FreeBit Co., Ltd.
Financial Results Meeting for the Full Fiscal Year Ending April 2019

June 14, 2019

Presentation
Wada: Thank you very much for your patience. Now we would like to start the financial results briefing forthe fiscal year ending April 30, 2019. I am Wada, Executive Officer and General Manager of Group Business
Administration of FreeBit Co., Ltd., and will serve as moderator today. Thank you for your cooperation.
I would like to introduce you to the participants today. From the left, Mr. Nobuaki Tanaka, Representative
Director and President.
Nobuaki Tanaka: Thank you very much.
Wada: Director and Executive Vice President, Mr. Takashi Shimizu.
Shimizu: Thank you very much.
Wada: As for today's presentation, Mr. Tanaka will first explain the financial results and business progress.
Then we will have a Q&A session, so please raise your hand at that time, if you have any questions.
Now Mr. Tanaka will start the presentation. President Mr. Tanaka, please start.
Nobuaki Tanaka: Thank you very much for your attendance despite your busy schedule. Today, I would liketo explain our financial results for the fiscal year ending April 30, 2019.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
1

First of all, consolidated net sales were 50.365 billion yen, an increase of 30.3% over the previous fiscal year.
The change is more than 11.0 billion yen, surpassing the 50.0-billion-yen mark for the first time in our group.
In the medium-term plan, we aimed to achieve 50.0 billion yen in the fiscal year ending April 2020, so weachieved this target one year ahead of schedule.
In EBITDA, the figure was 4.6 billion yen, an increase of 45% over the previous fiscal year. In our case, net
income tends to be a little lower than ordinary income.
Profits are comprised of those from the consolidated group, including the two listed subsidiaries. So, we haveminority interests or goodwill of acquired subsidiaries, et cetera, and this is our profit structure. Excludingthese items, you can see that our ability to generate profits on an EBITDA basis is considerably growing.
Ordinarily, operating income and ordinary income were 2.981 billion yen and 2.569 billion yen, as shown here.
Operating income increased by 61% and ordinary income increased by 80%, respectively, resulting in asignificant increase in earnings compared with the previous fiscal year.
Net income totaled 0.279 billion yen, which seems somewhat lower due to the management structure I
mentioned earlier. The previous fiscal year, unfortunately, recorded a net loss, but the current fiscal year
recorded a profit of 0.279 billion yen due to an improvement of 0.84 billion yen.

In this topic of the financial results, as I mentioned earlier, we have achieved record-high figures for operating
income and ordinary income. As I mentioned earlier, EBITDA increased 45% to 4.691 billion yen.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
2

In terms of net sales, in the current fiscal year, ALC PRESS INC. was made into a consolidated subsidiary in
September of 2018, and we started the EdTech business. This contributed to sales from this fiscal year. Ourgroup's sales of GIGA PRI.E condominium Internet grew significantly in the current fiscal year, resulting in a
30% increase.
We continued to achieve the highest level of sales for the current fiscal year for the fourth consecutive quarter,
reaching 50.0 billion yen. As a result, we achieved our medium-term goal one year ahead of schedule.
Operating profit rose 61% year-on-year, thanks to improved profit margins in the condominium internet
business, the HealthTech business, and the Mobile business, which contributed to the significant increase inprofit.
Looking at individual segments, in the Broadband business, the largest factor behind the increase in sales andprofits is the extremely strong growth in the condominium Internet business.
In the HealthTech business, we operate FreeBit EPARK Healthcare business, which is a solution business fordispensing pharmacies. Sales in this business increased significantly year-on-year. With an 82% increase, weare growing at an extremely high pace. At the same time, we have achieved profitability for the first time since
our launch.
I would like to mention that the growth in sales will continue from this fiscal year onwards, and that by creating
a surplus the achievement of profits will have a positive impact on overall results.
Then, the EdTech business, which was newly launched in the current fiscal year, is the business segment
centered on the acquired ALC. As this business was acquired, we naturally added net sales from the first fiscal
year, so it has contributed 50.0 billion yen of the total. And since we acquired it when the Company was in astate of positive profits, it is also making a contribution to profits.
In the future, we will inject our IT resources and know-how into the EdTech business and implement structuralreforms from the fiscal year under review onward, with the aim of further expanding the business andcontributing to profits.
This has been the discussion of the full fiscal year results.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
3

Next is about sales. In terms of the trends, the far-right bar chart shows sales and operating income for thelast quarter of the current fiscal year, which marked record highs for sales and operating income for the fourth
quarter. I think you can see that the graph shows a very high figure.
Specifically, we generated sales of 16.247 billion yen and operating income of 1.352 billion yen for this quarter
alone. As a result, we achieved record-high results.
In general, sales and profits in many of our business models are relatively concentrated in the fourth quarter.
This very large figure was basically in line with the plan, and the Company achieved profit for the current fiscal
year as forecasted.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
4The structure in sales is gradually changing. As you see, the Broadband Business, the Mobile Business, and the
AdTech Business are now the three pillars of sales. However, since the EdTech Business was added and the
HealthTech Business is growing, I think you can imagine that this structure will change in the future.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
5

As you see, the sales composition has been changing. EdTech contributed 4.7 billion yen of the 38.6 billion
yen, year-on-year. Condominium Internet services also contributed 4.3 billion yen. These are the biggest
factors behind the dramatic change in the sales composition. The HealthTech Business also posted a 1.3 billion
yen increase in revenues.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
6

There were many factors behind the operating income increase. The biggest contributor to the increase from
1.8 billion yen to 2.9 billion yen was the contribution of profits from the increase in condominium Internet
sales.
In addition, the HealthTech business became profitable. It had not been very long since this business waslaunched, and the up-front investments had been large up to the previous fiscal year. But it became profitable,
and contributed 0.4 billion yen in profit compared to the previous fiscal year.
In the Mobile business, we are seeking to improve our earnings structure and contribute to earnings despite
the extremely competitive environment and the challenging situation.
The EdTech Business is a newly added business, but as I mentioned earlier, we have acquired a business thatis not in the red, but is in the black. The business has been contributing to profits since the first year of theacquisition.
With regard to the decline in operating profits, the regular fixed-line connection business of Broadband iscontinuing to decline, so profits are declining. In order to create a business structure that can withstand theincrease in condominium Internet sales, we want to strengthen our business structure of GIGA PRI.E. This is
the contributing factor of the increase in expenses. As a result, operating income amounted to approximately
0.3 billion yen.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
7Under such business structure, as sales are growing a lot, the monetary figures in the graph are considerablylarger. Cost of sales and selling, general and administrative (SG&A) expenses are also increasing in line with
the increase in sales, and the monetary figures of profit are gradually increasing accordingly, resulting inoperating income of just under 0.3 billion yen.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
8Network-related expenses were as shown and there were no special major topics.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
9Selling, general and administrative (SG&A) expenses grew significantly. The consolidation of ALC was thebiggest factor of that. ALC is a company with about 230 permanent employees. Therefore, SG&A expenses
are considerable. This is the explanation of this graph.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
10In relation to the previous explanation, the addition of ALC’s employees is a factor behind this increase in thenumber of employees.
GIGA PRI.E has also increased significantly in terms of the number of employees, but its business structure is
now being put in place to a large extent. Therefore, the pace of increase in the number of GIGA PRI.E
employees is expected to be lower in the fiscal year under review than in the previous fiscal year.
However, as announced by GIGA PRI.E, they plan to increase the number of newly completed properties
offering internet service in the new fiscal year at the same pace as in the previous fiscal year. Therefore, I
believe that profitability will improve again.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
11Ordinary income increased, simply due to an increase in operating income, while equity in net losses ofaffiliates in the current fiscal year was smaller than in the previous fiscal year. As a result, ordinary income
totaled just under 2.6 billion yen.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
12

In terms of net income, we were able to return to profitability, due to an increase in ordinary income fromthe previous fiscal year and a decline in impairment losses and other factors.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
13

Total assets on the balance sheet have increased as a result of the consolidation of ALC. Goodwill of ALC isalso a factor of the increase. Net assets have increased, albeit slightly, as shown. Cash and cash equivalents
totaled more than 15.0 billion yen on a fiscal year-end basis, which was the overall figure up to the current
fiscal year.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
14

From here on, I would like to take a closer look at each business and explain it a little. In the Broadband
business, sales increased 35% year-on-year, and segment income increased 1.9%. Sales are rising as you cansee, and I think you can see that the blue-colored condominium ISP business is growing at a considerable pace.
As for segment profit and loss, most of the increase in profit is attributable to the increase in condominium
Internet sales, and then the decrease in fixed-connection Broadband business. As previously explained, eachof these items has been offset, resulting in a 1.9% increase in segment profit or loss.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
15

The number of condominiums with the Internet increased by 168,000 in the previous fiscal year, so sales
increased considerably. In the fiscal year under review as well, shown on the far right in the graph, the number
is planned to increase by 170,000 units. In the fiscal year ending April 30, 2020, we expect this to have asignificant impact on sales.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
16

In the Mobile Business, sales rose 2% year-on-year, with only a slight increase. However, segment income
increased 0.39 billion yen compared with the previous fiscal year.
In addition to regular telecommunications services, gross profit from the sales of smartphones during thecurrent fiscal year and cost reductions due in part to a decline in overall operating costs are largely attributable
to the profit growth.
The Mobile business will continue to be highly competitive in the IoT and regular consumer businesses, andtherefore we will be generating profits targeting specific corporate demand.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
17

In relation to the smartphones that I discussed earlier, this slide shows the smartphone for the group’s TONE
Mobile, which was sold at Tsutaya's shops.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
18

In the AdTech business, sales rose 6.6% year-on-year. Segment income declined 14%. The market is worldwide,and GAFA in the US is facing various regulations from the European Union.
The Internet advertising market itself is quite broad, and it has grown so fast. Now, the headwinds are halting,but the potential advertising needs of companies are inevitable.
On the other hand, there is a solid need for Internet media because it is a more efficient way to recover costs
than traditional legacy media. We expect the trend of increased revenues to remain unchanged.
However, the development cost of technologies which are required in the context of various regulations on
advertising has increased. As a result, segment income decreased by 14% in the current fiscal year.
Nevertheless, as sales will continue to increase in the future, we are moving to improve management
efficiency amid continued increases in sales and pressing ahead with plans to increase profits securely.
Today, our subsidiary, Full Speed Inc., is scheduled to announce its financial results and forecasts. As I have
explained, we also announced our plans to increase both sales and profits compared to the previous fiscal
year.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
19

In the affiliate provider business, which makes a significant contribution to earnings in the AdTech segment,
we have been ranked number one for the fifth consecutive year as an affiliate provider with a high degree ofsatisfaction as selected by affiliates.
There are a lot of affiliates, and it is very important for us to be selected by professional affiliates. It may be asource of growth if such affiliates say we are the best provider every year.
To keep enjoying credit with them, we will continue to make our best effort to develop technologies andoperate sales activities.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
20

The AdTech business group will focus on the categories in which the group excels, because the profitability ofthe domestic Internet advertising agency business alone will not increase as much as we expect. In terms ofgenres, we are focusing on providing health care and BtoB services, as well as cross-border services.
In this context, we are developing a media platform, and most of the cross-border business is provided in Asia,
so we will to provide services to Asia.
In addition, the number of foreign workers is expected to increase, due to the amendment of the Immigration
Control Law and the lack of specific skills in Japan. In order to create a suitable employment platform
accordingly, we are currently preparing to launch such a business in the midst of our development in Asia.
To achieve these targets, the AdTech business will be moving forward to provide our solutions from this fiscal
year under review and onward.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
21

Next is the cloud business. We have been steadily shifting the legacy business to the cloud business for years.
As the legacy business has shrunk, we have been offering new services. Some sales teams are working hardto offer new services, so while the growth rate is not so large, sales are increasing gradually.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
22

Next is the HealthTech business. As explained, FreeBit EPARK Healthcare, Inc. reported that it had achieved
an operating profit for the full year. Its services are currently growing at an extremely high growth rate.
We will continue to expand our FreeBit EPARK Healthcare business and provide our nursing care recording
systems to the largest nursing care facilities in the industry. For the time being, we plan to continue expanding
our business, focusing on targeting such dispensing pharmacies and nursing care facilities.
As a result of the various challenges faced by the segment as a whole, our subsidiary, a medical information
infrastructure organization, also had a business purchased two years ago by Mr. Hiroseido. However, it wasdifficult to launch this business and we incurred losses.
Through such a scrap-and-build approach, we will continue to make strategic investments, considering thatthe segment on the whole is expected to grow significantly in the future.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
23

In terms of FreeBit EPARK Healthcare, which I mentioned now, the monthly number of reservations made bydispensing pharmacies through our services, for example, is growing very strongly as shown. Even though theactual number is not disclosed, I think you can sense it from the graph.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
24

In addition, there are medical handbooks that can be used on smartphones. Some of them are available fromvarious manufacturers or pharmacy chains, but the app we offer is overwhelmingly downloaded, and theusage rate is high.
By continuing to expand this service, we intend to improve its usability for the patients, and contribute to thepharmacy and medical industries with continuous improvement of the service every day and night. I hope allof you will use it.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
25

Next, the EdTech business will be a business segment based on ALC. This April ALC marked the 50th
anniversary of its founding. It is an extremely long-established company in this industry, and its annual sales
are more than 6.0 billion yen.
With the size of the Company, they have been offering a lot of well-known services, such as Kikutan, which
was started about 50 years ago, and Hearing Marathon, which has long been famous. It is a company that
continues to produce content very steadily and earnestly, and is the most competent in producing content in
the industry.
They work very earnestly, but are a little weak in marketing, such as a lack of focus on selling various services.
So, it's just about that.
Now, by adopting IT, the learners have become much more successful. A number of ideas are emerging
around the world, leading to the idea that there are ways to produce more results than ever before.
ALC has been doing business for about 50 years and has gaining popularity, but its sales are only 6.0 billion
yen. We feel that they can do much more. So, we, as the pioneer in creating a variety of services, are trying
to grow them by a great deal from now on. We would like to strengthen the weak parts by advancing IT
adoption.
We made VINAYAMATO, a venture company that has built a learning management system, into our subsidiary.
They have an English conversation app created by an Israeli entrepreneur. Since the acquisition of thisSupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
26

company in the fall of last year, we have been promoting reforms to our business structure by newly engaging
in such businesses and acquiring businesses like ALC.

Up to now, I have discussed the segments. Next, as released on June 7, this week, Alpine purchased the sharesof ours that CCC had previously held.
CCC was selling some of these shares on the market, so there were more in the market rather than the numberthat they underwrote through a third-party allotment. It was not all. Alpine acquired the remaining shares
owned by CCC and CCC's group, of which the number of shares was not the same as at that time.
I can’t explain in detail, but since before the acquisition, we and Alps Alpine have been jointly developing their
new internet IT services. I have heard that the acquisition was made for this purpose.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
27

Some of these initiatives have been announced by TONE Mobile and FreeBit. In this way, we have started joint
development of digital key services, utilizing blockchain.
I hope that there will be an opportunity to explain any topic on this in the course of our future business.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
28

Next, I would like to explain our consolidated results forecasts for the fiscal year ending April 2020, which is
ongoing.
First, our Corporate Philosophy, “Being The NET Frontier! Broaden the Internet and contribute to society.”
This is our original philosophy, but based on this philosophy, we will expand our business.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
29

Beginning in the next fiscal year, we will partially change our reportable segments as the number of new
business initiatives has increased. The previous segments will be changed to InfraTech, Real Estate Tech,
AdTech, HealthTech, and EdTech. We plan to present based on these categories starting in the first quarter.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
30

Looking at the overall figures, sales were 57.0 billion yen, up 13% from the previous year. Operating income
and ordinary income are forecast to increase 34% and 47% to 4.0 billion yen and 3.8 billion yen respectively.
Net income is expected to reach 1.0 billion yen as the monetary amount of operating income has increased.
This is 258% in percentage terms.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
31

Looking at this by segment, we expect the volume of InfraTech, Real Estate Tech and AdTech to grow to 16.0
billion yen, 14.0 billion yen and 16.0 billion yen, respectively, at this point in time.
The HealthTech business is also projected to grow by 46% year-on-year to 4.3 billion yen, and this will be thelargest growth rate.
In Real Estate Tech, despite the large scale of the GIGA PRI.E business, it is planned to increase sales by 30%.
As both the growth rate and the scale of this business are large, the attributable amount to profits is expected
to be very large.
The right side shows segment profits. Real Estate Tech is expected to make the largest contribution to profit,
which is just under 1.6 billion yen. As this figure is incorporated into the overall plan, I would like you to takea look at the figures for this fiscal year under the review together with the progress of the GIGA PRI.E budget.
AdTech also will post higher sales and profits. The market environment has been blessed with a variety oftrends worldwide, but we are committed to achieving increases in both sales and profits by doing what should
be done properly.
Sales in the HealthTech segment will jump 46%. We reported the inclusion of goodwill and losses in thebusinesses other than FreeBit EPARK Healthcare. However, in the fiscal year under review, the HealthTech
segment is expected to become profitable on a segment profit basis, which includes amortization of goodwill
and other items, supported by the discontinuation of unprofitable businesses and growth in profits from
FreeBit EPARK Healthcare in the first place.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
32

In the EdTech business, sales for 12 months will be added, showing an increase of 33%, but profit is expected
to decline 45% from the previous fiscal year.
The business structure itself has been in place for 50 years, so there will not be a sudden drop in existing sales
and profits. However, as we aim to make it into an educational business company that is strong in ICT and IT,
we will have to make up-front investments for IT adoption. That is why the segment profit and loss isestimated at 0.13 billion yen.
However, as this will be done in conjunction with the expansion of sales of existing ordinary services, there isa possibility that we will be able to transform our business structure while investing in development. We will
work on finding out how we can realize such a scenario, taking this entire year into account.
Current earnings forecasts do not incorporate much uncertainty, so the overall earnings plan is as describedabove.

There are a number of different measures to focus on as shown. As to the infrastructure business, we will doeverything we can to ensure that our existing services do not reduce our profits.
The number of housing units offered by our partner house manufacturers is quite solid, honestly speaking.
Therefore, it's crucial to properly operate the project to see if it can be profitable by maintaining it up to theend of the project.
The reason we are chosen is that the quality of our services is quite high, and also, they highly value our future.
We are also planning to propose new IT services within IoT and housing.
SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
33

As I mentioned earlier, the external environment of the AdTech business is a little severe, but this is not justfor us, but for competitors, too. At this moment, we need to solidify the foundation. We have decided on thepolicies for the fiscal year under review to concentrate on areas where we are well-versed.
Therefore, I think that profitability in the AdTech business might improve more than our anticipation. I would
like to proceed based on the policy of doing what really needs to be done and doing what is right.

This is about HealthTech business. Some of the services are currently growing, so I think it is important to do
everything we can to further expand. Rather than doing anything new, we are doing something that is still
relatively unknown as we grow our existing growth businesses.
Most people are not aware of the fact that they can make reservations at pharmacies and receive various
information through electronic pharmaceuticals handbooks. I believe that we will focus on promoting these
services and making them known to the public.
Finally, the EdTech business. As I mentioned earlier, we have included in our group an excellent company interms of history, track record, and content. The key point is how we can transform the Company in the current
Internet era.
In 2020, the curriculum will be fully revised from elementary school to universities, and this will become abusiness opportunity. In this context, we will have to think about how we will roll out new services, and invest
in preparation for them.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
34

As shown on the bottom line, foreign workers are increasing. In fact, for more than 30 years, ALC has been
engaged in Japanese language education. It is also the oldest company in the industry, and their educational
know-how and methods have been imitated and used worldwide.
Now, we are starting to expand our sales activities in various ways, so that we can successfully provide a wide
variety of services, such as how to teach foreign workers Japanese language, as many foreign workers
continue to enter.
We will implement such measures in the fiscal year under review as well, to achieve 57.0 billion yen in
operating income and 4.0 billion yen in operating income, as I mentioned earlier. We aim to achieve net
income of 1.0 billion yen, and plan to grow at a high rate this year, as well.

SiLK VISION 2020, our medium-term business policy, calls for net sales of 50.0 billion yen and operating incomeof 5.0 billion yen. We will continue our commitment on that.
The Company does not include any uncertain items in its earnings forecasts, so the 4.0-billion-yen earnings
forecast is an official figure to achieve. However, the Company has set higher goals, of course, as internal
targets.
We are now working together to ensure that we are able to make sure that we are doing our utmost, and that
we are trying to surpass the official 4.0-billion-yen earnings forecasts we disclosed to the public, as well asthat we are trying to achieve the 5.0-billion-yen target. Our ultimate goal is to achieve the medium-term plan,and I intend to continue to work hard this year as well.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
35Fortunately, we were able to achieve our targeted sales one year ahead of schedule, so I would like to focus
on operating profit, and we would like to move forward this fiscal year. Thank you for your attention today.
That’s all about it. Thank you very much.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
36

Question & Answer

Wada: Now, we would like to open the Q&A session. Does anybody have questions?
Tanaka: I’m Tanaka of GI Capital Management Ltd. Thank you very much.
I think this fiscal year’s financial results were very good, and from the next fiscal year onwards, during thecourse of the vision of the next medium-term management plan, Real Estate Tech will be making a large profit.
But I assume that there are some anxiety factors after the Olympic Games.
There seem a variety of areas, such as healthcare and ad tech when you gradually change your businessportfolios. In what areas are you going to put more efforts from the long-term perspective? Also, I would liketo ask about your expectation of the amount of investment.
Nobuaki Tanaka: Thank you very much. As you said, the main profits of Real Estate Tech are coming from theinitiatives of occupancy rate improvement and asset value enhancement by incorporating the internet into
new buildings built by major house manufacturers or existing ones, and creating environments in which
tenants can use it with a smartphone or other Wi-Fi capable devices.
Existing properties have been built in the past, and if they continue to be operated, the market will soon
become saturated. So, I think a turning point will come somewhere. But soon after the Olympics or such timing,
there will still be a gap between the current market and our share. In that sense, there is still considerable
room for growth.
In addition, there are various problems, including vacancy rates in the buildings, but new buildings are still
being built and reconstructed in the future. As you said “long-term perspective,” there are some factors in thelong run that will drive business growth.
In regard to other businesses, HealthTech and EdTech are segments we are newly taking on. In particular, as
you know, the aging population is increasing, and health care is an extremely serious issue for the nation. This
will require a variety of medical expenses to be reduced.
For example, we already have been offering services for dispensing pharmacies to reduce their procurement
costs and provide their patients with information to propose generic drugs. Considering the situation, there
is considerable room for growth.
Regarding the HealthTech Business, the population is declining, and we are expecting to see a sharp drop in
the population somewhere in the future. Business will be harsh when that time comes, but we still have about
15 years to go, in that respect. So, I think there is considerable room for growth.
To that end, development investment has almost been carried out. So, it is no longer necessary to make sucha large investment. However, there is the possibility of company acquisitions or other actions when expanding
our business genre horizontally.
We have not set a maximum acquisition size because it depends on the value of the business. There may be
acquisitions worth 10.0 billion yen if their business values are worthwhile and we can have cooperation fromfinancial institutions.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
37

In regard to the EdTech business, we still don’t have absolute answers for what should be done to bear fruit,as it’s only been a few months since its start. Given the value of our current ALC brand, we have much more
we can do. So, the brand will increasingly contribute to the business performance.
Beyond that, we are also working on partnerships with Alps Alpine and this is an initiative in a genre that wehave never entered before. Now, if the scale of the business increases to a certain level, there is a possibility
that the Mobility business will become a new segment.
Wada: Do you have any other questions?
Nakata: Thank you for your explanation. I am Nakata from FISCO Ltd. I would like ask about the difference
between SiLK VISION's 5.0-billion-yen earnings you explained at the end of the presentation and the 4.0billion-yen earnings forecast in this financial report.
I think the 4.0 billion yen is a great achievement, but if there is room to grow, which of the segments you
explained will be the most possible segment to fill in that 10.0 billion yen? I believe some explanations were
given, but please summarize them again.
Nobuaki Tanaka: There are factors that will increase profits in each segment, but in terms of monetary impact,
I believe that the business with larger scale will eventually become larger.
For example, the InfraTech business is expected to suffer a decline in profits, but the scale of the business islarge. Cost review or other expenses could be possible, and the number of competitors could decrease, due
to the fact that the service has been mature, leading to a less competitive environment. And also, we could
acquire new good jobs resulting from competitors’ exit of the market. Such can be expected as the businessmatures to this degree.
We forecast a decline in earnings, but there is a possibility that profits might not actually decline. Such asituation will also have a significant impact on earnings.
Real Estate Tech and HealthTech are growing further. These businesses already recorded extremely highgrowth rates, but there is more room to grow. Since we have only 12 months to go, it is uncertain how far
they can grow. Basically, the chart will show an upward trend, and one month will make a big difference.
For example, if scheduled sales are made one month ahead, this will significantly contribute to an earnings
increase. If this happens, it could have a big impact, in terms of filling the difference of 1.0 billion yen.
Nobuaki Nakata: Thank you very much.
Wada: Do you have any other questions?
Murakami: I’m Murakami from SMBC Nikko Securities Inc. Thank you very much.
I would like to ask several questions. The first is about below the current profit in the current fiscal year's plan.
There are various items such as extraordinary losses and minority interests. Could you give us your point ofview on this first?
There were impairments and other items, especially in the last fiscal year and the previous fiscal year. Is thisnet profit of 1.0 billion yen for the current fiscal year considered such an item? Could you comment on this?
Nobuaki Tanaka: The plan does not incorporate extraordinary losses, because many of them are unexpected.
Below ordinary income and income before income taxes, minority interests and subsidiaries will make profitsand pay taxes, so income taxes are the majority.
SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
38Murakami: Thank you. Second, I would like to ask about your investment policy going forward. Earlier, youmentioned an assumption of the case that you can borrow about 10.0 billion yen. What financial discipline doyou have?
In particular, since there are considerable borrowings on the balance sheet, how large is the possible
investment in conjunction with the financial strategy? Could you comment on this?
Nobuaki Tanaka: This is a case-by-case situation, so it is hard to say specific figures. However, if the businessto be acquired is highly asset-oriented and profits can be earned without making any new upfront investments,
the discussions with financial institutions will naturally proceed smoothly.
For example, we believe that acquiring such business is less risky than acquiring a business that is not likely
so, even with a small amount of money. I think this is a case-by-case situation.
Currently, the amount of borrowing is relatively large, but cash and deposits are more than 15.0 billion yen. I
believe that the net amount of borrowing of interest-bearing debt is not so large at present.
If there is a deal, the deal will be considered on a project basis. As I just mentioned, we would probably nottake a deal requiring a very high payment, since this is still only in the planning stage. I believe that most of
our efforts will be focused on acquiring a deal with an appropriate asset background, or with customer's
background and then strengthening it.
Murakami: You are not thinking of having to raise money.
Nobuaki Tanaka: No. Currently, there are no such plans.
Murakami: The last question concerns the dividend, which is your current approach to dividends. Profits havegrown to this point, and I think you still have room to increase the dividend a little more. I would like to ask
for your comments on the dividend policy and what you will do in the future.
Nobuaki Tanaka: The Company will pay stable dividends, unchanged from its previous policy. The Company's
policy is not to raise the dividend payout ratio, but to pay a certain amount of dividends in a stable manner.
We expect net income to increase steadily in the current fiscal year and beyond. For example, we believe
there is a possibility that the dividend policy will change in the future, including commemorative dividends,
as next year will mark the 20th anniversary.
The current fiscal year's dividend is based on the Company's basic policy to date.
Murakami: Thank you.
Wada: Let me take the last question. Do you have any questions?
If not, I'll finish the financial results briefing session of FreeBit Co., Ltd. Thank you very much for your visit
today.
[END]

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
39

______________
DocumentuNotesu
1.
2.

SupportJapan
TollfreePortiono of the document where the audio io unclear are marked ao followo: [Inaudible].
Thio document hao been tranolated by SCRIPTS Aoia.

03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
40

Disclaimer
SCRIPTS Asia reserves the right to edit or modify, at its sole discretion and at any time, the contents of thisdocument and any related materials, and in such case SCRIPTS Asia shall have no obligation to provide
notification of such edits or modifications to any party. This event transcript is based on sources SCRIPTS Asia
believes to be reliable, but the accuracy of this transcript is not guaranteed by us and this transcript does not
purport to be a complete or error-free statement or summary of the available data. Accordingly, SCRIPTS Asia
does not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of theinformation contained in this event transcript. This event transcript is published solely for information
purposes, and is not to be construed as financial or other advice or as an offer to sell or the solicitation of an
offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.
In the public meetings and conference calls upon which SCRIPTS Asia’s event transcripts are based, companies
may make projections or other forward-looking statements regarding a variety of matters. Such forwardlooking statements are based upon current expectations and involve risks and uncertainties. Actual results
may differ materially from those stated in any forward-looking statement based on a number of importantfactors and risks, which are more specifically identified in the applicable company’s most recent public
securities filings. Although the companies may indicate and believe that the assumptions underlying theforward-looking statements are accurate and reasonable, any of the assumptions could prove inaccurate orincorrect and, therefore, there can be no assurance that the anticipated outcome described in any forwardlooking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE
PUBLIC MEETING OR CONFERENCE CALL. ALTHOUGH SCRIPTS ASIA ENDEAVORS TO PROVIDE ACCURATE
TRANSCRIPTIONS, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE
TRANSCRIPTIONS. IN NO WAY DOES SCRIPTS ASIA OR THE APPLICABLE COMPANY ASSUME ANYRESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BY ANY PARTY BASED UPON ANY EVENT
TRANSCRIPT OR OTHER CONTENT PROVIDED BY SCRIPTS ASIA. USERS ARE ADVISED TO REVIEW THE
APPLICABLE COMPANY'S PUBLIC SECURITIES FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER
DECISIONS. THIS EVENT TRANSCRIPT IS PROVIDED ON AN "AS IS" BASIS. SCRIPTS ASIA DISCLAIMS ANY AND
ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWAREERRORS OR DEFECTS, AND ACCURACY, COMPLETENESS, AND NON-INFRINGEMENT.
None of SCRIPTS Asia’s content (including event transcript content) or any part thereof may be modified,
reproduced or distributed in any form by any means, or stored in a database or retrieval system, without theprior written permission of SCRIPTS Asia. SCRIPTS Asia’s content may not be used for any unlawful or
unauthorized purposes.
The content of this document may be edited or revised by SCRIPTS Asia at any time without notice.
Copyright © 2018 SCRIPTS Asia Inc. (“SCRIPTS Asia”), except where explicitly indicated otherwise. All rights
reserved.

SupportJapan
Tollfree03.4405.3160
0120.966.744

North America
Email Support

1.800.674.8375
support@scriptsasia.com
41