Corporate Data

Stock Information Stock Distribution by Type of Shareholders

Notice toShareholders

39,937,100 shares

20,730,840 shares

9,257,600 shares

14,849,483 shares

1,033,695 shares

14,000,342 shares

40.01%

20.77%

9.28%

14.88%

1.04%

14.03%

Japanese institutions:

Individuals:

Japanese financial institutions:

Foreign institutions and individuals:

Japanese securities firms:

Treasury stocks:

Corporate Data & Stock Information (As of March 31, 2015)

HEIWABUSINESS REPORT

2015

01

04

09

06

08

Back Cover

Message from the PresidentHighest Net Sales, Operating Income, Ordinary Income, and Net Income Since Listing

Segment InformationPachinko and Pachislot Machine Business / Golf Business / Other

CloseupInterview with Creators

PachinkoKoumonchama CHOKOTOBUKI: Nihonmanyu 2700kmPachislotMahjong Monogatari 3: Yakumanranbu no KyukyokutaisenAiming for Japan’s Leading Pro Golf Tournament to Realize Dreams“HEIWA PGM CHAMPIONSHIP”

Shareholder InformationShare Exchange Agreement with PGM Holdings K.K. ConcludedShareholder Benefit Program Introduced

Financial DataSummary of Consolidated Financial Statements / Key Financial Position Indices

Corporate Data & Stock InformationCorporate Data / Stock Information / Stock Distribution by Type of Shareholders / Information for Shareholders

CONTENTS

07

06

Trade Name: Heiwa CorporationHead Office: 1-16-1, Higashiueno, Taito-ku, Tokyo, 110-0015, JapanFoundation: 1949Establishment: 1960Capital: 16,755 million yenDirectors and Audit and Supervisory Board Members (as of June 26, 2015)

Representative Director/President: Katsuya MineiRepresentative Director/Vice President: Toshinobu MoromizatoDirectors: Yasuaki Ikemoto

Yutaka OhtaMikio Miyara Toshio YoshinoKatsumasa NakadaTakashi SagehashiNobuki KatsumataHisao AraiTamiki Kaneshi

Outside Director: Kota YamaguchiFull-time Audit and Supervisory Board Member: Koji KawanoOutside Audit and Supervisory Board Member: Takeshi Sato

Akinori EndoYuichiro Eguchi

Offices: Head Office, Hokkaido, Sendai, Takasaki, Tokyo, Nagoya, Osaka, Hiroshima, Fukuoka and 20 Sales Offices

Factory: Isesaki

(1) To notify a change of address, to request the repurchase or additional purchase of fractional shares, and other procedures, please

contact your account administrator, i.e., the securities firm or other financial institution where you hold the relevant account. Please

note that the transfer agent (Mitsubishi UFJ Trust and Banking Corporation) do not accept such requests.

(2) The account to receive dividends can be designated by submitting the appropriate form through your account administrator (e.g.,

securities firm). For details of this procedure, please contact your account administrator.

(3) Accrued dividends can be received at the head office and branches of Mitsubishi UFJ Trust and Banking Corporation.

Information for Shareholders

Business Year:From April 1 of each year to March 31 of the following year

Record Dates:Year-end dividends: March 31 of each year Interim dividends: September 30 of each year

General Meeting of Shareholders:

June of each year

Transfer Agent/ Special Account Administrator:

Mitsubishi UFJ Trust and Banking Corporation

For Inquiries:Stock Transfer Agency Department of Mitsubishi UFJ Trust and Banking CorporationTel: 0120-232-711 (toll free)

Stock-Related Processing Forms:

Request by audio-assisted automated phone (0120-244-479 (toll-free))Download forms from the Internet (http://www.tr.mufg.jp/daikou/)

Stock Exchange Listing or Registration:

Tokyo Stock Exchange, First Section

How to Make Public Notification

Digital notification (http://www.pronexus.co.jp/koukoku/6412/6412.html)(However, when there is a problem or otherwise inevitable incidents that cannot be disclosed digitally, a notice will be placed in the Nikkei.)

Number of Shares Authorized 228,903,400 shares

Number of Shares Issued 99,809,060 shares

Number of Shareholders 14,269

Securities Code: 6412

From April 1, 2014 to March 31, 2015

010_7075402982706.indd 1-2 2015/07/29 10:04:08

about Heiwa Group Message from the President

Toward a comprehensive leisure companyHeiwa Group

For the fiscal year ended March 31, 2015, we achieved record-high business performance on a consolidated basis since the listing as both the pachinko and pachislot machine business and the golf business achieved higher sales and profit. The record-breaking overall business performance was led by higher pachinko machine sales volume in the pachinko and pachislot machine business. Furthermore, the improved profit margin of the golf business contributed to a significant year-on-year increase of profit. Operating income increased by 16.2% year on year, ordinary income increased by 18.8%, and net income increased by 28.9% on a consolidated basis.

In the pachinko and pachislot industry, pachinko parlors continued to operate in a challenging environment as sales competition among pachinko

The Highest Net Sales, Operating Income, Ordinary Income, and Net Income Since Listing

*Please see page 9 for more details.

Both pachinko and pachislot machine business and golf business achieved higher sales and profit

Net sales

Ordinaryincome

Operating income

Net income

9.4% year on year 3.6% compared to plan

18.8% year on year 1.5% compared to plan

16.2% year on year 3.4% compared to plan

28.9% year on year 2.9% compared to plan

Consolidated Financial Highlights for the Fiscal Year Ended March 31, 2015

Heiwa Corporation, an experienced manufacturer of pachinko and pachislot machines founded in 1949

and established in 1960, has always been a pioneer within the industry; in 1988 it became the first firm

in the industry to go public as an over-the-counter company, and in 1997 its shares were moved

to the First Section of the Tokyo Stock Exchange.

Subsequently, in 2007 the Company completed a business integration with Olympia Co., Ltd.,

a pachislot machine manufacturer, and in 2011 made PGM Holdings K.K., a major golf course operation

company, into a consolidated subsidiary. Heiwa has continued to evolve in order to adapt

to the changing industry environment.

Going forward, the Company will leverage its stable management base and continue to provide

customers with good times while aiming to become a comprehensive leisure company

under the motto “Let’s create more enjoyable future.”

Creating “More Enjoyable Future”

Heiwa Corporation (Tokyo Stock Exchange,

First Section)

Pachinko and pachislot machine business

Golf business

Amtex Co., Ltd.

PGM Holdings K.K. (Tokyo Stock Exchange,

First Section)

Olympia Co., Ltd.

198.6

42.0

42.8

26.2

President

Katsuya Minei

billion yen

billion yen

billion yen

billion yen

1

010_7075402982706.indd 3-1 2015/07/29 10:04:11

Message from the President

Regarding costs, although R&D expenditure increased for the purpose of enhancing product attractiveness, a reduction in the cost of pachislot machine sales contributed to increased profit.

In the golf business, golf courses newly acquired based on the M&A strategy contributed to results. Initiatives for profit maximization started to take effect as well, and as a result, the golf business achieved an increase in sales and significant growth in profit.

With regard to M&A, we acquired Sohkyu Country Club and concluded basic sponsorship agreements for Chiba International Country Club and two other golf courses to support their turnaround. At the same time, we reviewed our portfolio, including sale of golf courses and termination of contracts for management.

As for initiatives for profit maximization, we reinforced the department responsible for the pricing strategy and strove to thoroughly control expenses while offering appropriate prices. This led to a significant increase in profit.

On May 13, 2015, Heiwa and PGM Holdings K.K. concluded a share exchange agreement (simple share exchange) whereby PGM Holdings is to become a wholly owned subsidiary. The share exchange is scheduled to take effect on August 1, 2015, subject to approval by the general meeting of

shareholders of PGM Holdings. The objective is to enhance the corporate value of

the Group as a whole through further strengthening the earnings power and enhancing the corporate value of PGM Holdings. The golf industry is experiencing intensified competition due to decline in golfer population by aging and excessive supply of golf courses. Therefore, we believe it is essential to further promote M&A to boost profitability of PGM Holdings and enhance the corporate value of Heiwa Group.

We aim to establish a stable, highly profitable structure based on greater collaboration between the pachinko and pachislot machine business and the golf business so as to enhance corporate value.

In the fiscal year ending March 31, 2016, we emphasize differentiation and innovation in product development to create a stream of hit products. To this end, we need to pursue accuracy of trend forecasts and rapidly respond to market change. The plan calls for sales of 260,000 pachinko machines and 100,000 pachislot machines.

In the golf business, while strengthening M&A, we will encourage purchase of golf club memberships by offering an enhanced member privilege program. Furthermore, we will enhance the value of our golf courses and implement a well-designed pricing strategy to improve business performance.

For the fiscal year ending March 31, 2016, we forecast net sales of 215.1 billion yen, operating income of 38.0 billion yen, ordinary income of 36.8

billion yen, and profit attributable to owners of the parent of 22.4 billion yen.

With regard to distribution of dividends, we paid a year-end dividend of 40 yen per share. Together with an interim dividend, the annual dividend amounted to 80 yen per share, an increase of 10 yen compared with the previous fiscal year. As part of efforts to enhance the return to shareholders, we decided to introduce a shareholder benefit program. We will offer golf coupons to shareholders who own at least one tradable unit of shares, starting with shareholders on the register as of September 30, 2015. We will continue to pay stable dividends by maintaining the present dividend policy even after the introduction of the shareholder benefit program.

We request your long-term support for our businesses.

and pachislot machine manufacturers intensified. Moreover, following the change in the format inspection method for pachislot machines by the Security Communications Association (Hotsukyo) in September 2014, it is taking time for manufacturers to respond to the new method, resulting in a decrease in the pachislot sales volume in the market as a whole.

In the golf industry, despite the adverse impact of unsettled weather, demand for playing golf was robust.

In the pachinko and pachislot machine business, although pachislot machine sales were sluggish, a significant increase in pachinko machine sales led to great increases in both sales and profit.

We released ten pachinko machine titles during the year, including Super Street Fighter IV CR EDITION, Lupin The Third: Shuyaku wa Zenigata, and Moerutoukon Antonio Inoki: Kakutougi Sekaiichi Ketteisen. In addition, we continued sales of Lupin the Third: Kesareta Lupin, which was released in the previous fiscal year. As a result, the number of pachinko machines sold increased by 54,000 machines compared with the previous fiscal year to 252,000 machines.

We also released six pachislot machine titles, including Sengoku Otome: Kengeki ni Mau Shiroki Kensei: Saigoku Sansen version, COWBOY BEBOP, and Koumonchama KATSU. The number of pachislot machines sold decreased by 28,000 machines compared with the previous fiscal year to 92,000 machines.

Significant increase in pachinko machine sales

Growth through M&A and profit maximization

PGM Holdings to become a wholly owned subsidiary

Shareholder benefit program for greater return to shareholders

Consolidated Financial Highlights for the Fiscal Year Ended March 31, 2015

0

80,000

160,000

240,000

95,120

215,100

181,570177,111198,605

2012/3 2013/3 2014/3 2015/3 2016/3

(million yen)

(forecast)

0

14,000

7,000

21,000

28,000

0

200

100

300

400

240.44 235.53 237.74

305.90261.05

20,51622,400

20,36120,123

26,235

2012/3 2013/3 2014/3 2015/3 2016/3

(million yen) (yen)

(forecast)

(forecast)

0

10,000

20,000

30,000

50,000

40,000 38,00042,870

20,741

36,90934,434

2012/3 2013/3 2014/3 2015/3 2016/3

(million yen)

(forecast)

0

25

50

75

100

8080

607070

2012/3 2013/3 2014/3 2015/3 2016/3

(yen)

(forecast)

Net Sales Operating Income Annual dividend per shareNet Income* Net Income per Share

Please see page 9 for other financial performance indicators.

* In accordance with the revision of the accounting standard for consolidated financial statements, “net income” will be restated as “profit attributable to owners of the parent” from the fiscal year ending March 31, 2016 onward.

Please see page 8 for details of the share exchange and the shareholder benefit program.

32

010_7075402982706.indd 2-3 2015/07/29 10:04:12

Pachinko and Pachislot Machine Business

Golf Business

Segment Information / Topics

More golf clubs available for purchase of memberships

Prospects

Create hit products continuously, pursue higher profitability, and reinforce the Group’s organizational power to increase the market share and improve business performance.

Sales of eight pachinko titles in a total of 260,000 units, and five pachislot titles in a total of 100,000 units are forecasted.

Initiatives in Fiscal 2015

Implemented M&A strategy and profit maximization measures based on the mid-term business plan.

Appropriate pricing by the strengthened department responsible for the pricing strategy resulted in a robust revenue per customer in the second half of the year.

Key performance points

Pachinko machine sales volume greatly exceeded the previous year’s level and contributed to business performance.

Responded to the change of the format inspection method for pachislot machines ahead of competitors, and introduced Mahjong Monogatari 3: Yakumanranbu no Kyukyokutaisen

Key performance points

Revenue increased because of an increase in the number of visitors owing to newly acquired golf courses.

Profit increased significantly as selling, general and administrative expenses decreased because expenses were reduced and a provision for the shareholder benefit program will not be recorded until the fiscal year ending March 2016 in view of the change of the fiscal year-end of PGM Holdings K.K.

Prospects

Pursue further growth based on the key policy of strengthening M&A, vigorously encouraging purchase of golf club memberships, and enhancing product value and implementing a well-designed pricing strategy.

Initiatives in Fiscal 2015

Promoted vigorous introduction of new content, fostering and strengthening of original content, and development of pachinko and pachislot machines incorporating innovative ideas with the aim of developing hit products and strengthening brand power.

Net salesmillion yen million yen

million yen

million yen million yen

million yen

121,380 74,807

2,417

YoY +14.7%

YoY+2.3%Net sales

Net salesYoY

-5.4%

Operating income 34,310 12,127

140

YoY +13.9%

YoY+22.4%

Operating income

Operating income

YoY-11.8%

This is the fifth title in the series since the debut of the first pachinko title in January 2005. Through the pursuit of the ultimate you-are-there experience, the world of professional wrestler Antonio Inoki is conjured up with gripping bouts inside and outside the ring. In a first for the series, this title uses live-action images filmed specifically for it, realizing a pachinko machine that allows players to “meet” Antonio Inoki. The machine offers a dynamic, captivating experience not only for hard-core fans of Antonio Inoki but also for everyone who relishes the thrills of professional wrestling.

With its successive iterations of a historical fantasy motif, the Koumonchama series has won a place in the hearts of legions of fans and retained their loyalty over many years. Using an incredibly high-impact frame, this title stirs players up, demands a whole new approach to gaming, and questions common sense. It also comes with “Inro Chance,” a first-of-its-kind feature that allows the player to select any of six separate modes to enter different zones that changes the expectation level of the game. Players are also entertained by diverse audiovisual presentations, a dynamic “Inro Shutter,” and a multitude of other fascinating features.

Moerutoukon Antonio Inoki: Kakutougi Sekaiichi Ketteisen

Vigorous acquisition of golf courses in the Metropolitan area

Started operation of Sohkyu Country Club

Koumonchama KATSU

Topics TopicsMore enjoyable future

Pachinko

Pachislot

ChibaPrefecture

OtherInformation distribution service, operation of

restaurants and shops in service areas

Sales results in the second half of fiscal 2015

Pachinko machines Machines sold Release

Maison Ikkoku: Sukinanoni… 17,633 November 2014

Koumonchama CHOKOTOBUKI: Nihonmanyu 2700km 25,837 December 2014

Matsurida! Sabuchan 3,046 January 2015

Moerutoukon Antonio Inoki: Kakutougi Sekaiichi Ketteisen 34,604 February 2015

Total number of units sold in the second half of fiscal 2015* 90,231

Golf course for which new agreements/contracts were secured (as of March 31, 2015)

Newly acquired golf courses Number of holes Location

Sohkyu Country Club 18 Futtsu-shi, Chiba Prefecture

Chiba International Country Club

45Nagara-machi, Chosei-gun, Chiba Prefecture

Isehara Country Club 27Isehara-shi, Kanagawa Prefecture

Ohatano Country Club 18Hadano-shi, Kanagawa Prefecture

Pachislot machines Machines sold Release

COWBOY BEBOP 15,775 October 2014

Koumonchama KATSU 29,999 January 2015

Mahjong Monogatari 3: Yakumanranbu no Kyukyokutaisen 13,807 March 2015

Total number of units sold in the second half of fiscal 2015* 59,591

Results

Number of titles released Machines sold

Pachinko machines 10 252,103

Pachislot machines 6 92,763

* Sales of titles other than those mentioned above are included.

©2015 INOKI GENOME FEDERATION.

©C.A.L/2014

Membership

Sohkyu Country Club (Futtsu-shi, Chiba Prefecture) joined

the PGM Group in March 2015. Sohkyu Country Club offers

a spacious course with a wide fairway. Located near Tokyo

Bay, it offers memorable views of Mt. Fuji on fine days.

In April 2015 the PGM Group started soliciting new

memberships for 71 golf clubs* in Japan. PGM golf club

members enjoy the benefit of lower green fees, can

participate in monthly competitions, and are accorded

priority for booking on weekends. Members are also

eligible for the PGM Club Advantage Program (P-CAP)

and can play at over 120 PGM Group golf clubs

throughout Japan at discounted fees.*As of April 1, 2015

For more details of nearby golf courses where you can purchase a membership

http://www.pacificgolf.co.jp/membership/seikaiin/

Wakagi Golf Club (Saga Prefecture)

Sales results for the full year

*The amount of operating income of each segment presented is before deduction of intersegment transactions and corporate expenses and other unclassifiable business expenses.

PGM Membership Search

54

010_7075402982706.indd 4-5 2015/07/29 10:04:17

The first Mahjong Monogatari series, our original content which was released as a pachinko machine in 1991, was the first machine in the industry equipped with a full color LCD display, and exerted a massive influence over the pachinko and pachislot industry in the years to come. Although the series has a mahjong theme, you can fully enjoy the content without knowing how to play mahjong. Ever since the Mahjong Monogatari 2 pachislot machine debuted in 2005, inspired by the “moe (cute) & moe (hot)” concept we have capitalized on the attributes that make the characters so captivating and their red-hot battles.

As for aspirations concerning our original content produced, I would like to nurture this series to the point that it can stand shoulder to shoulder with Sengoku Otome, another series noted for its captivating characters.

We have increased the cast of characters for this title without compromising the quality of animation. In addition, we sought painstakingly to fully realize what we had in mind for the exclusive frame with its character figurines

and “touch-sensitive dice and vibration” functions. We clearly didn’t compromise on the gaming performance, either. We have implemented look-ahead functionality, providing a sequence of clues to widen the options for advance notices and presentations, raising players’ expectations and the thrill level.

Our “Da-WIN” service which links the pachinko and pachislot machine with the player’s cellphone/smartphone, takes player satisfaction to new heights. Through the service, players can enjoy from a wide selection of characters, and customize the navigation voice and songs during the jackpot.

Clearly, a pachinko or pachislot machine succeeds only to the extent that it offers players enjoyment. Even so, I think that building machines that we—the people who design them—actually want to play can help us achieve that. The development project is a team effort. I am moved by the dedication of the members of our development team. We all share the powerful feeling that “We are creating excellent products.” My ambition is to develop pachislot machines that I can confidently call masterpieces of Heiwa Group.

Original content based on the “moe (cute) & moe (hot)” content

Ultimate pursuit of gaming performance and fine-tuned quality to communicate the attractiveness of Mahjong Monogatari

Creating pachinko and pachislot machines that we want to play

With its familiar, comical characters from a popular historical fantasy drama, Koumonchama is one of the best-known series from Heiwa group, supported by a huge fan base comprising men and women of all ages. This title revisits the origins of the first title in the series, which debuted in 1994, and sticks to an easy-to-understand heroes-and-villains narrative as well as the Koumonchama series’ celebrated high payouts. We developed this title to appeal to veteran fans of the series as well as other players from older age groups.

This machine is an extravaganza of gimmicks. These must-see attractions include the familiar inro (a small case for carrying personal items) and the shuriken weapon with the pinwheel motif, and a “treasure ship” figurine whose unfurled banner completely covers the screen. The most attractive aspect, though, is the prize allocation system via the “Gochi Device”—a first of its kind in this industry.

The “Gochi Device” offers a value-for-money feeling during jackpots and exhilaration of the shooting experience. Our team tried and tested this device countless times before release.

I joined the project midstream as director of the

The Koumonchama series has won a place in the hearts of legions of fans and retained their loyalty for over 20 years. This new title released in December 2014 features the “Gochi Device,” an innovative gimmick.

The Mahjong Monogatari series and its characters, inspired by the mahjong motif, have won the allegiance of numerous fans. The latest title of this series, released in March 2015, doubles the pleasure thanks to enhanced characters and expanded gaming performance.

development. It wasn’t easy to give a coherent shape to the proposed concept. However, inspired by a sense of mission and responsibility, I did everything I could to encourage fruitful communication within the team. The result was a palpable sense of solidarity and high levels of motivation fueling the team’s progress toward our goal.

The development took a few months longer than usual and we had to overcome several obstacles to accomplish the project. Nevertheless, I feel that the team’s powerful determination rooted in the aspirations of every member of the team enabled us to climb a very high mountain and produce a hit product.

When I interviewed pachinko parlors, I was told, “Machines that contribute to above average utilization rates are not the only machines that players want.” This reminded me of simply built pachinko machines in the past. At that time, players could casually enjoy playing pachinko in a short period of time such as on the way home from work. But nowadays, players need longer time to fully enjoy the pachinko game. I started to realize at that point that I am in danger of losing sight of readily accessible pachinko entertainment.

From now on I would like to pursue development of pachinko machines that have mass appeal. With that in mind, I will regularly canvass players to find out what they really desire.

C. A.L/2014 HEIWA/OLYMPIA

Aiming for Japan’s Leading Pro Golf Tournament to Realize Dreams

“HEIWA PGM CHAMPIONSHIP”The third tournament to be held at Sohbu Country Club

The third “HEIWA PGM CHAMPIONSHIP” will be held at Sohbu Country Club’s Sohbu Course (Inzai-shi, Chiba Prefecture), following the first two championships held at Miho Golf Club (Miho-mura, Inashiki-gun, Ibaraki Prefecture).

Just like the previous championships, this one will also offer special invitations to young golfers and amateur golfers of all ages as well as professional golfers. It is a golden opportunity to discover and foster talented people who will come to lead the world of golf in Japan.

Outline of 2015 Championship

Event name: HEIWA PGM CHAMPIONSHIPSponsors: Heiwa Corporation, PGM Holdings K.K.Managing body/cosponsor: Japan Golf Tour OrganizationEvent dates: November 5 to 8, 2015 (Thur-Sun)Location: Sohbu Country Club Sohbu CourseTotal prize money: Prize money in the amount of ¥200,000,000;

prize money in the amount of ¥40,000,000 for the tournament winner

Koumonchama CHOKOTOBUKI: Nihonmanyu 2700km

Mahjong Monogatari 3: Yakumanranbu no Kyukyokutaisen

Interview with the Creator Interview with the Creator

Sub-directorPlanning Team, Development Group

ProducerPlanning Team, Development Group

Signaling the powerful revival of the original Koumonchama

Strong aspirations for development are the key to success.

Development focused on entertainment with mass appeal

Closeup

76

010_7075402982706.indd 6-7 2015/07/29 10:04:22

Financial Data

Consolidated Financial Statements (million yen)

Consolidated Balance Sheets

FY2014 FY2015

Assets

Current assets 148,086 162,023

Noncurrent assets 290,420 285,810

Total assets 438,506 447,833

Liabilities

Current liabilities 69,216 68,299

Noncurrent liabilities 212,787 201,264

Total liabilities 282,003 269,564

Net assets

Shareholders’ equity 141,129 161,855

Accumulated other comprehensive income 1,642 1,261

Subscription rights to shares 73 52

Minority interest 13,656 15,100

Net assets 156,502 178,269

Liabilities and total net assets 438,506 447,833

Consolidated Statements of Income

FY2014 FY2015

Net sales 181,570 198,605

Cost of sales 108,565 119,216

Gross profit 73,004 79,388

Selling, general and administrative expenses 36,095 36,517

Operating income 36,909 42,870

Non-operating income 1,761 1,319

Non-operating expenses 3,265 2,130

Ordinary income 35,405 42,059

Extraordinary income 3,002 2,464

Extraordinary loss 2,801 885

Income before income taxes 35,606 43,638

Income taxes 14,028 16,029

Minority interests in income 1,216 1,372

Net income 20,361 26,235

Consolidated Statements of Cash Flows

FY2014 FY2015

Net cash from operating activities 38,304 40,511

Net cash from investing activities (18,424) (31,322)

Net cash from financing activities (12,069) (20,774)

Ef fec t o f exchange ra te change on cash and cash equ i va l en ts 5 6

Net increase (decrease) in cash and cash equivalents 7,816 (11,577)

Cash and cash equivalents, beginning of period 47,189 55,005

Cash and cash equivalents, end of period 55,005 43,428

Explanations of Key Factors Contributing to Changes

Although noncurrent assets decreased by 4,609 million yen due mainly to decrease in investment securities, current assets increased by 13,937 million yen due to increase in cash and deposits, and available-for-sale securities. Total assets increased by 9,327 million yen as a result.

Increase in assets

While liabilities decreased by 12,439 million yen due to repayment of debt, net assets increased by 21,767 million yen. As a result, shareholders’ equity ratio increased by 3.8 percentage points to 36.4%. Ratio of interest-bearing debt improved by 22 percentage points to 96%, dropping below the 100% mark.

Improvement in shareholders’ equity ratio

Trends of Asset-related Indicators

0

300,000

200,000

100,000

400,000

500,000

0

30

20

10

40

50

FY2012 FY2013 FY2014 FY2015

(million yen) (%)

124,826 141,182 156,502 178,269

406,875

27.730.8 32.6

36.4

438,506417,057

447,833

0

10

20

30

FY2012 FY2013 FY2014 FY2015

(%)

19.6

7.4

16.7

4.9

17.2

5.9

15.0

4.8

Total assets Net assets Shareholders’ equity ratio ROE ROA

Please see pages 2 and 3 for trends of net sales and income.

Share Exchange Agreement with PGM Holdings K.K. Concluded

Shareholder Benefit Program Introduced

On May 13, 2015, Heiwa and PGM Holdings K.K. concluded a share exchange agreement

whereby Heiwa became a wholly owning parent and PGM Holdings became a wholly owned

subsidiary. The two companies intend to pursue ever-closer collaboration, and with that in

mind, making PGM Holdings a wholly owned subsidiary will eliminate possible conflicts of

interest resulting from the listing of both a parent and a subsidiary, and moreover enable swift

decision-making in implementing a medium- to long-term growth strategy for PGM Holdings.

The objective is to enhance the corporate value of the Group as a whole through further

strengthening the earnings power and enhancing the corporate value of PGM Holdings.

We have introduced a shareholder benefit program for the purpose of enhancing the

attractiveness of Heiwa shares as well as facilitating shareholders’ understanding of the

Group’s businesses so that more shareholders will hold Heiwa shares over the medium to

long term. The shareholder benefit program will commence with shareholders on the register

as of September 30, 2015 who own at least one tradable unit of shares (100 shares).

Share exchange allotment ratio

0.54 shares of Heiwa will be allotted per one PGM Holdings share. Heiwa shares to be allotted

will be treasury stock.

Share exchange method and schedule

Share exchange will be effective on August 1, 2015 subject to approval by the general meeting of

shareholders of PGM Holdings held on June 23, 2015. Heiwa intends to follow the procedures of

simple share exchange that does not require approval at the general meeting of shareholders of Heiwa.

Shareholder Information

Heiwa IR Search URL http://www.heiwanet.co.jp/en/ir/ir_top.php

For more details, please

refer to Investor Relations

of the Company’s site.

*ROE (%) = Net income / Average of shareholders’ equity at the beginning and the end of period x 100

*ROA (%) = Net income / Average of total assets at the beginning and the end of period x 100

Benefit We will offer shareholders golf coupons in accordance with the number of shares held. The coupons can be used at golf courses managed by the Heiwa Group and each coupon offers the maximum 3,500 yen discount from the play fee on weekdays of any month and on weekends and public holidays in designated months. The play fee eligible for discount consists of a green fee, related expenses, and cart fee, and consumption tax levied thereon.

Frequency Twice a yearNumber of coupons offered

100 shares-199 shares: 2 coupons at a time200 shares-299 shares: 4 coupons at a time300 shares-399 shares: 6 coupons at a timeMore than 400 shares: 8 coupons at a time

Eligible shareholders

1) Shareholders who own at least one tradable unit of shares (100 shares) and are recorded on Heiwa’s shareholder registry as of September 30, 2015

2) Shareholders who own at least one tradable unit of shares (100 shares) and are recorded on Heiwa’s shareholder registry as of March 31, 2016

Coupon validity

1) From January 1, 2016 to December 31, 20162) From July 1, 2016 to June 30, 2017* Use of coupons on weekends and public holidays is available in January, February, July, and August (except

January 1, 2016).* Use of coupons at golf clubs in Hokkaido and Chuodo Haregamine Country Club on weekends and public

holidays is available from October before the closure during the winter and from the opening in the spring after the closure in the winter until May.

98

010_7075402982706.indd 8-9 2015/07/29 10:04:24