Annual Securities Report(Report based on the provision of Article 24, paragraph (1) of
the Financial Instruments and Exchange Act)
Fiscal year
(Reporting Period 58)

From February 1, 2019
To January 31, 2020

Artner Co., Ltd.
5-2, Nishidaimotsucho, Amagasaki, Hyogo(E05717)

Contents
Page

Cover
Part I Company Information ......................................................................................................... 1
I. Overview of the Company ..................................................................................................... 1
1 Key Financial Data ............................................................................................................1
2 History...............................................................................................................................2
3 Business Fields .................................................................................................................. 3
4 Information about the Affiliates ......................................................................................... 5
5 Employees ......................................................................................................................... 5
II. Business Conditions ............................................................................................................. 6
1 Management Policy, Business Environment, and Issues to be Addressed ...........................6
2 Business and Other Risks ................................................................................................... 7
3 Management Analysis of Financial Status, Business Performance and Cash Flows ............94 Important Business Contracts ........................................................................................... 13
5 R&D Activities ................................................................................................................ 13
III. Facilities and Equipment................................................................................................... 14
1 Overview of Capital Investments and Others.................................................................... 14
2 Major Facilities ................................................................................................................ 14
3 Plans for Installation, Retirement, etc. of Facilities........................................................... 14
IV. State of the Reporting Company ....................................................................................... 15
1 The Company’s Shares .................................................................................................... 15
2 Acquisition of Treasury Shares ........................................................................................ 17
3 Dividend Policy ............................................................................................................... 17
4 Corporate Governance ..................................................................................................... 18
V. Financial Information......................................................................................................... 29
1 Non-consolidated Financial Statements, etc. .................................................................... 30
VI. Overview of Shareholder Services at the Reporting Company .......................................... 48
VII. Reference Information about the Reporting Company ..................................................... 49
1 Information about the Parent Company, etc. of the Reporting Company .......................... 49
2 Other Reference Information............................................................................................ 49
Part II Information about the Reporting Company’s Guarantor, etc............................................. 50[Auditor’s Report][Internal Control Report]

[Cover][Reported Document]

Annual Securities Report[Clause Serving as Basis]

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

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

April 23, 2020

[Fiscal Year]

Reporting Period 58 (FY2020) (February 1, 2019 to January 31, 2020)[Company Name]

Artner Co., Ltd.

[Name and Title of Representative]

SEKIGUCHI Sozo, President and CEO[Address of Head Office]5-2, Nishidaimotsucho, Amagasaki, Hyogo(This address is the location of the registered head office. The company’s businessis conducted in the nearest contact location shown below.)[Telephone No.]

06(6445)7551[Name of Administrative Contact]

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

Sumitomo Nakanoshima Building 2F, Nakanoshima 3-2-18, Kita-ku, Osaka City
06(6445)7551[Telephone No.]
[Name of Administrative Contact][Location for Public Inspection]

HARIGAE Tomonori, Director and Head of the Management DivisionTokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

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

FY2016FY2017FY2018FY2019FY2020January 2016

January 2017

January 2018

January 2019

January 2020

Net sales(thousandsof yen)4,761,224

5,153,319

5,765,117

6,331,692

7,002,175

Ordinary profit(thousandsof yen)432,557

564,242

690,426

794,098

893,656

Profit(thousandsof yen)276,492

363,555

480,977

540,973

613,377

Share of profit of entities
accounted for using equity
method(thousandsof yen)

－

－

－

－

－

Capital(thousandsof yen)238,284

238,284

238,284

238,284

238,284

Total number of shares issued(shares)

2,656,980

2,656,980

5,313,960

10,627,920

10,627,920

Net assets(thousandsof yen)1,357,786

1,616,193

1,963,726

2,333,306

2,728,380

Total assets(thousandsof yen)2,102,552

2,289,912

2,763,619

3,264,188

3,801,139

255.56152.10184.81

219.59256.77

35.00

45.00

30.00

18.00

20.50

15.00

20.00

13.00

7.50

10.00

Net assets per share(yen)

Dividend amount per share(Interim dividend per shareincluded therein)(yen)

Earnings per share

(yen)

52.04

34.21

45.26

50.91

57.73

Diluted earnings per share

(yen)

－

－

－

－

－

Equity ratio

(%)

64.6

70.6

71.1

71.5

71.8

Return on equity

(%)

22.0

24.4

26.9

25.2

24.2

Price Earnings Ratio(times)

11.4

12.4

23.8

18.1

14.3

Payout ratio

(%)

33.6

32.9

33.1

35.4

35.5

Net cash provided by (used in)operating activities
Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities
Cash and cash equivalents at
end of period(thousandsof yen)307,717

192,324

471,209612,537

591,153(thousandsof yen)(3,110)(15,717)(25,833)(75,542)(42,723)(thousandsof yen)(79,359)(105,677)(134,729)(169,438)(215,920)(thousandsof yen)1,301,799

1,372,728

1,683,375

2,050,932

2,383,441

Number of employees(people)

680

736

801

881

1,002

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

(%)

173.3

252.0

257.7

225.5

207.7

(%)

103.2

112.0

123.3

107.5

118.5

Highest stock price

(yen)

1,648

1,998
[879]

2,344

2,370
[1,367]1,075

Lowest stock price

(yen)

690

839
[833]

791

1,706
[560]

665

-1-

Notes: 1. Since we do not create consolidated financial statements, key financial data pertaining to the consolidated fiscal year are
not included.
2. Net sales do not include consumption tax.
3. Shares of profit of entities accounted for using equity method are not shown because we do not have an affiliate.
4. Diluted earnings per share are not shown because we have no dilutive shares.
5. On February 1, 2017, we carried out a 2-for-1 stock split (common shares). The net assets per share and the earnings per
share have been calculated on the assumption that this stock split was carried out at the beginning of FY2016. In addition,
on April 1, 2018, we carried out a 2-for-1 stock split (common shares). The net assets per share and the earnings per share
have been calculated on the assumption that this stock split was carried out at the beginning of FY2017.The dividend
amounts per share shown here are the actual dividends paid out prior to the stock splits. The total shareholder return has
been calculated on the assumption that these stock splits were carried out at the beginning of FY2016.
6. The highest and lowest stock prices refer to those that were quoted in the Second Section of the Tokyo Stock Exchange onor after October 26, 2017, and those in the First Section of the Tokyo Stock Exchange on or after July 3, 2018. Prices posted
any time earlier were in the Tokyo Stock Exchange JASDAQ (Standard). The stock prices shown for FY2017 and FY2019
were the highest and lowest prices before the stock splits. The highest and lowest stock prices after the stock splits are shownin the parentheses.
7. The dividend per share for FY2018 includes the commemorative dividend of JPY 2 for the Company's 55th anniversary of
establishment and the 10th anniversary of listing on JASDAQ (now Prime Market).
8. The dividend per share for FY2019 includes the commemorative dividend of JPY 2.50 for the stock moving up to the First
Section of the Tokyo Stock Exchange.

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

Event

September 1962

Sekiguchi Kogyo Co., Ltd. and the family of current President and CEO SEKIGUCHI Sozo invest 300,000 yen
as capital to establish Osaka Technology Center Co., Ltd. to start the main business of design creation anddesign drawing services.

June 1964

Headquarters (current Osaka headquarters) move to Fukushima Ward, Osaka City.

March 1980

Headquarters move to Kita Ward, Osaka City.

November 1986

The Company launches its specified worker dispatching business as the Worker Dispatching Business Act was
enforced.

April 1998

The Company changes its trade name from Osaka Technology Center Co., Ltd. to Artner Co., Ltd.

December 2003

The Company obtains its license for general worker dispatching business.

February 2004

The Company obtains its license for the paid employment agency business.
The Company establishes two headquarters in Osaka and Tokyo. The Tokyo headquarters opens in Minato
Ward, Tokyo.

October 2007

Company stock listed on JASDAQ.

February 2010

The Tokyo headquarters move to Kohoku Ward, Yokohama City.

April 2010

With the merger between the JASDAQ Securities Exchange and the Osaka Securities Exchange (OSE), theCompany lists its stock on the OSE JASDAQ.
The learning centers open in Suita, Osaka, for centralized management of education and training for newly
graduated engineers.

February 2011

The Company goes through reorganization to open business offices (in Utsunomiya, Yokohama, Nagoya, andOsaka) under the Engineer Business Division.
The Human Resources Business Department and the Hyper Artner Business Department are established underthe Human Resources Business Division.

February 2012

The Hyper Artner Business Department is renamed the Hyper Artner Business Division.

February 2013

The Engineer Agency Business Division is established.

July 2013

With the integration of the Tokyo Stock Exchange (TSE) and the OSE, the Company lists its stock on the TSE
JASDAQ (Standard).

February 2016

The Company integrates its business divisions to reorganize them into the Engineer Business Division and-2-Month and Year

Event
Human Resources Business Division.
The Engineer Business Division and the Hyper Artner Business Department are established under the Engineer
Business Division.

October 2017
February 2018

July 2018
January 2019
March 2020

The Technology Development Department and Engineer Agency Business Department are established under the
Human Resources Business Division.
Stock listing moved to the Second Section of the Tokyo Stock Exchange.
The Engineer Business Division and the Hyper Artner Business Department under the Engineer Business
Division are disbanded.
The High Value Group, the Wide Value Group, the Product Value Group, and the Contracting Group are
established under the Engineer Business Division.
Stock listing moved up to the First Section of the Tokyo Stock Exchange.
The recruitment, education, and sales departments are integrated into learning centers (current learning centersin West Japan) and relocated to a different part of Suita.
The learning centers in East Japan open in Kohoku Ward, Yokohama City.

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

Client company(client)
Staffing agreement

Employment relationshipSupervisory relationship
Designengineer-3-

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

Client company (client)
Service agreement

Employment relationshipSupervisory relationship

Design engineer-4-

[Systematic diagram of Artner’s business]
The figure below graphically shows how the business stated above is structured.

Client companies

Engineer dispatching

Contracting

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

4 Information about the Affiliates
Not applicable.

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

1,002

Average years of service(years)30.1

6.3

As of January 31, 2020
Average annual wage(yen)
4,279,812

Notes: 1. The number of employees is that of staff members working at Artner. It does not include registered employees.
2. The average annual wage includes bonuses and nonstandard wages.
3. Since we have only one reportable segment, figures sorted by segment have been omitted.
4. The increase of 121 employees compared to the end of the previous fiscal year is primarily as a result of new hires due tobusiness expansion.
(2) Labor union
Artner’s labor union is named Artner Workers’ Union, which has 1,085 members as of January 31, 2020. The superior body it
belongs to is UA ZENSEN.
We have stable labor-management relations.

-5-II. Business Conditions
1 Management Policy, Business Environment, and Issues to be Addressed
The statements about the future in the text are judgments we made at the end of the fiscal year ended January 31, 2023.
(1) Management policy
Based on our management philosophy of being an Engineer Support Company, we are committed to serving as a technical partnerthat contributes to the sustainable growth of our clients. This basic stance, developed over many years, has built up a lot of trust
and achievements, establishing our firm position as a pioneer in the industry.
We will continue to expand our corporate value by promoting management that will win the support and approval of our clients,
shareholders, employees, and all other members of society.
(2) Corporate planning and strategy(Guiding principle for the Medium-Term Business Plan)“Build a foundation for sustainable and next-generation growth”“Make Value! For the Next 2020-2022”(Priority measures for the Medium-Term Business Plan)(i) Promote strategies by segment• Develop strategies for each segment (recruitment - education - assignment - system).
• Establish approaches to markets by segment.
• Explore and seek new specialist fields of technology.
(ii) Promote diversity and inclusion in talent management• Utilize workers of retirement age, women, and foreign workers (overseas students) as personnel.
• Utilize and organize partner companies (set up a contracting system).
(3) Objective indicators for assessing the achievement status of management goals, etc.
In the engineer dispatching business, our main business, the following indicators are used. Net sales: the amount calculated by the
number of operative personnel (number of engineers × utilization rate) × unit price of engineers × total work person-hours; costof sales: labor costs for engineers assigned to our clients; and selling, general and administrative expenses: labor costs for engineers
undergoing in-house training (standby status) and labor costs for other staffers.
We consider the engineer count, utilization rate, and unit price of engineers as particularly important management indicators, andwill focus on efforts to improve them further.
(4) Business environment
Major manufacturers—our main clients—have seen steady rises in their R&D costs and design and development costs, which
generated great demand for engineers for various projects.In the recruitment market, however, competition with manufacturers
and other companies in our industry has been intensifying.
We are working to secure talented students who major in science or engineering as well as career engineers as our management
priority.
(5) Business and financial issues that should be addressed
Our main business, which is the engineer dispatching business, consists of a cycle of recruitment, training, sales, and support
activities. We must address the following issues for future business expansion..
(Recruitment activities)
We view securing and increasing the number of talented engineers as an essential requirement for the expansion of our business.
Therefore, we will strive to secure high-quality talents that meet the market needs by implementing measures such as improving
our recruitment criteria, securing recruitment opportunities, hiring diverse and inclusive talents, optimizing the composition ofengineers by field and business domain, and optimizing the composition of new graduate and career hires.
With regard to the recruitment of new graduates, we will regularly provide detailed follow-ups to universities and prospective
employees, and hold get-togethers for prospective employees in an effort to increase the percentage of prospective employees whojoin the Company.
(Training activities)
We will improve the skills of our engineers by providing general, external, basic, customized, and/or career training based on our
long-accumulated experience.
In addition, we will strive to improve the technical and human skills of our staff by holding skill development seminars for all
employees and human development training for managers.

-6-

(Sales activities)
We will secure and expand our business partners by strengthening our new business development and sales capabilities and making
proposals for the selection of engineers, team dispatching, and organization of contracting services in response to client needs.
In addition, we will negotiate with client companies to assign and place appropriate engineers for improved business terms andconditions, such as an increase in the unit price of engineers.
(Support activities)
We will strive to improve the retention rate by providing guidance and advice according to the engineers’ wishes and actual
conditions through regular interviews with them, and by providing dedicated counselors for improved mental health and motivation.

2. Business and Other Risks
Of the matters regarding business conditions and financial information included in the Annual Securities Report, those that may
have a material impact on investors are stated below.
Please note that the statements about the future in the text are judgments we made at the end of the fiscal year ended January 31,
2020.
(Performance trends in the manufacturing industry)
Our major clients belong to the manufacturing industry, and we dispatch engineers primarily to their design and development
departments. If these major clients were to reduce their capital investments, R&D costs, and the use of external engineers due toeconomic recession and other factors in the countries or regions in which they operate, our financial status and business performance
may be affected.
In addition, if significant changes in the business environment take place for automobile-related manufacturers, which account fora large share of our sales, our financial status and business performance may be affected.
(Competition with other companies in the industry)
If competition with other companies intensifies due to market contraction or new entrants in the engineer staffing industry, where
we operate our business, and this results in a fierce price competition, our financial status and business performance may be affected.
(Effectiveness of education and training)
We strive to improve the skills of our engineers by providing training programs that have been developed based on many years ofexperience. However, if the training does not turn out to be as effective as expected, customer satisfaction does not improve, theunit price of engineers does not increase, and/or if we fail to satisfy the requests from clients and they start to make complaints, ourfinancial status and business performance may be affected.
(Securing suitable clients for our dispatching business)
Although we always strive to secure and expand our clients for our engineer dispatching business, if we are unable to find suitableclients that match our engineers and cannot maintain or improve the unit price of engineers and/or utilization rates, our financial
status and business performance may be affected.
(Regulations on total work person-hours)
The total work person-hours of our engineers is determined based on the business conditions of the client company. If the revisions
to relevant laws and regulations generate a larger pressure against long working hours, which may result in a significant decreasein the total work person-hours of engineers, our financial status and business performance may be affected.
(Securing science and engineering graduates)
We consider science and engineering graduates to be an important managerial resource, but if the population of science andengineering graduates were to decrease due to the declining birth rate and other factors, making it significantly more difficult tohire talented graduates, our financial status and business performance may be affected.
(Securing career engineers)
We consider engineers with work experience to be an important managerial resource. However, if the competition to secure careerhires intensifies due to a shortage of engineers who wish to change jobs as a result of booming design and development activities
in the manufacturing industry, making it significantly more difficult to hire talented career engineers, our financial status andbusiness performance may be affected.
(Information management)
By introducing measures such as acquiring the “PrivacyMark,” we have been committed to properly managing personal information,
confidential information, and all other information obtained in the course of our business operations. However, if such informationis leaked to outside parties for some reason, our social credibility will be damaged, and our financial status and business performance-7-may be affected.
(Laws, regulations, licenses, and permits)
The following laws and regulations apply for each of our business categories:(i) Worker dispatching business
Dispatching of engineers, which is our main business, is carried out under the license from the Minister of Health, Labour andWelfare as described below, based on the Act on Securing the Proper Operation of Worker Dispatching Businesses andProtecting Dispatched Workers (hereinafter referred to as “Worker Dispatching Act”):
License nameSupervisory authority

License number

Licensed date

Expiration date

Worker dispatching
Ministry of Health,派 27-020513
December 1, 2003
November 30, 2021
business
Labour and Welfare
We consider compliance with the Worker Dispatching Act and relevant laws and regulations to be one of our highest priorities,
and strive to maintain a legal compliance system by monitoring compliance with laws and regulations via internal audits and by
regularly confirming compliance with laws and regulations at different meetings. However, in the unlikely event that we violate
such laws and regulations, which would hinder the continuity of our business, our financial status and business performance
may be affected.
In addition, Article 14 of the Worker Dispatching Act stipulates that if a dispatching business operator falls under any of thedisqualification grounds provided in Article 6 of the Worker Dispatching Act (main possible grounds: if the Company issentenced to imprisonment or more, or is sentenced to a fine for violating the Labor Standards Act, the Worker Dispatching Act,
the Employment Security Act or other labor-related laws, or the Health Insurance Act, the Employment Insurance Act or otherlaws, or for committing a crime under the Penal Code, the Immigration Control and Refugee Recognition Act or other laws, andfive years have not passed from the date on which the execution of the sentence is completed or the sentence is no longer
executed; or if the Company becomes an adult guardian or warrantee, or goes bankrupt and has not had its rights restored, etc.)
or violates the Worker Dispatching Act and the Employment Security Act, the business operator shall be ordered to have its
business license canceled or its operations suspended. However, there are no such disqualification grounds applicable to us at
this time. However, in the unlikely event that we violate such laws and regulations and are ordered to have our business license
canceled or our operations suspended, it may become difficult to continue our business, and our financial status and businessperformance may be affected.
The Worker Dispatching Act and other relevant laws and regulations are being revised from time to time by means of adding
modifications in response to changes in the labor environment, social conditions, and other factors.
We take appropriate measures whenever such laws and regulations are revised. However, if any such revisions made are
significantly unfavorable to our business, our financial status and business performance may be affected depending on the detailsof the revised laws and regulations.
(ii) Paid employment agency business
Our paid employment agency business is conducted under the license from the Minister of Health, Labour and Welfare as
described below, based on the Employment Security Act:
License nameSupervisory authority

License number

Licensed date

Expiration date

Paid employment agency
business

Ministry of Health,Labour and Welfare

27-ユ-020355

February 1, 2004

January 31, 2022

Article 32-9 of the Employment Security Act stipulates that if a provider of paid employment placement services (including its
executives in case of a company) falls under any of the disqualification grounds as a paid employment agency business (if theCompany is sentenced to imprisonment or more, or is sentenced to a fine for violating the Labor Standards Act, the Employment
Security Act, the Worker Dispatching Act, or other labor-related laws, or for committing a crime under the Penal Code, theImmigration Control and Refugee Recognition Act or other laws, and five years have not passed from the date on which theexecution of the sentence is completed or the sentence is no longer executed; or if the Company becomes an adult guardian or
warrantee, or goes bankrupt and has not had its rights restored, etc.), or violates the Employment Security Act and the Worker
Dispatching Act, the service provider shall be ordered to have its business license canceled or its operations suspended. However,there are no such disqualification grounds applicable to us at this time. However, in the unlikely event that we violate such laws
and regulations and are ordered to have our business license canceled or our operations suspended, it may become difficult tocontinue our business, and our financial status and business performance may be affected.
In addition, if such laws and regulations are revised in the future and if any such revisions made are significantly unfavorable toour business, our financial status and business performance may be affected.

-8-

(Disasters, accidents, etc.)
We have established a manual to deal with natural disasters, man-made disasters, and other disasters and accidents (hereinafterreferred to as “Disasters, etc.”) in an effort to minimize the damage. However, if any Disasters, etc. that significantly exceed our
prediction take place, our financial status and business performance may be affected.
In addition, in the event that our business activities are hindered as a result of the spread of COVID-19 infections and other factors,
our financial status and business performance may be affected.

3 Management Analysis of Financial Status, Business Performance and Cash Flows(1) Overview of business performance and other conditions
Artner’s financial status, business performance, and cash flows (hereinafter referred to as “financial performance and otherconditions”) for the fiscal year ended January 31, 2023, are summarized as below.
(i) Financial status and business performance
For this fiscal year, the Japanese economy has slowly recovered although there are signs of weakness.
Development of product software accelerated at our main clients, and the demand for software engineers increased more than thatfor hardware engineers. In the advanced development projects in the transportation equipment field mainly for automobiles, there
has been solid demand for engineers that specialize in eco cars, such as electric vehicles and hybrid vehicles, and automotive
driver assistance technologies. In addition, as we actively hired software engineers, we strengthened our efforts to develop new
clients for their placement. As a result, demand for engineers in the information and communications field also grew.
Amid this situation, the number of engineers increased compared to the same period of the previous year, as 156 newly graduatedengineers and 32 career engineers joined us this fiscal year.
The engineer dispatching business saw the utilization rate remain high, and newly graduated engineers who joined us in April
2019 were placed to their work ahead of the initial schedule, which led to a year-on-year increase in the number of operative
personnel. Moreover, unit price negotiations with client companies based on engineers’ work performance led the unit price ofengineers to surpass the unit price for the same period of the previous year. Total work person-hours saw a downward trend
following work style reforms. The contracting business actively engaged in sales activities. Consequently, the number ofcontracted projects increased.
As part of our upfront investment, we enhanced employee treatment, increased recruitment expenses, hired more staff and newly
graduated engineers, and expanded our education and training facilities. Although these measures led to increases in cost of sales
and SG&A expenses, they were absorbed by an increase in net sales. As a result, profit increased year on year.
As a result of all this, our financial status and business performance for this fiscal year are as stated below.
a. Financial status
The total assets at the end of this fiscal year increased JPY 536,950 thousand compared to the end of the previous fiscal year
to JPY 3,801,139 thousand.
The total liabilities at the end of this fiscal year increased JPY 141,877 thousand compared to the end of the previous fiscal
year to JPY 1,072,759 thousand.
The total net assets at the end of this fiscal year increased JPY 395,073 thousand compared to the end of the previous fiscal
year to JPY 2,728,380 thousand.
b. Business performance
Net sales for this fiscal year totaled JPY 7,002,175 thousand (up 10.6% year on year), operating profit JPY 886,007 thousand(up 12.8% year on year), ordinary profit JPY 893,656 thousand (up 12.5% year on year), and profit JPY 613,377 thousand (up13.4% year on year).
(ii) Cash flows
Cash and cash equivalents (hereinafter referred to as “cash”) at the end of this fiscal year increased JPY 332,508 thousandcompared to the end of the previous fiscal year to JPY 2,383,441 thousand.
Cash flows for the fiscal year and factors therein are as stated below.
(Net cash provided by (used in) operating activities)
The cash gained as a result of operating activities totaled JPY 591,153 thousand (down JPY 21,384 thousand year on year). Thisis mostly because we recorded JPY 893,656 thousand in profit before income taxes, whereas we also recorded JPY 304,355
thousand in income taxes paid.
(Net cash provided by (used in) investing activities)-9-

The cash used as a result of investing activities totaled JPY 42,723 thousand (down JPY 32,818 thousand year on year). This ismostly because we recorded JPY 15,507 thousand in purchase of property, plant and equipment, JPY 13,958 thousand inpurchase of intangible assets, and JPY 13,401 thousand in payments of leasehold and guarantee deposits.
(Net cash provided by (used in) financing activities)
The cash used as a result of financing activities totaled JPY 215,920 thousand (up JPY 46,482 thousand year on year). This isbecause we recorded JPY 215,920 thousand in dividends paid.

- 10 -

(iii) Records of production, orders received, and sales
a. Record of production
A record of production has been omitted because the mainstay of our business is the engineer dispatching business formachinery design and development, electronics design and development, and software development, among others. The
business, based on the nature of services provided, is not fit to be presented for a production record.
b. Record of orders received
A record of orders received has been omitted because orders received are almost equal to sales in terms of monetary amounts
due to how our business works.
c. Record of sales
Sales results by business category for this fiscal year are as shown below.
FY2020(Fiscal year ended January 31, 2020)

Business Category

Amount (thousands of yen)
Engineer Dispatching BusinessYoY (%)

6,753,819

108.7

Contracting Business

228,158

228.8

Other businesses

20,19795.2

7,002,175

110.6

Total

Notes: 1. Since we have only one reportable segment, the figures are sorted by business category.
2. The table below shows sales results sorted by major client and percentages they make up of overall sales for the last two
fiscal years.

ClientHonda R&D Co., Ltd.

FY2019(Fiscal year ended January 31, 2019)

FY2020(Fiscal year ended January 31, 2020)

Amount(thousands of yen)

Percentage (%)

Amount(thousands of yen)

Percentage (%)

1,094,249

17.3

1,340,047

19.1

3. The amounts presented above do not include consumption tax.
(2) Analysis and discussion of the state of business performance and other conditions from the perspective of the management
The management of Artner understands, analyzes, and discusses the Company’s business performance and other conditions as
stated below.
Please note that the statements about the future in the text are judgments made at the end of the fiscal year ended January 31, 2020.
(i) Significant accounting estimates and assumptions used in the estimates
Artner prepares its financial statements based on accounting standards that are generally accepted as fair and appropriate inJapan. The significant accounting policies we have used to prepare the financial statements are as stated in “V. Financial
Information 1. Financial Statements and Other Documents (1) Financial statements.” The financial statements and otherdocuments include projections, which is based on our decision as of the end of the fiscal year ended January 31, 2020. We madethese projections based on logical judgments that consider results in the past. However, since estimates are by their nature
uncertain, results may turn out to differ from the projections.
(ii) Understanding, analysis, and discussion of the state of business performance and other conditions for the fiscal year ended
January 31, 2020a. Business performance(Net sales)
The engineer dispatching business saw the number of engineers and the unit price of engineers surpass those in the same periodof the previous year and the utilization rate remain at the same level as the previous year. As a result, net sales for this fiscal year
increased 10.6% year on year to JPY 7,002,175 thousand.
(Operating profit, ordinary profit, and profit)
While cost of sales, including labor cost of engineers, and SG&A expenses, including recruitment expenses, increased year on
year, the increase in net sales more than offset them. As a result, operating profit for this fiscal year increased 12.8% year on- 11 -

year to JPY 886,007 thousand, ordinary profit increased 12.5% year on year to JPY 893,656 thousand, and profit increased
13.4% year on year to JPY 613,377 thousand.
b. Financial status(Assets)
The total assets at the end of this fiscal year increased JPY 536,950 thousand compared to the end of the previous fiscal year to
JPY 3,801,139 thousand. This is mostly because we recorded an increase of JPY 332,508 thousand in cash and deposits and anincrease of JPY 115,227 thousand in trade receivables.
(Liabilities)
Liabilities at the end of this fiscal year increased JPY 141,877 thousand compared to the end of the previous fiscal year to JPY
1,072,759 thousand. This is mostly because we recorded an increase of JPY 80,588 thousand in provision for retirement benefits
and an increase of JPY 66,910 thousand in accrued consumption taxes.
(Net assets)
Net assets at the end of this fiscal year increased JPY 395,073 thousand yen compared to the end of the previous fiscal year to
JPY 2,728,380 thousand. This is mostly because we recorded an increase of JPY 395,552 thousand in retained earnings.

- 12 -

c. Sources of capital and liquidity of funds
The cash we have demand for is primarily to cover personnel expenses for engineers we dispatch to client companies. As arule, we allocate our own funds to working capital, funds for equipment, and other required funds. Yet we also turn toborrowings from a bank to raise capital if the situation demands.
The state of cash flows is as stated in “II. Business Conditions 3 Management Analysis of Financial Status, Business
Performance and Cash Flows (1) Summary of business performance and other conditions (ii) Cash flows.”
The table below shows indicators related to our cash flows.
FY2016FY2017FY2018FY2019FY2020Equity ratio (%)

64.6

70.6

71.1

71.5

71.8

Market value-based equity ratio (%)

149.7

196.5

413.9

300.1

230.9

Ratio of cash flows to interest-bearing
liabilities (year)

－

－

－

－

－

7,413.8

5,777.8

6,131.6

16,772.7－

Interest coverage ratio (times)

Equity ratio: Equity / Total assets
Market value-based equity ratio: Market capitalization / Total assets
Ratio of cash flows to interest-bearing liabilities: Interest-bearing liabilities / Operating cash flow Interest coverage ratio: Operating
cash flow / Interest payments
Notes: 1. The calculation of market capitalization is based on the number of shares issued, excluding treasury shares.
2. The ratios of cash flows to interest-bearing liabilities are not shown because there are no year-end interest-bearing liabilities.
3. The interest coverage ratio for the fiscal year ended January 2020 is not shown because there were no interest payments.
d. Factors that may have a material impact on business performance
In regard to factors that may have a material impact on business performance, we are aware that our business environment,
business fields, how we operate our businesses, and a variety of risk factors may have a material impact on our businessperformance, as stated in “II. Business Conditions 2. Business and Other Risks.”
Therefore, while keeping an eye on market trends at all times, we plan to strengthen our internal management structure, hire
and retain talented employees, and offer services designed to match market needs, thereby diversifying and reducing risks that
may have a material impact on our business performance and taking appropriate actions.
e. Objective indicators for assessing management policies, corporate planning and strategies, and the achievement status ofmanagement goals
We consider the engineer count, utilization rate, and unit price of engineers as particularly important management indicators,
and focus on efforts to improve them further. With newly graduated and career engineers who joined us this fiscal year, theterm-end engineer count totaled 901 (up 116 year on year). As the demand for engineers from our clients grew, the utilization
rate remained high at 97.4% (down 0.2 percentage points year on year). Attributable to unit price negotiations with our clients
based on engineers’ work performance, the unit price of engineers stood at JPY 4,183 (up 0.7% year on year).

4 Important Business Contracts
Not applicable.

5 R&D Activities
Not applicable.

- 13 -

III. Facilities and Equipment
1 Overview of Capital Investments and Others
No important capital investments were made during the fiscal year.
No important facilities/equipment were/was retired or sold during the fiscal year, either.

2 Major Facilities
The table below shows our major facilities.
Since we have only one reportable segment, figures sorted by segment have been omitted.
As of January 31, 2020
Carrying amount
Description

Office (Location)

Building(thousands ofyen)

Tools, furnitureand fixtures(thousands ofyen)

Software(thousands ofyen)

Number of
employees
Other
Total (thousands(thousands of(people)of yen)yen)

Osaka headquarters (Kita Ward,
Osaka City)

Headquarters

2,712

6,161

41,12529,51979,51828

Yokohama Office of Tokyo
headquarters (Kohoku Ward,
Yokohama City)

Headquarters, businessoffice and technicalcenter

3,093

2,185

6,615

24,16036,054

30

241

401

－

5,895

6,538

8

Nagoya office (Nakamura Ward, Business office andNagoya City)
technical center
Utsunomiya office (Utsunomiya
City, Tochigi Prefecture)

Business office andtechnical center

4,999

1,128

－

5,315

11,444

15

Learning centers (Suita City,
Osaka Prefecture)

Training facilities andbusiness office

10,097

4,750

9,746

17,33741,931

39

Notes: 1. The amounts presented above do not include consumption tax.
2. The above offices are leased facilities. What these buildings contain are mostly furnishings.
3. The numbers of employees are those of staff members working at these offices. They do not include engineers assigned toclient companies.
4. Other than the above, we own land containing unutilized assets that is worth JPY 59,159 thousand (733 m2 in Kamigori,
Ako District, Hyogo Prefecture; 1,631 m2 in Sasayama City, Hyogo Prefecture; 550 m2 in Kita Ward, Kobe City; 155.47
m2 in Amagasaki City, Hyogo Prefecture; and 168.23 m2 in Amagasaki City, Hyogo Prefecture).
5. “Others” in the carrying amount are leasehold and guarantee deposits.
6. Other than the above, major facilities leased from others are as shown in the table below.
As of January 31, 2020
Office (Location)

Description

Leased areas (m2)Annual rent (thousands of yen)

Osaka headquarters (Kita Ward, Osaka
City)

Leased building

536.61

27,075

Yokohama Office of Tokyo headquarters(Kohoku Ward, Yokohama City)

Leased building

460.53

14,210

Nagoya office (Nakamura Ward, Nagoya
City)

Leased building

125.98

5,895

Utsunomiya office (Utsunomiya City,
Tochigi Prefecture)

Leased building

196.91

3,276

Learning centers (Suita City, Osaka
Prefecture)

Leased building

795.8824,561

3 Plans for Installation, Retirement, etc. of Facilities(1) Installation of new important facilities
Not applicable.
(2) Retirement of important facilities
Not applicable.

- 14 -

IV. State of the Reporting Company
1 The Company’s Shares(1) Total number of shares(i) Total number of shares
Type

Total number of authorized shares (shares)

Common shares

36,000,000
Total

36,000,000(ii) Total number of shares issued
Type

Number of shares issued year-end(As of January 31, 2020)

Number of shares issued submission date
(As of April 21, 2020)

Financial instruments exchange
where the Company is listed orRegistered/Authorized financial
instruments firms association

Definition

Common shares

10,627,920

10,627,920

First Section of the Tokyo
Stock Exchange

Number of shares
per share unit

Total

10,627,920

10,627,920－－

Note: The Company was listed on the First Section of the Tokyo Stock Exchange before the reorganization of the Tokyo Stock
Exchange sections effective as of April 4, 2020. From this date onward, the Company’s stock shares are traded on the Prime Marketof the Tokyo Stock Exchange.
(2) Stock acquisition rights(i) Stock option plans
Not applicable.
(ii) Rights plans
Not applicable.
(iii) Other stock acquisition rights
Not applicable.
(3) Status of corporate bond certificates, etc. with share options subject to exercise value change
Not applicable.
(4) Total number of shares issued and capital
Change in the
total number of Balance of total Change in capitalshares issued (thousands of yen)Dateshares issued(shares)(shares)

As of February 1, 2017
2,656,980(Notes)
As of April 1, 2018
5,313,960(Notes)Note: A 2-for-1 stock split was carried out.

Balance ofcapitalChange in legal Balance of legal
capital surplus capital surplus(thousands of yen) (thousands of yen) (thousands of yen)

5,313,960－

238,284－

168,323

10,627,920－

238,284－

168,323(5) Details by shareholder
As of January 31, 2020
Shareholder and shares held (number of shares per unit: 100)
Classification

Number of shareholders(people)Number of shares owned(units)Ratio of shares owned (%)

National andlocal
governments

Financial
institutions

Financial
instruments
business
operators

Other
corporations

－

16

21

－

6,107

－

5.75

Foreign corporations, etc.

Individuals
and others

Total

Shares lessthan one shareunit (shares)

Nonindividuals

Individuals

14

27

4

3,308

3,390

－

1,721

48,1471,774

648,494106,249

3,020

1.62

45.31

1.67

0.01

45.64

100.00－Note: Of treasury shares of 2,329, 23 units are included in the figures under “Individuals and others” and 29 shares in those under“Shares less than one share unit.”- 15 -

(6) Major shareholders
As of January 31, 2020
The number of shares
owned as a proportionof the total number ofissued shares (excluding
treasury stock)

Number of shares
owned (shares)

Name / Company name

Address

Sekiguchi Kogyo Co., Ltd.
Artner Employee Stock Ownership
Association
Osaka Small and Medium Business
Investment and Consultation Co., Ltd.

3-20, Nangocho, Nishinomiya City, Hyogo

4,310,000

40.56

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

937,848

8.82

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

480,000

4.51

HARIGAE Tomonori

Tsukuba City, Ibaraki

270,240

2.54

OKUSAKA Kazuya

Kishiwada City, Osaka

254,880

2.39

The Master Trust Bank of Japan, Ltd.
(Trust Account)

2-11-3, Hamamatsucho, Minato-ku Tokyo

194,700

1.83

Japan Trustee Services Bank, Ltd.
(Trust Account)

1-8-11, Harumi, Chuo-ku, Tokyo

124,000

1.16

EGAMI Yoji

Ichikawa City, Chiba

101,552

0.95

Artner Officer Stocks Society

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

100,200

0.94

88,5000.83

6,861,920

64.57

Japan Trustee Services Bank, Ltd. (Trust 1-8-11, Harumi, Chuo-ku, Tokyo
Account 5)
Total

－

Note: The number of shares owned by The Master Trust Bank of Japan, Ltd. (Trust Account), Japan Trustee Services Bank, Ltd.
(Trust Account), and Japan Trustee Service s Bank, Ltd. (Trust Account 5) is all for trust services.
(7) Voting rights(i) Shares issued
As of January 31, 2020
Classification

Number of shares (shares)

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

Number of voting rights

Definition

－

－

－

－

－

－

－

－

－

2,300

－

－

Common shares: 10,622,600

106,226

－

3,020

－

－

10,627,920－－

Common shares:
Common shares :Total number of shares issued

Voting rights held by all shareholders－－
106,226
Note: The figure for “Shares less than one share unit” includes 29 treasury shares less than one share unit owned by Artner.
(ii) Treasury shares
As of January 31, 2020
Shareholder name /Company name
Artner Co., Ltd.
Total

Address of shareholder
5-2, Nishidaimotsucho,
Amagasaki, Hyogo－

Number of shares
Number of shares Total shares
held in theheld in others’ owned (shares)
shareholder’sname (shares)
name (shares)

Ratio of shares
owned as aproportion of thetotal number ofissued shares (%)

2,300

－

2,300

0.02

2,300

－

2,300

0.02

- 16 -

2 Acquisition of Treasury Shares
Type of shares: Common shares(1) Acquisition of shares based on a resolution at the General Meeting of Shareholders: Not applicable.
(2) Acquisition of shares based on a resolution by the Board of Directors: Not applicable.
(3) Acquisition of shares not based on a resolution at the General Meeting of Shareholders or by the Board of Directors:
Not applicable.
(4) Acquired treasury shares disposed of/held
Classification

Fiscal year ended January 31, 2023
Total value of
Number of sharesshares for(shares)
disposition (yen)Acquisition period
Total value of
Number of sharesshares for(shares)
disposition (yen)Acquired treasury shares placed for subscription

－

－

－

－

Acquired treasury shares retired

－

－

－

－

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

－

－

－

－

Other

－

－

－

－

2,329

－

2,329

－

Number of treasury shares held

Note: The number of treasury shares held during the period does not include that of shares less than one share unit purchased or soldduring the period between April 1, 2020, and the date of submission of this Annual Securities Report.

3 Dividend Policy
In terms of profit distribution, Artner comprehensively considers future business developments, earnings, the management
environment, as well as the strengthening of its management foundations, and positions the supply of stable dividends to its
shareholders as top-priority management tasks.
While taking into account earnings trends and other factors, Artner’s basic policy calls for the biannual distribution of retained
earnings in the form of interim and year-end dividends. The distributions of retained earnings are decided by the generalshareholders meeting in the case of the year-end dividend and by the Board of Directors in the case of the interim dividend. Artner’s
Articles of Incorporation specifies that the Company may pay out dividends of surplus by resolutions of the Board of Directors
pursuant to Article 459, paragraph (1) of the Companies Act.
Shareholders will receive a year-end dividend payment of 10.50 yen per share for this fiscal year. Combined with the interim
dividend of 10 yen a share that was already paid, the dividend for the full year totals 20.50 yen per share. This makes the payout
ratio for this fiscal year 35.5%.
Internal reserves are set aside to address projected future changes in the management environment and invest efficiently in enriching
our pool of human resources, etc.
The table below shows the dividends of surplus for this fiscal year.
Total amount ofDate of resolution
dividends(thousands of yen)
Resolution by the Board of Directors on
106,255
September 9, 2019
Resolution at the Ordinary General Meeting
111,568of Shareholders on April 23, 2020- 17 -

Dividend per share
(yen)
10.00
10.50

4 Corporate Governance(1) Overview of corporate governance(i) Basic views on corporate governance
1. Artner’s No.1 business challenge is steadily improving shareholder value over the long term. So in addition to expanding ourbusiness and ensuring profitability, we want to grow as a “technical partner” together with our client companies in various
industries, as a collective of engineers focused on developing more and more advanced levels of technical expertise. At the sametime, with a constant awareness of what society needs most, and a desire to create a demand for it, we strive for businessefficiency and soundness to help in the sustainable development of the Company.
2. At Artner, we are highly conscious of our social responsibility as a company, so in addition to strictly observing all applicablelaws and regulations, we strive to sustain and develop favorable relationships with shareholders, with our local community, withall of our client companies, and with all employees.
3. We are committed to further strengthening our internal control and risk management efforts through the application of business
management systems (including internal control systems) to enable flexible adaptation to changes in the business environment.
Artner also will promptly disclose relevant information both inside and outside the company and enhance business transparency.
(ii) Overview of Artner’s corporate governance framework and why this framework is used
Artner is a company with an audit and supervisory committee, an organizational design defined by the Companies Act. The
Company has in place the following bodies in the framework.
(Board of Directors)
The Board of Directors, chaired by President and CEO SEKIGUCHI Sozo, is composed of eight members including five directors(SEKIGUCHI Sozo, OKUSAKA Kazuya, HARIGAE Tomonori, EGAMI Yoji, SATO So) (directors who are members of the
Audit and Supervisory Committee are excluded) and three outside directors (MITANI Takaaki, KANAI Hiroki, FUKUMURO
Kozaburo) who are members of the Audit and Supervisory Committee. The Board meets twice a month. At a mid-month business
report board meeting, the members deliberate on the Company’s monthly business performance; and at a regular month-end board
meeting, they deliberate and decide on matters relating to the Company’s management plan, as well as significant matters relating
to day-do-day business operations.
(Audit and Supervisory Committee)
The Audit and Supervisory Committee, chaired by Standing Audit and Supervisory Committee member MITANI Takaaki, is
composed of three Audit and Supervisory Committee members who are outside directors. The committee meets twice a month.
Directors who are members of the committee also attend board meetings and other important internal meetings. The committee
provides impartial and independent oversight of the Company’s corporate management, based on the audit standards as well as
the audit policy and plans established by the committee.
(Compliance and Risk Management Meeting)
The Compliance and Risk Management Meeting, chaired by the President and CEO, is composed mainly of Heads of Divisions
and Departments in addition to eight directors. The meeting is held monthly. In these meetings, members discuss policies andactions to ensure that all officers and employees of the Company abide by laws and the Company’s Articles of Incorporation, anddraw up the Risk Management Guidelines.
Artner currently uses this framework because the mutual supervision of business operations by directors works well, as do theaudits and supervision of the Board of Directors by the Audit and Supervisory Committee.

- 18 -

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

Audit / Supervision

Board of Directors

The Audit andSupervisory Committee

Audit

Selection / Discharge

President and CEO
ReportAppointment/ Dismissal

Appointment / Dismissal

Appointment / Dismissal

Inquiry
ReportCollaboration

Directions /Commands

Collaboration

ReportAccounts
Audit

Compliance and Risk
Management Meeting

ReportInternal Audit
OfficeInstructions

ReportCollabora-tion

External
Accounting
AuditorInternal
Audit
Consultation

Corporate Planning and Strategy Division
Management Division
Engineer Business Division
Human Resources Business Division

Consultation /AdviceLegal Advisors(iii) Other matters regarding corporate governance(a) Design of the Internal Control System
Artner has designed its internal control system in accordance with the following basic policies on the internal control systemthat has been established by the Board of Directors.
a. System to ensure that directors and employees execute their duties in compliance with applicable laws and regulations andthe Company’s Articles of Incorporation
1) At Artner, we have implemented the Compliance and Risk Management Meeting, chaired by the President and CEO, aspart of a system aimed at thoroughly educating employees regarding all applicable laws and regulations and the Articles ofIncorporation, and also ensuring such compliance.
2) We have set up an internal whistleblowing system, under which directors, employees, and other people engaged in workfor the Company can report corruption or wrongdoing to the Whistleblowing Committee, which has a duty of confidentiality.
It is prohibited to subject persons who submit whistleblower reports using the system to any disadvantageous treatment asa result of such reporting. The system is designed to ensure the effectiveness of whistleblowing to prevent or quickly detectviolations of applicable laws and regulations.
3) The Internal Audit Office, operating independently of other divisions that execute business practices, conducts internal
audits. Through such audits, it verifies the appropriateness and effectiveness of the internal management system of eachdivision, and by promoting the improvement of the systems, it ensures that all employees lawfully execute their duties.
b. System to ensure the appropriateness of financial reporting
1) Directors and employees ensure the appropriateness of financial reporting by executing their duties in compliance with the“Basic Framework of Internal Control Related to Financial Reporting.”
2) Directors and employees smoothly operate the system to ensure the appropriateness of financial reporting.
3) The Internal Audit Office audits the operation of the system to ensure the appropriateness of financial reporting.
c. System to store and manage information relating to the execution of duties by directors
1) Information and documents relating to the execution of duties by directors are appropriately stored and managed inaccordance with the “Document Management Rules,” other applicable rules and regulations, and related information
management system manuals.
2) The Internal Audit Office conducts internal audits to confirm that this information and related documents are appropriately
stored and managed.
d. Rules and system to manage the risk of loss
1) We have formulated guidelines, “Structure to Conduct Risk Management,” to define a clear system for managing different
risks.
2) We have classified and defined management risks in accordance with these policies, and each responsible division identifies
and analyzes the risk situation for each type of risk. We have set up a system in which the various kinds of risks are managed
through the Compliance and Risk Management Meeting. Management and countermeasures for each type of risk are- 19 -

clarified and managed in the meeting.
3) The Internal Audit Office, which is directly overseen by the President and CEO, is responsible for audits in accordance withan internal audit plan. The office examines the method and details of audit implementation and revises the audit method as
and when needed.
e. System to ensure that directors execute their duties efficiently
1) Board of Directors meetings are held twice a month, as the basis of a system to ensure that directors execute their duties
efficiently. The first board meeting of the month is a performance board meeting and the second is a regular board meeting.
Special board meetings are also held as and when needed. The scope of authority of the Board of Directors is clearly definedin the “Board of Directors Rules.”2) To ensure efficient business management by the directors, we have formulated “Organizational Rules,” “Administrative
Authority Rules,” “Division of Duties Rules,” “Division of Duties (Administrative Authority) Statement,” and other internal
rules.
f. System to ensure appropriate business practices in a corporate group consisting of companies, parent companies, andsubsidiaries
The company does not currently have any parent companies or subsidiaries.
g. Matters relating to employees who assist with the duties of the Audit and Supervisory Committee, independence of such
employees from other directors who are not members of the committee, and ensuring the effectiveness of the committee’s
instructions to such employees
1) If requested by the Audit and Supervisory Committee, an employee can be appointed to assist with the duties of thecommittee.
2) The appointment or dismissal, reassignment, and performance evaluation of such employees require the approval of the
Audit and Supervisory Committee.
3) If the Audit and Supervisory Committee requests the appointment of an employee to assist with its work, the appointmentof a suitable employee to assist with the work needed by the committee is made in consultation with the committee. The
appointment is made with the prior approval of the committee, and with an assurance of independence. To ensure theeffectiveness of the instructions of the Audit and Supervisory Committee to the applicable employee, the employee works
exclusively for the committee, without being assigned any other work.
h. System to enable directors who are not members of the Audit and Supervisory Committee and employees to report to the
Audit and Supervisory Committee
1) Directors who are members of the Audit and Supervisory Committee attend meetings of the Board of Directors and otherimportant meetings and receive reports on the state of business practice execution from other directors who are not membersof the committee.
2) Directors who are members of the Audit and Supervisory Committee are able to view important internal decision request
circulars, written decisions, and reports that are not discussed at the important meetings mentioned above, and they also
receive explanation of the contents of such documents as and when needed.
3) Directors or employees should report to the Audit and Supervisory Committee any of the following: a risk that may
significantly harm the company; misconduct relating to execution of duties by directors who are not members of the Audit
and Supervisory Committee; significant violation of an applicable law, regulation, or the Articles of Incorporation; reports
relating to the state of internal audits; facts reported based on the internal whistleblowing system; and any other matter
requested for the purposes of the Audit and Supervisory Committee.
i. System to ensure that persons who make whistleblower reports to the Audit and Supervisory Committee are not subjected toany disadvantageous treatment as a result of such reporting
The operation status of the internal whistleblowing system is reported to the Audit and Supervisory Committee as appropriate,
and in accordance with internal rules, it is prohibited to subject persons who submit whistleblower reports using the system to
disadvantageous treatment in retaliation for whistleblowing.
j. Matters relating to policies concerning procedures for prepayment or reimbursement of expenses arising from the executionof duties by the Audit and Supervisory Committee members or other processing of expenses or monetary obligations arisingfrom the execution of such duties
The procedures for prepayment or reimbursement of expenses arising from the execution of duties by members of the Audit
and Supervisory Committee or other processing of expenses or monetary obligations arising from the execution of such duties
are carried out appropriately through applications made by members of the Audit and Supervisory Committee.
k. Other systems to ensure that audits of the Audit and Supervisory Committee are effectively conducted
1) The President and CEO and the Head of the Internal Audit Office strive to enable sufficient opportunities for consultation- 20 -

with the Audit and Supervisory Committee members to examine the establishment of a suitable working environment forthe committee, in order to ensure the effectiveness of audits.
2) To ensure the effectiveness of audits by the Audit and Supervisory Committee, the committee members demand that the
President and CEO and the Board of Directors strive to make continuous improvements to the auditing system.
3) The Internal Audit Office, which is the internal auditing department of the Company, and the division responsible foroversight of compliance and risk management meet regularly with the Audit and Supervisory Committee to exchange
opinions regarding issues to be addressed.
4) If the Audit and Supervisory Committee deems it necessary to appoint legal advisors or other external advisors when
conducting an audit, such advisors can be appointed.
l. Basic approach to the exclusion of antisocial forces
1) To fulfill its obligations of corporate social responsibility and to protect the Company, any relations with antisocial forces
are cut off.
2) In the event that the company is subjected to any unreasonable demands by antisocial forces, we respond resolutely by legalmeans.
3) We set up a “System for Cutting off Relations with Antisocial Forces” based on the manual for dealing with antisocial
forces.
4) In preparation for unreasonable demands by antisocial forces, we are building close partnerships with an external specialized
agency, and in the event that we are subjected to an unreasonable demand by antisocial forces, we will consult with theagency regarding how to respond, or request a response from the agency.
5) Under no circumstances do we, for the sake of convenience, respond by engaging in behind-the-scenes dealing with orproviding money to antisocial forces.
6) We regularly inform directors and employees of our “System for Cutting off Relations with Antisocial Forces” and promoteawareness of it.
m. Internal system for exclusion of antisocial forces
1) Under the Head of the Management Division, the General Affairs Group, as department responsible for exclusion ofantisocial forces, strives to prevent the Company from being subjected to any unreasonable demands from such forces.
2) We have concluded advisory agreements with a legal advisor and retired police officers, and collaborate with a specialized
agency.
3) In collaboration with the Head of the Management Division, the General Affairs Group receives guidance and advice fromthe legal advisor as circumstances demand, and maintains a database of information on antisocial forces. As and whenneeded, the group also reports the details of such information to the Board of Directors. Based on the information, eachdivision and the Compliance and Risk Management Meetings examine approaches to the exclusion of antisocial forces.
4) We distribute a manual for dealing with antisocial forces to all employees and promote awareness of it.
5) The General Affairs Group raises awareness of issues relating to the exclusion of antisocial forces regularly at internal
training sessions.
(b) Risk management framework
Artner is aware that risk management is critical to its business. We also acknowledge that risk management related to compliancewith laws and regulations as well as internal rules is particularly important. To ensure the risk is fully managed, we have set up
the Compliance and Risk Management Meeting. To properly manage personal information, we use a personal information
protection management system that conforms to the Personal Information Protection Management Systems -- Requirements (JISQ 15001). We have also set up an internal whistleblowing system in order to prevent violations of laws and regulations andavoid risks, thereby developing and enhancing our risk management framework.
(c) Agreements limiting liability
a. Directors
Artner has an agreement in place that limits the liability for damages specified in Article 423, paragraph (1) of the Companies
Act with each director (non-Executive Director) pursuant to Article 427, paragraph (1) of the said Act. The limit of liability
based on the agreement is an amount prescribed by laws and regulations.
b. Accounting Auditor
Artner has an agreement in place that limits the liability for damages specified in Article 423, paragraph (1) of the Companies
Act with KPMG AZSA LLC who is our Accounting Auditor pursuant to Article 427, paragraph (1) of the said Act. The limitof liability based on the agreement is an amount prescribed by laws and regulations.
(d) Number of directors
Artner specifies in its Articles of Incorporation that it shall have up to ten directors (excluding directors who are members of the- 21 -

Audit and Supervisory Committee) and up to five directors who are members of the Audit and Supervisory Committee.
(e) Election of directors
Artner specifies in its Articles of Incorporation that resolutions on the election of directors shall be made with the approval of amajority of the votes of the shareholders who are present and hold at least one-third of the total votes of the shareholders whoare entitled to exercise such rights.
The Articles of Incorporation also prescribes that no cumulative voting shall be allowed on the resolutions of the election of
directors.
(f) Resolutions that may be passed by the Board of Directors instead of the General Meeting of Shareholders and reasons thereofa. Acquisition of treasury shares
Artner’s Articles of Incorporation specifies that the Company may acquire its treasury shares following a resolution by the
Board of Directors, pursuant to Article 165, paragraph (2) of the Companies Act. The purpose of this provision is to acquire
treasury shares through market transactions or by other means so that we are able to carry out flexible capital policies to adapt
to change of the business environment.
b. Organ deciding dividends of surplus
Artner specifies in its Articles of Incorporation that, to ensure flexible capital policies and dividend policies, the Company’s
Board of Directors may resolve on the matters such as dividends of surplus prescribed in the items under Article 459, paragraph(1) of the Companies Act, unless otherwise provided for in laws and regulations.
c. Release from liability of directors
Artner specifies in its Articles of Incorporation that, pursuant to Article 426, paragraph (1) of the Companies Act, theCompany’s Board of Directors, instead of the General Meeting of Shareholders, may resolve to release directors (including
former directors) from their liability related to the acts defined in Article 423, paragraph (1) of the said Act to the extent legallypermissible. The purpose of this provision is to provide an environment that enables directors to fulfill their expected role as
they perform their duties by achieving their full potential.
d. Release from liability of Accounting Auditors
Artner specifies in its Articles of Incorporation that, pursuant to Article 426, paragraph (1) of the Companies Act, theCompany’s Board of Directors, instead of the General Meeting of Shareholders, may resolve to release an Accounting Auditor(or a former Accounting Auditor) from their liability related to the acts defined in Article 423, paragraph (1) of the said Act
to the extent legally permissible. This provision has been set in the wake of the enforcement of the Companies Act that has
made accounting auditors subject to shareholder derivative suits, so that a balance is kept between our directors and Accounting
Auditor.
(g) Requirements for special resolutions at the General Meeting of Shareholders
Artner specifies in its Articles of Incorporation that, regarding the requirement for a special resolution at the General Meetingof Shareholders as prescribed in Article 309, paragraph (2) of the Companies Act, the resolution is adopted if shareholders withat least one-third of the total votes of the shareholders who are entitled to exercise their right to vote are present, and at least
two-thirds of the votes approve the resolution. The purpose of this provision is to ensure the smooth running of the General
Meeting of Shareholders by relaxing the quorum of the General Meeting of Shareholders for a special resolution.

- 22 -

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

President and CEO

Director
Head of the Engineer
Business Division

Name

SEKIGUCHI
Sozo

OKUSAKA
KazuyaDirector and Head of the HARIGAEManagement Division Tomonori

Director
Head of the Human
Resources Business
Division

EGAMI Yoji

Director
Head of the Corporate
Planning

SATO So

Date of birth

Career summary

Terms Number ofsharesof
owned
office (shares)

December 31,
1964

June 1983: Joined MEITEC CORPORATION
April 1988: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
March 1993: Appointed Director; Head of the Business Planning Office
Note 3February 1998: Appointed Director; Vice President
February 2002: Appointed President and CEO (current)
February 2012: Appointed Head of the Hyper Artner Business Division

6,644

September 3,
1955

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

275,962

May 24, 1954

April 1978: Joined Toyobo Interior Co., Ltd.
March 1982: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
March 1990: Appointed Head of the Kanto Business Dept.
March 1991: Appointed Director
Note 3
March 1993: Appointed Managing Director; Head of the General Affairs Dept.
February 2007: Appointed Managing Director; Head of the Management
Division
May 2008: Appointed Director; Head of the Management Division (current)

280,144

September 26,
1958

April 1981: Joined Osaka Technology Center Co., Ltd. (previous name of theCompany)
February 2007: Appointed Head of the Technology Development Dept. of the
Human Resources Division
April 2007: Appointed Director; Head of the Human Resources Division
February 2010: Appointed Director; Head of the Business Promotion Division Note 3
February 2011: Appointed Director; Head of the Human Resources Business
Division
February 2013: Appointed Director; Head of the Engineer Business Division
February 2016: Appointed Director; Head of the Human Resources Business
Division (current)

126,725

August 14,
1973

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

5,927- 23 -

TitleDirector(Audit and Supervisory
Committee member)

Director(Audit and Supervisory
Committee member)

Director(Audit and Supervisory
Committee member)

Name

Date of birth

Career summary

Terms Number ofsharesof
owned
office (shares)

MITANI
Takaaki

October 18,
1950

April 1973: Joined NEC Engineering, Ltd. (Now NEC Platforms, Ltd.)
July 1994: Appointed Deputy Head of the Accounts Dept.
April 2002: Appointed Head of the Accounts Dept. of Business Management
Division
April 2005 Appointed Head of the Accounts Dept.
Note 4
June 2010: Appointed Senior Professional of the Accounts Dept.
April 2011: Joined Artner Co., Ltd. as Standing Auditor
April 2017: Appointed Outside Director and standing member of the Audit andSupervisory Committee (current)

15,701KANAI
Hiroki

April 1979: Joined Dohi Certified Public Tax Accountants’ Office
September 1985: Joined Seki Certified Public Accountants’ Office
April 1991: Established Kanai Certified Public Tax Accountants’ General
Office; assumed the office of Principal (current)
September 18,
Established Keiei Clinic Co., Ltd.; assumed the office ofNote 41955
Representative Director (current)
April 2007: Joined Artner Co., Ltd. as Auditor
April 2017: Appointed Director and member of the Audit and Supervisory
Committee (current)

60,563

April 1971: Joined Nissan Diesel Motor Co., Ltd. (now UD Trucks Corp.)
July 1997: Appointed General Manager of the Vehicle Design Department
May 2000: Appointed Managing Executive Officer
June 2003: Joined Nissan Diesel Technical Research Institute Co., Ltd. (nowPERSOL R&D Co., Ltd.); assumed the office of Managing
Note 4
Director
May 2006: Appointed President and Representative Director
April 2011: Joined Artner Co., Ltd. as Auditor
April 2017: Appointed Director and member of the Audit and Supervisory
Committee (current)

15,701FUKUMURO February 21,
Kozaburo
1948

Total

787,367

Notes: 1. The numbers of shares owned are real holdings that contain each owner’s equity in the Artner Officer Stocks Society,including shares less than one unit. The number of shares acquired by the Artner Officer Stocks Society was not confirmed
as of the date of submission of this report. Hence, the number shown is the real holdings as of the end of the fiscal year
ended January 31, 2020.
2. Messrs. MITANI, KANAI and FUKUMURO are outside directors.
3. One year from the conclusion of the Ordinary General Meeting of Shareholders held on April 23, 2020
4. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on April 25, 2019(ii) Status of Outside Directors
Artner has three outside directors, all of whom hold shares of the Company. Apart from this shareholding position, none of thethree outside directors has any vested interests in he Company, including personal, capital, or business relationships.
Each outside director plays a role in ensuring that highly effective audits are conducted, from an objective and neutral view point,
and we believe that the current system satisfactorily fulfills its management monitoring and advisory functions. The three outside
directors are designated as independent directors as defined by the Tokyo Stock Exchange and they are registered with theexchange.
Although the Company does not have any specific standards or policies regarding independence for the appointment of outside
directors, when making such appointments we not only meet the regulatory requirements established by the Companies Act, butalso take into account the Tokyo Stock Exchange’s criteria for ensuring the independence of independent directors.
(iii) Mutual cooperation between supervision or audits by outside directors and internal audits, audits by Audit and Supervisory
Committee members, and accounting audits; relations with the internal control department
Artner has three outside directors, and they are directors who are members of the Audit and Supervisory Committee.
The Head of the Internal Audit Office and the Audit and Supervisory Committee consult with each other and exchange
information and views when preparing their annual audit plans and creating audit reports. This enables them to share informationand conduct audits efficiently.
The Internal Audit Office and the Audit and Supervisory Committee exchange information and views with an external
accounting auditor of record in order to have a common understanding of issues subject to audits and other relevant matters.
They also seek professional advice and guidance from the Accounting Auditor as needed.

- 24 -

(3) Audits(i) Internal audits and audits by the Audit and Supervisory Committee
An internal audit is conducted by the Internal Audit Office, which consists of one Head and one member, in accordance with theinternal audit plan approved by the President and CEO. The audit examines whether the Company’s departments perform theiroperations in compliance with laws and regulations and other rules. It also reviews the consistency of these operations with the
management policy, along with the validity of operational efficiency. Then the audit team gives advice necessary for the
departments to improve their operations and the efficiency thereof, and reports the audit results to the President and CEO.
Directors who are members of the Audit and Supervisory Committee attend board meetings and other important meetings tooffer their opinions as necessary.
They also regularly meet with the President and CEO as a means to audit the legitimacy and validity of execution of duties bydirectors (excluding directors who are members of the Audit and Supervisory Committee). Outside Director MITANI Takaaki
has years of experience in accounting in the accounting department. His knowledge of finance and accounting is enormous.
Outside Director KANAI Hiroki is a certified public tax accountant. His knowledge of finance and accounting is enormous.
Outside Director FUKUMURO Kozaburo has served as a representative director on the management team of another company.
His knowledge of finance and accounting is enormous.
(ii) Accounting Auditsa. Accounting firm name
KPMG AZSA LLC
b. Certified public accountants who performed the service
KITAYAMA Hisae (Designated Limited Liability and Engagement Partner)
YONO Kenji (Designated Limited Liability and Engagement Partner)
c. Assistants in the audit service
Eleven certified public accountants and six others serve as assistants in Artner’s accounting audit service. The number ofyears of continuous audit is omitted since it is seven or less.
d. Policy and reason for selection of the audit firm
The Audit and Supervisory Committee consults the Practical Guidelines for Auditors regarding Accounting Auditor
Evaluation and Selection Criteria published by the Japan Audit & Supervisory Board Members Association, and conducts acomprehensive review to select an Accounting Auditor. In this process, the committee ensures that the accounting firm has
independence as an Accounting Auditor and a proper quality management framework, which covers misconduct risk; that thefirm has in place an audit framework designed for the size and business of Artner; and that the audit plan and cost are practicaland fair. We have selected KPMG AZSA LLC as our Accounting Auditor because we decided that the firm has all theseelements to conduct proper accounting audits of Artner. The Audit and Supervisory Committee will also dismiss the
Accounting Auditor based on the consent of all Audit and Supervisory Committee members if any of the items of Article 340,
paragraph (1) of the Companies Act applies to the Accounting Auditor.
e. Evaluation of the Accounting Auditor by Audit and Supervisory Committee members and the Audit and Supervisory
Committee
The Audit and Supervisory Committee consults the Practical Guidelines for Auditors regarding Accounting Auditor
Evaluation and Selection Criteria published by the Japan Audit & Supervisory Board Members Association, and evaluates the
Accounting Auditor from all angles, such as the quality management framework the Auditor has developed and how it operates,of the independence and expertise the Auditor has, among others, to determine that the Auditor is qualified.
(iii) Details of audit fees
a. Audit fees for certified public accountants
Fiscal year ended January 31, 2019
Fees for audit services(thousands of yen)
20,000Fiscal year ended January 31, 2020

Fees for non-audit service(thousands of yen)

Fees for audit services(thousands of yen)－

Fees for non-audit service(thousands of yen)

20,000The non-audit service at Artner is preparation of comfort letters related to prospectuses for stock offerings.
b. Fees for an organization in the same network to which the certified public accountants belong
Not applicable.
c. Details of other fees based on important audit services- 25 -－

Not applicable.
d. Policy for determining audit fees
Artner’s policy for determining fees for an audit by certified public accountants is that the Company reviews the audit plan,details of the audit, and the audit schedule, among others, presented by the Accounting Auditor and receives approval fromthe Audit and Supervisory Committee to decide on proper fees.
e. Reason for the approval of the Audit and Supervisory Committee given to fees for the Accounting Auditor and otherrelevant fees
The Audit and Supervisory Committee reviewed the policy, contents, and the basis for calculation of estimates shown in theaudit plan, which would constitute grounds for fees paid to the Accounting Auditor. Then the committee received andexamined required reports about the contents submitted by relevant internal departments, and determined that the policy,
contents, and the basis were all fair for an accounting audit of Artner. Hence, the committee approved the fees for the
Accounting Auditor.
(4) Remuneration for directors(i) Policies for determining remuneration for directors and calculation methods
The remuneration of directors consists of a basic remuneration and a performance-linked bonus. The upper limits of the
remuneration established by resolution at the ordinary general meeting of shareholders held on April 27, 2017, are ¥200 million
per year for five directors who are not members of the Audit and Supervisory Committee and ¥30 million per year for three
directors who are members of the Committee. We have not established an advisory board that includes outside directors to
examine remuneration of directors. However, we ensure objectivity and transparency by obtaining appropriate involvement ofand advice from independent outside directors.
The Board of Directors and the Audit and Supervisory Committee are responsible for deliberating and determining the
remuneration of the Executive Team, which is composed of a fixed remuneration and performance-linked remuneration. The
remuneration of directors who are not members of the Audit and Supervisory Committee is determined solely by the Board of
Directors, whereas the remuneration of the Audit and Supervisory Committee members is determined by deliberation among themembers of the Committee.
How to determine the policy for determining the remuneration for each individual is set forth in the rules concerning the
remuneration of directors, resolved by the Board of Directors.
The Board of Directors receives reports that are deliberated by the Nomination and Remuneration Committee based on the policy
for determining the remuneration and within the range of the total amount resolved by the General Meeting of Shareholders, so
the Board of Directors deems that the content of the report is in line with the said policy.
The policy for determining the percentage of the amount of remuneration for each individual shall be decided based on thereports that are deliberated by the Nomination and Remuneration Committee, comprehensively taking into account the role andcontribution status of each director as well as business performance.
The basic remuneration is determined based on the amount established for each director position, with the Company’s businessperformance, relative weight against employee salaries, and remuneration levels at other companies taken into consideration.
However, if it is not appropriate to pay a remuneration calculated in such a manner due to a significant decline in the Company’sbusiness performance or other factors, the Company reserves the right to reduce the amount of basic remuneration.
The metrics for performance-linked bonuses is calculated using a formula based on the Company’s annual profit, as this is
judged to be the most reasonable way to measure the performance of directors. For the fiscal year ended January 31, 2020, thetarget metrics for performance-linked bonuses had been set at ¥604 million, and the result was ¥626 million.
The processes that the Board of Directors and the Audit and Supervisory Committee went through to determine the remunerationof directors for the fiscal year ended January 31, 2020, are summarized as follows:
With regard to the remuneration for directors who are not members of the Audit and Supervisory Committee, the amount ofbasic remuneration was determined by resolution of the Board of Directors on April 26, 2018, and has since remained unchanged.
The amount of a performance-linked bonus for each director was determined by resolution of the Board of Directors on February
28, 2020.
With regard to the remuneration for directors who are members of the Audit and Supervisory Committee, the amount of basic
remuneration was determined by deliberation among the members of the Committee on April 26, 2018, and has since remained
unchanged. The amount of a performance-linked bonus for each director was determined by deliberation among the membersof the Committee on February 27, 2020.

- 26 -

(ii) Total amount of remuneration by type of director, amount by type of remuneration, and the number of corresponding directors
Amount by type of remuneration
Total amount of
Number of(thousands of yen)remuneration
corresponding
Type of director
Basic
Performance(thousands of yen)directors
remuneration
linked bonus
Directors who are not members of
the Audit and Supervisory
Committee or outside directors

106,954

95,447

11,507

5

Director and member of the Audit
and Supervisory Committee but are
not outside directors

－

－

－

－

24,422

23,4001,022

3

Outside directors(iii) Total amount of remuneration for each director
We have omitted providing information here as no directors were paid remuneration of ¥100 million or more.
(5) Shares held(i) Criteria for and definitions of the classifications of shares for investment
Artner defines shares held to gain profits from fluctuations in the value of the stocks or by receiving dividends as shares solely
for investment purposes, and any other shares held as shares for non-investment purposes, and classifies the shares it holds
accordingly.
(ii) Shares held for non-investment purposesa. Policy on holding shares for non-investment purposes; approach for examining the rationality of holding those shares; detailsof the board review concerning the advisability of holding each of the stocks
Artner has the policy that it holds shares in enterprises after considering from all angles whether the shareholding will help
the Company continue to grow and raise its medium- to long-term enterprise value. We review these enterprises’ future outlook
and stock prices, and discuss the validity of the shareholding at board meetings. We also reduce the number of shares that nolonger serve the purpose of holding them.
b. Number of stocks and amount recorded on the balance sheet

Unlisted shares
Shares other than unlisted shares

Number of
Total amount recorded on the balancestocks (stocks)
sheet (thousands of yen)
－
－
13

7,133

- 27 -

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

Total acquisition value associatedwith increase in number of shares(thousands of yen)

Unlisted shares

－

－

－

Shares other than unlisted shares

1

208

New acquisition to collect information about industry
trends and other relevant matters

Reason for increase in number(Stocks that decreased in the number of shares during the fiscal year under review)
Number ofstocks (stocks)
Unlisted shares
Shares other than unlisted shares

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

－
－

－
－

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

Stock

Fiscal year ended
Fiscal year ended
January 31, 2020
January 31, 2019
Number of shares
Number of shares(shares)(shares)Amount recorded on
Amount recorded onbalance sheet (thousands balance sheet (thousandsof yen)of yen)BeNext Group Co.
Persol Holdings Co., Ltd.
TechnoPro Holdings, Inc.
Meitec Corporation
Abist Co., Ltd.
Yumeshin Holdings Co.
Ltd.
Altech Corporation

Copro-Holdings. Co., Ltd.

Sobal Corporation
Hip Corporation
SUS Co., Ltd.
Human Holdings Co., Ltd.
JTEC Corporation

2,000

1,000

2,272

3,240

438

438

869

846

100

100

738

570

100

100

630

474

200

200

513

641

600

600

509

490

220

200

399

349

100

―

280

―

200

200

245

185

300

300

240

234

400

400

221

290

100

100

127

169

400

400

85

123

Purpose of shareholding, quantitative effect ofshareholding, and reason for increase in number ofsharesArtner’s shares held

To collect information about industry trends and otherrelevant matters
Note 2

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters
Note 2
To collect information about industry trends and otherrelevant matters(Reason for the increase) New acquisition for the
purpose stated above

No

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

No

To collect information about industry trends and otherrelevant matters

Yes

Notes: 1. Although it is a challenge to describe a quantitative effect of a shareholding, we have examined economic rationality andvalidity of holding the shares to ensure that we hold these shares for the purposes that are in line with our policy onshareholdings.
2. BeNEXT Group Inc. (formerly Trust Tech Inc.) carried out a 2-for-1 stock split (common shares), and Altech Corporation
a 1.1-for-1 stock split (common shares)..
Deemed shares held
Not applicable.
(iii) Shares held solely for investment purposes
Not applicable- 28 -

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

2. Audit Certification
Artner had its financial statements for the fiscal year (from February 1, 2019 to January 31, 2020) audited by KPMG AZSA LLC
in accordance with Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act.

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

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

- 29 -

1【Non-consolidated Financial Statements, etc. 】(1)【Non-consolidated financial statements】(i)【Non-consolidated balance sheets】(Thousands of yen)
As of January 31, 2019
AssetsCurrent assets
Cash and deposits
Accounts receivable - trade
Work in process
Raw materials and supplies
Prepaid expenses
Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Total property, plant and equipment
Intangible assets
SoftwareTelephone subscription right
Total intangible assets
Investments and other assets
Investment securities
Investments in capital
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets- 30 -

As of January 31, 2020

2,050,932
764,636
1,786
3,036
23,043562
18,026(4,500)2,857,524

2,383,441
932,1122,370
2,374
24,010989
17,237(5,500)3,357,036

86,466(65,993)
20,472
1,677(1,669)7
37,187(22,101)
15,08559,15994,72690,606(68,467)
22,1391,677(1,672)
5
41,255(26,627)
14,62859,15995,93263,448
1,654
65,102

57,487
1,654
59,141

7,615
1,250
418
166,573
69,897
1,080
246,835
406,664
3,264,188

7,133
1,250
1,256
195,361
82,9201,106
289,028
444,1023,801,139

(Thousands of yen)
As of January 31, 2019
Liabilities
Current liabilities
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Deposits received
Unearned revenue
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Provision for retirement benefits
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Legal capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders' equity
Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 31 -

As of January 31, 2020

131,285
60,561
174,875
104,90912,74496
112,9212,862
600,255

91,78566,539180,764
171,819
13,95084
132,420
4,179
661,544

330,626
330,626
930,881

411,214411,214
1,072,759

238,284

238,284

168,323
168,323

168,323
168,323

10,46040,00010,46040,0001,872,798
1,923,258(698)
2,329,167

2,268,351
2,318,811(698)
2,724,720

4,139
4,139
2,333,306
3,264,188

3,659
3,659
2,728,380
3,801,139

(ii)【Non-consolidated statements of income】(Thousands of yen)
Fiscal year ended
January 31, 2019
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Commission income
Sales income of training materials
Rental income from land and buildings
Dividend income of insurance
Subsidy income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Cancellation penalty
Other
Total non-operating expenses
Ordinary profit
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit- 32 -

Fiscal year ended
January 31, 2020

6,331,692
4,033,065
2,298,627
1,513,026
785,600

7,002,175
4,461,849
2,540,326
1,654,318
886,007

6
206
505
851
1,069
4,573
891
589
8,693

6
230
556
857
949
4,445
1,762
602
9,410

36
58
100
194
794,098

－
1,761
0
1,761
893,656

1,742
1,742
792,356
284,098△32,716
251,382
540,973－－893,656
308,856△28,576
280,279
613,377

[Cost of Sales Statement]
FY20191
FY2020(Fiscal year ended January 31, 2019) (Fiscal year ended January 31, 2020)
Note
numberClassification

Amount(thousands of yen)

Ratio
(%)

Amount(thousands of yen)

Ratio
(%)

3,940,756

97.7

4,350,367

97.5

93,6204,034,377

2.3
100.0

112,065
4,462,433

2.5
100.0

I. Labor cost
II. Expenses*2

Total manufacturing cost for the period
Beginning inventory of work in process
Total
Ending inventory of work in process
Cost of sales for the period

474
4,034,851

1,786
4,464,220

1,786
4,033,065

2,370
4,461,849

FY2019(Fiscal year ended January 31, 2019)

FY2020(Fiscal year ended January 31, 2020)

1. Cost accounting method

1. Cost accounting method

Job costing based on actual costs*2 Details are as shown below:

Job costing based on actual costs*2 Details are as shown below:

Travel and transportation

JPY 56,830 thousand

Travel and transportation

JPY 69,218 thousand

Rent

JPY 10,869 thousand

Rent

JPY 11,649 thousand- 33 -

(iii)【Non-consolidated statements of changes in equity】
Fiscal year ended January 31, 2019
(Thousands of yen)
Shareholders' equity
Capital surplus

Retained earnings

Share capital Legal capital Total capital Legal retained
surplussurplusearnings
Balance at beginning of
periodChanges during period

238,284

168,323

168,323

10,460

Other retained earnings
Retained
Generalearnings
reservebrought
forward40,0001,501,835

Total
retainedearnings
1,552,295

Dividends of surplus(170,010)(170,010)

Profit540,973

540,973

Acquisition of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

－

－

－

－

－

370,962

370,962

238,284

168,323

168,323

10,46040,0001,872,798

1,923,258

1,958,400

Valuation and translation
adjustments
Valuation
Total
Total net assets
difference on valuation andavailable-fortranslation
sale securities adjustments
5,326
5,326
1,963,726

Dividends of surplus(170,010)(170,010)

Profit540,973

540,973

(195)

(195)

Shareholders' equity
Total
Treasury shares shareholders'equityBalance at beginning of
periodChanges during period

Acquisition of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period

(503)

(195)

(1,187)(1,187)(1,187)(195)

370,767(1,187)(1,187)369,580(698)

2,329,167

4,139

4,139

2,333,306- 34 -

Fiscal year ended January 31, 2020
(Thousands of yen)
Shareholders' equity
Capital surplus
Share capital

Balance at beginning of
periodRetained earnings

Legal capital Total capital Legal retained
surplussurplusearnings

238,284

168,323

168,323

10,460

Other retained earnings
Retained
Generalearnings
reservebrought
forward40,0001,872,798

Total
retainedearnings
1,923,258

Changes during period
Dividends of surplus(217,824)(217,824)

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

613,377

613,377

－

－

－

－

－

395,552

395,552

238,284

168,323

168,323

10,46040,0002,268,351

2,318,811

2,329,167

Valuation and translation
adjustments
Valuation
Total
Total net assets
difference on valuation andavailable-fortranslation
sale securities adjustments
4,139
4,139
2,333,306

Dividends of surplus(217,824)(217,824)

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

613,377

613,377

Shareholders' equity
Total
Treasury shares shareholders'equityBalance at beginning of
periodChanges during period

(698)

(479)

(479)

(479)

－

395,552

(479)

(479)

395,073(698)

2,724,720

3,659

3,659

2,728,380- 35 -

(iv)【Non-consolidated statements of cash flows】(Thousands of yen)
Fiscal year ended
January 31, 2019
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for retirement benefits
Interest and dividend income
Interest expenses
Decrease (increase) in accounts receivable – other
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accounts payable – other
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee
deposits
Payments for the acquisition of investment securities
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Payments for the acquisition of treasury shares
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 36 -

Fiscal year ended
January 31, 2020

792,356
16,971300
10,79277,364
(212)
36
6,321
(64,084)(3,226)
119
29,352
3,889
869,980212(36)(257,618)
612,537

893,656
26,9231,000
19,49980,588
(236)
－
(427)
(167,476)
77
66,910(32,201)
6,959
895,272236－(304,355)
591,153(12,397)(43,297)(20,321)(15,507)(13,958)(13,401)

500

379

－
(26)
(75,542)

(208)
(26)
(42,723)(195)(169,242)(169,438)
367,557
1,683,375
2,050,932－(215,920)(215,920)
332,5082,050,932
2,383,441

[Notes](Significant Accounting Policies)
1. Basis and method for valuation of securities
Available-for-sale securities
Securities with fair value
Fair value method based on the market value etc. on the closing date (with the entire amount of valuation differences inserted
directly into net assets, and the cost of sales calculated using the moving average method)
2. Basis and method for valuation of inventories(1) Work in process
Job costing method (with the amount shown on balance sheet written down as profitability declines)(2) Supplies
Job costing method (with the amount shown on balance sheet written down as profitability declines)
3. Depreciation method for non-current assets(1) Property, plant and equipment
Declining balance method (note: straight-line method for buildings (excluding facilities attached to the buildings) acquired on orafter April 1, 1998, and for facilities attached to buildings and for structures acquired on or after April 1, 2016)
Service life of the assets is mostly as shown below:
Buildings:
8 - 26 years
Tools, furniture and fixtures:
4 - 10 years(2) Intangible assets
Straight-line method is applied to software for internal use. The calculation is based on usable life within the Company (5 years).
4. Recognition criteria for provisions(1) Allowance for doubtful accounts
To make allowances for the non-payment of receivables, the historical default rate is used for general receivables; and receivables
designated as potentially irrecoverable is determined by reviewing actual collectability on an individual claim basis to record theestimated amount that is deemed irrecoverable.
(2) Provision for bonuses
To make allowances for the payment of bonuses to employees, the amount that should be paid in the fiscal year under review isrecorded, out of the estimated payment in the following fiscal year.
(3) Provision for retirement benefits
To make allowances for the payment of retirement benefits to employees, this is recorded based on the estimate for retirement
benefit liabilities as of the end of the fiscal year under review.
(i) Method for attributing estimated retirement benefit payments to the period
When calculating retirement benefit liabilities, the method for attributing estimated benefit payments to the period that lasts until
the end of the fiscal year under review is as per the benefit formula basis.
(ii) Method for processing actuarial gains and losses as expenses
Actuarial gains and losses are treated as expenses in the fiscal year following the fiscal year in which they arise. The amount is
proportionally divided using the straight-line method over a certain number of years (five years) that is within the average
number of employees’ remaining service years at the time the differences emerge each fiscal year.
5. Cash included in the statement of cash flows
The cash included in the statement of cash flows consists of cash on hand, savings available for withdrawal at any time, and shortterm investments that can easily be converted into cash, have only a limited risk of price fluctuations, and are redeemed within threemonths from the date of acquisition.
6. Other matters that form the basis of preparing financial statements
Accounting treatment of consumption tax
Tax is not included.
(Changes in Presentation Methods)(Changes due to the application of Partial Amendments to Accounting Standard for Tax Effect Accounting)Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28, February 16, 2018) have been
applied since the beginning of this fiscal year under review, and thus deferred tax assets are presented under the category ofinvestments and other assets.
As a result, in the balance sheet for the previous fiscal year, deferred tax assets of JPY 57,964 thousand, which were presented undercurrent assets, have been included in deferred tax assets of JPY 166,573 thousand under investments and other assets.

- 37 -

(Regarding Non-consolidated Balance Sheet)
1 Artner has entered into overdraft agreements with its six banks in order to ensure efficient financing for working capital. The tablebelow shows the balances of borrowings available for withdrawal according to the agreements.
FY2019(As of January 31, 2019)
Overdraft limit
Outstanding borrowing

JPY 1,450,000 thousand－

Balance1,450,000

FY2020(As of January 31, 2020)
JPY 1,450,000 thousand－
1,450,000(Regarding Non-consolidated Statement of Income)*1 Selling expenses accounted for approximately 7% in FY2019, and 7% in FY2020, and general and administrative expenses 93%
in FY2019, and 93% in FY2020.
The table below shows the main item of selling, general and administrative expenses, and the amounts thereof.

FY2019(Fiscal year ended January 31, 2019)
Salaries and allowances
Travel and transportation
Rent
Provision for bonuses
Retirement benefit expenses
Depreciation
Provision of allowance for doubtful accounts

JPY 517,117 thousand
140,992
120,217
19,50027,514
16,952300- 38 -FY2020(Fiscal year ended January 31, 2020)
JPY 589,113 thousand
150,655
141,286
22,70728,49926,8031,000

(Regarding Non-consolidated Statement of Changes in Equity)
FY2019 (Fiscal year ended January 31, 2019)
1. Matters concerning the type and total number of shares issued, and the type and total number of treasury shares
Number of shares at
beginning of FY2019(shares)
Shares issued
Common shares
Note 1,2
Total

Increase in shares during
Decrease in shares
Number of shares at end
FY2019 (shares)
during FY2020 (shares)of FY2020(shares)

5,313,960

5,313,960－

10,627,920

5,313,960

5,313,960－

10,627,920

Treasury shares
Common shares
1,078
1,251
－
2,329
Note 1,3
Total
1,078
1,251
－
2,329
Notes: 1. On April 1, 2018, we carried out a 2-for-1 stock split (common shares).
2. The increase of 5,313,960 shares issued (common shares) came from the stock split.
3. The increase of 1,251 treasury shares (common shares) came from an increase of 1,078 shares due to the stock split and anincrease of 173 shares due to the purchase of shares less than one share unit..
2. Matters concerning dividends(1) Dividends paid
Resolution
Ordinary General Meeting of
Shareholders on April 26, 2018
Board of Directors Meeting on
September 7, 2018

Type ofsharesTotal amount of
Dividend per
dividends
share (yen)(thousands of yen)

CommonsharesCommonsharesRecord date

Effective date

90,31817.00

January 31, 2018

April 27, 2018

79,691

7.50

July 31, 2018

October 5, 2018

(2) Dividends with a record date in the fiscal year under review and an effective date in the following fiscal year
Type of Total amount of Source of funds Dividend per
dividends
Resolution
Record date
Effective dateshares (thousands of yen) for dividends
share (yen)Ordinary General Meeting of Common
Shareholders on April 25, 2019 shares

Retainedearnings

111,568

10.50

January 31, 2019

April 26, 2019

FY2020 (February 1, 2019 to January 31, 2020)
1. Matters concerning the type and total number of shares issued, and the type and total number of treasury shares
Number of shares at
Increase in shares during
Decrease in shares
Number of shares at end
beginning of FY2020
FY2020 (shares)
during FY2020 (shares)of FY2020 (shares)(shares)
Shares issued
Common shares
Total

10,627,920－－

10,627,920

10,627,920－－

10,627,920

2,329

－

－

2,329

2,329

－

－

2,329

Treasury shares
Common shares
Total
2. Matters concerning dividends(1) Dividends paid
Resolution
Ordinary General Meeting of
Shareholders on April 25, 2019
Board of Directors Meeting on
September 9, 2019

Type ofsharesCommonsharesCommonsharesTotal amount of
Dividend per
dividends
share (yen)(thousands of yen)

Record date

Effective date

111,568

10.50

January 31, 2019

April 26, 2019106,255

10.00

July 31, 2019

October 4, 2019- 39 -

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

Ordinary General Meeting of Common
Shareholders on April 23, 2020 shares

Total amount of Source of funds Dividend per
dividends
share (yen)(thousands of yen) for dividends

Record date

Effective date

Retainedearnings

January 31, 2020

April 24, 2020

111,568

10.50(Regarding Non-consolidated Statement of Cash Flows)*1 Relationship between cash and cash equivalents at the end of the period and the amount for the account title shown in thebalance sheet

Cash and deposit accountCash and cash equivalents

FY2019(Fiscal year ended January 31, 2019)

FY2020(Fiscal year ended January 31, 2020)

JPY 2,050,932 thousand

JPY 2,383,441 thousand

2,050,932

2,383,441(Regarding Lease Transactions)
Notes on this matter have been omitted because they are of little importance.
(Regarding Financial Instruments)
1. Matters concerning financial instruments(1) Policy on financial instruments
Artner limits its fund management to short-term deposits or any equivalents, and it has the policy that it raises funds mostly
by borrowing from banks.
(2) Description of financial instruments, risks involved therein, and risk management framework
Accounts receivable are exposed to clients’ credit risk. We mitigate this risk in line with our credit management policy.
(3) Supplementary explanations about matters concerning the fair values of financial instruments
The fair value of financial instruments has no market value, and thus it depends on the rationally calculated value. Variablefactors are taken into account when the fair value is calculated. Hence, the value may fluctuate when different prerequisites
are used.
2. Matters concerning the fair values of financial instruments
The amounts calculated for the balance sheet and fair value, along with differences between them, are as shown in the table below.
Note that the instruments for which fair value can hardly be identified are not included (refer to Note 2).
FY2019 (As of January 31, 2019)
Amount recorded onbalance sheet(thousands of yen)
(1) Cash and deposits(2) Accounts receivable - trade
Total assets(1) Accounts payable - otherTotal liabilities

fair value(thousands of yen)

Difference(thousands of yen)

2,050,932
764,6362,050,932
764,636－－

2,815,568

2,815,568－

131,285

131,285－

131,285

131,285－

FY2020 (As of January 31, 2020)(1) Cash and deposits(2) Accounts receivable - trade

Amount recorded onbalance sheet(thousands of yen)
2,383,441
932,112

Total assets(1) Accounts payable - otherTotal liabilities- 40 -

fair value(thousands of yen)

Difference(thousands of yen)

2,383,441
932,112－－3,315,554

3,315,554－

91,78591,785－91,78591,785－

Notes: 1. How to calculate the fair value of a financial instrument
Assets(1) Cash and deposits, (2) Accounts receivable - trade
Since these are settled in a short term, their fair value approximates carrying amounts. Hence, the fair value
depends on the carrying amounts.
Liabilities(1) Accounts payable - other
Since these are settled in a short term, their fair value approximates carrying amounts. Hence, the fair value
depends on the carrying amounts.
2. Financial instruments for which fair value can hardly be identified(Unit: thousands of yen)
FY2019(Fiscal year ended January 31, 2019)

Classification

FY2020(Fiscal year ended January 31, 2020)

Leasehold and guarantee deposits
69,89782,920
Leasehold and guarantee deposits have no market value, which means their fair value can hardly be identified. Hence,
their fair value is not disclosed.
3. Planned redemption amounts after the closing date for monetary claims
FY2019 (As of January 31, 2019)
More than 1 year, More than 5 years,
within 10 years
within 5 years(thousands of yen)
Within 1 year

More than 10
years(thousands of yen) (thousands of yen) (thousands of yen)

Cash and deposits
Accounts receivable - tradeTotal

2,050,638
764,636

－
－

－
－

－
－

2,815,274－－－

FY2020 (As of January 31, 2020)
Within 1 year
(thousands of yen)

Cash and deposits
Accounts receivable - trade
Total

More than 1 year, More than 5 years,
within 10 years
within 5 years

More than 10
years(thousands of yen) (thousands of yen) (thousands of yen)

2,383,147
932,112

－
－

－
－

－
－

3,315,260－－－(Regarding Investment Securities)
1. Available-for-sale securities
FY2019 (As of January 31, 2019)Type
Securities recorded onbalance sheet at amount thatexceeds acquisition cost
Securities recorded onbalance sheet at amount that
does not exceed acquisition
cost

Amount recorded on balance
sheet (thousands of yen)

Stock
Subtotal
Stock
Subtotal

Total

Acquisition cost(thousands of yen)

Difference(thousands of yen)

7,325

1,278

6,046

7,325

1,278

6,046

290

374

(83)

290

374

(83)

7,615

1,653

5,962

FY2020 (As of January 31, 2020)
Type
Securities recorded onbalance sheet at amount thatexceeds acquisition cost
Securities recorded onbalance sheet at amount that
does not exceed acquisition
cost

Amount recorded on balance
sheet (thousands of yen)

Stock
Subtotal
Stock
Subtotal

Total
2. Available-for-sale securities soldNot applicable.

- 41 -

Acquisition cost(thousands of yen)

Difference(thousands of yen)

6,911

1,487

5,424

6,911

1,487

5,424

221

374

(152)

221

374

(152)

7,133

1,861

5,271

(Regarding Derivatives)
Not applicable, as Artner does not trade derivatives.
(Regarding Retirement Benefits)
1. Summary of the retirement benefit plan used
Artner uses the defined benefit retirement lump sum payment plan and the define contribution pension plan to pay retirement
benefits to its employees.
2. Defined benefit plan
(1) Reconciliation of the beginning and ending balances of retirement benefit liabilities
FY2019FY2020(Fiscal year ended January (Fiscal year ended January
31, 2019)
31, 2020)
Balance of retirement benefit liabilities at beginning of period
Service expenses
Interest expenses
Actuarial gains and losses incurred
Retirement benefit payments
Balance of retirement benefit liabilities at end of period

JPY 386,305 thousand
37,9203,233
12,940(11,773)428,626

JPY 428,626 thousand
41,8903,587
72,076(11,810)534,370(2) Reconciliation of the ending balance of retirement benefit liabilities and the provision for retirement benefits recorded on
the balance sheet

Retirement benefit liabilities in non-savings-type plan
Retirement benefit liabilities unfunded

FY2019(As of January 31, 2019)

FY2020(As of January 31, 2020)

JPY 428,626 thousand
428,626

JPY 534,370 thousand
534,370

Unrecognized actuarial gains and losses(98,000)(123,155)

Net liabilities and assets recorded on balance sheet

330,626

411,214

Provision for retirement benefits

330,626

411,214Net liabilities and assets recorded on balance sheet

330,626

411,214(3) Itemized retirement benefit expenses
FY2019 (February 1,
FY2020 (February 1, 2019
to January 31, 2020)2018 to January 31, 2019)
Service expenses

JPY 37,920 thousand

JPY 41,890 thousand

Interest expenses

3,233

3,587

Actuarial gains and losses processed as expenses

47,98446,920Retirement benefit expenses for defined benefit plan

89,13892,398(4) Matters concerning the basis for actuarial calculations
Basis for key actuarial calculations
FY2019(As of January 31, 2019)
Discount rate

0.8%

FY2020(As of January 31, 2020)
0.8%

To project the rates of increase in salary, we use pay raise indexes by age calculated with September 1 of the fiscal year being
the base date.
3. Defined contribution plan
Artner’s required contributions to the defined contribution plan were JPY 43,406 thousand for the previous fiscal year and JPY
48,505 thousand for the fiscal year under review.
(Regarding Stock Options)Not applicable.

- 42 -

(Regarding Tax Effect Accounting)
1. Breakdown of deferred tax assets and deferred tax liabilities by main cause
FY2019(As of January 31, 2019)
Deferred tax assets
Enterprise tax payable
Accrued expenses
Provision for bonuses
Provision for retirement benefits
Allowance for doubtful accounts
Impairment loss

FY2020(As of January 31, 2020)

JPY 9,558 thousand
8,323
34,531
101,105
1,376
8,617

Other
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities

JPY 10,200 thousand
9,204
40,494
125,749
1,681
8,617

4,885

1,025

168,397

196,973(1,823)(1,612)

Total deferred tax liabilities(1,823)(1,612)

Net deferred tax assets

166,573

195,361

2. Statutory effective tax rate and main causes of the difference from the income tax burden rate after the application of tax effectaccounting
Notes have been omitted because, for FY2019 and FY2020, the difference between the statutory effective tax rate and theincome tax burden rate after the application of tax effect accounting is five-hundredths or less of the statutory effective tax
rate.
(Equity in Earnings)
Not applicable.
(Regarding Business Combination)
Not applicable.
(Regarding Asset Retirement Obligations)
Notes on this matter have been omitted because they are of little importance.
(Regarding Investment and Rental Property)
Notes on this matter have been omitted because the total amount of investment and rental property is of little importance.
(Segment Data)[Segment data]
Since we have only one reportable segment, notes on this matter have been omitted.
[Related information]
FY2019 (Fiscal year ended January 31, 2019)
1. Information by product and service
Since our business is in a single segment, notes on this matter have been omitted.
2. Information by region(1) Net sales
Not applicable because we have no sales to external clients outside Japan.
(2) Property, plant and equipment
Not applicable because none of our property, plant and equipment are located outside Japan.
3. Information by major customer
Client name / Company name

(Unit: thousands of yen)
Net sales

Honda R&D Co., Ltd.

1,094,249

Note: Since our business is in a single segment, names of related segments have been omitted.

- 43 -

FY2020 (February 1, 2019 to January 31, 2020)
1. Information by product and service
Since our business is in a single segment, notes on this matter have been omitted.
2. Information by region(1) Net sales
Not applicable because we have no sales to external clients outside Japan.
(2) Property, plant and equipment
Not applicable because none of our property, plant and equipment are located outside Japan.
3. Information by major customer
Client name / Company name

(Unit: thousands of yen)
Net sales

Honda R&D Co., Ltd.

1,340,047

Note: Since our business is in a single segment, names of related segments have been omitted.
[Information about impairment loss on non-current assets in each reportable segment]
Not applicable.
[Information about amortization and unamortized balance of goodwill in each reportable segment]
Not applicable.
[Information about gain on bargain purchase in each reportable segment]
Not applicable.
[Information about related parties]
Not applicable.
(Per Share Information)
FY2019(Fiscal year ended January 31, 2019)

FY2020(Fiscal year ended January 31, 2020)

Net assets per share

JPY 219.59

JPY 256.77

Earnings per share

JPY 50.91

JPY 57.73

Notes: 1. On April 1, 2018, we carried out a 2-for-1 stock split (common shares). The net assets per share and the earnings per share
have been calculated on the assumption that this stock split was carried out at the beginning of the previous fiscal year.
2.Diluted earnings per share are not shown because we have no dilutive shares.
3. The table below shows the bases for calculations of earnings per share.
FY2019(Fiscal year ended January 31, 2019)
Profit (thousands of yen)Amounts not attributable to common shareholders(thousands of yen)
Profit pertaining to common shares (thousands ofyen)
Average number of common shares outstanding
during the period(Material Post-Balance Sheet Events)
Not applicable.

- 44 -FY2020(Fiscal year ended January 31, 2020)

540,973

613,377－－

540,973

613,377

10,625,615

10,625,591

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

Asset TypeBalance at
beginning of
period(thousands ofyen)

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

Amortization inperiod(thousands ofyen)

Balance at endof period(thousands ofyen)

Property, plant and equipment
Buildings

86,466

4,140－

90,606

68,4672,474

22,139Structures

1,677

－

－

1,677

1,672

2

5

Tools, furniture and fixtures

37,187

4,068－

41,255

26,627

4,526

14,628Land

59,159－－59,159－－59,159184,490

8,209－

192,699

96,767

7,003

95,932

Software

94,40913,958－108,368

50,88019,92057,487

Telephone subscription right

1,654

－

－

1,654

－

－

1,654

Total intangible assets

96,063

13,958－110,02250,88019,92059,141

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

Balance at
Decrease during
Increase during
Decrease during Balance at end of
beginning of
period (spending
period (thousands
period (other)
period (thousands
for purpose)
period (thousandsof yen)of yen)(thousandsofyen)(thousands of yen)of yen)
4,500

5,500

－

4,500

5,500

112,921

132,420

112,921－

132,420

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

- 45 -

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

Amount (thousands of yen)

Cash

293

Deposits
Current deposits

2,300,503

Ordinary deposits

21,338Special deposits

1,305Time deposits

60,000Subtotal

2,383,147

Total

2,383,441(b) Accounts receivable
Breakdown by client
ClientAmount (thousands of yen)

Honda Motor Co., Ltd.

260,875

Nikon Corporation

74,859

Tokyo Electron Technology Solutions Ltd.

29,256

Sumitomo Electric Industries, Ltd.

26,301

Terumo Corporation

24,677

Other

516,141
Total

932,112

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

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

Overdue (days)(A) ＋ (D)
2

(C)
(A)
764,636(B)

7,611,393

(C)

(D)

7,443,916

932,112× 100(A) ＋ (B)

(B)
365

88.9

40.7

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

Amount (thousands of yen)Contracting business

2,370
Total

2,370

- 46 -

(d) Raw materials and supplies
Item

Amount (thousands of yen)

Printed matter

2,325

Quo cards

46

Revenue stamps

3
Total

2,374

(e) Deferred tax assets
Deferred tax assets totaled JPY 195,361 thousand. Details thereof are stated in “1. Financial Statements and Other Documents(1) Financial Statements Notes (Regarding Tax Effect Accounting).”(ii) Liabilities(a) Provision for retirement benefits
Classification

Amount (thousands of yen)

Retirement benefit liabilities

534,370(123,155)

Unrecognized actuarial gains and losses
Total

411,214(3) Other
Quarterly financial information for the fiscal year under review(Cumulative)

Q1

Q2

Q3

Full year

Net sales (thousands of yen)

1,618,454

3,382,490

5,173,183

7,002,175

Profit before income taxes(thousands of yen)

180,481432,405

705,978

893,656

Profit (thousands of yen)

124,596

298,473

487,901

613,377

Earnings per share (yen)

11.73

28.09

45.92

57.73

(Accounting period)
Earnings per share (yen)

Q1

Q2
11.73

Q3
16.36

- 47 -

Q4
17.83

11.81

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

February 1 to January 31

Ordinary General Meeting of
Shareholders

In April

Record date

January 31

Record dates for dividends of surplus

January 31 and July 31

Number of shares per share unit

100 shares

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

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

Agency office-

Trading fee

None

How public notice is issued

Benefits for shareholders

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

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

- 48 -

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

2 Other Reference Information
Artner submitted the following documents during the period from the start date of the fiscal year under review to the date ofsubmission of the Annual Securities Report.
(1) Annual Securities Report, documents attached thereto, and confirmation letter
Fiscal year (FY2019) (from February 1, 2018 to January 31, 2019): Submitted to Director General of the Kinki Local Finance
Bureau on April 25, 2019(2) Internal control report and documents attached thereto
Submitted to Director General of the Kinki Local Finance Bureau on April 25, 2019(3) Quarterly reports and confirmation letter(FY2020, Q1) (from February 1, 2019 to April 30, 2019): Submitted to Director General of the Kinki Local Finance Bureau on
June 11, 2019
(FY2020, Q2) (from May 1, 2019 to July 31, 2019): Submitted to Director General of the Kinki Local Finance Bureau on
September 11, 2019
(FY2020, Q3) (from August 1, 2019 to October 31, 2019): Submitted to Director General of the Kinki Local Finance Bureau on
December 11, 2019(4) Extraordinary report
Submitted to Director General of the Kinki Local Finance Bureau on April 26, 2019
This extraordinary report is based on Article 19, paragraph (2), item (ix)-2 (result of exercising voting rights at a General Meetingof Shareholders) of the Cabinet Office Order on Disclosure of Corporate Affairs.

- 49 -

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

- 50 -

Independent Auditor’s Report and Internal Control Audit Report
April 23, 2020

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

YONO Kenji, Designated Limited Liability and Engagement Partner,
Certified Public Accountant

Financial Statement Audit
To execute audit certification pursuant to Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act, we audited Artner
Co., Ltd.’s financial statements for FY2020 (reporting period 58; from February 1, 2019 to January 31, 2020) shown in “Financial
Information,” namely the balance sheet, statement of income, statement of changes in equity, statement of cash flows, significant
accounting policies, other notes, and supplementary schedule.
Responsibilities of Management for Financial Statements
Management is responsible for preparing and correctly presenting financial statements in accordance with business accounting standards
that are generally accepted as fair and appropriate in Japan. This includes designing and implementing internal control that management
has decided is essential to prepare and correctly present financial statements that contain no material misrepresentations due to a wrongful
act or errors.
Responsibilities of the Auditor
The auditor is, based on the audit it has conducted, responsible for expressing its opinions on the financial statements from an
independent viewpoint. We conducted the audit in accordance with auditing standards that are generally accepted as fair and appropriate
in Japan. Those standards require that we formulate an audit plan and perform the audit according to the plan to obtain a rational
guarantee as to whether the Company’s financial statements contain any material misrepresentations.
In an audit, procedures are followed to obtain audit evidence about the amounts and other information disclosed in the financial
statements. The procedures for the audit are selected and applied at the auditor’s discretion based on the assessment of the risk of material
misrepresentations in the financial statements due to a wrongful act or errors. Although expressing an opinion about the effectiveness ofinternal control is not the objective of a financial statement audit, the auditor reviews internal control associated with the preparationand correct presentation of financial statements in order to plan appropriate audit procedures that are suitable for the situation when it
conducts risk assessment. In addition, an audit includes the evaluation of the overall presentation of the financial statements, which
involves the assessment of the accounting policies adopted by the Company’s management and how the policies are applied, along withthe estimates made by the management.
We are certain that we have obtained sufficient and appropriate evidence that serves as the basis for our opinions.
Opinions
We acknowledge that the above financial statements comply with the business accounting standards that are generally accepted as fair
and appropriate in Japan to correctly present, in all material respects, Artner’s financial status as of January 31, 2020 as well as its
business performance and cash flows for the fiscal year that ended on the same date.
Audit of Internal Control
To execute audit certification pursuant to Article 193-2, paragraph (2) of the Financial Instruments and Exchange Act, we audited Artner
Co., Ltd.’s internal control report that was current as of January 31, 2020.
Responsibilities of Management for an Internal Control ReportManagement is responsible for designing and implementing internal controls over financial reports in order to prepare and correctly
present the Company’s internal control report in accordance with standards that are generally accepted as fair and appropriate in Japanfor evaluation of internal controls over financial reports.
There is a possibility that internal controls over financial reports may not completely prevent or detect all misrepresentations in financial
reporting.

Responsibilities of the Auditor
The auditor is, based on the internal control audit it has conducted, responsible for expressing its opinions on the internal control reportfrom an independent viewpoint. We audited Artner’s internal control in accordance with standards that are generally accepted as fair
and appropriate in Japan for an audit of internal controls over financial reports. The standards for an audit of internal controls overfinancial reports require that we formulate an audit plan and perform the internal control audit according to the plan to obtain a rational
guarantee as to whether the Company’s internal control report contains any material misrepresentations.
In an audit of internal control, procedures are followed to obtain audit evidence for the results of the evaluation of the Company’s internal
controls over financial reports in the internal control report. The procedures for the audit of internal control are selected and applied at
the auditor’s discretion based on the materiality of the impact on the reliability of the Company’s financial reporting. In addition, an
audit of internal control includes the examination of the overall presentation of the Company’s internal control report, including
statements made by management about the scope of the evaluation of internal controls over financial reports, assessment procedures,
and assessment results.
We are certain that we have obtained sufficient and appropriate evidence that serves as the basis for our opinions.
Opinions
We acknowledge that the above internal control report, in which Artner presents the validity of its internal controls over the financial
reports as of January 31, 2020, complies with the standards for the evaluation of internal controls over financial reporting that are
generally accepted as fair and appropriate in Japan to adequately present, in all material respects, the results of the evaluation of internal
controls over financial reports.
Interest That Must Be Indicated According to the Certified Public Accountants Act of Japan
We do not have any interest in the Company that should be indicated herein according to the Certified Public Accountants Act of Japan.
END
Notes: 1. The above is a digitized version of the matters stated in the original auditor’s report, and the Company retains the original.
2. XBRL data are outside the audit scope.

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

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

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

April 23, 2020

[Company Name]

Artner Co., Ltd.

[Name and Title of Representative]

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

Not applicable.

[Address of Head Office]5-2, Nishidaimotsucho, Amagasaki, Hyogo(This address is the location of the registered head office. The company’s businessis conducted in the location shown below.)[Location for Public Inspection]

Sumitomo Nakanoshima Building 2F, Nakanoshima 3-2-18, Kita-ku, Osaka City
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo1. Particulars concerning the Fundamental Framework for the Internal Controls over Financial Reports
President and CEO SEKIGUCHI Sozo is responsible for designing and implementing internal controls over Artner’s financial
reports. He designs and implements internal controls over financial reports according to the fundamental framework for the internal
controls over financial reports indicated in “Revisions to the Standards for the Evaluation and Audit of Internal Controls overFinancial Reports and to the Implementation Standards for the Evaluation and Audit of Internal Controls over Financial Reports(Written Opinions)” published by the Business Accounting Council.
Internal control is designed in such a way that its basic elements are organically linked to work as one with the aim of achieving
objectives within a logical scope. Hence, there is a possibility that internal controls over financial reports may not completely
prevent or detect all misrepresentations in financial reporting.

2. Particulars concerning the Scope of Evaluation, the Reference Date, and the Procedures for Evaluation
The evaluation of internal controls over financial reports was conducted with January 31, 2020, (the last day of the fiscal year underreview) being the reference date. It complies with standards that are generally accepted as fair and appropriate for evaluation ofinternal controls over financial reports.
In this evaluation, we assessed the internal controls that have a material effect on overall financial reporting (i.e., company-wide
internal controls) and, based on the assessment results, we selected the business processes to evaluate. In the evaluation of thebusiness processes, we analyzed these selected processes, identified the main points in terms of control that have a material effecton the reliability of the Company’s financial reports, and evaluated how these main points are designed and implemented for control,
thereby evaluating the validity of the internal controls.
In regard to the scope of the evaluation of internal controls over financial reports, we determined the essential scope in light of themateriality of the impact on the reliability of Artner’s financial reports. We consider the materiality of a monetary and qualitative
impact to determine the materiality of the impact on the reliability of our financial reports. Based on the results of the evaluation ofcompany-wide internal control we had conducted, we logically determined the scope of the evaluation of internal controls overbusiness processes.
In regard to the scope of the evaluation of internal controls over business processes, the evaluation covers all our business bases.
The evaluation covered the business processes that were gone through to record net sales, accounts receivable, and cost of sales(personnel costs), which are the account titles closely connected to the objectives of our business, at those business bases. We also
added business processes connected to significant account titles where material misrepresentations can occur with high possibility,
and that involve estimates and projections, to the list of material business processes for evaluation, taking into account the impact
on our financial reports.

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

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

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