mixi Group’s Summary

mixi Group’s
of IR
Business
Activities
Areas Investor Information
Corporate Philosophy (As of March 31, 2020)

About mixi
We aim to always respond sincerely to the feelings
and requests of the users of our services and to
Effective April 2020, weCorporate
Investor relations activities
haveinformation
reorganized
In order to engage shareholders and investors in active Company name mixi, Inc.
Representative Koki Kimura, President and
provide value that exceeds users imagination and
expectations through communication services.
our business into three segments to
dialogue, we hold an earnings results briefing session for
securities analysts and institutional investors after each Establishment
Representative Director
June 3, 1999
To make the world more vibrant through incorporate expanded contributions
quarterly financial results announcement. Committed to
making disclosures that are fair to all investors, we quickly
Paid-in capital
Head office
¥9,698 million
36F, Shibuya Scramble Square,
communication: This is mixi Group s mission.
expected in the sports field.
post meeting materials and videos to our website. For
overseas investors, we hold both meetings and conference
2-24-12 Shibuya, Shibuya-ku,
Tokyo 150-6136, Japan
Number of employees 1,037 (full-time only)
calls each quarterEntertainment:
● Digital and offer investors opportunities
Provision of games towith a focusGroup
on smartphone
companies games Chariloto Co., Ltd.
Our consult● with management directly several times a year.
Sports: Management of professional sports teams and business development Netrelated
Dreamers to Co., Ltd.
Statement User surprise first
philosophy
In terms of toolsgovernment-managed
for information disclosure, financial Chiba Jets Funabashi Co., Ltd.
betting sports
SFIDANTE Inc.
results reports and other
● Lifestyle: timely
Provision ofdisclosures, as wellservices
lifestyle-focused as for internet users mixi recruitment, Inc.
quarterly securities reports (published in Japanese only), mixi empowerment, Inc.
In fiscal
presentation year 2020,
materials, andended
videosMarch 2020, results
of financial we focused on theCorporate
revitalization of our flhttp://mixi.co.jp/en
website agship service Monster Strike
What we
Mission For communication
should do and business growth in the Sports
presentations are posted to our corporate website. area and, going forward, we will aim to continue revitalizing
Stock exchange listing First Section of Tokyo Stock Exchange
Monster Strike in the Digital Entertainment segment. We will work to enhance (from Juneresults
business 23, 2020)
by
Going forward, we will continue to conduct IR activities
implementing a series perspective,
of measuresstrengthening Securities code 2121
that will bring new surprises and joy to users with the goal of realizing a
from a medium- to long-term Fiscal year end March 31
Integrity
brand that will still be popular
engagement and valuing dialogue with shareholders 10 years from now.
and
Values
Our action Be creative Annual ordinary general meeting of shareholders
guidelines First mover In thethe
investors with Sports
aim ofsegment,
achieving wesustainable
plan to make further
growth in investments in government-managedJune betting sports.
Inclusiveness
This is
corporate value. an attractive fi eld that offers large markets and growth potential
Independent and
public by leveraging
accountants our IT technology,
PricewaterhouseCoopers
we will rejuvenate it as a new form of entertainment, thereby developing a second pillar of business. Aarata LLC
Common stock Authorized: 264,000,000 shares
Principal IR activities in FY2020 Issued: 78,230,850 shares
Number of shareholders 18,681
CONTENTS Annual Stock transfer agent Sumitomo Mitsui Trust Bank, Limited
mixi Group’s Business Areas ...................................................................................... 1 Details frequency
Financial Highlights / Non-financial Information ..................................... 2 Financial results briefing sessions for securities Principal shareholders
4
To Our Stakeholders ........................................................................................................ 4 analysts and institutional investors Number of Percentage
Name shares held of total
Business Models and Performance of Existing Services ...................... 10 Small group meetings for securities analysts and
1 Kenji Kasahara 34,101,900 45.25
mixi Group’s Financial Strategy............................................................................... 12 institutional investors
THE BANK OF NEW YORK MELLON 140051
ESG at mixi Group.............................................................................................................. 16 Meetings and conference calls with domestic investors 76 2,766,900 3.67
(standing proxy: Mizuho Bank, Ltd.)

Digital71
ESG / Relationships with the Environment and Society ....................... 18 Meetings and conference calls with overseas investors STATE STREET BANK AND TRUST COMPANY
Environmental Consciousness ........................................................................... 18 505038

Entertainment Sports
Note: “Domestic investors” are investors with an office in Japan. All other
1,750,867 2.32
Social Contributions .................................................................................................. 18 (standing proxy: The Hongkong and Shanghai
investors are regarded as “overseas investors.” Banking Corporation Limited Tokyo Branch)
Message from the CTO............................................................................................. 20
THE BANK OF NEW YORK 133612
ESG / Corporate Governance..................................................................................... 23 1,448,200 1.92
(standing proxy: Mizuho Bank, Ltd.)
Investor relations web page
Directors ............................................................................................................................. 23 SAJAP (standing proxy: MUFG Bank, Ltd.) 1,088,100 1.44
https://mixi.co.jp/en/ir/
Audit and Supervisory Board Members ..................................................... 25
Message from an Outside Director................................................................. 26 Lifestyle Note: The Company has 2,881,300 treasury shares.
As these shares carry no voting rights, they are omitted from the
principal shareholders above and subtracted from calculations for the
Corporate Governance Structure .................................................................... 27 percentage of the total.
Risk Factors ....................................................................................................................... 29
Financial Information ..................................................................................................... 31 Breakdown of shareholders by type
Summary of IR Activities / Investor Information ....................................... 75 Financial institutions and
financial instruments brokers Other corporations
Disclaimer Regarding Future-Oriented Statements
This report contains future-oriented statements concerning plans, predictions, 7.07% 0.35%
projections, strategies, and operating results. These future-oriented statements reflect 5,529,431 shares 273,518 shares
management assumptions based on information available to management as of the
date of this report’s publication and are thus subject to risks and uncertainties that may Individuals and others Foreign corporations
cause actual results to differ significantly from such statements. These risks and
uncertainties include, but are not limited to, the economic environment in which mixi 60.61% 31.97%
Group’s businesses operate, changes in the development status of products and services, 47,417,947 shares 25,009,954 shares
and fluctuations in currency exchange rates.

Note: The content of this report is based on mixi Group’s consolidated results for fiscal year Note: A total of 2,881,300 treasury shares (28,813 units) are included in
2020, ended March 31, 2020. However, some information is from April 2020 or later. “Individuals and others.”

mixi Statements
Notes to Financial Group’s Corporate Philosophy
| Summary | mixi Group’s
of IR Activities Business
| Investor Areas
Information 751
 Financial Highlights Non-financial Information

About mixi
Net sales (millions of yen) EBITDA (millions of yen) Operating income (millions of yen) / Number of employees* Average length of employment (years) / Ratio of female employees (%) /
Operating income ratio (%) Average age Ratio of female managers (%)
208,799 207,161 97,913 95,033 1,037 33.2 33.6 34.3
189,094 91,064 89,008
884
74,228 72,359 775 33.0 32.1
144,032 45.5 30.0
43.0
38.3 3.9
112,171 28.5
3.4 3.3
42,091 41,033 18.5 18.0 16.7
15.3
20,069
17,165

FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 End of End of End of End of End of End of End of End of End of
FY2018 FY2019 FY2020 FY2018 FY2019 FY2020 FY2018 FY2019 FY2020

■ Operating income Operating income ratio ■ Average age Average length of employment Ratio of female employees
Ratio of female managers

Profit attributable to owners of parent ROE (%) / ROA (%) Total assets (millions of yen) / Number of non-Japanese employees Number of people with disabilities Ratio of employees taking childcare leave (%) /
(millions of yen) Net assets (millions of yen) / Equity ratio (%) Ratio of employees returned after childcare leave (%)
19
192,123 192,955 199,978
61,022 59,867 69.7 54 (including 10 at a special subsidiary)

176,974 180,938
165,039 170,434 178,990 46
150,529 13 100 100 100
40 (including 9 at
41,788 a special subsidiary)
44.1 121,490
92.5 90.0 100 100
84.9 88.4
45.3
26,521 73.6 80
26.1
35.0
15.2 4
10,724 22.6
6.0
13.8
5.4
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 End of End of End of End of End of End of End of End of End of
FY2018 FY2019 FY2020 FY2018 FY2019 FY2020 FY2018 FY2019 FY2020

ROE ROA ■ Total assets ■ Net assets Equity ratio Ratio of employees taking childcare leave
Ratio of employees returned after childcare leave

Free cash flow (millions of yen) Basic earnings per share (yen) / Dividend per share (yen) / Number of directors / Ratio of independent directors (%) / Ratio of female directors (%)
Net assets per share (yen) Dividend payout ratio (%) Average term of service (years) Ratio of outside directors (%)
67,536 2,368.05 2,387.56 147.00 147.00 9
2,176.88 8
1,889.16 121.00 120.00
110.00 7 37.5 12.5
44,374 33.3 11.1
39,353
1,441.66 77.3 28.6
33.3
5.7
4.8 25.0
734.59 730.85 4.4
7,302 533.48
–12,891 350.26 34.3 14.3
142.33 20.0 20.1 22.7
0.0
FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 End of End of End of End of End of End of End of End of End of
FY2018 FY2019 FY2020 FY2018 FY2019 FY2020 FY2018 FY2019 FY2020

■ Basic earnings per share ■ Net assets per share ■ Dividend per share Dividend payout ratio ■ Number of directors Average term of service Ratio of independent directors
Ratio of outside directors

* The number of employees is the total of (consolidated) full-time employees.

2 mixi Group Annual Report 2020 Financial Highlights | Non-financial Information 3

 To Our Stakeholders
Creating communication services
to energize Japan and the world
through the combination of
entertainment and technology
Koki Kimura
President and
Representative Director
mixi, Inc.
4 mixi Group Annual Report 2020
Sixth Anniversary Countdown Campaign
On June 23, 2020, mixi’s stock market listing
was transferred from the Mothers Section to
the First Section of the Tokyo Stock Exchange.
I would like to express my sincere gratitude to
our shareholders and other stakeholders for
their support.
A look back at FY2020
Reaffirming the strong profitability of Monster Strike
In fiscal year 2020, mixi Group focused on the revitalization of its flagship service
Monster Strike and business growth in the Sports area, and these efforts paid off with
Management Strategy
solid results.
For Monster Strike, we recovered monthly active users (MAU) by promoting the Sixth
Anniversary Countdown Campaign and other marketing activities, which created a
buzz among users. Through further measures such as collaborations with popular
intellectual properties (IPs), including the TV anime Demon Slayer: Kimetsu no Yaiba,
and introducing appealing characters, we were able to raise average revenue per user
(ARPU) in the second half of the fiscal year. We also worked to increase profitability
by optimizing advertising expenses and enhancing internal structures, including
improvement of communication among anime, games, and merchandising divisions.
This resulted in sales and profits that exceeded our initial forecasts.
Even more than six years after its original release, Monster Strike is still loved by
users, having achieved more than 53 million downloads globally, and it maintains a
high level of profitability that is rarely seen among any game released by competitors.
This reaffirms that the brand can produce strong profits with the appropriate measures
and gives us great confidence in the further growth of the Group’s business.
Collaboration with the TV anime Demon Slayer: Kimetsu no Yaiba
Increasing corporate value through M&A
We approached business growth in the Sports area by executing M&A with the aim of
boosting corporate value. In October 2019, we acquired shares of Chiba Jets Funabashi
Co., Ltd., marking our first foray into professional sports team management. We also
made Net Dreamers Co., Ltd. a subsidiary with the aim of advancing our government-
managed betting sports business. Net Dreamers operates netkeiba.com, which has
built up an unrivaled position as the leading media outlet for horse racing. We are
now working to create synergies among the Company, Net Dreamers Co., Ltd., and
Chariloto Co., Ltd., which we acquired in the previous fiscal year, through joint
business development, the exploration of surrounding business areas, and other
methods, with the goal of producing new services. In our Lifestyle Business,
To Our Stakeholders 5
 To Our Stakeholders

which includes the social network mixi, we have made SFIDANTE Inc., a leading company Focusing on government-managed betting sports
in the field of printing photos from smartphones, into our subsidiary. By combining to build the second pillar of business
both our assets—SFIDANTE’s high-quality service and the large amount of photo data When planning for medium- to long-term growth, an important management issue for
uploaded to FamilyAlbum—we have launched FamilyAlbum New Year Cards (officially mixi Group is making operations more stable by creating a second pillar of business

Mitene Nengajo in Japanese), a new service for creating traditional Japanese New Year
greeting cards. We will continue working to provide users with even greater added
value through investment and M&A.
Management Strategy
in addition to Monster Strike. Our Sports segment is one area in which we are actively
investing to achieve this aim.
Among our range of sports-related businesses, we are focusing particularly on
government-managed betting sports. Keirin bicycle races and horse racing in
particular are large markets with attractive growth potential. We will apply our
entertainment business expertise and IT to this area to rebrand it as a new form of

“Contributing
Betting ticket entertainment and develop a new, stable pillar of business.
Synergies Media
sales within In addition to offering economic growth potential,
mixi Group
to regional
government-managed betting sports have social significance
in that they can facilitate regional revitalization. mixi Group is
already providing support for government-managed betting
revitalization
and growth”
sports in regions with declining populations and a lack of
Entertainment/ expertise by assisting in areas such as stadium operations.

“Increasing
IT
In April 2020, we entered the Keirin stadium management
business with Chariloto Co., Ltd. as the overall business operator of Tamano Keirin
Medium- to long-term initiatives Stadium (Tamano City, Okayama Prefecture) and the owner of Toyama Keirin Stadium
mixi Group’s medium-term management policy calls for corporate value (Toyama City, Toyama Prefecture). We plan to expand our collaboration with local
“enriching global communication through the combination
of entertainment and technology.” We have positioned
by stabilizing governments to grow this market and contribute to regional revitalization and growth
across Japan.
our Entertainment Business as an area of focus, and we are operations through
diversification”
Net Dreamers service overview
working to advance business in the growing mobile game
Advertiser User
and government-managed betting sports-related markets. Net
Dreamers Provision
By diversifying and establishing pillars of business in addition to Monster Strike, Advertising of premium
fees services
we aim to make our operations more stable and raise corporate value.

Place Service fee

Growing business in the mobile game market advert Media payments
(some paid
We are working to further vitalize Monster Strike by improving the quality and volume services)

of game plans and updates, as well as ensuring greater synergy between our marketing netkeiba.com—Japan’s No. 1 horse racing website
and media mix, so that the brand will still be loved by users for the foreseeable future
Chariloto service overview
and beyond. In addition, we will develop collaborations using IPs from outside of
Keirin event
Chariloto Betting User
mixi Group while aiming to maximize profitability. Moreover, we will aim to continue organizer ticket sales
revitalizing Monster Strike by creating new game experiences that emulate its core
value of being a space to have fun with friends. Wagers
Income
When developing new games, we will maintain a strict focus on selecting projects from
betting
with extremely strong potential. Although the mobile game market is maturing, it is tickets Betting Winnings
ticket sales
still a large and thriving market. We believe we can create new industry categories and
establish a leading position by delivering new ways to play. Chariloto.com—online Keirin and auto racing betting site

6 mixi Group Annual Report 2020 To Our Stakeholders 7

 To Our Stakeholders

Growing other businesses The impact of the COVID-19 “Now is

the time
As anyone who witnessed the excitement of the 2019 pandemic and beyond

for mixi”
Rugby World Cup in Japan would know, nothing creates The spread of the COVID-19 pandemic has caused
moments of shared excitement among large groups of significant changes in the global economy as well as

“Delivering

Management Strategy
people quite like sports. The joy shared consumer mentality and behavior.
through these experiences can provide Chiba Jets Self-isolation has made it difficult to meet friends
people with motivation in their daily lives and encourage more and family and our sense of what is normal has
the unique enriching, healthy lifestyles. This is our vision as we work to deliver crumbled, placing great stress on society. This environment has reminded us of the

value of
the unique value of sports to society. necessity of entertainment as a way for people to relax.
We support the medium- to long-term growth of the B.LEAGUE However, there are still many forms of entertainment that can only be enjoyed

sports to (basketball league) team Chiba Jets, as well as FC Tokyo and the Tokyo offline. We want to leverage our entertainment expertise and

society”
Yakult Swallows. Also, through Unlim, a project we launched in IT know-how to digitally transform these areas so that they
February 2020, can be enjoyed by a greater number of customers. Based on
Unlim service overview
we will the belief that “now is the time for mixi Group to energize
Fans Media Donations Athlete Flag
participate in businesses that Foundation Japan and the world through our expertise in entertainment
View/visit
Sponsor-
assist the development of sports and communication services,” we will work as one to create
ギフティング

owned Support points

media
culture through economic Spread communication services that exceed users’ imagination and
Gifting

through SNS Point usage

support. post expectations.
sharing Athletes’ Donations
official sites I would like to thank all of our stakeholders for their
continued support.

Athlete Flag Athletes/teams

Foundation July 2020
Distribution

Donations

Support points

President and Representative Director

Unlim—a sports gifting service mixi, Inc.

A corporate culture that continuously supports growth

mixi Group is a gathering of people with a strong desire to create products and services
that deliver new surprises to users and bring them joy. This includes our engineers,
who willingly apply themselves in multiple fields, whether it be social media, game
development, or new video-related technologies, enjoy the fascination that comes with
creation, and dedicate themselves to the pursuit of original services. We will share this
creative corporate culture that our people have fostered, with the new colleagues who
join us as our business grows, as we continue our efforts to create new communication
services with the aim of sustainable growth.

8 mixi Group Annual Report 2020 To Our Stakeholders 9

 Business Models and Performance of Existing Services

Cumulative number of users of FamilyAlbum

(Millions of users)
8
FamilyAlbum, private family photo and video sharing app
User User 6
(parents) Upload of Viewing of/ (grandparents,
children’s commenting Surpassed
Monster Strike, hunting action role-playing game (RPG) Monster Strike-related businesses photos/ FamilyAlbum on children’s relatives, others)
videos photos/videos 4 7 million
User User
• Movies
Payment of Free Monthly Free to use Monthly 2
Monster Strike fees/ download (via distributor) Provision automatic automatic
(some paid
Provision Platform of app • Events of services/ generation of
services) generation of
of app
providers • Merchandising merchandise photobook photobook
suggestions suggestions
2015 2016 2017 2018 2019 2020
• App Store

Business Models
App is free to Collection of
• Google Play Pay for items Revenue Payment
play (contains transaction and other providers purchased generated This app helps parents share photos and videos of their children in real time while keeping it all in the family. It is well
fees through sales
in-app received for being free to use, offering unlimited storage, and facilitating fun communication among family members.
purchases) of tickets and
merchandise The service was launched in April 2015 in Japan, with English support starting in July 2017. The service is currently used
in seven languages and it surpassed seven million users as of April 2020.

Cumulative number of downloads of Monster Strike worldwide

Surpassed Improving profitability
In April 2019, we launched a premium service with monthly subscription fee that offers greater convenience than the traditional service. In June
(Millions of downloads)

55 Japan Overseas (Taiwan, Hong Kong, Macao)

53 million 2019, we acquired SFIDANTE Inc., which engages in the smartphone photo printing business, making it a subsidiary, and we began providing
FamilyAlbum New Year Cards (officially Mitene Nengajo in Japanese), a new service for creating traditional Japanese New Year greeting cards, using
this company’s know-how. As a result, we made steady progress with improving profitability. Furthermore, we expanded earnings opportunities
by linking the company’s photo gift service called OKURU and FamilyAlbum to provide a service where photographs on FamilyAlbum can be
ordered as gifts. By combining user assets of FamilyAlbum, we will work to provide new value and to reinforce the business going forward.
45

35
Launch in Hong Kong
and Macao
Cumulative number of downloads of minimo
(Millions of downloads)
4.5
25
minimo, salon artist booking app
User 3.5
Surpassed
Launch in Taiwan User (salon
15
Search/
appointment
minimo Ad
placement professional) 4 million
2.5
Listing is free
Revenue is
results-based Payment of
1.5
commission
5 (commissions)

Treatment/service 0.5

2013 2014 2015 2016 2017 2018 2019 2020

Visit to salon and payment for treatment/service 2014 2015 2016 2017 2018 2019 2020

Monster Strike is an exhilarating multiplayer action RPG that anybody can easily enjoy, with its key feature enabling
simultaneous cooperative (multi) play for up to four friends in the same area. Monster Strike was first released on October
10, 2013 in Japan. It is currently available in Taiwan, Hong Kong and Macao. Not just a game, Monster Strike consists of
merchandising, live events, videos, anime, physical storefronts, and more. An expansive media mix is being used to fuel
the growth of Monster Strike. The app surpassed 53 million downloads as of May 2020.
This app, launched in January 2014, allows customers to book appointments directly with individual salon staff such as
hairstylists, nail artists, and eye makeup artists 24 hours a day. Ignoring the convention of booking appointments for a
salon, minimo allows customers to choose and book salon staff directly and consult with a staff member in advance
about their desired service to prevent mismatches. Highly appreciated by both salon staff and customers, the app
surpassed four million downloads as of December 2019.

10 mixi Group Annual Report 2020 Business Models and Performance of Existing Services 11
 mixi Group’s
Financial Strategy

Summary of FY2020 financial results Lifestyle Business

YoY
(Millions of yen) FY2018 FY2019 FY2020 change Net sales of the Lifestyle Business in fiscal year 2020 were
Net sales 189,094 144,032 112,171 –22.1%
¥4.9 billion (down 8.7% year on year), while the segment
Gross profit 166,043 123,808 90,878 –26.6% loss was ¥675 million (compared to a segment loss of ¥1.6
  Gross profit ratio 87.8% 86.0% 81.0% —
billion in fiscal year 2019).
As for the FamilyAlbum private family photo and video
SG&A expenses 93,683 82,774 73,712 –10.9%
sharing app of the Lifestyle Business, in April 2019, we
  SG&A ratio 49.5% 57.5% 65.7% —
launched a premium service with a monthly subscription
EBITDA 74,228 42,091 20,069 –52.3%
fee that offers greater convenience than the base service,
Operating income 72,359 41,033 17,165 –58.2%
in June 2019, we acquired SFIDANTE Inc., which boasts
  Operating income ratio 38.3% 28.5% 15.3% —
among the largest number of orders on its New Year card
Ordinary income 72,717 41,120 16,933 –58.8%
app, making it a subsidiary, and in October 2019 we began
Profit attributable to
owners of parent
41,788 26,521 10,724 –59.6% providing FamilyAlbum New Year Cards (officially Mitene
Nengajo in Japanese), a new service for creating traditional
Japanese New Year greeting cards, using this company’s
Breakdown of SG&A expenses for FY2020
YoY know-how. As a result, we made steady progress with
(Millions of yen) FY2018 FY2019 FY2020 change
improving profitability.
SG&A expenses 93,683 82,774 73,712 –10.9%
 Personnel 5,363 6,067 7,347 +21.1% Summary of FY2020 results by segment
YoY
Hiroyuki Osawa  Advertising 23,593 24,419 19,556 –19.9% (Millions of yen) FY2018 FY2019 FY2020 change
Segment net sales
Director and CFO  Outsourcing 4,077 4,946 6,643 +34.3%
mixi, Inc.   Rents on properties 1,320 1,508 3,144 +108.5%   Entertainment Business 175,948 138,607 107,218 –22.6%
  Settlement fees 53,634 40,845 29,619 –27.5%
  Lifestyle Business 13,146 5,427 4,954 –8.7%

Financial Strategy
  Amortization of goodwill 1,085 — 768 —
Segment profit (loss) *

  Taxes and public charge 1,256 837 571 –31.7%

Overview of FY2020 consolidated financial results  Others 3,351 4,152 6,061 +46.0%   Entertainment Business 78,438 51,561 31,569 –38.8%
In fiscal year 2020, mixi Group recorded net sales of ¥112.1
  Segment profit ratio 44.6% 37.2% 29.4% —
billion (down 22.1% year on year), EBITDA of ¥20.0 billion Entertainment Business

We will continue
  Lifestyle Business 1,638 (1,690) (675) —
(down 52.3%), operating income of ¥17.1 billion (down Net sales of the Entertainment Business in fiscal year 2020
  Segment profit ratio 12.5% —% —% —
58.2%), ordinary income of ¥16.9 billion (down 58.8%), and were ¥107.2 billion (down 22.6% year on year) and

with proactive profit attributable to owners of parent of ¥10.7 billion

(down 59.6%). Despite falling sales and profits, we made
segment profit was ¥31.5 billion (down 38.8%). The flagship
Monster Strike boosted earnings, and upfront investments
*EBITDA is used for segment profit.

investments upward revisions to our earnings forecast two times and

ultimately exceeded these new targets. Revisions involved
were made in the Sports area.
Net sales of Monster Strike dropped over the previous
Overview of financial position and cash flows
Financial position and cash flow were greatly affected by

to further raise
the following. In terms of net sales, sales of Monster Strike
exceeded expectations due mainly to collaboration with
year due to the decline of average revenue per user (ARPU),
but the provision of new characters and collaborative
the acquisition of new subsidiaries through M&A and head
office relocation. On our balance sheet, current assets at

corporate value.
popular IPs and contributions were seen from the three
newly acquired consolidated subsidiaries and earnings of
Kotodaman, a game acquired from SEGA Games Co., Ltd.
As for profits, there was greater efficiency in advertising
expenses and a decline from initial estimates of head office
relocation costs, in addition to increased sales.
Furthermore, the number of consolidated subsidiaries
increased from stock acquisitions; therefore, we have
begun disclosing EBITDA from the fiscal year under review.
measures with popular IPs proved successful. As a result,
net sales exceeded the initial earnings forecast. Also, the
migration of Kotodaman was completed and collaboration
with Monster Strike helped boost earnings.
In the Sports area, we made proactive investments in
professional sports team management and the
government-managed betting sports business. In 2019, we
acquired the stock of Chiba Jets Funabashi Co., Ltd. in
October, followed by Net Dreamers Co., Ltd. in November,
making both consolidated subsidiaries.
the end of fiscal year 2020 were ¥146.1 billion, a decrease
of ¥14.7 billion year on year. This was due mainly to a
decrease in cash and deposits from the acquisition of
non-current assets and investment securities. Non-current
assets were ¥53.8 billion, up ¥21.7 billion year on year. This
was mainly attributable to an increase in goodwill resulting
from the acquisition of new subsidiaries and due to the
relocation of our head office. As for liabilities, current
liabilities were ¥13.7 billion, up ¥1.3 billion year on year. This
was mainly attributable to advances from the acquisition of

12 mixi Group Annual Report 2020 mixi Group’s Financial Strategy 13

 mixi Group’s Financial Strategy

new subsidiaries and an increase in short-term borrowings Overview of FY2021 earnings forecasts Summary of FY2021 earnings forecasts
of subsidiaries. Non-current liabilities were ¥5.2 billion, up From fiscal year 2021, our earnings forecasts’ reported FY2020 FY2021 YoY
¥3.7 billion year on year. This was mainly attributable to an segments will be divided into three. The segments will be (Millions of yen) (Actual) (Forecast) change

increase in long-term borrowings of subsidiaries. Net assets Digital Entertainment, centered on games including Net sales 112,171 100,000 –10.9%
increased ¥1.9 billion to ¥180.9 billion mainly due to an Monster Strike and Kotodaman; Sports, including Entertainment Business 107,218 — —
increase in retained earnings. government-managed betting sports and professional Digital Entertainment Business — 83,000 —
On our statements of cash flows, net cash provided by sports; and Lifestyle, including FamilyAlbum, salon artist Lifestyle Business 4,954 7,000 41.3%
operating activities declined slightly year on year, reflecting booking app minimo, and the social network mixi. Sports, Sports Business — 10,000 —
depreciation due to the relocation of our head office, an which was previously included in Entertainment, will EBITDA 20,069 15,000 –25.3%
increase in notes and accounts receivable from higher become its own segment with a focus on further Operating income 17,165 11,000 –35.9%
fourth quarter sales, and income taxes paid, and totaled business expansion.
  Operating income ratio 15.3% 11.0% —
¥17.7 billion. Net cash used in investing activities increased Management resources will be concentrated on the top
Ordinary income 16,933 11,000 –35.0%
year on year due to the acquisition of tangible fixed assets priority areas of maintaining the financial growth of
Profit attributable to owners
and investment securities as well as the acquisition of Monster Strike and growing earnings of the Sports segment, 10,724 6,500 –39.4%
of parent
shares of subsidiaries associated with changes in the scope with sports entertainment considered a priority business. Basic earnings per share (yen) 142.33 86.26 –39.4%
of consolidation, and totaled ¥30.6 billion. Net cash used in We aim to maximize profits for Monster Strike by using
financing activities amounted to ¥6.0 billion due to the close communication between game planning, marketing
long-term borrowings of subsidiaries, despite the payment and media mix measures, collaboration with outside IPs, M&A in FY2020
of a dividend. As a result, free cash flow—the sum of net and optimization of advertising expenses. We also aim to
Others Total
cash provided by operating activities and net cash used in continually revitalize Monster Strike through new game Net Dreamers Co., Ltd.
Around Around
Around ¥15 billion
investing activities—decreased from ¥7.3 billion in fiscal experiences. In the Sports segment, we will continue ¥4 billion ¥19 billion

year 2019 to negative ¥12.8 billion in fiscal year 2020. Cash supporting professional sports teams, speed up growth of
and cash equivalents at the end of the period declined by subsidiaries operating government-managed betting
Investment policy and shareholder returns

Financial Strategy
¥19.0 billion year on year to ¥125.4 billion. sports and promote joint business development.
Additionally, in the Lifestyle segment, we will continue to mixi Group will continue with proactive business
Summary of balance sheets and statement of cash flows
strengthen monetization of FamilyAlbum amid growing investment based on a stable financial foundation to realize
(Millions of yen) FY2019 FY2020
demand for remote communication. our growth strategy of revitalizing our flagship service,
Assets Moreover, we will sustain our concentration on our core Monster Strike, and fostering a second pillar of business in
Current assets 160,824 146,119 competencies with measures including deciding to exit the Sports segment.
Non-current assets 32,131 53,859 businesses that no longer fit our growth strategy. Regarding shareholder returns, in principle, we pay
Total assets 192,955 199,978 For fiscal year 2021, we forecast net sales of ¥100 billion, dividends targeting a consolidated payout ratio of 20% or
Liabilities and net assets EBITDA of ¥15 billion, and operating income of ¥11 billion. dividend on equity (DOE) ratio of 5%, while aiming to
Current liabilities 12,448 13,759 In terms of net sales, we expect sales of Monster Strike to continually increase corporate value by investing in
Non-current liabilities 1,516 5,280 fall. However, this represents a conservative forecast given businesses including M&A. Based on this, we plan to pay an
Net assets 178,990 180,938 uncertainty about events and movies linked to the game annual dividend of ¥110 per share for fiscal year 2021,
due to COVID-19. We plan on new service releases related comprising interim and year-end dividends of ¥55 each.
(Millions of yen) FY2019 FY2020
to games and government-managed betting sports, but Furthermore, we will strive to continue achieving
Net cash provided by operating activities 18,113 17,792 net sales of new businesses have not been included in the appropriate shareholder returns, along with informing
Net cash used in investing activities (10,811) (30,683) earnings forecast because of the high level of uncertainty. shareholders of changes caused by business expansion in a
Net cash used in financing activities (19,079) (6,085) timely manner. We ask for your continued support of the
Cash and cash equivalents at end of period 144,417 125,427 Group’s growth.
Free cash flow 7,302 (12,891)

14 mixi Group Annual Report 2020 mixi Group’s Financial Strategy 15

 ESG at mixi Group

Realizing a sustainable mixi Group’s medium-term management policy is to “enrich global communication through the
combination of entertainment and technology.” Though communication is crucial to realizing fulfilling

society by enriching lifestyles, it has begun to disappear due to factors such as the development of IT and the concentration
of people in greater Tokyo. We have created new services with the goal of enriching face-to-face

communication between communication. In addition to our social network mixi, we classify Monster Strike as a communication
service as it encourages communication between friends. We believe that, by applying our acquired
people knowledge, we can provide innovative communication services for both Japan and the world, enriching
our global society.

Relationships with the Environment and Society

Environmental Consciousness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Social Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Message from the CTO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Corporate Governance
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Audit and Supervisory Board Members . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Message from an Outside Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Corporate Governance Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Area Sub-Area Main Initiatives Relevant SDGs

E
▶︎ P.18
Office efficiency
Consolidate all group company offices to improve cost,
● 
personnel, and energy efficiency
● Achieve an eco-friendly office design

●  Promote going paperless and recycling to preserve our forests and

Reduce paper waste
reduce CO2 emissions

S
● As a company based in Shibuya since its establishment, contribute
Contribute to the to the cultural and municipal development of Shibuya
community ● Contribute to the growth of local regions where mixi Group
▶︎ P.18 businesses operate

● Nurture the next generation of experts in the field of IT

Nurture and support
●  Carry out educational activities to help guide us toward a safe
the next generation

ESG
internet society

Promote sports ● Support athletes and sports organizations to promote sports culture

●  Provide a conducive work environment for each and every

Promote diversity
employee by respecting individuality and promoting diversity

G
● Appoint independent officers
● Ensure that the Board of Directors possesses a wide range of
Corporate
knowledge, experience, and capabilities
▶︎ P.23 governance
● Enhance the capabilities of corporate auditors and the Audit and
Supervisory Board to monitor directors’ performance of their duties

●   long with managing risks related to corporate functions, establish

A
Risk management
a risk management committee to manage risks to our reputation

16 mixi Group Annual Report 2020 ESG at mixi Group 17

 ESG / Relationship with the Environment and Society
Environmental Social Contributions
Consciousness
Office streamlining Contributing to the local community
We have moved into a new office that consolidates five of ◦Contributing to Shibuya
our previous business sites into a single location. In As a company that has had its offices in Shibuya since
addition to making the use of expenses, manpower, and its establishment, mixi Group contributes to community
energy more efficient, it enables more effective internal support in Shibuya, a place known for its technology,
communication. The new office receives more natural entertainment, sports, culture, and diversity. Together
light and over 90% of lighting fixtures are LED. with the local community, we work to bring excitement to
Also, each floor Shibuya and in 2019 we sponsored various events in the
is connected to district, including a Golden Week (a week starting from late
others through a April containing a number of Japanese national holidays)
central staircase event for parents and children and a summer festival.
that saves energy In 2018, we got together with three other IT companies
by reducing based in Shibuya and launched the BIT VALLEY project with
elevator use. the purpose of turning Shibuya into a global technology
hub in the IT field. 2019 marked the second year of the
project and we held BIT VALLEY 2019 with the theme of
The central staircase
“innovating manufacturing.” The event targeted not only
engineers but also anyone involved in manufacturing in
the IT industry with the aim of raising the level of
manufacturing in Shibuya, as well as across the whole of
Japan. It was attended by more than 2,400 people,
including many engineers and other notable creators.
Entrance to the new office
Reducing paper consumption
We have established an integrated workflow system that
BIT VALLEY 2019
handles processes from approvals to payment processing
online, reducing the need for printed materials. Employees Also, as a special corporate member of Future Design
are also assigned laptop computers and monitors have Shibuya, General Incorporated Association, we are
been installed in all meeting rooms, collaborating to realize design that solves social issues
encouraging paperless meetings. through open innovation based on the ideas of the many
We have also installed “Mamoru-kun” people that gather in Shibuya.
confidential document disposal boxes that Social Innovation Week Shibuya, an event supported
enable us to both maintain confidentiality by Future Design Shibuya, was held for a second time in
and recycle paper. September 2019. This event considers various possible
Mamoru-kun
18 mixi Group Annual Report 2020
urban futures. We participated as a gold partner and held a Developing and supporting
talk session on the subject of “future communication the next generation
realized through technology and design.”
◦Developing the next generations
In June 2019, six parties, including mixi and the Shibuya
City Board of Education, launched the Kids VALLEY Future
Learning Project. The project aims to enhance
programming education in public elementary and junior
high schools in Shibuya to build a platform for producing a
next-generation IT workforce in the district.
mixi is responsible for activities such as raising awareness
about programming, developing a curriculum for junior
high schools, and providing educational materials. As part
of the project, in fiscal year 2020 we collaborated with
Hachiyama Junior High School to hold a hands-on
Social Innovation Week Shibuya
programming course that used an app developed by mixi.
Also, when the school was forced to close due to the
◦Regional revitalization COVID-19 pandemic, we distributed texts to students for
We are contributing to revitalizing regional areas through home schooling.
our government-managed betting sports business. We
made Chariloto Co., Ltd. a subsidiary and entered the Keirin
business. Keirin races are organized by local governments
and held at stadiums in each region. Event proceeds are a
source of revenue for these local governments, which leads
to a huge contribution to improving each region’s financial
situation, including funding school construction and
road maintenance.
In February 2020, Chariloto was selected as the business
operator for the Tamano Keirin Stadium Redevelopment
Project planned by Tamano City in Okayama Prefecture and
it has taken over management of the Keirin stadium and a
A hands-on programming course
hotel. There are high expectations that government-managed
betting sports and surrounding facilities will revitalize
regional economies. Going forward, we will strive to work
with local governments to energize regions and create Also, based on our desire to interest school students
ESG
new growth. in the work of the IT
industry and to
encourage them to
consider a career, we
welcome school
parties to visit the
Company. From April
2019 to March 2020, Students visiting the Company
we were visited
by 352 students from 53 schools.
Tamano Keirin Stadium (projection of the completed stadium redevelopment)
ESG / Relationships with the Environment and Society 19
 Message from the CTO
Uniting technological advancement with
business considerations
The role of the Board of Directors is to provide leadership
that realizes the Company’s philosophy of “user surprise
first” and sustainable growth, while also making a social
contribution to Japan. As a director, I have to stay aware
of all of the Group’s assets, including personnel, funds,
physical properties, and processes, while as CTO, I also
need to keep up to date with social trends and new
technologies, and to facilitate the ideas that will drive
business growth and innovation into new areas without
resorting to fixed ways of thinking. It is my responsibility
to build an organizational structure in which
technological advancement is combined with business
considerations to consistently provide users with
services that surpass their expectations.
Supporting value creation
Technology is key infrastructure that supports mixi‘s
value creation. mixi has grown by providing original
services that encourage communication, and the
development of these services has been driven by
technology. For example, our flagship service,
Monster Strike, has used technology to combine its
virtual game world with live events, boosting
communication between users and growing its
popularity. Now we will use the latest technologies such
as artificial intelligence (AI) and 5G to merge the real and
virtual realms and develop groundbreaking new
services. Using our technology, we aim to energize Japan
by entertaining and bringing happiness to people.
20 mixi Group Annual Report 2020
Technology × ESG Management
Advancing ESG
management through
technology that delivers
fun and joy
Tatsuma Murase
Director and CTO
The COVID-19 pandemic has made it difficult for
families and friends to communicate in person.
We would like to respond to this situation by creating
technology that will make people feel connected even
when meeting online, while also making their eventual
real-world reunion even more powerful. Moreover, in our
sports businesses, we are aiming to introduce IT
technology into government-managed betting sports to
create new entertainment proposals that will build a
more open and fun society.
Technology-oriented ESG management
mixi’s technology delivers fun and joy to users while
advancing ESG management.
We are using this technology to contribute broadly to
society through a range of initiatives. The Kids VALLEY
initiative supports programming education in elementary
and junior high schools in order to develop the next
generation of global IT professionals in Shibuya, while
our participation in the BIT VALLEY conference event
provides creators, including students and adults who are
involved in manufacturing, with an opportunity for
learning. We will also add to our current efforts by
actively providing opportunities for tackling whatever
future issues Japan faces. For example, I think we can
analyze user data collected through online participation
in government-managed betting sports and use it to
develop measures to fight addiction.
Going forward, we will continue to support the
sustainable growth of the mixi Group through initiatives
that unite technological advancement with business
considerations.
◦Realizing a safe and secure internet society
We hold internet security courses, primarily for elementary
and junior high school students, in order to educate them
about using the internet safely and securely. To avoid
a series of troubles potentially caused by lack of
understanding regarding the specific characteristics
of the internet and social media sites, carelessness, and
miscommunication, the courses focus on the way students
actually use these and the issues they hold, with the aim of
helping students to build the skills they need to use the
internet independently.
As a member of the Social Media Association of Japan,
an association of businesses that operate social media sites,
we work with other members to discuss and implement
initiatives that will protect internet users from a variety of
online dangers. We are actively implementing initiatives
such as measures to prevent child abuse through the social
network mixi, and we will further contribute to realizing a
safe and secure internet society by sharing the knowledge
gained through successful efforts.
Also, as one of the companies leading the Japan Online
Game Association, we are contributing to the healthy
development of the online game industry through
initiatives such as formulating industry guidelines and
carrying out activities that educate young people about
appropriate usage. We will continue to monitor the results
of game addiction surveys carried out by industry
organizations and carry out activities that will drive a swift
response from both mixi and the wider game industry.
An internet security lecture
Social Contributions
Promoting sports
We provide a wide range of support for athletes, from
individual athletes to professional sports teams such as the
Chiba Jets, FC Tokyo, and the Tokyo Yakult Swallows. In
February 2020 we launched Unlim, a sports gifting service
that provides a new way to support sports teams and
athletes. Unlim enables sports fans to financially support
their favorite athletes and teams and 67%–83% of the
money raised is used to directly support teams and
athletes. In the sporting world, athletes often have to give
up competing due to financial constraints and there are
many who worry about their career development after
they retire. We are contributing to solving the financial
issues of athletes and teams so that they can concentrate
on contributing to society through their sporting ability.
Teams and athletes supported by mixi
Professional teams
Chiba Jets (B.LEAGUE)
FC Tokyo (J.League)
Tokyo Yakult Swallows (Nippon Professional Baseball)
TOKYO DIME (3x3 basketball)
Individual athletes
Yuto Horigome (skateboarding)
Miho Nonaka (sports climbing)
Yayoi Matsumoto (swimming)
Yohei Uchino (BMX)
Ryo Sejiri (skateboarding)
ESG
Rui Ueda (skyrunning)
ESG / Relationships with the Environment and Society 21
 ESG / Corporate Governance
Social Contributions Directors
(As of June 26, 2020)
Encouraging diversity
◦LGBT ◦People with disabilities
In December 2016, we revised company regulations so mixi empowerment, Inc., is a special subsidiary that creates
that employees in a common-law marriage or same-sex employment opportunities for people with disabilities. It
partnership are entitled to the same benefits as employees engages in work such as analyzing the user data collected
who are legally married. As the first company in Japan to by the entire Group and assuring the quality of services. As
do this, we are working to build a comfortable working of March 2020, it employed 19 people across the Group.
Koki Kimura
environment where communication is based on respect for President and Representative Director
individuality and diversity. Feb. 2003 Joined Mobileproduction Co., Ltd.
Mar. 2005 Joined Index Corporation
June 2008 Joined the Company
Aug. 2012 Product owner of Product
Development Division of the Company
Nov. 2013 Producer of Monster Strike Studio of
the Company
Apr. 2014 Executive Director of Monster Strike
Studio of the Company
Nov. 2014 Corporate Officer of the Company
Jan. 2015 Managing Director of Monster Strike
Studio of the Company
June 2015 Director of the Company
Aug. 2015 Managing Director of XFLAG Studio of
the Company
Apr. 2017 Managing Director of XFLAG Business
Operations of the Company
Apr. 2018 Corporate Officer of the Company
June 2018 President and Representative Director
of the Company (current)
Nijihachi
Nijihachi was created by mixi to coincide with Tokyo Rainbow Pride, Japan’s
largest LGBT event. The character can be freely used by anyone.
mixi empowerment, Inc.
Masahiko Okuda
Director
Feb. 2004 Joined Yahoo Japan Corporation
Sep. 2008 Joined Pitcrew Co., Ltd.
Feb. 2011 Vice President and Director of
Pitcrew Co., Ltd.
Apr. 2013 Joined the Company
Jan. 2015 Managing Director of MS Operations of
the Company
Apr. 2016 Managing Director of Orange Studio
Operations of the Company
Jan. 2017 Representative Director of Marshal Co., Ltd.
(current)
Apr. 2018 Corporate Officer of the Company
Apr. 2018 Managing Director of General
Administration Operations of the Company
(current)
June 2018 Director of the Company (current)
22 mixi Group Annual Report 2020
Kosuke Taru
Director
Aug. 2008 Joined livedoor Co., Ltd.
Jan. 2012 Joined NHN Japan Co., Ltd.
(currently LINE Corporation)
Feb. 2014 Joined the Company
Feb. 2014 Manager of Planning Group of Monster
Strike Studio of the Company
Jan. 2015 Executive Director of Planning and
Operations Division, Monster Strike
Studio of the Company
Aug. 2015 Executive Director of Planning and
Operations Division, XFLAG Studio
Operations of the Company
July 2016 Executive Director of XFLAG GAMES,
XFLAG Studio Operations of the Company
Apr. 2017 Managing Director of Monster Strike
Business Operations of the Company
June 2017 Director of the Company (current)
Apr. 2018 Corporate Officer of the Company
Apr. 2018 Managing Director of Digital Entertainment
Business Operations of the Company
Tatsuma Murase
Director and CTO
Jan. 2005 Joined E-Mercury, Inc.
(currently the Company)
Dec. 2009 Director of KH2O, Inc.
Jan. 2012 Joined Q-Games Ltd.
Feb. 2013 Joined the Company
May 2014 Senior Director of Group 2 of the
System Coordination Division of Cross
Function Operations of the Company
July 2016 Executive Director of the Game
Development Division of XFLAG Studio
Operations of the Company
Jan. 2018 Managing Director of XFLAG
Development Operations
(currently Development Operations)
of the Company
Apr. 2018 Corporate Officer of the Company
June 2019 Director of the Company (current)
ESG / Relationships with the Environment and Society | ESG / Corporate Governance
Hiroyuki Osawa
Director and CFO
Oct. 2006 Joined KBMJ, Inc.
(currently Appirits Inc.)
June 2007 Joined the Company
Nov. 2011 Executive Director of Accounting and
Finance Division of Corporate Promotion
Operations of the Company
Apr. 2014 Executive Director of Management
Promotion Division of Corporate
Promotion Operations of the Company
June 2017 Managing Director of Corporate
Promotion Operations of the Company
Apr. 2018 Corporate Officer of the Company
June 2018 Director of the Company (current)
Apr. 2019 Managing Director of Corporate Support
Operations
Kenji Kasahara
Chairman of the Board of Directors
June 1999 Established E-Mercury, Inc. (currently the
ESG
Company) Director of E-Mercury, Inc.
Oct. 2000 Changed organizational structure of
E-Mercury, Inc. (currently the Company)
from yugen gaisha (limited company) to
kabushiki gaisha (joint-stock company)
President and Representative Director
Feb. 2006 Company name changed to mixi, Inc.
President and Representative Director of
the Company
May 2008 Chairperson at mixi Shanghai, Inc.
Oct. 2008 Representative Director of NexPas, Inc.
(currently Torchlight, Inc.)
Apr. 2011 Representative Director of mixi
recruitment, Inc.
July 2011 Corporate Officer of the Company
June 2013 Chairman of the Board of Directors of the
Company (current)
Apr. 2016 Managing Director of Vantage Studio of
the Company (current)
Apr. 2018 Corporate Officer of the Company
23
 Directors Audit and Supervisory Board Members
(As of June 26, 2020)

Satoshi Shima
Outside Director
Apr. 1986 Graduated from The Matsushita Institute
of Government and Management (MIGM)
Apr. 1994 Representative of Tokyo Institute of
Government and Management, MIGM
Oct. 1996 Elected as a member of the House of
Representatives, Japan; elected as such
for the following three consecutive terms
Nov. 2005 General Manager of CEO Office,
SoftBank Corp.
(currently SoftBank Group Corp.)
Apr. 2014 Advisor of SoftBank Corp.
Apr. 2014 Special Advisor of SoftBank Mobile Corp.
(currently SoftBank Corp.)
Apr. 2015 Visiting Professor of Tama University
(current)
Apr. 2017 Outside Director of Minrevi Co., Ltd.
(currently Yoriso Co., Ltd.)
June 2017 Director of the Company (current)
June 2017 Outside Director of Vortex. Co., Ltd.
(current)
Dec. 2017 External Director of Aucfan Co., Ltd.
(current)
Oct. 2018 Outside Director of i-mobile Co., Ltd.
(current)
Dec. 2018 Outside Director of NEO CAREER Co., Ltd.
(current)
Aug. 2019 Outside Director of OUTSOURCING
TECHNOLOGY Inc. (current)
Mar. 2020 Outside Director of Hanwha Solutions
(current)
Composition of Officers
Naoko Shimura
Outside Director
Apr. 1999 Registered as a lawyer
Apr. 1999 Joined Nishimura & Partners
(currently Nishimura & Asahi)
Sep. 2004 Worked at Debevoise & Plimpton LLP
Apr. 2005 Registered as a lawyer in New York
Oct. 2005 Returned to Nishimura & Partners
(currently Nishimura & Asahi)
Jan. 2008 Partner of Nishimura & Asahi (current)
May 2016 Outside Audit and Supervisory Board
Member of Tabikobo Co. Ltd. (current)
June 2018 Director of the Company (current)
June 2019 Outside Audit and Supervisory Board
Member of NIPPON SIGNAL Co., Ltd.
(current)
Expertise and experience
Independence
Masuo Yoshimatsu
Outside Director
Apr. 1982 Joined Mitsubishi Electric Corporation
Mar. 2000 Joined KVH Telecom Co., Ltd.
Nov. 2000 Member of the Board and Finance Director,
of Sun Microsystems, Inc. (currently Oracle
Information Systems Japan Godo Kaisha)
July 2003 Corporate Officer and General Manager
of the Finance Division of Nippon
Boehringer Ingelheim Co., Ltd.
Oct. 2004 Member of the Board and Finance
Director of SSP Co., Ltd.
Jan. 2008 Advisor of Nidec Corporation
June 2008 Member of the Board of Directors and
Vice President in charge of accounting,
finance, PR, and IR of Nidec Corporation
June 2009 Member of the Board of Directors, Senior
Vice President and CFO of Nidec Corporation
Apr. 2013 Member of the Board of Directors,
First Senior Vice President and CFO of
Nidec Corporation
June 2016 General Manager of the Global PMI
Promotion Division and First Senior Vice
President of Nidec Corporation
June 2018 Advisor of Nidec Corporation
Apr. 2019 Research Professor of the Graduate School
of Management at Tokyo Metropolitan
University Graduate School (current)
July 2019 Outside Director of MIG Inc. (current)
Dec. 2019 Founder of CFO Support Co., Ltd.
Representative Director, President, and
CEO of CFO Support Co., Ltd. (current)
Mar. 2020 Outside Director of HOSHIZAKI
CORPORATION (current)
June 2020 Director of the Company (current)
Takako Kato
Outside Audit and Supervisory Board Member
(Full-time)
Apr. 1970 Joined Japan Radio Co., Ltd.
June 2000 Director of Naval Research Co., Ltd.
Mar. 2004 Joined Eto Building Management Co., Ltd.
Aug. 2004 Audit and Supervisory Board Member
(full-time) E-Mercury, Inc.
(currently the Company) (current)
Nozomi Ueda
Outside Audit and Supervisory Board Member
Apr. 1999 Registered as a lawyer
Yuichiro Nishimura
Outside Audit and Supervisory Board Member
(Full-time)
Apr. 1982 Joined Nissan Motor Co., Ltd.
June 1985 Seconded to Nissan Cherry Shizuoka
Sales Co., Ltd.
(currently Nissan Prince Shizuoka
Sales Co., Ltd.)
June 1987 Returned to Nissan Motor Co., Ltd.
Apr. 1998 Seconded to Nissan Koei Co., Ltd.
(currently Nissan Creative Services Co., Ltd.)
Deputy General Manager of the General
Affairs Department of Nissan Koei Co., Ltd.
Jan. 2000 Returned to Nissan Motor Co., Ltd.
Apr. 2005 Seconded to Yorozu Corporation Group
Chief of the Administration Department
Oct. 2005 Permanent transfer to Yorozu Corporation
June 2008 Chief of the CSR Promotion Office of
Yorozu Corporation
Apr. 2014 General Manager of the General Affairs
Department of Yorozu Corporation
June 2019 Audit and Supervisory Board Member
of the Company (current)
Hiroyuki Wakamatsu
Outside Audit and Supervisory Board Member
Apr. 1995 Joined Tohmatsu & Co.
(currently Deloitte Touche Tohmatsu LLC)
Apr. 1998 Registered as a certified public accountant
Oct. 2008 Representative of Wakamatsu CPA Office
(current)
Apr. 2010 Instructor of the Faculty of Business
Administration, BBT University
June 2010 Outside Auditor of Withus Corp. (current)
Aug. 2010 Registered as a licensed tax accountant
June 2011 Outside Auditor of Eastern Co., Ltd.
June 2012 Audit and Supervisory Board Member of
the Company (current)
Sep. 2014 Instructor of the Graduate School of Finance,
Accounting and Law, Waseda University
Mar. 2015 Outside Auditor of Castalia Co. Ltd.
(current)
June 2015 Outside Audit & Supervisory Board
Member of Pioneer Corporation (current)
June 2015 Non-Member Auditor of Pal-System Tokyo
Cooperative Society (current)
Aug. 2017 Outside Auditor of RENOVA, Inc. (current)
July 2018 Representative Director of Generys Co., Ltd.
(current)

ESG
Male Corporate Apr. 1999 Joined Tokyo Themis
Officers
●
(outside Business Research
Female management, Finance and Legal affairs, Internal (currently Kioizaka Themis) (current)
●
officers only) M&A strategy, Technological,
management accounting compliance control
marketing development June 2019 Audit and Supervisory Board Member
strategy
Koki Kimura ● ● ●
of the Company (current)
Kosuke Taru ● ● ●

Hiroyuki Osawa ● ● ● ● ●

Masahiko Okuda ● ● ● ● ●

Directors Tatsuma Murase ● ● ●

Kenji Kasahara ● ● ● ●

Satoshi Shima Outside ● ● ● ●

Naoko Shimura Outside ● ● ● ●

Outside
Masuo Yoshimatsu ● ● ● ● ● ● ● ●
(newly appointed)
Takako Kato Outside ● ● ● ●
Audit and
Supervisory Yuichiro Nishimura Outside ● ● ● ●
Board Hiroyuki Wakamatsu Outside ● ● ● ●
Members
Nozomi Ueda Outside ● ● ●

Note: The above table does not represent all expertise and experience possessed by these officers.

24 mixi Group Annual Report 2020 ESG / Corporate Governance 25

 Message from an Outside Director
Supporting board members through a balance of growth-
oriented and protective governance
A business that combines the pursuit of growth
with social awareness
mixi is a company that has realized growth by consistently
seeking to enrich customers’ communication. It has realized
groundbreaking successes in the internet and online
gaming fields through mixi, which was the pioneering social
network in Japan, and Monster Strike, a smartphone app that
has become a top global seller. It is currently developing
ideas for new entertainment services, and I am sure it is
aiming to become a worldwide leader in this field too.
Companies that solve social issues through their business
can achieve sustainable growth. The mixi social network
contributed to developing the internet from a frightening
world of anonymity into a place where you can
communicate safely with friends and acquaintances.
Government-managed betting sports, which is a focus area
for future growth, is another field that is strongly linked to
solving social issues. I think that a company using a portion
of its earnings from government-managed betting sports for
social and environmental causes is a good example of ESG
management. I expect that the involvement of the mixi
Group will shine a light on the industry and lead its
transformation into better entertainment.
One of the characteristics of the way mixi does business is
its product-focused approach. If a service does not meet the
required standards, development will not move forward. This
means that the services which make it to the release stage
offer high levels of both quality and originality. The quality of
these products is also combined with excellent planning
and technological capabilities, but mixi’s greatest strength is
its marketing. The Company’s skill at viral marketing gives it
the ability to dramatically raise user numbers through word
of mouth.
A young and capable Board of Directors
The average age of mixi’s Board of Directors is low, but it
boasts strong track records and proven ability. Its world-class
lineup of board members includes a chairman who has been
a leader in the social network field in Japan since the
beginning, alongside a team that has the potential ability to
turn mixi into a trillion-yen company.
Furthermore, these members boast individual expertise in
a range of fields, including M&A and marketing, providing
the board with diverse points of view. Discussions at
26 mixi Group Annual Report 2020
Corporate Governance Structure
(As of June 26, 2020)
Continuing to strengthen and enhance our corporate governance structure
■ Main initiatives in FY2020
• Established a Nomination and Compensation Committee
meetings of the Board of Directors and Management • Audit and Supervisory Board Members: Increased by one (from three to four)
Council are conducted within a remarkable atmosphere. • Accounting auditor: Changed from Deloitte Touche Tohmatsu LLC to PricewaterhouseCoopers Aarata LLC
Outside directors like myself can give our opinions on topics • Evaluating the effectiveness of the Board of Directors
and reports in a frank and honest manner, and if there is an The Company conducts assessment and analysis of the effectiveness of its Board of Directors with the aim of enhancing its capabilities
and maximizing corporate value. In February 2020, a questionnaire was completed by all directors and Audit and Supervisory Board
issue, it is referred back to the relevant committee without
members. Anonymity was ensured by having responses given directly to an external organization. Analysis, deliberation, and evaluation
hesitation, so there is an appropriate sense of urgency.
was conducted at the April 2020 ordinary meeting of the Board of Directors, taking into consideration the external organization’s report
on the collected results. The responses revealed a generally positive evaluation and acknowledged that the Board of Directors is
Potential to be a global leader functioning effectively.
To take the next leap forward, mixi needs to find a balance of ■ Initiatives for FY2021 (ongoing)
growth-oriented and protective governance. In fiscal year • Establish the criteria for judging independence of outside members of the Board of Directors and Audit and Supervisory Board
2019, the Company strengthened its governance structure (April 22, 2020)
by overhauling its management team and appointing two
new officers to administrative positions, and in fiscal year
Basic approach to corporate governance
2020, there were no reports of matters that pose a significant We recognize corporate governance as a means for maximizing corporate value. As such, we engage in organizational overhauls as appropriate to
risk. I think this is the result of high-level risk management accommodate the expansion of our business ventures, to manage profits and losses of each of our businesses, and to further clarify authority and
responsibilities. We also focus on further enhancing the capabilities of the Board of Directors (which serves as the Company’s decision-making
that identifies risks at an early stage. Previously, I have served
body) and of Audit and Supervisory Board members and the Audit and Supervisory Board to monitor directors’ performance of their duties, as well
at companies where corporate governance was as on improving the ability of our systems for internal control to prevent improprieties in the execution of business activities.
strengthened as a result of incidents of misconduct, and In addition, to continually increase management transparency and fairness, we intend to appropriately present statutory disclosure documents
and to actively conduct IR activities using our website and other means.
I will use this experience to benefit mixi. I will also use what
We post our Corporate Governance Reports on our website (https://mixi.co.jp/ir/governance/) in Japanese.
I have learned from participating in many M&As to actively
advise on the Company’s M&A strategy. One crucial part of
General Meeting of Shareholders
a successful M&A is to include the core concept of treating
Election/dismissal Election/dismissal
personnel with importance, which I feel is a worthy Election/dismissal
undertaking. Report
Board of Directors Accounting auditors
mixi boasts a young and capable management team and
Report
Submission/ Election/ Report Coordi- Election/
significant funds, and I hope to support it in balancing report dismissal nation dismissal
Audits
growth-oriented and protective governance so that we can Nomination and Supervision Audit and Corporate
Compensation Committee Supervisory Board Auditing Division
create a new pillar of business to accompany Monster Strike Recommen- Report/
Consultation
dation direction Audits Coordi- Report
nation
and aim to establish another global leader.
Finally, I would like to thank our stakeholders for their Management Council President and Internal Auditing Division
Representative Director
continued support over the years.
ESG
Submission/report Report/direction
Managing Directors/ Audits/control
Each division
Board of Directors Council meetings are held once a week but may be held at any time
The Board of Directors has nine members, consisting of six internal when necessary.
directors (including zero female directors) and three outside directors
(including one female director). In principle, Board of Directors’ Audit and Supervisory Board
meetings are held once monthly, constituting a system that allows We are a company with corporate auditors as stipulated in Japan’s
speedy and efficient decision-making. To clarify the managerial Companies Act. Our Audit and Supervisory Board has four outside
responsibilities of directors and create a management system that is members (including two female auditors), two of whom are full-time
able to respond swiftly to changes in the management environment, (including one female auditor), and in principle meets once monthly.
the term of service for directors is prescribed as one year. Audits are conducted based on a yearly plan. The results of audits are
reported and deliberated in meetings of the Audit and Supervisory
Management Council Board, which offers appropriate advice to the directors. Overall audits
The Management Council conducts key discussions and decision- of the Company are conducted in coordination with the Internal
making related to business operations. In principle, Management Auditing Division and the accounting auditors.
Satoshi Shima Outside Director
ESG / Corporate Governance 27

Nomination and Compensation Committee
We have established a Nomination and Compensation Committee
consisting of all outside directors and the president. The objectives of
the committee are to strengthen transparency and objectivity by
obtaining the opinions and advice of outside directors before the
Board of Directors deliberates matters related to individual nomination
proposals and compensation of directors (excluding outside directors).
Appointment of outside directors and outside Audit
and Supervisory Board members
Three of the nine members of the Board of Directors and all four
members of the Audit and Supervisory Board are outside members.
Outside directors are expected to provide supervision from an
independent perspective, while outside Audit and Supervisory Board
Members are expected to provide objective auditing of job
performance without being influenced by directors. Outside directors
and outside Audit and Supervisory Board Members thus ensure
effective management monitoring.
Satoshi Shima, Outside Director  Outside Independent
Board meeting attendance: 100% (17/17 meetings)
In addition to experience as a member of the House of Representatives, he
possesses from his past career an abundance of insights and achievements
related to corporate activities. We expect him to monitor decisions related
to management matters in addition to performance of duties, based on this
knowledge and experience.
Naoko Shimura, Outside Director  Outside Independent
Board meeting attendance: 100% (17/17 meetings)
She possesses specialist knowledge and abundant experience in relation to
the law and compliance matters that she cultivated as a lawyer, and it is
anticipated that these qualities will enable her to contribute to further
strengthening the function of supervision of the Company’s Board
of Directors.
Masuo Yoshimatsu, Outside Director  New Outside Independent
Board meeting attendance: –% (–/– meetings)
He possesses an abundance of insights and achievements related to
corporate activities from engaging in corporate management on a global
scale as a manager. It is anticipated that these qualities will enable him to
contribute to further strengthening the function of supervision of the
Company’s Board of Directors.
Takako Kato, Outside Audit and Supervisory Board Member  Outside Independent
Board meeting attendance: 100% (17/17 meetings)
Auditor meeting attendance: 100% (19/19 meetings)
She has accumulated many years of accounting experience and has
considerable expertise in finance and accounting. We believe this
knowledge and experience will enable her to give appropriate advice and
recommendations during deliberation of agenda items and on other
occasions.
Yuichiro Nishimura, Outside Audit and Supervisory Board Member  Outside Independent
Board meeting attendance: 100% (13/13 meetings)
Auditor meeting attendance: 100% (13/13 meetings)
He has accumulated many years of accounting experience and has
considerable expertise in human resources and general affairs. We believe
this knowledge and experience will enable him to give appropriate advice
and recommendations during deliberation of agenda items and on
other occasions.
Hiroyuki Wakamatsu, Outside Audit and Supervisory Board Member  Outside Independent
Board meeting attendance: 100% (17/17 meetings)
Auditor meeting attendance: 100% (19/19 meetings)
He is a certified public accountant and a licensed tax accountant,
and we believe that he will give appropriate advice and recommendations
during deliberation of agenda items and on other occasions from his
specialist viewpoint.
Nozomi Ueda, Outside Audit and Supervisory Board Member  Outside Independent
Board meeting attendance: 100% (13/13 meetings)
Auditor meeting attendance: 100% (13/13 meetings)
28 mixi Group Annual Report 2020
Corporate Governance Structure
She is a qualified lawyer, and we believe that she will give appropriate
advice and recommendations during deliberation of agenda items and on
other occasions from her specialist viewpoint.
Appointment policy and nomination procedure for
directors
The following is our policy regarding the appointment of director
candidates (except outside directors).
Proposals for the position of director (except outside directors) are
given considering both the diversity and appropriate size of the
Board of Directors, with directors possessing a good overall balance
of the knowledge, experience, and abilities to efficiently fulfill their
roles and responsibilities.
Proposals for the position of directors (except outside directors)
who are to be in charge of business execution are given for the
persons who can make forward-looking, accurate, appropriate, and
swift business decisions and execution to help the Company
achieve continual growth and higher corporate value over the
medium to long term.
Candidate directors (except outside directors) are selected in
accordance with this policy, and final decisions are made by a
resolution of the Board of Directors after deliberation by the
Nomination and Compensation Committee.
Policy and procedure for deciding officers’
compensation
The following is our policy regarding the compensation for directors
(except outside directors).
Our basic approach to compensation for directors (except outside
directors) is to establish an appropriate ratio between cash
compensation and mixi stock compensation so as to function as a
sound incentive for continual growth.
Based on this policy, compensation for directors (except outside
directors) consists of two components: monthly cash compensation
and stock compensation (stock compensation-type stock options) tied
to medium- to long-term corporate value.
More specifically, compensation can be categorized as base
compensation, stock-based compensation, or performance-based
compensation. Base compensation consists of cash compensation,
stock-based compensation consists of stock compensation (stock
compensation-type stock options), and performance-based
compensation gives the choice of either cash compensation or stock
compensation (stock compensation-type stock options).
While the amounts of base salary and stock-based remuneration are
determined according to responsibilities, etc., the amount of
remuneration for performance-based remuneration is determined
based on a comprehensive evaluation of the performance of the
entire company and the departments in charge and the contributions
of each individual in the previous fiscal year.
The compensation system and level of compensation for directors
(except outside directors) are at the discretion of the President and
Representative Director at the Board of Directors’ meeting in light of
deliberation by the Nomination and Compensation Committee, from
the perspective of ensuring objectivity and transparency of the
decision-making process.
Compensation for outside directors consists of cash compensation
only, from the standpoint of independence.
Compensation for outside corporate auditors consists of cash
compensation only, in light of their role of mainly being responsible
for compliance audits.
Risk Factors
mixi Group recognizes that the following risks could have a great effect on investors’ decisions. It should be noted that future
concerns are based on the Company’s judgment as of the 21st ordinary general shareholders’ meeting (held on June 26,
2020) and may differ from actual results due to inherent uncertainty.
1. Business environment-related risk
(1) Mobile market
mixi Group provides various services via smart devices and the expansion
of the mobile-related market is a basic condition for business
development. However, the introduction of new legal regulations,
technical innovation, changes in trends at communications carriers, and
other factors may cause rapid and significant changes in the mobile-
related market.
(2) Competition
The various services we provide via smart devices are facing severe
competition from companies in both Japan and overseas. The fiercening
of competition and the cost of countering this competition may have an
impact on the Group’s business, performance, and financial position. If
time spent on competing services by users of the services provided by
mixi Group increases, demand for the services provided by mixi Group
may decrease.
(3) Technical innovation
Technical innovation and changes in customer needs are rapid in the
internet industry, and new services are being introduced one after
another. If mixi Group is unable to respond to change appropriately and in
a timely manner, our competitiveness may decline despite securing
outstanding engineers and adopting cutting-edge technology in research
and systems.
2. Business-related risk
(1) Response to changes in user tastes, interests, and concerns
As the main users of our services are ordinary mobile users, including
young people, user acquisition and retention, frequency of use, and the
amount of money spent are highly affected by changes in the users’ tastes.
If mixi Group is unable to accurately identify user needs and provide
content that satisfies them appropriately and in a timely manner, the
appeal of these services to users may decline.
Sales of paid content in games provided by the Entertainment Business
account for the majority of Group revenue, and there is a significant
dependence on sales of a specific title (Monster Strike). Therefore, a decline
in the competitiveness of that title could cause a decrease in the number
of users, a decrease in the percentage of users of who make in-app
purchases, and a decrease in the use of paid content, etc. Moreover, if the
popularity of newly developed titles and the number of paying users does
not progress as anticipated, it may have an impact on the Group’s
business, performance, and financial position.
(2) Dependence on external enterprises for user acquisition
Services in the Entertainment Business are provided via platform providers
such as Apple Inc. and Google Inc., but maintaining agreements with
these providers may become difficult or changes to their operational
policies, fees, etc., may arise. Furthermore, we contract operations to
various external enterprises for the development and provision of services,
and if relationships with those external enterprises were to deteriorate, it
may pose a problem for the maintenance of services and new development.
(3) Global expansion
If mixi Group is unable to address potential risks that include differences in
laws and regulations, political and social circumstances, culture, religion,
user preferences, commercial practices in different countries, and
exchange rate fluctuations, expected outcomes may not be achieved.
When releasing native smartphone games to overseas markets, mixi Group
and its services may not be as accepted as they are in Japan and could be
exposed to user criticism in some cases.
(4) Trust and social confidence in mixi Group and mixi Group’s
products, services, and businesses
Unsubstantiated rumors among users may damage the reputation and
trust of mixi Group and the services the Group provides. This, together
with inappropriate or illegal behavior on the part of some malicious users,
may cause the safety and reliability of services to drop and a decrease in
the number of users. In addition, if an external enterprise to which
operations are contracted leaks personal information or commits some
other illegal or inappropriate act, the reputation of mixi Group or its
services may decline.
mixi Group’s brand value may also decline if mixi Group is unable to
make the investments needed to maintain and enhance its brand value or
if a competitor establishes a more competitive brand.
We have established the following system to ensure that managerial
decisions take into consideration this kind of reputational and
compliance risk.
E stablishment of a risk management system and Risk Management
Committee
We have appointed officers in charge of risk management and compliance
ESG
and established our Compliance Operations in order to build an overall
risk management system that can take a complete overview of the Group’s
risk situation and establish a swift response to any incidents that occur.
Each month we hold a briefing session in which managing directors give a
report on risk concerning the operations they are responsible for. Matters
concerning the promotion of important projects worth above a certain
amount are submitted to the Board of Directors or Management Council,
which then makes a final decision.
We have also broadened the decision-making authority of the
Management Council to establish a structure in which the Board of
Directors can concentrate on discussion and decisions related to
management strategy and risk management. Additionally, we have
established the Risk Management Committee as a body for defining,
evaluating, and considering a response to risk across every sector of the
organization when launching new businesses or conducting M&A. The
results of deliberation by the committee will be provided as feedback to
ESG / Corporate Governance 29

relevant business divisions, the Board of Directors, and others with the aim
of improving our risk management and compliance systems.
3. Business promotion system-related risk
(1) Securing and developing human resources
If securing and developing outstanding human resources, such as the
leaders that become necessary as business expands, does not proceed as
planned, mixi Group’s competitiveness may decline and business
expansion may be restricted.
(2) Internal management systems
If the development of adequate internal management systems fails to
keep pace with rapid business expansion, etc., the appropriate operation
of business and the development of management systems may
become difficult.
(3) Information management system
The possibility of leaks, tampering, improper use, etc., of personal and
other information held by mixi Group cannot be completely ruled out. In
consideration of this, mixi Group is enrolled in insurance that covers leaks
of personal information, but this may not be able to completely
compensate for all such losses. If a situation like this were to arise, the
burden of considerable costs for an appropriate response, claims for
compensation for damages, and a decline in confidence in mixi Group,
etc., may occur.
4. System-related risk
(1) Continuous equipment and systems investment accompanying
business expansion
mixi Group plans continuous capital expenditure in systems infrastructure,
etc., to prepare for future increases in users and access volume. However, if
there is a sharp increase in the number of users and access volume
exceeding forecasts, it is possible that we could be forced to change the
timing, content, and scale of capital expenditure, and the burden of capital
expenditure and depreciation costs may increase.
(2) Systems failure and natural disasters
Computer systems may fail due to various factors that cannot be
predicted, including temporary overloads due to sudden increases in
traffic, interruptions to the power supply, software bugs, failures of external
linked systems, computer viruses and external intrusions into computers
by illegal means, natural disasters, and accidents.
5. Legal regulation-related risk
mixi Group’s business is subject to various laws and regulations, as well as
the guidelines, etc., of regulatory agencies. It is possible that mixi Group’s
business could be subject to new restrictions or that existing regulations
could be strengthened as a result of the establishment or revision of these
laws and regulations, the cancellation of approvals or imposition of
penalties by regulatory agencies, or the establishment or revision of new
guidelines or voluntary regulations.
30 mixi Group Annual Report 2020
Financial Information
Risk Factors
6. Intellectual property rights-related risk Consolidated Financial Statements
Accompanying the possibility that intellectual property rights which mixi Consolidated Balance Sheets .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Group has not recognized could already be established or that new Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
intellectual property rights could be established, it is possible that mixi Consolidated Statements of Comprehensive Income .. . . . . . . . . 35
Group could be subject to claims for compensation for damages or  Consolidated Statements of Changes in
injunctions due to infringement of the intellectual property rights of third Shareholders’ Equity .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
parties or that there could be claims against mixi Group for royalties for Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . 37
the intellectual property rights. Furthermore, it is also possible that the
Notes to Consolidated Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . . 38
usage of intellectual properties in open-source software we use in systems
Financial Statements
development may be restricted for unforeseeable reasons.
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7. Investment and lending-related risk Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
mixi Group invests in expanding our business portfolio with the Cost of Sales Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
expectation of realizing business synergies between individual investee Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . 68
companies and mixi Group or contributions to profits by investee Notes to Financial Statements .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
companies. However, anticipated synergies or profit contributions may not
be realized, and an impairment may be recorded due to the performance
of investee companies. In addition, it is possible that investment capital
cannot be recovered if an unlisted company into which an investment
partnership (fund) invests suffers a decline in performance.
8. Operational alliance and M&A-related risk
Regarding the implementation of operational and capital alliances and
M&A with companies that are highly compatible with mixi Group’s
services, if integration with an acquired company or the development and
strengthening of relations with an alliance partner do not progress as
planned, or if the business synergies, etc., initially anticipated due to the
integration or alliance cannot be obtained, or if the operational alliance in
question is dissolved for any reason, it is possible that profit commensurate
with investment, time, and other expenses may not be returned. Also, the
acquisition of companies, etc., results in the recording of substantial
goodwill in the balance sheet and if the expected effects are not realized
due to factors such as changes in the business environment or
competition, it will result in the impairment of this goodwill.
9. New business-related risk
If additional expenditure aimed at creating and developing new services
and new businesses arises, it is possible that profitability may decline. Also,
in cases where mixi Group has limited experience concerning a new
service or business, operations may not be able to proceed smoothly due
to this lack of experience. If the development of new services and
businesses does not proceed as planned, or if plans are canceled, or if the
new businesses are not able to achieve their anticipated profitability, etc.,
it may affect mixi Group’s business, performance, and financial position.
10. Trends in financial results
Since fiscal year 2017, there has been a downward trend in revenue from
Financial Information
Monster Strike due to factors such as a decline in active users, and a trend
of falling sales and profits has continued into the consolidated financial
results for fiscal year 2020. Although we will continue to implement policy
that includes measures to raise and maintain the profitability of Monster
Strike and new business development in the Sports area, if these efforts are
not executed in an appropriate and timely manner, or if they do not yield
results, it may have an impact on the Group’s business, performance, and
financial position.
ESG / Corporate Governance | Financial Information 31
 Consolidated Financial Statements

Consolidated Balance Sheets

mixi, Inc. and Consolidated Subsidiaries (Millions of yen) (Millions of yen)

FY2019 FY2020 FY2019 FY2020

(As of March 31, 2019) (As of March 31, 2020) (As of March 31, 2019) (As of March 31, 2020)

Assets: Liabilities:
Current assets Current liabilities
Cash and deposits 144,417 125,427 Short-term borrowings 66 671
Notes and accounts receivable — trade 9,402 14,254
Accounts payable — other 8,298 8,186
Merchandise 297 256
Income taxes payable 504 124
Consumption taxes receivable 1,417 1,248
Provision for bonuses 837 1,262
Other 5,315 4,977
Other 2,742 3,515
Allowance for doubtful accounts (27) (44)
Total current assets 160,824 146,119 Total current liabilities 12,448 13,759

Non-current assets Non-current liabilities

Property, plant and equipment Long-term borrowings 616 2,952
Buildings 1,057 7,352 Deferred tax liabilities 887 949
Accumulated depreciation (680) (815) Other 12 1,379
Buildings, net 376 6,537 Total non-current liabilities 1,516 5,280
Tools, furniture and fixtures 3,495 5,323
Total liabilities 13,964 19,040
Accumulated depreciation (2,007) (2,350)
Tools, furniture and fixtures, net 1,487 2,973
Net assets:
Land — 714
Shareholders’ equity
Construction in progress 2,244 113
Total property, plant and equipment 4,109 10,338 Paid-in capital 9,698 9,698

Intangible assets Capital surplus 9,668 9,472

Goodwill 3,110 17,315 Retained earnings 169,069 171,103
Customer-related assets 2,898 2,536 Treasury shares (10,905) (10,905)
Other 766 2,658 Total shareholders’ equity 177,531 179,369
Total intangible assets 6,775 22,510 Accumulated other comprehensive income
Investments and other assets
Valuation difference on available-for-sale securities 665 330
Investment securities 6,688 9,917
Foreign currency translation adjustment 234 201
Deferred tax assets 9,426 6,179
Total accumulated other comprehensive income 900 532
Other 5,132 4,915
Subscription rights to shares 555 971
Allowance for doubtful accounts (1) (2)
Total investments and other assets 21,246 21,009 Non-controlling interests 3 65

Total non-current assets 32,131 53,859 Total net assets 178,990 180,938

Financial Information
Total assets 192,955 199,978 Total liabilities and net assets 192,955 199,978

32 mixi Group Annual Report 2020 Consolidated Financial Statements 33

 Consolidated Financial Statements

Consolidated Statements of Income Consolidated Statements of Comprehensive Income

mixi, Inc. and Consolidated Subsidiaries (Millions of yen) mixi, Inc. and Consolidated Subsidiaries (Millions of yen)

FY2019 FY2020 FY2019 FY2020

(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) (April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)

Net sales 144,032 112,171 Period net income 26,520 10,729

Cost of sales 20,224 21,292 Other comprehensive income
Gross profit 123,808 90,878 Valuation difference on available-for-sale securities 665 (334)
SG&A expenses (Note 4 (*1)) 82,774 73,712 Foreign currency translation adjustment 21 (33)
Operating income 41,033 17,165 Total other comprehensive income (Note 5 (*1)) 687 (367)
Non-operating income Comprehensive income 27,208 10,361
Interest income 4 1 Comprehensive income (loss) attributable to:
Gain on investments in partnership 17 — Owners of parent 27,208 10,356
Foreign exchange gains 36 7
Non-controlling interests (0) 4
Gain on sales of goods 36 —
Interest on tax refund — 33
Gain on adjustment of account payable — 60
Sponsorship money income — 64
Other 126 69
Total non-operating income 219 237
Non-operating expenses
Interest expenses 0 10
Loss on investments in partnership — 400
Commission fee 111 —
Other 20 59
Total non-operating expenses 132 469
Ordinary income 41,120 16,933
Extraordinary income
Reversal of provision for business restructuring — 81
Gain on sales of non-current assets (Note 4 (*2)) 1 3
Gain on sales of investment securities 212 —
Gain on sales of shares of subsidiaries and associates 642 —
Gain on reversal of subscription rights to shares — 16
Total extraordinary income 856 101
Extraordinary losses
Head office relocation expenses — 619
Loss on withdrawal from business (Note 4 (*3)) 2,018 147
Loss on sales and retirement of non-current assets (Note 4 (*4)) 19 55
Impairment loss (Note 4 (*5)) 349 216
Loss on valuation of investment securities 524 —
Total extraordinary losses 2,912 1,039
Income before income taxes 39,063 15,996

Financial Information
Income taxes — current 11,777 4,833
Income taxes — deferred 765 433
Total income taxes 12,542 5,266
Period net income 26,520 10,729
Profit (loss) attributable to non-controlling interests (0) 4
Profit attributable to owners of parent 26,521 10,724

34 mixi Group Annual Report 2020 Consolidated Financial Statements 35

 Consolidated Financial Statements

Consolidated Statements of Changes in Shareholders’ Equity Consolidated Statements of Cash Flows

mixi, Inc. and Consolidated Subsidiaries mixi, Inc. and Consolidated Subsidiaries (Millions of yen)
Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
(Millions of yen)
FY2019 FY2020
Shareholders’ equity (April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)
Total shareholders’
Paid-in capital Capital surplus Retained earnings Treasury shares
equity Cash flows from operating activities
Balance at beginning of period 9,698 9,668 151,669 (1,450) 169,587 Income before income taxes 39,063 15,996
Changes of items during period Depreciation 1,058 1,482
Dividends of surplus (8,967) (8,967) Amortization of goodwill — 768
Profit attributable to owners of parent 26,521 26,521 Amortization of intangible assets — 653
Purchase of treasury shares (9,999) (9,999) Impairment loss 349 216
Disposal of treasury shares (154) 544 389 Loss on withdrawal from business 310 147
Transfer to capital surplus from retained earnings 154 (154) — Increase (decrease) in allowance for doubtful accounts 10 17
Net changes of items other than shareholders’ equity Increase (decrease) in provision for bonuses (76) 386
Total changes of items during period — — 17,399 (9,455) 7,944 Interest income (4) (1)
Balance at end of period 9,698 9,668 169,069 (10,905) 177,531 Interest expenses 0 10
Foreign exchange losses (gains) (9) 4
(Millions of yen) Commission fee 197 —
Accumulated other comprehensive income Non-
Loss (gain) on investments in partnership (17) 400
Valuation difference on Foreign currency Total accumulated other
Subscription
controlling Total net assets Loss (gain) on sales of shares of subsidiaries and associates (642) —
rights to shares Loss (gain) on valuation of investment securities 524 —
available-for-sale securities translation adjustment comprehensive income interests
Balance at beginning of period — 212 212 630 4 170,434 Loss (gain) on sales of investment securities (212) —
Changes of items during period Loss (gain) on sales and retirement of non-current assets 18 51
Dividends of surplus (8,967) Decrease (increase) in notes and accounts receivable — trade 2,389 (4,371)
Profit attributable to owners of parent 26,521 Decrease (increase) in inventories 355 117
Purchase of treasury shares (9,999) Increase (decrease) in accounts payable — other 373 662
Disposal of treasury shares 389 Increase (decrease) in accrued consumption taxes (101) —
Transfer to capital surplus from retained earnings — Other, net (4,614) 3,423
Net changes of items other than shareholders’ equity 665 21 687 (74) (0) 612 Subtotal 38,975 19,967
Total changes of items during period 665 21 687 (74) (0) 8,556 Interest income received 2 5
Balance at end of period 665 234 900 555 3 178,990 Interest expenses paid (0) (10)
Income taxes paid (20,863) (2,170)
Net cash provided by (used in) operating activities 18,113 17,792
Cash flows from investing activities
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020) Proceeds from sales of intangible assets — 15
(Millions of yen) Proceeds from withdrawal of time deposits — 302
Purchase of property, plant and equipment (3,512) (9,381)
Shareholders’ equity
Purchase of intangible assets (253) (553)
Total shareholders’
Paid-in capital Capital surplus Retained earnings Treasury shares
equity
Purchase of investment securities (3,238) (4,545)
Balance at beginning of period 9,698 9,668 169,069 (10,905) 177,531 Proceeds from sales of investment securities 285 100
Changes of items during period Proceeds from share of profits on investment securities 282 329
Dividends of surplus (8,665) (8,665) Payments for acquisition of businesses — (1,030)
Profit attributable to owners of parent 10,724 10,724 Collection of loans receivable 307 —
Change in ownership interest of parent due to Payments for guarantee deposits (158) —
(196) (196) Payments of leasehold and guarantee deposits — (121)
transactions with non-controlling interests
Others (25) (25) Payment for acquisition of the subsidiary resulting in change in scope of consolidation (Note 7 (*2)) (4,553) (15,825)
Net changes of items other than shareholders’ equity Payments for sales of shares of subsidiaries resulting in change in scope of consolidation (Note 7 (*3)) (24) —
Total changes of items during period — (196) 2,034 — 1,837 Proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation (Note 7 (*3)) 49 —
Balance at end of period 9,698 9,472 171,103 (10,905) 179,369 Other, net 3 26
Net cash provided by (used in) investing activities (10,811) (30,683)
(Millions of yen) Cash flows from financing activities
Accumulated other comprehensive income Non- Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation — (196)
Subscription Net increase (decrease) in short-term borrowings — 287
Valuation difference on Foreign currency Total accumulated other controlling Total net assets
rights to shares
available-for-sale securities translation adjustment comprehensive income interests Proceeds from long-term borrowings — 2,486
Balance at beginning of period 665 234 900 555 3 178,990 Repayments of long-term loans payable — (26)
Proceeds from disposal of treasury shares 0 —

Financial Information
Changes of items during period
Dividends of surplus (8,665) Purchase of treasury shares (10,111) —
Profit attributable to owners of parent 10,724 Cash dividends paid (8,965) (8,663)
Change in ownership interest of parent due to
(196)
Other, net (1) 27
transactions with non-controlling interests Net cash provided by (used in) financing activities (19,079) (6,085)
Others (25) Effect of exchange rate change on cash and cash equivalents 3 (14)
Net changes of items other than shareholders’ equity (334) (33) (367) 415 62 109 Net increase (decrease) in cash and cash equivalents (11,773) (18,990)
Total changes of items during period (334) (33) (367) 415 62 1,947 Cash and cash equivalents at beginning of period 156,190 144,417
Balance at end of period 330 201 532 971 65 180,938 Cash and cash equivalents at end of period (Note 7 (*1)) 144,417 125,427

36 mixi Group Annual Report 2020 Consolidated Financial Statements 37

 Notes to Consolidated Financial Statements
1. Important matters that form the basis of preparing consolidated financial statements
1. Matters related to the scope of consolidation
(1) Number of consolidated subsidiaries: 20
Names of the major consolidated subsidiaries:
Chariloto Co., Ltd.
Net Dreamers Co., Ltd.
MKP Inc. and one other company are newly established
companies, and SFIDANTE Inc. and three other companies are
newly acquired companies. Therefore, all of these companies
have been included in the scope of consolidation from the
fiscal year ended March 31, 2020. RATEL.Inc and three other
companies have been liquidated, and as such have been
removed from the scope of consolidation.
(2) Names of major non-consolidated subsidiaries
and others
E-Mercury, Inc. and three other companies
(Reason for exclusion from the scope of consolidation)
E-Mercury, Inc. and three other companies have been
excluded from the scope of consolidation as they are of
small-scale with combined total assets, net sales, profit or loss
(amount corresponding to equity interest) and retained
earnings (amount corresponding to equity interest) that have
no significant impact on consolidated financial statements.
2. Matters related to the application of equity
method
(1) Number of equity-method associates
There is no relevant information.
(2) Number of non-consolidated subsidiaries to which
the equity method is not applicable: 4
Names of the major companies and others:
E-Mercury, Inc. and three other companies
(Reason for not applying the equity method)
E-Mercury, Inc. and three other companies are excluded from
the scope of equity method application since their exclusion
has an insignificant impact on the consolidated financial
statements in terms of profit or loss (amount corresponding to
equity interest) and retained earnings (amount corresponding
to equity interest).
3. Matters related to the fiscal year of
consolidated subsidiaries
Among consolidated subsidiaries, the balance sheet date of
Scrum Ventures Fund I, L.P. and two other companies is
December 31, and the balance sheet date of AA Fund
Investment LPS is February 28 or 29. Their financial statements
use respective balance sheet dates. However, necessary
38 mixi Group Annual Report 2020
adjustments are made to reflect important transactions that
occurred during their consolidated balance sheet dates. In
addition, the balance sheet date of Chiba Jets Funabashi Co.,
Ltd. is June 30, although they use the financial statement
based on a provisional settlement of accounts.
Among consolidated subsidiaries, Chariloto Co., Ltd., which
had a balance sheet date of December 31, used the financial
statements as of the same date. Necessary adjustments were
made to reflect important transactions that occurred during
its consolidated balance sheet date, however, from the fiscal
year ended March 31, 2020 the balance sheet date has been
revised to March 31. In accordance with this revision to the
accounting period, the fiscal year ended March 31, 2020
extends over a 15-month period, from January 1, 2019 to
March 31, 2020.
4. Matters related to accounting policies
(1) Valuation standards and valuation methods of
significant assets
1) Securities
Available-for-sale securities
Available-for-sale securities with market value
Stated at market price as of the final balance sheet date using
the market value method. (All valuation gains or losses are
treated as a component of net assets, with the cost of securities
sold calculated according to the moving-average method.)
Available-for-sale securities without market value
Stated at cost using the moving-average method.
Investments in investment partnerships and others are based on
the financial statements for the most recent balance sheet date
using the net amount proportionate to mixi’s ownership interests.
2) Inventories
Merchandise
Stated at cost determined by the first-in, first-out (FIFO)
method (the book value in the balance sheet is written down
based on the decline in profitability).
(2) Depreciation and amortization methods of
significant depreciation assets
1) Property, plant and equipment (excluding leased assets)
The declining balance method is primarily applied.
However, the straight line method is applied for buildings
(excluding facilities attached to buildings) acquired on or after
April 1, 1998 and facilities attached to buildings acquired on or
after April 1, 2016.
The principal useful lives are as follows:
Buildings:  5 to 50 years
Tools, furniture and fixtures:  2 to 15 years
2) Intangible assets (excluding leased assets)
The straight line method is applied.
The amortization period for software for internal use is
based on its useful life within mixi (5 years).
In addition, customer-related assets are amortized based on
economic useful life (10 years).
3) Leased assets
Leased assets pertaining to finance leases other than those in
which the title of the leased property transfers to the lessee
The straight line method, substituting the lease term for the
useful life, assuming no residual value.
(3) Accounting standards for significant allowances
and provisions
1) Allowance for doubtful accounts
In order to provide for losses due to bad debt, including on
notes and accounts receivable - trade, for general receivables,
an estimated uncollectible amount is recorded according to
the historical bad debt ratio. For specific receivables at risk of
becoming bad debt, an estimated uncollectible amount is
recorded by assessing the collectability of each receivable
individually.
2) Provision for bonuses
In order to provide for payment of bonuses to employees, the
amount of bonuses estimated to be incurred in the
consolidated fiscal year under review is recorded.
2. Accounting standards, etc. not applied
• “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020)
• “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 31, 2020)
(1) Overview
This is a comprehensive accounting standard regarding
revenue recognition. Revenue is recognized by applying the
following five steps.
Step 1: Identify the contract with the customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Calculate the transaction price.
Step 4: Allocate the transaction price among the performance
obligations in the contract.
Step 5: Recognize revenue when a performance obligation is
fulfilled, or in line with the fulfillment.
(4) Translation of significant assets and liabilities
denominated in foreign currencies into Japanese yen
Monetary receivables and payables denominated in foreign
currencies have been translated into Japanese yen at the spot
exchange rate on the consolidated balance sheet date, and
translation adjustments are recorded as gains or losses. Assets,
liabilities, income, and expenses of overseas consolidated
subsidiaries are translated into Japanese yen using the spot
exchange rate on the consolidated balance sheet date, and
translation adjustments are included in foreign currency
translation adjustment and non-controlling interests under
“Net assets.”
(5) Amortization method and amortization period of
goodwill
Amortization of goodwill is estimated for each period in which
it is expected to emerge, and then equally amortized over the
designated amortization period (4 to 13 years).
(6) Scope of cash and cash equivalents in the
consolidated statements of cash flows
Cash and cash equivalents consist of cash on hand, deposits
that can be withdrawn at any time and short-term investments
with a maturity of three months or less from the date of
acquisition that are readily convertible into cash and subject
to minimum risk of price fluctuations.
(7) Other important matters that form the basis for
preparing consolidated financial statements
Accounting method for consumption taxes
Accounted for by the tax-exclusion method.
(2) Scheduled date of application
The scheduled date of application is at the start of the fiscal
year ending March 31, 2022.
(3) Impact of application of the said accounting
standards, etc.
At the time of preparation of these consolidated financial
statements, the financial impact was in the process
Financial Information
of evaluation.
Notes to Consolidated Financial Statements 39
 Notes to Consolidated Financial Statements

3. Changes in presentation *4. The breakdown of loss on sales and retirement of non-current assets is as follows:
(Millions of yen)

FY2019 FY2020
(Consolidated balance sheets) (April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)
“Short-term borrowings” and “Long-term borrowings” As a result, ¥2,808 million presented in “Other” under
presented in “Other” under “Current liabilities” and “Non-current “Current liabilities” in the consolidated balance sheets for the Buildings 0 0
liabilities” in the consolidated balance sheets for the previous previous fiscal year ended March 31, 2019 is reclassified as ¥66 Tools, furniture and fixtures 7 42
fiscal year ended March 31, 2019 have increased in million of “Short-term borrowings” and ¥2,742 million of Other 11 12
importance, and as such, the Company has decided to report “Other,” and ¥628 million previously presented in “Other” under
these items separately from the fiscal year ended March 31, “Non-current liabilities” is reclassified as ¥616 million of “Long- Total 19 55
2020. To reflect this change in presentation method, the term borrowings” and ¥12 million of “Other.”
Company has reclassified the consolidated balance sheets for *5. Impairment loss
the previous fiscal year ended March 31, 2019. For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
mixi Group posted impairment loss on the following assets in the consolidated fiscal year ended March 31, 2019.
Business Application Place Classification Amount (Millions of yen)
4. Consolidated statements of income
Buildings 158
Entertainment Shibuya Ward,
Store Tools, furniture and fixtures 83
*1. The major components and amounts of SG&A expenses are as follows: Business Tokyo
(Millions of yen) Other intangible assets 91

Assets are grouped mainly based on business segmentation. Idle assets and assets to be disposed of are grouped by relevant asset.
FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) Impairment loss in the Entertainment Business was recorded due to the fact that the revenue initially expected for a store
operated by mixi can no longer be expected.
Advertising expenses 24,419 19,556
Recoverable value of these assets is calculated by estimating the collectible amount, which amounts to zero due to the fact that
Settlement fees 40,845 29,619 no future cash flow can be anticipated.

*2. The breakdown of gain on sales of non-current assets are as follows: For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
(Millions of yen) mixi Group posted impairment loss on the following assets in the consolidated fiscal year ended March 31, 2020.
Business Application Place Classification Amount (Millions of yen)
FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) Ota Ward, Buildings 30
Tokyo Tools, furniture and fixtures 23
Tools, furniture and fixtures 1 0
Store
Other — 2 Entertainment Osaka City, Buildings 105
Business Osaka Prefecture Tools, furniture and fixtures 51

*3. Loss on withdrawal from business Shibuya Ward,

Business assets Tools, furniture and fixtures 5
For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019) Tokyo
This is a loss resulting from the withdrawal from telecommunications-related business, including mainly ¥1,913 million for disposal Assets are grouped mainly based on business segmentation. Idle assets and assets to be disposed of are grouped by relevant asset.
of inventories and retirement of non-current assets, as well as ¥104 million for expenses from termination of contracts. Impairment loss in the Entertainment Business was recorded due to the fact that the revenue initially expected for a store
For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020) operated by mixi can no longer be expected, and also due to the cancellation of the development of a new service.
This is a loss resulting from the withdrawal from the wellness business, including mainly ¥82 million for contract revisions and Recoverable value of these assets is calculated by estimating the collectible amount, which amounts to zero due to the fact that
terminations, and ¥64 million for loss on non-current assets. no future cash flow can be anticipated.

Financial Information
40 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 41
 Notes to Consolidated Financial Statements

5. Consolidated statements of comprehensive income 3. Matters related to subscription rights to shares

Class of shares Number of shares subject to subscription rights Balance as of

*1. Reclassification adjustments and tax effect associated with other comprehensive income Company name Details subject to sub- As of April 1, As of March March 31, 2019
(Millions of yen) scription rights Increase Decrease (Millions of yen)
2018 31, 2019

FY2019 FY2020 Subscription rights

(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) mixi, Inc. to shares as stock — 555
option
Valuation difference on available-for-sale securities:
Total — 555
Gains (losses) arising during the period 959 (480)
Reclassification adjustments — —
4. Matters related to dividends of surplus
Amount before income tax effect 959 (480) (1) Cash dividends paid
Income tax effect (293) 146
Total amount of
Valuation difference on available-for-sale securities 665 (334) Dividends per share
Resolution Class of shares dividends Record date Effective date
(Yen)
Foreign currency translation adjustment: (Millions of yen)
Gains (losses) arising during the period 21 (33) Board of Directors
March 31, June 6,
Meeting on Common shares 4,446 57
Reclassification adjustments — — 2018 2018
May 10, 2018
Amount before income tax effect 21 (33) Board of Directors
September 30, December 10,
Income tax effect — — Meeting on Common shares 4,520 60
2018 2018
November 8, 2018
Foreign currency translation adjustment 21 (33)
Total other comprehensive income 687 (367)
(2) Dividends with record dates within the consolidated fiscal year ended March 31, 2019, but with effective dates
belonging to the following consolidated fiscal year

6. Consolidated statements of changes in shareholders’ equity Total amount of

Funds for Dividends per
Resolution Class of shares dividends Record date Effective date
dividends share (Yen)
(Millions of yen)
For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019) Board of Directors
Retained March 31, June 11,
1. Matters related to class and total number of issued shares Meeting on Common shares 4,520 60
earnings 2019 2019
May 10, 2019
Class of shares As of April 1, 2018 Increase Decrease As of March 31, 2019
Common shares
78,230,850 — — 78,230,850 For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
(Shares)
1. Matters related to class and total number of issued shares

Class of shares As of April 1, 2019 Increase Decrease As of March 31, 2020

2. Matters related to class and total number of treasury shares
Common shares
Class of shares As of April 1, 2018 Increase Decrease As of March 31, 2019 78,230,850 — — 78,230,850
(Shares)
Common shares
229,300 2,795,800 143,800 2,881,300
(Shares)
2. Matters related to class and total number of treasury shares

(Summary of causes of changes) Class of shares As of April 1, 2019 Increase Decrease As of March 31, 2020
Increase due to purchase of treasury shares: 2,795,800 shares
Common shares
Decrease due to disposal of shares upon exercise of subscription rights to shares: 143,800 shares 2,881,300 — — 2,881,300
(Shares)

Financial Information
(Summary of causes of changes)
There is no relevant information.

42 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 43

 Notes to Consolidated Financial Statements

3. Matters related to subscription rights to shares *2. Principal assets and liabilities of companies that have become consolidated subsidiaries due to the acquisition of shares

Class of shares Number of shares subject to subscription rights Balance as of For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Company name Details subject to sub- As of April 1, As of March March 31, 2020 Chariloto Co., Ltd.
scription rights Increase Decrease (Millions of yen)
2019 31, 2020 (Millions of yen)
Subscription Current assets 1,004
mixi, Inc. rights to shares — 971
as stock option Non-current assets 636
Total — 971 Deferred assets 0
Total assets 1,641
4. Matters related to dividends of surplus Current liabilities 1,146
(1) Cash dividends paid Non-current liabilities 616
Total amount of Total liabilities 1,763
Dividends per share
Resolution Class of shares dividends Record date Effective date
(Yen)
(Millions of yen)
For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Board of Directors SFIDANTE Inc.
March 31, June 11,
Meeting on Common shares 4,520 60 (Millions of yen)
2019 2019
May 10, 2019
Current assets 197
Board of Directors
September 30, December 9,
Meeting on Common shares 4,144 55 Non-current assets 95
2019 2019
November 8, 2019 Total assets 292
Current liabilities 81
(2) D
 ividends with record dates within the consolidated fiscal year ended March 31, 2020, but with effective dates Non-current liabilities 115
belonging to the following consolidated fiscal year
Total liabilities 196
Total amount of
Funds for Dividends per
Resolution Class of shares dividends Record date Effective date
dividends share (Yen) Chiba Jets Funabashi Co., Ltd.
(Millions of yen)
(Millions of yen)
Board of Directors
Retained March 31, June 11,
Meeting on Common shares 4,144 55 Current assets 697
earnings 2020 2020
May 15, 2020 Non-current assets 30
Total assets 728
Current liabilities 595
7. Consolidated statements of cash flows
Non-current liabilities 22
Total liabilities 617
*1. The ending balance of cash and cash equivalents and its relationship to the amounts of items listed in the consolidated balance
sheets are as follows:
(Millions of yen) Net Dreamers Co., Ltd.
(Millions of yen)
FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) Current assets 2,058
Non-current assets 331
Cash and deposits account 144,417 125,427
Cash and cash equivalents 144,417 125,427 Total assets 2,390
Current liabilities 409

Financial Information
Total liabilities 409

44 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 45

 Notes to Consolidated Financial Statements

*3. Principal assets and liabilities of companies that have been excluded from the scope of consolidation due to the sales of shares customer by credit management personnel in accordance
with credit management policies, the Group also strives for the
For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019) early detection and mitigation of concerns for recovery due to
Diverse, Inc. reasons such as the deterioration of a customer’s financial
(Millions of yen) situation. Investment securities are composed mainly of shares
Current assets 738 in companies with which the Group has business relationships
and investments in investment partnerships and are exposed
Non-current assets 69
to credit risk but the Group monitors the financial situation of
Total assets 807 issuers and investment partnerships on a regular basis.
Current liabilities 742 Financial liabilities consist mainly of accounts payable — other,
income taxes payable, long-term borrowings (including the
Total liabilities 742
current portion of long-term borrowings), and long-term
accounts payable — other. Accounts payable — other are
nohana, Inc. mainly due within one month. In regard to liquidity risk
(Millions of yen)
whereby financing is no longer possible, mixi has abundant
cash reserves and has secured liquidity. For consolidated
subsidiaries, the department responsible manages the
liquidity risk by preparing and updating the cash management
plan in a timely manner.
2. Matters related to fair value and others of
financial instruments
The amounts recorded in the consolidated balance sheets, fair
value and the difference between the two as of the balance
sheet date are as follows. Items for which it is extremely
difficult to determine the fair value are not included in the
following table. (See (Note 2)).

Current assets 204 For the consolidated fiscal year ended March 31, 2019 (as of March 31, 2019)
(Millions of yen)
Non-current assets 11
Amount recorded on
Total assets 216 consolidated balance Fair value* Difference
Current liabilities 402 sheets*
(1) Cash and deposits 144,417 144,417 —
Total liabilities 402
(2) Accounts receivable — trade 9,402
Allowance for doubtful accounts (27)
For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
9,375 9,375 —
There is no relevant information.
(3) Consumption taxes receivable 1,417 1,417 —
(4) Investment securities
8. Lease transactions Available-for-sale securities 989 989 —
(5) Accounts payable — other (8,298) (8,298) —

Operating lease transactions (6) Income taxes payable (504) (504) —

Accrued lease payments related to non-cancellable operating lease transactions * Items recorded as liabilities are denoted by ( ).
(Millions of yen)

For the consolidated fiscal year ended March 31, 2020 (as of March 31, 2020)
FY2019 FY2020 (Millions of yen)
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)
Amount recorded on
Less than 1 year 1,174 3,063
consolidated balance Fair value* Difference
More than 1 year 232 10,108 sheets*
Total 1,406 13,172 (1) Cash and deposits 125,427 125,427 —
(2) Accounts receivable — trade 14,245
Allowance for doubtful accounts (44)
9. Financial instruments 14,200 14,200 —
(3) Consumption taxes receivable 1,248 1,248 —
(4) Investment securities
1. Matters related to status of financial (2) Details of financial instruments, related risks, and
instruments risk management system Available-for-sale securities 507 507 —
(1) Policy on financial instruments The main financial assets are cash and deposits, accounts (5) Accounts payable — other (7,766) (7,766) —

Financial Information
In regard to fund management, the mixi Group only invests its receivable — trade, and investment securities. Deposits are (6) Short-term borrowings (409) (409) —
funds in highly safe short-term financial assets. The Group’s mainly composed of ordinary deposits, and are exposed to the (7) Income taxes payable (124) (124) —
policy on financing for consolidated subsidiaries is to use credit risk of parties holding the deposits but these parties are
(8) Long-term borrowings (including the
internal funds and loans from banks and other financial banks with high creditworthiness. Accounts receivable — trade (3,214) (3,206) (7)
current portion of long-term borrowings
institutions. are exposed to the credit risk of customers but in addition to
regular management of the due dates and balance of each (9) Long-term accounts payable — other (1,796) (1,800) 4
* Items recorded as liabilities are denoted by ( ).

46 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 47

 Notes to Consolidated Financial Statements

(Notes) 4. Scheduled repayment amount of long-term borrowings (including the current portion of long-term borrowings) after the
1. Matters related to the calculation method of fair value of financial instruments consolidated balance sheet date
(1) Cash and deposits, (2) Accounts receivable — trade and (3) Consumption taxes receivable: For the consolidated fiscal year ended March 31, 2019 (as of March 31, 2019)
As these are based on short-term settlements, their fair values approximate their book values, and therefore their book values are
used. More than 1 year and less More than 5 years and
Less than 1 year More than 10 years
than 5 years less than 10 years
(4) Investment securities: (Millions of yen) (Millions of yen)
(Millions of yen) (Millions of yen)
Regarding these fair values, the shares are based on the price on the stock exchange.
Long-term borrowings
(5) Accounts payable - other, (6) Short-term borrowings and (7) Income taxes payable:
(including the current portion 66 616 — —
As these are based on short-term settlements, their fair values approximate their book values, and therefore their book values are used.
of long-term borrowings)
(8) Long-term borrowings (including the current portion of long-term borrowings)
Total 66 616 — —
The fair value of long-term borrowings is calculated based on the present value of the total amount of principal and interest
discounted at the interest rate that would be expected if a new similar loan were made.
(9) Long-term accounts payable — other For the consolidated fiscal year ended March 31, 2020 (as of March 31, 2020)
Long-term accounts payable — other is calculated based on the present value of future cash flows discounted at an interest rate
obtained when taking into account the remaining period and credit risks. More than 1 year and less More than 5 years and
Less than 1 year More than 10 years
The current portion of long-term accounts payable — other (¥419 million is included in “Accounts payable — other” under current than 5 years less than 10 years
(Millions of yen) (Millions of yen)
liabilities on the consolidated balance sheets) is included in long-term accounts payable — other. (Millions of yen) (Millions of yen)
Long-term borrowings
2. Consolidated balance sheet amounts of financial instruments whose market values are deemed to be extremely difficult to (including the current portion 272 1,282 1,669 —
of long-term borrowings)
determine
(Millions of yen) Total 272 1,282 1,669 —

Classification As of March 31, 2019 As of March 31, 2020

Unlisted shares and others 1,636 4,212 10. Securities

Contribution to investment partnerships 4,061 5,197
Available-for-sale securities
These financial instruments are not included in the above table as their market prices are not available, future cash flows cannot
For the consolidated fiscal year ended March 31, 2019 (as of March 31, 2019)
be estimated, and market values are deemed extremely difficult to determine. (Millions of yen)

3. Scheduled redemption amount of monetary receivables after the consolidated balance sheet date Amount recorded on
Acquisition cost Difference
For the consolidated fiscal year ended March 31, 2019 (as of March 31, 2019) Classification consolidated balance
(Millions of yen) (Millions of yen)
sheets (Millions of yen)
More than 1 year and less More than 5 years and Amount recorded on consolidated balance sheets
Less than 1 year More than 10 years
than 5 years less than 10 years that exceeds acquisition cost
(Millions of yen) (Millions of yen)
(Millions of yen) (Millions of yen) Shares 989 30 959
Cash and deposits 144,417 — — — Total 989 30 959
Accounts receivable — trade 9,402 — — —
Total 153,820 — — — For the consolidated fiscal year ended March 31, 2020 (as of March 31, 2020)
(Millions of yen)

Amount recorded on
For the consolidated fiscal year ended March 31, 2020 (as of March 31, 2020) Acquisition cost Difference
Classification consolidated balance
(Millions of yen) (Millions of yen)
More than 1 year and less More than 5 years and sheets (Millions of yen)
Less than 1 year More than 10 years Amount recorded on consolidated balance sheets
than 5 years less than 10 years
(Millions of yen) (Millions of yen) that exceeds acquisition cost
(Millions of yen) (Millions of yen)
Cash and deposits 125,427 — — — Shares 507 30 477
Total 507 30 477

Financial Information
Accounts receivable — trade 14,245 — — —
Total 139,672 — — —

48 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 49

 Notes to Consolidated Financial Statements

11. Retirement benefits (2) Volume of stock options and changes thereto
The following table shows information related to the stock options that existed during the current consolidated fiscal year (fiscal
year ended March 31, 2020). The number of stock options is presented by converting into the number of shares.
1. Outline of retirement benefit plans 2. Defined contribution plan
mixi has adopted a defined contribution plan and an advance The amount contributed by mixi to the defined contribution 1) Number of stock options
payment plan with optional plans. plan was ¥56 million for the previous consolidated fiscal year
2016 2017 2018
and ¥72 million for the current consolidated fiscal year.
Stock Option Stock Option Stock Option 1
Before vesting of stock options (Shares)
12. Stock options
As of March 31, 2019 — — —
Granted — — —
1. Amount recorded as expenses and item in which such expenses are recorded
(Millions of yen) Expired — — —
Vested — — —
FY2019 FY2020
Not vested — — —
SG&A expenses 314 431 After vesting of stock options (Shares)
As of March 31, 2019 47,000 38,500 205,500
2. Amount reported as profit due to forfeiture of unexercised stock options Vested — — —
(Millions of yen)
Exercised — — —
Expired — — —
FY2019 FY2020
Not vested 47,000 38,500 205,500
Gain on reversal of subscription rights to shares — 16
2018 2019 2019
Stock Option 2 Stock Option 1 Stock Option 2
3. Details and volume of stock options and changes thereto Before vesting of stock options (Shares)
(1) Details of stock options
As of March 31, 2019 — — —
2016 2017 2018
Granted — 368,900 36,800
Stock Option Stock Option Stock Option 1
Classification and number of persons mixi’s executive officers: mixi’s executive officers: mixi’s executive officers: Expired — — —
granted stock options 3 persons 4 persons 4 persons Vested — 368,900 36,800
Common shares: Common shares: Common shares:
Number of stock options (Note) Not vested — — —
133,800 shares 95,500 shares 205,500 shares
Grant date August 29, 2016 August 29, 2017 August 29, 2018 After vesting of stock options (Shares)
Vesting conditions No conditions Same as on the left Same as on the left As of March 31, 2019 57,400 — —
No requirement for period Vested — 368,900 36,800
Period of service eligible Same as on the left Same as on the left
of service
Exercised — — —
From August 30, 2016 to From August 30, 2017 to From August 30, 2018 to
Exercise period Expired 8,200 — 4,600
August 29, 2046 August 29, 2047 August 29, 2048
Not vested 49,200 368,900 32,200
2018 2019 2020
Stock Option 2 Stock Option 1 Stock Option 2
Classification and number of persons mixi’s corporate officers: mixi’s corporate officers: mixi’s corporate officers: 2) Unit price information
granted stock options 7 persons 5 persons 7 persons
Common shares: Common shares: Common shares: 2016 2017 2018
Number of stock options (Note) Stock Option Stock Option Stock Option 1
57,400 shares 368,900 shares 36,800 shares
Grant date November 26, 2018 July 16, 2019 July 16, 2019 Exercise price (Yen) 1 1 1

Financial Information
Vesting conditions No conditions Same as on the left Same as on the left Average stock price at exercise (Yen) — — —
No requirement for period Fairly evaluated unit price
Period of service eligible Same as on the left Same as on the left 1,897 3,944 1,380
of service (as of grant date) (Yen)
From November 27, 2019 to From July 17, 2019 to From July 17, 2020 to
Exercise period
November 26, 2024 July 16, 2049 July 16, 2025
(Note) The number of stock options is presented by converting into the number of shares.

50 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 51

 Notes to Consolidated Financial Statements

2018 2019 2019 5. Method of estimation of the number of stock options vested
Stock Option 2 Stock Option 1 Stock Option 2 As it is difficult to reasonably estimate the number of stock options that will expire in the future, only the number of stock options
Exercise price (Yen) 1 1 1 which actually expired is reflected.
Average stock price at exercise (Yen) — — —
A: 2,319 A: 2,012
Fairly evaluated unit price 13. Tax effect accounting
B: 2,207 928 B: 1,911
(as of grant date) (Yen)
C: 2,101 C: 1,814
(Note) As conditions for exercise in phases have been established for 2018 and 2019 Stock Option 2, three kinds of fairly evaluated unit prices are stated 1. Breakdown by main causes of deferred tax assets and deferred tax liabilities
in accordance with different expected remaining periods. (Millions of yen)

4. Method of estimation of fairly evaluated unit price of stock options granted during the current FY2019 FY2020
(As of March 31, 2019) (As of March 31, 2020)
consolidated fiscal year
(1) Method used for evaluation: Black-Scholes model Deferred tax assets:
(2) Major basic figures used and method of estimation Overdepreciation 121 135
2019 Tax losses carried forward 262 495
Stock Option 1 Software 8,865 4,383
Stock price volatility (Note 1) 66.37%
Investment securities 669 703
Expected remaining period (Note 2) 15.00 years
Enterprise tax payable 43 50
Expected dividends (Note 3) ¥120 per share
Provision for bonuses 255 378
Risk-free interest rate (Note 4) 0.08%
Subscription rights to shares 170 297
(Notes) 1. Calculated based on the actual stock prices during the period from September 11, 2006 to July 16, 2019
Advances received 162 212
2. Estimated based on the assumption that the rights are exercised in the middle of the exercise period as
reasonable estimation is difficult due to insufficient historical data Other 419 1,387
3. Based on the actual dividends paid for the fiscal year ended March 31, 2019
4. Interest rate of government bonds corresponding to the expected remaining period
Subtotal of deferred tax assets 10,969 8,042
Valuation allowance (1,249) (1,717)
2019
Stock Option 2 Total deferred tax assets 9,720 6,325
A: 32.25%
Stock price volatility (Note 1) B: 29.52%
C: 29.36% Deferred tax liabilities:
A:  1 year Valuation difference on available-for-sale securities (293) (146)
Expected remaining period (Note 2) B: 2 years Valuation difference related to business combination — (949)
C: 3 years
Total deferred tax liabilities (293) (1,095)
Expected dividends (Note 3) ¥110 per share
A: (0.17)% Net deferred tax assets 9,426 5,229
Risk-free interest rate (Note 4) B: (0.18)%
C: (0.19)%
(Notes) 1. Stock price volatility is calculated based on the actual stock prices during the following three periods that
correspond to the expected remaining periods.
  A: July 14, 2018 to July 16, 2019
  B: July 14, 2017 to July 16, 2019
  C: July 14, 2016 to July 16, 2019
2. As reasonable estimation is difficult due to insufficient historical data, the expected remaining periods are
assumed to be the three periods from the date of calculation to the time when the applicable
subscription rights to shares can be exercised in each phase, and their fairly evaluated unit prices are
calculated accordingly.

Financial Information
  A: July 16, 2019 to July 17, 2020
  B: July 16, 2019 to July 17, 2021
  C: July 16, 2019 to July 17, 2022
3. Based on the dividends forecast to be paid for the fiscal year ended March 31, 2020
4. Interest rate of government bonds corresponding to the expected remaining period
  A: Redemption date — August 1, 2020
  B: Redemption date — July 1, 2021
  C: Redemption date — June 20, 2022

52 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 53

 Notes to Consolidated Financial Statements

2. Breakdown of main items that cause difference when an important difference arises between statutory 5) Name of the entity after the business combination
tax rate and effective tax rate of income taxes and others after application of tax effect accounting SFIDANTE Inc.
6) Ratio of voting rights acquired
(%) 100%
7) Primary ground for determining the acquiring company
FY2019 FY2020
(As of March 31, 2019) (As of March 31, 2020)
Due to the acquisition by mixi of all of shares of SFIDANTE Inc. and its conversion to a consolidated subsidiary.

Statutory tax rate — 30.6 (2) Period of business performance of the acquired company which is included in the consolidated financial
(Adjustment) statements
The acquisition date was deemed to be May 31, 2019, and as such, business performance from June 1, 2019 to March 31,
Amortization of goodwill — 0.9
2020 is included.
Valuation allowance — (15.6)
Dividend income — (0.3) (3) Acquisition cost of the acquired company and its breakdown by type of consideration
(Millions of yen)
Per capita inhabitants’ tax — 0.1
Consideration for acquisition Cash 1,599
Impact of liquidation of consolidated subsidiaries — 17.4
Acquisition cost 1,599
Tax rate difference — 0.2
Other — (0.3)
(4) Details and amounts of major acquisition-related expenses
Effective tax rate of income taxes and others after application of tax
— 32.9 Advisory fees and research cost: ¥15 million
effect accounting
(Note) In the previous fiscal year, as the difference between the statutory tax rate and the effective tax rate of income taxes and others after the
(5) Amount of goodwill arising from business combination, reason for recognizing goodwill, method and period
application of tax effect accounting was less than 5% of the statutory tax rate, information regarding the difference is omitted.
of amortization
1) Amount of goodwill arising from business combination
¥1,014 million
14. Business combinations
The amount of goodwill was posted tentatively as the allocation of acquisition cost was still incomplete as of the end of the
nine months ended December 31, 2019. The amount was determined by the end of the consolidated fiscal year under review,
(Finalization of provisional accounting treatment related to business combinations) and accordingly the amount of goodwill declined ¥489 million due to an increase of ¥705 million in intangible assets.
Chariloto Co., Ltd. 2) Reason for recognizing goodwill
Regarding the business combination with Chariloto Co., Ltd. conducted on February 28, 2019, the provisional accounting Goodwill was generated due to the difference between the value of equity interest held by the acquiring company in the
treatment applied during the consolidated fiscal year ended March 31, 2019 was finalized during the consolidated fiscal year acquired company and the acquisition cost.
ended March 31, 2020. Following the finalization of the provisional accounting treatment, significant revisions have been made 3) Method and period of amortization
to the allocation of acquisition costs in the comparative information included in the quarterly consolidated financial statements Goodwill will be amortized over eight years using the straight line method.
for the consolidated fiscal year ended March 31, 2020.
As a result, the amount of goodwill calculated tentatively at ¥5,121 million decreased by ¥2,010 million to ¥3,110 million, due (6) Amount of assets accepted and liabilities assumed on the date of the business combination and major
to the finalization of the accounting treatment. The decrease in goodwill is due to an increase of ¥2,898 million in customer- breakdown thereof
related assets and an increase of ¥887 million in deferred tax liabilities. In addition, as of March 31, 2019, goodwill decreased by Please refer to the notes of the Consolidated Statements of Cash Flows.
¥2,010 million, and customer-related assets and deferred tax liabilities increased by ¥2,898 million and ¥887 million, respectively.
(7) Approximate amount of impact on the consolidated statements of income for the fiscal year ended March 31,
(Business combinations through acquisition) 2020, and the calculation method thereof, assuming that the business combination was completed on the
SFIDANTE Inc. commencement date of the fiscal year
(1) Summary of business combination The approximate amount of such impact is omitted as it is immaterial.
1) Name of the acquired entity and description of the acquired business
Name: SFIDANTE Inc. Chiba Jets Funabashi Co., Ltd.
Description of the acquired business: Smartphone-photo print (1) Summary of business combination
2) Reason for the business combination 1) Name of the acquired entity and description of the acquired business
mixi acquired SFIDANTE’s shares to offer users greater value and a better area for fun family communication by combining Name: Chiba Jets Funabashi Co., Ltd.

Financial Information
SFIDANTE’s app services that allow users to create high-quality New Year cards from a large selection of designs with mixi’s Description of the acquired business: Management of a professional basketball team
family-focused photo- and video-sharing app FamilyAlbum. 2) Reason for the business combination
3) Date of the business combination As the field of sports is one of mixi’s focus business areas, mixi acquired shares of “Chiba Jets Funabashi,” which has
June 28, 2019 pioneered the market expansion of the B.LEAGUE, based on the judgment that further business growth can be achieved
4) Legal form of the business combination by incorporating the expertise that mixi has gained in the entertainment industry into the team.
Acquisition of shares 3) Date of the business combination
October 31, 2019

54 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 55

 Notes to Consolidated Financial Statements

4) Legal form of the business combination 2) Reason for the business combination
Acquisition of shares mixi acquired the shares of Net Dreamers Co., Ltd. to further business growth in the sports industry by combining the
5) Name of the entity after the business combination management expertise it has gained through the social network mixi, the smartphone app Monster Strike, etc. with Net
Chiba Jets Funabashi Co., Ltd. Dreamers’ media management expertise in sports and publicly operated competitions.
6) Ratio of voting rights acquired 3) Date of the business combination
72.81% November 29, 2019
Following the date of business combination, with the acquisition of additional shares, the Company’s ratio of voting rights 4) Legal form of the business combination
in Chiba Jets Funabashi Co., Ltd. is 87.35% as of the end of the consolidated fiscal year under review. Acquisition of shares
7) Primary ground for determining the acquiring company 5) Name of the entity after the business combination
Due to the acquisition by mixi of shares of Chiba Jets Funabashi Co., Ltd. and its conversion to a consolidated subsidiary. Net Dreamers Co., Ltd.
6) Ratio of voting rights acquired
(2) Period of business performance of the acquired company which is included in the consolidated financial 100%
statements 7) Primary ground for determining the acquiring company
The acquisition date was deemed to be December 31, 2019, and as such, business performance from January 1, 2020 to Due to the acquisition by mixi of all of shares of Net Dreamers Co., Ltd. and its conversion to a consolidated subsidiary.
March 31, 2020 is included.
(2) Period of business performance of the acquired company which is included in the consolidated financial
(3) Acquisition cost of the acquired company and its breakdown by type of consideration statements
(Millions of yen) The acquisition date was deemed to be December 31, 2019, and as such, business performance from January 1, 2020 to
Consideration for acquisition Cash 1,222 March 31, 2020 is included.
Acquisition cost 1,222
(3) Acquisition cost of the acquired company and its breakdown by type of consideration
Following the date of business combination, the Company acquired additional shares at an acquisition cost of ¥203 million. (Millions of yen)

Consideration for acquisition Cash 15,000

(4) Details and amounts of major acquisition-related expenses
Acquisition cost 15,000
Advisory fees and research cost: ¥48 million

(5) Amount of goodwill arising from business combination, reason for recognizing goodwill, method and period (4) Details and amounts of major acquisition-related expenses
of amortization Advisory fees and research cost: ¥226 million
1) Amount of goodwill arising from business combination
¥939 million (5) Amount of goodwill arising from business combination, reason for recognizing goodwill, method and period
The amount of goodwill is calculated tentatively because calculation of specific and fair value of identifiable assets and of amortization
liabilities at the date of the business combination is pending and the allocation of acquisition cost has not been 1) Amount of goodwill arising from business combination
completed. ¥13,019 million
2) Reason for recognizing goodwill The amount of goodwill is calculated tentatively because calculation of specific and fair value of identifiable assets and
Goodwill was generated due to the difference between the value of equity interest held by the acquiring company in the liabilities at the date of the business combination is pending and the allocation of acquisition cost has not been
acquired company and the acquisition cost. completed.
3) Method and period of amortization 2) Reason for recognizing goodwill
Goodwill is amortized using the straight line method over the period during which the goodwill remains effective. Goodwill was generated due to the difference between the value of equity interest held by the acquiring company in the
Amortization period will be determined based on the result of the allocation of acquisition cost. acquired company and the acquisition cost.
3) Method and period of amortization
(6) Amount of assets accepted and liabilities assumed on the date of the business combination and major Goodwill is amortized using the straight line method over the period during which the goodwill remains effective.
breakdown thereof Amortization period will be determined based on the result of the allocation of acquisition cost.
Please refer to the notes of the Consolidated Statements of Cash Flows.
(6) Amount of assets accepted and liabilities assumed on the date of the business combination and major
(7) Approximate amount of impact on the consolidated statements of income for the fiscal year ended March 31, breakdown thereof
2020, and the calculation method thereof, assuming that the business combination was completed on the Please refer to the notes of the Consolidated Statements of Cash Flows.
commencement date of the fiscal year

Financial Information
The approximate amount of such impact is omitted as it is immaterial. (7) Approximate amount of impact on the consolidated statements of income for the fiscal year ended March 31,
2020, and the calculation method thereof, assuming that the business combination was completed on the
Net Dreamers Co., Ltd. commencement date of the fiscal year
(1) Summary of business combination The approximate amount of such impact is omitted as it is immaterial.
1) Name of the acquired entity and description of the acquired business
Name: Net Dreamers Co., Ltd.
Description of the acquired business: Management, etc. of horse racing and baseball media

56 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 57

 Notes to Consolidated Financial Statements

15. Asset retirement obligations 3. Information on net sales, profit or loss and other items by reportable segment
For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
(Millions of yen)
For the consolidated fiscal years ended March 31, 2019 and March 31, 2020 Reportable segment Amount recorded in
The Group recognizes liabilities relating to the restoration of a building to its original state when vacating the premises, based on Adjustment Consolidated
the real estate leasing contract of the building, as asset retirement obligations. Entertainment (Note 1) Financial Statements
Lifestyle Business Total
Instead of recognizing these asset retirement obligations as liabilities, the Group has adopted the method of making reasonable Business (Note 2)
estimates of leasehold and guarantee deposits relating to real estate leasing contracts which are ultimately expected not to be
Net sales
recovered and reporting the amount belonging to the current fiscal year as expenses.
In making these estimates, the average number of years in business is used as the expected period of use, upon taking into Net sales to external customers 138,605 5,427 144,032 — 144,032
account business strategies, terms and conditions of the real estate leasing contract and other factors. Inter-segment net sales or
2 — 2 (2) —
Additionally, the amount of leasehold deposit which was ultimately expected not to be recovered belonging to the fiscal year transfers
ended March 31, 2019 was ¥134 million and as of March 31, 2019, the amount ultimately deemed unrecoverable was ¥168 million. Total 138,607 5,427 144,035 (2) 144,032
The amount of leasehold deposit which was ultimately expected not to be recovered belonging to the fiscal year ended March Segment profit 51,561 (1,690) 49,871 (8,838) 41,033
31, 2020 was ¥175 million and as of March 31, 2020, the amount ultimately deemed unrecoverable was ¥2,578 million.
Other
Depreciation 444 22 466 592 1,058
16. Segment information Amortization of goodwill — — — — —
(Notes) 1. The segment profit adjustment of ¥(8,838) million includes depreciation of ¥(466) million and company-wide expenses of ¥(8,371) million not
allocated to each reportable segment. Company-wide expenses comprise mainly costs relating to mixi’s administrative departments not
1. Overview of reportable segments belonging to any reportable segment.
mixi Group’s reportable segments are components for which separate financial information is available and whose operating results 2. Segment profit is adjusted with operating income in the consolidated statements of income.
are regularly reviewed by the Board of Directors to decide on the allocation of management resources and assess business
performance. For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
The Group has two reportable segments, namely “Entertainment Business” and “Lifestyle Business.” The former is engaged in (Millions of yen)
providing native smartphone games, primarily Monster Strike, along with organizing related events and producing and selling
Reportable segment Amount recorded in
various goods, as well as professional sports team management, businesses related to publicly operated competitions and other
Adjustment Consolidated
services. The latter provides services including the family-focused photo- and video- sharing app FamilyAlbum and beauty staff Entertainment (Note 1) Financial Statements
Lifestyle Business Total
direct appointment application minimo. Business (Note 2)
Net sales
2. Calculation method of amounts of net sales, profit or loss, assets, liabilities and other items by
reportable segment Net sales to external customers 107,216 4,954 112,171 — 112,171
The accounting methods for business segments reported are substantially the same as those described in “Important matters that Inter-segment net sales or
1 0 1 (1) —
form the basis for preparing consolidated financial statements.” Profit of reportable segments is the amount based on operating transfers
income (EBITDA), excluding depreciation and amortization of goodwill. Total 107,218 4,954 112,172 (1) 112,171
Inter-segment net sales or transfers are based on the actual market price. Segment profit 31,569 (675) 30,894 (13,729) 17,165
Segment assets and liabilities are omitted as they are not subject to review for decision on the allocation of operating resources
and assessment of business performance. Other
Depreciation 1,184 175 1,360 775 2,136
Amortization of goodwill 662 105 768 — 768
(Notes) 1. The segment profit adjustment of ¥(13,729) million includes depreciation of ¥(1,360) million, amortization of goodwill of ¥(768) million, and
company-wide expenses of ¥(11,601) million not allocated to each reportable segment. Company-wide expenses comprise mainly costs
relating to mixi’s administrative departments not belonging to any reportable segment.
2. Segment profit is adjusted with operating income in the consolidated statements of income.

[Related information]
For the consolidated fiscal year ended March 31, 2019 2. Information by region

Financial Information
(April 1, 2018 to March 31, 2019) (1) Net sales
1. Information by product or service This information is omitted because the amount of net sales to
This information is omitted because the same information is external customers in Japan exceeds 90% of the amount of
disclosed in the segment information. net sales recorded in the consolidated statements of income.

58 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 59

 Notes to Consolidated Financial Statements

(2) Property, plant and equipment 2. Information by region For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
This information is omitted because the amount of property, (1) Net sales (Millions of yen)

plant and equipment located in Japan exceeds 90% of the This information is omitted because the amount of net sales to Reportable segment
amount of property, plant and equipment recorded in the external customers in Japan exceeds 90% of the amount of Corporate /
Entertainment Total
consolidated balance sheets. net sales recorded in the consolidated statements of income. Lifestyle Business Total Elimination
Business
Amortization for the year 662 105 768 — 768
3. Information by major customer (2) Property, plant and equipment
This information is omitted because among the sales to This information is omitted because the amount of property, Balance at end of the year 16,406 909 17,315 — 17,315
external customers there are no counterparties to whom the plant and equipment located in Japan exceeds 90% of the
sales account for 10% or more of net sales recorded in the amount of property, plant and equipment recorded in the [Information regarding negative goodwill by reportable segment]
consolidated statements of income. consolidated balance sheets. For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
There is no relevant information.
For the consolidated fiscal year ended March 31, 2020 3. Information by major customer
(April 1, 2019 to March 31, 2020) This information is omitted because among the sales to For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
1. Information by product or service external customers there are no counterparties to whom the There is no relevant information.
This information is omitted because the same information is sales account for 10% or more of net sales recorded in the
disclosed in the segment information. consolidated statements of income. [Information regarding related parties]
Transactions with related parties
[Information on impairment loss on non-current assets by reportable segment] Transactions between the company submitting the consolidated financial statements and its related parties
For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019) Executive officers and major shareholders (limited to individuals) of the company submitting the consolidated financial statements
(Millions of yen)
Reportable segment For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
Corporate /
Entertainment Total
Lifestyle Business Total Elimination
Business
Description Ownership Relation- Transaction
Impairment loss 333 15 349 — 349 Name of Paid-in
of business ratio of ships with Detail of amount Year-end
Type company or Location capital or Item
(Note) In the “Entertainment Business” segment, in line with the fact that the revenue initially expected for a store operated by mixi can no longer be or voting rights related transactions (Millions of balance
individual investments
expected, impairment loss was recorded in the consolidated fiscal year ended March 31, 2019. occupation (%) parties yen)

For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020) Chairman of the (Ownership) Purchase
Executive Kenji
(Millions of yen) — — Board of Direct — of treasury 4,997 — —
officer Kasahara
Reportable segment Directors of mixi 46.6 shares
Corporate /
Entertainment Total (Notes) 1. The ownership ratio of voting rights is the ratio before the purchase of treasury shares.
Lifestyle Business Total Elimination 2. Based on the resolution at the Board of Directors meeting held on May 10, 2018, treasury shares were purchased through Off-Auction Own
Business
Share Repurchase Trading (ToSTNeT-3), and the transaction amount was the final price on May 14, 2018.
Impairment loss 216 — 216 — 216
(Note) In the “Entertainment Business” segment, in line with the fact that the revenue initially expected for a store operated by mixi can no longer be For the consolidated fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
expected, impairment loss was recorded in the consolidated fiscal year ended March 31, 2020. There is no relevant information.

[Information regarding amortization of goodwill and unamortized balance of goodwill by reportable segment]
For the consolidated fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019) 17. Per share information
(Millions of yen)

Reportable segment
Corporate / (Yen)
Entertainment Total
Lifestyle Business Total Elimination
Business FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)
Amortization for the year — — — — —
Balance at end of the year 3,110 — 3,110 — 3,110 Net assets per share 2,368.05 2,387.56

Financial Information
(Notes) 1. Amortization for the year and the balance at end of the year for the consolidated fiscal year ended March 31, 2019 represent amounts
Basic earnings per share 350.26 142.33
reflecting the significant revision of the initial allocation of acquisition costs in conjunction with the finalization of the provisional accounting Diluted earnings per share 349.10 141.21
treatment described in the “Notes to Consolidated Financial Statements (Business combinations).”

60 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 61

 Notes to Consolidated Financial Statements

(Note) Basis for calculation of basic earnings per share and diluted earnings per share are as follows: 3. Scheduled repayment amounts of long-term borrowings (excluding current portion) and lease obligations (excluding current portion) after
the consolidated balance sheet date are as follows:
Item FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) More than 1 year and less More than 2 years and More than 3 years and More than 4 years and
More than 5 years
Classification than 2 years less than 3 years less than 4 years less than 5 years
Basic earnings per share (Yen) (Millions of yen)
(Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen)
Long-term
Profit attributable to owners of parent (Millions of yen) 26,521 10,724 271 668 176 167 1,669
borrowings
Amount not attributable to common shareholders (Millions of yen) — — Lease obligations 1 0 — — —
Profit attributable to owners of parent relating to common shares
26,521 10,724
(Millions of yen) [Schedule of asset retirement obligations]
Average number of common shares for the period under review The schedule of asset retirement obligations is omitted as the items to be stated in this schedule are stated as notes provided for in
75,718,679 75,349,550
(Shares)
Article 15–23 of the Regulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements.

Diluted earnings per share (Yen)

Amount of adjustment to profit attributable to owners of parent
— —
Other
(Millions of yen)
Number of increased common shares (Shares) 251,756 598,623
[Subscription rights to shares] (Shares) [251,756] [598,623] Quarterly financial information and others for the current consolidated fiscal year
Summary of potential shares not included in diluted earnings per (Cumulative period) 1Q of FY2020 2Q of FY2020 3Q of FY2020 FY2020
— —
share due to their lack of dilutive effect
Net sales (Millions of yen) 20,780 46,835 72,364 112,171
Income before income taxes
1,615 3,822 2,441 15,996
(Millions of yen)
18. Significant subsequent events Profit attributable to owners of
1,110 2,094 402 10,724
parent (Millions of yen)
Basic earnings per share (Yen) 14.73 27.79 5.34 142.33
There is no relevant information.

(Accounting period) 1Q of FY2020 2Q of FY2020 3Q of FY2020 4Q of FY2020

Consolidated Supplementary Schedules Basic earnings (loss) per share (Yen) 14.73 13.05 (22.45) 136.99
(Note) During the third and fourth quarters of the current consolidated fiscal year, the provisional accounting treatment relating to business
combinations was finalized, and the quarterly financial information for the first, second, and third quarters represents amounts after reflection of
[Schedule of bonds] the significant revision made to the initial allocation of acquisition costs in conjunction with the finalization of the provisional accounting
There is no relevant information. treatment.

[Schedule of borrowings and others]

As of March 31, 2019 As of March 31, 2020 Average interest rate Deadline for
Classification
(Millions of yen) (Millions of yen) (%) repayment
Short-term borrowings 66 671 1.7 —
Current portion of lease
2 2 — —
obligations
Long-term borrowings From April 2021 to
616 2,952 1.2
(excluding current portion) February 2027
Lease obligations (excluding From April 2021 to
4 2 —
current portion) December 2022
Total 690 3,627 — —

Financial Information
(Notes) 1. Average interest rate of lease obligations is omitted because lease obligations were recorded in the consolidated balance sheets at the
amount before deducting the portion equivalent to interest.
2. Due to quantitative insignificance, current portion of lease obligations is included in “Other” under “Current liabilities” in the consolidated
balance sheets, and lease obligations (excluding current portion) are included in “Other” under “Non-current liabilities” in the consolidated
balance sheets.

62 mixi Group Annual Report 2020 Notes to Consolidated Financial Statements 63

 Financial Statements

Balance Sheets
mixi, Inc. (Millions of yen) (Millions of yen)

FY2019 FY2020 FY2019 FY2020

(As of March 31, 2019) (As of March 31, 2020) (As of March 31, 2019) (As of March 31, 2020)

Assets: Liabilities:
Current assets Current liabilities
Cash and deposits 137,623 119,154 Accounts payable — other 7,905 6,545
Accounts receivable — trade 8,896 12,803
Accrued expenses 8 7
Merchandise 292 159
Income taxes payable 431 —
Advance payments — trade 1,553 790
Advances received 1,604 1,868
Prepaid expenses 1,491 1,814
Other 5,607 3,105 Deposits received 632 555

Allowance for doubtful accounts (816) (44) Lease obligations 2 2

Total current assets 154,648 137,783 Provision for bonuses 827 1,157
Non-current assets Other 0 —
Property, plant and equipment Total current liabilities 11,413 10,137
Buildings 964 5,302
Non-current liabilities
Accumulated depreciation (676) (768)
Lease obligations 4 2
Buildings, net 288 4,533
Long-term accounts payable — other 7 1,376
Tools, furniture and fixtures 3,326 5,074
Accumulated depreciation (1,949) (2,228) Total non-current liabilities 12 1,379

Tools, furniture and fixtures, net 1,376 2,846 Total liabilities 11,425 11,516
Construction in progress 2,235 108 Net assets:
Total property, plant and equipment 3,900 7,489 Shareholders’ equity
Intangible assets Paid-in capital 9,698 9,698
Software 224 244 Capital surplus
Other 20 1,074
Legal capital surplus 9,668 9,668
Total intangible assets 245 1,318
Total capital surplus 9,668 9,668
Investments and other assets
Retained earnings
Investment securities 5,288 7,813
Shares of subsidiaries and associates 9,516 27,007 Other retained earnings

Investments in capital of subsidiaries and associates 18 18 Retained earnings brought forward 169,104 171,628
Long-term loans receivable from subsidiaries and associates 3,523 3,022 Total retained earnings 169,104 171,628
Claims provable in bankruptcy, claims provable in rehabilitation and other 0 1 Treasury shares (10,905) (10,905)
Long-term prepaid expenses 546 257 Total shareholders’ equity 177,566 180,090
Deferred tax assets 9,656 6,042
Valuation and translation adjustments
Lease and guarantee deposits 4,535 4,473
Valuation difference on available-for-sale securities 665 331

Financial Information
Other 45 59
Total valuation and translation adjustments 665 331
Allowance for doubtful accounts (1,711) (2,379)
Subscription rights to shares 555 971
Total investments and other assets 31,420 46,317
Total non-current assets 35,565 55,125 Total net assets 178,788 181,392
Total assets 190,213 192,908 Total liabilities and net assets 190,213 192,908

64 mixi Group Annual Report 2020 Financial Statements 65

 Financial Statements

Statements of Income Cost of Sales Statements

mixi, Inc. (Millions of yen) mixi, Inc.

FY2019 FY2020 FY2019 FY2020

(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) (April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)

Net sales 141,427 105,495 Amount Composition ratio Amount Composition ratio
Classification
Cost of sales 18,933 18,461 (Millions of yen) (%) (Millions of yen) (%)
Gross profit 122,494 87,034 (I) Labor cost 2,296 12.7 2,471 13.9
SG&A expenses (Note 3 (*1)) 79,713 68,705 (II) Costs *1
15,842 87.3 15,333 86.1
Operating income 42,781 18,328
Total manufacturing costs 18,139 100.0 17,804 100.0
Non-operating income
Interest income 121 80 Beginning goods 427 292
Dividend income (Note 3 (*2)) 213 — Cost of purchased goods 658 523
Gain on investments in partnership 21 —
Total 19,225 18,620
Foreign exchange gains 36 7
Gain on sales of goods 36 — Ending goods 292 159
Interest on tax refund — 33 Cost of sales 18,933 18,461
Gain on adjustment of account payable — 26
Sponsorship money income — 64
*1. Major breakdown of costs is as follows:
Other 121 32 (Millions of yen)
Total non-operating income 550 246
Non-operating expenses Item FY2019 FY2020
Interest expenses 0 — (April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)

Loss on investments in partnership — 258 Subcontract expenses 13,921 13,331

Commission fee 111 —
Rent expenses 1,338 1,445
Other 0 9
Total non-operating expenses 111 267 Content expenses 67 64
Ordinary income 43,219 18,307 Depreciation 241 259
Extraordinary income
Gain on sales of non-current assets (Note 3 (*3)) 1 3
Gain on sales of investment securities 67 —
Gain on sales of shares of subsidiaries and associates 100 —
Gain on reversal of subscription rights to shares (Note 3 (*4)) — 16
Reversal of allowance for doubtful accounts (Note 3 (*5)) 153 —
Gain on liquidation of subsidiaries and associates (Note 3 (*6)) — 141
Gain on forgiveness of debts — 1
Total extraordinary income 321 162
Extraordinary losses
Head office relocation expenses — 619
Loss on withdrawal from business (Note 3 (*7)) 1,620 —
Loss on sales and retirement of non-current assets (Note 3 (*8)) 19 46
Impairment loss 333 216
Loss on valuation of investment securities 24 —
Loss on valuation of shares of subsidiaries and associates (Note 3 (*9)) 569 12
Provision of allowance for doubtful accounts (Note 3 (*10)) 2,091 953
Loss on sales of shares of subsidiaries and associates 346 —

Financial Information
Loss on forgiveness of debts 18 47
Total extraordinary losses 5,025 1,895
Income before income taxes 38,515 16,574
Income taxes — current 11,709 4,459
Income taxes — deferred 486 924
Total income taxes 12,195 5,384
Period net income 26,319 11,189

66 mixi Group Annual Report 2020 Financial Statements 67

 Notes to Financial Statements

Statements of Changes in Shareholders’ Equity 1. Matters related to significant accounting policies

Fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
(Millions of yen)
Valuation and translation 1. Valuation standards and valuation methods of (2) Intangible assets (excluding leased assets)
Shareholders’ equity
adjustments securities The straight line method is applied.
Capital surplus Retained earnings
(1) Shares of subsidiaries and associates The amortization period for software for internal use is
Other Valuation Stated at cost using the moving-average method. based on its useful life within mixi (5 years).
Subscription
retained difference Total net
Total Total valuation rights to
Paid-in Legal Other Total earnings Total Treasury on assets
shareholders’ and translation shares
capital capital capital capital retained shares available- (2) Available-for-sale securities (3) Leased assets
Retained equity adjustments
surplus surplus surplus earnings for-sale
earnings securities Available-for-sale securities with market value Leased assets pertaining to finance leases other than those in
brought
forward Stated at market price as of the final balance sheet date using which the title of the leased property transfers to the lessee
Balance at beginning of the market value method. (All valuation gains or losses are The straight line method, substituting the lease term for the
period 9,698 9,668 — 9,668 151,906 151,906 (1,450) 169,823 — — 630 170,454
Change of items during
treated as a component of net assets, with the cost of securities useful life, assuming no residual value.
period sold calculated according to the moving-average method.)
Dividends of surplus (8,967) (8,967) (8,967) (8,967) Available-for-sale securities without market value 4. Translation of significant assets and liabilities
Period net income 26,319 26,319 26,319 26,319 Stated at cost using the moving-average method. denominated in foreign currencies into
Purchase of treasury
shares (9,999) (9,999) (9,999)
Investments in investment partnerships and others are Japanese yen
Disposal of treasury based on the financial statements for the most recent balance Monetary receivables and payables denominated in foreign
shares (154) (154) 544 389 389 sheet date using the net amount proportionate to mixi’s currencies have been translated into Japanese yen at the spot
Transfer to capital surplus
from retained earnings 154 154 (154) (154) — — ownership interests. exchange rate at the balance sheet date, and translation
Net changes of items adjustments are recorded as gains or losses.
other than
shareholders’ equity 665 665 (74) 591
2. Valuation standards and valuation methods of
Total changes of items inventories 5. Accounting standards for allowances and
during period — — — — 17,198 17,198 (9,455) 7,742 665 665 (74) 8,333 Merchandise provisions
Balance at end of period 9,698 9,668 — 9,668 169,104 169,104 (10,905) 177,566 665 665 555 178,788 Stated at cost determined by the first-in, first-out (FIFO) (1) Allowance for doubtful accounts
method (the book value in the balance sheet is written down In order to provide for losses due to bad debt, including on
based on the decline in profitability). notes and accounts receivable — trade, for general
Fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
(Millions of yen) receivables, an estimated uncollectible amount is recorded
Valuation and translation 3. Depreciation and amortization methods of according to the historical bad debt ratio. For specific
Shareholders’ equity
adjustments non-current assets receivables at risk of becoming bad debt, an estimated
Capital surplus Retained earnings (1) Property, plant and equipment (excluding leased uncollectible amount is recorded by assessing the
Other Valuation
Subscription assets) collectability of each receivable individually.
retained difference Total net
Total Total valuation rights to The declining balance method is applied.
Paid-in Legal Other Total earnings Total Treasury on assets
shareholders’ and translation shares
capital capital capital capital
Retained
retained shares
equity
available-
adjustments However, the straight line method is applied for buildings (2) Provision for bonuses
surplus surplus surplus earnings for-sale
earnings securities (excluding facilities attached to buildings) acquired on or after In order to provide for payment of bonuses to employees, the
brought
forward April 1, 1998 and facilities attached to buildings acquired on or amount of bonuses estimated to be incurred in the fiscal year
Balance at beginning of after April 1, 2016. under review is recorded.
period 9,698 9,668 — 9,668 169,104 169,104 (10,905) 177,566 665 665 555 178,788
The principal useful lives are as follows:
Change of items during
period Buildings 5 to 50 years 6. Other important matters that form the basis
Dividends of surplus (8,665) (8,665) (8,665) (8,665) Tools, furniture and fixtures: 2 to 15 years for preparing financial statements
Period net income 11,189 11,189 11,189 11,189 Accounting method for consumption taxes
Purchase of treasury Accounted for by the tax-exclusion method.
shares — —
Disposal of treasury
shares — —
Transfer to capital surplus
from retained earnings — —
2. Changes in presentation method
Net changes of items
other than

Financial Information
shareholders’ equity (334) (334) 415 80 (Balance sheets) has reclassified the balance sheets for the previous fiscal year
Total changes of items
during period — — — — 2,524 2,524 — 2,524 (334) (334) 415 2,604 “Long-term accounts payable — other” presented in “Other” ended March 31, 2019.
Balance at end of period 9,698 9,668 — 9,668 171,628 171,628 (10,905) 180,090 331 331 971 181,392 under “Non-current liabilities” in the balance sheets for the As a result, ¥7 million presented in “Other” under “Non-
previous fiscal year ended March 31, 2019 has increased in current liabilities” in the balance sheets for the previous fiscal
importance, and as such, the Company has decided to report year ended March 31, 2019 is reclassified as ¥7 million of
this item separately from the fiscal year ended March 31, 2020. “Long-term accounts payable — other.”
To reflect this change in presentation method, the Company

68 mixi Group Annual Report 2020 Financial Statements | Notes to Financial Statements 69
 Notes to Financial Statements

3. Statements of income For the fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
There is no relevant information.

*1. A
 pproximate ratio of selling expenses to SG&A expenses was 80.1% and 70.3% for the previous fiscal year and the current fiscal *8. The breakdown of loss on sales and retirement of non-current assets is as follows:
(Millions of yen)
year, respectively. Approximate ratio of general and administrative expenses to SG&A expenses was 19.9% and 29.7% for the
previous fiscal year and the current fiscal year, respectively. FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020)
Major components and amounts of SG&A expenses are as follows:
(Millions of yen) Buildings 0 —
Tools, furniture and fixtures 7 33
FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) Software 11 12
Advertising expenses 23,170 18,788 Total 19 46
Settlement fees 40,538 29,420
*9. Loss on valuation of shares of subsidiaries and associates
*2. Amount attributable to subsidiaries and associates included in each item is as follows: For the fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
(Millions of yen) These items are related to investments in, and loans to, RATEL.Inc, Kuto, Inc., HECATE, Inc. and Compath Me Inc., whose financial
status deteriorated.
FY2019 FY2020
(April 1, 2018 to March 31, 2019) (April 1, 2019 to March 31, 2020) For the fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
These items are related to investments in, and loans to, SmartHealth, Inc. and Ratel Payment, Inc., whose financial status
Dividend income 213 —
deteriorated.

*3. The breakdown of gain on sales of non-current assets is as follows:
FY2019
(April 1, 2018 to March 31, 2019)
*10. Provision of allowance for doubtful accounts
(Millions of yen)
For the fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
FY2020 These items are related to investments in, and loans to, RATEL.Inc, Kuto, Inc., i-mercury Capital, Inc. and HECATE, Inc., whose financial
(April 1, 2019 to March 31, 2020) status deteriorated.

Tools, furniture and fixtures 1 3 For the fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
These items are related to investments in, and loans to, i-mercury Capital, Inc., HECATE, Inc. and SmartHealth, Inc., whose financial
status deteriorated.
*4. Gain on reversal of subscription rights to shares
For the fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
There is no relevant information. 4. Securities
For the fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Refers to the gain on reversal due to the forfeiture of the subscription rights to shares by the employees who hold the subscription
Fair value of shares of subsidiaries and associates is not Balance sheet amounts of shares of subsidiaries and
rights to shares.
presented as market value is not available and fair value is associates whose fair values are deemed extremely difficult to
deemed extremely difficult to determine. determine are as follows:
*5. Reversal of allowance for doubtful accounts
For the fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019) (Millions of yen)
These items are due to repayments of investments in, and loans to, nohana, Inc.
Classification FY2019 FY2020
For the fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020) (As of March 31, 2019) (As of March 31, 2020)
There is no relevant information.
Shares of subsidiaries 9,516 27,007
*6. Gain on liquidation of subsidiaries and associates Total 9,516 27,007
For the fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
There is no relevant information.

Financial Information
For the fiscal year ended March 31, 2020 (April 1, 2019 to March 31, 2020)
Refers to gain associated with the liquidation of Hunza, Inc.

*7. Loss on withdrawal from business

For the fiscal year ended March 31, 2019 (April 1, 2018 to March 31, 2019)
This is a loss resulting from the withdrawal from telecommunications-related business, including mainly ¥1,620 million for disposal
of inventories and retirement of non-current assets.

70 mixi Group Annual Report 2020 Notes to Financial Statements 71

 Notes to Financial Statements

5. Tax effect accounting 2. Breakdown of main items that cause significant difference between statutory tax rate and effective
tax rate of income taxes and others after application of tax effect accounting
(%)
1. Breakdown by main causes of deferred tax assets and deferred tax liabilities
(Millions of yen) FY2019 FY2020
(As of March 31, 2019) (As of March 31, 2020)
FY2019 FY2020 Statutory tax rate — 30.6
(As of March 31, 2019) (As of March 31, 2020)
(Adjustment)
Deferred tax assets:
Entertainment and other non-deductible expenses — 0.1
Overdepreciation 121 125
Dividend income and other non-taxable income — (0.3)
Software 8,811 4,306
Liquidation of shares of subsidiaries — 16.5
Lump sum depreciable assets 33 71
Loss succeeded from the liquidation of subsidiaries — (1.1)
Investment securities 274 307
Per capita inhabitants’ tax — 0.0
Shares of subsidiaries and associates 2,775 45
Valuation allowance — (13.6)
Allowance for doubtful accounts 774 741
Other — 0.2
Enterprise tax payable 43 45
Effective tax rate of income taxes and others
Provision for bonuses 253 354 — 32.5
after application of tax effect accounting
Asset retirement obligations 91 145 (Note) As the difference between the statutory tax rate and the effective tax rate of income taxes and others after the application of tax effect
Subscription rights to shares 170 297 accounting was less than 5% of the statutory tax rate for the previous fiscal year, information regarding the difference is omitted.

Advances received 162 212

Other 265 1,112 6. Business combinations
Subtotal of deferred tax assets 13,775 7,765
Valuation allowance (3,824) (1,576) Business combination through the acquisition
Total deferred tax assets 9,950 6,188 As this contains the same information stated under “Notes to Consolidated Financial Statements (Business combinations),” the note
is omitted.

Deferred tax liabilities:

Valuation difference on available-for-sale securities (293) (146) 7. Significant subsequent events
Total deferred tax liabilities (293) (146)
Net deferred tax assets 9,656 6,042 There is no relevant information.

Financial Information
72 mixi Group Annual Report 2020 Notes to Financial Statements 73
 mixi Group’s Summary of IR Activities Investor Information
Corporate Philosophy (As of March 31, 2020)

Supplementary Schedules We aim to always respond sincerely to the feelings Investor relations activities Corporate information
and requests of the users of our services and to In order to engage shareholders and investors in active Company name mixi, Inc.
Representative Koki Kimura, President and
provide value that exceeds users imagination and dialogue, we hold an earnings results briefing session for
Representative Director
(Schedule of property, plant and equipment and others) expectations through communication services. securities analysts and institutional investors after each Establishment June 3, 1999
(Millions of yen)
quarterly financial results announcement. Committed to Paid-in capital ¥9,698 million
To make the world more vibrant
Amount of through
making disclosures that are fair to all investors, we quickly Head office 36F, Shibuya Scramble Square,
Balance at Increase communication:
Decrease Balance at This is mixi Group s mission.
accumulated Difference at 2-24-12 Shibuya, Shibuya-ku,
Amount of post meeting materials and videos to our website. For
Type of assets beginning of during the during the end of depreciation end of Tokyo 150-6136, Japan
depreciation overseas investors, we hold both meetings and conference
period period period period as of March period Number of employees 1,037 (full-time only)
31, 2020 calls each quarter and offer investors opportunities to Group companies Chariloto Co., Ltd.
Property, plant and equipment Our consult with management directly several times a year. Net Dreamers Co., Ltd.
Statement User surprise first
270 philosophy
In terms of tools for information disclosure, financial Chiba Jets Funabashi Co., Ltd.
Buildings 964 4,608 5,302 768 227 4,533 SFIDANTE Inc.
(136)
results reports and other timely disclosures, as well as
799 mixi recruitment, Inc.
Tools, furniture and fixtures 3,326 2,547 5,074 2,228 897 2,846 quarterly securities reports (published in Japanese only), mixi empowerment, Inc.
(80)
7,532 What we presentation materials, and videos of financial results Corporate website http://mixi.co.jp/en
Mission
Construction in progress 2,235 5,405 108
should do — For communication
— 108 presentations are posted to our corporate website. Stock exchange listing First Section of Tokyo Stock Exchange
(—)
(from June 23, 2020)
Total property, plant 8,602 Going forward, we will continue to conduct IR activities
6,526 12,562 10,486 2,997 1,125 7,489 Securities code 2121
and equipment (216) from a medium- to long-term perspective, strengthening
Integrity Fiscal year end March 31
Intangible assets Our action Be creative engagement and valuing dialogue with shareholders and Annual ordinary general meeting of shareholders
Values
33 guidelines First mover
Software 418 111 496 251 Inclusiveness78 244 investors with the aim of achieving sustainable growth in June
(—) Independent public accountants
corporate value.
1,175 PricewaterhouseCoopers Aarata LLC
Other 21 2,382 1,229 154 153 1,074
(—) Common stock Authorized: 264,000,000 shares
1,208 Principal IR activities in FY2020 Issued: 78,230,850 shares
Total intangible assets 440 2,493 1,725 406 232 1,318 Number of shareholders 18,681
(—)
CONTENTS Annual Stock transfer agent Sumitomo Mitsui Trust Bank, Limited
(Notes) 1. Major components of the increase during the period are as follows:
mixi Group’s Business Areas ...................................................................................... 1 Details frequency
Buildings: Acquisition of a building in the relocation of the head office (¥4,548 million)
FinancialofHighlights
Tools, furniture and fixtures: Purchase of utensils and fixtures in the relocation / Non-fi
the head offi ce (¥1,755 nancial million) Information ..................................... 2 Financial results briefing sessions for securities Principal shareholders
4
Intangible assets (Other): Acquisition of customer–related assets (¥1,011 million)
To Our Stakeholders ........................................................................................................ 4 analysts and institutional investors Number of Percentage
2. Major components of the decrease during the period are as follows: Name shares held of total
Business Models and Performance of Existing Services ...................... 10 Small group meetings for securities analysts and
Tools, furniture and fixtures: Disposal of utensils and fixtures in the relocation of the head office (¥231 million) 1 Kenji Kasahara 34,101,900 45.25
3. Figures in the parentheses in decrease during the period represent the mixi Group’s
amount Financial Strategy
of impairment loss recorded.
............................................................................... 12 institutional investors
THE BANK OF NEW YORK MELLON 140051
ESG at mixi Group.............................................................................................................. 16 Meetings and conference calls with domestic investors 76 2,766,900 3.67
(standing proxy: Mizuho Bank, Ltd.)
(Schedule of allowances) ESG / Relationships with the Environment and Society ....................... 18 Meetings and conference calls with overseas investors 71 STATE STREET BANK AND TRUST COMPANY
(Millions of yen)
Environmental Consciousness ........................................................................... 18 505038
Note: “Domestic investors” are investors with an office in Japan. All other
1,750,867 2.32
Decrease
Social during.................................................................................................. 18
Contributions (standing proxy: The Hongkong and Shanghai
Balance at investors are regarded as “overseas investors.” Banking Corporation Limited Tokyo Branch)
Increase during the period Decrease during Balance at end of
Classification beginning of Message from the CTO............................................................................................. 20
the period (use for intended the period (other) period THE BANK OF NEW YORK 133612
1,448,200 1.92
period ESG / Corporate Governance..................................................................................... 23 (standing proxy: Mizuho Bank, Ltd.)
purpose) Investor relations web page
Allowance for doubtful accounts 2,527 2,423 Directors .............................................................................................................................
1,101 1,425 2,423 23 SAJAP (standing proxy: MUFG Bank, Ltd.) 1,088,100 1.44
https://mixi.co.jp/en/ir/
Audit and Supervisory Board Members ..................................................... 25 Note: The Company has 2,881,300 treasury shares.
Provision for bonuses 827 1,157 827 — 1,157
Message from an Outside Director................................................................. 26 As these shares carry no voting rights, they are omitted from the
(Note) Decrease during the period (other) of allowance for doubtful accounts includes reversed amount of ¥1,425 million. principal shareholders above and subtracted from calculations for the
Corporate Governance Structure .................................................................... 27 percentage of the total.
Risk Factors ....................................................................................................................... 29
Financial Information ..................................................................................................... 31 Breakdown of shareholders by type
Details of Major Assets and Liabilities Summary of IR Activities / Investor Information ....................................... 75 Financial institutions and
financial instruments brokers Other corporations
Disclaimer Regarding Future-Oriented Statements
Due to the availability of consolidated financial statements, information regarding
This report containsmajor assetsstatements
future-oriented and liabilities is omitted.
concerning plans, predictions, 7.07% 0.35%
projections, strategies, and operating results. These future-oriented statements reflect 5,529,431 shares 273,518 shares
management assumptions based on information available to management as of the
date of this report’s publication and are thus subject to risks and uncertainties that may Individuals and others Foreign corporations
cause actual results to differ significantly from such statements. These risks and
Other uncertainties include, but are not limited to, the economic environment in which mixi 60.61% 31.97%
Group’s businesses operate, changes in the development status of products and services, 47,417,947 shares 25,009,954 shares
and fluctuations in currency exchange rates.

Note: The content of this report is based on mixi Group’s consolidated results for fiscal year Note: A total of 2,881,300 treasury shares (28,813 units) are included in
There is no relevant information. “Individuals and others.”
2020, ended March 31, 2020. However, some information is from April 2020 or later.

74 mixi Group Annual Report 2020 Notes to Financial Statements | Summary of IR Activities | Investor Information 75