Annual Securities Report(Report based on the provision of Article 24, paragraph (1) of
the Financial Instruments and Exchange Act)
Fiscal year
(Reporting Period 62)

From February 1, 2023
To January 31, 2024

Artner Co., Ltd.
Nakanoshima 3-2-18, Kita Ward,Osaka Citygo(E05717)1

Contents
Page

Cover
Part I Company Information ........................................................................................................... 2
I.
Overview of the Company ................................................................................................... 3
1
Key Financial Data ........................................................................................................... 3
2
History .............................................................................................................................. 4
3
Business Fields ................................................................................................................. 5
4
Information about the Affiliates ....................................................................................... 6
5
Employees ......................................................................................................................... 6
II.
Business Conditions ............................................................................................................ 8
1
Management Policy, Business Environment, and Issues to be Addressed ...................... 8
2
Our Approach to and Efforts toward Sustainability ........................................................... 8
3
Business and Other Risks ............................................................................................... 17
4Management Analysis of Financial Status, Business Performance and Cash Flows ..... 19
5
Important Business Contracts ......................................................................................... 23
6
R&D Activities ............................................................................................................... 23
III.
Facilities and Equipment ................................................................................................. 24
1
Overview of Capital Investments and Others ................................................................. 24
2
Major Facilities ............................................................................................................... 24
3
Plans for Installation, Retirement, etc. of Facilities ........................................................ 25
IV.
State of the Reporting Company ..................................................................................... 26
1
The Company’s Shares ................................................................................................... 26
2
Acquisition of Treasury Shares ...................................................................................... 29
3
Dividend Policy .............................................................................................................. 29
4
Corporate Governance .................................................................................................... 30
V.
Financial Information ...................................................................................................... 43
1
Non-consolidated Financial Statements, etc ...................................................................... 44
VI.
Overview of Shareholder Services at the Reporting Company ....................................... 63
VII.
Reference Information about the Reporting Company .................................................. 64
1
Information about the Parent Company, etc. of the Reporting Company ...................... 64
2
Other Reference Information .......................................................................................... 64
Part II Information about the Reporting Company’s Guarantor, etc ............................................. 65[Auditor’s Report][Internal Control Report]-1-

[Cover][Reported Document]

Annual Securities Report[Clause Serving as Basis]

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

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

April 25, 2024

[Fiscal Year]

Reporting Period 62 (FY2024) (February 1, 2023 to January 31, 2024)[Company Name]

Artner Co., Ltd.

[Name and Title of Representative]

SEKIGUCHI Sozo, President and CEO[Address of Head Office]Nakanoshima 3-2-18, Kita Ward,Osaka City

[Telephone No.]

06(6445)7551[Name of Administrative Contact]

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

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

[Telephone No.]

06(6445)7551[Name of Administrative Contact]

HARIGAE Tomonori, Director and Head of the Management Division[Location for Public Inspection]

Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)-2-

Part I Company Information
I. Overview of the Company
1 Key Financial Data
State of the Reporting Company
Fiscal YearFY2020

FY2021

FY2022

FY2023

FY2024

Year end

January 2020

January 2021

January 2022

January 2023

January 2024

Net sales(thousandsof yen)7,002,175

7,174,725

8,102,991

9,242,360

10,110,524

Ordinary profit(thousandsof yen)893,656

910,457

1,032,341

1,203,054

1,532,616

Profit(thousandsof yen)613,377

628,561

728,785

895,148

1,051,817

profit of entities(thousands
for using equity

－

－

－

－

－

(thousandsof yen)238,284

238,284

238,284

238,284

238,284(shares)

10,627,920

10,627,920

10,627,920

10,627,920

10,627,920

Net assets(thousandsof yen)2,728,380

3,123,182

3,582,246

4,047,958

4,271,153

Total assets(thousandsof yen)3,801,139

4,432,313

5,088,983

5,673,188

6,114,087(yen)

256.77293.93337.14380.96401.97

20.50

23.00

34.50

60.00

75.00

10.00

11.50

14.00

20.00

37.50

Share ofaccounted
methodof yen)Capital
Total number of shares issued

Net assets per share
Dividend amount per share(Interim dividend per
included therein)

share

(yen)

Earnings per share

(yen)

57.73

59.16

68.59

84.24

98.99

Diluted earnings per share

(yen)

－

－

－

－

－

Equity ratio

(%)

71.8

70.5

70.4

71.4

69.9

Return on equity

(%)

24.2

21.5

21.7

23.5

25.3

(times)

14.3

14.6

12.7

11.8

22.3

(%)

35.5

38.9

50.3

71.2

75.8

591,153

899,285

770,935

872,598

1,126,248(42,723)(30,979)

33,643(24,085)(5,975)(215,920)(232,089)(270,037)(426,831)(818,544)

2,383,441

3,019,657

3,554,199

3,975,881

4,277,610(people)

1,002

1,079

1,180

1,276

1,321

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

(%)

91.8

98.3

102.7

123.1

262.9

(%)

110.2

121.2

129.7

138.8

183.9

Highest stock price

(yen)

1,075

1,116

939

1,084

2,441

Lowest stock price

(yen)

665

490

773

814

989

Price Earnings Ratio
Payout ratio

Net cash provided by (used in) (thousandsof yen)operating activities
Net cash provided by (used in) (thousandsof yen)investing activities
Net cash provided by (used in) (thousandsof yen)financing activities
Cash and cash equivalents at end (thousandsof yen)of period
Number of employees-3-Notes: 1. Since we do not create consolidated financial statements, key financial data pertaining to the consolidated fiscal year are
not included.
2. Shares of profit of entities accounted for using equity method are not shown because we do not have an affiliate.
3.Diluted earnings per share are not shown because we have no dilutive shares.
4.The highest and lowest stock prices refer to those that were quoted in the Prime Market of the Tokyo Stock Exchange onor after April 4, 2022. Prices posted any time earlier were in the First Section of the Tokyo Stock Exchange.
5. The dividend amount per share for FY2023 includes the commemorative dividend of JPY 17 for the Company’s 60th
anniversary of establishment and the 15th anniversary of listing on JASDAQ (now Prime Market).
6. The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) has been applied since thebeginning of FY2023, and thus it is reflected in the figures for the key financial data for FY2023 and thereafter.

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

June 1964
March 1980
November 1986
April 1998
December 2003
February 2004

October 2007
February 2010
April 2010

February 2011

February 2012
February 2013
July 2013
February 2016

October 2017
February 2018

July 2018
January 2019

Event
Sekiguchi Kogyo Co., Ltd. and the family of current President and CEO SEKIGUCHI Sozo invest 300,000 yen as
capital to establish Osaka Technology Center Co., Ltd. to start the main business of design creation and design
drawing services.
Headquarters (current Osaka headquarters) move to Fukushima Ward, Osaka City.
Headquarters move to Kita Ward, Osaka City.
The Company launches its specified worker dispatching business as the Worker Dispatching Business Act was
enforced.
The Company changes its trade name from Osaka Technology Center Co., Ltd. to Artner Co., Ltd.
The Company obtains its license for general worker dispatching business.
The Company obtains its license for the paid employment agency business.
The Company establishes two headquarters in Osaka and Tokyo. The Tokyo headquarters opens in Minato Ward,
Tokyo.
Company stock listed on JASDAQ.
The Tokyo headquarters move to Kohoku Ward, Yokohama City.
With the merger between the JASDAQ Securities Exchange and the Osaka Securities Exchange (OSE), theCompany lists its stock on the OSE JASDAQ.
The learning centers open in Suita, Osaka, for centralized management of education and training for newly
graduated engineers.
The Company goes through reorganization to open business offices (in Utsunomiya, Yokohama, Nagoya, andOsaka) under the Engineer Business Division.
The Human Resources Business Department and the Hyper Artner Business Department are established under the
Human Resources Business Division.
The Hyper Artner Business Department is renamed the Hyper Artner Business Division.
The Engineer Agency Business Division is established.
With the integration of the Tokyo Stock Exchange (TSE) and the OSE, the Company lists its stock on the TSE
JASDAQ (Standard).
The Company integrates its business divisions to reorganize them into the Engineer Business Division and Human
Resources Business Division.
The Engineer Business Division and the Hyper Artner Business Department are established under the Engineer
Business Division.
The Technology Development Department and Engineer Agency Business Department are established under the
Human Resources Business Division.

Stock listing moved to the Second Section of the Tokyo Stock Exchange.
The Engineer Business Division and the Hyper Artner Business Department under the Engineer Business Division
are disbanded.
The High Value Group, the Wide Value Group, the Product Value Group, and the Contracting Group are
established under the Engineer Business Division.
Stock listing moved up to the First Section of the Tokyo Stock Exchange.
The recruitment, education, and sales departments are integrated into learning centers (current learning centers inWest Japan) and relocated to a different part of Suita.

-4-March 2020
February 2022

April 2022

The learning centers in East Japan open in Kohoku Ward, Yokohama City.
The Human Resources Business Division is disbanded to divide its organizational functions into the Engineer
Agency Business Division and the Technology Development Division.
The Staffing Service Group, the Career Hire Group, and the New Hire Recruitment Group are established under
the Engineer Agency Business Division.
With the reorganization of the TSE Sections, the Company’s listed stock moves to the Prime Market of the Tokyo
Stock Exchange.

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

Client company(client)
Staffing agreement

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

Client company (client)
Service agreement

Employment relationshipSupervisory relationship
Design engineer-5-[Systematic diagram of Artner’s business]
The figure below graphically shows how the business stated above is structured.

Client companies

Engineer dispatching

Contracting

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

4 Information about the Affiliates
Not applicable.

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

1,321

As of January 31, 2024
Average annual wage
(yen)

Average years of service(years)30.4

6.6

4,625,682

Notes: 1. The number of employees is that of staff members working at Artner. It does not include registered employees.
2. The average annual wage includes bonuses and nonstandard wages.
3. Since we have only one reportable segment, figures sorted by segment have been omitted.
(2) Labor union
Artner’s labor union is named Artner Workers’ Union, which has 1,192 members as of January 31, 2024. The superior body it
belongs to is UA ZENSEN.
We have stable labor-management relations.
(3) Share of female workers in middle managerial positions, usage rate of childcare leave by male workers, and wage differences
between male and female workers
FY2024 (February 1, 2023 to January 31, 2024)
Share of female
workers in middle
managerial positions(%)
Note 1.

Usage rate of childcare
leave by male workers(%)
Note 2.

3.1

50.0

Wage differences between male and female workers (%)
Note 3.
Workers in regular
employment

All workers
89.2

97.2

Workers in irregular
employment
54.9

Notes: 1. The percentage has been calculated pursuant to provisions of the Act on the Promotion of Women’s Active Engagement inProfessional Life (Act No. 64 of 2015).
2. The usage rate of childcare leave as provided in Article 71-4, item (i) of the Ordinance for Enforcement of the Act onChildcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members (Ordinance of the Ministry of Labor No. 25 of 1991) has been calculated pursuant to provisions of the Act onChildcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members (Act No. 76 of 1991).

-6-

3. The wage differences between male and female workers presented are the ratios of wages for women to wages for men.
Workers are categorized into three types, namely all workers, workers in regular employment, and workers in irregular
employment (employees re-hired after retirement, permanent contract employees, and non-permanent contract employees).
There is no gender-based difference in wages in our wage plan and system. The differences shown above come from theratio of women in middle managerial positions and differences in job categories.

-7-II. Business Conditions
1.

Management Policy, Business Environment, and Issues to be Addressed
The Company’s management policy, business environment, and issues to address are as described below.
Please note that the statements about the future in the text are judgments we made at the end of the fiscal year ended
January 31, 2024.
(1) Management policy
Based on our management philosophy of being an Engineer Support Company, we are committed to serving as a technical partnerthat contributes to the sustainable growth of our clients. This basic stance, developed over many years, has built up a lot of trust
and achievements, establishing our firm position as a pioneer in the industry.We will continue to expand our corporate value by
promoting management that will win the support and approval of our clients, shareholders, employees, and all other members ofsociety.
(2) Corporate planning and strategy(Guiding principle for the Medium-Term Business Plan)“Build a foundation for sustainable and next-generation growth”“Make Value for 2022 to 2024”(Priority measures for the Medium-Term Business Plan)(i) Promote strategies by segment• Develop strategies for each segment (recruitment - education - assignment - system).
• Establish approaches to markets by segment.
• Explore and seek new specialist fields of technology.
(ii) Promote diversity and inclusion in talent management• Utilize workers of retirement age, women, and foreign workers (overseas students) as personnel.
• Utilize and organize partner companies (set up a contracting system).

(3) Objective indicators for assessing the achievement status of management goals, etc.
In the engineer dispatching business, our main business, the following indicators are used. Net sales: the amount calculated by the
number of operative personnel (number of engineers × utilization rate) × unit price of engineers × total work person-hours; costof sales: labor costs for engineers assigned to our clients; and selling, general and administrative expenses: labor costs for engineers
undergoing in-house training (standby status) and labor costs for other staffers.
We consider the engineer count, utilization rate, and unit price of engineers as particularly important management indicators, andwill focus on efforts to improve them further.
(4) Business environment
We will continue to watch the impact of the Noto Peninsula Earthquake, which occurred on January 1, 2024, on the economy togain a clearer outlook.
In regard to the market environment during the fiscal year ending January 31, 2025, we envisage that the full post-pandemic
recovery will speed up, and that our strategically critical clients, namely manufacturers in industries related to automobiles andsemiconductor manufacturing equipment, will further accelerate their development work. With this market environment, weforesee buoyant demand for engineers we provide will continue.
(5) Business and financial issues that should be prioritized
Our main business, which is the engineer dispatching business, consists of a cycle of recruitment, training, sales, and support
activities. We must address the following issues for future business expansion.
(Recruitment activities)
We view securing and increasing the number of talented engineers as an essential requirement for the expansion of our business.
Therefore, we will strive to secure high-quality talents that meet the market needs by implementing measures such as improving
our recruitment criteria, securing recruitment opportunities, hiring diverse and inclusive talents, optimizing the composition ofengineers by field and business domain, and optimizing the composition of new graduate and career hires.
With regard to the recruitment of new graduates, we will conduct company information sessions and interviews, etc., either online
or in person, for students in order to secure participants in the selection process. We will also regularly provide detailed followups to universities and prospective employees, and hold get-togethers for prospective employees in an effort to increase the-8-percentage of prospective employees who join the Company.
(Training activities)
We will improve the skills of our engineers by providing general, external, basic, customized, and/or career training based on our
long-accumulated experience.
In addition, we will strive to improve the technical and human skills of our staff by holding skill development seminars for all
employees and human development training for managers.
(Sales activities)
We will secure and expand our business partners by strengthening our new business development and sales capabilities, utilizing
online conferencing tools, and making proposals for the selection of engineers, team dispatching, and organization of contracting
services in response to client needs.
In addition, we will negotiate with client companies to assign and place appropriate engineers for improved business terms andconditions, such as an increase in the unit price of engineers.
(Support activities)
Through regular interviews with engineers, including online meetings, we will strive to improve the retention rate by providing
guidance and advice according to the engineers’ wishes and actual conditions, and by providing dedicated counselors for improved
mental health and motivation.

2.

Our Approach to and Efforts toward Sustainability
Our approach to and efforts toward sustainability are as stated below.
Please note that the statements about the future in the text are judgments we made at the end of the fiscal year ended
January 31, 2024.
(1) Sustainability in general
Artner’s basic approach to promoting sustainability activities is to support the growth and self-actualization of our engineers basedon our management philosophy of being an “Engineer Support Company that supports our engineers’ dreams,” while seeking tomaximize enterprise value, contribute to the resolution of social issues through our business activities, and build a foundation forsustainable growth and growth for the next generation. Based on this approach, we have established the following Basic
Sustainability Policy as well as a human rights policy, procurement policy, and other policies to clarify the principles and directionof our corporate activities. In addition, considering stakeholder interests and social issues, as well as their impact on our business
management, we have identified eight materiality topics (material issues) that should be prioritized and are engaging in effective
management practices and business activities to resolve these issues.
To ensure that our sustainability initiatives are accessible to all stakeholders, we provide information in our Annual Report, on
our sustainability website, and through other means.

Basic sustainability policy
Cultivating people
Employee happinessCorporate governanceContributing to society(i)

To foster engineers to support manufacturing industries.
To provide a workplace environment that makes the work of all employees meaningful andfulfilling.
To sustain and develop positive relationships with all stakeholders, while strictly abiding by all
applicable laws and regulations.
To make a positive contribution to society through business, to help build a better and more
prosperous world.

Governance
Artner sees sustainability issues, including social and environmental issues such as the recent SDGs and ESG, as key
management issues, and has established the Sustainability Committee to serve as a structure to promote sustainability
management. Under the direct supervision of the Board of Directors, the Committee is responsible for establishingsustainability policies, targets, and action plans, managing and evaluating progress toward these targets, deliberating on
individual measures, and reporting to the Board of Directors.
The Committee, chaired by the President and CEO, is composed mainly of Directors who are not members of the Audit andSupervisory Committee, Directors who are members of the Audit and Supervisory Committee, and division heads andmanagers, and is held four times a year.

-9-Structure for promoting sustainability(ii)Strategy
Our materiality topics (material issues) are determined through the following process.
a. Identify the issues
We analyzed potential materiality topics based on various international standards, ESG-related external evaluations, andrequirements from society including stakeholders. Thirty-one topics were identified.
b. Prioritize the issues
The identified issues were assessed by conducting internal and external stakeholder surveys in terms of their expectation andrequirement levels for Artner, and then prioritized by two criteria: “importance to stakeholders” and “importance to Artner.”c. Validate and determine the material issues
Selected and prioritized issues were reviewed in the Sustainability Committee for validation to finalize Artner’s materiality topics.

- 10 -

(iii) Risk management
In addition to clarifying the system for the overall management of various risks, we classify and define each business risk by
type and have the department in charge of each type of risk monitor and analyze the risk situation. We also have a system inplace for the overall management of various types of risks through the Compliance and Risk Management Meeting, where
we clarify and monitor the management and countermeasures for each type of risk.
(iv) Indicators and targets
We have categorized the eight materiality topics (material issues) into three areas (Environment, Social, and Governance),and set and monitor KPIs and targets for each issue. These indicators and targets are deliberated on and evaluated by the
Sustainability Committee, then reported to the Board of Directors by the President and CEO, who chairs the Sustainability
Committee. We review these materiality topics (material issues), indicators, and targets as necessary, based on the businessenvironment and awareness of the issues.
(2) Climate Change
In recent years, our social environment has continued to change on a global scale, and addressing social issues, such as
initiatives based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), has become an
important item on the management agenda. We regard addressing climate change as a material issue and have made carbon
neutrality a pillar of our business activities in our new Medium-Term Business Plan (FY2023–FY2025). We will continue tostrategically prioritize markets linked to carbon neutrality, such as electric vehicle (EV), fuel cell vehicle (FCV), automateddriving, and semiconductor-related markets, and will focus on recruitment, education, and sales for these markets. Moreover, by
having our engineers participate in carbon neutrality-related technology development projects such as these, we will advance thedevelopment of these technologies and support their widespread use in the market, thereby contributing to the realization ofcarbon neutrality.
In July 2022, we announced our support for the recommendations from the Task Force of Climate-related Financial Disclosures(TCFD). We will disclose information in a manner consistent with the recommendations published by the TCFD, with the aimof achieving a sustainable society.
(i)

Governance
As we have rated climate change as a high-priority issue, we have established the Sustainability Committee as a special
committee for discussing sustainability-related issues including climate change. This Committee is established directly
under the Board of Directors, and reports and submits the topics it discusses to the Board, which then deliberates andmakes decisions on them. The content of such discussions will be disclosed externally and reflected in the Company’s
management policies and various initiatives.The main members of the Committee consist of Directors who are notmembers of the Audit and Supervisory Committee (including the President and CEO), Directors who are Audit andSupervisory Committee members, as well as division heads and managers. The Committee is held four times a year. The
Committee promotes and manages the status of sustainability issues and initiatives, including those related to climatechange.The topics deliberated in the Committee are reported to the Board of Directors. The Board then deliberates andadopts the resolutions on important risks and opportunities related to climate change, gives instructions on how to deal
with them, and supervises the progress of such initiatives(ii)

Strategy
In April 2022, our Sustainability Committee conducted a climate change scenario analysis based on the recommendations
from the TCFD. For this analysis, we identified key risks and opportunities related to climate change and conducted aqualitative evaluation of their impact. Our first scenario analysis, which covered our main business area of engineer
dispatching, used two scenarios (a 4°C scenario and a combined 1.5°C and 2°C scenario) to examine the impact ofclimate change in the year 2030.We extracted risks and opportunities, and the degree of impact on our business activities
was evaluated on a three-point scale of large, medium, and small.
Regarding the financial impact of climate change on our business, we consider the risk of climate change to be low, as weare primarily engaged in engineer dispatching services in Japan and do not need to own production facilities or otherequipment.

Summary of scenario analysis results (risks and opportunities)
Short-term: Impact is apparent in less than 3 years; Medium-term: Impact is apparent in 3 years to less than 10 years (up to around2030); Long-term: Impact is apparent in 10 years or later
Based on financial impact – Large: Impact is clearly large; Medium: Degree of impact is unknown; Small: Impact is clearly small- 11 -

Large Medium
category category

Small
Timeframecategory

Consideration: risks

Our main customers are in theautomotive industry, which
requires us to provide engineers
who can develop products
related to low-carbon
technologies. If we are slower
than our competitors to respondTransition
to these technologies, ourAdvances in(1.5 and
Short- toengineers’ skills may beTechnology low-carbon
2°C
long-term
consideredobsolete and thetechnologies
scenarios)
demand for the dispatch ofengineers may shrink, resulting
in decreased sales.
If new technologies need to beincorporated, costs for
information gathering andtraining may increase.
Our main customers are in theautomotive industry, which
requires us to provide engineers
who can develop products
related to low-carbon
technologies. If we are slower
than our competitors to respond
Change into these technologies, ourdemand for Short- toMarketengineers’ skills may be
important long-term
considered obsolete and the
products
demand for the dispatch ofengineers may shrink, resulting
in decreased sales.
If new technologies need to beincorporated, costs for
information gathering andtraining may increase.
The momentum for
decarbonization is growing
throughout the supply chain.
Clients may require their
suppliers to reduce emissions
and disclose relevant
information.
Change in
In particular, the automotive
reputation Short- to industry, which accounts for a
Reputation
fromlong-term major part of our customer base,customers
is making much progress in thisarea than other industries. If ourefforts are deemed insufficient,
there is a risk that our reputation
will be damaged, leading to adecrease in sales. In addition,
significant costs may berequired to address these issues.

- 12 -

Consideration:
Evaluation
Evaluation
opportunities(risks)(opportunities)

Large

A low-carbon society
may be promoted,
which will lead to anincrease in the
demand for products
using low-carbon
technologies. In sucha case, our sales may
increase due to anincreased demand forthe dispatch ofengineers to ourexisting clients andnew clients.

Large

MediumSince the Company’s
main customers
belong to theautomotive industry,
actively attracting
engineers who candeal with the designand development
processes that
support the shift tozero-emission
vehicles (ZEVs) may
lead to increased
demand for the
dispatch ofengineers, which
could result in higher

Large

Large

As the entire supply
chain of theautomotive industry
is making an effort to
reduce emissions, if
we becomerecognized as aleader in addressing
climate change
issues, this could
lead to increased
sales.

Large

Physical
impact(4°C
scenario)

Acute

Chronic

If our clients are adversely
Intensifying
affected by increased natural
extremedisasters causing operation
weather
downtime, etc., our sales may
eventsdecrease due to reduced demand(typhoons,for engineers as a result of R&D
torrential Long-termbudget cutbacks.
rains,
Also, in the event that ourlandslides,
offices and training facilities arestorm
affected by such disasters, costs
surges, etc.)
for recovery and relocation may
be incurred.

Rising average temperatures will
Increased
increase the use of air
conditioning, which may
average Long-term
increase costs at all our businesstemperatureand training facilities.

Large

－

Small

If rising outdoor
temperatures
increase the need forsafer and more
comfortable indoor
temperatures, themanufacturers’
demand fordeveloping HVAC
equipment will
increase, which may
result in an increased
demand for the
dispatching of ourengineers andincreased sales.

－

Medium(iii) Risk management
At the Compliance and Risk Management Meeting, we identify risks that need to be addressed among various risks suchas climate change, set priorities for responding to such risks, and manage progress on an ongoing basis. The topics
discussed in the Meeting are reported and submitted to the Board of Directors, which then deliberates and makes
decisions on such topics.
(iv) Indicators and targets
We calculate our greenhouse gas (GHG) emissions as shown below.
Our goal for FY2051 is to achieve net zero GHG emissions
unit： tCO2

Greenhouse gas (GHG) emissions (Scope 1 and Scope 2)
Description
scope1

Use of fuel for rent-a-cars

scope2

Use of electricity at our locations

Target
FY2051Net zero

Total

ResultFY202586.0

FY2024FY2023

FY2022

7.5

11.4

18.0

91.2

79.9

79.3

98.7

91.3

97.3

*Scope 3 emissions are currently being calculated.
(3)

Human Capital
Artner’s Management Philosophy is “Engineer Support Company: We support our engineers’ dreams,” and our Purpose is to“support the growth and self-actualization of engineers, who are Japan’s world-class assets.” As they embody, we have promoted
our business as a corporation that exists for the sake of engineers’ growth while always asking ourselves what we can do for them.
We believe that creating value for the engineers themselves will, in turn, create value for Artner. We also believe that talent is ourgreatest business asset, and that talent development and organizational development are key areas essential to the Company’s
growth.
(i)

Governance
Artner has established a Sustainability Committee to maximize the value of our human capital. The Committee iscomposed mainly of Directors who are not members of the Audit and Supervisory Committee (including the President- 13 -

and CEO), Directors who are Audit and Supervisory Committee members, as well as division heads and managers. The
Committee is held four times a year. At each meeting, the members hold discussions to promote and manage the progressof issues and initiatives related to human capital. The Director/Head of the Management Division serves as the overall
supervisor and the Management Division’s General Affairs and Human Resources Group functions as the Health andProductivity Management Promotion Office to plan, operate, and promote different health-related initiatives. The Boardof Directors oversees sustainability matters, including occupational health and safety, and deliberates on key issues suchas respect for human rights, the promotion of diversity and inclusion, and talent development and retention.
(ii) Strategy
We believe that supporting the growth and self-actualization of engineers, who are Japan’s world-class assets, and creating
value for the engineers themselves will, in turn, create value for Artner. We consider our engineers to be not only assets ofArtner, but also shared assets of Japan, and we nurture engineers as a platform to support their growth and self-actualization
based on our policy on talent development. Amid a rapidly changing work environment and mindset, driven by talentmobility and diversity, we will strive to promote the happiness of working engineers and create a new model for “life as anengineer.”We are also committed to providing a satisfying work environment and supporting the growth and selfactualization of each and every one of our staff members, as stated in our basic sustainability policy: “aiming for thehappiness of all employees.” Our main business, which is the engineer dispatching business, consists of a cycle ofrecruitment, training, sales, and support activities. We must address the following issues for future business expansion.
(Recruitment activities)
We view securing and increasing the number of talented engineers as an essential requirement for the expansion of our business.
Therefore, we will strive to secure high-quality talents that meet the market needs by implementing measures such as improving
our recruitment criteria, securing recruitment opportunities, hiring diverse and inclusive talents, optimizing the composition ofengineers by field and business domain, and optimizing the composition of new graduate and career hires.
With regard to the recruitment of new graduates, we will conduct company information sessions and interviews, etc., either online
or in person, for students in order to secure participants in the selection process. We will also regularly provide detailed followups to universities and prospective employees, and hold get-togethers for prospective employees in an effort to increase thepercentage of prospective employees who join the Company.
(Training activities)
At Artner, we are building a “T-shaped specialist education system,” a system for improving the skills of each and every engineer,in which the horizontal axis represents specialized knowledge and work skills, and the vertical axis represents general educationand communication capabilities. Through this system, we will strive to enable new employees and workers with little or no
experience to participate in cutting-edge projects at an early stage and shift their careers to growing industry fields.
(iii) Risk management
At Artner, the Compliance and Risk Management Meeting identifies human capital risks and monitors their progress. Risks
that may have a significant impact on investors’ decisions include the following.
(Effectiveness of education and training)
We strive to improve the skills of our engineers by providing training programs that have been developed based on many years ofexperience. However, if the training does not turn out to be as effective as expected and the unit price of engineers does not increase
due to low customer satisfaction, and/or if we fail to satisfy the requests from clients and they start to make complaints, our financial
status and business performance may be affected.
(Securing science and engineering graduates)
We consider science and engineering graduates to be an important managerial resource, but if the population of science andengineering graduates were to decrease due to the declining birth rate and other factors, making it significantly more difficult tohire talented graduates, our financial status and business performance may be affected.
(Securing career engineers)
We consider engineers with work experience to be an important managerial resource. However, if the competition to secure careerhires intensifies due to a shortage of engineers who wish to change jobs as a result of booming design and development activities
in the manufacturing industry, making it significantly more difficult to hire talented career engineers, our financial status andbusiness performance may be affected.
(iv) Indicators and targets- 14 -

The Company has established KPIs and targets to evaluate the effectiveness of human capital initiatives in line with our
Medium-Term Business Plan. The targets we set are reviewed according to changes in the external environment and ourprogress made on human capital measures.
Indicators

KPI

Talent development

Average hours of annual training per
employee (engineer)
Average cost of annual training per
employee (engineer)
Percentage of employees who havereceived talent development training
Percentage of employees who havereceived harassment training

Work engagement

Recent result
73.2 hours (FY2024)

Same level each year

54,000 yen (FY2024)

Same level each year

87.4% (FY2024)

Same level each year

100.0% (FY2024)

100.0%

2.6 (FY2024)

2.7

133

200(FY2026)

58

100(FY2025)

Term-end engineer count

1,192

1,600(FY2025)

turnover rate (engineer) *Excluding
retirement and turnover via the

8.3％

7.1％(FY2025)

Recruitment cost(engineer)¥ 0.41 billion¥ 0.66 billion (FY2025)

Share of female employees (engineers)

3.7% (FY2024)

Increase on an ongoing basis

33.8% (FY2024)

Increase on an ongoing basis

5.2% (FY2024)

Increase on an ongoing basis

47.1% (FY2024)

Increase on an ongoing basis

3.1% (FY2024)

Increase on an ongoing basis

Share of female executive officers

0.0% (FY2024)

30.0% or more (FY2031)

Wage difference between male andfemale employees (overall)Wage difference between male andfemale employees (engineers)
Wage difference between male andfemale employees (administration)
Usage rate of childcare leave (maleemployees)
Usage rate of childcare leave (female
employees)

Male 100.0%：Female 89.2%(FY2024)
Male 100.0%：Female 95.8%(FY2024)
Male 100.0%：Female 71.9%(FY2024)

Narrow the difference

50.0% (FY2024)

30.0% or more (FY2029)

66.7% (FY2024)

80.0% or more (FY2029)

Number of occupational accidents

6 (FY2024)

None

Work engagement score(Measurement method: New Brief Job
Stress Questionnaire )Number of new
graduates (engineer)
Number ofcareer hires (engineer)

Mobility

Share of female employees(administration)
Share of female employees (engineers)among new employees
Share of female employees(administration) among new
Share of female employees inmanagerial positions
Diversity

Health/Safety

ComplianceTargetNarrow the difference
Narrow the difference

Occupational accident-related fatality
rate
Downtime due to occupational
accidents
Percentage that received health andsafety training, attendance rate

0.0% (FY2024)

0.0%

52.50 hours (FY2024)

0.00 hours

100.0% (FY2024)

100.0%

Number of serious human rights issues

None (FY2024)

None

Number of discrimination incidents

None (FY2024)

None

100.0% (FY2024)

100.0% (FY2024)

100.0% (FY2024)

100.0%

Percentage of employees who havereceived compliance training
Percentage of employees who havereceived information security training

To achieve the targets, we are specifically making the following efforts.
(Talent development/Work engagement/Mobility)
Artner will strive to improve the skills of our engineers by providing general, external, basic, customized, and/or career training basedon our long-accumulated experience, such as the “human skill enhancement seminar” and “technological capability booster lectures”
that help develop leadership skills. In addition, we will strive to improve the technical and human skills of our staff by holding skill
development seminars for all employees and human development training for managers.
Specifically, we facilitate the improvement of all engineers’ skill levels through educational programs and training curricula- 15 -

segmented by business field, with the aim of promoting the assignment of engineers to upstream business areas where the unit price ofengineers is likely to be higher. This has resulted in more engineers being assigned to upstream business areas, leading to an increasein the unit price of engineers and to the operating margin exceeding the target. In addition, due to the revamping of our businessmodel (establishment of four business divisions), engineers have been more attracted to the Company, and the turnover rate has been
lower compared to before the revamping.
For the development of next-generation leaders, we regularly conduct manager training.
We established the Nomination Committee as an advisory board to the Board of Directors, whose chair and a majority of the members
are independent outside directors. The committee deliberates on the nomination of the President and CEO, directors (not members of
the Audit and Supervisory Committee), directors (members of the Audit and Supervisory Committee), and executive officers(hereinafter collectively referred to as “officers, etc.” in this paragraph). By doing so, we seek to leverage the knowledge and adviceof outside directors, ensure the objectivity and transparency of the nomination process for officers, etc., enhance the supervisory
function of the Board of Directors, and further strengthen our corporate governance.
The Nomination Committee meets at least four times a year to deliberate and evaluate the continuation or replacement of candidates
and reports the results to the Board of Directors.
-Talent retention
We strive to increase motivation and improve the retention rate by holding regular interviews with engineers, including online
meetings, and providing guidance and advice according to the engineers’ wishes and actual conditions. In addition, we provide accessto dedicated counselors for mental health care who help our engineers find answers to various problems they face.
(Diversity)- Promotion of active participation of women
To help establish an employment environment that enables the active participation of women and permits employees to achieve a
better work-life balance, Artner has formulated a General Employers Action Plan, based on the Act on Promotion of Women’sParticipation and Advancement in the Workplace and the Act on Advancement of Measures to Support Raising Next-Generation
Children. We are working to increase the number of female employees in managerial positions and improve the childcare leave andnursing care leave utilization rate.
- Payment of fair wages
Artner’s wage system does not pay different wages based on gender. However, due to the higher proportion of male employees inhigh-ranking positions, the overall wage difference between male and female employees was 100.0% (male): 89.2% (female) in
FY2024. To narrow this gap, we are working to increase the ratio of female employees in middle managerial positions throughtraining and other measures for female employees.
- Promotion of diversity
We believe that promoting workplace diversity and giving all employees the opportunity to demonstrate their full potential will lead toinnovation and value creation. In September 2011, we established the Diversity Promotion Office (now Diversity Team) as adepartment focused on people with disabilities. This department promotes the employment of people with disabilities as well as thecreation of a fulfilling workplace. We strive to foster an inclusive company culture, through measures such as diversity training,
LGBTQ study meetings, and activities to promote an understanding of gender equality by all employees.
(Health/Safety)- Occupational safety and health
By considering the occupational health and safety of our employees, Artner strives to enhance enterprise value and create anorganization where all the employees can work safely and with peace of mind.
In addition, because we believe that the ability of our employees to work in good health and with peace of mind will result in the wellbeing of all the employees and reflection within the company, we promote employee health management and health promotion
initiatives.
- Risks related to potential hazards involved in labor
We strive to prevent accidents and reduce the risk of accidents occurring by providing health and safety education for employees
when they join the company and when they are assigned to clients.
- Employee benefits offered
We have established the Employee Stock Ownership Association, a system that allows employees to build their assets without asignificant commitment through the purchase of company stocks. Funds to purchase company stocks are deducted from employee
salaries and bonuses for non-burdensome, planned investments, with the Company paying out subsidies depending on how much money
was contributed in a month.

- 16 -

- Stance on the labor union
We will respect the rights of employees to form and join labor unions, to bargain collectively, and to participate in peaceful assemblyof their own volition, as well as their rights to withhold such participation. Artner’s labor union is named Artner Workers’ Union. The
superior body it belongs to is UA ZENSEN.
(Compliance)- Human rights
prohibits forced labor, slavery or labor trafficking, and child labor. In addition, we have established a mechanism for human rights due
diligence in line with the United Nations’ Guiding Principles on Business and Human Rights, and will identify negative impacts onhuman rights and work toward preventing and mitigating them, continuously assess the effectiveness of our efforts, and makeappropriate disclosures. There have been zero consultations about discrimination during the current fiscal year.
- Social risks in supply chains
Artner recognizes that human rights initiatives are required not only by the Company, but also by our supply chain. We have therefore
established a procurement policy and will comply with laws and regulations and respect basic human rights as a responsible member ofsociety. We share our approach to human rights with our suppliers and strive to identify human rights risks in the supply chain as partof our procurement process.

3.

Business and Other Risks
Of the matters regarding business conditions and financial information included in the Annual Securities Report, thosethat may have a material impact on investors are stated below. Please note that the statements about the future in the
text are judgments we made at the end of the fiscal year ended January 31, 2024.

(Performance trends in the manufacturing industry)
Our major clients belong to the manufacturing industry, and we dispatch engineers primarily to their design and development
departments. If these major clients were to reduce their capital investments, R&D costs, and the use of external engineers due toeconomic recession and other factors in the countries or regions in which they operate, our financial status and business performance
may be affected. In addition, if significant changes in the business environment take place for automobile-related manufacturers,
which account for a large share of our sales, our financial status and business performance may be affected.
(Competition with other companies in the industry)
If competition with other companies intensifies due to market contraction or new entrants in the engineer staffing industry, where
we operate our business, and this results in a fierce price competition, our financial status and business performance may be affected.
(Effectiveness of education and training)
We strive to improve the skills of our engineers by providing training programs that have been developed based on many years ofexperience. However, if the training does not turn out to be as effective as expected and the unit price of engineers does not increase
due to low customer satisfaction, and/or if we fail to satisfy the requests from clients and they start to make complaints, our financial
status and business performance may be affected.
(Securing suitable clients for our dispatching business)
Although we always strive to secure and expand our clients for our engineer dispatching business, if we are unable to find suitableclients that match our engineers and cannot maintain or improve the unit price of engineers and/or utilization rates, our financial
status and business performance may be affected.
(Regulations on total work person-hours)
The total work person-hours of our engineers is determined based on the business conditions of the client company. If the revisions
to relevant laws and regulations generate a larger pressure against long working hours, which may result in a significant decrease in
the total work person-hours of engineers, our financial status and business performance may be affected.
(Securing science and engineering graduates)
We consider science and engineering graduates to be an important managerial resource, but if the population of science andengineering graduates were to decrease due to the declining birth rate and other factors, making it significantly more difficult tohire talented graduates, our financial status and business performance may be affected.
(Securing career engineers)- 17 -

We consider engineers with work experience to be an important managerial resource. However, if the competition to secure careerhires intensifies due to a shortage of engineers who wish to change jobs as a result of booming design and development activities
in the manufacturing industry, making it significantly more difficult to hire talented career engineers, our financial status andbusiness performance may be affected.
(Information management)
By introducing measures such as acquiring the “PrivacyMark,” we have been committed to properly managing personal
information,confidential information, and all other information obtained in the course of our business operations. However, if suchinformation is leaked to outside parties for some reason, our social credibility will be damaged, and our financial status andbusiness performance may be affected.In addition, although we take appropriate security measures to ensure the stable supply of
our services, system failures and other problems may be caused by computer viruses, unauthorized access, natural disasters, orother unforeseen events, and in such cases, our financial status and business performance may be affected.
(Laws, regulations, licenses, and permits)
The following laws and regulations apply for each of our business categories:(i) Worker dispatching business
Dispatching of engineers, which is our main business, is carried out under the license from the Minister of Health, Labour andWelfare as described below, based on the Act on Securing the Proper Operation of Worker Dispatching Businesses andProtecting Dispatched Workers (hereinafter referred to as “Worker Dispatching Act”)
License nameSupervisory authority

License number

Licensed date

Expiration date

Worker dispatchingbusiness

Ministry of Health,Labour and Welfare

派 27-020513

December 1, 2003

November 30, 2026

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

(ii) Paid employment agency business
Our paid employment agency business is conducted under the license from the Minister of Health, Labour and Welfare as
described below, based on the Employment Security Act:
License nameSupervisory authority

License number

Licensed date

Expiration date

Paid employment agency
business

Ministry of Health,Labour and Welfare

27-ユ-020355

February 1, 2004

January 31, 2027

- 18 -

Article 32-9 of the Employment Security Act stipulates that if a provider of paid employment placement services (including its
executives in case of a company) falls under any of the disqualification grounds as a paid employment agency business (if theCompany is sentenced to imprisonment or more, or is sentenced to a fine for violating the Labor Standards Act, the Employment
Security Act, the Worker Dispatching Act, or other labor-related laws, or for committing a crime under the Penal Code, theImmigration Control and Refugee Recognition Act or other laws, and five years have not passed from the date on which theexecution of the sentence is completed or the sentence is no longer executed; or if the Company becomes an adult guardian or
warrantee, or goes bankrupt and has not had its rights restored, etc.), or violates the Employment Security Act and the Worker
Dispatching Act, the service provider shall be ordered to have its business license canceled or its operations suspended. However,there are no such disqualification grounds applicable to us at this time. However, in the unlikely event that we violate such laws
and regulations and are ordered to have our business license canceled or our operations suspended, it may become difficult tocontinue our business, and our financial status and business performance may be affected.
In addition, if such laws and regulations are revised in the future and if any such revisions made are significantly unfavorable toour business, our financial status and business performance may be affected.
(Disasters, accidents, etc.)
We have established a manual to deal with natural disasters, man-made disasters, and other disasters and accidents (hereinafterreferred to as “Disasters, etc.”) in an effort to minimize the damage. However, if any Disasters, etc. that significantly exceed our
prediction take place, our financial status and business performance may be affected.
In addition, in the event that our business activities are hindered as a result of the spread of COVID-19 infections and other factors,
our financial status and business performance may be affected.
(Climate change)
In the event that our business activities are halted or stagnated as a result of our facilities being damaged by natural disasters due
to climate change, our financial status and business performance may be affected.
In addition, if a carbon tax is introduced or environmental regulations are tightened as part of the government’s effort to transition
to a decarbonized society, and if we are unable to offer personnel that meets our clients’ demands for engineers committed tocarbon neutrality initiatives, our financial status and business performance may be affected.
(Mergers and acquisitions)
We have a policy of conducting mergers and acquisitions (M&A) to acquire new areas of expertise and technology with an aim
to increase sales and revenues through expanding the scale of our business. Our M&As are implemented after thoroughconsideration of the risks involved by conducting preliminary research through detailed due diligence on market trends and clientneeds, as well as the financial status and contractual relationships of the target company. However, M&As may result in significant
capital demands and amortization of goodwill, etc. In addition, such M&As may not necessarily generate synergies as expectedby us. If the business performance does not progress as expected due to major changes in the business environment or businessconditions, goodwill impairment losses or valuation losses on shares may arise, and our financial status and business performance
may be affected. Also, when a new business that we have not been engaged in previously is added to our portfolio through M&As,
additional risk factors specific to that business domain will emerge.
(Medium-Term Business Plan)
In March 2022, we announced our new Medium-Term Business Plan “Build a foundation for sustainable and next-generation
growth — Make Value for 2022 to 2024,” which concludes in the fiscal year ending January 31, 2025, and have been promoting
specific measures accordingly. However, as the Medium-Term Business Plan is based on the outlook of the market environment
and economic conditions at the time the plan was formulated, there is a possibility that the numerical business targets may not be
achieved in the event that the market environment or economic conditions change dramatically beyond expectations and thebusiness environment does not develop as predicted.

4. Management Analysis of Financial Status, Business Performance and Cash Flows(1)

Overview of business performance and other conditions
Artner’s financial status, business performance, and cash flows (hereinafter referred to as “financial performance and otherconditions”) for the fiscal year ended January 31, 2024, are summarized as below.
(i) Financial status and business performanceThis fiscal year has seen the Japanese economy on its way to full recovery as post-pandemic demand grew. Interest in
development remains strong in various industry fields, including our main clients, manufacturers in industries related toautomobiles and semiconductor manufacturing equipment, which generated great demand for engineers we provided.
In these circumstances, we turned out to have more employees in operative personnel than the same period of the previous
year because the number of engineers we have in our engineer dispatching business increased. In addition, the increase isattributable to the facts that the utilization rate remained high as demand for engineers rose, and that newly graduated- 19 -

engineers who joined us in 2023 were assigned to their work ahead of the initial schedule. Moreover, the trend of engineer
shortage pushed up the unit price for newly graduated engineers at their first assignments. Unit price negotiations with clientcompanies based on current engineers’ work performance also led the unit price of engineers to surpass the unit price for thesame period of the previous year. The total work person-hours were at the same level as the same period of the previous year.
The contracting business actively engaged in sales activities. Consequently, we had a larger number of engineers assigned tooutsourced projects. In terms of profit, we provided allowance to our employees in commemoration of the Company’s 60th
anniversary during the previous fiscal year, yet the allowance was not recorded for this fiscal year. Hence, while net sales
increased 9.4%, cost of sales rose only 6.5%. We also hired more staff members, and made recruitment investments including
running recruitment advertising. As our recruitment and sales activities recovered to normal, travel expenses increased, which
led to larger SG&A expenses.
As a result of all this, our financial status and business performance for this fiscal year are as stated below.
a. Financial status
The total assets at the end of this fiscal year increased JPY 440,898 thousand compared to the end of the previous fiscal year to
JPY6,114,087 thousand.
The total liabilities at the end of this fiscal year increased JPY217,702 thousand compared to the end of the previous fiscal year
to JPY 1,842,933 thousand.
The total net assets at the end of this fiscal year increased JPY 223,195 thousand compared to the end of the previous fiscal
year to JPY 4,271,153 thousand.
b. Business performance
Net sales for this fiscal year totaled JPY 10,110,524 thousand (up 9.4% year on year), operating profit JPY1,522,849 thousand(up 27.5％ year on year), ordinary profit JPY 1,532,616 thousand (up 27.4% year on year), and profit JPY1,051,817 thousand(up 17.5% year on year).

(ii) Cash flows
Cash and cash equivalents (hereinafter referred to as “cash”) at the end of this fiscal year increased JPY301,729thousandcompared to the end of the previous fiscal year to JPY4,277,610 thousand.
Cash flows for the fiscal year and factors therein are as stated below.
(Net cash provided by (used in) operating activities)
The cash gained as a result of operating activities totaled JPY 1,126,248 thousand (up JPY 253,650 thousand year on year). Thisis mostly because we recorded JPY 337,660 thousand in profit before income taxes, whereas we also recorded JPY 1,527,357
thousand in income taxes paid.
(Net cash provided by (used in) investing activities)
The cash used as a result of investing activities totaled JPY 5,975 thousand (down JPY 18,110 thousand year on year). This ismostly because we recorded JPY 12,922 thousand in purchase of intangible assets.
(Net cash provided by (used in) financing activities)
The cash used as a result of financing activities totaled JPY 818,544 thousand (up JPY 391,712 thousand year on year). This ismostly because we recorded JPY 818,414 thousand in dividends paid.
(iii) Records of production, orders received, and salesa.
Record of production
A record of production has been omitted because the mainstay of our business consists of software, electronics, and machineengineer dispatching services, which, based on the nature of services provided, are not fit to be presented for a production record.
b.
Record of orders received
A record of orders received has been omitted because orders received are almost equal to sales in terms of monetary amounts due
to how our business works.
c.
Record of sales
Sales results by business category for this fiscal year are as shown below.

- 20 -

Business Category
Engineer Dispatching Business

FY2024 (Fiscal year ended January 31, 2024)
Amount (thousands of yen)
9,116,361

YoY (%)
108.4

Contracting Business

943,575

118.7

Other businesses

50,587147.3

10,110,524

109.4

Total

Notes: 1. Since we have only one reportable segment, the figures are sorted by business category.
2. The table below shows sales results sorted by major client and percentages they make up of overall sales for the last two fiscal
years.
FY2023
FY2024(Fiscal year ended January 31, 2023) (Fiscal year ended January 31, 2024)
ClientAmountAmount(thousands of yen)
Percentage (%) (thousands of yen)
Percentage (%)
Honda Motor Co., Ltd.
1,051,753
11.4
1,292,593
12.8
Honda R&D Co., Ltd.
895,7639.7
1,026,843
10.2

(2)

Analysis and discussion of the state of business performance and other conditions from the perspective of the management
The management of Artner understands, analyzes, and discusses the Company’s business performance and other conditions as
stated below.
Please note that the statements about the future in the text are judgments made at the end of the fiscal year ended January 31,
2023.
(i)

Significant accounting estimates and assumptions used in the estimates
Artner prepares its financial statements based on accounting standards that are generally accepted as fair and appropriate inJapan. The significant accounting policies we have used to prepare the financial statements are as stated in “V. Financial
Information 1. Financial Statements and Other Documents (1) Financial statements.” The financial statements and otherdocuments include projections, which is based on our decision as of the end of the fiscal year ended January 31, 2023. We madethese projections based on logical judgments that consider results in the past. However, since estimates are by their nature
uncertain, results may turn out to differ from the projections.

(ii)

Understanding, analysis, and discussion of the state of business performance and other conditions for the fiscal year ended
January 31, 2024
a. Business performance(Net sales)
We turned out to have more employees in operative personnel than the same period of the previous year because the number ofengineers we have in our engineer dispatching business increased. In addition, the increase is attributable to the facts that theutilization rate remained high as demand for engineers rose, and that newly graduated engineers who joined us in 2023 wereassigned to their work ahead of the initial schedule. Moreover, the trend of engineer shortage pushed up the unit price for newly
graduated engineers at their first assignments. Unit price negotiations with client companies based on current engineers’ work
performance also led the unit price of engineers to surpass the unit price for the same period of the previous year. The total work
person-hours were at the same level as the same period of the previous year. As a result of all this, net sales for this fiscal year
increased 9.4% year on year to JPY 10,110,524 thousand.
(Operating profit, ordinary profit, and profit)
We provided allowance to our employees in commemoration of the Company’s 60th anniversary during the previous fiscal year,
yet the allowance was not recorded for this fiscal year. Hence, while net sales increased 9.4%, cost of sales rose only 6.5%. We
also hired more staff members, and made recruitment investments including running recruitment advertising. As our recruitment
and sales activities recovered to normal, travel expenses increased, which led to larger SG&A expenses. As a result of all this,operating profit for this fiscal year increased 27.5% year on year to JPY 1,522,849 thousand, ordinary profit increased 27.4% year
on year to JPY 1,532,616 thousand, and profit increased 17.5% year on year to JPY 1,051,817 thousand.

- 21 -

b. Financial status(Assets)
The total assets at the end of this fiscal year increased JPY 440,898 thousand compared to the end of the previous fiscal year to
JPY 6,114,087 thousand. This is mostly because we recorded an increase of JPY 301,729 thousand in cash and deposits and anincrease of JPY 110,993 thousand in trade receivables.
(Liabilities)
Liabilities at the end of this fiscal year increased JPY 217,702 thousand compared to the end of the previous fiscal year to JPY
1,842,933 thousand. This is mostly because we recorded an increase of JPY 163,655 thousand in income taxes payable.
(Net assets)
Net assets at the end of this fiscal year increased JPY 223,195 thousand yen compared to the end of the previous fiscal year to
JPY 4,271,153thousand. This is mostly because we recorded an increase of JPY 228,341thousand in retained earnings.

c. Sources of capital and liquidity of funds
The cash we have demand for is primarily to cover personnel expenses for engineers we dispatch to client companies. As a rule,
we allocate our own funds to working capital, funds for equipment, and other required funds. Yet we also turn to borrowings froma bank to raise capital if the situation demands.
The state of cash flows is as stated in “II. Business Conditions 4. Management Analysis of Financial Status, Business Performanceand Cash Flows (1) Summary of business performance and other conditions (ii) Cash flows.”

The table below shows indicators related to our cash flows.
FY2020Equity ratio (%)
Market value-based equity ratio(%)
Ratio of cash flows to interestbearing liabilities (year)
Interest coverage ratio (times)

FY2021

FY2022

FY2023

FY2024

71.8

70.5

70.4

71.4

69.9

230.9

206.9

181.4

186.7

384.2

－

－

－

－

－

－

－

7,849.9

6,663.8

11,431.7

Equity ratio: Equity / Total assets
Market value-based equity ratio: Market capitalization / Total assets
Ratio of cash flows to interest-bearing liabilities: Interest-bearing liabilities
Operating cash flow Interest coverage ratio: Operating cash flow / Interest payments
Notes: 1. The calculation of market capitalization is based on the number of shares issued, excluding treasury shares.
2. The ratios of cash flows to interest-bearing liabilities are not shown because there are no year-end interest-bearing liabilities.
3. The interest coverage ratios for the fiscal year ended January 2020 and the fiscal year ended January 2021 are not shown
because there were no interest payments.
d. Factors that may have a material impact on business performance
In regard to factors that may have a material impact on business performance, we are aware that our business environment, businessfields, how we operate our businesses, and a variety of risk factors may have a material impact on our business performance, as statedin “II. Business Conditions 3. Business and Other Risks.”
Therefore, while keeping an eye on market trends at all times, we plan to strengthen our internal management structure, hire and retain
talented employees, and offer services designed to match market needs, thereby diversifying and reducing risks that may have amaterial impact on our business performance and taking appropriate actions.

e. Objective indicators for assessing management policies, corporate planning and strategies, and the achievement status of management
goals
Our Medium-Term Business Plan has defined the engineer count of 1,600 as a particularly important indicator, and we focus on further- 22 -

efforts accordingly. With new graduates and career engineers who joined us this fiscal year, the term-end engineer count totaled 1,192(up 35 year on year).
5.

Important Business Contracts
Not applicable.

6.

R&D Activities
Not applicable.

- 23 -

III. Facilities and Equipment
Overview of Capital Investments and Others

1.

No important capital investments were made during the fiscal year.
No important facilities/equipment were/was retired or sold during the fiscal year, either.

2.

Major Facilities
The table below shows our major facilities.
As of January 31, 2024
Numberofemployee
Softwares
Other (thousands Total (thousands(thousands ofof yen)of yen)(people)yen)

Carrying amountTools,
Building furniture, and(thousands of
fixturesyen)(thousands ofyen)

Office (Location)

Description

Osaka headquarters(Kita Ward, Osaka City)

Headquarters

1,219

1,314

10,23630,68743,457

24

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

Headquarters,
business office,training facilities

19,222

5,626

6,219

26,68557,75344

Nagoya office(Nakamura Ward,
Nagoya City)

Business office andtechnical center

709

535

－

5,895

7,140

7

Utsunomiya office(Utsunomiya City,
Tochigi Prefecture)

Business office andtechnical center

3,343

828

－

5,315

9,488

13

Learning centers inWest Japan (Suita City,
Osaka Prefecture)

Training facilities
and business office

7,095

3,054

6,868

17,33734,35630

Notes: 1. The above offices are leased facilities. What these buildings contain are mostly furnishings.
2. “Others” in the carrying amount are leasehold and guarantee deposits.
3. The numbers of employees are those of staff members working at these offices. They do not include engineers assigned toclient companies.
4. Other than the above, we own land containing unutilized assets that is worth JPY 25,685 thousand (733 m2 in Kamigori,
Ako District, Hyogo Prefecture; 1,631 m2 in Sasayama City, Hyogo Prefecture; 550 m2 in Kita Ward, Kobe City).
5. Other than the above, major facilities leased from others are as shown in the table below.
As of January 31, 2024
Office (Location)

Description

Leased areas (m2)Annual rent (thousands ofyen)Osaka headquarters (Kita Ward,
Osaka City)

Leased building

536.61

29,413

Leased building

810.1028,525

Nagoya office (Nakamura Ward,
Nagoya City)

Leased building

125.98

5,895

Utsunomiya office (Utsunomiya City,
Tochigi Prefecture)

Leased building

196.91

5,315

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

Leased building

795.8826,006

Learning centers in East Japan,
Yokohama Office of Tokyo
headquarters (Kohoku Ward,
Yokohama City)- 24 -

3 Plans for Installation, Retirement, etc. of Facilities(1)

Installation of new important facilities
Not applicable.

(2)

Retirement of important facilities
Not applicable.

- 25 -

IV. State of the Reporting Company
1 The Company’s Shares(1)

Total number of shares(i)

Total number of shares
Type

(ii)

Total number of authorized shares (shares)

Common shares

36,000,000

Total

36,000,000

Total number of shares issued

Type

Number of shares issued - year- Number of shares issued - Financial instruments exchange
where the Company is listed orend
submission date (As of April Registered/Authorized financial(As of January 31, 2024)
25, 2024)
instruments firms association

Common shares

10,627,920

Total

10,627,920

(2)
(i)

Prime Market of the Tokyo Stock
Exchange

10,627,920

10,627,920

Definition

Number of shares
per share unit－－

Stock acquisition rights
Stock option plans
Not applicable.

(ii)

Rights plans
Not applicable.

(iii) Other stock acquisition rights
Not applicable.
(3)

Status of corporate bond certificates, etc. with share options subject to exercise value change
Not applicable.

(4)

Total number of shares issued and capital
Change in the
Balance of total
Change in legal Balance of legal
total number of
Change in capital Balance of capitalDateshares issued (thousands of yen) (thousands of yen) capital surplus
capital surplus
shares issued(shares)(thousands of yen) (thousands of yen)(shares)

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

(5)

10,627,920－

238,284－

168,323

Details by shareholder

Classification

National
and local

As of January 31, 2024
Shares lessShareholder and shares held (number of shares per unit: 100)than oneshare unit
Foreign corporations, Individuals
Financial
Financial instruments
Other
Total
(shares)etc.
and others- 26 -

government institutions business corporation Nonoperators
individuals Individualsss
Number of
－
－
10
29
62
60
15
9,227
9,403
shareholders (people)
Number of shares
－
5,176
4,573
28,01011,831
118
55,755
105,463
81,620
owned (units)
Ratio of shares owned
－
4.90
4.34
26.56
11.22
0.11
52.87
100.00－(%)
Note: Of treasury shares of 2,469 units are included in the figures under “Individuals and others” and 69 shares in those under “Sharesless than one share unit.”(6)

Major shareholders
As of January 31, 2024
The number of shares

Name / Company nameas a proportion
Number of shares ownedof the total number ofowned (shares) issued shares (excluding

Addresstreasury stock)

Sekiguchi Kogyo Co., Ltd.

3-20, Nangocho, Nishinomiya City, Hyogo

2,126,000

20.00

Artner Employee Stock Ownership
Association

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

808,148

7.60

Osaka Small and Medium Business
Investment and Consultation Co., Ltd.

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

480,000

4.51

The Master Trust Bank of Japan, Ltd. (Trust
2-11-3, Hamamatsucho, Minato-ku Tokyo
Account)

285,900

2.69

BBH FOR FIDELITY LOW-PRICEDSTOCK FUND (PRINCIPAL ALL
SECTOR SUBPORTFOLIO) (Standing
Proxy: MUFG Bank, Ltd.)245 SUMMER STREET BOSTON, MA
02210 U.S.A.
(Payment Service Department, 2-7-1,
Marunouchi, Chiyoda-ku, Tokyo)

243,439

2.29

JPMorgan Securities Japan Co., Ltd.

Tokyo Building, 2-7-3, Marunouchi,
Chiyoda-ku, Tokyo

203,547

1.19

STATE STREET BANK AND TRUSTCLIENT OMNIBUS ACCOUNT
OM02505002 (Standing Proxy: Settlement
and Clearing Services Division, Mizuho
Bank, Ltd.)

100 KING STREET WEST, SUITE 3500,
PO BOX 23 TORONTO, ONTARIO M5X
1A9 CANADA(Shinagawa Intercity Tower A, 2-15-1,
Konan, Minato-ku, Tokyo)

180,000

1.69

166,259

1.56

151,138

1.42

THE BANK OF NEW YORK MELLON 240 GREENWICH STREET, NEW YORK,NY 10286, U.S.A.
140040 (Standing Proxy: Settlement and(Shinagawa Intercity Tower A, 2-15-1,
Clearing Services Division, Mizuho Bank,
Konan, Minato-ku, Tokyo)
Ltd.)
BNYM SA/NV FOR BNYM FOR
2 KING EDWARD STREET, LONDONBNYMGCM CLIENT ACCTS M ILM FE
EC1A 1HQUNITED KINGDOM(Shinagawa Intercity Tower A, 2-15-1,(Standing Proxy: Settlement and Clearing
Konan, Minato-ku, Tokyo)
Services Division, Mizuho Bank, Ltd.)HARIGAE Tomonori

Tsukuba City, Ibaraki

140,840

1.32

Total

－

4,785,271

45.03

Note: The number of shares owned by the Master Trust Bank of Japan, Ltd. (Trust Account) is all for trust services.

(7) Voting rights(i)
Shares issued
As of January 31, 2024
Classification

Number of shares (shares)- 27 -

Number of voting rights

Definition

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

－

－

－

－

－

－

－

－

－

Common shares:

2,400

－

－

Common shares:

10,543,900

105,439－

Common shares:

Total number of shares issued

81,620－－10,627,920

－

－

－

105,439－

Voting rights held by all shareholders

Note: The figure for “Shares less than one share unit” includes 69treasury shares less than one share unit owned by Artner.
(ii)

Treasury shares
As of January 31, 2024

Shareholder name /Company name

Address of shareholder

Artner Co., Ltd.

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

Total

－

Ratio of shares
Number of shares Number of shares Total shares
owned as aheld in others’ owned (shares) proportion of the total
held in thename (shares)
shareholder’snumber of issued
name (shares)
shares (%)- 28 -

2,400

－

2,400

0.02

2,400

－

2,400

0.02

2 Acquisition of Treasury Shares
Type of shares: Acquisition of common shares under Article 155, item (vii) of the Companies Act(1)

Acquisition of shares based on a resolution at the General Meeting of Shareholders: Not applicable.

(2)

Acquisition of shares based on a resolution by the Board of Directors: Not applicable.

(3)

Acquisition of shares not based on a resolution at the General Meeting of Shareholders or by the Board of Directors:
Classification

Number of shares (shares)

Total amount (yen)93

Treasury shares acquired during the fiscal year

129,984

Treasury shares acquired during the period
10
24,760Note: The treasury shares acquired during the period do not include shares less than one share unit purchased during the period
between April 1, 2024, and the date of submission of this Annual Securities Report.
(4)

Acquired treasury shares disposed of/held
Classification

Fiscal year ended January 31, 2024
Total value of
Number of sharesshares for(shares)
disposition (yen)Acquisition period
Total value of
Number of sharesshares for(shares)
disposition (yen)Acquired treasury shares placed for subscription

－

－

－

－

Acquired treasury shares retired

－

－

－

－

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

－

－

－

－

Other

－

－

－

－

Number of treasury shares held

2,469

－

2,479

－

Note: The number of treasury shares held during the period does not include that of shares less than one share unit purchased or soldduring the period between April 1, 2024, and the date of submission of this Annual Securities Report.

3 Dividend Policy
In terms of profit distribution, Artner comprehensively considers future business developments, earnings, the management
environment, as well as the strengthening of its management foundations, and positions the supply of stable dividends to its
shareholders as top-priority management tasks. In addition, our basic approach is to continue to grow our profit this year, ensuringthat the dividend remains at least at the same amount as the previous year and continues to increase.
While taking into account earnings trends and other factors, Artner’s basic policy calls for the biannual distribution of retained
earnings in the form of interim and year-end dividends. The distributions of retained earnings are decided by the generalshareholders meeting in the case of the year-end dividend and by the Board of Directors in the case of the interim dividend. Artner’s
Articles of Incorporation specifies that the Company may pay out dividends of surplus by resolutions of the Board of Directors
pursuant to Article 459, paragraph (1) of the Companies Act.
Shareholders will receive a year-end dividend payment of 37.50 yen per share for this fiscal year. Combined with the interim
dividend of 37.50 yen a share that was already paid, the dividend for the full year totals 75 yen per share. This makes the payout
ratio for this fiscal year 75.8%.
Internal reserves are set aside to address projected future changes in the management environment and invest efficiently in enriching
our pool of human resources, etc.
The table below shows the dividends of surplus for this fiscal year.
Total amount ofdividends (thousands ofyen)

Dividend per share(yen)

Resolution by the Board of Directors on
September 8, 2023

398,454

37.50

Resolution at the Ordinary General Meeting of
Shareholders on April 25, 2024

398,454

37.50

Date of resolution- 29 -

4 Corporate Governance(1) Overview of corporate governance(i) Basic views on corporate governance1.

Artner’s No.1 business challenge is steadily improving shareholder value over the long term. So in addition to expanding ourbusiness and ensuring profitability, we want to grow as a “technical partner” together with our client companies in various
industries, as a collective of engineers focused on developing more and more advanced levels of technical expertise. At thesame time, with a constant awareness of what society needs most, and a desire to create a demand for it, we strive for businessefficiency and soundness to help in the sustainable development of the Company.

2.

At Artner, we are highly conscious of our social responsibility as a company, so in addition to strictly observing all applicablelaws and regulations, we strive to sustain and develop favorable relationships with shareholders, with our local community,with all of our client companies, and with all employees.

3.

We are committed to further strengthening our internal control and risk management efforts through the application of business
management systems (including internal control systems) to enable flexible adaptation to changes in the business environment.
Artner also will promptly disclose relevant information both inside and outside the company and enhance business
transparency.
(ii) Overview of Artner’s corporate governance framework and why this framework is used
Artner is a company with an audit and supervisory committee, an organizational design defined by the Companies Act.
The Company has in place the following bodies in the framework.

(The Board of Directors)
The Board of Directors, chaired by President and CEO SEKIGUCHI Sozo, is composed of eight members including five directors(SEKIGUCHI Sozo, HARIGAE Tomonori, OKUSAKA Kazuya, SATO So, EGAMI Yoji) (Directors who are members of the
Audit and Supervisory Committee are excluded) and three outside directors (NOMURA Ryuichiro, TERAMURA Yasuhiko,
MORII Shinichiro) who are members of the Audit and Supervisory Committee. The Board meets twice a month. At a mid-monthbusiness report board meeting, the members deliberate on the Company’s monthly business performance; and at a regular monthend board meeting, they deliberate and decide on matters relating to the Company’s management plan, as well as significant
matters relating to day-do-day business operations.

The Board of Directors met 30 times in this fiscal year. The attendance of each Director was as follows.
Position
President and CEO
Director
Director

Name
SEKIGUCHI
Sozo
HARIGAE
Tomonori
OKUSAKA
KazuyaAttendance
30/30 (Attendance rate 100％)
30/30 (Attendance rate 100％)
30/30 (Attendance rate 100％)

Director

SATO So

29/30 (Attendance rate 97％)

Director

EGAMI Yoji

30/30(Attendance rate 100％)

Outside directors and standing member ofthe Audit and Supervisory Committee
Outside directors and member of the Audit
and Supervisory Committee
Outside directors and member of the Audit
and Supervisory Committee

NOMURA
Ryuichiro
TERAMURA
Yasuhiko
MORII
Shinichiro- 30 -

30/30 (Attendance rate 100％)
30/30 (Attendance rate 100％)
30/30 (Attendance rate 100％)

(The Audit and Supervisory Committee)
The Audit and Supervisory Committee, chaired by Standing Audit and Supervisory Committee member NOMURA Ryuichiro, iscomposed of three Audit and Supervisory Committee members who are outside directors. The committee meets twice a month.
Directors who are members of the committee also attend board meetings and other important internal meetings. The committee
provides impartial and independent oversight of the Company’s corporate management, based on the audit standards as well as
the audit policy and plans established by the committee.
(The Nomination and Remuneration Committee)
The Nomination and Remuneration Committee, chaired by Audit and Supervisory Committee member TERAMURA Yasuhiko,
is composed of four members including the President and CEO and three members of the Audit and Supervisory Committee
who are outside directors. The Nomination and Remuneration Committee will deliberate and report to the Board of Directors on
the following matters in order to enhance the fairness and objectivity of the decision-making process of nominating anddetermining the remuneration of Directors as well as enhancing corporate governance.
-Matters relating to the appointment and dismissal of Directors-Matters relating to the succession plan
-Matters relating to the nomination policy and the evaluation criteria for “abilities, qualifications, experience, and values” based on thenomination policy-Matters relating to the appropriateness of the remuneration level of Directors-Matters relating to the basic policy on the remuneration of Directors and the policy for determining the remuneration for eachindividual

The Board of Directors met four times during this fiscal year. The attendance of each Director was as follows.
Position

Name

AttendancePresident and CEO

SEKIGUCHI
Sozo

4/4 (Attendance rate 100％)

Outside directors and standing member ofthe Audit and Supervisory Committee

NOMURA
Ryuichiro

4/4 (Attendance rate 100％)

Outside directors and member of the Audit
and Supervisory Committee

TERAMURA
Yasuhiko

4/4 (Attendance rate 100％)

Outside directors and member of the Audit
and Supervisory Committee

MORII
Shinichiro

4/4 (Attendance rate 100％)(The Compliance and Risk Management Meeting)
The Compliance and Risk Management Meeting, chaired by the President and CEO, is composed mainly of Heads ofDivisions and Departments in addition to eight directors. The meeting is held monthly. In these meetings, members discuss
policies and actions to ensure that all officers and employees of the Company abide by laws and the Company’s Articles ofIncorporation, and draw up the Risk Management Guidelines.
(Sustainability Committee)
The Sustainability Committee, chaired by the President and CEO, is composed mainly of Heads of Divisions and Departments
in addition to eight directors. The committee meets four times a year. At each meeting, the members hold discussions topromote and manage the progress of issues and initiatives related to sustainability.
Artner currently uses this framework because the mutual supervision of business operations by directors works well, as does
the audits and supervision of the Board of Directors by the Audit and Supervisory Committee.

- 31 -

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

Appointment/ Dismissal

Appointment / Dismissal

Appointment / Dismissal

Audit / Supervision

Board of Directors

The Audit andSupervisory
Committee

Audit
Selection /Discharge

Collaboration

President and CEO
ReportInquiry

ReportInquiry
ReportInquiry
ReportCompliance and
RiskManagement
Meeting

ReportSustainability
Committee

ReportNomination andRemuneration
Committee

Instructions

Collabora-tion

External
Accounting
AuditorInternal
Audit

Consultation

Consultation/ Advice

Corporate Planning and Strategy Division
Management Division
Engineer Business Division
Engineer Agency Division
Technology Development Division(iii)

ReportAccounts
Audit

Internal
Audit Office

ReportCollaboration

Directions /Commands

Legal
Advisors

Other matters regarding corporate governance(a) Design of the Internal Control System
Artner has designed its internal control system in accordance with the following basic policies on the internal control systemthat has been established by the Board of Directors.
a.

System to ensure that directors and employees execute their duties in compliance with applicable laws and regulations
and the Company’s Articles of Incorporation

1)

At Artner, we have implemented the Compliance and Risk Management Meeting, chaired by the President and CEO, aspart of a system aimed at thoroughly educating employees regarding all applicable laws and regulations and the Articles
of Incorporation, and also ensuring such compliance.

2)

We have set up an internal whistleblowing system, under which directors, employees, and other people engaged in workfor the Company can report corruption or wrongdoing to the Whistleblowing Committee, which has a duty ofconfidentiality. It is prohibited to subject persons who submit whistleblower reports using the system to any
disadvantageous treatment as a result of such reporting. The system is designed to ensure the effectiveness ofwhistleblowing to prevent or quickly detect violations of applicable laws and regulations.

3)

The Internal Audit Office, operating independently of other divisions that execute business practices, conducts internal
audits. Through such audits, it verifies the appropriateness and effectiveness of the internal management system of eachdivision, and by promoting the improvement of the systems, it ensures that all employees lawfully execute their duties.

b.

System to ensure the appropriateness of financial reporting

1)

Directors and employees ensure the appropriateness of financial reporting by executing their duties in compliance withthe “Basic Framework of Internal Control Related to Financial Reporting.”

2)

Directors and employees smoothly operate the system to ensure the appropriateness of financial reporting.

3)

The Internal Audit Office audits the operation of the system to ensure the appropriateness of financial reporting.

c.

System to store and manage information relating to the execution of duties by directors

1)

Information and documents relating to the execution of duties by directors are appropriately stored and managed inaccordance with the “Document Management Rules,” other applicable rules and regulations, and related information
management system manuals.

2)

The Internal Audit Office conducts internal audits to confirm that this information and related documents areappropriately stored and managed.

d.

Rules and system to manage the risk of loss

1)

We have formulated guidelines, “Structure to Conduct Risk Management,” to define a clear system for managing- 32 -

different risks.
2)

We have classified and defined management risks in accordance with these policies, and each responsible division
identifies and analyzes the risk situation for each type of risk. We have set up a system in which the various kinds of risks
are managed through the Compliance and Risk Management Meeting. Management and countermeasures for each type ofrisk are clarified and managed in the meeting.

3)

The Internal Audit Office, which is directly overseen by the President and CEO, is responsible for audits in accordancewith an internal audit plan. The office examines the method and details of audit implementation and revises the audit
method as and when needed.

e.

System to ensure that directors execute their duties efficiently

1)

Board of Directors meetings are held twice a month, as the basis of a system to ensure that directors execute their duties
efficiently. The first board meeting of the month is a performance board meeting and the second is a regular board
meeting. Special board meetings are also held as and when needed. The scope of authority of the Board of Directors isclearly defined in the “Board of Directors Rules.”2)

To ensure efficient business management by the directors, we have formulated “Organizational Rules,” “Administrative
Authority Rules,” “Division of Duties Rules,” “Division of Duties (Administrative Authority) Statement,” and otherinternal rules.

f.

System to ensure appropriate business practices in a corporate group consisting of companies, parent companies, andsubsidiaries
The company does not currently have any parent companies or subsidiaries.

g.

Matters relating to employees who assist with the duties of the Audit and Supervisory Committee, independence of such
employees from other directors who are not members of the committee, and ensuring the effectiveness of the committee’s
instructions to such employees

1)

If requested by the Audit and Supervisory Committee, an employee can be appointed to assist with the duties of thecommittee.

2)

The appointment or dismissal, reassignment, and performance evaluation of such employees require the approval of the
Audit and Supervisory Committee.

3)

If the Audit and Supervisory Committee requests the appointment of an employee to assist with its work, the appointmentof a suitable employee to assist with the work needed by the committee is made in consultation with the committee. The
appointment is made with the prior approval of the committee, and with an assurance of independence. To ensure theeffectiveness of the instructions of the Audit and Supervisory Committee to the applicable employee, the employee works
exclusively for the committee, without being assigned any other work.

h.

System to enable directors who are not members of the Audit and Supervisory Committee and employees to report to the
Audit and Supervisory Committee

1)

Directors who are members of the Audit and Supervisory Committee attend meetings of the Board of Directors and otherimportant meetings and receive reports on the state of business practice execution from other directors who are notmembers of the committee.

2)

Directors who are members of the Audit and Supervisory Committee are able to view important internal decision request
circulars, written decisions, and reports that are not discussed at the important meetings mentioned above, and they also
receive explanation of the contents of such documents as and when needed.

3)

Directors or employees should report to the Audit and Supervisory Committee any of the following: a risk that may
significantly harm the company; misconduct relating to execution of duties by directors who are not members of the
Audit and Supervisory Committee; significant violation of an applicable law, regulation, or the Articles of Incorporation;
reports relating to the state of internal audits; facts reported based on the internal whistleblowing system; and any othermatter requested for the purposes of the Audit and Supervisory Committee.

i.

System to ensure that persons who make whistleblower reports to the Audit and Supervisory Committee are not subjected
to any disadvantageous treatment as a result of such reportingIn accordance with internal rules, it is prohibited to subject persons who submit whistleblower reports using the system to
disadvantageous treatment in retaliation for whistleblowing.

j.

Matters relating to policies concerning procedures for prepayment or reimbursement of expenses arising from theexecution of duties by the Audit and Supervisory Committee members or other processing of expenses or monetary
obligations arising from the execution of such duties
The procedures for prepayment or reimbursement of expenses arising from the execution of duties by members of the- 33 -

Audit and Supervisory Committee or other processing of expenses or monetary obligations arising from the execution ofsuch duties are carried out appropriately through applications made by members of the Audit and Supervisory Committee.
k.

Other systems to ensure that audits of the Audit and Supervisory Committee are effectively conducted

1)

The President and CEO and the Head of the Internal Audit Office strive to enable sufficient opportunities for consultation
with the Audit and Supervisory Committee members to examine the establishment of a suitable working environment forthe committee, in order to ensure the effectiveness of audits.

2)

To ensure the effectiveness of audits by the Audit and Supervisory Committee, the committee members demand that the
President and CEO and the Board of Directors strive to make continuous improvements to the auditing system.

3)

The Internal Audit Office, which is the internal auditing department of the Company, and the division responsible foroversight of compliance and risk management meet regularly with the Audit and Supervisory Committee to exchange
opinions regarding issues to be addressed.

4)

If the Audit and Supervisory Committee deems it necessary to appoint legal advisors or other external advisors when
conducting an audit, such advisors can be appointed.

l.

Basic approach to the exclusion of antisocial forces

1)

To fulfill its obligations of corporate social responsibility and to protect the Company, any relations with antisocial forces
are cut off.

2)

In the event that the company is subjected to any unreasonable demands by antisocial forces, we respond resolutely bylegal means.

3)

We set up a “System for Cutting off Relations with Antisocial Forces” based on the manual for dealing with antisocial
forces.

4)

In preparation for unreasonable demands by antisocial forces, we are building close partnerships with an external
specialized agency, and in the event that we are subjected to an unreasonable demand by antisocial forces, we willconsult with the agency regarding how to respond, or request a response from the agency.

5)

Under no circumstances do we, for the sake of convenience, respond by engaging in behind-the-scenes dealing with orproviding money to antisocial forces.

6)

We regularly inform directors and employees of our “System for Cutting off Relations with Antisocial Forces” andpromote awareness of it.

m. Internal system for exclusion of antisocial forces
1)

Under the Head of the Management Division, the General Affairs Group, as department responsible for exclusion ofantisocial forces, strives to prevent the Company from being subjected to any unreasonable demands from such forces.

2)

We have concluded advisory agreements with a legal advisor and retired police officers, and collaborate with a
specialized agency.

3)

In collaboration with the Head of the Management Division, the General Affairs Group receives guidance and advice
from the legal advisor as circumstances demand, and maintains a database of information on antisocial forces. As andwhen needed, the group also reports the details of such information to the Board of Directors. Based on the information,
each division and the Compliance and Risk Management Meetings examine approaches to the exclusion of antisocial
forces.

4)

We distribute a manual for dealing with antisocial forces to all employees and promote awareness of it.

5)

The General Affairs Group raises awareness of issues relating to the exclusion of antisocial forces regularly at internal
training sessions.

(b) Risk management framework
Artner is aware that risk management is critical to its business. We also acknowledge that risk management related to compliancewith laws and regulations as well as internal rules is particularly important. To ensure the risk is fully managed, we have set up theCompliance and Risk Management Meeting. To properly manage personal information, we use a personal information protection
management system that conforms to the Personal Information Protection Management Systems -- Requirements (JIS Q 15001).
We have also set up an internal whistleblowing system in order to prevent violations of laws and regulations and avoid risks,
thereby developing and enhancing our risk management framework.
(c) Agreements limiting liabilitya.

Directors

Artner has an agreement in place that limits the liability for damages specified in Article 423, paragraph (1) of the Companies Act- 34 -

with each director (non-Executive Director) pursuant to Article 427, paragraph (1) of the said Act. The limit of liability based on theagreement is an amount prescribed by laws and regulations.
b.

Accounting Auditor

Artner has an agreement in place that limits the liability for damages specified in Article 423, paragraph (1) of the Companies Act
with KPMG AZSA LLC who is our Accounting Auditor pursuant to Article 427, paragraph (1) of the said Act. The limit of liability
based on the agreement is an amount prescribed by laws and regulations.
(d)Summary of a directors and officers liability insurance policy

Artner has a directors and officers liability insurance (D&O Insurance) policy in place with an insurance company, as stipulated in
Article 430-3, paragraph (1) of the Companies Act. The insured persons covered by this policy are directors, and they do not pay the
insurance premiums. To provide a summary, this insurance policy, together with the special clauses, shall cover damages
that may arise when an insured director assumes liabilities as a result of the execution of his duties or due to claims brought against
him for being held responsible for the consequences of his action. However, the policy has an exclusion that the insurance company
contends precludes coverage, such as liabilities incurred as a result of an unlawful act that an insured individual willfully andknowingly commits.
(e)

Number of directors

Artner specifies in its Articles of Incorporation that it shall have up to ten directors (excluding directors who are members of the
Audit and Supervisory Committee) and up to five directors who are members of the Audit and Supervisory Committee.
(f) Election of directors
Artner specifies in its Articles of Incorporation that resolutions on the election of directors shall be made with the approval of amajority of the votes of the shareholders who are present and hold at least one-third of the total votes of the shareholders who areentitled to exercise such rights.
The Articles of Incorporation also prescribes that no cumulative voting shall be allowed on the resolutions of the election of
directors.
(g)Resolutions that may be passed by the Board of Directors instead of the General Meeting of Shareholders and reasons
thereofa.

Acquisition of treasury shares

Artner’s Articles of Incorporation specifies that the Company may acquire its treasury shares following a resolution by the Board of
Directors, pursuant to Article 165, paragraph (2) of the Companies Act. The purpose of this provision is to acquire treasury sharesthrough market transactions or by other means so that we are able to carry out flexible capital policies to adapt to change of thebusiness environment.
b.

Organ deciding dividends of surplus

Artner specifies in its Articles of Incorporation that, to ensure flexible capital policies and dividend policies, the Company’s Boardof Directors may resolve on the matters such as dividends of surplus prescribed in the items under Article 459, paragraph (1) of theCompanies Act, unless otherwise provided for in laws and regulations.
c.

Release from liability of directors

Artner specifies in its Articles of Incorporation that, pursuant to Article 426, paragraph (1) of the Companies Act, the Company’s
Board of Directors, instead of the General Meeting of Shareholders, may resolve to release directors (including former directors)
from their liability related to the acts defined in Article 423, paragraph (1) of the said Act to the extent legally permissible. The
purpose of this provision is to provide an environment that enables directors to fulfill their expected role as they perform their duties
by achieving their full potential.
d.

Release from liability of Accounting Auditors

Artner specifies in its Articles of Incorporation that, pursuant to Article 426, paragraph (1) of the Companies Act, the Company’s
Board of Directors, instead of the General Meeting of Shareholders, may resolve to release an Accounting Auditor (or a former
Accounting Auditor) from their liability related to the acts defined in Article 423, paragraph (1) of the said Act to the extent legallypermissible. This provision has been set in the wake of the enforcement of the Companies Act that has made accounting auditors
subject to shareholder derivative suits, so that a balance is kept between our directors and Accounting Auditor.
(h)Requirements for special resolutions at the General Meeting of Shareholders

Artner specifies in its Articles of Incorporation that, regarding the requirement for a special resolution at the General Meeting of
Shareholders as prescribed in Article 309, paragraph (2) of the Companies Act, the resolution is adopted if shareholders with at least
one-third of the total votes of the shareholders who are entitled to exercise their right to vote are present, and at least two-thirds ofthe votes approve the resolution. The purpose of this provision is to ensure the smooth running of the General Meeting of- 35 -

Shareholders by relaxing the quorum of the General Meeting of Shareholders for a special resolution.
(2)

Executive Officers(i)Executive Team

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

President and CEO

Name

Date of birth

SEKIGUCHI December 31,
Sozo
1964

Director and Head of the HARIGAEManagement Division Tomonori

Director Head of the
OKUSAKA
Engineer Business Division Kazuya

Director
Head of the Corporate
Planning and Strategy
SATO So
Division; Head of theEngineer Agency Business
Division

May 24, 1954

September 3,
1955

Career summary

Terms
of officeJune 1983: Joined MEITEC CORPORATION(now MEITEC Group Holdings
Inc.)
April 1988: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
Note 3
March 1993: Appointed Director; Head of the Business Planning OfficeFebruary 1998: Appointed Director; Vice President
February 2002: Appointed President and CEO (current)
February 2012: Appointed Head of the Hyper Artner Business Division
April 1978: Joined Toyobo Interior Co., Ltd.
March 1982: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
March 1990: Appointed Head of the Kanto Business Dept.
March 1991: Appointed Director
March 1993: Appointed Managing Director; Head of the General Affairs Dept. Note 3
February 2007: Appointed Managing Director; Head of the Management
Division
May 2008: Appointed Director; Head of the Management Division (current)

April 1978: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
October 1993: Appointed Head of the No.3 Business Dept.
February 2002: Appointed Standing Auditor
April 2004: Appointed Managing Director; Head of the Human Resources Dept.
February 2007: Appointed Managing Director; Head of the Human Resources
Division
April 2007: Appointed Managing Director; Head of the Business Management
Division
March 2009: Appointed Managing Director; Head of the Technology
Development Division
February 2010: Appointed Managing Director; Head of the Business Promotion Note 3
Division
February 2011: Appointed Managing Director; Head of the Engineer Business
Division
April 2011: Appointed Director; Head of the Engineer Business Division
February 2013: Appointed Director; Head of the Human Resources Business
Division
February 2016: Appointed Director; Head of the Engineer Business Division(current)

April 1998: Joined Nihon Bayer Agrochem (now Bayer Crop Science) June
2004: Joined Aon Affinity
April 2007: Joined Artner Co., Ltd.
Appointed Head of the Corporate Planning and Strategy Division
February 2013: Appointed Head of the Corporate Planning and Strategy
Division; Head of the Engineer Agency Business Division April 2015:
Appointed Director; Head of the Corporate Planning and Strategy
August 14, 1973
Note 3
Division; Head of the Engineer Agency Business Division
February 2016: Appointed Director; Head of the Corporate Planning andStrategy Division
February 2022: Appointed Director; Head of the Corporate Planning andStrategy Division; Head of the Engineer Agency Business Division(current)- 36 -

Number ofsharesowned(shares)

7,950

144,077

144,2093,448

Director Head of theTechnology Development EGAMI Yoji
Division

Title

Name

Director (Audit andSupervisory Committee NOMURA
Ryuichiro
member)

September 26,
1958

Date of birth

February 18,
1956

Director (Audit andSupervisory Committee TERAMURA November 22,
Yasuhiko1955
member)Director (Audit andSupervisory Committee MORII
Shinichiro
member)April 1981: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
February 2007: Appointed Head of the Technology Development Dept. of the
Human Resources Division
April 2007: Appointed Director; Head of the Human Resources Division
February 2010: Appointed Director; Head of the Business Promotion Division
February 2011: Appointed Director; Head of the Human Resources Business
Division
Note 3February 2013: Appointed Director; Head of the Engineer Business Division
February 2016: Appointed Director; Head of the Human Resources Business
Division
February 2022: Appointed Director; Head of the Technology Development
Division (current)

November 28,
1953

Career summary

Terms
of officeApril 1978: Joined Yasuda Trust & Banking Co., Ltd. (now Mizuho Trust &Banking Co., Ltd.)May 1999: Appointed Kinshicho Branch Manager
April 2002: Appointed Hiroshima Branch Manager
April 2004: Appointed Head of the Securities Agency Sales Dept.
October 2005: Appointed Head of the Solution Sales Dept.
April 2007: Appointed Executive Officer; Head of the Solution Sales Dept.
April 2008: Joined Mizuho Realty Co., Ltd. as Senior Managing Executive
Note 4
Officer
September 2016: Joined Taiyo House Co., Ltd. as Vice President
March 2020: Joined Nihon Unist Inc. as Advisor
August 2020: Joined Marubeni Private Reit Inc. as Executive Officer
July 2022: Joined Artner Co., Ltd. as Director and member of the Audit andSupervisory Committee (current)

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

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

66,874

Number ofsharesowned(shares)

350

1,930

930

364,969

Notes: 1. The numbers of shares owned are real holdings that contain each owner’s equity in the Artner Officer Stocks Society, including
shares less than one unit. The number of shares acquired by the Artner Officer Stocks Society was not confirmed as of thedate of submission of this report. Hence, the number shown is the real holdings as of the end of the fiscal year ended January
31, 2024.
2. Messrs. Nomura, Teramura, and Morii are outside directors.
3. One year from the conclusion of the Ordinary General Meeting of Shareholders held on April 25, 2024
4. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on April 27, 2023(ii) Outside directors
Artner has three outside directors. The three outside directors hold shares in the Company as shown in the above table “Executive Team.”
Apart from this shareholding position, none of the three outside directors has any vested interests in the Company, including personal,- 37 -

capital, or business relationships.
Each outside director plays a role in ensuring that highly effective audits are conducted, from an objective and neutral view point, andwe believe that the current system satisfactorily fulfills its management monitoring and advisory functions. The three outside directors
are designated as independent directors as defined by the Tokyo Stock Exchange and they are registered with the exchange.
Although the Company does not have any specific standards or policies regarding independence for the appointment of outside directors,
when making such appointments we not only meet the regulatory requirements established by the Companies Act, but also take into
account the Tokyo Stock Exchange’s criteria for ensuring the independence of independent directors.
(iii) Mutual cooperation between supervision or audits by outside directors and internal audits, audits by Audit and Supervisory
Committee members, and accounting audits; relations with the internal control department
Artner has three outside directors, and they are directors who are members of the Audit and Supervisory Committee.
The Head of the Internal Audit Office and the Audit and Supervisory Committee consult with each other and exchange information andviews when preparing their annual audit plans and creating audit reports. This enables them to share information and conduct audits
efficiently.
The Internal Audit Office and the Audit and Supervisory Committee exchange information and views with an external accounting
auditor of record in order to have a common understanding of issues subject to audits and other relevant matters. They also seek
professional advice and guidance from the Accounting Auditor as needed.

(3)

Audits(j)

Internal audits and audits by the Audit and Supervisory Committee

An internal audit is conducted by the Internal Audit Office, which consists of one Head and one member, in accordance with the internal
audit plan approved by the President and CEO. The audit examines whether the Company’s departments perform their operations incompliance with laws and regulations and other rules. It also reviews the consistency of these operations with the management policy,
along with the validity of operational efficiency. Moreover, as our effort to ensure the effectiveness of internal audits, we haveestablished a framework that enables direct reporting at Compliance and Risk Management Meetings (convened once a month) attended
by the President and CEO and other Directors, Directors who are members of the Audit and Supervisory Committee, and division anddepartment heads.
Artner is a company with an audit and supervisory committee. The Audit and Supervisory Committee consists of three outside directors(one full-time director and two part-time directors). Outside Director NOMURA Ryuichiro has decades of experience in a financial
institution and has engaged in the management of other companies. His knowledge of finance and accounting is considerable. Outside
Director TERAMURA Yasuhiko has decades of experience in a financial institution and has been on the management teams of othercompanies. His knowledge of finance and accounting is considerable.
Outside Director MORII Shinichiro has worked in key posts (e.g., branch manager) as an Executive Officer. His knowledge of financeand accounting is enormous.
The Audit and Supervisory Committee met 26 times during this fiscal year. The attendance of each Audit and Supervisory Committee
member was as follows.

Position
Outside directors and standing member ofthe Audit and Supervisory Committee
Outside directors and member of the Audit
and Supervisory Committee
Outside directors and member of the Audit
and Supervisory Committee

Name
NOMURA
Ryuichiro
TERAMURA
Yasuhiko
MORII
Shinichiro

Attendance
26/26 (Attendance rate 100％)
26/26(Attendance rate 100％)
26/26 (Attendance rate 100％)

As its specific tasks, the Audit and Supervisory Committee develops the audit policies and plans, and reviews the legitimacy of executionof duties by directors, the legitimacy of financial statements and business reports, etc., and the competence of the Accounting Auditor.
Directors who are members of the Audit and Supervisory Committee attend board meetings and other important meetings to offer theiropinions as necessary. They also regularly meet with the President and CEO as a means to audit the legitimacy and validity of executionof duties by directors (excluding directors who are members of the Audit and Supervisory Committee).
Activities of full-time Audit and Supervisory Committee members include communication with and information gathering fromdirectors and others in relevant posts, creation and enhancement of the audit environment, and perusal of documents about importantmanagerial decisions, in accordance with the audit policies and plans set forth by the Audit and Supervisory Committee.

(ii)

Accounting Auditsa.

Accounting firm name
KPMG AZSA LLC

b.

Continuous audit period- 38 -

19 yearsc.

Certified public accountants who performed the service
NAKAHATA Takahide (Designated Limited Liability and Engagement Partner)
KOMATSUNO Satoru (Designated Limited Liability and Engagement Partner)d.

Assistants in the audit service
Four certified public accountants and 19 others serve as assistants in Artner’s accounting audit service.

e.

Policy and reason for selection of the audit firm
The Audit and Supervisory Committee consults the Practical Guidelines for Auditors regarding Accounting Auditor
Evaluation and Selection Criteria published by the Japan Audit & Supervisory Board Members Association, and conducts acomprehensive review to select an Accounting Auditor. In this process, the committee ensures that the accounting firm has
independence as an Accounting Auditor and a proper quality management framework, which covers misconduct risk; thatthe firm has in place an audit framework designed for the size and business of Artner; and that the audit plan and cost arepractical and fair. We have selected KPMG AZSA LLC as our Accounting Auditor because we decided that the firm has allthese elements to conduct proper accounting audits of Artner. The Audit and Supervisory Committee will also dismiss the
Accounting Auditor based on the consent of all Audit and Supervisory Committee members if any of the items of Article
340,
paragraph (1) of the Companies Act applies to the Accounting Auditor.

f.

Evaluation of the Accounting Auditor by Audit and Supervisory Committee members and the Audit and Supervisory
Committee
The Audit and Supervisory Committee consults the Practical Guidelines for Auditors regarding Accounting Auditor
Evaluation and Selection Criteria published by the Japan Audit & Supervisory Board Members Association, and evaluates
the Accounting Auditor from all angles, such as the quality management framework the Auditor has developed and how it
operates, of the independence and expertise the Auditor has, among others, to determine that the Auditor is qualified.

(iii)
Details of audit fees
a. Audit fees for certified public accountants
Fiscal year ended January 31, 2023
Fees for audit services(thousands of yen)
20,000Fiscal year ended January 31, 2024

Fees for non-audit service(thousands of yen)

Fees for audit services(thousands of yen)

2,000

Fees for non-audit service(thousands of yen)

20,000－The non-audit service at Artner during the previous fiscal year is preparation of comfort letters related to prospectuses for stock
offerings.
b. Fees for an organization in the same network to which the certified public accountants belong
Not applicable.
c. Details of other fees based on important audit services
Not applicable.
d. Policy for determining audit fees
Artner’s policy for determining fees for an audit by certified public accountants is that the Company reviews the audit plan,details of the audit, and the audit schedule, among others, presented by the Accounting Auditor and receives approval fromthe Audit and Supervisory Committee to decide on proper fees.
e. Reason for the approval of the Audit and Supervisory Committee given to fees for the Accounting Auditor and other relevant
fees
The Audit and Supervisory Committee reviewed the policy, contents, and the basis for calculation of estimates shown in theaudit plan, which would constitute grounds for fees paid to the Accounting Auditor. Then the committee received andexamined required reports about the contents submitted by relevant internal departments, and determined that the policy,
contents, and the basis were all fair for an accounting audit of Artner. Hence, the committee approved the fees for the
Accounting Auditor.

(4)

Remuneration for directors(i) Policies for determining remuneration for directors and calculation methods
The remuneration of directors consists of a basic remuneration and a performance-linked bonus. The upper limits of the
remuneration established by resolution at the general meeting of shareholders held on April 27, 2017, are ¥200 million peryear for five directors who are not members of the Audit and Supervisory Committee and ¥30 million per year for three
directors who are members of the Committee.
The Board of Directors and the Audit and Supervisory Committee are responsible for deliberating and determining the
remuneration of the Executive Team, which is composed of a fixed remuneration and performance-linked remuneration.
The remuneration of directors who are not members of the Audit and Supervisory Committee is determined solely by the
Board of Directors, whereas the remuneration of the Audit and Supervisory Committee members is determined by- 39 -

deliberation among the members of the Committee.
How to determine the policy for determining the remuneration for each individual is set forth in the rules concerning the
remuneration of directors, resolved by the Board of Directors.
The Board of Directors receives reports that are deliberated by the Nomination and Remuneration Committee based on thepolicy for determining the remuneration and within the range of the total amount resolved by the General Meeting of
Shareholders, so the Board of Directors deems that the content of the report is in line with the said policy.
The policy for determining the percentage of the amount of remuneration for each individual shall be decided based on thereports that are deliberated by the Nomination and Remuneration Committee, comprehensively taking into account the roleand contribution status of each director as well as business performance.
The basic remuneration is determined based on the amount established for each director position, with the Company’sbusiness performance, relative weight against employee salaries, and remuneration levels at other companies taken into
consideration.
However, if it is not appropriate to pay a remuneration calculated in such a manner due to a significant decline in the
Company’s business performance or other factors, the Company reserves the right to reduce the amount of basic
remuneration.
The metrics for performance-linked bonuses is calculated using a formula based on the Company’s annual profit, as this is
judged to be the most reasonable way to measure the performance of directors. For the fiscal year ended January 31, 2024,
the target metrics for performance-linked bonuses had been set at ¥920million, and the result was ¥1,074 million.
The processes that the Board of Directors and the Audit and Supervisory Committee went through to determine theremuneration of directors for the fiscal year ended January 31, 2024, are summarized as follows:
With regard to the remuneration for directors who are not members of the Audit and Supervisory Committee, the amount ofbasic remuneration was determined by resolution of the Board of Directors on April 26, 2018, and has since remained
unchanged. The amount of a performance-linked bonus for each director was determined by resolution of the Board of
Directors on February 29, 2024.
With regard to the remuneration for directors who are members of the Audit and Supervisory Committee, the amount ofbasic remuneration was determined by deliberation among the members of the Committee on April 26, 2018, and has sinceremained unchanged. The amount of a performance-linked bonus for each director was determined by deliberation among
the members of the Committee on February 29, 2024.

(ii)

Total amount of remuneration by type of director, amount by type of remuneration, and the number of corresponding
directors

Type of director

Amount by type of remuneration(thousands of yen)
Performance- linked
Basic remuneration
bonus

Number ofcorresponding directors

Directors who are notmembers of the Audit
and Supervisory
Committee or outside
directors

115,185

95,45019,735

5

Director and memberof the Audit andSupervisory Committee
but are not outside
directors

－

－

－

－

25,154

23,4001,754

3Outside directors

(iii)

(5)

Total amount of
remuneration (thousandsof yen)Total amount of remuneration for each director
We have omitted providing information here as no directors were paid remuneration of ¥100 million or more.

Shares held(i)

Criteria for and definitions of the classifications of shares for investment
Artner defines shares held to gain profits from fluctuations in the value of the stocks or by receiving dividends as sharessolely for investment purposes, and any other shares held as shares for non-investment purposes, and classifies theshares it holds accordingly.

(ii)

Shares held for non-investment purposesa. Policy on holding shares for non-investment purposes; approach for examining the rationality of holding those shares; detailsof the board review concerning the advisability of holding each of the stocks Artner has the policy that it holds shares inenterprises after considering from all angles whether the shareholding will help the Company continue to grow and raise its
medium- to long-term enterprise value. We review these enterprises’ future outlook and stock prices, and discuss the validityof the shareholding at board meetings. We also reduce the number of shares that no longer serve the purpose of holding them.
b. Number of stocks and amount recorded on the balance sheet- 40 -

Total amount recorded on the balance
sheet (thousands of yen)

Number of stocks (stocks)
Unlisted shares－－

Shares other than unlisted shares

5

1,570

(Stocks that increased in the number of shares during the fiscal year under review)
Total acquisition value associated with increase in number of Reason for increase inshares (thousands of yen)numberNumber of stocks(stocks)
Unlisted shares
Shares other thanunlisted shares

－
－

－
－

－
－

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

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

－
13

－
9,332

Unlisted shares
Shares other than unlisted sharesc.

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

Specific shares for investment

Stock

TechnoPro
Holdings, Inc.
Copro-Holdings.
Co., Ltd.

Fiscal year ended
January 31, 2024

Fiscal year ended
January 31, 2023

Number of shares(shares)Number of shares(shares)Amount recorded onbalance sheet(thousands of yen)Amount recorded onbalance sheet(thousands of yen)

100

300

343

1,204

200

200

330

221

100

200

315

591

100

300

293

730

100

220

288

490

－

2,378

－

4,532

Purpose of shareholding, summary of business tie-ups
Artner’setc., quantitative effect of shareholding, and reason forshares held
increase in number of shares

Abist Co., Ltd.

MEITEC Group
Holdings Inc.
AltechCorporation.
Open Up GroupInc.

We hold the shares to collect information aboutindustry trends and other relevant matters. Some ofthese shares were sold during this fiscal year.

No

We hold the shares to collect information aboutindustry trends and other relevant matters. Some ofthese shares were sold during this fiscal year. Note 2.

No

We hold the shares to collect information aboutindustry trends and other relevant matters. Some ofthese shares were sold during this fiscal year.

No

We hold the shares to collect information aboutindustry trends and other relevant matters. Some ofthese shares were sold during this fiscal year.

No

We hold the shares to collect information aboutindustry trends and other relevant matters. Some ofthese shares were sold during this fiscal year.

No

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

- 41 -

Persol Holdings
Co., Ltd.

－

438

－

1,239

－

400

－

368

－

300

－

249

－

200

－

203

－

400

－

91

－

100

－

88

－

100

－

87

SUS Co., Ltd.

Hip Corporation

Sobal
Corporation
JTEC
Corporation
Human Holdings
Co., Ltd.
Forum
Engineering Inc.

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

We examined the rationality of the shareholding anddecided to sell all the shares we had.

Yes

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

We examined the rationality of the shareholding anddecided to sell all the shares we had.

No

Notes: 1. Although it is a challenge to describe a quantitative effect of a shareholding, we have examined economic rationality andvalidity of holding the shares to ensure that we hold these shares for the purposes that are in line with our policy on shareholdings.
2. Copro-Holdings. Co., Ltd. has carried out a 2-for-1 stock split (common shares).
Deemed shares held
Not applicable.
(iii) Shares held solely for investment purposes
Not applicable- 42 -

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

2. Audit Certification
Artner had its financial statements for the fiscal year (from February 1, 2023 to January 31, 2024) audited by KPMG AZSA LLC
in accordance with Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act.

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

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

- 43 -

1【Non-consolidated Financial Statements, etc. 】(1)【Non-consolidated financial statements】(i)【Non-consolidated balance sheets】(Thousands of yen)
As of January 31, 2023
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Work in process
Raw materials and supplies
Prepaid expenses
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Total property, plant and equipment
Intangible assets
SoftwareTelephone subscription right
Total intangible assets
Investments and other assets
Investment securities
Investments in capital
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets- 44 -

As of January 31, 2024

3,975,881
1,129,522
4,099
3,689
30,788365
23,610(6,700)5,161,256

4,277,610
1,240,516
5,357
3,455
45,848573
34,292(7,400)5,600,255

109,981(72,934)
37,046
1,172(1,172)051,188(33,494)
17,69325,68580,42492,265(59,506)
32,758－－－48,178(36,818)
11,36025,68569,80325,715
1,654
27,37023,324
1,654
24,97910,0991,250
563
296,162
94,8761,185
404,137
511,932
5,673,188

1,570
1,200
671
319,608
94,786
1,211
419,048
513,831
6,114,087

(Thousands of yen)
As of January 31, 2023
Liabilities
Current liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Deposits received
Unearned revenue
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Provision for retirement benefits
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Legal capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 45 -

As of January 31, 2024

279,675
82,074
179,813
221,798
17,70037
165,195
7,290
953,585

272,523
95,003
343,469
210,039
20,245－
188,499
21,491
1,151,271

671,645
671,645
1,625,230

691,661
691,661
1,842,933

238,284

238,284

168,323
168,323

168,323
168,323

10,46010,46040,0003,585,798
3,636,258(739)
4,042,126

40,0003,814,139
3,864,599(869)
4,270,337

5,832

815

5,832
4,047,958
5,673,188815
4,271,153
6,114,087

(ii)【Non-consolidated statements of income】(Thousands of yen)
Fiscal year ended
January 31, 2023
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Commission income
Sales income of training materials
Rental income from land and buildings
Dividend income of insurance
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Cancellation penalty
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit- 46 -

Fiscal year ended
January 31, 2024

9,242,360
6,168,503
3,073,856
1,879,747
1,194,108

10,110,524
6,571,185
3,539,339
2,016,489
1,522,849

1
284
574
593
408
6,870
594
1,130
10,457

1
179
574
518
302
7,297
783
1,263
10,920

130
1,330
49
1,511
1,203,054

98
1,020
35
1,153
1,532,616

－
－

7,938
7,938

0
0
1,203,054
348,034(40,127)
307,906
895,148

13,197
13,197
1,527,357
496,775(21,235)
475,540
1,051,817

[Cost of Sales Statement]

ClassificationNote
number

FY2023 (Fiscal year ended January 31,
2023)

FY204 (Fiscal year ended January 31,
2024)

Amount (thousands of yen)

Ratio (%)

Amount (thousands of yen)

5,981,094

96.9
3.1

6,341,944

I. Labor cost
II. Expenses

190,557

Total manufacturing cost for theperiodBeginning inventory of work inprocess
Total

6,171,652

Ratio (%)
96.5
3.5

230,499
100.0

6,572,443

950

4,099

6,172,602

6,576,543

4,099

5,357

6,168,503

6,571,185

100.0

*2

Ending inventory of work inprocess
Cost of sales for the period

FY2023 (Fiscal year ended January 31, 2023)

1. Cost accounting method
Job costing based on actual costs*2 Details are as shown below:
Travel and transportation
JPY 81,585 thousand
Rent
JPY 19,138 thousand

FY2024 (Fiscal year ended January 31, 2024)

1. Cost accounting method
Job costing based on actual costs*2 Details are as shown below:
Travel and transportation
JPY 86,294 thousand
Rent
JPY 17,417 thousand- 47 -

(iii)Non-consolidated statements of changes in equity

Fiscal year ended January 31, 2023
(Thousands of yen)
Shareholders' equity
Capital surplus
SharecapitalBalance at beginning of
periodRetained earnings

238,284

168,323

Other retained earnings

Legalretainedearnings

Legal capital Total capitalsurplussurplus168,323

Generalreserve

10,46040,000Retainedearnings brought
forward

Total retained
earnings

3,120,984

3,171,444

Dividends of surplus(430,334)(430,334)

Profit895,148895,148

Changes during period

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

－

－

－

－

－

464,813464,813238,284

168,323

168,323

10,46040,0003,585,798

3,636,258

Shareholders' equity

Valuation and translation adjustments

Treasury Total shareholders' Valuation difference on
available-for-sale securities
equitysharesBalance at beginning of
period(739)

3,577,312

4,933

Total valuation andTotal net assets

translation adjustments
adjustments

4,933

3,582,246

Changes during period
Dividends of surplus(430,334)(430,334)

Profit895,148895,148

Net changes in items
other than shareholders'equity

898

898

898

Total changes during period－

464,813898

898

465,711

Balance at end of period(739)

4,042,126

5,832

5,832

4,047,958- 48 -

Fiscal year ended January 31, 2024
(Thousands of yen)
Shareholders' equity
Capital surplus
SharecapitalBalance at beginning of
periodRetained earnings

Legal capitalsurplusTotal
capitalsurplus168,323

168,323

238,284

Legalretainedearnings
10,460

Other retained earnings
General Retained earnings
reservebrought forward
40,000Total retained
earnings

3,585,798

3,636,258

Dividends of surplus(823,476)(823,476)

Profit

1,051,817(1,051,817)

Changes during period

Acquisition of Treasury
SharesNet changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

－

－

－

－

－

228,341

228,341

238,284

168,323

168,323

10,46040,0003,814,139

3,864,599

Shareholders' equity

Balance at beginning of period

Valuation and translation adjustments

TreasurysharesTotalshareholders'equityValuation difference on
available-for-sale securities

Total valuation andtranslation adjustments(739)

4,042,126

5,832

5,832

Total net
assets
4,047,958

Changes during period
Dividends of surplus(823,476)(823,476)

Profit

1,051,817

1,051,817

(129)

(129)

Acquisition of Treasury
SharesNet changes in items otherthan shareholders' equity(129)

Total changes during period(129)

Balance at end of period(869)(5,016)(5,016)(5,016)228,211(5,016)(5,016)

223,195

4,270,337

815

815

4,271,153- 49 -

(iv)【Non-consolidated statements of cash flows】(Thousands of yen)
Fiscal year ended
January 31, 2023
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Interest and dividend income
Interest expenses
Loss on retirement of non-current assets
Loss (gain) on sale of investment securities
Decrease (increase) in accounts receivable - other
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accounts payable - other
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Proceeds from sale of investment securities
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Purchase of treasury shares
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 50 -

Fiscal year ended
January 31, 2024

1,203,054
25,922700
23,745
92,111
(285)
130
0
－
970
(118,368)(3,20018,531
24,1394,945
1,272,396
285(130)(399,953)
872,598

1,527,357
24,717700
23,30420,016(181)
98
13,197(7,938)(207)(110,993)(1,025)(11,759)(8,116(5,343)
1,463,826
181(98)(337,660)
1,126,248(7,042)(7,099)(10,154)(2,398)(12,922)
(54)

238

144

－
(26)
(24,085)

9,231
23(5,975)－(426,831)(426,831)
421,6813,554,199
3,975,881(129)(818,414)(818,544)
301,729
3,975,881
4,277,610

[Notes](Significant Accounting Policies)
1. Basis and method for valuation of securities
Available-for-sale securities
Securities other than shares that do not have a market value
Fair value method (with the entire amount of valuation differences inserted directly into net assets, and the cost of sales calculatedusing the moving average method)
2. Basis and method for valuation of inventories(1)
Work in process
Job costing method (with the amount shown on balance sheet written down as profitability declines)(2)
Supplies
Job costing method (with the amount shown on balance sheet written down as profitability declines)
3. Depreciation method for non-current assets(1)
Property, plant and equipment
Declining balance method (note: straight-line method for buildings (excluding facilities attached to the buildings) acquired on orafter April 1, 1998, and for facilities attached to buildings and for structures acquired on or after April 1, 2016)
Service life of the assets is mostly as shown below:
Buildings:
8 - 26 years
Tools, furniture and fixtures:
4 - 15 years(2)
Intangible assets
Straight-line method is applied to software for internal use. The calculation is based on usable life within the Company (5 years).
4.
Recognition criteria for provisions(1)
Allowance for doubtful accounts
To make allowances for the non-payment of receivables, the historical default rate is used for general receivables; and receivables
designated as potentially irrecoverable is determined by reviewing actual collectability on an individual claim basis to record theestimated amount that is deemed irrecoverable.
(2)
Provision for bonuses
To make allowances for the payment of bonuses to employees, the amount that should be paid in the fiscal year under review isrecorded, out of the estimated payment in the following fiscal year.
(3)
Provision for retirement benefits
To make allowances for the payment of retirement benefits to employees, this is recorded based on the estimate for retirement
benefit liabilities as of the end of the fiscal year under review.
(i) Method for attributing estimated retirement benefit payments to the period
When calculating retirement benefit liabilities, the method for attributing estimated benefit payments to the periodthat lasts until the end of the fiscal year under review is as per the benefit formula basis.
Method for processing actuarial gains and losses as expenses
Actuarial gains and losses are treated as expenses in the fiscal year following the fiscal year in which they arise. The
amount is proportionally divided using the straight-line method over a certain number of years (five years) that iswithin the average number of employees’ remaining service years at the time the differences emerge each fiscal year.
5.
Recognition criteria for revenue and expenses(ア) Engineer dispatching services
Artner assigns its engineers to client companies based on staffing agreements to offer services over the terms of the agreements. We
judge that our obligation is fulfilled with the passing of engineers’ hours of operation, and thus we recognize revenue based onengineers’ records of operation during the term.
(イ) Contracting
Artner receives contracts from client companies for design and development, along with other relevant work. We ensure that(ii)

completed work is delivered or operations are performed according to our instructions pursuant to each agreement with a client. We
recognize revenue upon completion of the client’s inspection or of operations performed, as we judge that our obligation is fulfilledthen.
6.
Cash included in the statement of cash flows
The cash included in the statement of cash flows consists of cash on hand, savings available for withdrawal at any time, andshort¬term investments that can easily be converted into cash, have only a limited risk of price fluctuations, and are redeemedwithin three months from the date of acquisition.

- 51 -

1.

(Regarding Non-consolidated Balance Sheet)
Artner has entered into overdraft agreements with its six banks in order to ensure efficient financing for working capital.
The table below shows the balances of borrowings available for withdrawal according to the agreements.
FY2023 (As of January 31, 2023)
FY2024 (As of January 31, 2024)

Overdraft limit
Outstanding borrowing

JPY 1,450,000 thousand－

JPY 1,450,000 thousand－

1,450,000

1,450,000

Balance(Regarding Non-consolidated Statement of Income)*1 Selling expenses accounted for approximately 7% in FY2023, and 7% in FY2024, and general and administrative expenses
93% in FY2023, and 93% in FY2024.
The table below shows the main item of selling, general and administrative expenses, and the amounts thereof.
FY2023(Fiscal year ended January 31, 2023)

FY2024(Fiscal year ended January 31, 2024)

JPY668,997thousand
75,885
168,516
23,79928,826
175,562
25,626

JPY 670,160 thousand
103,230
172,051
27,48918,476
220,184
24,383700

700

Salaries and allowances
Travel and transportation
Rent
Provision for bonuses
Retirement benefit expenses
Commission paid
Depreciation
Provision of allowance for doubtful accounts- 52 -

(Regarding Non-consolidated Statement of Changes in Equity)
FY2023 (Fiscal year ended January 31, 2023)
1. Matters concerning the type and total number of shares issued, and the type and total number of treasury shares
Number of shares at
beginning of FY2023(shares)

Increase in shares during Decrease in shares during Number of shares at end
FY2023 (shares)
FY2023 (shares)of FY2023(shares)

Shares issued
Common shares

10,627,920－－

10,627,920

Total

10,627,920－－

10,627,920

Common shares

2,376

－

－

2,376

Total

2,376

－

－

2,376

Treasury shares

2. Matters concerning dividends(1) Dividends paid
Total amount ofdividends(thousands ofyen)
Ordinary General Meeting of Common
217,823
Shareholders on April 21, 2022
sharesResolution

Board of Directors Meeting on
September 8, 2022

Type ofsharesCommonsharesDividend pershare (yen)Record date

Effective date

20.50

January 31,
2022

April 22, 2022

20.00

July 31,2022

October 7, 2022

212,510(2) Dividends with a record date in the fiscal year under review and an effective date in the following fiscal year
amount of Source of funds Dividend perType of Total
dividends
Resolution
Record date
Effective dateshares (thousands of yen) for dividends
share (yen)Ordinary General Meeting of Common
Shareholders on April 27, 2023 shares

425,021

Retainedearnings

40.00

January 31, 2023

April 28, 2023

FY2024 (February 1, 2023 to January 31, 2024)
1. Matters concerning the type and total number of shares issued, and the type and total number of treasury shares
Number of shares at
Increase in shares during Decrease in shares during Number of shares at end
beginning of FY2024
FY2024 (shares)
FY2024 (shares)of FY2024 (shares)(shares)
Shares issued
Common shares

10,627,920－－

10,627,920

Total

10,627,920－－

10,627,920

Common shares

2,376

93

－

2,469

Total

2,376

93

－

2,469

Treasury shares

2. Matters concerning dividends(1) Dividends paid
Total amount ofdividends(thousands ofyen)
Ordinary General Meeting of Common
425,021
Shareholders on April 27, 2023 shares
Board of Directors Meeting on Common
398,454
September 8, 2023
sharesResolution

Type ofsharesDividend pershare (yen)Record date

40.00

January 31,
2023

April 28, 2023

37.50

July 31,2023

October 6, 2023

- 53 -

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

Type of shares

Ordinary General
Meeting of
Shareholders on
April 25, 2024

Common shares

Total amount ofdividends(thousands of yen)

Source of funds
for dividends

Dividend pershare (yen)398,454 Retained earnings

Record date

37.50 January 31, 2024

Effective date

April 26, 2024

(Regarding Non-consolidated Statement of Cash Flows)*1 Relationship between cash and cash equivalents at the end of the period and the amount for the account title shown in thebalance sheet
FY2023(Fiscal year ended January 31, 2023)

FY2024(Fiscal year ended January 31, 2023)

Cash and deposit account

JPY3,975,881thousand

JPY 4,277,610thousand

Cash and cash equivalents

3,975,881

4,277,610(Regarding Lease Transactions)
Notes on this matter have been omitted because they are of little importance.
Regarding Financial Instruments)
1.
Matters concerning financial instruments(1)
Policy on financial instruments
Artner limits its fund management to short-term deposits or any equivalents, and it has the policy that it raises funds mostly byborrowing from banks.
(2)
Description of financial instruments, risks involved therein, and risk management framework
Accounts receivable are exposed to clients’ credit risk. We mitigate this risk in line with our credit management policy.
(3)
Supplementary explanations about matters concerning the fair values of financial instruments
Variable factors are taken into account when the fair value of a financial instrument is calculated. Hence, the value may fluctuate
when different prerequisites are used.
2.

Matters concerning the fair values of financial instruments
Notes on cash, deposits, and accounts receivable have been omitted because they are in cash, and because their fair value
approximates carrying amounts as they are paid/made in a short term.
Note: Planned redemption amounts after the closing date for monetary claims
FY2023 (As of January 31, 2023)
Within 1 year
(thousands of yen)

Cash and deposits Accounts receivable - trade

3,975,707
1,129,522

Total

5,105,230

More than 1 year, More than 5 years, More than 10
within 5 years
within 10 years years (thousands of(thousands of yen) (thousands of yen)

yen)

－

－

－

－
－

－
－

－
－

FY2024 (As of January 31, 2024)

Within 1 year
(thousands of yen)

Cash and deposits Accounts receivable - trade3.

4,277,451
1,240,516

More than 1 year, More than 5 years, More than 10
within 5 years
within 10 years years (thousands of(thousands of yen) (thousands of yen)

－

－

yen)

－

－
－
－
5,517,967
－
－
－
Total
Matters concerning the breakdown of financial instruments by each fair value level Notes on the matters have been omitted
because they are of little importance.

- 54 -

(Regarding Investment Securities)
1. Available-for-sale securities
FY2023 (As of January 31, 2023)
Type
Securities recorded on balance
sheet at amount that exceeds Stockacquisition cost

Amount recorded on balance
sheet (thousands of yen)

Difference(thousands of yen)

10,099

1,697

8,401

10,099

1,697

8,401

－

－

－

－

－

－

10,099

1,697

8,401

Amount recorded on balance
sheet (thousands of yen)

Acquisition cost(thousands of yen)

Subtotal

Securities recorded on balance Stock
sheet at amount that does notexceed acquisition cost

Acquisition cost(thousands of yen)

Subtotal

Total
FY2024 (As of January 31, 2024)
Type
Securities recorded on balance
sheet at amount thatStockexceeds acquisition cost
Securities recorded on balance Stock
sheet at amount that does notexceed acquisition cost

Subtotal

Subtotal

Total

Difference (thousands of
yen)

1,570

395

1,175

1,570

395

1,175

－

－

－

－

－

－

1,570

395

1,175

2. Available-for-sale securities soldFY2023 (As of January 31, 2023)
Not applicable.
FY2024 (As of January 31, 2024)
Type
Stock

Total gain on sale (thousands
Total loss on sale (thousandsof yen)of yen)Sold at (thousands of yen)
9,332

- 55 -

7,938－

(Regarding Derivatives)
Not applicable, as Artner does not trade derivatives.
(Regarding Retirement Benefits)
1.
Summary of the retirement benefit plan used
Artner uses the defined benefit retirement lump sum payment plan and the define contribution pension plan to pay
retirement benefits to its employees.
2.
Defined benefit plan
(1) Reconciliation of the beginning and ending balances of retirement benefit liabilities
FY2023 (Fiscal year ended
January 31, 2023)

FY2024 (Fiscal year ended
January 31, 2024)

JPY653,266 thousand

JPY 529,360 thousand

Service expenses
Interest expenses
Actuarial gains and losses incurred

69,6655,467(186,550)

51,7489,142(18,718)

Retirement benefit payments(12,489)(22,878)

Balance of retirement benefit liabilities at end of period

529,360

548,654

Balance of retirement benefit liabilities at beginning of period(2) Reconciliation of the ending balance of retirement benefit liabilities and the provision for retirement benefits recorded on
the balance sheet
FY2023 (As of January 31,
2023)
Retirement benefit liabilities in non-savings-type plan
Retirement benefit liabilities unfunded

FY2024 (As of January 31,
2024)

JPY529,360 thousand
529,360

JPY 548,654 thousand
548,654

Unrecognized actuarial gains and losses

142,284

143,007

Net liabilities and assets recorded on balance sheet

671,645

691,661

Provision for retirement benefits

671,645

691,661

Net liabilities and assets recorded on balance sheet

671,645

691,661

FY2023(As of January 31, 2023)

FY2024(As of January 31, 2024)(3) Itemized retirement benefit expenses

Service expenses
Interest expenses
Actuarial gains and losses processed as expenses

JPY 69,665 thousand
5,467
29,468

JPY 51,748 thousand
9,142(17,995)

104,600

42,894Retirement benefit expenses for defined benefit plan(4) Matters concerning the basis for actuarial calculations
Basis for key actuarial calculations
FY2023(As of January 31, 2023)
1.7%

Discount rate

FY2024(As of January 31, 2024)
1.7%

To project the rates of increase in salary, we use pay raise indexes by age calculated with September 1 of the fiscal year being
the base date.

- 56 -

3. Defined contribution plan
Artner’s required contributions to the defined contribution plan were JPY 60,975 thousand for the previous fiscal year and
JPY 64,319 thousand for the fiscal year under review.
(Regarding Stock Options)Not applicable.
(Regarding Tax Effect Accounting)1.

Breakdown of deferred tax assets and deferred tax liabilities by main cause
FY2023(As of January 31, 2023)

Deferred tax assets
Enterprise tax payable

FY2024(As of January 31, 2024)

JPY 13,287 thousand

JPY 16,825 thousand

12,84850,516205,389
2,048
4,642

14,51757,642
211,510
2,262
4,642

9,999

12,566

298,731319,967(2,569)(359)

Total deferred tax liabilities(2,569)(359)

Net deferred tax assets

296,162

319,608

Accrued expenses
Provision for bonuses
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss
Other
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities

2.

Statutory effective tax rate and main causes of the difference from the income tax burden rate after the application of tax
effectFY2023(As of January 31, 2023)

Statutory effective tax rate

FY2023(As of January 31, 2024)

30.6％(Adjustments)
Items that are permanently excluded from deductible
expenses such as entertainment expenses
Inhabitant tax on per capita basis

0.1

Tax credit through taxation as an incentive to hire
human resources and for other purposes

(5.0)

0.2

Other

(0.3)
25.6

Income tax burden rate after the application of tax
effect accounting(Equity in Earnings)
Not applicable.
(Regarding Business Combination)
Not applicable.
(Regarding Asset Retirement Obligations)
Notes on this matter have been omitted because they are of little importance.

- 57 -

Notes have been omitted
because the difference
between the statutory
effective tax rate and theincome tax burden rate after
the application of tax effectaccounting is five-hundredths
or less of the statutory
effective tax rate.

(Regarding Investment and Rental Property)
Notes on this matter have been omitted because the total amount of investment and rental property is of little importance.
(Regarding Revenue Recognition)
1.

Disaggregation of revenue generated from contracts with clients

FY2023(Fiscal year ended January 31, 2023)
Engineer dispatching services

FY2024(Fiscal year ended January 31, 2024)

JPY 8,413,395 thousand

JPY 9,116,361 thousand

Contracting

794,627

943,575

Other

34,33750,587

9,242,360

10,110,524－－

9,242,360

10,110,524

Revenue generated from contracts with clients
Other revenue
Net sales to external clients2.

Basic information for understanding revenue generated from contracts with clients
Basic information for understanding revenue is as stated in “(Significant Accounting Policies) 5. Recognition criteria forrevenue and expenses.”

3.

Information for understanding the revenue amounts in the fiscal year under review and subsequent fiscal years
Balance of receivables arisen from contracts with clients
FY2023

Receivables arisen from contracts with clients
Accounts receivable - trade (beginning balance)
Accounts receivable - trade (ending balance)

JPY 1,011,154 thousand
1,129,522

FY2024
JPY1,129,522 thousand
1,240,516(Segment Data)[Segment data]
Since we have only one reportable segment, notes on this matter have been omitted.
[Related information]
FY2023 (Fiscal year ended January 31, 2023)
1.

Information by product and service
Since our business is in a single segment, notes on this matter have been omitted.

2.

Information by region(1)

Net sales
Not applicable because we have no sales to external clients outside Japan.

(2)

3.

Property, plant and equipment
Not applicable because none of our property, plant and equipment are located outside Japan.
Information by major customer

Client name / Company name
Honda Motor Co., Ltd.

(Unit: thousands of yen)
Net sales
1,051,753

Note: Since our business is in a single segment, names of related segments have been omitted.
FY2024 (Fiscal year ended January 31, 2024)
1.
Information by product and service
Since our business is in a single segment, notes on this matter have been omitted.

- 58 -

2.

Information by region(1) Net sales
Not applicable because we have no sales to external clients outside Japan.
(2) Property, plant and equipment
Not applicable because none of our property, plant and equipment are located outside Japan.
3.

Information by major customer(Unit: thousands of yen)
Client name / Company name
Honda Motor Co., Ltd.

Net sales
1,292,593

Honda R&D Co., Ltd.

1,026,843

Note: Since our business is in a single segment, names of related segments have been omitted.
[Information about impairment loss on non-current assets in each reportable segment]
Not applicable.
[Information about amortization and unamortized balance of goodwill in each reportable segment]
Not applicable.
[Information about gain on bargain purchase in each reportable segment]
Not applicable.
[Information about related parties]
Not applicable.
(Per Share Information)
FY2023

FY2024(Fiscal year ended January 31, 2023)
Net assets per share

JPY 380.96
JPY 84.24

Earnings per share(Fiscal year ended January 31, 2024)
JPY 401.97
JPY 98.99

Notes: 1. Diluted earnings per share are not shown because we have no dilutive shares.
2. The table below shows the bases for calculations of earnings per share.
FY2023

Y2024(Fiscal year ended January 31, 2023)
Profit (thousands of yen)Amounts not attributable to common shareholders(thousands of yen)
Profit pertaining to common shares (thousands ofyen)
Average number of common shares outstanding
during the period(Material Post-Balance Sheet Events)
Not applicable.

- 59 -(Fiscal year ended January 31, 2024)

895,148

1,051,817－－

895,148

1,051,817

10,625,544

10,625,474

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

Asset TypeBalance at
beginning of
period(thousands ofyen)

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

Amortization inperiod(thousands ofyen)

Balance at endof period(thousands ofyen)

Property, plant and equipment
109,981348

18,06392,26559,506

4,085

32,758Structures

1,172

－

1,172

－

－

－

－

Tools, furniture and fixtures

51,188

2,305

5,314

48,17836,818

4,609

11,360Land

25,685－－25,685－－25,685

188,026

2,653

24,550166,129

96,325

8,694

69,803

127,241

13,632

7,873

133,000

109,676

16,02323,324

Telephone subscription right

1,654

－

－

1,654

－

－

1,654

Total intangible assets

128,895

13,632

7,873

134,655

109,676

16,023

24,979Buildings

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

Balance at
Decrease during
Decrease during Balance at end of
Increase during
beginning of
period (spending
period (thousands
period (thousands
period (other)for purpose)
period (thousandsof yen)of yen)(thousands of yen) (thousands of yen)of yen)
6,700

7,400

－

6,700

7,400

165,195

188,499

165,195－

188,499

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

- 60 -

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

Amount (thousands of yen)

Cash

159

Deposits
Current deposits

4,164,898

Ordinary deposits

50,018Special deposits

2,535Time deposits

60,000Subtotal

4,277,451

Total

4,277,610(b) Accounts receivable
Breakdown by client
ClientAmount (thousands of yen)

Honda Motor Co., Ltd.

225,454

Honda R&D Co., Ltd.

158,878

Nikon Corporation

74,378Lasertec Corporation

54,512

Terumo Corporation

40,659Other

686,631Total

1,240,516

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

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

Overdue (days)(A) ＋ (D)
2

(C)
(A)
1,129,522(B)

11,121,530(C)

11,010,536(D)

1,240,516

× 100(A) ＋ (B)

(B)
365

89.9

38.9

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

Amount (thousands of yen)Contracting business

5,357
Total

5,357

- 61 -

(d) Raw materials and supplies
Item

Amount (thousands of yen)

Printed matter

2,974

Quo cards

480

Revenue stamps

1
3,455

Total
(e)

Deferred tax assets
Deferred tax assets totaled JPY 319,608 thousand. Details thereof are stated in “1. Financial Statements and Other Documents
Financial Statements Notes (Regarding Tax Effect Accounting).”(ii)

Liabilities(a) Income taxes payable
Classification

Amount (thousands of yen)

Income taxes payable

343,469

Total

343,469(b) Provision for retirement benefits
Classification

Amount (thousands of yen)

Retirement benefit liabilities

548,654

Unrecognized actuarial gains and losses

143,007Total(3)

143,007

Other
Quarterly financial information for the fiscal year under review(Cumulative)

Q1

Q2

Q3

Full year

Net sales (thousands of yen)

2,493,648

5,006,636

7,553,937

10,110,524

Profit before income taxes(thousands of yen)

479,100

890,768

1,184,001

1,527,357

Profit (thousands of yen)

333,186

617,721820,498

1,051,817

Earnings per share (yen)

31.36

58.14

77.22

98.99

(Accounting period)
Earnings per share (yen)

Q1

Q2
31.36

Q3
26.78

- 62 -

Q4
19.08

21.77

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

February 1 to January 31

Ordinary General Meeting of
Shareholders

In April

Record date

January 31

Record dates for dividends of surplus

January 31 and July 31

Number of shares per share unit

100 shares

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

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

Agency office-

Trading fee

None

How public notice is issued

Benefits for shareholders

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

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

- 63 -

VII. Reference Information about the Reporting Company
1.

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

2.

Other Reference Information
Artner submitted the following documents during the period from the start date of the fiscal year under review to the date ofsubmission of the Annual Securities Report.
(1) Annual Securities Report, documents attached thereto, and confirmation letter
Fiscal year (FY2023) (from February 1, 2022 to January 31, 2023): Submitted to Director General of the Kinki Local Finance
Bureau on April 27, 2023
(2) Internal control report and documents attached thereto
Submitted to Director General of the Kinki Local Finance Bureau on April 27, 2023
(3) Quarterly reports and confirmation letter(FY2024, Q1) (from February 1, 2023 to April 30, 2024): Submitted to Director General of the Kinki Local Finance Bureau
on June 12, 2023
(FY2024, Q2) (from May 1, 2023 to July 31, 2024): Submitted to Director General of the Kinki Local Finance Bureau on
September 12, 2023
(FY2024, Q3) (from August 1, 2023 to October 31, 2024): Submitted to Director General of the Kinki Local Finance Bureau
on December 12, 2023
(4) Extraordinary report
Submitted to Director General of the Kinki Local Finance Bureau on April 28, 2023
This extraordinary report is based on Article 19, paragraph (2), item (ix)-2 (result of exercising voting rights at a General
Meeting of Shareholders) of the Cabinet Office Order on Disclosure of Corporate Affairs.

- 64 -

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

- 65 -

Independent Auditor’s Report and Internal Control Audit Report
April 25, 2024

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

KOMATSUNO Satoru, Designated Limited Liability and Engagement
Partner, Certified Public Accountant

Financial Statement Audit
Opinions
To execute audit certification pursuant to Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act, we audited Artner
Co., Ltd.’s financial statements for FY2024 (reporting period 61; from February 1, 2023 to January 31, 2024) shown in “Financial
Information,” namely the balance sheet, statement of income, statement of changes in equity, statement of cash flows, significant
accounting policies, other notes, and supplementary schedule.
We acknowledge that the above financial statements comply with the business accounting standards that are generally accepted as fair
and appropriate in Japan to correctly present, in all material respects, Artner’s financial status as of January 31, 2024 as well as its
business performance and cash flows for the fiscal year that ended on the same date.
Basis for Opinions
We conducted the audit in accordance with auditing standards that are generally accepted as fair and appropriate in Japan. Our
responsibilities under these standards are described in the Responsibilities of the Auditor in a Financial Statement Audit. We are
independent of Artner pursuant to relevant ethics required of professionals in Japan, and we fulfill other ethical responsibilities we haveas an auditor. We are certain that we have obtained sufficient and appropriate evidence that serves as the basis for our opinions.
Major Particulars to Consider in the Audit
Major particulars to consider in the audit refer to matters that the professional auditor judged to be of special significance in the financial
statement audit for the fiscal year under review. Those particulars were addressed while we audited all financial statements and formed
our opinions. We are not to express our opinions about each of these particulars.

Accuracy of net sales from the engineer dispatching business
Major particulars to consider in the audit and reasons for the
Course of action by the auditor
decision
Artner Co., Ltd. (hereinafter referred to as the “Company”) had We mainly took the course of action stated below to examine thenet sales of JPY 10,110,524 thousand, and JPY 9,116,361 accuracy of sales from the engineer dispatching business.
thousand of this amount came from the engineer dispatching (1) Evaluation of internal control
We evaluated the validity of the design and implementation of thebusiness, accounting for 90 percent of net sales.
In the engineer dispatching business, sales are recognized once the Company’s internal controls in connection with the process ofservices have been rendered and the value is judged to have been recording sales from the engineer dispatching business. We focused
established in accordance with the realization principle. Once the particularly on the following during evaluation:
services are judged to have been rendered, the Company - Control on sales calculated based on the unit price specified ineach agreement with a client and billable hours worked by themultiplies the unit price prescribed by the contract with the client
assigned engineer. The department in charge of entering sales(hereinafter referred to as the “price of a contract”) by the hours
figures confirms the accuracy of calculated sales, and the control
worked by the assigned engineer, and records the calculated figureand sales department approves and reports this accountas sales.
receivable.
When sales from the engineer dispatching business are recorded,
there is a risk of recording wrong figures for sales mostly for the -When there is any difference in the payment of the receivable, theaccounting department checks the rationality of the cause of thefollowing reasons:difference.
- The Company enters into individual agreements with each client(2)
Examination of the accuracy of sales figuresthat specifies the price of a contract and billable hours based onWecarried out audit procedures that include the following in order
the level of the engineer’s skills, and these terms differ between
toexaminewhether sales from the engineer dispatching businessengineers.
areaccurately
recorded.
- The staff in charge of entering sales figures in the informationWe
identified
transactions that were potentially wrong in theirsystem calculates billable hours out of the total hours worked
recordedsales
figures considering the general monetary amountbased on the terms of each agreement, and the data the staff haveoftransactions
with each client, and re-calculated those figures
to process are enormous.
based
on
the
price
of a contract specified in each agreement andFor these reasons, we judged that it was particularly important to
the
hours
approved
by the clients. We confirmed that the reexamine the accuracy of sales from the engineer dispatchingcalculated
figureswere
the same as the sales figures calculated
business during the financial statement audit for the fiscal yearbytheCompany.
under review, and thus this issue constitutes a major particular to- Clients who had been extracted by statistical means were asked toconsider in the audit.
complete and return a balance confirmation letter pertaining toaccounts receivable. We obtained the completed letters directlyfrom the clients to check them against the book balance.
We perused reports pertaining to year-end differences inpayments the Company had received to see if there were any
differences in payments and studied the causes of thosedifferences, thereby checking for any significant differencesthat needed to be examined to identify the causes.
Other Information
Other information refers to information other than the financial statements and the auditor’s report included in the Annual Securities
Report. Management is responsible for preparing and disclosing other information. The Audit and Supervisory Committee is responsible
for overseeing the execution of duties by directors in the designing and implementation of the process of reporting other information.
Our opinions on the financial statements do not cover other information, and we are not to express our opinions on such information.
In a financial statement audit, we are responsible for reading all the content of other information and, in this process of perusal, examining
whether there are any material inconsistencies between the content of other information and the financial statements or the knowledge
we had acquired during the audit. We are also responsible for paying attention to any signs of material errors in the content of otherinformation, other than those material inconsistencies.
If we judge, based on the work we have done, that other information contains any material errors, we are required to report the fact.
Other information in this Annual Securities Report does not contain any issues we should report.
Responsibilities of management and the Audit and Supervisory Committee for financial statements
Management is responsible for preparing and correctly presenting financial statements in accordance with business accounting standards
that are generally accepted as fair and appropriate in Japan. This includes designing and implementing internal control that management

has decided is essential to prepare and correctly present financial statements that contain no material misrepresentations due to a wrongful
act or errors.
When preparing financial statements, management is responsible for evaluating as to whether it is appropriate to prepare financial
statements according to the going concern assumption, and, if matters concerning the going concern must be disclosed in accordancewith business accounting standards that are generally accepted as fair and appropriate in Japan, management is also responsible fordisclosing those matters.
The Audit and Supervisory Committee is responsible for overseeing the execution of duties by directors in the designing andimplementation of the process of financial reporting.
Responsibilities of the auditor in a financial statement audit
The auditor is, based on the audit it has conducted, responsible for obtaining a rational guarantee as to whether the Company’s financial
statements as a whole contain any material misrepresentations due to a wrongful act or errors, and for expressing its opinions on thefinancial statements in the auditor’s report from an independent viewpoint. A misrepresentation may occur due to a wrongful act orerrors. It may influence decisions made by users of the financial statements on its own or when it is added up, and when such influenceis likely, a misrepresentation is judged to be material.
The auditor makes professional judgments throughout an audit in accordance with auditing standards that are generally accepted as fair
and appropriate in Japan, and conducts the following with professional skepticism:- Identify and assess the risk of material misrepresentations due to a wrongful act or errors. Plan and implement audit procedures
designed to manage the risk of material misrepresentation. The auditor selects and applies audit procedures at its own discretion.
Also obtain sufficient and appropriate evidence that serves as the basis for the auditor’s opinions.
- Although expressing an opinion about the effectiveness of internal control is not the objective of a financial statement audit, theauditor reviews internal control associated with audits in order to plan appropriate audit procedures that are suitable for the situation
when it conducts risk assessment.
- Assess the accounting policies adopted by the management and the appropriateness of how the policies are applied, along with therationality of accounting estimates made by the management and the validity of relevant notes.
- Draw conclusions about whether it is appropriate that the management prepares financial statements as the going concern assumption,
and, based on audit evidence that has been obtained, whether material uncertainty is noted in connection with an event or circumstancethat would raise material doubt on the going concern assumption. If there is material uncertainty related to going concern assumption,
call for attention thereto in notes for the financial statements in the auditor’s report is required. If making a note on the material
uncertainty for the financial statements is inappropriate, the auditor is expected to present an opinion with exclusions on the financial
statements. Conclusions drawn by the auditor are based on audit evidence obtained by the date of the auditor’s report. Depending on
future events and circumstances, the Company may become unable to continue as a going concern.
- Evaluate as to whether the presentation of the financial statements and the notes therein comply with the accounting standards thatare generally accepted as fair and appropriate in Japan. Also evaluate as to whether the presentation, structure, and contents of thefinancial statements including relevant notes, and the financial statements, correctly present the transactions and accounting events
that serve as bases.
The auditor reports to the Audit and Supervisory Committee the planned audit scope and schedule, significant audit findings that include
material deficiencies in internal control identified during the audit, and other matters required by the auditing standards.
The auditor also reports to the Audit and Supervisory Committee the fact that it has complied with relevant ethics in Japan required ofa professional regarding independence, matters that may reasonably be thought to influence the independence of the auditor, andmeasures taken to eliminate obstructions or safeguards applied to reduce obstructions to an acceptable level, if any.
The auditor determines that the matters discussed with the Audit and Supervisory Committee and judged to be of special significance inthe financial statement audit for the fiscal year under review are major particulars to consider in the audit, and states these particulars in
the audit report accordingly. However, these matters are not included in the auditor’s report if laws and regulations prohibit the
publication thereof, or if, in extremely rare circumstances, the auditor decides against stating the matters in the auditor’s report because
adverse consequences of doing so would reasonably be expected to outweigh the public interest.
Audit of Internal Control
Opinions
To execute audit certification pursuant to Article 193-2, paragraph (2) of the Financial Instruments and Exchange Act, we audited Artner
Co., Ltd.’s internal control report that was current as of January 31, 2024.
We acknowledge that the above internal control report, in which Artner presents the validity of its internal controls over the financial
reports as of January 31, 2024, complies with the standards for the evaluation of internal controls over financial reporting that are
generally accepted as fair and appropriate in Japan to adequately present, in all material respects, the results of the evaluation of internal
controls over financial reports.

Basis for Opinions
We audited Artner’s internal control in accordance with standards that are generally accepted as fair and appropriate in Japan for an
audit of internal controls over financial reports. Our responsibilities under these standards for an audit of internal controls over financial
reports are described in the Auditor’s Responsibilities for the Audit of Internal Control. We are independent of Artner pursuant torelevant ethics required of professionals in Japan, and we fulfill other ethical responsibilities we have as an auditor. We are certain that
we have obtained sufficient and appropriate evidence that serves as the basis for our opinions.
Responsibilities of management and the Audit and Supervisory Committee for an internal control reportManagement is responsible for designing and implementing internal controls over financial reports in order to prepare and correctly
present the Company’s internal control report in accordance with standards that are generally accepted as fair and appropriate in Japanfor evaluation of internal controls over financial reports.
The Audit and Supervisory Committee is responsible for overseeing and verifying how the Company’s internal controls over financial
reports is designed and implemented.
There is a possibility that internal controls over financial reports may not completely prevent or detect all misrepresentations in financial
reporting.
Responsibilities of the auditor in the audit of internal control
The auditor is, based on the audit of internal control it has conducted, responsible for obtaining a rational guarantee as to whether theCompany’s internal control report contains any material misrepresentations, and for expressing its opinions on the internal control reportin the auditor’s report on internal control from an independent viewpoint.
The auditor makes professional judgments throughout an audit in accordance with standards that are generally accepted as fair andappropriate in Japan for an audit of internal controls over financial reports, and conducts the following with professional skepticism:- Follow the audit procedures for obtaining audit evidence for the results of the evaluation of the Company’s internal controls overfinancial reports in the internal control report. The procedures for the audit of internal control are selected and applied at the auditor’s
discretion based on the materiality of the impact on the reliability of the Company’s financial reporting.
- Examine the overall presentation of the Company’s internal control report, including statements made by management about thescope of the evaluation of internal controls over financial reports, assessment procedures, and assessment results.
- Obtain sufficient and appropriate audit evidence for the results of the evaluation of the Company’s internal controls over financial
reports in the Company’s internal control report. The auditor is responsible for giving instructions on, overseeing, and implementing
the audit of the Company’s internal control report.
The auditor reports to the Audit and Supervisory Committee the planned scope of the audit of internal control along with the audit
schedule, the results of the audit of internal control, material deficiencies identified in internal control that should be disclosed, theresults of rectification of these deficiencies, and other matters required by the standards for an audit of internal control.
The auditor also reports to the Audit and Supervisory Committee the fact that it has complied with relevant ethics in Japan required ofa professional regarding independence, matters that may reasonably be thought to influence the independence of the auditor, andmeasures taken to eliminate obstructions or safeguards applied to reduce obstructions to an acceptable level, if any.
The auditor also reports to the Audit and Supervisory Committee the fact that it has complied with relevant ethics in Japan required ofa professional regarding independence, matters that may reasonably be thought to influence the independence of the auditor, andmeasures taken to eliminate obstructions or safeguards applied to reduce obstructions to an acceptable level, if any.
Interest that must be indicated according to the Certified Public Accountants Act of Japan
We do not have any interest in the Company that should be indicated herein according to the Certified Public Accountants Act of Japan.
END
Notes: 1. Notes: 1. The Company (the company that has submitted the Annual Securities Report) retains the original of the auditor’sreport stated above.
2. XBRL data are outside the audit scope.

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

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

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

April 25, 2024

[Company Name]

Artner Co., Ltd.

[Name and Title of Representative]

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

Not applicable.

[Address of Head Office]Nakanoshima 3-2-18, Kita-ku, Osaka City

[Location for Public Inspection]

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

2. Particulars concerning the Scope of Evaluation, the Reference Date, and the Procedures for Evaluation
The evaluation of internal controls over financial reports was conducted with January 31, 2024, (the last day of the fiscal year underreview) being the reference date. It complies with standards that are generally accepted as fair and appropriate for evaluation ofinternal controls over financial reports.
In this evaluation, we assessed the internal controls that have a material effect on overall financial reporting (i.e., company-wide
internal controls) and, based on the assessment results, we selected the business processes to evaluate. In the evaluation of thebusiness processes, we analyzed these selected processes, identified the main points in terms of control that have a material effecton the reliability of the Company’s financial reports, and evaluated how these main points are designed and implemented for control,
thereby evaluating the validity of the internal controls.
In regard to the scope of the evaluation of internal controls over financial reports, we determined the essential scope in light of themateriality of the impact on the reliability of Artner’s financial reports. We consider the materiality of a monetary and qualitative
impact to determine the materiality of the impact on the reliability of our financial reports. Based on the results of the evaluation ofcompany-wide internal control we had conducted, we logically determined the scope of the evaluation of internal controls overbusiness processes.
In regard to the scope of the evaluation of internal controls over business processes, the evaluation covers all our business bases.
The evaluation covered the business processes that were gone through to record net sales, accounts receivable, and cost of sales(personnel costs), which are the account titles closely connected to the objectives of our business, at those business bases. We also
added business processes connected to significant account titles where material misrepresentations can occur with high possibility,
and that involve estimates and projections, to the list of material business processes for evaluation, taking into account the impact
on our financial reports.

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

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

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