throughout an audit in accordance with auditing standards that are generally accepted as fair
and appropriate in Japan, and conducts the following with professional skepticism:- Identify and assess the risk of material misrepresentations due to a wrongful act or errors. Plan and implement audit procedures
designed to manage the risk of material misrepresentation. The auditor selects and applies audit procedures at its own discretion.

Also obtain sufficient and appropriate evidence that serves as the basis for the auditor’s opinions.
- Although expressing an opinion about the effectiveness of internal control is not the objective of a financial statement audit, theauditor reviews internal control associated with audits in order to plan appropriate audit procedures that are suitable for the situation
when it conducts risk assessment.
- Assess the accounting policies adopted by the management and the appropriateness of how the policies are applied, along with therationality of accounting estimates made by the management and the validity of relevant notes.
- Draw conclusions about whether it is appropriate that the management prepares financial statements as the going concern assumption,
and, based on audit evidence that has been obtained, whether material uncertainty is noted in connection with an event or circumstancethat would raise material doubt on the going concern assumption. If there is material uncertainty related to going concern assumption,
call for attention thereto in notes for the financial statements in the auditor’s report is required. If making a note on the material
uncertainty for the financial statements is inappropriate, the auditor is expected to present an opinion with exclusions on the financial
statements. Conclusions drawn by the auditor are based on audit evidence obtained by the date of the auditor’s report. Depending on
future events and circumstances, the Company may become unable to continue as a going concern.
- Evaluate as to whether the presentation of the financial statements and the notes therein comply with the accounting standards thatare generally accepted as fair and appropriate in Japan. Also evaluate as to whether the presentation, structure, and contents of thefinancial statements including relevant notes, and the financial statements, correctly present the transactions and accounting events
that serve as bases.
The auditor reports to the Audit and Supervisory Committee the planned audit scope and schedule, significant audit findings that include
material deficiencies in internal control identified during the audit, and other matters required by the auditing standards.
The auditor also reports to the Audit and Supervisory Committee the fact that it has complied with relevant ethics in Japan required ofa professional regarding independence, matters that may reasonably be thought to influence the independence of the auditor, andsafeguards provided to eliminate or mitigate obstructions if any.
The auditor determines that the matters discussed with the Audit and Supervisory Committee and judged to be of special significance inthe financial statement audit for the fiscal year under review are major particulars to consider in the audit, and states these particulars in
the audit report accordingly. However, these matters are not included in the auditor’s report if laws and regulations prohibit the
publication thereof, or if, in extremely rare circumstances, the auditor decides against stating the matters in the auditor’s report because
adverse consequences of doing so would reasonably be expected to outweigh the public interest.
Audit of Internal Control
Opinions
To execute audit certification pursuant to Article 193-2, paragraph (2) of the Financial Instruments and Exchange Act, we audited Artner
Co., Ltd.’s internal control report that was current as of January 31, 2021.
We acknowledge that the above internal control report, in which Artner presents the validity of its internal controls over the financial
reports as of January 31, 2021, complies with the standards for the evaluation of internal controls over financial reporting that are
generally accepted as fair and appropriate in Japan to adequately present, in all material respects, the results of the evaluation of internal
controls over financial reports.
Basis for Opinions
We audited Artner’s internal control in accordance with standards that are generally accepted as fair and appropriate in Japan for an
audit of internal controls over financial reports. Our responsibilities under these standards for an audit of internal controls over financial
reports are described in the Auditor’s Responsibilities for the Audit of Internal Control. We are independent of Artner pursuant torelevant ethics required of professionals in Japan, and we fulfill other ethical responsibilities we have as an auditor. We are certain that
we have obtained sufficient and appropriate evidence that serves as the basis for our opinions.
Responsibilities of management and the Audit and Supervisory Committee for an internal control reportManagement is responsible for designing and implementing internal controls over financial reports in order to prepare and correctly
present the Company’s internal control report in accordance with standards that are generally accepted as fair and appropriate in Japanfor evaluation of internal controls over financial reports.
The Audit and Supervisory Committee is responsible for overseeing and verifying how the Company’s internal controls over financial
reports is designed and implemented.
There is a possibility that internal controls over financial reports may not completely prevent or detect all misrepresentations in financial
reporting.

Responsibilities of the auditor in the audit of internal control
The auditor is, based on the audit of internal control it has conducted, responsible for obtaining a rational guarantee as to whether theCompany’s internal control report contains any material misrepresentations, and for expressing its opinions on the internal control reportin the auditor’s report on internal control from an independent viewpoint.
The auditor makes professional judgments throughout an audit in accordance with standards that are generally accepted as fair andappropriate in Japan for an audit of internal controls over financial reports, and conducts the following with professional skepticism:- Follow the audit procedures for obtaining audit evidence for the results of the evaluation of the Company’s internal controls overfinancial reports in the internal control report. The procedures for the audit of internal control are selected and applied at the auditor’s
discretion based on the materiality of the impact on the reliability of the Company’s financial reporting.
- Examine the overall presentation of the Company’s internal control report, including statements made by management about thescope of the evaluation of internal controls over financial reports, assessment procedures, and assessment results.
- Obtain sufficient and appropriate audit evidence for the results of the evaluation of the Company’s internal controls over financial
reports in the Company’s internal control report. The auditor is responsible for giving instructions on, overseeing, and implementing
the audit of the Company’s internal control report.
The auditor reports to the Audit and Supervisory Committee the planned scope of the audit of internal control along with the audit
schedule, the results of the audit of internal control, material deficiencies identified in internal control that should be disclosed, theresults of rectification of these deficiencies, and other matters required by the standards for an audit of internal control.
The auditor also reports to the Audit and Supervisory Committee the fact that it has complied with relevant ethics in Japan required ofa professional regarding independence, matters that may reasonably be thought to influence the independence of the auditor, andsafeguards provided to eliminate or mitigate obstructions if any.
Interest that must be indicated according to the Certified Public Accountants Act of Japan
We do not have any interest in the Company that should be indicated herein according to the Certified Public Accountants Act of Japan.
END
Notes: 1. The Company (the company that has submitted the Annual Securities Report) retains the original of the auditor’s reportstated above.
2. XBRL data are outside the audit scope.

[Cover][Reported Document]Internal Control Report[Clause Serving as Basis]

Article 24-4-4, paragraph (1) of the Financial Instruments and Exchange Act[Recipient]

Director General of the Kinki Local Finance Bureau[Submission Date]

April 22, 2021

[Company Name]

Artner Co., Ltd.

[Name and Title of Representative]

SEKIGUCHI Sozo, President and CEO[Name and Title of Chief Financial Officer]

Not applicable.

[Address of Head Office]5-2, Nishidaimotsucho, Amagasaki, Hyogo(This address is the location of the registered head office. The company’s businessis conducted in the location shown below.)[Location for Public Inspection]

Sumitomo Nakanoshima Building 2F, Nakanoshima 3-2-18, Kita-ku, Osaka City
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo1. Particulars concerning the Fundamental Framework for the Internal Controls over Financial Reports
President and CEO SEKIGUCHI Sozo is responsible for designing and implementing internal controls over Artner’s financial
reports. He designs and implements internal controls over financial reports according to the fundamental framework for the internal
controls over financial reports indicated in “Revisions to the Standards for the Evaluation and Audit of Internal Controls overFinancial Reports and to the Implementation Standards for the Evaluation and Audit of Internal Controls over Financial Reports(Written Opinions)” published by the Business Accounting Council.
Internal control is designed in such a way that its basic elements are organically linked to work as one with the aim of achieving
objectives within a logical scope. Hence, there is a possibility that internal controls over financial reports may not completely
prevent or detect all misrepresentations in financial reporting.

2. Particulars concerning the Scope of Evaluation, the Reference Date, and the Procedures for Evaluation
The evaluation of internal controls over financial reports was conducted with January 31, 2021, (the last day of the fiscal year underreview) being the reference date. It complies with standards that are generally accepted as fair and appropriate for evaluation ofinternal controls over financial reports.
In this evaluation, we assessed the internal controls that have a material effect on overall financial reporting (i.e., company-wide
internal controls) and, based on the assessment results, we selected the business processes to evaluate. In the evaluation of thebusiness processes, we analyzed these selected processes, identified the main points in terms of control that have a material effecton the reliability of the Company’s financial reports, and evaluated how these main points are designed and implemented for control,
thereby evaluating the validity of the internal controls.
In regard to the scope of the evaluation of internal controls over financial reports, we determined the essential scope in light of themateriality of the impact on the reliability of Artner’s financial reports. We consider the materiality of a monetary and qualitative
impact to determine the materiality of the impact on the reliability of our financial reports. Based on the results of the evaluation ofcompany-wide internal control we had conducted, we logically determined the scope of the evaluation of internal controls overbusiness processes.
In regard to the scope of the evaluation of internal controls over business processes, the evaluation covers all our business bases.
The evaluation covered the business processes that were gone through to record net sales, accounts receivable, and cost of sales(personnel costs), which are the account titles closely connected to the objectives of our business, at those business bases. We also
added business processes connected to significant account titles where material misrepresentations can occur with high possibility,
and that involve estimates and projections, to the list of material business processes for evaluation, taking into account the impact
on our financial reports.

3. Particulars concerning Evaluation Results
After the above evaluations, we decided that our internal controls over financial reports are valid as of the last day of the fiscal year
under review.

4. Supplementary Particulars
There are no particulars that should be noted.

5. Special particulars
There are no special particulars that should be noted.