I-NET CORP.

Annual Report
FY2019（ April 1,2018 - March 31,2019)

Greetings
We would like to sincerely thank you for your continuous support to I-NET CORP.
We are pleased to express our gratitude in this greeting and take this opportunity to announce
the 48th term IR Report.

Noriyoshi Ikeda,

Mitsuru Sakai,

Chairman of the board

Representative Director,
Executive President

Financial results for the current fiscal year
(April 1, 2018 – March 31, 2019)

Net sales

27,591 mil. yen

Year-on-year term 107.7%

Operating income

2,345 mil. yen

Year-on-year term 112.7%

Current net profit attributableto owners of parent company

1,521 mil. yen

Year-on-year term 111.2 %Report of the 48th term
Regarding the Japanese economy in the current consolidated fiscal year, the conditions remained on amoderate recovery trend due to the improvements in corporate revenues and employment situations, etc. In
the future, the conditions are expected to remain on a moderate recovery trend despite requiring to pay
attention to the uncertainty in overseas economy like trade friction trends between the U.S. and China, as wellas to effects of fluctuations on financial and capital markets.
In the data processing service industry where our company group is engaged in, corporate IT investment
demands for operational efficiency, informatization and labor shortage support have been increasing while1corporate revenues have been recovered. Among them, along with intensifying initiatives in corporate “digitaltransformation (DX)”, a keen interest has been attracted in IT investments for enhancement of competitivenessaiming for improvements of corporate sales expansion and customer service, such as widespread usage ofcloud computing, promotion of IoT (Internet of Things), and enhanced usage of Big Data and AI (Artificial
Intelligence), etc.
Under the circumstance, our company group has adequately fulfilled diversifying customer needs, andresponded to demands of system development and has committed to improvements on market value of
products, such as data center service and cloud service, that are fundamental for data and indispensable for
initiatives in corporate “digital transformation (DX)”.
Furthermore, we have aggressively promoted alliances and M&A activities with companies having superior
technologies and solutions, aiming at expanding our business scale and services. We made Software Control
Corporation a subsidiary in Oct. 2018 during the current consolidated fiscal year. The company has a strong
business foundation in western Japan and we consequently expect to various synergetic effects along withfurther expansion of sales/development/customer bases in the future.
As a result of management for the current consolidated fiscal year, we have achieved net sales of 27,591 mil. yen(107.7% year-on-year), operating income of 2,345 mil. yen (112.7% year-on-year), ordinary income of 2,347 mil.
yen (114.5% year-on-year), and current net profit attributable to owners of parent company of 1,521 mil. yen(111.2% year-on-year).
With respect to dividend, we regard continuous stable dividend as a basic policy. In adherence with the policy,
we have set annual dividend for the current fiscal year 40 yen per share.
We would like to express our deepest gratitude for the further understanding and support from our valuable
shareholders.

Net sales by service category
Information-processing service

System equipment sales

4.0%
36.6%

59.4%

System development service

Information-processing service
Net sales

10,091mil. yen

System development service
Net sales

16,395mil. yen

System equipment sales
Net sales

1,104 mil. yen

Composition of sales

36.6 %

Composition of sales

59.4 %

Composition of sales

4.0 %Year-on-year term

100.4 %

Year-on-year term

114.3%

Year-on-year term

90.8 %

2

Top interview

Becoming an excellent company that makes sustainable growth possible~Announcement of our mid-term management plan~

Q results of the FY ending March, 2019?
How do you evaluate the financial

A

We achieved revenue growth for eight
consecutive terms and surpassed arecord high profit with promotion of
the key initiatives and the synergy
effect of the entire group.

The financial results ending March, 2019 (48th term)
have resulted in net sales of 27,591 mil. yen (107.7%
year-on-year), operating income of 2,345 mil. yen(112.7% year-on-year), ordinary income of 2,347 mil.
yen (114.5% year-on-year), and current net profit attributable to owners of parent company of 1,521 mil. yen(111.2% year-on-year), leading to growth in net sales for eight consecutive terms and an consecutive update of
the record high profit. Regarding current net profit, a rise for nine consecutive terms was recognized.
The trust we gained from customers in a variety of industries and business conditions led a number of inquiries
in data center service, cloud service and system development service on which our company group has
focused, and ended up this performance improvement. In regard to net sales conditions in each service, dataprocessing services remained strong, acquiring new large-scale projects particularly in IT managed service andcloud service utilized data center, though the volume of BPO service business was decreased along withbusiness pattern changes in some customers, which resulted in net sales of 10,091 mil. yen (100.4%
year-on-year), almost the same level as in the previous year. System development services were greatly
expanded and achieved net sales of 16,395 mil. yen (114.3% year-on-year) due to a strong progress in systemconstructions for oil industry and distribution service industry, etc., as well as an acquisition of Software
Control Corporation primarily engaging in system development services. Regarding system equipment sales,
the business generally progressed according to our plan.

Changes in net sales / operating income / current net profit
Net sales
Operating income
Current net profit(Unit: in millions of yen)
25,000Consecutive growth
in revenue
for eight terms

20,00015,00010,000

2,500
2,000
1,500
1,000

Consecutive growth
in profit
for nine terms

500

11/3 12/3 13/3 14/3 15/3 16/3 17/3 18/3 19/3

3

Also, we have been making good progress on the key initiatives set at the time of being appointed president inlast June. Our company has been providing advanced cloud environment as IT platform for supporting thecustomers’ businesses. Taking advantage of our competencies as a platformer, based on the alliance with someother companies, we have started providing services of “cloud platform (NextGenerationEASYCloud®,hereinafter referred to as NGEC) plus applications”, an initiative to provide cloud services mounting applicationsof other companies having each specialty on our company’s cloud platform. For example, we started the BIM
introduction support service as the first service of the advanced construction process renting business that ourcompany engaged in jointly with AKTIO Corporation; the major company in construction equipment renting
business, and PaperlessStudio co., ltd.; the major company in BIM consultant business. Together with Rworks,
Inc. who has an advantage in the field of security services, we started providing cloud services combining theirsolutions for instant web alteration detection and instant recovery with our company’s cloud platform. In
addition, we started joint development of the highly accurate cloud service with an AI solution company, SPJ,
Inc., gradually expanding our activities including providing AI cloud services, in the fields with high growthpotential (refer to topics on page 8-9).
We will continue to promote further development of business models centering on data center business; one of
our competencies, and further alliance with companies having experiences in various markets or having
know-how as well as provide new digital technology services including IoT, Big Data, AI and robotics, wherecompanies consider the most important IT investments, according to customers’ needs.

Q Please tell us about new initiatives in your second year as president.
For the sustainable growth down the road, “inet Way” was established as ourA group’s corporate philosophy to further strengthen “One inet”.

In two years, we will be celebrating our 50th anniversary in 2021. In order to stay as a company that continues
to grow, we felt that common values shared by all officers and employees that forms the basis of any type ofaction, was needed. So we took this opportunity to establish our group's philosophy, "inet Way.""inet Way" is formed by four tiers, "Corporate Philosophy,""Corporate Vision," "Management Policy," and "Mid-termManagement Plan." At its foundation are the "Charter ofCorporate Conduct," which should be followed by all
corporate employees, and the "Code of Conduct," whichacts as the driving force in achieving "inet Way."In order to build a solid business growth foundation withexpanding our business scale, a new “management
policy”—“Becoming an excellent company that makessustainable growth possible ~keep growing while changing~” was established. It expresses our thoughts that bothcompany itself and employees should always keep growing while changing personally in the light of changes intimes and trends.

Corporate
Philosophy
Corporate Vision
Management Policy
Mid-term Management Plan
Code of Conduct
Charter of Corporate Conduct

Based on this management policy, we will always think
about two-way management placing a priority on thebalance between “defense” strengthening connections with customers and “offense” exploiting new market
areas and services, as well as firmly practice efficient strategies/tactics corresponding to changes in conditions.
Also, we will powerfully continue to further promote the key targets—1. enhancing/expanding “partner
strategy and sales channel strategy”, 2. building services of “cloud platform (NGEC) + applications” and 3.
“cross-selling in business covering from planning to BPO”.

4

Furthermore, under the fourth layer of “inet Way”; “the mid-term management plan”, strategic plans are
specifically designed for the sustainable growth, and we decided to disclose the major contents. “The mid-term
management plan” is composed of “the business strategic plan”, “the investment strategic plan”, “the ESG
action plan” and “the performance plan”.
In “the business strategic plan”, strategies/tactics were designed based on differentiating competitors byfurther improving competencies in each business field, expanding sales of NGEC that can lift our position as a
IT platformer, increasing the rate of stock business that brings stable revenue, expanding DX solutions andcloud services having high corporate interest in IT investments, and entering new business market with highgrowth potential. Among those, for SS (gas station) commissioned counting/settlement business; our firstbusiness, cloud services and DX solutions; our current primary business, financial/unsecured loans businessand sales business for the distribution/service industries that are required specialized management know-how,and high technology space development business, we will firmly promote strategic plans that fit the futureindustrial strategies.
In “the investment strategic plan”, with promoting existing businesses, we will dedicate efforts moreaggressively than ever for the future growth. We will strengthen not only of course human resource
investment, but also enhancement of facilities in data centers as an axis of our company’s business model, andadditionally, investment in research and development in order to differentiate competitors as well as enhancecompetitiveness. We are planning to enter overseas business with our strong fields.
In “the ESG action plan”, based on an idea that employees are our most precious assets in operation, ourcompany strives to “promoting the wellness management” as well as “promoting diversity” in order to realize
the environment that every employees are in good mental and physical health and able to work safely andeffectively. Also, we continue to dedicate efforts to our society through our business activities and initiatives.
As steadily working on these three plans, we aim to achieve “the performance plan” by powerfully promoting
business models taking advantage of our company’s competencies. According to this plan, the forecast for the
FY ending March, 2022, in three years is as follows; net sales of 33,200 mil. yen, operating income of 2,730 mil.
yen and ROE at 11.1%. After the achievement of this plan, we will further aim to net sales of 50,000 mil. yen as a
mid- and long-term target for the FY 2024.

Becoming an excellent company that makes sustainable growth possible~keep growing while changing~
Expanding operational scale

Improving corporate value
Business strategy plan
Investor strategy plan

Striving for
further growth

ESG initiative plan

Net sales
50 billion yen
Net sales
32.2 billion yen

2019

2021

Mid-term Management Plan

2024

20XX

Next mid-term management plan

5

The strategic plan composing the mid-term management plan
The business strategic plan “Data processing service”
SS/commissioned counting/settlement
Increasing market share of processing SS (from 33% to over 55%), expanding non-oil businessby utilizing a nationwide network of sales branches, enhancing services for LPG distribution
business

Cloud service
Expanding sales of cloud service platform (NGEC), strengthening/expanding sales channels(increasing resellers/developing OEM model)

Printing/mailing/BPO
Reviewing/expanding range of services, aggressively expanding BPO service businessDX solution
Early monetizing BIM/CIM business with drones, expanding sales of AI cloud service to small
and medium-sized companies, establishing/developing IoT business model

The business strategic plan “System development service”
FinanceStrengthening/reviewing financial packages according to changing needs in the financial
marketDistribution/service
Differentiating competitors by using sales management know-how for the distribution
industry (developing the introduction business of industry template), utilizing themodernization know-how of AS 400 legacy assets/expanding orders

Space satellite
Expanding business fields by expanding business partners—new space companies andin-house satellite development venture companies

New market/service
Entering/developing new business markets (“parking lots”-related/“renting”-related)

The investment strategic plan
Human resource development
Implementing measures to achieve the targeted number of new graduate recruitment,
implementing a mid-career recruitment strategy, strengthening education and training
systems and the contents for upgrading human resources in each level

Data center
Systematically replacing facilities in the 1st data center and the 2nd data center, discussing a
policy of data center expansion plan

Research and development
Developing the next generation cloud platform developed from NGEC, developing data
analysis/science businesses, utilizing observed data from satellites in business

Overseas business
Discussing forms of overseas expansion (planning to launch an overseas site in Southeast Asia),
aiming at service development with strong fields and advanced technologies

The ESG action plan
Promoting the wellness management, promoting diversity, promoting employment for the disabled, developing a supporting website for childcare/women
empowerment, “Working Mothers’ Supporter”* Refer to Concerning human relations to our employees on page 15-18

6

Q Please tell us about an outlook for the FY ending March, 2020.
intend to remain strong while aiming to further increase our sales andA We
surpass a record high profit.
With regard to a business environment in the current fiscal year (49th term) surrounding our company, we
anticipate that it will continue to advance steadily. Further expansion in IT market is expected against the
backdrop of corporate positive interest in IT investment. Moreover, corporations are pursuing utilization ofcloud services for cost reduction, whereas they are promoting IoT and making use of Big Data and AI, etc., aswell as are accelerating IT investment to enhance competitiveness aiming for further business expansion andimprovements in customer services. Our company group will also focus on system construction, data center
business, and cloud service, etc. more than ever, to meet these corporate needs. From the above, with regard
to consolidated performance for the current fiscal year (49th term), we will strive to further improve data center
business and cloud service, as well as expand the existing business such as system development service and SS,
with a forecast; net sales of 30,000 mil. yen (108.7% year-on-year), operating income of 2,450 mil. yen (104.4%
year-on-year), ordinary income of 2,390 mil. yen (101.8% year-on-year), and current net profit attributable toowners of parent company of 1,590 mil. yen (104.5% year-on-year).

Plan for the 49th term
Net sales

30,000 mil. yen (record high)Operating income

2,450 mil. yen (record high)Ordinary income

2,390 mil. yen (record high)Current net profit attributable toowners of parent company

1,590 mil. yen (record high)

Q In closing, please give a message to the shareholders.
We aim to implement an increase of dividend considering a strong perforA mance, and continuously stable profit return due to a performance expansion.
Our company is determined to implement stable profit returns to the shareholders while realizing sustainablegrowth with consistent promotion of “inet Way” and business models that take advantage of ourcompetencies, as well as aiming for a reinforcement of the financial basis. With respect to the dividend, as
revenue and profit are anticipated to rise in the current fiscal year (49th term), we plan to set; in addition to anormal dividend payment of 40 yen in the previous term (48th term), further 3 yen is allocated, resulting in a
total of 43 yen that achieves a dividend raise for eight consecutive terms.
Finally, our entire group is committed to strive for the target. We would like to express our deepest gratitude
for further support and guidance from our valuable shareholders.

Plan of annual dividend per share (planned to increase for eight consecutive terms)
FY ending March, 2018

FY ending March, 2019

FY ending March, 2020

38.0 yen

40.0 yen

43.0 yen

Mid-term (19.0 yen)
Year-end (19.0 yen)

Mid-term (20.0 yen)
Year-end (20.0 yen)

Mid-term (21.5 yen)
Year-end (21.5 yen)7

Topics
Report of primary activities
Topics1

A demonstration test for “Plant construction progress management with drones”
In the VDI environment through our company’s cloud platform (NGEC),
we conducted a demonstration test creating 3D images of anunder-construction plant with CAD and 3DCG software that are
required advanced graphics functions based on a huge amount ofpictures of the construction site periodically taken by an auto-navigated drone.

Topics2

Working Mothers’ Supporter on a special TV program; tvk “Kanagawa Business
Up To Date” × “Yokohama KYOSO”
Our company’s search website for childcare facilities “Working Mothers’
Supporter” was featured as one of the cases on a special TV program, A
new value comes after “Future City” Yokohama’s collaboration “KYOSO”,
on which Television KANAGAWA’s economic information program“Kanagawa Business Up To Date” collaborated with Co-Governance andCreation Division, City of Yokohama.

Topics3

Started joint developments of the highly accurate cloud service

Highly accurate chatbot cloud service
Let me handle recruiting activities!
An example of the introduction

New graduate
recruitment version
How much isyour take-homesalary?

Can you takedays off whenever
you like?

“Salary” category contains theanswer?
There is a key word “take-home”!

?

“Vacation” category contains
the answer?
Yes, it’s in the 4th FAQ!

!

Our original highly
accurate AI engines

FAQ
A1.Take-home salary after insurance,
etc. is about 180 thousand yen in
the first year. From next fiscal year,
A2.Flextime system is……
A3.Atmosphere and superiors in thecompany are……
A4.It’s easy to take vacations. Many
younger employees take a paid
leave at least once a month.……
A5.The turnover rate is 15% and due
to marriage……

Similar text
Morphological
Scoring
calculating method
analysis

We started joint developments of the highly accurate cloud service, applying SPJ, Inc.’s AI technologies to ourcompany’s cloud computing. We will gradually expand AI to contact center/help desk operations, multilingual
chatbot corresponding to inbound, interpretation/automatic summarization/spell check of a variety of texts,
and reputation analysis of products/services.

8Topics

4

Acquired ISO/IEC 27017 certification Cloud Service Data Security Management
SystemIn order to ensure the security of customers’ data in our company’s cloud service “NextGenerationEASYCloud®”, we acquired ISO/IEC 27017 certification that complies with the international standards for data security management systems specialized for cloud services(Targeted for the certification: Cloud platform service utilizing Software-Defined Data
Center architectures).

Topics5

A seminar for teleworking “Work Style Reform”

Virtual desktop service

File sharing service
Video conference
systemBusiness chatby NEOJAPAN Inc.

Topics6

We introduced cloud services that ourcompany provides for teleworking, including a virtual desktop service “VIDAAS®”
enabling to operate PCs at home or fromanywhere with a high level of security, as
well as NEOJAPAN’s business chat service“ChatLuck”.

Acquired Software Control Corporation as a subsidiary
We acquired shares of Software Control Corporation and made it asubsidiary. Our company will further strive to expand sales/development foundations as well as strengthen our business in western Japanby welcoming this company having a strong business foundation inwestern Japan to our company group.

Topics7

Started the BIM introduction support service provided/sold by AKTIO Corporation
As the first service of “the advanced construction process renting business” that
our company engaged in with AKTIO Corporation and PaperlessStudio co., ltd., westarted providing i-BIM+. Our company provides BIM* packages through virtual
desktop services, cloud platform to BIM educational video streaming websites
and drone flying fields for pilot training, etc.
*It’s an abbreviation of Building Information Modeling—solutions and flows in every process tocentrally control/utilize buildings’ database that cost data and other are added to a 3D model

Topics8

Started the micro data center business with NVIDIA’ s GPU installed
We aim to establish micro data centers receiving attention as one of
methods to realize edge computing* at our company’s drone flying field(DreamDroneFlyingField) as well as at construction/civil engineering
fields, factories/plants and farms/fields, etc.
*A method for reducing processing time and network load by performing dataprocessing near end users

9Corporate Governance
Basic Idea for Corporate Governance
We promote construction and maintenance of business management systems as priority items which can copewith a change of the management environment quickly, while we improve business transparency for the
purpose of effectiveness and efficiency of business operations, reliability of the financial statements, thecompliance of the relevant laws and ordinances.

Overview of Corporate Governance Framework
We are a company with a Board of Corporate Auditors. The Board of Company Auditors, whose members are alloutside corporate auditors, supervises management. We have also introduced the Executive Officer System, inwhich the Board of Directors is responsible for the “management decision-making and supervisory functions,"
and the executive officers are responsible for the “business operation functions."

Board of Corporate Auditors
We have adopted the Board of Corporate Auditors System. Our Board of Corporate Auditors is composed offour members (of whom one is a certified public accountant, who possesses a considerable degree ofknowledge on finance and accounting) and all four members are outside corporate auditors.
Furthermore, in order to enhance audits, corporate auditors hold a Board of Corporate Auditors meeting every
month and hold regular auditory liaison meetings that include group companies to share information within
the entire group and boost the level of the Board of Corporate Auditors.

Board of Directors
At our company, we regularly hold a Board of Directors meeting every month. We ensure that our corporate
governance is a management system that functions properly by always having an auditor attend thesemeetings and actively state his/her valid opinion from the perspective of supervisor/auditor of corporate
management. Of the seven directors, two are outside corporate directors.

Executive Officer System
Our company has introduced the Executive Officer System to clarify the division of responsibilities between
management supervision and business operation functions. Under this system, we are working to strengthen
the supervision of business operations by the Board of Directors while also ensuring the soundness andefficiency of management by speeding up decision-making.

Group Executive Committee
The Group Executive Committee, composed of our company director, auditors, executive officers, division
heads, president of subsidiary companies, and representatives of affiliated companies, holds a monthly

10meeting, where each department gives performance reports and consider future measures centered aroundbudget control.

Legal Matters
We have concluded an advisory contract with several law firms and have established a system to receive timely
advice and guidance on all legal issues.

Risk Management Committee
The "Risk Management Committee," composed of our company director, executive officers, division heads, andadministrative office, holds monthly meetings to discuss and check the progress of countermeasuresconcerning risks that may adversely affect our company’s business development.

System to Ensure the Proper Operation of Our Subsidiary Companies
We dispatch our executive officers to our subsidiaries as corporate auditors, establishing a system in which
important matters of our subsidiary companies are reported to us through the executive officers.

Organization Chart

11

Situation of the Compliance System
To promote the compliance of laws and ordinances as a part of the corporate governance, we founded theCompliance Room (current Risk Management Office) under the structural reform dated April 1, 2004.
As the first step, this reform embodied the compliance as indispensable for retaining and developing thecompany.

Compliance Basic Policy
We advocate following compliance basic policies, observe them, and behave ourselves at all times based on"open and honorable spirit".
1. We try hard to build the trust from the society through sound and appropriate task performance, while wealways recognize our dignified social responsibility which the information service business should
inherently have.
2. We try hard to seek for the transparent management which leads to social evaluation by widening the spanof communication with the society including positive and fair disclosure of our accurate management
information.
3. We try hard to carry out honest and fair company business activity observing the laws, ordinances or therules which we have to follow depending on place and time.

Protection of Personal Information
We acquired the PrivacyMark on December 3, 1999 and have been renewing our accreditation by passing
continuing reviews since then. We are striving to continuously improve our personal information protection
management system.
In addition, we consider initiatives for the “Personal Information Protection Act,” which was fully implemented
on April 1, 2005, as a top priority and strive to deepen the understanding of the Personal Information
Protection Act by hold e-learning training sessions every year for all our employees at our information center.
In the future, we will further enhance the content of our initiatives and continue our educational activities.

Additional Information
We reviewed sales management regulations and prevention of insider trading regulations etc., which was
instructed to all employees throughout the nation so as to continuously awaken individual consciousness
toward the risk management and legal compliance.
As for the insider trading, particularly, we distribute the booklet, "Insider trade regulation Q & A", issued by the
Tokyo Stock Exchange Co., Ltd. to all directors and employees including subsidiaries so as to promote theirunderstanding and observance of the regulation contents.
Further, since 2008, in the compliance education program for new employee, we improved the content
emphasizing the compliance and put emphasis on the observance of "I-NET Charter of Corporate Code"established in March, 2007 as well as the importance of the compliance.

12

CSR activities
We would like to introduce CSR activities by I-NET CORP.

Social Contribution Activity to the Local Community
I-NET CORP. positively works on social contribution activities to the local community such as job creation,
co-sponsorship to local held events, support to cultural activities or disaster recovery assistance.

Activity to Promote Employment of Persons with Disables
I-NET CORP. sincerely considers it as one of utmost essential assignments that we provide strong support for
persons with disables, same as with persons who are not physically handicapped, to be employed with theoccupation fit for their ability and aptitude so that we can materialize the society that they can spend
independent life in community. As one of these activities, we founded I-NET DATA SERVICE CORP. , special
exceptional subsidiary, and support persons with disables for "their independence, growth, autonomy" in daily
life in the community.

What is a "Special Exceptional Subsidiary"?
Based on "The Act for Promotion of Employment of Persons with Disables,", special exceptional subsidiary isdefined as that enterprises establish a subsidiary which especially considers yield volume circumstances orworking condition when employing the person with disables, and receives the authorization of the Minister of
Health, Labor and Welfare, regarded as satisfying constant condition.

Activity to the Environment
I-NET CORP. built the environmental management system in the Data Centers (the 1st Data Center, the 2nd Data
Center), acquired the certification of ISO14001 and has tried to reduce the environmental load.
As the natural environmental problem in the community and the earth becomes severe and detrimental topics
these days, preservation of the global environment becomes urgent and pressing challenges common tohuman being. The strongly-built and high level secured Data Centers of our company operate as information
infrastructure of industry and the society without stopping for 24 hours a day, for 365 days a year.
We considered minimizing the influence to the preservation of environment as one of our social
responsibilities through the operation of our Data Centers and established the environmental policy to carryout the activities for environment load reduction.

13

Environmental Management
Environmental Policy
1. We strive to minimize the negative influence on environmental preservation and reduce the environmental
burden through our operational activities.
2. We strive to work on pollution prevention as well as environmental protection by managing our facilities/processes, etc. that may affect the environment.

The Application Range of the Environmental Management System
1. Applicable offices
The 1st Data Center I-NET CORP.
The 2nd Data Center I-NET CORP.
2. The range of organizations and personnel
All organizations/departments of the 1st Data Center/the 2nd Data Center (including subcontractors,
part-timers) and outsourcing companies
3. Applicable products/services
Housing service
Hosting service
Printing service
Mailing service
Credit service
Cloud service

Environmental Goals
1. Reduction of the environmental load
We reduce the environmental load by recognizing the influence on the environment by operational
activities of our Data Centers as well as promoting resource saving, energy saving, recycling and preventionof global warming.
2. Observance of the laws, etc.
We observe the laws/regulations relevant to the environment, including the other requirements that our
Data Centers consent to.
3. Continuous improvement of the environmental management system
We promote planned and continuous improvement activities, establishing the environmental
policy/environmental goals and periodically performing their review.
4. Education/training
We provide necessary educational trainings to all people working in our Data Centers in order to enhancetheir environmental consciousness.
We make these environmental policy/environmental goals to be known to all employees working in our Data
Centers as well as announce those outside the company.
August 1, 2017 I-NET CORP.
The 1s t Data Center
The 2nd Data Center
Masayuki Shimura, Supervisor in charge of Data Center Management

14Concerning human relations to our employees
I-NET CORP. promotes the innovation of individual work style to make working environment where our
employees can exert all their abilities in peace.

Wellness Management Declaration
I-NET CORP., under a philosophy that employees are the greatest assets in management, actively promotes thewellness management that supports our employees’ better health, considering health promotion of ouremployees from a management perspective and considering both physical and mental wellness of ouremployees as a source of continuous development of our corporate value.

The 2019 Health and Productivity Management Outstanding Organizations(White 500)
I-NET CORP. was recognized under the joint program by the Ministry of Economy, Trade and Industry and the
Nippon Kenko Kaigi as “the 2019 Health and Productivity Management Outstanding Organizations (White 500)”
on Feb. 21, 2019.

What is "The 2019 Health and Productivity Management Outstanding Organizations (White 500)"?
Under the Health and Productivity Management Outstanding Organizations
recognition program, the Ministry of Economy, Trade and Industry praises theoutstanding large enterprises engaging in efforts to develop better healthand productivity management every year, based on initiatives for local
health-related challenges and initiatives for health promotions led by the
Nippon Kenko Kaigi.

Main initiatives
1. To prevent healthy individuals from acquiring epidemics including lifestyle diseases
2. To prevent people at high risks of acquiring epidemics including life style diseases from becoming severe
3. Outbreak prevention/early detection/support against stress-related diseases including mental illness
4. To support a person to balance reinstatement/work in a workplace with treatment after a leave of absence
5. To ensure appropriate working hours and work-life balance

Yokohama Health Management Certification
I-Net CORP. achieved Yokohama wellness management certification by City of Yokohama as a certified
workplace on Jan. 18, 2018.

What is the "Yokohama Wellness Management Certification System"?

15

Under the Yokohama Wellness Management Certification System, City of
Yokohama recognizes workplaces engaging in efforts to develop better healthand productivity management as certified workplaces of Yokohama Wellness
Management Certification in order to widely spread the concept of "healthand productivity management" that treats initiatives for employees’ healthmaintenances/promotions as investments enhancing the future corporate
revenues, strategically engaging in health promotions for employees from the
management perspective.

Requirements for certification
Class AA:
Organizing a system for engaging in health and productivity management, appropriately understanding
employees' health-related challenges as a workplace based on features of the workplace, and taking
countermeasures against the challenges throughout the organization.
Taking into account health promotions from the management perspective, I-NET CORP. will strive to improve
employees' mindset including improving motivation for work as well as awareness of health control, promoterealization of individual abilities and improve corporate productivity by positively engaging in health andproductivity management as part of activities to create employees' working environment stipulated in ourcompany's corporate behavior charter.

Women Empowerment
Eruboshi Certification
I-NET CORP. was authorized by the Ministry of Health, Labor and Welfare thatthe company matched the criteria pursuant to Article 9 of the Act on
promotion of the participation and advancement of females in labor force (Acton Promotion of Women's Participation and Advancement in the Workplace)on Oct. 3, 2018, and acquired the best certification logo "Eruboshi" (Stage 3).

What is the "Eruboshi certification system"?
Under this system, entrepreneurs that prepared and registered general entrepreneur action plan based on the
Act on Promotion of Women's Participation and Advancement in the Workplace can receive the certification as
outstanding entrepreneurs in terms of implement conditions of initiatives on the promotion of theparticipation and advancement of females by applying to prefectural labor offices.
There are three stages according to the number of satisfied items.

Requirements for approval
1. Meeting all the five criteria (1. recruitment, 2. continuous employment, 3. way to work including working
hours, 4. percentage of managers, 5. various career courses), and announcing the performance on the
database of the promotion of the participation and advancement of females on the website of the Ministryof Health, Labor and Welfare every year.

162. Having prepared appropriate general entrepreneur action plan according to Enterpreneur Action Plan
formulation Guidelines.
3. Announcing the established general entrepreneur action plan, and make employees to be known to all
appropriately.
4. No material fact found to violate the Act on Promotion of Women’s Participation and Advancement in the
Workplace, orders pertaining to the Act on Promotion of Women's Participation and Advancement in the
Workplace, or other relevant ordinances.
* "Other relevant ordinances" include the Equal Employment Opportunity Act for Men and Women, the Child
Care and Family Care Leave Act, and Part-Time Employment Act, etc.
I-NET CORP. will continue to strive to promote the work style reform as an entrepreneur engaging in promoting
women's participation and advancement, and create a better working environment for women.

Child Care Support
Kurumin Certification
I-NET CORP. was authorized by the Minister of Health, Labor and Welfare(authority delegated to Director of Kanagawa Labor Bureau) pursuant to Law
for Measures to Support the Development of the Next Generation as "Childcare support company" on May 31, 2012, and acquired Kurumin, next
generation support certification logo.

What is the "Act on Advancement of Measures to Support Raising Next-Generation Children"?
This law is enforced to carry out unitary measures (measures to support the development of the next
generation) among the national government, local municipal governments, enterprises and peoples together
for the purpose of making the environment where children for next generation can be born and raised in good
health.
When we achieved the requirements for approval after we prepared and submitted the action plan called"General employer action plans (companies, etc.)", we are authorized as "Child care support company".

Requirements for approval
1. Having prepared appropriate action plan according to Action Plan Formulation Guidelines concerning thecreation of an employment environment.
2. Having achieved the targets which were carried out as per the prepared action plan.
3. Announcing the action plan, and make employees to be known to all appropriately.
4. More than one person among male employees acquired the parental leave during action planned period.
5. More than 70% of a parental leave acquisition rate of the female employees during action planned period.
6. Taking necessary measures for an an employee bringing up a child of 3 year of age or more before the timeof commencement of elementary school concerning "Child care leave system", "Limitation on overtime work

17

system", and "System pertaining to measures to shorten working hours & measures to change the startingtime and the ending time of the work hours".
7. Carrying out one of following ① - ③.

① Measures for reduction of overtime work
② Measures for promotion of the acquisition of annual paid leave③ Measures for creation of a variety of working conditions to contribute to other working style review

8. No material fact found to violate the relevant laws, orders pertaining to the relevant law, or other relevant
ordinances.
I-NET CORP. promises to pursue further good working environment, where the work and child care allowed tostand side by side so that making family life and life in a working place balanced, securing easy to work
environment, and all employees hereby can exert their own ability sufficiently.

Kanagawa Child Care Supporters
I-NET CORP. acquired the certification by Kanagawa prefectural government pursuant to "Kanagawa
Prefecture, Children/Childcare Support Promotion Ordinances" as a promotion company on July 3, 2008.

What is "the certification system pursuant to Kanagawa Prefecture, Children/Childcare Support Promotion Ordinances"?

The certification system pursuant to Kanagawa Prefecture, Children/Childcare
Support Promotion Ordinances" is the system that Kanagawa prefectural
government authenticates a company institutionalizing children/childcare
support for employees as a "Kanagawa childcare supporter".

Requirements for certification
1. Following requirements are clearly regulated as internal system, which systems or measures are obliged
under the Child Care and Family Care Leave Law.
①Childcare leave②Sick/injured child care leave for an employee bringing up before the time of commencement ofelementary school③Limit of overtime work, the late-night work for an employee bringing up a child before the time ofcommencement of elementary school④Measures to shorten working hours for an employee bringing up a child younger than 3 years of age
2. Being clarified a responsible person in the company concerning support for balance of work and child care.
3. Announcing public inside and out the planned promotion to carry out for children/childcare support.
4. Contents of the plan and business activities being appropriate in the light of relevant laws and ordinances.
I-NET CORP. approves of this purpose, and will push forward maintaining and improving the working
environment where our employees can not only have balance of work and child care but are easy to work.

18

Stock Information
Basic Information of Stock
Overview of Stock(As of March 31, 2019)

Authorized shares

60,000,000 shares

Number of shares outstanding

16,242,424 shares

Capital¥3,203,992,690

The number of shareholders

3,647 people

Major shareholders
Shareholders
Sep 30, 2017

Mar 31, 2018

Sep 30, 2018

Mar 31, 2019

Thousand shares
Individual and Others

9,998

9,711

9,403

9,506

General corporation

1,558

1,532

1,520

1,529

Financial institution

3,219

3,607

4,433

4,458

Securities company

163

142

149

87

Foreigner

1,302

1,247

735

661

Total

16,242

16,242

16,242

16,242

Sep 30, 2017

Mar 31, 2018

Sep 30, 2018

Mar 31, 2019

personIndividual and Others

3,767

3,565

3,500

3,648

General corporation

63

53

50

51

Financial institution

26

27

26

26

Securities company

22

25

30

32

Foreigner

70

75

73

70

3,948

3,745

3,679

3,647

Total

※1,' Individual and Others ' include company-owned stocks.
2,'General corporation'include securities depository center stock
3,Stock figures are rounded to 1,000.

19Major shareholders(Top 10)(As of March 31, 2019)

Number of Shares Held
Thousand shares

Shareholding Ratio

Noriyoshi Ikeda

1,742

10.96%

Japan Trustee Services Bank, Ltd.

1,588

9.99%

I-NET Employee Stock Ownership

1,333

8.39%

Junji Kitagawa

781

4.91%

The Bank of Yokohama,Ltd.

707

4.45%

The Master Trust Bank of Japan,Ltd.

426

2.68%

N and I Co.,Ltd.

316

1.99%

NIPPON LIFE INSURANCE COMPANY

275

1.73%

Mitsubishi Research Institute DCS Co.,Ltd.

239

1.51%

TOPPAN FORMS CO.,LTD.

232

1.46%

※1.Number of shares, it has been rounded down to the nearest thousand shares.
2.The shareholding ratio is calculated after deducting treasury stock 343,711 shares.

IR calendar
On Jul. 31, 2019

The financial results announcement for the first quarter of the FY ending March,
2020

On Sep. 30

The record date of the interim dividends
The fixed date of the shareholder benefits rights

In late Oct.

The financial results announcement for the second quarter of the FY ending
March, 2020

In late Nov.

The financial results briefing for the second quarter of the FY ending March, 2020

In early Dec.

Release of IR Report to shareholders for the second quarter of the FY ending
March, 2020
Payment of the interim dividends

In late Jan. 2020

The financial results announcement for the third quarter of the FY ending March,
2020

On Mar. 31

The record date of the year-end dividends
The record date of the ordinary general meeting of shareholders

In early May

The financial results announcement for the FY ending March, 2020

20

In mid-May

The financial results briefing for the FY ending March, 2020

In early June

Release of the notice of the ordinary general meeting of shareholders

In late June

The 49th ordinary general meeting of shareholders
Release of the resolution notice/the IR Report to shareholders
Payment of the year-end dividends

21

Sahreholder Return
Sahreholder Return
Dividend Policy
Our basic policy is carrying out the stable dividend regularly and is making an effort toward the innerreservation to deal with funding requirements in the future.
In addition, we will enhance the return of profits to shareholders by increasing the corporate value to improve
the profitability.
Retained earnings are used for facility enhancement ‘data center’ which we have been focused on and forbusiness expansion such as the promotion of various research and development activities.

Dividend
2015/032018/032017/03

2016/03

2019/03

Dividend/Stock(yen)

30.00

34.00

36.00

38.00

40.00

(a midterm dividend)

15.00

17.00

18.00

19.00

20.00

※ 1, Dividend in March,2016 includes 2 yen which is the commemoration dividend.
2,Common shares in inet were split on October 1, 2016.
The dividends before October 1, 2016 are based on the pre-split number of shares.

Change of dividend
Dividend/Stock(yen)
50
45
40
35
30
25
20
15
10
5
0

2015/3

2016/32017/3

2018/3

2019/322

Shareholder Preferential Treatment
Shareholder Preferential Treatment
Information of Shareholder Preferential Treatment
We have a shareholder preferential treatment in order to thank for the daily support of the shareholders andenhance the attraction of our stock.

Intended shareholder
Shareholder who possess the number of our stock more than 1,000.

Contents of Shareholder Preferential Treatment
We deliver original Quo card once a year according to the number of our stock which you possess. (Delivery
time is the early part of December)Social Contribution
We contribute 10% of the donated amount separately to support group of physically handicapped.
Number of Stocks Held

Contents of Shareholder Preferential Treatment

More than 1,000 stocks Less than 3,000 stocks

1,000yenMore than 3,000 stocks Less than 5,000 stocks

2,000yenMore than 5,000

3,000yenIn addition, we deliver 1,000 yen QUO card to shareholder who possess our stock more than 3 years.

23

Outline of consolidated financial statements
Outline of profit and loss
(Unit: in millions of yen)Previous fiscal year

Current fiscal year

(April 1, 2017 - March 31, 2018)(April 1, 2018 - March 31, 2019)

Net sales

25,61527,591Gross profit

6,065

6,586

Operating income

2,081

2,345

Ordinary income

2,051

2,347

296

Current net profit attributable to owners ofparent company

1,368

1,521

153

Growth amount

Point

1

1,975
521

Point

2

264

Outline of assets and liabilities(Unit: in millions of yen)

Current assets

Previous fiscal year

Current fiscal year

(March 31, 2018)(March 31, 2019)

9,535

9,997

Growth amount
461
Point

3

Noncurrent assets

16,471

18,518Current liabilities/Noncurrent liabilities

12,50014,158

Net assets

13,507

14,357850

Total assets

26,00728,515

2,508

Point

4

2,046
1,658

Outline of cash flows(Unit: in millions of yen)Previous fiscal year

Current fiscal year

(April 1, 2017 - March 31, 2018)(April 1, 2018 - March 31, 2019)

Cash flows from operating activities

2,937

3,052

115

Cash flow from investing activities(1,223)(3,074)(1,850)Cash flow from financing activities(1,330)17

1,348

Final balance of cash and cash equivalents

3,303

3,299

(3)

Point

5

Growth amount24

Points in the settlement values
Point

1

Point

2

Point

3

Point

4

Point

5

We have achieved growth in net sales for eight consecutive terms, increasing by 1,975 mil. yen as aresult of a strong progress in data center, cloud services, and system constructions for oil industry
and distribution service as well as an acquisition of Software Control Corporation.

We have surpassed a record high profit, increasing operating income by 264 mil. yen due to rises in
net sales of data processing service and in high revenue projects on system development services.

The fixed assets have resulted in a rise of 2,046 mil. yen because of a rise of 1,250 mil. yen intangible fixed assets due to enhancement of facilities in data centers as well as acquiring goodwillof 296 mil. yen due to a new consolidated subsidiary, etc.

The total liabilities have increased by 1,658 mil. yen because of a rise of 1,000 mil. yen ininterest-bearing liability due to a new consolidated subsidiary and enhancement of facilities indata centers, etc., as well as a rise of 445 mil. yen in accounts payable-other due to purchased fixed
assets, etc., despite a decrease of 225 mil. yen in lease obligations.

[Cash flow from investing activities]
This has been attributable to the outflows of 1,949 mil. yen for an acquisition of tangible fixed
assets, 809 mil. yen for an acquisition of a subsidiary, and 349 mil. yen for an acquisition of
intangible fixed assets, etc.

[Cash flow from financing activities]
This has been attributable to 2,434 mil. yen of repayment of long-term loans payable, 301 mil. yenof repayment of lease obligations and 619 mil. yen of dividend payments, etc., while there is 3,370
mil. yen of new long-term loans payable.

25

Financial Summary
Consolidated 5-year Financial Summary(millions of yen)

2015.032016.032017.032018.032019.03

Net sales

23,22924,434

24,617

25,61527,591

Operating income

1,598

1,918

1,992

2,081

2,345

Ordinary income

1,546

1,838

1,939

2,051

2,347

Net income(Net sales by segment)

982

1,114

1,314

1,368

1,521

Information processing service

9,107

9,607

9,784

10,051

10,091

System development service

13,457

14,081

13,937

14,347

16,395

664

746

895

1,216

1,104

Net assets

12,147

11,793

12,684

13,507

14,357

Total assets (※3)

25,962

25,11025,04326,00728,515

Number of employees(personnel)

1,297

1,295

1,307

1,324

1,556

Cash flows from operating activites

2,648

2,523

2,932

2,937

3,052

Cash flows from investing activites

(622)

(468)

(979)

(1,223)(3,074)

Cash flows from financing activites(1,675)(1,892)(1,728)(1,330)17Cash fand cash equivalents at the end of year

2,533

2,696

2,920

3,303

3,299

Net income(EPS) (※1)

60.52

69.70

82.68

86.06

95.72

Net assets

732.91

741.67797.79849.55903.04

30.0

34.0

36.0

38.0

40.0

Return on equity(ROE)

8.8%

9.4%

10.7%

10.4%

10.9%

Return on asset(ROA) (※3)

6.1%

7.2%

7.7%

8.1%

8.6%

For the year

System products sales
At year-end

Cash flows

Per share information(yen)Cash dividends (※2)
Rations※1 Common shares in inet were split at a ratio of 1:1.1 on October 1, 2016.
Netincome FY2016-7 are shown based on post-split assumption.
※2 The dividends before October 1,2016 are based on the pre-split number of shares.

※3 The partial amendment of “the accounting standards for tax effect accounting” has been applied since the beginningof the FY ending March, 2019. Those new accounting standards were applied to the major management benchmarks,etc. in the FY ending March, 2018.

26

Company / Overview
Company profile
Trade name

I-NET CORP.

Headquarters

23F, MitsubishiJuko Yokohama Bldg. , 3-3-1 Minatomirai, Nishi-Ku,
Yokohama, Kanagawa 220-8401, Japan
Phone#: +81-(0)45-682-0800 (main)

FoundedApril 22, 1971

Capital￥3,203.992,000

Listing

Tokyo Stock Exchange 1st Section of the Tokyo Stock
Exchange(code: 9600)(as of June 25 2019)

Board of Directors and Auditors

Chairman of the board

Noriyoshi Ikeda

Representative Director,
Executive President

Mitsuru Sakai

Representative Director,
Senior Managing Executive Officer

Hiroshi Wanibuchi

Director and Managing Executive Officer

Tomomichi Saeki

Director and Managing Executive Officer

Naokatsu UchidaDirector (※1)

Kiyoko Asai

Director (※1)

Yukiko Takenouchi

Standing Auditor (※2)

Masatoshi Miyazaki

Auditor (※2)

Hideo Ohashi

Auditor (※2)

Yoshihiko Tashita

Auditor (※2)

Chikafumi Urakawa

Senior Executive Officer

Akira Ishigami

Senior Executive Officer

Masakazu Kinoshita

Executive Officer

Toshiaki Ikebe

Executive Officer

Mikio Ito

Executive Officer

Shigeru Hiki

Executive Officer

Katsuyuki Imai

Executive Officer

Katsumi Kawasaki※1…Outside Director※2…Outside Auditor

Employees

consolidated 1,675 , Non-consolidated 945(as of April 1, 2019)

Business Outline

Information-processing service
System development service
System equipment sales

Qualifications

Ministry of Health, Labour and Welfare
Workers Dispatching Undertaking[permit number: HA14-301383]

27

Ministry of Internal Affairs and Communications
Notifying telecommunications Carrier[nortification number: A-07-968]
Kanagawa Prefecture, Electrical Constructors[nortification acceptance number, Kanagawa Prefectual governor
notice: No. 300001]
JIPDEC Privacy Marks[registration number:11820061(10)]ISO 9001[registration number:JQA-QM6329] 1st Data Center/ 2nd Data Center[registration number:JQA-QM7676] Control Division/ Space
Development Division/Space & IoT Sales Dept.
ISO 14001[registration number:JQA-EM6606] 1st Data Center/ 2nd Data Center
ISO/IEC 27001[registration number:JQA-IM0093] 1st Data Center/ 2nd Data Center[registration number:JQA-IM0327] Control Division/ Space
Development Division/ Space & IoT Sales Dept.
ISO/IEC 27017[registration number:JQA- IC0018] Operation and maintenance of
Next Generation EASY Cloud®（Cloud infrastructure service using
Software-Defined Data Center architecture）
PCI DSS[registration number:ICMS-PCI0145] 2nd Data Center
Nippon Keidanren(Japan Business Federation)
Japan Information Technology Services Industry Association (JISA)
Memberships

FujitsuCenter Association (FCA)
Kanagawa Information Services Industry Association (KIA)
Information Technology Alliance (ITA)

Group Affiliate
Subsidiaries
IST-Software Co., Ltd.

13F, Nissay Aroma Square, 5-37-1 Kamata, Ota-ku, Tokyo 144-8721,
Japan
TEL : +81-(0)3-5480-7211
http://www.ist-software.co.jp

Software Control Co., LTD.

Seisyou Nihonbashi Bldg, 12-2, Nihonbashi Ohdenmachou, Chuo-ku,
Tokyo 103-0011, Japan
http://www.scnet.co.jp/

I-NET DATA SERVICE CORP.

644-12, Maioka-cho, Totsuka-ku, Yokohama, Kanagawa 244-0813,
Japan
TEL : +81-(0)45-820-5897
http://www.inet-d.co.jp

28