Rakuten, Inc.
Annual Report 2012

Annual Report

Fiscal Year Ended December 31, 2012

Rakuten, Inc.
TEL: +81-3-6387-1111 URL: http://global.rakuten.com/corp/investors/
Shinagawa Seaside Rakuten Tower, 4-12-3 Higashishinagawa, Shinagawa-ku, Tokyo 140-0002, Japan

Rakutenis Unique
Annual Report
Fiscal Year Ended December 31, 2012

Our Mission

Corporate Information

Since Rakuten’s foundation in 1997, it has been our corporate mission to empower people andsociety through the Internet, while aiming to become the No. 1 Internet services company in theworld. Many online shopping sites at the time of our foundation were little more than online web
catalogs, and few believed that consumers would buy products and services on the Internet. It
was during such a time that we boldly launched the Internet shopping mall Rakuten Ichiba. Oursite was created based on the concept of not having Internet-savvy people run the business, but
creating a platform that enabled ordinary people skilled in retail to open their own online shops.
Beyond Rakuten Ichiba, the Rakuten Group has expanded into a diverse array of one-stop
online services in Japan, including travel, eBooks & eReading, banking, securities, credit cards,

Company Overview

Number of Shares and Shareholders(As of December 31, 2012)

Name

Rakuten, Inc.

FoundedFebruary 7, 1997

Service Launched

May 1, 1997

IPO

April 19, 2000

Capital108,255 million yen(As of December 31, 2012)

Employees

9,311 (Consolidated)

Major Shareholders

Headquarters

Shinagawa Seaside Rakuten Tower, 4-12-3
Higashishinagawa, Shinagawa-ku,
Tokyo 140-0002, Japan(As of December 31, 2012)

insurance, and professional sports. We are also accelerating our overseas expansion andsharing with our overseas group companies the unique business model and ecosystem that we

Number of Shares Authorized

3,941,800,000

Total Number of Shares Issued

1,320,626,600
83,450

Number of Shareholders

The Company splited one share into 100, and adopted Share Unit System, which defines 100 shares as one trading unit, on July 1, 2012.

Name

Number ofsharesPercentage
heldhave built in Japan—starting with our e-commerce, eBooks & eReading, and travel businesses—

Crimson Group, Inc.

226,419,000

17.14

along with our corporate commitment to the empowerment of individuals and society. We will

Hiroshi Mikitani

203,072,000

15.38

continue to move forward to the creation of a truly global Rakuten ecosystem.

Haruko Mikitani

141,125,000

10.69

JP MORGAN CHASE BANK 380055

63,428,463

4.80

Masuda and Partners Inc.

33,161,000

2.51

THE CHASE MANHATTAN BANK 385036

30,171,300

2.28

STATE STREET BANK AND TRUST COMPANY

25,926,963

1.96

CBNY-ORBIS FUNDS

23,878,903

1.81

MELLON BANK, N.A. AS AGENT FOR ITS
CLIENT MELLON OMNIBUS US PENSION

21,006,741

1.59

JP MORGAN CHASE BANK 385164

19,991,600

1.51

Stock Information

Rakutenmembers:

82

millionGrosstransaction
volume in Japan:

Number of
Rakuten Ichiba
merchants:

4

Over

40,000¥
trillion

Stock Code4755 (JASDAQ Tokyo Stock Exchange)

Fiscal Year

January 1 to December 31

Month of Annual General
Shareholders’ Meeting

March

Shareholder
Record Date

December 31

Transfer Agent

Sumitomo Mitsui Trust Bank, Limited

Contact

Sumitomo Mitsui Trust Bank, Limited

Notes:	Crimson Group, Inc. implemented an organizational change as of December
27, 2012, and structured as Crimson Group, LLC.

Stock Transfer Agency Department
2-8-4 Izumi, Suginami-ku,
Tokyo 168-0063, JapanClassification by Type of Shareholder(As of December 31, 2012)

Cross-use ratio:

Over

50%

Share ofJapanese online
retail market:

EC/Internet
businesses in

20

Nearlycountries/
regions

30%

Individuals
Foreign financial institutions
and individuals

Inquiry

Other domestic corporations
Domestic financial institutions

Investor Relations, Rakuten, Inc.
URL http://global.rakuten.com/corp/investors/

Securities firms
Others(As of December 31, 2012)

Contents

1
12
16
17
20
21

To Our Shareholders
A CSR Partnership for Sustained Growth
Financial Highlights
Review of Operations
Board of Directors
Corporate Governance26
32

Financial Section
Consolidated Subsidiaries andAffiliated Companies

34
35

Corporate History
Corporate Information

36.61%
38.60%
20.04%
4.23%
0.51%
0.01%

Cautionary Statement
In this report, unless indicated otherwise, references to “Rakuten”, “Rakuten Group”, “we”,”our” and “us” are to Rakuten, Inc. and its consolidated subsidiaries and consolidated affiliates. Statements regarding current plans, strategies, beliefs and other statements that are
not historical facts of the Rakuten Group are forward-looking statements.
Such forward-looking statements are based on management’s assumptions and beliefs
in light of information currently available, and it should be noted that risks and unforeseen
factors could cause actual results to differ significantly from those discussed in the report.
We do not intend to update these forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by applicable laws.
“Rakuten”,
andare registered trademarks of Rakuten, Inc. in Japan.

Origins of the Name Rakuten
Rakuten Ichiba is named after Rakuichi-Rakuza , the first free and open marketplacein Japan, opened in the 16th century.
When used as a verb, raku is written with a Chinese character meaning to enjoy
oneself ( 楽 ). The same character is used in Rakuten, which means “positive spirit.” The
name Rakuten Ichiba literally means a “market of positive spirit,” where shopping isentertainment. These words symbolize the driven, forward-looking nature of ourbusiness. That is why we named our company Rakuten, Inc.

35

To Our Shareholders

Unique?
Absolutely,
and transferable
worldwide
Shop-centric rather than product-centric,
the Rakuten Ichiba model is both uniqueand highly profitable. With our long-termgoal to be the global No. 1 Internet services
company, we are focusing on our Ichiba
marketplace e-commerce to build
competitive positions internationally. Signs
in 2012 confirm we are on the right track.

Hiroshi Mikitani
Chairman and CEO

1

To Our Shareholders

Results for Fiscal 2012
Our consolidated financial results for

These results emerged from anfiscal 2012 (the year ended December

environment transformed by the31, 2012) included record highs for

spread of the Internet, its evolution asrevenue and operating income,a social infrastructure platform, andmarking our fifth consecutive year of

its continuing role as a growth driver

operating income growth excluding

for the world economy. First, theadditional line items, as well as our

Rakuten Group has gained an

15th consecutive year of revenue

overwhelming advantage in thegrowth. On these results, we paid aJapanese e-commerce market,

dividend of ¥3 per share for fiscal

especially through Rakuten Ichiba.

2012 (¥250 per share for fiscal 2011).

Second, solid earnings trends haveThis is equivalent to ¥300 per sharestarted to emerge in the Internet

when a 1:100 share split on July 1,

finance business. Third, we are2012 is taken into account.

starting to reap the benefits of

Net income for fiscal 2012 wasintroducing the Rakuten business¥21,136 million (IFRS). This resultmodel in other countries. By

reflects additional line items, including

introducing our unique corporate

restructuring losses resulting from thephilosophy of empowering people

reorganization of our U.K. consolidated

and society through the Internet, we

subsidiary Play.com, as well as ahope to continue to grow the Rakuten

goodwill impairment loss caused by aGroup globally and to raisechange in the business model of ourshareholder value.

U.S. subsidiary Buy.com.

“	Rakuten’s domestic
e-commerce businessgenerated grossmerchandise sales(GMS) of ¥1.4 trillion in2012, and this growth
has continued in thecurrent fiscal year. We
are now working
toward our next goal,
GMS of ¥10 trillion. ”

Strengthening our Unique Business Platform
Rakuten aims to introduce

Rakuten Ichiba to provide a uniqueconsumers to the ‘joy of discovery’

merchant-centered Internet shopping

through our Ichiba Internet shopping

mall. We have also developedmall, and to create an environment

initiatives based on our “Shopping iswhere merchants and consumers

Entertainment” concept and developed

can interact in the same way theytargets for the realization of the “Happymight in a real-world marketplace,

Merchants + Happy Shoppers =where transactions can be engaging,

Happy Commerce” formula.

exciting, informative and personal.

Rakuten’s domestic e-commerce

To do this, we have created abusiness generated gross merchandisebusiness model that satisfies bothsales (GMS) of ¥1.4 trillion in 2012,

consumers and merchants, by using

and this growth has continued in the2current fiscal year. We are now

place greater emphasis on theworking toward GMS of ¥10 trillion

Rakuten brand.

and sustainable growth.

The development of the global

By providing one-stop access to

Rakuten ecosystem is expected toInternet-based services, we haveaccelerate as a result of recent

achieved positions of leadership in all

acquisitions, including the Canadianof our business segments in Japan.

e-book company Kobo, Alpha Direct

The growth of Rakuten Ichiba has been

Services (ADS), which is a major

paralleled by a sustained rise in thelogistics company in France, and thepower of the Rakuten brand in Japan.

Spanish video streaming company

Awareness of Rakuten is also

Wuaki.TV. We see these moves as therising in overseas markets. Rakuten

start of a new transition in ouris the only Japanese company

overseas e-commerce activities.

selected for inclusion among the 50

In July 2012, two years after firstglobally successful companies

announcing our Englishnization project,

whose growth strategies were

English became the official language

analyzed in the book Grow, by Jim

throughout the Rakuten organization.

Stengel, a former P&G global

This change has already produced

marketing executive who is now asurprising benefits by stimulatingwell-known marketing consultant.

communication among the manyOver the past few years thenationalities within the Rakuten Group,

Rakuten Group has rapidly expanded

and by accelerating the introduction of

its activities globally. However, we

the Rakuten model by overseas groupregard 2012 as the starting point forcompanies. The use of a common

our evolution into a truly global

language is also helping us to sharecompany. We apply our B2B2C

stories of our successes in Japan, alongmarketplace business model to every

with our technologies and expertise,overseas group company that wewith group companies worldwide.

acquire. At the same time we are

Another benefit is the fusion of

ensuring that all overseas employees

Japan’s unique culture of omotenashi

gain a thorough understanding of the(hospitality) with advanced technologies

concept of Rakuten Shugi, which isand development methods fromthe corporate culture and philosophy

Western countries. We believe thatdeveloped by the Rakuten Group inprocess is starting to generate new,Japan, so that they can identify

unique values.

themselves as part of a group

In 2013, we aim to transformorganization united by highRakuten into a truly global organization

aspirations and work with us tothat is backed by the uniqueness andachieve ambitious goals.

strengths we have built up in Japan,

We are also working to develop

promote our regional headquarters in

the Rakuten brand into a strong

Asia, Europe and the Americas,

presence in overseas markets, in partwhilst globalizing our humanby changing company names toresources platform.
3“	Over the past few
years the Rakuten
Group has rapidly
expanded its
activities globally.
However, we regard
2012 as the starting
point for our evolution
into a truly global
company. ”

To Our Shareholders“	In 2012, we continued
to enhance services
for smartphone andtablet users, while
also using campaigns
based on the Rakuten
Super Points system,
to motivate users tomake purchases. ”

Initiatives and Results in Business Segments
Domestic e-Commerce

the number of merchants increased to

Rakuten Ichiba is the global pioneer ofover 40,000. There was also a rapid

the B2B2C marketplace, which

increase in transactions via mobile

provides the platform, traffic anddevices and tablets as a percentage ofexpertise to empower even small-scale

the gross transaction volume ofretailers to set up their businesses on

Rakuten Ichiba. There was a

the Internet. In addition to theparticularly significant rise in the

overwhelming strength of Rakuten

number of smartphone applications.

Ichiba, the rapid proliferation of

We responded to this expansion

smartphones and tablets and theof our e-commerce business in Japan

resulting lifestyle changes also

by further strengthening our domestic

contributed to the sustained expansion

logistics systems. In July 2012, weof our business in this segment.

launched our own delivery service for

In 2012, we continued to enhancefood items ordered from our Internet

the Rakuten Group’s services forsupermarket, Rakuten Mart. In addition

smartphone and tablet users, while

to our existing distribution center inalso using campaigns based on the

Ichikawa City, Chiba Prefecture, which

Rakuten Points system, such as

was opened in 2010, we commenced

Rakuten Super Sales, to motivate

construction of a new center inusers to make purchases. At the same

Kawanishi City, Hyogo Prefecture. The

time, we further enhanced merchanttarget date for completion is November

support and improved next-day

2013. We will use these distributiondelivery systems and other aspects

centers to strengthen the Rakutenof our services. In September 2012,

Super Logistics system.

we introduced the new “Diamond”

In November 2012, we acquired

rank as the top level in the Rakuten

the French logistics company Alpha

Points Club with the aim of providing

Direct Services (ADS). We plan tousers with additional motivation to

use that company’s advanced

make purchases.

technology and expertise in our

In December 2012, we launched

distribution centers.

Rakuten Smart Pay, a credit card

Gross booking transaction volume

settlement service that can be used via(GTV) for our travel services grew bysmall devices, such as smartphones.

12.9% year on year income. In addition

By keeping installation costs low, weto strong sales of Dynamic Packages,

encouraged merchants to introduce

this growth also reflects our efforts tosmartphone settlement services.

diversify income sources, including

These initiatives were reflected in

improvements to the consolidated

firm trends in the numbers of both

settlement service for corporate

unique purchasers and orders, whileaccommodation bookings.

4

Rakuten Ichiba and Books’
GMS surpassed¥1 trillion

Over

¥1
trillionin October 2012

High Value Added

RakutenSuper Points
The No.1 point program

Rakuten Super Points is the most popular loyalty
points program in Japan. Points can be earned
through shopping and various other services in
the Rakuten Group's ecosystem.

’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12

Rank

Company

Score

1

Rakuten

266

2

ANA

200

3

MACROMILL

124

4JCB Card

121

5

JAL

117

Source: Point “Tanken” Club

Growth ofDomestic EC Market
RakutenSuper Logistics

Mobile GMS

674

times

in Rakuten Ichiba
2001=1’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12

Rakuten Travel’s gross booking
transaction value increased

Set to cover 65%
of population, 71% ofvolumes of five facilities

Tohoku Area

12.9 %¥475.1billionYoY

Kawanishi City, Hyogo

Kyushu Area

Chukyo Area

Ichikawa City, Chiba

Completed

Scheduled

5’08 ’09 ’10 ’11 ’12

To Our Shareholders“	The benefits of thesechanges wereapparent from growthin card shoppingtransactions, whichwere 36.0% higher
year on year.
Operating revenues
and operating income
also showed healthy
growth, and Rakuten
Securities’ investment
trust balance
surpassed ¥300 billion. ”

Internet Finance

Securities’ investment trust balance

Strong growth in the card, banking

surpassed ¥300 billion.

and securities businesses in 2012 was

In June 2012, Rakuten Edy

indicative of a clear expansionarychanged its trading and service names

trend in this segment.

from Bit Wallet to Rakuten Edy. Since

We reorganized our card businessthen it has provided e-money services

in 2011. The benefits of these changes

as Rakuten Edy. Rakuten Edy has

were apparent from growth in card

begun to install multi-e-money

shopping transactions in 2012, which

terminals that can also be used towere 36.0% higher year on year ataccess e-money services provided by¥1,802 billion. Both operatingt ransp ort at i on and d i st ri bution

revenues and operating income also

companies, in retail outlets, restaurants

showed healthy growth.

and other locations. It recorded

There was further expansion ofquarterly profits for the first time since

the contribution made by the Super

its establishment. In January 2013 it

Loan business of the Rakuten Bank aslaunched a coupon site, Rakuten Edy

an income growth driver. The balance

Smart Coupon, as a new online toof loans outstanding reached ¥181.8

offline (O2O) service.

billion, while total loan customers
climbed to 216,000.

Airio Life Insurance, whichbecame a consolidated subsidiary in

Rakuten Securities recorded a

October 2012, achieved healthy

substantial increase in domestic share

growth in the number of insurance

trading, and the number of newpolicies and annualized insurance

accounts opened reached 10,000 perpremiums. In April 2013 it changed its

month. The number of accounts

company name to Rakuten Liferegistered for the Money Bridge

Insurance, allowing it to use the power

service, which links accounts withof the Rakuten brand to strengthen its

Rakuten Bank accounts, reachedsales of insurance products.

130,000. In February 2013, Rakuten

6Profits from Internet
Finance business
surged byInternet Finance82.8 % YoY

Rakuten Card Shoppingtransaction value exceeded¥1,800 billion
and revolving balance¥160 billion

Rakuten Bank’s“Super Loan”
receivables exceeded¥181 billion
and Super Loancustomers reachedLoan
receivables¥181.8billionRakuten Edy(E-Money)
introduced at

Total loancustomers

216,308
persons

216,000

350,000

stores, commercial
and travel facilities
Dec Mar Jun Sep Dec’11 ’12 ’12 ’12 ’12

Rakuten aquired

AIRIO Life Insurance
a mid-sized insurance company,
and aims to transform its Internetpresence, renaming it Rakuten
Life Insurance

7120,000
users
for Rakuten Securities“Money Bridge ,” a service
linking accounts with
Rakuten BankTo Our Shareholders“	Our overseas
marketplace
e-commercetransaction value
grew by 49% YoY due
to the success of theunique and highly
profitable Rakuten
Ichiba model. ”

Overseas e-Commerce
Business

Rakuten model to overseas markets

We continued to develop the Rakuten

through regional headquarters. Our

Group’s overseas activities

aim is to provide consumers withdynamically in the year under review.

opportunities to enjoy shopping by

In April 2012, we launched Rakuten.

continually enhancing our productcom.br Shopping, a new Internet

lineups, price competitiveness andshopping mall in Brazil. This wasdelivery services. We are also

followed in November by the launch of

introducing the Rakuten Super Points

Rakuten Online Shopping in Malaysia

system aggressively, while using KPI

as our first overseas greenfield venture

management to strengthen costestablished by Rakuten without thecontrol.

help of a local partner.

Specifically, we are extending theAnother focus will be theWe also continued to expand ourcreation of a global IT development

activities beyond the e-commerceorganization to enhance our ability tofield, and to develop a major

keep pace with the global growth of

involvement in the digital content

mobile e-commerce.

business. For example, in May we

We expanded our involvement inacquired an equity stake in Pinterest,

overseas logistics with the acquisitiona major SNS site in the United States,of the French logistics company,

while in June we acquired the Spanish

Alpha Direct Services (ADS), invideo streaming company Wuaki.TV

November 2012. ADS automation

as a wholly owned subsidiary.

technology, which spans all stages

These initiatives were paralleled byf rom i nvent ory management tothe continuing process of applying thedelivery services, will be used to

Rakuten Ichiba business model thatprovide efficient fulfillment services to

has evolved in Japan to the companies

overseas group companies.

that we have acquired overseas. Our

We are also actively expanding

overseas marketplace e-commerce

our overseas activities in the area oftransaction value grew by 49% YoY in

travel. Rakuten Travel opened sales

2012 to ¥45.7 billion, which confirmed

offices in Nanjing, Hangzhou andthe growth potential of the unique andTsingtao, China in February 2012, andhighly profitable Rakuten Ichiba modelin Manila in the Philippines and Hoin other countries. We aim to maintain

Chi Minh City, Vietnam in January andincome growth over the medium- to

Malaysia in February 2013. In March,long-term future by focusing on theit established Rakuten Traveltransition to marketplace-based

Singapore Pte. Ltd. as its first local

e-commerce in our overseas

subsidiary in Southeast Asia.

activities, and by capitalizing on ourcompetitive advantage.

8

Sharing marketplace know-how (yokoten)
to bring synergy for GMS growth• Super Points• University• EXPO• Super Points• EXPO• R-tool box• Super Points• University• EXPO• Marathon• Super Sale

• Super Points• University• EXPO• Marathon• RMS• Super Points• University• EXPO• Super Points• University• EXPO• Super Points• University

Initiatives for Growth of Global E-commerce

Attractive shopping destination via Happy Commerce• Entertaining consumers• Improving product lineup, price competitiveness and delivery quality• RMS• Super Points• Super Sale

Quarterly Marketplace GMS

Overseas
Companies+23.4%

Rakuten Model Integration through Regional HQs• Branding, Storefront, R-mail (EDM), Rakuten Super Points

Offering fulfillment services with ADS
Higher take rate
• Adoption of fixed fees at Buy.com

Lean and strong operation• Cost control under KPI management• Promoting Agile IT development and mobile commerce

Global Marketplace

9

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4’11 ’11 ’11 ’11 ’12 ’12 ’12 ’12Marketplace = Rakuten Ichiba Taiwan + Tarad Premium Mall +Lekutian + Buy.com marketplace + PriceMinistermarketplace + Rakuten Belanja Online + Rakuten
Deutschland + Play.com marketplace + Rakuten
Brasil marketplace (from Q2/12).

To Our Shareholders“	The company plans todevelop a highlysophisticated e-bookbusiness model byadding unique social
functions, an
expanding range of
devices and languages
and building win-win
relationships withleading local retailers
and publishers. ”

e-Books

was distributing over 100,000 titles

In January 2012, we acquired Kobo

in Japan.

Inc., which is involved in the e-bookKobo’s e-book business hasreader and content business. At thecontinued to expand steadily in Japan

time of the acquisition Kobo was active

and in overseas markets. The company

in eight countries, but the businessplans to develop a highly sophisticatedexpanded rapidly in fiscal 2012, and ae-book business model by adding

further seven countries were added.

unique social functions to its services,

Kobo also released three new devices.

and by providing support for an

According to the IT industry

expanding range of devices andnewspaper Digitimes, Kobo gained alanguages. It will also step up its efforts

20% share of global e-book reading

to build win-win relationships with

device shipments in 2012, after only

leading local retailers and publishers.

three years since its establishment in

We see Kobo as a trailblazer for the

2009. Its content has expanded to 3.2

overseas expansion of the Rakuten

million titles in 68 languages, and there

Group, since our entry into many

has also been strong growth in themarkets is likely to begin with e-books

company’s content sales, which morerather than e-commerce.

than doubled in fiscal 2012. The

The global expansion of the

cumulative number of users reached

Rakuten Group is reflected in the

12 million at the end of 2012, and there

growth of our worldwide membership.

was an increase of 4 million in between

We will continue to realize ourJuly and December 2012.

commitment to the empowerment of

In Japan, Kobo launched theindividuals and communities by

Kobo Touch in July 2012 and began

increasing our efforts to bringto distribute content. The Kobo Glo

increased vitality to communities inwent on sale in November, followed

Japan and in the overseas countries

by the Kobo Mini in December. Kobo

where we are active. Our aim is tocontinues to enhance its range ofcontribute to economic prosperity indevices and functions for readers,Japan and globally through theincluding the introduction of an

growth of the Rakuten Group in the

Android app for Japanese users in

medium- to long-term future.

December. By the end of 2012, Kobo

10

Kobo has

12 Million users
in 197 countries.
Kobo’s growth rate
significantly outpaces
the competition.

> Global content store with

3.2 Mil. titles in 68 languages> A family of award-winninge-reading devices and apps
provide universal access tocontent & industry leading
experience> A unique global model thathas created the world’s
largest network of exclusive
retail partners providing
access to the best customers

Global e-reader
Market Share20%

Kobo Quarterly Revenues(As of December 31, 2012)

Q4 Q1 Q2 Q3 Q4’11 ’12 ’12 ’12 ’12Japanese market deployment of e-book business
E-book reader “Kobo Touch” sales andservice in Japan was started in July 2012.
November 2012, a tie-up with Digital
Publishing Initiatives Japan Co., Ltd.
November 2012 “Kobo Glo” andDecember “Kobo Mini” sales start.
The number of Japanese-language titles
reached 100,000 in December 2012

E-book Business
11

A CSR Partnership for Sustained Growth

Renewed Vitality for Japan, and for the World
Rakuten’s founding philosophy is empowering people andthrough our core business activities. Every employee in every

society through the Internet. This commitment has been a

Rakuten business in Japan and overseas shares a strong

driving force for the growth and evolution of our businessawareness of the values of the Rakuten Group and is helping

activities. We define and clarify what we mean by

to achieve sustainable growth for Rakuten and build a“Empowerment” with the expression, “Renewed Vitality forsustainable society by putting the principle of empowerment

Japan, and for the World.” This remains our foremost

to productive use.

corporate value, a determination to contribute to society

Rakuten brand philosophy a global standout
Rakuten’s philosophy, expressed in the formula “Happy Merchants + Happy Customers = Happy
Commerce,” is also reflected in assessments of its brand value.
Rakuten was the only Japanese company selected as one of 50 global brands listed in “Grow: How
Ideals Power Growth and Profit at the World’s Greatest Companies” by leading international marketer Jim
Stengel*. An extremely high value was placed on the Rakuten Ichiba brand because of its success infostering partnerships between businesses and consumers. Other brands listed in Stengel’s book include
Accenture, Apple, Coca-Cola, Google, Mercedes Benz, Starbucks and Visa.
*	Jim Stengel is an American businessman, author, professor, and public speaker. He served as the global marketing officer of Procter & Gamble from2001 to 2008. Stengel is currently the president and CEO of The Jim Stengel Company, where he advocates for ideals-driven businesses and brands.

Empowering Merchants
Partnership Approachdirect contact with Rakuten

We recognize that the birth and growth of the Rakuten

Ichiba merchants. EachGroup would never have been possible without the strong

year, a theme linked tosupport of our business partners, who have worked

current trends is selectedalongside us and shared our belief in the future of thefor these events, which are

Internet. Since the opening of Rakuten Ichiba in 1997, weused not only to share

have worked to make the operation of shops as easy as

Rakuten strategies, but also

possible by repeatedly introducing a variety of

to find solutions to merchants’ problems and foster

enhancements to our system and marketing approaches

communications among partners. Approximately 5,000

and continually providing the best possible services tomerchants in Japan attended Rakuten Expo 2013 inmeet changing needs.

January 2013.
Rakuten Travel hosts the Rakuten Travel New Year

Conferences

Conference for the same purposes. This event, which

Rakuten holds Rakuten Expos annually in countries wheretargets hotels, inns and other accommodation facilities, is

we operate e-commerce business as opportunities forheld annually at seven venues.
12EC Consultants

Rakuten University and Rakuten Travel College

Rakuten employs EC (e-commerce) consultants whose task

Rakuten University wasis to help merchants with businesses operating on Rakuten

opened in 2000 as a provider

Ichiba to increase their sales and solve problems affectingof EC service expertise for

their activities. After first gaining a shared understanding of

Rakuten Ichiba merchants.

each merchant’s goals and vision, our consultants help

In 2004, Rakuten Travel

merchants to achieve their sales targets by providing wide-

established Rakuten Travel

ranging advice, including suggestions on ways to expand

College for operators ofsales, marketing strategies for each type of goods andhotels, inns and other accommodation facilities. Bothsharing best practices and success stories.

institutions help merchants to solve problems through theirown efforts by building databases of merchants’ successstories and problems, and by sharing that information in a
structured way.

Entertaining and Secure Shopping for Consumers
Customer Satisfaction

Rakuten Bank

“Shopping is Entertainment”—This core belief of the

Rakuten Bank has won the Asian Banker magazine’s “BestRakuten Group is behind our ongoing efforts to provide an

Direct Bank” award three years in a row.

entertaining and pleasant shopping experience throughinnovations that include the points program and customer
review system. These efforts are reflected in the highscores achieved by Rakuten Group companies in customer

Kobo Inc.

satisfaction surveys in Japan and overseas.

Wired Magazine included the Kobo Touch in its Editor’s

Nikkei BP—Brand Japan

Pick for 2012 as the best e-book reader. PC World gave it

Rakuten Ichiba’s rating as a consumer brand has risen

five stars out of a possible six and described it as “a realsteadily, reaching tenth place in 2012. Our points program

eye-opener” and “a lovely piece of hardware.” The Kobo

has also been rated as the most user-friendly loyalty

Glo was selected by Computer Bild as its “Test Winner.”

program in Japan.

Rakuten Card
Rakuten Card has achieved the number-one ranking in thecredit card category of the Japanese Customer Satisfaction

Rakuten LinkShare

Index (JCSI) for three consecutive years.

Rakuten LinkShare was the top-ranked affiliate network in
mThink’s “Blue Book” survey in two consecutive years.

13Technology and Information Security
Global R&D Network

ISMS Certification—ISO/IEC 27001

As a provider of Internet-based services ranging from

Information security management system (ISMS)

e-commerce to finance, the Rakuten Group aims to provide

certification is granted to organizations that comply withboth consumers and merchants with innovative services

the relevant international standards. Eighteen Rakuten

backed by a strong commitment to advanced research andGroup companies have obtained this certification.

development. Our personalization technology allows us toBusinesses operating in Rakuten Ichiba are required to

combine information about over 100 million registeredundergo information security testing and are only allowed

products supplied by over 40,000 Rakuten Ichiba businesses

to operate after passing these tests. As part of our efforts

with membership information for more than 80 million

to ensure that consumers can enjoy Internet shopping

people, while our product search engine can combinewith confidence, we also

prices, delivery and payment terms, reviews and otherencourage businesses toinformation for over 100 million items. We use big data

publish information on privacy

analysis systems, parallel and distributed computer systems

policies for each outlet, and toand other technologies capable of processing some of theappoint store security officers.

biggest data resources in Japan. Our innovative services are
the result of R&D based on information sharing among ourPrivacyMark

development organization and Rakuten Institute of

The PrivacyMark system provides certification forTechnology in Japan, as well as our research center in New

businesses that have established systems to protect

York, and engineering staff in overseas subsidiaries.

personal information. Seven Rakuten Group companies
have obtained PrivacyMark certification.

System Security
We are keenly aware that the ongoing development of the

PCI DSS

Rakuten Group’s business activities depends on our

We have obtained full compliance certification for the

information assets, including customer data and other

Rakuten Card under the Payment Card Industry Data

information, as well as the hardware and software that make

Security Standard (PCI DSS), which is the international

up our data systems. One of our most important

standard for credit card information security.

management priorities is the steady reinforcement of the
security measures used to protect these information assets.
Rakuten Group Companies are continually developing
security management structures based on the relevant
standards. The following types of certification have beenobtained on the basis of third-party audits.

Engagement with Stakeholders
For Greatest Possible Valueis determined develop its business activities in ways that

The mission of the Rakuten Group is to empower people

meet the expectations of all stakeholders who place theirand society through the Internet, and to transform andconfidence in it, and to provide the greatest possible value

enrich society through its own success. The Rakuten Groupaccording to the needs of each stakeholder.
14

Employees• Establishment of Machiraku

Solidarity is a key brand

The Machiraku site isconcept for the Rakuten

dedicated to the revitalization

Group. We provide a varietyof local communities inof information-sharing

Japan’s 47 prefectures. It is

opportunities to enable allused to distribute information

Rakuten Group employees

about the attractions of

to work together toward theindividual communities for the enjoyment not only of people

same goal as one big team.

who live outside of the prefectures concerned, but also of

These information-sharing

local residents and people who originally came from theopportunities include the morning meetings held at 8 a.m.

areas covered. The site also introduces local products thatevery Tuesday, and the half-yearly operating plancan be bought through Rakuten Ichiba, as well as travel

presentation meetings. We believe that it is important for all

and accommodation information from Rakuten Travel.

employees to share information and strategies at the same

Local government organizations are also able to supply

time, and for that reason we ensure that every employee isinformation directly through Machiraku, including seasonalable to attend these meetings by streaming them live to

updates and blogs by local government staff.

over 50 offices in Japan and overseas.

• Contributing with Kobo e-Books

Shareholders

Rakuten has worked in various ways to

The Rakuten Group works actively to meet its information

contribute to recovery and community

disclosure requirements as a listed company. To ensurerevitalization efforts, including thethat investors can assess our business performancepromotion of educational initiatives, in areas affected by theaccurately, we provide fair access to the wide-ranging

Great East Japan Earthquake of March 2011. One uniqueinformation needed to support investment decisions,form of assistance involves the use of Kobo e-books supplied

including management strategies, financial results and key

by the Rakuten Group as the basis for a mobile library

indicators, such as gross merchandise sales. In addition toservice. Launched in December 2012 in Fukushimameetings with institutional investors and analysts, we also

Prefecture, the service is based on mobile libraries equippeddisclose information actively, accurately and promptlywith up to 40 Kobo Touch e-book readers and around 500

through our investor relations website.

books for children. In January 2013, we donated Kobo Touch

We also receive a variety of shareholder input onreaders to 1,644 young people who had just come of age inmatters that include shareholder returns, policies on theseven municipalities in Iwate Prefecture.

allocation of management resources, and governance.
the aim of improving reciprocal understanding and• Rakuten Solar Club Membership Service—Solar
Mileage Club

improving both management quality and shareholder value.

The Solar Mileage Club is a membership service for users of

When necessary, we discuss issues with shareholders withsolar power systems installed by Rakuten Solar. Modeled onSociety and the Environment

airline frequent flyer systems, this is the first system in the

We aim to contribute to society through the businesssolar power industry that allows members to earn rewards

activities of the Rakuten Group in a number of priority

based on the amount of solar power (kWh) that they

areas, including community revitalization, education for

produce. For every 10,000kWh generated, members canchildren, and the solution of energy problems. Our priority

choose from among four rewards: a solar panel inspection, ais to use the strengths of the Rakuten Group to contributemodule cleaning service, or an energy-saving cleaning

in ways that reflect our unique characteristics.

service for either an air conditioner or range hood.
15

Financial Highlights (IFRS)

Thousands of
U.S. dollars

Millions of yen

Fiscal Year

2011

2012

2012

¥ 346,425¥ 400,444$ 4,625,129

76,13678,793910,056644

50,055578,134

9,631

21,136244,123$ 1,209,131

Income and Loss
Revenue
Operating Income before additional line items
Operating income
Net income
Cash FlowsNet cash flows from operating activities¥35,222¥104,687

Net cash flows from investing activities

60,26067,444

778,936

Net cash flows used in financing activities(47,405)(56,820)(656,268)

Assets and Liabilities
Total assets¥1,959,765¥2,287,634$26,422,199

Total liabilities

1,747,419

2,045,722

23,628,114

Total net assets

212,346

241,9122,794,085
U.S. dollars

Yen

Earnings Per Share Attributable to Owners of the Company
Net income (basic)¥6.08¥15.59$0.18

Net income (diluted)

6.06

15.56

0.18

Notes:	U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥86.58 to US$1, the approximate rate of exchange at December 31, 2012.

Revenue

Operating Income before
additional line items (Billions of yen)(Billions of yen)
500

100
400.4

400

Return on equity
(%)
10.0

78.8

80

6.0

300

60

200

40

100

20

0

0

0

-2.0

FY

’11

’12

8.1

8.0

4.0
2.0

FY

’12

’11

FY

’11

’12

Overview
from 28% to 29% to fortify our hold on theNo. 1 position.

• Consolidated financial results for the fiscal
year ended December 31, 2012 included
revenue of ¥400.4 billion together with
operating income before additional line items at¥78.8 billion (IFRS).

• Internet Finance income sharply jumped
owing to aggressive promotion of thesegment centering on Rakuten Card for its
notable synergies with Internet Services.

• Rakuten Ichiba and other services grew 15%
year on year in domestic e-commerce grossmerchandise sales (transaction value), lifting
our share* of the Japan e-commerce market*	From a Ministry of Economy, Trade, and Industry (METI) survey of the retaile-commerce market. Assumes 2012 year-on-year growth rate is the same as
2011.

16

Review of Operations

Internet Services
Rakuten Ichiba, Travel Business, Other Domestic Internet Services, Overseas Businesses, E-book Business

Revenue

Rakuten Ichiba
Rakuten Travel
Others(Billions of yen)

’11
’12
0

50

100

150

200

250

300

Operating Income(Billions of yen)

’11
’12
0

20

40

60

80

In the Internet Services segment for fiscal 2012, Rakuten advanced its growthstrategy with increased strength by actively promoting the Rakuten Ichiba B2B2C
marketplace model. Rakuten focused on deepening its product lineup, enhancing
services for smartphones and tablet devices, expanding next-day delivery and190,849
running the Rakuten Super Sale large-scale sales events, among other initiatives,
228,567
which included empowerment of merchants.
Overseas, Rakuten is proceeding to roll out its business model by focusing onmarketplace-model services while actively implementing points programs and otherinitiatives that have proven successful in Japan.
During the first quarter, Rakuten made Canadian-based Kobo Inc., a worldwide
operator in the e-book market experiencing continuous high sales growth, into a
58,128
consolidated
subsidiary.
As a result, revenue for the segment rose to ¥285,815 million, a 25.0% year-on-year
65,782increase, while segment operating income was down 10.6% year on year to ¥58,639
million due to our continued forward-looking investments, mainly in overseas businesses.

Rakuten Ichiba

Maintaining No.1 E-commerce Marketplace Status in Japan

Revenue of
Rakuten Ichiba(Billions of yen)

On top of these successful initiatives, theexpanding use of e-commerce in daily
consumption raised the numbers of uniquebuyers and orders to a new plateau.
Rakuten’s domestic e-commerce GMS grew
15.3% to ¥1,446 billion, furthering anuninterrupted record of high growth.
Unique buyers of Rakuten Ichiba (buyers
who made at least one purchase during aquarter) grew to over 13 million buyers.
There are over 81 million Rakuten members
today, and indications show that the numberof active buyers among them is expanding
steadily. As a result, Rakuten Ichiba retained
its No.1 share in the Japanese E-commercemarket, and revenue of Rakuten Ichibashowed a 13.8% increase.

Rakuten Travel

Strengtening Domestic and Overseas Operations

120
90
60
30
0

’11

’12

Revenue of
Rakuten Travel(Billions of yen)

Rakuten Travel, one of Japan’s largest travelcompanies, stands apart from its
competitors through its use of Rakuten
Super Points and practical smartphone
applications. In fiscal 2012, grosstransaction value increase by 12.9% year on
year. Dynamic Packages had solid sales as
it upgraded its single-payment service for
combined corporate air travel, hotel

reservations and car rentals in pursuit of amore diversified earnings base.
During the fiscal year, Rakuten Travel
established three branches in China, abranch in the U.S. and a subsidiary inIndonesia, to enhance its overseas
operations. Revenue of Rakuten Travel grew
18.7% year on year.

17

40
30
20
10
0

’11

’12

Review of Operations

Internet Finance
Credit Card Business, Banking Business, Securities Business, E-money Business and Others

Revenue

Credit Card Business
Rakuten Bank
Rakuten Securities
Others(Billions of yen)

’11
’12
0

40

80

120

160

Operating Income(Billions of yen)In the Internet Finance segment, credit card and related services led profit growth, asrising credit card membership boosted shopping transaction value, and the resulting
rise in revolving shopping balances lifted commission income. Banking services
benefited from marketing to Rakuten members and healthy growth in loan balances
137,234
to achieve increased interest income from loans. In securities services, a fourth
141,160
quarter resurgence in the domestic market brought a sharp increase in stock trading
commissions. In our aim to enrich financial service offerings, we made AIRIO Life
Insurance Co., Ltd.* a consolidated subsidiary in the fourth quarter.
As a result, the Internet Finance segment recorded ¥156,430 million in revenue, a
10.8% increase over the previous year. Segment operating income was ¥23,714
million, 82.8% growth over the previous fiscal year in which results were depressed.
* Renamed Rakuten Life Insurance Co., Ltd. in April 2013.
12,011’11’12

13,326
0

5

10

15

20

25

Rakuten Card

Revenue of
Rakuten Card

No.1 Card in Customer Satisfaction*(Billions of yen)

Rakuten Card is highly valued by its
cardholders for the Rakuten Super Points
Program linkage and other attractive
services. Also, Rakuten Card receives highmarks from the mass media in the area ofcustomer satisfaction. As a result, Rakuten
Card shopping transaction value increased
by 36.0% year on year to ¥1,802.3 billion
and shopping revolving balance increased

by 34.6% year on year to ¥161.2 billion.
Due to these, Rakuten Card performancewas expanded significantly in both revenue
and income terms.
Revenue of Rakuten Card showed a156.3% increase year on year to ¥82,161
million. Operating income also increased
dramatically by 169.4% to ¥10,878 million.

100
80
60
40
20
0

* See P13

Rakuten Bank

Success from Effective Group Synergies

’11

’12

Revenue of
Rakuten Bank(Billions of yen)In fiscal 2012, Rakuten Bank concentrated
on programs to create synergies within theGroup, such as launching the Money Bridge
service to link accounts with Rakuten
Securities and marketing campaigns aimed
at Rakuten Ichiba members. These initiatives
brought an increase in the number ofaccounts, which rose to 4 million as of April

2012. Furthermore, the Rakuten Bank Super
Loans saw rapid growth in the balance ofloan receivables, which grew 23.8% year on
year to ¥181.8 billion.
Revenue of Rakuten Bank were ¥40,502
million or 5.2% over the total for theprevious year. Operating income increased
by 40.5% year on year to ¥8,183 million.

18

50
40
30
20
10
0

’11

’12

Others
Telecommunications Business, Professional Sports and Others

Revenue(Billions of yen)

’11
’12
0

10

20

30

40

Operating income in the Others segment firmed during the year, despite lower
telecommunications sales stemming from the shift to a new business model thatemphasizes new, high-growth ventures such as cloud services, while moving awayfrom a traditional landline operator providing bypass services. The professional
36,461
sports division lifted revenue through year-on-year revenue increases in both
34,174advertising and tickets.
As a result of the above, revenue for the segment were ¥33,270 million, a 2.6%
year-on-year decrease, while segment operating income grew 38.8% to ¥1,585 million.

Operating Income(Millions of yen)

’11

193

’12

1,142
0

400

800

1,200

1,600

Fusion Communications and Rakuten Baseball
In fiscal 2012, Fusion Communications
enhanced its business including therelease of the first cloud linkage platform
service in Japan, “FUSION iPaaS”, to EC
merchants and launch of the Rakuten
Broadband LTE service.
As in the previous year, the Tohoku
Rakuten Golden Eagles baseball club

adopted the slogan “Gambarou Tohoku!”(We’re Behind You Tohoku!) for a series of
support activities created for earthquake
recovery efforts. Annual season tickets sales
reached a record high and sponsorships
and broadcasting sales stayed healthy.

Tohoku Rakuten Golden Eagles

A Local Project—”Making Spectators into Participants”
The Tohoku Rakuten Golden Eagles (theRakuten Eagles) philosophy reads, “TheBaseball Entertainment Company—We area ball club that creates thrills and inspires
dreams through the game of baseball.”Since the team’s establishment, theRakuten Eagles have promoted regionallycentered communication to be a ball clubthat is loved and supported by local fans.

Special pre-game events give local fansthe chance to participate, under the banner“Spectators Becoming Participants.”
A Rakuten Eagles volunteer program
enables fans to participate directly in ballclub operations, the first in professional
baseball. The team also reaches out tofuture Eagles fans through visits to schools
and similar activities.

19

Board of Directors(As of March 28, 2013)

Atsushi Kunishige

Masatada Kobayashi Toru Shimada

Akio Sugihara

Executive Vice President
and Representative
Director

Senior Executive Officer
and Director

Senior Executive Officer
and Director

Senior Executive Officer
and Director

Kazunori Takeda

Hiroaki Yasutake

Yoshihisa Yamada

Kentaro Hyakuno

Senior Executive Officer
and Director

Senior Executive Officer
and Director

CFO, Senior Executive
Officer and Director

Senior Executive Officer
and Director

Hiroshi Mikitani
Chairman and CEOCharles B. Baxter

Koichi Kusano

Ken Kutaragi

Joshua G. James

Hiroshi Fukino

Jun Murai

Director

Director

Director

Director

Director

Director

Tanekiyo Kunitake

Yoshiaki Senoo

Takeo Hirata

Katsuyuki Yamaguchi

Company Auditor

Company Auditor

Company Auditor

Company Auditor

Board of Directors and Company Auditors(As of March 28, 2013)

Position

Name

Chairman and CEO
Executive Vice President and Representative Director
Senior Executive Officer and Director
Senior Executive Officer and Director
Senior Executive Officer and Director
Senior Executive Officer and Director
Senior Executive Officer and Director
CFO, Senior Executive Officer and Director
Senior Executive Officer and Director
Director
Director
Director
Director
Director
Director
Company Auditor
Company Auditor
Company Auditor
Company Auditor

Hiroshi Mikitani
Atsushi Kunishige
Masatada Kobayashi
Toru Shimada
Akio Sugihara
Kazunori Takeda
Hiroaki Yasutake
Yoshihisa Yamada
Kentaro Hyakuno
Charles B. Baxter
Koichi Kusano * 1
Ken Kutaragi * 1
Joshua G. James * 1
Hiroshi Fukino * 1
Jun Murai * 1
Tanekiyo Kunitake * 2
Yoshiaki Senoo * 2Takeo Hirata * 2
Katsuyuki Yamaguchi * 2*1: Outside director*2: Outside company auditor

20

Shares owned (Thousands)

199,062
20
2,366
402
5,839
359
460
20
340
—
20
10
—
140
—
5
—
—
20

Corporate Governance

1. Basic Approach to Corporate Governancewith directors retaining responsibility for management decisionmaking and supervision, while executive functions weretransferred to the Executive Officers.
In April 2012, the Company revised the Executive Officers’
scope of duties with the aim of quickening business execution
and reinforced its group-wide internal controls through theapplication of Functional Teams operating across all Rakuten
Group businesses.

The Rakuten Group gives top priority to effective corporate
governance. The Group has implemented a range of measures tostrengthen its competitiveness and maximize corporate value by
maintaining effective internal control and risk management
systems, with a view to realizing its goal of becoming the world’s
leading Internet services company.

Corporate Governance2. Corporate Organization(1) Directors, Board of Directors, Executive Officers, etc.

1. Basic Structure of Corporate Governance andReasons for Adoption
Rakuten, Inc. supervises management by using a Company
Auditor System. In March 2003, the Company adopted an
Executive Officer System to separate the supervisory andexecutive roles of management. Under that system, functions
previously performed by the Board of Directors were separated,

The Board of Directors consists of 15 Directors, including fiveOutside Directors. Resolutions to appoint Directors must be
approved by a majority of voting rights at a General Meeting of
Shareholders attended by shareholders holding at least one-thirdof voting rights.
In addition to regular monthly meetings, the Board of
Directors holds extraordinary meetings as required. At these

Corporate Governance Structure
Shareholders’ Meeting
Appointment / Dismissal

Appointment /Dismissal
Audit

Board of Directors

Board of Auditors

Appointment /Dismissal

AssistRepresentative Directors

Cooperation

ReportDirect businessexecution

ReportCooperation

Internal Audit
Department

Company
Auditors’ Office

Audit report

Accounting Auditor

Supervision
Audit

Conduct
internal audit

Executive Officers

21has set up a hotline, the Rakuten Hotline, for reporting ofcompliance violations.
Directors are closely supervised in the performance of theirduties by the Outside Directors and Outside Company Auditors.
Attorneys have been appointed to help each of the outside
directors and outside auditors verify compliance with the Articles
of Incorporation and regulatory requirements from an objective
perspective based on expert knowledge.
Rakuten, Inc. is also expanding the Rakuten Group
Regulations (RGR) as the basis for integrated groupmanagement, with the aim of strengthening corporate
governance and paving the way for further growth.

meetings, Directors make decisions on important management
matters and supervise Executive Officers’ activities. To ensure
appropriate decision-making by the Board of Directors, mediumand long-term management plans, basic policies and other key
strategies are first discussed at Corporate Strategy Meetings,
which are held before the Board of Directors meetings andconsists mainly of executives at Senior Executive Officer level
and above.
Board decisions are delegated to the Executive Officers’
Meeting, which consists of Executive Officers. Individual
Executive Officers carry out their respective duties in accordancewith these decisions. To ensure appropriate and efficient
conduct of business operations, activities in individual segments
are supervised by management councils convened within eachsegment, as well as by Functional Teams responsible for humanresources, financial management, accounting, organizational
management and other management aspects across the
Rakuten Group.

4. Risk Management Systems
Rakuten has established a Group Risk Management Committee
chaired by the CEO for the comprehension of risks, from a unifed
perspective, that may have a material adverse effect on the
Rakuten Group and for providing an appropriate response tosuch risks. Under the Group Risk Management Committee, wehave established risk control sections within business units,
responsible for 10 risk categories including compliance risk,
information security risk, and disaster, dispute and accident risk.
Each section conducts regular risk assessments and related
measures through the leadership of the Risk Management
Department, a group-wide department in charge of risk
management. In accordance with these assessments, the Group
Risk Management Committee examines policies to reinforce risk
management, ensures that policies are made into concretemeasures by the Risk Management Department and risk control
sections, and develops and implements measures at eachbusiness unit and group company.
Rakuten, Inc., in accordance with RGR, consolidates risk
information and ensures thorough and consistent application ofrisk management through such actions as obtaining approval
from the Board of Directors for proposed business investments
by each business unit that exceed a set amount, and receives
reports on risks related to business execution presented at theManagement Conferences held in each business unit.
Each group subsidiary, including the finance businesses, hasalso established its own risk management system and instituted
the PDCA cycle to handle company-specific risks other thangroup-wide risks.
The Development Unit has taken measures to handle risks
related to information security and information systems. Our
efforts to minimize this risk factor throughout the Rakuten Group
include acquisition of Information Security Management System(ISMS) certification (ISO/IEC 27001).

(2) Company Auditors and the Board of Auditors
Rakuten, Inc. has four Company Auditors, including two full-time
auditors. All four are outside auditors.
A two-member Company Auditors’ Office assists theCompany Auditors in the performance of their duties. In addition
to its regular meetings, the Board of Auditors holds extraordinary
meetings as required.
In accordance with audit policies and plans established by
the Board of Auditors, the Company Auditors attend Board of
Directors meetings and other important management meetings,
and receive reports about the state of the Company’s operations
from Directors, the Internal Audit Department and other sources.
In addition, they conduct on-site inspections of the Company’shead office and other important business sites, and check theoperations of subsidiaries. In addition, the Company Auditors
receive audit reports from the independent auditors and peruse
financial statements and business reports. They also discussvarious matters with the CEO.

3. Internal Control Systems
Basic internal control policies for Rakuten, Inc. are determined by
the Board of Directors. The Company has declared its intention
to comply with all regulatory requirements, and to apply highethical standards to its business activities.
The performance of business operations by Directors andemployees is subject to regular operational audits by the Internal
Audit Department, an independent unit reporting directly to theCEO. The Compliance Committee also helps to ensure that all
operations are conducted appropriately by implementing
group-wide compliance initiatives.
Compliance training is provided for all Directors andemployees to enable them to develop the knowledge and ethicalperceptions needed to perform their duties. In addition, Rakuten

Internal Audits, Company Auditor Organization,
Personnel and ProceduresInternal audits are conducted by the 20-member Internal Audit
Department, which is an independent unit reporting directly to22

There are four Outside Auditors. Mr. Takekiyo Kunitake has
wide-ranging expertise and experience, especially in the fields ofbusiness management and finance. Mr. Yoshiaki Senoo has
extensive knowledge and experience relating primarily to finance,business management and compliance. Mr. Takeo Hirata brings
wide-ranging expert knowledge and experience relating to sportand education. Mr. Katsuyuki Yamaguchi was selected as aperson who could contribute to Rakuten’s audit systems throughhis extensive knowledge and experience, especially as an
attorney, and through his perspectives as an expert on corporate
law.
Documents for meetings of the Board of Directors areforwarded in advance to the Outside Directors and Outside
Directors, who, if necessary, can also seek advance briefings
from and consultations with the units concerned. As noted
above, the Outside Auditors also actively exchange views with
the Internal Audit Department and the independent auditors.
Rakuten, Inc. has signed an agreement with each of its
Outside Directors and Outside Auditors under the provisions ofArticle 427, Paragraph 1 of the Corporate Law. This agreement issummarized below:
Provided that duties have been carried out in good faith andwithout gross negligence, the total liability in situations as definedin Article 423, Paragraph 1 of the Corporate Law will be limited tothe sum of the amounts stipulated in the following items:i. 	Two times the bigger of the sum of fees, bonuses and otherpayments received or asset benefits received in the year that
includes the date on which the event that resulted in theliability occurred, and in the preceding year, or the value of
asset benefits to be received (excluding benefits stipulated
under Item ii below).
ii. 	Two times the smaller of the sum of retirement bonuses orasset benefits that are in the nature of retirement bonuses, orthat amount divided by the number of years during which theoffice of Outside Director was held.
iii.	The amounts stipulated below if stock options, as defined in
Article 238, Paragraph 3 of the Corporate Law, were
exercised or transferred after the person was appointed as
an Outside Director.
1. If the options have been exercised		An amount calculated by subtracting the sum of the issue
price of the stock options and the paid-in value per shareon the exercise date from the market price per share on
the exercise date and multiplying the result by the numberof shares granted through the exercise of the stock
options.
2. If the options have been transferred		An amount calculated by subtracting the issue price of theoptions from the transfer price and multiplying the result
by the number of stock options.

the CEO. Head office divisions, business units and groupcompanies are all subject to internal auditing. Audits are
implemented under plans approved by the Board of Directors
with the aim of verifying the legality, appropriateness andefficiency of operations. The purpose of the internal audit process
is to ensure that business operations are conducted in an
appropriate manner by identifying any improvements that may berequired, and by monitoring the implementation of those
improvements. Audit results are reported to the Board of
Directors, the CEO, the Compliance Committee responsible forareas covered by audits. The Internal Audit Department also
cooperates with the Board of Auditors.
The Internal Audit Department is also working to enhance theeffectiveness of internal audits throughout the Rakuten Group by
working closely with audit units in group companies.
Information about audits by Company Auditors can be foundunder Corporate Organization 2-(2) Company Auditors and theBoard of Auditors.

Outside Directors and Outside Auditors
Rakuten’s 15-member Board of Directors currently includes fiveOutside Directors, and all four Company Auditors are Outside
Auditors. An Outside Director, Mr. Koichi Kusano, is a
representative partner in Nishimura & Asahi, a law firm with which
Rakuten has a business relationship that includes the provision ofservices. An Outside Auditor, Mr. Katsuyuki Yamaguchi, is apartner in the same firm. A Director, Mr. Ken Kutaragi is an
Outside Director of Kadokawa Group Holdings, Inc., and Rakuten
has a business relationship with a subsidiary of this company that
includes the provision of services. A Director, Mr. Jun Murai, is an
Outside Director of BroadBand Tower, Inc., a company withwhich Rakuten has a business relationship that includes theprovision of services. He is a relative within the third degree ofkinship to an employee of the Company. There are no otherpersonal, capital or business relationships or significant interests.
As described above, Rakuten appoints highly independent
Outside Directors and Outside Auditors whose expertise andobjective viewpoints strengthen supervision of the Board of
Directors in the performance of its duties. They also enhance theeffectiveness of corporate governance by allowing a wide rangeof discussion with the Board of Directors.
The five Outside Directors include attorneys, notably Mr. Koichi
Kusano, who can contribute wide-ranging knowledge and experienceof corporate law. Another, Mr. Ken Kutaragi, has extensive
knowledge of the entertainment business and technology andwide-ranging experience in business management. Mr. Hiroshi
Fukino also has extensive experience of business management andexpertise as a business consultant. Mr. Joshua G. James has
specialized knowledge of Internet services and a wealth ofexperience in management of Internet service businesses in North
America; Mr. Murai has a distinguished background as an academic
expert in Internet technology.

23

Remuneration for Directors and Auditors
1.	Total amounts of fees, etc., for each category of the filing company’s officers, total amount of each type of remuneration paid,
and number of officers eligible
Category of officer

Total amount of fees, etc.
(millions of yen)

Total amount of each type of remuneration (millions of yen)
Basic fees

Stock options

BonusesNumber ofrecipients

Directors (excluding Outside Directors)

408

305

22

80

12

Auditors (excluding Outside Auditors)

—

—

—

—

—

108

108

0

—

9

Outside Directors and Auditors

2. Consolidated total amount of fees, etc., for directors and auditors of the filing company
For purposes of full disclosure, we declare that no person in the filing company received a consolidated total amount of fees of morethan 100 million yen this fiscal year.
3. Total amount of significant items included in salaries and bonuses paid to directors who are also employees
Total amount (millions of yen)

Number of recipients

Details359

9Salaries (including bonuses) paid to directors who are also employees

4.	Policies concerning amounts of remuneration for Directors and Auditors, the adoption of methods for calculating those amounts, andthe establishment of those policies
Business performance is taken into account in decisions concerning remuneration for Directors and Auditors. A resolution of the 13th
Regular General Meeting of Shareholders, held on March 30, 2010, set the upper limit for total remuneration over the year at ¥1,100
million (including ¥100 million for Outside Directors). Total remuneration for Company Auditors is within the upper limit of ¥120 million
as stipulated in a resolution of the 10th Regular General Meeting of Shareholders, held on March 29, 2007.

Shareholdings
1.	Shares held for purposes other than pure investment
Number of companies: 11
Total amount shown in balance sheet: ¥2,697 million
2.	Name of company, number of shares held, amount shown in balance sheet and purpose of holding for each shareholding held forreasons other than pure investment
December 31, 2011
Company

Shares held

Amount shown inbalance sheet(millions of yen)

Reason for holding

Synergy Marketing, Inc.

1,136,000

1,217

Reinforcement of business relationship

5,779

533

Reinforcement of business relationship

FreeBit Co., Ltd.

498

107

Reinforcement of business relationship

IMJ Corporation

5,500

93

Reinforcement of business relationship

Alpen Co., Ltd.

18,00024

Reinforcement of business relationship

F@N Communications, Inc.

December 31, 2012
Company

Amount shown inbalance sheet(millions of yen)

Shares held

Reason for holding

5,779

1,039

Reinforcement of business relationship

1,136,000

580

Reinforcement of business relationship

FreeBit Co., Ltd.

199,200

83

Reinforcement of business relationship

Alpen Co., Ltd.

18,00027

Reinforcement of business relationship

F@N Communications, Inc.
Synergy Marketing, Inc.

3.	There are no investment stocks held purely for investment purposes.

24

2. Audit Fees, etc.

Audits by Independent Auditors
Rakuten, Inc. has entered into an auditing agreement with Ernst& Young ShinNihon LLC, which conducts financial audits inaccordance with Japan’s Corporate Law and the Financial
Instruments and Exchange Law.
In fiscal 2012, audits were conducted by the following charteredpublic accountants and assistants.

Audit Fees Paid to Chartered Public Accountants, etc.
Item

[Chartered public accountants]
Designated limited liability partner,
executive partner

Masaharu Sugiyama

Fiscal year ended
December 31, 2011

Fiscal year ended
December 31, 2012

millions of yen

millions of yen

Fees paid
for audit
certification
services

Fees paid
for non-audit
services

Fees paid
for audit
certification
services

Fees paid
for non-audit
services

Companysubmitting
financial reports

128

72

178

36

Consolidated
subsidiaries

176

19

203

11

304

91

381

47

Designated limited liability partner,
executive partner

Kenichi Ishida

Total

Designated limited liability partner,
executive partner

Kenji Takagi

Other Important Matters Pertaining to Fees
Fiscal year ended December 31, 2012
Some consolidated subsidiaries of Rakuten, Inc. are audited by
Ernst & Young, which belongs to the same network as Ernst &Young ShinNihon LLC, the company providing certified public
accountants and other audit personnel for Rakuten, Inc. Fees
paid to Ernst & Young in fiscal 2012 amounted to ¥61 million.

* Since these accountants have conducted audits for fewer than seven years,
the number of years has been omitted.

[Names of assistants]
20 chartered public accountants and 29 others

Non-Audit Services Provided to the Company
Submitting Financial Reports by Certified Public
Accountants and Other Audit Personnel
Fiscal year ended December 31, 2012

Other Provisions of the Articles of Incorporation
1. Matters Requiring Resolutions of General Meetingsof Shareholders that Can Be Implemented by
Resolutions of the Board of Directors
The Articles of Incorporation of Rakuten, Inc. state that, unlessotherwise stipulated in laws and regulations, the Board of
Directors is authorized to pass resolutions on matters pertaining
to the distribution of surpluses and other matters, as stipulated in
the items of Article 459, Paragraph 1 of the Corporate Law,
without resolutions of General Meetings of Shareholders. The
purpose of this provision is to allow the Board of Directors to
implement a flexible dividend policy.

The non-audit services for which Rakuten, Inc. pays fees tocertified public accountants and other audit personnel consist
primarily of advisory services relating to advice on IFRS.

Policy on Setting of Audit Fees
The policy of Rakuten, Inc. regarding audit fees paid to certified
public accountants and other audit personnel is to pay fees that areappropriate based on relevant factors, including the size of
Rakuten, Inc., the characteristics of its business activities, and thenumber of days required for audits.

2. Items Requiring Special Resolutions ofGeneral Meetings of Shareholders
The Articles of Incorporation of Rakuten, Inc. state that mattersrequiring resolutions of General Meetings of Shareholders, as
stipulated in Article 309, Paragraph 2 of the Corporate Law,require resolutions supported by at least two-thirds of voting
rights at General Meetings of Shareholders attended byshareholders holding at least one-third of voting rights. The
purpose of this provision is to facilitate the administration ofGeneral Meetings of Shareholders by easing the quorum
requirements for special resolutions.

25

Financial Section
Results of Operations and Financial Condition (IFRS)For the fiscal year ended December 31, 2012

Business Performance
Rakuten seeks to shift growth to a higher gear through vigorous
international expansion of Rakuten Ichiba’s BtoBtoC marketplacemodel and service enhancements for smartphones and tablets. We
also aim for a leap in delivery quality through a major buildout of ourlogistics infrastructure and related measures. We are aggressively
promoting the Internet Finance business segment, centering on
Rakuten Card for its notable synergies with Internet Services.
As a result, the Rakuten Group achieved solid growth for thetwelve months ended December 31, 2012, with revenue of¥400,444 million (up 15.6% from the previous fiscal year) andoperating income before additional line items of ¥78,793 million(up 3.5% from the previous fiscal year). However, we recorded an
extraordinary loss of ¥28,738 million, which included the loss
from the restructuring of overseas businesses and impairment of
goodwill. This was mainly attributable to a loss from businessrestructuring at Play.com in the U.K. due to an organizational
restructuring carried out amidst local regulatory changes, and therecording of an impairment of goodwill and other intangible
assets at Buy.com in the U.S. due to the income plan falling
below initial forecasts after reprioritizing the business model toraise medium-term competitiveness. As a result of these factors,
net income attributable to owners of the company amounted to¥20,489 million (a 156.6% increase from the previous fiscal year).

Company, which grew by ¥17,233 million during the period afterrecording ¥21,136 million in net income for the period. Other
contributors include an increase of ¥10,311 million for othercomponents of equity.

Cash Flows
Cash and cash equivalents for the fiscal year ended December
31, 2012 was ¥270,114 million, an increase of ¥117,313 million
from the end of the previous fiscal year. Cash flow conditions andtheir major factors are as follows.
Cash Flows from Operating Activities—resulted in a cash inflowof ¥104,687 million (compared with a cash inflow of ¥35,222
million for the previous fiscal year). Primary factors on the cash
outflow side include ¥96,287 million for an increase in loans for
credit card business (compared with a cash outflow of ¥56,195
million for the previous fiscal year) and ¥35,113 million for an
increase in loans for banking business (compared with a cash
outflow of ¥29,731 million for the previous fiscal year). On the
cash inflow side, primary factors include ¥49,106 million inincome before income tax (compared with a cash outflow of¥1,185 million for the previous fiscal year), ¥66,941 million for an
increase in deposits for banking business (compared with
$27,737 million cash inflow for the previous fiscal year), ¥21,227
million for depreciation and amortization, a non-cash flow item(compared with ¥18,112 million for the previous fiscal year), and¥24,805 million for an impairment loss (compared with ¥83 million
for the previous fiscal year).
Cash Flows from Investing Activities—resulted in a cash inflow of¥67,440 million (compared with a cash inflow of ¥60,260 million
for the previous fiscal year). Primary factors on the cash outflow
side include ¥253,991 million for purchase of investment
securities for banking business (compared with a cash outflow of¥382,236 million for the previous fiscal year), ¥35,076 million for
acquisition of subsidiaries including Kobo Inc. (compared with a¥10,641 million cash outflow for the previous fiscal year), and¥18,949 million for purchase of intangible assets including
software (compared with a cash outflow of ¥15,102 million for theprevious fiscal year). On the cash inflow side, a primary factor
was ¥385,115 million for proceeds from sale and redemption of
investment securities for banking business (compared with acash inflow of ¥446,626 million for the previous fiscal year).
Cash Flows from Financing Activities—resulted in a cash outflow
of ¥56,820 million (compared with a cash outflow of ¥47,405
million for the previous fiscal year). Primary factors on the cash
inflow side include ¥14,000 million for an increase in commercial
paper (compared with a cash outflow of ¥30,200 million for theprevious fiscal year) and ¥30,100 million for proceeds fromlong-term debt (compared with a cash inflow of ¥173,760 million
for the previous fiscal year). On the cash outflow side, major
factors include ¥90,168 million in repayment of long-term debt
(compared with a cash outflow of ¥152,686 million for theprevious fiscal year).

Financial Position
AssetsTotal assets at the end of the fiscal year on December 31, 2012amounted to ¥2,287,634 million, an increase of ¥ 327,869 million
from ¥1,959,765 million on December 31, 2011. Primary factors
were a decrease of ¥127,628 million in investment securities forbanking business from the sale of government bonds, which wasoffset by increases of ¥200,103 million in financial assets forsecurities business amidst active trading in the capital markets and¥96,287 million in loans for credit card business in conjunction withincreased credit card use for shopping. Other increases include¥38,395 million in intangible assets from the acquisition of Kobo
Inc. etc., and ¥13,623 million in securities for insurance businessfrom the acquisition of AIRIO Life Insurance Co., Ltd.*
Liabilities
Total liabilities at the end of the fiscal year were ¥2,045,722
million, ¥298,303 million greater than at the end of the previous
fiscal year. Major factors were a decrease of ¥42,796 million inbonds and borrowing, which was offset by increases of ¥193,565
million in financial liabilities for securities business, ¥66,938
million in deposits for banking business resulting from anincrease in accounts at Rakuten Bank Co, Ltd., and ¥18,496
million in policy reserves and others for insurance business fromthe acquisition of AIRIO Life Insurance Co., Ltd.
Net Assets
Net assets at the end of the fiscal year were, at ¥241,912 million,¥29,566 million higher than at the end of the previous fiscal year.
A major component was total equity attributable to owners of the*A IRIO Life Insurance Co., Ltd. changed its name to Rakuten Life Insurance Co., Ltd.
on April 1, 2013.

26

Consolidated Statement of Financial Position
Rakuten, Inc. and Consolidated Subsidiaries
December 31, 2012 and 2011

Thousands of
U.S. dollars

Millions of yen

January 1,
2011

December 31,
2011

December 31,
2012

December 31,
2012¥ 105,896
44,603
483,073
348,791
484,530
124,885—
10,14359,754
142,556
9,454
25,885
152,215
47,212
13,574
2,052,571¥ 152,801
48,958415,600
306,131423,954
154,555—
9,829
10,963
172,764
9,685
21,535
149,620
64,57918,791
1,959,765¥ 270,114
65,493615,703402,418
296,326
189,669
13,623
10,674
23,411
123,132
6,601
24,143
188,01440,546
17,7672,287,634$ 3,119,822
756,444
7,111,375
4,647,933
3,422,566
2,190,673
157,351
123,288
270,396
1,422,172
76,241
278,855
2,171,566
468,309205,208
26,422,199

36,836
714,856
427,440
2,429
377,661
152,130
17,59032,499—6,236
67,435
1,835,112

59,365742,593364,490
2,861
347,983
176,413
3,981
23,181—
6,054
20,498
1,747,419

79,965809,531558,055
4,685
305,186
210,048
2,873
29,614
18,496
6,416
20,853
2,045,722

923,6029,350,088
6,445,545
54,112
3,524,905
2,426,056
33,184
342,041
213,624
74,103
240,854
23,628,114

107,779
117,311(1,656)(3,626)(11,032)
208,776
8,683
217,459

107,959
116,864
3,641(3,626)(16,471)
208,367
3,979
212,346

108,255
116,599
20,873(3,626)(6,159)235,942
5,970
241,9121,250,351
1,346,715
241,089(41,876)(71,148)
2,725,131
68,954
2,794,085¥2,052,571¥1,959,765¥2,287,634$26,422,199

ASSETSCash and cash equivalents
Accounts receivable — trade
Financial assets for securities business
Loans for credit card business
Investment securities for banking business
Loans for banking business
Investment securities for insurance business
Derivative assets
Investment securities
Other financial assets
Investments in associates and joint ventures
Property, plant and equipment
Intangible assets
Deferred tax assets
Other assets
Total assets
Liabilities

Accounts payable — trade
Deposits for banking business
Financial liabilities for securities business
Derivative liabilities
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provisions
Policy reserves and others for insurance business
Deferred tax liabilities
Other liabilities
Total liabilities
Net assets

Equity attributable to owners of the Company
Common stock
Capital surplus
Retained earnings
Treasury stock
Other components of equity
Total equity attributable to owners of the Company
Non-controlling interests
Total net assets
Total liabilities and net assets

The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been madeat ¥86.58 to $1, the rate of exchange prevailing at December 31, 2012.

27

Consolidated Statement of Income
Rakuten, Inc. and Consolidated Subsidiaries
Years ended December 31, 2012 and 2011

Millions of yen

Thousands of
U.S. dollars

Year ended
Year ended
December 31, 2011 December 31, 2012

Year ended
December 31, 2012

Continuing operations

Revenue
Operating expenses
Other income
Other expenses
Operating income before additional line items
Additional line items
Operating income
Financial income
Financial expenses
Share of (loss) / profit of associates(Loss) Income before income tax
Income tax expense
Net income¥346,425
265,463
1,178
6,004
76,136(75,492)
644
277
2,569
463
(1,185)(10,816)¥ 9,631¥400,444
319,435
3,365
5,581
78,793(28,738)
50,055
193
2,565
1,423
49,10627,970¥ 21,136$4,625,129
3,689,481
38,86564,457910,056(331,922)
578,134
2,228
29,621
16,431
567,172
323,049$ 244,123¥¥ 20,489
647¥ 21,136$ 236,651
7,472$ 244,123

Net income attributable to

Owners of the Company
Non-controlling interests
Net income

¥

7,986
1,645
9,631
Yen

U.S. dollars

Earnings per share attributable to owners of the Company:

Basic
Diluted

¥

28

6.08
6.06

¥

15.59
15.56

$

0.18
0.18

Consolidated Statement of Comprehensive Income
Rakuten, Inc. and Consolidated Subsidiaries
Years Ended December 31, 2012 and 2011

Net income

Millions of yen

Thousands of
U.S. dollars

Year ended
Year ended
December 31, 2011 December 31, 2012

Year ended
December 31, 2012

¥ 9,631¥21,136$244,123(3,008)

(72)

(833)

815

(51)

(588)

(20)
(2,213)

28
(95)

327
(1,094)

Other comprehensive income
Items that will not be reclassified to net income:

Gains and losses on financial assets measured at fair value throughother comprehensive income
Income tax relating to gains and losses on financial assets
measured at fair value through other comprehensive income
Share of other comprehensive income of associates
Total items that will not be reclassified to net income
Items that will be reclassified to net income:

Foreign currency translation adjustments(3,708)10,362

119,674

The portion of gains or losses on effective cash flow hedges
recognized in other comprehensive income

185

(447)

(5,160)

Income tax relating to the portion of gains or losses on effective cash
flow hedges recognized in other comprehensive income

(117)

176

2,028

The portion of gains or losses on effective cash flow hedges reclassified from other comprehensive income to net income

526

713

8,240

Income tax relating to the portion of gains or losses on effective cash
flow hedges reclassified from other comprehensive income to net
income

(197)

(271)

(3,135)

Total items that will be reclassified to net income(3,311)

10,533

121,647

Other comprehensive income, net of tax(5,524)

10,438120,553¥ 4,107¥31,574$364,676¥ 2,551
1,556¥ 4,107¥30,907667¥31,574$356,974
7,702$364,676

Comprehensive income
Total comprehensive income attributable to

Owners of the Company
Non-controlling interests
Comprehensive income

The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been madeat ¥86.58 to $1, the rate of exchange prevailing at December 31, 2012.

29

Consolidated Statement of Changes in Equity
Rakuten, Inc. and Consolidated Subsidiaries
Years Ended December 31, 2012 and 2011

Millions of yen
Other components of equity

Retainedearnings

Treasurystock

Foreigncurrencytranslation
adjustments

Financial
instruments
measured
at fair value
through othercomprehensive
income¥117,311¥ (1,656)¥(3,626)¥(14,500)¥ 4,222

—

—

7,986

—

—

—

—

—

—

—

—

7,986

—

Issuance of common stock

180

180

—

Cash dividends paid——

(2,624)

Others

—

295

(65)

Total contributions by anddistributions to ownersof the Company

180

475

Commonstock

Capitalsurplus¥107,779

Net income
Other comprehensive income,net of tax
Total comprehensive income

As of January 1, 2011

Total othercomponentsof equity

Total equity
attributable toowners of
the Company

Noncontrollinginterests

Total
net assets¥(754)¥(11,032)¥208,776¥ 8,683¥217,459

—

—

—

7,986

1,645

9,631

(3,623)(2,192)380(5,435)(5,435)(89)(5,524)(3,623)(2,192)380(5,435)

2,551

1,556

4,107

—

—

—

—

—

360

—

360

—

—

—

—

—

(2,624)—(2,624)

—

—

(4)

—

(4)

226

—

226

(2,689)

—

—

(4)

—

(4)

(2,038)—(2,038)Cash flow
hedgesComprehensive income

Transactions with owners
Contributions by and distributions toowners of the Company

Changes in ownershipinterests in subsidiaries
Issuance of common stock

—

—

—

—

—

—

—

—

—

1,379

1,379

Acquisitions and disposals of
non-controlling interests—(1,692)

—

—

—

—

—

—

(1,692)(1,187)(2,879)

Sales of subsidiaries

—

—

—

—

—

—

—

—

—

(5,915)(5,915)

Others

—

770

—

—

—

—

—

—

770

(537)

233

Total changes in ownershipinterests in subsidiaries

—

(922)

—

—

—

—

—

—

(922)

(6,260)(7,182)

Total transactions with owners

180

(447)

(2,689)

—

—

(4)

—

(4)

(2,960)(6,260)(9,220)¥107,959¥116,864¥ 3,641¥(3,626)¥(18,123)¥ 2,026¥(374)¥(16,471)¥208,367¥ 3,979¥212,346

Net income——

20,489

—

—

—

—

—

20,489647

21,136

Other comprehensive income,net of tax

—

—

—

—

10,341(94)

171

10,418

10,41820

10,438

Total comprehensive income——

20,489—10,341(94)

171

10,41830,907667

31,574Issuance of common stock

296

296

—

—

—

—

—

—

592

—

592

Cash dividends paid——

(3,284)

—

—

—

—

—

(3,284)—(3,284)

Others

—

334

27

(0)

—

(106)

—

(106)

255

—

255

Total contributions by anddistributions to ownersof the Company

296

630

(3,257)

(0)

—

(106)

—

(106)

(2,437)—(2,437)Issuance of common stock

—

—

—

—

—

—

—

—

—

30

30

Acquisitions and disposals of
non-controlling interests

—

(494)

—

—

—

—

—

—

(494)

1,380

886

Others

—

(401)

—

—

—

—

—

—

(401)

(86)

(487)

Total changes in ownershipinterests in subsidiaries

—

(895)

—

—

—

—

—

—

(895)

1,324

429

As of December 31, 2011
Comprehensive income

Transactions with owners
Contributions by and distributions toowners of the Company

Changes in ownership interestsin subsidiaries

Total transactions with owners
As of December 31, 2012
As of December 31, 2012
Thousands of U.S. dollars

296

(265)

(3,257)

(0)

—

(106)

—

(106)

(3,332)

1,324(2,008)¥108,255¥116,599¥20,873¥(3,626)¥ (7,782)¥ 1,826¥(203)¥ (6,159)¥235,942¥ 5,970¥241,912$1,250,351 $1,346,715$241,089$(41,876)$(89,884)$21,079$(2,343)30$(71,148) $2,725,131$68,954 $2,794,085

Consolidated Statement of Cash Flows
Rakuten, Inc. and Consolidated Subsidiaries
Years Ended December 31, 2012 and 2011

Millions of yen

Thousands of
U.S. dollars

Year ended
Year ended
December 31, 2011 December 31, 2012

Year ended
December 31, 2012

Net cash flows from operating activities(Loss) Income before income tax
Depreciation and amortization
Impairment loss
Loss on business restructuring
Other loss
Decrease (Increase) in accounts receivables
Decrease (Increase) in loans for credit card business
Increase (Decrease) in deposits for banking business
Decrease (Increase) in call loans for banking business
Decrease (Increase) in loans for banking business
Increase (Decrease) in operating payables
Decrease (Increase) in security deposits
Increase (Decrease) in accounts payable —other and accrued expenses
Decrease (Increase) in financial assets for securities business
Increase (Decrease) in financial liabilities for securities business
OthersIncome tax paid
Net cash flows from operating activities¥(1,185)
18,112
83
75,492
3,894(4,283)(56,195)
27,737(24,053)(29,731)
21,422
2,137¥ 49,106
21,22724,8054,250
955(9,379)(96,287)
66,94142,000(35,113)
14,284
7,207$

567,172
245,177
286,497
49,082
11,028(108,324)(1,112,119)
773,173
485,100(405,561)
164,982
83,246

12,396

10,852

125,343

67,473(62,951)
8,039(23,165)¥ 35,222(200,103)
193,565
17,294(6,917)¥ 104,687(2,311,188)
2,235,679
199,740(79,896)$ 1,209,131

5,573(9,946)(3,884)(15,102)(382,236)

12,431(6,349)(5,162)(18,949)(253,991)

143,579(73,337)(59,624)(218,861)(2,933,598)

446,626

385,115

4,448,079(10,641)(3,199)1,388
33,554(3,137)1,264¥ 60,260(35,076)(15,637)
3,324—(4,200)5,934¥ 67,440(405,132)(180,608)
38,388—(48,512)
68,562$ 778,936¥ (19,235)(30,200)
173,760(152,686)(4,800)(2,630)(3,328)(8,286)(47,405)(1,172)
46,905
105,896¥ 152,801¥$

Net cash flows from investing activities

Increase in time deposits
Decrease in time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities for banking business
Proceeds from sales and redemption of investment securities forbanking business
Acquisition of subsidiaries
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Proceeds from sales of subsidiaries
Other payments
Other proceeds
Net cash flows from investing activities
Net cash flows from financing activities

Net increase (decrease) in short-term borrowings
Increase (Decrease) in commercial papers
Proceeds from long-term debt
Repayment of long-term dept
Redemption of bonds
Cash dividends paid
Acquisions of non-controlling interests
OthersNet cash flows (used in) from financing activities
Effect of change in exchange rates on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year

6,607
14,00030,100(90,168)(4,800)(3,286)(6,956)(2,317)(56,820)
2,006
117,313
152,801¥ 270,114

76,309161,700
347,651(1,041,444)(55,445)(37,949)(80,346)(26,744)(656,268)
23,166
1,354,965
1,764,857$ 3,119,822

The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been madeat ¥86.58 to $1, the rate of exchange prevailing at December 31, 2012.

31

Consolidated Subsidiaries and Affiliated Companies(As of December 31, 2012)

Name

Location

Consolidated Subsidiaries
Internet Services
Rakuten Auction, Inc.
Signature Japan Co., Ltd.
Fine Trading Co., Ltd.
LinkShare Corporation
LinkShare International LLC
LinkShare Ltd.
Rakuten USA, Inc.
Keiba Mall, Inc.
Rakuten Europe S.a.r.l.
Taiwan Rakuten Ichiba Inc.
FreeCause, Inc.
Rakuten (Thailand) Co., Ltd.
TARAD Dot Com Co., Ltd.
Rakuten Shigoto Shoukai, Inc.
LinkShare Hong Kong Ltd.
LinkShare Japan K.K.
Rakuten Logistics, Inc.
Buy.com Inc.
BuyServices Inc.
PRICEMINISTER S.A.S.
Voyager moins Cher S.A.S.
TMG MEDIA GROUP S.A.S.
Target, Inc.
Rakuten Research, Inc.
Rakuten Shashinkan, Inc.
RAKUTEN SHOWTIME, Inc.
PT Rakuten Indonesia
PT. Rakuten-MNC
China Rakuten Network Science and Technology Co.,Ltd
Rakuten Brazil Holdings LTDA.
RAKUTEN BRASIL INTERNET SERVICE LTDA.
Rakuten Deutschland GmbH
Ticket Star Inc.
Play Holdings Limited
Play European Holdings Limited
Vanilla Limited
Play Trade S.a.r.l.
Play Media S.a.r.l.
Webworks Development Limited
Play Limited
Boa Limited
The Web Factory Limited
Play Direct Limited
Play Payments Limited
Rakuten Travel, Inc.
RAKUTEN TRAVEL KOREA CO., LTD.
Rakuten Bus Services Inc.
Rakuten Travel Guam, Inc.
RAKUTEN TRAVEL USA, INC.
China Online Travel, Inc.
ET MOBILE (CHINA) CO., LTD
ET Solution (China) Co., Ltd.
Beijing Happy Travel Business Service Co.,Ltd.
Beijing Happy Travel International Hotel Management Co.,Ltd.
Rakuten Travel Singapore Pte. Ltd.
Kobo Inc.
Kobo Europe S.A.
KOBO (US) INC.
Kobo Software Ireland Limited
KOBO LIVROS DO BRASIL LTDA.
Aquafadas S.A.S.

Japan
Japan
Japan
U.S.A.
U.S.A.
U.K.
U.S.A.
Japan
Luxembourg
TaiwanU.S.A.
ThailandThailandJapan
Hong Kong
Japan
Japan
U.S.A.
U.S.A.
FranceFranceFrance
Japan
Japan
Japan
Japan
Indonesia
Indonesia
China
BrazilBrazilGermanyJapan
Jersey Island
Jersey Island
Jersey Island
Luxembourg
Luxembourg
Jersey Island
Jersey Island
Jersey Island
Jersey Island
Jersey Island
Jersey Island
Japan
Korea
Japan
U.S.A.
U.S.A.
Japan
China
China
China
China
Singapore
CanadaLuxenbourg
U.S.A.
Ireland
BrazilFrance32

Ownership (%)

60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
100.0
100.0
67.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.0
100.0
100.0
90.0
100.0
66.7
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Note

2
2
2

17
2
3
2

2
2
4
4
4

6

7
4
8
9
9
9
9
9
9
9
9
9
9
10
10
10
10
10
10

1, 10
1, 17
1, 13
1, 13
1, 13
1, 13
1, 13

Name

Location

Ownership (%)

Note

Aquafadas Inc.
AVE! Comics Production SASU
LINKSHARE AUSTRALIA PTY LIMITED
Rakuten Mart, Inc.
Wuaki TV, S.L.
Kenko.com, Inc.
Shareee, Inc.
Rakuten EMOBILE, Inc.
Media Forum, Inc.
Internet Finance
Rakuten Bank, Ltd.
eBANK Capital Management (Cayman) Ltd.
Rakuten Securities, Inc.
Rakuten Card Co., Ltd.
Kajiyama Warehouse Co., Ltd.
Rakuten Insurance Planning Co., Ltd.
Rakuten Investment Management, Inc.
Dot Commodity, Inc.
RS Empowerment, Inc.
Rakuten Edy, Inc.
Rakuten Sales solution, Inc.
Rakuten Card Services Co.,Ltd.
Market brokerage & futures systems, Inc.
AIRIO Life Insurance Co., Ltd.
OthersRakuten Baseball, Inc.
FUSION COMMUNICATIONS CORPORATION
O-net, Inc.
Rakuten Sociobusiness, Inc.

U.S.A.
FranceAustralia
Japan
Spain
Japan
Japan
Japan
U.S.A.

100.0
100.0
100.0
100.0
100.0
51.8
90.0
51.0
100.0

1, 13
1, 13
1, 2
1
1, 4
1, 16
1
1
1, 2

Japan
Cayman Islands
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan

100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.1
100.0
85.0
100.0
100.0
100.0
100.0

17
11

Japan
Japan
Japan
Japan

100.0
54.8
100.0
100.0

Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
U.S.A.

18.5
19.7
27.0
50.0
32.0
16.0
28.1
32.5
29.1

Equity-method Affiliates
OKWaveDrecom Co., LtdWORLD TRAVEL SYSTEMS INC.
Rakuten ANA Travel Online Co., Ltd.
TECHMATRIX CORPORATIONNEXT Co., Ltd.
SOURCENEXT CORPORATION
Stylife Corporation
Daily Grommet Inc.
Notes:

17
12

1
1, 12
1, 5
1, 18

16
16

16
16
14, 161, 16
1, 15

1. The company became a group member during the fiscal year ended December 31, 2012.
2.	LinkShare Corporation, FreeCause, Inc. and Buy.com Inc. are subsidiaries of Rakuten USA, Inc. LinkShare International, LLC and Media Forum, Inc. are subsidiaries of
LinkShare Corporation, and LinkShare Ltd., LinkShare Hong Kong Ltd. and LINKSHARE AUSTRALIA PTY LIMITED are subsidiaries of LinkShare International, LLC.,
BuyServices Inc. is a subsidiary of Buy.com Inc.
3. Trad Dot Com Co., Ltd is a subsidiary of Rakuten (Thailand) Co., Ltd.
4.	PRICEMINISTER S.A.S., Rakuten Deutschland GmbH and Wuaki TV, S.L. are subsidiaries of Rakuten Europe S.a.r.l. In addition, Voyager moins Cher S.A.S. and TMG
MEDIA GROUP S.A.S. are subsidiaries of PRICEMINISTER S.A.S.
5. Market brokerage & futures systems, Inc. is a subsidiary of Dot Commodity, Inc.
6. PT.Rakuten-MNC is a subsidiary of PT RAKUTEN INDONESIA.
7. RAKUTEN BRASIL INTERNET SERVICE LTDA. is a subsidiary of Rakuten Brazil Holdings LTDA.
8. Ticket Star Inc. is a subsidiary of Rakuten Baseball, Inc.
9.	Play European Holdings Limited and Vanilla Limited are subsidiaries of Play Holdings Limited. Play Trade S.a.r.l., Play Media S.a.r.l., Webworks Development Limited,
Play Limited, Boa Limited, The Web Factory Limited, Play Direct Limited and Play Payments Limited are subsidiaries of Play European Holdings Limited.
10.	RAKUTEN TRAVEL KOREA CO., LTD., Rakuten Bus Services Inc., Rakuten Travel Guam Inc., Rakuten Travel USA, Inc., China Online Travel Inc. and Rakuten Travel
Singapore Pte. Ltd. are subsidiaries of Rakuten Travel Inc. In addition, ET MOBILE (CHINA) CO., LTD is a subsidiary of China Online Travel Inc.
11. eBANK Capital Management (Cayman) Ltd. is a subsidiary of Rakuten Bank Ltd.
12. Kajiyama Warehouse Co., Ltd. and Rakuten Card Services Co., Ltd. are subsidiaries of Rakuten Card Co., Ltd.
13.	Kobo Europe S.A., KOBO (US) INC., Kobo Software Ireland Limited, KOBO LIVROS DO BRASIL LTDA. and Aquafadas S.A.S. are subsidiaries of Kobo Inc. In addition,
Aquafadas Inc. and AVE! Comics Production SASU are subsidiaries of Aquafadas S.A.S.
14. SOURCENEXT CORPORATION is an equity-method affiliate of RS Empowerment, Inc.
15. Daily Grommet Inc. is an equity-method affiliate of Rakuten USA, Inc.
16. Denotes companies required to submit financial reports and securities registration statements according to Japanese securities and exchange legislation.
17. This is a special-purpose company.
18. AIRIO Life Insurance Co., Ltd. changed its name to Rakuten Life Insurance Co., Ltd. on April 1, 2013.

33

Corporate History

1997

Rakuten Ichiba, the Internet shopping mall,commences operation.

2000

Rakuten, Inc. goes public through an IPO on the
JASDAQ market.

2010

bitWallet, Inc., the Edy e-money system operator,
becomes a subsidiary.
LinkShare Japan K.K. becomes a
subsidiary through a merger with Traffic Gate, Ltd.
Buy.com Inc. becomes a subsidiary through Rakuten
USA, Inc.

Rakuten Books is founded as a joint venture with
Nippon Shuppan Hanbai inc.
Infoseek Japan K.K. is acquired by Rakuten, Inc. tocreate a portal service.

PRICEMINISTER S.A. (now PRICEMINISTER S.A.S.), an
e-commerce site operator in France, becomes a wholly
owned subsidiary through Rakuten Europe S.a.r.l.

2001

Rakuten Travel starts online hotel reservation services.

Rakuten Bank Ltd. is made a wholly owned subsidiarythrough a stock swap.

2003

MyTrip.net is acquired by Rakuten, Inc. to spearhead
the travel business; later merged with Rakuten Travel,
Inc. in 2004.

Rakuten launches an Internet shopping mall in China asa joint venture with Baidu, Inc.

2011

Rakuten, Inc. acquires 96.7% of sharesin DLJdirect SFG Securities to create the current
Rakuten Securities, Inc.

2004

Ikeda Internet Software LTDA., one of Brazil’s leading
e-commerce platform providers, becomes a subsidiaryof Rakuten, Inc.

Rakuten, Inc. acquires 96.5% of shares in
Aozora Card; the company is later renamed
Rakuten Credit, Inc.

Tradoria GmbH., one of Germany’s leading online
e-commerce platform providers, becomes a subsidiaryof Rakuten, Inc.

 akuten Baseball, Inc. is founded to start a professionalR
sports business.

2005

Play Holdings Limited, one of the UK’s most successful
e-commerce businesses, becomes a subsidiary of
Rakuten, Inc.

Rakuten, Inc. acquires 100% of shares in LinkShare
Corporation to spearhead overseas push.

Rakuten, Inc. announcs the acquisition of Kobo, Inc.,
based in Canada, a leading global e-book business.

Rakuten Auction, Inc. is founded as a joint venture withNTT Docomo, Inc.
Kokunai Shinpan Co., Ltd.
(later nemed Rakuten KC Co., Ltd.) is included in the
consolidation as a subsidiary of Rakuten Inc.

2006

Rakuten KC Co., Ltd. transfers its auto loan business toOrient Corporation to streamline its business.

2007

Rakuten, Inc. acquires 73.5% of the sharesin Fusion Communications to commence an
IP telephony business.

2012

Kenko.com Inc., operator of a healthcare goods online
shopping site, acquired through a third-party allocationof shares.
Wuaki.TV, S.L. (Spain), an emerging European providerof on-demand video services, acquired and made awholly owned subsidiary.
Acquisition of majority interest in equity-method affiliate,
AIRIO Life Insurance Co., Ltd. (now renamed Rakuten
Life Insurance Co., Ltd.), which became a consolidated
subsidiary.

Rakuten Logistics, Inc. is founded to commence newlogistics business.
Rakuten, Inc. and President Chain Store establish a
joint venture and start a Taiwan-based internet shopping
mall business: Rakuten Ichiba Taiwan.

Rakuten Austria GmbH is established through Rakuten
Europe S.a.r.l. to operate an e-commerce site in Austria.

Rakuten, Inc. signs an agreement with eBANK
Corporation (now Rakuten Bank, Ltd.) regarding astrategic and capital alliance.

2009

Kobo, Inc. acquisition completed and Kobo made awholly owned subsidiary.
Rakuten Malaysia Sdn. Bhd. established in preparation
for local e-commerce service launch.

Rakuten Books is integrated into Rakuten Ichiba.

2008

Rakuten, Inc. and Indonesia’s largest media group, PT
Global Mediacom Tbk., launched an Indonesia-basedInternet shopping mall, “Rakuten Belanja Online.”

Rakuten Bank, Ltd. becomes a subsidiary.
TARAD Dot Com Co., Ltd., an Internet shopping mall
operator in Thailand, becomes a subsidiary throughRakuten (Thailand) Co., Ltd.

34

Our Mission

Corporate Information

Since Rakuten’s foundation in 1997, it has been our corporate mission to empower people andsociety through the Internet, while aiming to become the No. 1 Internet services company in theworld. Many online shopping sites at the time of our foundation were little more than online web
catalogs, and few believed that consumers would buy products and services on the Internet. It
was during such a time that we boldly launched the Internet shopping mall Rakuten Ichiba. Oursite was created based on the concept of not having Internet-savvy people run the business, but
creating a platform that enabled ordinary people skilled in retail to open their own online shops.
Beyond Rakuten Ichiba, the Rakuten Group has expanded into a diverse array of one-stop
online services in Japan, including travel, eBooks & eReading, banking, securities, credit cards,

Company Overview

Number of Shares and Shareholders(As of December 31, 2012)

Name

Rakuten, Inc.

FoundedFebruary 7, 1997

Service Launched

May 1, 1997

IPO

April 19, 2000

Capital108,255 million yen(As of December 31, 2012)

Employees

9,311 (Consolidated)

Major Shareholders

Headquarters

Shinagawa Seaside Rakuten Tower, 4-12-3
Higashishinagawa, Shinagawa-ku,
Tokyo 140-0002, Japan(As of December 31, 2012)

insurance, and professional sports. We are also accelerating our overseas expansion andsharing with our overseas group companies the unique business model and ecosystem that we

Number of Shares Authorized

3,941,800,000

Total Number of Shares Issued

1,320,626,600
83,450

Number of Shareholders

The Company splited one share into 100, and adopted Share Unit System, which defines 100 shares as one trading unit, on July 1, 2012.

Name

Number ofsharesPercentage
heldhave built in Japan—starting with our e-commerce, eBooks & eReading, and travel businesses—

Crimson Group, Inc.

226,419,000

17.14

along with our corporate commitment to the empowerment of individuals and society. We will

Hiroshi Mikitani

203,072,000

15.38

continue to move forward to the creation of a truly global Rakuten ecosystem.

Haruko Mikitani

141,125,000

10.69

JP MORGAN CHASE BANK 380055

63,428,463

4.80

Masuda and Partners Inc.

33,161,000

2.51

THE CHASE MANHATTAN BANK 385036

30,171,300

2.28

STATE STREET BANK AND TRUST COMPANY

25,926,963

1.96

CBNY-ORBIS FUNDS

23,878,903

1.81

MELLON BANK, N.A. AS AGENT FOR ITS
CLIENT MELLON OMNIBUS US PENSION

21,006,741

1.59

JP MORGAN CHASE BANK 385164

19,991,600

1.51

Stock Information

Rakutenmembers:

82

millionGrosstransaction
volume in Japan:

Number of
Rakuten Ichiba
merchants:

4

Over

40,000¥
trillion

Stock Code4755 (JASDAQ Tokyo Stock Exchange)

Fiscal Year

January 1 to December 31

Month of Annual General
Shareholders’ Meeting

March

Shareholder
Record Date

December 31

Transfer Agent

Sumitomo Mitsui Trust Bank, Limited

Contact

Sumitomo Mitsui Trust Bank, Limited

Notes:	Crimson Group, Inc. implemented an organizational change as of December
27, 2012, and structured as Crimson Group, LLC.

Stock Transfer Agency Department
2-8-4 Izumi, Suginami-ku,
Tokyo 168-0063, JapanClassification by Type of Shareholder(As of December 31, 2012)

Cross-use ratio:

Over

50%

Share ofJapanese online
retail market:

EC/Internet
businesses in

20

Nearlycountries/
regions

30%

Individuals
Foreign financial institutions
and individuals

Inquiry

Other domestic corporations
Domestic financial institutions

Investor Relations, Rakuten, Inc.
URL http://global.rakuten.com/corp/investors/

Securities firms
Others(As of December 31, 2012)

Contents

1
12
16
17
20
21

To Our Shareholders
A CSR Partnership for Sustained Growth
Financial Highlights
Review of Operations
Board of Directors
Corporate Governance26
32

Financial Section
Consolidated Subsidiaries andAffiliated Companies

34
35

Corporate History
Corporate Information

36.61%
38.60%
20.04%
4.23%
0.51%
0.01%

Cautionary Statement
In this report, unless indicated otherwise, references to “Rakuten”, “Rakuten Group”, “we”,”our” and “us” are to Rakuten, Inc. and its consolidated subsidiaries and consolidated affiliates. Statements regarding current plans, strategies, beliefs and other statements that are
not historical facts of the Rakuten Group are forward-looking statements.
Such forward-looking statements are based on management’s assumptions and beliefs
in light of information currently available, and it should be noted that risks and unforeseen
factors could cause actual results to differ significantly from those discussed in the report.
We do not intend to update these forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by applicable laws.
“Rakuten”,
andare registered trademarks of Rakuten, Inc. in Japan.

Origins of the Name Rakuten
Rakuten Ichiba is named after Rakuichi-Rakuza , the first free and open marketplacein Japan, opened in the 16th century.
When used as a verb, raku is written with a Chinese character meaning to enjoy
oneself ( 楽 ). The same character is used in Rakuten, which means “positive spirit.” The
name Rakuten Ichiba literally means a “market of positive spirit,” where shopping isentertainment. These words symbolize the driven, forward-looking nature of ourbusiness. That is why we named our company Rakuten, Inc.

35

Rakuten, Inc.
Annual Report 2012

Annual Report

Fiscal Year Ended December 31, 2012

Rakuten, Inc.
TEL: +81-3-6387-1111 URL: http://global.rakuten.com/corp/investors/
Shinagawa Seaside Rakuten Tower, 4-12-3 Higashishinagawa, Shinagawa-ku, Tokyo 140-0002, Japan

Rakutenis Unique
Annual Report
Fiscal Year Ended December 31, 2012