Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated
document and the Japanese original, the original shall prevail.
OPT Holding, Inc. assumes no responsibility for actions taken based on this translation.

(Securities code: 2389)
March 6, 2019
To our shareholders:
Noboru Hachimine
Founder, President and CEO
OPT Holding, Inc.
6, Yonbancho, Chiyoda-ku, Tokyo
Convocation Notice of the 25th General Meeting of Shareholders

You are cordially invited to attend the 25th General Meeting of Shareholders of OPT Holding, Inc. (the“Company”), which will be held as described below.
If you are unable to attend the meeting, you can exercise your voting rights by mailing the enclosed Voting Rights
Exercise Form or via the Internet. Please refer to the Reference Documents for the General Meeting of Shareholders,and exercise your voting rights no later than 6 p.m., Wednesday, March 27, 2019 (JST).
1.

Date and time: Thursday, March 28, 2019 at 10:00 a.m. (JST)2.

Place:

Conference room, Head office, OPT Holding, Inc.
5th floor, 6 Yonbancho, Chiyoda-ku, Tokyo, Japan

3.

Agenda of the Meeting:
Matters to be reported:
I. The Business Report, the Consolidated Financial Statements, and the audit results of the Consolidated Financial
Statements by the External Auditor and the Audit & Supervisory Committee of the Board for the 25th Fiscal Term(from January 1, 2018 to December 31, 2018) on OPT Holding consolidated basis..
II. Report on the Non-Consolidated Financial Statements of OPT Holding Inc. for the 25th Fiscal Term (from January
1, 2018 to December 31, 2018).
Proposals to be resolved:
Proposal:

Election of five (5) Directors (Excluding the Audit & Supervisory Committee members)

－

1 －

4.

Instructions for Exercising Voting Rights
1 Exercising voting rights by paper form
To vote in writing, please indicate your approval or disapproval of the proposals on the enclosed Voting Rights Exercise
Form, and return the Form by post to reach us by 6 p.m. (JST) on Wednesday, March 27, 2019.
2 Exercising voting rights via the Internet
To vote via the Internet, please refer to the “Voting Right Exercise Site (https://www.net-vote.com/)” (Japanese only)
which are noted on the enclosed Voting Rights Exercise Form. Follow the instructions and indicate your approval ordisapproval by 6 p.m. (JST) on Wednesday, March 27, 2019. If you want to use your smartphone, you can exercise yourvoting rights by using QR code (Please refer to the next page for details.)
3 Handling of duplicate voting(1) If you vote both in writing and via the Internet, we will treat the vote submitted via the Internet as valid..
(2) If you vote both more than once via the Internet, we will treat the most recent vote as valid.

RequestWhen attending the meeting in person, you are kindly requested to submit the enclosed voting rights exercise
form to the receptionist at the meeting site. Please bring this Notice of the 25th Annual General Meeting of
Shareholders with you to the meeting.

NoticeThe digital documents of the Convocation Notice of the General Meeting of Shareholders and the Reference
Documents for the General Meeting of Shareholders are available on the Company’s website(http://www.optholding.co.jp/).
The English translated document of the Convocation Notice of the General Meeting of Shareholders and theReference Documents for the General Meeting of Shareholders are made available on the Company’s website(http://www.optholding.co.jp/en).
Any amendments to the reference documents for the General Meeting of Shareholders, the Business Report, theConsolidated Financial Statements or Non-consolidated Financial Statements will be posted on the Company
website. (http://www.optholding.ne.jp/).

－2 －Instructions Exercise of Voting Rights via the Internet
You can exercise your voting rights via the Internet by accessing the Voting Right Exercise Site as instructed below fromyour PCs or smartphones.
1. Accessing the Voting Right Exercise Site
Address of Voting Right Exercise Site (https://www.net-vote.com/)Please use the Company’s designated voting website to submit votes regarding the proposals. Votes can be submitted until
6 p.m., Wednesday, March 27, 2019.
2. How to vote online[For PC users]
Access the Voting Right Exercise Site at the URL provided above, log in using the login ID and password printed on
enclosed voting rights exercise form and follow the instructions on the screen to indicate your approval or disapproval of
the proposal.
[For smartphone users]
Simply scan the QR code® located on the bottom right of the enclosed voting rights exercise form. You don’t have to enter
Log-in ID nor password.
In case you wish to change any of your votes, access the Voting Right Exercise Site at the URL, you need to log in using
the login ID and password printed on the voting rights exercise form and follow the instructions on the screen to indicate
approval or disapproval of the proposal. (QR code® is a registered trademark of DENSO WAVE INCORPORATED).
3. Notes(1) Any costs arising from accessing the Voting Right Exercise Site shall be born by you.
(2) Depending on your network environments, you may not be able to exercise your voting rights.
(3) The Voting Right Exercise Site is not accessible via the cellular phones.
Institutional investors can exercise the voting rights through “The Electronic Proxy Voting Platform” operated by ICJ,Inc.

For an inquiry regarding online exercise of the voting rights, please contact the following
IR Japan, Inc., Custody Service Department
TEL 0120-975-960
Business Hours: 9:00 a.m. to 5:00 p.m. JST (not available on Saturdays, Sundays and holidays)－

3 －Business Report (January 1, 2018 to December 31, 2018)
1.

Overview of the Group(1) Business for the year ended December 31, 2018
OPT Group (hereinafter “The Group”) announced mid-term management plan; “NEW STAGE 2020” (three-year plan from2018 to 2020) which with the target of CAGR 16 to 18 % of revenue growth and CAGR 18 to 20% of EBITDA growth from2017 through strengthen group linkages and optimizing its resources in order to maximize mid-to-long term enterprise value
and cash flow.
The Group also seek continuous growth of its revenue, profit and cash flow by proactively allocating generated cash toinvestments on resources related to digitalization. At the same time, the Group aims over 10% of ROE through building
optimal capital structure taking into consideration of capital cost.
The Group’s core growth strategy is to be a leader of any and all “digital shift” in rapidly expanding digital economy. The
group will realize it by actively leveraging our business assets: rich pool of digital talents and professionals, sales network
covering thousands of clients both inside and outside of Japan, and the know-how of investments and services on digitaltechnology and its related businesses. The Group will lead “digital shift” of “ad and sales promotion” where TV and flyers
losing grounds in Japanese advertisement market, “business operations and human resources” for developing technologies
such as big data analytics, Internet of Things (IoT), Artificial Intelligence (AI), robotics, etc, and “business process/model”
that many corporations are working on.
As a results of business operations based on above management policy, the results of operation for the year ended December
31, 2018, were as follows.
(in million yen unless otherwise stated)2018
Actual87,216
17,347
1,767
3,265
6,089
1,922
9.9%
3,805
84.20
84.66

Revenue
Gross profit
Operating income
EBIT*1
EBITDA*2
Net income attributable to owners of parent
ROE (Last twelve month; LTM, %)*3
Free cash flow*4
Earnings per share- diluted (yen)Earnings per share- basic (yen)Year-on-year change (%)
Adjusted*5
Nominal
14.2%
5.6%
13.1%
5.7%
(15.1%)(20.5%)
106.6%
56.1%
71.9%
49.7%
232.4%
90.2%
311.4%-

Notes:
EBIT= Net income before taxes and other adjustment+interest paid-interest received
EBITDA = EBIT + other financial related gains (losses)+ depreciation + amortization of intangible assets + amortization of longterm prepaid expenses + Non-cash gain(loss)
3. Return on equity (ROE): Net income attributable to owners of parent in last twelve months/average amount of equity as of the endof reporting year and previous year
4. Free cash flow (FCF)=Operating cash flow+ investing cash flow ±one-off cash flow items
5. A previously consolidated subsidiary, Classified Inc. was sold at the end of 2017 (approximately 8% of consolidated revenue in2017); the earnings and the gain of sales of Classified in 2017 were excluded.
1.
2.

－

4 －

Change of reporting segments
The Company has changed reporting segments from three segments; Marketing Business, Investment and incubation businessand Overseas business into two segments; Marketing Business and Synergy Investment Business from the beginning of theyear ended December 2018. The Company has expanded the scope of disclosure shown as below. Detailed J-GAAP segment
results are Segment information in “Primary Notes on Consolidated Financial Statements.”<Reporting segments, major line of business, and disclose items)
New segments

Marketing Business

Synergy Investment
Business

Previous
segments
MarketingBusiness

Investment &incubation
Business

Overseas
Business

Business description

Disclosure items



Revenue,
Operating income
EBIT
EBITDA

Digital marketing
Internet advertisement agency
business in Japan
Development of solutions
HR and IT support

Investment on start-ups
Investment fund management
AI related business

Overseas internet ad agency
business
China cross-border e-commercebusiness

Revenue
Operating income
EBIT
EBITDA
AUM*1
IRR*2
Revenue
Operating income
EBIT
EBITDA

Notes;
AUM: total amount of (1) book value of subsidiaries and affiliates’ stocks, (2) fair market value (FMV*3) of operational
investment securities and invested securities.
2. IRR: Internal Rate of Return
3. FMV (Fair market value): an estimate of the fair market value of a assets or liabilities
1.

The full-year results for each reporting segment are discussed as follows. The previous year results have been re-categorized
into the current reporting segments.

Marketing Business
The table below shows 2018 full-year results of Marketing Business before Corporate Function Cost allocation.

(in million yen unless otherwise stated)2018

Revenue
Gross profit
Operating income
EBIT
EBITDA

Actual
82,04014,892
4,058
4,216
6,171

Year-on-year change (%)
Adjusted*
14.9%
14.1%
11.5%
15.8%
37.0%

Nominal
5.7%
5.3%
6.2%
0.8%
21.8%

Note:
Adjusted YoY figures compares the reporting period of 2018 full-year and to the 2017 full-year results excluding 2017 Classified earnings (approximately 8%of consolidated revenue) and gain of sales of Classified at the end of the previous year.

Operating results of the Marketing Business segment for full-year 2018 was as follows. Revenue was JPY 82,040 million(YoY +5.7%), gross profit was JPY14,892 million (YoY +5.3%), operating income was JPY4,058 million (YoY +6.2%), EBIT
was JPY4,216 million (YoY+0.8%) and EBITDA was JPY6,171 million (YoY +21.8%). Adjusted results excluding theimpact of Classified, the growth rate from the previous year was +14.9% for revenue, +14.1% for gross profit, +11.5% foroperating income, +15.8% for EBIT, and +37.0% for EBITDA .
The reasons for the difference from the previous year excluding the impact of Classified’s earnings and the gain from the saleof Classified were as follows.
1. Revenue for Marketing Business segment increased by JPY 6,131 million in Large Corporation segment, mainly due

to continued favorable order from brand sponsors and new business from retail clients in addition to existing clients.
－

5 －In Local/SME segment, revenue increased by JPY 4,869 million mainly due to continued robust new orders from eCommerce clients capturing “digital shift” among Local/SMEs. As a result, aggregate marketing segment revenue
increased by 14.9%.
2. Operating income grew by 11.5% from the previous year although costs such as hiring and training for further growthincreased. Operating income increased by JPY 272 million in Large Corporation segment, and JPY 145 million
increase in Local/SME segment due to an increase in revenue and gross profit.
3. EBITDA increased by JPY 1,493 million for Large Corporation mainly due to increased operating income and thegain from business transfer (video streaming business operated by Skillup), and JPY 252 million yen for Local SMEs
mainly due to increased operating income. As a result, the aggregate Marketing segment growth rate of EBITDA
was +37.0%.
Measures taken in Marketing Business segment in 2018 were as shown below.
Sales initiatives to acquire large-scale clients mainly by OPT, Inc. were taken in Tokyo metropolitan area and otherregions

The Omni-channel Innovation Center, specialized in “digital shift” for retail business, has started. New service
utilizing location data was highly appreciated and acquisition of new clients has progressed.

Responding to digital shift by clients, the Group have provided not only digitalization of advertisement, but one-stop
digital marketing consultation including development of marketing and CRM (customer relation management)
strategy, research, analysis and operation.

Established a specialized organization called “Studio Opt” involving creators who work independently or at design
firms inside and outside Japan through promoting open innovation for creating new business or services.



Established “Amazon Strategy Department” which supports to produce ad on Amazon for clients.

Awarded “Top New Go-to-Market Partner” at IBM Geography Excellence Awards 2018.



Acquired new local and SME clients using 21 local offices by a consolidated subsidiary; SoldOut, Inc. (hereinafter,“SoldOut”, securities code: 6553).



SoldOut started business alliance with Nihon M&A Center Inc., the No.1 player in M&A for SMEs.



SoldOut invested in Linkers Corporation that operates manufacturer-focus business matching site called “Linkers”

SoldOut concluded a strategic partnership contract with LINE Corporation

Synergy Investment Business
The table below shows 2018 full-year results of Synergy Investment Business before corporate function cost allocation.
(in million yen unless otherwise stated)2018

Revenue
Gross profit
Operating income or loss
EBIT
EBITDA

5,270
2,498
(466)
949
1,639

Year-on-year change
(%)
2.5%
10.6%
-*
-*
-*

Note: Figures were omitted due to relevant amounts in reporting or the previous period are negative.

Operating results of the Synergy Investment Business segment for 2018 was as follows. Revenue was JPY 5,270 (YoY
+2.5%), gross profit was JPY 2,498 million (YoY +10.6%), operating loss was JPY 466 million (JPY 310 million loss for2017), EBIT was JPY949 million (JPY1,350 million loss for 2017) and EBITDA was JPY1,639 million (JPY 429 million loss
for 2017).
The reasons for the difference from the previous year were as follows.
1. Revenue was JPY 5,270 million, a 2.5% increase, mainly due to an increased revenue from cross-border China e-

Commerce business and the gain from sales of operational investment securities against factors such as
deconsolidation of WriteUp Corporation (hereinafter WriteUp) of which the Company sold the part of shares andweak performance of overseas businesses.
2. In spite of deconsolidation of WriteUp, gross profit was JPY 2,498 million, (YoY +10.6%) due to a gain of sales ofoperational investment securities.
－

6 －3. EBITDA was JPY 1,639 million, increased by JPY 2,068 million (JPY429 million loss for previous year). Although

there were factors lowing profit such as de-consolidation of WriteUp, weak oversea business, evaluation loss ofinvested securities, EBITDA increased mainly due to gains from the sales of WriteUp, and sales of other operational
investment securities.
The company disclose fair market value (hereinafter “FMV”) of the invested assets for improving transparency of its return.
At the time, the Company has amended the definition of assets under management. The AUM is defined as “total amount of 1)
book value of subsidiaries’ and affiliates’ shares and 2) fair market value (FMV*1) of operational investment securities andother investments. , and the total book value*2 of the acquired asset was JPY 9,700 million as of the end of 2018.

Note;
1. FMV: an estimated market value of a property or liability, based on the third-party transaction between a knowledgeable
and willing buyer and a knowledgeable and willing seller
2. Total book value: aggregate amount of 1) book value of subsidiaries’ and affiliates’ shares and 2) acquisition value of
operational investment securities and invested securities. For assets categorized 2), impairment will be reflected to the value tobe aggregated.
FMV of each operating investment security and invested securities were calculated by category defined as follows.
(1)

Shares of subsidiaries and affiliates; book value(2)

Operational investment securities and other investment securities: calculated depending on the followingclassificationi

Notes or securities of which investment amount is small: acquisition priceii

Listed companies’ shares: closing price as of the end of December, 2018.

iii

Securities with financing in recent period: based on value of relevant financing

iv

Other securities estimated by comparable multiple, DCF, or net asset valuation depending on each company’s
performance

The FMV calculation is prepared with guidance and advice by KPMG Azsa.
Also, internal rate of return (hereinafter “IRR”) for the investments is also disclosed with the aim of improved transparency of
our return from investment based on the definition as follows. IRR is calculated by applying the same computation method on
securities which have not been sold yet.
Prerequisite:
Subject to calculate: Those the Company has invested in from 2003 to the end of December 2018 (includes business
investments)
The reference date for calculation: December 31, 2018
Method of calculation:• Impaired investment: Calculated as if they were sold at the net asset value after impairment.
• Investment with recent financing: Calculated as if they were sold at the valuation amount of the share value at the timeof financing.
• IPOed investment: Calculated as if they were sold at the market value as of the reference date.
• Fund: Calculated with the amount collected before the end of the reporting period and the book value as of the end ofreporting period.
• Others: Any other investment with no change in their acquisition cost due to sale, impairment, financing, IPO or the
like are calculated as if they were sold on the reference date at the acquisition cost.
Income tax are included when to calculate IRR.
The IRR after deducting taxes as of the end of December 2018 based on the method above was 14.0%.

Measures taken by the companies under Synergy Investment segments in 2018 were discussed below.


Established a new company “SIGNATE Inc. (hereinafter SIGNATE)” in April 2018. SIGNATE provides algorithm
development through the competition platform which offers data analysis contests, and placement service with a－

7 －focus on high skilled IT professionals such as data scientists or AI developers who promote business use of big data,etc.


SIGNATE launched “SIGNATE Career” web site targeted at highly-skilled IT engineers, especially data scientists or
AI developers.



Raksul Inc., an existing investee, was listed on the TSE Mothers on May 31, 2018.

WriteUp Co., Ltd., an existing investee, which had been a consolidated subsidiary until the second quarter of 2018,
was listed on the TSE Mothers on June 22, 2018

OPT Ventures established #2 Investment Limited Partnership Limited. .

Corporate Function Cost
The table below shows 2018 results of Corporate Function Cost (excluding gain/loss on derivative evaluation)(in million yen unless otherwise stated)
Selling and administrative expense
Operating income or loss
EBIT
EBITDA2018(1,822)(1,822)(1,793)(1,598)Difference from 2017*
(827)
(827)
(939)
(885)

Note: Negative amount in this column means increase of expense.

As for corporate functions, continued efforts for human resource development, and started introducing a common system tosupport corporate function. As a result, selling, general and administrative expense in corporate function for 2018 was JPY
1,822 million, (JPY 994 million in 2017), EBITDA was negative JPY 1,598 million (negative JPY 712 million in 2017).
Consolidated Results of Operations for the YearFor the year ended December 31, 2018, consolidated operating results were as follows. JPY 87,216 million yen (YoY +5.6%)
for revenue, JPY17,347 million (YoY 5.7%) for gross profit, JPY 1,767 million (YoY -20.5%) for operating income, JPY
3,265 million (YoY +56.1%) for EBIT, JPY6,089 million (YoY +49.7%) for EBITDA, JPY 1,922 million (YoY +90.2%) fornet income attributable to owners of parent. Excluding the impact of Classified earnings and gain of sales of its stocks fromthe 2017 full-year results, the growth rates were +14.2% for consolidated revenue, +13.1% for gross profit, -15.1% foroperating income, +106.6% for EBIT, +71.9% for EBITDA, and 232.4% for net income attributable to owners of parent.

(2)Issues to be addressedWith regard to issues to be addressed by the Group, the following seven items are the major management agenda.

(3)

1.

Further accumulation of marketing know-how and insights

2.

Achievement of higher profitability by developing own products of the Group and differentiation of ouruniqueness3.

Strengthening of sales force and technology development by our engineers

4.

Establishment of group-wide management system which enable both effective governance andmanagement decision

5.

Improvement of IT system for improved productivity

6.

Hiring and training of excellent talents

Capital Expenditure

There were no significant capital expenditures.

(4)

Financing

There were no significant capital financing.
－

8 －

(5)

Significant Reorganizations and Other Such Events

1) Effective September 1, 2018, the consolidated subsidiary relaido, Inc., (hereinafter “relaido”) implemented absorptiontype split, in which the video streaming business was separated and succeeded by a newly established subsidiary of
Nippon Television Network Corporation.
2) The consolidated Crossfinity Inc. acquired 90,000 treasury shares on June 6, 2018 and retired them on June 7, 2018.
As a result, Crossfinity became a wholly owned consolidated subsidiary of the Company.
The Company acquired additional shares of a consolidated subsidiary, relaido, Inc., on September 10, 2018, making it
a wholly owned consolidated subsidiary.
(6)

Assets, revenue and income(Yen in thousand, unless otherwise
FY2015FY2016FY2017FY2018stated)Revenue
64,052,229
69,815,591
82,602,185
87,216,948
Operating income
1,191,850
2,004,793
1,921,582
1,669,787
Net income attributable to267,280
745,611
1,011,088
1,922,614
owners of parent
Net income per share (Yen)
10.34
28.81
43.95
84.66
Total assets
37,421,413
46,325,081
46,127,842
57,181,793
Net assets
17,609,461
19,720,508
18,813,159
27,133,666(Note) Net income per share is calculated based on the average number of shares outstanding (total issued shares net oftreasury shares) during each fiscal year.

－

9 －

(7)

Status of Parent Company and Principal Subsidiaries (As of December 31, 2018)

1) Status of Parent Company
Not applicable2) Status of Principal Subsidiaries
Company Name
OPT, Inc.

Voting rights
owned by theCompany

Capital(Yen in thousands)
100,000

Major businesses

100.0% Marketing business

SEO solution services and media
consulting services
Advertising agency business serving midSoldout, Inc.
573,923
57.4%
sized and venture companies
Full-line of programmatic advertising
Heartlass, Inc.
15,101100.0%
operations(Notes) 1. The Company has 31 consolidated subsidiaries, including those in the table above.
2. The Company does not have any specified wholly owned subsidiaries as defined in the Companies Act.
3. Company subsidiary s1o Interactive, Inc., was renamed Heartlass, Inc., on October 1, 2018.
Crossfinity, Inc.

30,000100.0%(8) Principal Businesses
The Group is comprised of OPT Holding, Inc., and 31 consolidated subsidiaries as of December 31, 2018. It
operates Marketing Business and Synergy Investment Business. The Marketing Business provides a full rangeof customer marketing support services, including Internet advertising agency, ad production, website
development, SEO services, various other marketing support solutions, omni-channel development and databasemarketing. The Synergy Investment Business includes overseas Internet advertising agency, information
gathering and investee support. The Synergy Investment Business also invests in Internet-related venturecompanies.

Segment

Major businesses

Marketing Business• Internet advertising related services and data marketing, etc.,FI

Synergy Investment Business• Investments in Internet-related venture companies• Internet advertising agency and marketing campaign support in Asia
(excluding Japan)• Overseas research, development and investee support (mainly in China)• Information gathering in US

－

10 －

(9) Major Offices (As of December 31, 2018)1) Main Office
OfficeHead Office

Address
Chiyoda-ku, Tokyo

2) Subsidiaries
Company Name
OPT, Inc.
Crossfinity, Inc.
Soldout, Inc.
Heartlass, Inc.
(10)

Address
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo

Workforce (As of December 31, 2018)

Number of Employees
Change from Dec. 31, 2017
1,631
+58
(Notes) 1. Part-time, contractors and temporary workers are not counted as employees.
2. Personnel seconded to positions outside of the Group are not counted as employees.
(11)

Main Lenders (As of December 31, 2018) (Yen in millions)

LenderAmount borrowed
Sumitomo Mitsui Banking Corporation
3,000
Syndicate Loan
2,750
Mizuho Bank, Ltd.
2,500
MUFG Bank, Ltd.
1,000
Resona Bank, Limited.
750(Note) The syndicate loan is a 15-bank syndicate lead-managed by Sumitomo Mitsui Banking Corporation.
Workforce (As of December 31, 2018)(12)

Other Significant Matters Concerning the GroupNot applicable.

－

11 －

2. Status of the Company(1) Matters Concerning Stock (As of December 31, 2018)
1) Total number of shares authorized to be issued

86,630,400 shares2) Total number of shares issued

23,817,700 shares (including 917,705 treasury shares)

3) Number of shareholders

3,6654) Major Shareholders (Top 10)
Number of Shares
Held(Shares)

Shareholder

Ownership of Shares(%)

HIBC Co., Ltd.

4,899,200

21.39%

Japan Trustee Services Bank, Ltd. (Trust account)

3,835,800

16.75%Tomohito Ebine

1,036,900

4.52%

GOLDMAN,SACHS& CO.REG

1,005,700

4.39%

Atsushi Nouchi

885,000

3.86%

CGML PB CLIENT ACCOUNT/COLLATERAL

801,900

3.50%

Mynavi Corporation

755,800

3.30%

Japan Trustee Services Bank, Ltd. (Trust account)

597,900

2.61%

NOMURA PB NOMINEES LIMITEDOMNIBUS-MARGIN(CASHPB)

576,000

2.51%

Japan Trustee Services Bank, Ltd. (Trust account 9)553,900

2.41%(Notes) 1. The Company holds 917,705 treasury shares which is omitted from the above list of major shareholders.
The treasury shares (917,705 shares) do not include the shares held by OPT Group Employee Stock
Ownership Plan (29,400 shares).
2. Ownership percentages are calculated based on shares outstanding (issued shares net of treasury shares)
and rounded off to two decimal places.
3. HIBC Co., Ltd., is an asset management company wholly owned by the Company President and Group
CEO, Noboru Hachimine.
4. Time and Space, Ltd, an asset management company wholly owned by the Director and COO, Atsushi
Nouchi, holds 390,800 shares of the Company.
5. Tempered Investment Management, Ltd., held the following shares as of April 4, 2018, which was reported
by Large Shareholding Report (Change Report) submitted on April 6, 2018. However, the Company could
not confirm the number of shares actually held by the entity as of the end of reporting period. Thus, major
shareholders are described based on the register of shareholders at the end of the reporting year. The
following table is the summary of the Report.
Name or Name of Institution

Address1431 Bramwell Road
Tempered Investment
West Vancouver, B.C.
Management Ltd.
V7S 2N8 CANADA(Note) The number of shares held is described in the Report as of April 6, 2019.

Number of shares held*
1,182,600

6. 3D Investment Partners Private Ltd., held the following shares as of July 18, 2018, which was reported byLarge Shareholding Report (Change Report) submitted on July 18, 2018. However, the Company could notconfirm the number of shares actually held by the entity as of the end of reporting period. Thus, major
shareholders are described based on the register of shareholders at the end of the reporting year. The
following table is the summary of the Report.
－

12 －Name or Name of Institution

Address
250 North Bridge Road
3D Investment Partners Private#13-01 Raffles Ci Raffles City
Ltd.
Singapore, 179101
Singapore(Note) The number of shares held is described in the Report as of July 25, 2019.

Number of shares held*
1,342,400

7. Rheos Capital Works Corporation held the following shares as of August 15, 2018, which was reported byLarge Shareholding Report (Change Report) submitted on August 21, 2018. However, the Company could
not confirm the number of shares actually held by the entity as of the end of reporting period. Thus, major
shareholders are described based on the register of shareholders at the end of the reporting year. The
following table is the summary of the Report.
Name or Name of Institution

Address
Number of shares held*
1-11-1 Marunouchi, Chiyoda-ku, Tokyo,
Rheos Capital Works
1,139,800
100-6227, Japan(Note) The number of shares held is described in the Report as of August 21, 2019.
8. Dalton Investments LLC., held the following shares as of December 18, 2018, which was reported byLarge Shareholding Report (Change Report) submitted on December 21, 2018. However, the Company
could not confirm the number of shares actually held by the entity as of the end of reporting period. Thus,
major shareholders are described based on the register of shareholders at the end of the reporting year. The
following table is the summary of the Report.
Name or Name of Institution

Address
Number of shares held*
1601 Cloverfield Blvd. #5050N, Santa
Dalton Investments LLC
2,653,100
Monica, California, 90404, United State(Note) The number of shares held is described in the Report as of December 21, 2019.

－

13 －

5) Other Significant Matters Concerning Stock
A. Issuance of New Shares
The Company has adopted a restricted stock compensation plan pursuant to a resolution passed at its 24th Annual
General Meeting of Shareholders on March 29, 2018. In line with the plan’s adoption, the Company issued newshares as follows pursuant to an August 17, 2018 resolution of its Board of Directors.
• Class of shares issued

Common stock of the Company• Total number of shares issued

282,528• Total value of shares issued

752,654,592 yen• Issuance date

September 3, 2018

B. Retirement of treasury shares
The Company retired treasury shares as follows pursuant to an August 17, 2018 resolution of its Board of
Directors to alleviate shareholder concerns about potential equity dilution.
• Class of shares retired

Common stock of the Company• Total number of shares retired

282,528• Retirement date

September 3, 2018

－

14 －

(2) Matters Concerning Corporate Officers
1) Matters Concerning Directors (As of December 31, 2018)
Position in Company

Name

President and Group CEO

Noboru Hachimine

Vice President and Group COO

Atsushi Nouchi

Director Group CFO

Hiroshi Teraguchi

Director

Syusaku Minoda

Director
Director (Chairman of Audit andSupervisory Committee, full-time)

Tomoyuki Mizutani

Director (Audit and Supervisory
Committee member)

Fumiyuki Shinomiya
Nobuaki Ishizaki

Area of Responsibility and Significant Other
Positions
Director at Soldout, Inc.
Independent Outside Director at UT Group
Co., Ltd.
CEO at Opt Ventures, Inc.
Representative Director and CEO at OPT
Incubate,Inc.
Director, SIGNATE, Inc.

Company Director and Auditor
full-time Auditor, Crossfinity Inc,
Auditor, SIGNATE, Inc.
Outside Auditor, Aucfan Co.,Ltd.
Outside Auditor, Global Group Corp.
LawyerAuditor, Heartlass, Inc.

Director (Audit and Supervisory
Toshio Yamaue
Committee member)(Notes)
1. Director Tomoyuki Mizutani, and Directors and Audit and Supervisory Committee members, Fumiyuki
Shinomiya, Nobuaki Ishizaki and Toshio Yamaue are External Directors.
2. Director and Audit and Supervisory Committee member Fumiyuki Shinomiya had a long career at afinancial institution and possesses considerable expertise in financial matters and accounting.
3. Director and Audit and Supervisory Committee member Nobuaki Ishizaki previously worked in financeand accounting at a listed company and possesses considerable expertise in financial matters andaccounting as a credentialed SME management consultant.
4. The Board of Directors’ composition changed as follows during the fiscal year ended December 31, 2018.

1) Mr. Hiroshi Teraguchi was newly appointed and elected as a Director at the 24th Annual General
Meeting of Shareholders on March 29, 2018.
2) Mr. Fumiyuki Shinomiya was newly appointed and elected as a Director (Audit and Supervisory
Committee member) at the 24th Annual General Meeting of Shareholders on March 29, 2018.
3) Former director and Audit and Supervisory Committee member Masatoshi Go terminated his
directorship upon its expiration at the conclusion of the 24th Annual General Meeting of Shareholders
on March 29, 2018.
5. Director and Audit and Supervisory Committee member Fumiyuki Shinomiya was newly appointed andelected as an Auditor of the Company’s subsidiary OPT, Inc., on March 23, 2018.
6. Director and Audit Committee member Nobuaki Ishizaki terminated his former position as an auditor at

the Company’s subsidiary OPT, Inc., on March 8, 2018.
7. The Company established a full-time Audit and Supervisory Committee position to strengthen audit andoversight functions, improve information gathering and increase audit effectiveness.
8. The Company has designated Director Tomoyuki Mizutani and Directors and Audit and Supervisory

Committee members Fumiyuki Shinomiya, Nobuaki Ishizaki and Toshio Yamaue as independent directors
in accordance with the Tokyo Stock Exchange’s independence standards and filed a notification to that
effect with the Tokyo Stock Exchange.
9. The Company and Directors Syusaku Minoda and Tomoyuki Mizutani and Directors and Audit andSupervisory Committee members Fumiyuki Shinomiya, Nobuaki Ishizaki and Toshio Yamaue haveentered into agreements limiting each of the five Directors’ liability for damages under Article 423 (1) of－

15 －the Companies Act to the statutory prescribed minimum liability, pursuant to the Company’s Articles ofIncorporation.
2) Directors’ Total Compensation
Subgroup

Number of Recipients

Total Compensation(Yen in thousands)

Directors (excluding those who are Audit and¥131,978Supervisory Committee members)
5 (1)(¥9,250)(External Directors’ share thereof)
Directors (Audit and Supervisory Committee¥24,387
members)
4 (4)(¥24,387)(External Directors’ share thereof)
Total¥156,365
9 (5)(External Directors’ share thereof)(¥33,637)(Notes) 1. Director Tomoyuki Mizutani and Directors and Audit and Supervisory Committee members, Fumiyuki
Shinomiya, Nobuaki Ishizaki and Toshio Yamaue are External Directors.
2. Directors’ total compensation does not include salaries earned as employees by Directors who
concurrently hold employee positions.
3. The above compensation includes a 20,728,000 yen expense recognized in the fiscal year ended March 31,
2018, in connection with one Director’s restricted stock compensation.
4. At an Annual General Meeting of Shareholders on March 25, 2016, shareholders passed a resolution
limiting Directors’ annual compensation to a maximum of 200 million yen for Directors who are not Audit
and Supervisory Committee members and 30 million yen for Directors who are Audit and Supervisory
Committee members. To award restricted stock grants to Directors (excluding External Directors andDirectors who are Audit Committee members), shareholders passed an additional resolution authorizing
total Directors’ compensation of up to 550 million yen per year at the 24th Annual General Meeting of
Shareholders on March 29, 2018.

－

16 －

3) Matters Concerning External Directors
Position in the
CompanyName

Significant Concurrent
Positions at Other Entities

Main Activities at the Company

Mr. Mizutani attended 22 of 23 Board
meetings held in 2018. He appropriately
spoke up at meetings to ensure thesoundness of the Board’s decision-making
Tomoyuki
Directorfrom an objective and neutral standpoint
Mizutani
independent from management,
capitalizing on his wealth of experienceand long track record in corporate
management.
Mr. Shinomiya attended all 19 Board
meetings and all 10 Auditand Supervisory
Committee meetings held in 2018 after
Director
Company Director andhis appointment. He appropriately(Chairman of
Fumiyuki
Auditorprovided valuable perspectives on agenda
Audit and Supervisory
Shinomiya
Full-time Auditor, Crossfinity
items and other discussions, capitalizing
Committee, full-time)Inc.
on his insight and wealth of domestic andinternational experience, mainly in thefinancial sector.
Mr. Ishizaki attended all 23 Board
meetings and all 14 Audit andAuditor, SIGNATE, Inc.
Director
Supervisory Committee meetings held in
Outside Auditor, Aucfan Co.,
(Audit andNobuaki2018. He appropriately provided valuable
Ltd.
Supervisory
Ishizakiperspectives on agenda items and otherOutside Auditor, Global
Committee member)discussions from both fairness andGroup Corp.
objectiveness viewpoint as certified SME
management consultant.
Mr. Yamaue attended 21 of 23 Board
Director
meetings and all 14 Audit Committee(Audit and
LawyerToshio Yamaue
meetings held in 2018. He appropriately
Supervisory
Auditor, Heartlass, Inc.
provided valuable agenda items and otherCommittee member)discussions from lawyer’s perspectives.
(Notes) 1. OPT, Inc., and Crossfinity Inc., companies at which Director (Audit and Supervisory Committee
Chairman) Fumiyuki Shinomiya holds positions, are subsidiaries of the Company.
2. SIGNATE, Inc., where Director (Audit and Supervisory Committee member) Nobuaki Ishizaki, holds a
position, is a subsidiary of the Company. The Company’s relationships with Aucfan Co., Ltd., and Global
Group Corp., the other two companies at which Mr. Ishizaki holds positions, do not warrant disclosure.
3. Heartlass, Inc., where Director (Audit and Supervisory Committee member) Toshio Yamaue holds a
position, is a subsidiary of the Company.

－

17 －

(3) Independent External Auditor
1) Name

KPMG AZSA LLC

2) Amount of Compensation(Yen in thousands)
Independent auditor’s compensation for fiscal year ended December 31, 2018¥59,500
Total monetary amount payable to the independent auditor by the Company and its subsidiaries ¥87,500(Notes) 1. The audit agreement between the Company and its independent auditor does not explicitly distinguishthe compensation for audit services performed pursuant to the Companies Act from the compensation
for audit services performed pursuant to the Financial Instruments and Exchange Act. Givendisaggregating compensation between the two types of audit services is not feasible, the Company isdisclosing the above total amount as its independent auditor’s compensation for the fiscal year ended
December 31, 2018.
2. A consolidated subsidiary eMFORCE Inc. was audited by an accounting firm other than the Company’s
independent auditor.
3. The Audit and Supervisory Committee approved the independent auditor’s compensation after
performing required verification of the appropriateness of the independent auditor’s audit plan, audit
performance and basis for calculating estimates of its compensation.
3) Non-Audit Services
The Company paid KPMG AZSA LLC compensation for advisory services.

4) Policy for Dismissal or Non-reappointment of Independent External Auditor
If the Audit and Supervisory Committee decides that the independent auditor needs to be replaced for failure to
perform its duties or for other reasons, it shall draft a proposal regarding dismissal or non-reappointment of the
independent auditor to an Annual General Meeting of Shareholders. Additionally, if any of the causes for
dismissal fall into the stipulation of Article 340(1) of the Companies Act, the Audit and Supervisory Committee
may dismiss the independent auditor with the unanimous consent of all of its members.
If the independent auditor is dismissed, an Audit and Supervisory Committee member selected by the Audit andSupervisory Committee shall report on the dismissal, including the reason(s) for it, at the earliest Annual
General Meeting of Shareholders convened after the dismissal.

－

18 －

3. The Systems and Policies of the Group(1) Controls to Ensure Operational Soundness
1) Controls to Ensure the Company and Its Subsidiaries’ Directors and Employees Comply with Laws andArticles of Incorporation in Executing Their Duties
The Company is committed to improving compliance awareness among its own and its subsidiaries’ directors,
officers and employees, and cultivating a Group-wide mindset of respect for compliance through such means
as conducting training sessions and preparing and distributing manuals. This initiative is led by its corporate
officers in charge of administrative organizational units, working in concert with organizational units
responsible for administrative functions.
2) Controls Related to Retention and Management of Information Concerning Directors’ Execution of Their
DutiesThe Company and its subsidiaries’ directors prepare, retain and manage documents related to significant
decisions and reports in accordance with Document Management Regulations. The Company’s subsidiaries
keep such documents readily accessible if requested to do so by the Company’s Audit and Supervisory
Committee or their own auditors.
3) Regulations and Other Controls Related to Management of the Company and Its Subsidiaries’ Risk of Losses
The Company manages risk in accord with Basic Risk Management Policies established by its Board of
Directors. It does so through a Risk Management Office staffed with employees and corporate officers, mainly
the officers in charge of administrative organizational units. The Risk Management Office reports on risk
management matters to the Board of Directors on an as-needed basis. The Company’s subsidiaries haveestablished regulations aligned with the Company’s internal regulations and other controls, and implemented
their own controls for managing risks, including the risk of losses, to the extent needed by their scale,attributes and other relevant circumstances.
4) Controls to Ensure the Company and Its Subsidiaries’ Directors Execute Their Duties Effectively
The Company adopts business plans, explicitly sets operating performance targets on a company-wide basis,and clarifies how it evaluates performance. It pursues improvement in operating efficiency by clearly defining
every organizational unit’s responsibilities with respect to operating performance. The Company’s subsidiaries
also analyze and make decisions on significant management matters through their respective Boards of
Directors, which meet monthly as a general rule.

5) Controls to Ensure Operational Soundness of the Group Consisting of the Company and Its Subsidiaries
To ensure Group companies’ operational soundness, the Company supervises its subsidiaries as required basedon their respective circumstances in accordance with its affiliated company management regulations.
Additionally, the Company’s Board of Directors and subsidiaries’ management teams promote informationsharing and effective communication among Group companies and alignment of Group management policies,
exchanging information on important matters affecting the Group as a whole whenever such matters arise.

6) Matters Concerning Staffing Requested by Audit and Supervisory Committee to Assist with Its Duties
When the Audit and Supervisory Committee requests staff to assist performing its duties, the Company assigns
the needed staff to the Committee.

7) Matters Concerning Assurance that Staff Assigned to Audit and Supervisory Committee are Independent from
Directors and Effectively Supervised
The Company respects the Audit and Supervisory Committee’s request on assignment of staff to assist the
Audit and Supervisory Committee. Staff that have been ordered to perform auditing tasks by the Audit andSupervisory Committee will not obey to orders or directions from Company Directors (excluding Directors
who are Audit and Supervisory Committee members) against the orders from the Audit Committee.
－

19 －8) Channels Through which the Company and Its Subsidiaries’ Directors (excluding Company Directors Who Are
Audit and Supervisory Committee Members) and Employees Can Report to Audit and Supervisory Committee
ChairmanCompany Directors (excluding Directors who are Audit and Supervisory Committee members) and employees
are required to immediately report to the Audit and Supervisory Committee Chairman if they become aware of
an illegal act or misconduct by a Director (other than a Director who is an Audit and Supervisory Committee
member) or if any matter that would cause a material loss on the Company arises or is at risk of arising.
Additionally, the Company is endeavoring to strengthen compliance with respect to preventing irregularities
and illegalities on a Group-wide basis. Toward this end, the Company has set up a communication channel
through which its subsidiaries’ Directors and Auditors can directly consult with or indirectly report to its Audit
and Supervisory Committee Chairman regarding illegalities, irregularities and facts materially detrimental to
the subsidiary in question.

9) Controls to Prevent Retaliation Against Whistleblowers
The Company prohibits retaliatory treatment for individuals who have reported to the Audit and Supervisory
Committee Chairman and promotes universal awareness of this prohibition among its directors (excluding
Directors who are Audit and Supervisory Committee members), employees, its subsidiaries’ Directors andemployees.

10) Matters Concerning Policies Pertaining to Prepayment or Reimbursement of Expenses Related to Execution of
Audit and Supervisory Committee Members’ Duties or Handling of Other Expenses or Liabilities Related to
Said Duties’ Execution
When billed in advance for necessary expenses related to execution of Audit and Supervisory Committee
members’ duties, the Company promptly pays the billed charges.
11) Other Controls to Ensure Effectiveness of Audit and Supervisory Committee’s Audits
Directors (excluding Directors who are Audit and Supervisory Committee members) endeavor to make theaudit system function efficiently by promoting deeper understanding about the audit system and creating anaudit-friendly environment within the Company. The Representative Director notifies Audit and Supervisory
Committee members of Board of Directors meeting dates in advance and promotes appropriate communicationand effective performance of audit work to ensure that the Audit and Supervisory Committee’s audits are
conducted effectively.

12) Controls to Ensure Reliability of Financial Reporting
To ensure the reliability of its financial reporting, and effective and appropriate reporting on internal controls
in accordance with the Financial Instruments and Exchange Act, the Company has established the Basic
Policies for Implementing, Operating and Evaluating Internal Controls over Financial Reporting, andimplements an internal control system accordingly. It also continually evaluates whether its internal controls
are functioning properly and modifies them as needed.

13) Controls to Eradicate Antisocial Forces
The Company’s rules and regulations contain required provisions on severing relations with anti-social forces(as defined in the Guideline for How Companies Prevent Damage from Anti-Social Forces issued by the
Ministerial Meeting Concerning Measures Against Crime) pursuant to the Basic Compliance Policies approved
by Board of Directors. Such rules and regulations mandate that the Company sever all relations with antisocial
forces and respond organizationally to any illicit demands by anti-social forces.
Additionally, the Company is a long-standing member of the Special Anti-Violence Countermeasures
Federation of the Metropolitan Police Department. It also builds cooperative relationships with attorneys andother concerned external organizations, and incorporates an anti-social forces clause into its contracts with new
suppliers and customers.
－

20 －(2) Overview of Implementation Status of Controls to Ensure Operational Soundness
1) Execution of Directors’ Duties
In the fiscal year ended December 31, 2018, the Board of Directors met 23 times and made management
decisions. The Board of Directors instituted Board of Directors Regulations and other internal regulations toensure that Directors act in accordance with laws, government regulations and the Company’s Articles ofIncorporation.
2) Execution of Duties by Directors Who Are Audit and Supervisory Committee Members
In addition to conducting audits pursuant to audit plans formulated at Audit and Supervisory Committee
meetings, the Directors who are Audit and Supervisory Committee members oversee Directors’ execution of
their duties through such means as attending important meetings, including Board of Directors meetings andregularly exchanging information with the independent external auditor and Internal Audit Office.
3) Risk Management and Compliance
To mitigate, prevent and swiftly respond to risks, the Company has established Risk Management Regulations
and is strengthening its risk-management system. Additionally, it is endeavoring to elevate its employees’compliance awareness by periodically conducting compliance trainings.

(3) Policy for Determination of Dividends from Retained Earnings
As its dividend policy, the Company aims to pay dividends equivalent to 20% of net income attributable toowners of the parent before amortization of goodwill so it can internally retain earnings to fund investments,
including business and human-resource investments needed to strengthen its management team and boost
earnings in pursuit of further growth in line with its Group’s corporate vision over the medium to long term.
For the fiscal year ended December 31, 2018, the Company’s Board of Directors passed a resolution
authorizing a dividend of 19.00 yen per share on February 7, 2019.

Monetary values presented in this Business Report are rounded down to the nearest whole unit in which they arepresented; percentages and other numbers are rounded off to one decimal places.

－

21 －

Consolidated balance sheet(As of December 31, 2018)
Account
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Operational investment securities
Inventories
Deferred tax assets
Other
Allowance for doubtful accounts(Yen in thousands)
AmountAmountAccount
Liabilities
50,236,554 Current liabilities
19,631,361 Notes and accounts payable-trade
Current portion of long-term loans
13,652,827
payable15,337,154 Income taxes payable
252,727 Deferred tax liabilities
145,450 Provision for bonuses
1,266,380 Other(49,347)

Noncurrent liabilities
Long-term loans payable
Liabilities on retirement benefits
Deferred tax liabilities
Asset retirement obligations
Other
Total liabilities
Intangible assets
1,498,224
Net assets
Other
1,498,224 Shareholders’ equity
Capital stock
Investments and other assets
5,147,396 Capital surplus
Share of subsidiaries
0 Retained earnings
Shares of affiliates
1,027,800 Treasury shares
Accumulated other
Investment securities
2,208,615
comprehensive income
Valuation difference on availableLease and guarantee deposits
731,289
for-sale securities
Foreign currency translation
Deferred tax assets
702,109
adjustment
Other
557,588 Subscription rights to shares
Allowance for doubtful accounts(80,007) Non-controlling interests
Total net assets
Total liabilities and net
Total assets
57,181,793
assets(Note) The amounts presented above are rounded down to the nearest whole thousand yen.
Noncurrent assets
Property, plant and equipment
Buildings and structures
Lease assets
Other

6,945,238
299,617132,2652,233
165,118－

22 －

20,979,042
12,163,997
1,300,000
557,799
2,400,057
727,9893,829,198

9,069,084
8,700,000
200,376
61,734
104,979
1,992
30,048,126
16,872,113
8,212,254
3,915,198
5,442,903(698,241)6,604,672
6,214,119
390,552
228
3,656,652
27,133,666
57,181,793

Consolidated statement of income(from January 1, 2018 to December 31, 2018)(Yen in thousands)
Account

AmountRevenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
5,329
Dividends income
164
Gain on investments in partnership
78,214Gain on valuation of derivatives
56,525
Other
41,108Non-operating expenses
Interest expenses
31,894
Commission fee
15,638Loss on investments in partnership
115,543
Other
116,459
Ordinary income
Extraordinary income
Gain on sales of investment securities
1,677,013
Gain on transfer of business
526,544
Gain on reversal of subscription rights to shares
240
Other
2,526
Extraordinary loss
Loss on retirement of noncurrent assets
92,263
Impairment loss
379,013
Loss on valuation of investment securities
129,375
Loss on sales of investment securities
15,714Other
21,101
Net income before taxes and other adjustments
Income taxes-current
1,585,648
Income taxes-deferred(386,851)
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent(Note) The amounts presented above are rounded down to the nearest whole thousand yen.

－

23 －

87,216,948
69,869,664
17,347,284
15,579,302
1,767,981

181,342

279,536
1,669,787

2,206,325

637,468
3,238,644
1,198,797
2,039,847
117,232
1,922,614

Consolidated statement of changes in net assets(from January 1, 2018 to December 31, 2018)(Yen in thousands)
Shareholders’ equity

Balance at beginning of year
Changes of items during theperiodIssuance of new shares
Dividends from surplus
Net income attributable toowners of parent
Purchase of treasury shares
Retirement of treasury shares
Changes in ownership interestin subsidiaries
Change in scope of
consolidation
Net changes of items other thanshareholders’ equity
Total changes of items during theperiodBalance at end of year

Capital stock

Capital surplus

7,835,926

3,567,434

376,327

376,327

Retainedearnings
4,214,070

Treasury shares(912,886)

Total
shareholders’equity14,704,545(271,411)

752,654(271,411)

1,922,614

1,922,614(214,963)(318)
214,963(28,563)(318)－(28,563)(207,407)(207,407)

376,327

347,763

1,228,832

214,645

2,167,568

8,212,254

3,915,198

5,442,903(698,241)

16,872,113

Accumulated other comprehensive income
Valuationdifference
NonForeign Total accumulated Subscriptiononrights tocontrollingcurrency
otheravailablesharesinterests
translation comprehensive
foradjustment
incomesale
securities
Balance at beginning of(1,389)515,583
514,193
1,244
year
Changes of items during theperiodIssuance of new shares
Dividends from surplus
Net income attributable toowners of parent
Purchase of treasury
sharesRetirement of treasury
sharesChanges in ownershipinterest in subsidiaries
Change in scope of
consolidation
Net changes of items other
6,215,508 (125,030)
6,090,478(1,016)than shareholders’ equity
Total changes of items
6,215,508 (125,030)
6,090,478(1,016)during the period
Balance at end of year
6,214,119
390,552
6,604,672
228(Note) The amounts presented above are rounded down to the nearest whole thousand yen.

－

24 －

3,593,175

Total net assets

18,813,159

752,654(271,411)
1,922,614(318)－(28,563)(207,407)
63,477

6,152,938

63,4778,320,507

3,656,652

27,133,666

Notes to Consolidated Financial Statements
1. Significant matters for preparing consolidated financial statements:(1) Scope of consolidation
1) Status of consolidated subsidiaries• Number of consolidated subsidiaries: 31 consolidated subsidiaries• Names of consolidated subsidiaries
OPT, Inc.
Soldout, Inc.
Crossfinity, Inc.
Heartlass, Inc.
SearchLIFE Co., Ltd.
relaido, Inc.
ConnectOm, Inc.
Platform ID, Inc.
Consumer first, Inc.
Demand Side Science, Inc.
Plugworldwide Inc.
Marketinginsu Inc.
TechLoCo, Inc.
Growth Gear Co., Ltd.
Internet Utilization Association
brainy, Inc.
OPT Ventures, Inc.
OPT Ventures No. 1 Limited Partnership for Investment
OPT Ventures No. 2 Limited Partnership for Investment
SIGNATE Inc.
OPT Incubate Inc.
IMJ FENOX PTE. LTD. No.2
OPT China Limited
OPT Shenzhen (China)
OPT America,Inc.
eMFORCE Inc.
OPT SEA Pte.,Ltd.
OPTOK Co.,Ltd.
Lead Commerce Pte.,Ltd.
grasia Pte.,Ltd.
Multimedia School WAVEInternet Utilization Association is newly included in the scope of consolidation because the Company acquired controlof them in the fiscal year ended December 31, 2018. Also newly funded OPT Ventures No. 2 Limited Partnership for
Investment is newly included in the scope of consolidation. .
Demand Side Science, Inc., Plugworldwide Inc., Marketinginsu Inc.,IMJ Fenox GlobaSide Science, Inc., OPT China
Limited, OPT Shenzhen (China), OPTOK Co.,Ltd., and Lead Commerce Pte., Ltd. are newly included in the scope of
consolidation from the fiscal year ended December 31, 2018 associated with their increased materiality. .
Tokyo Gets Co., Ltd., WriteUp Co., Ltd. and grasia Bangkok Co., Ltd. were excluded from the scope of consolidationby the sales of these companies’ shares.
Groover inc. (merged to OPT Inc,) and OPT Growth Partners Inc. (merged to OPT Incubate Inc.) were removed fromthe scope of consolidation.
NETMARKE, Inc., was removed from the scope of consolidation due to its liquidation.
As of April 1, 2018, SIGNATE Inc., was renamed from OPT Works, Inc. As of September 2018, relaido, Inc., wasrenamed from SkillUp Video Technologies Corporation. As of October 1, 2018, Heartlass, Inc., was also renamed
from s1o Interactive, Inc.
－

25 －2) Status of non-consolidated subsidiaries


Name of major non-consolidated subsidiaries
Crossfinity Taiwan, Co., Ltd.

 The reason for exclusion from the scope of consolidation
The non-consolidated subsidiary was a small-scale company and neither of its total assets, revenue, net income/loss(relevant amount according to shares we hold) nor retained earnings (relevant amount according to shares we hold)had significant impact on the Consolidated Statement of Income.
(2) Application of equity method
1) Status of equity-method affiliates
 Number of equity-method affiliates: Three affiliates
 Names of equity-method affiliates
Chai Communication Co.,LTD.
GENERATE INC.
Jimoty, Inc.
redfox, Inc., was excluded from the scope of consolidation as the Company has sold their shares.
2) Status of major non-consolidated subsidiaries and affiliates not subject to equity methodName of non-consolidated subsidiaries and affiliates in this categoryNon-consolidated subsidiary: Crossfinity Taiwan, Co., Ltd.

The reason for exclusion from equity method

The non-consolidated subsidiaries and affiliates which were excluded from equity method, due to the amount of theCompany’s pro rata share of net income and retained earnings, have minor impact on the consolidated financial
statements and immaterial as a whole. Also, Dot metrix.Inc.,which was non-consolidated affiliates not subject toequity method, was excluded due to its liquidation.
(3) Special notes on procedures for application of equity method
Since the closing date of GENERATE INC., an equity method affiliate, is March 31, we used the financial
statements based on the provisional account closing on the consolidated closing date. Other equity method affiliates
have the same fiscal year ending at the consolidated closing date.

－

26 －

(4) Fiscal years of consolidated subsidiaries
The closing dates of OPT SEA Pte., Ltd., OPTOK Co., Ltd and Commerce Pte., Ltd. is November 30. We used thefinancial statements at their respective closing dates. However, significant transactions between consolidated
companies before the consolidated closing date are adjusted as required for consolidation.
Other consolidated subsidiaries have the same fiscal year ending at the consolidated closing date.

(5) Matters on accounting policies
1) Valuation standards and valuation method for significant assets
A. Held-to-maturity bonds
The amortized cost method (straight-line method) is adopted.
B. Shares of subsidiaries and affiliates
They are valued at cost by the moving-average method.
C. Available-for-sale securities (including operational investment securities)• Those with market value:
Subject to the market value method based on the market price or the like at the end of the period. (The related
valuation differences are directly debited or credited to the net assets and the cost of securities sold is computed by
the moving average method.)• Those without market value:
Subject to the moving average cost method.
• Investment in limited partnership for investment or the like
Subject to the method where the amount equal to the Company’s interests is added to, or subtracted from, thepartnership’s gains or losses based on the most recently available financial statements.
D. Derivatives
The market value method based on the market price or the like at the end of the period is adopted.
E. Inventories• Merchandise and Work in process:
The FIFO cost method is mainly adopted. (The balance sheet value is computed subject to write-down due todecreased profitability.)• Supplies:
The identified cost method is mainly adopted. (The balance sheet value is computed subject to write-down due todecreased profitability.)2) Depreciation/amortization method for significant depreciable/amortizable assets
A. Property, plant and equipment (excluding leased assets)
Mainly subject to the declining-balance method.
However, the buildings (excluding equipment attached to buildings) acquired on or after April 1, 1998 and theequipment attached to buildings and structures acquired on or after April 1, 2016 are subject to the straight-line
method.
The straight-line method is adopted by overseas consolidated subsidiaries. Primary useful life is as indicatedbelow.
Buildings and structures: 5 to 18 years.

－

27 －

B. Intangible assets (excluding leased assets)
Subject to the straight-line method.
The software for internal use is subject to the straight-line method based on the period available for internal use(mainly, five years).
C. Leased assets• Leased assets from non-ownership transfer finance lease transactions:
Subject to the straight-line method where the lease term is the useful life, and the residual value is the guaranteed
residual value if the relevant lease agreement stipulates residual value guarantee, or otherwise, residual value iszero.

3) Standards for recognition of significant allowances
A. Allowance for doubtful accounts
To prepare for losses from accounts receivable, uncollectible amounts are estimated and recognized, for ordinary
receivables, by the actual bad debt ratio based on losses in the past, or for doubtful receivables and other certain
receivables, by taking into consideration the collectability of individual receivable accounts.
B. Provision for bonuses
In terms of provision for bonuses, the amount accrued in the fiscal year under review for the estimated payout toemployees is recognized to prepare for payments of bonuses to employees.

4) Accounting method pertaining to retirement benefits
To calculate liabilities on retirement benefits and expenses, some consolidated subsidiaries have adopted thesimplified method, where the necessary amount to pay for voluntary retirement benefits at the end of the period inline with the retirement benefit plan is regarded as the retirement benefit obligations.

5) Standards for translating significant assets or liabilities in foreign currency into Japanese currency
The assets and liabilities of overseas subsidiaries are translated into the Japanese yen based on the spot exchange rate
as of the closing date while their earnings and expenses are translated into the Japanese yen based on the average rate.
The translation differences are included in and recognized as foreign currency translation adjustment and noncontrolling interests under net assets.

6) Amortization method and period for goodwill
Goodwill is regularly amortized over a reasonable period, which we estimate case-by-case based on the duration of its
effect.

7) Other significant matters for preparing consolidated financial statements
A. Accounting procedures for consumption taxes
The accounting procedures for national and local consumption taxes are subject to the tax-excluded method. Nondeductible national and local consumption taxes are expensed for the fiscal year under review.
B. Application of consolidated tax payment system
The consolidated tax payment system is adopted by the Company and some of its consolidated subsidiaries.

2. Notes on changes in accounting policies(Change in inventory valuation methods)
The Groups inventories (excluding supplies) have previously been mainly valued at cost by the identified cost method.
Effective from the fiscal year ended December 31, 2018, the Group switched mainly to the FIFO cost method. The Group－28 －made this change to more appropriately value its inventories and measure profit for the period as a result of reassessing its
inventory management system in response to an increase in its inventories materiality.
The change’s financial statement impact is immaterial. The change has accordingly not been retroactively applied.

3. Changes in presentation method(Consolidated balance sheet)
Shares of subsidiaries, which were included in investment securities under investments and other assets in the previous
fiscal year, are presented as a separate line item from the fiscal year ended December 31, 2018, with the aim of improving
clarity.
“Shares of affiliates”, which were included in investment securities under investments and other assets in the previous fiscal
year, are presented as a separate line item from the fiscal year ended December 31, 2018, with the aim of improving clarity.
Deferred tax assets, which were included in the other line item under investments and other assets, in the previous fiscal
year, are presented as a separate line item from the fiscal year ended December 31, 2018, because their monetary
materiality has increased.
For the fiscal year under review onwards, we decided to separate and independently indicate Deferred tax liabilities, which
had been included in other of Current liabilities for the previous fiscal year, due to its growing significance in value.

(Consolidated statement of income)
Provision of allowance for doubtful accounts, which was presented as a separate line item under non-operating expenses forthe previous fiscal year, is included in the other line under non-operating expenses for the fiscal year under review. Thechange resulted from a revision of accounts presented on the consolidated statement of income with the aim of improving
clarity.

4. Notes on additional information(Adoption of Practical Solution on the Accounting for Virtual Currencies under the Payment Services Act)The Company began accounting for cryptocurrencies in accordance with the Practical Solution on the Accounting for
Virtual Currencies under the Payment Services Act (ASBJ Practical Issues Task Force (PITF) No. 38; March 14, 2018)from the fiscal year ended December 31, 2018, the first year in which PITF No. 38 was permitted to be adopted.

－

29 －

5. Notes on consolidated balance sheet(1) Breakdown of inventories presented as a single line item
(Yen in thousands)¥243,146¥9,364¥216

MerchandiseWork in process
Supplies(2) Assets pledged as collateral and secured liabilities
1) Assets pledged as collateral (Yen in thousands)
Cash and deposits (term deposits)¥21,257

2) Liabilities secured by above assets (Yen in thousands)
Accounts payable¥33,588(Yen in thousands)(3) Accumulated depreciation on property, plant and equipment¥422,804
733 thousand yen of impairment loss for non-current assets were included above accumulated depreciation onproperty, plant and equipment.
6. Notes on consolidated statement of changes in net assets(1) Matters concerning classes and numbers of issued shares and treasury sharesClass of stock
Issued commonsharesCommon shares
Treasury shares
Common shares

As of Jan. 1, 2018

Additions

Subtractions

As of Dec. 31, 2018

23,817,700 shares

282,528 shares

282,528 shares

23,817,700 shares

1,200,062 shares

171 shares

282,528 shares

917,705 shares(2) Matters concerning subscription rights to shares

Category
Consolidated
subsidiaries

Type

As of Jan.
1, 2018

Additions

Subtractions

As of Dec.
31, 2018

Balance as ofDec. 31, 2018
(Yen inthousands)

―

―

―

―

228

―

―

―

―

228

Number of shares underlying stock options

Class ofunderlying
stock

Subscription
rights to shares
Common shares
granted as stock
options
Total(3) Matters concerning dividend
1) Amount of dividend distribution
Authorization

Class of stock

Total dividend
distribution (Yenin thousands)

March 29, 2018
AnnualShareholders’Meeting

Common shares

271,411

Dividend pershare (Yen)Record date

Declaration date

12.0

December 31,
2017

March 30, 2018

2) Dividends with a record date in the fiscal year ended December 31, 2018, and declaration date in the following fiscal
year
－

30 －

Scheduled
authorization

Class ofstock

Dividend
funding source

February 7,
2019
Board ofDirectors
Meeting

CommonsharesRetainedearnings

Total dividend
distribution (Yen inthousands)

Dividend pershare (Yen)Record date

Declaration date

435,099

19.0

December31, 2018

March 7,2019

7. Notes on financial instruments(1) Matters concerning financial instruments
1) Activities and policies related to financial instruments
The Group invest into financial assets focusing on safety and liquidity given own cash flows and financial market
conditions. When borrowing funds or otherwise raising capital, the Group takes stability, cost-efficiency andflexibility into consideration in selecting funding instruments.
The Group manages investment businesses that invest in securities for investment purposes through dedicatedbusiness units.

2) Nature of financial instruments and associated risks
Trade notes and accounts receivable are subject to customer credit risk. With respect to this risk, the Group has staff
that manage receivable collection schedules and receivable balances on a customer-by-customer basis andperiodically assess major customers’ credit status in accord with the Group’s credit management regulations. Trade
receivables denominated in foreign currencies are subject to currency risk. Investment securities are mainly stocks ofcompanies with which the Company has business relationships. They are subject to the risk of market pricefluctuations.
The Group’s holdings of operational investment securities and investment securities other than the aforementioned
stockholdings mainly consist of stocks and equity interests in partnerships and other such entities. The Group holds
the securities for purely investment purposes or to advance its businesses. The listed stocks among these securities
are subject to the risk of market price fluctuations. The unlisted stocks among these securities are subject to the tworisks disclosed below because unlisted companies tend to be more sensitive than listed companies to changes in theeconomic environment and other such developments as a result of having less stable financial/earnings foundations
and being more constrained in terms of management resources.

a. The Group has no assurance of earning any capital gains on its investments.
b. The Group may incur capital losses on its investments.

Trade notes and accounts payable are predominately payable within one year. Trade payables denominated in foreign
currencies are subject to currency risk.
Loans payable and long-term loans payable are mostly funding needed for working capital, among other purposes.

3) Financial instrument risk-management regime• Management of credit risk (risk associated with, e.g., counterparties’ contractual nonperformance)
For trade receivables, the Group conducts credit screenings when it starts doing business with a new customer,
continually monitors receivables’ collection status, reviews credit limits and revises them when necessary in accord
with its credit management regulations.
• Management of market risks (e.g., foreign currency risk, interest rate fluctuation risk)
For operational investment securities and other investment securities, the Group periodically checks market values
and assesses the issuer’s (or partner company’s) financial condition and continually reviews and, as necessary,adjusts its holdings in light of market conditions and/or its relationship with the partner company.
－

31 －• Management of liquidity risk in connection with borrowings (risk of inability to repay borrowings by repayment
date)
The Group manages liquidity risk through such means as having its finance staff prepare and update cash flowschedules on a timely basis.
4) Supplemental information on financial instruments’ fair value
Financial instruments’ fair values include valuations based on market prices and, in the case of financial instruments
without market prices, valuations measured by reasonable means. The latter valuation measurements incorporate
variables and are therefore subject to change in response to, e.g., changes in underlying assumptions.
(2) Matters concerning financial instruments’ fair value
Financial instruments’ carrying amounts on the consolidated balance sheet and fair values as of December 31, 2018 (theconsolidated balance sheet date for the fiscal year under review), and the differences between the two are presented in
the table below. The table omits financial instruments for which fair-value measurement is deemed unfeasible (see Note
2).

(Yen in thousands)
Carrying amount on
consolidated balance sheet(1) Cash and deposits(2) Notes and accounts receivabletrade(3) Operational investment
securities and investment
securities, etc.
Total assets(1) Notes and accounts payabletrade(2) Long-term loans payable(including current portion
thereof)
Total liabilities(Note 1)
AssetsFair value

Difference

19,631,361

19,631,361―

13,652,827

13,652,827―

11,724,352

11,724,352―

45,008,542

45,008,542―

12,163,997

12,163,997―

10,000,000

9,987,371(12,628)

22,163,997

22,151,368(12,628)

Matters concerning financial instrument fair-value measurement methods and securities(1) Cash and deposits and (2) Notes and accounts receivable-trade
Because these assets all have short-term maturities, their fair value approximates their carrying amounts. Their fairvalue is accordingly measured at their respective carrying amounts.
(3) Operational investment securities and investment securities
As a general rule, these securities’ fair value is based on exchange-traded prices in the case of equities and, in the caseof bonds, on price quotes provided by financial institutions or total principal and interest receivable discounted topresent value using the discount rate that factors in residual maturity and credit risk.
Liabilities(1) Notes and accounts payable-trade
Because these liabilities have short-term maturities, their fair value approximates their carrying amounts. Their fairvalue is accordingly measured at their respective carrying amounts.

－

32 －

(2) Long-term loans payable (including current portion thereof)
The fair value of long-term loans payable is measured by discounting total principal and interest payable using a
discount rate that incorporates a benchmark rate (e.g., government bond yield) plus a credit spread.

(Note 2)Financial instruments for which fair-value measurement is deemed infeasible(Yen in thousands)
Carrying amount on consolidated balance sheet

Type
Operational investment securities and investment
securities*1
4,953,543
Unlisted equities
Equity interests in investment limited partnerships and1,895,673
similar partnerships
Subsidiaries’ share*2
0
Unlisted equities
Affiliates’ shares*2
1,027,800
Unlisted equities
Total
6,849,216(*1) Fair-value measurement is deemed infeasible for the above financial instruments, which do not have market prices.
They are therefore omitted from “(3) Operational investment securities and investment securities.”(* 2) Fair-value measurement is deemed infeasible for the above financial instruments, which do not have market prices.
They are therefore not included above table.
(Note 3) Post-reporting-date maturity schedule for receivables and securities with maturity dates(Yen in thousands)
Type(1) Cash and deposits(2) Notes and accounts receivable–
trade
Total

Within 1 year

1-5 years

5-10 years

Over 10 years

19,631,361

―

―

―

13,652,827

―

―

―

33,284,189(Note 4) Repayment schedule for loans payable and other interest-bearing debt
(Yen in thousands)
Type
Long-term loans payable
Total

Within 1 year
1,300,000
1,300,000

1-5 years
8,700,000
8,700,000

5-10 years

Over 10 years
―
―

―
―

8. Notes on per-share information
Net assets per share
Net income per share¥1,025.19¥84.66

9. Notes on significant subsequent events
Not applicable.

－

33 －

Balance sheet(As of December 31, 2018)
Account
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Merchandise
Operational investment securities
Advances paid
Short-term loans receivable fromsubsidiaries and associates
Accounts receivable - otherConsumption taxes receivable
Other
Allowance for doubtful accounts
Noncurrent assets(Property, plant and equipment)
Buildings and structures
Tools, furniture and fixtures(Intangible assets)
Patent right
Trademark right
Software
Software in progress
Other(Investments and other assets)
Investment securities
Shares of subsidiaries and associates
Investments in other securities ofsubsidiaries and associates
Long-term loans receivable
Loans receivable from subsidiaries
and associates
Long-term loans receivable fromshareholders, directors or employees
Long-term prepaid expenses
Lease and guarantee deposits

AmountAccount
Liabilities
28,049,178 Current liabilities
Current portion of long-term loans
13,889,916
payable318,508
Accounts payable
Deposits received from subsidiaries
243,146
and associates
12,626,853
Accrued expenses
77,574
Income taxes payable
80,000

Advances received

447,959
Deposits received
23,533
Provision for bonuses
341,778
Deferred tax liabilities
(94)
Other
11,661,276 Noncurrent liabilities
133,493Long-term loans payable
83,765
Asset retirement obligations
49,728Other
64,503759
Total liabilities
3,310
55,471
1,701
3,260
11,463,279
Net assets
201,976 Shareholders’ equity
8,003,009 Capital stock(Yen in thousands)
Amount11,826,081
1,300,000
308,552
7,132,968
65,291
232,646
22,56921,90065,9782,559,455
116,719
8,776,998
8,700,000
76,631367
20,603,080

12,892,426
8,212,254

809,740

Capital surplus

3,423,712

35,404

Legal capital surplus

3,423,712

Retained earnings

1,954,701

Other retained earnings

1,954,701

1,110,200
4,442
173,754541,290

Retained earnings brought forward
Treasury shares
Valuation and translation
Deferred tax assets
618,866
adjustments
Allowance for doubtful
Valuation difference on available-for(35,404)
accounts
sale securities
Total net assets
Total assets
39,710,455
Total liabilities and net assets(Note) The amounts presented above are rounded down to the nearest whole thousand yen.

－

34 －

1,954,701(698,241)6,214,948
6,214,948
19,107,374
39,710,455

Statement of income(from January 1, 2018 to December 31, 2018)(Yen in thousands)
Account

AmountRevenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating loss
Non-operating income
Interest income
40,286
Dividends income
5,097
Gain on valuation of derivatives
56,525
Other
8,915
Non-operating expenses
Interest expenses
29,223
Commission fee
1,000
Loss on investments in partnership
127,495
Foreign exchange losses
20,937
Other
9,608
Ordinary loss
Extraordinary income
Gain on sales of shares of subsidiaries
1,152,253
Gain on sales of investment securities
12,277Extraordinary loss
Loss on retirement of noncurrent assets
5,438
Loss on valuation of investment securities
10,264
Loss on valuation of shares of subsidiaries
1,444,138
Loss on liquidation of subsidiaries
310,824
Other
17,601
Loss before income taxes
Income taxes-current
131,937
Income taxes-deferred(264,006)
Loss(Note) The amounts presented above are rounded down to the nearest whole thousand yen.

－

35 －

4,197,362
2,883,229
1,314,133
1,361,696
47,562

110,825

188,264
125,001

1,164,530

1,788,268(748,740)(132,068)
616,671

Statement of changes in net assets(from January 1, 2018 to December 31, 2018)(Yen in thousands)
Shareholders’ equity
Capital surplus
Capital stock

Balance at beginning of year
Changes of items during period
Issuance of new shares
Dividends from surplus
Profit (loss)
Purchase of treasury shares
Retirement of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
the period
Balance at end of year

Legal capitalsurplus7,835,926

3,047,385

376,327

376,327

376,327(271,411)(616,671)(271,411)(616,671)(214,963)(214,963)

376,327

376,327

376,327(1,103,046)(1,103,046)

8,212,254

3,423,712

3,423,712

1,954,701

1,954,701

Treasury shares

Total
shareholders’equity(912,886)

13,028,172

Valuation and translation
adjustments
Valuation
Total valuation Total net assets
difference onand translation
available-foradjustments
sale securities(1,145)(1,145)13,027,026(318)
214,963752,654(271,411)(616,671)(318)―

752,654(271,411)(616,671)(318)―

Shareholders’ equity

Balance at beginning of year
Changes of items during period
Issuance of new shares
Dividends from surplus
Profit (loss)
Purchase of treasury shares
Retirement of treasury shares

Retained earnings
Other retained
earnings
Total capital
Total retained
surplusearnings
Retained earnings
brought forward
3,047,385
3,057,747
3,057,747

Net changes of items other
6,216,094
than shareholders’ equity
Total changes of items during
214,645(135,746)
6,216,094
the period
Balance at end of year
(698,241)
12,892,426
6,214,948(Note) The amounts presented above are rounded down to the nearest whole thousand yen.

－

36 －

6,216,094

6,216,094

6,216,094

6,080,348

6,214,948

19,107,374

Notes to Non-Consolidated Financial Statements

1. Notes on significant accounting policies(1) Asset valuation standards and methods
1) Securities valuation standards and methods
A. Held-to-maturity bonds
The amortized cost method (straight-line method) is adopted.
B. Shares of subsidiaries and affiliates
The moving-average cost method is used.
C. Available-for-sale securities (including operational investment securities)• Those with market value:
Subject to the market value method based on the market price or the like at the end of the period. (The related
valuation differences are directly debited or credited to the net assets and the cost of securities sold is computed by
the moving average method.)• Those without market value:
Subject to the moving average cost method.
• Investment in limited partnership for investment or the like:
Subject to the method where the amount equal to the Company’s interests is added to, or subtracted from, thepartnership’s gains or losses based on the most recent financial statements available.
D. Derivatives
The market value method based on the market price or the like at the end of the period is adopted.
2) Inventory valuation standards and methods
A. Merchandise and Work in process:
The FIFO cost method is mainly adopted. (The balance sheet value is computed subject to write-down due todecreased profitability.)
B. Supplies:
The identified cost method is mainly adopted. (The balance sheet value is computed subject to write-down due todecreased profitability.)

－

37 －

(2) Noncurrent asset depreciation and amortization methods
1) Property, plant and equipment (excluding lease assets)
Mainly subject to the declining-balance method.
However, the buildings (excluding equipment attached to buildings) acquired on or after April 1, 1998 andthe equipment attached to buildings and structures acquired on or after April 1, 2016 are subject to the straight-line
method.
The straight-line method is adopted by overseas consolidated subsidiaries. Primary useful life is as indicatedbelow.
Buildings and structures:

5 to 18 years.

Tools, furniture and fixtures:

4 to 6 years

2) Intangible assets (excluding leased assets)
Subject to the straight-line method.
The software for internal use is subject to the straight-line method based on the period available for internaluse (mainly, five years).
3) Leased assets
Leased assets from non-ownership transfer finance lease transactions

Subject to the straight-line method where the lease term is the projected life in use, and the residual value isthe guaranteed residual value if the relevant lease agreement stipulates residual value guarantee, or otherwise,
residual value is zero.

(3) Standards for recognition of significant allowances
1) Allowance for doubtful accounts
To prepare for losses from accounts receivable, uncollectible amounts are estimated and recognized, for ordinary
receivables, by the actual bad debt ratio based on losses in the past, or for doubtful receivables and other certain
receivables, by taking into consideration the collectability of individual receivable accounts.
2) Provision for bonuses
In terms of provision for bonuses, the amount accrued in the fiscal year under review for the estimated payout toemployees is recognized to prepare for payments of bonuses to employees.

(4) Other significant matters for preparing consolidated financial statements
1) Accounting procedures for consumption taxes
The accounting procedures for national and local consumption taxes are subject to the tax-excluded method. Nondeductible national and local consumption taxes are expensed for the fiscal year under review.
2) Application of consolidated tax payment system
The consolidated tax payment system is adopted by the Company and some of its consolidated subsidiaries.
(5) Changes to significant matters that form the basis of financial statements’ preparation
Not applicable.

－

38 －

2. Notes on changes in accounting policies
The Company’s inventories (excluding supplies) previously were mainly valued at cost by the identified cost method.
Effective from the fiscal year ended December 31, 2018, the Group switched mainly to the FIFO cost method. The
Company made this change to more appropriately value its inventories and measure profit for the period as a result ofreassessing its inventory management system in response to an increase in its inventories’ materiality.

3 Notes on balance sheet(1) Assets pledged as collateral and secured liabilities
Not applicable.

(2)Monetary receivables from and monetary payables to affiliates (excluding those presented as separate line items)(Yen in thousands)¥789,472¥135,811

Short-term monetary receivables
Short-term monetary payables(Yen in thousands)(3) Accumulated depreciation on property, plant and equipment¥307,828
578 thousand yen of accumulated impairment loss on property, plant and equipment were included above accumulated
depreciation.
4 Notes on statement of income
Transactions with affiliates accounted for the following transaction volumes included in line items is presented on thestatement of income.
(Yen in thousands)¥3,336,526¥45,344

Operating transactions
Non-operating transactions
5 Notes on statement of changes in net assets
Matters concerning class and number of treasury sharesClass of stock
Treasury shares
Common shares

As of Jan.1, 2018

Additions1,200,062 shares

171 shares

－

39 －

Subtractions
282,528 shares

As of Dec. 31, 2018917,705 shares6 Notes on deferred tax accounting matters
Breakdown of deferred tax assets and deferred tax liabilities by main cause （Yen in thousands）
Deferred tax assets
Allowance for doubtful accounts

10,871

Provision for bonuses

20,205

Asset retirement obligations

18,934Long-term accounts receivable - other

168,065

Loss on valuation of investment securities

1,301,452

Adjustment of investments’ carrying amount

92,754

Loss on liquidation of subsidiaries

95,189Enterprise taxes payable

16,152

Other

30,073

Subtotal deferred tax assets

1,753,697

Valuation allowance(920,295)

Total deferred tax assets

833,401

Deferred tax liabilities
Valuation difference on available-for-sale securities(2,773,990)

Total deferred tax liabilities(2,773,990)

Net deferred tax assets(1,940,588)(Note) Net deferred tax assets are included in the following balance sheet accounts.
(Yen in thousands)
Noncurrent assets, deferred tax assets

618,866

Current liabilities, deferred tax liabilities(2,559,455)

－

40 －

7 Notes on transaction with related party(1) Consolidated subsidiaryType
Consolidated
subsidiary
Consolidated
subsidiary
Consolidated
subsidiary
Consolidated
subsidiary
Consolidated
subsidiaryType

Consolidated
subsidiary

Consolidated
subsidiary

Consolidated
subsidiary

Consolidated
subsidiary

Name of company

Capital stock orequity stake(yen in millions)

Address

OPT, Inc.

Chiyoda-ku, Tokyo

Crossfinity, Inc.

Chiyoda-ku, Tokyorelaido, Inc.

Shibuya-ku, Tokyo

MarketingBusiness
Marketing
30
Business
Marketing
50
Business
Investment
75
Business
Investment
2,405
Business
100

OPT Ventures, Inc. Chiyoda-ku, Tokyo
OPT America,Inc

California, U.S.A

Relationship withrelated party

Nature of transaction

Director interlock
Management
involvement
CMS transactions

Management consulting fee
Collection of loan receivable
Receipt of interest(Note 3)
Borrowing of funds via CMS(Note 2)
Payment of interest(Note 3)

Director interlock
Management
involvement
CMS transactions

Borrowing of funds via CMS(Note 2)
Payment of interest(Note 3)

Management
involvement
CMS transactions

Borrowing of funds via CMS(Note 2)
Payment of interest(Note 3)

Director interlock
Management
involvement
CMS transactions

Borrowing of funds via CMS(Note 2)
Payment of interest(Note 3)
Payment of outsourcing fees
(Note 4)
Lending of funds

Consolidated
subsidiary

Loans of funds

Receipt of interest(Note 3)

Transaction
amount(Yen inthousands)

Account

1,471,961

Accounts
receivable
590,000―
862―
Deposits received― from subsidiaries
and associates
22―― Deposits received
from subsidiaries
6 and associates――

Deposits received
from subsidiaries
and associates
1―― Deposits received
from subsidiaries
and associates
1―774,626

41 －―Loans receivablefrom subsidiaries
and associates
36,750
Other current
assets―(Notes) 1. Transaction amounts do not include consumption tax.
2. For borrowing transactions through the CMS (cash management system), only fiscal
year-end balances are presented because balances frequently change.
－

Ownership percentage(reciprocal ownership
percentage)
100.00%(―)
100.00%(―)
100.00%(―)
100.00%(―)
100.00%(―)

Business

Endingbalance(Yen inthousands)
126,330――
3,384,937―
1,365,335―
914,172―

969,153――
1,110,200
12,557

3. For interest payment amounts, interest rates are rationally determined based on market
interest rates and other relevant factors.
4. The Company pays outsourcing fees in an amount determined based on an outsourcing
agreement pertaining largely to general management advisory services.
(2) Corporate officers and individual shareholders
Not applicable.

8 Notes on per-share information
Net assets per share
Net loss per share
9¥834.38¥(27.15)

Notes on significant subsequent events
Not applicable.

－

42 －

AUDITOR’S REPORTS
AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditor’s ReportFebruary 15, 2019

The Board of Directors
OPT Holding, Inc.

KPMG AZSA LLC

Masaki Sugiyama (Seal)
Designated Limited Liability Partner Engagement Partner
Certified Public Accountant

Toru Narushima (Seal)
Designated Limited Liability Partner Engagement Partner
Certified Public Accountant

We have audited the consolidated financial statements, comprising the consolidated balance sheets, the consolidated statementof profit or loss, the consolidated statements of changes in net assets and the notes to consolidated financial statements of OPT
Holding, Inc. (“the Company”) as at December 31, 2018 and for the year from January 1, 2018 to December 31, 2018 inaccordance with Article 444 (4) of the Companies Act.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordancewith accounting principles generally accepted in Japan. Management is also responsible for the establishment and operation ofsuch internal control as management determines is necessary to enable the preparation and fair presentation of consolidated
financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit as independent auditor.
We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected and applied depend on our judgement, including the assessment of the risks ofmaterial misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, while the objective of the financial
statement audit is not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

－

43 －

OpinionIn the independent auditor’s opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position and operating results of the corporate group comprising OPT Holding, Inc., and its
consolidated subsidiaries for the period to which said consolidated financial statements pertain, in conformity with corporate
accounting principles generally accepted in Japan.

Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as required by theCompanies Act

－

44 －

Certified Copy of Independent Auditor’s Report
Independent Auditor’s ReportFebruary 15, 2019

The Board of Directors
OPT Holding, Inc.

KPMG AZSA LLC

Masaki Sugiyama (Seal)
Designated Limited Liability Partner Engagement Partner
Certified Public Accountant

Toru Narushima (Seal)
Designated Limited Liability Partner Engagement Partner
Certified Public Accountant

We have audited the financial statements, comprising the balance sheet, the statement of income, the statement of changes inequity and the notes to financial statements, and the supporting schedules of OPT Holding, Inc. (“the Company”) as at
December 31, 2018 and for the 25th business year from January 1, 2018 to December 31, 2018 in accordance with Article 436(2) (i) of the Companies Act.
Management’s Responsibility for the Financial Statements and Others
Management is responsible for the preparation and fair presentation of the financial statements and the supporting schedules inaccordance with accounting principles generally accepted in Japan, and for the establishment and operation of such internal
control as management determines is necessary to enable the preparation and fair presentation of financial statements and the
supporting schedules that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and the supporting schedules based on our audit as
independent auditor. We conducted our audit in accordance with auditing standards generally accepted in Japan. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements andthe supporting schedules are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements and the supporting schedules. The procedures selected and applied depend on our judgement, including theassessment of the risks of material misstatement of the financial statements and the supporting schedules, whether due to fraud
or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fairpresentation of the financial statements and the supporting schedules in order to design audit procedures that are appropriate in
the circumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements and the supporting schedules.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
－45 －Opinion
In our opinion, the financial statements and the supporting schedules referred to above present fairly, in all material respects,
the financial position and the results of operations of the Company for the period, for which the financial statements andsupporting schedules were prepared, in accordance with accounting principles generally accepted in Japan.

Other Matter
Our firm and engagement partners have no interest in the Company which should be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Notes to the Reader of Independent Auditor’s Report:
The Independent Auditor’s Report herein is the English translation of the Independent Auditor’s Report as required by theCompanies Act

－

46 －

AUDIT COMMITTEE’S REPORT
AUDIT REPORT
We, the Audit and Supervisory Committee of OPT Holding, Inc.. (“the Company”), have audited the performance of duties
by Directors and Executive Officers during the 25th business year from January 1, 2018 to December 31, 2018. We report
the method and results as follows.
1. Method and details of audit

We, the Audit and Supervisory Committee, have received reports from the Executive Officers and employees on aregularly basis on the details of the board resolutions with respect to items prescribed in Article 399-13(1)(i)(b)-(c) of theCompanies Act, and the status of the establishment and operation of the system established based on such board
resolutions (internal control system), sought explanations, whenever the necessity arose, and expressed our opinions.
Additionally, we conducted audits as follows.
(1) In coordination with the Company’s internal audit staff, we attended important meetings, received reports from

Directors, employees and others regarding the execution of their job duties, requested explanations as needed, inspected
documents, including documentation of significant decisions, and investigated the status of operations and property at
the Company’s Head Office and other major places of business, all in compliance with auditing standards prescribed by
the Audit and Supervisory Committee and in accordance with audit policies, audit plans and an agreed-upon division ofduties. We also communicated and exchanged information with subsidiaries’ Directors, Auditors and other personnel
and, as needed, received reports from subsidiaries on their operations.
(2) In addition to monitoring and examining whether the Accounting Auditor maintained an independent position andperformed auditing appropriately, we received reports from the Accounting Auditor on the performance of its duties
and requested explanations when necessary. In addition, we received notice from the Accounting Auditor that “Thesystems for ensuring the proper performance of duties” (set forth in each item of Article 131 of the Regulations ofCorporate Financial Calculation) are organized in accordance with the “Standards for Quality Control of Audit”(Business Accounting Council, October 28, 2005) and other relevant standards, and sought explanations whenevernecessity arose.
Based on the above methods, we examined the business report, financial statements (balance sheet, statementof income, statement of changes in equity, notes to financial statements), supporting schedules, and the consolidated
financial statements (the consolidated balance sheets, the consolidated statement of profit or loss, the consolidated
statements of changes in net assets and the notes to consolidated financial statements) for the fiscal year under review.
2. Results of audit(1) Results of audit of business report, etc.
i)

In our opinion, the business report and accompanying schedules fairly represent the condition of the Company inaccordance with the laws, regulations and Articles of Incorporation of the Company.

ii)

We have determined that there were no serious occurrences of dishonest or false activity or violations of any laws,
regulations or the Company’s Articles of Incorporation by any Directors or Executive Officers in carrying out theirduties.

iii)

We believe the details of resolutions of the Board of Directors regarding the internal control system are appropriate.
We found no matters of note with respect to the execution of duties of Executive Officers regarding the internal
control system.

(2) Results of audit of financial statements and accompanying schedules

In our opinion, the audit method and audit results received from the accounting auditor KPMG AZSA LLC are
appropriate.
(3) Results of audit of consolidated financial statements

In our opinion, the audit method and audit results received from the accounting auditor KPMG AZSA LLC are
appropriate.

February 21, 2018

－

47 －

Audit Committee of OPT Holding, Inc.

Audit Committee Member
time)

Fumiyuki Shinomiya

Audit Committee Member

Nobuaki Ishizaki(Seal)

Audit Committee Member

Toshio Yamaue (Seal)(Seal) (Full-

Notes to the Reader of Audit Report:
1. The Audit Report herein is the English translation of the Audit Report as required by the Companies Act.
2. Mr. Fumiyuki Shinomiya, Mr. Nobuaki Ishizaki and Mr. Toshio Yamaue are External Directors as provided for in Article
2, Item 15 and Article 331, Paragraph 6 of the Companies Act.

－

48 －

Reference Documents for the General Meeting of Shareholders

Proposal: Election of Five (5) Directors (Excluding those who are the Audit and Supervisory Committee members)

The terms of office of all of the current five (5) Directors will expire at the conclusion of this Annual General Meeting of
Shareholders. Accordingly, the election of five (5) directors is proposed on the basis of the decision by the Nomination andCompensation Committee.
All candidates for Director in this proposal are deemed qualified by the Company’s Audit and Supervisory
Committee.

The candidates for Director are as follows:
Candidate
No.

Name(Date of birth)

Career Summary and Position in the Company(Significant concurrent positions)Apr. 1991
Mar. 1994

1

2

Number of theCompany’s
Shares
Owned

Joined Mori Building Co., Ltd.
Established Deca Legs Ltd. (currently OPT
Holdings Inc.), assumed position as Presidentof the Company
Noboru Hachimine Mar. 2009 President and CEO of the Company (current
5,000
position)(June 22, 1967)
Jun. 2016 Outside Director, UT Group Co., Ltd. (current
position)Mar. 2017 Independent Outside Director at UT Group
Co., Ltd., SoldOut, Inc. (current position)[Reasons for nomination as candidate for Director]
Mr. Noboru Hachimine has long demonstrated excellent leadership and driven growth in the Group’s corporate
value. He has been nominated because he is well-qualified to continue to build an operational foundation for therealization of sustained Group-wide growth and to grow corporate value over the medium to long term.
Apr. 1991 Joined Mori Building Co., Ltd.
Oct. 1996 Joined the OPT Holdings Inc.
Mar. 1999 Director of the Company
Feb. 2015 CEO at Opt Ventures, Inc. (current position)
Atsushi Nouchi
Mar. 2015 Representative Director and CEO at OPT(December 21,
885,000
Incubate,Inc. (current position)
1967)
Mar. 2017 Vice President and COO of OPT Holdings Inc.
(current position)
May 2017 Director, OPT Works (currently SIGNATE
Inc.) (current position)[Reasons for nomination as candidate for Director]
Mr. Atsushi Nouchi is well-versed in all aspects of the Company’s operations and has been driving growth in theGroup’s corporate value through strong leadership, decisiveness and executive capabilities. He has been
nominated because he is well-qualified to continue to build an operational foundation for the realization ofsustained Group-wide growth and to grow corporate value over the medium to long term.

－

49 －

Candidate
No.

3

4

Name
(Date of birth)

Career Summary and Position in the Company(Significant concurrent positions)

Number of theCompany’s
SharesOwned

Apr. 1982 Joined Mobil Sekiyu K.K.
Dec. 2000 CFO, Aoba Life Insurance Company, Ltd.
Sept. 2005 Executive Officer, Axa Life Insurance Co.,
Ltd.
Mar. 2007 General Manager of Accounting and Financeand CFO, Quintiles Transnational Japan K. K.
Hiroshi Teraguchi(currently IQVIA Services JAPAN K. K.)
70,028(October 27, 1959) Apr. 2012 Director and Managing Executive Officer,
Intelligence, Ltd.
Mar. 2014 Director and CFO, Skylark Co., Ltd.
Aug. 2017 Senior Executive Officer and Group CFO of
the Company
Mar. 2018 Director and Group CFO of the Company(current position)[Reasons for nomination as candidate for Director]
Mr. Hiroshi Teraguchi has long been involved in business, including accounting and finance roles, and corporate
management. He has been spearheading restructuring of the Company’s administrative organizational units froma finance standpoint, capitalizing on his wealth of experience and expertise. He has been nominated because he iswell-qualified to continue to build an operational foundation for the realization of sustained Group-wide growth
and to grow corporate value over the medium to long term.
Apr. 1974 Joined The Industrial Bank of Japan (currently
Mizuho Bank, Ltd.)
Jun. 1998 Manager of Business Promotion Arrangement
Office, Mizuho Bank, Ltd.
Apr. 2000 Manager of Syndication, Mizuho Bank, Ltd.
Apr. 2002 Manager of Syndication, Mizuho Corporate
Bank (currently Mizuho Bank, Ltd.)
Apr. 2004 Managing Executive Officer, Supervisor of
Syndicated Finance Business Unit,
Supervisor of Syndicated Finance & Loan
Trading Compliance, and Group Supervisor,
SyusakuMizuho Bank, Ltd.
Minoda10,000
Apr. 2006 Managing Executive Officer, Supervisor of(July 20, 1951)
Global Syndication Unit and Global Products
Unit, Mizuho Bank, Ltd.
Jul. 2007
Managing Director and Co-Chief Executive
Officer, Kohlberg Kravis Roberts & Co.
(KKR) Japan
Sept. 2007 Director, KKR Capital Markets (KCM)
Jan. 2008 President, KKR Japan
Apr. 2009 Director, Toys”R”US JapanMay 2013 Chairman, KKR Japan
Sept. 2014 Company Advisor, OPT Holding Inc.
Mar. 2015 Director of the Company (current position)[Reasons for nomination as candidate for Director]
Mr. Syusaku Minoda has vast experience in the financial sector both in Japan and overseas. He also possesses
extensive experience and broad insight as a high-ranking corporate executive. He has been nominated to offer
opinions and advice to the Company’s management from various perspectives.

－

50 －

Candidate
No.

Name
(Date of birth)

Career Summary and Position in the Company(Significant concurrent positions)Apr. 1988

Joined Recruit Co., Ltd. (currently Recruit
Holdings Co., Ltd.)

Apr. 1997

Editor-in-Chief, “Tech Being”

Apr. 2001

Editor-in-Chief, “Recruit Navi
Career”(currently “RikuNavi NEXT”)

Apr. 2002

Editor-in-Chief, “Being” (Kanto region
edition)

Apr. 2004

Corporate Executive Officer (responsible for
Human Resource (HR) Division) of Recruit
Holdings Co., Ltd.

Apr. 2006

Director, Recruit HR Marketing Co., Ltd.
(currently Recruit Jobs Co., Ltd.)Tomoyuki Mizutani(August 16, 1964) Apr. 2007

5

Director and Corporate Executive Officer(responsible for HR, administration, corporate
communication, Recruit Holdings Co., Ltd.

Apr. 2009Managing Executive Officer, Recruit AgentCo., Ltd. (currently Recruit Career Co., Ltd.)

Apr. 2011

President, Recruit Agent Co., Ltd.

Oct. 2012

First President, Recruit Career Co., Ltd.

Apr. 2015

Advisor, Recruit Holdings Co., Ltd.

Number of theCompany’s
SharesOwned

10,000April 2016 Advisor, Japan Executive Search andRecruitment Association (current position)
Mar. 2017

External Director of the Company (current
position)[Reasons for nomination as candidate for Director]
Mr. Tomoyuki Mizutani has spent much of his career at Recruit Co., Ltd. (currently Recruit Holdings Co., Ltd.),
mainly in the HR business domain. He was active in multiple high-ranking executive positions, including as a
Corporate Executive Officer (responsible for HR Division) at Recruit and the first President of Recruit CareerCo., Ltd. Outside of the Recruit Group, he has been active in a wide range of activities with HR and societalcontribution themes, including cultivation of social entrepreneurs. In addition to such extensive experience, Mr.
Mizutani possesses broad insight. He has been nominated to offer opinions and advice to ensure appropriate,sound management decision-making from an independent, objective standpoint.
(Notes)1.

The Company was renamed OPT Holding, Inc., in April 2015.

2.

None of the candidates has any special interests in the Company or vice versa.

3.

Mr. Tomoyuki Mizutani is an External Director candidate.

4.

Mr. Tomoyuki Mizutani is currently an External Director of the Company; he will have served as an External
Director for two years as of the conclusion of the 24th Annual General Meeting of Shareholders.

5.

If Messrs. Syusaku Minoda and Tomoyuki Mizutani are reappointed, the Company plans to renew existing
agreements with both of them pursuant to Article 427(1) of the Companies Act. The agreements limit their
liability for damages under Article 423(1) of the Companies Act to the minimum liability stipulated in Article
425(1) of the Companies Act.

6.

Mr. Tomoyuki Mizutani meets the independent director requirements of the Tokyo Stock Exchange, Inc. If
reappointed, he will continue to serve as an independent director.

7.

HIBC Co., Ltd., an asset management company wholly owned by Mr. Noboru Hachimine, owns 4,899,200
shares of the Company’s stock.
－

51 －

8.

Time & Space, an asset management company wholly owned by Mr. Atsushi Nouchi, owns 390,800 shares of
the Company’s stock.

9.

The above numbers of the Company’s shares owned by the Director candidates are as of February 21, 2019.

－52 －