Contentsirvision2next.blob.core.windows.net/4326/ir/12519324931599999999... · Contents 02 The INTAGE Group’s Value Creation Model ... 1964 Launched SCI (Household consumer panel

Contents

02 The INTAGE Group’s Value Creation Model

04 INTAGE Group Snapshot

06 Consolidated Performance Highlights

08 Message from the President

13 Discussion: Using AI to Create New Value

16 Overview of Services

19 Review of Operations 19 Marketing Support (Consumer Goods & Services) 21 Marketing Support (Healthcare) 23 Business Intelligence

24 Sustainability

26 Corporate Governance

28 Management Team

30 Management’s Discussion and Analysis

33 Business-Related Risks

35 Consolidated Financial Statements 35 Consolidated Statements of Income 35 Consolidated Statements of Comprehensive Income 36 Consolidated Balance Sheets 38 Consolidated Statements of Changes in Net Assets 39 Consolidated Statements of Cash Flows

40 Corporate Data/INTAGE Group

41 Stock Information

Forward-Looking StatementsThis INTAGE Group Report contains forward-looking statements concerning future strategies of INTAGE HOLDINGS Inc. These forward-looking statements are not historical facts. They are expectations and projections based on information currently available to the Company and are subject to a number of risks, uncertainties, and assumptions. As such, actual results may differ materially from those projected.

We connect our customers to their customers, to create a prosperous society of limitless possibilities.

1960 1970

Growth in Consolidated Net Sales

THEINTAGEGROUP

WAY

History

1960sFrom the Company's founding in 1960, conducted and gradually systematized panel research and data collection and analysis.

1960 Established Marketing Intelligence Corporation (MiC) (now INTAGE HOLDINGS Inc.)

Launched SDI (Drug-store Tracking Research)

Began custom research

1964 Launched SCI (Household consumer panel research)

1970s-1980sStrengthened and expanded systems in step with changing times.

1987 Net sales surpassed ¥10 billion

1988 Began switch to SCI “home scan” data gathering system

1990sBuilt a variety of panels and began development of retail POS tracking.Made bold moves into big data utilization with the arrival of the Internet.

1994 Launched SRI (FMCG* retail tracking research) * Fast-moving consumer goods

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See page 17.

Know today,Power tomorrow

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See page 16.

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See page 16.

1980 1990 2010 20162000

The INTAGE Group formulated THE INTAGE GROUP WAY as an update of the former Group vision and code of conduct on the occasion of the Group’s 55th anniversary.

Intelligence is the origin of our business. THE INTAGE GROUP WAY expresses our determination to “power tomorrow” by connecting people, products and services with intelligence that adds value to information, in order to achieve further growth. The phrase “create a prosperous society of limitless possibilities” embodies the desire of

the INTAGE Group as a collection of businesses to contribute to the creation of a society in which products, healthcare and services that match people’s needs grow and expand the range of options available to consumers.

Based on our new corporate identity, we will strive to be the company of choice for our various stakeholders through contributions to society that reflect our vision and take full advantage of the unique capabilities of the INTAGE Group.

Our New Corporate Identity: THE INTAGE GROUP WAY

Year endedMarch 2016

¥45.4billion

2000s-2010sExpanded business operations in Asia and focused on development of new services in the communications area.

2000 Introduced “The Intelligence Provider” as our business vision

2001 Changed company name to INTAGE Inc.

Shares listed on JASDAQ

2002 Established INTAGE Marketing Consulting (Shanghai) Co., Ltd. (now INTAGE CHINA Inc.) 2005 Launched personal eye (consumer panel survey)

2007 TM Marketing Inc. (now ANTERIO Inc.) becomes a subsidiary

2008 INTAGE listed on the Second Section of the Tokyo Stock Exchange

Established INTAGE (Thailand) Co., Ltd.

2009 INTAGE listed on the First Section of the Tokyo Stock Exchange

2010 Launched SCI-personal (nationwide consumer panel research)

2011 FTA Research and Consultant, LLC (now INTAGE VIETNAM LIMITED LIABILITY COMPANY) becomes a subsidiary

2012 Established DOCOMO InsightMarketing, INC. as a joint venture with NTT DOCOMO INC.

Established INTAGE INDIA Private Limited

Japan Medical Information Research Institute Inc. becomes a subsidiary

2013 Launched i-SSP

Established INTAGE SINGAPORE PTE. LTD.

CONSUMER SEARCH HONG KONG LIMITED becomes a subsidiary

Established PT. INTAGE INDONESIA

2014 Name of SCI-personal changed to SCI

Established Plamed Korea Co., Ltd.

Sales surpassed ¥40 billion

2015 Established INTAGE CONSULTING Inc.

Established Nielsen-INTAGE DigitalMetrics Inc. as a joint venture between INTAGE Inc. and The Nielsen Company

2016 Established DataAge Inc.

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See page 17.

01INTAGE GROUP REPORT 2016


Know today, Power tomorrow

Our Value

The INTAGE Group’s Value Creation Model

Our Strengths

The Value We Offer

Understandingof marketing

Research, analysis and

handlingtechniques

Collaboration with

other industries

Understanding of consumers

Knowledge ofa wide range of industries and

businesses

Consulting expertise

Development capabilities for IT needs

02 INTAGE HOLDINGS INC.


Know today, Power tomorrow

Our Value

Our Solutions

The Value We Offer

Business Intelligence

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See page 23.

Marketing Support (Healthcare)

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See page 21.

Marketing Support (Consumer Goods

& Services)

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See page 19.

Data-driven solutions and services

Data analysisOTC andprescription drug surveys

CRO

(Contract research organization)

ED

C system

sP

rescription data analysis

IT infra

stru

ctur

e

installa

tion

Pan

el r

esea

rch/

cust

om r

esea

rch

Co

mm

unic

atio

n

Glo

bal r

esearch

Systems development

Research &

Developm

ent

IT solutions


INTAGE Group Snapshot

Sales Growth Leadership in Japan

Consolidated net sales for the year ended March 31, 2016 were ¥45.4 billion, up 3.5% from the previous fiscal year. This marks the INTAGE Group’s 23rd consecutive year of sales growth.

The INTAGE Group began conducting panel research in 1960, and since then has consistently delivered high-level service in terms of data quality and quantity, analytical know-how, price and speed. Today, our panel research has become the de facto standard across many industries.

Consolidated Net SalesData collected continuously from panel participants over a long period

Alliance between INTAGE Inc., ALBERT Inc. and DOCOMO InsightMarketing, INC. in the CRM fieldStarted co-development of data management platform (DMP) to support the use of big data

Established Nielsen-INTAGE DigitalMetrics Inc. (INDIGIM), a joint venture between INTAGE Inc. and The Nielsen CompanyBegan development of new advertising effectiveness measurement solution

Capital and business alliance between ASKLEP Inc. and Kyoto Constella Technologies Co., Ltd.Expanded pharmacovigilance services and started drug discovery research support

Business alliance between INTAGE TECHNOSPHERE Inc. and TENMONDO INC. Began unique course evaluation analysis in the field of university institutional research support

Capital and business alliance between INTAGE TECHNOSPHERE Inc. and XCompass Intelligence Ltd. Deepened cooperation in business for companies using AI information processing technology

Cooperation between INTAGE Inc. and Agile Media Network Inc.Started cooperation in inbound marketing services for foreign visitors to Japan

Establishment of DataAge Inc., a joint venture between INTAGE TECHNOSPHERE Inc. and AGS CorporationHigher productivity and lower costs by using shared infrastructure in IT operations

(Billions of yen)

20152014201320122011(Years ended March 31)

20102009200820072006 20160

50.0

45.0

35.0

40.0

30.0

25.0

45.4

Years of Sales Increases23 No.1

The INTAGE Group’s Business Alliances and Cooperation in Recent Years

Sep. 2014

Apr. 2015

May 2015

Jun. 2015

Jul. 2015

Jan. 2016

Apr. 2016

Discussion: Using Al to Create New Value

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P.13


Expansion of Overseas Operations Global Position

Since its founding, the INTAGE Group has won the support of a long list of clients as one of Japan’s leading marketing research providers. We rank first in Japan and ninth worldwide in the latest rankings.

Overseas Operations

INTAGE HOLDINGS Inc.

Marketing Research IT

Main Companies Supporting the INTAGE Group

Main Operating Companies

• INTAGE Inc.• INTAGE RESEARCH Inc.• Access JP Inc.• Overseas subsidiaries

Main Operating Companies

• ANTERIO Inc.• ASKLEP Inc.• Japan Medical Information Research Institute Inc.• PLAMED Inc.

• INTAGE TECHNOSPHERE Inc.

Group Companies at a Glance

Consumer Goods & Services


Healthcare

(As of June 2016)

ChinaKorea

Hong Kong, Macao

Thailand

India

Vietnam

Singapore

Indonesia

Top 10 Global Marketing Research Companies

Source: Marketing News, August 2015 edition (American Marketing Association)* The ranking is as of August 2015. Sales for the fiscal year ended March 31, 2015.

9 Countries and Regions

INTAGE Inc.No. 1 in Japan in marketing research

INTAGE TECHNOSPHERE Inc.Provides IT solutions with a marketing perspectiveUnique IT company with comprehensive strengths

ASKLEP Inc.Industry leader in post-marketing surveillance

ANTERIO Inc.Dominant strength in custom research of pharmaceuticals

Major Companies

Rank Company Name and Location of Headquarters

2014 Sales (Millions of U.S. dollars)

1 Nielsen Holdings N.V. (U.S.) 6,288.0

2 Kantar (U.K.) 3,835.0

3 IMS Health Inc. (U.S.) 2,600.0

4 Ipsos S.A. (France) 2,219.9

5 GfK SE (Germany) 1,932.0

6 Information Resources Inc. (U.S.) 954.0

7 Westat Inc. (U.S.) 517.4

8 dunnhumby Ltd. (U.K.) 481.4

9 INTAGE Group (Japan) 415.4*

10 Wood Mackenzie (U.K.) 374.2

The INTAGE Group is expanding its business presence in Asia, with operating bases in China, Korea, Hong Kong, Macao, Thailand, Vietnam, India, Singapore and Indonesia.

No.9


Notes: 1. In line with the enactment of the Companies Act of Japan in 2006, “Total net assets” for fiscal years ended on or after March 31, 2007 has been calculated by adding minority interests and other items to “Total shareholders’ equity” from prior years. 2. On October 1, 2013, the Company implemented a stock split at a ratio of two shares for each share of common stock. However, net income per share and net assets per share is calculated assuming this stock split took place at the beginning of the previous fiscal year.

INTAGE HOLDINGS Inc. and Consolidated Subsidiaries

Net Sales Operating Income/Operating Margin

Net Income Attributable toOwners of the Parent/Net Income per Share2

3.503.30

2.88

3.573.883.88

7.9 8.3 8.2 8.1 8.58.5

0

16

12

8

4

201420132012 2015 20160

4.0

3.0

2.0

1.0

42.50

(Billions of yen) (Billions of yen)

1.64

1.241.32

2.462.322.32

131.85

62.1581.66

123.03 116.55116.55

0

250

200

150

100

50

201320132012 2015 20160

2.4

3.0

1.8

1.2

0.6

(Billions of yen) (Yen)(%)

39.9336.65

43.92 45.48

201420132012 2015 20160

50.0

40.0

30.0

20.0

10.0

Operating Income (left scale)(Years ended March 31) (Years ended March 31) (Years ended March 31)

Operating Margin (right scale)Net Income Attributable to Owners of the Parent (left scale)Net Income per Share (right scale)

Consolidated Performance Highlights

Years ended March 31 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

For the Year:

Net sales ¥45,481 ¥43,925 ¥42,508 ¥39,930 ¥36,658 ¥36,538 ¥34,526 ¥34,345 ¥33,104 ¥30,800 ¥28,777

Cost of sales 33,257 31,723 31,107 29,121 25,874 26,021 24,138 23,870 22,755 21,958 20,681

Selling, general and administrative expenses 8,340 8,630 7,895 7,499 7,898 7,051 7,131 7,154 7,034 5,910 5,481

Operating income 3,883 3,571 3,505 3,309 2,885 3,465 3,256 3,320 3,314 2,930 2,614

Net income attributable to owners of the Parent 2,326 2,463 1,642 1,249 1,325 1,915 1,679 1,728 1,765 1,626 1,361

Cash flows from operating activities 1,713 2,947 3,612 3,433 2,943 3,025 2,905 3,190 2,247 2,042 1,627

Cash flows from investing activities (1,791) 2,327 (1,151) (1,332) (3,341) (1,052) (1,810) (1,554) (1,033) (1,902) (1,060)

Cash flows from financing activities 1,566 (4,940) (592) (960) 675 (1,108) (924) (1,707) (546) 9 (597)

Cash and cash equivalents at end of year 9,812 8,366 7,926 5,906 4,599 4,337 3,484 3,303 3,394 2,721 2,569

At Year-End:

Total assets 36,830 33,301 33,740 29,398 27,730 24,660 23,349 21,180 21,261 20,272 17,945

Total net assets1 21,338 19,917 17,171 15,493 14,517 13,757 12,386 11,590 10,288 9,034 7,454

Equity ratio (%) 57.5 59.3 50.5 52.5 52.3 55.8 53.0 54.2 47.9 43.4 41.5

Per Share Data (Yen):

Net income2 116.55 123.03 81.66 62.15 131.85 190.51 164.31 168.69 170.10 157.58 129.34

Total shareholders’ equity2 1,060.17 989.01 846.49 767.29 1,442.25 1,367.39 1,230.86 1,120.90 994.41 851.35 719.52

Cash dividends3 32.50 30.00 27.50 50.00 50.00 50.00 50.00 50.00 40.00 30.00 26.00

Financial Data (%):

Operating margin 8.5 8.1 8.2 8.3 7.9 9.5 9.4 9.7 10.0 9.5 9.1

ROA 11.3 10.3 10.7 11.2 10.9 14.3 14.5 15.6 16.0 15.2 14.7

ROE4 11.4 13.4 10.1 8.4 9.4 14.7 14.1 15.9 18.6 20.0 19.9


3. On October 1, 2013, the Company implemented a stock split at a ratio of two shares for each share of common stock. Dividend amounts for fiscal years prior to the year ended March 31, 2014 are the actual amounts before the stock split. 4. ROE for fiscal years ended on or after March 31, 2007 = Net income ÷ Average shareholders’ equity x 100

Fiscal 2016 Results Summary

Net sales

¥45,481 million +3.5% YoY (new record)

Operating income

¥3,883 million+8.7% YoY (new record)

Net income attributable to owners of the Parent

¥2,326 million -5.6% YoY

Cash dividends per share

¥32.50

Total Assets/Total Net Assets/Equity Ratio ROA/ROE

Payout Ratio/ Cash Dividends per Share3

13.4

8.4

10.9

10.3

11.411.4

9.4

11.211.2 10.7

10.111.3

(Years ended March 31) (Years ended March 31) (Years ended March 31)Total AssetsTotal Net AssetsEquity Ratio (right scale)

0

80

20

40

60

201420132012 2015 20160

16

12

8

4

(Billions of yen) (%) (%)

27.5

50.050.0

30.0

28.128.1

37.9 40.233.7

24.5

32.532.5

0

60

45

25

30

201420132012 2015 20160

75

100

50

25

(%) (Yen)

36.83

201420132012 2015 20160

40.0

20.0

30.0

10.0

ROEROA

Payout Ratio (left scale)Cash Dividends per Share (right scale)

14.51

27.7327.73

15.4917.17

19.91

29.3933.74 33.30

52.552.552.352.3 50.5

59.357.557.5

21.3321.33

(Millions of yen)

Years ended March 31 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

For the Year:

Net sales ¥45,481 ¥43,925 ¥42,508 ¥39,930 ¥36,658 ¥36,538 ¥34,526 ¥34,345 ¥33,104 ¥30,800 ¥28,777

Cost of sales 33,257 31,723 31,107 29,121 25,874 26,021 24,138 23,870 22,755 21,958 20,681

Selling, general and administrative expenses 8,340 8,630 7,895 7,499 7,898 7,051 7,131 7,154 7,034 5,910 5,481

Operating income 3,883 3,571 3,505 3,309 2,885 3,465 3,256 3,320 3,314 2,930 2,614

Net income attributable to owners of the Parent 2,326 2,463 1,642 1,249 1,325 1,915 1,679 1,728 1,765 1,626 1,361

Cash flows from operating activities 1,713 2,947 3,612 3,433 2,943 3,025 2,905 3,190 2,247 2,042 1,627

Cash flows from investing activities (1,791) 2,327 (1,151) (1,332) (3,341) (1,052) (1,810) (1,554) (1,033) (1,902) (1,060)

Cash flows from financing activities 1,566 (4,940) (592) (960) 675 (1,108) (924) (1,707) (546) 9 (597)

Cash and cash equivalents at end of year 9,812 8,366 7,926 5,906 4,599 4,337 3,484 3,303 3,394 2,721 2,569

At Year-End:

Total assets 36,830 33,301 33,740 29,398 27,730 24,660 23,349 21,180 21,261 20,272 17,945

Total net assets1 21,338 19,917 17,171 15,493 14,517 13,757 12,386 11,590 10,288 9,034 7,454

Equity ratio (%) 57.5 59.3 50.5 52.5 52.3 55.8 53.0 54.2 47.9 43.4 41.5

Per Share Data (Yen):

Net income2 116.55 123.03 81.66 62.15 131.85 190.51 164.31 168.69 170.10 157.58 129.34

Total shareholders’ equity2 1,060.17 989.01 846.49 767.29 1,442.25 1,367.39 1,230.86 1,120.90 994.41 851.35 719.52

Cash dividends3 32.50 30.00 27.50 50.00 50.00 50.00 50.00 50.00 40.00 30.00 26.00

Financial Data (%):

Operating margin 8.5 8.1 8.2 8.3 7.9 9.5 9.4 9.7 10.0 9.5 9.1

ROA 11.3 10.3 10.7 11.2 10.9 14.3 14.5 15.6 16.0 15.2 14.7

ROE4 11.4 13.4 10.1 8.4 9.4 14.7 14.1 15.9 18.6 20.0 19.9


By executing our new Group vision, we will aim to further increase our corporate value.

Pioneering the Future with“THE INTAGE GROUP WAY”

Message from the President

Kenji Miyakubi


President and Representative Director


Record Sales and ProfitsThe INTAGE Group is currently implementing the 11th Medium-Term Management Plan (for the three years ending March 31, 2018), with the theme of “Renovation and Innovation,” to speed up the pace of growth. In the year ended March 31, 2016, the second year of the plan, we made progress toward our financial and strategic objectives.

In terms of financial performance, net sales and operating income both reached record levels. Net sales increased 3.5 percent compared with the previous fiscal year, but we view real growth as more than 5 percent, considering that we recorded a large, single order from a government agency of more than ¥1.0 billion in the year ended March 31, 2015. We are not satisfied with that, of course, and are steadily creating the foundation for further growth. As for profits, DOCOMO InsightMarketing, INC. (a joint venture established in 2012 with NTT DOCOMO, INC.) moved into the black and contributed to our bottom line.

By segment, the Marketing Support (Consumer Goods & Services) segment posted stable sales in panel research as well as strong performance in the communications area and custom research. The Marketing Support (Healthcare) segment also increased sales and profits with growth in custom research and post-marketing surveillance. In the Business Intelligence segment, which engages in software development and systems operation, sales growth was partly driven by orders for system development projects in the travel sector. While profits were down slightly, reflecting the absence of large, highly profitable orders received in the previous fiscal year, this business generally posted solid results in line with the plan.

Steady Progress with Each of Our Strategic PointsAmong the initiatives in the 11th Medium-Term Management Plan, rearrangement of the Group formation has produced very good results.

First, we have introduced new segments based on client industries and services provided to make the Group’s strategies clearer. Our businesses can largely be divided into Marketing Support and Business Intelligence. In the former, we not only conduct market research but aim to be a strategic partner to our customers. The latter focuses on building new business models geared to big data and the

Pioneering the Future with“THE INTAGE GROUP WAY”

Review of the Year Ended March 31, 2016

Introduced new segments based onclient industries andservices provided

The 11th Medium-Term Management Plan (April 2014-March 2017)

Basic Policy Renovation & InnovationToward accelerated growth utilizing our deep insights on people as our greatest asset.

Starting Point = Action Principle Consumers first, with a thorough commitment to intelligence

Priorities

Reinforcement Boost market value by reinforcing mainline businesses

Fruition Achieve steady growth in the mobile & single-source, global and healthcare fields

Challenge & Creation Seek and establish new business models transcending research

Acceleration Strengthen the management of strategic planning and implementation from optimal perspectives

Record sales and operating income

Big DataLarge quantities of data that are generated and recorded daily in various types and forms



Internet of Things (IoT), and we intend to build it into a future growth driver.

The Marketing Support business is further divided into the consumer goods & services industry and the healthcare industry, indicating the direction in which the INTAGE Group is moving. Healthcare in particular will increasingly be a focal point in countries with rapidly aging populations. Therefore, we plan to grow by taking advantage of synergies among the three Group companies specializing in the healthcare sector and accelerating expansion overseas.

In addition, we have carried out business transfers within the Group and shifted to a more specialized service system. This has helped to clarify the issues and themes that each company and business should prioritize, and I feel that they are addressing those issues and themes more quickly.

Sales have improved substantially in our overseas businesses, which are close to becoming profitable. In the communications area, which we have positioned as a growth business, we have seen solid expansion in the scale of business, and new initiatives are making good progress. One such initiative is a service for measuring digital advertising reach that was launched by Nielsen-INTAGE DigitalMetrics Inc., a joint venture established in 2015 by INTAGE Inc. and The Nielsen Company.

We have also steadily made strategic investments for Group-wide growth, including investments related to next-generation retail tracking research and single-source data and the development of a new electronic data capture (EDC) system. We are particularly excited about our new investments for capturing diverse business opportunities, such as our initiatives with artificial intelligence (AI) technology provider XCompass Intelligence Ltd., with which we formed a capital and business alliance in the previous fiscal year, and business with Kyoto Constella Technologies Co., Ltd., which provides a pharmaceutical adverse event reporting system.

Shifting Gears to “Innovation”In the year ending March 31, 2017, the last year of the 11th Medium-Term Management Plan, we will pursue more aggressive business activities as we finish up “Renovation” and shift gears to “Innovation.”

For “Renovation,” over the last two years we have taken various steps to reinforce our mainline businesses and raise our market value. In the retail tracking research business, in addition to the rearrangement of the Group formation I mentioned earlier, we forced the withdrawal of competitors. In custom research, we increased

Upcoming Initiatives

Next-Generation Retail Tracking ResearchIn retail tracking research, the INTAGE Group’s mainstay service, we have established a platform for the use of big data, such as census data using artificial intelligence, to develop services for retailers and manufacturers.

Adverse EventsSide effects that come to light after a drug is manufactured and sold.

Substantial improve-ment in earnings of overseas businesses

The 11th Medium-Term Management Plan

The Group’s Basic Policy

INTAGE HOLDINGS’Basic Policy

Strategic Point

Renovation & InnovationEnter the final stage of renovation to put more focus on innovation

Further strategic investments to create a new growth engineEffort and investment funneled into R&D (an R&D perspective)

1 Creation of new service areas through the use of Deep Learning technologies 2 Initiatives taken by IXT Inc. 3 Overseas business challenges

Develop and establish an environment for strategic investments and group management systems, while looking at the five years ahead

Key words

IoT Big Data AI

Single SourceCollection of various data, such as purchases and contact with advertising, from the same individuals. INTAGE Inc. offers the “i-SSP (INTAGE Single Source Panel)” as one of its services.

▲

See page 17.

EDC SystemElectronic collection of clinical testing data. ASKLEP Inc. has developed the “ADDIN” series of EDC systems.

▲

See page 22.

IoTThe network of physical objects of various kinds that are connected to the Internet, allowing them to exchange data and be controlled remotely. Also refers to the structure of such a network.


the number of operation bases and improved profitability by examining the progress management of projects and business operations. In the year ending March 31, 2017, we will shift our emphasis to “Innovation.” To do so, we set “Further strategic investments to create a new growth engine” as a strategic point. Focusing only on the short term will catch up with a company sooner or later, even if it takes a defensive approach to business. The key is to manage for earnings growth in the present while also steadily making investments for the future.

Technology is at the heart of our business, but we do not intend to simply conduct research and development. These days, we cannot assume that business will develop according to the original plan, and involving our clients in an ongoing process of innovation and renovation as we conduct research and development will lead to faster creation of new businesses.

Key Words: IoT, Big Data and AIThree specific examples illustrate what we are doing.

The first is development of an automatic identification system for digital content using deep learning technology. A massive amount of digital content exists today, mainly on the Internet, but this system is capable of automatically recognizing and extracting the audio and video of content that a specific target comes into contact with; discovering relationships between, and rules for, consumer purchasing and attitude changes; and performing classification and patterning for optimal ad placement.

The second example is an initiative at IXT Inc., which was established in January 2015. This initiative uses INTAGE’s technologies for collection, cleaning and attribution based on individual smart TV viewing log data and detailed TV program data. By making this huge volume of data, or big data, meaningful, IXT will develop services for applying it in the areas of communication and research.

The third example is initiatives in overseas businesses. To enhance the sales capabilities of overseas subsidiaries, we will strengthen their expatriate functions, expand operating bases and restructure organizations. In addition, we will release locally developed products under the leadership of our regional office in Thailand. We are also setting up healthcare operations at overseas offices in cooperation with ANTERIO Inc., a Group company that specializes in healthcare research, and overseas subsidiaries in Asia. With this structure in place, we will begin to take a full-scale approach to developing healthcare-related business in Asia and building the customer base.

The key words in the strategic investments we are making are “IoT,” “Big Data” and “AI.” Many companies in the world will be transformed by these technological waves, and forms of business are also likely to change drastically. The INTAGE Group up to now has taken the initiative in technological development, but we will accelerate business creation through collaboration with outside partners. In incorporating their technologies, the area I will focus on in particular is automation. The development of the automatic identification system for digital content is a representative example. We will also consider the partial automation of business processes in our own operations to improve efficiency and optimize allocation of resources.

Further strategic investments to create a new growth engine

Performance Outlook and Shareholder Returns for the Year Ending March 31, 2017

Expecting Sales and Profit Growth through Steady EffortsBased on the policies and strategies I have outlined, we are anticipating sales and profit growth again in the year ending March 31, 2017. While we will focus on generating solid earnings growth in each of our businesses, we will aggressively

Measures to reinforce core businesses made smooth progress

AIRefers to software and systems that mimic the intellectual processes of the human brain with computers.

▲

See page 13-15.


Enhancing Corporate Value

Stronger Governance and Human Resource DevelopmentIn response to the Corporate Governance Code that came into effect in June 2015, we have started to build a new governance system. We are aiming for “aggressive governance” with an emphasis on creating an environment that supports appropriate risk-taking by the business execution side. To facilitate that effort, we decided to shift to an Audit & Supervisory Committee structure from a Board of Corporate Auditors structure. This change will speed up the business plan review process, and we will transition to “monitoring-based management” that focuses on the execution process.

The source of the corporate value enhancement we are aiming for is, without a doubt, our talented people. Up to now, we have placed high priority on the development of individual employees, and focused on efforts such as improving professional development programs and conducting proactive training. While we will continue these programs, we plan to take additional measures to boost employee mobility within the Group and groom the next generation of managers.

Furthermore, in recent years, the importance of creating shared value (CSV), in which companies pursue profits while simultaneously creating value for society, has been acknowledged. The INTAGE Group also subscribes to that view. We believe it is important to determine how to make the value of the information we handle a useful mechanism for society, and are currently considering policies for accomplishing that.

Know today, Power tomorrowThe INTAGE Group has established itself as Japan’s number-one marketing research company, but we believe our expertise can also be applied in other fields in the future. Drawing on advanced technology, we will help our clients to grow and create value for consumers. Handling information and increasing its value is our path to growth.

“THE INTAGE GROUP WAY,” our new corporate identity, conveys this line of thinking, which is shared by managers and employees alike. The new Group vision is “Know today, Power tomorrow”. Our passion for and commitment to information is as strong as ever, and we want to help create a prosperous society with limitless possibilities by serving as a bridge that connects our clients to their customers.

I hope our shareholders will continue to share our excitement about the future of the INTAGE Group as we continue to tackle new challenges.

July 2016

Forecast for annual dividends per share: 35.0 yen (26.6% payout ratio)

Shifting to monitoring-based management

make strategic investments for various research and development projects.

We also plan to enhance shareholder returns, which is one of our top management priorities. Our basic policy is to allocate profits based on consolidated results while maintaining a balance between dividends and retained earnings, with a target payout ratio of 30 percent. For the year ending March 31, 2017, we intend to pay dividends of ¥35.0 per share (a 26.6 percent payout ratio), an increase of ¥2.5 from the year ended March 31, 2016.

Kenji Miyakubi President and Representative Director



Artificial intelligence (AI) is generating high expectations and drawing a great deal of attention.

The INTAGE Group has been exploring the potential applications for AI in marketing research since the 1980s.

Today, INTAGE has a capital and business alliance with XCompass Intelligence Ltd., a startup founded at the Tokyo Institute of Technology that specializes in data analysis techniques using deep learning, an AI-driven data processing technology that is attracting interest globally. Together, INTAGE and XCompass Intelligence are conducting research and development for the creation of new businesses.

In this discussion, the presidents of the two companies talk about the landscape surrounding AI and new ideas from their own perspectives.



Kenji Miyakubi

President

XCompass Intelligence Ltd.

Akira Sato

Using AI to Create New Value

Miyakubi: The defeat of a professional Go player by an AI program was big news earlier this year.

Sato: Yes, that came as a surprise. I thought it would happen eventually, but not this soon. It demonstrates just how much the learning functions of AI have evolved.

Miyakubi: I have been interested in AI ever since I joined the company. The work I was doing involved market forecasting, and I had been

focusing on and studying a technique at that time called the neural network¹ because I wanted to improve accuracy. Another reason I was interested in AI was related to forecasting. I was working with small data – for example, predicting what the results would be if a particular chain opened dozens of stores in a year. Of course, my predictions

My involvement in AI started from a desire to achieve more advanced market forecasting.

Discussion


I want to apply AI to the know-how, insight and strengths we have cultivated as a research company to create new value.

sometimes missed the mark, and since our clients were very demanding, I had to look for the reasons why my predictions were wrong, and what elements were lacking. I was accumulating all of this data in order to create a model, and thought that if the process could be automated, we could build a more precise forecasting model and provide a higher level of service. That desire is what has driven my involvement in AI ever since.

Sato: My time at university coincided with the emergence of neural networks, the second AI boom. This was a model that imitated the structure of the neural circuitry of the human brain, and it was thought that AI could be achieved by using this structure. Until then, AI research had been conducted on topics such as machine learning, but for that to be effective, it was important to quantify the characteristics of objects and identify what are called “features.” The shape of an object appears different when it is viewed from above, and colors appear different at night, so the central focus of AI research was how to design features that could be used in as many

conditions as possible.

Miyakubi: In other words, if you could turn any drink into powder, and by pouring water onto the powder, turn it back into the original drink, that powder would be the feature. The mechanism for that had been developed, but making an effective “powder” was a difficult challenge.

Miyakubi: And then deep learning,² an evolved form of neural network, emerged.

Sato: Yes. Based on technology that appeared in the mid-2000s, deep learning was a dramatic evolution of neural networks. In deep learning, the features I talked about are not defined by a human, but are extracted automatically from data. This is a stunning development. Big data or visual images can now be input directly into a deep learning program essentially in their original form. The necessary features are automatically and hierarchically

extracted, and it has become possible to obtain features that are superior to those made by humans. The range of applications is also very broad. In addition to images, sounds, and games such as Go, deep learning can be applied, for example, to time-series data analysis and natural language processing. We can also now apply deep learning to problems that were difficult using previous methods. For example, even a child can easily recognize the difference between a dog and cat, but machines were not very good at that. They had limitations in deciding where to look to distinguish the difference between a dog and cat with the rules made by humans. Now a mechanism that allows the machine to identify objects in much the same way humans do has apparently been developed. It is expected that deep learning could lead to “strong AI.”

Miyakubi: There are many potential applications for deep learning in our business. Recently, I have been thinking about whether the research reports we produce could be written by AI. I would like humans to do more creative work and spend their time providing constructive services to clients. This is an important point. One thing I want to make clear is that we are not trying to launch an AI business, just as we did not go into

Creating New Value Using Deep Learning as a Platform1. Neural network:

An information processing mechanism modeled on the way the human brain processes information. A neural network has learning capabilities and is used to solve linearly inseparable problems such as speech, text and image recognition.

2. Deep learning:A type of machine learning based on neural networks, it performs deeper, multifaceted and multi-level learning of data features by changing intermediate (“hidden”) layers to a multi-layer configuration.

Discussion: Using AI to Create New Value


I view deep learning as one tool, and think we have to provide it as a shared asset that anyone can use.

the Internet business when the Internet came along. What I hope to do is use AI to create new value from the expertise, insight and strengths we have cultivated as a market research company.

Sato: The INTAGE Group has always been adept at analyzing data, and it has a lot of data. I hope that this alliance, in addition to allowing us to use that data, will enable us to build a platform by applying your company’s strengths in information analysis and approach to training as a good “teacher.”

Miyakubi: The other day, I received this question from an analyst: “In the future, a platform will be developed that allows general use of deep learning. When that happens, won’t differentiation become difficult?” I immediately replied that I didn’t think so, and that it should give rise to clear differentiation. No matter how much machine learning methods evolve, success will depend on setting the objective – what will we use this for? – and determining how to collect the necessary data and how to train the program to achieve that objective.

Sato: Exactly. The key is what you incorporate into the logic of deep learning.

Miyakubi: In the end, it will require precise data in order to learn. Since we have been insistent on that since the company was founded, I am confident that we will be in a good position.

Sato: By partnering with other companies, we want to combine the knowledge and expertise unique to their businesses with our own knowledge and platforms in order to create new value. We view deep learning as a tool, and I think we have to provide it as a shared asset that anyone can use. In that respect, too, I think it fits in well with the INTAGE Group's business model.

Miyakubi: That would be the common platform, the Intelligence eXchange (IX) concept that you talk about, right? What really matters is the kind of businesses that can be created using the platform. When a service is provided, AI will be working in the background where it is not directly visible.

Sato: It should be as invisible as air.

Miyakubi: That means it will be a system that is unseen from either the service provider’s or the customer’s perspective. I think the use of AI will be essential in the services that we intend to create, since it will certainly be embedded in our business structure. People’s lifestyles changed a great deal with the emergence of mobile technology and the Internet. Looking ahead, I expect AI to change people’s lives even more. It will also be important to transform our businesses and services by incorporating AI. Our partnership will broaden the possibilities for both of our companies, and I have high expectations that we can use deep learning as a shared asset and platform to create new business models.

Business Innovation and Creation of New Business Models


Overview of Services

Panel research involves the continuous collection of data on a fixed group of participants (individuals, households, stores, etc.) over an extended period. The INTAGE Group’s panel research makes it possible to assess both purchasing and sales data over time. Our retailer and consumer panel data, collected over many years, is utilized by approximately 400 of the leading companies in Japan for brand marketing and in-store promotions, and is considered an essential index for ascertaining consumer market trends and competitor conditions. Another key advantage of the INTAGE Group is that we can perform market analysis using a combination of retail panels and consumer panels.

Since its establishment as a specialist in market research, the INTAGE Group has grown with “the power of information” as its core competence. Today, with the diversification of communication driven by the Internet, and the increasing fragmentation of consumer preferences and behavior, the INTAGE Group provides a variety of services with its unmatched ability to collect, process, analyze and add value to information.

• Where, in what quantity and by whom products are purchased • Quantitative changes in the market structure associated with purchasing behavior such as

brand switching• Consumer attributes such as the types of people who are purchasing a product

What the data reveal

Using specialized scanners, smartphones and apps, the SCI collects data on purchases of food products, beverages and miscellaneous daily items, consumed both inside and outside the home, from 50,000 male and female respondents nationwide. It is Japan’s largest consumer panel, and provides insight based on high-quality data that gives a detailed picture of consumer purchasing behavior.

Panel Research

SCINationwide Individual ConsumerPanel Research

Main client industries

Food

Miscellaneous daily items

Beverages

Cosmetics

Consumer panel researchWhat do different types of households and individuals purchase, where and at what prices?

• Which products are sold when, where, in what amounts, at what prices, and at which kinds of stores

• How stores are competing in terms of distribution, merchandise assortment and price, and the resulting sales volume

• Merchandise assortment and hot-selling products by store type


The SRI collects POS data on a variety of product categories, such as food, beverages and miscellaneous daily items, from approximately 4,000 supermarkets, convenience stores and drugstores and other major retailers nationwide. It has unrivaled strength in this field, and is used as the standard index in various industries.

SRI Retail Tracking Research


Food


Beverages

Cosmetics

Retail tracking researchWhat kinds of products are selling when, where, and at what prices?


Today, with the spread of social networking sites and the use of multiple devices, new approaches to diversifying consumer purchasing behavior are required. The INTAGE Group’s panel research data provides a visual representation of the customer journey, and helps to measure the effectiveness of clients’ communication strategies.

• What was sold when, where and at what prices• The size of the market for each category• Changes in product market shares


• The actual media exposure of target segments and the faces of the audience• How to efficiently reach the target of the ad campaign• Whether the ad campaign strategy led to purchases or a better image


The SDI collects POS data focused on healthcare-related categories, centered on over-the-counter (OTC) drugs, from approximately 3,200 pharmacy, drugstore, supermarket and convenience store outlets nationwide. It has established a position as the sole source of data for learning about the OTC drug market.

The i-SSP collects data from the same person (single source data) on his or her exposure to advertisements and interaction with media such as television, computers and mobile devices. It is Japan’s largest cross-media single source panel, and provides comprehensive support for the marketing PDCA cycle from media planning to reach measurement and advertising effectiveness measurement.

SDI Drug-Store Tracking Research

INTAGE Single Source Paneli -SSP

i-SSP service overview

Collects purchasing data, media contact data and other data from the same person

Tablet Purchases Attributes and

values

Newspapers, outdoor

advertisements, etc.

TelevisionComputer Smartphone

Communications


Advertising agencies


Food

Mass media

Telecommunications

Beverages

Other panels


Pharmaceuticals


Overview of Services

Custom Research

Drug Development Flow and Service LineupA CRO is an organization that supports and performs various work-related clinical testing, post-marketing surveillance and safety information (pharmacovigilance) on behalf of pharmaceutical manufacturers. The INTAGE Group provides CRO services primarily in post-marketing surveillance and pharmacovigilance. We also support efficient, high-quality data accumulation that meets client needs using the EDC* system we developed.

In addition to healthcare-related information and data, we are also actively providing high-value-added services beyond the CRO framework.

* EDC (Electronic data capture): Electronic collection and management of clinical test results and other data

Basic research

Preclinical studies

Phase1

Phase2 Application Approval

Post-marketing

surveillance

Phase3

Clinical trials

Regulatory and application consulting

Pharmacovigilance support

IT solutions

Drug discoveryScreening

Data management, statistical analysis, medical writing and audits

Data management, statistical analysis, medical writing and audits

2-3 years 3-5 years 3-7 years 4-10 years

CRO (Contract Research Organization)

Variety of Solutions Developed by the INTAGE GroupIn the Business Intelligence business, the INTAGE Group works in software development and sales through to system operation, maintenance and management, as well as data center operations. Our support services are not limited to improving the operational processes related to system development and operation, but extend to a wide range of other services in support of management strategies, encompassing evaluation and analysis of the vast amount of data involved in clients’ business activities, and solutions based on that evaluation and analysis.

INTAGEGROUP

Distribution and retail• Demand/supply planning, SCM,

logistics planning solutions• Area Manager

Pharmaceuticals• Sales information systems• MR activity support systems

Publishing and books• Library support systems• Publishing POS information systems

Health insurance societies• Sukoyaka Support 21• Kenpo 2000CS• Health information data analysis services

Real estate• LandStage

Education• JobHunter+s

Travel• Screening/settlement outsourcing

services for travel coupons, etc.

System Development and IT Solutions

Mail Interviews Central location test

(CLT)

Door-to-door interviews

Data Collection Methods

Internet Access panel: approximately

6.38 million* individuals

This research is customized to address each client’s issues. We use various research methods and our unique analytical abilities to provide valuable information that reflects the real market situation.


Food and beverages

Advertising agencies

Automobiles

Telecommunica-tions


Pharmaceuticals

Cosmetics

Finance

Media

The industry’s largest online access panel comprising

some 6.38 million “Mighty Monitors”

• We can flexibly handle requests, from simple surveys to highly challenging research requiring detailed design.

• Respondents are classified by information screened for attributes and specific themes, enabling precise and efficient respondent selection.

• Mobile interviews by chat or video calls that take advantage of the unique characteristics of smartphones are also possible.

*As of June 2016


Operating Companies

• INTAGE Inc.

• INTAGE RESEARCH Inc.

• Access JP Inc.

• INTAGE CONSULTING Inc.

• IXT Inc.

• Overseas subsidiaries

Business Overview

The INTAGE Group mobilizes its sophisticated research techniques and data analysis capabilities based on data obtained from panel research and custom research to provide one-stop marketing support for a diverse range of customers, including consumer goods manufacturers. In this business, our understanding of consumers is the source of the value we deliver to our customers. Our main strengths in this business are panel data from both consumers and retailers, our understanding of the relationship between contact with media and purchasing behavior in a cross-media environment, and our ability to use Japan’s largest cross-media single source panel to provide a picture of actual consumer behavior.

Marketing Support(Consumer Goods & Services)

The consumer landscape is changing dramatically with the diversification of smart devices, the proliferation of social networking sites and the realization of the Internet of Things, backed by advances in digital technology. Along with these changes, massive amounts of data, or big data, from the activity logs of consumers and other sources is being accumulated every day. The use of AI to quickly and accurately process that big data is also becoming a reality.

In the INTAGE Group, we will use deep learning and machine learning technologies to connect big data with our information evaluation capabilities to provide

comprehensive support for marketing based on understanding of consumers. In custom research, we will enhance sales and products, pursue further productivity improvement, and strengthen cooperation among Group companies by bringing together our domestic and overseas research expertise.

In the mainstay communications area, we will use single-source panels as the core service to tailor solutions for advertisers, advertising agencies, Internet businesses and media companies in order to establish a common effectiveness measurement index for the advertising industry.

Policies for the Year Ending March 31, 2017

Performance in the Year Ended March 31, 2016

In this business, the INTAGE Group has restructured its organization to maximize Group synergy, boosted the profitability of existing businesses and created markets by establishing business models adapted to the progress of digital marketing technology. In overseas business, the Group has executed various measures led by regional offices, and is now close to becoming profitable.

Segment sales increased 3.9% year on year to ¥30,080 million. In the communications area, this segment’s core business area, sales of interactive promotions and i-SSP (INTAGE Single Source Panel) rose substantially, while existing surveys and Internet surveys in custom research also performed well.

Segment operating income increased 6.8% to ¥2,045 million. This increase reflected the contribution of sales revenues from existing surveys and Internet surveys in custom research, which more than offset the additional expenses incurred with business expansion in the communications area.

Main Customer Industries

Panel research12,598

Custom research8,372

Communication2,501

Overseas subsidiaries3,744

Others2,863

Net sales

¥30,080million

Sales by Service

Consumer goods

Durable consumer

goodsServices Government

agencies

Review of Operations


Solution Illustration

What is Targeting Metrics?

In January 2016, INDIGIM launched its Targeting Metrics service, a new measurement index that can be used to evaluate digital advertising effectiveness.

This service blends consumer attribute and purchasing data based on INTAGE Group’s high-value-added panels with Nielsen Digital Ad Ratings provided globally by Nielsen. It quickly measures advertising effectiveness for each target segment.

Targeting Metrics helps clients take their advertising and marketing to a higher level, but the use of this tool can also be expected to produce a synergy effect. To accommodate client needs and requests, the services provided can be broadened to the detailed research and analysis that INTAGE or ANTERIO

Synergy Effect

excel at – for example, by researching the measurement results obtained with Targeting Metrics in greater depth, or meeting new analysis needs derived from the results – thus contributing to the sales of INTAGE Group companies.

Survey of promotional ad on the Internet for “Shampoo A”: “What kind of users were exposed to the ad?”

INDIGIM MethodologyProjected ad reach

Develo

p n

ext marketin

g

app

roach

Attributes of INTAGE Panel

113,196people

Heavy users 36,721Medium users 36,722Light users 36,027Others 3,726

8,000 22%7,000 19%2,000 6% 500 13%

Ad reachAd viewers

Shampoo purchasing frequency known from SCI

Targets narrowed

down from SCI

* User classifications by frequency based on consumer self-reporting

*The above is a fictional case prepared for illustrative purposes. In the actual service, more detailed and sophisticated target setting and numerical value setting are performed.

Product purchasing behavior

Product ownership

Lifestyle attributes

Media representation

Reach by age and gender

Real-time data

INTAGE Nielsen

SCI/i-SSP, etc. :No. 1 share in panel research in Japan

Nielsen Digital Ad Ratings (DAR):World’s largest digital ad ratings

Targeting Metrics: New measurement index combining both

companies’ strengths

Purchaser reach

Product owner reach

Lifestyle reach

Nielsen-INTAGE DigitalMetrics

Nielsen DARMeasures people who viewed a promotional ad for Shampoo A on the Internet

Light users were especially unlikely to look at the ad!

Manufacturer

Review of Operations: Marketing Support (Consumer Goods & Services)

About Nielsen-INTAGE DigitalMetrics

Established on April 1, 2015, Nielsen-INTAGE DigitalMetrics Inc.(INDIGIM) is a joint venture between INTAGE Inc., the leader in the marketing research industry in Japan, and The Nielsen Company, the world’s number-one provider of marketing and media information. INDIGIM will develop new advertising effectiveness measurement solutions for “the cross-platform* age” in Japan.

*The entirety of the advertising market that extends across various devices, including TV, PCs and mobile

Targeting Metrics New Service from Nielsen-INTAGE DigitalMetrics


Operating Companies

• ANTERIO Inc.

• ASKLEP Inc.

• Japan Medical Information Research Institute Inc.

• PLAMED Inc.

• Plamed Korea Co., Ltd.

Business Overview

The INTAGE Group supports the research and development and marketing activities of pharmaceutical companies with services including marketing research, contract research organization (CRO) services and prescription data analysis for over-the-counter and prescription drugs. The source of our competitiveness in this business is our high-value-added solutions that draw on the insight and expertise we have gained through extensive experience in surveying consumers, patients and healthcare professionals, together with our system development capabilities.

Marketing Support(Healthcare)

The pharmaceutical industry is in a period of significant change. Reviews for approval of new drugs have become stricter worldwide, while the Japanese government has instituted policies to hold down healthcare costs through drug price reductions and promotion of the use of generic drugs, and has also indicated policies for boosting the international competitiveness of the Japanese pharmaceutical industry. These major changes in the external environment are being accompanied by a further rise in outsourcing needs from pharmaceutical and medical equipment manufacturers, and the size of the market is expanding.

At ASKLEP, there are concerns about intensifying competition for EDC systems, a growth driver, and the trend toward smaller-scale post-marketing studies. However, ASKLEP is

working to capture new business centered on ADDIN-EX, a new product adapted to client needs, and will also focus on developing new services, expanding GVP* services with its differentiation strategy, and improving quality and efficiency by creating an IT platform. ANTERIO will focus on expanding custom research orders and on research and development to further increase the value of existing businesses and development of new business areas. In addition, the INTAGE Group will expand its client base by strengthening cooperation with Group companies in Asia, and will step up expansion of the healthcare area in the Group’s overseas business.



In this business, marketing research related to over-the-counter pharmaceuticals was transferred from INTAGE Inc. to ANTERIO Inc. to enhance specialization in the healthcare field. The INTAGE Group has aggressively pursued business growth, particularly through a capital and business alliance with Kyoto Constella Technologies Co., Ltd. for the expansion of pharmacovigilance services.

Segment sales increased 3.5% year on year to ¥9,734 million. The increase was driven by patient registration and sales of data management and statistical analysis services in post-marketing surveillance, as well as the strong performance of custom research (existing, Internet and global) at ANTERIO, although there were concerns about a decline in sales due to the transfer of a business in the previous fiscal year at ASKLEP Inc., which provides CRO services.

Segment operating income increased 18.2% to ¥1,365 million as a result of highly profitable orders received at ANTERIO and ASKLEP, in addition to the business transfer at ASKLEP Inc. in the previous fiscal year and sweeping business process improvements.

Panel research2,326

Custom research2,848

CRO3,860

Others697

Net sales

¥9,734million

消費財消費財

Main Customer Industry

Sales by Service

Pharmaceuticals

* GVP (good vigilance practice) services: Services related to post-marketing safety management of pharmaceutical products



Developing a new drug involves numerous phases, starting with basic research, and takes a long time – typically more than 10 years – and enormous effort. In that process, contract research organizations (CRO) perform and support various related work for pharmaceutical manufacturers, such as clinical trials and post-marketing surveillance. In the INTAGE Group, ASKLEP Inc. conducts this business.

Until recently, when pharmaceutical manufacturers collected data for clinical trials and post-marketing surveillance, they obtained information from paper-based reports written by the facilities that conducted the clinical trials or surveillance. However, considerable time, labor and manpower were

required until the data was finalized, and the complexity of this process was considered one factor driving up costs. The electronic data capture (EDC) system was developed to improve this situation. By adopting an EDC system, pharmaceutical manufacturers and CROs are able to collect data through the Internet that doctors and clinical research staff enter into computers or other devices, allowing them to manage clinical trials and surveillance while monitoring data in real time.

ASKLEP began offering its EDC solution service in 2004, and released ADDIN, an EDC system specifically for post-marketing surveillance, in 2010.

ADDIN EX A Next-Generation EDC System That Continues to Evolve

Creation of ADDIN EX Enables EDC in All Post-Marketing Surveillance

In October 2015, ASKLEP released ADDIN EX, the next-generation version of ADDIN.

In the roughly 10 years since ASKLEP began providing EDC services, changes have taken place in medical practice, the information required by pharmaceutical manufacturers, and the business landscape.

For example, one problem that has arisen is the shrinking scale of surveillance due to the emergence of fields in which needs cannot be met with existing drugs, and the increase in rare diseases that affect relatively few patients.

To make it even easier to use, the new system can accommodate the needs of physicians and pharmaceutical manufacturers in all types of post-marketing surveillance, including “hybrid surveillance” using both paper and EDC and small-scale surveillance. It has been acclaimed for its ease of use and high quality.

Although various companies provide EDC services, ASKLEP’s EDC has won particular praise because it fully incorporates ASKLEP’s expertise in in-house development and operation of EDC systems specifically for post-marketing surveillance, and its knowledge as a specialist.

Shift of Case Reports from Paper to Electronic Data with EDC Systems

Pharmaceutical Development Flow

Basic research 2-3 years

Preclinical studies

3-5 years

CRO (Contract research organization)

ADDIN EX specializes

here

Phase I-III trials Clinical trials

3-7 years

Post-marketing surveillance 4-10 years

Launch Review

Support

features

SpeedDramatically reduced development time with initial development and setup in as little as 3 months

Cost Reduced costs withenhanced efficiency

Quality Stress-free functions of EDC

Pharmaceuticalmanufacturers

Hospitals

ASKLEP Inc.• Surveillance data can be collected from doctors and staff

via the Internet, and data input can be commissioned.

• Central management is possible with manual input.

EDC system“ADDIN” series

CRO

Review of Operations: Marketing Support (Healthcare)



Operating Company

• INTAGE TECHNOSPHERE Inc.

Business Overview

In the Business Intelligence segment, the INTAGE Group’s business extends from software development and sales to system operation, maintenance and management, as well as data center operation. In addition, we provide other services in support of management strategies, including support for improvement of business processes related to system development and operation. Our strengths in this business are our ability to solve problems with a unique approach that combines advanced information technology with our marketing insight, and to provide proprietary systems services backed by industry expertise. In recent years, we have also expanded our service offerings to research of the latest information technologies, particularly artificial intelligence and deep learning, and development of related services.

“Change” is the keyword for the year ending March 31, 2017. The INTAGE Group will further sharpen its industry expertise and information technology capabilities to cultivate new clients and create new services.

As the pace of change in the environment accelerates, driven by advances such as the Internet of things (IoT) and the continued explosive growth of data, attention in this business area is focusing on automation technologies that use artificial intelligence (AI).

The INTAGE Group will reinforce its partnership with XCompass Intelligence, which has cutting-edge AI

information processing technologies, including deep learning, and will step up research and development for full-scale commercialization.

On April 1, 2016, DataAge Inc. was established as a joint investment with AGS Corporation for the purpose of improving productivity by using common infrastructure and strengthening complementary functions such as mutual use of data centers.

Going forward, we will also consider collaboration for business expansion with mutual use of each company’s services, improvement of productivity in IT work and reduction of operating costs.



* Consumer goods and services


In this business, IT solution services in the areas of fast-moving consumer goods, durable consumer goods and pharmaceutical and health information were transferred from INTAGE Inc. to INTAGE TECHNOSPHERE Inc. to strengthen the business structure and develop new clients. In addition, through the capital and business alliance with XCompass Intelligence Ltd. INTAGE TECHNOSPHERE conducted demonstration trials in order to create new businesses in the AI field and build a next-generation data usage platform.

Segment sales increased 2.0% year on year to ¥5,665 million, reflecting solid performance that included orders for system development projects in the travel area.

Segment operating income declined 5.5% to ¥471 million, reflecting a large, highly profitable order recorded in the previous fiscal year.

Domestic CG&S*3,206

Healthcare2,458

Net sales

¥5,665million

消費財消費財消費財消費財

Main Customer Industries

Sales by Area

Health insurancePharmaceuticalsServices

Software development

System operation

Data center operation


Sustainability

Based on The INTAGE Group Way, we strive to utilize the INTAGE Group’s capabilities to solve issues facing society while meeting our fundamental social responsibilities. With this approach, we aim for the continuous synergistic growth of the INTAGE Group and society.

We want to remain the company of choice for all of our stakeholders. In addition to building relationships of trust through dialogue, we also focus on engagement with employees, consideration for the environment and participation in the community.

Energy UsageThe INTAGE Group operates a data center, which is an energy-intensive business. Electricity use at the Hibarigaoka Office is particularly high due to the large-scale equipment deployed there. This office is considered a Type 2 specified business operator under the Energy Saving Act and a specified business operator under the Tokyo Metropolitan Ordinance on Environmental Preservation. Therefore, it is promoting environmental measures including reduction of energy use and waste in cooperation with an energy service company (ESCO),* as

well as green purchasing. As a result, the amount of electricity used has been declining annually.

Environmental Conservation Efforts

Year endedMarch 31, 2014



Electricity usage (thousands of kWh)

7,569 7,210 7,095

Crude oil equivalent (kl) 1,879 1,790 1,762

Note: Amounts are rounded down*Totals for the Akihabara, Hibarigaoka and Higashikurume offices

Energy Usage at Main Offices* by Year

* A company that provides services related to improving the energy efficiency of buildings.

Initiatives for Women in the WorkplaceThe INTAGE Group respects diverse values and individuality, and seeks to employ a wide range of people. Our policy is to provide equal employment opportunities and ensure equal treatment of men and women, and we do not have different pay scales for male and female employees.

Based on a new law to promote the role of women in the workplace in Japan, INTAGE has set the goal of having women fill 25% of executive positions by the end of March 2021. In fiscal 2016, we began efforts to encourage women to take an exam for appointment to executive positions.

As of May 2016, the INTAGE Group overall had three female officers, and four including an outside director.

In addition, we conduct the IMR (QWL) Employee Survey once a year as part of our support for employees. This

survey gauges employee satisfaction and mental health, and the results are one of the items used to evaluate each Group company.

Relationship with Our Employees

Employment Data

Number of employeesRegular employees: 835, Contract employees: 70, Transfer employees: 2, Direct hire part-time employees: 70

Breakdown of full-time employees, and number and percentage of employees who are union members

Managers: 269, Full-time employees: 566Union members: 208, Percentage of union employees: 36.7%

Turnover

Number of employees who left in the past year: 56 (32 men and 24 women) Turnover rate: 6.2% (Male employees: 6.1%, Female employees: 6.3%)

Number of female managers 49: 18.2% (49 out of 269 managers)

Note: Figures shown are for INTAGE Inc. only (as of March 31, 2016)

Donations and Support for Various OrganizationsThe INTAGE Group supports the activities of various organizations through donations from shareholders and survey panelists.

In addition, we donated ¥10 million through the Japanese Red Cross to aid the victims of the earthquakes that struck Kumamoto Prefecture in April 2016. We also called on employees to cooperate in donating funds, and set up donation boxes at each office. In total, INTAGE Group employees voluntarily contributed more than ¥360 thousand.

Relationship with Society



The C.W. Nicol Afan Woodland Trust 128,690 138,970

Japan Guide Dog Association 563,990 537,740

UNICEF 468,130 425,460

Japan Earthquake and Tsunami Relief Fund (Japanese Red Cross)

90,000 76,000

Total 1,250,810 1,178,170

(Yen)Donations from Shareholder Benefit Plan and Cue Monitors


TOPIC

Overseas INTAGE Group companies conduct social contribution activities through internal communications. They make voluntary efforts to provide value not only for customers but also for society.

INTAGE (Thailand) Co., Ltd. provides support for improving the educational environment for children in the local community. Research Dynamics Co., Ltd. (acquired by INTAGE (Thailand) in 2011) built a library called the Intelligence Library at an elementary school in a mountainous area in 2009, and in recent years employees have volunteered their time to do renovation work on the library. INTAGE (Thailand) also provides ongoing financial assistance for learning materials and school lunches.

At INTAGE VIETNAM LIMITED LIABILITY COMPANY, the mindset of contributing to society has taken root among employees, and each fall, the company conducts CSR activities that also serve as outside training for employees. In 2015, employees visited the city of Dalat, about 150 kilometers northeast of Ho Chi Minh City, and donated funds collected by employees as well as rice and other food to Gan Reo, Lam Dong Province, where many impoverished hill tribes live. This experience strengthened ties among employees, and was a significant opportunity for each of them to think about poverty and deepen their awareness in ways such as reaffirming people-to-people connections and the social responsibility of companies.

Employees were welcomed with singing and dancing by the children (Thailand)

A student immersed in a book in the school library (Thailand)A school principal (right) is presented with educational support funds from local employees (Thailand)

Employees wear matching polo shirts to participate in community activities and to conduct food donation activities. (Vietnam)

Social Contribution Efforts Overseas


Basic Approach to Corporate GovernanceWe believe that, as an enterprise made up of numerous stakeholders, the INTAGE Group has an important responsibility not only to improve business results but also to ensure the soundness, fairness and transparency of management.

The INTAGE Group Way, our corporate philosophy, is the cornerstone of our management. To fulfill that philosophy, the INTAGE Group’s Ethical Charter has been established as a set of guidelines that all of the Group’s executives and employees must follow in conducting business activities. Based on this charter, the Group has formulated the INTAGE Group Employee Code of Conduct, which defines the basic attitude and behaviors expected of employees. The code of conduct is instilled in the Group’s executives and employees to ensure that they carry out sound business activities in compliance with laws and regulations.

To further enhance corporate value, we formulated and announced our Basic Policy on Corporate Governance in June 2016. This policy shows our basic approach to corporate governance as well as corporate governance frameworks and policies related to administration.

Corporate Governance StructureIn accordance with the approval of amendments to the Company’s Articles of Incorporation at the General Meeting of Shareholders held on June 17, 2016, we transitioned from a company with a Board of Corporate Auditors to a company with an Audit & Supervisory Committee. This change will enable faster decision-making by broadening authority for decisions on important business execution matters to the representative director and other executive directors. The change is also based on the idea that enhancing the effectiveness of audits will be effective in increasing the Company’s corporate value by strengthening oversight of business execution by the Board of Directors and by having audits performed by Audit & Supervisory Committee members with voting rights on the Board of Directors.

• Board of DirectorsThe Board of Directors consists of four directors, (excluding directors serving as Audit & Supervisory Committee members) and four directors serving as Audit & Supervisory Board members (including three outside directors), who meet once a month, in principle, to make decisions on policies and other important matters concerning the Company’s business execution, and oversee the execution of duties by executive directors, including the representative director. By appointing outside directors as directors serving as Audit & Supervisory Committee members, we further strengthen the oversight function of the Board of Directors and incorporate objective views on the Company’s overall management. Those views are reflected in the Board’s discussions and decisions.

• CommitteesThe Company has established the Internal Control Committee to promote internal control initiatives in the Group, the Crisis Management Committee to respond to crises involving the Group’s business, and the Management System Committee to further improve the Group’s management systems.

• Audit & Supervisory CommitteeThe Audit & Supervisory Committee consists of four directors serving as Audit & Supervisory Committee members (including three outside directors), and convenes once a month in principle. Directors serving as full-time Audit & Supervisory Committee members attend meetings of the Internal Control Committee and other key meetings. They then report to the other directors serving as Audit & Supervisory Committee members (the outside directors) at Audit & Supervisory Committee meetings, collect the views of the Audit & Supervisory Committee, and otherwise strengthen auditing and oversight of management.

In addition, through the Company’s internal control system, Audit & Supervisory Committee members regularly receive reports on the status and results of internal audits. They

Corporate Governance

Corporate Governance Structure General Meeting of Shareholders

Crisis Managem

ent Comm

ittee

Board of Directors (5 inside directors and

3 outside directors)

Audit & Supervisory Committee

(1 inside and 3 outside members)


Executive Committee

Internal Audit Department

Operating departments and management departments of

INTAGE HOLDINGS and Group companies

Group Management Meeting

Managem

ent System Com

mittee

Internal Control Comm

ittee Independent Auditor

Consulting Law Office

• THE INTAGE GROUP WAY• INTAGE Group’s Ethical Charter

• INTAGE Group Employee Code of Conduct• Basic Policy on Internal Control Systems

Promote

Emergency response

Accounting audits/ Audits of internal control over financial reporting

Reporting of legal or compliance violations

Legal consultation/Reports of compliance violations

Instruct

Collaboration

Collaboration

Internal audits

Report

Report Audit andsupervisionInstruct

Internal control departments


may also request reports as necessary from directors, executive officers and business execution departments of the Company and Group companies.

Outside Directors The Company has three outside directors, all of whom are Audit & Supervisory Committee members.

As of March 31, 2016, outside directors Shizue Kishi, Hajime Nakajima and Eiichi Izumo held 500 shares, 500 shares and 100 shares, respectively, of the Company’s common stock. There are no special interests between the Company and the outside directors.

The functions and roles of the outside directors in supervising the Company are to draw on their experience, achievements and professional insight to provide advice and recommendations from an independent standpoint to promote sound, appropriate decision-making by the Board of Directors. At meetings of the Audit & Supervisory Committee, they make statements and recommendations aimed at ensuring sound business operations, which are reflected in the Company’s management.

The Company believes that appointing outside directors enables it to reflect a broad range of expertise from an independent standpoint in its management decisions. The Company’s criteria for the independence of outside directors are based on its Independence Criteria for Outside Directors, with reference to the independence criteria of the Tokyo Stock Exchange.

The outside directors share information on audits with the Internal Audit Department and internal control departments through the activities of the Audit & Supervisory Committee. They also maintain close cooperation with the Company’s independent auditors by exchanging opinions on each other’s audits and sharing information on the status and results of audits.

Internal Control SystemsIn addition to the regular meetings of the Board of Directors and the Audit & Supervisory Committee, the Group Management Meeting, which is responsible for reporting, deliberation and decision-making on management policies and measures and matters related to business operations, convenes once a month, and is attended by directors (excluding Audit & Supervisory Committee members), directors serving as full-time Audit & Supervisory Committee members, executive officers and the presidents of Group companies. The Executive Committee, which consists of directors (excluding Audit & Supervisory Committee members), directors serving as full-time Audit & Supervisory Committee members, and executive officers, meets every other week to support the Board of Directors, report on and discuss various matters, and improve management efficiency.

Risk Management StructureIn accordance with the Basic Policy on Internal Control Systems, the Group appoints a director as Chief Risk Officer, and has set up the Internal Control Committee comprising representatives from Group companies to establish mechanisms for recognizing and assessing risks, as well as rules for risk management. This committee also collaborates and cooperates with the Management System Committee to increase the effectiveness of risk management and handles

cross-sectional risk management for the entire INTAGE Group.

The Company’s quality management system is regularly audited internally and externally to verify that it conforms to the framework of ISO9001, for which the Company holds certification. In addition, a system for the protection of personal information based on the Privacy Mark, which the Company has obtained, is applied and implemented throughout the INTAGE Group. The INTAGE Group’s Ethical Charter and the INTAGE Group Employee Code of Conduct are publicized to all employees on the company intranet, and compliance training is provided on a regular basis through e-learning and other systems, to promote compliance throughout the Group. Moreover, a compliance hotline that connects to the Company’s law firm has been set up to facilitate adherence to and maintenance of the compliance system.

Audits by the Audit & Supervisory Committee and Internal Audits The Audit & Supervisory Committee consists of four directors serving as Audit & Supervisory Committee members. In accordance with the audit policies set by the Audit & Supervisory Committee, the Audit & Supervisory Committee members attend meetings of the Board of Directors and other important meetings, monitor the process of decision-making on matters concerning management, clearly express their opinions as appropriate, and conduct audits to ascertain the status of timely business execution and verify its legality.

The Internal Audit Department, which is responsible for internal audits, consists of seven members and conducts audits of the Company and Group companies to confirm the fairness, accuracy and effectiveness of organizational management and the conduct of business in accordance with the Company’s management philosophy, management policies and regulations.

The Internal Audit Department also exchanges opinions and information concerning audits with independent auditors, and maintains close cooperation with internal control departments, which centrally monitor the status of these audits and internal control activities.

Communication with Shareholders and InvestorsRecognizing the importance of listening to the views of its shareholders and investors and reflecting them in its management, the Company works to enhance communication with them through IR activities.

For communication with individual shareholders and investors, the Company holds regular information meetings for individual investors throughout Japan, in addition to the general meeting of shareholders.

For communication with analysts and institutional investors, the Company holds regular briefings in conjunction with announcements of financial results for the fiscal year and for the first half, and also holds numerous individual meetings.

For overseas shareholders and investors, the Company provides information through its website and conducts individual meetings as necessary.


Management Team

As of June 17, 2016, INTAGE Holdings shifted to an Audit & Supervisory Committee structure from a Board of Corporate Auditors structure in order to further enhance corporate governance and increase corporate value by strengthening the supervision functions of the Board of Directors.

Kenji Miyakubi


Apr. 1980 Joined the CompanyJun. 2007 Director and General Manager, Incubation CenterApr. 2010 Executive Director and General Manager, Business Development GroupApr. 2011 President, Representative Director and General Manager, Business Development GroupApr. 2012 President and Representative Director (current position)

1 Noriaki Ishizuka

Director; President and Representative Director of INTAGE Inc.

Apr. 1982 Joined the CompanyJun. 2006 Director and Deputy General Manager, Sales GroupApr. 2008 Director and Unit Director, Business Solutions UnitApr. 2009 Director and General Manager, Sales GroupApr. 2011 Director and General Manager, DCG and Services Business GroupApr. 2013 Executive DirectorOct. 2013 President and Representative Director, INTAGE Inc. (current position)Jun. 2015 Director (current position)

2

Kenji Ikeya

Director and CFO, in charge of internal controls; President and Representative Director of INTAGE Associates Inc.

Apr. 1980 Joined The Saitama Bank, Ltd.Oct. 2011 General Manager, Corporate Management DivisionApr. 2013 Executive Officer and General Manager, Finance & Investor Relations DivisionApr. 2014 Executive Officer in charge of Finance & Investor Relations DivisionOct. 2014 Executive Officer in charge of Finance & Investor Relations Division and General Manager, Corporate Administration OfficeApr. 2015 Executive Officer in charge of Finance & Investor Relations Division and General Manager, President’s OfficeJun. 2015 Senior Executive Officer in charge of Finance, General Manager, President’s Office In charge of Crisis Management Committee, Internal Control CommitteeApr. 2016 Senior Executive Officer in charge of Corporate Finance Division, President’s Office, Internal Control and Risk Management Division, Crisis Management Committee, Internal Control Committee President and Representative Director of INTAGE Associates Inc. (current position)Jun. 2016 Director and CFO, in charge of Internal Controls (current position)

3

Yoshiya Nishi

Executive Officer in charge of Group Healthcare BusinessPresident and Representative Director, ANTERIO Inc.Director, ASKLEP Inc.

Jun. 1992 Joined Social Survey Research Information Co., Ltd.Dec. 1994 Director, TM Marketing Inc. (currently ANTERIO Inc.)Jan. 2005 Vice President and Representative Director, TM Marketing Inc.Mar. 2007 President and Representative Director, TM Marketing Inc. (current position)Jul. 2014 Executive Officer in charge of Group Healthcare SolutionsApr. 2015 Executive Officer in charge of Group Healthcare Business May 2015 Director, ASKLEP Inc. (current position)Jun. 2016 Director in charge of Group Healthcare Business (current position)

4

Directors

(As of June 17, 2016 )


Takashi Ito

Director Serving on the Audit & Supervisory Committee (full-time)

Apr. 1977 Joined IBM Japan, Ltd.Jan. 2008 Deputy General Manager, Sales GroupApr. 2012 Executive Officer, General Manager, FMCG Business GroupDec. 2015 Senior Executive, Auditing Staff and in charge of Internal Audit OfficeApr. 2016 Senior Executive, Auditing Staff and in charge of Internal Audit Division (current position)Jun. 2016 Director serving on the Audit & Supervisory Committee (full-time) (current position)

5 Shizue Kishi

Director Serving on the Audit & Supervisory Committee (Outside Director)

Apr. 1983 Full-time Instructor, Faculty of Commerce, Nagoya University of Commerce & BusinessMar. 1988 Assistant Professor, Faculty of Economics, Nagoya City UniversityApr. 1996 ProfessorApr. 1998 Professor, Faculty of Business Administration, Tokyo Keizai University (current position)Oct. 2010 Chairperson, Japan Academy of Advertising (current position)Apr. 2014 Dean, Faculty of Business Administration, Tokyo Keizai University Jun. 2015 Director, the CompanyJun. 2016 Director serving on the Audit & Supervisory Committee (current position)

6

Hajime Nakajima


Apr. 1986 Appointed as JudgeApr. 1997 Judge, Tokyo District CourtApr. 2002 General Manager, Administrative Bureau, Secretarial Training Institute, Supreme CourtApr. 2004 General Manager of Training, Comprehensive Training Institute for Court StaffApr. 2005 Judge, Tokyo High CourtMar. 2007 Retired as Judge, Tokyo High CourtApr. 2007 Professor, Toin Law School (current position)Jun. 2007 Registered as an AttorneyJun. 2014 Substitute Corporate Auditor, the CompanyJun. 2015 Outside Corporate Auditor, the CompanyJun. 2016 Director serving on the Audit & Supervisory Committee (current position)

7

Eiichi Izumo


Apr. 1995 Joined Tohmatsu & Co. (currently Deloitte Touche Tohmatsu LLC)Apr. 1998 Registered as Certified Public AccountantJul. 2010 Partner, Deloitte Touche Tohmatsu LLCFeb. 2015 Representative, Izumo Certified Public Accountant Office (current position)Jun. 2015 Substitute Corporate Auditor, the Company (current position)Jun. 2015 Outside Audit & Supervisory Board member, Benesse Holdings, Inc. (current position)Mar. 2016 Outside Audit & Supervisory Board Member, TORII PHARMACEUTICAL CO., LTD. (current position)Jun. 2016 Director serving on the Audit & Supervisory Committee (current position)

8

Directors Serving on the Audit & Supervisory Committee

Kiyomi MiyauchiSenior Executive Officer, Chief Senior Director of Overseas Business, in charge of Group Overseas Business

Ayumi HigakiSenior Executive Officer in charge of Group Business Strategy; Director at INTAGE Inc.; Director (part-time) at INTAGE TECHNOSPHERE Inc.

Shigemi SugawaExecutive Officer, Group CIOPresident and Representative Director, INTAGE TECHNOSPHERE Inc.In charge of Information Security

Toshio OdagiriExecutive Officer, in charge of Affiliated Companies, in charge of Management Planning, in charge of Incubation Promotion

Executive Officers and their Responsibilities

1 2 3 4

5 6 7 8


Scope of ConsolidationThe INTAGE Group (the “Group”) consists of INTAGE HOLDINGS Inc. (the “Company”), 21 consolidated subsidiaries and 2 affiliated companies.

In fiscal 2016 (the year ended March 31, 2016), the Group changed its reportable segments from three segments that were based on services provided – Marketing Research and Consulting, System Solutions and Drug Development Solutions – to three segments based on customer industry and services provided – Marketing Support (Consumer Goods & Services), Marketing Support (Healthcare) and Business Intelligence. Comparisons and analysis for fiscal 2016 are based on the new segmentation.

In Marketing Support (Consumer Goods & Services), the Group provides data services custom research, analytical models, communication services and other services based on various types of independently collected data, research techniques and data analysis. In Marketing Support (Healthcare), the Group conducts marketing research for over-the-counter and prescription pharmaceuticals, performs data management and analysis on consignment from pharmaceutical manufacturers, and provides contract research organization (CRO) services to support pharmaceutical development. In Business Intelligence, the Group’s services include software development and sales, system operation, maintenance and management, data center operation, support for business process improvement through system construction and operation, data evaluation, analysis, consultation, and research and development anticipating the use of artificial intelligence (AI) information processing technology.

The Group also helps clients to solve issues in their businesses by blending its research techniques, system technologies, industry and operations knowledge, consulting capabilities and other professional skills, backed by a comprehensive understanding of marketing, to provide intelligence that aids in decision-making. In addition, the Group proposes new business models.

Summary of ResultsIn fiscal 2016, the Japanese economy remained on a moderate growth path, supported by increases in corporate earnings and consumer spending, although there were concerns about the appreciation of the yen and falling stock prices.

In overseas economies, although moderate growth continued, led mainly by advanced countries, the outlook for the global economy remained unclear due to the slowdown in emerging markets, particularly China, and the drop in oil prices.

In the information services industry, of which the INTAGE Group is a part, sales showed year-on-year increases in nearly every month of the fiscal year under review, according to the Survey of Selected Service Industries

prepared by the Ministry of Economy, Trade and Industry (METI). In fiscal 2016, the second year of the INTAGE Group’s 11th Medium-Term Management Plan, the Group worked to achieve the plan’s priority objectives with “Renovation & Innovation: towards accelerated growth utilizing our deep insights on people as our greatest asset” as the Group’s basic policy.

As a result, the INTAGE Group’s net sales for fiscal 2016 were ¥45,481 million (up 3.5% year on year), with operating income of ¥3,883 million (up 8.7%), ordinary income of ¥3,947 million (up 14.5%) and net income attributable to owners of the Parent of ¥2,326 million (down 5.6%).

Results by Business Segment• Marketing Support (Consumer Goods & Services)

In the Marketing Support (Consumer Goods & Services) segment, sales increased from the previous fiscal year, reflecting strong performance in the communications area, including interactive promotions and i-SSP (INTAGE Single Source Panel) research, as well as existing research studies in the custom research area and Internet surveys. Operating income also increased as expenses associated with business expansion in the communications area, this segment’s core business area, were more than offset by income from existing research and Internet surveys in custom research areas.

As a result, sales in the Marketing Support (Consumer Goods & Services) segment totaled ¥30,080 million (up 3.9% year on year), with operating income of ¥2,045 million (up 6.8%).

• Marketing Support (Healthcare)

In the Marketing Support (Healthcare) segment, sales increased slightly from the previous fiscal year, buoyed mainly by strong performance of existing research studies, Internet surveys and global research studies in custom research at ANTERIO Inc. Operating income also grew, reflecting an increase in the number of highly profitable projects and cost reductions resulting from business transfers.

As a result, sales in the Marketing Support (Healthcare) segment were ¥9,734 million (up 3.5% year on year), with operating income of ¥1,365 million (up 18.2%).

• Business Intelligence

In the Business Intelligence segment, sales increased due primarily to the solid performance of the travel area, which received orders for system development projects. However, profit decreased due to the absence of large orders recorded in the previous fiscal year.

As a result, sales in the Business Intelligence segment amounted to ¥5,665 million (up 2.0% year on year), with operating income of ¥471 million (down 5.5%).

Management’s Discussion and Analysis


Sales and Income• Net Sales

In the Marketing Support (Consumer Goods & Services) segment, sales increased due to strong performance in the communications area, including interactive promotions and i-SSP (INTAGE Single Source Panel) research, as well as existing research and Internet surveys in the custom research area.

In the Marketing Support (Healthcare) segment, sales increased largely due to strong performance of existing customer research studies, Internet surveys and global research at ANTERIO Inc.

In the Business Intelligence segment, sales increased primarily because of orders for system development projects in the travel area.

As a result, net sales increased ¥1,555 million compared with the previous fiscal year to ¥45,481 million, an increase of 3.5%.

• Cost of Sales and Selling, General and Administrative Expenses Cost of sales increased ¥1,533 million, or 4.8%, year on year to ¥33,257 million, largely due to the increase in operating costs associated with growth in net sales. The cost-to-sales ratio was 73.1%, an increase of 0.9 percentage point from the previous fiscal year. Selling, general and administrative (SG&A) expenses decreased ¥290 million, or 3.4%, year on year to ¥8,340 million, mainly because the Company shifted its focus from sales activities to project delivery activities and implemented cost reductions. The ratio of SG&A expenses to net sales was 18.3%, down 0.3 percentage point from the previous fiscal year.

• Operating Income

Operating income increased ¥312 million, or 8.7%, to ¥3,883 million as the increase in net sales exceeded the increase in cost of sales while SG&A expenses decreased.

• Non-Operating Income and Expenses

Non-operating income increased ¥25 million, or 24.1%, year on year to ¥131 million due to factors including equity in income of affiliates. Non-operating expenses decreased ¥162 million, or 70.8%, to ¥67 million.

• Extraordinary Income and Losses

Extraordinary income decreased from ¥2,919 million in the previous fiscal year to zero in fiscal 2016, and extraordinary losses decreased ¥1,147 million, or 89.7%, to ¥131 million, mainly because impairment loss, extra retirement payment and loss on abolishment of retirement benefit plan were recorded in the previous fiscal year.

• Net Income Attributable to Owners of the Parent Income before income taxes decreased ¥1,271 million and income taxes decreased ¥1,121 million compared with the previous fiscal year. As a result, net income attributable to owners of the Parent decreased ¥136 million, or 5.6%, year on year to ¥2,326 million.

• Cash Flows

Cash and cash equivalents (“cash”) as of March 31, 2016 totaled ¥9,812 million, an increase of ¥1,446 million from the previous fiscal year. The increase was the result of ¥1,713 million in cash generated by operating activities, ¥1,566 million in cash generated by financing activities and ¥1,791 million in cash used in investing activities.

Cash Flows from Operating ActivitiesNet cash provided by operating activities totaled ¥1,713 million, a decrease of ¥1,234 million from the previous fiscal year. This lower figure was largely the result of a decrease in accrued consumption taxes, compared with an increase in the previous fiscal year.

Cash Flows from Investing ActivitiesNet cash used in investing activities was ¥1,791 million, compared with net cash provided by investing activities of ¥2,327 million in the previous fiscal year. This increase was mostly because the Company realized proceeds from the sale of shares of a subsidiary resulting in a change in the scope of consolidation in the previous fiscal year.

Cash Flows from Financing Activities Net cash provided by financing activities amounted to ¥1,566 million, compared with cash used of ¥4,940 million in the previous fiscal year. This was largely due to an increase in proceeds from short-term loans payable and repayments of long-term loans payable in the previous fiscal year.


Analysis of Financial Position• Assets

Current assets as of March 31, 2016 increased ¥2,712 million from the end of the previous fiscal year to ¥24,273 million. This was mostly due to increases of ¥1,445 million in cash and deposits and ¥1,431 million in notes and accounts receivable–trade.

Non-current assets increased ¥815 million from the end of the previous fiscal year to ¥12,556 million, reflecting changes including an increase of ¥634 million in investment securities.

As a result, total assets increased ¥3,528 million to ¥36,830 million.

• Liabilities

Current liabilities increased ¥1,843 million from the end of the previous fiscal year to ¥11,885 million. While income taxes payable decreased ¥927 million, short-term loans payable increased ¥2,297 million and accounts payable-trade increased ¥231 million.

Long-term liabilities increased ¥263 million to ¥3,606 million, largely because of new long-term loans payable of ¥200 million. As a result, total liabilities increased ¥2,107 million to ¥15,491 million.

• Net Assets

Total net assets increased ¥1,421 million from the end of the previous fiscal year to ¥21,338 million. This increase was mostly because retained earnings rose ¥1,740 million, while remeasurements of defined benefit retirement assets decreased ¥424 million.

Dividend Policy The INTAGE Group’s basic policy is to distribute earnings while considering the balance between dividends and retained earnings, based on consolidated results that reflect the performance of the Group’s management. INTAGE HOLDINGS considers the return of earnings to shareholders to be one of its highest management priorities, and aims for a consolidated payout ratio of 30%. Retained earnings are used for investment to continually enhance the Group’s growth and profitability. Our aim is to ensure returns to shareholders through efforts to enhance performance.

The Company plans to pay a dividend of ¥32.50 per share (a payout ratio of 28.1%) for the fiscal year ended March 31, 2016. For the fiscal year ending March 31, 2017, the Company plans to pay a dividend of ¥35.00 per share.

Performance Outlook for the Year Ending

March 31, 2017In fiscal 2017, although there are concerns about the effects from a downturn in emerging economies, the overall economy is expected to pick up gradually, underpinned by interest-rate policies and monetary easing measures of the government and the Bank of Japan, coupled with improvement in employment and income reflecting the recovery in corporate earnings.

Under these circumstances, in fiscal 2017, the final year of the 11th Medium-Term Management Plan, the INTAGE Group will continue to set “Renovation & Innovation” as its basic policy, and will make strategic investments and develop and establish group management systems in a steady manner while looking at the five years ahead.

As a result, the INTAGE Group expects consolidated net sales of ¥48,000 million (up 5.5% year on year) in fiscal 2017, with operating income of ¥4,200 million (up 8.2%), ordinary income of ¥4,250 million (up 7.7%) and net income attributable to owners of the Parent of ¥2,650 million (up 13.9%)

Management Discussion and Analysis


1. Information ManagementThe information services industry in which the INTAGE Group participates involves handling a large volume and variety of corporate and personal information, given the characteristics of the business. Therefore, in addition to utilizing a system for protection of personal information in accordance with the Personal Information Protection Law and the Privacy Mark, the INTAGE Group gives adequate attention to management of various types of information, including establishing a specialized unit for information security management systems (ISMS) and computer security incidents and taking security measures for the public disclosure system.

In addition, as there is a risk that various types of information held by the Group may be improperly obtained or falsified as a result of unauthorized access to the Group’s information systems, stringent verification is conducted when systems are used, and necessary measures are taken to protect their security. However, any leakage or other misuse of information could cause a loss of public trust in the Group and could have a material impact on the Group’s business results.

2. Dependence on Second-Half PerformanceThe business performance of the INTAGE Group is disproportionately weighted toward the second half of the fiscal year. This imbalance is attributable to three main factors: in the Marketing Support business, research required by corporate clients for the preparation of the following year’s marketing plans is concentrated toward the end of the fiscal year; completion and delivery periods for reports commissioned by governmental agencies are concentrated toward the end of the fiscal year; and, in the Business Intelligence business, a high proportion of systems development contracts stipulate delivery at the end of the fiscal year.

Risks related to the INTAGE Group’s business operations and financial condition that may have a significant impact on investor decisions are described below. Note that any references to the future in this section are based on the judgment of the Group’s management as of March 31, 2016.

Apr.-Sep. 2014 Oct. 2014-Mar. 2015 Apr.-Sep. 2015 Oct. 2015-Mar. 2016

Net sales 19,338 (44.0) 24,587 (56.0) 20,343 (44.7) 25,137 (55.3)

Marketing Support(Consumer Goods & Services) 12,247 (42.3) 16,716 (57.7) 13,282 (44.2) 16,798 (55.8)

Marketing Support (Healthcare) 4,583 (48.7) 4,821 (51.3) 4,568 (46.9) 5,165 (53.1)

Business Intelligence 2,507 (45.1) 3,049 (54.9) 2,492 (44.0) 3,172 (56.0)

Operating income 1,317 (36.9) 2,253 (63.1) 1,319 (34.0) 2,564 (66.0)

Ordinary income 1,255 (36.4) 2,191 (63.6) 1,333 (33.8) 2,614 (66.2)

For Reference: Performance in Each Half of the Past Two Fiscal Years

3. Business Investment The INTAGE Group makes investments that are necessary for ensuring growth in its established businesses and developing new areas of business.

However, negative effects that arise as a result of these investments, or the inability to obtain results from the investments as expected, could adversely affect the INTAGE Group’s business performance and business development.

In addition, the delayed discovery of problems at a company the INTAGE Group has invested in and inability to take prompt corrective action, or the INTAGE Group’s inability to devote sufficient personnel or other resources to investment activities, could adversely affect the INTAGE Group’s business performance and business development.

4. Business Risk(1) In panel research, the core service of the INTAGE Group’s Consumer Goods & Services business, the Group is introducing new products and working to increase added value through a shift from data provision to solutions provision in order to secure further growth potential. Should these measures fail to progress as anticipated, the INTAGE Group’s business performance could be adversely affected.

In the custom research sector, competition is intensifying with the emergence of companies specializing in Internet research. To overcome this competition, the INTAGE Group must constantly invest in systems at each stage of collecting, processing, analyzing and providing research data. If the results of this competition and the cost of system investment become an excessive burden, the INTAGE Group’s business performance could be adversely affected.

(2) The Healthcare business can be greatly affected by trends in the pharmaceutical industry. The Group’s business

Business-Related Risks

Parentheses indicate percentage of total amounts for the year

(Millions of yen)


performance could be adversely affected in the event of a contraction of the market resulting from factors such as a decrease in new drug development in Japan, or by changes such as revisions to the Pharmaceutical Affairs Act or other laws or regulations.

(3) In the Business Intelligence business, the INTAGE Group is strengthening its solution functions for specific industries based on the industry knowledge and client base it has cultivated by providing services in close contact with clients, such as operation, maintenance and management of systems. However, the Group’s business performance could be adversely affected if these efforts do not progress as expected.

5. PersonnelAs the INTAGE Group engages in many highly specialized businesses, the recruitment and development of human assets is an important matter. Recruitment of global human assets has also become urgent as the Group actively expands its business internationally.

Accordingly, the INTAGE Group continuously reviews the implementation of systems related to recruitment, development and evaluation of personnel, and the plan. Furthermore, the Group places priority on developing the next generation of managers, and is working to speed up succession. However, should human asset development fail to progress satisfactorily despite these measures, the INTAGE Group’s business performance could be adversely affected.

6. Conditions in Overseas MarketsThe INTAGE Group conducts the custom research business at consolidated subsidiaries INTAGE CHINA Inc. in China, CONSUMER SEARCH HONG KONG LIMITED in Hong Kong and MACAO RESEARCH CENTRE LTD. in Macao; the healthcare research business at Plamed Korea Co., Ltd. in Korea; the custom research business at INTAGE (Thailand) Co., Ltd. in Thailand and INTAGE VIETNAM LIMITED LIABILITY COMPANY in Vietnam; the panel research and custom research businesses at INTAGE SINGAPORE PTE. LTD. in Singapore; and the custom research business at PT. INTAGE INDONESIA in Indonesia and INTAGE INDIA Private Limited in India.

However, the INTAGE Group’s business performance could be adversely affected if laws or regulations related to the Group’s business overseas are enacted, amended or otherwise changed; if situations that hinder the Group’s business operations arise as a result of political factors; or if unforeseen events such as natural disasters or infectious disease epidemics occur.

7. Management IssuesThe INTAGE Group maintains the Management System Committee to respond to various management issues. Furthermore, the Group has an Internal Control Committee

and is placing particular emphasis on strengthening the compliance structure.

Nevertheless, should these mechanisms fail to function adequately and inadequate inculcation of the spirit of compliance at the individual employee level occur, the INTAGE Group’s business performance could be adversely affected.

8. Changes in Foreign Exchange RatesThe INTAGE Group translates the financial statements of the overseas Group companies listed in “6. Conditions in Overseas Markets” from local currencies into Japanese yen. Consequently, changes in exchange rates could adversely affect the INTAGE Group’s business performance.

9. Systems FailureThe INTAGE Group’s data center is manned around the clock, and the management system incorporates thorough security measures including the installation of surveillance cameras and information control at the time of entry and exit by means of electronic key cards. In addition, all possible measures are taken to ensure stable operation at all times, including an earthquake-resistant structure, fire-extinguishing equipment, redundancy of electric power facilities, and the installation of on-site power generation facilities.

Nevertheless, the inability to use the Group’s facilities or networks due to unexpected serious events such as the occurrence of a system or hardware failure, a malicious computer virus, a hacker attack, a large-scale power outage or an earthquake, fire, flood, accident or other disaster of unexpected magnitude could adversely affect the INTAGE Group’s business performance.

10. Intellectual PropertyIn the course of conducting its business activities, the INTAGE Group takes meticulous care not to violate the patents, trademarks or other intellectual property rights of third parties. Nevertheless, should the Group violate the intellectual property rights of a third party, or should a third party newly establish intellectual property rights in one of the INTAGE Group’s business areas, the Group may be forced to discontinue business operations in the field in question, or receive demands for compensation, an injunction, or other claims from that third party. Such outcomes could adversely affect the INTAGE Group’s business performance.

11. Holding Company INTAGE HOLDINGS Inc., the listed holding company representing the INTAGE Group, derives its income from management fees paid to the Company by the operating companies whose shares it directly holds, and from dividends paid according to the business results and financial position of the operating companies. Therefore, deterioration of the financial position of operating companies resulting in their inability to pay dividends to the Company could adversely affect the Company’s business performance.

Business-Related Risks


Consolidated Statements of Income INTAGE HOLDINGS Inc. and Consolidated SubsidiariesFor the fiscal years ended March 31, 2015 and 2016

Millions of yen Thousands of U.S. dollars*2015 2016 2016

Net sales ¥43,925 ¥45,481 $403,629Cost of sales 31,723 33,257 295,145

Gross profit 12,201 12,223 108,475 Selling, general and administrative expenses: 8,630 8,340 74,014

Operating income 3,571 3,883 34,460

Non-operating income:

Interest income 4 6 53 Dividend income 33 37 328 Investment gain due to equity method — 39 346 Insurance benefit received and dividends 43 11 97 Other 24 36 319

Total 105 131 1,162

Non-operating expenses:

Interest expenses 29 20 177 Equity in losses of affiliates 144 — —Foreign exchange losses 19 17 150 Other 36 29 257

Total 230 67 594 Ordinary income 3,446 3,947 35,028

Extraordinary income:

Gain on bargain purchase 7 — —Gain on sales of subsidiaries and affiliates’ stocks 2,911 — —

Total 2,919 — —

Extraordinary losses:

Impairment loss 703 — —Extra retirement payment 131 — —Loss on abolishment of retirement benefit plan 396 — —Loss from revaluation of stocks of subsidiaries and affiliates — 120 1,064 Other 48 11 97

Total 1,279 131 1,162 Income before income taxes 5,087 3,815 33,856 Income taxes - current 2,458 1,259 11,173 Income taxes - deferred 148 225 1,996

Total 2,607 1,485 13,178 Net income 2,480 2,330 20,678 Net income attributable to non-controlling interests 16 3 26 Net income attributable to owners of the Parent ¥ 2,463 ¥ 2,326 $ 20,642

Consolidated Statements of Comprehensive IncomeINTAGE HOLDINGS Inc. and Consolidated SubsidiariesFor the fiscal years ended March 31, 2015 and 2016


Net income ¥2,480 ¥2,330 $20,678 Other comprehensive income:

Valuation difference on available-for-sale securities 91 170 1,508 Foreign currency translation adjustments 206 (74) (656)Remeasurements of defined benefit retirement plans 450 (424) (3,762)

Total of other comprehensive income (loss) 748 (328) (2,910)

Comprehensive income ¥3,228 ¥2,001 $17,758 Comprehensive income attributable to:

Comprehensive income attributable to owners of the parent ¥3,185 ¥2,004 $17,784 Comprehensive income (loss) attributable to non-controlling interests 43 (2) (17)

Consolidated Financial Statements

* The U.S. dollar amounts presented are calculated from Japanese yen at US$1 = ¥112.68, the rate prevailing on March 31, 2016.



Consolidated Balance SheetsINTAGE HOLDINGS Inc. and Consolidated SubsidiariesAs of March 31, 2015 and 2016


ASSETS

Current assets:

Cash and deposits ¥ 8,377 ¥ 9,823 $ 87,176

Note and accounts receivable–trade 9,208 10,640 94,426

Work in progress 1,384 1,240 11,004

Stored item 34 49 434

Deferred tax assets 1,101 1,102 9,779

Other current assets 1,459 1,423 12,628

Allowance for doubtful accounts (6) (5) (44)

Total current assets 21,560 24,273 215,415

Non-current assets:

Property, plant and equipment:

Buildings and structures 5,520 5,838 51,810

Accumulated depreciation (3,823) (4,046) (35,906)

Net buildings and structures 1,697 1,792 15,903

Equipment and fixtures 1,153 1,229 10,906

Accumulated depreciation (800) (839) (7,445)

Net equipment and fixtures 352 390 3,461

Land 1,998 1,998 17,731

Lease assets 1,304 1,440 12,779

Accumulated depreciation (603) (654) (5,804)

Net lease assets 701 786 6,975

Other 0 0 3

Accumulated depreciation (0) (0) (3)

Net other 0 0 0

Net property, plant and equipment 4,749 4,966 44,071

Intangible assets:

Goodwill 537 336 2,981

Other intangible assets 1,326 1,520 13,489

Total intangible fixed assets 1,864 1,857 16,480

Investments and other assets:

Investment securities 1,576 2,211 19,621

Deferred tax assets 796 755 6,700

Net defined benefit retirement assets 1,569 1,296 11,501

Other 1,184 1,469 13,036

Allowance for doubtful accounts — (0) (2)

Total investments and other assets 5,127 5,732 50,869

Total non-current assets 11,740 12,556 111,430

Total assets ¥33,301 ¥36,830 $326,854

*The U.S. dollar amounts presented are calculated from Japanese yen at US$1 = ¥112.68, the rate prevailing on March 31, 2016.



LIABILITIES

Current liabilities:

Accounts payable–trade ¥ 2,462 ¥ 2,693 $ 23,899

Short-term loans payable 57 2,354 20,891

Lease obligations 300 307 2,724

Income taxes payable 2,074 1,147 10,179

Provision for bonuses 1,492 1,640 14,554

Allowance for point program 960 1,113 9,877

Allowance for directors’ bonuses 6 10 88

Provision for stock benefits 3 1 8

Other current liabilities 2,685 2,616 23,216

Total current liabilities 10,042 11,885 105,475

Non-current liabilities:

Long-term loans payable — 200 1,774

Retirement allowance for directors 4 — —

Provision for stock benefits 23 49 434

Net defined benefit retirement liability 2,840 2,797 24,822

Lease obligations 473 555 4,925

Other — 3 26

Total long-term liabilities 3,342 3,606 32,002

Total liabilities 13,384 15,491 137,477

NET ASSETS

Shareholders’ equity:

Capital stock 1,681 1,681 14,918

Capital surplus 1,336 1,336 11,856

Retained earnings 15,692 17,433 154,712

Treasury stock, at cost (221) (216) (1,916)

Total shareholders’ equity 18,489 20,234 179,570

Accumulated other comprehensive income:

Unrealized holdings gains on securities, net of taxes 113 284 2,520

Foreign currency translation adjustments 532 464 4,117

Net defined benefit retirement assets 603 179 1,588

Total accumulated other comprehensive income 1,249 928 8,235

Non-controlling interests 178 175 1,553

Total net assets 19,917 21,338 189,368

Total liabilities and net assets ¥33,301 ¥36,830 $326,854



Consolidated Statements of Changes in Net AssetsINTAGE HOLDINGS Inc. and Consolidated SubsidiariesFor the fiscal years ended March 31, 2015 and 2016

Millions of yen

Shareholders’ equity Accumulated other comprehensive income

2015 Capital stock Capital surplus

Retained earnings Treasury stock Total

Net unrealized holding gain on

securities

Foreign currency

translation adjustment

Net defined benefit

retirement assets Total

Minority interests Total net assets

Balance at the previous year-end ¥1,681 ¥1,336 ¥14,012 ¥(533) ¥16,497 ¥21 ¥350 ¥155 ¥527 ¥146 ¥17,171Cumulative effects of changes

in accounting policies — — 298 — 298 — — — — — 298

Restated balance 1,681 1,336 14,311 (533) 16,796 21 350 155 527 146 17,470Change during period shown:

Dividends from surplus — — (553) — (553) — — — — — (553)Net income attributable to

owners of the Parent — — 2,463 — 2,463 — — — — — 2,463

Disposition of treasury stock — — — — — — — — — — —Purchase of treasury stock — — — (217) (217) — — — — — (217)Retirement of treasury stock — — (529) 529 — — — — — — —Changes in the scope of

consolidation — — — — — — — — — — —

Net changes of items other than shareholders' equity — — — — — 91 181 448 722 32 754

Total — — 1,380 311 1,692 91 181 448 722 32 2,446Balance at fiscal year-end ¥1,681 ¥1,336 ¥15,692 ¥(221) ¥18,489 ¥113 ¥532 ¥603 ¥1,249 ¥178 ¥19,917

Millions of yen





securities

Foreign currency


Net defined benefit


Non-controllinginterests Total net assets

Balance at the previous year-end ¥1,681 ¥1,336 ¥15,692 ¥(221) ¥18,489 ¥113 ¥532 ¥603 ¥1,249 ¥178 ¥19,917Cumulative effects of changes

in accounting policies — — — — — — — — — — —

Restated balance 1,681 1,336 15,692 (221) 18,489 113 532 603 1,249 178 19,917Change during period shown:

Dividends from surplus — — (603) — (603) — — — — — (603)Net income attributable to


Disposition of treasury stock — — — 5 5 — — — — — 5Purchase of treasury stock — — — (0) (0) — — — — — (0)Retirement of treasury stock — — — — — — — — — — —Changes in the scope of

consolidation — — 17 — 17 — — — — — 17

Net changes of items other than shareholders' equity — — — — — 170 (67) (424) (321) (2) (324)

Total — — 1,740 5 1,745 170 (67) (424) (321) (2) 1,421Balance at fiscal year-end ¥1,681 ¥1,336 ¥17,433 ¥(216) ¥20,234 ¥284 ¥464 ¥179 ¥928 ¥175 ¥21,338

Thousands of U.S. dollars*





securities

Foreign currency


Net defined benefit


Non-controllinginterests Total net assets

Balance at the previous year-end $14,918 $11,856 $139,261 $(1,961) $164,084 $1,002 $4,721 $5,351 $11,084 $1,579 $176,757 Cumulative effects of changes

in accounting policies — — — — — — — — — — —

Restated balance 14,918 11,856 139,261 (1,961) 164,084 1,002 4,721 5,351 11,084 1,579 176,757 Change during period shown:

Dividends from surplus — — (5,351) — (5,351) — — — — — (5,351)Net income attributable to


Disposition of treasury stock — — — 44 44 — — — — — 44 Purchase of treasury stock — — — (0) (0) — — — — — (0)Retirement of treasury stock — — — — — — — — — — —Changes in the scope of

consolidation — — 150 — 150 — — — — — 150

Net changes of items other than shareholders' equity — — — — — 1,508 (594) (3,762) (2,848) (17) (2,875)

Total — — 15,441 44 15,486 1,508 (594) (3,762) (2,848) (17) 12,610 Balance at fiscal year-end $14,918 $11,856 $154,712 $(1,916) $179,570 $2,520 $4,117 $1,588 $8,235 $1,553 $189,368 * The U.S. dollar amounts presented are calculated from Japanese yen at US$1 = ¥112.68, the rate prevailing on March 31, 2016.


Consolidated Statements of Cash FlowsINTAGE HOLDINGS Inc. and Consolidated SubsidiariesFor the fiscal years ended March 31, 2015 and 2016


Cash flows from operating activities:Income before income tax and minority interests ¥ 5,087 ¥ 3,815 $ 33,856Depreciation 1,370 1,562 13,862 Impairment loss 703 — —Amortization of goodwill 190 91 807 Decrease (increase) in net defined benefit retirement assets (742) 272 2,413 Increase (decrease) in net defined benefit retirement liability (482) (43) (381)Increase (decrease) in provision for directors’ retirement benefits (25) (4) (35)Increase (decrease) in accrued employees’ bonuses 128 148 1,313 Increase (decrease) in provision for directors’ bonuses 3 4 35 Increase (decrease) in allowance for doubtful accounts 5 (0) (0) Increase (decrease) in allowance for point program 93 152 1,348 Increase (decrease) in provision for stock benefits 26 24 212 Interest and dividend income (37) (43) (381)Equity in (earnings) losses of affiliates 144 (39) (346)Interest expenses 29 20 177 Gain on bargain purchase (7) — —Loss (gain) on sales of stocks of subsidiaries and affiliates (2,911) — —Extra retirement payments 131 — —Loss on abolishment of retirement benefit plan 396 — —Loss from revaluation of stocks of subsidiaries and affiliates — 120 1,064 Decrease (increase) in notes and accounts receivable-trade (487) (1,454) (12,903)Decrease (increase) in inventories (145) 123 1,091 Increase (decrease) in notes and accounts payable-trade 31 260 2,307 Increase (decrease) in accrued consumption taxes 599 (623) (5,528)Other 760 (495) (4,392)

Sub total 4,860 3,893 34,549 Proceeds from Interest and dividend income 38 44 390 Interests expenses paid (29) (20) (177) Extra retirement payments paid (131) — —Income taxes paid (1,791) (2,203) (19,550)

Net cash provided by operating activities 2,947 1,713 15,202Cash flows from investing activities:

Payments into time deposits (36) (9) (79)Proceeds from withdrawal of time deposits — 9 79 Payments for purchases of property, plant and equipment (347) (127) (1,127)Payments for acquisition of intangible assets (764) (1,022) (9,069)Payments for purchases of investment securities (630) (356) (3,159)Payments for loans (0) (0) (0)Proceeds from loans receivable 1 0 0Collection of long-term loans receivable 48 — —Proceeds from sales of shares of subsidiaries and affiliates 22 — —Payments for asset retirement obligations (99) — —Purchase of investments in affiliates resulting in change in scope of consolidation (114) — —Proceeds from sales of investment in subsidiaries resulting in change in scope of consolidation 4,185 — —Payments for security deposits (193) (328) (2,910)Proceeds from refund of security deposits 244 34 301 Other 10 8 70

Net cash provided by (used in) investing activities 2,327 (1,791) (15,894)Cash flows from financing activities:

Proceeds from short-term loans payable 52 2,356 20,908 Repayments of short-term loans payable (756) (56) (496)Proceeds from long-term loans payable — 200 1,774 Repayments of long-term loans payable (3,173) — —Proceeds from payments from non-controlling interests 58 — —Repayments of lease obligations (341) (336) (2,981)Payments for acquisition of treasury stock (217) (0) (0)Dividends paid (561) (596) (5,289)Payments for dividends paid to non-controlling interests (0) — —

Net cash provided by (used in) financing activities (4,940) 1,566 13,897 Effect of exchange rate changes on cash and cash equivalents 105 (38) (337)Net increase (decrease) in cash and cash equivalents 439 1,449 12,859 Cash and cash equivalents at beginning of year 7,926 8,366 74,245 Decrease in cash and cash equivalents due to exclusion from consolidation — (3) (26)Cash and cash equivalents at end of year ¥ 8,366 ¥ 9,812 $ 87,078

* The U.S. dollar amounts presented are calculated from Japanese yen at US$1 = ¥112.68, the rate prevailing on March 31, 2016.


Company Name INTAGE HOLDINGS Inc.

Established March 1960

President and Representative Director Kenji Miyakubi

Capital ¥1,681.4 million

Net Sales (Consolidated) ¥45.4 billion (fiscal year ended March 2016)

Employees (Consolidated) 2,349

Head Office INTAGE Akihabara Building, 3 Kanda-Neribeicho, Chiyoda-ku, Tokyo 101-0022, Japan Tel: +81-3-5294-7411 Fax: +81-3-5294-0199

Domestic Group Companies

CompanyCapital or Amount Invested

(Thousands of yen)Percentage of

Voting Rights Held*

INTAGE Inc. 450,000 100.0

ASKLEP Inc. 150,000 100.0

INTAGE RESEARCH Inc. 40,000 100.0 (100.0)

INTAGE TECHNOSPHERE Inc. 400,000 100.0

INTAGE ASSOCIATES Inc. 30,000 100.0

ANTERIO Inc. 145,400 100.0

Japan Medical Information Research Institute Inc. 188,250 100.0

PLAMED Inc. 90,000 100.0 (100.0)

Access JP Inc. 10,000 100.0 (100.0)

INTAGE CONSULTING Inc. 90,000 100.0

IXT Inc. 100,000 100.0 (100.0)

DOCOMO InsightMarketing, INC. 950,000 49.0

Nielsen-INTAGE DigitalMetrics Inc. 300,000 50.0 (50.0)

Overseas Group Companies

Company Capital or Amount Invested Percentage ofVoting Rights Held*

INTAGE (Thailand) Co., Ltd. 105,000 thousand baht 94.2 (91.0)

INTAGE ASIA HOLDINGS LIMITED 21,085 thousand US dollars 100.0

INTAGE CHINA Inc. 31,978 thousand yuan 99.0 (99.0)

INTAGE VIETNAM LIMITED LIABILITY COMPANY 3.1 billion Vietnamese dong 93.3 (93.3)

INTAGE INDIA Private Limited 175 million Indian rupees 98.8

INTAGE SINGAPORE PTE. LTD. 1.5 million Singaporean dollars 100.0

CONSUMER SEARCH HONG KONG LIMITED 13.8 million H.K. dollars 51.0 (51.0)

MACAO RESEARCH CENTRE LTD. 25 thousand Macanese patacas 100.0 (100.0)

PT. INTAGE INDONESIA 5 billion Indonesian rupiah 60.0 (60.0)

Plamed Korea Co., Ltd. 350 million Korean won 51.0 (51.0)

*Numbers in parentheses in percentage of voting rights held indicate the percentage held indirectly.

Corporate Data

INTAGE Group

(As of March 31, 2016 )Corporate Data/INTAGE Group


Authorized Shares 74,000,000

Shares Issued 20,118,000

Number of Shareholders 4,013

Distribution Chart

Investment in INTAGE

Number ofshares held

Shareholding ratio (%)

Mizuho Trust & Banking Co., Ltd. as trustee forRetirement Benefit Trust of Eisai Co., Ltd. (reentrusted to Trust & Custody Services Bank, Ltd.)

1,800,000 8.9

BBH Fidelity Low-Priced Stock Fund(Principal All Sector Subportfolio) 1,791,600 8.9

BNP PARIBAS SEC SERVICES LUXEMBOURGJASDEC ABERDEEN GLOBAL CLIENT ASSETS 1,345,600 6.7

INTAGE Group Employees’ StockholdingAssociation 1,078,256 5.4

Saitama Resona Bank, Ltd. 935,000 4.6

Goldman Sachs and Company Regular Account 924,481 4.6

Hoei Jitsugyo Co., Ltd. 910,000 4.5

Mizuho Bank, Ltd. 700,000 3.5

The Dai-ichi Mutual Life Insurance Company 700,000 3.5

Northern Trust Company (AVFC) 671,300 3.3

Stock Information

Securities Firms

1.2%Treasury Stock

0.0%

OtherCorporations

12.2%Foreign Companies,

Others

27.4%

Individuals and Others

25.9%

Total

4,013

Major Shareholders Stock

Stock Price and Trading Volume

Stock Information

(Yen)

1 2 3 4 5 6 7 8 9 10 11 12 12 1 2 3

900,000

2,000

1,500

2,500

1,000

500

600,000

300,000

0

2013

1 2 3 4 5 6 7 8 9 10 11

2014

121 2 3 4 5 6 7 8 9 10 11

2015 2016

(Shares)

Stock price of INTAGE Holdings

TOPIX

Trading volume

Note: Shareholding ratio is calculated after deducting treasury stock (5,088 shares).

(As of March 31, 2016 )

Financial Institutions

33.3%


Further Information: INTAGE HOLDINGS Inc.

INTAGE Akihabara Building, 3 Kanda-Neribeicho, Chiyoda-ku, Tokyo 101-0022, Japan

Tel.+81-3-5294-7411

Fax.+81-3-5294-0199

URL: http://www.intageholdings.co.jp/english/

Documents

Contentsirvision2next.blob.core.windows.net/4326/ir/12519324931599999999... · Contents 02 The INTAGE Group’s Value Creation Model ... 1964 Launched SCI (Household consumer panel