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President's Message

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TO OUR SHAREHOLDERS

I would like to express my appreciation for your continued support and understanding of the Company.

The 19th business term (the fiscal year ended June 30, 2018) was a year for selection and focus under the Mid-term Business Plan, "Road to 2020." Specifically, we concentrated on launching applications for users and releasing "Brand Official," a new service for cosmetics manufacturers. The release of these applications and services has successfully prepared a beauty platform base for the Company to pursue.

Meanwhile, the domestic stores business is growing steadily. The Company ventured into retailing in its early stage as an IT company with the first store opening in 2007. Now, retail sales have finally grown to close to 10.0 billion yen. I believe that our stance of not proceeding with IT merely for cost reduction but working to collaborate with @cosme with a view to satisfying customers has been gradually accepted.

As for the global business, growth of cross-border E-commerce in China together with revenue in Malaysia, etc. has enabled the Company to proceed with the diversification of revenue.

We will further give topspin to our businesses in the 20th business term based on these services we have developed in the 19th business term.

Specifically, we will increase the utilization rate for an @cosme application, as the beginning of our innovation. Use of the application will enable customers to more conveniently enjoy services appropriate for their individual needs.

In order to intensively invest in this innovation, we expect decreased operating income in spite of increased net sales in the 20th business term. Though our shareholders may have concerns, I believe that we have reached an ideal moment for investment now that we have developed our platform base. I have no doubt that enhancing the utilization rate of the application we are to make with this investment will eventually increase the value of the services we will be able to provide for manufacturers.

I feel that business environment surrounding the Company is catching a tailwind. The Company is making concerted efforts to provide customers with brand new @cosme value. I greatly appreciate your ongoing support and understanding.

September 2018

Tetsuro Yoshimatsu, President and Chief Executive Officer

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