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June 11th, 2018
Stock Code：3092
To our Shareholders
6-1 Nakase 2-chome, Mihama-ku Chiba
START TODAY CO.,LTD. President and representative
YUSAKU MAEZAWA
Notice of the 20th Ordinary General Meeting of Shareholders
You are cordially invited to attend the 20th Ordinary General Meeting of Shareholders of START TODAY
CO.,LTD. (hereinafter “the Company”), which will be held as described below.
If you are unable to attend the meeting, you may exercise your voting rights in writing. Please review
the reference materials for the General Meeting of Shareholders contained herein and exercise your
voting rights in the manner described hereafter. All votes must be received by 5:00 p.m., Monday, June
25th, 2018.
Yours sincerely
1. Date and Time 1:00 p.m., Tuesday, June 26th, 2018
2. Venue Makuhari Messe 2-1, Nakase, Mihama-ku, Chiba International Conference Halls
3. Matters
: Matters to be Reported
1. Report of the Business Report, the Consolidated Financial Statements, and Auditors Reports of the Accounting
Auditor and the Audit & Supervisory Board for the Consolidated Financial Statements, for the 20th Fiscal Year
(from April 1, 2017 to March 31, 2018)
2. Report of the Non-consolidated Financial Statements for the 20th Fiscal Year (from April 1,2017 to March 31,
2018)
: Matters to be Resolved
Agenda No. 1 Appropriation of surplus
Agenda No. 2 Partial amendments to the articles of incorporation
Agenda No. 3 Amendment of directors’ remuneration (Issuance of stock options)
End
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※For those attending, please submit the enclosed Voting Rights Exercise Form at the reception desk on arrival at the
meeting.
※Modifications to the Reference Document concerning the General Meeting of Shareholders, Business Report, Financial Statements, etc. if any, will be posted on the Company’s website. (http://www.starttoday.jp/irinfo.html).
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20th Fiscal Year Business Report
（April 1, 2017- March 31, 2018）
I. START TODAY Group's Business at a Glance
Progress and results
[1] Overview of the FY2017
(million yen)
FY 2016
(Results)
FY 2017
(Results)
YoY (%)
Total Transaction Value 212,090 (100.0％) 270,543 (100.0％) 27.6％
Net Sales 76,393 (36.0％) 98,432 (36.4％) 28.8％
Gross Profit 69,213 (32.6％) 90,464 (33.4％) 30.7％
Operating Profit 26,284 (12.4％) 32,669 (12.1％) 24.3％
Recurring Profit 26,442 (12.5％) 32,740 (12.1％) 23.8％
Net Income 17,035 (8.0％) 20,156 (7.5％) 18.3％
( ) % against the total transaction value
“Make the world a better place, bring smiles to the world” – this is START TODAY group’s corporate
philosophy. We have strived to work towards this vision by operating one of the largest fashion E-
commerce websites in Japan “ZOZOTOWN”, sales of the private brand “ZOZO”, and the fashion media
“WEAR”.
During FY2017, our group has concentrated on increasing the number of unique users, as well as the
conversion rate (the ratio of purchases made by our unique users) by enhancing user and client brands’
satisfaction with better usability of “ZOZOTOWN”. Specifically, we have accelerated the openings of new
shops on our platform to meet diversified needs of users, and proactively implemented promotion
effectively such as issuance of brand coupons. For shipping charge, which we receive from customers,
we implemented the measure of free shipping charge (customers choose how much they pay) for a month
from October 2017, and then amended the shipping policy from November 2017 to uniform 200 yen
(including tax) per shipment.
In November 2017, we announced the release of the body measurement suit “ZOZOSUIT” and the private
brand “ZOZO”, and commenced pre-orders of the former of free distribution. Furthermore, from January
31, 2018, we have started sales of “ZOZO”.
As a result, the total transaction value resulted as 270,543 million yen (+27.6% YoY), net sales resulted
as 98,432 million yen (+28.8% YoY) and gross profit resulted as 90,464 million yen (+30.7% YoY). Due
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to the rise in the other revenue segment such as increase in shipping income and settlement commission,
gross profit margin (towards the total transaction value) rose by 0.8p to 33.4% on YoY basis.
SG&A resulted as 57,794 million yen (+34.6% YoY) and SG&A ratio (towards the total transaction value)
increased by 1.2p from 20.2% to 21.4% on YoY basis. As primary reasons for such the increase in the
SG&A ratio are as follows. The ratio of shipping cost (towards the total transaction value) increased by
1.0p YoY to 5.2% due to the price revision of the shipping fees to the carrier in Sep 2017, and the ratio
of outsourcing expenses (towards the total transaction value) increased by 1.0p YoY to 2.8% due to
outsourcing fees associated with our private brand and outsourcing fees for operations aligned with the
expansion of logistics and warehouse. On the one hand, total promotion costs (towards the total
transaction value) decreased by 1.1p YoY to 1.6%.
Consequently, operating profit resulted as 32,669 million yen (+24.3% YoY), and operating profit
margin (towards the total transaction value) resulted as 12.1%, which is 0.3p decrease from 12.4% the
operating profit margin of the last fiscal year. Recurring profit resulted as 32,740 million yen (+23.8%
YoY), and profit attributable to owners of parent resulted as 20,156 million yen (+18.3% YoY).
However, we recorded extraordinary loss of 4,260 million yen: Impairment loss of non-current asset of
1,486 million yen because some of the equipment which are not expected to be utilized in the future due
to the spec change in regard with manufacture of the body measurement suit, inventory valuation loss of
263 million yen for the same reason addressed above, loss on valuation of investment securities of 1,848
million yen due to StretchSense Limited, an affiliated company, has been struggling compared to its
original business forecast, and loss on valuation of advance payment of 663 million yen for advance
payment which had been made in prospect of manufacturing considerable number of suits prior to the
spec change of the body measurement suit.
Total transaction value of FY2017 4Q (January – March 2018) resulted 73,555 million yen (+14.9% YoY).
Since the financial impact of deferred payment method which was introduced in November 2016 took
around, and keeping a lid on total promotion costs, the growth rate became settled at organic growth
rate. SG&A resulted 15,770 million yen (+16.3% YoY), SG&A ratio (towards total transaction value) was
21.4%. As a result, operating profit resulted 9,118 million yen (+30.4% YoY) and operating profit ratio
(towards total transaction value) was 12.4%.
[2] Compared to the Original forecast
(million yen)
FY2017
( Original forecast）
FY2017
(Results)
Compared
to forecast
Total Transaction Value 270,000 (100.0％) 270,543 (100.0％) 0.2％
Net Sales 100,000 (37.0％) 98,432 (36.4％) △1.6％
Operating Profit 32,000 (11.9％) 32,669 (12.1％) 2.1％
Recurring Profit 32,000 (11.9％) 32,740 (12.1％) 2.3％
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Net Income 22,200 (8.2％) 20,156 (7.5％) △9.2％
( ) % against the total transaction value
In comparison with the guidance which was disclosed on April 28, 2017, the total transaction value could
overachieve by 0.2%. The net sales was 1.6% behind the plan but this was mainly due to the shortfall
of ZOZOUSED within ZOZOTOWN business. We overachieved 2.1% and 2.3% for operating profit and
recurring profit respectively; however, due to the extraordinary losses such as impairment loss, the profit
attributable to owners of parent was 9.2% behind to the plan.
Since our group only operates within a single business segment of E-commerce, descriptions by each
segment are omitted, but we have indicated the results for each type of business as follows.
［３］YoY comparison of each business segment
Business Unit
FY 2016
(April 1, 2016 ~ March 31, 2017)
FY2017
(April 1, 2017 ~March 31, 2018)
Total
Transaction
Value
YoY(%)
Net
Sales
YoY(%)
Total
Transaction
Value
(million ¥)
Ratio
(%)
Net Sales
(million ¥)
Total
Transaction
Value
(million ¥)
Ratio
(%)
Net Sales
(million ¥)
ZOZOTOWN
(Purchased Stock) 191,903 90.5 55,253 246,803 91.2 71,192 28.6 28.8
(Consignment) 193 0.1 193 166 0.1 166 △14.0 △14.0
(ZOZOUSED) 12,875 6.1 12,875 15,951 5.9 15,931 23.9 23.7
Total 204,972 96.7 68,322 262,920 97.2 87,290 28.3 27.8
B to B 6,220 2.9 1,338 7,536 2.8 1,642 21.2 22.7
ZOZOFURIMA 898 0.4 △0 86 0.0 － △90.4 △100.0
Others － － 6,731 － － 9,498 － 41.1
Total 212,090 100.0 76,393 270,543 100.0 98,432 27.6 28.8
(Notes) Transaction value and net sales of the private brand “ZOZO” is included to that of purchased stock shop
1. ZOZOTOWN Business
Our ZOZOTOWN business is divided into 3 segments: Consignment business, Purchased Stock business,
and “ZOZOUSED” business. The Consignment business, we take care of the inventory which is sent from
our brands, and contract sales. The Purchased Stock business, we purchase fashion merchandise from
multiple brands, store and sell them as our own inventory. The ZOZOUSED business, we purchase
second-hand apparel items mainly from individual users, then re-sell them as our inventory.
We understand that “increasing the number of buyers” as well as “having users spend more of their
fashion budget on ZOZOTOWN” are significant factors for ZOZOTOWN business’s continuous growth. To
achieve that, we are aiming to create an attractive website for both our users and brands.
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The total transaction value of ZOZOTOWN business for this fiscal year was 262,920 million yen (+28.3%
YoY), and its net sales resulted as 87,290 million yen (+27.8% YoY). The main driving forces supported
the high growth momentum are 1) sales contribution from new shops opened and aggressive new shop
openings of variety of genres, 2) offering diversified payment methods, and 3) implementing promotion
campaigns such as brand coupons to maximize their effectiveness.
KPI performances of ZOZOTOWN business are as follows.
［４］KPIs for ZOZOTOWN Business FY2016 FY2017
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Number of Shops on
ZOZOTOWN (Note1)
842 872 934 954 987 1,016 1,094 1,111
(Purchased Stock) 10 7 7 7 8 7 6 6
(Consignment) 832 865 927 947 979 1,009 1,088 1,105
Number of brands
(Note1,6)
5,148 5,333 5,655 5,683 5,859 6,032 6,346 6,443
Number of Total Buyers
(Note2)
4,832,558 5,252,541 5,783,381 6,324,033 6,734,740 6,963,986 7,205,777 7,223,227
(Active Member) 2,844,171 3,059,991 3,421,440 3,893,156 4,181,873 4,591,017 4,957,861 5,112,861
(Guest Buyer) 1,988,387 2,192,550 2,361,941 2,430,877 2,552,867 2,372,969 2,247,916 2,110,366
Annual Purchase
(Note 2,4,5）
48,644 48,556 48,275 46,417 47,119 46,818 46,707 47,661
Annual Pieces(Note2,4) 9.9 10.4 10.5 10.3 10.7 10.9 11.0 11.4
Number of Shipment
(Note3)
4,652,101 5,391,093 5,886,580 6,931,318 6,787,599 7,148,647 8,303,595 8,293,761
Average Retail Price
(Note 3,5)
4,468 3,855 5,236 4,474 4,099 3,664 4,858 4,203
Average Purchase Amount
Per Shipment(Note3,5)
8,680 7,941 10,143 8,955 8,530 8,186 9,043 8,611
The Ratio of Shipment
Volume to the total
Purchase volume(by Access
Terminal)( Note3)
PC 29.7％ 28.1％ 24.6％ 22.3％ 20.5％ 19.5％ 17.8％ 16.7％
Smart Phone 69.9％ 71.6％ 75.2％ 77.5％ 79.4％ 80.4％ 82.1％ 83.2％
Feature Phone 0.4％ 0.3％ 0.2％ 0.2％ 0.1％ 0.1％ 0.1％ 0.1％
(Notes)
1. As at the end of the each quarter period
2. Data is based on 12 months-period prior to the fiscal year ending date
3. Figures are quarterly basis
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4. Indicators are per active user basis
5. Japanese yen basis.
6. Private brand “ZOZO” is not included.
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During FY2017, we welcomed 219 shops (net increase of 157 shops). Major shops opened during this
fiscal year are “N.HOLLYWOOD”, a domestic street brand which we have been attracting over past few
years, “BEDWIN & THE HEARTBREAKERS”, “ATTACHMENT”, a global sport brand “NIKE”, “UNDER
ARMOUR”, “MIKI HOUSE”, a department store kids brands etc. By the end of March 2018, we ended
with 1,111 shops (954 shops at the end of March 2017).
The number of total buyers for last 12 months (from April 2017 to March 2018) was 7,223,227 (+17,450
buyers from the previous quarter), the annual purchase amount per active member was 47,661 yen
(+2.0% from the previous quarter), and the annual purchase pieces resulted as 11.4 pieces (+3.7% from
the previous quarter).
For FY2017 Q4, the average retail price resulted as 4,203 yen (-6.1% YoY), and average purchase amount
per shipment resulted as 8,611 yen (-3.8% YoY). The drop of the average purchase amount per
shipment in FY2017 Q3 was -10.9% decrease YoY, but that of FY2017 Q4 was kept at -3.8% YoY. This
was mainly due to the penetration of shipping fee policy amendment from November 2017 to users,
resulting the increase in numbers of average purchase pieces per order compared to FY2016 Q4. The
number of shipment resulted as 8,293,761 (+19.7% YoY).
Detailed performances of the consignment business, the purchase stock business, and ZOZOUSED
business are as follows.
a. Consignment business
The transaction value for the consignment business in FY2017 was 246,803 million yen (+28.6% YoY),
which accounts for 91.2% (90.5% for FY2016) of the total transaction value. Net sales was 71,192
million yen (+28.8% YoY). As of March 2018, the number of consignment shops is 1,105 (947 shops as
of March 2017).
b. Purchased stock business
The transaction value of the purchased stock business in FY2017 was 166 million yen (-14.0% YoY),
which accounts for 0.1% (0.1% for FY2016), which is equivalent to the transaction value. As of March
2018, the number of purchased stock shops is 6 (7 shops as of March 2017).
c. ZOZOUSED
The transaction value of the ZOZOUSED business in FY2017 was 15,951 million yen (+23.9% YoY), which
accounts for 5.9% (6.1% for FY2016) of the total transaction value. Net sales was 15,931 million yen
(+23.7% YoY). ZOZOUSED started marketplace business from FY2017 Q4 which records the commission
to the transaction value received from brands/shops as the net sales, thus the transaction value and the
net sales are not equal.
② BtoB Business
With respect to our E-commerce business, we operate the brands’ individual E-commerce sites on a
consignment basis. The transaction value for FY2017 was 7,536 million yen (+21.2% YoY), which
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accounts for 2.8% (2.9% for FY2016) of the total transaction value. Net sales (which is equal to
consignment fees) was 1,642 million yen (+22.7% YoY).
③ Others
This includes sales related to the ZOZOTOWN business (membership fees, revenue from shipping fees,
cash-on delivery fees) as well as other revenues from our subsidiaries. In FY2017, this accounted for
9,498 million yen of the net sales (+41.1% YoY). The factors increasing other revenues are increase of
shipping fees from changing the shipping policy and increase of settlement commission from the deferred
payment. Paid membership service was terminated by the end of July 2017.
WEAR, our fashion media platform, is continuously operating to expand both the user base as well as
content volume. At the end of March 2018, the number of app downloads exceeded 11 million and it has
been growing steadily.
The private brand business, which has started from FY2017, is a business model that sells in-house
designed apparel items and its items are sold at the private brand shop on ZOZOTOWN. The private
brand “ZOZO” is the business model offering best fit items to users based on the body measurement
results of users from “ZOZOSUIT”, the body measurement suit. Distribution of “ZOZOSUIT” and sales of
the private brands started from January 31, 2018 and since distributed number of “ZOZOSUIT” are not
sufficient, its full-fledged business commencement will be from the next fiscal year.
(2) Capital investments
In FY2017, to accommodate the increase in transaction and website accesses, we have added logistic
equipment and server capacity, which resulted in a total capital investment of 4,565 million yen.
(3) Capitalization
None applicable.
(4) Issues we need to address
The key issues we need to address include: ①Vertical launch of sales of the private brand “ZOZO” both
domestically and internationally, ②Having a steady supply of inventory and increasing the number of
brands on ZOZOTOWN, ③Strengthening our fulfillment and E-commerce system, and ④Enhancement
of system engineers to become a fashion technology company.
① Vertical launch of sales of the private brand “ZOZO” both domestically and internationally
We will be strengthening sales of the private brand “ZOZO” which started from this fiscal year by
distributing body measurement suits “ZOZOSUIT” to users inside and outside of Japan, and offer items of
the private brand fitting the users’ body sizes. Best fit items for users is the differentiator from the
existing brands. What we will pursue with the private brand is that they are basic items with low price,
best fit, and will instantly delivered. For that, we will promote distribution of ZOZOSUIT in Japan first.
Currently item categories are T-shirt and denim only, but within the next fiscal year, it will be expanded
to 10-20 item categories and a wide variety of item categories in the future. Also, we will aim to establish
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production lines which are able to respond quickly with low price and minimum amount of inventory. As
for overseas business, we are planning to start sales of the private brand items in 72 countries around
the world from July 2018.
② Having a steady supply of inventory and increasing the number of brands
To sustain transaction value growth, it is essential that we obtain sufficient inventory from our brands.
We have had great relationships with all our existing clients; nevertheless, we are still missing out on
sales opportunities due to a lack of supply. Therefore, it is key that we continue to focus on strengthening
our relationships with our clients to secure enough stock to meet latent demand. Offering an even wider
range of brands that caters to diversity of tastes is also important in carving out a dominant position in
today's market.
③ Strengthening our fulfillment and EC system
Taking into consideration the potential increase in the products that we will handle, we start to discuss a
further expansion of our logistics capacity and an improvement in operational efficiencies. And regarding
hardware, we will regularly update the system so that we can cope with the growth in users and the
significant increase in access therefrom.
④ Enhancement of system engineers to become a fashion technology company
It is significant for us to strengthen the resource of system engineers for the private brand business in the
future and the expansion of the existing business. We will try to speed up development by increasing
the number of engineers to 1,000 in a few years from 200 at present, and grow to a “fashion technology
company” from an E-commerce business platformer.
(5) Shift in profit and loss
Division FY2014
The 17th Term FY2015
The 18th Term FY2016
The 19th Term
FY2017 The 20th Term
(Consolidated results for FY2018)
Net Sales (million yen)
41,182 54,422 76,393 98,432
Recurring Profit (million yen)
15,139 17,883 26,442 32,740
Net Income (million yen)
8,999 11,988 17,035 20,156
Earnings per Share (yen)
27.93 37.46 54.66 64.68
Total Assets (million yen)
41,351 34,916 55,720 70,718
Net Assets (million yen)
26,244 17,932 29,868 40,810
(Notes)
1. The earnings per share is calculated based on the average number of shares outstanding for the period.
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2. The company conducted a one-for-three stock split on October 1, 2016. Earnings per Share are calculated on the assumption that such the stock
split occurred in the beginning of FY2013.
(6) Description of our key businesses
Business Unit Business areas
ZOZOTOWN
business
The ZOZOTOWN business consists from the “Consignment business”, the “Purchased stock business”, and the
“ZOZOUSED” business.
(Consignment)
A tenant-like consignment business model where brands open
stores on ZOZOTOWN, but we manage their respective inventory within our logistics center.
(Purchased Stock)
We purchase inventory from each of the brands, keep it as our own stock, and resell it.
(ZOZOUSED)
We purchase second hand fashion items from our individual users, keep it as our own inventory, and resell it
as used clothing.
B to B Business
Using the system and fulfillment operations we have built in-house especially for fashion, we operate EC sites
for individual brands. We develop systems, design websites, take care of fulfillment, undertake marketing, and
everything else necessary for the EC business on the behalf of the brands.
Others Other sales include sales related to the EC business, such as membership fees, revenues from shipping fees,
and cash on delivery fees.
(7) Main business offices
1. START TODAY CO., LTD.
Headquarters Mihama district, Chiba City, Chiba Prefecture
Logistics Center (ZOZOBASE) Narashino City, Chiba Prefecture
2. Subsidiaries
Crown Jewel, Inc. Shibuya Ward, Tokyo
START TODAY Engineering Shibuya Ward, Tokyo
aratana Inc. Miyazaki City, Miyazaki
VASILY, Inc. Shibuya Ward, Tokyo
Colorcle, Inc Fukuoka City, Fukuoka
STV FUND, LP Cayman Islands
STARTTODAY USA, Inc. California
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STARTTODAY Germany GmbH Berlin (Notes)
On April 2018, an Absorption merger took place where START TODAY Engineering as a surviving company, Vasily, Inc. and Colorcle, Inc as extinguished
companies, and the company changed its trade name to Start Today Technologies Inc.
(8) Workforce
1. Total number of employees working in the group
Number of Employees 904
Change from FY2016 +104 employees
(Notes)
1. This includes full-time employees as well as contract employ
2. 1,860 part-time employees are not included in this figure.
2. Total number of employees working at START TODAY Co., Ltd
Number of Employees Change from FY2016
(March 31, 2017) Average Age Average Retention
471 +22 31.4 6.0 Years
(Notes) Assigned employees and part-time employees （1,127 staff）are not included in this figure.
(9) Important updates regarding the parent company and subsidiaries
1. Relationship to the parent company
None applicable.
2. Important updates about subsidiaries (Thousand yen)
Name of Company Share Capital START TODAY’s Voting Power Main Business
Crown Jewel, Inc. 99,000 100.0% Specializes in fashionable second-hand
clothing and accessories.
START TODAY Engineering 280,000 100.0% System and App developments specialized
in smartphones and tablet applications.
aratana Inc. 99,000 100.0%
Develops and provides, EC websites,
Web marketing, Web security, and EC
related Apps.
VASILY, Inc. 10,000 100.0％ Develop and operate the fashion media and
develop other software.
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Colorcle, Inc 0 100.0％ Development of software.
(Notes)
１ VASILY Inc. and Colorcle inc. became wholly-owned subsidiaries through stock acquisition, they are included in the scope of consolidation.
２ None of our subsidiaries are designated wholly-owned subsidiaries
３ ZOZOTOWN HONGKONG CO., LIMITED was voted by the Board of Directors to begin liquidation procedures at the Board meeting held in March
2013. Therefore it is not listed above.
４ On April 2018, an Absorption merger took place where START TODAY Engineering as a surviving company, Vasily, Inc. and Colorcle, Inc as
extinguished companies, and the company changed its trade name to Start Today Technologies Inc.
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II. Overview of the Company's Shares
(1) Amount of shares 1,287,360,000 shares
(2) Shares outstanding 311,644,285 shares
(3) Number of shareholders 21,643
(4) Major shareholders
Shareholders
Investment to Our Company
Number of Shares Held
(shares)
Number of Shares Held
(shares)
YUSAKU MAEZAWA 118,226,600 37.9％
THE MASTER TRUST BANK OF JAPAN, Ltd. (Trust Account) 9,095,700 2.9％
JAPAN TRUSTEE SERVICES BANK, Ltd. (Trust Account) 8,209,000 2.6％
GOLDMAN SACHS AND COMPANY (Regular Account) 6,236,552 2.0％
STATE STREET BANK AND TSUST COMPANY 505225 4,621,076 1.5％
THE BANK OF NEW YORK 133524 3,791,300 1.2％
JAPAN TRUSTEE SERVICES BANK, Ltd．(Trust Account5) 3,697,500 1.2％
STATE STREET BANK WEST CLIENT TREATY 505234 3,656,164 1.2％
JAPAN TRUSTEE SERVICES BANK, Ltd．(Trust Account７） 3,298,900 1.1％
THE BANK OF NEW YORK MELON SANV10 3,206,578 1.0％
III. New Share Acquisition Rights
None applicable
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IV. Directors
(1) Names of Directors and Auditors (as of March 31, 2018)
Name Positions and responsibilities Other important roles
YUSAKU MAEZAWA
CEO Director of START TODAY Engineering
KOJI YANAGISAWA
CFO (In charge of Strategic planning and business administration division)
Director at COLOPL, Inc., Grown Jewel, Inc, and
aratana Inc.
AKIKO OISHI Director (In charge of HR division)
―
TAKANOBU MUTO
Director (In charge of EC business operation)
―
MINEKI OHKURA Director (In charge of Logistics management department / fulfillment division)
Director of Crown Jewel, Inc. CEO of START TODAY Engineering
Director of aratana Inc.
KOTARO SAWADA
Director (In charge of Corporate image & strategy division)
Director of Crown Jewel, Inc.
TOSHIAKI SHIMIZU
Director (In charge of Hospitality & Marketing division)
―
MASAHIRO ITO
Director (In charge of PB Preparation division)
Director of StretchSense Limited
KOJI ONO Director Director at Diamond Heads Inc.
SEIJI HATAKEYAMA
Statutory Auditor Auditor at START TODAY Engineering
Auditor at VASILY, Inc
JUNICHI MOTAI Auditor CEO of Accounting Assist Co., Ltd
Auditor at VOYAGE GROUP, Inc. and Vision Inc.
SHICHIRO HATTORI
Auditor ―
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Name Positions and responsibilities Other important roles
JUNKO UTSUNOMIYA
Auditor
UTSUNOMIYA ・ SHIMIZU ATORNEYS AT LAW (Lawyer) Auditor at Solasto Corporation
Director at Adventure Inc. (Notes)
１ Masahiro Ito was newly elected as a director at the 19th Ordinary General Meeting of Shareholders on June 27, 2017 and assumed his position
thereafter.
２ Koji Ono is an External Director of our company. The Company has appointed and registered him as an independent executive stipulated by the
Tokyo Stock Exchange
３ Auditors, Seiji Hatakeyama, Junichi Motai, Junko Utsunomiya are External Auditors. The Company has appointed and registered Seiji Hatakeyama,
Junichi Motai, and Junko Utsunomiya as independent executives stipulated by the Tokyo Stock Exchange.
４ Auditor Junichi Motai is a qualified CPA and CTA, therefore has considerable expertise in financing and accounting.
(2) Summary of contents of liability limitation agreement
Pursuant to Article 427, Paragraph 1 of the Companies Act of Japan, the Company has concluded
agreements with the External Director and each Auditor, limiting their liability to the amount prescribed
under Article 423, Paragraph 1 of the Companies Act of Japan, which will be carried out in good faith and
with no gross negligence.
(3) Remuneration paid to Directors and Auditors
Remuneration for this fiscal year.
Positions Number of provided members Amount of remuneration
Directors ８ 294 (million yen)
(External Directors) (－) (－)
Auditors ４ 41 (million yen)
(External Auditors) (３) (34 million yen)
Total 12 335 (million yen)
(Note) The total amount of remuneration paid includes a provision to accrued bonuses to directors for this fiscal year（8 million yen for 8 directors）
(4) External Directors
① External Directors who serve as executive officers of other companies, and our relationship with such
companies:
Our External Director KOJI ONO is a Director at Diamond Heads Inc.
Our Company does not have capital ties or business relations with Diamond Heads Inc.
Our Auditor SEIJI HATAKEYAMA is an Auditor at START TODAY Engineering and VASILY, Inc.
START TODAY Engineering and VASILY, Inc. are subsidiary of the company.
Our Auditor, JUNICHI MOTAI, is the CEO of Accounting Assist Co., Ltd.
He is also the Auditor of VOYAGE GROUP, Inc and at Vision Inc.
- 16 -
Our Company does not have capital ties or business relations with the following firms: Accounting Assist
Co., Ltd., VOYAGE GROUP, Inc., Vision Inc.
Our Auditor JUNKO USTUNOMIYA is lawyer at (JUNKO MORITA under commercial registration and family
registration) UTSUNOMIYA・SHIMIZU ATORNEYS AT LAW. She is also the Auditor of Solasto Corporation,
a Director at Adventure Inc.
Our Company does not have capital ties or business relations with the following firms:
UTSUNOMIYA・SHIMIZU ATORNEYS AT LAW, Solasto Corporation and Adventure Inc.
② Main activities during FY2017
Name (Position) Main activities
KOJI ONO (Director)
He has attended 18 out of 19 of our Board meetings during this fiscal term.
Having a wealth of experience and extensive knowledge in the fashion industry such as
art direction and branding for products and corporations, he has given us excellent,
sound advice.
SEIJI HATAKEYAMA (Auditor)
He has attended 19 out of 19 of our Board meetings during this fiscal term. Having
years of experience in the field of human resource and personnel management, and as
a Director and Auditor for several companies, as well as expertise as a labor and social
security attorney, he has provided valuable input. He has also attended 21 out of 21
Auditor meetings during this fiscal term, consulting on and discussing important
matters concerning audits.
JUNICHI MOTAI (Auditor)
He has attended 18 out of 19 of our Board meetings during this fiscal term.
Having expertise as a CPA, he has given us excellent advice and shared his extensive
knowledge in financial affairs and accounting. He has also attended 21 out of 21
Auditor meetings during this fiscal term, consulting on and discussing important
matters concerning audits.
JUNKO UTSUNOMIYA
(Auditor)
She has attended 19 out of 19 of our Board meetings during this fiscal term. Having a
wealth of expertise as a lawyer, she has shared with us her extensive knowledge on law
and compliance. She has also attended 21 out of 21 Auditor meetings during this
fiscal term, consulting on and discussing important matters concerning audits.
- 17 -
V. Accounting Auditor
(1) Name of our accounting Auditor
Limited liability KPMG AZSA LLC
(2) Compensation paid to the accounting Auditor in FY2017.
1. Compensation paid to the accounting Auditor in FY2017：29,000 (thousand yen)
2. Compensation to be paid to the accounting Auditor by our company and subsidiaries.
Total amount of other property benefits：36,000 (thousand yen)
(Notes)
1. The reason the Board of Audits agreed to the remuneration towards the Accounting Auditor
The Board of Audits of the company report with necessary material when they receive information from
the Directors, departments involved, as well as the Accountant Auditors, and also consider whether the
remuneration for the current period is fair based on the Auditor plans and execution circumstances, obtain
agreement based on the Paragraph 1, Article 399 of the Corporation Law.
2. Under the audit agreement between the Company and its Accounting Auditor, compensation for audits
pursuant to the Companies Act and audits pursuant to the Financial Instruments and Exchange Law are
not strictly separated, and otherwise cannot be separated. Consequently, the above amount reflects total
compensation for the fiscal year under review.
(3) Non-audit work
The Company pays the Accounting Auditors for advisory services, which are services other than those
defined in Article 2, Paragraph 1 of the Certified Public Accountants Act.
(4) Summary of the liability limitation agreement
Pursuant to Article 427 Paragraph 1 of the Companies Act, we have executed liability limitation
agreements with our accounting Auditor, which limits its obligations to compensate for damages as
stipulated in Article 423 Paragraph 1 of the Companies Act to the amount stipulated by law, insofar as
there is no intent or gross negligence.
(5) Policies regarding the dismissal and non-reappointment of the accounting Auditor
If it is determined at the board of Auditors meeting that any one of the following applies to the accounting
Auditor, interferes with the performance of its duties, and is not remedies in a timely manner, and if every
Auditor agrees, they may propose the dismissal or non-reappointment of said accounting Auditor at the
shareholders meeting.
① If the accounting Auditor has infringed upon the Companies Act, the Certified Public Accountants Act, etc. and thus disciplinary action has been taken against or is imposed upon by the supervisory authorities.
② If it is deemed that Article 340 Paragraph 1 of the Companies Act applies.
- 18 -
③ If, having taken all of its capabilities including its audit quality, quality management, independence into consideration, it is deemed that the accounting Auditor cannot sufficiently perform its duties or is inadequate. VI. Corporate Governance and Company Policies
（1） Ensuring sound business operation We have ruled in our Board meetings on the "structure that ensures sound business operation" as
stipulated in the Companies Act and in the Ordinance for Enforcement of the Companies Act (the first
resolution was on July 17, 2007, and thereafter revised on April 30, 2008, June 13, 2008, May 17, 2011
and on April 30, 2015). Summary is provided below:
1. Structure ensuring that the execution of duties by our Directors and employees is in
compliance with the laws and regulations and the articles of incorporation.
a. To ensure that the execution of duties by our Directors and employees are in compliance with the
laws and regulations and the articles of incorporation, the CEO appoints the CFO as the General
Manager of Compliance. Moreover, we will build and maintain a compliance structure by organizing a
Compliance Committee with our CEO as chair to discuss important issues regarding compliance,
thereby preventing any acts that may be considered a violation and any inappropriate dealings to
help ensure legislative compliance of our Directors and employees.
b. Establish an internal reporting system (a helpline) in order to report acts that may be in non-
compliance with laws and regulations as well as the company regulations, etc. in order to detect and
correct misconduct, etc. as early as possible. Any matters reported to the helpline will be investigated
by the Compliance Committee, and if any behavior that requires remedy is discovered, the Compliance
Committee will decide on and implement without delay, by corrective and preventive measures.
c. The internal audit body will investigate the compliance structure and the presence of any matters
that may not be in compliance with laws and regulations as well as the articles of incorporation, and
report such findings to the Board and to the Auditors.
d. The Board of Directors will regularly review the compliance structure, and make efforts to identify
and remedy any issues.
e. The board of Auditors shall audit the effectiveness and functions of the internal control system in
order to identify issues in their early stages and to remedy them.
- 19 -
2. Structure for storing and managing information related to the performance of duties by Directors.
a. Any documents in relation to the performance of Directors' duties will be appropriately
stored/managed as a hard copy or on an electromagnetic media in accordance with the
"Information System Management Regulations" and "Document Management Regulations".
b. Our Auditors may access such documentation at any time.
3. Regulations and structure for managing risk of loss
a. Our CFO shall be in charge of risk management, and our Directors, administrative chief, and Directors
of respective departments will identify and evaluate the various risks, and take measures to avoid,
mitigate, and hedge risks in accordance to "Risk Management Regulations".
b. The internal audit body will investigate each organizations risk management status, and report such
findings to the Directors meeting and Board of Auditors.
c. The Board of Directors shall regularly reexamine the risk management structure and make efforts to
keep abreast of and remedy any issues.
4. A structure ensuring the efficient performance of our Directors
a. The roles and responsibility of the Directors and the employees in each division will be clarified by our
"Board of Directors Regulations", "Organization Regulations", "Division of Duties Regulations", and
"Administrative Authority Regulations". Moreover, the "Board of Directors Regulations" will also define
matters to be discussed by the Board, and the scope of matters the Board may make decisions on to
create a structure that enables the efficient performance of duties by the Board.
b. The CEO will create the mid-term management plan and annual management plan, and shall seek
the Board's approval. The Board of Directors in each division shall draft detailed measures and a
structure that enables the efficient performance of duties based on such plans approved by the Board.
c. The CFO shall regularly report on the progress of the mid-term and annual management plan to the
Board, and the Board of Directors shall identify and remedy any causes that inhibit the implementation
of such measures and efficient operation of business.
5. Structure ensuring the sound business operations of our company as well as our subsidiaries
(hereafter collectively referred to as the "Group").
- 20 -
a. START TODAY will assign 1 Director or Auditor from START TODAY to its subsidiary to monitor and
supervise or audit the performance of duties by the Director of such subsidiary. The Strategic Planning
and Business Administration Division shall be in charge of the business operation, the establishment
of the compliance structure and risk management structure as well as the subsidiaries' business
management in accordance with the relative company management regulations. With respect to the
business management of subsidiaries, their autonomy will be respected, however, the subsidiary shall
regularly report to START TODAY regarding its current status, and seek START TODAY 's approval
with regard to any important matters.
b. The internal audit body shall internally audit the business management status and business activities
of the Group's subsidiaries.
6. Matters concerning the framework, insurance of effectiveness of such employees, and
independence from such Director in case the statutory Auditor request for employees' assistance
in the execution of their duties.
a. Should the statutory Auditor request for employees' assistance in the execution of their duties, the
board of directors and Auditors shall deliberate and appoint an employee(s) for this purpose. During
the term in which the statutory Auditor requires assistance, the right to command such employee(s)
shall be transferred to said Auditor, and such employee(s) shall not be directed by other Directors.
b. Personnel change, personnel evaluation, and disciplinary action concerning such employee(s)
assisting the statutory Auditor shall be agreed to by the Board.
7. Structure for our Directors and employees of the Group to report to our Auditors and other
Auditors.
a. The Group's Directors and employees shall report any matters that may pose a significant loss to the
company, misconduct, or any activities that infringe on laws and regulations and/or articles of
incorporation, as well as any important matters that need to be deliberated on and decided by the
Board, important accounting policies, accounting standards and change thereof, enforcement of
Internal Audits, important monthly reports, and other important matters to Auditors in accordance to
laws and regulations and corporate regulations.
b. Measures should be taken so that the individuals that report on any of the aforementioned matters
shall not be treated unfavorably.
8. Other structures that ensure that corporate Auditors will be able to conduct their audits
effectively.
- 21 -
a. In order for the Auditors to keep abreast of any important decision making processes, and business
operation updates, the Auditors shall take part in the Board meetings and other important meetings,
peruse important documents such as internal memos necessary for the performance of their duties
and may request for further explanation from the Directors and employees.
b. The Auditors shall take advantage of their independence and authority which arises from the "Board
of Directors' Regulations" and "Auditing Standards" to ensure the effectiveness of their audits and
shall ensure that a system is in place that allows them to conduct their audits effectively while working
closely with the internal audit body and Accounting Auditor.
c. The CEO shall meet regularly with the Auditors to communicate with and exchange ideas on how to
address the company's challenges, discuss the status/environment of Auditors' audits, important
audit challenges, etc.
d. Should the Auditors request for advance payment or reimbursement of costs related to the
performance of their duties, or request for payment regarding other costs incurred or monies owed
from the performance of their duties, the company shall promptly comply with such requests.
9. Structure for eliminating of anti-social forces.
We will not have any dealings with any anti-social forces that threaten public order and the company's
healthy activities, and shall work closely with independent specialized institutions such as the policies
and legal advisors to take a firm stand against undue claims, etc.
10. System for ensuring reliability and appropriateness of financial reporting
To preserve the credibility of our financial reporting, we will build, maintain, and put into effect an
effectively functioning, internal financial reporting structure.
(1) The overview of ensuring the structure under appropriate operation
a. Compliance system
The company will establish a counter (a help line) which includes the compliance committee as well
as external lawyers, and the counter will be noticed to all employees through in-house intranet
communications. Also, whistleblowers will not suffer from any disadvantageous treatment, managed
in accordance with our internal rules and regulations.
b. Regulation and other management systems which concern risks of loss.
By controlling management regulations for risks of loss and information security as well as information
system regulations, the Company established and maintains the risk management system. As a part
- 22 -
of management, we held an educational work shop once for our employees during this the fiscal year
to prevent inappropriate information control and confidential information efflux from taking place.
c. Internal controls to ensure efficient execution of Directors’ duties
Based on rules concerning the Board meetings, mutual meetings are held once a month, and
extraordinary meetings are held when necessary. Meetings will be held for the purposes of making
decisions on legal matters and other important business issues and overseeing operating performance,
as well as encouraged communication among the Directors, and help the Directors to oversee the
execution of one another’s duties.
d. The system in the interest of ensuring the appropriateness of operations of our Group
By dispatching at least one Director or Auditor to our subsidiaries from the Company, we aim to
manage the business properly. Based on the authority standard of approval which determines which
items need pre-approval, and the subsidiaries act by discussing or reporting to the Company.
e. Initiatives regarding the internal audits
Based on the internal audit plan which is set by the internal audit office, we conduct internal audits
concerning risk control management and execution of operations, then report results to the CEO
when necessary. In addition, they exchanged information once a month with our Statutory Auditor,
and once every fiscal quarter with the board of Auditors.
f. Initiatives regarding the execution of the duties of Auditors
The Auditors conduct audits by ensuring the effectiveness of Corporate Auditors’ operations through
the board meetings and the management meetings (includes the Board of Directors and General
Managers as members), as well as panel gatherings with the CEO and meetings with the internal
audit office on a periodical basis, based on the audit standards and plans.
(3) Policies regarding company's control
We do not have any specific guidelines regarding the individual in control of the decision making of our
company's financial and business policies.
(4) Policies concerning decisions on the distribution of surplus funds
We recognize that when the Company’s profitability has exceeded the cost of capital, the corporate value
increases, and we are able to satisfy our shareholders and all stakeholders. Our basic dividend payout
policy will be determined after taking into consideration a wide range of indices such as our business
performance, financial situation, future business and investment plans, and our internal reserve balance.
More specifically, we plan to further improve our profitability, to maintain the return on equity (ROE) at
30%, and the amount that excesses our standard level will be given back to our shareholders as much as
possible, while considering the improvement in liquidity as well.
In principle, we plan to distribute surplus funds as dividends either once a year - at the end of the fiscal
year - or twice a year, including the interim dividends. Decisions regarding interim dividends will be made
- 23 -
in a Board meeting, while decisions regarding year-end dividends will be made at the general meeting of
shareholders.
The year-end dividend for FY 2017 is planned to be 17 yen per share, which is based on a payout ratio of
40%. Again, in FY2018, we will be basing our calculations on a dividend payout ratio of 40%, thus the
dividend per share will be approximately 36 yen per share.
―24―
Balance Sheet （As of March 31, 2018）
(Million yen) Item amount Item amount
(Assets) (Liabilities)
Current assets 50,060 Current liabilities 26,680
Cash and deposits 21,375 Accounts payable - trade 15
Accounts receivable - trade 25,218 Deposits received for consignment sales 14,114
Merchandise 235 Accounts payable - other 3,550
Supplies 0 Accrued expenses 158
Advance payments - trade 28 Income taxes payable 6,117
Prepaid expenses 736 Accrued consumption taxes 1,193
Short-term loans receivable 1 Advance received 182
Deferred tax assets 1,314 Deposits received 109
Others 1,149 Provision for directors' bonuses 8
Provision for customer
benefit program
1,123
Provision for sales returns 106
Provision for loss on order received 0
Non-current assets 19,130 Non-current liabilities 2,155
Property, plant and equipment 5,424 Provision for retirement benefits 1,088
Buildings 1,448 Asset retirement obligations 578
Vehicles 6 Others 488
Tools, furniture & fixtures 2,914 Total liabilities 28,836
Construction in progress 1,055
Intangible assets 421 (Net assets）
Trademark rights 16 Shareholders' equity 40,262
Software 223 Capital stock 1,359
Others 182 Capital surplus 1,328
Investments and other assets 13,283 Capital reserve 1,328
Investment securities 707 Retained earnings 37,574
Shares of subsidiaries and associates 6,048 Other retained earnings 37,574
Investments in capital of subsidiaries and affiliates 216 Retained earnings brought forward 37,574
Lease deposits 1,797 Valuation and translation adjustments 91
Long-term loans receivable 1,215 Valuation difference on available-for-sale securities 91
Deferred tax assets 3,299 Total net assets 40,354
Total assets 69,190 Total liabilities net assets 69,190
―25―
Statement of Income （April 1st, 2017 ~ March 31st ,2018）
(Million yen) Item Amount
Net sales 84,070
Cost of sales 120
Gross profit 83,949
Reversal of provision for sales returns 85
Provision for sales returns 106
Gross profit - Net 83,928
Total SG&A expenses 53,099
Operating profit 30,829
Non-operating profit
Interest earned 10
Profit from recycling 32
Gain from lapsed points 41
Support fees of subsidiaries and associates 44
Rent income 457
Others 13 601
Non-operating expenses
Interest expenses 8
Exchange losses 35
Rent payment 347
Loss on investments in partnership 35 427
Ordinary income 31,003
Extraordinary income
Gains from sale of non-current assets 0
Reversal of allowance for doubtful accounts 94 94
Extraordinary loss
Provision of allowance for doubtful accounts 5
Loss on valuation of stocks of subsidiaries and affiliates 1,848
impairment loss 1,486
loss on devaluation of inventories 263
Loss on Advance payment 663 4,265
Income (loss) before income taxes 26,831
Income taxes – current 9,836
Income taxes - deferred △ 1,787 8,049
Net income 18,782
―26―
Shareholders' Equity Statement （April 1st, 2017 ~ March 31st ,2018）
(Million yen)
Shareholders’ equity
Capital stock
Capital surplus Retained earnings
Legal capital surplus
Other retained earnings
Total capital surplus
Other retained earnings
Retained earnings brought forward
Balance at beginning of current period 1,359 1,328 － 1,328 39,276
Changes of items during period
Dividends of surplus △8,726
Net income 18,782
Disposal of treasury shares △11,758 △11,758
Transfer to capital surplus from
retained earnings 11,758 11,758 △11,758
Net changes of items other than
shareholders' equity
Total changes of items during the
period － － － － △1,701
End-of-term balance 1,359 1,328 － 1,328 37,574
Shareholders ‘equity Valuation and Translation
Adjustments Total net
assets Treasury stock
Total of
shareholder's equity
Valuation difference on
available-for-sale securities
Balance at beginning of current period △11,758 30,205 65 30,271
Changes of items during period
Dividends of surplus △8,726 △8,726
Net income 18,782 18,782
Disposal of treasury shares 11,758 － －
Transfer to capital surplus from
retained earnings － －
Net changes of items other than
shareholders' equity 25 25
Total changes of items during the
period 11,758 10,056 25 10,082
End-of-term balance － 40,262 91 40,354
―27―
Consolidated Balance Sheet （As of March 31, 2018）
(Million yen)
Item Amount Item Amount
Assets Liabilities
Current assets 55,278 Current liabilities 27,243
Cash and deposits 24,571 Accounts payable - trade 25
Accounts receivable - trade 25,382 Deposits received for consignment sales 13,671
Merchandise 2,194 Accounts payable - other 3,626
Deferred tax assets 1,704 Income taxes payable 6,479
Others 1,425 Provision for bonus 25
Provision for directors' bonuses 10
Non-current assets 15,439 Provision for customer benefit program 1,123
Property, plant and equipment
5,668 Provision for sales returns 106
Buildings 1,561 Others 2,174
Vehicles 6 Non-current liabilities 2,664
Tools, furniture & fixtures 2,979 Asset retirement obligations 1,566
Construction in progress 1,120 Asset retirement obligations. 603
Intangible assets 3,222 Deferred tax liabilities 5
Good will 2,769 Others 488
Software 254 Total liabilities 29,907
Others 198 (Net assets）
Investments and other assets 6,548 Shareholders' equity 40,892
Investment securities 1,841 Capital stock 1,359
Deferred tax assets 2,686 Capital surplus 1,328
Others 2,020 Retained earnings 38,204
Other comprehensive income △81
Valuation difference on available-for-sale securities 91
Adjustments for Retirement Benefits △173
Total net assets 40,810
Total assets 70,718 Total liabilities and net assets 70,718
―28―
Consolidated Statement of Income （April 1st, 2017 ~ March 31st ,2018）
(Million yen)
Item Amount
Net sales 98,432
Cost of sales 7,946
Gross profit 90,485
Reversal of provision for sales returns 85
Provision for sales returns 106
Gross profit - Net 90,464
Total SG&A expenses 57,794
Operating profit 32,669
Non-operating profit
Interest earned 0
Rent income 5
Profit from recycling 32
Subsidy income 43
Gain from lapsed points 41
Others 32 155
Non-operating expenses
Interest expenses 9
Exchange losses 5
Rent payment 35
Loss on investments in partnership 35 85
Ordinary income 32,740
Extraordinary income
Gains from sale of non-current assets 4 4
Extraordinary loss
Provision of allowance for doubtful accounts 6
Loss on valuation of stocks of subsidiaries and affiliates 1,848
impairment loss 1,486
loss on devaluation of inventories 263
Loss on Advance payment 663
Foreign currency translation adjustments reversal loss 56 4,323
Income (loss) before income taxes 28,420
Income taxes – current 10,381
Income taxes - deferred △2,117 8,264
Net income 20,156
Profit (loss) attributable to non-controlling interests 0
Profit attributable to owners of parent. 20,156
―29―
Consolidated Statement of Shareholders' Equity (April 1st, 2017 ~ March 31st ,2018)
(Million yen)
Shareholders’ equity
Capital stock legal capital surplus
Other capital surplus
Treasury shares Total of shareholder's equity
Balance at beginning of current period 1,359 1,328 38,532 △11,758 29,461
Changes of items during period
Dividends of surplus △8,726 △8,726
Profit attributable to owners of parent. 20,156 20,156
Disposal of treasury shares △11,758 11,758 －
Transfer to capital surplus from retained earnings 11,758 △11,758 －
Net changes of items other than shareholders' equity
Total changes of items during the period － － △328 11,758 11,430
End-of-term balance 1,359 1,328 38,204 － 40,892
Accumulated other comprehensive income
Non-
controlling
interests
Total net
assets
Valuation
difference on
available-for-
sale securities
Foreign
currency
translation
adjustment
Total amount of
Re-measurements
of defined
benefit plans
Total amount of
accumulated
other
comprehensive
income
Balance at beginning of current period 65 △32 △79 △45 452 29,868
Changes of items during period
Dividends of surplus △8,726
Profit attributable to owners of parent. 20,156
Disposal of treasury shares －
Transfer to capital surplus from retained earnings －
Net changes of items other than shareholders' equity 25 32 △94 △36 △452 △488
Total changes of items during the period 25 32 △94 △36 △452 10,941
End-of-term balance 91 － △173 △81 － 40,810
―30―
Reference Document for the General Meeting of Shareholders
Agenda and Minutes
Agenda Item 1: Appropriation of surplus
Based on FY2017’s business performance, future business plans, inner reserve and other factors, the
year-end dividend for the 20th fiscal period will be as follows:
Year-end dividends
① Assignment of dividend property to shareholders and the total amount of dividends
Dividend per share of our company’s common stock: 17 yen
Total Amount: 5,297,952,845 yen
② The day on which dividend of surplus comes into effect
June 27, 2018
Agenda No.2: Partial amendments to the articles of incorporation
1. Reason for the amendments
As explained on the medium-term management plan which was announced on April 27, 2018, the
Company recognizes this fiscal year as the “Second Foundation” of the company where full-fledged
initiation of the private brand “ZOZO” business and a momentous milestone of 20th anniversary of the
Company’s establishment. At this significant turning point, the Company will change its trade name
coincide with the service name for following intentions: 1) organic expansion of brand recognition of the
service to companies, 2) able to effectively use the new trade name for both internal and external
communication effectively and, 3) explicitly appeal commitments of the second foundation to the
stakeholders.
―31―
2. Details of Amendment
The details of the amendments are as follows:
(Proposed amendments are undelined）
Current Articles of Incorporation Proposed Amendments
(Trade Name) (Trade Name)
Article 1 The name of the Company is Kabushiki
Kaisha Start Today, being expressed
as “START TODAY Co., LTD.” in
English.
Article 1 The name of the Company is Kabushiki
Kaisha ZOZO, being expressed as
“ZOZO,Inc.” in English.
Article 2 through 47 (Articles Omitted) Article 2 through 47 (Unchanged)
Supplementary Provision
The amendments to Article 1 (Trade Name)
shall come into effect as of October 1, 2018,
and this Supplementary Provision shall be
deleted on the date of the entry into force of
the amendments.
Agenda No.3: Amendment of directors’ remuneration (Issuance of stock options)
Remuneration of the directors and external directors has been approved to be lower than 800 million
yen (within this, external directors’ remuneration is less than 50 million yen annually) at the 19th
Ordinary General meeting of Shareholders which was held on June 27, 2017. Other than the
aforementioned remuneration, Start Today Co., Ltd. (hereinafter, the “Company”) will seek approval at
the Shareholders Meeting to issue the stock compensation type stock options with stock price condition
(hereinafter, the “Stock Options”) to the company’s directors (excluding external directors, hereinafter
the “Eligible Directors”) within the range of less than 134 billion yen as remuneration within this fiscal
year. With respect to this remuneration, the amount is calculated by the fair evaluated unit price based
on the maximum value of the expected stock price, and premise that all the stock options are exercised
at the time of granting the Stock Options.
The Company announced its Medium-Term Management Plan (hereinafter, the “MTP”) targeting 3
years from the fiscal year ending 2019 March to the fiscal year ending 2021 March (hereinafter, the
“MTP Period”) on April 27, 2018. Within the MTP, in addition to continuous growth of the existing
business mainly from ZOZOTOWN Business (Gross merchandise value target of the existing business at
the last year of the MTP Period is 515 billion yen), the Company initiated the private brand business
(hereinafter, the “PB Business”) as its second pillar from January 2018, aiming for exponential growth
of gross merchandise value (Gross merchandise value target of the PB Business at the last year of the
MPT Period is 200 billion yen).
―32―
To increase motivation of achieving the MTP and continuously enhance corporate value and expand
business performance after the MTP Period, the Company believes that granting the Stock Options would
contribute to enhancement of corporate value from increasing motivation and morale of the Directors,
and bring stronger solidarity to the Company by corresponding directors’ remuneration and increment
of shareholders’ value to share profit consciousness of the directors and shareholders.
Exercising rights for the Stock Options will be effective if and only when the predetermined conditions
stated below are fulfilled; when these conditions are not fulfilled, the rights shall expire. Specifically,
the Company is scheming to introduce 3 different types of the Stock Options with following exercise
conditions and working term conditions:
(1) Stock Options of 3-years working term conditions — Achieving net sales of 393 billion yen, market
capitalization of 2 trillion yen, and 1.3x stock price to the stock price of the date of allocation.
(2) Stock Options of 6-years working term conditions — Achieving market capitalization of 3 trillion yen,
and 1.8x stock price to the stock price of the date of allocation.
(3) Stock Options of 10-years working term conditions — Achieving market capitalization of 5 trillion
yen, and 2.5x stock price to the stock price of the date of allocation.
Also, this agenda is seeking only the issuance of the Stock Options within this fiscal year, thus issuance
of in the next fiscal year or later will not take place.
At the time when all 3 types of stock options are exercised, 31,000,000 shares (maximum) of
outstanding 311,644, 285 stocks as of March 31, 2018 will be issued, resulting 9.95% dilution.
However, achieving conditions of exercising the rights means contribution to enhance corporate and
shareholders value and meets the interests of existing shareholders, thus the Company recognizes that
the size of such issue is reasonable.
The Eligible Directors for this agenda are all 8 business executing directors. Specific payment timings
and allocation to each director shall be determined through the Board of Directors, however the
Company is deliberating a plan to allocate more than 90% of issuance to Mr. Yusaku Maezawa, the
president and representative director of the Company. In consideration of such circumstances and to
ensure the fairness of the granting procedure of the Stock Options, Mr. Yusaku Maezawa did not take
part in deliberation and resolution for this matter.
Regarding the introduction of the Stock Options, the Company received opinions from external directors
and external auditors who are independent directors of the Company, that it has reasonability from the
following points of view:
① Granting of the Stock Options will contribute to increase corporate value because the Eligible
Directors will share profit consciousness of shareholders and encouraging Mr. Yusaku Maezawa
who has been taking a significant role in the Company’s to develop and initiate new businesses,
to make commitment to the Company and achievement of the medium-term management plan,
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② Given the difficulty of achieving the conditions to exercise the rights and corporate value at the
time of achievements, the number of granting shares and resulting dilution to the existing
shareholders are within reasonable range, and the granting conditions have certain validity with
guarantee,
③ Even though the stock compensation expenses will be recorded from the time of allocation to
the time of exercising the stock acquisition rights, when conditions for exercising the rights are
fulfilled, as stated above, existing shareholders will enjoy the profit from increase in corporate
value. On the other hand, if the conditions for exercising the rights are not fulfilled, the shares
will not be issued and expired. The stock compensation expense recorded temporarily will be
recorded as reversal gain; therefore, the existing shareholders will not bear serious
disadvantages.
Details of the Stock Options are as follows:
1. Type and Number of Shares
The type of shares to be subject to the Stock Options shall be common stocks of the Company, and the
number of shares to be subject to the Stock Options shall be 31,000,000 shares maximum.
2. The Number of the Stock Acquisition Right
The number of the stock acquisition rights shall be 310,000 units maximum. The number of shares to
be issued upon exercise of each stock acquisition rights (hereinafter, the “Number of Shares”) shall be
100 shares of the common stock of the Company. However, if the Company implemented a stock split
(including gratis allocation of common stock; the same shall apply hereinafter) or a reverse stock split
after the date of allocation of the stock acquisition rights, the Number of Shares will be adjusted based
on the following formula:
Number of Shares to be
issued after adjustment =
Number of Shares to be
issued before
adjustment
x
Ratio of stock split or
reverse stock split
In addition, if there is an unavoidable ground requiring adjustment of the Number of Shares to be
issued such as the Company’s merger, company split and capital reduction, the Number of Shares to be
issued may be adjusted to the extent necessary. Furthermore, in parallel with the adjustment of the
Number of Shares to be issued, above 1.’s maximum number shall be adjusted.
3. Amount Paid for the Stock Acquisition Right
Amount paid for the stock acquisition rights will be equivalent to the fair evaluation value of the stock
acquisition rights calculated by the Black-Scholes model at the date of allocation of stock acquisition
rights. Persons whom the stock acquisition rights are allotted can offset their payment obligations to
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be paid for the stock acquisition rights with their monetary compensation claims; thus, persons will not
be required to make payment.
4. Value of Assets Financed Upon the Exercise
The value of assets to be financed upon the exercise of the stock acquisition rights shall be 1 yen (the
paid-in amount per share to be delivered upon the exercise of the stock acquisition rights) multiplied by
the number of shares granted.
5. Period for the Exercise of the Stock Acquisition Rights
The period for exercising the stock acquisition rights shall be the period defined by the Board of Directors
of the Company and less than 20 years from the next day of the date of allocation of stock acquisition
rights.
6. Conditions of Exercising Rights of Stock Acquisition Rights
Persons whom the stock acquisition rights are allotted can exercise their rights within the exercising
period complying any of the following conditions from I. to III. However, the Eligible Directors must be
in position of business executing directors continuously at the time of exercising the rights; as for Mr.
Yusaku Maezawa the president and the representative director of the Company must be in the position
of the representative director.
I. The Eligible Directors can exercise their rights from the next day of when all the following
conditions are fulfilled:
a) The Eligible Directors continued to be in the position of the business executing director for 3
years from the date of allocation of the stock acquisition rights,
b) net sales of the consolidated financial statements of the Company exceeds 393 billion yen in
the audited securities report for fiscal year ending 2021 March,
c) the average market capitalization (calculated by the following formula; the same shall apply
hereinafter) of the Company exceeds 2 trillion yen of preceding 30 business days from the
specified date between the date of allocation to June 30, 2021 (including the specified date, but
excluding the days on which ordinary transactions of the Company’s common stock cannot take
place), and
d) the average stock price (calculated by the following formula; the same shall apply hereinafter)
of the Company exceeds 1.3x of preceding 30 business days from the specified date (This should
be the exact same day which stated in c); the same shall apply hereinafter) between the date
of allocation to June 30, 2021 (including the specified date, but excluding the days on which
ordinary transactions of the Company’s common stock cannot take place).
Market Capitalization
＝ （Total number of outstanding stocks of the Company (*)－Treasury stocks the Company holds (*)）×Closing price of ordinary transactions of the Company’s common stocks on the Tokyo Stock Exchange
(*) Both shall be numerical values on the aforementioned specified date
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Stock Price ＝ Closing price of ordinary transactions of the Company’s common stocks on the Tokyo Stock Exchange (*)
(*) If stock split or reverse stock split is implemented after the date of allocation, this shall be adjusted by the following formula (rounded up to the nearest yen unit)
Adjusted stock price
＝ Stock price before adjustment×Ratio of split (or reverse split)
II. The Eligible Directors can exercise their rights from the next day of when all the following
conditions are fulfilled:
a) The Eligible Directors continued to be in the position of the business executing director for 6
years from the date of allocation of the stock acquisition rights,
b) the average market capitalization of the Company exceeds 3 trillion yen of preceding 30
business days from the specified date between the date of allocation to June 30, 2024 (excluding
the days on which ordinary transactions of the Company’s common stock cannot take place),
and
c) the average stock price of the Company exceeds 1.8x of preceding 30 business days from
the specified date between the date of allocation to June 30, 2024 (excluding the days on which
ordinary transactions of the Company’s common stock cannot take place).
III. The Eligible Directors can exercise their rights from the next day of when all the following
conditions are fulfilled:
a) The Eligible Directors continued to be in the position of the business executing director for
10 years from the date of allocation of the stock acquisition rights,
b) the average market capitalization of the Company exceeds 5 trillion yen of preceding 30
business days from the specified date between the date of allocation to June 30, 2028 (excluding
the days on which ordinary transactions of the Company’s common stock cannot take place),
and
c) the average stock price of the Company exceeds 2.5x of preceding 30 business days from
the specified date between the date of allocation to June 30, 2028 (excluding the days on which
ordinary transactions of the Company’s common stock cannot take place).
（(*) With the approval of the agenda as the condition, based on the resolution of the Board of
Directors after the adjournment of the Shareholders Meeting, the Company is deliberating to
allocate stock acquisition rights of 155,000 (maximum) with the conditions stated in above I.,
that of 93,000 (maximum) with the conditions stated in above II., and that of 62,000
(maximum) with the conditions stated in above III. respectively.
7. Restriction on Acquisition of Stock Acquisition Rights by Transfer
Approval by the Board of Directors of the Company shall be required for the acquisition of the stock
acquisition rights by transfer.
8. Other Details in regard with the Stock Acquisition Rights
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Other details in regard with the stock acquisition rights shall be resolved by the Board of Directors of
the Company.
