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

(Securities code: 2389)
Date of issue: March 2, 2023
Date of electronic provision measures commencement: March 1, 2023
To our shareholders:Atsushi Nouchi
President and Group CEO
DIGITAL HOLDINGS, INC.
6, Yonbancho, Chiyoda-ku, Tokyo
Convocation Notice of the 29th Annual General Meeting of Shareholders
We would like to inform you that the 29th Annual General Meeting of Shareholders (the “Meeting”) of DIGITALHOLDINGS, Inc. (the “Company”) will be held as described below.
When convening the General Meeting of Shareholders, the Company takes measures to electronically provide theinformation that is the content of the reference documents for the general meeting of shareholders, etc. (Electronic
Provision Measures Matters), and posts this information as the “Convocation Notice of the 29th Annual General
Meeting of Shareholders” on the Company’s website. Please access the Company’s website using the Internet
address shown below to review the information.
The Company’s website:
https://www.digital-holdings.co.jp/ir/stocks_meeting/(in Japanese only)

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In addition to the Company’s website, the Company also posts this information on the website of the Tokyo Stock
Exchange, Inc. (TSE). Please access the TSE website (Listed Company Search) by using the Internet address given
below, input the issue name (company name) or securities code, and click “Search,” and then click “Basic
information” and select “Documents for public inspection/PR information.”
TSE website (Listed Company Search):https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show(in Japanese only)

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In holding the General Meeting of Shareholders, from the viewpoint of preventing the spread of COVID-19,
we would like to ask those who are not feeling well on the day of the Meeting, especially those who would begreatly affected by infection, such as the elderly, those with underlying medical conditions, and those whoare pregnant, to refrain from attending the Meeting and to exercise your voting rights in advance. Please
note that no souvenirs will be handed out to shareholders attending the Meeting in person.
The Meeting will be live streamed on the Internet. Please note that you cannot exercise your voting rights
through the live streaming. We highly appreciate your understanding.
If you wish to exercise your voting rights in advance, please refer to the Reference Documents for the
General Meeting of Shareholders, and exercise your voting rights no later than 6:00 p.m., Thursday, March
23, 2023 (JST).

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1.

Date and Time: Friday, March 24, 2023 at 10:00 a.m. (JST)2.

Place:

3.

Agenda of the Meeting:Conference room, Head office, DIGITAL HOLDINGS, Inc.
5th floor, 6 Yonbancho, Chiyoda-ku, Tokyo, Japan

Matters to be reported:
I. Report on Business Report, Consolidated Financial Statements and audit results of the Consolidated
Financial Statements by the Accounting Auditor and the Audit and Supervisory Committee for the
29th Fiscal Term (from January 1, 2022 to December 31, 2022).
II. Report on the Non-Consolidated Financial Statements of the Company for the 29th Fiscal Term (fromJanuary 1, 2022 to December 31, 2022).
Proposals to be resolved:
Proposal:
4.

Election of Seven (7) Directors (Excluding Directors Who Are Audit and Supervisory
Committee Members)

Instructions for Exercising Voting Rights(1) Exercising voting rights in writing
To vote in writing, please indicate your approval or disapproval of the proposal on the Voting Rights Exercise
Form sent together with this Convocation Notice, and return the Form by post to reach us by 6:00 p.m.
Thursday, March 23, 2023 (JST).
If you do not indicate your approval or disapproval of the proposal, it shall be treated as an indication of
approval.
(2) Exercising voting rights via the Internet
To vote via the Internet, please access to the “Voting Right Exercise Site (https://www.net-vote.com/)” (inJapanese only), which is provided on the Voting Rights Exercise Form sent together with this Convocation
Notice. Follow the instructions and indicate your approval or disapproval by 6:00 p.m. Thursday, March 23,2023 (JST). If you want to use your smartphone, you can exercise your voting rights by using QR code (Pleaserefer to the next page for details.)(3) Handling of exercising voting rights in duplicate
1) If you vote both in writing and via the Internet, voting rights exercise via the Internet shall be deemed valid.
2) If you vote more than once via the Internet, the most recent shall be deemed as valid.

Request: When attending the Meeting in person, you are kindly requested to submit the Voting Rights Exercise
Form sent together with this Convocation Notice at the reception desk. Please bring this Convocation
Notice of the 29th Annual General Meeting of Shareholders with you to the meeting.
Notice:The English version of the Convocation Notice of the Annual General Meeting of Shareholders andthe Reference Documents for the General Meeting of Shareholders are available on the Company’s
website (https://digital-holdings.co.jp/en/).
If amendments to the Electronic Provision Measures Matters are to be taken arise, a notice of theamendments and the details of the matters before and after the amendments will be posted on the
Company’s aforementioned website and the TSE website.

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Instructions for Exercising Voting Rights via the Internet
You can exercise your voting rights via the Internet by accessing the Voting Right Exercise Site as instructed below
from your PCs or smartphones.
1. Accessing the Voting Right Exercise Site
[Address of Voting Right Exercise Site]
https://www.net-vote.com/ (in Japanese only)
Please access the Voting Right Exercise Site at the URL provided above. You can exercise your voting rights
until 6:00 p.m. Thursday, March 23, 2023 (JST).
2. How to vote via the Internet[For PC users]
Access the Voting Right Exercise Site at the URL provided above, log in by entering the login ID and password
printed on the Voting Rights Exercise Form sent together with this Convocation Notice and follow the
instructions on the screen to indicate your approval or disapproval of the proposals.
[For smartphone users]
Simply scan the QR code® located on the Voting Rights Exercise Form sent together with this Convocation
Notice. You don’t have to enter login ID nor password.
In case you would like to change any of your indication, access the Voting Right Exercise Site at the above
URL, log in by entering 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 registeredtrademark of DENSO WAVE INCORPORATED).
3. Notes(1) Any costs arising from accessing the Voting Right Exercise Site shall be borne by shareholders.
(2) Depending on your network environments, you may not be able to access the Voting Right Exercise Site.
(3) The Voting Right Exercise Site is not accessible via some cellular phones such as feature phones.
Institutional investors can exercise their 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:
Custody Service Department, IR Japan, Inc.
TEL: 0120-975-960
Business Hours: 9:00 a.m. to 5:00 p.m. (JST) (not available on Saturdays, Sundays and holidays)-3-Live Streaming of the General Meeting of Shareholders
The 29th Annual General Meeting of Shareholders will be live streamed on the Internet as follows for viewing at
home or elsewhere.
1. Date and time of the live streaming
From 10:00 a.m. to the end of the Meeting on Friday, March 24, 2023 (JST)
2. How to watch the live streaming
Access the Live Streaming Site at the URL provided below with your “Shareholder ID number” as you will be
required to enter it on the authentication screen (login screen) for shareholders. Please be sure to make a note ofyour “Shareholder ID number” before sending the enclosed Voting Rights Exercise Form by post.
◆Live Streaming Site
https://2389.ksoukai.jp (in Japanese only)

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◆ID number (9-digit number without hyphen)“Shareholder ID number” provided on the enclosed Voting Rights Exercise
Form or other such documents as dividend-related documents. (If your ID
number is eight (8) digits, add a zero (0) in front of the ID number.)◆Password (7-digit number without hyphen)“Postal code” of the registered address on the register of shareholders◆Viewing test
You can check your viewing environment in advance at the Live Streaming Site. The test page will beavailable from 10:00 a.m. Thursday, March 2, 2023 to around 9:30 a.m. Friday, March 24, 2023 (JST).
For an inquiry regarding how to watch the live streaming, please contact the following (only available on the date of
the Meeting):
TEL: 03-4223-0804 (in Japanese only)
Available from 9:00 a.m. to the end of the Meeting on Friday, March 24, 2023 (JST)Shareholders’ Comments
To improve communication with shareholders, we are accepting inquiries for the General Meeting of Shareholders(to distinguish from inquiries made by exercising the right to inquire under the Article 314 of the Companies Act,
hereinafter the “Comments”) through the following methods. Although they will not be regarded as formal
statements at the General Meeting of Shareholders, some of the Comments may be featured and answered during theMeeting. We highly appreciate your understanding on this matter.
Method 1: Please access the Live Streaming Site at the URL provided above, log in with your Shareholder ID
number and Postal code, and enter your comments in the “Ask a Question in Advance” section. Eachshareholder may comment up to three times (up to 300 characters in Japanese per comment). Please send
your comments by 6:00 p.m. Friday, March 17, 2023 (JST).
Method 2: Enter your comment on the comment submission form on the screen of Live Streaming Site at the URL
provided above and send it after the opening of the Meeting and up until the chairperson declares theacceptance closed.

Matters to Be Noted on the Operation of the General Meeting of Shareholders•

The number of seats available for shareholders at the Meeting will be limited. Therefore, even if you come tothe venue on the day, we may refuse your entry into the venue.

•

From the viewpoint of preventing the spread of COVID-19 and placing the top priory on the safety ofshareholders, our staff will check your body temperature at the reception and if your body temperature is at 37.5
degree Celsius or above, or if you look unwell, we may refuse your entry into the venue.

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•

All shareholders who attend the Meeting in person will be requested to wear a mask. To avoid the risk ofinfection among shareholders attending the Meeting, if you refuse to wear a mask, we may refuse your entry
into the venue.

•

For some officers, participation may be via remote communication to avoid the risk of infection.

•

As the Q&A session will also be live streamed, if you intend to attend the Meeting in person and do not wish
that your name be live streamed, all you have to do is to state your number written on your attendance card at
making your comment.

•

In consideration of the privacy of shareholders attending the Meeting in person, the live streaming video will be
shot from the rear of the space and limited to showing the area where the chairperson and officers are seated.
However, you may inevitably appear in the streaming. We highly appreciate your understanding.

•

While watching the live streaming, the video or audio may be distorted depending on the environment of yourPC or other device (model, specifications, etc.) or the environment of the Internet connection (network
conditions, connection speed, etc.). Any costs arising from watching the live streaming, including
communication charges, shall be borne by shareholders.

•

While every effort will be made to ensure the live streaming is available, the live streaming may be suspended
or cancelled due to unavoidable circumstances such as deterioration in the communication environment or
system failure.

•

No souvenir will be handed out to shareholders attending the Meeting in person.

-5-

Business Report (January 1, 2022 to December 31, 2022)
1.

Overview of the Group(1) Business for the Year Ended December 31, 2022
DIGITAL HOLDINGS, Inc. and its consolidated subsidiaries (hereinafter the “Group”) are surrounded by a businessenvironment where the domestic market is shrinking due to declining population of Japan accelerated by its aging
society with a falling birth rate. However, the recent rapid advances in science, technology and innovation haveboosted the trend to realize digital transformation (DX) that transforms conventional products and services as well as
business models by leveraging data and digital technologies. In addition, we believe that “Society 5.0,” a humancentered society that balances economic advancement with the resolution of social problems by a system that highly
integrates cyberspace (virtual space) and physical space (real space), as advocated by the Japanese Cabinet Office,will become a reality, and we expect that demand for “digital shift” relating to “information, human resources,
products and money” that the Group pursues to offer will further increase.
With the sights set on the vision of becoming a “true digital shift company committed to creating new value that will
be a driver for Society 5.0 as well as resolving social challenges” by 2030, the Group has set a management policy tomaximize corporate value and cash flows by leading any and all corporate “digital shift.” As such, “OPT Holding,Inc.” changed its trade name to “DIGITAL HOLDINGS, Inc.” on July 1, 2020. The Group also aims to expand its
business by shifting its main business domain to the Digital Shift-related Businesses, in addition to the Marketing
Business, which centers on support for clients’ sales promotion, thereby achieving a target of “corporate value of
JPY 1 trillion by 2030.”
The Group has set “DS Innovation 2023” as its medium-term business goal through 2023 to realize the above
management policy. In order to strongly promote a pivot to the Digital Shift Business, the Group set “focusedinvestment in IX (industrial transformation)” and “continuous improvement of profitability of the Advertising
Business” as key measures for this fiscal year, and implemented the following measures, respectively.
1) Focused investment in IX
From the perspective of selection and concentration, the Group concentrated its investment of human andfinancial resources on IX businesses with high growth potential, and invested over JPY 3.3 billion in IX and
IX-related businesses during the current fiscal year. As a result, the Group’s IX-related business sales growthrate was up 421.9% year on year.
* IX-related business sales growth rate: Calculated based on the accounting standards before the applicationof the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc.
2) Continuous improvement of profitability of the Advertising Business
The operating margin for the Advertising Business in fiscal 2021 had improved to 4.2% from 2.2% in fiscal
2020, and we continued to review our Internet advertising operations and creative business processes in thisfiscal year and implemented business portfolio reorganization, resulting in a steady improvement in
profitability of 4.5% of operating margin.
* Operating margin: Calculated based on the net sales in accordance with the accounting standards before theapplication of the Accounting Standard for Revenue Recognition, etc.
As a results of business operations based on the above management policy, the Group reported operating results forthe fiscal year ended December 31, 2022 (hereinafter the “current fiscal year”) with revenue of JPY 16,924 million(down 48.2% YoY), gross profit of JPY 11,208 million (down 55.6% YoY), operating loss of JPY 447 million(operating profit of JPY 10,922 million in the previous fiscal year), EBIT of JPY 8,324 million (down 45.6% YoY),
EBITDA of JPY 9,983 million (down 40.9% YoY), and profit attributable to owners of parent of JPY 5,719 million(down 44.1% YoY).
Excluding the impact of the exclusion of SoldOut, Inc. and three of its consolidated subsidiaries and SIGNATE Inc.
from the scope of consolidation from the second quarter of the current fiscal year, operating results for the current
fiscal year and year-on-year comparisons are as follows: revenue of JPY 15,503 million (down 43.6% YoY), grossprofit of JPY 10,019 million (down 51.5% YoY), operating loss of JPY 354 million (operating profit of JPY 10,845
million in the previous fiscal year), EBIT of negative JPY 459 million (JPY 15,323 million in the previous fiscal
year), EBITDA of JPY 1,101 million (down 93.3% YoY), and loss attributable to owners of parent of JPY 212
million (profit attributable to owners of parent of JPY 10,553 million in the previous fiscal year).
In addition, effective from the current fiscal year, the Company has applied the Accounting Standard for Revenue
Recognition, etc., and “revenue” is shown after the application of the Accounting Standard for Revenue Recognition,etc., instead of “net sales” based on the accounting standards before the application of the Accounting Standard for
Revenue Recognition, etc. Because the accounting treatment of revenue differs from that of the previous fiscal year,-6-the above revenue in consolidated operating results, revenue of the Digital Shift Business, and revenue of theAdvertising Business are explained by comparing them with the previous fiscal year using figures that have been
reclassified to revenue based on the accounting standards after the application of the Accounting Standard for
Revenue Recognition, etc. For reference, a comparison with the previous fiscal year is shown on page 9, where therevenue for the same period of the previous fiscal year, in which transactions conducted as an agent are reclassified
from gross amount to net amount, is reclassified into net sales based on the accounting standards before theapplication of Accounting Standard for Revenue Recognition, etc.
The full-year operating results for each business segment are as follows.

Digital Shift Business
Digital Shift Business consists of the development of new businesses and provision of services, including industryspecific Vertical SaaS, to solve industry issues faced by various industries, led by Re:teigi, Inc., RePharmacy, Inc.,and ConnectOm, Inc.; installment and deferred payment service for advertising expenditures by Vankable, Inc.; anddigital shift consulting and DX product development led by Digital Shift, Inc.
In the current fiscal year, due to factors including the exclusion of SoldOut, Inc.’s two consolidated subsidiaries and
SIGNATE Inc. from the scope of consolidation from the second quarter of the current fiscal year, the Digital ShiftBusiness segment posted revenue of JPY 5,137 million (down 13.3% YoY), gross profit of JPY 2,097 million (down
21.3% YoY), operating loss of JPY 603 million (operating loss of JPY 741 million in the previous fiscal year), EBIT
of negative JPY 620 million (negative JPY 743 million in the previous fiscal year), and EBITDA of negative JPY
369 million (negative JPY 469 million in the previous fiscal year).
Excluding the impact of the exclusion of SoldOut, Inc.’s two consolidated subsidiaries and SIGNATE Inc. from thescope of consolidation from the second quarter of the current fiscal year, operating results for the current fiscal year
and year-on-year comparisons are as follows: revenue of JPY 4,561 million (up 13.4% YoY), gross profit of JPY
1,645 million (up 37.5% YoY), operating loss of JPY 624 million (operating loss of JPY 731 million in the previous
fiscal year), EBIT of negative JPY 734 million (negative JPY 690 million in the previous fiscal year), and EBITDA
of negative JPY 547 million (negative JPY 616 million in the previous fiscal year).

Advertising Business
Advertising Business consists of the Internet advertising agency business, solution development and sales, etc., led
by OPT, Inc.
The operating results of the Advertising Business segment for the current fiscal year were significantly impacted by
the exclusion of SoldOut, Inc. and one of its consolidated subsidiaries from the scope of consolidation, and as aresult, the Advertising Business segment posted revenue of JPY 9,355 million (down 28.4% YoY), gross profit of
JPY 8,213 million (down 27.7% YoY), operating profit of JPY 2,658 million (down 17.5% YoY), EBIT of JPY
2,426 million (down 22.9% YoY), and EBITDA of JPY 2,689 million (down 23.4% YoY).
Excluding the impact of the exclusion of SoldOut, Inc. and one of its consolidated subsidiaries from the scope of
consolidation from the second quarter of the current fiscal year, operating results for the current fiscal year and yearon-year comparisons are as follows: revenue of JPY 8,449 million (down 10.4% YoY), gross profit of JPY 7,425
million (down 7.9% YoY), operating profit of JPY 2,646 million (down 12.1% YoY), EBIT of JPY 2,638 million(down 11.9% YoY), and EBITDA of JPY 2,859 million (down 11.2% YoY).

Financial Investment Business
Financial Investment Business consists of the investment business managed by DIGITAL HOLDINGS, Inc., Bonds
Investment Group, Inc., BIG No. 1 Limited Partnership for Investment, BIG No. 2 Limited Partnership for
Investment, and OPT America, Inc., as well as BIG SX No. 1 Limited Partnership for Investment, which was formedin December 2022 to specialize in investing in start-ups that promote sustainable businesses that can transform andsolve social issues and social structures.
Although the Financial Investment Business segment recorded a gain on sale of operational investment securities forthe current fiscal year, because a gain on sale of shares of RAKSUL Inc., which the Company had held as
operational investment securities, was recorded in the previous fiscal year, revenue was JPY 2,594 million (down
81.7% YoY), gross profit was JPY 953 million (down 91.6% YoY), and operating profit was JPY 763 million (down
93.1% YoY). In addition, non-operating profit from the initial public offering of shares in the U.S. held by an-7-

investment fund in which the Group has a stake was recorded in the third quarter of the previous fiscal year, resultingin EBIT of JPY 811 million (down 94.8% YoY) and EBITDA of JPY 1,879 million (down 88.4% YoY).
The Company discloses IRR (Internal Rate of Return) to enhance the transparency of investment returns. The
calculation of IRR is now applied to stocks invested in by the Financial Investment Business since fiscal 2013, andthe details of its calculation method are disclosed in the footnote. As of the end of the current fiscal year, the aftertax IRR decreased by 1.8% from the end of the previous fiscal year to 19.0%. AUM (Assets Under Management)
decreased by 13.8% from the end of the previous fiscal year to JPY 13,817 million, mainly due to a decline in themarket value of listed stocks held by the Group.

The definitions of IRR and AUM are as follows:
Internal Rate of Return (IRR)
Prerequisites for calculation-

Subject to: Securities invested in by the Financial Investment Business from 2013 through December
31, 2022-

The reference date for calculation: December 31, 2022-

Method:1.

Impaired investment: Calculated as if they were sold at the net asset value after impairment.

2.

Investment involved in financing in the recent period: Calculated as if they were sold at the valueof relevant financing.

3.

IPOed investment: Calculated as if they were sold at the market value as of the reference date.

4.

Fund: Calculated with the amount collected until the end of the reporting period and the bookvalue as of the end of reporting period.

5.

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 taxes are included.

Assets Under Management (AUM)
AUM is defined as aggregate amount of 1) book value of affiliates’ shares and 2) fair value after considering
impairment of operational investment securities and investment securities.
i)

Shares of affiliates: Stated at book valueii)

Operational investment securities and investment securities: Each security’s fair market value is calculated
depending on the classification shown below:-

Notes or securities of which investment amount is small: Acquisition cost-

Listed companies’ shares: Closing price at the end of reporting period-

Securities involved in financing in the recent period: Based on the value of relevant financing-

Other securities: Calculated by using the comparable multiple method, DCF method, or net asset
valuation method depending on each company’s performance.

Management costs of DIGITAL HOLDINGS, Inc.
In the management division of DIGITAL HOLDINGS, Inc., selling, general and administrative expenses for thecurrent fiscal year were JPY 3,269 million (up 25.6% YoY), mainly due to an increase in personnel expenses.
As announced in the “Notice Regarding the Execution of a Tendering Agreement for a Tender Offer for Shares of a
Subsidiary and Expected Recording of Extraordinary Income” on February 9, 2022, the Company tendered all of thecommon shares held by the Company of SoldOut, Inc. in the tender offer that Hakuhodo DY Holdings Inc. had been-8-

conducting since February 10, 2022, and as a result, the Company recorded an extraordinary income of JPY 9,008
million.

(Reference)
As the Accounting Standard for Revenue Recognition, etc. was applied from the beginning of the current fiscal year,
the main impact of this change was to change the presentation of net sales and cost of sales for transactions
conducted as an agent, which were previously presented as gross amount, to net amount. For reference, tables below
show the figures for revenue for the previous fiscal year (FY2021), which have been reclassified from gross amountto net amount for transactions conducted as an agent, and the figures for revenue for the current fiscal year
(FY2022), which have been reclassified to net sales based on the accounting standards before the application of the
Accounting Standard for Revenue Recognition, etc.
After the application of the Accounting Standard for Revenue Recognition, etc.
FY2021
Revenue

FY202232,701

16,924

Digital Shift Business

5,927

Advertising Business

13,068Financial Investment Business
Adjustment(Yen in millions)YoY change(15,776)(48.2)

5,137

(790)

(13.3)

9,355(3,712)(28.4)

14,184

2,594(11,590)(81.7)

(479)

(162)

316

—

Before the application of the Accounting Standard for Revenue Recognition, etc.
FY2021
Net sales

YoY change (%)

FY2022

98,51569,459(Yen in millions)YoY change(29,056)

YoY change (%)(29.5)

Digital Shift Business

9,055

8,301

(754)

(8.3)

Advertising Business

76,19358,999(17,194)(22.6)

Financial Investment Business

14,184

2,594(11,590)(81.7)

(917)

(434)

482

—

Adjustment(2) Issues to be Addressed
The following five items are key business and financial issues to be addressed by the Group.
1. Maintain high growth rate in the Digital Shift Business
While the demand for “digital shift” in Japan has been on the rise, the competition among corporate DXrelated services has been increasingly fierce as they are offered by a variety of companies, such as leading
IT vendors and consulting firms. The Group intends to achieve high growth rate in the Digital Shift Businessby offering services utilizing the client base and marketing know-how cultivated through the conventional
Internet advertising agency business.
2. Improve profitability in the Advertising BusinessTotal Internet advertising expenditures in Japan surpassed television media advertising expenditures for the
first time in 2019, and the market size of the Internet advertising business, which is the core domain in theGroup’s Advertising Business, has expanded to exceed JPY 2 trillion. Meanwhile, the competition among
peers is intensifying. The Group intends to secure profitability by such means as reviewing its operational
processes and driving the automation of programmatic advertising operations.
3. Secure a certain size of investment in digital shift-related companies
The Group plans to acquire companies related to the Digital Shift Business using capital gains arising frominvestments in Internet-related companies in the Financial Investment Business as funds for acquisition.
Investments in digital shift-related companies tend to be valued higher due to their high growth potential.
However, we intend to select candidate investees by making full use of knowledge and network of personal
contacts that the Group has cultivated in Internet-related industries since its foundation.

-9-4. Reorganize Group’s operating structure
The Group has been working on the reorganization of its operating structure to adapt to changes of businessin order to develop and secure human resources capable of supporting the future growth of its corebusinesses. In addition, the Group also intends to improve the decision-making process for businessdevelopment of the Group, which is affected by the significant development of technology.
5. Achieve ROE of 10%
The Group has set the achievement of ROE of 10% on a constant basis as a key objective in order to makedecisions with a focus on investment efficiency to improve its profitability and capital efficiency. To thisend, the Group intends to give consideration to shareholder return policies such as repurchase of treasury
shares in a flexible and agile manner taking into account the level of internal reserves, while improving the
profitability of its core businesses.
(3) Capital Expenditure
There were no significant capital expenditures.
(4) Financing
There are no special matters to be noted.
(5) Significant Reorganizations and Other Such Events
On April 1, 2022, the Company transferred all shares of SoldOut, Inc. to Hakuhodo DY Holdings Inc. and excluded
SoldOut, Inc. and its subsidiaries from the scope of consolidation of the Group.
(6) Assets, net sales and income(Yen in millions,
unless otherwise stated)
Revenue(Presented as net sales up to FY2021)
Ordinary profit (loss)

FY2019FY2020

FY2021

FY2022

89,95388,76898,515

16,924

2,833

4,358

14,662(439)

Profit attributable toowners of parent

1,928

3,750

10,231

5,719

Earnings per share- basic (Yen)

84.23

167.86473.28299.29Total assets

61,132

71,43469,72855,963

Net assets

32,60140,01840,93036,245(Notes) 1. Earnings per share is calculated based on the average number of shares issued (total shares issued excluding treasury
shares) during each fiscal year.
2. The Accounting Standard for Revenue Recognition, etc. has been applied from the beginning of the 29th fiscal term, andthe key management indicators, etc. for the current fiscal year are those after the application of this accounting standard,etc.

(7) Status of Parent Company and Principal Subsidiaries (As of December 31, 2022)
1) Status of Parent Company
Not applicable2) Status of Principal Subsidiaries
Company Name

Capital(Yen in millions)Voting rights owned by
the Company

Major businesses

OPT, Inc.

100

100.0%

Internet advertising agency business

Digital Shift, Inc.

499

100.0%

Support businesses related to digital shift

OPT America, Inc.

2,405

100.0%

Financial investment business(Notes) 1. The Company has 15 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. SoldOut, Inc. was excluded from principal subsidiaries because all shares of SoldOut, Inc. were transferred to Hakuhodo
DY Holdings Inc. on April 1, 2022.

- 10 -

(8) Major Businesses (As of December 31, 2022)
The Group is comprised of DIGITAL HOLDINGS, Inc. and 15 consolidated subsidiaries as of the end of the
fiscal year ended December 31, 2022. It operates the Digital Shift Business segment, the Advertising Businesssegment, and the Financial Investment Business segment. The Digital Shift Business provides support for DX
development and the digital shift consulting, and the development and sales of SaaS products. The Advertising
Business is engaged in the Internet advertising agency business and related solution development and sales.
The Financial Investment Business invests in venture capital, manages funds, and supports the management ofinvestee companies.
Segment

Major businesses

Digital Shift Business
Advertising Business
Financial Investment Business• Digital marketing, development support• Installment and deferred payment service for advertising expenditures• SaaS product development and sales, etc.
• Internet advertising agency business• Solution development and sales, etc.
• Venture capital investment• Fund management• Management support for investee companies, etc.

(9) Major Offices (As of December 31, 2022)
1) Main Office
OfficeHead Office

Address
Chiyoda-ku, Tokyo

2) Subsidiaries
Company Name
OPT, Inc.
Digital Shift, Inc.
OPT America, Inc.

Address
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
California, U.S.A.

(10) Workforce (As of December 31, 2022)
Number of Employees

Change from Dec. 31, 2021

1,022

-496

(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.
3. The number of employees decreased by 496 from the end of the previous fiscal year, mainly because the Company’s
consolidated subsidiaries SIGNATE Inc. and SoldOut, Inc. were excluded from the scope of consolidation as a result of thetransfer of shares of SIGNATE Inc. and the tender offer for shares of SoldOut, Inc., respectively.

(11) Main Lenders (As of December 31, 2022)
Amount borrowed(Yen in millions)
3,000

LenderSumitomo Mitsui Banking Corporation
Mizuho Bank, Ltd.

1,000

MUFG Bank, Ltd.

1,000

Resona Bank, Limited.

167(12) Other Significant Matters Concerning the GroupNot applicable- 11 -

2. Status of the Company(1) Matters Concerning Shares (As of December 31, 2022)
1) Total Number of Shares Authorized to Be Issued
86,630,400 shares2) Total Number of Shares Issued
23,817,700 shares (including 6,346,243 treasury shares)
3) Number of Shareholders
7,1664) Major Shareholders (Top 10)
Number of Shares Held
(Shares)
4,520,200
2,018,100
1,036,900
885,000
786,200
755,800
400,800
238,100
218,142
170,800

Shareholder
HIBC Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust account)
Tomohito Ebine
Atsushi Nouchi
Custody Bank of Japan, Ltd. (Trust account)
Mynavi Corporation
Time and Space, Ltd.
平野秀和
Digital Holdings Employee Stock Ownership Plan
Masaki Kobayashi

Ownership of Shares (%)
25.87%
11.55%
5.93%
5.06%
4.50%
4.32%
2.29%
1.36%
1.24%
0.97%

*1. Although the Company holds 6,346,243 treasury shares, it is omitted from the above list of major shareholders.
The treasury shares (6,346,243 shares) do not include the Company’s shares held by Digital Holdings Employee Stock Ownership
Plan (218,142 shares).
*2. Ownership of shares is calculated based on shares outstanding (the number of shares issued net of treasury shares) and rounded
off to two decimal places.
*3. HIBC Co., Ltd., is an asset management company wholly owned by the Chairperson of the Company, Noboru Hachimine.
*4. The Chairperson of the Company, Noboru Hachimine, holds 5,000 shares of the Company.
*5. Time and Space, Ltd. is an asset management company wholly owned by the President and Group CEO of the Company, Atsushi
Nouchi.

5) Other Significant Matters Concerning Shares
There were no significant matters concerning shares.

- 12 -

(2) Matters Concerning Corporate Officers
1) Matters Concerning Directors (As of December 31, 2022)
Position in Company

Name

Area of Responsibility andSignificant Other Positions
Chairperson and Director at Digital Shift, Inc.
Representative Director at Bonds Investment
Group, Inc.
Director at Re:teigi, Inc.
Director at RePharmacy, Inc.

Chairperson

Noboru Hachimine

President and Group CEO

Atsushi Nouchi

Director and Group COO

Daisuke Kanazawa

Director

Tomoyuki Mizutani

Director

Koji Yanagisawa

Director

Yasuhiro Ogino

Director

Mariko Tokioka

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

Yuki Okabe

Director (Audit and Supervisory
Committee member)

Fumiyuki Shinomiya

Auditor at Vankable, Inc.

Director (Audit and Supervisory
Committee member)

Masahiro Yamamoto

Certified Public Accountant
Auditor at OPT Incubate Inc.
Outside Audit & Supervisory Board Member at
Nissui Corporation

Director (Audit and Supervisory
Committee member)

Ryoichi Kagizaki

LawyerDirector, Executive Vice President & CFO at
ZOZO, Inc.
External Director at COLOPL, Inc.
Director and CFO at ANDPAD Inc.
Founder & CEO of East Meet East, Inc.
External Director at Asteria Corporation
Certified Public Accountant
Auditor at OPT, Inc.
Auditor at Digital Shift, Inc.
Auditor at Bonds Investment Group, Inc.
Auditor at Re:teigi, Inc.
Auditor at RePharmacy, Inc.

(Notes) 1. Directors Tomoyuki Mizutani, Koji Yanagisawa, Yasuhiro Ogino, and Mariko Tokioka, Director and Chairperson of the
Audit and Supervisory Committee (full-time) Yuki Okabe, and Directors and Audit and Supervisory Committee members
Fumiyuki Shinomiya, Masahiro Yamamoto, and Ryoichi Kagizaki are External Directors.
2. Director and Chairperson of the Audit and Supervisory Committee (full-time) Yuki Okabe has experience as an auditor at
multiple listed companies and possesses considerable expertise in finance and accounting as a Certified Public Accountant(CPA).
3. Director and Audit and Supervisory Committee member Fumiyuki Shinomiya had a long career at a financial institution
and possesses considerable expertise in finance and accounting.
4. Director and Audit and Supervisory Committee member Masahiro Yamamoto has experience in supporting numerous
companies as a Representative Partner at audit firms and possesses considerable expertise in finance and accounting as a
CPA.
5. Director and Audit and Supervisory Committee member Ryoichi Kagizaki possesses considerable expertise in corporate
legal affairs as a lawyer.
6. Former Director Shusaku Minoda and former Director and Audit and Supervisory Committee member Toshio Yamaue
terminated their office upon its expiration at the conclusion of the 28th Annual General Meeting of Shareholders held on
March 25, 2022.
7. The Company established a full-time Audit and Supervisory Committee position to strengthen audit and oversightfunctions, improve information gathering and increase audit effectiveness.
8. The Company has designated Directors Tomoyuki Mizutani, Koji Yanagisawa, Yasuhiro Ogino, and Mariko Tokioka,
Director and Chairperson of the Audit and Supervisory Committee (full-time) Yuki Okabe, and Directors and Audit andSupervisory Committee members Fumiyuki Shinomiya, Masahiro Yamamoto, and Ryoichi Kagizaki as independent
directors in accordance with the Tokyo Stock Exchange’s independence standards and filed a notification to that effectwith the Tokyo Stock Exchange.

2) Outline of liability limitation agreement
Pursuant to the provisions of Article 427, paragraph 1 of the Companies Act and Article 32, paragraph 2 of
the Company’s Articles of Incorporation, the Company and Directors (excluding Executive Directors, etc.)
have entered into agreements limiting their liability for damages under Article 423, paragraph 1 of theCompanies Act. The maximum amount of liability for damages under the said agreement is the statutory
prescribed minimum amount.
3) Outline of Directors and Officers liability insurance contract, etc.
The Company has concluded Directors and Officers liability insurance contracts as provided for in Article
430-3, paragraph 1 of the Companies Act with an insurance company. The insured under such insurance
contracts are Directors and managerial employees of the Company, and Directors, Auditors, and managerial- 13 -

employees of the Company’s subsidiaries. The premiums of the insurance contracts are borne entirely by theCompany and the insured do not bear any of the premiums. The insurance contracts cover losses that may
arise from an insured’s assumption of liability incurred in the course of the performance of duties, or receipt
of claims pertaining to the pursuit of such liability. However, in order to ensure that the appropriateness of
the insured’s performance of duties is not compromised, coverage is not provided in cases of a willfulbreach of trust, criminal or fraudulent acts, or willful violation of laws and regulations by the insured.
4) Remuneration, etc. for Directors
A. Policy for determining the details of remuneration, etc. for officers
At the Board of Directors meeting held on February 19, 2021, the Company passed a resolution on thepolicy for determining the details of individual remuneration, etc. for Directors. When passing the said
resolution by the Board of Directors, the Board of Directors consulted the Nomination and Remuneration
Committee regarding the details of the resolution in advance and received its report.
As for individual remuneration, etc. for Directors for the current fiscal year, the Board of Directors has
confirmed that the method of determining the details of remuneration, etc. and the details of remuneration,etc. determined are consistent with the decision policy resolved by the Board of Directors and that thereport from the Nomination and Remuneration Committee is respected, and has determined that the detailsof remuneration, etc. are in line with the relevant decision policy.
The details of the policy for determining the details of individual remuneration, etc. for Directors are as
follows:
a. Basic policy
The Company’s remuneration consists of basic remuneration and performance-linked remuneration.
However, only basic remuneration is paid to Non-Executive Directors (excluding External Directors andDirectors who are Audit and Supervisory Committee members), External Directors (excluding Directors
who are Audit and Supervisory Committee members), and Directors who are Audit and Supervisory
Committee members, who are all responsible for governance functions. The Company’s basic policy is thatsuch remuneration should contribute to securing an excellent management team for the realization of the
management plan and that such remuneration should raise awareness of their contribution to medium- tolong-term improvement of business performance and corporate value.
b. Policy for determining the amount of individual basic remuneration (monetary remuneration) (including
policy for determining the timing or conditions for granting remuneration, etc.)
The basic remuneration of Directors shall be fixed monthly remuneration consisting of compensation for
representation, compensation for resolution and supervision, and compensation for business execution, andshall be determined by comprehensively taking into consideration the required responsibilities and external
compensation database services.
c. Policy for determining the details of performance-linked remuneration, etc. and the method for calculating
the amount or number of such remuneration (including policy for determining the timing or conditions for
granting remuneration, etc.)
Performance-linked remuneration shall be medium- to long-term monetary remuneration for Executive
Directors only and shall be paid in a lump sum in the fiscal year following the relevant three fiscal years, inaccordance with the rate of achievement, only when the rate of achievement of the KPIs reaches the target,by setting the market capitalization (set for every three fiscal years), which is a key indicator for improving
the corporate value of the Company, as the KPI. The values to be used as indicators in the performancelinked remuneration will be reviewed and revised periodically in response to changes in the businessenvironment and based on the report of the Nomination and Remuneration Committee.
d. Policy for determining the ratio of the amount of monetary remuneration, the amount of performancelinked remuneration, etc., or the amount of non-monetary remuneration, etc., to the amount of individual
remuneration, etc. of Directors
The Nomination and Remuneration Committee shall make a report on the ratio of remuneration for
Executive Directors by type of remuneration based on external remuneration database services and otherinformation. Thereafter, the Board of Directors shall determine the details of remuneration, etc. for each
Director within the scope of the ratio of remuneration by type indicated in the report, while respecting thecontent of the report of the Nomination and Remuneration Committee.

- 14 -

e. Matters related to decisions on the details of individual remuneration, etc. for Directors
Individual remuneration, etc. of Directors is deliberated by the Nomination and Remuneration Committee,
a voluntary body chaired by an External Director, and reported to the Board of Directors for resolution by
the Board of Directors. Remuneration for Audit and Supervisory Committee members is determinedthrough consultation of the Audit and Supervisory Committee with the consent of all Audit andSupervisory Committee members.
B. Total amount of remuneration, etc. for the current fiscal year
Subgroup
Directors (excluding
those who are Audit andSupervisory Committee
members)(External Directors’share thereof)
Directors who are Audit
and Supervisory
Committee members(External Directors’share thereof)
Total(External Directors’share thereof)

Total amount of
remuneration, etc.
(Yen in millions)

Total amount of remuneration, etc. by type
(Yen in millions)
Performance-linked
Non-monetary
Basic remuneration
remuneration, etc.
remuneration, etc.

Number of
eligible officers(Persons)

153
(36)

153
(36)

–
(–)

–
(–)

8
(4)

30
(30)

30
(30)

–
(–)

–
(–)

5
(5)

183
(66)

183
(66)

–
(–)

–
(–)

13
(9)

(Notes) 1. The above includes one (1) Director and one (1) Director and Audit and Supervisory Committee member who terminatedtheir office upon its expiration at the conclusion of the Annual General Meeting of Shareholders held on March 25, 2022.
2. Remuneration, etc. for Directors does not include salaries earned as employees by Directors who concurrently holdemployee positions.
3. At the Annual General Meeting of Shareholders held on March 25, 2016, shareholders passed a resolution to set the
remuneration for Directors (excluding those who are Audit and Supervisory Committee members) at up to JPY 200 million
per year. The number of Directors (excluding those who are Audit and Supervisory Committee members) as of theconclusion of the said General Meeting of Shareholders is five.
4. At the Annual General Meeting of Shareholders held on March 29, 2018, shareholders passed a resolution to set the total
remuneration for Directors (excluding those who are External Directors or Audit and Supervisory Committee members) for
the grant of restricted stock at up to JPY 550 million per year. The number of Directors (excluding those who are External
Directors or Audit and Supervisory Committee members) as of the conclusion of the said General Meeting of Shareholders
is four.
5. At the Annual General Meeting of Shareholders held on March 27, 2020, shareholders passed a resolution to set the
remuneration for Directors who are Audit and Supervisory Committee members at up to JPY 50 million per year. The
number of Directors who are Audit and Supervisory Committee members as of the conclusion of the said General Meetingof Shareholders is four.
6. At the Annual General Meeting of Shareholders held on March 26, 2021, shareholders passed a resolution to set theperformance-linked remuneration for Directors who are Executive Directors at up to JPY 600 million per year. The number
of Directors who are Executive Directors as of the conclusion of the said General Meeting of Shareholders is three.

- 15 -

5) Matters Concerning External Directors
Position in the Company

Director

Name

Significant Concurrent
Positions at Other Entities

Tomoyuki
Mizutani

Director

Koji
Yanagisawa

Director, Executive Vice
President & CFO at ZOZO,Inc.
External Director at
COLOPL, Inc.

Director

Yasuhiro
Ogino

Director and CFO at
ANDPAD Inc.

Director

MarikoTokiokaFounder & CEO of East
Meet East, Inc.
External Director at Asteria
Corporation

Yuki
Okabe

CPA
Auditor at OPT, Inc.
Auditor at Digital Shift, Inc.
Auditor at Bonds Investment
Group, Inc.
Auditor at Re:teigi, Inc.
Auditor at RePharmacy, Inc.

Fumiyuki
Shinomiya

Auditor at Vankable, Inc.

Director(Audit and Supervisory
Committee member)

Masahiro
Yamamoto

CPA
Auditor at OPT Incubate
Inc.
Outside Audit &Supervisory Board Member
at Nissui Corporation

Director(Audit and Supervisory
Committee member)

RyoichiKagizaki

LawyerDirector(Chairperson of the Audit
and Supervisory Committee(full-time))

Director(Audit and Supervisory
Committee member)

Main Activities at the Company
Mr. Mizutani attended 18 of 19 Board meetings held in
2022. He appropriately spoke up at meetings to ensure
the validity and appropriateness of the Board’s decisionmaking from an objective and neutral standpoint
independent from management and fulfilled his role
appropriately, capitalizing on his wealth of experienceand long achievement in corporate management.
Mr. Yanagisawa attended all 19 Board meetings held in
2022. He appropriately spoke up at meetings to ensure
the validity and appropriateness of the Board’s decisionmaking from an objective and neutral standpoint
independent from management and fulfilled his role
appropriately, capitalizing on his experience as CFO andothers at a growing company as well as broad insight inoverall business administration centered on accounting,finance, IR, legal affairs and corporate governance.
Mr. Ogino attended all 19 Board meetings held in 2022.
He appropriately spoke up at meetings to ensure thevalidity and appropriateness of the Board’s decisionmaking from an objective and neutral standpoint
independent from management and fulfilled his role
appropriately, capitalizing on his experience as CFO andothers at growing companies as well as broad insight inoverall business administration centered on businessdevelopment and M&A.
Ms. Tokioka attended all 13 Board meetings held after her
appointment in 2022. She appropriately spoke up at meetings
to ensure the validity and appropriateness of the Board’s
decision-making from an objective and neutral standpoint
independent from management and fulfilled her role
appropriately, capitalizing on her abundant experience andbroad knowledge, including her entrepreneurial experience in
the SaaS field, global business management, and diversity
management, as the founder and CEO of an IT company
based in the U.S.
Ms. Okabe attended all 19 Board meetings and all 13
Audit and Supervisory Committee meetings held in 2022.
She appropriately provided valuable perspectives on
agenda items and other discussions and fulfilled her role
appropriately, capitalizing on her career as a CPA as well
as experience in serving as an auditor at multiple listedcompanies.
Mr. Shinomiya attended all 19 Board meetings and all 13
Audit and Supervisory Committee meetings held in 2022.
He appropriately provided valuable perspectives on
agenda items and other discussions and fulfilled his role
appropriately, capitalizing on his insight and wealth ofdomestic and international experience, mainly in thefinancial sector.
Mr. Yamamoto attended all 19 Board meetings and all 13
Audit and Supervisory Committee meetings held in 2022.
He appropriately provided valuable perspectives on
agenda items and other discussions and fulfilled his role
appropriately, capitalizing on his career as a CPA as well
as experience in supporting numerous companies as a
Representative Partner at audit firms.
Mr. Kagizaki attended all 13 Board meetings and all 10
Audit and Supervisory Committee meetings held after his
appointment in 2022. He appropriately provided valuable
perspectives on agenda items and other discussions andfulfilled his role appropriately from lawyer’s
perspectives.

(Notes) 1. The Company’s relationships with ZOZO, Inc. and COLOPL, Inc., two companies at which Director Mr. Yanagisawa
holds positions, do not warrant disclosure.

- 16 -

2. The Company’s relationship with ANDPAD Inc., at which Director Mr. Ogino holds a position, does not warrant
disclosure.
3. The Company’s relationships with East Meet East, Inc. and Asteria Corporation, two companies at which Director Ms.
Tokioka holds positions, do not warrant disclosure.
4. OPT, Inc., Digital Shift, Inc., Bonds Investment Group, Inc., Re:teigi, Inc., and RePharmacy, Inc., at which Director andChairperson of the Audit and Supervisory Committee (full-time) Ms. Okabe holds positions, are subsidiaries of theCompany.
5. Vankable, Inc., at which Director and Audit and Supervisory Committee member Mr. Shinomiya holds a position, is thesubsidiary of the Company.
6. OPT Incubate Inc., at which Director and Audit and Supervisory Committee member Mr. Yamamoto holds a position, isthe subsidiary of the Company. The Company’s relationship with Nissui Corporation, at which Mr. Yamamoto holds a
position, does not warrant disclosure.

(3) Accounting Auditor
1) Name KPMG AZSA LLC
2) Amount of Compensation(Yen in millions)48
Accounting auditor’s compensation for fiscal year ended December 31, 2022
57
Total monetary amount payable to the Accounting Auditor by the Company and its subsidiaries(Notes) 1. The audit agreement between the Company and its Accounting Auditor does not explicitly distinguish thecompensation for audit services performed pursuant to the Companies Act from the compensation for audit
services performed pursuant to the Financial Instruments and Exchange Act. Given disaggregating compensation
between the two types of audit services is not feasible, the Company is disclosing the above total amount as its
Accounting Auditor’s compensation for the fiscal year ended December 31, 2022.
2. The Audit and Supervisory Committee approved the Accounting Auditor’s compensation after performing
required verification of the appropriateness of the Accounting Auditor’s audit plan, audit performance and basis
for calculating estimates of its compensation.

3) Policy for Dismissal or Non-reappointment of Accounting Auditor
If the Audit and Supervisory Committee decides that the Accounting Auditor needs to be replaced for
failure to perform its duties or for other reasons, it shall draft a proposal regarding dismissal or nonreappointment of the Accounting Auditor to be submitted to a general meeting of shareholders. Additionally,
if any of the causes for dismissal fall into the provisions of Article 340, paragraph 1 of the Companies Act,
the Audit and Supervisory Committee may dismiss the Accounting Auditor with the unanimous consent of
all of its members.
If the Accounting Auditor is dismissed, an Audit and Supervisory Committee member selected by the Audit
and Supervisory Committee shall report on the dismissal, including the reason(s) for it, at the earliest
general meeting of shareholders convened after the dismissal.

- 17 -

3.

The Systems and Policies of the Group(1) Systems for Ensuring the Appropriateness of Business Operation
1) Controls to Ensure the Company and Its Subsidiaries’ Directors and Employees Comply with Laws andRegulations, and Articles of Incorporation in Executing Their Duties
Under the directions and orders of those responsible for Group compliance, the division responsible for theCompany’s compliance conducts training sessions and prepares and distributes manuals in accordance withthe “Group Compliance Rules,” working to improve the compliance knowledge of the Directors andemployees of the Company and its subsidiaries, and to cultivate a mindset of respect for compliance. Basedon the “Group Internal Audit Rules,” the division responsible for the Company’s internal audit conducts
regular audits of the execution of duties and confirms that the execution of duties complies with laws andregulations, and the Articles of Incorporation.
2) Systems Related to Storage and Management of Information Concerning Execution of Duties by theCompany and Its Subsidiaries’ Directors
Regarding information on important decision-making and reports, the Company and its subsidiaries’
Directors prepare, store and manage documents and electronic records in accordance with the “Group
Authority Rules,” “Group Confidentiality Protection Rules” and “Group Document Management Rules.”The Company’s subsidiaries keep such information readily accessible if requested to do so by theCompany’s Audit and Supervisory Committee members or their own Auditors.
3) Rules and Other Systems Related to Management of the Company and Its Subsidiaries’ Risk of Losses
Based on the “Group Risk Management Basic Guidelines” and “Group Risk Management Rules”
established by the Board of Directors, the Company operates the Group Risk Management Committee
composed of the Company’s officers, mainly those responsible for Group risk. The Group Risk
Management Committee selects important risks, prepares annual response plans and conducts monitoring,and reports the status of Group risk management, including the results of such monitoring, to the Board of
Directors on an as-needed basis. The Company’s subsidiaries have implemented their own controls for
managing risks, including the risk of losses, to the extent needed by their scale, attributes and otherrelevant circumstances in accordance with the “Group Risk Management Rules.”4) Systems to Ensure the Company and Its Subsidiaries’ Directors Execute Their Duties Effectively
The Company and its subsidiaries prepare business plans in accordance with the “Group Finance andAccounting Rules,” explicitly set operating performance targets on a company-wide basis and clarify how
they evaluate performance. They pursue improvement in operating efficiency by clearly defining everyorganizational division’s responsibilities with respect to operating performance. The Company and its
subsidiaries also analyze and make decisions on significant management matters in accordance with the“Group Authority Rules,” working to ensure operating efficiency.
5) Systems to Ensure the Appropriateness of Business Operation of the Group Consisting of the Company
and Its Subsidiaries
To ensure the Group’s appropriateness of business operation, the Company supervises its subsidiaries as
required based on their respective circumstances in accordance with the “Group Authority Rules.”Additionally, in the project manager meetings held monthly, management teams of the Company and eachsubsidiary promote information-sharing and effective communication among the Group and alignment of
the “Group Management Policies” by exchanging information on important matters affecting the Group asa whole.
6) Matters Related to Employees Requested by Audit and Supervisory Committee of the Company to Assist
with Its Duties
When the Audit and Supervisory Committee requests employees to assist executing its duties, theCompany assigns the needed employees to the Audit and Supervisory Committee.
7) Matters Related to the Independence from the Directors and Ensuring the Effectiveness of Instructions by
the Directors of the Employees Assigned to Audit and Supervisory Committee
The Company respects the Audit and Supervisory Committee’s request on assignment of employees toassist the Audit and Supervisory Committee. The employees that have been ordered to perform auditing
tasks by the Audit and Supervisory Committee will not obey to orders or directions from the Company’s- 18 -

Directors (excluding Directors who are Audit and Supervisory Committee members) against the orders
from the Audit and Supervisory Committee.
8) Systems for the Company and Its Subsidiaries’ Directors (Excluding Company Directors Who Are Audit
and Supervisory Committee Members) and Employees to Report to Chairperson of the Audit andSupervisory Committee
The Company’s Directors (excluding Directors who are Audit and Supervisory Committee members) andemployees are required to immediately report to the Chairperson of the Audit and Supervisory Committee
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 has established an internal reporting channel within the Group. It has createdan environment in which misconduct and illegal acts can be reported either directly or indirectly to theCompany’s full-time Audit and Supervisory Committee member, working to enhance compliance toprevent misconduct and illegal acts throughout the entire Group.
9) Systems to Prevent Retaliation Against Whistleblowers
The Company prohibits retaliatory treatment for individuals who have reported to the full-time Audit andSupervisory Committee member and fully publicizes this prohibition among the Company’s Directors(excluding Directors who are Audit and Supervisory Committee members), employees, its subsidiaries’
Directors and employees.
10) Matters Concerning Policy Pertaining to Advance Payment or Reimbursement of Expenses Related to
Execution of Duties by Audit and Supervisory Committee Members of the Company or Processing of
Other Expenses or Obligations 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 Systems to Ensure Effectiveness of the Audit by the Audit and Supervisory Committee
The Company’s Directors (excluding Directors who are Audit and Supervisory Committee members)
endeavor to make the audit system function more efficiently by promoting deeper understanding about theaudit system and creating an audit-friendly environment within the Company. Furthermore, theRepresentative Director notifies Audit and Supervisory Committee members of Board of Directors meeting
dates, details, etc. in advance and promotes appropriate communication and effective performance of audit
work to ensure that the Audit and Supervisory Committee’s audits are conducted effectively.
12) Systems 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 Policy for Building Internal Controls Systems,” and implements and operates internal controls overfinancial reporting accordingly. It also continually evaluates whether its internal controls are functioning
properly and modifies them as needed.
13) Systems to Eradicate Antisocial Forces
The Company has established the “Group Rules on Response to Anti-Social Forces” containing 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 “Group Compliance Basic Policy.” Such rules and regulations mandate that
the Company sever all relations with anti-social forces and respond organizationally to any illicit demandsby anti-social forces. Moreover, the Company has established more specific guidelines for dealing with
anti-social forces in the “Group Anti-Social Forces Response Manual,” and ensures that the Directors andemployees of the Company and its subsidiaries are well informed so that they will not have any
relationship with 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 lawyers and other external related organizations, and incorporates an antisocial forces clause into its contracts with new suppliers and customers.

- 19 -

(2) Overview of Execution Status of Systems to Ensure Appropriateness of Business Operation
1) Execution of Directors’ Duties
In the fiscal year ended December 31, 2022, the Company held Board of Directors meetings nineteen (19)times and made management decisions. The Board of Directors instituted Board of Directors Rules andother internal rules to ensure that Directors act in accordance with laws and regulations, the Company’s
Articles of Incorporation.
2) Execution of Duties by Audit and Supervisory Committee Members
In addition to conducting audits pursuant to audit plans formulated at Audit and Supervisory Committee
meetings, Audit and Supervisory Committee members oversee the execution of duties by Directors(excluding Directors who are Audit and Supervisory Committee members) through such means as
attending important meetings, including Board of Directors meetings, and regularly exchanging
information with the Accounting Auditor and the division responsible for the Company’s internal audit.
3) Risk Management and Compliance
The Company works to strengthen the risk management system to reduce risk, facilitate risk prevention,and take prompt action should a risk materialize, and in addition to establishing the “Group Risk
Management Basic Guidelines” and the “Group Risk Management Rules,” it has established the Group
Risk Management Committee. Furthermore, the Company works to heighten awareness among the
Directors and employees of the Company and its subsidiaries by creating the “Group Compliance Basic
Policy” and the “Group Compliance Rules,” establishing the Group Compliance Committee, and getting
division responsible for the Company’s compliance to prepare manuals and guidelines, and plan, conduct
and administrate trainings.
(3) Policy for Determination of Dividends from Retained Earnings
As its dividend policy, the Company aims to pay dividends equivalent to 20% of profit attributable to ownersof 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 inpursuit of further growth in its corporate value over the medium to long term. For the fiscal year ended
December 31, 2022, the Company’s Board of Directors passed a resolution authorizing a dividend of JPY
67.00 per share on February 13, 2023.
Monetary values presented in this Business Report are rounded down to the nearest whole unit in which
they are presented; percentages and other numbers are rounded off to one decimal place.

- 20 -

Consolidated balance sheet(As of December 31, 2022)
Account
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Contract assets
Operational investment securities
Inventories
Accounts receivable - other
Other
Allowance for doubtful accounts

Amount47,361
26,471
10,298
21
6,861
12
2,894
802
(0)

Account
Liabilities
Current liabilities
Accounts payable-trade
Current portion of long-termborrowings
Income taxes payable
Contract liabilities
Provision for bonuses
Other(Yen in millions)
AmountNoncurrent liabilities
Long-term borrowings
Deferred tax liabilities
Asset retirement obligations
Total liabilities
Net assets
Intangible assets
855
Shareholders’ equity
181
Goodwill
Share capital
673
Other
Capital surplus
Retained earnings
Investments and other assets
7,530
Treasury shares
Investment securities
6,612
Accumulated other comprehensive income
Leasehold and guarantee deposits
299
Valuation difference on available-forsale securities
Other
618
Foreign currency translation
adjustment
Non-controlling interests
Total net assets
Total assets
55,963
Total liabilities and net assets(Note) The amounts presented above are rounded down to the nearest whole million yen.
Noncurrent assets
Property, plant and equipment
Buildings and structures
Other

8,601
215
164
51

- 21 -

15,079
9,990
1,167
1,704
39
562
1,615
4,637
4,000
468
169
19,71727,031
8,212
3,843
23,674(8,698)
2,799
1,389
1,409
6,414
36,24555,963

Consolidated statement of income(From January 1, 2022 to December 31, 2022)(Yen in millions)
Account

AmountRevenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Gain on investments in investment partnerships
Other
Non-operating expenses
Interest expenses
Commission expenses
Foreign exchange losses
Other
Ordinary profit
Extraordinary income
Gain on change in equity
Gain on sales of investment securities
Other
Extraordinary losses
Loss on retirement of noncurrent assets
Tender offer-related expenses
Loss on extinguishment of stock compensation
Impairment loss
Other
Profit before income taxes
Income taxes-current
Income taxes-deferred
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent(Note) The amounts presented above are rounded down to the nearest whole million yen.

- 21 -

16,924
5,716
11,208
11,656
447
39
29
14
32
9
3

47
9,044
1
13
103
119
108
0
3,431
(654)

68

60
439

9,094

344
8,310
2,776
5,533
186
5,719

Consolidated statement of changes in net assets(From January 1, 2022 to December 31, 2022)(Yen in millions)Shareholders’ equity

Balance at beginning of year
Changes of items during theperiodDividends of surplus
Profit (loss) attributable toowners of parent
Purchase oftreasury shares
Changes in ownershipinterest in subsidiaries
Net changes of items otherthan shareholders’ equity
Total changes of items during
the period
Balance at end of year

Share capital

Capital surplus

Retained earnings

Treasury shares

8,212

3,841

20,011(3,698)

Total shareholders’equity28,367(2,056)(2,056)

5,719

5,719
(4,999)1(4,999)
1

―

1

3,663

(4,999)(1,335)

8,212

3,843

23,674(8,698)27,031

Accumulated other comprehensive income
Total
Valuation
Foreign currency accumulateddifference ontranslation
otheravailable-for-saleadjustment
comprehensive
securities
incomeBalance at beginning of year
3,780
513
4,294
Changes of items during theperiodDividends from surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Changes in ownershipinterest in subsidiaries
Net changes of items other(2,390)895(1,494)than shareholders’ equity
Total changes of items during(2,390)895(1,494)the period
Balance at end of year
1,389
1,409
2,799

Share
acquisitionrights(Note) The amounts presented above are rounded down to the nearest whole million yen.

- 22 -

12

Non-controlling
Total net assetsinterests
8,256

40,930(2,056)
5,719(4,999)1(12)(1,842)(3,348)(12)(1,842)(4,684)―

6,414

36,245

Notes to Consolidated Financial Statements
1. Significant matters that form the basis of preparing consolidated financial statements:(1) Scope of consolidation
1) Status of consolidated subsidiaries• Number of consolidated subsidiaries: 15 consolidated subsidiaries• Names of consolidated subsidiaries
OPT, Inc.
ConnectOm, Inc.
Bonds Investment Group, Inc.
BIG No. 1 Limited Partnership for Investment
BIG No. 2 Limited Partnership for Investment
OPT Incubate Inc.
OPT China Limited
OPT Shenzhen (China)
OPT America, Inc.
Digital Shift, Inc.
Re:teigi, Inc.
RePharmacy, Inc.
Vankable, Inc.
JOMYAKU, Inc.
BIG SX No. 1 Limited Partnership for Investment
From the fiscal year ended December 31, 2022, newly established company BIG SX No. 1 Limited
Partnership for Investment is included in the scope of consolidation.
On the other hand, SoldOut, Inc. and its subsidiaries, SIGNATE, Inc., Hyogo-Kobe Startup Limited
Partnership for Investment, and IMJ FENOX PTE. LTD. No. 2 were excluded from the scope of
consolidation because of share transfer and other reasons in the fiscal year ended December 31, 2022.
2) Status of major non-consolidated subsidiaries
Not applicable(2) Application of equity method accounting
1) Status of equity-method affiliates• Number of equity-method affiliates: One affiliate• Names of equity-method affiliates
PharmaShift Co., Ltd.
2) Status of major non-consolidated subsidiaries and affiliates not subject to the equity method• Name of non-consolidated subsidiaries and affiliates in this categoryNon-consolidated subsidiary: Not applicable
Affiliates: Not applicable(3) Special notes to procedures for application of equity method accounting
Since the financial closing date of PharmaShift Co., Ltd., an equity method affiliate, is March 31, we used thefinancial statements based on the provisional settlement of accounts on the consolidated closing date.
(4) Fiscal years of consolidated subsidiaries
Consolidated subsidiaries have the same fiscal year-end as the consolidated closing date.

- 23 -

(5) Matters on accounting policies
1) Valuation standards and methods for significant assets
A. Securities
Shares of affiliates
Stated at cost using the moving-average method.
Available-for-sale securities (including operational investment securities)• Securities other than shares, etc. that do not have a market price:
Stated at fair value (The related valuation differences are directly debited or credited to the net assets andthe cost of securities sold is calculated using the moving average method).
• Shares, etc. that do not have a market price:
Stated at cost using the moving-average method.
• Investment in limited partnership for investment:
Stated at an amount calculated using the method where the amount equivalent to the Company’s equity
interests in the partnership is added to or subtracted from the partnership’s gains or losses based on themost recent financial statements available.
B. Inventories• Merchandise and Work in process:Mainly stated at cost using the FIFO method. (The balance sheet value is calculated by writing down thebook value based on decreased profitability.)• Supplies:
Mainly stated at cost using the specific cost method. (The balance sheet value is calculated by writing
down the book value based on decreased 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, buildings (excluding equipment attached to buildings) acquired on or after April 1, 1998 andequipment attached to buildings and structures acquired on or after April 1, 2016 are subject to the straightline method.
The straight-line method is adopted by overseas consolidated subsidiaries. Primary useful lives are as
indicated below:
Buildings and structures:
3 to 18 years.
Other:
4 to 15 years.
B. Intangible assets (excluding leased assets)
Subject to the straight-line method.
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 theguaranteed residual value if the relevant lease agreement stipulates residual value guarantee, or otherwise,
residual value is zero.
3) Standards for recognition of significant allowances
A. Allowance for doubtful accounts
To prepare for losses from receivables, 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 othercertain 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 for the estimated payout toemployees is recognized to prepare for payments of bonuses to employees.

- 24 -

4) Standards for recognition of significant revenue and expenses
Revenue recognition for each of the major categories of revenue is as follows:
A. Contracted development services
The Company provides contracted development services for the purpose of supporting customers’ DX,
etc., and is obligated to produce and deliver deliverables such as software based on customer
specifications.
Performance obligation is satisfied as the development work progresses, and revenue is recognized over acertain period if the degree of progress in the satisfaction of such performance obligation can be reasonably
measured.
However, when the term from the transaction commencement date to the point when the performanceobligation is expected to be fully satisfied is very short, revenue is recognized when the deliverables are
accepted by a customer.
B. Advertisement-related services
In the programmatic advertising and affiliate services, the Company has performance obligations to act as
an intermediary for placing advertisements and to optimize the placement and distribution ofadvertisements to achieve the advertising results expected by customers.
Performance obligation is satisfied when the results from distribution of advertisements are achieved inaccordance with the arrangement with the customer, and revenue is recognized on a volume basis based on
the number of results achieved.
The Company does not control the goods or services transferred to the advertisers in the case ofintermediation of advertising space and management agency services in the case of programmatic
advertising, which the Company determines to fall under agent transaction. For such transactions, revenue
is recognized at the net amount of the amount received in exchange for services provided by the other party
less the amount paid to the other party concerned.
The Company also enters into certain transactions in which it has an obligation to produce and deliver
advertising productions. For these transactions, revenue is recognized at the time the performanceobligation is satisfied upon fulfillment of delivery to a customer.
C. Financial investment services
The Group performs operational investment for the purpose of earning capital gains of venture companies.
In funds in which the Group participates as a limited liability partner, the Group contributes the amountpromised to be invested based on the partnership agreement, and for funds managed by the Group, theamount promised to be invested for which contributions have been received is managed and operated inaccordance with the partnership agreement.
Revenue is recognized at the time when operational investment securities held directly by the Company
and investment targets held through funds are sold.
As consideration for the revenue recognized by the Group is received generally within one year from thesatisfaction of performance obligation, it does not include a significant financing component.
5) Standard for translating significant assets or liabilities denominated in foreign currencies into Japanese yen
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 currencytranslation adjustment 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.

- 25 -

7) Other significant matters that form the basis of preparing consolidated financial statements
A. Accounting procedures for consumption taxes
Non-deductible consumption taxes are expensed for the current fiscal year.
B. Application of tax effect accounting for the transition from the consolidated taxation system to the grouptax sharing system
The Company and its certain domestic consolidated subsidiaries will transition from the consolidated
taxation system to the group tax sharing system from the following fiscal year. However, with respect toitems subject to the review under the non-consolidated taxation system conducted to coincide with thetransition to the group tax sharing system established under the “Act Partially Amending the Income Tax
Act” (Act No. 8 of 2020), we have not adopted the provisions of paragraph 44 of the “Guidance on
Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) inaccordance with the treatment set out in paragraph 3 of the “Practical Solution on the Treatment of Tax
Effect Accounting for the Transition from the Consolidated Taxation System to the Group Tax Sharing
System” (PITF No. 39, March 31, 2020). Accordingly, the amounts of deferred tax assets and deferred tax
liabilities have been calculated based on the provisions of tax laws in effect before the revision.
The Company and its certain domestic consolidated subsidiaries plan to adopt the “Practical Solution on
the Accounting and Disclosure Under the Group Tax Sharing System” (PITF No. 42, August 12, 2021)
from the beginning of the following fiscal year, which provides for accounting treatment and disclosure ofincome taxes, local income taxes, and tax effect accounting when the group tax sharing system is adopted.
2. Notes on changes in accounting policies(1) Application of Revenue Recognition Standard, etc.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020; hereinafter “Revenue Recognition Standard”), etc. from the beginning of the current fiscal
year. The Company recognizes revenue when control of promised goods or services is transferred to acustomer in an amount which the Company expects to receive in exchange for those goods or services.
The Company previously recognized as net sales the gross amount of consideration received from a customer.
However, the Company determined that the transaction is an agent transaction as the Company does notcontrol the goods or services transferred to the customer, but only provides services to arrange for these goods
or services. Accordingly, the Company changed the method of recognizing as revenue the net amount of thetotal consideration received from customers less the related costs.
The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional treatment
provided for in the proviso to paragraph 84 of the Revenue Recognition Standard. The cumulative amount of
impact of retrospectively applying the new accounting policies prior to the beginning of the current fiscal year
is adjusted to retained earnings at the beginning of the current fiscal year, with the new accounting policies
applied from the beginning balance. However, the Company applies the method provided for in paragraph 86of the Revenue Recognition Standard and does not apply the new accounting policies retrospectively tocontracts for which substantially all revenue amounts had been recognized prior to the beginning of the current
fiscal year in accordance with the previous treatment. In addition, applying the method stipulated in proviso (1)to paragraph 86 of the Revenue Recognition Standard, contract modifications that occurred prior to thebeginning of the current fiscal year were accounted for based on the terms of the contract after reflecting allcontract modifications, with the cumulative amount of impact adjusted to retained earnings at the beginning of
the current fiscal year.
Furthermore, “notes and accounts receivable - trade,” which was presented under “current assets” in the
consolidated balance sheet of the previous fiscal year, has been included under “accounts receivable - trade”
and “contract assets” from the current fiscal year, and “other,” which was presented under “current liabilities,”
has been included under “contract liabilities” and “other” from the current fiscal year.
As a result of this change, revenue decreased by JPY 52,534 million and cost of sales decreased by JPY 52,534
million for the current fiscal year. There is no effect on the balance of retained earnings at the beginning of the
fiscal year.
“Net sales,” which had been presented in the consolidated statement of income, is now presented as “revenue”
considering from the viewpoint of more appropriate presentation upon the application of the Revenue
Recognition Standard, etc.

- 26 -

(2) Application of Fair Value Measurement Standard, etc.
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30,
July 4, 2019; hereinafter “Fair Value Measurement Standard”), etc. from the beginning of the current fiscal
year, and will prospectively apply the new accounting policies stipulated by the Fair Value Measurement
Standard, etc. in accordance with the transitional treatment provided in paragraph 19 of the Fair Value
Measurement Standard and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, July 4, 2019). This does not affect the consolidated financial statements. In addition, theCompany will include notes regarding matters such as the breakdown, etc. of financial instruments by the levelof fair value in “8. Notes on financial instruments” in the Notes to Consolidated Financial Statements.
3.

Notes on significant accounting estimates
Valuation of shares, etc. that do not have a market price(1) Amounts recorded in the consolidated financial statements for the current fiscal year
Operational investment securities of JPY 6,861 million and investment securities of JPY 6,612 million wererecorded in the consolidated balance sheet for the current fiscal year. These include JPY 4,885 million ofshares, etc. that do not have a market price and JPY 6,460 million in equity interests in investment limited
partnerships and similar partnerships.
(2) Information on significant accounting estimates for identified items
For shares, etc. that do not have a market price, the acquisition cost is used as the value on the consolidatedbalance sheet. However, if the actual value of the securities declines significantly due to a deterioration in thefinancial position of the issuer of the securities, a substantial reduction is made to the value, and the valuationdifference is treated as a loss for the current period.
However, for securities acquired at a price substantially higher than the amount based on net assets per sharereflecting the excess earning capacity, etc. of the investee at the time of acquisition, if it is judged that theexcess earning capacity, etc. initially expected has not decreased, the actual value is deemed not to havedecreased significantly, and no loss on valuation of securities is recognized. Judgments as to whether theexcess earning capacity, etc. of investees has decreased are made based on the achievement of business plans,
but said judgments involve significant and careful judgments by management, as the development of venturebusinesses is subject to uncertainty.
In the event that the actual value, including excess earning capacity, of the investees declines significantly,
such as when the business results of the investees fall far short of the business plans, there is a possibility thatloss on valuation of securities may be recorded in the following fiscal year.
4.

Additional information
Sale of shares of a material subsidiary
The Company sold all common shares held by the Company of SoldOut, Inc., a consolidated subsidiary, on
April 1, 2022, and gain on sales of investment securities of JPY 9,008 million is recorded as extraordinary
income. Please refer to “11. Notes to business combination, etc.” in the Notes to Consolidated Financial
Statements for details of the sale of the shares.

5. Notes to consolidated balance sheet(1) Breakdown of inventories(Yen in millions)

Work in process
Supplies

120(2) Accumulated depreciation of property, plant and equipment(Yen in millions)313

Accumulated depreciation
6.

Notes to consolidated statement of income
Revenue from contracts with customers
The Company does not separate and state revenue from contracts with customers and other sources of revenue.
The amount of revenue from contracts with customers is presented in “9. Notes on revenue recognition, (1)Disaggregation information of revenue for the current fiscal year” in the Notes to Consolidated Financial
Statements.

- 27 -

7. Notes to consolidated statement of changes in net assets(1) Matters concerning class and total number of shares issued and class and number of treasury sharesClass of stock

As of Jan. 1, 2022

Additions

Subtractions

As of Dec. 31, 2022

Shares issued
Common shares

23,817,700 shares――

23,817,700 shares

2,613,543 shares

3,732,700 shares―

6,346,243 shares

Record date

Effective date

December 31,
2021

March 4, 2022

Treasury shares
Common shares(2) Matters concerning dividend
1) Amount of dividend distribution
Resolution date

Class of stock

Total dividend
distribution(Yen in millions)February 10, 2022
Board of Directors
Meeting

Common shares

2,056

Dividend per share
(Yen)

97.0

2) Dividends with a record date in the fiscal year ended December 31, 2022, but with an effective date in thefollowing fiscal year
Scheduledresolution date

Class ofstock

Dividend funding
sourceFebruary 13, 2023
Board of Directors
Meeting

CommonsharesRetainedearnings

Total dividend
distribution(Yen in millions)

1,170- 28 -

Dividend per share
(Yen)

67.0

Record date

Effective date

December 31,
2022

March 3, 2023

8. Notes on financial instruments(1) Matters concerning financial instruments
1) Policy for financial instruments
The Group invests 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, costefficiency and flexibility into consideration in selecting funding instruments.
The Group manages investment businesses that invest in securities for investment purposes throughdedicated business units.
2) Nature of financial instruments and associated risks
Notes and accounts receivable-trade, which are trade receivables, are exposed 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 and periodically assess major customers’ credit status in accord withregulations regarding the Group’s credit management. Trade receivables denominated in foreign currencies
are exposed to currency risk. Investment securities are mainly stocks of companies with which theCompany has business relationships. They are exposed to the risk of market price fluctuations. Operational
investment securities and investment securities other than the aforementioned investment securities held by
the Group are mainly stocks and equity interests in partnerships and other such entities. The Group holds
these securities for purely investment purposes or to advance its businesses. Listed stocks among thesesecurities are exposed to the risk of market price fluctuations. Unlisted stocks among these securities are
exposed to the following two risks because unlisted companies tend to be more sensitive than listedcompanies to changes in the economic environment and other such developments as a result of having lessstable financial and earnings foundations and being more constrained in terms of management resources.
a. The Group has no assurance of earning any capital gains from its investments.
b. The Group may incur capital losses on its investments.
Accounts payable-trade, which are trade payables, are mostly payable within one year. Trade payables
denominated in foreign currencies are exposed to currency risk.
Short-term loans payable and long-term borrowings are mostly funding needed for working capital, among
other purposes.
3) Risk-management regime for financial instruments• Management of credit risk (risk associated with counterparties’ contractual nonperformance, etc.)
For trade receivables, the Group conducts credit screenings when it starts doing business with a newcustomer, continually monitors the collection status of receivables and reviews credit limits whennecessary in accordance with its regulations regarding credit management.
• Management of market risks (foreign currency risk, interest rate fluctuation risk, etc.)
For operational investment securities and other investment securities, the Group periodically checks
market values and assesses the issuer’s (or counterparties’) financial condition and continually reviews
and, as necessary, adjusts its holdings in light of market conditions and/or its relationship with thecounterparty.
• Management of liquidity risk in connection with financing (risk of inability to repay borrowings on thedue date)
The Group manages liquidity risk through such means as having its finance staff prepare and update cash
flow schedules on a timely basis.
4) Supplemental information on the fair value of financial instruments
In calculation of the fair value of financial instruments, as fluctuation factors are incorporated, the value
may fluctuate by adopting different preconditions.

- 29 -

(2) Matters concerning financial instruments’ fair value
The book value and fair value of financial instruments in the consolidated balance sheet as of December 31,
2022 (the consolidated balance sheet date for the current fiscal year) and their differences are as follows.
(Yen in millions)
Carrying amount in the
consolidated balance sheet
Operational investment securities andinvestment securities
Total assets
Long-term borrowings (including current
portion thereof)
Total liabilities

Fair value

Difference

2,128

2,128

―

2,128

2,128

―

5,167

5,158

(8)

5,167

5,158

(8)

(Note 1) “Cash and deposits,” “accounts receivable-trade,” “accounts receivable-other” and “accounts payable-trade” are omitted
because they consist of cash and have short‑term maturities, and their fair value approximates their book value.
(Note 2) Shares, etc. that do not have a market price are not included in the above. The carrying amount of such financial instrumentson the consolidated balance sheet are as follows:(Yen in millions)
Type
Carrying amount on consolidated balance sheet
Operational investment securities and investment securities
Unlisted stocks
4,885
Equity interests in investment limited partnerships and similar
6,460
partnerships*
Total
11,345(*)
Equity interests in investment limited partnerships and similar partnerships are not subject to fair value disclosure in accordancewith paragraph 27 of “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.
31, July 4, 2019).
(Note 3) Post-reporting-date maturity schedule for monetary receivables

(1)
(2)
(3)

Type
Cash and deposits
Accounts receivable–trade
Accounts receivable-other
Total

Within 1 year
26,471
10,2982,894
39,6641-5 years――――(Yen in millions)Over 10 years
―
―
―
―

―
―

(Yen in millions)Over 10 years――

5-10 years――――(Note 4) Post-reporting-date repayment schedule for loans payable
TypeLong-term borrowings
Total

Within 1 year
1,167
1,167

1-5 years
4,000
4,000

5-10 years(3) Breakdown, etc. of financial instruments by level of fair value
The fair value of financial instruments is classified into the following three levels according to theobservability and materiality of inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e., quoted prices in active markets for assets
or liabilities that are the subject of such fair value measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs.
If multiple inputs that have significant impact on fair value measurement are used, the fair value is categorized
in the level of the lowest priority for fair value measurement among the level of each input.
1) Financial instruments measured at fair value in the consolidated balance sheet
Type

Level 1

Operational investment securities and investment securities
Shares
Other
Total assets- 30 -

1,786
―
1,786

Fair value (Yen in millions)Level 2
Level 3
―
―
―

―
342
342

Total
1,786
342
2,128

2) Financial instruments other than those measured at fair value in the consolidated balance sheet
Level 1

Fair value (Yen in millions)Level 2
Level 3Total
Long-term borrowings
―
5,158
―
5,158
(including current portion thereof)
Total liabilities
―
5,158
―
5,158
(Note) A description of the valuation technique(s) and inputs used in the fair value measurements
 Operational investment securities and investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, their fair value isclassified as Level 1. Other is share acquisition rights of unlisted shares. As their investment timing and the end of
the consolidated fiscal year are close, the book value is considered to approximate fair value. Accordingly, the bookvalue is used as fair value, and their fair value is classified as Level 3.
 Long-term borrowings
The fair value is measured by discounting the total amount of principal and interest at an interest rate thatincorporates a benchmark rate (e.g., government bond yield) plus a credit spread, and is classified as Level 2.

9. Notes on revenue recognition(1) Disaggregation of revenue from contracts with customers for the current fiscal year
(Yen in millions)
Business segment
Digital Shift Advertising
Business
Business
Goods or services transferred at apoint in time
Goods or services transferred overa certain period
Revenue from contracts withcustomers
Other revenue
Revenue from external customers

Financial
Investment
Business

Total

965

919

―

1,885

4,022

8,424

―

12,446

4,987

9,344

―

14,331

―

―

2,593

2,593

4,987

9,344

2,593

16,924(2) Basic information in understanding revenue
Basic information in understanding revenue is as presented in “1. Significant matters that form the basis ofpreparing consolidated financial statements, (5) Matters on accounting policies, 4) Standards for recognition ofsignificant revenue and expenses” in the Notes to Consolidated Financial Statements.
(3) Information in understanding the amounts of revenue for the current fiscal year and following fiscal years
1) Contract asset and contract liability balances, etc.
Contract assets (balance at beginning of year)
Contract assets (balance at end of year)
Contract liabilities (balance at beginning of year)
Contract liabilities (balance at end of year)(Yen in millions)
11
21
160
39

Contract assets consist of unbilled accounts receivables-trade for which revenue is recognized over acertain period based on the estimated degree of progress in satisfying performance obligations. Contract
assets are reclassified to receivables from contracts with customers when they are accepted by a customer.
Contract liabilities primarily relate to advances received from customers for the period based on thepayment terms on the contracts for which revenue is recognized at time of satisfaction of performanceobligations. Contract liabilities are reversed as revenue is recognized.
2) Transaction price allocated to the remaining performance obligations
Since the Group does not have significant transactions with an initial expected contract term of more than
one year, the Group has applied the practical expedient and figures are omitted. Further, there is no
significant amount of consideration arising from contracts with customers that are not included in thetransaction price.

- 31 -

10. Notes to per-share information¥1,707.41¥299.29

Net assets per share
Earnings per share

11. Notes to business combination, etc.
Business divestiture(Sale of shares of a subsidiary)
At the Board of Directors meeting held on February 9, 2022, the Company resolved to tender the shares heldby the Company of SoldOut, Inc., a consolidated subsidiary of the Company, in a tender offer for commonshares and share acquisition rights of SoldOut, Inc. conducted by Hakuhodo DY Holdings Inc. Since the tender
offer was completed on March 28, 2022, SoldOut, Inc. and its subsidiaries were excluded from the scope of
consolidation of the Company on April 1, 2022, the date of transfer of shares.
(1) Overview of the business divestiture
1) Name of the buyer
Hakuhodo DY Holdings Inc.
2) Name and business of the divested subsidiaries
Name of the subsidiaries: SoldOut, Inc. and its three subsidiaries
Business: Internet business support business
3) Reason for the business divestiture
SoldOut, Inc. has been providing various Internet-based services and has been exploring group synergies
with the Company. However, in light of the fact that the Company’s purpose and strategy of focusing on
industrial transformations (IX) are different from SoldOut, Inc.’s corporate vision and strategy of focusing
on digital transformation (DX), the Company carefully considered from various perspectives andconcluded that partnering with a company which can share SoldOut, Inc.’s corporate vision and canmaximize synergies would lead to the growth of both parties and enhance both corporate values. As aresult, the Company has decided on the transfer.
4) Date of the business divestiture
April 1, 2022
5) Other matters regarding the overview of the transaction including legal form
A share transfer in which consideration is limited to cash, etc.
(2) Overview of accounting treatments applied
1) Amount of gain or loss on the transfer
Gain on sales of investment securities(Yen in millions)
9,0082) Appropriate book value and breakdown of assets and liabilities of the business transferred
Current assets
Noncurrent assets(Yen in millions)
6,359
1,935

Total assets
Current liabilities
Noncurrent liabilities

8,295
4,188
1,078

Total liabilities

5,266

3) Accounting treatments
The difference between consolidated book value and sales price of shares in SoldOut, Inc. and its
subsidiaries is recorded as gain on sales of investment securities under extraordinary income.
(3) Reporting segment of the divested business
Digital Shift Business, Advertising Business- 32 -

(4) Approximate amounts of profit or loss of the divested business included in consolidated statement of income
for the fiscal year ended December 31, 2022
Revenue
Operating income(Yen in millions)
1,322
51

12. Notes to significant subsequent events
Not applicable.

- 33 -

Balance sheet(As of December 31, 2022)
Account
AssetsCurrent assets
Cash and deposits
Accounts receivable-trade
Operational investment securities
Advances paid
Short-term loans receivable fromsubsidiaries and associates
Accounts receivable - other
Other
Allowance for doubtful accounts

AmountAccount
Liabilities
Current liabilities
Current portion of long-termborrowings
Accounts payable

25,854
20,423
262
2,290
78
1,900
273
1,864
(1,237)

9,906
1,167
496

Deposits received from subsidiaries
and associates

6,193

Accrued expenses
Income taxes payable
Deposits received
Provision for bonuses
Other

136
1,580
45
276
11

Noncurrent assets
11,319Property, plant and equipment
201
Buildings and structures
150
Noncurrent liabilities
Tools, furniture and fixtures
50
Long-term borrowings
Intangible assets
84
Asset retirement obligations
Trademark right5
Total liabilities
Software43
Net assets
Software in progress
35
Shareholders’ equity
Other
0
Share capital
Investments and other assets
11,033
Capital surplus
1,291
Investment securities
Legal capital surplus
Shares of subsidiaries and associates
7,907
Retained earnings
Retained earnings brought forward
Investments in other securities of
1,344
subsidiaries and associates
Treasury shares
Long-term prepaid expenses
1
Valuation and translation adjustments
Deferred tax assets
217
Valuation difference on available-forLeasehold and guarantee deposits
270
sale securities
Other
0
Total net assets
Total assets
37,173
Total liabilities and net assets(Note) The amounts presented above are rounded down to the nearest whole million yen.

- 34 -(Yen in millions)
Amount

4,156
4,000
156
14,06322,502
8,212
3,423
3,423
19,564
19,564(8,698)608
608
23,11037,173

Statement of income(From January 1, 2022 to December 31, 2022)(Yen in millions)
Account

AmountRevenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
10Gain on investments in partnership
179
Other
3
Non-operating expenses
Interest expenses
13
Commission expenses
32
Provision of allowance for doubtful accounts
1,008
Other
5
Ordinary profit
Extraordinary income
Gain on sales of shares of subsidiaries
10,712Gain on liquidation of subsidiaries
1
Extraordinary loss
Loss on valuation of shares of subsidiaries
308
Other
0
Profit before income taxes
Income taxes-current
3,289
Income taxes-deferred(85)
Profit(Note) The amounts presented above are rounded down to the nearest whole million yen.

- 35 -

4,039
2,755
1,283
600
682

192

1,060
185

10,713309
10,2183,203
7,015

Statement of changes in net assets(From January 1, 2022 to December 31, 2022)(Yen in millions)Shareholders’ equity
Capital surplus

Balance at beginning of year
Changes of items during period
Dividends of surplus
Net income (loss)
Purchase of treasury shares
Net changes of items other thanshareholders’ equity
Total changes of items during
the period
Balance at end of year

Share capital

Legal capitalsurplus

Total capitalsurplus

8,212

3,423

3,423

Retained earnings
Other retained
earnings
Total retained
earnings
Retained earnings
brought forward
14,606
14,606(2,056)
7,015(2,056)
7,015

―

―

―

4,958

4,958

8,212

3,423

3,423

19,564

19,564

Valuation and translation
adjustments
Valuation
Total valuation and Total net assets
Total shareholders’ difference on
Treasury sharestranslation
equityavailable-for-saleadjustments
securities(3,698)22,543
1,583
1,583
24,127
Shareholders’ equity

Balance at beginning of year
Changes of items during period
Dividends from surplus(2,056)
Net income (loss)
7,015
Purchase of treasury shares(4,999)(4,999)Net changes of items other than
(975)
shareholders’ equity
Total changes of items during(4,999)(41)(975)
the period
Balance at end of year
(8,698)22,502608(Note) The amounts presented above are rounded down to the nearest whole million yen.

- 36 -(2,056)
7,015(4,999)
(975)

(975)

(975)

(1,016)608

23,110Notes to Non-Consolidated Financial Statements
1.

Notes to significant accounting policies(1) Valuation standards and methods for significant assets
1) Valuation standards and methods for securities
A. Shares of subsidiaries and affiliates
Stated at cost using the moving-average method.
B. Available-for-sale securities (including operational investment securities)• Securities other than shares, etc. that do not have a market price:
Stated at fair value (The related valuation differences are directly debited or credited to the net assets
and the cost of securities sold is calculated using the moving average method).
• Shares, etc. that do not have a market price:
Stated at cost using the moving-average method.
• Investment in limited partnership for investment:
Stated at an amount calculated using the method where the amount equivalent to the Company’s equity
interests in the partnership is added to or subtracted from the partnership’s gains or losses based on themost recent financial statements available.
(2) Depreciation/amortization methods for noncurrent assets
1) Property, plant and equipment (excluding lease assets)
Mainly subject to the declining-balance method.
However, buildings (excluding equipment attached to buildings) acquired on or after April 1, 1998 andequipment attached to buildings and structures acquired on or after April 1, 2016 are subject to the straightline method.
Primary useful lives are as indicated below:
Buildings and structures:
3 to 18 years
Tools, furniture and fixtures:
4 to 10 years
2) Intangible assets (excluding leased assets)
Subject to the straight-line method.
Software for internal use is subject to the straight-line method based on the period available for internal use(mainly, five years).
(3) Standards for recognition of significant allowances
1) Allowance for doubtful accounts
To prepare for losses from receivables, 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 othercertain 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 for the estimated payout to employees
is recognized to prepare for payments of bonuses to employees.
(4) Standards for recognition of revenue and expenses
1) Services related to contracts with subsidiaries
The Company has performance obligations to provide back-office services and management consulting
under contracts with its subsidiaries. As it is considered that the subsidiaries receive benefits as the Company
performs its obligations under the contracts, revenue is recognized over the period in which the services areprovided at the contract amounts agreed to with each subsidiary at the beginning of the fiscal year.
Management consulting fees are recognized as revenue at the amounts calculated based on the amount ofrevenue recognized by each subsidiary, and dividends from subsidiaries are also recognized as revenue on
the effective date of the dividends.

- 37 -

2) Financial investment services
The Company performs operational investment for the purpose of earning capital gains of venture companies.
In funds in which the Company participates as a limited liability partner, the Company contributes theamount promised to be invested based on the partnership agreement. Revenue is recognized as gains orlosses at the time when operational investment securities held directly by the Company and investments held
through funds are sold.
(5) Other significant matters that form the basis of preparing financial statements
1) Accounting procedures for consumption taxes
Non-deductible consumption taxes are expensed for the current fiscal year.
2) Application of tax effect accounting for the transition from the consolidated taxation system to the grouptax sharing system
The Company will transition from the consolidated taxation system to the group tax sharing systemfrom the following fiscal year. However, with respect to items subject to the review under the nonconsolidated taxation system conducted to coincide with the transition to the group tax sharing systemestablished under the “Act Partially Amending the Income Tax Act” (Act No. 8 of 2020), we have not
adopted the provisions of paragraph 44 of the “Guidance on Accounting Standard for Tax EffectAccounting” (ASBJ Guidance No. 28, February 16, 2018) in accordance with the treatment set out inparagraph 3 of the “Practical Solution on the Treatment of Tax Effect Accounting for the Transition
from the Consolidated Taxation System to the Group Tax Sharing System” (PITF No. 39, March 31,2020). Accordingly, the amounts of deferred tax assets and deferred tax liabilities have been calculated
based on the provisions of tax laws in effect before the revision.
The Company plans to adopt the “Practical Solution on the Accounting and Disclosure Under theGroup Tax Sharing System” (PITF No. 42, August 12, 2021) from the beginning of the following fiscal
year, which provides for accounting treatment and disclosure of income taxes, local income taxes, andtax effect accounting when the group tax sharing system is adopted.
2. Notes on changes in accounting policies(1) Application of Revenue Recognition Standard, etc.
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29,
March 31, 2020; hereinafter “Revenue Recognition Standard”), etc. from the beginning of the current fiscal
year. The Company recognizes revenue when control of promised goods or services is transferred to acustomer in an amount which the Company expects to receive in exchange for those goods or services.
As there are no changes from the previous treatments, the application of the Revenue Recognition Standard,
etc. does not affect the financial statements.
“Net sales,” which had been presented in the statement of income, is now presented as “revenue” consideringfrom the viewpoint of more appropriate presentation upon the application of the Revenue Recognition
Standard, etc.
(2) Application of Fair Value Measurement Standard, etc.
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30,
July 4, 2019; hereinafter “Fair Value Measurement Standard”), etc. from the beginning of the current fiscal
year, and will prospectively apply the new accounting policies stipulated by the Fair Value Measurement
Standard, etc. in accordance with the transitional treatment provided in paragraph 19 of the Fair Value
Measurement Standard and paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ
Statement No. 10, July 4, 2019). This does not affect the financial statements.
3.

Notes on significant accounting estimates
Valuation of shares, etc. that do not have a market price(1) Amounts recorded in the non-consolidated financial statements for the current fiscal year
Operational investment securities of JPY 2,290 million and investment securities of JPY 1,291 million wererecorded in the balance sheet for the current fiscal year. These include JPY 1,383 million of shares, etc. that do
not have a market price and JPY 1,057 million in equity interests in investment limited partnerships and similar
partnerships.
(2) Information on significant accounting estimates for identified items
Notes are omitted because the same information is provided in “3. Notes on accounting estimates” in the Notes
to Consolidated Financial Statements.

- 38 -

4.

Additional information
Sale of shares of a material subsidiary
The Company sold all common shares held by the Company of SoldOut, Inc., a consolidated subsidiary, on
April 1, 2022, and gain on sales of shares of subsidiaries of JPY 10,682 million is recorded as extraordinary
income. Please refer to “12. Notes to business combination, etc.” in the Notes to Financial Statements fordetails of the sale of the shares.

5. Notes to balance sheet(1) Monetary receivables from and monetary payables to subsidiaries and associates (excluding those presented as
separate line items)(Yen in millions)Short-term monetary receivables
2,246
Short-term monetary payables
385(2) Accumulated depreciation of property, plant and equipment(Yen in millions)273

Accumulated depreciation(3) Contingent liabilities
The Company guarantees the obligation of JPY 1,245 million in payables for customers of subsidiaries.
6.

Notes to statement of income
Transactions with subsidiaries and associates(Yen in millions)Operating transactions
Revenue
Non-operating transactions

7.

Notes to statement of changes in net assets
Matters concerning class and number of treasury sharesClass of stock
Common shares

8.

3,600
10

As of Jan. 1, 2022
2,613,543 shares

Additions
3,732,700 shares

Subtractions

As of Dec. 31, 2022

― shares

6,346,243 shares

Notes to deferred tax accounting matters
Breakdown of deferred tax assets and deferred tax liabilities by main cause(Yen in millions)Deferred tax assets
Allowance for doubtful accounts
Provision for bonuses
Intangible assets
Asset retirement obligations
Loss on valuation of investment securities
Enterprise taxes payable
Other
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
Total deferred tax liabilities
Net deferred tax assets

378
84
52
26
929
131
34
1,639
(1,152)
486
(268)
(268)
217

- 39 -

9.

Notes to transactions with related party(1) Subsidiaries, etc.
Share capital or
equity stake(Yen in millions)Type

Name ofcompany

Address

Subsidiary

OPT, Inc.

Chiyoda-ku, Tokyo

100

Subsidiary

Digital Shift, Inc.

Chiyoda-ku, Tokyo

499

Subsidiary

Vankable, Inc.

Chiyoda-ku, Tokyo

1,689

Subsidiary

Re:teigi, Inc.

Chiyoda-ku, Tokyo

10

Type

Subsidiary

Subsidiary

Subsidiary

Subsidiary

Name of company

OPT, Inc.

Digital Shift, Inc.

Vankable, Inc.

Re:teigi, Inc.

Relationship withrelated party

Director interlock
Management
involvement
CMS transactions

Director interlock
Management
involvement
CMS transactions

Director interlock
CMS transactions
Loans of funds
Guarantee ofobligation

Director interlock
CMS transactions

Nature of transaction

Management
consulting fee
Borrowing of funds
via CMS (Note 1)
Payment of interest(Note 2)
Management
consulting fee
Borrowing of funds
via CMS (Note 1)

Business

Percentage of voting
rights holding (held)

Advertising
Business
Digital ShiftBusiness
Digital ShiftBusiness
Digital ShiftBusiness

100.00%(―)
100.00%(―)
100.00%(―)
100.00%(―)

Transaction
amount(Yen inmillions)

Account

Accounts receivabletrade
Deposits received―
from subsidiaries
and associates

1,787

0

Fiscalyear-endbalance(Yen inmillions)
164
2,982

―

Accounts receivabletrade
Deposits received―
from subsidiaries
and associates

―

627

57
682

Payment of interest(Note 2)0――

Borrowing of funds
via CMS (Note 2)―

Deposits received
from subsidiaries
and associates

2,396

Payment of interest(Note 2)

0

―

―

7

Short-term loans
receivable fromsubsidiaries
and associates

1,900

1,245

―

―

2,380

―

―

Borrowing of funds
via CMS (Note 1)―

Deposits received
from subsidiaries
and associates

651

Receipt of interest(Note 2)

1――

Receipt of interest(Note 2)
Guarantee ofobligation(Note 3)
Underwriting of
capital increase(Note 4)(Notes) 1. For borrowing transactions through the CMS (cash management system), only fiscal year-end balances are presented
because balances frequently change.
2. For transaction amount, interest rates are rationally determined based on market interest rates and other relevant factors.
3. The Company guarantees obligations owed to customers. No guarantee fee is received for this guarantee of obligation.
4. Underwriting of capital increase for which the total amount of capital increase carried out by the company has been
underwritten.

(2) Corporate officers and individual shareholders
Not applicable- 40 -

10. Notes on revenue recognition
Basic information in understanding revenue
Basic information in understanding revenue from contracts with customers is as presented in “1. Notes tosignificant accounting policies, (4) Standards for recognition of revenue and expenses” in the Notes to NonConsolidated Financial Statements.
11. Notes to per-share information
Net assets per share
Earnings per share¥1,322.77¥367.07

12. Notes to business combination, etc.
Business divestiture(Sale of shares of a subsidiary)
Overview of accounting treatments applied
Amount of gain or loss on the transfer(Yen in millions)
Gain on sales of shares of subsidiaries
10,682
Notes are omitted because the content other than the above is the same as provided in “11. Notes to businesscombination, etc.” in the Notes to Consolidated Financial Statements.
13. Notes to significant subsequent events
Not applicable.

- 41 -

Certified Copy of Audit Report of Business Report, Audit and Supervisory Committee Members, and Renewed
Audit and Supervisory Committee
AUDIT REPORT
We, the Audit and Supervisory Committee of DIGITAL HOLDINGS, Inc. (“the Company”), have audited theperformance of duties by Directors and Executive Officers during the 29th fiscal year from January 1, 2022 to
December 31, 2022. We report the method and results as follows.
1. Method and details of audit

We, the Audit and Supervisory Committee, have received reports from Directors, employees and others on aregularly basis on the details of the board resolutions with respect to items prescribed in Article 399-13,
paragraph 1, item i (b) and (c) of the Companies Act, and the status of the establishment and operation of thesystem 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 asneeded, inspected documents, including documentation of significant decisions, and investigated the statusof operations and property at the Company’s Head Office and other major places of business, all incompliance with auditing standards prescribed by the Audit and Supervisory Committee and in accordancewith audit policies, audit plans and an agreed-upon division of duties. We also communicated andexchanged 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 and performed auditing appropriately, we received reports from the Accounting Auditor on theperformance of its duties and requested explanations when necessary. In addition, we received notice fromthe Accounting Auditor that “The systems for ensuring the proper performance of duties” (set forth in each
item of Article 131 of the Regulations of Corporate Financial Calculation) are organized in accordance withthe “Standards for Quality Control of Audit” (Business Accounting Council, October 28, 2005) and otherrelevant standards, and sought explanations whenever necessity arose.
Based on the above methods, we examined the business report, financial statements (balance sheet, statementof income, statement of changes in net assets, notes to financial statements), supporting schedules, andconsolidated financial statements (consolidated balance sheet, consolidated statement of income,consolidated statement of changes in net assets and 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 theCompany in accordance 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 violationsof any laws, regulations or the Company’s Articles of Incorporation by any Directors or Executive
Officers in carrying out their duties.

iii)

We believe the details of resolutions of the Board of Directors regarding the internal control system areappropriate. We found no matters of note with respect to the description on the business report as wellas 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.

- 42 -

February 21, 2023
Audit and Supervisory Committee of DIGITAL HOLDINGS, Inc.

Chairperson of the Audit and Supervisory Committee Yuki Okabe (Seal)(Full-time)

Audit and Supervisory Committee member

Fumiyuki Shinomiya (Seal)

Audit and Supervisory Committee member

Masahiro Yamamoto (Seal)

Audit and Supervisory Committee member

Ryoichi Kagizaki (Seal)

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. Audit and Supervisory Committee members Ms. Yuki Okabe, Mr. Fumiyuki Shinomiya, Mr. Masahiro
Yamamoto, and Mr. Ryoichi Kagizaki are External Directors as provided for in Article 2, item 15 and Article
331, paragraph 6 of the Companies Act.

- 43 -

Reference Documents for the General Meeting of Shareholders
Proposal: Election of Seven (7) Directors (Excluding Directors Who Are Audit and Supervisory Committee
Members)
The terms of office of all the current seven (7) Directors (excluding Directors who are Audit and Supervisory
Committee members; the same shall apply hereinafter in this proposal) will expire at the conclusion of this Annual
General Meeting of Shareholders.
In that regard, the Company proposes to elect seven (7) Directors.
As for this proposal, the Audit and Supervisory Committee of the Company has agreed that all the candidates are
qualified to serve as Directors.
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

3

Number of theCompany’s
Shares
Owned

Joined Mori Building Co., Ltd.
Established Deca Legs Ltd. (currently the Company) andassumed the position as President
Jun. 2016
Outside Director, UT Group Co., Ltd.
Noboru Hachimine
Mar. 2017
Director, SoldOut, Inc.
4,525,200(June 22, 1967)
Mar. 2020
Chairperson, the Company (current position)
Apr. 2020
President and Representative Director, Digital Shift, Inc.
Mar. 2021
Chairperson and Representative Director, Digital Shift, Inc.
Mar. 2022
Chairperson and Director, Digital Shift, Inc. (current position)[Reasons for nomination as candidate for Director]
Mr. Noboru Hachimine has long been demonstrating excellent leadership and driving 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 sustainable Group-wide growth and to improve corporate value over the medium to long term.
Apr. 1991
Joined Mori Building Co., Ltd.
Oct. 1996
Joined OPT, Inc. (currently the Company)
Mar. 1999
Director, OPT, Inc.
Atsushi Nouchi(December 21,
1,285,800
Feb. 2015
CEO, OPT Ventures, Inc. (currently Bonds Investment Group,
1967)Inc.) (current position)
Mar. 2017
Vice President and Group COO, the Company
Mar. 2020
President and Group CEO, the Company (current position)[Reasons for nomination as candidate for Director]
Mr. Atsushi Nouchi is well-versed in all aspects of the Group’s operations and has been driving growth in the Group’s
corporate value through strong leadership, decisiveness and executive capabilities. He has been nominated because heis well-qualified to continue to build an operational foundation for the realization of sustainable Group-wide growth
and to improve corporate value over the medium to long term.
Sep. 2005
Joined OPT, Inc. (currently the Company)
Jan. 2008
General Manager of Sales Department, OPT, Inc.
Apr. 2013
Executive Officer, OPT, Inc.
Apr. 2015
President, Representative Director and CEO, OPT, Inc.
Daisuke Kanazawa
Apr. 2017
Senior Executive Officer, the Company(September 4,30,900
Apr. 2019
Group Executive Officer, the Company
1980)
Apr. 2020
Director, OptDigital, Inc. (currently Re:teigi, Inc.) (current
position)
Oct. 2020
Director, RePharmacy, Inc. (current position)
Mar. 2021
Director and Group COO, the Company (current position)[Reasons for nomination as candidate for Director]
Mr. Daisuke Kanazawa has been engaged in marketing throughout his career since he joined OPT, Inc. in 2005 and has
long been leading the execution of operations in the Group’s core business domains through strong leadership,decisiveness and executive capabilities by serving in such positions as Representative Director at OPT, Inc. and Group
Executive Officer of the Company. He has been nominated because he is well-qualified for the Group to continue toaim for corporate value of JPY 1 trillion.

- 44 -

Candidate
No.

Name
(Date of birth)

Career Summary and Position in the Company(Significant concurrent positions)Apr. 1988
Apr. 1997
Apr. 2001

4

5

Number of theCompany’s
Shares
Owned

Joined Recruit Co., Ltd. (currently Recruit Holdings Co., Ltd.)
Editor-in-Chief, “Tech Being”
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
Tomoyuki
Jobs Co., Ltd.)
Mizutani
10,000
Apr. 2007
Director and Corporate Executive Officer (responsible for HR,(August 16, 1964)
administration, corporate communication) of Recruit Holdings
Co., Ltd.
Apr. 2011
President, Recruit Agent Co., Ltd.
Oct. 2012
First President, Recruit Career Co., Ltd.
Apr. 2015
Advisor, Recruit Holdings Co., Ltd.
Apr. 2016
Advisor, Japan Executive Search and Recruitment Association(current position)
Mar. 2017
External Director, the Company (current position)[Reasons for nomination as candidate for Director and outline of expected role]
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 Career Co.,
Ltd. Outside of the Recruit Group, he has been active in a wide range of activities with HR and societal-contribution
themes, including cultivation of social entrepreneurs. In addition to such extensive experience, he possesses broad
insight. He has been nominated because he is expected to offer opinions and advice to ensure appropriate, soundmanagement decision-making from an independent and objective standpoint.
Apr. 1995
Joined The Fuji Bank, Limited (currently Mizuho Bank, Ltd.)May 1999
Joined NTT DATA INSTITUTE OF MANAGEMENTCONSULTING, Inc.
May 2005
Joined Mizuho Securities Co., Ltd.
Feb. 2006
Full-time Statutory Auditor, START TODAY CO., LTD.
(currently ZOZO, Inc.)
Koji Yanagisawa Jun. 2008
Director and General Manager of Strategic Planning and0(May 19, 1971)
Business Administration Division, START TODAY CO.,LTD.
Apr. 2009
Director and CFO, START TODAY CO., LTD.
Dec. 2015
External Director, COLOPL, Inc. (current position)
Apr. 2017
Director, Executive Vice President & CFO, START TODAYCO., LTD. (current position)
Mar. 2020
External Director, the Company (current position)[Reasons for nomination as candidate for Director and outline of expected role]
With his experience as CFO and others at a growing company, Mr. Koji Yanagisawa possesses broad insight in overallbusiness administration centered on accounting, finance, IR, legal affairs, and corporate governance. He has been
nominated because he is expected to offer opinions and advice to ensure appropriate, sound management decisionmaking from an independent and objective standpoint.

- 45 -

Candidate
No.

Name
(Date of birth)

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

Number of theCompany’s
SharesOwned

Aug. 2005
Jan. 2008

6

7

Joined Macromill, Inc.
Executive Officer (in charge of Finance and Accounting
Headquarters), Macromill, Inc.
Jun. 2008
Joined J-Magic K.K.
Dec. 2008
Director, CFO, General Manager of Administration
Management Division, J-Magic K.K.
Dec. 2009
Joined mixi, Inc.
Yasuhiro Ogino
Nov. 2011
Executive General Manager of the Administrative(September 29,
0
Headquarter, mixi, Inc.
1973)
Feb. 2012
Executive Officer, mixi, Inc.
Jun. 2012
Director, mixi, Inc.
May 2017
Representative Director, SMART HEALTH Inc.
Apr. 2018
Executive Officer, mixi, Inc.
Mar. 2020
External Director, the Company (current position)
Apr. 2020
Director and CFO, OCT Inc. (currently ANDPAD Inc.)(current position)[Reasons for nomination as candidate for Director and outline of expected role]
With his experience as CFO and others at growing companies, Mr. Yasuhiro Ogino possesses abundant insight inoverall business administration centered on business development and M&A. He has been nominated because he isexpected to offer opinions and advice to ensure appropriate, sound management decision-making from an independentand objective standpoint.
Oct. 2002
Joined Oracle Corporation Japan
Dec. 2010
Co-founder & COO, Quipper Limited
Mariko Tokioka
Oct. 2013
Founder & CEO, East Meet East, Inc. (current position)
0(July 29, 1979)
Jun. 2019
External Director, Asteria Corporation (current position)
Mar. 2022
External Director, the Company (current position)[Reasons for nomination as candidate for Director and outline of expected role]
Ms. Mariko Tokioka is the founder and CEO of an IT company based in the U.S. and has a wealth of experience and awide range of insight, including entrepreneurial experience in the SaaS field, global business management, anddiversity management. She has been nominated because she is expected to offer opinions and advice to ensure
appropriate, sound management decision-making from an independent and objective standpoint.

(Notes) 1. None of the candidates has any special interests in the Company or vice versa.
2. Messrs. Tomoyuki Mizutani, Koji Yanagisawa, and Yasuhiro Ogino, and Ms. Mariko Tokioka are External Director
candidates.
3. Messrs. Tomoyuki Mizutani, Koji Yanagisawa, and Yasuhiro Ogino, and Ms. Mariko Tokioka are currently External
Directors of the Company; Mr. Tomoyuki Mizutani will have served for six years as of the conclusion of the 29th Annual
General Meeting of Shareholders, Messrs. Koji Yanagisawa and Yasuhiro Ogino for three years, and Ms. Mariko Tokioka
for one year.
4. If Messrs. Tomoyuki Mizutani, Koji Yanagisawa, and Yasuhiro Ogino, and Ms. Mariko Tokioka are reappointed, theCompany plans to renew each of the existing agreements with them pursuant to the provisions of Article 427, paragraph 1of the Companies Act and Article 32, paragraph 2 of the Company’s Articles of Incorporation. The agreements limit their
liability for damages under Article 423, paragraph 1 of the Companies Act to the minimum liability stipulated in Article
425, paragraph 1 of the same act.
5. The Company has concluded Directors and Officers liability insurance contracts as provided for in Article 430-3,
paragraph 1 of the Companies Act with an insurance company. The insured under such insurance contracts are Directors
and managerial employees of the Company, and Directors, Auditors, and managerial employees of the Company’s
subsidiaries. The insurance contracts cover losses that may arise from an insured’s assumption of liability incurred in thecourse of the performance of duties, or receipt of claims pertaining to the pursuit of such liability. However, in order toensure that the appropriateness of the insured’s performance of duties is not compromised, coverage is not provided incases of a willful breach of trust, criminal or fraudulent acts, or willful violation of laws and regulations by the insured. In
the event that each candidate’s election as a Director is approved, he or she shall be the insured under the said insurance
contract. The insurance contract is scheduled to be renewed with the same terms and conditions at the next renewal.
6. Messrs. Tomoyuki Mizutani, Koji Yanagisawa, and Yasuhiro Ogino, and Ms. Mariko Tokioka meet the independent
director requirements of the Tokyo Stock Exchange, Inc. If reappointed, they will continue to serve as independent
directors.
7. The number of the Company’s shares owned by Mr. Noboru Hachimine includes 4,520,200 shares owned by HIBC Co.,
Ltd., an asset management company wholly owned by Mr. Hachimine.
8. The number of the Company’s shares owned by Mr. Atsushi Nouchi includes 400,800 shares owned by Time and Space,Ltd., an asset management company wholly owned by Mr. Nouchi.

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