17 November 2017
To whom it may concern
Wedge Holdings Co., Ltd.
Tatsuya Konoshita,
Representative Managing Director& CEO(Code 2388 TSE JASDAQ Market)
Contact: Yasuhiro Kotake,
IR Representative(Tel: 03-6225-2207)(Progress report) Regarding the establishment of independent third-party committee
We, Wedge Holdings CO., LTD, announced on 14 November 2017 that Group Lease
PCL (GL) released the financial statements for the third quarter of 2017 and received aqualified audit opinion for the financial statements. We would like to announce thattoday the board of directors of Wedge Holdings have resolved to establish anindependent third-party committee to investigate the fairness of the transactions
excluded from the audit opinion which concluded it as qualified. The details are asindicated below.
1. Reasons for the establishment of independent third-party committee(1) Announcement from The Securities and Exchange Commission (SEC)
On 16 November 2017, SEC announced that they filed a criminal complaint with theDepartment of Special Investigation (DSI) against Mr. MITSUJI KONOSHITA, the thenCEO of GL for falsification and corporate fraud case. The subject transactions for its
investigation are loan transactions from Group Lease Holdings PTE LTD (GLH), awholly owned subsidiary of GL, to borrowers in Cyprus and Singapore amounting toUSD 54million. The SEC alleges the loans were transferred from the lender groupcompanies by instruction of Mr. MITSUJI KONOSHITA and finally the groupcompanies repaid installments to GLH.
The interest revenue from the transactions were overstated which caused an
impact on GL's financial statements to exaggerate the loan transactions since theloan's interest rate was approximately 14-25% per year. As a result, Mr. MITSUJI
KONOSHITA was unqualified for holding the positions of directors and executives of
any issuing and listed companies and no longer held such positions as of that date.
Moreover, on 19 October 2017 SEC announced that if GL's directors do not amend
the financial statements and permit to present a false or inaccurate financialstatements, this might be failure to comply with Section 312 of the Securities andExchange Act.

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(2) Revised auditor’s opinions from GL’s independent auditor
On 27 October 2017, GL received from its independent auditor revised audit reports
with the opinion changed from “Unqualified” to “Disclaimer”. The revision andmodification are subject to financial statements of 3 quarters below.
+ Consolidated financial statements for the year ended on 31 December 2016
(Dated 28 February 2017)+ Quarterly financial statements for the first quarter ended 31 March 2017 (Dated 12May 2017)+ Quarterly financial statements for second quarter ended 30 June 2017 (Dated15
August 2017)(3) Reasons for Revised audit report from GL’s independent auditor
The Auditor stated their reasoning for the change of opinion in the revised reportwhich is that the “Because of that executive being legally charged and underongoing official investigation and the ongoing legal process that have yet to beconcluded and also the limitation as a professional auditor in searching for real
status of these loan transactions when the real borrowers could be the Company
itself, I am therefore unable to carry out any additional tasks further except to await
for an official legal consideration and investigations for the final outcome since theauthority has more scope and power to search for the true position. Therefore,
under this circumstance that is now known to me, I have to modify my previous
opinion on the consolidated financial statements and the Company’s financial
statements…to the present opinion that I am unable to render the respective
opinions for those related period.” The changes made to the Revised Report relate
only to the auditor’s opinion. The statement of financial position, statement ofcomprehensive income, statement of change in equity, and statement of cash
flows all remain unchanged.
(4) GL’s Response
GL had a discussion with our auditing firm while simultaneously reviewing the financial
statements and loan accommodations up to this point, and decided to allocate anallowance to all the related loans and uncollected interest. This is a response to thenotification from Thailand’s Security Exchange Committee on 19th October 2017, and at
the same time, and this is also integrating all the possibility of probable loss generation,and therefore we believe that we are providing stakeholders with an opportunity tojudge the soundness of GL’s financial statements.
As stated above, because of the reasons that all the problematic transactions
on financial statements have been dealt with, the auditing firm’s opinion upon the third
quarterly financial statements on December 2017 is that the audit report of qualified
opinion is received.

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For the details regarding the allowance that is generated when establishingGL’s third quarterly financial statements on December 2017, please refer to “The
Notification about the Occurrence of the Events that Causes Significant Effect onFinancial Statements at the Subsidiary Group Lease PCL”, which is released on 14th
November 2017.
(5)The Company’s Response
The Company has carefully discussed with our auditing firm about the GL’s
reception of the qualified opinion’s review report which GL has received by releasing
their third quarterly financial statements on December 2017. As a result, the qualified
opinion is publicised saving for the section of loan and other interest income against theCyprus and Singapore’s debtors. Hence, the Company determined that it is appropriatethat those excluded transactions’ appropriateness and effectiveness to be evaluatedby external experts, and therefore today, we resolved of setting up the third-party panel.
We believe that, taking into the investigation result by the third-party panel
account, we reflect the transaction into the Company’s consolidated financialstatement.
２．The purpose of set up of the independent committee
To investigate the below points on loan receivables to the borrowers in Cyprus andSingapore and its interest income:（１）the fact of this transaction（２）the appropriateness of this transaction（３）the possibility if there is any legal issue and responsibility on this transaction（４）the others which the committee recognizes to investigate
３．composition of independent committee
The independent committee is composed of members who do not have any stake inthe company. Therefore, there is independency and neutrality of the independentcommittee.
The appointment of the committee has been done according to Guideline forindependent committee in misconduct of companies（revised on 17 December, 2010）”
which was settled by Japan Federation of Bar Associations.
（reference）member of committee
Position

Name

Licentiate

Chairman

Tetsuya Takano

LawyerCommittee

Hajime Nose

Certifiedaccountant

Representative director, Tokyo
Financial Advisors co.,ltd.

Committee

Kohei Yamada

Certifiedaccountant

Representative, LR accounting-3-Others
Partner, Daichi Law office＊independent committee will appoint a lawyer in charge of the investigation, anddelegate whole of the investigation including field investigation.
４．Further schedule
The company and GL will thoroughly corporate the investigation of the fact which theindependent committee conducts, and work to confirm the appropriateness and thevalidity of transaction. The result of investigation by independent committee will bedisclosed promptly.
Progress report of the investigation is expected to be submitted by the independent
committee around 11 December, 2017.
It’s not confirmed yet how much the impact on the business result is and will beinformed promptly once confirmed.
We would like to show our deepest apologies to all those concerned parties, including
investors, for the troubles.
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